UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07657
OPPENHEIMER DEVELOPING MARKETS FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
Oppenheimerfunds, Inc.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: August 31
Date of reporting period: August 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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Korea, Republic of South 17.8%
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Brazil 16.5
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India 16.3
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Mexico 7.9
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Taiwan 5.7
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Indonesia 4.3
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South Africa 4.0
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Egypt 3.5
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Turkey 3.3
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Hong Kong 3.2
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of investments.
TOP TEN COMMON STOCK HOLDINGS
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Banco Bradesco SA, Preference 1.8%
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Companhia Vale do Rio Doce, Sponsored ADR 1.7
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Corporacion GEO SA de CV, Series B 1.6
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SK Telecom Co. Ltd., ADR 1.5
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Housing Development Finance Corp. Ltd. 1.5
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Companhia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 1.4
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Companhia Energetica de Minas Gerais, Preference 1.4
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Uniao de Bancos Brasileiros SA, Sponsored GDR 1.4
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PT Telekomunikasi Indonesia Tbk 1.4
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Tele Norte Leste Participacoes SA 1.3
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005,and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
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9 | OPPENHEIMER DEVELOPING MARKETS FUND
TOP HOLDINGS AND ALLOCATIONS
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
REGIONAL ALLOCATION
Asia 52.9%
Latin America 26.6
Middle East/Africa 12.6
Europe 4.0
United States/Canada 2.9
Emerging Europe 1.0
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of investments.
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10 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2005, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund produced a strong return
over the fiscal year ending August 31, 2005, both on an absolute and a relative
basis. While the discussion earlier in this report is reflective of the Fund's
absolute performance and applies to many of the Fund's relative stock
discussions, below are more details of how the Fund performed relative to the
Morgan Stanley Capital International Emerging Markets Free Index (MSCI EMF).
On a relative basis, the Fund's best performance came from its holdings in
India, Brazil and Taiwan. In addition to good stock selection in India, our
large overweight relative to the benchmark helped fuel returns. Housing
Development Financial Corp. Ltd. (HDFC) and ICICI Bank were two of our best
performers. An example of a recent addition to the portfolio, which contributed
to returns was Reliance Industries, a large Indian conglomerate. Reliance has
good exposure in refining and telecommunications, two areas we believe currently
offer significant opportunities in India. We purchased the stock on weakness and
as the company began restructuring its operations, its stock price has
recovered.
Brazil also performed well in spite of political uncertainty and
considerably higher interest rates than other large developing markets. Looking
forward, Brazil is one of the last opportunities in the major markets for a
secular decline in interest rates, to which should be positive for domestic
demand growth and equity market valuations.
In Taiwan, it was our significant underweight that helped our relative
performance. Largely a technology-driven market, the Fund benefited by not
owning shares in Taiwan Semiconductor, a large component of the index, when the
sector as a whole sold off earlier in the period. Instead, we benefited from our
investment in High Tech Computer, a designer of mobile "smartphones" and a
relatively new holding for the Fund. The stock was one of the Fund's best
performing stocks for the 12-month period.
In closing, we'd like to remind shareholders that investing in foreign
markets, especially in the securities of emerging countries, poses considerable
risks, including heightened volatility, political and economic uncertainty,
currency fluctuations and higher expenses.
11 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until August 31, 2005. In the case of Class A, Class B and Class C
shares, performance is measured from the inception of the Classes on November
18, 1996. In the case of Class N shares, performance is measured from inception
of the Class on March 1, 2001. The Fund's performance reflects the deduction of
the maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C, and Class N shares, and reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
The Fund's performance is compared to the performance of the Morgan
Stanley Capital International (MSCI) Emerging Markets Free Index, an unmanaged
capitalization-weighted equity index of issuers located in 25 developing
markets. The MSCI Emerging Markets Free Index is widely recognized as a measure
of performance in developing markets. Index performance reflects the
reinvestment of income but does not consider the effect of transaction costs,
and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of the Fund's business and operating expenses.
While index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
investments in the index.
12 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class A)
MSCI Emerging Markets Free Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing
Markets Fund MSCI Emerging Markets
(Class A) Free Index
11/18/1996 9,425 10,000
11/30/1996 9,331 10,000
02/28/1997 11,008 11,162
05/31/1997 11,923 11,102
08/31/1997 12,083 10,306
11/30/1997 10,641 8,504
02/28/1998 11,331 8,831
05/31/1998 11,073 7,796
08/31/1998 7,693 5,062
11/30/1998 9,091 6,415
02/28/1999 8,275 6,247
05/31/1999 10,552 7,787
08/31/1999 11,533 8,538
11/30/1999 13,617 9,157
02/29/2000 18,933 10,485
05/31/2000 16,504 9,094
08/31/2000 17,198 8,923
11/30/2000 14,677 6,875
02/28/2001 16,147 7,352
05/31/2001 15,456 6,963
08/31/2001 13,745 6,281
11/30/2001 13,309 6,202
02/28/2002 15,614 7,010
05/31/2002 15,981 7,295
08/31/2002 14,492 6,296
11/30/2002 13,920 6,369
02/28/2003 13,564 5,925
05/31/2003 15,372 6,645
08/31/2003 18,538 7,911
11/30/2003 21,310 8,707
02/29/2004 24,182 10,064
05/31/2004 22,644 9,145
08/31/2004 23,842 9,264
11/30/2004 28,941 10,911
02/28/2005 33,271 12,401
05/31/2005 32,129 11,547
08/31/2005 35,864 12,771
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 41.77% 5-Year 14.47% Since Inception (11/18/96) 15.65%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
13 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class B)
MSCI Emerging Markets Free Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing
Markets Fund MSCI Emerging Markets
(Class B) Free Index
11/18/1996 10,000 10,000
11/30/1996 9,900 10,000
02/28/1997 11,650 11,162
05/31/1997 12,580 11,102
08/31/1997 12,730 10,306
11/30/1997 11,190 8,504
02/28/1998 11,886 8,831
05/31/1998 11,593 7,796
08/31/1998 8,039 5,062
11/30/1998 9,492 6,415
02/28/1999 8,617 6,247
05/31/1999 10,978 7,787
08/31/1999 11,962 8,538
11/30/1999 14,101 9,157
02/29/2000 19,586 10,485
05/31/2000 17,039 9,094
08/31/2000 17,729 8,923
11/30/2000 15,096 6,875
02/28/2001 16,577 7,352
05/31/2001 15,842 6,963
08/31/2001 14,065 6,281
11/30/2001 13,593 6,202
02/28/2002 15,917 7,010
05/31/2002 16,259 7,295
08/31/2002 14,713 6,296
11/30/2002 14,119 6,369
02/28/2003 13,759 5,925
05/31/2003 15,592 6,645
08/31/2003 18,804 7,911
11/30/2003 21,616 8,707
02/29/2004 24,529 10,064
05/31/2004 22,969 9,145
08/31/2004 24,185 9,264
11/30/2004 29,356 10,911
02/28/2005 33,748 12,401
05/31/2005 32,591 11,547
08/31/2005 36,379 12,771
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 44.14% 5-Year 14.68% Since Inception (11/18/96) 15.83%
14 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class C)
MSCI Emerging Markets Free Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing
Markets Fund MSCI Emerging Markets
(Class C) Free Index
11/18/1996 10,000 10,000
11/30/1996 9,900 10,000
02/28/1997 11,660 11,162
05/31/1997 12,590 11,102
08/31/1997 12,740 10,306
11/30/1997 11,190 8,504
02/28/1998 11,895 8,831
05/31/1998 11,602 7,796
08/31/1998 8,042 5,062
11/30/1998 9,497 6,415
02/28/1999 8,622 6,247
05/31/1999 10,984 7,787
08/31/1999 11,980 8,538
11/30/1999 14,109 9,157
02/29/2000 19,582 10,485
05/31/2000 17,032 9,094
08/31/2000 17,722 8,923
11/30/2000 15,087 6,875
02/28/2001 16,577 7,352
05/31/2001 15,840 6,963
08/31/2001 14,058 6,281
11/30/2001 13,585 6,202
02/28/2002 15,905 7,010
05/31/2002 16,249 7,295
08/31/2002 14,696 6,296
11/30/2002 14,097 6,369
02/28/2003 13,709 5,925
05/31/2003 15,512 6,645
08/31/2003 18,671 7,911
11/30/2003 21,415 8,707
02/29/2004 24,249 10,064
05/31/2004 22,672 9,145
08/31/2004 23,823 9,264
11/30/2004 28,864 10,911
02/28/2005 33,116 12,401
05/31/2005 31,926 11,547
08/31/2005 35,565 12,771
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 48.29% 5-Year 14.95% Since Inception (11/18/96) 15.54%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
15 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class N)
MSCI Emerging Markets Free Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing
Markets Fund MSCI Emerging Markets
(Class N) Free Index
03/01/2001 10,000 10,000
05/31/2001 9,522 9,471
08/31/2001 8,460 8,543
11/30/2001 8,185 8,436
02/28/2002 9,593 9,534
05/31/2002 9,820 9,921
