<PAGE> 1
SEMIANNUAL REPORT DECEMBER 31, 1998
OPPENHEIMER
GOLD & SPECIAL
MINERALS FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 An Interview
with your Fund's
Managers
9 Financial
Statements
25 Officers and
Trustees
28 Information and
Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - VOLATILITY AND WEAKNESS IN THE WORLD'S EQUITY MARKETS, together with reduced
sales of gold by central banks and greater demand for certain metals created
favorable conditions for the Fund's investments.
- - GUIDED BY OUR PROPRIETARY STOCK SELECTION MODEL, we maintained our
disciplined, conservative investment approach, focusing on good companies with
increasingly strong earnings.
- - WE BELIEVE THE FUND CONTINUES TO PROVIDE an attractive opportunity for
diversification for investors seeking protection against a loss of value in
other industries and economic sectors.
CUMULATIVE TOTAL RETURNS
For the 6-Month Period
Ended 12/31/98
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- --------------------------------
5.21% -0.84%
- --------------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- --------------------------------
4.71% -0.29%
- --------------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- --------------------------------
4.82% 3.82%
- --------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. BECAUSE THE STOCK
MARKET CAN BE VOLATILE, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL
SHORT-TERM CHANGES. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR
FINANCIAL ADVISOR, CALL US AT 1-800-525-7048 OR VISIT OUR WEBSITE,
WWW.OPPENHEIMERFUNDS.COM.
1. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
2. Class A return includes the current maximum initial sales charge of 5.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the contingent deferred sales charge of 1%. Class B and
C shares are subject to an annual 0.75% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer Gold & Special Minerals Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Gold & Special
Minerals Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
In retrospect, 1998 has been an unsettling year for the financial markets.
Around the world, stock and bond markets experienced considerable instability,
with particular tumult being felt in Southeast Asia, Russia and Latin America.
The U.S. stock market was not immune from the extreme volatility, as it climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter. In the bond market, yields on
U.S. Treasury securities declined to record lows before rising modestly late in
the year.
Does the swift recovery of the U.S. stock market and the favorable
economic environment for the bond market mean that domestic stocks and bonds
will continue to prosper? We are optimistic over the long term, but we do expect
that concerns about corporate earnings growth in a slow-growth economy will
contribute to more stock market volatility in 1999. In the bond market, the
Federal Reserve Board's decisions to reduce short-term interest rates should
help create a positive climate for fixed income securities. While lower interest
rates are generally good for bond prices, it will become more difficult for bond
funds to maintain their dividends at current levels if yields decline further.
As an Oppenheimer fund shareholder, you may wonder how this potential
volatility will affect you. If you maintain a long-term perspective, as we do,
short-term volatility over the coming months should have little bearing on your
ability to achieve your future financial goals. That's why we continue to
suggest that you adhere to your long-term investment plan. In fact, we are very
encouraged that most of our shareholders stayed the course during last summer's
stock market correction, avoiding the temptation of selling into a temporarily
declining market.
Finally, I would like to thank those shareholders who contacted us about
our revised account statement. Response has been very positive, and we are
pleased that many of you find the new format easier to read and more
informative. If you have any questions about the new statement or any other
matter, please don't hesitate to call us at 1-800-525-7048. In the meantime,
thank you for choosing OppenheimerFunds, The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
January 25, 1999
3 Oppenheimer Gold & Special Minerals Fund
<PAGE> 4
"THE OUTLOOK FOR GOLD REMAINS POSITIVE BECAUSE WORLDWIDE DEMAND HAS, FOR MANY
YEARS, OUTPACED MINING PRODUCTION."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM DURING THE LAST SIX MONTHS?
The investment environment was much more favorable for the gold and special
minerals markets during the six months that ended December 31, 1998 than for the
preceding year. Our disciplined, conservative investment approach enabled us to
take advantage of these favorable conditions. In addition, the Fund's Class A
shares were ranked in the 1st Quartile for the 1-year period ending December 31,
1998, as measured by Lipper Analytical Services.(1)
WHAT MADE CONDITIONS GENERALLY FAVORABLE FOR THE FUND?
The market for gold benefited as a result of both macro-economic factors and
market-specific events. On the broad economic front, volatility and weakness in
global financial markets caused many investors to turn to gold for shelter.
Historically, gold prices and gold stocks have risen sharply when the prices of
other assets have dropped. Ownership of gold is viewed by many as insurance
against loss of value in other investments, such as stocks and bonds. That's
why, during the month of September when broad equities indexes such as the Dow
Jones Industrial Average and the S&P 500 were hovering near their lows for the
entire previous year, the Fund increased in value by more than 50 percent.
