UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07857
OPPENHEIMER REAL ASSET FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: August 31
Date of reporting period: September 1, 2002 - August 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc. of
the Fund's performance during its fiscal year ended August 31, 2003, followed by
a graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's Discussion of Fund Performance. The Fund's Class A
shares (without sales charge) produced a total return of 23.08% for the
12-months ended August 31, 2003, which compares very favorably to the 21.95%
return for the Fund's benchmark, the Goldman Sachs Commodity Index(R), for the
same period. 1
During the period, we used approximately one-third of Fund assets to make
leveraged investments in commodities resulting in dollar for dollar commodity
exposure. The remaining Fund assets, which serve as collateral for our
commodities investments, were invested primarily in high-quality, short-term
fixed-income securities.
On the commodities side of the portfolio, we employed the same key strategies
we have long used: intramarket trades, sector focus and term structure. The
first strategy, intramarket trades, seeks to exploit pricing discrepancies
within the various commodities sectors. The second, sector focus, is a matter of
shifting our investments to the sector(s) that we believe have the most
favorable fundamental and technical characteristics at a given time.
The third and final strategy, term structure, centers on the maturity dates
of our investments. For instance, we might choose to invest a small percentage
of assets in contracts for industrial metals that mature in one month and a
larger percentage in contracts maturing two months hence. We follow this
strategy when we believe that some event or trend is likely to bring about a
shift in supply and/or demand that will, in turn, cause prices for that
commodity to vary between the first and second months. During this 12-month
period, the Fund's term-structure investments, especially several natural gas
investments, made significant contributions to performance and were the primary
reason for the Fund's strong relative returns.
The Fund's outperformance can also be attributed to its fixed-income
investments. During the fiscal year, we implemented a fixed-income investment
strategy that seeks capital appreciation potential, in addition to current
income. More importantly, we also sought to pare back the risk associated with
changing interest rates by shortening the average maturity of the Fund's
fixed-income investments.
Under this approach, we emphasized broader diversification and the use of
high-quality, short-term corporate bonds, asset-backed securities (ABSs) and
mortgage-backed
1. The Fund's performance is compared to the Goldman Sachs Commodity Index(R).
For more information on the Index, please see page 6. While the Fund is
benchmarked to the GSCI, it is actively managed and the allocations of the
Fund's investments may vary (at times, significantly) from the GSCI. The Fund is
not an index fund.
5 | OPPENHEIMER REAL ASSET FUND
FUND PERFORMANCE DISCUSSION
securities (MBSs). Because of their short maturities, these securities are not
as highly susceptible to interest-rate movements as longer-term securities.
Furthermore, they pay slightly higher yields than Treasuries and have the
potential to generate capital appreciation as the financial positions of the
issuing companies improve. Throughout the period, our corporate securities
performed well, reflecting healthier corporate balance sheets. Our MBS holdings
were less consistent contributors, the result of considerable volatility in that
market sector.
Despite the volatility among MBSs, the fixed-income portfolio generally
performed as we intended, adding modestly to total return, while curbing some of
the Fund's volatility. Also reducing volatility was the Fund's cash position,
which, due to technical reasons, was higher than usual. While holding assets in
the shortest-term interest-bearing instruments (i.e., cash equivalents) put a
mild damper on performance, it also had a positive effect on the volatility of
the portfolio. The Fund's holdings, strategies and management are subject to
change.
Comparing the Fund's Performance to the Market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until August 31, 2003. The graphs assume that all dividends and
capital gains distributions were reinvested in additional shares. In the case of
Class A, B, C and Y shares, performance is measured from inception of the Class
on March 31, 1997. In the case of Class N shares, performance is measured from
inception of the Class on March 1, 2001. The graphs reflect the deduction of the
current maximum initial sales charge on Class A shares and the applicable
contingent deferred sales charge for Class B, Class C and Class N shares. Class
Y shares are available principally to certain institutional investors and are
not subject to a sales charge.
The Fund's performance is compared to the performance of the Goldman Sachs
Commodity Index(R) (GSCI(R)). The GSCI(R) is a composite index of commodity
sector returns representing an unleveraged, long-term investment in commodity
futures that is broadly diversified across the spectrum of commodities and
includes reinvestment of income. Index performance reflects the reinvestment of
income but does not consider the effect of capital gains or transaction cost,
and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of Fund operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance, it
must be noted that the Fund's investments are not limited to the investments in
the Index and the Fund's investments allocations may differ, at times
significantly, from the GSCI's sector weightings. The Fund is not an index fund.
6 | OPPENHEIMER REAL ASSET FUND
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Real Asset Fund (Class A)
Goldman Sachs Commodity Index(R)
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Oppenheimer Real Goldman Sachs
Date Asset Fund (Class A) Commodity Index (R)
03/31/1997 9,425 10,000
05/31/1997 9,679 10,305
08/31/1997 9,717 10,403
11/30/1997 9,161 9,879
02/28/1998 7,750 8,451
05/31/1998 7,057 7,805
08/31/1998 5,594 6,527
11/30/1998 4,872 6,025
02/28/1999 4,464 5,672
05/31/1999 5,028 6,526
08/31/1999 5,958 7,702
11/30/1999 6,160 8,003
02/29/2000 7,294 9,503
05/31/2000 7,803 10,349
08/31/2000 8,850 11,812
11/30/2000 9,566 12,753
02/28/2001 8,572 11,662
05/31/2001 8,489 11,470
08/31/2001 7,980 10,767
11/30/2001 6,435 8,616
02/28/2002 6,434 8,596
05/31/2002 6,990 9,418
08/31/2002 7,538 10,406
11/30/2002 7,463 10,361
02/28/2003 9,934 13,721
05/31/2003 8,826 12,079
08/31/2003 9,277 12,690
Average Annual Total Returns of Class A Shares of the Fund at 8/31/03*
1-Year 16.00% 5-Year 9.35% Since Inception -1.16%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Real Asset Fund (Class B)
Goldman Sachs Commodity Index(R)
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Oppenheimer Real Goldman Sachs
Date Asset Fund (Class B) Commodity Index(R)
03/31/1997 10,000 10,000
05/31/1997 10,250 10,305
08/31/1997 10,270 10,403
11/30/1997 9,670 9,879
02/28/1998 8,156 8,451
05/31/1998 7,413 7,805
08/31/1998 5,865 6,527
11/30/1998 5,101 6,025
02/28/1999 4,662 5,672
05/31/1999 5,246 6,526
08/31/1999 6,202 7,702
11/30/1999 6,402 8,003
02/29/2000 7,570 9,503
05/31/2000 8,081 10,349
08/31/2000 9,144 11,812
11/30/2000 9,855 12,753
02/28/2001 8,822 11,662
05/31/2001 8,722 11,470
08/31/2001 8,185 10,767
11/30/2001 6,591 8,616
02/28/2002 6,576 8,596
05/31/2002 7,132 9,418
08/31/2002 7,663 10,406
11/30/2002 7,573 10,361
02/28/2003 10,068 13,721
05/31/2003 8,934 12,079
08/31/2003 9,392 12,690
Average Annual Total Returns of Class B Shares of the Fund at 8/31/03*
1-Year 17.12% 5-Year 9.52% Since Inception -0.97%
*See Notes on page 10 for further details.