08/31/2002 8,894 8,563
11/30/2002 8,541 8,663
02/28/2003 8,319 8,059
05/31/2003 9,423 9,038
08/31/2003 11,360 10,759
11/30/2003 13,047 11,842
02/29/2004 14,790 13,688
05/31/2004 13,833 12,438
08/31/2004 14,560 12,599
11/30/2004 17,655 14,840
02/28/2005 20,279 16,866
05/31/2005 19,561 15,705
08/31/2005 21,816 17,369
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 48.84% 5-Year N/A Since Inception (3/1/01) 18.93%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
16 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
CLASS B shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for 1-year period. Class C shares are subject to a 0.75% annual asset-based
sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
17 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended August 31, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to
18 | OPPENHEIMER DEVELOPING MARKETS FUND
exceptions described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/05) (8/31/05) AUGUST 31, 2005
- --------------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,078.00 $ 7.57
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,017.95 7.35
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,073.60 11.72
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,013.96 11.38
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,074.00 11.40
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.27 11.08
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,075.80 9.51
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.08 9.24
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended August 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- --------------------------
Class A 1.44%
- --------------------------
Class B 2.23
- --------------------------
Class C 2.17
- --------------------------
Class N 1.81
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
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19 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS August 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--96.3%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--16.9%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.2%
Amtek Auto Ltd. 1 7,296,853 $ 36,894,480
- --------------------------------------------------------------------------------
Hyundai Autonet
Co. Ltd. 3,899,565 20,859,012
----------------
57,753,492
- --------------------------------------------------------------------------------
AUTOMOBILES--4.3%
Bajaj Auto Ltd. 528,000 16,953,567
- --------------------------------------------------------------------------------
Hero Honda
Motors Ltd. 767,055 11,267,563
- --------------------------------------------------------------------------------
Hyundai Motor Co. 550,720 38,031,586
- --------------------------------------------------------------------------------
Hyundai Motor Co.
Ltd., Preference 363,170 15,066,823
- --------------------------------------------------------------------------------
Kia Motors Corp. 1,989,260 29,679,607
- --------------------------------------------------------------------------------
PT Astra
International Tbk 45,738,500 45,072,405
- --------------------------------------------------------------------------------
Ssangyong
Motor Co. 1,2 7,796,210 55,269,393
----------------
211,340,944
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.3%
Danubius Hotel
& Spa Rt. 2 201,171 5,774,100
- --------------------------------------------------------------------------------
Hongkong &
Shanghai Hotels
Ltd. (The) 13,908,000 16,157,772
- --------------------------------------------------------------------------------
Intralot SA
Integrated Lottery 1,060,960 17,120,492
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 38,650,000 22,664,594
----------------
61,716,958
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--4.2%
Consorcio Ara
SA de CV 5,951,500 19,976,676
- --------------------------------------------------------------------------------
Corporacion GEO
SA de CV, Series B 1,2 28,915,000 80,386,657
- --------------------------------------------------------------------------------
Humax Co. Ltd. 1,272,452 24,756,498
- --------------------------------------------------------------------------------
LG Electronics, Inc. 143,220 8,635,192
- --------------------------------------------------------------------------------
LG Electronics, Inc.,
Preference 414,830 15,055,203
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
SARE Holding SA
de CV, Cl. B 2 1,174,416 $ 977,315
- --------------------------------------------------------------------------------
Steinhoff
International
Holdings Ltd. 17,805,600 46,166,553
- --------------------------------------------------------------------------------
Urbi, Desarrollos
Urbanos SA de CV 2 1,394,019 8,813,881
----------------
204,767,975
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.3%
GS Home
Shopping, Inc. 1 698,292 65,309,308
- --------------------------------------------------------------------------------
MEDIA--3.1%
Corporacion
Interamericana
de Entretenimiento
SA de CV 2 10,116,939 21,532,007
- --------------------------------------------------------------------------------
Grupo Televisa SA,
Sponsored GDR 478,100 30,024,680
- --------------------------------------------------------------------------------
Shaw Brothers Ltd. 3 7,050,000 8,917,218
- --------------------------------------------------------------------------------
Singapore Press
Holdings Ltd. 10,645,000 28,714,867
- --------------------------------------------------------------------------------
Television
Broadcasts Ltd. 4,627,000 25,630,638
- --------------------------------------------------------------------------------
Zee Telefilms Ltd. 8,194,286 35,401,549
----------------
150,220,959
- --------------------------------------------------------------------------------
MULTILINE RETAIL--0.8%
Lojas Americanas
SA, Preference 1 2,226,500,000 40,893,163
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--0.5%
Courts (Singapore)
Ltd. 1 11,425,000 3,872,881
- --------------------------------------------------------------------------------
JD Group Ltd. 1,625,192 18,898,324
----------------
22,771,205
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.2%
Folli-Follie SA 330,000 10,357,156
- --------------------------------------------------------------------------------
CONSUMER STAPLES--10.7%
- --------------------------------------------------------------------------------
BEVERAGES--2.6%
Coca-Cola Femsa
SA de CV,
Sponsored ADR 1 1,360,000 36,720,000
20 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
BEVERAGES Continued
Companhia
de Bebidas das
Americas, ADR 238,200 $ 6,109,830
- --------------------------------------------------------------------------------
Companhia
de Bebidas das
Americas, ADR,
Preference 957,300 30,729,330
- --------------------------------------------------------------------------------
Fomento Economico
Mexicano SA de CV,
Sponsored ADR 276,400 18,938,928
- --------------------------------------------------------------------------------
Serm Suk Public
Co. Ltd. 7,323,000 3,570,462
- --------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 1,2 1,465,724 17,522,388
- --------------------------------------------------------------------------------
United Breweries
Ltd. 1,2 719,989 10,545,758
----------------
124,136,696
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--3.1%
Companhia Brasileira
de Distribuicao
Grupo Pao de
Acucar, Sponsored
ADR 1 2,892,100 69,468,242
- --------------------------------------------------------------------------------
Dairy Farm
International
Holdings Ltd. 3,965,600 12,255,124
- --------------------------------------------------------------------------------
Jeronimo Martins
Sociedade Gestora
de Participacoes SA 1,615,632 23,499,884
- --------------------------------------------------------------------------------
Massmart Holdings
Ltd. 2,746,012 20,604,529
- --------------------------------------------------------------------------------
President Chain
Store Corp. 13,012,074 23,481,330
----------------
149,309,109
- --------------------------------------------------------------------------------
FOOD PRODUCTS--1.1%
Sadia SA, Preference 16,547,000 36,505,897
- --------------------------------------------------------------------------------
Tiger Brands Ltd. 945,000 19,252,681
----------------
55,758,578
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.6%
Able C&C 1,2 537,778 15,455,043
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS Continued
Trent Ltd. 701,326 $ 14,589,992
----------------
30,045,035
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.1%
Amore Pacific Corp. 130,675 35,326,941
- --------------------------------------------------------------------------------
Natura
Cosmeticos SA 479,700 16,078,193
----------------
51,405,134
- --------------------------------------------------------------------------------
TOBACCO--2.2%
Eastern Tobacco Co. 858,091 28,985,794
- --------------------------------------------------------------------------------
ITC Ltd. 1,624,600 63,906,469
- --------------------------------------------------------------------------------
PT Gudang Garam 15,501,000 16,554,466
----------------
109,446,729
- --------------------------------------------------------------------------------
ENERGY--5.1%
- --------------------------------------------------------------------------------
OIL & GAS--5.1%
Bharat Petroleum
Corp. Ltd. 3,472,770 28,138,679
- --------------------------------------------------------------------------------
Det Norske
Oljeselskap ASA 3,477,742 23,481,553
- --------------------------------------------------------------------------------
Oil & Natural
Gas Corp. Ltd. 871,070 19,417,788
- --------------------------------------------------------------------------------
Reliance Industries
Ltd. 3,761,355 61,476,047
- --------------------------------------------------------------------------------
S-Oil Corp. 456,260 33,891,069
- --------------------------------------------------------------------------------
Sinopec Zhenhai
Refining &
Chemical Co.
