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: FEBRUARY 28, 2006
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 19.9%
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India 15.9
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Brazil 14.1
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Taiwan 10.3
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Mexico 7.1
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South Africa 4.9
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Indonesia 4.9
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Turkey 3.6
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Egypt 3.3
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Hong Kong 3.1
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2006, and are based on the total market value of investments.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
Hynix Semiconductor, Inc. 1.5%
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Hyundai Motor Co. 1.5
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Petroleo Brasileiro SA, ADR 1.4
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Companhia Brasileira de Distribuicao Grupo Pao de Acucar, Sponsored ADR 1.4
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Kia Motors Corp. 1.4
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Infosys Technologies Ltd. 1.3
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PT Telekomunikasi Indonesia Tbk 1.3
- --------------------------------------------------------------------------------
Hyundai Heavy Industries Co. Ltd. 1.2
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Housing Development Finance Corp. Ltd. 1.2
- --------------------------------------------------------------------------------
Sadia SA, Preference 1.2
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2006, and are based on net assets.
For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com.
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8 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asia 58.8%
Latin America 22.7
Middle East/Africa 13.9
Europe 2.7
United States/Canada 1.6
Emerging Europe 0.3
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2006, and are based on the total market value of investments.
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9 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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 the 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.
CLASS Y shares of the Fund were first publicly offered on 9/7/05. Class Y shares
are offered only to certain institutional investors under special agreements
with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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 February 28, 2006.
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
11 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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.
12 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(9/1/05) (2/28/06) FEBRUARY 28, 2006 1,2
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,334.20 $ 7.78
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.15 6.73
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,329.40 12.24
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.33 10.59
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,329.30 11.95
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.58 10.34
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,332.10 9.52
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.66 8.23
ENDING EXPENSES
BEGINNING ACCOUNT PAID DURING
ACCOUNT VALUE PERIOD ENDED
VALUE (2/28/06) FEBRUARY 28, 2006 2,3
- --------------------------------------------------------------------------------
Class Y Actual $1,000.00 $1,293.80 $ 5.36
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.13 4.72
Hypothetical assumes 5% annual return before expenses.
1. Actual expenses paid for Classes A, B, C and N are equal to the Fund's
annualized expense ratio for that class, multiplied by the average account value
over the period, multiplied by 181/365 (to reflect the one-half year period).
2. Hypothetical expenses paid for all classes are equal to the Fund's annualized
expense ratio for that class, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
3. Actual expenses paid for Class Y are equal to the Fund's annualized expense
ratio or that class, multiplied by the average account value over the period,
multiplied by 175/365 [to reflect the period from September 7, 2005 (inception
of offering) to February 28, 2006].
Those annualized expense ratios based on the 6-month period ended February 28,
2006 for Classes A, B, C and N, and for the period from September 7, 2005
(inception of offering) to February 28, 2006 for Class Y are as follows:
CLASS EXPENSE RATIOS
- ----------------------------
Class A 1.34%
- ----------------------------
Class B 2.11
- ----------------------------
Class C 2.06
- ----------------------------
Class N 1.64
- ----------------------------
Class Y 0.94
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13 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS February 28, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--96.8%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--17.1%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.4%
Amtek Auto Ltd. 1 9,513,158 $ 74,547,491
- --------------------------------------------------------------------------------
Hyundai Mobis 518,570 43,739,323
- --------------------------------------------------------------------------------
Rico Auto Industries
Ltd. 1,2 7,715,655 15,113,314
--------------
133,400,128
- --------------------------------------------------------------------------------
AUTOMOBILES--5.5%
Bajaj Auto Ltd. 2 523,100 30,733,233
- --------------------------------------------------------------------------------
China Motor Corp. 2 12,480,000 14,033,428
- --------------------------------------------------------------------------------
Hyundai Motor Co. 1,599,255 136,042,205
- --------------------------------------------------------------------------------
Hyundai Motor
Co. Ltd., Preference 359,820 19,302,251
- --------------------------------------------------------------------------------
Kia Motors Corp. 5,866,635 125,976,284
- --------------------------------------------------------------------------------
Mahindra & Mahindra
Ltd. 2 3,678,697 48,699,492
- --------------------------------------------------------------------------------
PT Astra International
Tbk 66,702,500 70,797,181
- --------------------------------------------------------------------------------
Ssangyong Motor
Co. 1,2 9,903,959 68,077,774
--------------
513,661,848
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HOTELS, RESTAURANTS & LEISURE--0.7%
Danubius Hotel
& Spa Rt. 2 142,733 3,876,567
- --------------------------------------------------------------------------------
Hongkong & Shanghai
Hotels Ltd. (The) 2 13,587,500 16,101,805
- --------------------------------------------------------------------------------
Intralot SA Integrated
Lottery 727,660 17,346,347
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 38,294,000 26,665,068
--------------
63,989,787
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--5.3%
Consorcio Ara
SA de CV 2 6,957,000 29,554,797
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Corporacion GEO
SA de CV, Series B 2 19,813,100 77,550,081
- --------------------------------------------------------------------------------
Cyrela Brazil Realty SA
Empreendimentos
e Participacoes 2 339,400 6,234,987
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
Cyrela Brazil Realty SA
Empreendimentos
e Participacoes,
GDR 2,3 589,620 $ 106,824,404
- --------------------------------------------------------------------------------
Humax Co. Ltd. 1 2,978,563 84,262,852
- --------------------------------------------------------------------------------
LG Electronics, Inc. 605,640 49,686,070
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LG Electronics, Inc.,
Preference 411,010 21,052,051
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Rossi Residencial
SA 2 550,000 7,329,880
- --------------------------------------------------------------------------------
SARE Holding SA
de CV, Cl. B 1,2 45,577,904 56,042,330
- --------------------------------------------------------------------------------
Steinhoff International
Holdings Ltd. 2 17,641,600 57,878,796
--------------
496,416,248
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.6%
GS Home Shopping,
Inc. 1 524,524 53,356,794
- --------------------------------------------------------------------------------
MEDIA--2.1%
Corporacion
Interamericana
de Entretenimiento
SA de CV 2 11,154,039 22,361,319
- --------------------------------------------------------------------------------
Grupo Televisa SA,
Sponsored GDR 2 706,700 55,447,682
- --------------------------------------------------------------------------------
Shaw Brothers Ltd. 6,985,000 8,193,390
- --------------------------------------------------------------------------------
Singapore Press
Holdings Ltd. 10,547,000 28,768,595
- --------------------------------------------------------------------------------
Television Broadcasts
Ltd. 4,584,000 25,592,298
