Annual Report 4/30/2018. Oppenheimer Real Estate Fund

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1 Annual Report 4/30/2018 Oppenheimer Real Estate Fund

2 Table of Contents Fund Performance Discussion 3 Top Holdings and Allocations 6 Fund Expenses 9 Statement of Investments 11 Statement of Assets and Liabilities 13 Statement of Operations 15 Statements of Changes in Net Assets 16 Financial Highlights 17 Notes to Financial Statements 23 Report of Independent Registered Public Accounting Firm 35 Federal Income Tax Information 36 Portfolio Proxy Voting Policies and Guidelines; Updates to Statement of Investments 37 Distribution Sources 38 Trustees and Officers 39 Privacy Notice 45 Class A Shares AVERAGE ANNUAL TOTAL RETURNS AT 4/30/18 Class A Shares of the Fund Without Sales Charge With Sales Charge FTSE NAREIT Equity REIT Index 1-Year -2.77% -8.36% -3.26% 5-Year Year Performance data quoted represents past performance, which does not guarantee future results. The 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 their original cost. Fund returns include changes in share price, reinvested distributions, and a 5.75% maximum applicable sales charge except where without sales charge is indicated. Current performance may be lower or higher than the performance quoted. Returns do not consider capital gains or income taxes on an individual's investment. Returns for periods of less than one year are cumulative and not annualized. For performance data current to the most recent monthend, visit oppenheimerfunds.com or call CALL OPP ( ). See Fund prospectuses and summary prospectuses for more information on share classes and sales charges. 2 OPPENHEIMER REAL ESTATE FUND

3 Fund Performance Discussion The Fund s Class A shares (without sales charges) produced a -2.77% return for the one-year reporting period ended April 30, On a relative basis, the Fund outperformed its benchmark, the FTSE NAREIT Equity REIT Index (the Index ), which produced a -3.26% return for the same period. MARKET OVERVIEW In a period of overall market volatility, the Index returned -3.26% during the reporting period. Returns of real estate investment trusts ( REITs ) in the U.S. were overall negative due to the rising interest rate environment, as well as decelerating real estate market conditions. Health Care stocks had a negative return for the period and were the largest drag on the Index s overall return for the period. There were two principal causes for the underperformance rising interest rates, COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Real Estate Fund (Class A shares with sales charge) FTSE NAREIT Equity REIT Index and disappointing earnings guidance for large cap Health Care REITs, some of which was attributed to large tenancy issues. The Retail sectors (shopping centers, regional malls, and net lease) experienced negative performance, as increased store closings continued to act as a headwind to fundamentals, with headline risk due to the growth of e-commerce. The higher-dividend yielding Diversified sector underperformed with the expectation of a higher interest rate environment. $20,000 15,000 $18,467 $16,066 10,000 5, /30/08 4/30/09 4/30/10 4/30/11 4/30/12 4/30/13 4/30/14 4/30/15 4/30/16 4/30/17 4/30/18 3 OPPENHEIMER REAL ESTATE FUND

4 Returns were strong in the Industrial e-commerce demand. Industrial supply remained at manageable levels, and high occupancy levels have been providing property owners with strong pricing power. interest rates (short-term leases), strong demand, and better than feared results, given expectations of outsized supply growth. business and leisure spending following the FUND REVIEW The Fund s outperformance versus the Index can be attributed to the following: underweight this sector. These higheryielding REITs underperformed with the expectation of a higher interest rate environment. Apartment sector. The Fund was underweight this sector earlier in the period, and it underperformed as supply growth weighed on rent growth results. The Fund recently increased its weight in this sector, as we believe the spread between the current pricing of Apartment REITs and their net asset values (NAVs) presents a buying opportunity. was due to stock selection (mostly from overweight positions in Kilroy Realty and Cousins Properties). Companies within geographic footprint and management quality. The Fund was previously concentrating in companies with assets in the West Coast and Sunbelt, over New York City and Washington, DC. Recently, given the large discounts in some gateway market names, and the uncertainty around Amazon s second headquarters location, the Fund has broadened its geographic exposure in this sector. Industrial sector. The Fund was overweight from strong leasing trends driven by e-commerce demand. Non-core sectors. The Fund outperformed due to its overweight position in the non-core Timber, Infrastructure (mostly cell-tower companies) and Single Family increased use of smartphones, although this sector has trailed recently due to merger talks among cell carriers T-Mobile and Sprint. The Fund s weakest performance relative to the Index was due to its underweight position in the Self-Storage sector. Although this sector performed relatively well compared to the total Index, we believe supply issues will adversely affect future growth and the Fund intends to maintain its underweight position in this sector. STRATEGY & OUTLOOK At the end of the reporting period, the U.S. appears to be at the later stages of the economic cycle. We believe tax cuts and government spending will likely provide 4 OPPENHEIMER REAL ESTATE FUND