The market-specific conditions most responsible for the Fund's performance
were related to reductions in sales of gold holdings by central banks and gold
producers. With the price of gold already relatively low, many of these
institutions decided to cease or slow the pace of their sales
1. Source: Lipper Analytical Services, Inc., 12/31/98. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 3 of 42 (1-year), 3 of 27
(5-year) and 4 of 22 (10-year) among gold-oriented funds for the periods ended
12/31/98.
4 Oppenheimer Gold & Special Minerals Fund
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Frank Jennings
Shanquan Li
rather than drive the price even lower. For example, Russia, which was expected
to be the biggest seller of gold this year, actually bought gold recently. These
actions helped stabilize the market and produced an environment in which gold
prices could rise.
Other metals in which the Fund invests benefited from growing demand
during the period. For example, platinum and palladium, in addition to many
other uses, are essential components of catalytic converters that reduce
automotive emissions. As environmental protection laws have become stricter and
more globally accepted, demand has risen for these metals.
HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS?
We didn't waver from our conservative approach to Fund management. We focused on
large, mature companies with strong balance sheets and good earnings growth. Our
focus on earnings growth is one of the characteristics that differentiate the
Fund from most of its peers.
We have developed a proprietary stock selection model we believe offers us
an advantage in selecting companies that, relative to the market, are favorably
positioned to perform well. The model incorporates not only information on a
company's fundamentals, but also forward-looking analyses of changes to a
company's prospects. In other words, if credible analysts predict rising
earnings, we factor in the degree and rate of those improved projections. This
method has helped us identify good companies with increasingly strong earnings,
such as Stillwater Mining Co., one of our largest holdings during the period.
5 Oppenheimer Gold & Special Minerals Fund
<PAGE> 6
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 12/31/98(2)
Class A
1 year 5 year 10 year
- -------------------------------
- -6.97% -9.05% -1.10%
- -------------------------------
Class B
Since
1 year 5 year Inception
- -------------------------------
- -7.14% N/A -10.03%
- -------------------------------
Class C
Since
1 year 5 year Inception
- -------------------------------
- -3.02% N/A -9.07%
- -------------------------------
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
Our discipline also enables us to keep transaction costs to a minimum by
buying and holding most of the stocks in our portfolio for the long term. When
we do buy and then sell a stock within a relatively short period of time, it is
usually to capitalize on a particular opportunity in the market. For example, we
recently purchased shares of a Korean zinc producer when the price of the stock
was very low, shortly after a devaluation of Korean currency. We recognized the
fact that local demand for zinc was strong, and that the currency devaluation
allowed the company to substantially increase their profit margins when selling
to international markets. When we sold our position after approximately three
months, the value of the Fund's holding in the company had appreciated more than
100 percent.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
Over the short term, we believe that the markets in which we invest are likely
to offer attractive opportunities for investors under a variety of economic
conditions. If economic activity in Japan and a variety of global emerging
markets begin to recover from their recent slump, industrial demand for gold and
special minerals is likely to increase. On the other hand, if central banks
overstimulate their economies in an attempt to recover from recent difficulties,
inflation is likely to result.
2. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 7/19/83. The Fund's maximum
sales charge for Class A shares was higher prior to 4/1/91, so actual
performance may have been lower. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 3% (since inception on
11/1/95). Class C returns for the one-year result include the contingent
deferred sales charge of 1%. Class C shares have an inception date of 11/1/95.
Class B and C shares are subject to an annual 0.75% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
6 Oppenheimer Gold & Special Minerals Fund
<PAGE> 7
SECTOR ALLOCATION(4)
[PIE CHART]
<TABLE>
<S> <C>
- - Basic Materials 92.5%
- - Financial 2.6
- - Cash Equivalents 4.9
</TABLE>
Historically, inflationary environments have produced good returns from precious
metals.
Over the longer term, we believe that the outlook for gold remains
positive because worldwide demand has, for many years, outpaced mining
production. In addition, we believe that the restructuring and consolidation
currently underway within the gold industry will, ultimately, lead to stronger,
more competitive companies. Our strategy has been to identify these firms and
concentrate the Fund's investments in such companies, which is why Oppenheimer
Gold & Special Minerals Fund remains part of The Right Way to Invest.