Ltd., Cl. H 19,906,000 21,643,499
- --------------------------------------------------------------------------------
SK Corp. 1,251,053 62,293,695
----------------
250,342,330
- --------------------------------------------------------------------------------
FINANCIALS--25.0%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--14.5%
Banco Bradesco SA,
Preference 2,040,203 86,550,657
- --------------------------------------------------------------------------------
Banco
Latinoamericano
de Exportaciones
SA, Cl. E 1 3,805,885 65,232,869
- --------------------------------------------------------------------------------
Bank Hapoalim Ltd. 7,098,303 26,327,585
21 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Bank Leumi Le-Israel 11,800,000 $ 35,067,166
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 4 1,800,000 14,789,187
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR,
S Shares 2,273,708 18,681,274
- --------------------------------------------------------------------------------
Daegu Bank 1,335,000 14,041,881
- --------------------------------------------------------------------------------
Grupo Financiero
Banorte SA de CV 2,964,400 24,338,124
- --------------------------------------------------------------------------------
Grupo Financiero
Inbursa SA de CV 24,049,000 49,752,696
- --------------------------------------------------------------------------------
Hana Bank 1,050,000 31,757,729
- --------------------------------------------------------------------------------
HSBC Holdings plc 3,232,801 51,788,710
- --------------------------------------------------------------------------------
HSBC Holdings plc,
Sponsored ADR 392,458 31,726,305
- --------------------------------------------------------------------------------
ICICI Bank Ltd. 871,655 9,537,222
- --------------------------------------------------------------------------------
ICICI Bank Ltd.,
Sponsored ADR 1,925,000 45,006,500
- --------------------------------------------------------------------------------
Industrial Bank
of Korea 1,170,000 12,240,384
- --------------------------------------------------------------------------------
PT Bank Mandiri 281,527,000 37,579,131
- --------------------------------------------------------------------------------
Shinhan Financial
Group Co. Ltd. 1,100,000 32,469,709
- --------------------------------------------------------------------------------
TMB Bank Public
Co. Ltd. 2 219,869,400 20,800,259
- --------------------------------------------------------------------------------
Uniao de Bancos
Brasileiros SA,
Sponsored GDR 1,512,300 67,630,056
- --------------------------------------------------------------------------------
Woori Finance
Holdings Co. Ltd. 2,730,000 32,362,349
----------------
707,679,793
- --------------------------------------------------------------------------------
CONSUMER FINANCE--0.2%
Tisco Bank Public
Co. Ltd. 16,493,280 11,102,208
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.7%
Fubon Financial
Holding Co. Ltd. 36,147,000 32,670,266
- --------------------------------------------------------------------------------
Fubon Financial
Holding Co.
Ltd., GDR 1,639,500 14,755,500
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Guoco Group Ltd. 2,584,000 $ 25,801,265
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS 8,847,551 39,125,179
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR 12,000,000 13,140,000
- --------------------------------------------------------------------------------
Kiatnakin Finance
Public Co. Ltd. 1 25,718,220 17,386,702
- --------------------------------------------------------------------------------
Old Mutual plc 13,855,890 35,444,942
----------------
178,323,854
- --------------------------------------------------------------------------------
INSURANCE--0.9%
Aksigorta AS 1 8,762,905 43,473,062
- --------------------------------------------------------------------------------
REAL ESTATE--4.2%
Cyrela Brazil
Realty SA
Empreendimentos
e Participacoes 394,000 2,089,521
- --------------------------------------------------------------------------------
Cyrela Brazil
Realty SA, GDR 4 435,720 22,875,300
- --------------------------------------------------------------------------------
Hang Lung
Development Co. 15,594,000 29,295,246
- --------------------------------------------------------------------------------
Henderson Land
Development
Co. Ltd. 6,522,000 32,477,196
- --------------------------------------------------------------------------------
IRSA Inversiones y
Representaciones SA,
Sponsored GDR 2 586,200 7,122,330
- --------------------------------------------------------------------------------
Medinet Nasr
for Housing &
Development Co. 1 1,316,496 10,692,332
- --------------------------------------------------------------------------------
Midland
Holdings Ltd. 31,122,000 18,127,199
- --------------------------------------------------------------------------------
SM Prime
Holdings, Inc. 447,005,396 56,568,682
- --------------------------------------------------------------------------------
Solidere, GDR 2,4 2,063,978 27,347,709
----------------
206,595,515
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.5%
Housing
Development
Finance Corp. Ltd. 3,546,200 72,885,385
22 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE--2.7%
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.5%
Diagnosticos da
America 2 2,139,100 $ 26,128,421
- --------------------------------------------------------------------------------
PHARMACEUTICALS--2.2%
Cipla Ltd. 2,822,573 21,913,809
- --------------------------------------------------------------------------------
Divi's Laboratories
Ltd. 1 796,149 27,597,411
- --------------------------------------------------------------------------------
Ranbaxy
Laboratories Ltd. 1,425,950 17,014,231
- --------------------------------------------------------------------------------
Sun Pharmaceutical
Industries Ltd. 2,672,963 38,016,486
----------------
104,541,937
- --------------------------------------------------------------------------------
INDUSTRIALS--6.4%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.4%
Empresa Brasileira
de Aeronautica SA 2,282,000 15,171,379
- --------------------------------------------------------------------------------
Empresa Brasileira
de Aeronautica SA,
Preference 6,070,500 54,446,487
----------------
69,617,866
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.7%
Sinotrans Ltd. 1 91,900,000 32,223,209
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.0%
Taiwan Secom 520,000 703,389
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.8%
GS Engineering &
Construction Corp. 327,580 12,093,070
- --------------------------------------------------------------------------------
Hyundai
Development Co. 465,220 12,488,257
- --------------------------------------------------------------------------------
Kyeryong
Construction
Industrial Co. Ltd. 1 657,218 16,198,401
----------------
40,779,728
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.4%
Bharat Heavy
Electricals Ltd. 874,892 21,237,867
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.6%
LG Chemical Ltd. 710,680 16,639,807
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES Continued
Murray & Roberts
Holdings Ltd. 4,000,000 $ 10,085,352
----------------
26,725,159
- --------------------------------------------------------------------------------
MACHINERY--2.2%
Hyundai Heavy
Industries Co. Ltd. 756,850 50,745,155
- --------------------------------------------------------------------------------
Larsen & Toubro
Ltd. 1,795,931 54,375,610
----------------
105,120,765
- --------------------------------------------------------------------------------
ROAD & RAIL--0.3%
All America Latina
Logistica 420,820 14,247,533
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.0%
LG International
Corp. 137,160 1,724,458
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--8.1%
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.5%
Benq Corp. 59,025,592 55,351,563
- --------------------------------------------------------------------------------
High Tech
Computer Corp. 3,850,400 42,526,104
- --------------------------------------------------------------------------------
Lite-On Technology
Corp. 35,129,075 36,308,983
- --------------------------------------------------------------------------------
Quanta Computer,
Inc. 22,630,650 36,116,438
----------------
170,303,088
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8%
Synnex Technology
International Corp. 25,633,080 30,446,620
- --------------------------------------------------------------------------------
Varitronix
International Ltd. 11,577,000 8,118,566
----------------
38,565,186
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.0%
NCsoft Corp. 2 57,844 4,026,899
- --------------------------------------------------------------------------------
NHN Corp. 2 323,875 44,890,847
----------------
48,917,746
23 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
IT SERVICES--2.1%
Flextronics Software
Systems Ltd. 1,259,205 $ 19,097,585
- --------------------------------------------------------------------------------
HCL Technologies
Ltd. 4,118,600 42,420,878
