[cover page]
OPPENHEIMER DEVELOPING MARKETS FUND
Semiannual Report February 28, 1997
OPPENHEIMERFUNDS SM[LOGO]
THE RIGHT WAY TO INVEST
<PAGE>
This Fund is for people who are looking for HIGH LONG-TERM GROWTH opportunities
in emerging foreign markets.
HOW YOUR FUND IS MANAGED
Oppenheimer Developing Markets Fund searches for companies
located in emerging market countries that may offer shareholders impressive
growth potential. The Fund seeks to take advantage of investment opportunities
in developing markets by employing a disciplined "theme" approach to investing.
PERFORMANCE
Cumulative total returns since inception on 11/18/96 for the
period ended 2/28/97 were 16.80% for Class A shares, 16.50% for Class B shares
and 16.60% for Class C shares, without deducting sales charges. (1)
Your Fund's cumulative total returns since inception on
11/18/96 for the period ended 3/31/97 were 9.90% for Class A shares, 11.20% for
Class B shares and 15.30% for Class C shares. (2)
OUTLOOK
"We look for companies with strong long-term growth potential, and then buy them
when their prices are at reasonable levels. Using this strategy, we think the
Fund should be well-positioned to perform favorably over the long term."
Frank Jennings and Rajeev Bhaman
Portfolio Managers
February 28, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the period shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS 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 THE ORIGINAL COST. For more complete
information, please review the prospectus before you invest.
1. Includes change in net asset value without deducting any sales charges. Such
performance is not annualized and would have been lower if sales charges were
taken into account.
2. Class A returns include the current maximum initial sales charge of 5.75%.
Class B returns include the deduction of the applicable contingent deferred
sales charge of 5%. Class C returns include the deduction of the 1% contingent
deferred sales charge. An explanation of the different total returns is in the
Fund's prospectus. Class B and Class C shares are subject to an annual
0.75% asset-based sales charge.
2 Oppenheimer Developing Markets Fund
<PAGE>
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer Developing
Markets Fund
Dear Shareholder,
Because of a recent downturn in the U.S. stock market, many
investors are now weighing the benefits of international equity investing,
particularly those of the emerging markets. Several industry experts believe the
returns of foreign stocks may surpass those of domestic stocks this year for
three reasons: corporate profits of overseas' companies are growing at a rapid
rate; the interest rates of many foreign countries appear to be heading
downward; and many international stocks are trading at bargain prices, relative
to their historical trading range.
Recently, we've seen exceptionally strong growth in the
performance of stocks within the emerging markets. As countries in these
emerging markets take steps to globalize industries, reduce governmental
spending, rebound from recessions and rebuild, or in many cases, build their
economies for the first time, we believe these stocks are poised for impressive
performance.
Latin America is beginning to benefit from years of political
reform, privatization and deregulation aimed at shifting their economies toward
the U.S. capitalist model. Argentina is growing the fastest, stemming from the
most extensive reforms. However, we are looking to Brazil, the most populated
country in Latin America, to spur economic development both at home and with
South American neighbors, such as Peru and Chile. In addition, we've also seen
outstanding growth from the European markets and feel confident this could be
the beginning of a strong growth cycle in Europe.
On the other hand, Asia's economic growth was dominated by a
recession in Japan. While Japan seems to be positioned for a recovery, the
timing of this recovery is difficult to determine. But, when the Japanese
economy does begin to grow, the rest of Asia should follow. We are also closely
monitoring the situation in Hong Kong as the British prepare to relinquish the
city to China in July.
Because investing abroad involves greater risk and expenses --
including political and economic uncertainties, currency-rate fluctuations and
liquidity restrictions -- it should be undertaken with a long-term approach in
mind. We are confident that by diversifying investments throughout the world,
investors should be well-positioned to participate in any economic environment.
Your portfolio managers discuss the outlook for your Fund in
light of these broad issues on the following pages. Thank you for your
confidence in OppenheimerFunds. We look forward to helping you reach your
investment goals in the future.