5 growth, although if interest rates continue to rise, they could act as a headwind to future growth. In our opinion, non-core real estate sectors including infrastructure REITs (cell towers), data centers and single family rentals should provide opportunities given their above average growth expectations. Cell tower and data center REITs are likely internet of things, self-driving autos and the corporate embrace of the cloud. We also believe that there is pricing opportunity in the Apartment sector. Apartments have absorbed near term supply and rent growth has stabilized, with the potential to reaccelerate. We favor companies exposed to higher job growth. demographic trends as millennials age and hit milestones (albeit later than in the past), which require the extra space a single-family residence can provide. Furthermore, the single-family rental segment is several years behind the rental growth curve versus multifamily, and has more upside in its potential rent growth. Within Core sectors, we are focused on the Industrial sector due to strong demand drivers. Supply chains and logistics are being reinvented due to ecommerce growth. We leisure spending increases. Overall, we believe the REIT Market is trading at a 10% discount to the market s earnings growth and strong private capital demand for real estate. We believe this is an opportunity for long-term investors. We believe REIT performance will continue to be bifurcated among segments, depending on the nature of the economy s growth, as well as fundamental trends such as evolving consumer demand due to ecommerce. We are optimistic that the U.S. recovery will continue at a measured pace. However, the portfolio positioning relies on secular pressures we believe will drive outperformance in the mid to long term. David Wharmby, CFA Portfolio Manager The Portfolio Manager is employed by the Fund s sub-sub-adviser, Barings LLC. The opinions of the Portfolio 5 OPPENHEIMER REAL ESTATE FUND

6 Top Holdings and Allocations TOP TEN COMMON STOCK HOLDINGS Prologis, Inc. 7.6% Digital Realty Trust, Inc. 7.0 UDR, Inc. 5.8 Equinix, Inc. 5.2 Simon Property Group, Inc. 5.0 Essex Property Trust, Inc. 4.9 Camden Property Trust 4.3 Boston Properties, Inc. 4.2 Hilton Worldwide Holdings, Inc. 3.9 Sun Communities, Inc. 3.9 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2018, and are based on net assets. For more current Fund holdings, please visit oppenheimerfunds. com. SECTOR ALLOCATION Residential REITs 21.5% Specialized REITs 18.1 Retail REITs Industrial REITs 11.3 Health Care REITs 8.1 Hotel & Resort REITs 4.6 Hotels, Resorts & Leisure Mortgage REITs 1.0 Investment Company * * Represents a value of less than 0.05%. Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2018, and are based on market value of total investments. 6 OPPENHEIMER REAL ESTATE FUND

7 Share Class Performance AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 4/30/18 Inception Date 1-Year 5-Year 10-Year Class A (OREAX) 3/4/ % 4.80% 5.48% Class B (OREBX) 10/1/ Class C (ORECX) 10/1/ Class I (OREIX) 8/28/ * Class R (ORENX) 10/1/ Class Y (OREYX) 10/1/ AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 4/30/18 Inception Date 1-Year 5-Year 10-Year Class A (OREAX) 3/4/ % 3.57% 4.86% Class B (OREBX) 10/1/ Class C (ORECX) 10/1/ Class I (OREIX) 8/28/ * Class R (ORENX) 10/1/ Class Y (OREYX) 10/1/ * Shows performance since inception. Performance data quoted represents past performance, which does not guarantee future results. The 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 their original cost. Current performance may be lower or higher than the performance quoted. Returns do not consider capital gains or income taxes on an individual s investment. For performance data current to the most recent month-end, visit oppenheimerfunds.com or call CALL OPP ( ). Fund returns include changes in share price, reinvested distributions, and the applicable sales charge: for Class A shares, the current maximum initial sales charge of 5.75%; for Class B shares, the contingent deferred sales charge of 5% (1-year) and 2% (5-year); and for Class C shares, the contingent deferred sales charge of 1% for the 1-year period. There is no sales charge for Class I, Class R and Class Y shares. Because Class B shares automatically converted to Class A shares 72 months after purchase, the 10-year return for Class B shares uses Class A performance for the period after conversion. Effective June 1, 2018, all Class B shares converted to Class A shares. Returns for periods of less than one year are cumulative and not annualized. See Fund prospectuses and summary prospectuses for more information on share classes and sales charges. The FTSE NAREIT (National Association of Real Estate Investment Trusts) Equity REIT Index consists of certain companies that own and operate income-producing real estate that have 75% or more of their respective gross invested assets in the equity or mortgage debt of commercial properties. The Index is unmanaged and cannot be purchased directly by investors. 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 comprising the Index. Index performance includes reinvestment of income, but does not reflect transaction 7 OPPENHEIMER REAL ESTATE FUND