- --------------------------------------------------------------------------------
Tata Consultancy
Services Ltd. 1,343,360 42,897,505
----------------
104,415,968
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.7%
Mtekvision Co. Ltd. 1 823,668 24,208,101
- --------------------------------------------------------------------------------
Telechips, Inc. 1 608,145 9,805,358
----------------
34,013,459
- --------------------------------------------------------------------------------
MATERIALS--8.0%
- --------------------------------------------------------------------------------
CHEMICALS--1.2%
Asian Paints Ltd. 2,248,000 24,555,666
- --------------------------------------------------------------------------------
Finetec Corp. 1 1,538,406 18,636,822
- --------------------------------------------------------------------------------
Petkim Petrokimya
Holding AS 2 3,787,990 16,725,545
----------------
59,918,033
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--1.3%
Cemex SA de CV,
Sponsored ADR 1,274,594 60,759,896
- --------------------------------------------------------------------------------
METALS & MINING--5.5%
Anglo Platinum Ltd. 983,100 47,967,401
- --------------------------------------------------------------------------------
Companhia de
Minas Buenaventura
SA, Sponsored ADR 193,400 4,798,254
- --------------------------------------------------------------------------------
Companhia
Siderurgica Nacional
SA, Sponsored ADR 3,147,100 60,927,856
- --------------------------------------------------------------------------------
Companhia Vale
do Rio Doce,
Sponsored ADR 2,810,000 84,300,000
- --------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd. 279,000 29,374,628
- --------------------------------------------------------------------------------
PT Aneka
Tambang Tbk 1 178,972,100 39,232,018
----------------
266,600,157
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--10.3%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.6%
Contax
Participacoes SA 2 3,222,585 $ 2,310,636
- --------------------------------------------------------------------------------
Magyar Telekom 7,922,175 40,032,710
- --------------------------------------------------------------------------------
PT Telekomunikasi
Indonesia Tbk 137,215,000 67,572,487
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA 3,222,585 65,436,113
----------------
175,351,946
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--6.7%
America Movil SA
de CV, Series L 1,320,000 29,040,000
- --------------------------------------------------------------------------------
Orascom Telecom
Holding SAE 482,695 45,445,365
- --------------------------------------------------------------------------------
Shin Corp. Public Co.
Ltd. (Holding Co.) 55,114,700 50,803,119
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd. 158,750 29,049,813
- --------------------------------------------------------------------------------
SK Telecom Co.
Ltd., ADR 3,509,300 74,607,718
- --------------------------------------------------------------------------------
Turkcell Iletisim
Hizmetleri AS, ADR 3,502,913 47,044,122
- --------------------------------------------------------------------------------
Vodafone Egypt
Telecommunications
Co. SAE 3,209,320 48,205,818
----------------
324,195,955
- --------------------------------------------------------------------------------
UTILITIES--3.1%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.6%
Centrais Electricas
Brasileiras SA,
Preference, Cl. B 1,336,081,000 17,855,983
- --------------------------------------------------------------------------------
Companhia
Energetica de
Minas Gerais,
Preference 1,936,121,000 68,170,845
- --------------------------------------------------------------------------------
Eletropaulo
Metropolitana SA 2 795,831,800 30,182,183
- --------------------------------------------------------------------------------
National Thermal
Power Corp. Ltd. 5,302,419 12,330,628
----------------
128,539,639
24 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
GAS UTILITIES--0.5%
Gail India Ltd. 3,237,690 $ 17,193,740
- --------------------------------------------------------------------------------
Transportadora
de Gas del Sur SA,
Cl. B 2,3 6,000,000 7,501,932
----------------
24,695,672
----------------
Total Common Stocks
(Cost $3,399,265,855) 4,694,961,665
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd., 2% Sec.
Debs., 7/7/10 3 [INR]
(Cost $743,371) $32,425,500 648,142
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd. Wts.,
Exp. 1/7/10 2
(Cost $0) 63,757 593,762
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.4%
- --------------------------------------------------------------------------------
Undivided interest of 26.83% in joint repurchase
agreement (Principal Amount/Value $438,604,000,
with a maturity value of $438,647,129) with
UBS Warburg LLC, 3.54%, dated 8/31/05, to
be repurchased at $117,671,570 on 9/1/05,
collateralized by Federal National
Mortgage Assn., 6%, 4/1/35,
with a value of $447,924,090
(Cost $117,660,000) $117,660,000 $ 117,660,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $3,517,669,226) 98.7% 4,813,863,569
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 1.3 61,665,193
------------------------------
NET ASSETS 100.0% $ 4,875,528,762
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
PRINCIPAL AMOUNT IS REPORTED IN U.S. DOLLARS, EXCEPT FOR THOSE DENOTED IN THE
FOLLOWING CURRENCIES:
INR Indian Rupee
1. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended August 31, 2005.
The aggregate fair value of securities of affiliated companies held by the Fund
as of August 31, 2005 amounts to $737,023,598. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
AUGUST 31, GROSS GROSS AUGUST 31,
2004 ADDITIONS REDUCTIONS 2005
- --------------------------------------------------------------------------------------------------------------
Able C&C -- 537,778 -- 537,778
Aksigorta AS 8,762,905,700 -- 8,754,142,795** 8,762,905
Amtek Auto Ltd. -- 7,296,853 -- 7,296,853
Banco Latinoamericano de Exportaciones SA, Cl. E 405,000 3,400,885 -- 3,805,885
Brazil Realty SA Empreendimentos e Participacoes 394,000 -- 394,000**** --
Brazil Realty SA, GDR 435,720 -- 435,720**** --
Coca-Cola Femsa SA de CV, Sponsored ADR 543,450 816,550 -- 1,360,000
Companhia Brasileira de Distribuicao Grupo Pao de
Acucar, Sponsored ADR 1,461,600 1,430,500 -- 2,892,100
Corporacion GEO SA de CV, Series B 28,530,000 385,000 -- 28,915,000
Courts (Singapore) Ltd. 10,700,000 725,000 -- 11,425,000
Divi's Laboratories Ltd. 381,652 573,014 158,517 796,149
Finetec Corp. -- 1,538,406 -- 1,538,406
GS Home Shopping, Inc. 687,900 10,392 -- 698,292
Hyundai Autonet Co. Ltd.* 10,200,000 -- 6,300,435 3,899,565
Kiatnakin Finance Public Co. Ltd. 5,399,920 20,318,300 -- 25,718,220
25 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
SHARES SHARES
AUGUST 31, GROSS GROSS AUGUST 31,
2004 ADDITIONS REDUCTIONS 2005
- ----------------------------------------------------------------------------------------------------------------------------
Kyeryong Construction Industrial Co. Ltd. -- 657,218 -- 657,218
Lojas Americanas SA, Preference 2,226,500,000 -- -- 2,226,500,000
Medinet Nasr for Housing & Development Co. 1,060,000 256,496 -- 1,316,496
Mtekvision Co. Ltd. -- 823,668 -- 823,668
PT Aneka Tambang Tbk 135,094,900 43,877,200 -- 178,972,100
PT Hero Supermarket Tbk 20,000,000 -- 20,000,000*** --
Sinotrans Ltd. 76,500,000 15,400,000 -- 91,900,000
Ssangyong Motor Co. -- 7,796,210 -- 7,796,210
Telechips, Inc. -- 608,145 -- 608,145
United Breweries Holdings Ltd. 1,850,000 76,239 460,515 1,465,724
United Breweries Ltd. 1,462,826 21,270 764,107*** 719,989
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------------------------
Able C&C $ 15,455,043 $ -- $ --
Aksigorta AS 43,473,062 1,774,766 --
Amtek Auto Ltd. 36,894,480 -- --
Banco Latinoamericano de Exportaciones SA, Cl. E 65,232,869 3,529,953 --
Brazil Realty SA Empreendimentose Participacoes -- 102,730 --
Brazil Realty SA, GDR -- 1,140,845 --
Coca-Cola Femsa SA de CV, Sponsored ADR 36,720,000 394,493 --
Companhia Brasileira de Distribuicao Grupo Pao de Acucar,
Sponsored ADR 69,468,242 631,628 --
Corporacion GEO SA de CV, Series B 80,386,657 -- --
Courts (Singapore) Ltd. 3,872,881 101,651 --
Divi's Laboratories Ltd. 27,597,411 146,267 (636,198)
Finetec Corp. 18,636,822 -- --
GS Home Shopping, Inc. 65,309,308 1,680,341 --
Hyundai Autonet Co. Ltd.* --* 724,670 1,846,491
Kiatnakin Finance Public Co. Ltd. 17,386,702 929,055 --
Kyeryong Construction Industrial Co. Ltd. 16,198,401 -- --
Lojas Americanas SA, Preference 40,893,163 456,295 --
Medinet Nasr for Housing & Development Co. 10,692,332 471,816 --
Mtekvision Co. Ltd. 24,208,101 -- --
PT Aneka Tambang Tbk 39,232,018 2,279,300 --
PT Hero Supermarket Tbk -- -- 3,986,401
Sinotrans Ltd. 32,223,209 655,442 --
Ssangyong Motor Co. 55,269,393 -- --
Telechips, Inc. 9,805,358 -- --
United Breweries Holdings Ltd. 17,522,388 -- 3,844,837
United Breweries Ltd. 10,545,758 74,352 8,264,046
------------------------------------------------
$ 737,023,598 $ 15,093,604 $ 17,305,577
================================================
* No longer an affiliate as of August 31, 2005.
