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 811-3694
OPPENHEIMER GOLD & SPECIAL MINERALS 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.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: JUNE 30
Date of reporting period: DECEMBER 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
Goldcorp, Inc. 6.2%
- --------------------------------------------------------------------------------
Yamana Gold, Inc. 5.3
- --------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 5.3
- --------------------------------------------------------------------------------
Barrick Gold Corp. 3.6
- --------------------------------------------------------------------------------
Impala Platinum Holdings Ltd. 3.1
- --------------------------------------------------------------------------------
Kinross Gold Corp. 2.9
- --------------------------------------------------------------------------------
Randgold Resources Ltd., ADR 2.7
- --------------------------------------------------------------------------------
IAMGOLD Corp. 2.5
- --------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. B 2.4
- --------------------------------------------------------------------------------
Hecla Mining Co. 2.3
Portfolio holdings and allocations are subject to change. Percentages are as of
December 31, 2006, and are based on net assets.
For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GEOGRAPHIC HOLDINGS
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Canada 57.5%
United States 12.2
Australia 9.5
South Africa 8.4
United Kingdom 4.2
Jersey, Channel Islands 2.7
Brazil 2.1
Bermuda 1.9
Peru 1.3
China 0.2
Portfolio holdings and allocations are subject to change. Percentages are as of
December 31, 2006, and are based on the total market value of investments.
- --------------------------------------------------------------------------------
9 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 7/19/83. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 11/1/95. Unless
otherwise noted, 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 10-year return for Class B uses
Class A performance for the period after conversion. 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 11/1/95. Unless
otherwise noted, 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.
10 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
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.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
11 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
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,
contingent deferred sales charges on redemptions; and redemption fees, if any;
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 $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended December 31, 2006.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line 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 $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide 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 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 only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to exceptions
described in the Statement of Additional Information). Therefore, the
12 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
"hypothetical" lines of the table are 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.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(7/1/06) (12/31/06) DECEMBER 31, 2006
- ------------------------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,147.60 $ 6.13
- ------------------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.51 5.77
- ------------------------------------------------------------------------------------------
Class B Actual 1,000.00 1,143.30 10.36
- ------------------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.58 9.75
- ------------------------------------------------------------------------------------------
Class C Actual 1,000.00 1,143.10 10.31
- ------------------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.63 9.70
- ------------------------------------------------------------------------------------------
Class N Actual 1,000.00 1,145.70 7.76
- ------------------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.00 7.30
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding affiliated fund indirect expenses, based on the 6-month period ended
December 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------------
Class A 1.13%
- ---------------------------------
Class B 1.91
- ---------------------------------
Class C 1.90
- ---------------------------------
Class N 1.43
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager that can be terminated at any time, without advance notice.
The "Financial Highlights" tables in the Fund's financial statements, included
in this report, also show the gross expense ratios, without such waivers or
reimbursements.
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13 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENT OF INVESTMENTS December 31, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--99.5%
- --------------------------------------------------------------------------------
ENERGY--5.0%
- --------------------------------------------------------------------------------
OIL & GAS--5.0%
Cameco Corp. 275,100 $ 11,127,795
- --------------------------------------------------------------------------------
Denison
Mines Corp. 1 490,000 4,958,196
- --------------------------------------------------------------------------------
Paladin
Resources Ltd. 1 2,000,000 13,922,687
- --------------------------------------------------------------------------------
Peabody
Energy Corp. 200,000 8,082,000
- --------------------------------------------------------------------------------
SXR Uranium
One, Inc. 1 847,700 11,630,751
- --------------------------------------------------------------------------------
SXR Uranium
