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
Date of reporting period: 08/31/2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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Brazil 15.5%
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India 14.5
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Taiwan 13.2
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Korea, Republic of South 12.7
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South Africa 6.8
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Mexico 6.3
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Indonesia 5.1
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Turkey 4.6
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Egypt 3.4
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Russia 2.4
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2006, and are based on the total market value of investments.
TOP TEN COMMON STOCK HOLDINGS
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Petroleo Brasileiro SA, ADR 3.4%
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America Movil SA de CV, Series L 2.0
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Hon Hai Precision Industry Co. Ltd. 1.6
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Anglo Platinum Ltd. 1.6
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AngloGold Ashanti Ltd., Sponsored ADR 1.5
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Samsung Electronics Co. 1.5
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Surgutneftegaz OJSC, Sponsored ADR 1.4
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Infosys Technologies Ltd. 1.3
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All America Latina Logistica 1.3
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Orascom Telecom Holding SAE 1.2
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2006, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
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10 | OPPENHEIMER DEVELOPING MARKETS FUND
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REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asia 51.2%
Latin America 23.1
Middle East/Africa 17.2
Emerging Europe 3.2
Europe 2.7
United States/Canada 2.6
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2006, and are based on the total market value of investments.
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11 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2006, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. We were quite pleased with our
performance during the reporting period, given the strong absolute return of
28.41% for Class A shares (without sales charge) for the 12-month period ended
August 31, 2006. On a relative basis, we outperformed the average Lipper
competitor, placing us in the 2nd quartile of performance.
The biggest drivers of that relative outperformance were the Industrials
and Materials sectors where our stock selection proved very strong. Our best
performing Industrial stock was Motech Industries, Inc., a solar panel display
manufacturer. Motech was up 86% during the reporting period. In Materials, PT
Aneka Tambang Tbk and Anglo Platinum Ltd. drove performance.
From a country perspective Brazil and Taiwan were our best performing
countries. In both cases a mix of stock selection and country allocation boosted
results. Allocation played a more prominent role in Taiwan where our underweight
in the latter half of last year (a period where that market significantly
underperformed) helped the Fund.
Relative to the benchmark, the Morgan Stanley Capital International (MSCI)
Emerging Markets Index, the biggest drag on performance was the Energy sector,
where our lack of Russian holdings cost the Fund 162 basis points in
performance. The Fund has historically avoided Russia because of the appalling
status of minority shareholders and the extremely opaque governance structure at
its leading energy companies. In the past we have been able to compensate for
our underexposure, even with Russia's strong performance, with other holdings.
However, with such strong outperformance for the Russian energy sector in the
reporting period, we were only able to perform in line with our peers. We look
forward to improved governance conditions in the Russian energy sector; a
development which may be hastened by a correction in commodity prices.
Another underperforming sector for the Fund was Consumer Staples. Here we
were hurt by poor stock selection in which holdings such as Companhia Brasileira
de Distribuicao Grupo Pao de Acucar (a Brazilian grocer) and President Chain
Store Corp. (a collection of convenience stores in Taiwan and China) posted poor
results. CBD was hurt by a shift in consumption away from staples and to
durables (a phenomena which helped other holdings in the portfolio such as Lojas
Americanas SA) while President Chain was hurt by weak consumer spending in
Taiwan; itself a function of a deep political crisis in which the Prime Minister
narrowly avoided impeachment, as well as concerns on relations with China.
12 | OPPENHEIMER DEVELOPING MARKETS FUND
The worst performing countries were Russia, for reasons discussed earlier,
and Korea. Ssangyong Motor Co., one of Korea's auto manufacturers, was a poor
performer in the portfolio. In addition to weakening demand for autos caused by
the rise in oil prices and a slowdown in Korean spending, attempts by the
company to cut back on production were blocked by challenges from union workers.
However, Ssangyong is a solid growth story, whose recent underperformance has
led us to add to our position in the stock.
In closing, we'd like to remind shareholders that investing in foreign
markets, especially in the securities of emerging countries, poses considerable
risks, including heightened volatility, political and economic uncertainty,
currency fluctuations and higher expenses.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until August 31, 2006. In the case of Class A, Class B and Class C
shares, performance is measured from the inception of the Classes on November
18, 1996. In the case of Class N shares, performance is measured from inception
of the Class on March 1, 2001. In the case of Class Y shares, performance is
measured from inception of the Class on September 7, 2005. The Fund's
performance reflects the deduction of the maximum initial sales charge on Class
A shares, the applicable contingent deferred sales charge on Class B, Class C
and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Fund's performance is compared to the performance of the Morgan
Stanley Capital International (MSCI) Emerging Markets Index, an unmanaged
capitalization-weighted equity index of issuers located in 26 developing
markets. The MSCI Emerging Markets Index is widely recognized as a measure of
performance in developing markets. Index performance reflects the reinvestment
of income but does not consider the effect of transaction costs, and none of the
data in the graphs shows the effect of taxes. The Fund's performance reflects
the effects of the Fund's business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance, it
must be noted that the Fund's investments are not limited to the investments in
the index.
13 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class A)
MSCI Emerging Markets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing MSCI Emerging
Markets Fund (Class A) Markets Index
11/18/1996 $ 9,425 $ 10,000
11/30/1996 $ 9,331 $ 10,000
02/28/1997 $ 11,008 $ 11,162
05/31/1997 $ 11,923 $ 11,102
08/31/1997 $ 12,083 $ 10,306
11/30/1997 $ 10,641 $ 8,504
02/28/1998 $ 11,331 $ 8,831
05/31/1998 $ 11,073 $ 7,796
08/31/1998 $ 7,693 $ 5,062
11/30/1998 $ 9,091 $ 6,415
02/28/1999 $ 8,275 $ 6,247
05/31/1999 $ 10,552 $ 7,787
08/31/1999 $ 11,533 $ 8,538
11/30/1999 $ 13,617 $ 9,157
02/29/2000 $ 18,933 $ 10,485
05/31/2000 $ 16,504 $ 9,094
08/31/2000 $ 17,198 $ 8,923
11/30/2000 $ 14,677 $ 6,875
02/28/2001 $ 16,147 $ 7,352
05/31/2001 $ 15,456 $ 6,963
08/31/2001 $ 13,745 $ 6,281
11/30/2001 $ 13,309 $ 6,202
02/28/2002 $ 15,614 $ 7,010
05/31/2002 $ 15,981 $ 7,295
08/31/2002 $ 14,492 $ 6,296
11/30/2002 $ 13,920 $ 6,369
02/28/2003 $ 13,564 $ 5,925
05/31/2003 $ 15,372 $ 6,645
08/31/2003 $ 18,538 $ 7,911
11/30/2003 $ 21,310 $ 8,707
02/29/2004 $ 24,182 $ 10,064
05/31/2004 $ 22,644 $ 9,145
08/31/2004 $ 23,842 $ 9,264
11/30/2004 $ 28,941 $ 10,911
02/28/2005 $ 33,271 $ 12,401
05/31/2005 $ 32,129 $ 11,547
08/31/2005 $ 35,865 $ 12,771
11/30/2005 $ 40,879 $ 14,072
02/28/2006 $ 47,848 $ 16,476
05/31/2006 $ 44,740 $ 15,820
08/31/2006 $ 46,053 $ 16,286
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/06
1-Year 21.03% 5-Year 25.86% Since Inception (11/18/96) 16.89%
14 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class B)
MSCI Emerging Markets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing MSCI Emerging
Markets Fund (Class B) Markets Index
11/18/1996 $ 10,000 $ 10,000
11/30/1996 $ 9,900 $ 10,000
02/28/1997 $ 11,650 $ 11,162
05/31/1997 $ 12,580 $ 11,102
08/31/1997 $ 12,730 $ 10,306
11/30/1997 $ 11,190 $ 8,504
02/28/1998 $ 11,886 $ 8,831
05/31/1998 $ 11,593 $ 7,796
08/31/1998 $ 8,039 $ 5,062
11/30/1998 $ 9,492 $ 6,415
02/28/1999 $ 8,617 $ 6,247
05/31/1999 $ 10,978 $ 7,787
08/31/1999 $ 11,962 $ 8,538
11/30/1999 $ 14,101 $ 9,157
02/29/2000 $ 19,586 $ 10,485
05/31/2000 $ 17,039 $ 9,094
08/31/2000 $ 17,729 $ 8,923
11/30/2000 $ 15,096 $ 6,875
02/28/2001 $ 16,577 $ 7,352
05/31/2001 $ 15,842 $ 6,963
08/31/2001 $ 14,065 $ 6,281
11/30/2001 $ 13,593 $ 6,202
02/28/2002 $ 15,917 $ 7,010
05/31/2002 $ 16,259 $ 7,295
08/31/2002 $ 14,713 $ 6,296
11/30/2002 $ 14,119 $ 6,369
02/28/2003 $ 13,759 $ 5,925
05/31/2003 $ 15,592 $ 6,645
08/31/2003 $ 18,804 $ 7,911
11/30/2003 $ 21,616 $ 8,707
02/29/2004 $ 24,529 $ 10,064
05/31/2004 $ 22,969 $ 9,145
08/31/2004 $ 24,185 $ 9,264
11/30/2004 $ 29,356 $ 10,911
02/28/2005 $ 33,748 $ 12,401
05/31/2005 $ 32,591 $ 11,547
08/31/2005 $ 36,379 $ 12,771
11/30/2005 $ 41,466 $ 14,072
02/28/2006 $ 48,535 $ 16,476
05/31/2006 $ 45,383 $ 15,820
08/31/2006 $ 46,714 $ 16,286
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/06
1-Year 22.44% 5-Year 26.18% Since Inception (11/18/96) 17.06%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE
INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD
AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 19 FOR
FURTHER INFORMATION.