8 costs, fees, expenses or taxes. Index performance is shown for illustrative purposes only as a benchmark for the Fund's performance, and does not predict or depict performance of expenses. The views in the Fund Performance Discussion represent the opinions of this Fund's portfolio managers and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the close of business on April 30, 2018, and are subject to change based on subsequent developments. The Fund s portfolio and strategies are subject to change. Before investing in any of the Oppenheimer funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses. Fund prospectuses and summary prospectuses contain this and other information oppenheimerfunds.com, or calling CALL OPP ( ). Read prospectuses and summary prospectuses carefully before investing. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. 8 OPPENHEIMER REAL ESTATE FUND

9 Fund Expenses Fund Expenses. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and/or contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1, invested at the beginning of the period and held for the entire 6-month period ended April 30, Actual Expenses. values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1, (for example, an $8, section under the heading entitled Expenses Paid During 6 Months Ended April 30, 2018 to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes. The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs charges (loads). Therefore, the hypothetical section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. 9 OPPENHEIMER REAL ESTATE FUND

10 Actual Beginning Account Value November 1, 2017 Ending Account Value April 30, 2018 Expenses Paid During 6 Months Ended April 30, 2018 Class A $ 1, $ $ 6.59 Class B 1, Class C 1, Class I 1, Class R 1, Class Y 1, Hypothetical (5% return before expenses) Class A 1, , Class B 1, , Class C 1, , Class I 1, , Class R 1, , Class Y 1, , Expenses are equal to the Fund s annualized expense ratio for that class, multiplied by the based on the 6-month period ended April 30, 2018 are as follows: Class Expense Ratios Class A 1.35% Class B 2.13 Class C 2.10 Class I 0.93 Class R 1.60 Class Y 1.10 expenses by the Fund s Manager and Transfer Agent. Some of these undertakings may be as indicated in the Fund's prospectus. The Financial Highlights tables in the Fund gross expense ratios, without such waivers or reimbursements and reduction to custodian expenses, if applicable. 10 OPPENHEIMER REAL ESTATE FUND

11 STATEMENT OF INVESTMENTS April 30, 2018 Shares Value Common Stocks 99.2% Consumer Discretionary 3.9% Hotels, Restaurants & Leisure 3.9% Hilton Worldwide Holdings, Inc. 484,166 $ 38,171,647 Financials 95.3% Real Estate Investment Trusts (REITs) 95.3% 1.3% STORE Capital Corp. 500,400 12,625,092 Health Care REITs 8.0% Healthcare Realty Trust, Inc. 356,400 9,918,612 Medical Properties Trust, Inc. 846,370 10,816,609 National Health Investors, Inc. 157,159 10,729,245 Physicians Realty Trust 1,329,760 19,866,614 Welltower, Inc. 501,907 26,821,910 78,152,990 Hotel & Resort REITs 4.6% Chesapeake Lodging Trust 597,870 17,661,080 Park Hotels & Resorts, Inc. 454,771 13,088,309 Sunstone Hotel Investors, Inc. 918,450 14,327,820 45,077,209 Industrial REITs 11.2% First Industrial Realty Trust, Inc. 1,134,484 35,293,797 Prologis, Inc. 1,136,854 73,793, ,086,990 Mortgage REITs 1.0% New Residential Investment Corp. 566,960 9,910, % Boston Properties, Inc. 337,539 40,980,610 Brandywine Realty Trust 746,419 12,024,810 Cousins Properties, Inc. 2,600,690 23,120,134 Properties, Inc. 588,880 19,356,486 JBG SMITH Properties 58,520 2,157,632 Kilroy Realty Corp. 458,474 32,858,831 Vornado Realty Trust 88,220 6,001, ,500,110 Shares Value Residential REITs 21.3% Camden Property Trust 493,540 $ 42,148,316 Essex Property Trust, Inc. 199,010 47,700,707 Invitation Homes, Inc. 1,011,940 23,416,292 Sun Communities, Inc. 404,120 37,926,662 UDR, Inc. 1,563,040 56,503, ,695,873 Retail REITs 15.9% Acadia Realty Trust 805,738 19,015,417 Agree Realty Corp. 340,060 16,622,133 Macerich Co. (The) 235,530 13,571,239 Realty Income Corp. 270,040 13,639,720 Regency Centers Corp. 559,059 32,900,622 Retail Properties of America, Inc., Cl. A 846,900 9,773,226 Simon Property Group, Inc. 313,737 49,049, ,571,999 Specialized REITs 18.0% American Tower Corp. 145,540 19,845,835 Crown Castle International Corp. 200,370 20,211,322 Digital Realty Trust, Inc. 643,500 68,011,515 Equinix, Inc. 120,280 50,612,621 Gaming & Leisure Properties, Inc. 495,645 16,985, ,667,047 Total Common Stocks (Cost $868,310,334) 967,459, OPPENHEIMER REAL ESTATE FUND

