Annual Report August 31, 1997
O P P E N H E I M E R
Developing
Markets Fund
[PHOTO]
[OppenheimerFunds Logo]
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
[bullet] The emerging consumer market has grown substantially over the past
three years. As individual incomes grow, disposable incomes grow as well,
creating a wealth of opportunities for goods and services.
[bullet] Russia, Lebanon, Egypt and India were among the many strong markets
this year.
[bullet] In our opinion, one of the best businesses in emerging markets is
banking.
Contents
-------------------------------
3 President's Letter Total Returns
-------------------------------
4 Fund Performance
For the Period Ended 8/31/97(1)
6 An Interview
with the Fund's Class A
Managers
Since Inception
10 Statement of
Investments -------------------------------
28.20%
16 Statement of -------------------------------
Assets &
Liabilities Class B
18 Statement of Since Inception
Operations
-------------------------------
19 Statement of 27.30%
Changes in -------------------------------
Net Assets
Class C
20 Financial Highlights
Since Inception
21 Notes to Financial
Statements -------------------------------
27.40%
27 Independent -------------------------------
Auditors' Report
28 Federal
Income Tax
Information
29 Officers & Trustees
32 Information &
Services
Total returns include changes in share price and reinvestment of
dividends and capital gains distributions in a hypothetical investment for
the periods shown. In reviewing performance and rankings, please
remember that past performance does not guarantee future results.
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 the original cost.
1. Includes changes in net asset value per share without deducting any
sales charges. Such performance is not annualized and would have been lower if
sales charges were taken into account.
2 Oppenheimer Developing Markets Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO OF BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer
Developing
Markets Fund
I'd like to welcome you to the premier issue of our newly redesigned shareholder
reports. As you can see, we've changed the format to allow easier access to the
information you need to monitor your investments. Some notable additions are
"at-a-glance" report highlights and charts that let you quickly assess how your
Fund has performed. On the following pages, your portfolio team discuss their
current investment thinking, your Fund's strategies, and performance. Before
these commentaries, I'd like to share a few global observations.
As we consider the world's financial markets over the past six months, some
global trends emerge. For example, inflation has hit its lowest level in three
decades worldwide, which has helped spur many bullish financial markets. The
United States has been a beneficiary of this low-inflation environment, as well
as of a strong dollar, robust corporate earnings and a healthy economy. However,
many financial analysts are now concerned that the United States has reached a
point in the business cycle where earnings could decline because companies are
unable to further reduce costs.
On the other hand, a wave of corporate restructuring throughout Europe has
resulted in some exciting changes and opportunities. Because a similar
restructuring took place in the United States ten years ago, European companies
have been able to enjoy the benefit of hindsight by following our footsteps.
Latin America, too, has begun to shift its economies more toward the U.S.
capitalist model and has reported positive earnings growth along the way.
With major changes occurring in today's economies around the globe, it's
more important than ever to maintain a diversified portfolio across different
countries and market sectors. Now is the time to speak to your financial adviser
to ensure that your assets are allocated properly, so you have the opportunity
to benefit from investments in both domestic and international funds. It's
important to remember that investing abroad can involve greater risk and
expenses--including political and economic uncertainties--and should be
undertaken with a long-term approach in mind.
To keep in touch with our views on the markets, visit our website,
www.oppenheimerfunds.com, where you can access your account information and fund
performance data, 24 hours a day. The site also features prospectuses, timely
market updates and insightful commentaries. Our new shareholder reports and
presence on the Internet are just two examples of our commitment to keeping you
well informed.
Thank you for your confidence in OppenheimerFunds, The Right Way to Invest.
We look forward to helping you reach your investment goals in the future.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill September 22, 1997
3 Oppenheimer Developing Markets Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
- -------------------------------
Total Returns
- -------------------------------
For the Period Ended 9/30/97(1)
Class A
Since Inception
- -------------------------------
25.64%
- -------------------------------
Class B
Since Inception
- -------------------------------
27.30%
- -------------------------------
Class C
Since Inception
- -------------------------------
31.40%
- -------------------------------
Oppenheimer Developing Markets Fund seeks high-potential growth companies
located in emerging foreign markets. At OppenheimerFunds, we have identified key
worldwide growth trends that we believe will lead us to promising companies at
advantageous prices. With that in mind, in this fund we believe the key is
diversifica tion. That's why the Fund's holdings--about 80 stocks--are invested
in 27 countries.