One, Inc. 1 120,000 1,646,443
- --------------------------------------------------------------------------------
UrAsia Energy Ltd. 1 200,000 920,979
-----------------
52,288,851
- --------------------------------------------------------------------------------
MATERIALS--94.5%
- --------------------------------------------------------------------------------
METALS & MINING--94.5%
African Rainbow
Minerals Ltd. 1 30,726 442,495
- --------------------------------------------------------------------------------
Agnico-Eagle
Mines Ltd. 1,332,100 54,935,804
- --------------------------------------------------------------------------------
Alamos Gold, Inc. 1 1,406,800 11,653,465
- --------------------------------------------------------------------------------
Amerigo
Resources Ltd. 941,200 1,751,408
- --------------------------------------------------------------------------------
AngloGold Ashanti
Ltd., Sponsored ADR 490,000 23,074,100
- --------------------------------------------------------------------------------
Anvil Mining Ltd. 1 713,200 6,831,406
- --------------------------------------------------------------------------------
Aquarius
Platinum Ltd. 916,541 19,901,787
- --------------------------------------------------------------------------------
Aurelian
Resources, Inc. 1 290,000 7,709,128
- --------------------------------------------------------------------------------
Aurizon Mines Ltd. 1 1,240,000 3,891,781
- --------------------------------------------------------------------------------
Avocet Mining plc 1 1,050,000 2,004,484
- --------------------------------------------------------------------------------
Barrick Gold Corp. 1,226,815 37,663,221
- --------------------------------------------------------------------------------
Bema Gold Corp. 1 2,000,000 10,461,776
- --------------------------------------------------------------------------------
Canadian
Royalties, Inc. 1 235,000 505,810
- --------------------------------------------------------------------------------
Centerra Gold, Inc. 1 1,191,200 13,483,548
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
Central African
Mining & Exploration
Co. plc 1 2,800,000 $ 3,083,821
- --------------------------------------------------------------------------------
Coeur d'Alene Mines
Corp. 1 2,483,800 12,294,810
- --------------------------------------------------------------------------------
Companhia de Minas
Buenaventura SA,
Sponsored ADR 480,000 13,468,800
- --------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, ADR 750,000 22,305,000
- --------------------------------------------------------------------------------
Consolidated
Minerals Ltd. 1,194,018 2,045,213
- --------------------------------------------------------------------------------
Constellation
Copper Corp. 1 500,000 617,416
- --------------------------------------------------------------------------------
Crew Gold Corp. 1 1,080,000 2,361,617
- --------------------------------------------------------------------------------
Cumberland
Resources Ltd. 1 300,000 1,656,734
- --------------------------------------------------------------------------------
Cumberland
Resources Ltd. 1 500,000 2,761,223
- --------------------------------------------------------------------------------
Dia Bras
Exploration, Inc. 1 60,000 61,227
- --------------------------------------------------------------------------------
Eldorado
Gold Corp. 1 4,026,000 21,784,556
- --------------------------------------------------------------------------------
European
Goldfields Ltd. 1 1,072,300 4,450,484
- --------------------------------------------------------------------------------
First Quantum
Minerals Ltd. 320,000 17,219,054
- --------------------------------------------------------------------------------
Freeport-McMoRan
Copper & Gold, Inc.,
Cl. B 451,600 25,167,668
- --------------------------------------------------------------------------------
Frontera
Copper Corp. 1 1,072,600 4,571,300
- --------------------------------------------------------------------------------
Gabriel
Resources Ltd. 1 500,000 2,169,532
- --------------------------------------------------------------------------------
Gammon Lake
Resources, Inc. 1 1,382,500 22,513,120
- --------------------------------------------------------------------------------
Gold Fields Ltd.,
Sponsored ADR 965,400 18,226,752
- --------------------------------------------------------------------------------
Goldcorp, Inc. 2,273,068 64,646,054
- --------------------------------------------------------------------------------
Golden Star
Resources Ltd. 1 4,795,000 14,145,250
14 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
Harmony Gold
Mining Co. Ltd.,
Sponsored ADR 1 872,000 $ 13,734,000
- --------------------------------------------------------------------------------
Hecla Mining Co. 1 3,089,800 23,667,868
- --------------------------------------------------------------------------------
High River Gold
Mines Ltd. 1 5,324,800 9,817,193
- --------------------------------------------------------------------------------
HudBay
Minerals, Inc. 1 860,300 16,111,951
- --------------------------------------------------------------------------------
IAMGOLD Corp. 2,922,300 25,745,463
- --------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd. 1,226,352 32,174,636
- --------------------------------------------------------------------------------
Imperials
Metals Corp. 1 494,000 4,897,003
- --------------------------------------------------------------------------------
Independence
Group NL 449,521 1,426,409
- --------------------------------------------------------------------------------
Ivanhoe Mines Ltd. 1 493,100 4,847,173
- --------------------------------------------------------------------------------
Jabiru Metals Ltd. 1 1,223,788 965,993
- --------------------------------------------------------------------------------
JSC Mining &
Metallurgical Co.