12 STATEMENT OF INVESTMENTS Continued Shares Value Investment Company 0.0% Oppenheimer Institutional Government Money Market Fund, Cl. E, 1.67%(Cost $220,838) 1,2 220,838 $ 220,838 Total Investments, at Value (Cost $868,531,172) 99.2% 967,680,256 Net Other Assets (Liabilities) 0.8 7,708,541 Net Assets 100.0% $ 975,388,797 Footnotes to Statement of Investments 1. period, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the reporting period in which the issuer was an Shares April 30, 2017 Gross Additions Gross Reductions Shares April 30, 2018 Oppenheimer Institutional Government Money Market Fund, Cl. E 14,836, ,759, ,374, ,838 Realized Gain (Loss) Change in Unrealized Gain (Loss) Value Income Oppenheimer Institutional Government Money Market Fund, Cl. E $ 220,838 $ 63,227 $ $ 2. Rate shown is the 7-day yield at period end. See accompanying Notes to Financial Statements. 12 OPPENHEIMER REAL ESTATE FUND

13 STATEMENT OF ASSETS AND LIABILITIES April 30, 2018 Assets Investments, at value see accompanying statement of investments: 868,310,334) $ 967,459, , ,680,256 Cash 6,784,641 Receivables and other assets: Investments sold 13,083, ,466 Dividends 235,777 Other 64,831 Total assets 988,369,869 Liabilities Payables and other liabilities: Investments purchased 11,063,539 1,661,263 Distribution and service plan fees 113,273 Trustees' compensation 68,874 Shareholder communications 13,936 Other 60,187 Total liabilities 12,981,072 Net Assets $ 975,388,797 Composition of Net Assets $ 41,878 Additional paid-in capital 882,546,016 Accumulated net investment loss (10,051,029) Accumulated net realized gain on investments 3,702,848 Net unrealized appreciation on investments 99,149,084 Net Assets $ 975,388, OPPENHEIMER REAL ESTATE FUND

14 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 $390,099,692 and $23.25 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $24.67 Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and interest outstanding) $22.68 Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $75,956,098 and 3,363,980 shares of $22.58 Class I Shares: Net asset value, redemption price and offering price per share (based on net assets of $23.49 Class R Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $86,490,956 and 3,740,265 shares of $23.12 Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $23.52 See accompanying Notes to Financial Statements. 14 OPPENHEIMER REAL ESTATE FUND

15 STATEMENT OF OPERATIONS For the April 30, 2018 Investment Income Dividends: $ 30,061,346 63,227 Interest 42,714 Total investment income 30,167,287 Expenses Management fees 10,888,302 Distribution and service plan fees: Class A 1,123,737 Class B 28,712 Class C 906,412 Class R 479,666 Transfer and shareholder servicing agent fees: Class A 982,321 Class B 6,224 Class C 193,406 Class I 67,307 Class R 204,636 Class Y 504,349 Shareholder communications: Class A 22,110 Class B 744 Class C 5,975 Class I 3,007 Class R 2,261 Class Y 4,439 Borrowing fees 37,707 Trustees' compensation 14,723 Custodian fees and expenses 6,626 Other 83,990 Total expenses 15,566,654 Less waivers and reimbursements of expenses (1,214,697) Net expenses 14,351,957 Net Investment Income 15,815,330 Realized and Unrealized Gain (Loss) 41,385,917 companies (87,032,868) Net Decrease in Net Assets Resulting from Operations $ (29,831,621) See accompanying Notes to Financial Statements. 15 OPPENHEIMER REAL ESTATE FUND