Top 15 Country Holdings
(As a percentage of common stock)(2)
.............................................
Brazil 18.6% Chile 3.6%
.............................................
India 10.1 Greece 3.5
.............................................
Mexico 7.6 Russia 3.5
.............................................
Hong Kong 6.3 Egypt 3.5
.............................................
Argentina 5.8 Lebanon 3.1
.............................................
Portugal 5.2 Turkey 2.9
.............................................
Singapore 5.0 Philippines 2.5
.............................................
South Africa 4.8
.............................................
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 11/18/96. Class B returns
include the applicable contingent deferred sales charge of 5% (since inception
on 11/18/96). Class C returns include the contingent deferred sales charge of
1% since inception on 11/18/96. An explanation of the different performance
calculations is in the Fund's prospectus. Class B and C shares are subject to
an annual 0.25% service fee and 0.75% asset-based sales charge and Class A
shares are subject to an annual service fee not to exceed 0.25%.
2. Portfolio is subject to change. Percentages are as of August 31, 1997.
4 Oppenheimer Developing Markets Fund
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Developing Markets Fund is for investors who are looking for
long-term growth opportunities in emerging markets.
SECTOR WEIGHTINGS(3)
[PIE CHART]
[bullet] Financial 32.8%
[bullet] Consumer
Non-Cyclical 20.7
[bullet] Consumer Cyclical 20.4
[bullet] Utility 11.8
[bullet] Energy 6.2
[bullet] Industrial
Technology 2.1
What We Look For
[bullet] Companies of any size that stand to benefit from one or more key
global growth trends.
[bullet] Quality companies with strong management and accelerating earnings.
[bullet] Better value than in the United States--cheaper valuations.
[bullet] Diversification to help lower the special risks of volatility in
emerging markets and other foreign investment risks, such as currency
fluctuations.
Top 10 Stock Holdings
(Percentage of net assets)(3)
...................................................................
Grupo Televisa, S.A. 3.1% Giordano International 1.9%
...................................................................
Telebras S.A. 2.2 Times Publishing Ltd. 1.9
...................................................................
Solidere GDR 2.2 IRSA, GDR 1.8
...................................................................
Saneamento Basico 2.2 Grupo Fin Banorte 1.8
...................................................................
London Forfaiting Co. plc 2.0 Liberty Life Association 1.8
...................................................................
3. Portfolio is subject to change. Percentages are as of August 31, 1997 and
are based on total market value of investments.
5 Oppenheimer Developing Markets Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed?
Since its inception on November 18, 1996 through August 31, 1997, Oppenheimer
Developing Markets Fund's Class A shares had a cumulative total rate of return,
before sales charges, of 28.20%.(1) Our basic philosophy is to buy good
companies in good businesses at good prices. With that in mind, we try to
maintain a highly diversified portfolio, with holdings distributed all over the
world, to reduce volatility. That's why the Fund's holdings--about 80
stocks--are invested in 27 countries.
"The emerging
consumer
market has
grown
considerably
over the past
three years."
What international markets stood out during the period?
There were many strong markets this year including Russia, Turkey, Lebanon and
Egypt and we had meaningful presences in each of these countries. Latin America
was very buoyant, particularly Brazil and Mexico. India's stock market was
positive and we had a good position there. Southeast Asia was weak, as an
extreme bear market hit Thailand, Malaysia and the Philippines. To a large
extent, our relatively good performance was due to our underweight position in
the weak Southeast Asian markets.
In general, markets are driven by corporate earnings, interest rates and
risk perceptions. The earnings outlook in Southeast Asia deteriorated, interest
rates went up and the general risk perception of business in that area rose
sharply. For all these reasons, markets in Thailand, Malaysia, Indonesia and the
Philippines went down. On the other hand, in Latin America, the earnings outlook
brightened, while interest rates declined and the perceived riskiness of the
region declined.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
6 Oppenheimer Developing Markets Fund
<PAGE>
[PHOTO OF FRANK JENNINGS] [PHOTO OF RAJEEV BHAMAN]
Portfolio Management
Team (l to r)
Frank Jennings
Rajeev Bhaman
(Fund Managers)
Why has Russia been such a good market recently?
