Semiannual Report February 28, 1999
OPPENHEIMER
Real Asset
Fund
[PICTURE]
Oppenheimer Funds
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An Interview with Your Fund's Manager
11 Financial Statements
30 Officers and Trustees
32 Information and Services
Report highlights
- ------------------
- - Commodity prices declined sharply over the past six months, making 1998 the
worst year for the commodities markets in over 60 years.
- - The Fund continues to serve as an effective asset allocation tool within a
broadly diversified, long-term investment portfolio.
Cumulative Total Returns
For the 6-Month Period Ended 2/28/99
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
- -20.20% -24.79%
- ----------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
- -20.52% -24.31%
- ----------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
- -20.49% -21.25%
- ----------------------------
Class Y
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
- -20.17% -20.17%
- ----------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. In reviewing performance, 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. Because the stock market can be volatile, the Fund's performance may be
subject to substantial short-term changes.
For updates on the Fund's performance, please contact your financial advisor,
call us at 1-800-525-7048 or visit our website, www.oppenheimerfunds.com. It is
important to note that the Fund has a limited operating history, having been
first offered 3/31/97, is non-diversified and invests a substantial portion of
its assets in derivative instruments that entail potentially higher volatility
and risk of loss than traditional equity or debt securities. The Fund is not
intended as a complete investment program and is intended for investors with
long-term investment goals who are willing to accept this greater risk.
1. Includes changes in net asset value per share without deducting any
sales charges.
2. Class A return includes the current maximum initial sales charge of 5.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the contingent deferred sales charge of 1%. Class Y
shares are available principally to certain institutional investors. Class B
and Class C Shares are subject to an annual 0.75% asset-based sales charge.
An explanation of the different performance calculations is in the Fund's
prospectus.
2 Oppenheimer Real Asset Fund
<PAGE>
[PHOTOGRAPH OF JAMES C. SWAIN]
James C. Swain
Chairman
Oppenheimer
Real Asset Fund
[PHOTOGRAPH OF BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer
Real Asset Fund
Dear shareholder,
Contrary to what many analysts had expected, the U.S. economy appears to have
picked up steam over the past few months. The fourth quarter of 1998 posted the
fastest rate of economic growth in two years, and early indications suggest that
the first quarter of 1999 may follow suit.
With respect to the U.S. bond market, stronger than expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of longer
term taxable bonds have risen from their October 1998 lows, when investors had
bid up prices during the global "flight to quality." At the same time, tax
exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat. What's more, the disparity
in valuations between large companies, which have led the market's advance, and
smaller ones, which have lagged, has become historically wide.
What do these observations mean for your investments? In our view, actively
managed portfolios that are closely monitored by expert money managers are
likely to provide better returns than passive index investing in 1999. That's
because selectivity is expected to be more critical to performance than it has
been over the past few years. In a potentially overvalued stock market and
rising interest-rate environment, the ability to identify the most promising
securities could become paramount.
Even though many equity investors may be tempted to jump aboard the
technology bandwagon, we suggest a more prudent course: broad diversification
beyond any single asset class, industry, capitalization range or geographic
region. We believe that the risks of this investment environment require
consideration of a broad range of investments and markets, including bonds. That
way, if one market experiences setbacks, one or more of the others may help
cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
Sincerely,
/S/ James C. Swain /S/ Bridget A. Macaskill
- --------------------- ---------------------------
James C. Swain Bridget A. Macaskill
March 19, 1999
3 Oppenheimer Real Asset Fund
<PAGE>
An interview with your Fund's managers
How did Oppenheimer Real Asset Fund perform during the six-month period that
ended February 28, 1999?
While we are disappointed that most commodity prices have remained quite weak,
we are pleased that the Fund has performed as it was designed: as a financial
planning tool providing returns that have tended to be uncorrelated to the stock
market.
Because the past six months have been strong for stocks and weak for
commodities, the Fund's share price fell along with its unmanaged benchmark, the
Goldman Sachs Commodities Index (GSCI ).(1) However, we remain confident that
the Fund will prove its true worth during periods of sustained declines in
common stocks, when we expect rising commodity prices to help the Fund offset
unrealized losses in the equities portion of your total investment portfolio.
Why have commodity prices continued to decline?
In 1998, we experienced the worst year for commodities prices since the Great
Depression. Every sector of the commodities market saw prices decline, including
energy, agricultural products, livestock, industrial metals and precious metals.