- --------------------------------------------------------------------------------
Yedang Entertainment
Co. Ltd. 1,2 2,639,997 29,674,718
- --------------------------------------------------------------------------------
Zee Telefilms Ltd. 7,379,661 29,435,305
--------------
199,473,307
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.1%
Lojas Americanas
SA, Preference 1 2,324,246,000 100,040,539
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--0.3%
JD Group Ltd. 1,610,192 23,919,560
14 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.1%
Folli-Follie SA 2 296,650 $ 8,755,995
- --------------------------------------------------------------------------------
CONSUMER STAPLES--8.7%
- --------------------------------------------------------------------------------
BEVERAGES--1.3%
Companhia de Bebidas
das Americas, ADR 238,200 8,503,740
- --------------------------------------------------------------------------------
Companhia de Bebidas
das Americas, ADR,
Preference 948,500 40,254,340
- --------------------------------------------------------------------------------
Fomento Economico
Mexicano SA de CV,
Sponsored ADR 2 456,900 39,745,731
- --------------------------------------------------------------------------------
Serm Suk Public
Co. Ltd. 2 7,255,600 3,988,632
- --------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 2 1,303,297 17,470,837
- --------------------------------------------------------------------------------
United Breweries
Ltd. 713,389 17,631,552
--------------
127,594,832
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.6%
Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar, Sponsored
ADR 2 3,176,900 135,018,250
- --------------------------------------------------------------------------------
Dairy Farm International
Holdings Ltd. 2 3,929,100 13,830,432
- --------------------------------------------------------------------------------
Jeronimo Martins
Sociedade Gestora de
Participacoes SA 2 1,600,732 26,047,245
- --------------------------------------------------------------------------------
Massmart Holdings
Ltd. 3,767,712 37,052,958
- --------------------------------------------------------------------------------
President Chain Store
Corp. 2 12,892,074 28,028,690
--------------
239,977,575
- --------------------------------------------------------------------------------
FOOD PRODUCTS--1.5%
Sadia SA, Preference 1 33,932,000 108,659,101
- --------------------------------------------------------------------------------
Tiger Brands Ltd. 907,200 22,391,803
- --------------------------------------------------------------------------------
Uni-President
Enterprises Corp. 2 14,130,000 8,055,500
--------------
139,106,404
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.3%
Able C&C 1,2 656,655 $ 11,114,452
- --------------------------------------------------------------------------------
Trent Ltd. 2 701,326 14,041,212
--------------
25,155,664
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.8%
Amore Pacific Corp. 129,475 45,269,580
- --------------------------------------------------------------------------------
Natura Cosmeticos
SA 590,100 34,458,394
--------------
79,727,974
- --------------------------------------------------------------------------------
TOBACCO--2.2%
Eastern Tobacco Co. 888,822 48,794,332
- --------------------------------------------------------------------------------
ITC Ltd. 2 17,976,925 70,019,666
- --------------------------------------------------------------------------------
KT&G Corp. 505,673 29,944,591
- --------------------------------------------------------------------------------
PT Gudang Garam
Tbk 2 46,571,500 55,520,699
--------------
204,279,288
- --------------------------------------------------------------------------------
ENERGY--5.7%
- --------------------------------------------------------------------------------
OIL & GAS--5.7%
Bharat Petroleum
Corp. Ltd. 2 5,615,631 54,935,990
- --------------------------------------------------------------------------------
Det Norske Oljeselskap
ASA 7,004,686 46,134,604
- --------------------------------------------------------------------------------
Hindustan Petroleum
Corp. Ltd. 2 6,067,163 44,357,779
- --------------------------------------------------------------------------------
Oil & Natural Gas
Corp. Ltd. 1,182,510 30,351,313
- --------------------------------------------------------------------------------
Pearl Energy Ltd. 2 3,935,000 4,777,781
- --------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR 1,545,200 135,266,808
- --------------------------------------------------------------------------------
Reliance Industries
Ltd. 2 5,010,963 80,226,338
- --------------------------------------------------------------------------------
Reliance Natural
Resources 2 5,010,963 507,038
- --------------------------------------------------------------------------------
S-Oil Corp. 839,750 60,365,139
- --------------------------------------------------------------------------------
S-Oil Corp.,
Preference 215,948 11,520,865
- --------------------------------------------------------------------------------
15 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
OIL & GAS Continued
Sinopec Zhenhai
Refining & Chemical
Co. Ltd., Cl. H 19,722,000 $ 26,692,919
- --------------------------------------------------------------------------------
SK Corp. 607,922 37,442,386
--------------
532,578,960
- --------------------------------------------------------------------------------
FINANCIALS--22.3%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--0.1%
Mirae Asset Securities
Co. Ltd. 2 127,991 8,356,982
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--12.8%
Banco Bradesco SA,
Preference 2,190,946 90,382,326
- --------------------------------------------------------------------------------
Banco Latinoamericano
de Exportaciones SA,
Cl. E 1 3,824,185 69,179,507
- --------------------------------------------------------------------------------
Banco Nossa Caixa
SA 1,360,500 31,060,532
- --------------------------------------------------------------------------------
Bank Hapoalim Ltd. 16,081,325 73,542,958
- --------------------------------------------------------------------------------
Bank Leumi
Le-Israel 20,900,600 75,541,660
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 2,3 1,783,400 21,953,654
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR,
S Shares 2 2,406,908 29,629,037
- --------------------------------------------------------------------------------
Daegu Bank 1,667,800 25,785,932
- --------------------------------------------------------------------------------
Grupo Financiero
Banorte SA de CV 11,748,400 28,667,218
- --------------------------------------------------------------------------------
Grupo Financiero
Inbursa SA de CV 2 23,827,500 37,305,107
- --------------------------------------------------------------------------------
Hana Financial
Group, Inc. 1,261,823 53,655,813
- --------------------------------------------------------------------------------
HSBC Holdings plc 3,230,857 55,399,564
- --------------------------------------------------------------------------------
HSBC Holdings plc,
Sponsored ADR 3,307 283,377
- --------------------------------------------------------------------------------
ICICI Bank Ltd.,
Sponsored ADR 2 2,300,200 70,639,142
- --------------------------------------------------------------------------------
Industrial Bank
of Korea 2 2,078,790 34,060,543
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Israel Discount Bank,
Cl. A 2 7,358,253 $ 13,924,909
- --------------------------------------------------------------------------------
Jeonbuk Bank 1 2,466,548 21,352,092
- --------------------------------------------------------------------------------
Kookmin Bank,
Sponsored ADR 422,800 32,027,100
- --------------------------------------------------------------------------------
Orszagos Takarekpenztar
es Kereskedelmi Bank
Rt. 2 243,600 9,122,047
- --------------------------------------------------------------------------------
PT Bank Mandiri 2 227,089,500 39,919,878
- --------------------------------------------------------------------------------
Shinhan Financial
Group Co. Ltd. 1,288,130 50,742,505
- --------------------------------------------------------------------------------
Standard Bank
Group Ltd. 2 5,835,561 74,411,754
- --------------------------------------------------------------------------------
Standard Chartered
plc 2 858,890 22,448,142
- --------------------------------------------------------------------------------
TMB Bank Public
Co. Ltd. 2 527,198,600 63,360,469
- --------------------------------------------------------------------------------
Turkiye Vakiflar
Bankasi TAO, Cl. D 2 11,185,600 73,632,804
- --------------------------------------------------------------------------------
Woori Finance
Holdings Co. Ltd. 2 4,613,240 90,998,657
--------------
1,189,026,727
- --------------------------------------------------------------------------------
CONSUMER FINANCE--0.2%
Tisco Bank Public
Co. Ltd. 1,2 30,360,180 21,850,386
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.6%
Fubon Financial
Holding Co. Ltd. 2 82,613,000 74,083,244
- --------------------------------------------------------------------------------
Fubon Financial
Holding Co.