** Due to share revaluation.
*** Result of a tender offer.
**** Result of a conversion.
26 | OPPENHEIMER DEVELOPING MARKETS FUND
2. Non-income producing security.
3. Illiquid security. The aggregate value of illiquid securities as of August
31, 2005 was $17,067,292, which represents 0.35% of the Fund's net assets. See
Note 6 of Notes to Financial Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $65,012,196 or 1.33% of the Fund's net
assets as of August 31, 2005.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- --------------------------------------------------------------------------------
Korea, Republic of South $ 857,616,128 17.8%
Brazil 795,232,325 16.5
India 783,436,707 16.3
Mexico 381,260,860 7.9
Taiwan 272,360,193 5.7
Indonesia 206,010,507 4.3
South Africa 192,349,468 4.0
Egypt 166,799,770 3.5
Turkey 159,507,908 3.3
Hong Kong 156,406,534 3.2
United States 140,535,300 2.9
United Kingdom 118,959,957 2.5
Thailand 103,662,750 2.1
Philippines 79,233,276 1.6
Panama 65,232,869 1.4
Israel 61,394,751 1.3
China 53,866,708 1.1
Hungary 45,806,810 0.9
Singapore 32,587,748 0.7
Greece 27,477,648 0.6
Lebanon 27,347,709 0.6
Portugal 23,499,884 0.5
Norway 23,481,553 0.5
Bermuda 20,373,690 0.4
Argentina 14,624,262 0.3
Peru 4,798,254 0.1
-------------------------------
Total $ 4,813,863,569 100.0%
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $3,003,195,657) $ 4,076,839,971
Affiliated companies (cost $514,473,569) 737,023,598
-----------------
4,813,863,569
- --------------------------------------------------------------------------------------------------------
Cash 535,077
- --------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $25,350,375) 24,731,108
- --------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 41,460,402
Shares of beneficial interest sold 31,097,805
Interest and dividends 10,312,673
Other 39,225
-----------------
Total assets 4,922,039,859
- --------------------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 705,461
- --------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 23,478,522
Shares of beneficial interest redeemed 10,791,942
Foreign capital gains tax 7,358,429
Distribution and service plan fees 1,875,717
Transfer and shareholder servicing agent fees 716,117
Shareholder communications 255,067
Trustees' compensation 162,113
Other 1,167,729
-----------------
Total liabilities 46,511,097
- --------------------------------------------------------------------------------------------------------
NET ASSETS $ 4,875,528,762
=================
- --------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------------------------------
Paid-in capital $ 3,440,112,545
- --------------------------------------------------------------------------------------------------------
Accumulated net investment income 20,945,106
- --------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 126,789,431
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 1,287,681,680
-----------------
NET ASSETS $ 4,875,528,762
=================
28 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $4,104,557,607 and
131,946,149 shares of beneficial interest outstanding) $31.11
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $33.01
- --------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $222,722,673 and 7,234,870 shares
of beneficial interest outstanding) $30.78
- --------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $450,012,521 and 14,759,082 shares
of beneficial interest outstanding) $30.49
- --------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $98,235,961 and 3,203,202 shares
of beneficial interest outstanding) $30.67
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------
Interest $ 1,996,581
- ----------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $9,609,737) 94,992,622
Affiliated companies (net of foreign withholding taxes of $1,025,402) 15,093,604
--------------
Total investment income 112,082,807
- ----------------------------------------------------------------------------------------
EXPENSES
- ----------------------------------------------------------------------------------------
Management fees 28,509,383
- ----------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 6,377,827
Class B 1,690,042
Class C 2,935,327
Class N 278,519
- ----------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 5,428,234
Class B 393,259
Class C 513,240
Class N 194,665
- ----------------------------------------------------------------------------------------
Shareholder communications:
Class A 277,405
Class B 46,439
Class C 43,587
Class N 4,053
- ----------------------------------------------------------------------------------------
Custodian fees and expenses 3,208,081
- ----------------------------------------------------------------------------------------
Trustees' compensation 129,774
- ----------------------------------------------------------------------------------------
Other 335,131
--------------
Total expenses 50,364,966
Less reduction to custodian expenses (40,020)
Less waivers and reimbursements of expenses (6,677)
--------------
Net expenses 50,318,269
- ----------------------------------------------------------------------------------------
NET INVESTMENT INCOME 61,764,538
30 | OPPENHEIMER DEVELOPING MARKETS FUND
- -----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- -----------------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies $ 117,403,113
Affiliated companies 17,305,577
Foreign currency transactions 26,189,952
---------------
Net realized gain 160,898,642
- -----------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $7,358,429) 926,658,556
Translation of assets and liabilities denominated in foreign currencies 25,818,451
---------------
Net change in unrealized appreciation 952,477,007
- -----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,175,140,187
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2005 2004
- -------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income $ 61,764,538 $ 20,907,438
- -------------------------------------------------------------------------------------------------
Net realized gain 160,898,642 44,208,693
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 952,477,007 202,119,765
------------------------------------
Net increase in net assets resulting from operations 1,175,140,187 267,235,896
- -------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (31,307,183) (27,952,368)
Class B (879,176) (2,748,497)
Class C (1,898,747) (3,209,280)
Class N (545,843) (455,621)
- -------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (10,889,372) --
Class B (742,531) --
Class C (1,173,811) --
Class N (217,007) --
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial
interest transactions:
Class A 1,608,133,391 774,658,690
Class B 42,129,047 13,494,351
Class C 173,879,187 76,067,428
Class N 53,161,881 14,703,179
- -------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------
Total increase 3,004,790,023 1,111,793,778
- -------------------------------------------------------------------------------------------------
Beginning of period 1,870,738,739 758,944,961
------------------------------------
End of period (including accumulated net investment income
(loss) of $20,945,106 and $(7,081,902), respectively) $ 4,875,528,762 $ 1,870,738,739
====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.09 $ 16.92 $ 13.43 $ 12.93 $ 16.85
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .55 1 .48 .19 .25 .21
Net realized and unrealized gain
(loss) 9.97 4.31 3.50 .45 (3.54)
-----------------------------------------------------------------
Total from investment operations 10.52 4.79 3.69 .70 (3.33)
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.37) (.62) (.20) (.20) (.20)
Distributions from net realized gain (.13) -- -- -- (.39)
-----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.50) (.62) (.20) (.20) (.59)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 31.11 $ 21.09 $ 16.92 $ 13.43 $ 12.93
=================================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 50.42% 28.61% 27.93% 5.44% (20.08)%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) $ 4,104,558 $ 1,549,854 $ 588,450 $ 337,405 $ 167,178
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 2,739,224 $ 1,145,452 $ 374,841 $ 257,746 $ 153,027
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.01% 1.64% 1.42% 1.91% 1.76%
Total expenses 1.43% 1.52% 1.81% 1.81% 1.69%
Expenses after payments and waivers
and reduction to custodian expenses N/A 4 N/A 4 1.76% 1.77% N/A 4
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 15% 6% 10% 16%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ---------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.87 $ 16.79 $ 13.32 $ 12.82 $ 16.70
- ---------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .31 1 .12 .09 .15 .12
Net realized and unrealized gain
(loss) 9.88 4.46 3.47 .44 (3.53)
------------------------------------------------------------
Total from investment operations 10.19 4.58 3.56 .59 (3.41)
- ---------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.15) (.50) (.09) (.09) (.08)
Distributions from net realized gain (.13) -- -- -- (.39)
------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.50) (.09) (.09) (.47)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.78 $ 20.87 $ 16.79 $ 13.32 $ 12.82
============================================================
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 49.14% 27.50% 26.98% 4.61% (20.67)%
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) $ 222,723 $ 119,749 $ 84,705 $ 63,005 $ 45,393
- ---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 169,763 $ 117,271 $ 62,676 $ 54,744 $ 48,135
