-----------------------------------
Semiannual Report February 28, 1998
-----------------------------------
OPPENHEIMER
Developing
Markets Fund
[GRAPHIC OF GLOBE]
[OPPENHEIMER FUNDS LOGO]
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
11 Statement of Investments
16 Statement of Assets and Liabilities
18 Statement of Operations
19 Statements of Changes in Net Assets
20 Financial Highlights
22 Notes to Financial Statements
30 Officers and Trustees
32 Information and Services
[bullet] 1st Quartile Ranking: Lipper Analytical Services ranked the Fund's
Class A shares 9 out of 142 in the emerging markets fund category for the
one-year period ended March 31, 1998.(1)
[bullet] Highly Diversified Fund: By holding stocks in more than two dozen
countries around the world, we believe we are able to help reduce volatility and
risk in the portfolio.
[bullet] Our Best-Performing Areas: financial services, media and drug and
medical companies presented the best opportunities for the Fund during the past
six months.
Cumulative Total Returns
For the 6-Month Period
Ended 2/28/98
Class A
Without With
Sales Chg.(2) Sales Chg.(3)
(6.22)% (11.61)%
Class B
Without With
Sales Chg.(2) Sales Chg.(3)
(6.63)% (11.10)%
Class C
Without With
Sales Chg.(2) Sales Chg.(3)
(6.63)% (7.52)%
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. Source: Lipper Analytical Services, Inc., 3/31/98. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 9 of 142 (one-year) among
emerging markets funds for the period ended March 31, 1998. Past performance
does not guarantee future results.
2. 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.
3. Class A returns include the current maximum initial sales charge of 5.75%.
Class B returns include the applicable contingent deferred sales charge of 5%.
Class C returns include the contingent deferred sales charge of 1%. 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 0.25%
service fee.
2 Oppenheimer Developing Markets Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO OF BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer
Developing Markets Fund
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to
its lowest level in 30 years and inflation has also fallen to a record low. In
fact, long-term interest rates have fallen to their lowest level since the
government began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch farther and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations seeking to improve their
bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
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.
Bridget A. Macaskill
March 20, 1998
3 Oppenheimer Developing Markets Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Developing Markets Fund, like most emerging market funds,
experienced some difficulty over the past six months, due primarily to concerns
in Asia. However, the Fund has weathered the storm much better than many of its
competitors. For the six-month period ending February 28, 1998, the Fund's Class
A shares had a cumulative total return, without sales charges, of (6.22)%.(2)
This compares to the IFC Emerging Markets Investable Composite Total Return
Index of (14.16)% for the same period.(3)
Avg Annual Total Returns
For the Periods Ended 3/31/98(1)
Class A Since
1 year Inception
3.39% 14.62%
Class B Since
1 year Inception
3.76% 15.89%
Class C Since
1 year Inception
7.76% 18.72%
Top 10 Industries(4)
- -----------------------------------------------------------------
Banks 14.7% Telephone-Utility 5.9%
- -----------------------------------------------------------------
Diversified Financial 9.4 Healthcare/Drugs 5.6
- -----------------------------------------------------------------
Media 8.8 Electric Utilities 4.1
- -----------------------------------------------------------------
Autos & Housing 7.3 Insurance 3.5
- -----------------------------------------------------------------
Food 6.2 Oil-Integrated 2.8
- -----------------------------------------------------------------
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, B and C shares were first publicly offered on 11/18/96. Class B
returns include the applicable contingent deferred sales charge of 5% for the
1-year period, and 4% since inception. Class C returns include the contingent
deferred sales charge of 1% for the one year result. 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 0.25% service fee.
2. 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.
3. The IFC Emerging Markets Investable Composite Total Return Index is a
broad-based, unmanaged index of emerging market stocks including reinvestment of
net dividends, and cannot be purchased by investors. Past performance does not
guarantee future results.
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.
Region Breakdown(4)
[TABULAR REPRESENTATION OF PIE CHART]
Latin America 33.7%
Asia 20.3
United States/
Canada 16.6
Emerging Europe 14.7
Middle East/
Africa 13.2
Europe 1.5
What We Look For
[bullet] Anticipated long-term, sustainable earnings growth for a reasonable
price.
[bullet] Quality companies in good businesses with strong management.
[bullet] Diversification to help lower the volatility of emerging markets and
other foreign investment risks, such as currency fluctuations.