15 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class C)
MSCI Emerging Markets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing MSCI Emerging
Markets Fund (Class C) Markets Index
11/18/1996 $ 10,000 $ 10,000
11/30/1996 $ 9,900 $ 10,000
02/28/1997 $ 11,660 $ 11,162
05/31/1997 $ 12,590 $ 11,102
08/31/1997 $ 12,740 $ 10,306
11/30/1997 $ 11,190 $ 8,504
02/28/1998 $ 11,895 $ 8,831
05/31/1998 $ 11,602 $ 7,796
08/31/1998 $ 8,042 $ 5,062
11/30/1998 $ 9,497 $ 6,415
02/28/1999 $ 8,622 $ 6,247
05/31/1999 $ 10,984 $ 7,787
08/31/1999 $ 11,980 $ 8,538
11/30/1999 $ 14,109 $ 9,157
02/29/2000 $ 19,582 $ 10,485
05/31/2000 $ 17,032 $ 9,094
08/31/2000 $ 17,722 $ 8,923
11/30/2000 $ 15,087 $ 6,875
02/28/2001 $ 16,577 $ 7,352
05/31/2001 $ 15,840 $ 6,963
08/31/2001 $ 14,058 $ 6,281
11/30/2001 $ 13,585 $ 6,202
02/28/2002 $ 15,905 $ 7,010
05/31/2002 $ 16,249 $ 7,295
08/31/2002 $ 14,696 $ 6,296
11/30/2002 $ 14,097 $ 6,369
02/28/2003 $ 13,709 $ 5,925
05/31/2003 $ 15,512 $ 6,645
08/31/2003 $ 18,671 $ 7,911
11/30/2003 $ 21,415 $ 8,707
02/29/2004 $ 24,249 $ 10,064
05/31/2004 $ 22,672 $ 9,145
08/31/2004 $ 23,823 $ 9,264
11/30/2004 $ 28,864 $ 10,911
02/28/2005 $ 33,116 $ 12,401
05/31/2005 $ 31,926 $ 11,547
08/31/2005 $ 35,565 $ 12,771
11/30/2005 $ 40,464 $ 14,072
02/28/2006 $ 47,275 $ 16,476
05/31/2006 $ 44,129 $ 15,820
08/31/2006 $ 45,344 $ 16,286
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/06
1-Year 26.50% 5-Year 26.39% Since Inception (11/18/96) 16.70%
16 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class N)
MSCI Emerging Markets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing MSCI Emerging
Markets Fund (Class N) Markets Index
03/01/2001 $ 10,000 $ 10,000
05/31/2001 $ 9,522 $ 9,471
08/31/2001 $ 8,460 $ 8,543
11/30/2001 $ 8,185 $ 8,436
02/28/2002 $ 9,593 $ 9,534
05/31/2002 $ 9,820 $ 9,921
08/31/2002 $ 8,894 $ 8,563
11/30/2002 $ 8,541 $ 8,663
02/28/2003 $ 8,319 $ 8,059
05/31/2003 $ 9,423 $ 9,038
08/31/2003 $ 11,360 $ 10,759
11/30/2003 $ 13,047 $ 11,842
02/29/2004 $ 14,790 $ 13,688
05/31/2004 $ 13,833 $ 12,438
08/31/2004 $ 14,560 $ 12,599
11/30/2004 $ 17,655 $ 14,840
02/28/2005 $ 20,279 $ 16,866
05/31/2005 $ 19,561 $ 15,705
08/31/2005 $ 21,816 $ 17,369
11/30/2005 $ 24,846 $ 19,139
02/28/2006 $ 29,060 $ 22,408
05/31/2006 $ 27,145 $ 21,517
08/31/2006 $ 27,910 $ 22,151
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/06
1-Year 26.93% 5-Year 26.96% Since Inception (3/1/01) 20.52%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE
INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD
AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 19 FOR
FURTHER INFORMATION.
17 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Developing Markets Fund (Class Y)
MSCI Emerging Markets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Developing MSCI Emerging
Markets Fund (Class Y) Markets Index
09/07/2005 $ 10,000 $ 10,000
11/30/2005 $ 11,042 $ 11,019
02/28/2006 $ 12,938 $ 12,901
05/31/2006 $ 12,110 $ 12,388
08/31/2006 $ 12,478 $ 12,753
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 8/31/06
1-Year N/A 5-Year N/A Since Inception (9/7/05) 24.78%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE
INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD
AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 19 FOR
FURTHER INFORMATION.
18 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
CLASS B shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for 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.
19 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
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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 agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
20 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended August 31, 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
21 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
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exceptions described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/06) (8/31/06) AUGUST 31, 2006
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Class A Actual $1,000.00 $ 962.50 $ 6.90
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Class A Hypothetical 1,000.00 1,018.20 7.10
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 958.60 10.72
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.32 11.03
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 959.20 10.48
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.57 10.77
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 960.40 8.89
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.18 9.14
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 964.50 4.86
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.27 5.00
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended August 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ------------------------------
Class A 1.39%
- ------------------------------
Class B 2.16
- ------------------------------
Class C 2.11
- ------------------------------
Class N 1.79
- ------------------------------
Class Y 0.98
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
22 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS August 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--98.7%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--12.3%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--0.8%
Amtek Auto Ltd. 1 9,513,158 $ 59,734,496
- --------------------------------------------------------------------------------
Rico Auto Industries
Ltd. 1,2 8,990,692 13,842,980
----------------
73,577,476
- --------------------------------------------------------------------------------
AUTOMOBILES--4.5%
Bajaj Auto Ltd. 627,393 36,346,595
- --------------------------------------------------------------------------------
China Motor Corp. 6,679,250 5,055,654
- --------------------------------------------------------------------------------
Ford Otomotiv
Sanayi AS 2,922,632 20,951,482
- --------------------------------------------------------------------------------
Hyundai Motor Co. 1,012,235 85,291,829
- --------------------------------------------------------------------------------
Hyundai Motor Co.
Ltd., Preference 359,820 17,359,476
- --------------------------------------------------------------------------------
Kia Motors Corp. 4,312,985 68,294,533
- --------------------------------------------------------------------------------
Mahindra &
Mahindra Ltd. 3,990,210 55,413,629
- --------------------------------------------------------------------------------
PT Astra International
Tbk 45,562,500 55,594,564
- --------------------------------------------------------------------------------
Ssangyong Motor
Co. 1,2 12,552,839 59,414,769
----------------
403,722,531
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.3%
Danubius Hotel &
Spa Rt. 2 42,989 1,153,494
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 38,294,000 24,122,205
----------------
25,275,699
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--5.1%
Consorcio ARA,
SA de CV 6,052,000 28,172,181
- --------------------------------------------------------------------------------
Corporacion GEO
SA de CV, Series B 2 10,090,500 40,683,958
- --------------------------------------------------------------------------------
Cyrela Brazil Realty SA
Empreendimentos e
Participacoes, GDR 3 474,320 81,955,381
- --------------------------------------------------------------------------------
Gafisa SA 2 2,868,400 37,995,597
- --------------------------------------------------------------------------------
Humax Co. Ltd. 1 3,550,683 92,837,592
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
Inventec Appliances
Corp. 1 22,053,200 $ 57,853,910
- --------------------------------------------------------------------------------
LG Electronics, Inc.,
Preference 166,401 6,447,974
- --------------------------------------------------------------------------------
SARE Holding SA
de CV, Cl. B 1,2 45,037,950 50,762,331
- --------------------------------------------------------------------------------
Steinhoff
International
Holdings Ltd. 2 17,641,600 57,533,867
----------------
454,242,791
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.1%
GS Home Shopping,
Inc. 130,624 9,463,700
- --------------------------------------------------------------------------------
MEDIA--0.5%
Corporacion
Interamericana de
Entretenimiento
SA de CV 2 11,154,039 19,930,794
- --------------------------------------------------------------------------------
Television
Broadcasts Ltd. 3,084,000 17,507,294
- --------------------------------------------------------------------------------
Yedang
Entertainment
Co. Ltd. 1,2 1,887,737 7,272,471
----------------
44,710,559
- --------------------------------------------------------------------------------
MULTILINE RETAIL--0.7%
Lojas Americanas
SA, Preference 1,341,870,000 59,464,118
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--0.2%
JD Group Ltd. 1,610,192 14,863,311
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.1%
Folli-Follie SA 296,650 7,943,098
- --------------------------------------------------------------------------------
CONSUMER STAPLES--8.0%
- --------------------------------------------------------------------------------
BEVERAGES--1.5%
Companhia de
Bebidas das
Americas, ADR 238,200 9,337,440
- --------------------------------------------------------------------------------
Companhia de
Bebidas das
Americas, ADR,
Preference 948,500 42,549,710
23 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
BEVERAGES Continued
Fomento Economico
Mexicano SA de CV,
Sponsored ADR 566,000 $ 53,158,720
- --------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 1 2,606,594 12,748,701
- --------------------------------------------------------------------------------
United Breweries
Ltd. 1 7,133,890 17,729,330
----------------
135,523,901
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.1%
Companhia Brasileira
de Distribuicao
Grupo Pao de
Acucar, Sponsored
ADR 2,909,100 80,174,796
- --------------------------------------------------------------------------------
Jeronimo Martins
Sociedade Gestora
de Participacoes SA 1,600,732 28,628,811
- --------------------------------------------------------------------------------
Massmart Holdings
Ltd. 3,675,012 28,070,674
- --------------------------------------------------------------------------------
President Chain
Store Corp. 12,892,074 26,257,169
- --------------------------------------------------------------------------------
Shinsegae
Department Store
Co. 50,586 25,100,928
----------------
188,232,378
- --------------------------------------------------------------------------------
FOOD PRODUCTS--1.6%
Bunge Ltd. 354,200 19,955,628
- --------------------------------------------------------------------------------
Sadia SA,
Preference 1 33,135,000 90,101,236
- --------------------------------------------------------------------------------
Tiger Brands Ltd. 907,200 19,175,052
- --------------------------------------------------------------------------------
Uni-President
