|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FIN
ANCIAL STATEMENTS
|
|
|
1. Significant Accounting Policies
Oppenheimer Developing Markets Fund (the “Fund”) is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment
objective is to aggressively seek capital appreciation. The Fund’s investment adviser was OppenheimerFunds, Inc. (“OFI” or the “Sub-Adviser”) through December 31, 2012. Effective January 1, 2013, the Fund’s
investment adviser is OFI Global Asset Management, Inc. (“OFI Global” or the “Manager”), a wholly-owned subsidiary of OFI. The Manager has entered into a sub-advisory agreement with OFI, as of the same effective date.
The Fund offers Class A, Class C, Class I, Class N and Class Y shares, and previously offered Class B shares for new purchase
through June 29, 2012. Subsequent to that date, no new purchases of Class B shares are permitted, however reinvestment of dividend and/or capital gain distributions and exchanges of Class B shares into and from other Oppenheimer funds will
be allowed. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class C and Class N shares are sold, and Class B shares were sold, without a front-end sales charge but may be subject
to a contingent deferred sales charge (“CDSC”). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class I and Class Y shares are sold to certain
institutional investors or intermediaries without either a front-end sales charge or a CDSC, however, the intermediaries may impose charges on their accountholders who beneficially own Class I and Class Y shares. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as
transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N shares have separate distribution and/or service plans under which they pay fees. Class I and Class Y shares
do not pay such fees. Class B shares will automatically convert to Class A shares 72 months after the date of purchase.
The following is a summary of significant accounting policies consistently followed by the Fund.
Fiscal Year End.
The last day of the Fund’s fiscal year was the last day the New York Stock Exchange was open for trading. The
Fund’s financial statements have been presented through that date to maintain consistency with the Fund’s net asset value calculations used for shareholder transactions.
Structured Securities.
The Fund invests in structured securities whose market values, interest rates and/or redemption prices are linked to
the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured securities are
often leveraged, increasing the volatility of each note’s market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the
accompanying
30 OPPENHEIMER DEVELOPING MARKETS FUND
1. Significant Accounting Policies (Continued)
Statement of Operations. The Fund records a realized gain or loss when a structured security is sold or matures.
Investment in Oppenheimer Institutional Money Market Fund.
The Fund is permitted to invest daily available cash balances in an affiliated
money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is the investment adviser of IMMF, and the Sub-Adviser provides investment and related advisory services to IMMF. When applicable,
the Fund’s investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of IMMF’s Class E expenses, including
its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund’s investment in IMMF.
Foreign Currency Translation.
The Fund’s accounting records are maintained in U.S. dollars. The values of securities denominated in
foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.
Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and
maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from
changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign
currency gains and losses in the Fund’s Statement of Operations.
Allocation of Income, Expenses, Gains and Losses.
Income,
expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that class.
31 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FINANCIAL STATEMENTS
Continued
|
|
|
1. Significant Accounting Policies (Continued)
Federal Taxes.
The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is
required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.
The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax
regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed
Net Investment
Income
|
|
Undistributed
Long-Term
Gain
|
|
|
Accumulated
Loss
Carryforward
1,2,3
|
|
|
Net Unrealized
Appreciation
Based on cost of
Securities
and
Other Investments
for Federal Income
Tax Purposes
|
|
|
$109,954,381
|
|
|
$—
|
|
|
|
$416,705,186
|
|
|
|
$3,832,193,871
|
|
1.
As of August 30, 2013, the Fund had $416,705,186 of net capital loss carryforwards available to
offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. Details of the capital loss carryforwards are included in the table below. Capital loss carryovers with no expiration, if any, must be utilized prior
to those with expiration dates.
|
|
|
|
|
|
|
Expiring
|
|
|
2015
|
|
$
|
13,912,245
|
|
|
2016
|
|
|
3,478,061
|
|
|
2018
|
|
|
397,683,597
|
|
|
No expiration
|
|
|
1,631,284
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
416,705,187
|
|
|
|
|
|
|
|
Of these losses, $10,434,183 are subject to loss limitation rules resulting from merger activity. These limitations
generally reduce the utilization of these losses to a maximum of $3,478,061 per year.
2.
During the fiscal year ended
August 30, 2013, the Fund utilized $385,361,522 of capital loss carryforward to offset capital gains realized in that fiscal year.
3.