/S/ BRIDGET A. MACASKILL
Bridget A. Macaskill
March 21, 1997
3 Oppenheimer Developing Markets Fund
<PAGE>
FRANK JENNINGS
RAJEEV BHAMAN
Portfolio Managers
Q + A
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED DURING ITS FIRST MONTHS OF OPERATION?
Oppenheimer Developing Markets Fund has done very well. For the six-month
period ended 2/28/97, the Fund's Class A shares turned in a solid performance
with a return of 16.80%, without deducting sales charges. (1) We attribute this
success to the portfolio's concentration in about 75 stocks diversified in over
20 countries as of 2/28/97. By keeping the number of holdings to a manageable
amount, we were able to maintain larger positions in a smaller number of care-
fully selected stocks in which we had great confidence. (2)
WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
Rather than allocate our assets by certain country or region weightings, the
strategy of this Fund is to seek companies, located throughout the world, that
exhibit faster-than-average growth. We look for strong companies that are
well-positioned to address one of the "themes" we've identified as being
instrumental to future global economic growth. We believe that over time, these
trends will lead us to some of the best opportunities for long-term growth. Of
course, foreign investments involve greater expenses and risks, such as adverse
currency fluctuation.
The Fund had a large percentage of the portfolio invested in financial
services, which we think offer superior performance in emerging markets.
Within financial services, our strongest performers were banks, diversified
financials and insurance companies, particularly in Turkey and Malaysia. These
countries are in the very early stages of consumer growth and demand for
credit is strong. Many consumers are making first-time purchases of
automobiles, homes and property. As a result, sales of homeowner, automobile
and life insurance policies have soared, and the insurance industry as a whole
is reporting tremendous earnings growth.
ARE THERE ANY COUNTRIES IN WHICH YOU HAVE LIMITED EXPOSURE?
Stock prices in Korea, Taiwan and Thailand are currently unattractive, and as a
result, we're fairly underweighted in those countries. However, we feel
confident that this region will improve and we will continue to keep a watchful
eye for better opportunities in the future. We're also not directly invested in
China, but prefer to have an exposure through Hong Kong, where we believe the
quality of management is stronger and more robust.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We believe the outlook for the Fund is positive. As you know, we look for
companies with strong long-term growth potential, and then buy them when their
prices are at reasonable levels. Using this strategy, we think the Fund should
be well-positioned to perform favorably over the long term. //
1. Includes change in net asset value without deducting any sales charges.
Such performance is not annualized and would have been lower if sales charges
were taken into account.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS - 1.5%
- ---------------------------------------------------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion, Zero Coupon:
24.493%, 11/6/97MXP(2) 726,690 $ 78,513
24.657%, 12/4/97MXP(2) 720,000 76,558
22.896%, 2/4/98MXP(2) 962,300 98,759
---------------
Total Foreign Government Obligations (Cost $257,706) 253,830
SHARES
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 87.5%
- ---------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.9%
- ---------------------------------------------------------------------------------------------------------------------------
METALS - 1.9%
----------------------------------------------------------------------------------------------------------------
Cia de Minas Buenaventura SA, Sponsored ADR 2,500 48,750
----------------------------------------------------------------------------------------------------------------
Noble Group Ltd.(3)(4) 300,000 264,000
---------------
312,750
- ---------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 13.9%
- ---------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 8.2%
----------------------------------------------------------------------------------------------------------------
Amoy Properties Ltd. 76,000 90,780
----------------------------------------------------------------------------------------------------------------
Brazil Realty SA, GDR(4)(5) 13,000 318,500
----------------------------------------------------------------------------------------------------------------
Henderson Investment Ltd. 112,000 125,827
----------------------------------------------------------------------------------------------------------------
Henderson Land Development Co. Ltd. 9,000 80,482
----------------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA,
Sponsored GDR 9,000 325,125
----------------------------------------------------------------------------------------------------------------
New World Development Co. Ltd. 22,099 136,978
----------------------------------------------------------------------------------------------------------------
Solidere, GDR(4) 25,000 303,750
---------------
1,381,442
- ---------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 0.7%
----------------------------------------------------------------------------------------------------------------
Lusomundo SGPS SA(4) 11,700 119,233
- ---------------------------------------------------------------------------------------------------------------------------
MEDIA - 2.8%
----------------------------------------------------------------------------------------------------------------
Grupo Radio Centro SA de CV, Sponsored ADR(4) 25,900 249,288