Top 10 Stock Holdings(4)
- -----------------------------------------------------------------------------
Industrial Credit & Dairy Farm International
Investment Corp. of India 4.0% Holdings Ltd. 2.3%
- -----------------------------------------------------------------------------
Lusomundo SGPS SA 3.4 Cia Paranaense Energia,
Sponsored ADR,
Preference B 2.3
- -----------------------------------------------------------------------------
Grupo TeleVisa SA,
Sponsored GDR 2.6 Cia Electricidade Da Bahia 1.8
- -----------------------------------------------------------------------------
Banco Totta & Acores, Banco BHIF, Sponsored
B Shares 2.6 ADR 1.7
- -----------------------------------------------------------------------------
Telecommunicacoes Dr. Reddy's Laboratories
Brasileiras SA 2.6 Ltd. 1.7
- -----------------------------------------------------------------------------
4. Portfolio is subject to change. Percentages are as of February 28, 1998 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?
We were reasonably pleased with the performance of Oppenheimer Developing
Markets Fund during the past six months, despite fairly difficult conditions in
emerging markets around the world. As of February 28, 1998, the Fund ranked
among the top-performing diversified emerging markets funds. For the six month
period ending February 28, 1998, the Fund's Class A shares had a cumulative
total return, without sales charges, of (6.22)%.(1) While the Fund's negative
return may be unsettling, by contrast, the IFC Emerging Markets Investable
Composite Total Return Index posted a loss of (14.16)% during the same
period.(2)
[CALLOUT]
"While we were concerned about prospects in Asia generally, we remain invested
in a few Asian companies."
[END CALLOUT]
We believe we achieved such strong relative performance thanks to our
philosophy of buying "good companies in good businesses at good prices" in
diversified markets around the world.
How has your strategy contributed to the Fund's positive performance?
The key has been buying the best companies for the long term at the bargain
prices. Typically, such companies can perform well, even in turbulent times.
Accordingly, we maintain a "bottom up" investment strategy, evaluating the
business fundamentals of companies one at a time. The market in which each is
situated is a secondary consideration. For example, while we have been very
concerned about prospects in Asia generally, we remain invested in a few Asian
companies we think have
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. The IFC Emerging Markets Investable Composite Total Return Index is a
broad-based, unmanaged index of emerging market stocks including reinvestment
of net dividends, and cannot be purchased by investors. Past performance does
not guarantee future results.
6 Oppenheimer Developing Markets Fund
<PAGE>
[PHOTO OF FRANK JENNINGS AND RAJEEV BHAMAN]
Portfolio Management
Team (l to r)
Frank Jennings and
Rajeev Bhaman
steady, long-term growth prospects. We bought the stock of Dairy Farm, an
Asian-based supermarket chain, when new management focused more sharply on the
company's bottom line. Although the company operates in an environment where
local currencies have fallen sharply against the U.S. dollar, its stock has
recently climbed strongly in U.S. dollar terms.
At the same time, we have tried to maintain a highly diversified
portfolio to reduce volatility and risk. At present, we hold stocks in more than
two dozen countries around the world. Our holdings are most heavily weighted in
Brazil, India, Mexico and Portugal. Of these, Portugal has been the strongest
performer during the last six months. Since it's likely to be an early entrant
into the European Monetary Union, the cost of capital has fallen rapidly there,
providing a powerful boost to the country's growth. The Fund has capitalized
with holdings like Banco Espirito Santo, one of Portugal's best run banks.
In what types of businesses has the Fund invested?
Our largest holdings were among companies in the financial services area.
Because of their core businesses, these companies often possess preferential
access to business knowledge and can employ leverage to put their capital to
work more efficiently. In many parts of the world, they also stand in a
privileged position in relation to their national governments. As a result,
financial services companies tend to perform well when the local economy
thrives. We strive to identify
7 Oppenheimer Developing Markets Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
well-organized and well-managed companies that can provide capital and services
at a competitive cost.
Another area of concentration for the Fund has been the media business,
particularly companies that provide high quality content and delivery. One such
company, Grupo TeleVisa, is currently among our largest holdings. This leading
Mexican broadcaster is the world's largest Spanish-language content provider--a
market we expect to grow as the Spanish-speaking world grows wealthier.
Drug and medical companies are yet another focus of our global
perspective. We look for companies that provide unique formulations, produce
products more cost-efficiently than competitors, or have markets in which they
show particular strength.