Although each individual sector responds to its own unique combination of
economic and market-driven influences, two factors appear to have adversely
affected all commodities: the Asian financial crisis and the weather.
1. While the Fund seeks to maintain a 90% or greater correlation with the GSCI,
this projected correlation is a portfolio management technique and not a formal
investment policy of the Fund. The correlation strategy can be changed by the
Manager at any time. Because the Fund's commodity-linked investments may be
allocated to different commodity sectors in amounts that vary from the
proportional weightings of the GSCI, the Fund is not an "index" fund.
4 Oppenheimer Real Asset Fund
<PAGE>
[PHOTOGRAPH OF PORTFOLIO MANAGEMENT]
Portfolio Management
Team (l to r)
Mark Anson
Russell Read
The Asian currency and credit crisis that began in 1997 appears to have
stabilized, but the entire Asian region, including Japan, remains mired in a
severe economic recession. Because devaluation of many of the region's local
currencies made imported goods more expensive for consumers and businesses,
demand for U.S. dollar denominated raw materials has plunged.
Largely due to the atmospheric phenomenon known as El Ni o, the winter of
1997 in the United States was the second warmest in over 100 years. As a result,
demand for energy-related commodities such as oil and gas fell sharply, and
especially good growing conditions served to increase the supply of agricultural
commodities and livestock. The warm winter affected commodities prices
throughout the year because unsold goods went into storage, dramatically
increasing inventories which remained high throughout the six-month reporting
period.
Basic economics tells us that when supply is high relative to demand, or
when demand is low relative to supply, prices tend to fall. Over the past six
months, the combination of ample supply and low demand drove commodities prices
lower.
5 Oppenheimer Real Asset Fund
<PAGE>
<TABLE>
<CAPTION>
Avg Annual Total Returns
For the Periods Ended 3/31/99(2)
Class A
Since
1 year Inception
- --------------------
<S> <C>
- -36.80% -28.23%
- --------------------
Class B
Since
1 year Inception
- --------------------
- -36.60% -28.07%
- --------------------
Class C
Since
1 year Inception
- --------------------
- -34.01% -26.68%
- --------------------
Class Y
Since
1 year Inception
- --------------------
- -32.77% -25.98%
- --------------------
</TABLE>
An interview with your Fund's managers
Why hasn't the Fund outperformed the overall commodities market?
As a mutual fund providing direct exposure to the commodities markets, the Fund
is designed to closely mirror the overall market's performance. In fact, over
the period we maintained a 95.6% correlation with the GSCI, which is consistent
with the Fund's role as an asset allocation alternative within a broader
investment portfolio.
With respect to the remaining 4.4% of noncorrelative performance, we sought
to enhance the Fund's performance by modestly increasing or decreasing our
exposure to individual commodities relative to the benchmark. This strategy
helped performance over the past year or so, when our preference for silver over
gold in the precious metals sector helped reduce the effects of declining gold
prices and magnify the effects of rising silver prices. Over the past six
months, however, our modest emphasis on oil hindered performance. Although we
increased our exposure to oil when prices were near historical lows, they
subsequently declined even further.
2. Class A returns include the maximum 5.75% sales charge. Class A, B, C and Y
shares were first publicly offered on 3/31/97. Class B returns include the
applicable contingent deferred sales charge of 5% (1-year) and 4% (since
inception). Class C returns include the contingent deferred sales charge of 1%.
Class Y shares are available principally to certain institutional investors.
Class B and C shares are subject to a 0.75% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
6 Oppenheimer Real Asset Fund
<PAGE>
managers
When can we expect commodities prices to recover?
As with stocks and bonds, it is virtually impossible to predict the short-term
performance of the commodities markets. With that said, however, lately we have
seen signs of a potential recovery. During the first two months of 1999, prices
for livestock and industrial metals have increased, and agricultural and energy
prices have stabilized. Precious metals prices, nonetheless, have continued to
decline because of the massive selling of gold by central banks worldwide.
In addition, global economic conditions appear to be changing. The first
and most important positive sign for commodities is rising long-term interest
rates during the first two months of 1999. In our view, rates have risen because
of unexpectedly robust economic growth in the United States, the advent of
European Monetary Union in Europe and international measures designed to
stimulate economic growth in the emerging markets. If global economies grow more
strongly than most analysts anticipate, demand for raw materials should rise and
prices may recover.