Ltd., GDR 2 1,624,400 14,538,380
- --------------------------------------------------------------------------------
Guoco Group Ltd. 2,560,000 31,893,167
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS 2 9,094,751 71,660,685
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR 2 11,889,500 23,481,763
- --------------------------------------------------------------------------------
Kiatnakin Bank
Public Co. Ltd. 2 24,376,620 23,243,740
- --------------------------------------------------------------------------------
Korea Investment
Holdings Co. Ltd. 2 133,360 5,038,870
16 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Reliance Capital
Ventures Ltd. 2 5,010,963 $ 2,710,617
--------------
246,650,466
- --------------------------------------------------------------------------------
INSURANCE--1.8%
Aksigorta AS 2 6,491,905 68,305,171
- --------------------------------------------------------------------------------
Cathay Financial
Holding Co. Ltd. 2 6,355,000 12,259,380
- --------------------------------------------------------------------------------
Liberty Life Assn.
Africa Ltd. 2 2,228,783 30,548,834
- --------------------------------------------------------------------------------
Old Mutual plc 18,351,640 60,438,184
--------------
171,551,569
- --------------------------------------------------------------------------------
REAL ESTATE--3.6%
Hang Lung
Development Co. 15,450,000 33,978,848
- --------------------------------------------------------------------------------
Henderson Land
Development
Co. Ltd. 15,602,000 83,098,156
- --------------------------------------------------------------------------------
Link REIT (The) 2 19,891,000 43,364,229
- --------------------------------------------------------------------------------
Medinet Nasr for
Housing &
Development Co. 1 1,304,396 26,880,738
- --------------------------------------------------------------------------------
Midland Holdings
Ltd. 1 68,526,000 42,683,521
- --------------------------------------------------------------------------------
SM Prime Holdings,
Inc. 2 443,971,755 68,699,691
- --------------------------------------------------------------------------------
Solidere, GDR 2,3 1,557,045 31,919,423
--------------
330,624,606
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.2%
Housing Development
Finance Corp. Ltd. 2 3,554,700 109,267,650
- --------------------------------------------------------------------------------
HEALTH CARE--2.1%
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.9%
Diagnosticos
da America 1,2 3,440,200 85,782,242
- --------------------------------------------------------------------------------
PHARMACEUTICALS--1.2%
Cipla Ltd. 2 2,096,973 26,151,183
- --------------------------------------------------------------------------------
Divi's Laboratories
Ltd. 1,2 788,816 30,497,916
- --------------------------------------------------------------------------------
Ranbaxy Laboratories
Ltd. 2,822,975 27,279,909
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PHARMACEUTICALS Continued
Sun Pharmaceutical
Industries Ltd. 1,402,063 $ 24,489,184
--------------
108,418,192
- --------------------------------------------------------------------------------
INDUSTRIALS--10.8%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.0%
Bharat Electronics
Ltd. 637,400 15,836,745
- --------------------------------------------------------------------------------
Empresa Brasileira
de Aeronautica SA 3,094,000 30,087,638
- --------------------------------------------------------------------------------
Empresa Brasileira
de Aeronautica SA,
Preference 4,544,500 46,012,126
--------------
91,936,509
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.4%
Sinotrans Ltd. 1 91,054,000 39,013,363
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--3.0%
Continental Engineering
Corp. 2 14,307,000 6,005,733
- --------------------------------------------------------------------------------
Empresas ICA SA
de CV 2 17,906,583 54,104,377
- --------------------------------------------------------------------------------
Gafisa SA 2 695,600 8,058,281
- --------------------------------------------------------------------------------
GS Engineering &
Construction Corp. 324,560 17,559,628
- --------------------------------------------------------------------------------
Hyundai Development
Co. 556,520 25,312,660
- --------------------------------------------------------------------------------
Hyundai Engineering
& Construction
Co. Ltd. 2 1,394,074 67,261,000
- --------------------------------------------------------------------------------
Impulsora del Desarrollo
y el Empleo en America
Latina SA de CV 2 36,252,500 45,579,516
- --------------------------------------------------------------------------------
Joongang Construction
Co. Ltd. 2 325,260 7,911,445
- --------------------------------------------------------------------------------
Kolon Engineering
& Construction
Co. Ltd. 388,900 4,655,682
- --------------------------------------------------------------------------------
Kyeryong Construction
Industrial Co. Ltd. 1 614,082 20,426,981
- --------------------------------------------------------------------------------
Murray & Roberts
Holdings Ltd. 2 7,157,100 26,449,585
--------------
283,324,888
17 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.9%
Bharat Heavy
Electricals Ltd. 1,049,461 $ 48,046,470
- --------------------------------------------------------------------------------
Merry Electronics
Co. Ltd. 1,2 8,319,000 26,140,255
- --------------------------------------------------------------------------------
Motech Industries,
Inc. 1,2 4,537,000 100,827,404
--------------
175,014,129
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--1.0%
Koc Holding AS 2 11,493,206 69,689,273
- --------------------------------------------------------------------------------
LG Chemical Ltd. 704,130 24,411,253
--------------
94,100,526
- --------------------------------------------------------------------------------
MACHINERY--2.4%
Hyundai Heavy
Industries Co. Ltd. 1,469,406 116,563,095
- --------------------------------------------------------------------------------
Larsen & Toubro
Ltd. 2 1,877,531 101,645,351
--------------
218,208,446
- --------------------------------------------------------------------------------
ROAD & RAIL--1.0%
All America
Latina Logistica 1,288,920 70,713,059
- --------------------------------------------------------------------------------
All America Latina
Logistica, GDR 4 118,900 6,500,263
- --------------------------------------------------------------------------------
Gateway Distriparks
Ltd. 2,828,000 15,770,372
--------------
92,983,694
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.0%
LG International
Corp. 135,900 3,197,227
- --------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.1%
Grupo Aeroportuario
del Pacifico SA de
CV, ADR 2 355,800 10,247,040
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--13.2%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.4%
Inventec Appliances
Corp. 2 6,125,000 37,547,178
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.5%
High Tech Computer
Corp. 2 1,672,400 36,114,929
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS Continued
Hon Hai Precision
Industry Co. Ltd. 2 14,500,000 $ 91,589,490
- --------------------------------------------------------------------------------
Lite-On Technology
Corp. 2 59,653,075 80,570,691
- --------------------------------------------------------------------------------
Mitac International
Corp. 2 28,000,000 39,391,395
- --------------------------------------------------------------------------------
Quanta Computer,
Inc. 2 54,330,650 82,835,350
--------------
330,501,855
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8%
AU Optronics
Corp. 2 10,495,000 16,928,685
- --------------------------------------------------------------------------------
Synnex Technology
International Corp. 2 28,680,080 35,573,357