The performance information for the Goldman Sachs Commodity Index(R) in the
graphs begins on 3/31/97 for Class A, Class B, Class C and Class Y shares, and
on 2/28/01 for Class N shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
7 | OPPENHEIMER REAL ASSET FUND
FUND PERFORMANCE DISCUSSION
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Real Asset Fund (Class C)
Goldman Sachs Commodity Index(R)
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Oppenheimer Real Goldman Sachs
Date Asset Fund (Class C) Commodity Index(R)
03/31/1997 10,000 10,000
05/31/1997 10,240 10,305
08/31/1997 10,260 10,403
11/30/1997 9,650 9,879
02/28/1998 8,141 8,451
05/31/1998 7,408 7,805
08/31/1998 5,862 6,527
11/30/1998 5,088 6,025
02/28/1999 4,660 5,672
05/31/1999 5,237 6,526
08/31/1999 6,195 7,702
11/30/1999 6,397 8,003
02/29/2000 7,556 9,503
05/31/2000 8,069 10,349
08/31/2000 9,133 11,812
11/30/2000 9,845 12,753
02/28/2001 8,808 11,662
05/31/2001 8,719 11,470
08/31/2001 8,180 10,767
11/30/2001 6,584 8,616
02/28/2002 6,568 8,596
05/31/2002 7,114 9,418
08/31/2002 7,658 10,406
11/30/2002 7,570 10,361
02/28/2003 10,058 13,721
05/31/2003 8,921 12,079
08/31/2003 9,346 12,690
Average Annual Total Returns of Class C Shares of the Fund at 8/31/03*
1-Year 21.04% 5-Year 9.78% Since Inception -1.05%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Real Asset Fund (Class N)
Goldman Sachs Commodity Index(R)
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Oppenheimer Real Goldman Sachs
Date Asset Fund (Class N) Commodity Index(R)
03/01/2001 10,000 10,000
05/31/2001 9,932 9,836
08/31/2001 9,325 9,233
11/30/2001 7,470 7,388
02/28/2002 7,463 7,371
05/31/2002 8,092 8,076
08/31/2002 8,722 8,923
11/30/2002 8,703 8,885
02/28/2003 11,558 11,766
05/31/2003 10,264 10,358
08/31/2003 10,782 10,882
Average Annual Total Returns of Class N Shares of the Fund at 8/31/03*
1-Year 22.63% Since Inception 3.06%
*See Notes on page 10 for further details.
8 | OPPENHEIMER REAL ASSET FUND
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Real Asset Fund (Class Y)
Goldman Sachs Commodity Index(R)
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Oppenheimer Real Goldman Sachs
Date Asset Fund (Class Y) Commodity Index(R)
03/31/1997 10,000 10,000
05/31/1997 10,270 10,305
08/31/1997 10,310 10,403
11/30/1997 9,730 9,879
02/28/1998 8,221 8,451
05/31/1998 7,495 7,805
08/31/1998 5,941 6,527
11/30/1998 5,174 6,025
02/28/1999 4,743 5,672
05/31/1999 5,359 6,526
08/31/1999 6,343 7,702
11/30/1999 6,563 8,003
02/29/2000 7,772 9,503
05/31/2000 8,323 10,349
08/31/2000 9,464 11,812
11/30/2000 10,242 12,753
02/28/2001 9,195 11,662
05/31/2001 9,121 11,470
08/31/2001 8,592 10,767
11/30/2001 6,923 8,616
02/28/2002 6,927 8,596
05/31/2002 7,543 9,418
08/31/2002 8,132 10,406
11/30/2002 8,059 10,361
02/28/2003 10,738 13,721
05/31/2003 9,559 12,079
08/31/2003 10,058 12,690
Average Annual Total Returns of Class Y Shares of the Fund at 8/31/03*
1-Year 23.69% 5-Year 11.11% Since Inception 0.09%
The performance information for the Goldman Sachs Commodity Index(R) in the
graphs begins on 3/31/97 for Class A, Class B, Class C and Class Y shares, and
on 2/28/01 for Class N shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
9 | OPPENHEIMER REAL ASSET FUND
NOTES
In reviewing performance and rankings, please remember that past performance
cannot 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 of ongoing
market volatility, the Fund's performance may be subject to substantial
fluctuations, and current performance may be more or less than the results
shown. For updates on the Fund's performance, visit our website at
www.oppenheimerfunds.com.
Total returns and the ending account values in the graph includes changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677). Read the prospectus
carefully before you invest or send money.
Please note that Oppenheimer Real Asset Fund(R) 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.
Class A shares of the Fund were first publicly offered on 3/31/97. Class A
returns include the current maximum initial sales charge of 5.75%.
Class B shares of the Fund were first publicly offered on 3/31/97. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "since inception" return for Class B uses Class A
performance for the period after conversion, and the ending account value does
not reflect the deduction of any sales charges. Class B shares are subject to an
annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 3/31/97. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
Class N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
Class Y shares of the Fund were first publicly offered on 3/31/97. Class Y
shares are offered principally to certain institutional investors under special
agreement with the Distributor and are not subject to a sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF INVESTMENTS August 31, 2003
Principal Market Value
Amount See Note 1
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Asset-Backed Securities--5.3%
AQ Finance NIM Trust, Home Equity Collateralized Mtg. Obligations,
Series 2002-1, Cl. Note, 9.50%, 6/25/32 1 $ 321,726 $ 319,715
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BMW Vehicle Owner Trust, Automobile Loan Certificates,
Series 2003-A, Cl. A2, 1.45%, 11/25/05 1 1,460,000 1,461,358
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Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.:
Series 2002-3, Cl. A2A, 3.05%, 9/15/05 2 1,680,000 1,707,778
Series 2002-4, Cl. A2B, 1.74%, 1/17/05 1,2 851,715 853,421
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CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized
Mtg. Obligations, Series 2002-1, Cl. AF1, 2.474%, 9/25/32 372,748 374,340
- ----------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Certificates,
Series 2002-D, Cl. A2A, 2.10%, 3/15/05 788,828 791,478
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Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.,
Series 2002-2, Cl. A1, 1.91%, 4/16/07 405,704 407,110
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Honda Auto Receivables Owner Trust, Automobile Receivables
Obligations, Series 2002-4, Cl. A2, 1.66%, 6/15/05 800,186 801,605
- ----------------------------------------------------------------------------------------------------
Household Automotive Trust, Automobile Loan Certificates,
Series 2002-2, Cl. A2, 2.15%, 12/19/05 388,086 389,256
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M&I Auto Loan Trust, Automobile Loan Certificates, Series 2002-1,
Cl. A2, 1.95%, 7/20/05 302,629 303,286
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MMCA Auto Lease Trust, Auto Retail Installment Contracts,
Series 2002-A, Cl. A2, 1.28%, 5/16/05 3,4 541,235 541,668
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MSF Funding LLC, Collateralized Mtg. Obligations, Series 2000-1,
Cl. C, 8.46%, 7/25/07 1,4 295,529 103,435
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NC Finance Trust, Collateralized Mtg. Obligations:
Series 1999-I, Cl. ECFD, 8.75%, 12/25/28 1 691,934 207,580
Series 2002-I, Cl. ECFD, 9.25%, 3/25/32 1 315,768 312,807
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Nissan Auto Lease Trust, Auto Lease Obligations, Series 2002-A,
Cl. A2, 1.86%, 11/15/04 1 1,406,020 1,408,433
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Nissan Auto Receivables Owner Trust, Auto Receivable Nts.,
Series 2002-C, Cl. A2, 1.94%, 9/15/04 537,361 538,199
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Salomon Smith Barney Auto Loan Trust, Asset-Backed Auto Loan
Obligations, Series 2002-1, Cl. A2, 1.83%, 9/15/05 1 878,303 880,377
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Salomon Smith Barney Mutual Fund Fee Trust XIV, Asset-Backed Nts.,
Series 2000-14, Cl. 2, 8.61%, 9/30/08 3,716,396 1,412,230
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Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed
Obligations, Series 2003-A, Cl. A2, 1.28%, 8/15/05 2,770,000 2,769,099
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USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.,
Series 2002-1, Cl. A2, 1.95%, 3/15/05 136,918 137,148
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Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities,
Series 2002-A, Cl. A2, 1.77%, 2/20/05 2 1,352,089 1,355,009
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Whole Auto Loan Trust, Automobile Loan Receivables, Series 2002-1,
Cl. A2, 1.88%, 6/15/05 2 853,645 855,932
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Total Asset-Backed Securities (Cost $20,854,331) 17,931,264
11 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