- ---------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.15% 0.61% 0.66% 1.14% 0.92%
Total expenses 2.24% 2.41% 2.67% 2.58% 2.46%
Expenses after payments and waivers
and reduction to custodian expenses N/A 4 N/A 4,5 2.52% 2.54% N/A 4
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 15% 6% 10% 16%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS C YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- -------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.70 $ 16.67 $ 13.25 $ 12.78 $ 16.68
- -------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .34 1 .31 .10 .17 .12
Net realized and unrealized gain
(loss) 9.79 4.25 3.44 .41 (3.52)
----------------------------------------------------------
Total from investment operations 10.13 4.56 3.54 .58 (3.40)
- -------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.21) (.53) (.12) (.11) (.11)
Distributions from net realized gain (.13) -- -- -- (.39)
----------------------------------------------------------
Total dividends and/or distributions
to shareholders (.34) (.53) (.12) (.11) (.50)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.49 $ 20.70 $ 16.67 $ 13.25 $ 12.78
==========================================================
- -------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 49.29% 27.60% 27.05% 4.54% (20.68)%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) $ 450,012 $ 175,025 $ 77,081 $ 46,722 $ 20,864
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 294,791 $ 145,460 $ 52,236 $ 33,334 $ 19,646
- -------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.28% 0.83% 0.66% 1.15% 0.94%
Total expenses 2.17% 2.31% 2.57% 2.57% 2.46%
Expenses after payments and waivers
and reduction to custodian expenses N/A 4 N/A 4 2.52% 2.53% N/A 4
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 15% 6% 10% 16%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001 1
- ----------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.84 $ 16.77 $ 13.36 $ 12.91 $ 15.26
- ----------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .45 2 .45 .22 .32 .05
Net realized and unrealized gain (loss) 9.83 4.22 3.41 .34 (2.40)
----------------------------------------------------
Total from investment operations 10.28 4.67 3.63 .66 (2.35)
- ----------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.32) (.60) (.22) (.21) --
Distributions from net realized gain (.13) -- -- -- --
----------------------------------------------------
Total dividends and/or distributions
to shareholders (.45) (.60) (.22) (.21) --
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.67 $ 20.84 $ 16.77 $ 13.36 $ 12.91
====================================================
- ----------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 49.84% 28.16% 27.73% 5.13% (15.40)%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) $ 98,236 $ 26,110 $ 8,709 $ 1,741 $ 77
- ----------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 57,727 $ 18,770 $ 4,196 $ 686 $ 35
- ----------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.67% 1.31% 1.27% 1.68% 1.63%
Total expenses 1.82% 1.99% 2.08% 2.04% 1.96%
Expenses after payments and waivers and
reduction to custodian expenses 1.80% 1.88% 1.99% 2.00% N/A 5
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 15% 6% 10% 16%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares
on the reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Developing Markets Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to aggressively seek capital
appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic exchanges are valued
based on the last sale price of the security traded on that exchange prior to
the time when the Fund's assets are valued. Securities traded on NASDAQ are
valued based on the closing price provided by NASDAQ prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the last sale price on the prior trading day, if it is within the spread of the
closing "bid" and "asked" prices, and if not, at the closing bid price.
Securities traded on foreign exchanges are valued based on the last sale price
on the principal exchange on which the security is traded, in the country that
is identified by the portfolio pricing service, prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the official closing price on the principal exchange. Corporate, government and
municipal debt instruments having a remaining maturity in excess of sixty days
and all mortgage-backed securities will be valued at the mean between the "bid"
and "asked" prices. Futures contracts traded on a commodities or futures
exchange will be valued at the final settlement price or official closing price
on the principal exchange as reported by such principal exchange at its trading
session ending at, or most recently prior to, the time when the Fund's assets
are valued. Securities may be valued primarily
37 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Trustees. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such
38 | OPPENHEIMER DEVELOPING MARKETS FUND
class. Operating expenses directly attributable to a specific class are charged
against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
----------------------------------------------------------------------
$109,972,513 $91,368,100 $-- $1,234,229,624
1. During the fiscal year ended August 31, 2005, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended August 31, 2004, the Fund utilized $19,295,605
of capital loss carryforward to offset capital gains realized in that fiscal
year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2005. Net assets of the
Fund were unaffected by the reclassifications.
INCREASE TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL INCOME ON INVESTMENTS 3
----------------------------------------------------------------------
$19,251,646 $893,419 $20,145,065
3. $19,251,646, including $13,658,274 of long-term capital gain, was distributed
in connection with Fund share redemptions.
39 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The tax character of distributions paid during the years ended August 31, 2005
and August 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
------------------------------------------------------------
Distributions paid from:
Ordinary income $ 34,630,949 $ 34,365,766
Long-term capital gain 13,022,721 --
---------------------------------
Total $ 47,653,670 $ 34,365,766
=================================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 3,571,773,446
Federal tax cost of other investments 1,095,698
----------------
Total federal tax cost $ 3,572,869,144
================
Gross unrealized appreciation $ 1,326,705,935
Gross unrealized depreciation (92,476,311)
----------------
Net unrealized appreciation $ 1,234,229,624
================
Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended August
31, 2005, the Fund's projected benefit obligations were increased by $70,758 and
payments of $933 were made to retired trustees, resulting in an accumulated
liability of $123,592 as of August 31, 2005.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and
40 | OPPENHEIMER DEVELOPING MARKETS FUND
will not materially affect the Fund's assets, liabilities or net investment
income per share. Amounts will be deferred until distributed in accordance to
the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
CLASS A
Sold 88,754,718 $2,427,698,410 63,139,029 $1,266,479,821
Dividends and/or
distributions reinvested 1,371,503 34,603,027 1,184,139 23,007,783
Redeemed (31,652,270) (854,168,046) 1 (25,627,852) (514,828,914)
------------------------------------------------------------
Net increase 58,473,951 $1,608,133,391 38,695,316 $ 774,658,690
============================================================
41 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
CLASS B
Sold 2,990,642 $ 82,326,626 2,655,996 $ 52,882,450
Dividends and/or
distributions reinvested 57,208 1,437,052 126,635 2,449,139
Redeemed (1,550,934) (41,634,631) 1 (2,090,223) (41,837,238)
------------------------------------------------------------
Net increase 1,496,916 $ 42,129,047 692,408 $ 13,494,351
============================================================
- ---------------------------------------------------------------------------------------
CLASS C
Sold 8,093,292 $ 221,658,558 5,461,597 $ 108,717,047
Dividends and/or
distributions reinvested 103,479 2,573,527 143,023 2,741,763
Redeemed (1,891,282) (50,352,898) 1 (1,775,168) (35,391,382)
------------------------------------------------------------
Net increase 6,305,489 $ 173,879,187 3,829,452 $ 76,067,428
============================================================
- ---------------------------------------------------------------------------------------
CLASS N
Sold 2,555,275 $ 69,740,342 1,134,305 $ 22,542,746
Dividends and/or
distributions reinvested 30,025 749,123 23,641 454,865
Redeemed (634,917) (17,327,584) 1 (424,467) (8,294,432)
------------------------------------------------------------
Net increase 1,950,383 $ 53,161,881 733,479 $ 14,703,179
============================================================
1. Net of redemption fees of $67,827, $4,203, $7,299 and $1,429 for Class A,
Class B, Class C and Class N, respectively.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2005, were as
follows:
PURCHASES SALES
-------------------------------------------------------
Investment securities $2,662,985,902 $866,035,327
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 1.00% of the first $250 million of average annual net assets of
the Fund, 0.95% of the next $250 million, 0.90% of the next $500 million and
0.85% of average annual net assets over $1 billion.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended August 31, 2005, the Fund paid
$6,220,598 to OFS for services to the Fund.