- --------------------------------------------------------------------------------
Varitronix
International Ltd. 1 29,336,000 21,408,413
--------------
73,910,455
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.1%
Inventec Co. Ltd. 2 58,936,000 36,000,244
- --------------------------------------------------------------------------------
Mobilians Co. Ltd. 1,2 387,602 4,413,841
- --------------------------------------------------------------------------------
NCsoft Corp. 2 405,471 27,120,630
- --------------------------------------------------------------------------------
NHN Corp. 2 111,064 31,235,048
--------------
98,769,763
- --------------------------------------------------------------------------------
IT SERVICES--3.2%
HCL Technologies
Ltd. 5,098,816 70,243,316
- --------------------------------------------------------------------------------
Infosys Technologies
Ltd. 1,897,600 121,247,104
- --------------------------------------------------------------------------------
Tata Consultancy
Services Ltd. 2,706,335 103,962,384
--------------
295,452,804
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT--4.1%
Hynix
Semiconductor, Inc. 2 4,140,428 139,517,345
- --------------------------------------------------------------------------------
Mtekvision Co. Ltd. 1 909,675 27,809,544
18 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT Continued
Powerchip
Semiconductor
Corp. 2 58,000,000 $ 35,436,560
- --------------------------------------------------------------------------------
Sunplus Technology
Co. Ltd. 1,2 50,919,000 60,984,685
- --------------------------------------------------------------------------------
Telechips, Inc. 1 655,280 17,990,400
- --------------------------------------------------------------------------------
United
Microelectronics
Corp. 2 179,576,000 105,176,402
--------------
386,914,936
- --------------------------------------------------------------------------------
SOFTWARE--0.1%
Patni Computer
Systems Ltd. 2 673,135 7,073,702
- --------------------------------------------------------------------------------
MATERIALS--5.0%
- --------------------------------------------------------------------------------
CHEMICALS--0.5%
Finetec Corp. 1 1,913,045 21,287,841
- --------------------------------------------------------------------------------
Jubilant Organosys
Ltd. 2 94,160 2,315,241
- --------------------------------------------------------------------------------
Petkim Petrokimya
Holding AS 2 3,753,102 20,898,112
--------------
44,501,194
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--1.0%
Cemex SA de CV,
Sponsored ADR 2 1,502,994 92,824,909
- --------------------------------------------------------------------------------
METALS & MINING--3.5%
Anglo Platinum
Ltd. 2 1,250,261 99,761,601
- --------------------------------------------------------------------------------
Companhia de Minas
Buenaventura SA,
Sponsored ADR 401,700 10,532,574
- --------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, Sponsored
ADR 1,470,700 59,857,490
- --------------------------------------------------------------------------------
Harmony Gold Mining
Co. Ltd., Sponsored
ADR 2 1,086,000 15,193,140
- --------------------------------------------------------------------------------
Highland Gold Mining
Ltd. 2 2,215,226 11,540,671
- --------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd. 376,467 63,758,929
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
PT Aneka
Tambang Tbk 1,2 148,199,900 $ 64,486,093
--------------
325,130,498
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.0%
Suzano Bahia Sul
Paper e Celulose SA 59,600 405,847
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--10.1%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--5.0%
Bharti Tele-Ventures
Ltd. 2 6,843,100 55,803,529
- --------------------------------------------------------------------------------
Magyar Telekom 2 3,851,880 17,676,555
- --------------------------------------------------------------------------------
Orascom Telecom
Holding SAE 1,501,426 89,885,675
- --------------------------------------------------------------------------------
PT Indosat Tbk 2 178,089,000 101,378,043
- --------------------------------------------------------------------------------
PT Telekomunikasi
Indonesia Tbk 2 175,207,000 116,625,728
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA 3,192,585 83,892,745
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA,
Preference 253,100 4,827,196
--------------
470,089,471
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--5.1%
Advanced Info
Service Public
Co. Ltd. 2 16,188,900 38,865,532
- --------------------------------------------------------------------------------
America Movil SA
de CV, Series L 2,969,700 103,137,681
- --------------------------------------------------------------------------------
Hutchison
Telecommunications
International Ltd. 2 12,401,000 19,017,505
- --------------------------------------------------------------------------------
Reliance
Communication
Ventures Ltd. 2 5,010,963 20,776,115
- --------------------------------------------------------------------------------
Shin Corp. Public Co.
Ltd. (Holding Co.) 2 68,995,400 85,560,647
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd. 157,288 32,659,719
- --------------------------------------------------------------------------------
SK Telecom Co.
Ltd., ADR 3,477,000 83,969,550
19 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
Telesp Celular
Participacoes SA,
ADR 2 475,200 $ 2,352,240
- --------------------------------------------------------------------------------
Vodafone Egypt
Telecommunications
Co. SAE 4,769,594 84,066,304
--------------
470,405,293
- --------------------------------------------------------------------------------
UTILITIES--1.8%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.2%
Centrais Electricas
Brasileiras SA,
Preference, Cl. B 2 1,570,596,700 34,503,572
- --------------------------------------------------------------------------------
Companhia Energetica
de Minas Gerais,
Preference 55,967,000 2,872,806
- --------------------------------------------------------------------------------
Eletropaulo
Metropolitana SA,
Preference 2 1,137,757,400 56,102,933
- --------------------------------------------------------------------------------
NTPC Ltd. 5,253,619 15,562,103
- --------------------------------------------------------------------------------
Reliance Energy
Ventures Ltd. 2 5,010,963 4,844,025
--------------
113,885,439
- --------------------------------------------------------------------------------
GAS UTILITIES--0.6%
Gail India Ltd. 9,409,920 57,979,130
--------------
Total Common Stocks
(Cost $6,295,030,751) 9,026,382,019
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd., 2% Sec.
Debs., 7/7/10 [INR]
(Cost $743,371) 32,425,500 638,623
VALUE
UNITS SEE NOTE 1
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd. Wts.,
Exp. 1/7/10 2
(Cost $0) 63,757 $ 483,848
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--1.5%
- --------------------------------------------------------------------------------
Undivided interest of 35.40% in joint repurchase
agreement (Principal Amount/Value $400,738,000,
with a maturity value of $400,787,981) with
Cantor Fitzgerald & Co./Cantor Fitzgerald
Securities, 4.49%, dated 2/28/06, to be
repurchased at $141,863,691 on 3/1/06,
collateralized by U.S. Treasury Bills, 5/4/06,
with a value of $49,625,000 and U.S. Treasury
Bonds, 2.375%--8%, 8/15/06-- 11/15/21, with a
value of $359,989,701 (Cost $141,846,000) $141,846,000 141,846,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $6,437,620,122) 98.3% 9,169,350,490
- --------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES 1.7 156,171,328
------------------------------
NET ASSETS 100.0% $9,325,521,818
==============================
20 | OPPENHEIMER DEVELOPING MARKETS FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currency:
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 February 28, 2006.