<TABLE>
<CAPTION>
TOP 10 STOCK HOLDINGS(3)
- -----------------------------------------------------------------------------
<S> <C>
Stillwater Mining Co. 8.9%
- -----------------------------------------------------------------------------
Euro-Nevada Mining Corp. 7.0
- -----------------------------------------------------------------------------
Placer Dome, Inc. 5.9
- -----------------------------------------------------------------------------
Barrick Gold Corp. 5.5
- -----------------------------------------------------------------------------
Newmont Mining Corp. 4.4
- -----------------------------------------------------------------------------
Getchell Gold Corp. 4.2
- -----------------------------------------------------------------------------
Franco-Nevada Mining Corp. Ltd. 3.8
- -----------------------------------------------------------------------------
Normandy Mining Ltd. 3.8
- -----------------------------------------------------------------------------
Impala Platinum Holdings Ltd. 3.4
- -----------------------------------------------------------------------------
Homestake Mining Co. 2.7
- -----------------------------------------------------------------------------
<CAPTION>
INDUSTRY BREAKDOWN(4)
- -----------------------------------------------------------------------------
<S> <C>
Gold & Precious Minerals 75.4%
- -----------------------------------------------------------------------------
Metals 16.1
- -----------------------------------------------------------------------------
Diversified Financial 2.6
- -----------------------------------------------------------------------------
Chemicals 1.0
- -----------------------------------------------------------------------------
</TABLE>
3. Portfolio is subject to change. Percentages are as of December 31, 1998, and
are based on net assets.
4. Portfolio is subject to change. Percentages are as of December 31, 1998, and
are based on total market value of investments.
7 Oppenheimer Gold & Special Minerals Fund
<PAGE> 8
FINANCIALS
- --------------------------------------------------------------------------------
8 Oppenheimer Gold & Special Minerals Fund
<PAGE> 9
STATEMENT OF INVESTMENTS December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
=============================================================================================================================
<S> <C> <C>
COMMON STOCKS--89.6%
- ----------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--88.4%
- ----------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.9
AMCOL International Corp. 45,000 $ 444,375
- -----------------------------------------------------------------------------------------------------------------------------
Engelhard Corp. 10,000 195,000
- -----------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 15,000 320,625
-----------
960,000
- -----------------------------------------------------------------------------------------------------------------------------
GOLD & PRECIOUS MINERALS--71.8%
- -----------------------------------------------------------------------------------------------------------------------------
GOLD--10.8%
Euro-Nevada Mining Corp. 442,000 7,215,149
- -----------------------------------------------------------------------------------------------------------------------------
Franco-Nevada Mining Corp. Ltd. 203,000 3,890,336
-----------
11,105,485
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING: AUSTRALIA--8.1%
Acacia Resources Ltd. 1,130,000 1,672,868
- -----------------------------------------------------------------------------------------------------------------------------
Delta Gold NL 1,000,000 1,520,260
- -----------------------------------------------------------------------------------------------------------------------------
Great Central Mines NL 400,000 286,888
- -----------------------------------------------------------------------------------------------------------------------------
Lihir Gold Ltd.(1) 1,000,000 1,121,805
- -----------------------------------------------------------------------------------------------------------------------------
Lihir Gold Ltd., Sponsored ADR(1) 30,000 663,750
- -----------------------------------------------------------------------------------------------------------------------------
Newcrest Mining Ltd.(1) 700,000 970,637
- -----------------------------------------------------------------------------------------------------------------------------
Ranger Minerals NL 300,000 735,610
- -----------------------------------------------------------------------------------------------------------------------------
Sons of Gwalia Ltd. 453,019 1,288,548
- -----------------------------------------------------------------------------------------------------------------------------
Zimbabwe Platinum Mines Ltd.(1) 200,000 39,232
-----------
8,299,598
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING: CANADA--16.6%
Barrick Gold Corp. 292,000 5,694,000
- -----------------------------------------------------------------------------------------------------------------------------
Goldcorp, Inc., Cl. A(1) 278,900 1,584,349
- -----------------------------------------------------------------------------------------------------------------------------
Kinross Gold Corp.(1) 790,000 1,820,895
- -----------------------------------------------------------------------------------------------------------------------------
Placer Dome, Inc. 530,000 6,086,938
- -----------------------------------------------------------------------------------------------------------------------------
Rio Narcea Gold Mines Ltd.(1) 140,000 233,105
- -----------------------------------------------------------------------------------------------------------------------------
Teck Corp., Cl. B 133,600 977,029
- -----------------------------------------------------------------------------------------------------------------------------
TVX Gold, Inc.(1) 400,000 725,000
-----------
17,121,316
- -----------------------------------------------------------------------------------------------------------------------------
GOLD RELATED INVESTMENT--3.8%
Normandy Mining Ltd. 4,186,946 3,875,614
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING: SOUTH AFRICA--10.2%