Enterprises Corp. 14,130,000 10,781,177
----------------
140,013,093
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.2%
Able C&C 1 589,454 4,384,267
- --------------------------------------------------------------------------------
Trent Ltd. 701,326 12,587,999
----------------
16,972,266
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.9%
Amorepacific Corp. 2 80,402 34,961,028
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS
Natura Cosmeticos
SA 2,950,500 $ 37,734,473
- --------------------------------------------------------------------------------
Pacific Corp. 49,072 6,355,419
----------------
79,050,920
- --------------------------------------------------------------------------------
TOBACCO--1.7%
Eastern Tobacco Co. 888,822 46,462,206
- --------------------------------------------------------------------------------
ITC Ltd. 12,240,625 50,372,401
- --------------------------------------------------------------------------------
PT Gudang Garam
Tbk 43,454,500 48,245,625
----------------
145,080,232
- --------------------------------------------------------------------------------
ENERGY--15.3%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.2%
China Oilfield
Services Ltd. 12,406,000 6,938,969
- --------------------------------------------------------------------------------
GlobalSantaFe
Corp. 1,755,900 86,425,398
- --------------------------------------------------------------------------------
Hydril Co. 2 797,529 52,198,273
- --------------------------------------------------------------------------------
Technip SA 1,174,184 67,753,824
- --------------------------------------------------------------------------------
Tenaris SA, ADR 1,782,900 65,450,259
----------------
278,766,723
- --------------------------------------------------------------------------------
OIL & GAS--12.1%
Bharat Petroleum
Corp. Ltd. 2 4,218,879 32,912,113
- --------------------------------------------------------------------------------
China Petroleum
& Chemical Corp. 117,978,000 69,851,623
- --------------------------------------------------------------------------------
China Shenhua
Energy Co. Ltd. 26,987,500 47,747,983
- --------------------------------------------------------------------------------
Det Norske
Oljeselskap ASA 2 18,370,344 31,963,585
- --------------------------------------------------------------------------------
LUKOIL, Sponsored
ADR 1,012,900 84,779,730
- --------------------------------------------------------------------------------
Oil & Natural Gas
Corp. Ltd. 798,640 20,896,617
- --------------------------------------------------------------------------------
PetroChina Co. Ltd. 38,142,000 42,794,277
- --------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR 3,369,800 302,136,268
- --------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR 680,300 54,845,786
24 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
OIL & GAS Continued
Reliance Industries
Ltd. 4,130,963 $ 99,188,385
- --------------------------------------------------------------------------------
S-Oil Corp. 839,750 57,392,671
- --------------------------------------------------------------------------------
S-Oil Corp.,
Preference 215,948 10,895,119
- --------------------------------------------------------------------------------
Surgutneftegaz OJSC,
Sponsored ADR 1,734,227 128,315,456
- --------------------------------------------------------------------------------
Tupras-Turkiye Petrol
Rafinerileri AS 3,109,200 56,783,710
- --------------------------------------------------------------------------------
Yanzhou Coal Mining
Co. Ltd. 44,961,000 31,738,197
----------------
1,072,241,520
- --------------------------------------------------------------------------------
FINANCIALS--18.5%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--0.8%
Korea Investment
Holdings Co. Ltd. 830,850 33,386,731
- --------------------------------------------------------------------------------
Mirae Asset Securities
Co. Ltd. 572,960 36,059,586
----------------
69,446,317
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--10.7%
Banco Bradesco SA,
Preference 2,254,256 73,873,147
- --------------------------------------------------------------------------------
Banco
Latinoamericano de
Exportaciones SA,
Cl. E 1 3,299,385 54,307,877
- --------------------------------------------------------------------------------
Banco Nossa Caixa
SA 1,360,500 27,920,709
- --------------------------------------------------------------------------------
Bank Hapoalim Ltd. 10,467,391 46,055,561
- --------------------------------------------------------------------------------
Bank Leumi
Le-Israel 12,956,600 46,205,740
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 3 2,675,100 20,999,535
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 4,228,723 33,195,476
- --------------------------------------------------------------------------------
Daegu Bank 1,667,800 27,932,570
- --------------------------------------------------------------------------------
Grupo Financiero
Banorte SA de CV 4,258,300 12,463,184
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Grupo Financiero
Inbursa SA de CV 23,827,500 $ 38,100,594
- --------------------------------------------------------------------------------
Hana Financial
Group, Inc. 816,033 35,186,277
- --------------------------------------------------------------------------------
ICICI Bank Ltd.,
Sponsored ADR 2,300,200 61,392,338
- --------------------------------------------------------------------------------
Israel Discount
Bank, Cl. A 2 13,230,853 21,600,898
- --------------------------------------------------------------------------------
Jeonbuk Bank 1 2,466,548 17,960,924
- --------------------------------------------------------------------------------
Kookmin Bank,
Sponsored ADR 635,100 51,176,358
- --------------------------------------------------------------------------------
Orszagos
Takarekpenztar es
Kereskedelmi Bank
plc 2,279,500 65,909,726
- --------------------------------------------------------------------------------
PT Bank Mandiri 240,263,500 55,463,708
- --------------------------------------------------------------------------------
Shinhan Financial
Group Co. Ltd. 672,490 30,132,853
- --------------------------------------------------------------------------------
Standard Bank
Group Ltd. 2,491,736 26,878,976
- --------------------------------------------------------------------------------
TMB Bank Public
Co. Ltd. 2 582,693,189 50,547,626
- --------------------------------------------------------------------------------
Turkiye Is Bankasi,
Cl. C 5,414,300 31,235,635
- --------------------------------------------------------------------------------
Turkiye Vakiflar
Bankasi TAO, Cl. D 14,841,200 68,394,961
- --------------------------------------------------------------------------------
Woori Finance
Holdings Co. Ltd. 2,380,110 46,558,452
----------------
943,493,125
- --------------------------------------------------------------------------------
CONSUMER FINANCE--0.3%
Kiatnakin Bank
Public Co. Ltd. 17,401,420 13,196,926
- --------------------------------------------------------------------------------
Tisco Bank Public
Co. Ltd. 24,094,980 13,280,059
----------------
26,476,985
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.2%
Fubon Financial
Holding Co. Ltd. 109,057,000 81,221,300
- --------------------------------------------------------------------------------
Fubon Financial
Holding Co. Ltd.,
GDR 1,624,400 12,426,660
25 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Haci Omer Sabanci
Holding AS 21,635,376 $ 81,980,158
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR 17,834,250 17,388,394
----------------
193,016,512
- --------------------------------------------------------------------------------
INSURANCE--1.8%
Aksigorta AS 12,983,810 47,424,990
- --------------------------------------------------------------------------------
Anadolu Anonim
Turk Sigorta Sirketi 1,691,866 2,887,735
- --------------------------------------------------------------------------------
Cathay Financial
Holding Co. Ltd. 43,506,642 83,187,202
- --------------------------------------------------------------------------------
Liberty Group Ltd. 2,228,783 21,929,495
- --------------------------------------------------------------------------------
Shin Kong Financial
Holding Co. Ltd. 9,336,411 8,088,633
----------------
163,518,055
- --------------------------------------------------------------------------------
REAL ESTATE--0.3%
Solidere, GDR 3 1,557,045 28,338,219
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--1.2%
Medinet Nasr for
Housing &
Development Co. 1 1,532,459 20,125,707
- --------------------------------------------------------------------------------
Midland Holdings
Ltd. 35,704,000 15,884,257
- --------------------------------------------------------------------------------
SM Prime Holdings,
Inc. 443,971,755 69,042,852
----------------
105,052,816
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.2%
Housing
Development
Finance Corp. Ltd. 3,839,500 108,097,581
- --------------------------------------------------------------------------------
HEALTH CARE--2.0%
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.7%
Diagnosticos da
America 1,2 3,273,900 63,859,374
- --------------------------------------------------------------------------------
PHARMACEUTICALS--1.3%
Divi's Laboratories
Ltd. 1 788,816 30,371,153
- --------------------------------------------------------------------------------
Dr. Reddy's
Laboratories Ltd. 328,368 5,097,166
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PHARMACEUTICALS Continued
Ranbaxy
Laboratories Ltd. 2,226,116 $ 19,455,493
- --------------------------------------------------------------------------------
Teva Pharmaceutical
Industries Ltd.,
Sponsored ADR 1,757,000 61,073,320
----------------
115,997,132
- --------------------------------------------------------------------------------
INDUSTRIALS--9.1%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.8%
Bharat Electronics
Ltd. 818,900 20,393,751
- --------------------------------------------------------------------------------
Elbit Systems Ltd. 157,177 4,518,029
- --------------------------------------------------------------------------------
Empresa Brasileira
de Aeronautica SA 4,787,100 46,397,359
----------------
71,309,139
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--3.6%
Aveng Ltd. 2,274,805 8,418,197
- --------------------------------------------------------------------------------
Continental
Engineering Corp. 14,736,210 7,794,448
- --------------------------------------------------------------------------------
Empresas ICA
SA de CV 2 14,452,483 49,000,671
- --------------------------------------------------------------------------------
GS Engineering &
Construction Corp. 324,560 22,079,528
- --------------------------------------------------------------------------------
Hyundai
Development Co. 556,520 22,692,789
- --------------------------------------------------------------------------------
Hyundai Engineering
& Construction Co.