The aggregate fair value of securities of affiliated companies held by the Fund
as of February 28, 2006 amounts to $1,303,904,587.
Transactions during the period in which the issuer was an affiliate are as
follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2005 ADDITIONS REDUCTIONS FEBRUARY 28, 2006
- -------------------------------------------------------------------------------------------------------------------------
Able C&C 537,778 124,981 6,104 656,655
Aksigorta AS* 8,762,905 -- 2,271,000 6,491,905
Amtek Auto Ltd. 7,296,853 2,304,705 88,400 9,513,158
Banco Latinoamericano
de Exportaciones SA, Cl. E 3,805,885 53,800 35,500 3,824,185
Coca-Cola Femsa SA de CV,
Sponsored ADR 1,360,000 -- 1,360,000 --
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar, Sponsored ADR* 2,892,100 311,400 26,600 3,176,900
Corporacion GEO SA de CV, Series B* 28,915,000 -- 9,101,900 19,813,100
Courts (Singapore) Ltd. 11,425,000 -- 11,425,000 --
Diagnosticos da America 2,139,100 1,388,000 86,900 3,440,200
Divi's Laboratories Ltd. 796,149 -- 7,333 788,816
Finetec Corp. 1,538,406 388,809 14,170 1,913,045
GS Home Shopping, Inc. 698,292 -- 173,768 524,524
Humax Co. Ltd. 1,272,452 1,726,804 20,693 2,978,563
Jeonbuk Bank -- 2,477,728** 11,180 2,466,548
Kiatnakin Finance Public Co. Ltd.* 25,718,220 2,408,200 3,749,800 24,376,620
Kyeryong Construction Industrial Co. Ltd. 657,218 -- 43,136 614,082
Lojas Americanas SA, Preference 2,226,500,000 390,164,000 292,418,000 2,324,246,000
Medinet Nasr for Housing
& Development Co. 1,316,496 -- 12,100 1,304,396
Merry Electronics Co. Ltd. -- 8,319,000 -- 8,319,000
Midland Holdings Ltd. 31,122,000 37,766,000 362,000 68,526,000
Mobilians Co. Ltd. -- 489,222 101,620 387,602
Motech Industries, Inc. -- 4,965,000 428,000 4,537,000
Mtekvision Co. Ltd. 823,668 94,289 8,282 909,675
PT Aneka Tambang Tbk 178,972,100 -- 30,772,200 148,199,900
Rico Auto Industries Ltd. -- 7,715,655 -- 7,715,655
Sadia SA, Preference 16,547,000 17,567,000 182,000 33,932,000
SARE Holding SA de CV, Cl. B 1,174,416 44,753,009 349,521 45,577,904
Sinotrans Ltd. 91,900,000 -- 846,000 91,054,000
Ssangyong Motor Co. 7,796,210 2,204,829 97,080 9,903,959
Sunplus Technology Co. Ltd. -- 50,919,000 -- 50,919,000
Telechips, Inc. 608,145 55,376 8,241 655,280
Tisco Bank Public Co. Ltd. 16,493,280 14,035,600 168,700 30,360,180
United Breweries Holdings Ltd.* 1,465,724 -- 162,427 1,303,297
United Breweries Ltd.* 719,989 -- 6,600 713,389
Varitronix International Ltd. 11,577,000 17,968,000 209,000 29,336,000
Yedang Entertainment Co. Ltd. -- 2,651,447 11,450 2,639,997
21 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------------
Able C&C $ 11,114,452 $ -- $ (188,251)
Aksigorta AS* --* -- 14,464,637
Amtek Auto Ltd. 74,547,491 295,112 (84,640)
Banco Latinoamericano de Exportaciones SA, Cl. E 69,179,507 1,144,511 (234,655)
Coca-Cola Femsa SA de CV, Sponsored ADR -- -- 8,232,349
Companhia Brasileira de Distribuicao Grupo Pao
de Acucar, Sponsored ADR* --* -- (1,991)
Corporacion GEO SA de CV, Series B* --* -- 21,160,038
Courts (Singapore) Ltd. -- -- (42,532)
Diagnosticos da America 85,782,242 -- 407,443
Divi's Laboratories Ltd. 30,497,916 -- (3,105)
Finetec Corp. 21,287,841 196,259 4,240
GS Home Shopping, Inc. 53,356,794 1,354,360 4,853,769
Humax Co. Ltd. 84,262,852 288,509 (51,016)
Jeonbuk Bank 21,352,092 168,841 (13,030)
Kiatnakin Finance Public Co. Ltd.* --* -- (1,296,841)
Kyeryong Construction Industrial Co. Ltd. 20,426,981 421,850 (247,668)
Lojas Americanas SA, Preference 100,040,539 867,140 6,477,936
Medinet Nasr for Housing & Development Co. 26,880,738 736,147 62,731
Merry Electronics Co. Ltd. 26,140,255 -- --
Midland Holdings Ltd. 42,683,521 401,111 (66,976)
Mobilians Co. Ltd. 4,413,841 -- (599,781)
Motech Industries, Inc. 100,827,404 -- 942,526
Mtekvision Co. Ltd. 27,809,544 749,461 2,448
PT Aneka Tambang Tbk 64,486,093 -- 3,078,632
Rico Auto Industries Ltd. 15,113,314 -- --
Sadia SA, Preference 108,659,101 2,140,927 (51,719)
SARE Holding SA de CV, Cl. B 56,042,330 -- 4,501
Sinotrans Ltd. 39,013,363 431,658 (82,801)
Ssangyong Motor Co. 68,077,774 -- (89,623)
Sunplus Technology Co. Ltd. 60,984,685 -- --
Telechips, Inc. 17,990,400 84,971 (4,476)
Tisco Bank Public Co. Ltd. 21,850,386 -- (16,586)
United Breweries Holdings Ltd.* --* -- 1,471,001
United Breweries Ltd.* --* 24,376 26,490
Varitronix International Ltd. 21,408,413 216,174 (38,609)
Yedang Entertainment Co. Ltd. 29,674,718 -- (17,652)
---------------------------------------------------------
$1,303,904,587 $9,521,407 $58,056,789
=========================================================
* No longer an affiliate as of February 28, 2006
** A portion of the transactions (81,974) was the result of a stock dividend.
2. Non-income producing security.
3. 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 $160,697,481 or 1.72% of the Fund's net
assets as of February 28, 2006.