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Mortgage-Backed Obligations--32.2%
- ----------------------------------------------------------------------------------------------------
Government Agency--30.4%
- ----------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--30.3%
FHLMC Structured Pass-Through Securities, Collateralized Mtg. Obligations:
Series H003, Cl. A2, 1.88%, 1/15/07 $ 786,716 $ 790,792
Series H006, Cl. A1, 1.724%, 4/15/08 1 923,736 909,456
- ----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
8%, 4/1/16 597,834 646,592
9%, 8/1/22-5/1/25 147,097 163,827
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Federal National Mortgage Assn.:
5%, 9/1/33 5 1,253,000 1,212,668
5.50%, 9/1/33 5 6,394,000 6,368,028
6%, 9/25/33 5 7,151,000 7,271,673
6.50%, 9/1/33 5 18,300,000 18,923,335
7%, 9/25/33 5 63,069,000 66,439,281
8.50%, 7/1/32 334,048 359,544
-------------
103,085,196
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GNMA/Guaranteed--0.1%
Government National Mortgage Assn., 8.50%, 8/15/17-12/15/17 193,751 213,481
- ----------------------------------------------------------------------------------------------------
Private--1.8%
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Commercial--1.0%
Bear Stearns Commercial Mortgage Securities, Inc., Commercial
Mtg. Obligations, Series 2003-T10, Cl. A1, 4%, 3/13/40 1,329,714 1,306,494
- ----------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations,
Series 2003-C1, Cl. A2, 4.093%, 1/10/38 1,081,000 1,064,679
- ----------------------------------------------------------------------------------------------------
J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2003-ML1A, Cl. A1, 3.972%, 3/12/39 802,228 787,268
- ----------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through Certificates,
Series 1996-WF1, Cl. A2, 7.385%, 11/15/28 3,4 279,004 280,701
-------------
3,439,142
- ----------------------------------------------------------------------------------------------------
Residential--0.8%
Granite Mortgages plc, Mtg.-Backed Obligations, Series 2002-2,
Cl. 1A1, 1.479%, 1/21/17 1,4 162,154 162,147
- ----------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Commercial Mtg
Pass-Through Certificates, Series 1999-NC2, Cl. M3, 4.36%, 4/25/29 1,4 1,538,722 1,547,527
- ----------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations
Pass-Through Certificates, Series 1998-8, Cl. B, 2.41%, 8/25/28 4 993,042 975,432
-------------
2,685,106
Total Mortgage-Backed Obligations (Cost $109,163,555) 109,422,925
12 | OPPENHEIMER REAL ASSET FUND
Principal Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------
U.S. Government Obligations--8.2%
Federal Home Loan Bank Unsec. Bonds, Series EY06, 5.25%, 8/15/06 $ 9,286,000 $ 9,918,730
- ----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts., 2.75%, 8/15/06 6,310,000 6,301,305
- ----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
5.25%, 6/15/06 2 1,600,000 1,710,510
5.50%, 2/15/06 2 8,000,000 8,574,328
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
2.625%, 5/15/08 1,042,000 1,009,520
3.50%, 11/15/06 363,000 372,727
-------------
Total U.S. Government Obligations (Cost $28,046,121) 27,887,120
- ----------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--12.4%
AEP Resources, Inc., 6.50% Sr. Nts., 12/1/03 3 755,000 762,147
- ----------------------------------------------------------------------------------------------------
Albertson's, Inc., 6.55% Sr. Nts., 8/1/04 2 640,000 662,886
- ----------------------------------------------------------------------------------------------------
American Express Co., 5.50% Nts., 9/12/06 2 770,000 827,121
- ----------------------------------------------------------------------------------------------------
Anthem, Inc., 4.875% Unsub. Nts., 8/1/05 420,000 437,833
- ----------------------------------------------------------------------------------------------------
AOL Time Warner, Inc., 6.15% Nts., 5/1/07 560,000 613,535
- ----------------------------------------------------------------------------------------------------
AT&T Corp., 5.625% Nts., 3/15/04 475,000 485,014
- ----------------------------------------------------------------------------------------------------
Bank of America Corp., 3.875% Nts., 1/15/08 2 500,000 501,969
- ----------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The), 3.75% Nts., 2/15/08 470,000 469,888
- ----------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co., 4.75% Nts., 10/1/06 875,000 915,645
- ----------------------------------------------------------------------------------------------------
Cardinal Health, Inc., 4.45% Nts., 6/30/05 370,000 384,392
- ----------------------------------------------------------------------------------------------------
CIT Group, Inc., 4.125% Sr. Nts., 2/21/06 900,000 923,946
- ----------------------------------------------------------------------------------------------------
Citigroup, Inc., 3.50% Nts., 2/1/08 800,000 790,310
- ----------------------------------------------------------------------------------------------------
Citizens Communications Co.:
6.375% Sr. Unsec. Unsub. Nts., 8/15/04 500,000 523,005
7.625% Sr. Unsub. Nts., 8/15/08 515,000 587,243
- ----------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 4.625% Sr. Unsec. Nts., 1/15/08 875,000 889,402
- ----------------------------------------------------------------------------------------------------
Conoco, Inc., 5.90% Sr. Unsec. Nts., 4/15/04 610,000 627,064
- ----------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 5.50% Nts., Series K, 2/1/07 2 635,000 672,752
- ----------------------------------------------------------------------------------------------------
Credit Suisse First Boston Inc. (USA), 5.75% Nts., 4/15/07 600,000 645,706
- ----------------------------------------------------------------------------------------------------
DaimlerChrysler NA Holding Corp., 3.40% Nts., Series D, 12/15/04 2 860,000 867,176
- ----------------------------------------------------------------------------------------------------
Diageo plc Nts., 1.33%, 1/6/04 6 1,015,000 1,007,798
- ----------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 3.875% Nts., 1/15/04 420,000 423,341
- ----------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 615,000 662,796
- ----------------------------------------------------------------------------------------------------
EOP Operating LP, 7.75% Unsec. Nts., 11/15/07 390,000 443,828
- ----------------------------------------------------------------------------------------------------
FleetBoston Financial Corp., 4.20% Nts., 11/30/07 430,000 438,126
- ----------------------------------------------------------------------------------------------------
Fred Meyer, Inc., 7.375% Sr. Nts., 3/1/05 630,000 674,032
- ----------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts., 11/30/07 515,000 517,177
- ----------------------------------------------------------------------------------------------------
General Motors Nova Scotia Finance Co., 6.85% Nts., 10/15/08 1,205,000 1,219,598
- ----------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 4.125% Nts., 1/15/08 2 1,000,000 1,006,790
- ----------------------------------------------------------------------------------------------------
GTE North, Inc., 6.40% Debs., Series E, 2/15/05 605,000 643,742
13 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------
Corporate Bonds and Notes Continued
Hertz Corp. (The), 6.50% Sr. Nts., 5/15/06 2 $ 1,215,000 $ 1,252,268
- ----------------------------------------------------------------------------------------------------
Household Finance Corp., 6.50% Unsec. Nts., 1/24/06 515,000 559,056
- ----------------------------------------------------------------------------------------------------
Ingersoll-Rand Co., 5.80% Sr. Unsec. Nts., 6/1/04 1,000,000 1,031,956
- ----------------------------------------------------------------------------------------------------
J.P. Morgan Chase & Co., 4% Nts., 2/1/08 800,000 803,628
- ----------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 5% Nts., 7/27/07 3 760,000 796,803
- ----------------------------------------------------------------------------------------------------
KeyCorp, 8% Sub. Nts., 7/1/04 595,000 625,612
- ----------------------------------------------------------------------------------------------------
Kroger Co. (The), 7.625% Sr. Nts., 9/15/06 460,000 513,549
- ----------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 3.625% Nts., 2/15/08 1,130,000 1,120,913
- ----------------------------------------------------------------------------------------------------