During the fiscal year ended August 31, 2012, the Fund did not utilize any capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which
amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund.
Accordingly,
the following amounts have been reclassified for August 31, 2013. Net assets of the Fund were unaffected by the reclassifications.
32 OPPENHEIMER DEVELOPING MARKETS FUND
1. Significant Accounting Policies (Continued)
|
|
|
|
|
|
|
|
|
|
|
Increase
to Paid-in Capital
|
|
Reduction
to Accumulated
Net Investment
Income
|
|
|
Reduction
to Accumulated Net
Realized Loss
on Investments
|
|
|
$106,961
|
|
|
$18,696,816
|
|
|
|
$18,589,855
|
|
The tax character of distributions paid during the years ended August 31, 2013 and August 31, 2012
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
August 31, 2013
|
|
|
Year Ended
August 31, 2012
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
147,453,305
|
|
|
$
|
400,765,522
|
|
The aggregate cost of securities and other investments and the composition of unrealized
appreciation and depreciation of securities and other investments for federal income tax purposes as of August 30, 2013 are noted in the following table. The primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss.
|
|
|
|
|
|
|
Federal tax cost of securities
|
|
$
|
29,675,024,052
|
|
|
Federal tax cost of other investments
|
|
|
63,573,296
|
|
|
|
|
|
|
|
|
Total federal tax cost
|
|
$
|
29,738,597,348
|
|
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
6,467,624,185
|
|
|
Gross unrealized depreciation
|
|
|
(2,635,430,314
|
)
|
|
|
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
3,832,193,871
|
|
|
|
|
|
|
|
Certain foreign countries impose a tax on capital gains which is accrued by the Fund based on unrealized
appreciation, if any, on affected securities. The tax is paid when the gain is realized.
Trustees’ Compensation.
The Fund
has adopted an unfunded retirement plan (the “Plan”) for the Fund’s independent trustees. Benefits are based on years of service and fees paid to each trustee during their period of service. The Plan was frozen with respect to adding
new participants effective December 31, 2006 (the “Freeze Date”) and existing Plan Participants as of the Freeze Date will continue to receive accrued benefits under the Plan. Active independent trustees as of the Freeze Date have
each elected a distribution method with respect to their benefits under the Plan. During the year ended August 30, 2013, the Fund’s projected benefit obligations, payments to retired trustees and accumulated liability were as follows:
|
|
|
|
|
|
|
Projected Benefit Obligations Increased
|
|
$
|
97,850
|
|
|
Payments Made to Retired Trustees
|
|
|
88,253
|
|
|
Accumulated Liability as of August 30, 2013
|
|
|
669,756
|
|
The Board of Trustees has adopted a compensation deferral plan for independent trustees that enables trustees to
elect to defer receipt of all or a portion of the annual compensation
33 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FINANCIAL STATEMENTS
Continued
|
|
|
|
|
|
|
|
|
|
|
|
1. Significant Accounting Policies (Continued)
|
|
|
they are entitled to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the
Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and
Liabilities. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed
in accordance with the compensation deferral plan.
Dividends and Distributions to Shareholders.
Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and
paid annually or at other times as deemed necessary by the Manager.
Investment Income.
Dividend income is recorded on the
ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities
received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.
Custodian Fees.
“Custodian fees and expenses” in the Statement of Operations may include interest expense incurred by the Fund on
any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund
pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The “Reduction to custodian expenses” line
item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings.
Security Transactions.
Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on
the basis of identified cost.
Indemnifications.
The Fund’s organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
34 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Significant Accounting Policies (Continued)
|
|
|
Other.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the
“Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading.
The
Fund’s Board has adopted procedures for the valuation of the Fund’s securities and has delegated the day-to-day responsibility for valuation determinations under those procedures to the Manager. The Manager has established a Valuation
Committee which is responsible for determining a “fair valuation” for any security for which market quotations are not “readily available.” The Valuation Committee’s fair valuation determinations are subject to review,
approval and ratification by the Fund’s Board at its next regularly scheduled meeting covering the calendar quarter in which the fair valuation was determined.
Valuation Methods and Inputs
Securities are valued using unadjusted quoted market prices, when
available, as supplied primarily by third party pricing services or dealers.