4. Illiquid security. The aggregate value of illiquid securities as of February
28, 2006 was $6,500,263, which represents 0.07% of the Fund's net assets. In
addition, the Fund has restricted currency of $7,172,139, which represents 0.08%
of the Fund's net assets. See Note 6 of Notes to Financial Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER DEVELOPING MARKETS FUND
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 $ 1,822,148,718 19.9%
India 1,461,334,219 15.9
Brazil 1,296,001,739 14.1
Taiwan 942,120,980 10.3
Mexico 652,567,788 7.1
South Africa 451,366,960 4.9
Indonesia 448,727,622 4.9
Turkey 327,667,808 3.6
Egypt 301,209,740 3.3
Hong Kong 284,905,414 3.1
Thailand 236,869,406 2.6
Israel 163,009,527 1.8
United States 141,846,000 1.5
United Kingdom 138,569,267 1.5
Philippines 95,364,759 1.0
Panama 69,179,507 0.8
China 65,706,282 0.7
Norway 46,134,604 0.5
Bermuda 35,238,845 0.4
Singapore 33,546,376 0.4
Lebanon 31,919,423 0.4
Hungary 30,675,169 0.3
Greece 26,102,342 0.3
Portugal 26,047,245 0.3
Cayman Islands 19,017,505 0.2
Jersey, Channel Islands 11,540,671 0.1
Peru 10,532,574 0.1
----------------------------------
Total $ 9,169,350,490 100.0%
==================================
23 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
February 28, 2006
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of
investments:
Unaffiliated companies (cost $5,531,862,629) $7,865,445,903
Affiliated companies (cost $905,757,493) 1,303,904,587
---------------
9,169,350,490
- --------------------------------------------------------------------------------
Cash 8,199,774
- --------------------------------------------------------------------------------
Cash--foreign currencies (cost $155,304,022) 155,234,011
- --------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 143,734
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 129,893,531
Investments sold 40,668,467
Interest and dividends 24,187,520
Other 71,365
---------------
Total assets 9,527,748,892
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 7,645
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 154,650,757
Shares of beneficial interest redeemed 25,647,975
Foreign capital gains tax 16,233,466
Distribution and service plan fees 3,290,473
Transfer and shareholder servicing agent fees 965,001
Trustees' compensation 261,819
Shareholder communications 144,905
Other 1,025,033
---------------
Total liabilities 202,227,074
- --------------------------------------------------------------------------------
NET ASSETS $9,325,521,818
===============
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $6,285,817,686
- --------------------------------------------------------------------------------
Accumulated net investment loss (45,632,510)
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions 369,442,528
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 2,715,894,114
---------------
NET ASSETS $9,325,521,818
===============
24 | 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 $7,571,123,463 and 190,625,707 shares of beneficial
interest outstanding) $ 39.72
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $ 42.14
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $366,631,076 and 9,310,816 shares of beneficial
interest outstanding) $ 39.38
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $987,826,667 and 25,377,822 shares of beneficial
interest outstanding) $ 38.92
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $217,986,830 and 5,569,766 shares of beneficial
interest outstanding) $ 39.14
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $181,953,782 and 4,584,885 shares of
beneficial interest outstanding) $ 39.69
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended February 28, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding
taxes of $4,898,505) $ 47,825,138
Affiliated companies (net of foreign withholding
taxes of $969,947) 9,521,407
- --------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $2) 3,612,318
- --------------------------------------------------------------------------------
Other income 13,931
-------------
Total investment income 60,972,794
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 28,729,389
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 6,753,012
Class B 1,421,186
Class C 3,331,056
Class N 358,292
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 4,340,830
Class B 241,955
Class C 427,789
Class N 165,506
Class Y 5,547
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 243,967
Class B 27,866
Class C 32,237
Class N 2,351
Class Y 29
- --------------------------------------------------------------------------------
Custodian fees and expenses 1,882,882
- --------------------------------------------------------------------------------
Trustees' compensation 156,205
- --------------------------------------------------------------------------------
Other 388,628
-------------
Total expenses 48,508,727
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 12,464,067
26 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies $ 370,698,301
Affiliated companies 58,056,789
Foreign currency transactions 19,668,492
---------------
Net realized gain 448,423,582
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $16,233,466) 1,284,318,573
Translation of assets and liabilities denominated in foreign
currencies 143,893,861
---------------
Net change in unrealized appreciation 1,428,212,434
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,889,100,083
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2006 AUGUST 31,
(UNAUDITED) 2005
- --------------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Net investment income $ 12,464,067 $ 61,764,538
- --------------------------------------------------------------------------------------------------------------------
Net realized gain 448,423,582 160,898,642
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 1,428,212,434 952,477,007
-----------------------------------
Net increase in net assets resulting from operations 1,889,100,083 1,175,140,187
- --------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (68,674,341) (31,307,183)
Class B (1,913,075) (879,176)
Class C (5,631,507) (1,898,747)
Class N (1,612,601) (545,843)
Class Y (1,210,159) --
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (168,966,174) (10,889,372)
Class B (8,946,574) (742,531)
Class C (20,858,213) (1,173,811)
Class N (4,578,511) (217,007)
Class Y (2,421,013) --
- --------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 2,142,232,098 1,608,133,391
Class B 74,279,519 42,129,047
Class C 378,428,165 173,879,187
Class N 84,775,119 53,161,881
Class Y 165,990,240 --
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
Total increase 4,449,993,056 3,004,790,023
- --------------------------------------------------------------------------------------------------------------------
Beginning of period 4,875,528,762 1,870,738,739
-----------------------------------
End of period (including accumulated net investment
income (loss) of $(45,632,510) and $20,945,106, respectively) $ 9,325,521,818 $ 4,875,528,762
===================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2006 AUGUST 31,
CLASS A (UNAUDITED) 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.11 $ 21.09 $ 16.92 $ 13.43 $ 12.93 $ 16.85
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 1 .55 1 .48 .19 .25 .21
Net realized and unrealized gain (loss) 10.09 9.97 4.31 3.50 .45 (3.54)
----------------------------------------------------------------------------------
Total from investment operations 10.17 10.52 4.79 3.69 .70 (3.33)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.45) (.37) (.62) (.20) (.20) (.20)
Distributions from net realized gain (1.11) (.13) -- -- -- (.39)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.56) (.50) (.62) (.20) (.20) (.59)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.72 $ 31.11 $ 21.09 $ 16.92 $ 13.43 $ 12.93
==================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 33.42% 50.42% 28.61% 27.93% 5.44% (20.08)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 7,571,123 $4,104,558 $1,549,854 $588,450 $337,405 $167,178
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 5,574,079 $2,739,224 $1,145,452 $374,841 $257,746 $153,027
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.48% 2.01% 1.64% 1.42% 1.91% 1.76%
Total expenses 1.34% 1.43% 1.52% 1.81% 1.81% 1.69%
Expenses after payments and waivers and
reduction to custodian expenses 1.34% 1.43% 1.52% 1.76% 1.77% 1.69%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2006 AUGUST 31,
CLASS B (UNAUDITED) 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.78 $ 20.87 $ 16.79 $ 13.32 $ 12.82 $ 16.70
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.05) 1 .31 1 .12 .09 .15 .12
Net realized and unrealized gain (loss) 10.00 9.88 4.46 3.47 .44 (3.53)
----------------------------------------------------------------------------------
Total from investment operations 9.95 10.19 4.58 3.56 .59 (3.41)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.24) (.15) (.50) (.09) (.09) (.08)