[CALLOUT]
"We don't play
a market timing
game . . ."
[END CALLOUT]
How has the Asian crisis impacted today's emerging markets?
A number of markets where we invest have been suffering from the recent market
pullbacks and currency devaluations in Asia's emerging markets. Some lenders
and investors have failed to differentiate between various emerging markets.
Observing the problems in Asia, they have become concerned that a country like
Brazil may also be vulnerable to devaluation due to its large deficit and an
arguably overvalued currency. Accordingly, less money has flowed into the
Brazilian economy and the availability of credit has tightened. That tightening
of credit, in turn, has raised concerns about the ability of companies to
obtain the capital they need to operate and grow, and the country's market as a
whole has suffered. Our stocks in Brazil, and many other emerging markets, have
fallen as a result.
8 Oppenheimer Developing Markets Fund
<PAGE>
How is the Fund responding?
Generally speaking, we remain dedicated to our philosophy of buying the best
companies we can for the long term. We don't play a market timing game by
jumping in and out of markets based on short-term predictions. We typically do
not hedge against currency movements. We prefer to make an investment decision
on individual company prospects, rather than on currency movements.
[CALLOUT]
". . . we prefer
to make an investment decision based
on individual company prospects."
[END CALLOUT]
What is your outlook for the Fund?
In Southeast Asia, domestic political realities are making it difficult for
countries to implement necessary economic restructuring. As a result, the
situation remains problematic and we are finding fewer attractive investments
in the region. However, over time, we believe that the consequences of the
Asian crisis will have a relatively positive impact on economies elsewhere
because the lower cost of Asian goods and services is likely to keep global
inflation and interest rates in check. We believe that should create favorable
conditions for growth, especially among countries with relatively large
domestic sectors.
We continue to have a great deal of confidence in our disciplined
strategy of building the portfolio one company and one investment at a time.
Temporary ups and downs are inevitable, given the nature of markets. But quality
companies are most likely to survive difficult times and outperform when
conditions warrant. We believe our approach positions Fund shareholders to
benefit from the diversity and strengths of the world's emerging markets . . .
which is why we believe Oppenheimer Developing Markets Fund is part of The Right
Way to Invest.
9 Oppenheimer Developing Markets Fund
<PAGE>
Financials
- -------------------------------------------------------------------------------
10 Oppenheimer Developing Markets Fund
<PAGE>
Statement of Investments February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
====================================================================================
<S> <C> <C>
Common Stocks--83.9%
- ------------------------------------------------------------------------------------
Basic Materials--1.6%
- ------------------------------------------------------------------------------------
Gold & Platinum--1.2%
Driefontein Consolidated Ltd.(1) 108,700 $ 701,714
- ------------------------------------------------------------------------------------
Metals--0.4%
De Beers Consolidated Mines Ltd., ADR 11,500 229,281
- ------------------------------------------------------------------------------------
Consumer Cyclicals--17.8%
- ------------------------------------------------------------------------------------
Autos & Housing--7.3%
Brazil Realty SA, GDR(2) 33,800 747,683
- ------------------------------------------------------------------------------------
Courts (Singapore) Ltd. 2,306,000 938,894
- ------------------------------------------------------------------------------------
Ellerine Holdings Ltd. 88,000 773,771
- ------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA, Sponsored GDR 25,332 883,454
- ------------------------------------------------------------------------------------
Solidere, GDR(2) 79,800 999,495
------------
4,343,297
- ------------------------------------------------------------------------------------
Leisure & Entertainment--1.6%
CDL Hotels International Ltd. 2,678,000 977,122
- ------------------------------------------------------------------------------------
Media--8.9%
Grupo Radio Centro SA de CV, Sponsored ADR 53,000 824,813
- ------------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored GDR(1)(2) 44,500 1,557,500
- ------------------------------------------------------------------------------------
Lusomundo SGPS SA(1) 189,000 2,034,390
- ------------------------------------------------------------------------------------
Times Publishing Ltd. 440,000 868,592
------------
5,285,295
- ------------------------------------------------------------------------------------
Consumer Non-Cyclicals--18.0%
- ------------------------------------------------------------------------------------
Beverages--2.0%
Serm Suk Public Co. Ltd. 71,800 709,670
- ------------------------------------------------------------------------------------
Vina Concha y Toro SA, ADR 17,000 493,000
------------
1,202,670
- ------------------------------------------------------------------------------------
Food--6.2%
Cresud SA(1) 450,000 891,433