----------------------------------------------------------------------------------------------------------------
Times Publishing Ltd. 100,000 223,003
---------------
472,291
- ---------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.9%
----------------------------------------------------------------------------------------------------------------
PT Matahari Putra Prima 96,000 147,153
- ---------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.3%
----------------------------------------------------------------------------------------------------------------
Giordano International Ltd. 82,000 58,239
----------------------------------------------------------------------------------------------------------------
Makro Atacadista SA, GDR(4) 13,500 151,875
---------------
210,114
- ---------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 19.3%
- ---------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 10.1%
----------------------------------------------------------------------------------------------------------------
Al-Ahram Beverages Co., GDR(4)(5) 15,000 261,750
----------------------------------------------------------------------------------------------------------------
Cia Cervejaria Brahma, Preference 425,000 285,104
----------------------------------------------------------------------------------------------------------------
Ege Biracilik ve Malt Sanayii AS 90,450 27,591
----------------------------------------------------------------------------------------------------------------
Erciyas Biracilik ve Malt Sanayii 530,000 57,124
----------------------------------------------------------------------------------------------------------------
Fomento Economico Mexicano SA, Cl. B, Sponsored ADR 44,000 184,391
----------------------------------------------------------------------------------------------------------------
Hellenic Bottling Co., SA 5,000 165,269
</TABLE>
5 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (UNAUDITED)(CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
BEVERAGES (CONTINUED)
----------------------------------------------------------------------------------------------------------------
Panamerican Beverages, Inc., Cl. A 5,270 $ 297,096
----------------------------------------------------------------------------------------------------------------
Serm Suk Public Co. Ltd. 6,000 130,218
----------------------------------------------------------------------------------------------------------------
Vina Concha y Toro SA, ADR 10,000 281,250
---------------
1,689,793
- ---------------------------------------------------------------------------------------------------------------------------
FOOD - 3.7%
----------------------------------------------------------------------------------------------------------------
Cresud SA(4) 125,000 240,103
----------------------------------------------------------------------------------------------------------------
Dairy Farm International Holdings Ltd. 237,000 183,675
----------------------------------------------------------------------------------------------------------------
Disco SA, Sponsored ADR(4) 6,700 205,188
---------------
628,966
- ---------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 2.1%
----------------------------------------------------------------------------------------------------------------
Dr. Reddy's Laboratories, Sponsored GDR(4) 50,000 275,000
----------------------------------------------------------------------------------------------------------------
Wockhardt Ltd., Sponsored GDR 12,000 86,400
---------------
361,400
- ---------------------------------------------------------------------------------------------------------------------------
TOBACCO - 3.4%
----------------------------------------------------------------------------------------------------------------
Papastratos Cigarette SA 9,000 178,490
----------------------------------------------------------------------------------------------------------------
PT Hanjaya Mandala Sampoerna(4) 23,000 114,161
----------------------------------------------------------------------------------------------------------------
R.J. Reynolds Berhad 100,000 273,857
---------------
566,508
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY - 6.7%
- ---------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 6.7%
----------------------------------------------------------------------------------------------------------------
Elf Gabon SA 1,000 268,550
----------------------------------------------------------------------------------------------------------------
Lukoil Oil Co., Sponsored ADR 5,000 302,493
----------------------------------------------------------------------------------------------------------------
Petroleo Brasileiro SA, ADR(4) 17,650 351,005
----------------------------------------------------------------------------------------------------------------
Surgutneftegaz, Sponsored ADR(4) 5,000 210,625
---------------
1,132,673
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 28.1%
- ---------------------------------------------------------------------------------------------------------------------------
BANKS - 22.2%
----------------------------------------------------------------------------------------------------------------
Akbank T.A.S. 345,000 60,337
----------------------------------------------------------------------------------------------------------------
Banco Bradesco SA, Preference 24,700,000 203,300
----------------------------------------------------------------------------------------------------------------
Banco de Galicia y Buenos Aires SA de CV,
Sponsored ADR 11,000 259,875