7 Oppenheimer Real Asset Fund
<PAGE>
An interview with your Fund's managers
The second positive sign is the restructuring and consolidation of certain
commodities-producing industries. For example, mining companies in both the
precious metals and industrial metals sectors have shut down unprofitable mines.
Agricultural companies have curtailed production on higher cost farms while
energy companies have shut down production. Over the past six months some of the
world's largest oil companies have announced plans to merge, enabling them to
focus on their lowest cost areas of exploration and production. Even the Middle
Eastern oil-producing nations within OPEC have announced cuts in production
quotas. The effects of these actions should be a reduction in the available
supply of these commodities, which we expect to support prices as inventories
are drawn down.
What can be expected from Oppenheimer Real Asset Fund in 1999?
We expect the Fund's performance to reflect the performance of the overall
commodities markets. Despite the recent weakness in these markets, we believe
that commodities have an important role as a financial planning tool in a
diversified investment portfolio. At some point, stocks will reverse course.
When that happens, we believe the Fund will help cushion the effects of stock
market declines.
8 Oppenheimer Real Asset Fund
<PAGE>
Portfolio Composition(3)
[PIE CHART]
- - U.S. Government,
Agencies &
Mortgages 64.6%
- - Commodity-Linked
Notes 24.6
- - Cash Equivalents 10.8
In our view, owning a variety of financial assets that respond differently to
the same economic influences is the essence of diversification. And providing
the products and services investors require for broad diversification is an
important part of what makes OppenheimerFunds The Right Way to Invest.
<TABLE>
<CAPTION>
Sector Weights
Percentage of Commodity-Linked Notes(4)
- ----------------------------------------------
<S> <C>
Petroleum 40.0%
- ----------------------------------------------
Agriculture 24.6
- ----------------------------------------------
Natural Gas 13.4
- ----------------------------------------------
Livestock 12.1
- ----------------------------------------------
Industrial Metals 6.2
- ----------------------------------------------
Precious Metals 3.7
<FN>
3. Portfolio is subject to change. Percentages are as of February 28, 1999, and
are dollar-weighted based on total investments.
4. Portfolio is subject to change. Percentages are as of February 28, 1999, and
are dollar-weighted based on commodity-linked notes. The Fund's allocation of
its investments within each sector of the GSCI may differ (at times,
significantly) from the sector weightings within the GSCI.
</FN>
</TABLE>
9 Oppenheimer Real Asset Fund
<PAGE>
Financials
10 Oppenheimer Real Asset Fund
<PAGE>
Statement of Investments February 28, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage-Backed Obligations-53.2%
- -----------------------------------------------------------------------------------------------
Government Agency-43.5%
- -----------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored-43.5%
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation Certificates,
Series 1451, Cl. G, 7%, 9/15/06 $8,000,000 $ 8,070,000
- -----------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 6/30/99(1) 6,500,000 6,515,210
6.03%, 7/7/99(1) 6,540,000 6,556,350
6.07%, 7/1/99(1) 1,220,000 1,223,050
6.29%, 5/7/99(1) 3,480,000 3,485,986
- -----------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1992-188, Cl. PG, 6.65%, 1/25/17 3,294,747 3,299,887
- -----------------------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Interest-Only Stripped Mtg.-Backed Security:
Trust 1993-23, Cl. PN, 12.935%, 4/25/22(1)(2) 3,624,240 978,545
Trust 1997-3, 9.001%, 3/18/26(1)(2) 3,424,713 719,190
- -----------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Series 1997-5, Cl. PJ, 19.002%, 5/20/22(2) 2,442,142 238,872
-------------
31,087,090
- -----------------------------------------------------------------------------------------------
Private-9.7%
- -----------------------------------------------------------------------------------------------
Commercial-6.8%
NC Finance Trust, Collateralized Mtg. Obligations,
Series 1998-I, Cl. 1, 5%, 5/25/28(3) 4,104,747 3,981,605
- -----------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1994-C2, Cl. G, 8%, 4/25/25 884,888 853,640
-------------