Norilsk Nickel, ADR 86,000 13,501,674
- --------------------------------------------------------------------------------
Kimberley
Diamond Co. NL 1 6,448,900 4,688,078
- --------------------------------------------------------------------------------
Kingsgate
Consolidated Ltd. 1,650,000 5,470,175
- --------------------------------------------------------------------------------
Kinross Gold Corp. 1 2,558,890 30,399,613
- --------------------------------------------------------------------------------
Lihir Gold Ltd. 1 7,046,000 17,352,625
- --------------------------------------------------------------------------------
Lonmin plc 400,000 23,480,581
- --------------------------------------------------------------------------------
Lundin
Mining Corp. 1 160,000 5,899,756
- --------------------------------------------------------------------------------
Major Drilling Group
International, Inc. 1 7,200 161,022
- --------------------------------------------------------------------------------
Meridian Gold, Inc. 1 741,400 20,603,506
- --------------------------------------------------------------------------------
Metallica
Resources, Inc. 1,2 1,963,600 7,745,624
- --------------------------------------------------------------------------------
Miramar
Mining Corp. 1 12,600 57,373
- --------------------------------------------------------------------------------
Newcrest
Mining Ltd. 1,048,800 21,814,298
- --------------------------------------------------------------------------------
Newmont Mining
Corp. (Holding Co.) 370,105 16,710,241
- --------------------------------------------------------------------------------
Northern Orion
Resources, Inc. 1 1,380,000 5,017,536
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
NovaGold
Resources, Inc. 1 685,700 $ 11,766,612
- --------------------------------------------------------------------------------
Pan American
Silver Corp. 1 788,541 19,847,577
- --------------------------------------------------------------------------------
Pan Australian
Resources Ltd. 1 10,000,000 2,486,443
- --------------------------------------------------------------------------------
Perilya Ltd. 2,000,000 8,651,243
- --------------------------------------------------------------------------------
Quadra
Mining Ltd. 1 342,000 3,006,046
- --------------------------------------------------------------------------------
Randgold
Resources Ltd., ADR 1 1,190,000 27,917,400
- --------------------------------------------------------------------------------
Red Back
Mining, Inc. 1 1,000,700 3,046,336
- --------------------------------------------------------------------------------
Rio Narcea
Gold Mines Ltd. 1 1,200,000 2,953,308
- --------------------------------------------------------------------------------
Royal Gold, Inc. 453,057 16,300,991
- --------------------------------------------------------------------------------
Sally Malay
Mining Ltd. 1 2,436,492 4,461,911
- --------------------------------------------------------------------------------
Scarborough
Minerals plc 1 2,066,115 1,659,025
- --------------------------------------------------------------------------------
Shore Gold, Inc. 1 1,186,400 6,256,794
- --------------------------------------------------------------------------------
Silver Standard
Resources, Inc. 1 398,000 12,234,520
- --------------------------------------------------------------------------------
Silver
Wheaton Corp. 1 1,012,700 10,612,009
- --------------------------------------------------------------------------------
Silvercorp
Metals, Inc. 1 670,000 9,853,364
- --------------------------------------------------------------------------------
Sino Gold Ltd. 1 1,650,000 9,507,684
- --------------------------------------------------------------------------------
Stillwater
Mining Co. 1 812,500 10,148,125
- --------------------------------------------------------------------------------
Straits Resources Ltd. 950,000 2,647,075
- --------------------------------------------------------------------------------
Taseko Mines Ltd. 1 2,907,700 7,530,943
- --------------------------------------------------------------------------------
Western Areas NL 1 1,000,000 3,131,859
- --------------------------------------------------------------------------------
Yamana Gold, Inc. 4,220,100 55,404,306
- --------------------------------------------------------------------------------
Zhaojin Mining
Industry Co. Ltd. 1 900,000 1,795,766
-----------------
987,368,972
-----------------
Total Common Stocks
(Cost $786,575,719) 1,039,657,823
15 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
UNITS SEE NOTE 1
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Jabiru Metals
Ltd. Rts., Exp.
1/23/07 1 122,378 $ 16,478
- --------------------------------------------------------------------------------
Nevsun Resources
Ltd. Wts., Exp.
12/19/08 1 70,000 3,749
-----------------
Total Rights, Warrants
and Certificates
(Cost $117,814) 20,227
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MONEY MARKET FUND--0.3%
- --------------------------------------------------------------------------------
Oppenheimer
Institutional Money
Market Fund,
Cl. E, 5.25% 2,3
(Cost $2,589,010) 2,589,010 $ 2,589,010
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $789,282,543) 99.8% 1,042,267,060
- --------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES 0.2 2,305,238
-------------------------------
NET ASSETS 100.0% $ 1,044,572,298
===============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Represents ownership of at least 5% of the voting securities of the issuer,
and is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended December 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
JUNE 30, 2006 ADDITIONS REDUCTIONS DECEMBER 31, 2006
- ----------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.25%* -- 88,458,900 85,869,890 2,589,010
Metallica Resources, Inc. 1,559,600 404,000 -- 1,963,600
VALUE DIVIDEND
SEE NOTE 1 INCOME
- ----------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E, 5.25%* $ 2,589,010 $ 48,104
Metallica Resources, Inc. 7,745,624 --
---------------------------------
$ 10,334,634 $ 48,104
=================================
* The money market fund and the Fund are affiliated by having the same
investment advisor.