----------------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA, Sponsored ADR 7,360 210,680
----------------------------------------------------------------------------------------------------------------
Banco Itau SA, Preference 495,000 255,287
----------------------------------------------------------------------------------------------------------------
Bank Inicjatyw Gospodarczych SA 63,000 94,744
----------------------------------------------------------------------------------------------------------------
Bank Rozwoju Eksportu SA 1,900 66,464
----------------------------------------------------------------------------------------------------------------
Banque Libanaise Pour Le Comm SAL, GDR, Cl. B(4) 18,000 278,100
----------------------------------------------------------------------------------------------------------------
Commercial International Bank, Sponsored GDR(4) 13,000 260,000
----------------------------------------------------------------------------------------------------------------
Grupo Financiero Banorte SA de CV, Series B 132,500 143,638
----------------------------------------------------------------------------------------------------------------
Grupo Financiero Inbursa SA de CV, Series B 45,000 155,269
----------------------------------------------------------------------------------------------------------------
Hansabank Ltd.(4) 21,000 312,818
----------------------------------------------------------------------------------------------------------------
HSBC Holdings plc 8,400 205,011
----------------------------------------------------------------------------------------------------------------
Liu Chong Hing Bank Ltd. 105,000 199,316
----------------------------------------------------------------------------------------------------------------
Philippine National Bank(4) 15,500 181,009
----------------------------------------------------------------------------------------------------------------
PT Panin Bank 98,000 134,890
----------------------------------------------------------------------------------------------------------------
Public Bank Berhad 90,000 210,225
</TABLE>
6 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (UNAUDITED)(CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
BANKS (CONTINUED)
----------------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS 1,830,000 $ 163,745
----------------------------------------------------------------------------------------------------------------
Uniao de Bancos Brasileiros SA, Preference 5,450,000 215,213
----------------------------------------------------------------------------------------------------------------
Wielkopolski Bank Kredytowy SA 14,300 118,279
---------------
3,728,200
- ---------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 2.5%
----------------------------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd. (The),
GDR(4)(5) 25,700 253,788
----------------------------------------------------------------------------------------------------------------
Public Finance Berhad 86,000 171,789
---------------
425,577
- ---------------------------------------------------------------------------------------------------------------------------
INSURANCE - 3.4%
----------------------------------------------------------------------------------------------------------------
Adamjee Insurance Co. Ltd.(4) 49,000 133,259
----------------------------------------------------------------------------------------------------------------
Aksigorta 3,550,000 179,038
----------------------------------------------------------------------------------------------------------------
Liberty Life Association of Africa Ltd. 9,000 260,570
---------------
572,867
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 5.7%
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 1.5%
----------------------------------------------------------------------------------------------------------------
HI Cement Corp.(5) 600,000 244,953
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 1.2%
----------------------------------------------------------------------------------------------------------------
BAU Holdings AF, Preference 100 4,797
----------------------------------------------------------------------------------------------------------------
MRC Allied Industries, Inc.(4) 1,475,000 204,460
---------------
209,257
- ---------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.7%
----------------------------------------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 16,000 121,901
- ---------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.3%
----------------------------------------------------------------------------------------------------------------
Asian Terminals, Inc. 825,000 181,721
----------------------------------------------------------------------------------------------------------------
Guangshen Railway Co. Ltd., Sponsored ADR(4) 8,700 209,888
---------------
391,609
- ---------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 3.0%
- ---------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.7%
----------------------------------------------------------------------------------------------------------------
Accton Technology Corp.(4) 15,000 118,500
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.3%
----------------------------------------------------------------------------------------------------------------
Ericsson Telecomunicacoes SA 8,300,000 221,847
----------------------------------------------------------------------------------------------------------------
Intracom SA(4) 5,000 169,991
---------------
391,838
- ---------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.9%
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.8%