4,835,245
- -----------------------------------------------------------------------------------------------
Residential-2.9%
Salomon Brothers Mortgage Securities VII,
Series 1998-2, Cl. 1, 5%, 11/25/27(3) 2,146,687 2,058,136
-------------
Total Mortgage-Backed Obligations (Cost $38,353,598) 37,980,471
</TABLE>
11 Oppenheimer Real Asset Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- ----------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Obligations-10.5%
- --------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 6.52% Debs., 1/2/02 $4,870,000 $ 5,000,803
- --------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Unsec. Medium-Term Nts., 5.08%, 9/24/99 2,500,000 2,497,650
-------------
Total U.S. Government Obligations (Cost $7,502,291) 7,498,453
- --------------------------------------------------------------------------------------------------
Structured Instruments-24.2%
- --------------------------------------------------------------------------------------------------
AIG International, Inc., Commodity Index Excess Return
Linked Nts., 4.81%, 1/6/00(4)(7) 5,000,000 4,485,250
- --------------------------------------------------------------------------------------------------
Bank of America NT & SA (London Branch), Goldman Sachs
Commodity Index Excess Return Linked Nts., 4.60%, 12/23/99(5)(7) 6,500,000 3,974,750
- --------------------------------------------------------------------------------------------------
Cargill Financial Services Corp., Goldman Sachs
Commodity Index Total Return Linked Nts., 4.75%, 12/15/99(5)(7) 4,000,000 3,366,373
- --------------------------------------------------------------------------------------------------
Chase Manhattan Bank USA National Assn.,
Chase Physical Commodity Index Linked Deposit Nts.:
4.70%, 12/15/99(6)(7) 2,500,000 2,229,500
5.40%, 8/30/99(6)(7) 5,500,000 3,240,600
-------------
Total Structured Instruments (Cost $23,500,000) 17,296,473
- --------------------------------------------------------------------------------------------------
Repurchase Agreements-10.7%
- --------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 4.73%,
dated 2/26/99, to be repurchased at $7,602,996 on 3/1/99,
collateralized by U.S. Treasury Nts., 5.375%-7.875%, 6/30/99-2/15/07,
with a value of $7,801,428 (Cost $7,600,000) 7,600,000 7,600,000
- --------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $76,955,889) 98.6% 70,375,397
- --------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.4 976,346
----------- -------------
Net Assets 100.0% $ 71,351,743
=========== =============
</TABLE>
12 Oppenheimer Real Asset Fund
<PAGE>
1. Securities with an aggregate market value of $18,499,786 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Identifies issues considered to be illiquid or restricted-See Note 7 of Notes
to Financial Statements.
4. Security is linked to the Dow Jones-AIG Commodity Index. The index contains
commodities from the sectors of energy, precious metals, livestock and grains;
however, no related group of commodities may constitute more than 33% of the
index and no single commodity may constitute less than 2% of the index. The
index is designed to provide weightings that reflect economic significance,
diversification, low volatility, annual reweightings and rebalancing and
liquidity.
5. Security is linked to the Goldman Sachs Commodity Index, the Goldman Sachs
Commodity Excess Return Index or the Goldman Sachs Commodity Index Total Return
Index. The indexes currently contain twenty-six commodities from the sectors of
energy, metals and agricultural products. Individual components qualify for the
inclusion in the index based on liquidity and are weighted by their respective
world production quantities.
6. Security is linked to the Chase Physical Commodity Index. The index currently
contains nineteen commodities from the sectors of energy, metals, livestock,
grain and fiber. The index offers a balanced cross-section of physical
commodities and, in order to optimally reflect real market conditions, the
weight of the different commodities may be adjusted annually in keeping with
prevailing world supply, demand and inventory conditions.
7. Security is leveraged, which increases the Fund's exposure to commodities and
increases the notes' volatility relative to the face value of the security by a
weighted average leverage factor of 3.00.
See accompanying Notes to Financial Statements.