Ltd. 2 1,069,542 56,520,060
- --------------------------------------------------------------------------------
Impulsora del
Desarrollo y el
Empleo en America
Latina SA de CV 2 32,277,200 31,824,820
- --------------------------------------------------------------------------------
Joongang
Construction
Co. Ltd. 325,260 4,710,395
- --------------------------------------------------------------------------------
Kyeryong
Construction
Industrial Co. Ltd. 1 585,682 18,399,663
- --------------------------------------------------------------------------------
Larsen & Toubro
Ltd. 1,877,531 96,983,241
26 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING Continued
Orascom
Construction
Industries 112,200 $ 4,711,266
----------------
323,135,078
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.8%
Bharat Heavy
Electricals Ltd. 1,129,247 54,866,820
- --------------------------------------------------------------------------------
Motech Industries,
Inc. 2 531,000 13,090,785
- --------------------------------------------------------------------------------
Ormat Industries
Ltd. 589,662 5,865,557
----------------
73,823,162
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.1%
Empresas Copec SA 412,827 3,853,561
- --------------------------------------------------------------------------------
Far Eastern Textile
Ltd. 17,434,880 12,242,814
- --------------------------------------------------------------------------------
Keppel Corp. Ltd. 4,566,000 43,520,254
- --------------------------------------------------------------------------------
Koc Holding AS 2 19,152,936 71,266,130
- --------------------------------------------------------------------------------
LG Corp. 609,490 18,092,373
- --------------------------------------------------------------------------------
Murray & Roberts
Holdings Ltd. 8,101,300 32,730,824
----------------
181,705,956
- --------------------------------------------------------------------------------
MACHINERY--0.3%
SembCorp Marine
Ltd. 11,840,000 26,031,072
- --------------------------------------------------------------------------------
ROAD & RAIL--1.4%
All America Latina
Logistica 1,331,820 113,304,090
- --------------------------------------------------------------------------------
All America Latina
Logistica, GDR 4 118,900 10,274,149
----------------
123,578,239
- --------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.1%
Gateway Distriparks
Ltd. 2,828,000 10,504,347
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--14.8%
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.1%
High Tech Computer
Corp. 3,523,280 88,894,636
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS Continued
Inventec Co. Ltd. 68,670,160 $ 41,749,220
- --------------------------------------------------------------------------------
Lite-On Technology
Corp. 2 41,931,075 52,068,895
- --------------------------------------------------------------------------------
Mitac International
Corp. 30,230,211 30,784,797
- --------------------------------------------------------------------------------
Quanta Computer,
Inc. 44,834,761 64,329,054
----------------
277,826,602
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.6%
Hon Hai Precision
Industry Co. Ltd. 25,051,200 141,261,155
- --------------------------------------------------------------------------------
Merry Electronics
Co. Ltd. 1 12,873,090 45,784,552
- --------------------------------------------------------------------------------
Synnex Technology
International Corp. 31,548,088 28,003,106
- --------------------------------------------------------------------------------
Varitronix
International Ltd. 1 25,033,000 15,128,111
----------------
230,176,924
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.2%
NHN Corp. 2 180,117 17,013,028
- --------------------------------------------------------------------------------
Tech Mahindra
Ltd. 2 36,412 421,318
----------------
17,434,346
- --------------------------------------------------------------------------------
IT SERVICES--3.6%
HCL Technologies
Ltd. 4,421,393 55,259,099
- --------------------------------------------------------------------------------
Infosys Technologies
Ltd. 3,033,200 118,282,070
- --------------------------------------------------------------------------------
Infosys Technologies
Ltd., Sponsored
ADR 1,157,512 51,914,413
- --------------------------------------------------------------------------------
Tata Consultancy
Services Ltd. 4,398,746 94,341,215
----------------
319,796,797
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.3%
Mtekvision Co. Ltd. 19,279 411,130
- --------------------------------------------------------------------------------
Powerchip
Semiconductor
Corp. 32,018,797 21,169,694
27 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT Continued
Samsung
Electronics Co. 195,328 $ 131,393,506
- --------------------------------------------------------------------------------
Sunplus Technology
Co. Ltd. 1 53,455,983 51,267,954
- --------------------------------------------------------------------------------
Taiwan
Semiconductor
Manufacturing Co.
Ltd. 21,761,000 38,433,089
- --------------------------------------------------------------------------------
Taiwan
Semiconductor
Manufacturing Co.
Ltd., ADR 11,799,400 109,852,414
- --------------------------------------------------------------------------------
Telechips, Inc. 1 655,280 14,090,002
- --------------------------------------------------------------------------------
United
Microelectronics
Corp. 181,412,798 99,263,763
----------------
465,881,552
- --------------------------------------------------------------------------------
MATERIALS--8.6%
- --------------------------------------------------------------------------------
CHEMICALS--0.4%
Finetec Corp. 1 1,676,105 26,422,589
- --------------------------------------------------------------------------------
Taiwan Fertilizer
Co. Ltd. 3,098,000 4,661,621
----------------
31,084,210
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.5%
Cemex SAB,
Sponsored ADR 1,689,264 48,802,837
- --------------------------------------------------------------------------------
METALS & MINING--7.3%
Anglo Platinum Ltd. 1,250,261 140,015,369
- --------------------------------------------------------------------------------
AngloGold Ashanti
Ltd., Sponsored
ADR 2,931,700 135,239,321
- --------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, ADR 1,053,700 22,591,328
- --------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, Sponsored
ADR 2,941,400 52,945,200
- --------------------------------------------------------------------------------
Harmony Gold
Mining Co. Ltd.,
Sponsored ADR 2 1,858,100 25,548,875
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
Highland Gold
Mining Ltd. 1,2 8,931,119 $ 32,139,785
- --------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd. 459,510 85,023,680
- --------------------------------------------------------------------------------
Inco Ltd. 857,200 66,843,452
- --------------------------------------------------------------------------------
PT Aneka Tambang
Tbk 1 141,942,900 84,257,630
----------------
644,604,640
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.4%
Aracruz Celulose
SA, Sponsored ADR 708,700 36,802,791
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--9.0%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.1%
PT Indosat Tbk 203,451,500 98,404,595
- --------------------------------------------------------------------------------
PT Telekomunikasi
Indonesia Tbk 117,957,000 102,876,271
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA 2,429,585 61,816,167
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA,
Preference 864,100 11,244,585
----------------
274,341,618
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--5.9%
Advanced Info
Service Public Co.
Ltd. 9,667,700 23,281,715
- --------------------------------------------------------------------------------
America Movil SA
de CV, Series L 4,847,200 180,849,032
- --------------------------------------------------------------------------------
Bharti Airtel Ltd. 2 7,820,593 69,080,364
- --------------------------------------------------------------------------------
Far EasTone
Telecommunications
Co. Ltd. 20,507,000 22,192,306
- --------------------------------------------------------------------------------
Hutchison
Telecommunications
International Ltd. 2 17,286,000 30,494,573
- --------------------------------------------------------------------------------
Orascom Telecom
Holding SAE 2,030,402 109,981,870
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd.,
ADR 902,800 19,771,320
- --------------------------------------------------------------------------------
Turkcell Iletisim
Hizmetleri AS 1,293,856 6,006,842
28 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
Vodafone Egypt
Telecommunications
Co. SAE 4,051,475 $ 60,337,963
----------------
521,995,985
- --------------------------------------------------------------------------------
UTILITIES--1.1%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.5%
Eletropaulo
Metropolitana SA,
Preference 2 913,058,900 40,329,607
- --------------------------------------------------------------------------------
Reliance Energy Ltd. 375,822 3,540,973
----------------
43,870,580
- --------------------------------------------------------------------------------
GAS UTILITIES--0.6%
Gail India Ltd. 9,409,920 52,585,144
- --------------------------------------------------------------------------------
Reliance Natural
Resources 2 5,010,963 2,148,248
----------------
54,733,392
----------------
Total Common
Stocks
(Cost $7,041,011,164) 8,743,879,699
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd., 2% Sec.
Debs., 7/7/10 [INR]
(Cost $743,366) 32,425,500 $ 600,709
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Trent Ltd. Wts., Exp.