3. Rate shown is the 7-day yield as of December 31, 2006.
16 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
- --------------------------------------------------------------------------------
GEOGRAPHIC HOLDINGS
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
VALUE PERCENT
- --------------------------------------------------------------------------------
Canada $ 599,713,335 57.5%
United States 127,195,233 12.2
Australia 98,588,171 9.5
South Africa 87,651,983 8.4
United Kingdom 43,729,585 4.2
Jersey, Channel Islands 27,917,400 2.7
Brazil 22,305,000 2.1
Bermuda 19,901,787 1.9
Peru 13,468,800 1.3
China 1,795,766 0.2
-------------------------
Total $1,042,267,060 100.0%
=========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
December 31, 2006
- ----------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $780,256,076) $ 1,031,932,426
Affiliated companies (cost $9,026,467) 10,334,634
----------------
1,042,267,060
- ----------------------------------------------------------------------------------------------------------
Cash 1,046,857
- ----------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 160
- ----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 3,727,094
Dividends 239,046
Investments sold 48,025
Other 23,481
----------------
Total assets 1,047,351,723
- ----------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 1,856,121
Distribution and service plan fees 579,614
Transfer and shareholder servicing agent fees 145,630
Trustees' compensation 98,005
Shareholder communications 73,066
Other 26,989
----------------
Total liabilities 2,779,425
- ----------------------------------------------------------------------------------------------------------
NET ASSETS $ 1,044,572,298
================
- ----------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Paid-in capital $ 781,073,450
- ----------------------------------------------------------------------------------------------------------
Accumulated net investment loss (6,432,492)
- ----------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 16,945,394
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 252,985,946
----------------
NET ASSETS $ 1,044,572,298
================
18 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -----------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $725,196,419
and 25,025,572 shares of beneficial interest outstanding) $28.98
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering
price) $30.75
- -----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $124,138,908 and 4,457,999 shares of
beneficial interest outstanding) $27.85
- -----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $173,565,513 and 6,241,160 shares of
beneficial interest outstanding) $27.81
- -----------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $21,671,458 and 761,585 shares of
beneficial interest outstanding) $28.46
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended December 31, 2006
- -------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $173,895) $ 4,170,875
Affiliated companies 48,104
- -------------------------------------------------------------------------------------------
Interest 87,218
- -------------------------------------------------------------------------------------------
Other income 7,758
-------------
Total investment income 4,313,955
- -------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------
Management fees 3,192,606
- -------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 766,532
Class B 561,601
Class C 753,435
Class N 49,276
- -------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 477,448
Class B 92,278
Class C 123,437
Class N 19,921
- -------------------------------------------------------------------------------------------
Shareholder communications:
Class A 50,489
Class B 13,706
Class C 11,901
Class N 1,237
- -------------------------------------------------------------------------------------------
Custodian fees and expenses 65,196
- -------------------------------------------------------------------------------------------
Trustees' compensation 47,333
- -------------------------------------------------------------------------------------------
Other 43,467
-----------
Total expenses 6,269,863
Less reduction to custodian expenses (11,632)
Less waivers and reimbursements of expenses (875)
-----------
Net expenses 6,257,356
- -------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,943,401)
20 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------------
Net realized gain on:
Investments (including premiums on options exercised) $ 25,036,270
Closing and expiration of option contracts written 1,261,890
Foreign currency transactions 2,123,599
--------------
Net realized gain 28,421,759
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 105,423,507
Translation of assets and liabilities denominated in foreign currencies (3,450,206)
Option contracts written (1,184,389)
--------------
Net change in unrealized appreciation 100,788,912
- ----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 127,267,270
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
DECEMBER 31, ENDED
2006 JUNE 30,
(UNAUDITED) 2006
- ----------------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------------
Net investment loss $ (1,943,401) $ (2,845,634)
- ----------------------------------------------------------------------------------------------------
Net realized gain 28,421,759 153,682,142
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 100,788,912 109,530,035