----------------------------------------------------------------------------------------------------------------
Centrais Electricas Brasileiras SA, Sponsored ADR 5,000 111,805
----------------------------------------------------------------------------------------------------------------
Centrais Electricas de Santa Catarina SA, Preference B 65,000 88,445
----------------------------------------------------------------------------------------------------------------
First Philippine Holdings Corp., B Shares 45,625 107,428
---------------
307,678
- ---------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.2%
----------------------------------------------------------------------------------------------------------------
Gazprom, ADR(4)(5) 15,700 273,180
----------------------------------------------------------------------------------------------------------------
Primagaz Rt 1,600 91,145
---------------
364,325
</TABLE>
7 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (UNAUDITED)(CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 4.9%
----------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 1,900,000 $ 176,814
----------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA, Sponsored ADR 1,950 189,150
----------------------------------------------------------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro SA, Preference(4) 1,000,000 145,585
----------------------------------------------------------------------------------------------------------------
Telefonica del Peru SA, ADR 14,000 308,000
---------------
819,549
---------------
Total Common Stocks (Cost $13,622,593) 14,718,577
FACE
AMOUNT(1)
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 17.3%
- ---------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 5.36%, dated 2/28/97,
to be repurchased at $2,901,295 on 3/3/97, collateralized by U.S.
Treasury Nts., 6.125%-7.875%, 5/15/99-11/15/04, with a value of
$2,967,581
(Cost $2,900,000) $ 2,900,000 2,900,000
----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $16,780,299) 106.3% 17,872,407
----------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (6.3) (1,060,290)
------------- -------------
NET ASSETS 100.0% $ 16,812,117
============= ===============
</TABLE>
1. Face amount is reported in U.S. Dollars, except
for those denoted in the following currency:
MXP - Mexican Peso
2. For zero coupon bonds, the interest rate shown is the
effective yield on the date of purchase.
3. When-issued security to be delivered and settled after
February 28, 1997.
4. Non-income producing security.
5. 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
$1,352,171 or 8.04% of the Fund's net assets, at February 28, 1997.
8 Oppenheimer Developing Markets Fund
<PAGE>
-----------------------------------------------
STATEMENT OF INVESTMENTS (UNAUDITED)(CONTINUED)
Distribution of investments by country of issue, as a percentage of
total investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
------- ------------ -------
<S> <C> <C>
----------------------------------------------------------------------------------------------------------------
United States $ 2,900,000 16.2%
Brazil 2,713,931 15.2
Mexico 1,283,512 7.2
Argentina 1,240,971 6.9
Hong Kong 1,202,209 6.7
Philippines 919,572 5.1
Russia 786,298 4.4
Malaysia 655,870 3.7
Lebanon 581,850 3.3
Egypt 521,750 2.9
Greece 513,750 2.9
Turkey 487,834 2.7
Singapore 487,003 2.7
Indonesia 396,204 2.2
Peru 356,750 2.0
India 340,188 1.9
Finland 312,818 1.8
Chile 281,250 1.6
Poland 279,487 1.6
Luxembourg 275,000 1.5
France 268,550 1.5
South Africa 260,570 1.5
China 209,888 1.2
Pakistan 133,259 0.7
Thailand 130,218 0.7
Portugal 119,233 0.7
Taiwan 118,500 0.7
Hungary 91,145 0.5
Austria 4,797 0.0
--------------- --------------
TOTAL $ 17,872,407 100.0%
=============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Developing Markets Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $16,780,299) - see accompanying statement $17,872,407
----------------------------------------------------------------------------------------------------
Cash 173,285
----------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 463,274
Investments sold 48,793
Interest 814
----------------------------------------------------------------------------------------------------
Other 663
-------------------
Total assets 18,559,236
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Unrealized depreciation on forward foreign currency
exchange contracts - Note 5 3,820
----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,691,735
Shares of beneficial interest redeemed 25,795
Custodian fees 11,583
Distribution and service plan fees 3,308
Other 10,878
-------------------
Total liabilities 1,747,119
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $16,812,117
-------------------
-------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $15,625,580
NET ASSETS ----------------------------------------------------------------------------------------------------
Accumulated net investment loss (6,139)
----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 104,487
----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,088,189
-------------------
Net assets $16,812,117
-------------------
-------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $12,362,617 and 1,058,058 shares of beneficial interest outstanding) $11.68
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $12.39
----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $3,717,435 and 319,103 shares of beneficial interest outstanding) $11.65
----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $732,065 and 62,805 shares of beneficial interest outstanding) $11.66
See accompanying Notes to Financial Statements.