MBNA Corp., 5.625% Nts., 11/30/07 500,000 521,006
- ----------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 4% Nts., Series B, 11/15/07 410,000 410,105
- ----------------------------------------------------------------------------------------------------
Midamerican Energy Holdings Co., 4.625% Sr. Nts., 10/1/07 910,000 921,585
- ----------------------------------------------------------------------------------------------------
Monumental Global Funding II, 3.85% Nts., 3/3/08 3 1,120,000 1,115,164
- ----------------------------------------------------------------------------------------------------
News America, Inc., 6.625% Sr. Nts., 1/9/08 443,000 487,781
- ----------------------------------------------------------------------------------------------------
Nisource Finance Corp., 7.625% Sr. Unsec. Nts., 11/15/05 603,000 662,907
- ----------------------------------------------------------------------------------------------------
PNC Bank NA, 7.875% Sub. Nts., 4/15/05 2 580,000 632,716
- ----------------------------------------------------------------------------------------------------
Progress Energy, Inc.:
6.55% Sr. Unsec. Nts., 3/1/04 455,000 465,674
6.75% Sr. Nts., 3/1/06 465,000 504,557
- ----------------------------------------------------------------------------------------------------
Raytheon Co., 5.70% Sr. Unsec. Nts., 11/1/03 620,000 622,664
- ----------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 6.25% Nts., 1/15/04 2 620,000 626,739
- ----------------------------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 3.03% Nts., Series VII, 2/25/04 4 390,000 393,042
- ----------------------------------------------------------------------------------------------------
Shopping Center Associates, 6.75% Sr. Unsec. Nts., 1/15/04 3 178,000 181,373
- ----------------------------------------------------------------------------------------------------
Sprint Capital Corp., 5.70% Sr. Nts., 11/15/03 710,000 713,918
- ----------------------------------------------------------------------------------------------------
Target Corp., 5.40% Nts., 10/1/08 755,000 801,892
- ----------------------------------------------------------------------------------------------------
Teachers Insurance & Annuity Association Global Markets,
3.875% Sr. Unsec. Nts., 1/22/08 3 1,750,000 1,754,146
- ----------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.975% Nts., 8/15/04 1,025,000 1,076,404
- ----------------------------------------------------------------------------------------------------
Verizon Wireless, Inc., 5.375% Unsub. Nts., 12/15/06 860,000 913,055
- ----------------------------------------------------------------------------------------------------
Viacom, Inc., 6.40% Sr. Nts., 1/30/06 2 675,000 732,500
- ----------------------------------------------------------------------------------------------------
Vodafone Group plc, 3.95% Unsec. Nts., 1/30/08 860,000 861,182
- ----------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 6.75% Sr. Nts., 3/30/06 400,000 435,809
- ----------------------------------------------------------------------------------------------------
Washington Mutual, Inc., 4.375% Nts., 1/15/08 515,000 521,352
- ----------------------------------------------------------------------------------------------------
Wyeth, 5.875% Nts., 3/15/04 380,000 388,860
-------------
Total Corporate Bonds and Notes (Cost $41,452,034) 42,072,478
14 | OPPENHEIMER REAL ASSET FUND
Principal Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------
Structured Notes--29.2%
AIG Goldman Sachs Commodity Index Total Return Linked Nts.,
1.228%, 1/22/04 8 $11,000,000 $ 12,835,818
- ----------------------------------------------------------------------------------------------------
Bank of New York (The), Core Investment Grade Bond Trust I,
Pass-Through Certificates, Series 2002-1, 4.727% 11/30/07 9,700,000 9,857,092
- ----------------------------------------------------------------------------------------------------
Business Development Bank of Canada:
Goldman Sachs Commodity Index Excess Return Linked Nts.,
1.20%, 11/20/03 8 9,500,000 17,501,850
Goldman Sachs Commodity Index Non Energy Excess Return Linked Nts.,
1.10%, 4/23/04 8 3,000,000 3,700,500
- ----------------------------------------------------------------------------------------------------
Cargill Financial Services Corp.:
Goldman Sachs Commodity Index Total Return Linked Nts., 1.54%, 2/26/04 8 17,000,000 28,811,758
Goldman Sachs Commodity Index Total Return Linked Nts., 1.57%, 3/22/04 8 9,000,000 15,253,768
- ----------------------------------------------------------------------------------------------------
Koch Supply & Trading LP, Goldman Sachs Energy Total Return
Linked Nts., 1.09%, 4/30/04 4 4,000,000 5,613,508
- ----------------------------------------------------------------------------------------------------
Sempra Energy Trading Corp., Goldman Sachs Commodity Index
Total Return Linked Nts., 1.17%, 6/9/04 4,8 5,500,000 5,904,800
-------------
Total Structured Notes (Cost $68,918,071) 99,479,094
Date Strike Contracts
- ----------------------------------------------------------------------------------------------------
Options Purchased--0.0%
Live Cattle Futures, 10/31/03 Call 7,9 10/3/03 $80 62 96,720
Live Cattle Futures, 10/31/03 Call 7,9 10/3/03 82 30 28,800
-------------
Total Options Purchased (Cost $36,445) 125,520
Principal
Amount
- ----------------------------------------------------------------------------------------------------
Joint Repurchase Agreements--40.1% 10
Undivided interest of 22.88% in joint repurchase agreement
(Principal Amount/Market Value $174,849,000, with a maturity value
of $174,868,622) with PaineWebber, Inc., 1.01%, dated 8/29/03, to be
repurchased at $40,004,489 on 9/2/03, collateralized by Federal
National Mortgage Assn., 5%--6%, 4/1/18--3/1/33, with a value
of $178,650,471 $40,000,000 40,000,000
- ----------------------------------------------------------------------------------------------------
Undivided interest of 24.89% in joint repurchase agreement
(Principal Amount/Market Value $388,120,000, with a maturity value
of $388,162,693) with Zions Bank/Capital Markets Group, 0.99%, dated
8/29/03, to be repurchased at $96,622,627 on 9/2/03, collateralized by
U.S. Treasury Nts., 2.375%--2.75%, 10/31/03--8/15/06, with a value of
$336,611,159 and U.S. Treasury Bills, 11/28/03--2/5/04, with a value
of $60,243,636 96,612,000 96,612,000
-------------
Total Joint Repurchase Agreements (Cost $136,612,000) 136,612,000
- ----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $405,082,557) 127.4% 433,530,401
- ----------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (27.4) (93,280,274)
---------------------------
Net Assets 100.0% $340,250,127
===========================
15 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF INVESTMENTS Continued
Footnotes to Statement of Investments
1. Identifies issues considered to be illiquid. See Note 7 of Notes to Financial
Statements.
2. Securities with an aggregate market value of $19,031,684 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $5,432,002 or 1.60% of the Fund's net
assets as of August 31, 2003.
4. Represents the current interest rate for a variable or increasing rate
security.
5. When-issued security to be delivered and settled after August 31, 2003. See
Note 1 of Notes to Financial Statements.
6. Zero coupon bond reflects effective yield on the date of purchase.
7. Non-income producing security.
8. Security is linked to the Goldman Sachs Commodity Index. The index currently
contains multiple 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.
9. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
Contracts Expiration Exercise Premium Market Value
Calls Subject to Call Dates Price Received See Note 1
- ---------------------------------------------------------------------------------------------
Cocoa Futures, 12/12/03 25 9/5/03 $600 $ 4,406 $ 40,500
Crude Oil Futures, 9/22/03 75 9/17/03 34 13,469 12,750
-----------------------
17,875 53,250
-----------------------
Contracts
Puts Subject to Put
- ---------------------------------------------------------------------------------------------
Coffee Futures, 12/17/03 30 9/12/03 60 10,013 3,938
Live Cattle Futures, 10/31/03 62 10/3/03 72 19,407 4,340
Live Cattle Futures, 10/31/03 30 10/3/03 74 4,687 2,400
Wheat Futures, 12/12/03 50 9/26/03 350 3,563 3,750
-----------------------
37,670 14,428
-----------------------
$55,545 $67,678
=======================
10. The Fund may have elements of risk due to concentrated investments. Such
concentrations may subject the Fund to additional risks.