The major event in Russia in 1997 was the health of Mr. Yeltsin, who had major
heart surgery just after being re-elected president. Without his leadership,
there was much more political risk that the country would revert to Communist
rule. By the spring of 1997, however, Yeltsin recovered, and the political risk
diminished. In addition, the Russian government has little ability to collect
taxes, partly because wages are low. As a result, stocks in Russia were
inexpensive. However, Russia is still one of the riskiest markets in the world.
What are some of your top performers in different parts of the world?
We have done well with our holdings in Solidere, the owner of Beirut's central
business district. The expectations are that Beirut may reach some of its
former glory in terms of being the center of business in the Middle East. We've
also had success with a leading bank in Estonia, one of our better performing
stocks, as demand for banking services in this region has grown. This
high-quality banking institution's management has executed strong business
plans, and coupled with the high demand, the company has been gaining market
share. In Latin America, one of our better investments has been one of the
largest providers of telecommunication equipment in Brazil. The demand for
wired communications, cellular telephones and computer networks should be very
substantial over the next
7 Oppenheimer Developing Markets Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
five years, and we think this company is well positioned to supply that demand.
In addition, the Fund's largest holding is Grupo Televisa, which is the
dominant TV and media company in Mexico, and the largest Spanish language
content provider in the world. As Latin America's economy continues to
flourish, we expect earnings and disposable incomes to grow. To that end, we
believe that Televisa's potential for growth is substantial.
"This fund seeks
good companies
in good
businesses..."
How did the strengthening dollar affect the Fund?
A stronger dollar has hurt the Fund since we don't hedge against adverse
currency movements. A hedge is like buying an insurance policy that locks in an
exchange rate. However, it's very expensive to hedge fundamentally weak
currencies. If you own a stock in the Philippines and their peso goes down, then
you lose money even if the stock didn't decline. That's because the peso will
buy fewer dollars later in the period when you sell your stock. Generally, we're
dealing with countries that are much poorer than the United States by magnitudes
of 10 and 20 times. These countries have higher inflation rates, greater
difficulty collecting taxes and a higher need for fiscal deficit spending. All
these factors push down their exchange rates over long periods of time.
Where do you see opportunities now?
In our opinion, one of the best businesses in emerging markets is banking. As
markets grow, the need for capital grows to finance new businesses, plants and
equipment as well as the growing needs of consumers for homes and automobiles.
We also think there is a case for holding drug stocks in developing markets.
Drug companies in developing markets have more profit
8 Oppenheimer Developing Markets Fund
<PAGE>
potential because the costs of doing research and development in these
countries are lower. In addition, the emerging consumer fits into
OppenheimerFunds' overall thematic approach to international investing. We've
built our international investment approach by identifying key long-term global
growth trends that we believe will create significant investment opportunities
over the next 20 years. Within the demographic/geopolitical change umbrella,
we've seen the emerging consumer market grow substantially over the past three
years. Bearing that in mind, we believe that as incomes grow, consumption
grows, and companies that have good brands, products, distribution and delivery
systems will tend to do very well.
"...that are
selling at
good prices."
What is your outlook?
We're still fairly cautious in Southeast Asia, and we are waiting to see a
resolution to the financial crises in the region. Stock prices are not yet low
enough to entice us to invest more heavily at this time. In Latin America and
Eastern Europe, stock prices have risen substantially and, therefore, there are
fewer bargains to be found.
In closing, we'd like to point out that the Fund is designed to seek
high-quality opportunities in high-risk markets. While any investment involves
some risk, it's important to understand the additional risk factors and expenses
associated with investing overseas and particularly in emerging markets, such as
political and economic uncertainty and currency exchange fluctuation.