1/7/10 2 (Cost $0) 63,757 369,924
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.2%
- --------------------------------------------------------------------------------
Undivided interest of 2.55% in joint repurchase
agreement (Principal Amount/Value $886,796,000,
with a maturity value of $886,924,585) with
UBS Warburg LLC, 5.22%, dated 8/31/06,
to be repurchased at $22,640,282 on
9/1/06, collateralized by Federal
National Mortgage Assn., 5%-5.50%,
9/1/35-12/1/35, with a value of
$906,809,462
(Cost $22,637,000) $ 22,637,000 22,637,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $7,064,391,530) 98.9% 8,767,487,332
- --------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES 1.1 94,927,158
--------------------------------
NET ASSETS 100.0% $ 8,862,414,490
================================
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. Represents ownership of at least 5% of the voting securities of the issuer,
and is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended August 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2005 ADDITIONS REDUCTIONS AUGUST 31, 2006
- ----------------------------------------------------------------------------------------------------------------------------
Able C&C 537,778 124,981 73,305 589,454
Aksigorta AS* 8,762,905 6,491,905** 2,271,000 12,983,810
Amtek Auto Ltd. 7,296,853 2,304,705 88,400 9,513,158
Banco Latinoamericano de Exportaciones SA, Cl. E 3,805,885 53,800 560,300 3,299,385
Coca-Cola Femsa SA de CV, Sponsored ADR 1,360,000 -- 1,360,000 --
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar, Sponsored ADR* 2,892,100 311,400 294,400 2,909,100
Corporacion GEO SA de CV, Series B* 28,915,000 -- 18,824,500 10,090,500
Courts (Singapore) Ltd. 11,425,000 -- 11,425,000 --
Diagnosticos da America 2,139,100 1,976,600** 841,800 3,273,900
29 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
SHARES GROSS GROSS SHARES
AUGUST 31, 2005 ADDITIONS REDUCTIONS AUGUST 31, 2006
- -------------------------------------------------------------------------------------------------------------------
Divi's Laboratories Ltd. 796,149 -- 7,333 788,816
Finetec Corp. 1,538,406 388,809 251,110 1,676,105
GS Home Shopping, Inc.* 698,292 -- 567,668 130,624
Highland Gold Mining Ltd. -- 8,931,119 -- 8,931,119
Humax Co Ltd. 1,272,452 2,493,233 215,002 3,550,683
Inventec Appliances Corp. -- 22,053,200** -- 22,053,200
Jeonbuk Bank -- 2,477,728*** 11,180 2,466,548
Kiatnakin Bank plc* 25,718,220 2,408,200 10,725,000 17,401,420
Kyeryong Construction Industrial Co. Ltd. 657,218 -- 71,536 585,682
Lojas Americanas SA, Preference* 2,226,500,000 390,164,000 1,274,794,000 1,341,870,000
Medinet Nasr for Housing & Development Co. 1,316,496 228,063 12,100 1,532,459
Merry Electronics Co. Ltd. -- 12,873,090** -- 12,873,090
Mtekvision Co. Ltd.* 823,668 94,289 898,678 19,279
PT Aneka Tambang Tbk 178,972,100 -- 37,029,200 141,942,900
Rico Auto Industries Ltd. -- 8,990,692 -- 8,990,692
Sadia SA, Preference 16,547,000 20,763,000 4,175,000 33,135,000
SARE Holding SA de CV, Cl. B 1,174,416 50,643,925 6,780,391 45,037,950
Sinotrans Ltd. 91,900,000 -- 91,900,000 --
Ssangyong Motor Co. 7,796,210 4,853,709 97,080 12,552,839
Sunplus Technology Co. Ltd. -- 53,455,983** -- 53,455,983
Telechips, Inc. 608,145 55,376 8,241 655,280
United Breweries Holdings Ltd. 1,465,724 1,303,297** 162,427 2,606,594
United Breweries Ltd. 719,989 -- 719,989** --
United Breweries Ltd. -- 7,133,890** -- 7,133,890
Varitronix International Ltd. 11,577,000 17,968,000 4,512,000 25,033,000
Yedang Entertainment Co. Ltd. -- 2,651,447 763,710 1,887,737
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------
Able C&C $ 4,384,267 $ 169,361 $ (2,779,116)
Aksigorta AS* --* 1,533,370 14,464,637
Amtek Auto Ltd. 59,734,496 295,112 (84,640)
Banco Latinoamericano de Exportaciones SA, Cl. E 54,307,877 6,304,365 (3,866,355)
Coca-Cola Femsa SA de CV, Sponsored ADR -- -- 8,232,349
Companhia Brasileira de Distribuicao Grupo Pao de Acucar,
Sponsored ADR* --* 796,384 (475,849)
Corporacion GEO SA de CV, Series B* --* -- 53,326,839
Courts (Singapore) Ltd. -- -- (42,532)
Diagnosticos da America 63,859,374 -- (3,026,240)
Divi's Laboratories Ltd. 30,371,153 169,565 (3,105)
Finetec Corp. 26,422,589 196,259 267,252
GS Home Shopping, Inc.* --* 1,354,360 18,745,780
Highland Gold Mining Ltd. 32,139,785 -- --
Humax Co Ltd. 92,837,592 288,509 (1,878,038)
Inventec Appliances Corp. 57,853,910 2,271,400 --
Jeonbuk Bank 17,960,924 168,841 (13,030)
Kiatnakin Bank plc* --* 1,146,086 (1,673,573)
Kyeryong Construction Industrial Co. Ltd. 18,399,663 421,850 310,428
30 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------
Lojas Americanas SA, Preference* $ --* $ 1,770,523 $ 38,405,700
Medinet Nasr for Housing & Development Co. 20,125,707 736,147 62,731
Merry Electronics Co. Ltd. 45,784,552 716,996 --
Mtekvision Co. Ltd.* --* 749,461 (3,831,606)
PT Aneka Tambang Tbk 84,257,630 1,933,645 4,830,170
Rico Auto Industries Ltd. 13,842,980 -- --
Sadia SA, Preference 90,101,236 3,191,227 (3,122,551)
SARE Holding SA de CV, Cl. B 50,762,331 -- (991,012)
Sinotrans Ltd. -- 860,240 (4,725,198)
Ssangyong Motor Co. 59,414,769 -- (89,623)
Sunplus Technology Co. Ltd. 51,267,954 2,476,237 --
Telechips, Inc. 14,090,002 84,971 (4,476)
United Breweries Holdings Ltd. 12,748,701 14,339 1,471,001
United Breweries Ltd. -- 24,376 26,490
United Breweries Ltd. 17,729,330 -- --
Varitronix International Ltd. 15,128,111 1,275,680 (1,053,979)
Yedang Entertainment Co. Ltd. 7,272,471 -- (9,278,098)
------------------------------------------------------
$ 940,797,404 $ 28,949,304 $ 103,204,356
======================================================
* No longer an affiliate as of August 31, 2006.
** Result of a corporate action.
*** All or a portion of the transactions were the result of a stock split or
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 $131,293,135 or 1.48% of the Fund's net
assets as of August 31, 2006.
4. Illiquid or restricted security. The aggregate value of illiquid securities
as of August 31, 2006 was $10,274,149, which represents 0.12% of the Fund's net
assets. In addition, the Fund has restricted currency of $7,114,229, which
represents 0.08% of the Fund's net assets. See Note 6 of accompanying Notes.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- -------------------------------------------------------------------------------------------------------------------
Brazil $ 1,357,653,311 15.5%
India 1,267,478,613 14.5
Taiwan 1,157,716,008 13.2
Korea, Republic of South 1,115,461,910 12.7
South Africa 595,427,641 6.8
Mexico 553,749,122 6.3
Indonesia 444,842,393 5.1
Turkey 404,320,037 4.6
Egypt 295,814,023 3.4
Russia 213,095,186 2.4
Israel 185,319,105 2.1
United States 161,260,671 1.8
Hong Kong 146,037,451 1.7
Thailand 100,306,326 1.1
Philippines 93,165,057 1.1
China 86,425,149 1.0
Singapore 69,551,326 0.8
France 67,753,824 0.8
Hungary 67,063,220 0.8
31 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
GEOGRAPHIC HOLDINGS VALUE PERCENT
- -------------------------------------------------------------------------------------------------------------------
Canada $ 66,843,452 0.8%
Luxembourg 65,450,259 0.7
Panama 54,307,877 0.6
Bermuda 35,083,739 0.4
Jersey, Channel Islands 32,139,785 0.4
Norway 31,963,585 0.4
Cayman Islands 30,494,573 0.3
Portugal 28,628,811 0.3
Lebanon 28,338,219 0.3
Greece 7,943,098 0.1
Chile 3,853,561 0.0
------------------------------
Total $ 8,767,487,332 100.0%
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement
of investments:
Unaffiliated companies (cost $6,246,859,275) $ 7,826,689,928
Affiliated companies (cost $817,532,255) 940,797,404
----------------
8,767,487,332
- --------------------------------------------------------------------------------
Cash 7,852,578
- --------------------------------------------------------------------------------
Cash--foreign currencies (cost $62,157,906) 62,137,439
- --------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 370
- --------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 41,587,366
Interest and dividends 14,403,949
Shares of beneficial interest sold 12,413,725
Other 77,986
----------------
Total assets 8,905,960,745
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 16,409
- --------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 18,361,525
Investments purchased 10,075,562
Foreign capital gains tax 6,495,394
Distribution and service plan fees 3,494,729
Custodian fees 2,284,226
Transfer and shareholder servicing agent fees 1,320,613
Shareholder communications 785,757
Trustees' compensation 560,870
Other 151,170
----------------
Total liabilities 43,546,255
- --------------------------------------------------------------------------------
NET ASSETS $ 8,862,414,490
================
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $ 6,434,982,785
- --------------------------------------------------------------------------------
Accumulated net investment income 21,332,483
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions 709,385,166
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies 1,696,714,056
----------------
NET ASSETS $ 8,862,414,490
================
33 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $7,069,819,065 and 184,943,427
shares of beneficial interest outstanding) $ 38.23
Maximum offering price per share (net asset
value plus sales charge of 5.75% of offering price) $ 40.56
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $308,973,068
and 8,184,634 shares of beneficial interest outstanding) $ 37.75
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $945,369,222
and 25,326,382 shares of beneficial interest outstanding) $ 37.33
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $240,672,689
and 6,401,789 shares of beneficial interest outstanding) $ 37.59
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $297,580,446
and 7,774,642 shares of beneficial interest outstanding) $ 38.28
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign
withholding taxes of $16,402,216) $ 161,986,388
Affiliated companies (net of foreign
withholding taxes of $3,086,739) 28,949,304
- --------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $4) 8,891,113
- --------------------------------------------------------------------------------
Other income 13,931
----------------
Total investment income 199,840,736
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 68,374,830
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 16,002,677
Class B 3,125,684
Class C 8,303,648
Class N 949,368
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 10,205,457
Class B 503,245
Class C 1,031,598
Class N 583,615
Class Y 11,004
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 965,604
Class B 107,451
Class C 154,778
Class N 12,340
Class Y 982
- --------------------------------------------------------------------------------
Custodian fees and expenses 7,339,017
- --------------------------------------------------------------------------------
Trustees' compensation 521,234
- --------------------------------------------------------------------------------
Other 313,922
----------------
Total expenses 118,506,454
Less reduction to custodian expenses (49,891)
Less waivers and reimbursements of expenses (35,719)
----------------
Net expenses 118,420,844