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2003
- ----------------------------------------------------------------------------------------------------
Assets
Investments, at value (including cost and market value of $136,612,000 in
repurchase agreements)(cost $405,082,557)--see accompanying statement $433,530,401
- ----------------------------------------------------------------------------------------------------
Cash 254,429
- ----------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 5,036,718
Interest and principal paydowns 2,508,180
Futures margins 324,713
Other 2,038
--------------
Total assets 441,656,479
- ----------------------------------------------------------------------------------------------------
Liabilities
Options written, at value (premiums received $55,545)--see accompanying statement 67,678
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis 100,148,330
Shares of beneficial interest redeemed 905,340
Distribution and service plan fees 120,025
Transfer and shareholder servicing agent fees 70,965
Shareholder reports 42,504
Trustees' compensation 2,316
Other 49,194
--------------
Total liabilities 101,406,352
- ----------------------------------------------------------------------------------------------------
Net Assets $340,250,127
==============
- ----------------------------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of beneficial interest $ 45,325
- ----------------------------------------------------------------------------------------------------
Additional paid-in capital 329,843,769
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 73,631
- ----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (21,532,593)
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 31,819,995
--------------
Net Assets $340,250,127
==============
17 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$238,827,846 and 31,805,451 shares of beneficial interest outstanding) $7.51
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $7.97
- ---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $37,588,537
and 5,004,399 shares of beneficial interest outstanding) $7.51
- ---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $36,531,240
and 4,883,385 shares of beneficial interest outstanding) $7.48
- ---------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,578,381
and 210,558 shares of beneficial interest outstanding) $7.50
- ---------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $25,724,123 and 3,421,442 shares of beneficial interest outstanding) $7.52
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER REAL ASSET FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2003
- -------------------------------------------------------------------------------------------------
Investment Income
Interest $ 5,213,477
- ------------------------------------------------------------------------------------------------
Expenses
Management fees 2,612,422
- ------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 468,770
Class B 320,657
Class C 256,957
Class N 4,987
- ------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 444,775
Class B 136,005
Class C 98,388
Class N 3,130
Class Y 9,141
- ------------------------------------------------------------------------------------------------
Shareholder reports 38,000
- ------------------------------------------------------------------------------------------------
Trustees' compensation 11,995
- ------------------------------------------------------------------------------------------------
Custodian fees and expenses 6,883
- ------------------------------------------------------------------------------------------------
Other 61,503
-------------
Total expenses 4,473,613
Less reduction to custodian expenses (6,883)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (25,505)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (9,593)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (1,981)
-------------
Net expenses 4,429,651
- ------------------------------------------------------------------------------------------------
Net Investment Income 783,826
- ------------------------------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain on:
Investments (including premiums on options exercised) 13,135,907
Closing of futures contracts 14,638,016
Closing and expiration of option contracts written 1,293,512
-------------
Net realized gain 29,067,435
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 20,781,346
Futures contracts 491,022
-------------
Net change in unrealized appreciation 21,272,368
- ------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $51,123,629
=============
See accompanying Notes to Financial Statements
19 | OPPENHEIMER REAL ASSET FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended August 31, 2003 2002
- ------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 783,826 $ 6,892,992
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 29,067,435 (37,404,463)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 21,272,368 24,930,588
------------------------------
Net increase (decrease) in net assets resulting from operations 51,123,629 (5,580,883)
- ------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (1,303,888) (6,637,082)
Class B (43,213) (1,035,243)
Class C (29,456) (597,787)
Class N (6,191) (6,068)
Class Y (148,718) (146,188)
- ------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Class A 54,035,053 41,724,285
Class B 7,287,354 5,578,210
Class C 15,042,430 6,731,211
Class N 1,134,147 244,031
Class Y 14,764,802 5,076,876
- ------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 141,855,949 45,351,362
- ------------------------------------------------------------------------------------------------------------
Beginning of period 198,394,178 153,042,816
------------------------------
End of period [including undistributed net investment income
of $73,631 and $755,471, respectively] $340,250,127 $198,394,178
==============================
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER REAL ASSET FUND
FINANCIAL HIGHLIGHTS
Class A Year Ended August 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $6.15 $6.93 $8.18 $5.74 $5.81
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .03 .29 .45 .32 .20
Net realized and unrealized gain (loss) 1.38 (.71) (1.21) 2.40 .09
----------------------------------------------------------------
Total from investment operations 1.41 (.42) (.76) 2.72 .29
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.05) (.36) (.43) (.28) (.36)
Distributions from net realized gain -- -- (.06) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.05) (.36) (.49) (.28) (.36)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.51 $6.15 $6.93 $8.18 $5.74
================================================================
- ---------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 23.08% (5.54)% (9.83)% 48.55% 6.50%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $238,828 $148,319 $117,331 $161,547 $109,328
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $193,837 $115,458 $139,631 $126,143 $ 66,106
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.46% 4.73% 5.73% 4.81% 3.73%
Total expenses 1.49% 3 1.68% 3,4 1.51% 3 1.50% 3 1.82% 3
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 49% 105% 93% 86%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER REAL ASSET FUND
FINANCIAL HIGHLIGHTS Continued
Class B Year Ended August 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $6.16 $6.95 $8.20 $5.75 $5.76
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.04) .23 .40 .27 .16
Net realized and unrealized gain (loss) 1.40 (.70) (1.22) 2.40 .10
----------------------------------------------------------------
Total from investment operations 1.36 (.47) (.82) 2.67 .26
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.32) (.37) (.22) (.27)
Distributions from net realized gain -- -- (.06) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.01) (.32) (.43) (.22) (.27)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.51 $6.16 $6.95 $8.20 $5.75
================================================================
- ---------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 22.12% (6.38)% (10.49)% 47.44% 5.75%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $37,589 $24,738 $21,321 $27,156 $18,690
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $32,101 $20,032 $26,295 $21,416 $15,454
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.41)% 4.10% 4.99% 4.03% 2.95%
Total expenses 2.44% 2.45% 2.27% 2.27% 2.58%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.36% N/A 3,4 N/A 3 N/A 3 N/A 3
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 49% 105% 93% 86%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER REAL ASSET FUND
Class C Year Ended August 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $6.14 $6.93 $8.17 $5.73 $5.76
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.03) .23 .41 .27 .15
Net realized and unrealized gain (loss) 1.38 (.70) (1.22) 2.39 .11
----------------------------------------------------------------
Total from investment operations 1.35 (.47) (.81) 2.66 .26
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.32) (.37) (.22) (.29)
Distributions from net realized gain -- -- (.06) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.01) (.32) (.43) (.22) (.29)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.48 $6.14 $6.93 $8.17 $5.73
================================================================
- ---------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 22.04% (6.39)% (10.43)% 47.43% 5.68%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $36,531 $18,115 $12,588 $20,256 $15,965
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $25,746 $11,771 $16,165 $16,536 $10,477
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.43)% 3.99% 4.95% 4.03% 2.96%
Total expenses 2.40% 2.45% 2.26% 2.27% 2.58%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.36% N/A 3,4 N/A 3 N/A 3 N/A 3
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 49% 105% 93% 86%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
23 | OPPENHEIMER REAL ASSET FUND
FINANCIAL HIGHLIGHTS Continued
Class N Year Ended August 31, 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $6.15 $6.99 $7.67
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .30 .22
Net realized and unrealized gain (loss) 1.36 (.78) (.73)
------------------------------------
Total from investment operations 1.43 (.48) (.51)
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.08) (.36) (.17)
Distributions from net realized gain -- -- --
------------------------------------
Total dividends and/or distributions to shareholders (.08) (.36) (.17)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.50 $6.15 $6.99
====================================
- ------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 23.63% (6.47)% (6.75)%
- ------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,578 $314 $61
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,001 $146 $14
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.27% 3.57% 5.95%
Total expenses 1.83% 1.94% 1.88%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.63% N/A 4,5 N/A 4
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 49% 105%
<FN>
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
24 | OPPENHEIMER REAL ASSET FUND
Class Y Year Ended August 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $6.15 $6.94 $8.16 $5.72 $5.81
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06 .32 .25 .36 .20
Net realized and unrealized gain (loss) 1.39 (.73) (.95) 2.38 .10
----------------------------------------------------------------
Total from investment operations 1.45 (.41) (.70) 2.74 .30
- ---------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.08) (.38) (.46) (.30) (.39)
Distributions from net realized gain -- -- (.06) -- --
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.08) (.38) (.52) (.30) (.39)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.52 $6.15 $6.94 $8.16 $5.72
================================================================
- ---------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 23.69% (5.36)% (9.21)% 49.20% 6.77%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $25,724 $6,908 $1,741 $1 $1
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $15,755 $3,420 $ 868 $1 $1
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.83% 3.95% 6.46% 5.28% 3.88%
Total expenses 1.08% 1.27% 1.38% 3 1.09% 1.68%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 4 1.26% 1.17% N/A 4 N/A 4
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 49% 105% 93% 86%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Added since August 31, 2001 to reflect expenses before reduction to custodian
expenses and voluntary waiver of transfer agent fees.
4. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
25 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 investment objective is to seek total return. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Advisor). The
Sub-Advisor is Oppenheimer Real Asset Management, Inc. (the Manager), a wholly
owned subsidiary of the Advisor.
The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are 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 Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC. All classes of shares have identical
rights and voting privileges. Earnings, net assets and net asset value per
share may differ by minor amounts due to each class having its own expenses
directly attributable to that class. Classes A, B, C and N 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.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ 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 closing bid and asked
prices, and if not, at the closing bid price. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Trustees, or at their fair value. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in commodity-linked structured notes whose
market values and redemption prices 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 volatility of each
note's market value relative to the change in the underlying commodity prices.
Fluctuations in value of these securities related to the commodity exposure are
recorded as unrealized gains and losses in the accompanying financial
statements. The Fund records a realized gain or loss when a structured note is
sold or matures. As of August 31, 2003, the market value of these
26 | OPPENHEIMER REAL ASSET FUND
securities comprised 26.3% of the Fund's net assets, and resulted in unrealized
gains of $30,622,002. The Fund also hedges a portion of the commodity exposure
generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
Securities on a When-Issued Basis. Delivery and payment for securities that
have been purchased by the Fund on a when-issued basis can take place a month
or more after the trade date. Normally the settlement date occurs within six
months after the trade date; however, the Fund may, from time to time, purchase
securities whose settlement date extends six months or more beyond trade date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains segregated assets with a market value equal to or greater than
the amount of its purchase commitments. The purchase of securities on a
when-issued basis may increase the volatility of the Fund's net asset value to
the extent the Fund makes such purchases while remaining substantially fully
invested. As of August 31, 2003, the Fund had entered into when-issued purchase
commitments of $100,148,330.
In connection with its ability to purchase securities on a when-issued
basis, the Fund may enter into forward roll transactions with respect to
mortgage-related securities. Forward roll transactions require the sale of
securities for delivery in the current month, and a simultaneous agreement with
the same counterparty to repurchase similar (same type, coupon and maturity)
but not identical securities on a specified future date. The forward roll may
not extend for a period of greater than one year. The Fund records the
incremental difference between the forward purchase and sale of each forward
roll as interest income.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities to what was sold to the counterparty
at redelivery; counterparty credit risk; and the potential pay down speed
variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint
trading accounts on a daily basis. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. Securities pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
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.
27 | OPPENHEIMER REAL ASSET 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 tax components of capital shown in the table below 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 investment for federal income
tax purposes.
Net Unrealized
Appreciation
Undistributed Undistributed Accumulated Based on Cost of
Net Investment Long-Term Loss Securities for Federal
Income Gain Carryforward 1,2 Income Tax Purposes
-------------------------------------------------------------------------
$73,634 $12,368,123 $30,622,002 $28,541,282
1. During the fiscal year ended August 31, 2003, the Fund utilized $27,556,670
of capital loss carryforward to offset capital gains realized in that fiscal
year. During the fiscal year ended August 31, 2002, the Fund did not utilize
any capital loss carryforwards.
2. The Fund had $30,622,002 of straddle losses which were deferred.
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, 2003. Net assets of
the Fund were unaffected by the reclassifications.
To To Net
Ordinary Capital Tax Return Investment
Income Loss 3 of Capital Loss
-------------------------------------------------------
$65,800 $5,999,155 $-- $--
3. $5,933,355, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.
The tax character of distributions paid during the years ended August 31, 2003
and August 31, 2002 was as follows:
Year Ended Year Ended
August 31, 2003 August 31, 2002
-------------------------------------------------------
Distributions paid from:
Ordinary income $1,531,466 $8,422,368
The aggregate cost of investments and the composition of unrealized
appreciation and depreciation of investments for federal income tax purposes as
of August 31, 2003 are noted below. The primary difference between book and tax
appreciation or depreciation of investments, if applicable, is attributable to
the tax deferral of losses or tax realization of financial statement unrealized
gain or loss.
28 | OPPENHEIMER REAL ASSET FUND
Federal tax cost $408,361,270
============
Gross unrealized appreciation $ 32,761,508
Gross unrealized depreciation (4,220,226)
------------
Net unrealized appreciation $ 28,541,282
============
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are
declared and paid quarterly. Capital gain distributions, if any, are declared
and paid annually.
- --------------------------------------------------------------------------------
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, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 income and
expenses during the reporting period. Actual results could differ from those
estimates.
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
Year Ended August 31, 2003 Year Ended August 31, 2002
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
Class A
Sold 34,470,741 $240,879,466 16,431,339 $94,218,844
Dividends and/or
distributions reinvested 182,879 1,164,613 1,026,928 5,891,961
Redeemed (26,972,700) (188,009,026) (10,253,038) (58,386,520)
-------------------------------------------------------------------
Net increase 7,680,920 $ 54,035,053 7,205,229 $41,724,285
===================================================================
29 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest Continued
Year Ended August 31, 2003 Year Ended August 31, 2002
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
Class B
Sold 4,589,002 $32,275,935 1,958,303 $11,475,012
Dividends and/or
distributions reinvested 6,070 38,017 156,457 898,572
Redeemed (3,603,595) (25,026,598) (1,167,837) (6,795,374)
--------------------------------------------------------------------
Net increase 991,477 $ 7,287,354 946,923 $ 5,578,210
====================================================================
- ------------------------------------------------------------------------------------------------
Class C
Sold 6,300,352 $44,752,722 1,879,522 $11,031,078
Dividends and/or
distributions reinvested 3,715 23,258 89,916 516,091
Redeemed (4,370,436) (29,733,550) (836,564) (4,815,958)
--------------------------------------------------------------------
Net increase 1,933,631 $15,042,430 1,132,874 $ 6,731,211
====================================================================
- ------------------------------------------------------------------------------------------------
Class N
Sold 310,503 $2,241,096 50,337 $ 291,021
Dividends and/or
distributions reinvested 1,012 6,180 1,062 6,021
Redeemed (151,980) (1,113,129) (9,144) (53,011)
--------------------------------------------------------------------
Net increase 159,535 $1,134,147 42,255 $ 244,031
====================================================================
- ------------------------------------------------------------------------------------------------
Class Y
Sold 3,474,505 $22,981,857 1,068,259 $ 6,188,944
Dividends and/or
distributions reinvested 8,593 56,004 9,822 55,984
Redeemed (1,184,394) (8,273,059) (206,298) (1,168,052)
--------------------------------------------------------------------
Net increase 2,298,704 $14,764,802 871,783 $ 5,076,876
====================================================================
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2003, were
$148,709,751 and $104,210,151, respectively.
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Advisor were in accordance with
the investment advisory agreement with the Fund which provides for a fee at an
annual rate of 1.00% of the first $200 million of average annual 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 Advisor pays the Sub-Advisor the following annual
fees: 0.50% of the first $200 million of average annual 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.
30 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended August 31, 2003, the Fund
paid $648,379 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $5,000 for
assets of less than $10 million and $10,000 for assets of $10 million or more.
The Class Y shares are subject to the minimum fees in the event that the per
account fee does not equal or exceed the applicable minimum fees. OFS may
voluntarily waive the minimum fees.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees up to an annual rate of 0.35% of average annual net assets for all
classes. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- ----------------------------------------------------------------------------------------------------------------
August 31, 2003 $1,126,335 $247,269 $34,354 $608,727 $263,216 $17,284
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its
own resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- ------------------------------------------------------------------------------
August 31, 2003 $2,073 $161,081 $56,886 $10,057
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A Shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended August 31, 2003, expense under
the Class A Plan totaled $468,770, all of which were paid by the Distributor to
recipients, which included $395 retained by the Distributor and $7,126 which
was paid to an affiliate of the Manager. Any unreimbursed expenses the
Distributor incurs with respect to Class A shares in any fiscal year cannot be
recovered in subsequent years.