16 STATEMENTS OF CHANGES IN NET ASSETS April 30, 2018 April 30, 2017 Operations Net investment income $ 15,815,330 $ 9,490,088 Net realized gain 41,385, ,221,556 Net change in unrealized appreciation/depreciation (87,032,868) (83,048,598) Net increase (decrease) in net assets resulting from operations (29,831,621) 58,663,046 Dividends and/or Distributions to Shareholders Dividends from net investment income: Class A (5,168,282) (13,274,321) Class B (11,061) (123,247) Class C (405,740) (1,794,067) Class I (3,456,454) (5,320,415) Class R (838,816) (2,268,537) Class Y (3,343,493) (7,170,590) (13,223,846) (29,951,177) Distributions from net realized gain: Class A (16,461,021) (56,628,837) Class B (88,959) (739,880) Class C (3,304,072) (11,445,041) Class I (8,728,575) (19,650,504) Class R (3,459,833) (10,952,668) Class Y (8,853,107) (25,803,177) (40,895,567) (125,220,107) transactions: Class A (120,028,542) 9,786,701 Class B (4,345,197) (6,113,916) Class C (22,290,555) (6,810,183) Class I 46,431,291 60,067,519 Class R (10,323,217) 484,346 Class Y (45,477,121) (135,148,889) (156,033,341) (77,734,422) Net Assets Total decrease (239,984,375) (174,242,660) Beginning of period 1,215,373,172 1,389,615,832 End of period (including accumulated net investment loss of $10,051,029 and $23,079,568, respectively) $ 975,388,797 $ 1,215,373,172 See accompanying Notes to Financial Statements. 16 OPPENHEIMER REAL ESTATE FUND

17 FINANCIAL HIGHLIGHTS Class A April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $25.06 $27.13 $28.23 $26.11 $25.90 Income (loss) from investment operations: Net investment income Net realized and unrealized gain (loss) (0.98) Total from investment operations (0.64) Dividends and/or distributions to shareholders: Dividends from net investment income (0.27) (0.61) (0.56) (0.48) (0.35) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (1.17) (3.28) (2.60) (1.70) (0.35) Net asset value, end of period $23.25 $25.06 $27.13 $28.23 $26.11 Total Return, at Net Asset Value 4 (2.77)% 4.59% 5.93% 14.70% 2.33% Ratios/Supplemental Data Net assets, end of period (in thousands) $390,100 $543,858 $579,488 $638,707 $502,283 Average net assets (in thousands) $461,402 $600,337 $576,678 $589,603 $466,636 Ratios to average net assets: 5 Net investment income 1.37% 0.66% 1.59% 0.97% 1.19% below 1.45% 1.43% 1.43% 1.42% 1.54% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 1.43% 1.43% 1.42% 1.54% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.34% 1.33% 1.33% 1.32% 1.39% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 17 OPPENHEIMER REAL ESTATE FUND

18 FINANCIAL HIGHLIGHTS Continued Class B April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $24.48 $26.55 $27.66 $25.61 $25.42 Income (loss) from investment operations: Net investment income Net realized and unrealized gain (loss) (0.96) Total from investment operations (0.82) Dividends and/or distributions to shareholders: Dividends from net investment income (0.08) (0.38) (0.34) (0.26) (0.19) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (0.98) (3.05) (2.38) (1.48) (0.19) Net asset value, end of period $22.68 $24.48 $26.55 $27.66 $25.61 Total Return, at Net Asset Value 4 (3.56)% 3.80% 5.15% 13.80% 1.60% Ratios/Supplemental Data Net assets, end of period (in thousands) $556 $5,068 $11,564 $16,988 $19,227 Average net assets (in thousands) $2,861 $8,661 $13,992 $18,851 $20,698 Ratios to average net assets: 5 Net investment income 0.59% 0.20% 1.06% 0.39% 0.63% below 2.23% 2.19% 2.18% 2.18% 2.37% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 2.19% 2.18% 2.18% 2.37% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 2.12% 2.09% 2.08% 2.08% 2.17% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 18 OPPENHEIMER REAL ESTATE FUND