13 Oppenheimer Real Asset Fund
<PAGE>
Statement of Assets and Liabilities February 28, 1999 (Unaudited)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments, at value (including repurchase agreements of $7,600,000)
(cost $76,955,889)-see accompanying statement $ 70,375,397
- ------------------------------------------------------------------------------------
Cash 393,857
- ------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,056,583
Shares of beneficial interest sold 361,911
Interest and principal paydowns 190,650
Daily variation on futures contracts-Note 5 7,912
Other 25,691
-------------
Total assets 72,412,001
- ------------------------------------------------------------------------------------
Liabilities
Options written, at value (premiums received $468,530)-
see accompanying statement-Note 6 428,089
- ------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 286,574
Daily variation on futures contracts-Note 5 249,930
Shareholder reports 42,014
Distribution and service plan fees 32,630
Transfer and shareholder servicing agent fees 6,107
Other 14,914
-------------
Total liabilities 1,060,258
- ------------------------------------------------------------------------------------
Net Assets $ 71,351,743
=============
- ------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $148,071,014
- ------------------------------------------------------------------------------------
Undistributed net investment income 261,642
- ------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (70,276,208)
- ------------------------------------------------------------------------------------
Net unrealized depreciation on investments - Notes 3 and 5 (6,704,705)
-------------
Net assets $ 71,351,743
=============
</TABLE>
14 Oppenheimer Real Asset Fund
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
50,457,527 and 11,548,173 shares of beneficial interest outstanding) $4.37
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $4.64
- ---------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $12,275,820
and 2,807,377 shares of beneficial interest outstanding) $4.37
- ---------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $8,617,961
and 1,977,344 shares of beneficial interest outstanding) $4.36
- ---------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $435 and 100 shares of beneficial interest outstanding) $4.35
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Real Asset Fund
<PAGE>
Statement of Operations For the Six Months Ended February 28, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------
Investment Income
Interest $ 2,257,104
- ------------------------------------------------------------------------------------
Expenses
Management fees-Note 4 419,260
- ------------------------------------------------------------------------------------
Distribution and service plan fees-Note 4:
Class A 72,998
Class B 77,391
Class C 48,337
- ------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees-Note 4 130,061
- ------------------------------------------------------------------------------------
Shareholder reports 75,359
- ------------------------------------------------------------------------------------
Custodian fees and expenses 23,033
- ------------------------------------------------------------------------------------
Legal, auditing and other professional fees 18,292
- ------------------------------------------------------------------------------------
Trustees' compensation 4,827
- ------------------------------------------------------------------------------------
Other 16,472
-------------
Total expenses 886,030
Less expenses paid indirectly-Note 4 (2,110)
-------------
Net expenses 883,920
- ------------------------------------------------------------------------------------
Net Investment Income 1,373,184
- ------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments (17,877,992)
Closing of futures contracts (3,768,084)
Closing and expiration of option contracts written-Note 6 (626,990)
-------------
Net realized loss (22,273,066)
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 2,623,206
-------------
Net realized and unrealized loss (19,649,860)
- ------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(18,276,676)
=============
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Real Asset Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1999 August 31,
(Unaudited) 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ (1,373,184 $ (4,066,912
- ------------------------------------------------------------------------------------------
Net realized loss (22,273,066) (47,729,016)
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 2,623,206 (10,943,262)
------------------- -------------
Net decrease in net assets resulting from operations (18,276,676) (54,605,366)
- ------------------------------------------------------------------------------------------
Dividends to Shareholders
Dividends from net investment income:
Class A (2,907,698) (1,102,914)
Class B (620,048) (441,240)
Class C (406,781) (236,846)
Class Y (30) (21)
- ------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions-Note 2:
Class A 3,527,374 61,012,518
Class B (1,122,588) 14,242,312
Class C 990,474 6,523,710
- ------------------------------------------------------------------------------------------
Net Assets
Total increase (decrease) (18,815,973) 25,392,153
- ------------------------------------------------------------------------------------------
Beginning of period 90,167,716 64,775,563
------------------- -------------
End of period (including undistributed net investment
income of $261,642 and $2,823,015, respectively) $ 71,351,743 $ 90,167,716
=================== =============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Real Asset Fund
<PAGE>
Financial Highlights
- ---------------------
<TABLE>
<CAPTION>
Class A
----------------------------------
Six Months
Ended
February 28,
1999 Year Ended August 31,
(Unaudited) 1998 1997(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 5.81 $ 10.31 $ 10.00
- -----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10 .29 .09
Net realized and unrealized gain (loss) (1.26) (4.59) .22
------------ --------- ---------
Total income (loss) from investment operations (1.16) (4.30) .31
Dividends to shareholders from net
investment income (.28) (.20) -
- -----------------------------------------------------------------------------------
Net asset value, end of period $ 4.37 $ 5.81 $ 10.31
============ ========= =========
Total Return, at Net Asset Value(2) (20.20)% (42.43)% 3.10%
- -----------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 50,458 $ 62,568 $ 37,687
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $ 59,125 $ 59,251 $ 18,361
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.51%(3) 4.59% 4.27%(3)
Expenses(4) 1.89%(3) 1.66% 1.74%(3)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(5) 29% 105% 39%
<FN>
1. For the period from March 31, 1997 (commencement of operations) to August 31,
1997.
