Dear Shareholders,

We are happy to announce that today marks the 20th anniversary of Oppenheimer Developing Markets Fund. I would personally like to thank all of you for your commitment to this Fund and trusting us to manage your assets. After 20 years, our journey is really just beginning and I am optimistic about the future. Below are some of my thoughts about where we have been, where we are going, and why I look forward to your continued confidence in our Developing Markets Fund.

We are blessed to have witnessed enormous growth and change across “emerging market” (EM) equities over the past two decades. Like parents of a ruddy teenager, we can observe features that are consistent with the Developing Markets Fund in its youth. And like parents, we are amazed at how the Fund has grown up. Twenty years ago emerging market equities were only peripheral and, for most investors, irrelevant to global portfolios. Today, they are a core allocation. EM equities now occupy nearly a quarter of total global capitalization, which is not far from the capitalization of non-U.S. developed markets.1

Though our markets have evolved, our core investment principles remain unchanged. When Rajeev Bhaman and I began our careers in the emerging markets in the early 1990s, this was really a cottage industry. Being a successful portfolio manager today demands a deeper skill set—the ability to appreciate nuance, an awareness of areas of potential disruption, a focus on fundamentals, and, above all, imagination. We have harbored a core set of investment principles for two decades, which helps us identify opportunity and navigate volatility. We are ultimately stock pickers who invest in extraordinary companies to hold for the long term. Curiosity and imagination are vital ingredients to our decision-making and instrumental in discovering those rare investment opportunities in companies that will prosper in an uncertain future. The team has expanded considerably over the past 10 years, but one key, continuing thread, is that the team is deliberately populated with curious analysts.

Emerging markets will remain a growing component of global investors’ portfolios. By contrast with 1996, one cannot overestimate the importance of the developing world on the global economy. EM economies now represent more than a third of nominal global GDP and a majority of worldwide growth.1 We anticipate economic reform across the developing world will greatly improve investment conditions and drive this growth forward. However, given challenging conditions in global trade, macro outperformance will be largely about self-help. At an investment level, it is my belief, our philosophy of investing in companies with long-term structural growth and durable advantages will be best suited to capture the future of emerging markets.

Today, we are broadly optimistic about opportunities across the EM equities landscape. Nominal growth and corporate earnings have largely bottomed, reform efforts will amplify the long-term growth potential, and valuations are exceptionally attractive. After nearly a decade at the helm of the Developing Markets Fund, I am unusually optimistic about the Fund’s next 10 years. Beyond my confidence in the Fund’s durable investment approach, I derive tremendous pleasure in building this extraordinary investment team. We are in the midst of a long journey, oriented towards sustaining first class performance and building a deep pool of investment talent. After 20 years, our journey is really just beginning.

Justin Leverenz, CFA
SVP, Director of Emerging Market Equities, Portfolio Manager

InsightsEmerging Markets:
Thoughts About an Uncertain Future

1 Sources: Bloomberg and World Bank Data as of 12/31/15