The following methodologies are
used to determine the market value or the fair value of the types of securities described below:
Securities
traded on a registered U.S. securities exchange (including exchange-traded derivatives other than futures and futures options) are valued based on the last sale price of the security reported on the principal exchange on which it is traded, prior to
the time when the Fund’s assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the current day’s closing “bid” and “asked”
prices, and if not, at the current day’s closing bid price. A security of a foreign issuer traded on a foreign exchange but not listed on a registered U.S. securities exchange is valued based on the last sale price on the principal exchange on
which the security is traded, as identified by the third party pricing service used by the Manager, prior to the time when the Fund’s assets are valued. If the last sale price is unavailable, the security is valued at the most recent official
closing price on the principal exchange on which it is traded. If the last sales price or official closing price for a foreign security is not available, the security is valued at the mean between the bid and asked price per the exchange or, if not
available from the exchange, obtained from two dealers. If bid and asked prices are not available from either the exchange or two dealers, the security is valued by using one of the following methodologies (listed in order of priority);
(1) using a bid from the exchange, (2) the mean between the bid and asked price as provided by a single dealer, or (3) a bid from a single dealer.
Shares of a registered investment company that are not traded on an exchange are valued at that investment company’s net asset value per share.
35 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FINANCIAL STATEMENTS
Continued
|
|
|
|
|
|
|
|
|
|
|
|
2. Securities Valuation (Continued)
|
|
|
Corporate and government debt securities (of U.S. or foreign issuers) and
municipal debt securities, event-linked bonds, loans, mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities are valued at the mean between the “bid” and “asked” prices utilizing evaluated
prices obtained from third party pricing services or broker-dealers who may use matrix pricing methods to determine the evaluated prices.
Short-term money market type debt securities with a remaining maturity of sixty days or less are valued at cost adjusted by
the amortization of discount or premium to maturity (amortized cost), which approximates market value. Short-term debt securities with a remaining maturity in excess of sixty days are valued at the mean between the “bid” and
“asked” prices utilizing evaluated prices obtained from third party pricing services or broker-dealers.
Structured securities, swaps, swaptions, and other over-the-counter derivatives are valued utilizing evaluated prices
obtained from third party pricing services or broker-dealers.
A description of the standard inputs that may generally be considered by
the third party pricing vendors in determining their evaluated prices is provided below.
|
|
|
|
|
Security Type
|
|
Standard inputs generally considered by third-party pricing
vendors
|
|
|
|
Corporate debt, government debt, municipal, mortgage-backed and asset-backed securities
|
|
Reported trade data, broker-dealer price quotations, benchmark yields, issuer spreads on comparable securities, the credit quality, yield, maturity, and other appropriate
factors.
|
|
|
|
Loans
|
|
Information obtained from market participants regarding reported trade data and broker-dealer price quotations.
|
|
|
|
Event-linked bonds
|
|
Information obtained from market participants regarding reported trade data and broker-dealer price quotations.
|
|
|
|
Structured securities
|
|
Relevant market information such as the price of underlying financial instruments, stock market indices, foreign currencies, interest rate spreads, commodities, or the occurrence of other
specific events.
|
|
|
|
Swaps
|
|
Relevant market information, including underlying reference assets such as credit spreads, credit event probabilities, index values, individual security values, forward interest rates,
variable interest rates, volatility measures, and forward currency rates.
|
If a market value or price cannot be determined for a security using the methodologies described above, or if, in
the “good faith” opinion of the Manager, the market value or price obtained does not constitute a “readily available market quotation,” or a significant event has occurred that would materially affect the value of the security
the security is fair valued either (i) by a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Valuation Committee and the Fund’s Board or (ii) as determined
in good faith by the Manager’s Valuation Committee. The Valuation Committee considers all relevant facts that are reasonably available, through either public
36 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Securities Valuation (Continued)
|
|
|
information or information available to the Manager, when determining the fair value of a
security. Fair value determinations by the Manager are subject to review, approval and ratification by the Fund’s Board at its next regularly scheduled meeting covering the calendar quarter in which the fair valuation was determined. Those fair
valuation standardized methodologies include, but are not limited to, valuing securities at the last sale price or initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate
securities index, or changes in the value of similar securities which may be further adjusted for any discounts related to security-specific resale restrictions. When possible, such methodologies use observable market inputs such as unadjusted
quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be
assured that the Fund can obtain the fair value assigned to a security if it were to sell the security.