2. Assumes a $1,000 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.
</FN>
</TABLE>
18 Oppenheimer Real Asset Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
Six Months Six Months
Ended Ended
February 28, February 28,
1999 Year Ended August 31, 1999 Year Ended August 31,
(Unaudited) 1998 1997(1) (Unaudited) 1998 1997(1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 5.76 $ 10.27 $ 10.00 $ 5.76 $ 10.26 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .28 .07 .07 .26 .08
Net realized and unrealized gain (loss) (1.26) (4.62) .20 (1.24) (4.60) .18
------------ --------- --------- ------------ --------- ---------
Total income (loss) from investment operations (1.17) (4.34) .27 (1.17) (4.34) .26
- -----------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (.22) (.17) - (.23) (.16) -
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.37 $ 5.76 $ 10.27 $ 4.36 $ 5.76 $ 10.26
============ ========= ========= ============ ========= =========
- -----------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(2) (20.52)% (42.89)% 2.70% (20.49)% (42.87)% 2.60%
- -----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 12,276 $ 17,357 $ 16,471 $ 8,618 $ 10,243 $ 10,616
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 15,579 $ 22,659 $ 7,388 $ 9,738 $ 12,060 $ 5,599
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.75%(3) 3.87% 3.35%(3) 2.74%(3) 3.87% 3.34%(3)
Expenses(4) 2.64%(3) 2.39% 2.56%(3) 2.64%(3) 2.38% 2.56%(3)
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 29% 105% 39% 29% 105% 39%
<FN>
4. The expense ratio reflects the effect of 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, 1999, were $22,609,885 and $32,419,045,
respectively.
</FN>
</TABLE>
19 Oppenheimer Real Asset Fund
<PAGE>
Financial Highlights (Continued)
- ----------------------------------
<TABLE>
<CAPTION>
Class Y
----------------------------------
Six Months
Ended
February 28,
1999 Year Ended August 31,
(Unaudited) 1998 1997(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 5.81 $ 10.31 $ 10.00
- -----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .42 .20
Net realized and unrealized gain (loss) (1.25) (4.71) .11
------------ --------- ---------
Total income (loss) from investment operations (1.16) (4.29) .31
- -----------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (.30) (.21) -
- -----------------------------------------------------------------------------------
Net asset value, end of period $ 4.35 $ 5.81 $ 10.31
============ ========= =========
- -----------------------------------------------------------------------------------
Total Return, at Net Asset Value(2) (20.17)% (42.38)% 3.10%
- -----------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) - $ 1 $ 1
Average net assets (in thousands) $ 1 $ 1 $ 1
Ratios to average net assets:
Net investment income 3.57%(3) 4.84% 4.75%(3)
Expenses(4) 1.79%(3) 1.40% 1.57%(3)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(5) 29% 105% 39%
<FN>
1. For the period from March 31, 1997 (commencement of operations) to August 31,
1997.
2. Assumes a $1,000 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 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, 1999, were $22,609,885 and $32,419,045, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
20 Oppenheimer Real Asset Fund
<PAGE>
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Real Asset Fund (the Fund) is a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's objective is to seek to provide total return. The Fund seeks
its investment objective by investing primarily in commodity-linked hybrid
instruments and U.S. government securities. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Sub-Advisor is Oppenheimer Real Asset
Management, Inc., a wholly owned subsidiary of the Advisor. The Fund offers
Class A, Class B, Class C and Class Y shares. Class A shares are sold with a
front-end sales charge, except for purchases greater than $1 million. Class A,
Class B and Class C shares may be subject to a contingent deferred sales charge.
All classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. No
such plan has been adopted for Class Y shares. 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.
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in commodity-linked structured notes whose
market value and redemption price are linked to commodity indices. The
structured notes are leveraged, which increases the Fund's exposure to changes
in prices of the overall commodities' markets and increases the potential of the
notes' volatility relative to the face value of the securities. Fluctuations in
value of these securities related to the commodity exposure are recorded as
unrealized gains and losses in the accompanying financial statements. During the
six months ended February 28, 1999, the market value of these securities
comprised 33% of the Fund's net assets, on average, and resulted in realized and
unrealized losses of $23,706,455. The Fund also hedges a portion of the
commodity exposure generated by these securities, as discussed in Note 5.