</TABLE>
10 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE PERIOD FROM NOVEMBER 18, 1996
(COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1997 (UNAUDITED)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $26,385
----------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $785) 7,665
-------------------
Total income 34,050
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees - Note 4 18,778
----------------------------------------------------------------------------------------------------
Shareholder reports 7,998
----------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 2,416
Class B 2,997
Class C 570
----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 3,393
Class B 1,056
Class C 193
----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 2,113
----------------------------------------------------------------------------------------------------
Trustees' fees and expenses - Note 1 1,723
----------------------------------------------------------------------------------------------------
Custodian fees and expenses 861
----------------------------------------------------------------------------------------------------
Legal and auditing fees 738
----------------------------------------------------------------------------------------------------
Other 985
-------------------
Total expenses 43,821
Less expenses paid indirectly - Note 4 (3,632)
-------------------
Net expenses 40,189
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (6,139)
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND Net realized gain (loss) on:
UNREALIZED GAIN (LOSS) Investments 118,508
Foreign currency transactions (14,021)
-------------------
Net realized gain 104,487
----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments 1,214,124
Translation of assets and liabilities denominated in foreign currencies (125,935)
-------------------
Net change 1,088,189
-------------------
Net realized and unrealized gain 1,192,676
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,186,537
-------------------
-------------------
See accompanying Notes to Financial Statements.
</TABLE>
11 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED
FEBRUARY 28, 1997(1)
(UNAUDITED)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income (loss) ($6,139)
----------------------------------------------------------------------------------------------------
Net realized gain 104,487
----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 1,088,189
-------------------
Net increase in net assets resulting from operations 1,186,537
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 11,415,504
Class B 3,516,897
Class C 693,179
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 16,812,117
----------------------------------------------------------------------------------------------------
Beginning of period --
-------------------
End of period (including accumulated net investment
losses of $6,139) $16,812,117
-------------------
-------------------
1. For the period from November 18, 1996 (commencement of operations) to February 28, 1997.
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------ ---------------- ----------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1997(1) 1997(1) 1997(1)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.01) -- --
Net realized and unrealized gain 1.69 1.65 1.66
- -------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.68 1.65 1.66
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.68 $11.65 $11.66
===========================================================
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 16.80% 16.50% 16.60%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $12,363 $3,717 $732
- -------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 5,566 $1,109 $211
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.32)% (0.23)% (0.35)%
Expenses 1.50 % 2.24 % 2.23 %
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 16.8% 16.8% 16.8%
Average brokerage commission rate(5) $0.0009 $0.0009 $0.0009
</TABLE>
1. For the period from November 18, 1996 (commencement of operations)
to February 28, 1997.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or commencement of operations), 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.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended February 28, 1997 were $17,958,934 and $989,621,
respectively.
5. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total of related shares
purchased and sold.
See accompanying Notes to Financial Statements.
13 Oppenheimer Developing Markets Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Developing Markets Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is capital
appreciation, primarily by investing in equity securities of issuers in emerging
markets throughout the world. The Fund's investment adviser is OppenheimerFunds,
Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class B
and Class C shares may be subject to a contingent deferred sales charge. All
three classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service plan,
expenses directly attributable to a particular class and exclusive voting rights
with respect to matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by the
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
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.