- ------------------------------------------------------------------------------------
Dairy Farm International Holdings Ltd. 1,164,000 1,396,800
- ------------------------------------------------------------------------------------
Makro Atacadista SA 91,000 887,250
- ------------------------------------------------------------------------------------
Rolimpex SA(1) 250,000 517,605
------------
3,693,088
</TABLE>
11 Oppenheimer Developing Markets Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------
<S> <C> <C>
Healthcare/Drugs--5.7%
Cheminor Drugs Ltd.(1) 152,850 $ 504,968
- ------------------------------------------------------------------------------------
Dr. Reddy's Laboratories Ltd. 113,000 1,024,466
- ------------------------------------------------------------------------------------
Glaxo (India) Ltd.(1) 916 8,345
- ------------------------------------------------------------------------------------
Lavipharm, SA(1) 159,300 941,358
- ------------------------------------------------------------------------------------
Pfizer Ltd. 384 4,704
- ------------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd., ADR 21,000 882,000
------------
3,365,841
- ------------------------------------------------------------------------------------
Household Goods--2.6%
Grupo Casa Autrey, SA 48,500 727,500
- ------------------------------------------------------------------------------------
Pond's (India) Ltd. 28,000 821,321
------------
1,548,821
- ------------------------------------------------------------------------------------
Tobacco--1.5%
Eastern Tobacco 24,500 543,370
- ------------------------------------------------------------------------------------
Papastratos Cigarettes SA 18,800 320,217
------------
863,587
- ------------------------------------------------------------------------------------
Energy--3.8%
- ------------------------------------------------------------------------------------
Energy Services & Producers--0.9%
Gazprom, ADR(2) 26,795 555,996
- ------------------------------------------------------------------------------------
Oil-Integrated--2.9%
Energy Africa Ltd.(1) 110,000 361,731
- ------------------------------------------------------------------------------------
Petroleo Brasileiro SA, ADR 17,650 399,803
- ------------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 4,160,000 938,633
------------
1,700,167
- ------------------------------------------------------------------------------------
Financial--27.9%
- ------------------------------------------------------------------------------------
Banks--14.8%
Amalgamated Banks of South Africa Ltd. 109,000 838,205
- ------------------------------------------------------------------------------------
Banco Bradesco SA, Preference 73,722,790 626,232
- ------------------------------------------------------------------------------------
Banco de Galicia y Buenos Aires SA de CV,
Sponsored ADR 17,977 444,943
- ------------------------------------------------------------------------------------
Banco Espirito Santo e Comercial de Lisboa SA(1) 22,800 926,332
- ------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA, Sponsored ADR 11,400 337,725
- ------------------------------------------------------------------------------------
Banco Totta & Acores, B Shares(1) 56,000 1,553,672
- ------------------------------------------------------------------------------------
Banque Audi SAL GDR, B Shares(1) 18,000 522,000
- ------------------------------------------------------------------------------------
Banque Libanaise Pour Le Commercial, GDR(1) 30,500 568,825
- ------------------------------------------------------------------------------------
Commercial International Bank, Sponsored GDR 37,500 620,625
- ------------------------------------------------------------------------------------
Espirito Santo Financial Group, ADR 20,000 492,500
</TABLE>
12 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
==============================================================================================
<S> <C> <C>
Banks (continued)
Grupo Financiero Banorte SA de CV, Series B(1) 430,000 $ 623,544
- ----------------------------------------------------------------------------------------------
Grupo Financiero Inbursa SA de CV, Series B 165,000 530,414
- ----------------------------------------------------------------------------------------------
PT Pan Indonesia Bank 1,100,000 77,193
- ----------------------------------------------------------------------------------------------
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 18,000 616,500
------------
8,778,710
- ----------------------------------------------------------------------------------------------
Diversified Financial--9.5%
Banco BHIF, Sponsored ADR 73,500 1,047,375
- ----------------------------------------------------------------------------------------------
Haci Omer Sabanci Holding AS ADR 70,000 945,000
- ----------------------------------------------------------------------------------------------
Housing Development Finance Corp. Ltd.(1) 5,000 383,767
- ----------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd.(1) 4,040 9,137
- ----------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd. 2,160 4,935
- ----------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of India Ltd., GDR(2) 150,000 2,362,500
- ----------------------------------------------------------------------------------------------