21 Oppenheimer Real Asset Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
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, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
22 Oppenheimer Real Asset Fund
<PAGE>
- --------------------------------------------------------------------------------
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. As of August 31, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $49,041,000, which expires in 2006.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
For Class A, Class B, Class C and Class Y shares from net investment income
annually. Beginning March 1999, the Fund will declare dividends separately for
Class A, Class B, Class C and Class Y shares from net investment income
quarterly. Distributions from net realized gains on investments, if any, will be
declared at least once each year.
- --------------------------------------------------------------------------------
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 paydown gains and losses. The character of 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.
23 Oppenheimer Real Asset Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1999 August 31, 1998
-------------------------- --------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 5,695,371 $ 30,227,878 11,980,392 $101,952,769
Dividends reinvested 581,217 2,667,787 111,164 1,045,978
Redeemed (5,493,773) (29,368,291) (4,981,608) (41,986,229)
----------- ------------- ----------- -------------
Net increase 782,815 $ 3,527,374 7,109,948 $ 61,012,518
=========== ============= =========== =============
- -------------------------------------------------------------------------------
Class B:
Sold 520,788 $ 2,765,846 2,490,310 $ 22,171,281
Dividends reinvested 119,697 550,607 42,367 397,911
Redeemed (845,295) (4,439,041) (1,124,288) (8,326,880)
----------- ------------- ----------- -------------
Net increase (decrease) (204,810) $ (1,122,588) 1,408,389 $ 14,242,312
=========== ============= =========== =============
- -------------------------------------------------------------------------------
Class C:
Sold 572,550 $ 2,978,004 1,579,842 $ 13,009,004
Dividends reinvested 82,781 379,966 24,009 227,456
Redeemed (456,680) (2,367,496) (860,150) (6,712,750)
----------- ------------- ----------- -------------
Net increase 198,651 $ 990,474 743,701 $ 6,523,710
=========== ============= =========== =============
</TABLE>
- --------------------------------------------------------------------------------
3. Unrealized Gains and Losses on Investments
As of February 28, 1999, net unrealized depreciation on investments and options
written of $6,540,051 was composed of gross appreciation of $85,714, and gross
depreciation of $6,625,765.
- --------------------------------------------------------------------------------
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 a fee of 1.0% of the first
$200 million of average net assets, 0.90% of the next $200 million, 0.85% of the
next $200 million, 0.80% of the next $200 million, and 0.75% of net assets in
excess of $800 million. Under the Sub-Advisory Agreement, the Manager pays the
Sub-Advisor the following annual fees: 0.50% of the first $200 million of
average net assets, 0.45% of the next $200 million, 0.425% of the next $200
million, 0.40% of the next $200 million, and 0.375% of the net assets in excess
of $800 million. The Fund's management fee for the six months ended February 28,
1999 was 1.00% of average annual net assets for each class of shares.
24 Oppenheimer Real Asset Fund
<PAGE>
- --------------------------------------------------------------------------------
For the six months ended February 28, 1999, commissions (sales charges paid by
investors) on sales of Class A shares totaled $87,952, of which $26,650 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Advisor, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class A, Class
B and Class C shares totaled $4,985, $48,459 and $23,524, respectively. The
amount paid to an affiliated broker/dealer for Class B shares was $3,042. During
the six months ended February 28, 1999, OFDI received contingent deferred sales
charges of $52,749 and $2,834, 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 other Oppenheimer funds. OFS's
total costs of providing such services are allocated ratably to these funds.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
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, 1999, OFDI paid $1,602 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its 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 Class 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,
1999, OFDI retained $68,306 and $40,497, 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. As of February 28, 1999,
OFDI had incurred excess distribution and servicing costs of $1,364,148 for
Class B and $50,119 for Class C.