9 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments August 31, 1997
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--91.6%
- --------------------------------------------------------------------------------
Consumer Cyclicals--18.6%
- --------------------------------------------------------------------------------
Autos & Housing--5.5%
Brazil Realty SA, GDR(1) 33,800 $ 922,382
- --------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA, Sponsored GDR 25,000 1,110,937
- --------------------------------------------------------------------------------
Solidere, GDR 80,000 1,350,000
----------
3,383,319
- --------------------------------------------------------------------------------
Leisure & Entertainment--1.6%
Beijing Enterprises Holdings Ltd., Cl. H(2) 134,000 1,011,609
- --------------------------------------------------------------------------------
Media--7.4%
Grupo Radio Centro SA de CV, Sponsored ADR 31,600 458,200
- --------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored ADR(1)(2) 58,700 1,915,087
- --------------------------------------------------------------------------------
Lusomundo SGPS SA 138,000 1,038,474
- --------------------------------------------------------------------------------
Times Publishing Ltd. 550,000 1,163,624
----------
4,575,385
- --------------------------------------------------------------------------------
Retail: General--0.2%
PT Matahari Putra Prima 270,000 143,322
- --------------------------------------------------------------------------------
Retail: Specialty--3.9%
Courts (Singapore) Ltd. 755,000 574,044
- --------------------------------------------------------------------------------
Ellerine Holdings Ltd. 75,000 621,867
- --------------------------------------------------------------------------------
Giordano International Ltd. 1,700,000 1,206,600
----------
2,402,511
- --------------------------------------------------------------------------------
Consumer Non-Cyclicals--19.0%
- --------------------------------------------------------------------------------
Beverages--5.1%
Al-Ahram Beverages Co., GDR(1)(2) 20,400 520,200
- --------------------------------------------------------------------------------
Cia Cervejaria Brahma, Preference 777,000 519,425
- --------------------------------------------------------------------------------
Fomento Economico Mexicano SA de CV, Cl. B,
Sponsored ADR 44,000 301,475
- --------------------------------------------------------------------------------
Hellenic Bottling Co., SA 10,000 362,227
- --------------------------------------------------------------------------------
Serm Suk Public Co. Ltd. 21,800 374,916
- --------------------------------------------------------------------------------
Vina Concha y Toro SA, ADR 40,000 1,085,000
- --------------------------------------------------------------------------------
3,163,243
- --------------------------------------------------------------------------------
Food--4.9%
Cresud SA(2) 450,000 1,057,696
- --------------------------------------------------------------------------------
Dairy Farm International Holdings Ltd. 1,260,000 1,058,400
- --------------------------------------------------------------------------------
Disco SA, Sponsored ADR(2) 400 17,575
- --------------------------------------------------------------------------------
Makro Atacadista SA, GDR 37,500 534,375
- --------------------------------------------------------------------------------
Rolimpex SA(2) 91,720 356,345
----------
3,024,391
10 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Healthcare/Drugs--6.5%
Dr. Reddy's Laboratories Ltd. 130,000 $1,008,189
- --------------------------------------------------------------------------------
Glaxo (India) Ltd. 90,000 1,011,973
- --------------------------------------------------------------------------------
Lavipharm, SA 146,300 1,090,364
- --------------------------------------------------------------------------------
Pfizer Ltd. 110,000 937,104
------------
4,047,630
- --------------------------------------------------------------------------------
Household Goods--0.8%
Pond's (India) Ltd.(2) 10,000 466,625
- --------------------------------------------------------------------------------
Tobacco--1.7%
Eastern Tobacco(2) 20,000 504,236
- --------------------------------------------------------------------------------
Papastratos Cigarettes SA 18,800 321,734
- --------------------------------------------------------------------------------
R.J. Reynolds Berhad 123,000 202,502
------------
1,028,472
- --------------------------------------------------------------------------------
Energy--5.7%
- --------------------------------------------------------------------------------
Energy Services & Producers--1.4%
Gazprom, ADR(1) 44,295 858,216
- --------------------------------------------------------------------------------
Oil-Integrated--4.3%
Elf Gabon SA 2,250 515,301
- --------------------------------------------------------------------------------
Lukoil Oil Co., Sponsored ADR 6,000 543,446
- --------------------------------------------------------------------------------
Petroleo Brasileiro SA, ADR 17,650 442,867
- --------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 2,400,000 580,222
- --------------------------------------------------------------------------------
Surgutneftegaz, Sponsored ADR 10,500 568,011
------------
2,649,847
- --------------------------------------------------------------------------------
Financial--30.0%
- --------------------------------------------------------------------------------
Banks--18.5%
Amalgamated Banks of South Africa Ltd. 150,000 973,566
- --------------------------------------------------------------------------------
Banco Bradesco SA, Preference 99,200,000 972,018
- --------------------------------------------------------------------------------