42 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 0.25% per year under each plan. If either the
Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at August 31, 2005
for Class B, Class C and Class N shares were $2,437,994, $3,536,870 and
$624,099, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
August 31, 2005 $ 1,493,238 $ 349 $ 261,113 $ 89,216 $ 68,815
43 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended August 31, 2005, OFS
waived $6,677 for Class N shares. This undertaking may be amended or withdrawn
at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2005, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION AS OF
EXPIRATION AMOUNT AUGUST 31, UNREALIZED
CONTRACT DESCRIPTION DATES (000S) 2005 DEPRECIATION
- --------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Hong Kong Dollar [HKD] 9/1/05 4,620HKD $ 594,471 $ 88
Indian Rupee [INR] 9/1/05 3,871INR 87,922 49
Indonesia Rupiah [IDR] 9/1/05 140,445,376IDR 13,635,473 53,160
------------
53,297
------------
CONTRACTS TO SELL
Euro [EUR] 9/1/05 7,962EUR 9,822,755 88,376
South African Rand [ZAR] 9/1/05 183,296ZAR 28,803,086 563,788
------------
652,164
------------
Total unrealized depreciation $ 705,461
============
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of August 31, 2005, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid
44 | OPPENHEIMER DEVELOPING MARKETS FUND
securities. Securities that are illiquid are marked with the applicable footnote
on the Statement of Investments.
- --------------------------------------------------------------------------------
7. SUBSEQUENT EVENT
Effective September 2, 2005, the Fund will offer Class Y shares.
- --------------------------------------------------------------------------------
8. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005, and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
45 | OPPENHEIMER DEVELOPING MARKETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER DEVELOPING MARKETS FUND:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Developing Markets Fund, including the statement of investments, as
of August 31, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 2005, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Developing Markets Fund as of August 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with U.S.
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
October 17, 2005
46 | OPPENHEIMER DEVELOPING MARKETS FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends and distributions of $0.4983, $.02808, $0.3366 and $0.452 per
share were paid to Class A, Class B, Class C and Class N shareholders,
respectively, on December 9, 2004, of which $0.1286 was designated as a "capital
gain distribution" for federal income tax purposes. Whether received in stock or
in cash, the capital gain distribution should be treated by shareholders as a
gain from the sale of the capital assets held for more than one year (long-term
capital gains).
None of the dividends paid by the Fund during the year ended August 31,
2005 are eligible for the corporate dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended August 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $85,887,240 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2006, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
The Fund has elected the application of Section 853 of the Internal
Revenue Code to permit shareholders to take a federal income tax credit or
deduction, at their option, on a per share basis for an aggregate amount of
$12,031,772 of foreign income taxes paid by the Fund during the fiscal year
ended August 31, 2005. A separate notice will be mailed to each shareholder,
which will reflect the proportionate share of such foreign taxes which must be
treated by shareholders as gross income for federal income tax purposes.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
47 | OPPENHEIMER DEVELOPING MARKETS FUND
REPORT OF SHAREHOLDER MEETING Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On August 17, 2005, a joint special meeting of shareholders was held at which
the eleven Trustees identified below were elected (Proposal No. 1). The meeting
was adjourned until September 16, 2005 to allow the Fund to solicit additional
votes for the proposals to change, add or eliminate certain fundamental
investment policies (Proposal No. 2) as described in the Fund's proxy statement
for that meeting. On September 16, 2005, the meeting was reconvened and the
proposals regarding changes in, or the addition or elimination of, certain
fundamental investment policies were approved (Proposal No. 2). The following is
a report of the votes cast:
- --------------------------------------------------------------------------------
PROPOSAL NO. 1
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 75,278,297.718 1,007,691.920 76,285,989.638
Robert G. Galli 75,197,746.301 1,088,243.337 76,285,989.638
Phillip A.Griffiths 75,264,029.157 1,021,960.481 76,285,989.638
Mary F. Miller 75,249,816.127 1,036,173.511 76,285,989.638
Joel W. Motley 75,280,889.075 1,005,100.563 76,285,989.638
John V. Murphy 75,272,445.840 1,013,543.798 76,285,989.638
Kenneth A. Randall 75,173,621.040 1,112,368.598 76,285,989.638
Russell S. Reynolds, Jr. 75,181,608.405 1,104,381.233 76,285,989.638
Joseph M. Wikler 75,271,732.323 1,014,257.315 76,285,989.638
Peter I. Wold 75,265,940.056 1,020,049.582 76,285,989.638
Clayton K. Yeutter 75,190,387.740 1,095,601.898 76,285,989.638
- --------------------------------------------------------------------------------
PROPOSAL NO. 2: TO APPROVE A MODIFICATION TO THE FUND'S FUNDAMENTAL INVESTMENT
OBJECTIVE
BROKER
FOR AGAINST ABSTAIN NON-VOTES TOTAL
- --------------------------------------------------------------------------------------------------------------
2a: Borrowing
47,574,064.981 1,448,086.264 1,767,027.116 19,587,971.000 70,377,149.361
2b: Concentration of Investments
47,866,779.192 1,174,695.147 1,747,704.022 19,587,971.000 70,377,149.361
2c: Diversification of Investments
48,066,408.659 1,042,842.995 1,679,926.707 19,587,971.000 70,377,149.361
2g: Investing in Other Investment Companies
47,327,830.926 1,722,500.619 1,738,846.816 19,587,971.000 70,377,149.361
2h: Lending
47,395,297.556 1,639,064.303 1,754,816.502 19,587,971.000 70,377,149.361
2k: Real Estate and Commodities
47,698,075.453 1,384,941.212 1,706,161.696 19,587,971.000 70,377,149.361
2l: Senior Securities
47,609,876.054 1,418,531.160 1,760,771.147 19,587,971.000 70,377,149.361
48 | OPPENHEIMER DEVELOPING MARKETS FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
49 | OPPENHEIMER DEVELOPING MARKETS FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio manager and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that were available to the
Fund. The Board noted that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services and information the
Board received regarding the experience and professional qualifications of the
Manager's personnel and the size and functions of its staff. The Board members
also considered their experiences as directors or trustees of the Fund and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Fund's service agreements. The Board was aware that there are alternatives
to retaining the Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services to be provided, the Board
considered the experience of Mark Madden and the Manager's Global Emerging
Markets investment team and analysts. He became co-portfolio manager and Vice
President of the Fund and a Vice President of the Manager in August, 2004.
Effective December 1, 2004, Mr. Madden became the Fund's sole portfolio manager.
Mr. Madden has had over 15 years of experience managing global and U.S. equity
investments.
50 | OPPENHEIMER DEVELOPING MARKETS FUND
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other emerging markets funds advised by
other investment advisers. The Board also receives and reviews comparative
performance information regarding the Fund and other funds at each Board
meeting. The Board considered that the Fund's one-year, three-year, and
five-year performance were all better than its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Fund. The independent
consultant provided comparative data in regard to the fees and expenses of the
Fund, other emerging markets funds and other funds with comparable asset levels
and distribution features. The Board considered that the Fund's management fees
and its total expenses were lower than its peer group average. In addition, the
Board evaluated the comparability of the fees charged and the services provided
to the Fund to the fees charged and services provided to other types of entities
advised by the Manager.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates and research
provided to the Manager in connection with permissible brokerage arrangements
(soft dollar arrangements).