London Forfaiting Co. plc 126,500 874,787
------------
5,627,501
- ----------------------------------------------------------------------------------------------
Insurance--3.6%
Adamjee Insurance Co. Ltd. 322,500 608,636
- ----------------------------------------------------------------------------------------------
Aksigorta AS 11,375,000 665,133
- ----------------------------------------------------------------------------------------------
Liberty Life Assn. of Africa Ltd. 27,700 840,836
------------
2,114,605
- ----------------------------------------------------------------------------------------------
Industrial--3.3%
- ----------------------------------------------------------------------------------------------
Industrial Services--2.0%
Cia de Saneamento Basico do Estado de Sao Paulo 4,650,126 964,873
- ----------------------------------------------------------------------------------------------
MRC Allied Industries, Inc.(1) 4,400,000 66,165
- ----------------------------------------------------------------------------------------------
Noble Group Ltd.(1) 550,000 129,250
------------
1,160,288
- ----------------------------------------------------------------------------------------------
Transportation--1.3%
Asian Terminals, Inc. 3,099,000 192,619
- ----------------------------------------------------------------------------------------------
Guangshen Railway Co. Ltd., Sponsored ADR 46,000 595,125
------------
787,744
- ----------------------------------------------------------------------------------------------
Technology--0.9%
- ----------------------------------------------------------------------------------------------
Telecommunications-Technology--0.9%
Ericsson Telecomunicacoes SA 15,700,000 529,282
- ----------------------------------------------------------------------------------------------
Plessey Corp. Ltd.(1) 20,000 27,522
------------
556,804
</TABLE>
13 Oppenheimer Developing Markets Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities--10.6%
- ----------------------------------------------------------------------------------------------------
Electric Utilities--4.1%
Cia de Eletricidade do Estado da Bahia(1) 16,560,000 $1,075,521
- ----------------------------------------------------------------------------------------------------
Cia Paranaense Energia, Sponsored ADR, Preference B Shares 106,800 1,361,700
-----------
2,437,221
- ----------------------------------------------------------------------------------------------------
Gas Utilities--0.6%
Primagaz Rt. 13,500 362,251
- ----------------------------------------------------------------------------------------------------
Telephone Utilities--5.9%
- ----------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 15,700,000 1,548,948
- ----------------------------------------------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro SA, Preference 7,418,554 1,024,015
- ----------------------------------------------------------------------------------------------------
Telefonica del Peru SA, ADR 26,400 499,950
- ----------------------------------------------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR(1) 33,000 429,000
-----------
3,501,913
-----------
Total Common Stocks (Cost $51,604,933) 49,793,916
</TABLE>
<TABLE>
<CAPTION>
Units
====================================================================================================
<S> <C> <C>
Rights, Warrants and Certificates--0.0%
- ----------------------------------------------------------------------------------------------------
Cia de Saneamento Basico do Estado de Sao Paulo Rts., Exp. 3/98 3,506 --
- ----------------------------------------------------------------------------------------------------
PT Pan Indonesia Bank Wts., Exp. 6/00 371,500 3,129
-----------
Total Rights, Warrants and Certificates (Cost $3,112) 3,129
</TABLE>
<TABLE>
<CAPTION>
Face
Amount(3)
==================================================================================================
<S> <C> <C>
U.S. Government Obligations--6.2%
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 5.85%, 2/15/27(4) $ 1,500,000 273,829
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 6.093%, 8/15/27(4) 18,900,000 3,388,997
-----------
Total U.S. Government Obligations (Cost $3,507,932) 3,662,826
====================================================================================================
Corporate Bonds and Notes--1.0%
- ----------------------------------------------------------------------------------------------------
Grupo Financiero Banorte SA de CV, 19.28% Nts., 12/5/02
(Cost $585,738)(5)(6) MXP 4,800,000 566,666
====================================================================================================
Repurchase Agreements--9.8%
- ----------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.63%, dated
2/27/98, to be repurchased at $5,802,721 on 3/2/98, collateralized
by U.S. Treasury Nts., 5.50%--6%, 9/30/98--9/30/99, with a value of
$5,923,291 (Cost $5,800,000) 5,800,000 5,800,000
- ----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $61,501,715) 100.9% 59,826,537
- ----------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets ( 0.9) (505,290)
------------ --------------
Net Assets 100.0% $59,321,247
============ ==============
</TABLE>
14 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. 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 $6,223,174 or 10.49% of the Fund's net
assets as of February 28, 1998.