Banco de Galicia y Buenos Aires SA de CV, Sponsored ADR 15,300 455,414
- --------------------------------------------------------------------------------
Banco Espirito Santo e Comercial de Lisboa, SA 21,000 517,185
- --------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA, Sponsored ADR 18,900 618,975
- --------------------------------------------------------------------------------
Banco Itau SA, Preference 685,000 388,921
- --------------------------------------------------------------------------------
Banco Totta & Acores, B Shares 60,000 1,080,341
- --------------------------------------------------------------------------------
Bank Handlowy W Warszawie, GDR(2) 20,000 252,102
- --------------------------------------------------------------------------------
Bank Inicjatyw Gospodarczych SA 135,000 157,348
- --------------------------------------------------------------------------------
Bank Rozwoju Eksportu SA 3,325 66,983
- --------------------------------------------------------------------------------
Banque Libanaise Pour Le Comm SAL, GDR, Cl. B(2) 18,000 424,800
- --------------------------------------------------------------------------------
Commercial International Bank, Sponsored GDR 37,000 926,850
- --------------------------------------------------------------------------------
Grupo Financiero Banorte SA de CV, Series B(2) 720,000 1,109,117
- --------------------------------------------------------------------------------
Grupo Financiero Inbursa SA de CV, Series B 119,000 488,119
11 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Banks (continued)
Hansabank Ltd. 9,700 $ 161,968
- --------------------------------------------------------------------------------
HSBC Holdings plc 16,982 517,193
- --------------------------------------------------------------------------------
Liu Chong Hing Bank Ltd. 215,000 572,942
- --------------------------------------------------------------------------------
Philippine National Bank(2) 46,750 202,993
- --------------------------------------------------------------------------------
PT Pan Indonesia Bank(2) 1,100,000 414,384
- --------------------------------------------------------------------------------
Public Bank Berhad 114,000 107,137
- --------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS 5,311,108 212,305
- --------------------------------------------------------------------------------
Uniao de Bancos Brasileiros SA, Preference 7,470,000 265,350
- --------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros SA,
Sponsored GDR Representing 500 Units of one Preferred
Share of Unibanco and one Preferred Share of Unibanco
Holdings SA(2) 11,300 395,500
- --------------------------------------------------------------------------------
Wielkopolski Bank Kredytowy SA 27,000 147,635
----------
11,429,146
- --------------------------------------------------------------------------------
Diversified Financial--7.9%
Banco BHIF, Sponsored ADR 43,200 950,400
- --------------------------------------------------------------------------------
H.O. Sabanci Holdings, Inc.(2) 125,000 1,031,250
- --------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd. 200,000 495,458
- --------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd.,
GDR(1)(2) 76,700 1,073,800
- --------------------------------------------------------------------------------
London Forfaiting Co. plc 170,000 1,240,679
- --------------------------------------------------------------------------------
Public Finance Berhad 111,000 76,144
----------
4,867,731
- --------------------------------------------------------------------------------
Insurance--3.6%
Adamjee Insurance Co. Ltd. 277,700 756,343
- --------------------------------------------------------------------------------
Aksigorta AS 6,250,000 382,212
- --------------------------------------------------------------------------------
Liberty Life Association of Africa Ltd. 36,000 1,108,810
----------
2,247,365
- --------------------------------------------------------------------------------
Industrial--5.5%
- --------------------------------------------------------------------------------
Industrial Materials--0.3%
HI Cement Corp.(1) 1,600,000 189,473
- --------------------------------------------------------------------------------
Industrial Services--3.5%
Asian Terminals, Inc. 2,300,000 264,802
- --------------------------------------------------------------------------------
Cia de Saneamento Basico de Sao Paulo(2) 5,040,000 1,338,466
- --------------------------------------------------------------------------------
MRC Allied Industries, Inc.(2) 4,400,000 315,526
- --------------------------------------------------------------------------------
Noble Group Ltd.(2) 550,000 231,000
----------
2,149,794
- --------------------------------------------------------------------------------
Transportation--1.7%
Guangshen Railway Co. Ltd., Sponsored ADR 50,000 1,065,625
12 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Technology--2.0%
- --------------------------------------------------------------------------------
Telecommunications-Technology--2.0%
Ericsson Telecomunicacoes SA 9,800,000 $ 482,822
- --------------------------------------------------------------------------------
Intracom SA 5,000 207,693
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd. 697 522,360
----------
1,212,875
- --------------------------------------------------------------------------------
Utilities--10.8%
- --------------------------------------------------------------------------------
Electric Utilities--3.3%
Cia Eletricidade Da Bahia(2) 9,160,000 733,977
- --------------------------------------------------------------------------------
Cia Paranaense Energia, Sponsored ADR,
Preference B Shares 37,800 543,375
- --------------------------------------------------------------------------------