Distributions from net realized gain (1.11) (.13) -- -- -- (.39)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.35) (.28) (.50) (.09) (.09) (.47)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.38 $ 30.78 $ 20.87 $ 16.79 $ 13.32 $ 12.82
==================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 32.94% 49.14% 27.50% 26.98% 4.61% (20.67)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 366,631 $ 222,723 $ 119,749 $ 84,705 $ 63,005 $ 45,393
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 287,984 $ 169,763 $ 117,271 $ 62,676 $ 54,744 $ 48,135
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.30)% 1.15% 0.61% 0.66% 1.14% 0.92%
Total expenses 2.11% 2.24% 2.41% 2.67% 2.58% 2.46%
Expenses after payments and waivers and
reduction to custodian expenses 2.11% 2.24% 2.41% 2.52% 2.54% 2.46%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER DEVELOPING MARKETS FUND
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2006 AUGUST 31,
CLASS C (UNAUDITED) 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.49 $ 20.70 $ 16.67 $ 13.25 $ 12.78 $ 16.68
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.04) 1 .34 1 .31 .10 .17 .12
Net realized and unrealized gain (loss) 9.88 9.79 4.25 3.44 .41 (3.52)
----------------------------------------------------------------------------------
Total from investment operations 9.84 10.13 4.56 3.54 .58 (3.40)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.30) (.21) (.53) (.12) (.11) (.11)
Distributions from net realized gain (1.11) (.13) -- -- -- (.39)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.41) (.34) (.53) (.12) (.11) (.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.92 $ 30.49 $ 20.70 $ 16.67 $ 13.25 $ 12.78
==================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 32.93% 49.29% 27.60% 27.05% 4.54% (20.68)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 987,827 $ 450,012 $ 175,025 $ 77,081 $ 46,722 $ 20,864
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 675,432 $ 294,791 $ 145,460 $ 52,236 $ 33,334 $ 19,646
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.23)% 1.28% 0.83% 0.66% 1.15% 0.94%
Total expenses 2.06% 2.17% 2.31% 2.57% 2.57% 2.46%
Expenses after payments and waivers and
reduction to custodian expenses 2.06% 2.17% 2.31% 2.52% 2.53% 2.46%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2006 AUGUST 31,
CLASS N (UNAUDITED) 2005 2004 2003 2002 2001 1
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.67 $ 20.84 $ 16.77 $ 13.36 $ 12.91 $ 15.26
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .03 2 .45 2 .45 .22 .32 .05
Net realized and unrealized gain (loss) 9.94 9.83 4.22 3.41 .34 (2.40)
----------------------------------------------------------------------------------
Total from investment operations 9.97 10.28 4.67 3.63 .66 (2.35)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.39) (.32) (.60) (.22) (.21) --
Distributions from net realized gain (1.11) (.13) -- -- -- --
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.50) (.45) (.60) (.22) (.21) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.14 $ 30.67 $ 20.84 $ 16.77 $ 13.36 $ 12.91
==================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 33.21% 49.84% 28.16% 27.73% 5.13% (15.40)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 217,987 $ 98,236 $ 26,110 $ 8,709 $ 1,741 $ 77
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 148,575 $ 57,727 $ 18,770 $ 4,196 $ 686 $ 35
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.19% 1.67% 1.31% 1.27% 1.68% 1.63%
Total expenses 1.64% 1.82% 1.99% 2.08% 2.04% 1.96%
Expenses after payments and waivers
and reduction to custodian expenses 1.64% 1.80% 1.88% 1.99% 2.00% 1.96%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER DEVELOPING MARKETS FUND
PERIOD
ENDED
FEBRUARY 28, 2006 1
CLASS Y (UNAUDITED)
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.15
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .17
Net realized and unrealized gain 9.04
-----------
Total from investment operations 9.21
- --------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.56)
Distributions from net realized gain (1.11)
-----------
Total dividends and/or distributions to shareholders (1.67)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 39.69
===========
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 29.38%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 181,954
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 80,929
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.98%
Total expenses 0.94%
- --------------------------------------------------------------------------------
Portfolio turnover rate 23%
1. For the period from September 7, 2005 (inception of offering) to February 28,
2006.
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, Class N and Class Y 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. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
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. No such plan has been adopted for
Class Y shares. 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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. 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, as 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
34 | OPPENHEIMER DEVELOPING MARKETS FUND
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 (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.
35 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 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.
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.
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 six months ended
February 28, 2006, the Fund's projected benefit obligations were increased by
$91,228 and payments of $21,653 were made to retired trustees, resulting in an
accumulated liability of $193,167 as of February 28, 2006.
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 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.
36 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
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, to the extent they are not
offset by positive cash balances maintained by the Fund, 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. At February 28, 2006, the Fund had $8,896 of such earnings on
cash balances available to offset future custodian fees or interest expenses
incurred during the next fiscal year.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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.
37 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
SIX MONTHS ENDED FEBRUARY 28, 2006 1 YEAR ENDED AUGUST 31, 2005
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
CLASS A
Sold 74,428,050 $2,697,285,168 88,754,718 $ 2,427,698,410
Dividends and/or
distributions reinvested 5,747,451 200,471,052 1,371,503 34,603,027
Redeemed (21,495,943) (755,524,122) 2 (31,652,270) (854,168,046) 3
---------------------------------------------------------------------
Net increase 58,679,558 $2,142,232,098 58,473,951 $ 1,608,133,391
=====================================================================
- --------------------------------------------------------------------------------------------------------------
CLASS B
Sold 2,783,132 $ 99,603,402 2,990,642 $ 82,326,626
Dividends and/or
distributions reinvested 273,772 9,483,455 57,208 1,437,052
Redeemed (980,958) (34,807,338) 2 (1,550,934) (41,634,631) 3
---------------------------------------------------------------------
Net increase 2,075,946 $ 74,279,519 1,496,916 $ 42,129,047
=====================================================================
- --------------------------------------------------------------------------------------------------------------
CLASS C
Sold 11,389,203 $ 406,591,148 8,093,292 $ 221,658,558
Dividends and/or
distributions reinvested 599,499 20,526,830 103,479 2,573,527
Redeemed (1,369,962) (48,689,813) 2 (1,891,282) (50,352,898) 3
---------------------------------------------------------------------
Net increase 10,618,740 $ 378,428,165 6,305,489 $ 173,879,187
=====================================================================
- --------------------------------------------------------------------------------------------------------------
CLASS N
Sold 2,815,619 $ 101,315,091 2,555,275 $ 69,740,342
Dividends and/or
distributions reinvested 172,439 5,930,182 30,025 749,123
Redeemed (621,494) (22,470,154) 2 (634,917) (17,327,584) 3
---------------------------------------------------------------------
Net increase 2,366,564 $ 84,775,119 1,950,383 $ 53,161,881
=====================================================================
- --------------------------------------------------------------------------------------------------------------
CLASS Y
Sold 5,042,262 $ 181,372,798 -- $ --
Dividends and/or
distributions reinvested 53,371 1,858,366 -- --
Redeemed (510,748) (17,240,924) 2 -- --
---------------------------------------------------------------------
Net increase 4,584,885 $ 165,990,240 -- $ --
=====================================================================
1. For the six months ended February 28, 2006, for Class A, Class B, Class C and
Class N shares and for the period from September 7, 2005 (inception of offering)
to February 28, 2006, for Class Y shares.