31 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Distribution fees paid to the Distributor for the year ended August 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------------------------
Class B Plan $320,657 $258,672 $2,006,059 5.34%
Class C Plan 256,957 125,406 593,017 1.62
Class N Plan 4,987 4,099 42,261 2.68
- --------------------------------------------------------------------------------
5. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy
and sell futures contracts that relate to broadly based securities indices
"financial futures", debt securities "interest rate futures" and various
commodities "commodity index futures" inherent in the Fund's holdings of
structured notes. 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 and the resulting negative effect on the value of fixed rate
portfolio securities, decreases in market value of portfolio securities, or
decreases in commodity prices. 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 interest rates, commodity prices
or market indices. 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
32 | OPPENHEIMER REAL ASSET FUND
margin. Realized gains and losses are reported on the Statement of
Operations as closing and expiration of futures contracts.
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.
As of August 31, 2003, the Fund had outstanding futures contracts as follows:
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts August 31, 2003 (Depreciation)
- ------------------------------------------------------------------------------------------------
Contracts to Purchase
Agriculture
Corn 12/12/03 502 $ 6,067,925 $ 525,630
Cotton #2 12/5/03 44 1,301,960 29,995
Soybean 1/14/04 690 20,372,250 431,344
Wheat 12/12/03-12/19/03 501 9,511,650 536,596
Energy
Brent Crude Oil 10/16/03 548 16,018,040 58,955
Crude Oil 9/22/03 961 30,338,770 272,386
Gas Oil 10/10/03 197 5,013,650 112,511
Heating Oil 9/30/03 264 9,162,014 16,924
Natural Gas 9/26/03 274 12,962,940 (182,358)
Unleaded Gasoline 9/30/03 272 10,603,757 346,715
Livestock
Feeder Cattle 10/30/03 25 1,174,063 47,094
Lean Hogs 10/15/03 171 3,746,610 9,529
Live Cattle 10/31/03 39 1,292,460 128,554
Industrial Metals
Copper 12/29/03 152 3,079,900 2,305
London Metals Exchange
Aluminum High Grade 10/15/03 74 2,649,663 (17,915)
London Metals Exchange Lead 10/14/03 23 290,663 (6,011)
London Metals Exchange
Nickel 10/15/03-12/17/03 30 1,688,850 30,488
Precious Metals
Gold 100 oz. 12/29/03 26 979,680 40,762
Platinum 10/28/03 12 425,160 9,015
Softs
Cocoa 12/12/03 79 1,391,190 240,404
Sugar #11 9/30/03 123 866,510 (53,684)
-----------
2,579,239
-----------
Contracts to Sell
Agriculture
Soybean 11/14/03 562 16,550,900 (345,700)
Wheat 3/12/04 50 970,625 (10,812)
Livestock
Feeder Cattle 12/31/03 15 485,700 (14,550)
Industrial Metals
London Metals Exchange Zinc 12/17/03 37 764,050 4,486
Precious Metals
Silver 12/29/03 25 641,500 (16,594)
Softs
Coffee, Cl. C 12/17/03 37 879,675 (13,226)
Orange Juice 11/6/03 36 421,200 (3,105)
33 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Futures Contracts Continued
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts August 31, 2003 (Depreciation)
- ------------------------------------------------------------------------------------------------
Governments
U.S. Long Bonds 12/19/03 32 $ 3,392,000 $ (49,292)
U.S. Treasury Nts., 2 yr. 9/29/03-12/29/03 265 56,748,234 236,713
U.S. Treasury Nts., 5 yr. 9/19/03 656 73,133,750 1,045,284
U.S. Treasury Nts., 10 yr. 12/19/03 55 6,034,531 (28,159)
-----------
805,045
-----------
$3,384,284
===========
- --------------------------------------------------------------------------------
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 security 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 note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized 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 or commodity 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 or commodity 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.
34 | OPPENHEIMER REAL ASSET FUND
Written option activity for the year ended August 31, 2003 was as follows:
Call Options Put Options
----------------------- ------------------------
Number of Amount of Number of Amount of
Contracts Premiums Contracts Premiums
- ----------------------------------------------------------------------------------
Options outstanding as of
August 31, 2002 120 $ 33,527 267 $ 34,619
Options written 2,594 695,483 4,708 1,146,008
Options closed or expired (2,439) (647,243) (4,417) (1,040,788)
Options exercised (175) (63,892) (386) (102,169)
--------------------------------------------------
Options outstanding as of
August 31, 2003 100 $ 17,875 172 $ 37,670
==================================================
- --------------------------------------------------------------------------------
7. Illiquid Securities
As of August 31, 2003, investments in securities included issues that are
illiquid. 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 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of August
31, 2003 was $8,166,256, which represents 2.40% of the Fund's net assets.
- --------------------------------------------------------------------------------
8. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at August 31, 2003.
35 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of Oppenheimer Real Asset Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Real Asset Fund, including the statement of investments, as of
August 31, 2003, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of August 31, 2003, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Real Asset Fund as of August 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
Denver, Colorado
October 15, 2003
36 | OPPENHEIMER REAL ASSET FUND
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
None of the dividends paid by the Fund during the year ended August 31, 2003
are eligible for the corporate dividend-received deduction.
Dividends paid by the Fund during the fiscal year ended August 31, 2003
which are not designated as capital gain distribution, may be eligible for
lower individual income tax rates to the extent that the Fund has received
qualified dividend income as stipulated by recent tax legislation. In early
2004, shareholders of record will receive information regarding the percentage
of distributions that are eligible for lower individual income tax rates. The
amount will be the maximum amount allowed.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
37 | OPPENHEIMER REAL ASSET FUND
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TRUSTEES AND OFFICERS Unaudited
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- --------------------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held
Fund, Length of Service, Age by Trustee; Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way,
TRUSTEES Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.
James C. Swain, Formerly, Chief Executive Officer (until August 27, 2002) of the Board II Funds,
Chairman and Trustee Vice Chairman (until January 2, 2002) of OppenheimerFunds, Inc. (the Manager)
(since 1997) and President and a director (until 1997) of Centennial Asset Management
Age: 69 Corporation (a wholly-owned investment advisory subsidiary of the Manager).
Oversees 43 portfolios in the OppenheimerFunds complex.
William L. Armstrong, Chairman of the following private mortgage banking companies: Cherry Creek
Vice Chairman and Trustee Mortgage Company (since 1991), Centennial State Mortgage Company (since 1994),
(since 1999) The El Paso Mortgage Company (since 1993), Transland Financial Services, Inc.
Age: 66 (since 1997); Chairman of the following private companies: Great Frontier
Insurance (insurance agency) (since 1995), Ambassador Media Corporation and
Broadway Ventures (since 1984); a director of the following public companies:
Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992)
and UNUMProvident (insurance company) (since 1991). Mr. Armstrong is also a
Director/Trustee of Campus Crusade for Christ and the Bradley Foundation.
Formerly a director of the following: Storage Technology Corporation (a
publicly-held computer equipment company) (1991-February 2003), and
International Family Entertainment (television channel) (1992-1997), Frontier
Real Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier
Title (title insurance agency) (1995-June 1999); a U.S. Senator (January
1979-January 1991). Oversees 43 portfolios in the OppenheimerFunds complex.
Robert G. Avis, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner
Trustee (since 1997) of private equity funds) (until February 2001); Chairman, President and Chief
Age: 72 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice
Chairman and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards &
Sons, Inc. (its brokerage company subsidiary) (until March 1999); Chairman of
A.G. Edwards Trust Company and A.G.E. Asset Management (investment advisor)
(until March 1999); and a Director (until March 2000) of A.G. Edwards & Sons
and A.G. Edwards Trust Company. Oversees 43 portfolios in the OppenheimerFunds
complex.