Electricidade de Portugal SA 20,000 312,719
- --------------------------------------------------------------------------------
First Philippine Holdings Corp., B Shares 420,000 428,289
----------
2,018,360
- --------------------------------------------------------------------------------
Gas Utilities--0.9%
Primagaz Rt. 11,000 560,046
- --------------------------------------------------------------------------------
Telephone Utilities--6.6%
Telecomunicacoes Brasileiras SA 13,100,000 1,379,704
- --------------------------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro SA, Preference 8,194,722 1,055,862
- --------------------------------------------------------------------------------
Telefonica del Peru SA, ADR 40,000 935,000
- --------------------------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR 48,000 709,200
----------
4,079,766
----------
Total Common Stocks (Cost $55,392,624) 56,574,751
Face
Amount(3)
================================================================================
Foreign Government Obligations--0.5%
- --------------------------------------------------------------------------------
Bonos de la Tesoreria de la Federacion,
Zero Coupon:
24.49%, 11/6/97(4) MXP 726,690 89,890
24.66%, 12/4/97(4) MXP 720,000 87,618
22.90%, 2/4/98(4) MXP 962,300 112,972
----------
Total Foreign Government Obligations
(Cost $287,753) 290,480
Units
================================================================================
Rights, Warrants and Certificates--0.0%
- --------------------------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp. 6/00 (Cost $0) 94,500 6,958
13 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Face Market Value
Amount(3) See Note 1
================================================================================
Repurchase Agreements--10.0%
- --------------------------------------------------------------------------------
Repurchase agreement with J.P. Morgan Securities,
Inc., 5.55%, dated 8/29/97, to be repurchased at
$6,203,823 on 9/2/97, collateralized by U.S. Treasury
Bonds, 7.25%-11.25%, 2/15/03-8/15/19, with a value of
$5,915,535 and U.S. Treasury Nts., 5.875%, 10/31/98,
with a value of $414,508 (Cost $6,200,000) $6,200,000 $6,200,000
- --------------------------------------------------------------------------------
Total Investments, at Value (Cost $61,880,377) 102.1% 63,072,189
- --------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (2.1) (1,275,601)
--------- -----------
Net Assets 100.0% $61,796,588
========= ===========
1. 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 $5,479,158 or 8.87% of the Fund's net
assets at August 31, 1997.
2. Non-income producing security.
3. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency:
MXP--Mexican Peso
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
14 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
Country Market Value Percent
- --------------------------------------------------------------------------------
Brazil $10,555,266 16.7%
United States 6,200,000 9.8
India 5,702,350 9.1
Mexico 4,562,478 7.2
Hong Kong 3,539,344 5.6
Argentina 3,260,597 5.2
Portugal 2,948,719 4.7
Singapore 2,796,068 4.4
South Africa 2,704,244 4.3
Chile 2,035,400 3.2
Greece 1,982,018 3.1
Russia 1,969,673 3.1
Egypt 1,951,286 3.1
Lebanon 1,774,800 2.8
Turkey 1,625,767 2.6
Philippines 1,401,083 2.2
Great Britain 1,240,679 2.0
China 1,065,625 1.7
Poland 980,413 1.6
Peru 935,000 1.5
Pakistan 756,343 1.2
Indonesia 564,664 0.9
Hungary 560,046 0.9
Korea, Republic of (South) 522,360 0.8
France 515,301 0.8
Malaysia 385,783 0.6
Thailand 374,915 0.6
Finland 161,967 0.3
----------- -----
Total $63,072,189 100.0%
=========== =====
See accompanying Notes to Financial Statements.
15 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities August 31, 1997
- --------------------------------------------------------------------------------
===============================================================================
Assets
Investments, at value (including repurchase agreements of
$6,200,000) (cost $61,880,377)--see accompanying statement $63,072,189
- -------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 470,117
Investments sold 325,279
Interest 47,462
- -------------------------------------------------------------------------------
Other 15,343
------------
Total assets 63,930,390
===============================================================================
Liabilities
Bank overdraft 36,219
- -------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 1,265,885
Investments purchased 741,585
Distribution and service plan fees 21,093
Transfer and shareholder servicing agent fees 4,178
Trustees' fees--Note 1 4,122
Other 60,720
------------
Total liabilities 2,133,802
===============================================================================
Net Assets $61,796,588
============
===============================================================================
Composition of Net Assets
Paid-in capital $59,065,301
- -------------------------------------------------------------------------------
Accumulated net investment income 276,929
- -------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency
transactions 1,264,096
- -------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,190,262
------------
Net assets $61,796,588
============
16 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based
on net assets of $37,613,291 and 2,933,407 shares of
beneficial interest outstanding) $12.82
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $13.60
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $20,469,923 and 1,607,566
shares of beneficial interest outstanding) $12.73
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $3,713,374 and 291,443 shares
of beneficial interest outstanding) $12.74
See accompanying Notes to Financial Statements.
