OppenheimerFunds DEVELOPING MARKETS FUND

There can be money in the world's developing markets

It's easy to fall into the groove of investing only in funds that invest their assets in U.S. companies. Doing so fits the bill for many fund investors. But there's a great big world out there that's full of opportunities, too.

"We are looking in parts of the world that presently have more than two-thirds of the world's population," says Rajeev Bhaman, portfolio manager of the OppenheimerFunds Developing Markets Fund ( 1-800-525-7048). "So we have a fairly large canvas to paint on and to select some good companies from."

Investing in developing markets means taking on additional risks, having patience, and a willingness to tolerate volatile markets. For instance, while the Developing Market Fund was up 5.57 percent year-to-date through Feb. 13, last year it was down 5.7 percent; at year-end 2000 it was down 5.3 percent; and in 1999, up 82.3 percent.

Bhaman likes to keep about 60 to 80 stocks in the fund's portfolio---right now there are about 65. The countries where most of its assets are currently invested include India, Brazil, Mexico and Korea. Here's more from him about the OppenheimerFunds Developing Markets Fund, (ODMAX).

Q: Tell me about a couple of the fund's holdings.

Bhaman: Something that we've owned for a long time is Embraer. It's a Brazilian aircraft manufacturer and makes regional jets. Regional jets are airplanes that fly intra-continent rather than inter-continent. So they are smaller jets that fly high and allow for is better point-to-point travel.

Convenience is one of our underlying investment themes and we think that people are going to demand more convenience in the future. They don't want to have to fly from Cleveland to Pittsburgh and then on to Tampa. They'd rather fly from Cleveland to Tampa directly. And what these planes allow you to do is fly directly, fly conveniently, fly safely, and fly quickly. That makes them a viable proposition for the airlines and a great thing for customers.

Q: Will these be like the American Eagle planes?

Bhaman: American Eagle is one of their biggest customers. As is Continental Express.

Q: Another trend and company that represents it?

Bhaman: We own a company called Grupo Televisa, in Mexico. Televisa is the world's largest Spanish language broadcaster. They own cable, satellites and massive amounts of programming. They also are the largest supplier of programming to Univision in the U.S. Univision in Miami gets more viewership than NBC.

The purchasing power of the US Hispanic market is bigger than the purchasing power of all of Mexico. Mexico is getting more affluent, the cost of money is coming down and we think this is a trend that's very compelling.

Q: What about the size of the companies you invest in. Are they small, medium and large?

Bhaman: One has to distinguish what a large-cap is in a U.S. environment from what a large-cap is in an emerging markets one.

The U.S. economy is more than two times as big as every other economy in the world. And, most emerging markets are less than one-tenth the size of the U.S's economy. Which means, a large-cap company in the U.S. is much larger than a large-cap company in a developing country. For instance, in the U.S., a large-cap company is considered one that has $10 billion in market cap. In a country that's a tenth of the U.S.'s size economically, a large-cap company could be a billion dollar company. And that's considered small-cap by U.S. standards.

So what we are looking for is to invest in businesses that have growth opportunities that we think are significant. Whether they are a billion dollars in market cap or a quarter of a billion it really isn't relevant. What is relevant is the opportunity the company offers.

Q: Looking ahead, do you expect to see some choppy markets?

Bhaman:I think they will be. There are lots of uncertainties( in the markets) and perceived uncertainties can be greater than what actually happens. But choppy markets allow for opportunities. So I'm excited about that. Frankly, choppy markets are when people throw away the baby with the bath water. We're here ready to catch the baby.

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Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.