To
assess the continuing appropriateness of security valuations, the Manager, or its third party service provider who is subject to oversight by the Manager, regularly compares prior day prices, prices on comparable securities, and sale prices to the
current day prices and challenges those prices exceeding certain tolerance levels with the third party pricing service or broker source. For those securities valued by fair valuations, whether through a standardized fair valuation methodology or a
fair valuation determination, the Valuation Committee reviews and affirms the reasonableness of the valuations based on such methodologies and fair valuation determinations on a regular basis after considering all relevant information that is
reasonably available.
Classifications
Each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Various data inputs are used in determining the value of
each of the Fund’s investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards:
1) Level 1-unadjusted quoted prices in active markets for identical assets or liabilities (including securities
actively traded on a securities exchange)
2) Level 2-inputs other than unadjusted quoted prices that are
observable for the asset or liability (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.)
3) Level 3-significant unobservable inputs (including the Manager’s own judgments about assumptions that market
participants would use in pricing the asset or liability).
The inputs used for valuing securities are not necessarily an indication of
the risks associated with investing in those securities.
37 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FINANCIAL STATEMENTS
Continued
|
|
|
|
|
|
|
|
|
|
|
|
2. Securities Valuation (Continued)
|
|
|
The table below categorizes amounts that are included in the Fund’s Statement of Assets and
Liabilities as of August 30, 2013 based on valuation input level:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1—
Unadjusted
Quoted Prices
|
|
|
Level 2—
Other Significant
Observable Inputs
|
|
|
Level 3—
Significant
Unobservable
Inputs
|
|
|
Value
|
|
|
Assets Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, at Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
$
|
5,127,363,256
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,127,363,256
|
|
|
Consumer Staples
|
|
|
5,745,326,534
|
|
|
|
928,867,602
|
|
|
|
—
|
|
|
|
6,674,194,136
|
|
|
Energy
|
|
|
3,659,628,969
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,659,628,969
|
|
|
Financials
|
|
|
5,508,495,590
|
|
|
|
93,700,201
|
|
|
|
—
|
|
|
|
5,602,195,791
|
|
|
Health Care
|
|
|
965,572,417
|
|
|
|
—
|
|
|
|
—
|
|
|
|
965,572,417
|
|
|
Industrials
|
|
|
1,026,757,256
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,026,757,256
|
|
|
Information Technology
|
|
|
6,435,769,817
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,435,769,817
|
|
|
Materials
|
|
|
1,338,343,709
|
|
|
|
149,222,534
|
|
|
|
—
|
|
|
|
1,487,566,243
|
|
|
Telecommunication Services
|
|
|
940,116,459
|
|
|
|
—
|
|
|
|
—
|
|
|
|
940,116,459
|
|
|
Structured Security
|
|
|
—
|
|
|
|
49,137,878
|
|
|
|
—
|
|
|
|
49,137,878
|
|
|
Investment Company
|
|
|
1,543,137,005
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,543,137,005
|
|
|
Total Assets
|
|
$
|
32,290,511,012
|
|
|
$
|
1,220,928,215
|
|
|
$
|
—
|
|
|
$
|
33,511,439,227
|
|
Currency contracts and forwards, if any, are reported at their unrealized appreciation/ depreciation at measurement
date, which represents the change in the contract’s value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and
liabilities included in the above table are reported at their market value at measurement date.
The table below shows the transfers
between Level 1 and Level 2. The Fund’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers into
Level 1*
|
|
|
Transfers out of
Level 1**
|
|
|
Transfers into
Level 2**
|
|
|
Transfers out
Level 2*
|
|
|
Assets Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, at Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
$
|
461,237,817
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(461,237,817)
|
|
|
Consumer Staples
|
|
|
479,750,147
|
|
|
|
(614,835,078)
|
|
|
|
614,835,078
|
|
|
|
(479,750,147)
|
|
|
Financials
|
|
|
452,620,917
|
|
|
|
(149,945,428)
|
|
|
|
149,945,428
|
|
|
|
(452,620,917)
|
|
|
Information Technology
|
|
|
359,285,918
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(359,285,918)
|
|
|
Total Assets
|
|
$
|
1,752,894,799
|
|
|
$
|
(764,780,506)
|
|
|
$
|
764,780,506
|
|
|
$
|
(1,752,894,799)
|
|
*Transferred from Level 2 to Level 1 due to the presence of a readily available unadjusted quoted market price.