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 81,419,892
35 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies (net of foreign
capital gains tax of $5,778,185) $ 779,615,936
Affiliated companies 103,204,356
Foreign currency transactions 62,973,234
Net increase from payment by affiliate 1,146,863
----------------
Net realized gain 946,940,389
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (net of foreign capital gains tax of $863,035) 420,895,694
Translation of assets and liabilities
denominated in foreign currencies (11,863,318)
----------------
Net change in unrealized appreciation 409,032,376
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,437,392,657
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2006 2005
- -------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $ 81,419,892 $ 61,764,538
- -------------------------------------------------------------------------------------------------------
Net realized gain 946,940,389 160,898,642
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 409,032,376 952,477,007
----------------------------------
Net increase in net assets resulting from operations 1,437,392,657 1,175,140,187
- -------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (68,674,628) (31,307,183)
Class B (1,912,990) (879,176)
Class C (5,631,498) (1,898,747)
Class N (1,612,601) (545,843)
Class Y (1,210,164) --
- -------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (168,966,879) (10,889,372)
Class B (8,946,174) (742,531)
Class C (20,858,379) (1,173,811)
Class N (4,578,511) (217,007)
Class Y (2,421,023) --
- -------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial
interest transactions:
Class A 2,007,139,730 1,608,133,391
Class B 32,982,481 42,129,047
Class C 385,516,073 173,879,187
Class N 119,755,258 53,161,881
Class Y 288,912,376 --
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
Total increase 3,986,885,728 3,004,790,023
- -------------------------------------------------------------------------------------------------------
Beginning of period 4,875,528,762 1,870,738,739
----------------------------------
End of period (including accumulated net investment income
of $21,332,483 and $20,945,106, respectively) $ 8,862,414,490 $ 4,875,528,762
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 31.11 $ 21.09 $ 16.92 $ 13.43 $ 12.93
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .55 1 .48 .19 .25
Net realized and unrealized gain 8.26 9.97 4.31 3.50 .45
-------------------------------------------------------------------------------
Total from investment operations 8.68 10.52 4.79 3.69 .70
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.45) (.37) (.62) (.20) (.20)
Distributions from net realized gain (1.11) (.13) -- -- --
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.56) (.50) (.62) (.20) (.20)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.23 $ 31.11 $ 21.09 $ 16.92 $ 13.43
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 28.41% 50.42% 28.61% 27.93% 5.44%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 7,069,819 $ 4,104,558 $ 1,549,854 $ 588,450 $ 337,405
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 6,540,507 $ 2,739,224 $ 1,145,452 $ 374,841 $ 257,746
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.11% 2.01% 1.64% 1.42% 1.91%
Total expenses 1.37% 1.43% 1.52% 1.81% 1.81%
Expenses after payments and waivers
and reduction to custodian expenses 1.37% 1.43% 1.52% 1.76% 1.77%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 65% 28% 15% 6% 10%
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.
38 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.78 $ 20.87 $ 16.79 $ 13.32 $ 12.82
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 1 .31 1 .12 .09 .15
Net realized and unrealized gain 8.21 9.88 4.46 3.47 .44
-------------------------------------------------------------------------------
Total from investment operations 8.32 10.19 4.58 3.56 .59
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.24) (.15) (.50) (.09) (.09)
Distributions from net realized gain (1.11) (.13) -- -- --
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.35) (.28) (.50) (.09) (.09)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.75 $ 30.78 $ 20.87 $ 16.79 $ 13.32
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 27.44% 49.14% 27.50% 26.98% 4.61%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 308,973 $ 222,723 $ 119,749 $ 84,705 $ 63,005
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 313,463 $ 169,763 $ 117,271 $ 62,676 $ 54,744
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.30% 1.15% 0.61% 0.66% 1.14%
Total expenses 2.14% 2.24% 2.41% 2.67% 2.58%
Expenses after payments and waivers
and reduction to custodian expenses 2.14% 2.24% 2.41% 2.52% 2.54%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 65% 28% 15% 6% 10%
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.
39 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.49 $ 20.70 $ 16.67 $ 13.25 $ 12.78
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .15 1 .34 1 .31 .10 .17
Net realized and unrealized gain 8.10 9.79 4.25 3.44 .41
-------------------------------------------------------------------------------
Total from investment operations 8.25 10.13 4.56 3.54 .58
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.21) (.53) (.12) (.11)
Distributions from net realized gain (1.11) (.13) -- -- --
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.41) (.34) (.53) (.12) (.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.33 $ 30.49 $ 20.70 $ 16.67 $ 13.25
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 27.50% 49.29% 27.60% 27.05% 4.54%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 945,369 $ 450,012 $ 175,025 $ 77,081 $ 46,722
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 832,650 $ 294,791 $ 145,460 $ 52,236 $ 33,334
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.42% 1.28% 0.83% 0.66% 1.15%
Total expenses 2.09% 2.17% 2.31% 2.57% 2.57%
Expenses after payments and waivers
and reduction to custodian expenses 2.09% 2.17% 2.31% 2.52% 2.53%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 65% 28% 15% 6% 10%
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.
40 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS N YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.67 $ 20.84 $ 16.77 $ 13.36 $ 12.91
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 1 .45 1 .45 .22 .32
Net realized and unrealized gain 8.12 9.83 4.22 3.41 .34
-------------------------------------------------------------------------------
Total from investment operations 8.42 10.28 4.67 3.63 .66
- --------------------------------------------------------------------------------------------------------------------------------
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 $ 37.59 $ 30.67 $ 20.84 $ 16.77 $ 13.36
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 27.93% 49.84% 28.16% 27.73% 5.13%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 240,673 $ 98,236 $ 26,110 $ 8,709 $ 1,741
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 194,085 $ 57,727 $ 18,770 $ 4,196 $ 686
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.81% 1.67% 1.31% 1.27% 1.68%
Total expenses 1.75% 1.82% 1.99% 2.08% 2.04%
Expenses after payments and waivers
and reduction to custodian expenses 1.73% 1.80% 1.88% 1.99% 2.00%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 65% 28% 15% 6% 10%
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.
41 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y PERIOD ENDED AUGUST 31, 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 32.15
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .65
Net realized and unrealized gain 7.15
----------
Total from investment operations 7.80
- --------------------------------------------------------------------------------
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 $ 38.28
==========
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 24.78%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 297,580
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 159,042
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.76%
Total expenses 0.97%
Expenses after payments and waivers
and reduction to custodian expenses 0.97%
- --------------------------------------------------------------------------------
Portfolio turnover rate 65%
1. For the period from September 7, 2005 (inception of offering) to August 31,
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.
42 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Developing Markets Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to aggressively seek
capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).
The Fund offers Class A, Class B, Class C, 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(R) 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
43 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Securities
(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.
44 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
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.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
------------------------------------------------------------------------
$299,150,456 $541,645,449 $9,897,244 $1,597,062,384
1. The Fund had $9,897,244 of post-October foreign currency losses which were
deferred.
2. During the fiscal year ended August 31, 2006, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended August 31, 2005, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2006. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL INCOME ON INVESTMENTS 4
---------------------------------------------------
$160,564,322 $1,990,634 $158,573,688
4. $160,564,322, including $120,249,881 of long-term capital gain, was
distributed in connection with Fund share redemptions.
45 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The tax character of distributions paid during the years ended August 31, 2006
and August 31, 2005 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005
-----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 145,815,535 $ 34,630,949
Long-term capital gain 138,997,312 13,022,721
--------------------------------
Total $ 284,812,847 $ 47,653,670
================================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 7,164,042,832
Federal tax cost of other investments 55,071,045
----------------
Total federal tax cost $ 7,219,113,877
================
Gross unrealized appreciation $ 2,039,518,335
Gross unrealized depreciation (442,455,951)
----------------
Net unrealized appreciation $ 1,597,062,384
================
Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended August
31, 2006, the Fund's projected benefit obligations were increased by $361,563
and payments of $21,653 were made to retired trustees, resulting in an
accumulated liability of $463,502 as of August 31, 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
46 | OPPENHEIMER DEVELOPING MARKETS FUND
will not materially affect the Fund's assets, liabilities or net investment
income per share. Amounts will be deferred until distributed in accordance to
the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, 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. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
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.