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board considered that the Fund has recently experienced
significant asset growth and that, based on current asset levels, the Fund has
passed its last management fee breakpoint.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
51 | OPPENHEIMER DEVELOPING MARKETS FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the advisory
agreement for another year. In arriving at this decision, the Board did not
single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
52 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
THE FUND, LENGTH OF TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX
SERVICE, AGE CURRENTLY OVERSEEN
INDEPENDENT TRUSTEES THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS TWO WORLD FINANCIAL
CENTER, NEW YORK, NY 10281-1008. EACH TRUSTEE SERVES FOR AN INDEFINITE
TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board of Attorney at Hogan & Hartson (law firm) (since June 1993); Director of
Trustees (since 2003); Danielson Holding Corp. (waste-to-energy company) (since 2002); Director of
Trustee (since 1996) Weyerhaeuser Corp. (1999-April 2004); Director of Caterpillar, Inc.
Age: 74 (1993-December 2002); Director of ConAgra Foods (1993-2001); Director of
Texas Instruments (1993-2001); Director of FMC Corporation (1993-2001).
Oversees 38 portfolios in the OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research
Trustee (since 2005) foundation) (since 2005); Director of ICI Education Foundation (education
Age: 64 foundation) (since October 1991); President of the Investment Company
Institute (trade association) (1991-2004); Director of ICI Mutual Insurance
Company (insurance company) (1991-2004). Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in
Trustee (since 1997) the OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 1999) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The
Age: 67 Andrew W. Mellon Foundation (since 2001); Member of the National Academy of
Sciences (since 1979); Member of the American Philosophical Society (since
1996); Council on Foreign Relations (since 2002); Director of the Institute
for Advanced Study (1991-2004); Director of Bankers Trust New York
Corporation (1994-1999). Oversees 38 portfolios in the OppenheimerFunds
complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2004) 1998); and Senior Vice President and General Auditor of American Express
Age: 62 Company (financial services company) (July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial
Trustee (since 2002) adviser) (since 2002); Managing Director of Carmona Motley, Inc.
Age: 53 (privately-held financial adviser) (since January 2002); Managing Director
of Carmona Motley Hoffman Inc. (privately-held financial adviser) (January
1998-December 2001). Oversees 38 portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company)
Trustee (since 1996) (since February 1972); Former Director of Prime Retail, Inc. (real estate
Age: 78 investment trust), Dominion Energy Inc. (electric power and oil & gas
producer), Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company;
Former President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research). Oversees 38 portfolios in
the OppenheimerFunds complex.
53 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance
Trustee (since 1996) consulting and executive recruiting) (since 1993); Life Trustee of
Age: 73 International House (non-profit educational organization); Former Trustee
of The Historical Society of the Town of Greenwich. Oversees 38 portfolios
in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992)
Trustee (since 2005) and Cathco (since 1996); Director of Lakes Environmental Association (since
Age: 64 1996); Member of the Investment Committee of the Associated Jewish
Charities of Baltimore (since 1994); Director of Fortis/Hartford mutual
funds (1994-December 2001). Oversees 39 portfolios in the
OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and
Trustee (since 2005) production company) (since 1994); Vice President, Secretary and Treasurer
Age: 57 of Wold Trona Company, Inc. (soda ash processing and production) (since
1996); Vice President of Wold Talc Company, Inc. (talc mining) (since
1999); Managing Member of Hole-in-the-Wall Ranch (cattle ranching) (since
1979); Director and Chairman of the Denver Branch of the Federal Reserve
Bank of Kansas City (1993-1999); and Director of PacifiCorp. (electric
utility) (1995-1999). Oversees 39 portfolios in the OppenheimerFunds
complex.
- -----------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE AND THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
OFFICER STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES AS A TRUSTEE
FOR AN INDEFINITE TERM AND AS AN OFFICER FOR AN ANNUAL TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED
TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
President and Principal President (since September 2000) of the Manager; President and Director or
Executive Officer (since Trustee of other Oppenheimer funds; President and Director of Oppenheimer
2001) and Trustee (since Acquisition Corp. ("OAC") (the Manager's parent holding company) and of
2001) Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
Age: 56 Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc.
(subsidiary of the Manager) (since November 2001); Chairman and Director of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the Manager) (since July 2001); President
and Director of OppenheimerFunds Legacy Program (charitable trust program
established by the Manager) (since July 2001); Director of the following
investment advisory subsidiaries of the Manager: OFI Institutional Asset
Management, Inc., Centennial Asset Management Corporation, Trinity
Investment Management Corporation and Tremont Capital Management, Inc.
(since November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since November
2001) and Director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts Mutual Life Insurance
Company (OAC's parent company) (since February 1997); Director of DLB
Acquisition Corporation (holding company parent of Babson Capital
Management LLC) (since June 1995); Member of the Investment Company
Institute's Board of Governors (since October 3, 2003); Chief Operating
Officer of the Manager (September 2000-June 2001); President and Trustee of
MML Series Investment Fund and MassMutual Select Funds (open-end investment
companies) (November 1999-November 2001); Director of C.M. Life Insurance
Company (September 1999-August 2000); President, Chief Executive Officer
and Director of MML Bay State Life Insurance Company (September 1999-August
2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank (wholly-
owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees 77
54 | OPPENHEIMER DEVELOPING MARKETS FUND
JOHN V. MURPHY, portfolios as a Trustee or Director and 10 additional portfolios as officer
Continued in the OppenheimerFunds complex.
- -----------------------------------------------------------------------------------------------------------
OTHER OFFICERS OF THE FUND THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR
MESSRS. MADDEN, AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
11TH FLOOR, NEW YORK, NY 10281-1008, FOR MESSRS. WIXTED AND MR. VANDEHEY,
6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN
ANNUAL TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
MARK MADDEN, Vice President of the Manager (since August 2004). Formerly he held the
Vice President following positions in Global Asset Management at Pioneer Investment
(since 2004) Management, Inc.: Managing Director, Global Emerging Markets Team (November
Age: 48 2000-July 2004), Senior Vice President and Portfolio Manager, International
Equities (December 1998-October 2000) and Vice President and Portfolio
Manager, International Equities (February 1993-November 1998). An officer
of 1 portfolio in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and Chief March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Compliance Officer (since Centennial Asset Management Corporation and Shareholder Services, Inc.
2004) (since June 1983); Vice President and Director of Internal Audit of the
Age: 55 Manager (1997-February 2004). An officer of 87 portfolios in the
OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership
Age: 46 Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since
March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (since June 2003); Treasurer and
Chief Financial Officer of OFI Trust Company (trust company subsidiary of
the Manager) (since May 2000); Assistant Treasurer of the following: OAC
(since March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March 1999). An officer
of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2001) March 2002) of the Manager; General Counsel and Director of the Distributor
Age: 57 (since December 2001); General Counsel of Centennial Asset Management
Corporation (since December 2001); Senior Vice President and General
Counsel of HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001); Assistant
Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since
December 2001); Senior Vice President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
55 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
ROBERT G. ZACK, (since November 2001); Director of OppenheimerFunds (Asia) Limited (since
Continued December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General Counsel
(May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
56 | OPPENHEIMER DEVELOPING MARKETS FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction
2(b) to Item 3 of Form N-CSR to qualify as an "audit committee financial
expert," whether through the type of specialized education or experience
described in that Instruction. The Board has concluded that while the members of
the Audit Committee collectively have the necessary attributes and experience
required to serve effectively as an Audit Committee, no single member possesses
all of the required technical attributes through the particular methods of
education or experience set forth in the Instructions to be designated as an
audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $18,000 in fiscal 2005 and $15,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $132,059 in fiscal 2005 and $39,500 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2005 and $7,563 in fiscal 2004 to the
registrant during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and $6,000 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: Computations of capital gain tax liability, preparation of tax
returns, preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $137,059 in fiscal 2005 and $53,063 in fiscal
2004 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
The registrant's audit committee of the board of trustees has considered whether
the provision of non-audit services that were rendered to the registrant's
investment adviser, and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee
evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of August 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's management,
including its principal executive officer and principal financial officer, to
allow timely decisions regarding required disclosure, and (b) is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms adopted by the U.S. Securities and Exchange Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Developing Markets Fund
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: October 17, 2005