**Transferred from Level 1 to Level 2 because of the absence of a readily available unadjusted quoted market price due to a significant
event occurring before the Fund’s assets were valued but after the close of the securities’ respective exchanges.
38 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Shares of Beneficial Interest
|
|
|
The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended August 30, 2013
|
|
|
Year Ended August 31, 2012
1
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Class A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
134,054,549
|
|
|
$
|
4,706,833,984
|
|
|
|
113,073,202
|
|
|
$
|
3,579,619,517
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
1,249,030
|
|
|
|
42,754,317
|
|
|
|
5,575,697
|
|
|
|
166,883,335
|
|
|
|
|
Redeemed
|
|
|
(105,271,889
|
)
|
|
|
(3,663,728,287
|
)
|
|
|
(110,072,018
|
)
|
|
|
(3,425,334,166
|
)
|
|
|
|
|
|
|
|
|
Net increase
|
|
|
30,031,690
|
|
|
$
|
1,085,860,014
|
|
|
|
8,576,881
|
|
|
$
|
321,168,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
224,253
|
|
|
$
|
7,765,315
|
|
|
|
1,220,711
|
|
|
$
|
38,155,960
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
—
|
|
|
|
—
|
|
|
|
42,362
|
|
|
|
1,252,648
|
|
|
|
|
Redeemed
|
|
|
(1,213,342
|
)
|
|
|
(41,415,867
|
)
|
|
|
(2,608,993
|
)
|
|
|
(80,813,349
|
)
|
|
|
|
|
|
|
|
|
Net decrease
|
|
|
(989,089
|
)
|
|
$
|
(33,650,552
|
)
|
|
|
(1,345,920
|
)
|
|
$
|
(41,404,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
13,920,933
|
|
|
$
|
469,571,434
|
|
|
|
14,485,934
|
|
|
$
|
441,236,292
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
—
|
|
|
|
—
|
|
|
|
599,958
|
|
|
|
17,266,780
|
|
|
|
|
Redeemed
|
|
|
(14,306,063
|
)
|
|
|
(476,946,898
|
)
|
|
|
(14,433,878
|
)
|
|
|
(432,335,255
|
)
|
|
|
|
|
|
|
|
|
Net increase (decrease)
|
|
|
(385,130
|
)
|
|
$
|
(7,375,464
|
)
|
|
|
652,014
|
|
|
$
|
26,167,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
59,271,321
|
|
|
$
|
2,083,744,295
|
|
|
|
19,005,352
|
|
|
$
|
598,520,290
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
199,291
|
|
|
|
6,740,013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Redeemed
|
|
|
(8,237,540
|
)
|
|
|
(285,178,669
|
)
|
|
|
(314,246
|
)
|
|
|
(9,933,186
|
)
|
|
|
|
|
|
|
|
|
Net increase
|
|
|
51,233,072
|
|
|
$
|
1,805,305,639
|
|
|
|
18,691,106
|
|
|
$
|
588,587,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class N
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
8,838,261
|
|
|
$
|
298,836,438
|
|
|
|
11,024,212
|
|
|
$
|
337,544,792
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
33,628
|
|
|
|
1,112,405
|
|
|
|
281,100
|
|
|
|
8,135,043
|
|
|
|
|
Redeemed
|
|
|
(6,920,567
|
)
|
|
|
(233,729,354
|
)
|
|
|
(5,706,983
|
)
|
|
|
(173,768,917
|
)
|
|
|
|
|
|
|
|
|
Net increase
|
|
|
1,951,322
|
|
|
$
|
66,219,489
|
|
|
|
5,598,329
|
|
|
$
|
171,910,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
|
|
|
247,551,435
|
|
|
$
|
8,588,345,743
|
|
|
|
180,143,266
|
|
|
$
|
5,634,105,379
|
|
|
|
|
Dividends and/or distributions reinvested
|
|
|
2,056,262
|
|
|
|
69,542,772
|
|
|
|
4,860,731
|
|
|
|
143,924,559
|
|
|
|
|
Redeemed
|
|
|
(132,999,341
|
)
|
|
|
(4,605,281,095
|
)
|
|
|
(91,706,543
|
)
|
|
|
(2,839,520,243
|
)
|
|
|
|
|
|
|
|
|
Net increase
|
|
|
116,608,356
|
|
|
$
|
4,052,607,420
|
|
|
|
93,297,454
|
|
|
$
|
2,938,509,695
|
|
|
|
|
|
|
|
|
|
1.