19 Class C April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $24.39 $26.48 $27.61 $25.57 $25.40 Income (loss) from investment operations: Net investment income (loss) (0.02) Net realized and unrealized gain (loss) (0.96) Total from investment operations (0.81) Dividends and/or distributions to shareholders: Dividends from net investment income (0.10) (0.41) (0.36) (0.27) (0.20) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (1.00) (3.08) (2.40) (1.49) (0.20) Net asset value, end of period $22.58 $24.39 $26.48 $27.61 $25.57 Total Return, at Net Asset Value 4 (3.51)% 3.82% 5.14% 13.83% 1.55% Ratios/Supplemental Data Net assets, end of period (in thousands) $75,956 $104,929 $120,654 $129,009 $98,260 Average net assets (in thousands) $90,823 $119,534 $119,652 $115,951 $95,086 Ratios to average net assets: 5 Net investment income (loss) 0.61% (0.08)% 0.82% 0.18% 0.46% below 2.21% 2.18% 2.18% 2.17% 2.30% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 2.18% 2.18% 2.17% 2.30% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 2.10% 2.08% 2.08% 2.07% 2.16% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 19 OPPENHEIMER REAL ESTATE FUND

20 FINANCIAL HIGHLIGHTS Continued Class I April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $25.32 $27.38 $28.47 $26.32 $26.11 Income (loss) from investment operations: Net investment income Net realized and unrealized gain (loss) (0.98) Total from investment operations (0.54) Dividends and/or distributions to shareholders: Dividends from net investment income (0.39) (0.73) (0.69) (0.61) (0.47) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (1.29) (3.40) (2.73) (1.83) (0.47) Net asset value, end of period $23.49 $25.32 $27.38 $28.47 $26.32 Total Return, at Net Asset Value 4 (2.37)% 5.04% 6.41% 15.22% 2.82% Ratios/Supplemental Data Net assets, end of period (in thousands) $242,465 $215,127 $172,681 $153,137 $114,628 Average net assets (in thousands) $224,650 $206,215 $147,821 $153,143 $106,092 Ratios to average net assets: 5 Net investment income 1.79% 0.97% 1.96% 1.47% 1.36% below 1.02% 0.99% 0.99% 0.98% 1.03% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 0.99% 0.99% 0.98% 1.03% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 0.92% 0.89% 0.89% 0.88% 0.90% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 20 OPPENHEIMER REAL ESTATE FUND

21 Class R April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $24.94 $27.01 $28.11 $26.01 $25.80 Income (loss) from investment operations: Net investment income Net realized and unrealized gain (loss) (0.98) Total from investment operations (0.71) Dividends and/or distributions to shareholders: Dividends from net investment income (0.21) (0.54) (0.49) (0.41) (0.29) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (1.11) (3.21) (2.53) (1.63) (0.29) Net asset value, end of period $23.12 $24.94 $27.01 $28.11 $26.01 Total Return, at Net Asset Value 4 (3.06)% 4.34% 5.68% 14.39% 2.08% Ratios/Supplemental Data Net assets, end of period (in thousands) $86,491 $103,838 $112,028 $112,993 $88,540 Average net assets (in thousands) $96,292 $115,032 $106,969 $104,767 $78,539 Ratios to average net assets: 5 Net investment income 1.12% 0.40% 1.31% 0.72% 0.89% below 1.71% 1.68% 1.68% 1.67% 1.80% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 1.68% 1.68% 1.67% 1.80% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.60% 1.58% 1.58% 1.57% 1.64% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 21 OPPENHEIMER REAL ESTATE FUND

22 FINANCIAL HIGHLIGHTS Continued Class Y April 30, 2018 April 30, 2017 April 29, April 30, 2015 April 30, 2014 Per Share Operating Data Net asset value, beginning of period $25.34 $27.40 $28.48 $26.33 $26.11 Income (loss) from investment operations: Net investment income Net realized and unrealized gain (loss) (0.98) Total from investment operations (0.58) Dividends and/or distributions to shareholders: Dividends from net investment income (0.34) (0.68) (0.63) (0.55) (0.40) Distributions from net realized gain (0.90) (2.67) (2.04) (1.22) Total dividends and/or distributions to shareholders (1.24) (3.35) (2.67) (1.77) (0.40) Net asset value, end of period $23.52 $25.34 $27.40 $28.48 $26.33 Total Return, at Net Asset Value 4 (2.55)% 4.87% 6.22% 14.97% 2.57% Ratios/Supplemental Data Net assets, end of period (in thousands) $179,821 $242,553 $393,201 $412,271 $345,270 Average net assets (in thousands) $236,047 $292,395 $390,618 $390,060 $299,697 Ratios to average net assets: 5 Net investment income 1.62% 1.07% 1.84% 1.25% 1.44% below 1.21% 1.18% 1.18% 1.18% 1.30% Interest and fees from borrowings 0.00% % % % 0.00% Total expenses % 1.18% 1.18% 1.18% 1.30% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.10% 1.08% 1.08% 1.08% 1.17% Portfolio turnover rate 84% 114% 85% 60% 123% 1. Represents the last business day of the Fund's reporting period. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calcu- would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods less than one full year. 6. Less than 0.005%. 7. April 30, % April 30, % April 29, % April 30, % April 30, % See accompanying Notes to Financial Statements. 22 OPPENHEIMER REAL ESTATE FUND