George C. Bowen, Formerly (until April 1999): Senior Vice President (from September 1987) and
Trustee (since 1997) Treasurer (from March 1985) of the Manager; Vice President (from June 1983) and
Age: 66 Treasurer (since March 1985) of OppenheimerFunds Distributor, Inc. (a subsidiary
of the Manager); Senior Vice President (since February 1992), Treasurer (since
July 1991) Assistant Secretary and a director (since December 1991) of
Centennial Asset Management Corporation; Vice President (since October 1989) and
Treasurer (since April 1986) of HarbourView Asset Management Corporation (an
investment advisory subsidiary of the Manager); President, Treasurer and a
director (June 1989-January 1990) of Centennial Capital Corporation (an
investment advisory subsidiary of the Manager); Vice President and Treasurer
(since August 1978) and Secretary (since April 1981) of Shareholder Services,
Inc. (a transfer agent subsidiary of the Manager); Vice President, Treasurer and
Secretary (since November 1989) of Shareholder Financial Services, Inc. (a
transfer agent subsidiary of the Manager); Assistant Treasurer (since March
1998) of Oppenheimer Acquisition Corp. (the Manager's parent corporation);
Treasurer (since November 1989) of Oppenheimer Partnership Holdings, Inc. (a
holding company subsidiary of the Manager); Vice President and Treasurer (since
July
38 | OPPENHEIMER REAL ASSET FUND
George C. Bowen, 1996) of Oppenheimer Real Asset Management, Inc. (an investment advisory
Continued subsidiary of the Manager); Chief Executive Officer and director (since March
1996) of MultiSource Services, Inc. (a broker-dealer subsidiary of the Manager);
Treasurer (since October 1997) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc (offshore fund management subsidiaries of the Manager).
Oversees 43 portfolios in the OppenheimerFunds complex.
Edward L. Cameron, A member of The Life Guard of Mount Vernon, George Washington's home (since June
Trustee (since 1999) 2000). Formerly (March 2001 - May 2002) Director of Genetic ID, Inc. and its
Age: 65 subsidiaries (a privately held biotech company); a partner with
PricewaterhouseCoopers LLP (from 1974-1999) (an accounting firm) and Chairman
(from 1994-1998), Price Waterhouse LLP Global Investment Management Industry
Services Group. Oversees 43 portfolios in the OppenheimerFunds complex.
Jon S. Fossel, Chairman and Director (since 1998) of Rocky Mountain Elk Foundation (a
Trustee (since 1997) not-for-profit foundation); and a director (since October 1999) of P.R.
Age: 61 Pharmaceuticals (a privately held company) and UNUMProvident (an insurance
company) (since June 1, 2002). Formerly Chairman and a director (until October
1996) and President and Chief Executive Officer (until October 1995) of the
Manager; President, Chief Executive Officer and a director of Oppenheimer
Acquisition Corp., Shareholders Services Inc. and Shareholder Financials
Services, Inc. (until October 1995). Oversees 43 portfolios in the
OppenheimerFunds complex.
Sam Freedman, Director of Colorado Uplift (a non-profit charity) (since September 1984).
Trustee (since 1997) Formerly (until October 1994) Mr. Freedman held several positions in subsidiary
Age: 62 or affiliated companies of the Manager. Oversees 43 portfolios in the
OppenheimerFunds complex.
Beverly L. Hamilton, Trustee (since 1996) of MassMutual Institutional Funds and of MML Series
Trustee (since 2002) Investment Fund (open-end investment companies); Director of MML Services (since
Age: 56 April 1987) and America Funds Emerging Markets Growth Fund (since October 1991)
(both are investment companies), The California Endowment (a philanthropy
organization) (since April 2002), and Community Hospital of Monterey Peninsula,
(since February 2002); a trustee (since February 2000) of Monterey International
Studies (an educational organization), and an advisor to Unilever (Holland)'s
pension fund and to Credit Suisse First Boston's Sprout venture capital unit.
Mrs. Hamilton also is a member of the investment committees of the Rockefeller
Foundation, the University of Michigan and Hartford Hospital. Formerly,
President (February 1991-April 2000) ARCO Investment Management Company.
Oversees 44 portfolios in the OppenheimerFunds complex.
Robert J. Malone, Chairman and CEO (since August 2003) of Steele Street Bank (a commercial bank
Trustee (since 2002) entity), Director (since 2001) of Jones Knowledge, Inc. (a privately held
Age: 59 company), U.S. Exploration, Inc., (since 1997), Colorado UpLIFT (a non-profit
organization) (since 1986) and a trustee of the Gallagher Family Foundation
(non-profit organization) (since 2000). Formerly, Chairman of U.S. Bank (a
subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April
1, 1999) and a director of Commercial Assets, Inc. (a REIT) (1993-2000).
Oversees 44 portfolios in the OppenheimerFunds complex.
39 | OPPENHEIMER REAL ASSET FUND
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TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
F. William Marshall, Jr., Trustee (since 1996) of MassMutual Institutional Funds and of MML Series
Trustee (since 2000) Investment Fund (open-end investment companies); Trustee (since 1987), Chairman
Age: 61 of the Board (since 2003) and Chairman of the investment committee (since 1994)
for the Worcester Polytech Institute; President and Treasurer (since January
1999) of the SIS Fund (a private not for profit charitable fund); Trustee (since
1995) of the Springfield Library and Museum Association; Trustee (since 1996) of
the Community Music School of Springfield. Formerly, member of the investment
committee of the Community Foundation of Western Massachusetts (1998 - 2003);
Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS
Bank); President, Chief Executive Officer and Director (May 1993-December 1998)
of SIS Bankcorp, Inc. and SIS Bank (formerly Springfield Institution for
Savings) and Executive Vice President (January 1999-July 1999) of Peoples
Heritage Financial Group, Inc. Oversees 43 portfolios in the OppenheimerFunds
complex.
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INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New York,
AND OFFICER NY 10018. Mr. Murphy serves for an indefinite term, until his resignation, death
or removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President and Trustee (since September 2000) of the Manager; President and a director or trustee of
(since 2001) other Oppenheimer funds; President and a director (since July 2001) of
Age: 54 Oppenheimer Acquisition Corp. and of Oppenheimer Partnership Holdings, Inc.; a
director (since November 2001) of OppenheimerFunds Distributor, Inc.; Chairman
and a director (since July 2001) of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.; President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the following investment advisory subsidiaries of
OppenheimerFunds, Inc.: OFI Institutional Asset Management, Inc. and Centennial
Asset Management Corporation (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President
(since November 1, 2001) and a director (since July 2001) of Oppenheimer Real
Asset Management, Inc.; a director (since November 2001) of Trinity Investment
Management Corp. and Tremont Advisers, Inc. (investment advisory affiliates of
the Manager); Executive Vice President (since February 1997) of Massachusetts
Mutual Life Insurance Company (the Manager's parent company); a director (since
June 1995) of DLB Acquisition Corporation (a holding company that owns shares of
David L. Babson & Company, Inc.); formerly, Chief Operating Officer (September
2000-June 2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 75 portfolios in the
OppenheimerFunds complex.
40 | OPPENHEIMER REAL ASSET FUND
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OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Baum,
Manioudakis and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted,
6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an
annual term or until his or her earlier resignation, death or removal.
Kevin Baum, Portfolio Manager of the Fund (since May 1999); he has served as the Fund's
Vice President (since 1999) principal trader since its inception in March 1997; an officer of 1 portfolio in
Age: 33 the OppenheimerFunds complex; formerly he was a trading and securities analyst
for the Manager (May 1993-February 1997).
Angelo Manioudakis, Senior Vice President of the Manager (since April 2002); an officer of 12
Vice President (since 2002) portfolios in the OppenheimerFunds complex; formerly Executive Director and
Age: 36 portfolio manager for Miller, Anderson & Sherrerd, a division of Morgan Stanley
Investment Management (August 1993-April 2002).
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 43 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (offshore fund management subsidiaries of the Manager)
(since May 2000) and OFI Institutional Asset Management, Inc. (since November
2000); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 91 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Vice President & Secretary of the Manager; General Counsel and a director (since November 2001) of
(since 2001) OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
Age: 55 (since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001); OppenheimerFunds International Ltd. And OppenheimerFunds
plc (October 1997-November 2001). An officer of 91 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
41 | OPPENHEIMER REAL ASSET FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that Edward L. Cameron, the
Chairman of the Board's Audit Committee, and George C. Bowen, a member of the
Board's Audit Committee, possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts," and has designated Messrs. Cameron and Bowen as the Audit
Committee's financial experts. Messrs. Cameron and Bowen are "independent"
Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of August 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)