For the year ended August 31, 2012, for Class A, Class B, Class C, Class N and Class Y shares, and for the period from December 29, 2011 (inception of
offering) to August 31, 2012, for Class I shares.
|
|
|
|
39 OPPENHEIMER DEVELOPING MARKETS FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO
FINANCIAL STATEMENTS
Continued
|
|
|
|
|
|
|
|
|
|
|
|
4. Purchases and Sales of Securities
|
|
|
The aggregate cost of purchases and proceeds from sales of securities, other than short-term
obligations and investments in IMMF, for the year ended August 30, 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
Sales
|
|
|
Investment securities
|
|
$
|
15,096,738,447
|
|
|
$
|
8,636,070,230
|
|
5. Fees and Other Transactions with Affiliates
Management Fees.
Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the
Fund at an annual rate as shown in the following table:
|
|
|
|
|
|
|
Fee Schedule
|
|
|
|
|
Up to $250 million
|
|
|
1.00
|
%
|
|
Next $250 million
|
|
|
0.95
|
|
|
Next $500 million
|
|
|
0.90
|
|
|
Next $6 billion
|
|
|
0.85
|
|
|
Next $3 billion
|
|
|
0.80
|
|
|
Next $20 billion
|
|
|
0.75
|
|
|
Over $30 billion
|
|
|
0.74
|
|
Sub-Adviser Fees.
The Manager has retained the Sub-Adviser to provide the day-to-day portfolio management of
the Fund. Under the Sub-Advisory Agreement, the Manager pays the Sub-Adviser an annual fee in monthly installments, equal to a percentage of the investment management fee collected by the Manager from the Fund, which shall be calculated after any
investment management fee waivers. The fee paid to the Sub-Adviser is paid by the Manager, not by the Fund.
Transfer Agent Fees.
OppenheimerFunds Services (“OFS”), a division of OFI, acted as the transfer and shareholder servicing agent for the Fund through December 31, 2012. Effective January 1, 2013, OFI Global (the “Transfer
Agent”) serves as the transfer and shareholder servicing agent for the Fund. Fees incurred by the Fund with respect to these services are detailed in the Statement of Operations.
Sub-Transfer Agent Fees.
Effective January 1, 2013, the Transfer Agent has retained Shareholder Services, Inc., a wholly-owned
subsidiary of OFI (the “Sub-Transfer Agent”), to provide the day-to-day transfer agent and shareholder servicing of the Fund. Under the Sub-Transfer Agency Agreement, the Transfer Agent pays the Sub-Transfer Agent an annual fee in monthly
installments, equal to a percentage of the transfer agent fee collected by the Transfer Agent from the Fund, which shall be calculated after any applicable fee waivers. The fee paid to the Sub-Transfer Agent is paid by the Transfer Agent, not by the
Fund.
Distribution and Service Plan (12b-1) Fees.
Under its General Distributor’s Agreement with the Fund, OppenheimerFunds
Distributor, Inc. (the “Distributor”) acts as the Fund’s principal underwriter in the continuous public offering of the Fund’s classes of shares.
40 OPPENHEIMER DEVELOPING MARKETS FUND
5. Fees and Other Transactions with Affiliates (Continued)
Service Plan for Class A Shares.
The Fund has adopted a Service Plan (the “Plan”) for Class A shares under
Rule 12b-1 of the Investment Company Act of 1940. Under the Plan, the Fund reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an
annual rate of up to 0.25% of the daily net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal service and
maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Fund
under the Plan are detailed in the Statement of Operations.
Distribution and Service Plans for Class B, Class C and Class N Shares.
The Fund has adopted Distribution and Service Plans (the “Plans”) for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act of 1940 to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the Plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares daily net assets and 0.25% on Class N shares daily net assets. The
Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. Fees incurred by the Fund
under the Plans are detailed in the Statement of Operations. The Distributor determines its uncompensated expenses under the Plans at calendar quarter ends. The Distributor’s aggregate uncompensated expenses under the Plans at June 30,
2013 were as follows:
|
|
|
|
|
|
|
Class C
|
|
$
|
28,982,402
|
|
|
Class N
|
|
|
11,609,579
|
|
Sales Charges.
Front-end sales charges and contingent deferred sales charges (“CDSC”) do not
represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and
the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.