------------------------------------
Net increase in net assets resulting from operations 127,267,270 260,366,543
- ----------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (3,441,380) --
Class B -- --
Class C -- --
Class N (56,341) --
------------------------------------
(3,497,721) --
- ----------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (93,019,634) (17,051,795)
Class B (16,786,704) (3,790,726)
Class C (22,947,025) (4,190,420)
Class N (2,835,580) (454,501)
------------------------------------
(135,588,943) (25,487,442)
- ----------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions:
Class A 149,313,765 191,185,409
Class B 21,237,236 9,050,590
Class C 38,424,665 43,980,898
Class N 3,737,109 8,166,569
------------------------------------
212,712,775 252,383,466
- ----------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Total increase 200,893,381 487,262,567
- ----------------------------------------------------------------------------------------------------
Beginning of period 843,678,917 356,416,350
------------------------------------
End of period (including accumulated net investment loss
of $6,432,492 and $991,370, respectively) $ 1,044,572,298 $ 843,678,917
====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2006 JUNE 30,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $ 29.15 $ 18.27 $ 16.89 $ 13.79 $ 13.37 $ 9.91
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) (.03) 1 (.06) 1 (.03) 1 (.07) 1 .07 .19
Net realized and unrealized
gain 4.34 12.12 2.79 4.37 1 .50 3.74
---------------------------------------------------------------------------------------------------
Total from investment
operations 4.31 12.06 2.76 4.30 .57 3.93
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment
income (.16) -- (.43) (.75) (.15) (.47)
Distributions from net
realized gain (4.32) (1.18) (.95) (.45) -- --
---------------------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (4.48) (1.18) (1.38) (1.20) (.15) (.47)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.98 $ 29.15 $ 18.27 $ 16.89 $ 13.79 $ 13.37
===================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE 2 14.76% 68.01% 16.49% 29.93% 4.35% 3 41.56%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 725,196 $ 582,745 $ 232,702 $ 206,696 $ 131,183 $ 117,794
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $ 635,247 $ 390,347 $ 232,401 $ 195,859 $ 128,266 $ 76,482
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets: 4
Net investment income (loss) (0.19)% (0.26)% (0.18)% (0.40)% 0.46% 0.34%
Total expenses 1.13% 5,6,7 1.18% 7 1.26% 7,8 1.27% 7,8 1.40% 7 1.45% 7,8
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 152% 81% 108% 134% 60%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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 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. For the year ended June 30, 2003, 0% of the Fund's total return consists of a
voluntary reimbursement by the Manager for a realized loss on investments not
meeting the Fund's investment restrictions, and another 0.07% consists of a gain
on investments not meeting the Fund's investment restrictions. Excluding these
items, the total return would have been 4.28%.
4. Annualized for periods of less than one full year.
5. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended December 31, 2006 1.13%
6. Voluntary waiver of affiliated funds management fees less than 0.01%.
7. Reduction to custodian expenses less than 0.01%.
8. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2006 JUNE 30,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.13 $ 17.80 $ 16.48 $ 13.50 $ 13.10 $ 9.73
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.14) 1 (.25) 1 (.17) 1 (.21) 1 (.01) .16
Net realized and unrealized gain 4.18 11.76 2.71 4.28 1 .47 3.62
--------------------------------------------------------------------------------
Total from investment operations 4.04 11.51 2.54 4.07 .46 3.78
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- (.27) (.64) (.06) (.41)
Distributions from net realized gain (4.32) (1.18) (.95) (.45) -- --
--------------------------------------------------------------------------------
Total dividends and/or distributions to
shareholders (4.32) (1.18) (1.22) (1.09) (.06) (.41)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.85 $ 28.13 $ 17.80 $ 16.48 $ 13.50 $ 13.10
================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.33% 66.67% 15.56% 28.91% 3.57% 3 40.46%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 124,139 $ 104,543 $ 60,391 $ 56,502 $ 41,426 $ 36,585
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 111,744 $ 81,043 $ 60,427 $ 57,639 $ 38,243 $ 23,133
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.97)% (1.06)% (0.96)% (1.19)% (0.34)% (0.51)%
Total expenses 1.91% 5 2.00% 2.04% 2.06% 2.18% 2.22%
Expenses after payments and waivers and reduction
to custodian expenses 1.91% 1.99% 2.04% 2.06% 2.18% 2.22%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 152% 81% 108% 134% 60%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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 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. For the year ended June 30, 2003, 0% of the Fund's total return consists of a
voluntary reimbursement by the Manager for a realized loss on investments not
meeting the Fund's investment restrictions, and another 0.07% consists of a gain
on investments not meeting the Fund's investment restrictions. Excluding these
items, the total return would have been 3.50%.