25 Oppenheimer Real Asset Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
5. Futures Contracts
The Fund may buy and sell futures contracts, primarily to hedge the various
commodities exposures inherent in its holdings of structured notes that are
linked to commodities indices. The Fund may also buy or write put or call
options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates or decreases in commodity prices and the resulting negative
effect on the value of fixed rate portfolio securities. The Fund may also
purchase futures contracts without owning the underlying fixed-income security
as an efficient or cost effective means to gain exposure to changes in commodity
prices. The Fund will then either purchase the underlying fixed-income security
or close out the futures contract.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
26 Oppenheimer Real Asset Fund
<PAGE>
- --------------------------------------------------------------------------------
As of February 28, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts February 28, 1999 (Depreciation)
- --------------------- ---------- --------- ------------------ ---------------
<S> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
COMMODITIES
Agriculture
Corn 9/99 45 $ 504,563 $ (17,439)
Energy
Crude Oil 3/99 45 552,150 (4,600)
Crude Oil 2/00 100 1,341,000 9,500
Crude Oil 11/99 119 1,563,660 54,670
Gasoline 3/99 75 1,196,370 19,845
Heating Oil 3/99 75 1,019,655 26,670
Natural Gas 3/99 90 1,465,200 (79,300)
Natural Gas 12/99 100 2,330,000 (32,500)
Natural Gas 6/99 100 1,743,000 (113,250)
---------------
(136,404)
---------------
Contracts to Sell
- ---------------------
COMMODITIES
Industrial Metals
Aluminum 5/99 30 889,125 (375)
Precious Metals
Silver 5/99 50 1,407,500 (27,875)
---------------
(28,250)
---------------
$ (164,654)
===============
</TABLE>
27 Oppenheimer Real Asset Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
6. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying securities at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
Written option activity for the six months ended February 28, 1999, was as
follows:
<TABLE>
<CAPTION>
Call Options Put Options
-------------------------- -------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding as of
August 31, 1998 - $ - 100 $ ( 95,750
Options written 100 72,500 1,350 1,003,750
Options closed or expired (100) (72,500) (1,008) (630,970)
------------- ----------- ------------ -----------
Options outstanding as of
February 28, 1999 - $ - 442 $ 468,530
============= =========== ============ ===========
</TABLE>
28 Oppenheimer Real Asset Fund
<PAGE>
- --------------------------------------------------------------------------------
7. Illiquid and Restricted Securities
As of February 28, 1999, 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 as of February 28, 1999, was $6,039,741, which
represents 8.46% of the Fund's net assets.
- --------------------------------------------------------------------------------
8. 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.
The Fund had no borrowings outstanding during the six months ended February
28, 1999.
29 Oppenheimer Real Asset Fund
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Real Asset Fund
<S> <C>
- --------------------------------------------------------------------------------
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Trustee, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Mark J.P. Anson, Vice President
Russell Read, Sr. Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
Investment Advisor OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
Sub-Advisor Oppenheimer Real Asset Management, Inc.
- --------------------------------------------------------------------------------
Distributor OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
- --------------------------------------------------------------------------------
Custodian of The Bank of New York
Portfolio Securities
- --------------------------------------------------------------------------------
Independent Auditors Deloitte & Touche LLP
- --------------------------------------------------------------------------------
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
- --------------------------------------------------------------------------------
Special Counsel Kramer, Levin, Naftalis & Frankel
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 Real Asset
Fund. This report must be preceded or accompanied by a Prospectus
of Oppenheimer Real Asset 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, are not insured by the FDIC or
any other agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
30 Oppenheimer Real Asset Fund
<PAGE>
OppenheimerFunds Family
- ------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------
Real Asset Funds
- -----------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
- -----------------------------------------------------------------------------------------
Global Stock Funds
- -----------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Global Growth & Income Fund
International Small Global Fund Europe Fund
Company Fund Quest Global Value Fund
- -----------------------------------------------------------------------------------------
Stock Funds
- -----------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Large Cap Growth Fund
Quest Small Cap Value Fund Quest Capital Value Fund Disciplined Value Fund
Quest Value Fund
- -----------------------------------------------------------------------------------------
Stock & Bond Funds
- -----------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Multiple Strategies Fund
Income Fund(1) Quest Balanced Disciplined Allocation Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Capital Income Fund(2)
- -----------------------------------------------------------------------------------------
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(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
- -----------------------------------------------------------------------------------------
Money Market Funds(4)
- -----------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
<FN>
1. On 12/22/98, the Fund's name was changed from "Main Street Income & Growth Fund."
2. On 4/1/99, the Fund's name was changed from "Equity Income Fund."
3. Available only to investors in certain states.
4. 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 may 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.
Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
</FN>
</TABLE>
31 Oppenheimer Real Asset Fund
<PAGE>
Information and services
- --------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
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 Oppenheimer
funds 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.
OppenheimerFunds
Distributor, Inc.
Internet
24-hr access to account information. Online
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32 Oppenheimer Real Asset Fund
RS 0735.col.0299 April 29, 1999