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.
5. Represents the current interest rate for a variable rate security.
6. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
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>
Brazil $10,720,439 17.9%
United States 9,955,326 16.6
India 5,553,144 9.3
Mexico 4,830,437 8.1
Portugal 4,514,394 7.5
South Africa 3,773,061 6.3
Singapore 3,204,286 5.4
Argentina 2,557,555 4.3
Lebanon 2,090,320 3.5
Turkey 1,610,133 2.7
Chile 1,540,375 2.6
Greece 1,261,575 2.1
Egypt 1,163,995 1.9
Hong Kong 1,106,372 1.8
Israel 882,000 1.5
Great Britain 874,787 1.5
Thailand 709,670 1.2
Pakistan 608,636 1.0
China 595,125 1.0
Russia 555,996 0.9
Poland 517,605 0.9
Peru 499,950 0.8
Hungary 362,251 0.6
Philippines 258,784 0.4
Indonesia 80,321 0.2
----------- -----
Total $59,826,537 100.0%
=========== =====
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Developing Markets Fund
<PAGE>
Statement of Assets and Liabilities February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
========================================================================================
Assets
Investments, at value (cost $61,501,715)--see accompanying statement $59,826,537
- ----------------------------------------------------------------------------------------
Cash 120,805
- ----------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 413,135
Interest 33,182
Investments sold 19,281
- ----------------------------------------------------------------------------------------
Deferred organization costs--Note 1 22,138
- ----------------------------------------------------------------------------------------
Other 4,004
-----------
Total assets 60,439,082
========================================================================================
Liabilities
Unrealized depreciation on forward foreign currency exchange
contracts--Note 5 637
- ----------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 944,021
Shares of beneficial interest redeemed 78,621
Distribution and service plan fees 16,098
Trustees' fees--Note 1 15,422
Transfer and shareholder servicing agent fees 10,384
Other 52,652
-----------
Total liabilities 1,117,835
========================================================================================
Net Assets $59,321,247
===========
========================================================================================
Composition of Net Assets
Paid-in capital $64,309,658
- ----------------------------------------------------------------------------------------
Overdistributed net investment income (132,574)
- ----------------------------------------------------------------------------------------
Accumulated net realized loss on investments
and foreign currency transactions (3,182,326)
- ----------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of assets and
liabilities denominated in foreign currencies (1,673,511)
-----------
Net assets $59,321,247
===========
</TABLE>
16 Oppenheimer Developing Markets Fund
<PAGE>
<TABLE>
<S> <C>
==========================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $37,160,326 and 3,251,517 shares of beneficial interest outstanding) $ 11.43
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $ 12.13
- ------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $17,760,845
and 1,561,955 shares of beneficial interest outstanding) $ 11.37
- ------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $4,400,076
and 387,258 shares of beneficial interest outstanding) $ 11.36
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Developing Markets Fund
<PAGE>
Statement of Operations For the Six Months Ended February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===========================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $7,973) $ 378,484
- -------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $9,019) 235,378
----------------
Total income 613,862
===========================================================================================
Expenses
Management fees--Note 4 293,941
- -------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 39,865
Class B 96,202
Class C 19,369
- -------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 132,064
- -------------------------------------------------------------------------------------------
Custodian fees and expenses 82,126
- -------------------------------------------------------------------------------------------
Shareholder reports 39,708
- -------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 17,002
- -------------------------------------------------------------------------------------------
Legal and auditing fees 9,637
- -------------------------------------------------------------------------------------------
Registration and filing fees 1,288
- -------------------------------------------------------------------------------------------
Other 3,648
----------------
Total expenses 734,850
===========================================================================================
Net Investment Loss (120,988)
===========================================================================================
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments (442,437)
Foreign currency transactions (1,889,660)
----------------
Net realized loss (2,332,097)
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 582,585
Translation of assets and liabilities denominated in foreign currencies (3,446,358)
----------------
Net change (2,863,773)
----------------
Net realized and unrealized loss (5,195,870)
===========================================================================================
Net Decrease in Net Assets Resulting from Operations $ (5,316,858)
================
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Developing Markets Fund
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Period Ended
February 28, 1998 August 31,
(Unaudited) 1997(1)
<S> <C> <C>
=======================================================================================================
Operations
Net investment income (loss) $ (120,988) $ 275,409
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) (2,332,097) 1,264,096