47 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS 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:
YEAR ENDED AUGUST 31, 2006 1 YEAR ENDED AUGUST 31, 2005
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
CLASS A
Sold 116,245,460 $ 4,343,069,164 88,754,718 $ 2,427,698,410
Dividends and/or
distributions reinvested 5,748,226 200,498,088 1,371,503 34,603,027
Redeemed (68,996,408) (2,536,427,522) 2 (31,652,270) (854,168,046) 3
------------------------------------------------------------------------
Net increase 52,997,278 $ 2,007,139,730 58,473,951 $ 1,608,133,391
========================================================================
- ---------------------------------------------------------------------------------------------------------
CLASS B
Sold 3,502,775 $ 127,972,810 2,990,642 $ 82,326,626
Dividends and/or
distributions reinvested 273,758 9,482,971 57,208 1,437,052
Redeemed (2,826,769) (104,473,300) 2 (1,550,934) (41,634,631) 3
------------------------------------------------------------------------
Net increase 949,764 $ 32,982,481 1,496,916 $ 42,129,047
========================================================================
- ---------------------------------------------------------------------------------------------------------
CLASS C
Sold 15,529,886 $ 567,774,372 8,093,292 $ 221,658,558
Dividends and/or
distributions reinvested 599,503 20,526,987 103,479 2,573,527
Redeemed (5,562,089) (202,785,286) 2 (1,891,282) (50,352,898) 3
------------------------------------------------------------------------
Net increase 10,567,300 $ 385,516,073 6,305,489 $ 173,879,187
========================================================================
- ---------------------------------------------------------------------------------------------------------
CLASS N
Sold 5,347,732 $ 199,082,912 2,555,275 $ 69,740,342
Dividends and/or
distributions reinvested 172,439 5,930,182 30,025 749,123
Redeemed (2,321,584) (85,257,836) 2 (634,917) (17,327,584) 3
------------------------------------------------------------------------
Net increase 3,198,587 $ 119,755,258 1,950,383 $ 53,161,881
========================================================================
- ---------------------------------------------------------------------------------------------------------
CLASS Y
Sold 9,611,236 $ 359,268,212 -- $ --
Dividends and/or
distributions reinvested 53,371 1,858,372 -- --
Redeemed (1,889,965) (72,214,208) 2 -- --
------------------------------------------------------------------------
Net increase 7,774,642 $ 288,912,376 -- $ --
========================================================================
1. For the year ended August 31, 2006, for Class A, Class B, Class C and Class N
shares and for the period from September 7, 2005 (inception of offering) to
August 31, 2006, for Class Y shares.
2. Net of redemption fees of $151,090, $7,241, $19,235, $4,484 and $3,674 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.
48 | 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 year ended August 31, 2006, were as
follows:
PURCHASES SALES
---------------------------------------------------------------
Investment securities $7,632,346,894 $4,955,545,776
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
average annual rate as shown in the following table:
FEE SCHEDULE AUG. 31, 2005 TO DEC. 31, 2005 FEE SCHEDULE EFFECTIVE JAN. 1, 2006
- ------------------------------------------- ---------------------------------------------
Up to $250 million of net assets 1.00% Up to $250 million of net assets 1.00%
Next $250 million of net assets 0.95 Next $250 million of net assets 0.95
Next $500 million of net assets 0.90 Next $500 million of net assets 0.90
Over $1 billion of net assets 0.85 Next $6 billion of net assets 0.85
Next $3 billion of net assets 0.80
Over $10 billion of net assets 0.75
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended August 31, 2006, the Fund paid
$11,694,704 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
49 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS 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 August 31, 2006 for Class B, Class C and Class N shares were $3,583,211,
$9,447,325 and $1,378,238, 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 following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------
August 31, 2006 $2,392,405 $98,018 $431,611 $424,710 $78,663
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. During the year ended August 31, 2006,
the Manager voluntarily reimbursed the Fund $1,146,863 for certain transactions.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the year ended August 31, 2006, OFS waived $35,719 for Class N shares.
This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and
50 | OPPENHEIMER DEVELOPING MARKETS FUND
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities as a receivable or payable and in the Statement of
Operations with the change in unrealized appreciation or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2006, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION
EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000s) AUGUST 31, 2006 APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Singapore Dollar [SGD] 9/1/06 2,932SGD $1,862,970 $ -- $ 274
----------------------
CONTRACTS TO SELL
Hungarian Forint [HUF] 9/5/06 12,484HUF 57,740 370 --
New Turkish Lira [TRY] 9/1/06 2,824TRY 1,928,211 -- 16,135
----------------------
370 16,135
----------------------
Total unrealized appreciation and depreciation $ 370 $ 16,409
======================
- --------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY
As of August 31, 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 restricted
currency is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATES COST AUGUST 31, 2006 DEPRECIATION
- -------------------------------------------------------------------------------------------
CURRENCY
Argentine Peso [ARP] 10/14/05-2/22/06 $7,209,012 $7,114,229 $94,783
- --------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires
51 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENT Continued
the evaluation of tax positions taken in the course of preparing the Fund's tax
returns to determine whether it is "more-likely-than-not" that tax positions
taken in the Fund's tax return will be ultimately sustained. A tax liability and
expense must be recorded in respect of any tax position that, in Management's
judgment, will not be fully realized. FIN 48 is effective for fiscal years
beginning after December 15, 2006. As of August 31, 2006, the Manager is
evaluating the implications of FIN 48. Its impact in the Fund's financial
statements has not yet been determined.
- --------------------------------------------------------------------------------
8. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) 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.
In response to the defendants' motions to dismiss the suit, 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,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
52 | OPPENHEIMER DEVELOPING MARKETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER DEVELOPING MARKETS FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Developing Markets Fund, including the statement of investments, as
of August 31, 2006, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Developing Markets Fund as of August 31, 2006, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with U.S.
generally accepted accounting principles.
KPMG LLP
Denver, Colorado
October 16, 2006
53 | OPPENHEIMER DEVELOPING MARKETS FUND
FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $0.7529 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December 9,
2005. Whether received in stock or in cash, the capital gain distribution should
be treated by shareholders as a gain from the sale of the capital assets held
for more than one year (long-term capital gains).
None of the dividends paid by the Fund during the fiscal year ended August
31, 2006 are eligible for the corporate dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended August 31, 2006 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $161,061,222 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2007, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
The Fund has elected the application of Section 853 of the Internal
Revenue Code to permit shareholders to take a federal income tax credit or
deduction, at their option, on a per share basis for an aggregate amount of
$25,091,542 of foreign income taxes paid by the Fund during the fiscal year
ended August 31, 2006. A separate notice will be mailed to each shareholder,
which will reflect the proportionate share of such foreign taxes which must be
treated by shareholders as gross income for federal income tax purposes.
Gross income of $138,895,000 was derived from sources within foreign
countries or possessions of the United States.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended August 31, 2006, $4,820,091 or 6.10% of the ordinary distributions
paid by the Fund qualifies as an interest related dividend and $258,436,914 or
100% of the short-term capital gain distribution paid by the Fund qualifies as a
short-term capital gain dividend.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
54 | OPPENHEIMER DEVELOPING MARKETS FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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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 30, no later than August 31 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.
55 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited
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NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX
CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE
TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January
Chairman of the Board 2005); Attorney at Hogan & Hartson (law firm) (since June 1993); Director
of Trustees (since 2003), of Covanta Holding Corp. (waste-to-energy company) (since 2002); Director
Trustee (since 1996) of Weyerhaeuser Corp. (1999-April 2004); Director of Caterpillar, Inc.
Age: 75 (1993-December 2002); Director of ConAgra Foods (1993-2001); Director of
Texas Instruments (1993-2001); Director of FMC Corporation (1993-2001).
Oversees 43 portfolios in the OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research
Trustee (since 2005) foundation) (since 2005); Director of ICI Education Foundation (education
Age: 65 foundation) (October 1991-August 2006); President of the Investment
Company Institute (trade association) (October 1991-June 2004); Director
of ICI Mutual Insurance Company (insurance company) (October 1991-June
2004). Oversees 43 portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 53 portfolios
Trustee (since 1996) in the OppenheimerFunds complex.
Age: 73
PHILLIP A. GRIFFITHS, Distinguished Presidential Fellow for International Affairs (since 2002)
Trustee (since 1999) and Member (since 1979) of the National Academy of Sciences; Council on
Age: 68 Foreign Relations (since 2002); Director of GSI Lumonics Inc. (precision
medical equipment supplier) (since 2001); Senior Advisor of The Andrew W.
Mellon Foundation (since 2001); Chair of Science Initiative Group (since
1999); Member of the American Philosophical Society (since 1996); Trustee
of Woodward Academy (since 1983); Foreign Associate of Third World
Academy of Sciences; Director of the Institute for Advanced Study
(1991-2004); Director of Bankers Trust New York Corporation (1994-1999);
Provost at Duke University (1983-1991). Oversees 43 portfolios in the
OppenheimerFunds complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since
Trustee (since 2004) October 1998); and Senior Vice President and General Auditor of American
Age: 63 Express Company (financial services company) (July 1998-February 2003).
Oversees 43 portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial
Trustee (since 2002) adviser) (since 2002); Managing Director of Carmona Motley, Inc.
Age: 54 (privately-held financial adviser) (since January 2002); Managing
Director of Carmona Motley Hoffman Inc. (privately-held financial
adviser) (January 1998-December 2001); Member of the Finance and Budget
Committee of the Council on Foreign Relations, the Investment Committee
of the Episcopal Church of America, the Investment Committee and Board of
Human Rights Watch and the Investment Committee of Historic Hudson
Valley. Oversees 43 portfolios in the OppenheimerFunds complex.