23 NOTES TO FINANCIAL STATEMENTS April 30, Organization Oppenheimer Real Estate Fund (the Fund ) is registered under the Investment Company Act company. The Fund s investment objective is to seek total return. The Fund s investment adviser is OFI Global Asset Management, Inc. ( OFI Global or the Manager ), a whollyowned subsidiary of OppenheimerFunds, Inc, ( OFI or the Sub-Adviser ). The Manager has entered into a sub-advisory agreement with OFI. The Sub-Advisor has entered into a sub-subadvisory agreement with Barings LLC (the Sub-Sub-Adviser ), an indirect, wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company, the parent of OFI. The Fund offers Class A, Class C, Class I, Class R and Class Y shares, and previously offered Class B shares for new purchase through June 29, Subsequent to that date, no new purchases of Class B shares are permitted, however reinvestment of dividend and/or capital gain distributions and exchanges of Class B shares into and from other Oppenheimer funds are allowed. Class B shares automatically converted to Class A shares 72 months after the date of purchase. Effective June 1, 2018, all Class B shares converted to Class A shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class C and Class R shares are sold, and Class B shares were sold, without a front-end sales charge but may be subject to a contingent deferred sales charge ( CDSC ). Class R shares are sold only through retirement plans. Retirement plans that offer Class R shares may impose charges on those accounts. Class I and Class Y shares are sold to certain institutional investors or intermediaries without either a front-end sales charge or a CDSC, Class I and Class Y shares. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and R shares have separate distribution and/or service plans under which they pay fees. Class I and Class Y shares do not pay such fees. accepted in the United States ( U.S. GAAP ). Security Valuation. All investments in securities are recorded at their estimated fair value, as described in Note 3. Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those shares based upon the relative proportion of net assets represented by such class. Operating class. 23 OPPENHEIMER REAL ESTATE FUND

24 NOTES TO FINANCIAL STATEMENTS Continued Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. GAAP, 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 or at other times as determined necessary by the Manager. Investment Income. Dividend income is recorded on the ex-dividend date or upon ex- some of the dividend income originally recorded from a real estate investment trust ( REIT ) Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, if any, is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily. Return of Capital Estimates. Distributions received from the Fund s investments in Real Estate Investments Trusts (REITs), generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates. Such estimates are based on historical information available from each REIT and other industry sources. These estimates may subsequently be revised based on information received from REITs after their tax reporting periods are concluded. Custodian Fees. Custodian fees and expenses in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio activity. The Fund pays interest to its custodian on such cash overdraft at a rate equal to the Prime Rate plus 0.35%. The Reduction to custodian expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. Security Transactions. Security transactions are recorded on the trade date. Realized gains The Fund s organizational documents provide current and former Trustees performance of their duties to the Fund. In the normal course of business, the Fund may also s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote. 24 OPPENHEIMER REAL ESTATE FUND

25 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 any uncertain tax positions requiring recognition in the Fund The tax components of capital shown in the following table represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes. Net Unrealized Appreciation Based on cost of Securities and Undistributed Net Investment Income 1 Undistributed Long-Term Gain Accumulated Loss Carryforward 2,3,4,5 Other Investments for Federal Income Tax Purposes $ $25,108,820 $12,066,286 $86,880, At period end, the Fund elected to defer $6,655,305 of late year ordinary losses. 2. At period end, the Fund had $11,870,103 of post-october losses available to offset future realized capital gains, if any. 3. The Fund had $196,183 of straddle losses which were deferred. 4. During the reporting period, the Fund did not utilize any capital loss carryforward. 5. During the previous reporting period, the Fund did not utilize any capital loss carryforward. from net investment income or net realized gains are determined in accordance with federal income tax requirements, which may differ from the character of net investment income or net Increase to Paid-in Capital Reduction to Accumulated Net Investment Loss Reduction to Accumulated Net Realized Gain on Investments 6 $5,909,237 $10,437,055 $16,346, OPPENHEIMER REAL ESTATE FUND