17 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Period Ended August 31, 1997(1)
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $24,346) $ 537,816
- --------------------------------------------------------------------------------
Interest 207,532
------------
Total income 745,348
================================================================================
Expenses
Management fees--Note 4 211,914
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 25,863
Class B 60,686
Class C 12,147
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 75,095
- --------------------------------------------------------------------------------
Shareholder reports 30,825
- --------------------------------------------------------------------------------
Registration and filing fees 18,177
- --------------------------------------------------------------------------------
Legal and auditing fees 15,714
- --------------------------------------------------------------------------------
Custodian fees and expenses 14,757
- --------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 5,853
- --------------------------------------------------------------------------------
Deferred organization expenses--Note 1 2,663
- --------------------------------------------------------------------------------
Other 3,002
------------
Total expenses 476,696
Less expenses paid indirectly--Note 4 (6,757)
------------
Net expenses 469,939
================================================================================
Net Investment Income 275,409
================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments 311,180
Foreign currency transactions 952,916
------------
Net realized gain 1,264,096
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 2,694,962
Translation of assets and liabilities denominated in
foreign currencies (1,504,700)
------------
Net change 1,190,262
------------
Net realized and unrealized gain 2,454,358
================================================================================
Net Increase in Net Assets Resulting from Operations $ 2,729,767
============
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
See accompanying Notes to Financial Statements.
18 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Period Ended
August 31,
1997(1)
================================================================================
Operations
Net investment income $ 275,409
- --------------------------------------------------------------------------------
Net realized gain 1,264,096
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 1,190,262
------------
Net increase in net assets resulting from operations 2,729,767
================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 35,563,435
Class B 19,948,692
Class C 3,554,694
================================================================================
Net Assets
Total increase 61,796,588
- --------------------------------------------------------------------------------
Beginning of period --
------------
End of period (including accumulated net investment
income of $276,929) $61,796,588
============
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
See accompanying Notes to Financial Statements.
19 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class C
------------ ------------ ------------
Period Ended Period Ended Period Ended
August 31, August 31, August 31,
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 from investment operations:
Net investment income .07 .03 .04
Net realized and unrealized gain 2.75 2.70 2.70
------ ------ --------
Total income from investment operations 2.82 2.73 2.74
- ------------------------------------------------------------------------------------
Net asset value, end of period $12.82 $12.73 $12.74
====== ====== ========
====================================================================================
Total Return, at Net Asset Value(2) 28.20% 27.30% 27.40%
====================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $37,613 $20,470 $3,713
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $17,852 $7,802 $1,560
- ------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 1.45% 0.87% 0.98%
Expenses(4) 1.94% 2.78% 2.77%
- ------------------------------------------------------------------------------------
Portfolio turnover rate(5) 26.7% 26.7% 26.7%
Average brokerage commission rate(6) $0.0012 $0.0012 $0.0012
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 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 expense ratio reflects the effect of gross expenses paid indirectly by
the Fund.
5. 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 August 31, 1997 were $60,015,886 and $5,966,015,
respectively.
6. 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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
20 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
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 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 A shares are sold with a front-end sales charge. 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 that class and exclusive voting rights
with respect to matters affecting that 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 an
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 foreign 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.
21 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
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. During the period ended
August 31, 1997, a provision of $787 was made for the Fund's projected benefit
obligations, resulting in an accumulated liability of $787 at August 31, 1997.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Organization Costs. The Manager advanced $17,000 for organization and start-up
costs of the Fund. Such expenses are being amortized over a five-year period
from the date operations commenced. In the event that all or part of the
Manager's initial investment in shares of the Fund is withdrawn during the
amortization period, the redemption proceeds will be reduced to reimburse the
Fund for any unamortized expenses, in the same ratio as the number of shares
redeemed bears to the number of initial shares outstanding at the time of such
redemption.