56 | OPPENHEIMER DEVELOPING MARKETS FUND
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company)
Trustee (since 1996) (February 1972-October 2005); Former Director of Prime Retail, Inc. (real
Age: 79 estate investment trust), Dominion Energy Inc. (electric power and oil &
gas producer), Lumberman's Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company;
Former President and Chief Executive Officer of The Conference Board,
Inc. (international economic and business research). Oversees 43
portfolios in the OppenheimerFunds complex.
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance
Trustee (since 1996) consulting and executive recruiting) (since 1993); Life Trustee of
Age: 74 International House (non-profit educational organization); Founder,
Chairman and Chief Executive Officer of Russell Reynolds Associates, Inc.
(1969-1993); Banker at J.P. Morgan & Co. (1958-1966); 1st Lt. Strategic
Air Command, U.S. Air Force (1954-1958). Oversees 43 portfolios in the
OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992)
Trustee (since 2005) and Cathco (since 1996); Director of Lakes Environmental Association
Age: 65 (since 1996); Member of the Investment Committee of the Associated Jewish
Charities of Baltimore (since 1994); Director of Fortis/Hartford mutual
funds (1994-December 2001). Oversees 43 portfolios in the
OppenheimerFunds complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and
Trustee (since 2005) production company) (since 1994); Vice President, Secretary and Treasurer
Age: 58 of Wold Trona Company, Inc. (soda ash processing and production) (since
1996); Vice President of Wold Talc Company, Inc. (talc mining) (since
1999); Managing Member of Hole-in-the-Wall Ranch (cattle ranching) (since
1979); Director and Chairman of the Denver Branch of the Federal Reserve
Bank of Kansas City (1993-1999); and Director of PacifiCorp. (electric
utility) (1995-1999). Oversees 43 portfolios in the OppenheimerFunds
complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September
Trustee (since 2005) 1995); Director of Special Value Opportunities Fund, LLC (registered
Age: 63 investment company) (since September 2004); Member of Zurich Financial
Investment Advisory Board (insurance) (since October 2004); Board of
Governing Trustees of The Jackson Laboratory (non-profit) (since August
1990); Trustee of the Institute for Advanced Study (non-profit
educational institute) (since May 1992); Special Limited Partner of
Odyssey Investment Partners, LLC (private equity investment) (January
1999-September 2004); Trustee of Research Foundation of AIMR (2000-2002)
(investment research, non-profit); Governor, Jerome Levy Economics
Institute of Bard College (August 1990-September 2001) (economics
research); Director of Ray & Berendtson, Inc. (May 2000-April 2002)
(executive search firm). Oversees 53 portfolios in the OppenheimerFunds
complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
AND OFFICER STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A
TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT,
DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED
TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS
AFFILIATES.
57 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
Trustee, President and President (since September 2000) of the Manager; President and a director
Principal Executive Officer or trustee of other Oppenheimer funds; President and Director of
(since 2001) Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent holding
Age: 57 company) and of Oppenheimer Partnership Holdings, Inc. (holding company
subsidiary of the Manager) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since
November 2001); Chairman and Director of Shareholder Services, Inc. and
of Shareholder Financial Services, Inc. (transfer agent subsidiaries of
the Manager) (since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust program established by
the Manager) (since July 2001); Director of the following investment
advisory subsidiaries of the Manager: OFI Institutional Asset Management,
Inc., Centennial Asset Management Corporation, Trinity Investment
Management Corporation and Tremont Capital Management, Inc. (since
November 2001), HarbourView Asset Management Corporation and OFI Private
Investments, Inc. (since July 2001); President (since November 1, 2001)
and Director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts Mutual Life Insurance
Company (OAC's parent company) (since February 1997); Director of DLB
Acquisition Corporation (holding company parent of Babson Capital
Management LLC) (since June 1995); Member of the Investment Company
Institute's Board of Governors (since October 3, 2003); Chief Operating
Officer of the Manager (September 2000-June 2001); President and Trustee
of MML Series Investment Fund and MassMutual Select Funds (open-end
investment companies) (November 1999-November 2001); Director of C.M.
Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle Bancorp and
Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp)
(June 1989-June 1998). Oversees 91 portfolios in the OppenheimerFunds
complex.
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OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR
OF THE FUND MESSRS. MADDEN, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL
CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS.
VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY,
CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
MARK MADDEN, Vice President of the Manager (since August 2004); Mr. Madden held the
Vice President and Portfolio following positions in Global Asset Management at Pioneer Investment
Manager (since 2004) Management, Inc.: Managing Director, Global Emerging Markets Team
Age: 49 (November 2000-July 2004), Senior Vice President and Portfolio Manager,
International Equities (December 1998-October 2000) and Vice President
and Portfolio Manager, International Equities (February 1993-November
1998). An officer of 8 portfolio in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and Chief March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Compliance Officer Centennial Asset Management Corporation and Shareholder Services, Inc.
(since 2004) (since June 1983). Former Vice President and Director of Internal Audit
Age: 56 of the Manager (1997-February 2004). An officer of 91 portfolios in the
OppenheimerFunds complex.
58 | OPPENHEIMER DEVELOPING MARKETS FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer
Age: 47 Partnership Holdings, Inc. (since March 1999), OFI Private Investments,
Inc. (since March 2000), OppenheimerFunds International Ltd. (since May
2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy
Program (charitable trust program established by the Manager) (since June
2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust
company subsidiary of the Manager) (since May 2000); Assistant Treasurer
of the following: OAC (since March 1999),Centennial Asset Management
Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer of Bankers
Trust Company-Mutual Fund Services Division (March 1995-March 1999). An
officer of 91 portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002);
Assistant Treasurer Manager/Financial Product Accounting of the Manager (November 1998-July
(since 2004) 2002). An officer of 91 portfolios in the OppenheimerFunds complex.
Age: 36
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of
Assistant Treasurer Financial Reporting and Compliance of First Data Corporation (April
(since 2005) 2003-July 2004); Manager of Compliance of Berger Financial Group LLC (May
Age: 36 2001-March 2003); Director of Mutual Fund Operations at American Data
Services, Inc. (September 2000-May 2001). An officer of 91 portfolios in
the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2001) March 2002) of the Manager; General Counsel and Director of the
Age: 58 Distributor (since December 2001); General Counsel of Centennial Asset
Management Corporation (since December 2001); Senior Vice President and
General Counsel of HarbourView Asset Management Corporation (since
December 2001); Secretary and General Counsel of OAC (since November
2001); Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of Oppenheimer
Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer
Real Asset Management, Inc. (since November 2001); Senior Vice President,
General Counsel and Director of Shareholder Financial Services, Inc. and
Shareholder Services, Inc. (since December 2001); Senior Vice President,
General Counsel and Director of OFI Private Investments, Inc. and OFI
Trust Company (since November 2001); Vice President of OppenheimerFunds
Legacy Program (since June 2003); Senior Vice President and General
Counsel of OFI Institutional Asset Management, Inc. (since November
2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
Senior Vice President (May 1985-December 2003), Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May
1981-October 2001) of the Manager; Assistant Secretary of the following:
Shareholder Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 91 portfolios in the OppenheimerFunds complex.
59 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004);
Assistant Secretary First Vice President (April 2001-April 2004), Associate General Counsel
(since 2004) (December 2000-April 2004), Corporate Vice President (May 1999-April
Age: 38 2001) and Assistant General Counsel (May 1999-December 2000) of UBS
Financial Services Inc. (formerly, PaineWebber Incorporated). An officer
of 91 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant
Assistant Secretary Secretary (since October 2003) of the Manager; Vice President (since
(since 2001) 1999) and Assistant Secretary (since October 2003) of the Distributor;
Age: 40 Assistant Secretary of Centennial Asset Management Corporation (since
October 2003); Vice President and Assistant Secretary of Shareholder
Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since December
2001); Assistant Counsel of the Manager (August 1994-October 2003). An
officer of 91 portfolios in the OppenheimerFunds complex.
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); First Vice President (2000-September 2004), Director
(since 2004) (2000-September 2004) and Vice President (1998-2000) of Merrill Lynch
Age: 42 Investment Management. An officer of 91 portfolios in the
OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
60 | OPPENHEIMER DEVELOPING MARKETS FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee
financial expert," whether through the type of specialized education or
experience described in that Instruction. The Board has concluded that while the
members of the Audit Committee collectively have the necessary attributes and
experience required to serve effectively as an Audit Committee, no single member
possesses all of the required technical attributes through the particular
methods of education or experience set forth in the Instructions to be
designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $22,000 in fiscal 2006 and $18,000 in fiscal 2005.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $75,000 in fiscal 2006 and $132,059 in fiscal 2005 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $201 in fiscal 2006 and no such fees in fiscal 2005.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during fiscal 2006 and $5,000 during fiscal 2005
to the registrant's investment adviser or any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services to the
registrant.
Such services include: Venezuelan tax filing and filing form 5500.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $8,000 in fiscal 2006 and no such fees in 2005 to the
registrant's investment
adviser or any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees would include the cost to the principal accountant of attending audit
committee meetings and consultations regarding the registrant's retirement plan
with respect to its trustees.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $83,201 in fiscal 2006 and $137,059 in fiscal
2005 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and
whether the individual would be deemed an "audit committee financial
expert" within the meaning of applicable SEC rules. The Committee also
considers whether the individual's background, skills, and experience will
complement the background, skills, and experience of other nominees and
will contribute to the Board. There are no differences in the manner in
which the Committee evaluates nominees for trustees based on whether the
nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of 08/31/2006, 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) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Developing Markets Fund
By: /S/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 10/16/2006
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: 10/16/2006
By: /S/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 10/16/2006