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (2,863,773) 1,190,262
------------ -----------
Net increase (decrease) in net assets
resulting from operations (5,316,858) 2,729,767
=======================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (246,881) --
Class B (28,438) --
Class C (13,196) --
- -------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (1,271,390) --
Class B (679,602) --
Class C (163,333) --
=======================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial
interest transactions--Note 2:
Class A 4,097,991 35,563,435
Class B (8,110) 19,948,692
Class C 1,154,476 3,554,694
=======================================================================================================
Net Assets
Total increase (decrease) (2,475,341) 61,796,588
- -------------------------------------------------------------------------------------------------------
Beginning of period 61,796,588 --
------------ -----------
End of period [including undistributed (overdistributed) net
investment income of $(132,574) and $276,929, respectively] $ 59,321,247 $61,796,588
============ ===========
</TABLE>
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
--------------------------- --------------------------- ----------------------------
Six Months Six Months Six Months
Ended Period Ended Period Ended Period
February 28, Ended February 28, Ended February 28, Ended
1998 August 31, 1998 August 31, 1998 August 31,
(Unaudited) 1997(1) (Unaudited) 1997(1) (Unaudited) 1997(1)
<S> <C> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data
Net asset value, beginning
of period $12.82 $10.00 $12.73 $10.00 $12.74 $10.00
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income (loss) -- .07 (.06) .03 (.05) .04
Net realized and
unrealized gain (loss) (.84) 2.75 (.82) 2.70 (.83) 2.70
Total income (loss) from
investment operations (.84) 2.82 (.88) 2.73 (.88) 2.74
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.09) -- (.02) -- (.04) --
Distributions from net
realized gain (.46) -- (.46) -- (.46) --
------ ------ ------ ------ ------ ------
Total dividends and
distributions to shareholders (.55) -- (.48) -- (.50) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.43 $12.82 $11.37 $12.73 $11.36 $12.74
====== ====== ====== ====== ====== ======
==========================================================================================================================
Total Return, at Net Asset Value(2) 6.22% 28.20% (6.63)% 27.30% (6.63)% 27.40%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $37,160 $37,613 $17,761 $20,470 $4,400 $3,713
- --------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $35,961 $17,852 $19,385 $ 7,802 $3,910 $1,560
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (0.08)% 1.45% (0.95)% 0.87% (0.79)% 0.98%
Expenses(4) 2.19% 1.94% 2.98% 2.78% 2.96% 2.77%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 48.5% 26.7% 48.5% 26.7% 48.5% 26.7%
Average brokerage
commission rate(6) $0.0019 $0.0012 $0.0019 $0.0012 $0.0019 $0.0012
</TABLE>
20 Oppenheimer Developing Markets Fund
<PAGE>
- --------------------------------------------------------------------------------
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 February 28, 1998 were $28,354,368 and $26,508,393,
respectively.
6. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number 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.
21 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. The Fund's investment advisor 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.
22 Oppenheimer Developing Markets Fund
<PAGE>
================================================================================
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. During the six months
ended February 28, 1998, a provision of $14,196 was made for the Fund's
projected benefit obligations and payments of $1,509 were made to retired
trustees, resulting in an accumulated liability of $13,474 at February 28,
1998.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
23 Oppenheimer Developing Markets Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
1. Significant Accounting Policies (continued)
Organization Costs. The Manager advanced $26,486 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
24 Oppenheimer Developing Markets Fund
<PAGE>
================================================================================
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:
<TABLE>
<CAPTION>
Six Months Ended Feb. 28, 1998 Period Ended August 31, 1997(1)
------------------------------ ------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 2,006,979 $ 23,682,198 4,247,882 $ 52,288,386
Dividends and distributions
reinvested 137,984 1,466,775 -- --
Redeemed (1,826,853) (21,050,982) (1,314,475) (16,724,951)
---------- ------------- ---------- -------------
Net increase 318,110 $ 4,097,991 2,933,407 $ 35,563,435
========== ============= ========== =============
- ------------------------------------------------------------------------------------------------
Class B:
Sold 693,454 $ 8,235,293 1,782,562 $ 22,206,999
Dividends and distributions
reinvested 64,718 686,008 -- --
Redeemed (803,783) (8,929,411) (174,996) (2,258,307)
---------- ------------- ---------- -------------
Net increase (decrease) (45,611) $ (8,110) 1,607,566 $ 19,948,692
========== ============= ========== =============
- ------------------------------------------------------------------------------------------------
Class C:
Sold 232,973 $ 2,786,100 342,441 $ 4,208,237
Dividends and distributions
reinvested 15,549 164,660 -- --
Redeemed (152,707) (1,796,284) (50,998) (653,543)
---------- ------------- ---------- -------------
Net increase 95,815 $ 1,154,476 291,443 $ 3,554,694
========== ============= ========== =============
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
================================================================================
3. Unrealized Gains and Losses on Investments
At February 28, 1998, net unrealized depreciation on investments of $1,674,065
was composed of gross appreciation of $4,732,835, and gross depreciation of
$6,406,900.