26 NOTES TO FINANCIAL STATEMENTS Continued 6. $5,895,142, all of which was long-term capital gain, was distributed in connection with Fund share redemptions. The tax character of distributions paid during the reporting periods: April 30, 2018 April 30, 2017 Distributions paid from: Ordinary income $ 13,223,846 $ 50,951,119 Long-term capital gain 40,895, ,220,165 Total $ 54,119,413 $ 155,171,284 The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes at period end are noted in the following table. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is gain or loss. Federal tax cost of securities $ 880,799,816 Gross unrealized appreciation $ 105,261,800 Gross unrealized depreciation (18,381,360) Net unrealized appreciation $ 86,880,440 In addition, distributions paid by the Fund s investments in real estate investment trusts ( REITS ) often include a return of capital which is recorded by the Fund as a reduction of the cost basis of securities held. The Internal Revenue Code requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of non-cash expenses such as property depreciation, an equity REIT income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the distribution is deemed a return of capital, and is generally not taxable to shareholders. Use of Estimates. 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 operations during the reporting period. Actual results could differ from those estimates. 3. Securities Valuation The Fund calculates the net asset value of its shares as of 4:00 P.M. Eastern Time, on each day the New York Stock Exchange (the "Exchange") is open for trading, except in the case of a scheduled early closing of the Exchange, in which case the Fund will calculate net asset value of the shares as of the scheduled early closing time of the Exchange. The Fund s Board has adopted procedures for the valuation of the Fund s securities and has delegated the day-to-day responsibility for valuation determinations under those procedures to the Manager. The Manager has established a Valuation Committee which is 26 OPPENHEIMER REAL ESTATE FUND

27 3. Securities Valuation (Continued) responsible for determining a fair valuation for any security for which market quotations are not readily available. The Valuation Committee s fair valuation determinations are subject to s Board at least quarterly or more frequently, if necessary. Valuation Methods and Inputs Securities are valued primarily using unadjusted quoted market prices, when available, as supplied by third party pricing services or broker-dealers. The following methodologies are used to determine the market value or the fair value of the types of securities described below: Equity securities traded on a securities exchange (including exchange-traded derivatives time when the Fund is valued at the last sale price on the principal exchange on which it is traded, or if no sales occurred, the security is valued at the mean between the quoted bid and asked prices. Overthe-counter equity securities are valued at the last published sale price, or if no sales occurred, at the mean between the quoted bid and asked prices. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities s assets are valued. Shares of a registered investment company that are not traded on an exchange are valued at that investment company s net asset value per share. has occurred that would materially affect the value of the security, are fair valued either (i) by event as previously approved by the Valuation Committee and the Fund s Board or (ii) as determined in good faith by the Manager s Valuation Committee. The Valuation Committee considers all relevant facts that are reasonably available, through either public information or information available to the Manager, when determining the fair value of a security. Those standardized fair valuation methodologies include, but are not limited to, valuing securities at the last sale price or initially at cost and subsequently adjusting the value based on: changes in the value of similar securities which may be further adjusted for any discounts related market inputs such as unadjusted quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities nor can it be assured that the Fund can obtain the fair value assigned to a security if it were to sell the security. Each investment asset or liability of the Fund is assigned a level at measurement date based 27 OPPENHEIMER REAL ESTATE FUND

28 NOTES TO FINANCIAL STATEMENTS Continued 3. Securities Valuation (Continued) used in determining the value of each of the Fund s investments as of the reporting period end. accounting standards: 1) Level 1-unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange) 2) Level 2-inputs other than unadjusted quoted prices that are observable for the asset or liability (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.) s own judgments about assumptions that market participants would use in pricing the asset or liability). The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. offered as Level 1. Investment companies that are not publicly offered, if any, Level 2 in the fair value hierarchy. The table below categorizes amounts that are included in the Fund's Statement of Assets and Liabilities at period end based on valuation input level: Level 1 Unadjusted Quoted Prices Level 2 Observable Inputs Level 3 Unobservable Inputs Value Assets Table Investments, at Value: Common Stocks Consumer Discretionary $ 38,171,647 $ $ $ 38,171,647 Financials 929,287, ,287,771 Investment Company 220, ,838 Total Assets $ 967,680,256 $ $ $ 967,680,256 For the reporting period, there were no transfers between levels. Forward currency exchange contracts and futures contracts, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract s value from trade date. All additional assets and liabilities included in the above table are reported at their market value at measurement date. 4. Investments and Risks The Fund is permitted to invest in other mutual funds advised by the Manager ( open-end management investment companies registered under the 1940 Act, as amended. The Manager is the investment adviser of, and the Sub-Adviser provides investment and related advisory services 28 OPPENHEIMER REAL ESTATE FUND