2. Net of redemption fees of $62,195, $3,213, $7,536, $1,658 and $903 for Class
A, Class B, Class C, Class N and Class Y, respectively.
3. 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.
38 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended February 28, 2006, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
Investment securities $3,920,195,961 $1,479,515,807
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Effective January 1, 2006 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, 0.85% of the next $6 billion, 0.80% of the next $3
billion and 0.75% of average annual net assets over $10 billion. Prior to
January 1, 2006 the advisory fee was 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 six months ended February 28, 2006, the Fund paid
$4,932,743 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
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
periodically 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 periodically 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
periods. 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
39 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
and servicing accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% 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 February 28, 2006 for Class B, Class C and Class N shares were $3,797,985,
$7,570,034 and $1,187,202, 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
SIX MONTHS ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------------
February 28, 2006 $1,343,370 $-- $150,543 $83,944 $26,675
- --------------------------------------------------------------------------------
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. 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
40 | OPPENHEIMER DEVELOPING MARKETS FUND
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 February 28, 2006, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT
EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) FEB. 28, 2006 APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Hungarian Forint [HUF] 3/1/06 56,286 HUF $ 264,925 $ 360 $ --
Indian Rupee [INR] 3/1/06 1,082,539 INR 24,450,352 107,214 --
Indonesian Rupiah [IDR] 3/1/06 56,420,072 IDR 6,144,304 3,010 --
Norwegian Krone [NOK] 3/1/06 73,863 NOK 10,945,984 31,621 --
South African Rand [ZAR] 3/6/06 6,454 ZAR 1,045,252 -- 3,515
Thailand Baht [THB] 3/1/06-3/2/06 24,185 THB 618,385 1,529 --
----------------------------
143,734 3,515
----------------------------
CONTRACTS TO SELL
South African Rand [ZAR] 3/7/06 10,288 ZAR 1,665,878 -- 4,130
----------------------------
Total unrealized appreciation
and depreciation $ 143,734 $ 7,645
============================
- --------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY
As of February 28, 2006, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also 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 or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
Securities that are illiquid or restricted are marked with the applicable
footnote on the Statement of Investments. Information concerning currency is as
follows:
ACQUISITION VALUATION AS OF UNREALIZED
CURRENCY DATES COST FEBRUARY 28, 2006 DEPRECIATION
- ------------------------------------------------------------------------------------------
Argentine Peso [ARP] 9/14/05-2/22/06 $7,209,012 $7,172,139 $36,873
41 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LITIGATION
A complaint was filed as a putative class action against the Manager and the
Transfer Agent (and other defendants) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses. Seven of the eight counts in the complaint, including the
claims against certain of the Oppenheimer funds, as nominal defendants, and
against certain present and former Directors, Trustees and Officers of the
funds, and the Distributor, as defendants, were dismissed with prejudice, by
court order dated March 10, 2006, in response to motions to dismiss the suit
that had been filed by the defendants. The remaining count against the Manager
and the Transfer Agent was dismissed with prejudice by court order dated April
5, 2006. The time in which plaintiffs may file an appeal to those decisions has
not yet lapsed.
42 | 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.
43 | 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
investment advisory agreement (the "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 Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE AND EXTENT OF SERVICES. The Board considered information on the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel that provide such services. The Manager's duties
include providing the Fund with 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; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing, and supervising
the activities of, all administrative and clerical personnel that are necessary
in order to provide effective corporate administration for the Fund; compiling
and maintaining records with respect to the Fund's operations; preparing and
filing reports required by the Securities and Exchange Commission; preparing
periodic reports regarding the operations of the Fund for its shareholders;
preparing proxy materials for shareholder meetings; and preparing the
registration statements required by Federal and state securities laws for the
sale of the Fund's shares. The Manager also provides the Fund with office space,
facilities and equipment.
44 | OPPENHEIMER DEVELOPING MARKETS FUND
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took account of the facts 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 has received regarding the experience and
professional qualifications of the Manager's personnel and the size and
functions of its staff. In its evaluation of the quality of the portfolio
management services provided, the Board considered the experience of Mark Madden
and the Manager's Global investment team and analysts. Mr. Madden has had over
13 years of experience managing global/international investments. The Board
members also considered their experiences with the Manager and its officers and
other personnel through their service as directors or trustees of the Fund and
other funds advised by the Manager. The Board considered 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. In light of the foregoing, the Board concluded that
the Fund benefits from the services provided under the Agreement as a result of
the Manager's experience, reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the performance of the Fund and the Manager at
each Board meeting, including comparative performance information. 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 the
Manager and other investment advisers. The Board noted 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 reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also evaluated the comparability of the fees charged and the services provided
to the Fund to those of other clients or accounts advised by the Manager. 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 noted that the
Fund's contractual and actual management fees and total expenses were all lower
than its peer group median and average.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, to what extent
those
45 | OPPENHEIMER DEVELOPING MARKETS FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
economies of scale benefit the Fund shareholders and the current level of Fund
assets in relation to the Fund's breakpoint schedule for its management fees.
The Board also noted the Fund's breakpoints, which are intended to share
economies of scale that may exist as the Fund grows with its shareholders. Based
on this evaluation, the Board requested and the Manager agreed to a revised
breakpoint schedule that, effective January 1, 2006, reduced the management fee
on average annual net assets over $7.0 billion to 0.80% and reduced the
management fee on average annual net assets over $10.0 billion to 0.75%.
PROFITS AND OTHER BENEFITS TO THE MANAGER. The Board considered
information regarding the Manager's costs in serving as the Fund's investment
adviser, including the costs associated with the personnel and systems necessary
to manage the Fund, and information regarding the Manager's profitability from
its relationship with the Fund. 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 to
considering the profits realized by the Manager, the Board also considered
information 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 for services provided and research provided to the Manager
in connection with permissible brokerage arrangements (soft dollar
arrangements).
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.
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, and the revised fee structure
adopted by the Board and the Manager, 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.
46 | OPPENHEIMER DEVELOPING MARKETS FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
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 February 28, 2006, 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) Not applicable to semiannual reports.
(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: April 19, 2006
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: April 19, 2006
By: /s/ Brian W. Wixted
----------------------------
Brian W. Wixted
Principal Financial Officer
Date: April 19, 2006