25 Oppenheimer Developing Markets Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
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 six months ended February 28, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $190,676, of which
$58,082 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 $215,897 and $17,737, respectively, of which $25,125
was paid to an affiliated broker/dealer for Class B. During the six months ended
February 28, 1998, OFDI received contingent deferred charges of $15,987 and
$1,754, respectively, upon redemption of Class B and 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.
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 six months
ended February 28, 1998, OFDI paid $3,791 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
26 Oppenheimer Developing Markets Fund
<PAGE>
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its 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 for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the six months
ended February 28, 1998, OFDI retained $87,922 and $15,118, 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 February 28, 1998, OFDI had incurred excess distribution and
servicing costs of $564,023 for Class B and $49,461 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.
27 Oppenheimer Developing Markets Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
================================================================================
5. Forward Contracts (continued)
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, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Expiration Contract Amount Valuation as of Unrealized
Date (000s) February 28, 1998 Depreciation
- ---------------------------------------------------------------------------------------------------
Contracts to Purchase
- -------------------------------
<S> <C> <C> <C> <C>
Philippines Peso (PHP) 3/3/98 492 PHP $ 12,330 $ 62
South African Rand (ZAR) 3/3/98 1,229 ZAR 248,509 575
----
Total Unrealized Depreciation $637
====
</TABLE>
================================================================================
6. Illiquid and Restricted Securities
At February 28, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no
more than 10% of its net assets (determined at the time of purchase and
reviewed periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at February 28, 1998 was $566,666, which represents
0.96% of the Fund's net assets.
28 Oppenheimer Developing Markets Fund
<PAGE>
================================================================================
7. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
For the period ended February 28, 1998, the Fund had borrowings
of $6,000,000 outstanding over a two-day period at an average interest rate of
6.069%. The Fund had no borrowings outstanding at February 28, 1998.
29 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 Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of Portfolio The Bank of New York
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
of 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.
30 Oppenheimer Developing Markets Fund
<PAGE>
OppenheimerFunds Family
<TABLE>
<S> <C> <C>
=======================================================================================
Real Asset Funds
- ---------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
=======================================================================================
Global Stock Funds
- ---------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
=======================================================================================
Stock Funds
- ---------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
=======================================================================================
Stock & Bond Funds
- ---------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Growth & Income Multiple Strategies Fund
Quest Opportunity Value Fund Convertible Securities Fund(1)
Value Fund Equity Income Fund
=======================================================================================
Taxable Bond Funds
- ---------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
=======================================================================================
Municipal Bond Funds
- ---------------------------------------------------------------------------------------
California Municipal Fund(2) Pennsylvania Municipal Fund(2) Rochester Division:
Florida Municipal Fund(2) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(2) Insured Municipal Fund Limited Term New York
New York Municipal Fund(2) Intermediate Municipal Fund Municipal Fund
=======================================================================================
Money Market Funds(3)
- ---------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
2. Available only to investors in certain states.
3. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds seek to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer Developing Markets Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
Internet
24-hr access to account
information. Online
transactions now available
- ---------------------------
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-8pm ET
- ---------------------------
1-800-852-8457
- ---------------------------
PhoneLink
24-hr automated information and automated transactions
- ---------------------------
1-800-533-3310
- ---------------------------
Telecommunication Device for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
- ---------------------------
1-800-843-4461
- ---------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
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1-800-835-3104
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RS0785.001.0298 April 29, 1998
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
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your
OppenheimerFunds accounts and your bank checking or savings account, you can
use the Telephone Transactions number or website to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OPPENHEIMER FUNDS LOGO]
Distributor, Inc.