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded 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.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the 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 dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
14 Oppenheimer Developing Markets Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
PERIOD ENDED FEBRUARY 28, 1997(1)
SHARES AMOUNT
Class A:
Sold 1,072,097 $11,567,777
Redeemed (14,039) (152,273)
----------- ------------
Net increase 1,058,058 $11,415,504
=========== ===========
Class B:
Sold 320,110 $ 3,528,044
Redeemed (1,007) (11,147)
----------- ------------
Net increase 319,103 $ 3,516,897
=========== ===========
Class C:
Sold 62,806 $ 693,193
Redeemed (1) (14)
----------- ------------
Net increase 62,805 $ 693,179
=========== ===========
1. For the period from November 18, 1996 (commencement of operations) to
February 28, 1997.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At February 28, 1997, net unrealized appreciation on investments of $1,092,108
was composed of gross appreciation of $1,251,252, and gross depreciation of
$159,144.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of 1.00% of
the first $250 million of average annual net assets, 0.95% of the next $250
million, 0.90% of the next $500 million and 0.85% of net assets in excess of $1
billion.
For the period ended February 28, 1997, commissions (sales charges paid by
investors) on sales of Class A shares totaled $29,423, of which $9,586 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $60,643 and $3,220, of which $1,798 was paid to an
affiliated broker/dealer for Class B.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other registered investment
companies. OFS's total costs of providing such services are allocated ratably to
these companies.
Expenses paid indirectly represent a reduction of custodian fees for earnings on
cash balances maintained by the Fund.
15 Oppenheimer Developing Markets Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (Continued)
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a
portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares.
The Fund has adopted compensation type Distribution and Service Plans for Class
B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the Plans,
the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class
B and Class C shares, as compensation for sales commissions paid from its own
resources at the time of sale and associated financing costs. OFDI also receives
a service fee of 0.25% per year as compensation for costs incurred in connection
with the personal service and maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers, banks and other financial
institutions. Both fees are computed on the average annual net assets of Class B
and Class C shares, determined as of the close of each regular business day.
During the period ended February 28, 1997, OFDI retained $2,968 as compensation
for Class B sales commissions and service fee advances, as well as financing
costs. If the Plans are terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales charge to OFDI for
certain expenses it incurred before the Plans were terminated. At February 28,
1997, OFDI had incurred unreimbursed expenses of $10,360 for Class B and $2,323
for Class C.
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks. They
may also be used to tactically shift portfolio currency risk. The Fund generally
enters into forward contracts as a hedge upon the purchase or sale of a security
denominated in a foreign currency. In addition, the Fund may enter into such
contracts as a hedge against changes in foreign currency exchange rates on
portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Fund will realize a gain or loss upon
the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statement of Assets and Liabilities. Realized gains and losses are reported with
all other foreign currency gains and losses in the Fund's Statement of
Operations.
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
At February 28, 1997, the Fund had outstanding forward contracts to purchase
foreign currencies as follows:
<TABLE>
<CAPTION>
CONTRACT VALUATION
EXCHANGE AMOUNT AS OF UNREALIZED
CONTRACTS TO PURCHASE DATE (000'S) FEBRUARY 28, 1997 DEPRECIATION
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Austrian Schilling (ATS) 3/10/97 57 ATS $ 4,821 $ 2
Brazilian Rial (BRR) 3/3/97-3/5/97 493 BRR 417,294 3,630
Hong Kong Dollar (HKD) 3/3/97 1,157 HKD 149,422 29
Malaysian Ringgit (MYR) 3/7/97 195 MYR 78,480 33
Philippines Peso (PHP) 3/4/97-3/6/97 2,764 PHP 104,983 126
-------- ------
$755,000 $3,820
======== ======
</TABLE>
16 Oppenheimer Developing Markets Fund
<PAGE>
OPPENHEIMER DEVELOPING MARKETS FUND
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro,
Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Rajeev Bhaman, Vice President
Frank Jennings, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISER OppenheimerFunds, Inc.
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Developing Markets
Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer
Developing Markets Fund. For material information concerning the Fund, see the
Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
17 Oppenheimer Developing Markets Fund
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