22 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
During the period ended August 31, 1997, the Fund adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Accordingly, during the period ended August 31,
1997, amounts have been reclassified to reflect an increase in undistributed
net investment income of $1,520. Paid-in capital was decreased by the same
amount.
- --------------------------------------------------------------------------------
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.
23 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
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:
Period Ended August 31, 1997(1)
----------------------------------
Shares Amount
--------------- ----------------
Class A:
Sold 4,247,882 $ 52,288,386
Redeemed (1,314,475) (16,724,951)
----------- -------------
Net increase 2,933,407 $ 35,563,435
=========== =============
Class B:
Sold 1,782,562 $ 22,206,999
Redeemed (174,996) (2,258,307)
----------- -------------
Net increase 1,607,566 $ 19,948,692
=========== =============
Class C:
Sold 342,441 $ 4,208,237
Redeemed (50,998) (653,543)
----------- -------------
Net increase 291,443 $ 3,554,694
=========== =============
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
================================================================================
3. Unrealized Gains and Losses on Investments
At August 31, 1997, net unrealized appreciation on investments of $1,191,812
was composed of gross appreciation of $5,715,349, and gross depreciation of
$4,523,537.
24 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 average annual net assets
in excess of $1 billion.
For the period ended August 31, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $260,494, of which $78,557
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 $369,016 and $23,133, respectively, of which $14,225 was
paid to an affiliated broker/ dealer for Class B. During the period ended August
31, 1997, OFDI received contingent deferred charges of $9,165 upon redemption of
Class C shares as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
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 at the custodian bank by the Fund.
25 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (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 shareholder 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. During the period ended August 31, 1997, OFDI paid
$1,108 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
The Fund has adopted 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 August 31, 1997, OFDI retained $52,924
and $7,886, respectively, as compensation for Class B and Class C sales
commissions and service fee advances, as well as financing costs. If either
Plan is terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for distributing
shares before the Plan was terminated. At August 31, 1997, OFDI had incurred
unreimbursed expenses of $355,034 for Class B and $38,902 for Class C.
26 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Developing Markets Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Developing Markets Fund as of August 31, 1997, and
the related statement of operations, statement of changes in net assets and the
financial highlights for the period from November 18, 1996 (commencement of
operations) to August 31, 1997. 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 audit.
We conducted our audit in accordance with generally accepted
auditing standards. 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 and financial highlights. Our procedures included
confirmation of securities owned as of August 31, 1997, by correspondence with
the custodian and brokers; and where confirmations were not received from
brokers, we performed other auditing procedures. 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 audit provides 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, 1997, and the
results of its operations, changes in net assets and financial highlights for
the period from November 18, 1996 (commencement of operations) to August 31,
1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
September 22, 1997
27 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1998, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1997.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
Dividends paid by the Fund during the period ended August 31, 1997
which are not designated as capital gain distributions should be multiplied by
0.86% to arrive at the net amount eligible for the corporate dividend-received
deduction.
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 adviser for specific
guidance.
28 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
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.
29 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
==========================================================================================
<S> <C>
Real Asset Funds
- ------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==========================================================================================
Stock Funds
- ------------------------------------------------------------------------------------------
Developing Markets Fund Quest Small Cap Value Fund Global Fund
Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund
International Growth Fund Quest Capital Value Fund Disciplined Value Fund
Discovery Fund Growth Fund Quest Value Fund
==========================================================================================
Stock & Bond Funds
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==========================================================================================
Bond Funds
- ------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==========================================================================================
Municipal Funds
- ------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==========================================================================================
Money Market Funds(4)
- ------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==========================================================================================
LifeSpan
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer Developing Markets Fund
<PAGE>
Internet
24-hr access to account
information
- ----------------------------
www.oppenheimerfunds.com
- ----------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ----------------------------
1-800-525-7048
- ----------------------------
Account Transactions
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ----------------------------
1-800-852-8457
- ----------------------------
PhoneLink
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and automated transactions
- ----------------------------
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- ----------------------------
Telecommunication Device
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Mon-Fri 8:30am-2pm ET
- ----------------------------
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- ----------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
- ----------------------------
1-800-835-3104
- ----------------------------
RA0785.001.0897 October 30, 1997
Information and services
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing
simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
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When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
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So call us today, or visit us at our website at
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