4. Annualized for periods of less than one full year.
5. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended December 31, 2006 1.91%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2006 JUNE 30,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.10 $ 17.77 $ 16.47 $ 13.51 $ 13.11 $ 9.74
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.14) 1 (.24) 1 (.16) 1 (.20) 1 .09 .15
Net realized and unrealized gain 4.17 11.75 2.71 4.27 1 .38 3.63
---------------------------------------------------------------------------------
Total from investment operations 4.03 11.51 2.55 4.07 .47 3.78
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- (.30) (.66) (.07) (.41)
Distributions from net realized gain (4.32) (1.18) (.95) (.45) -- --
---------------------------------------------------------------------------------
Total dividends and/or distributions to
shareholders (4.32) (1.18) (1.25) (1.11) (.07) (.41)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.81 $ 28.10 $ 17.77 $ 16.47 $ 13.51 $ 13.11
=================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.31% 66.79% 15.64% 28.90% 3.63% 3 40.46%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 173,566 $ 138,279 $ 57,431 $ 47,810 $ 25,899 $ 17,526
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 149,990 $ 92,491 $ 55,077 $ 44,168 $ 21,672 $ 11,090
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.97)% (1.00)% (0.91)% (1.11)% (0.26)% (0.38)%
Total expenses 1.90% 5 1.92% 1.99% 1.99% 2.13% 2.22%
Expenses after payments and waivers and reduction
to custodian expenses 1.90% 1.91% 1.99% 1.99% 2.13% 2.22%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 152% 81% 108% 134% 60%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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 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. For the year ended June 30, 2003, 0% of the Fund's total return consists of a
voluntary reimbursement by the Manager for a realized loss on investments not
meeting the Fund's investment restrictions, and another 0.07% consists of a gain
on investments not meeting the Fund's investment restrictions. Excluding these
items, the total return would have been 3.56%.
4. Annualized for periods of less than one full year.
5. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended December 31, 2006 1.90%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2006 JUNE 30,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.68 $ 18.03 $ 16.69 $ 13.68 $ 13.31 $ 9.89
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.07) 1 (.13) 1 (.09) 1 (.13) 1 .01 .47
Net realized and unrealized gain 4.26 11.96 2.75 4.33 1 .53 3.40
-----------------------------------------------------------------------------
Total from investment operations 4.19 11.83 2.66 4.20 .54 3.87
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) -- (.37) (.74) (.17) (.45)
Distributions from net realized gain (4.32) (1.18) (.95) (.45) -- --
-----------------------------------------------------------------------------
Total dividends and/or distributions to shareholders (4.41) (1.18) (1.32) (1.19) (.17) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.46 $ 28.68 $ 18.03 $ 16.69 $ 13.68 $ 13.31
=============================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.57% 67.62% 16.11% 29.40% 4.17% 3 40.97%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 21,671 $ 18,112 $ 5,893 $ 3,781 $ 1,419 $ 130
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 19,650 $ 10,956 $ 4,816 $ 2,857 $ 775 $ 34
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.50)% (0.53)% (0.51)% (0.71)% 0.13% 1.87%
Total expenses 1.44% 5 1.44% 1.57% 1.62% 1.80% 1.69%
Expenses after payments and waivers and reduction
to custodian expenses 1.43% 1.44% 1.57% 1.62% 1.69% 1.69%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 152% 81% 108% 134% 60%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. 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 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. For the year ended June 30, 2003, 0% of the Fund's total return consists of a
voluntary reimbursement by the Manager for a realized loss on investments not
meeting the Fund's investment restrictions, and another 0.07% consists of a gain
on investments not meeting the Fund's investment restrictions. Excluding these
items, the total return would have been 4.10%.
4. Annualized for periods of less than one full year.
5. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended December 31, 2006 1.44%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Gold & Special Minerals Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Fund's investment objective is to seek
capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).
The Fund offers Class A, Class B, Class C and Class N 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. 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 N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic 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(R) 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 traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, as identified by the portfolio pricing
service, prior to the time when the Fund's assets are valued. In the absence of
a sale, the security is valued at the official closing price on the principal
exchange. Corporate, government and municipal debt instruments having a
remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its
27 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
trading session ending at, or most recently prior to, the time when the Fund's
assets are valued. Options are valued daily based upon the last sale price on
the principal exchange on which the option is traded. Securities (including
restricted securities) for which market quotations are not readily available are
valued at their fair value. Foreign and domestic securities whose values have
been materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Trustees. Investments in open-end registered investment companies (including
affiliated funds) are valued at that fund's net asset value. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
AFFILIATED FUNDS. The Fund is permitted to invest daily available cash balances
in affiliated money market funds. Each day, the Fund invests the available cash
in Class E shares of Oppenheimer Institutional Money Market Fund ("IMMF") which
seeks current income and stability of principal. IMMF is a registered open-end
management investment company, regulated as a money market fund under the
Investment Company Act of 1940, as amended. The Manager is also the investment
advisor of IMMF. The Fund's investment in IMMF is included in the Statement of
Investments. As a shareholder, the Fund is subject to its proportional share of
IMMF's Class E expenses, including its management fee. The Manager will waive
fees and/or reimburse Fund expenses in an amount equal to the indirect
management fees incurred through the Fund's investment in IMMF.
28 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential loss on a particular financial instrument is
greater than the value of such financial instrument, as reflected in the Fund's
Statement of Assets and Liabilities.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
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.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the six months ended December 31, 2006,
the Fund's projected benefit obligations were increased by $38,197, resulting in
an accumulated liability of $79,177 as of December 31, 2006.
The Board of Trustees has adopted a compensation deferral plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the
29 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
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 and 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.
- --------------------------------------------------------------------------------
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 securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. 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 and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund'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.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
30 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
SIX MONTHS ENDED DECEMBER 31, 2006 YEAR ENDED JUNE 30, 2006
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
CLASS A
Sold 6,284,511 $ 187,141,949 13,414,677 $ 351,057,670
Dividends and/or
distributions reinvested 2,668,957 77,533,195 618,117 13,734,551
Redeemed (3,917,442) (115,361,379) 1 (6,782,414) (173,606,812) 2
---------------------------------------------------------------------
Net increase 5,036,026 $ 149,313,765 7,250,380 $ 191,185,409
=====================================================================
- -------------------------------------------------------------------------------------------------
CLASS B
Sold 798,017 $ 22,969,169 1,729,947 $ 43,725,086
Dividends and/or
distributions reinvested 513,851 14,351,845 150,696 3,245,985
Redeemed (569,650) (16,083,778) 1 (1,557,861) (37,920,481) 2
---------------------------------------------------------------------
Net increase 742,218 $ 21,237,236 322,782 $ 9,050,590
=====================================================================
- -------------------------------------------------------------------------------------------------
CLASS C
Sold 1,595,570 $ 45,950,267 3,076,126 $ 78,603,831
Dividends and/or
distributions reinvested 654,053 18,241,543 154,738 3,328,406
Redeemed (928,975) (25,767,145) 1 (1,542,771) (37,951,339) 2
---------------------------------------------------------------------
Net increase 1,320,648 $ 38,424,665 1,688,093 $ 43,980,898
=====================================================================
- ----------------------------------------------------------------------------------------------------
CLASS N
Sold 270,459 $ 7,935,278 543,490 $ 14,112,324
Dividends and/or
distributions reinvested 88,031 2,511,536 17,896 391,736
Redeemed (228,502) (6,709,705) 1 (256,590) (6,337,491) 2
---------------------------------------------------------------------
Net increase 129,988 $ 3,737,109 304,796 $ 8,166,569
=====================================================================
1. Net of redemption fees of $29,238, $5,148, $6,903 and $904 for Class A, Class
B, Class C and Class N, respectively.
2. Net of redemption fees of $62,895, $13,058, $14,903 and $1,765 for Class A,
Class B, Class C and Class N, respectively.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and money market funds, for the six months ended
December 31, 2006, were as follows:
PURCHASES SALES
- --------------------------------------------------------
Investment securities $280,439,405 $201,935,886
31 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
----------------------------------------
Up to $200 million 0.75%
Next $200 million 0.72
Next $200 million 0.69
Next $200 million 0.66
Over $800 million 0.60
- --------------------------------------------------------------------------------
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 six months ended December 31, 2006, the Fund paid
$704,309 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
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
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.
- --------------------------------------------------------------------------------
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 to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of up to 0.25% per year under each plan. If either the Class B,
Class C or Class N plan is terminated by the Fund or by the shareholders of a
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at December 31,
2006 for Class B, Class C and Class N shares were
32 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
$1,891,501, $1,827,923 and $160,829, respectively. Fees incurred by the Fund
under the plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
December 31, 2006 $ 329,516 $ 12,686 $ 81,278 $ 44,209 $ 5,976
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the six months ended December 31, 2006, the Manager waived $875 for
IMMF management fees.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
33 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
As of December 31, 2006, the Fund had outstanding foreign currency contracts as
follows:
EXPIRATION CONTRACT AMOUNT VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE (000S) DECEMBER 31, 2006 APPRECIATION
- -----------------------------------------------------------------------------------------
CONTRACTS TO SELL
Canadian Dollar (CAD) 1/2/07 33CAD $ 28,071 $ 160
- --------------------------------------------------------------------------------
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 or put options are noted
in the Statement of Investments where applicable. Contracts subject to call or
put, 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 increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
34 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Written option activity for the six months ended December 31, 2006 was as
follows:
CALL OPTIONS PUT OPTIONS
------------------------ ------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- --------------------------------------------------------------------------------
Options outstanding as of
June 30, 2006 6,000 $ 559,602 11,300 $ 1,105,787
Options closed or expired (6,000) (559,602) (7,535) (756,788)
Options exercised -- -- (3,765) (348,999)
---------------------------------------------------
Options outstanding as of
December 31, 2006 -- $ -- -- $ --
===================================================
- --------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
December 31, 2006, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of December 31, 2006, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.
- --------------------------------------------------------------------------------
8. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers
35 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. LITIGATION Continued
of the funds breached their fiduciary duties to fund shareholders under the
Investment Company Act of 1940 and at common law. The plaintiffs sought
unspecified damages, an accounting of all fees paid, and an award of attorneys'
fees and litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
36 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS 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
1.800.525.7048, (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 is required to
file 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 Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
37 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate
the terms of the Agreement. The Board employs an independent consultant to
prepare a report that provides information, including comparative information,
that the Board requests for that purpose. In addition, the Board receives
information throughout the year regarding Fund services, fees, expenses and
performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE AND EXTENT OF SERVICES. The Board considered information about the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel who provide such services. The Manager's duties
include providing the Fund with the services of the portfolio manager and the
Manager's investment team, who provide research, analysis and other advisory
services in regard to the Fund's investments; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel who are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took account of the fact that the Manager has had over forty
years of experience as an invest-
38 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
ment adviser and that its assets under management rank it among the top mutual
fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services, and information the
Board has received regarding the experience and professional qualifications of
the Manager's personnel and the size and functions of its staff. In its
evaluation of the quality of the portfolio management services provided, the
Board considered the experience of Shanquan Li and the Manager's Global
investment team and analysts. The Board members also considered their
experiences with the Manager and its officers and other personnel through their
service on the boards of the Fund and other funds advised by the Manager. The
Board considered information regarding the quality of services provided by
affiliates of the Manager, which its members have become knowledgeable about in
connection with the renewal of the Fund's service agreements. In light of the
foregoing, the Board concluded that the Fund benefits from the services provided
under the Agreement and from the Manager's experience, reputation, personnel,
operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of all retail front-end load and no-load
gold-oriented funds advised by other investment advisers. The Board noted that
the Fund's three-year and ten-year performance were better than its peer group
median. However its one-year and five-year performance were below its peer group
median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also evaluated the comparability of the fees charged and the services provided
to the Fund to the fees and services for other clients or accounts advised by
the Manager. The independent consultant provided comparative data in regard to
the fees and expenses of the Fund, other gold-oriented funds and other funds
with comparable asset levels and distribution features. The Board noted that the
Fund's contractual and actual management fees and total expenses are lower than
its peer group median.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted
39 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
the Fund's breakpoints, which are intended to share economies of scale that may
exist as the Fund grows with its shareholders.
BENEFITS TO THE MANAGER. The Board considered information regarding the
Manager's costs in serving as the Fund's investment adviser, including the costs
associated with the personnel and systems necessary to manage the Fund, and
information regarding the Manager's profitability from its relationship with the
Fund. The Board considered that the Manager must be able to pay and retain
experienced professional personnel at competitive rates to provide services to
the Fund and that maintaining the financial viability of the Manager is
important in order for the Manager to continue to provide significant services
to the Fund and its shareholders. In addition to considering the profits
realized by the Manager, the Board considered information regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates for services
provided and research provided to the Manager in connection with permissible
brokerage arrangements (soft dollar arrangements).
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the Agreement for
another year. In arriving at this decision, the Board did not single out any
factor or factors as being more important than others, but considered all of the
factors together. The Board judged the terms and conditions of the Agreement,
including the management fee, in light of all of the surrounding circumstances.
40 | OPPENHEIMER GOLD & SPECIAL MINERALS FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of December 31, 2006, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Not applicable to semiannual reports.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Gold & Special Minerals Fund
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: February 8, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: February 8, 2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: February 8, 2007