Anglogold Ltd. 61,500 2,396,178
- -----------------------------------------------------------------------------------------------------------------------------
Anglogold Ltd., Sponsored ADR 48,000 939,000
- -----------------------------------------------------------------------------------------------------------------------------
Ashanti Goldfields Co. Ltd., Sponsored GDR 156,120 1,463,625
</TABLE>
9 Oppenheimer Gold & Special Minerals Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOLD MINING: SOUTH AFRICA (CONTINUED)
Driefontein Consolidated Ltd. 60,000 $ 239,689
- -----------------------------------------------------------------------------------------------------------------------------
Gold Fields Ltd.(1) 330,418 1,825,477
- -----------------------------------------------------------------------------------------------------------------------------
Gold Fields of South Africa Ltd. 120,000 224,390
- -----------------------------------------------------------------------------------------------------------------------------
Harmony Gold Mining Co.(1) 300,000 1,501,882
- -----------------------------------------------------------------------------------------------------------------------------
Meridian Gold, Inc.(1) 120,000 705,191
- -----------------------------------------------------------------------------------------------------------------------------
Randfontein Estates Ltd.(1) 190,000 419,881
- -----------------------------------------------------------------------------------------------------------------------------
Western Areas Ltd.(1) 245,000 797,562
-----------
10,512,875
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING: UNITED STATES--11.4%
Getchell Gold Corp.(1) 157,000 4,278,250
- -----------------------------------------------------------------------------------------------------------------------------
Hecla Mining Co.(1) 60,000 217,500
- -----------------------------------------------------------------------------------------------------------------------------
Homestake Mining Co. 300,000 2,756,250
- -----------------------------------------------------------------------------------------------------------------------------
Newmont Mining Corp. 247,871 4,477,170
-----------
11,729,170
- -----------------------------------------------------------------------------------------------------------------------------
PLATINUM MINING--10.9%
Anglo American Platinum Corp. Ltd. 73,600 1,009,673
- -----------------------------------------------------------------------------------------------------------------------------
Anglo American Platinum Corp. Ltd., ADR 83,718 1,148,477
- -----------------------------------------------------------------------------------------------------------------------------
Stillwater Mining Co.(1) 222,000 9,102,000
-----------
11,260,150
-----------
73,904,208
- -----------------------------------------------------------------------------------------------------------------------------
METALS--15.7%
- -----------------------------------------------------------------------------------------------------------------------------
ALUMINUM--0.8%
Billiton plc 230,000 455,701
- -----------------------------------------------------------------------------------------------------------------------------
Pechiney SA 10,000 326,709
-----------
782,410
- -----------------------------------------------------------------------------------------------------------------------------
COPPER--0.4%
Freeport-McMoRan Copper & Gold, Inc., Cl. A 45,000 435,937
- -----------------------------------------------------------------------------------------------------------------------------
METALS: DIVERSIFIED--7.1%
Cia de Minas Buenaventura SA, Sponsored ADR, B Shares 88,600 1,151,800
- -----------------------------------------------------------------------------------------------------------------------------
Cia Vale do Rio Doce, Preference A 130,000 1,667,773
- -----------------------------------------------------------------------------------------------------------------------------
Cominco Ltd. 50,000 566,438
- -----------------------------------------------------------------------------------------------------------------------------
Dia Met Minerals Ltd., Cl. B(1) 50,000 652,955
- -----------------------------------------------------------------------------------------------------------------------------
Gencor Ltd. 600,000 1,009,754
- -----------------------------------------------------------------------------------------------------------------------------
Johnson Matthey plc 202,500 1,361,447
- -----------------------------------------------------------------------------------------------------------------------------
Lonrho plc 110,000 583,616
- -----------------------------------------------------------------------------------------------------------------------------
Metall Mining Corp.(1) 140,000 274,241
-----------
7,268,024
</TABLE>
10 Oppenheimer Gold & Special Minerals Fund
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
=============================================================================================================================
<S> <C> <C>
METALS: MISCELLANEOUS--7.4%
Aluminum of Greece SA 15,000 $ 873,352
- -----------------------------------------------------------------------------------------------------------------------------
Caemi Mineracao e Metalurgia SA 5,100,000 103,418
- -----------------------------------------------------------------------------------------------------------------------------
Degussa AG 25,000 1,380,946
- -----------------------------------------------------------------------------------------------------------------------------
Impala Platinum Holdings Ltd. 260,000 3,535,841
- -----------------------------------------------------------------------------------------------------------------------------
Quimica Minera Chile SA, Sponsored ADR 20,000 673,750
- -----------------------------------------------------------------------------------------------------------------------------
SouthernEra Resources Ltd.(1) 150,000 812,928
- -----------------------------------------------------------------------------------------------------------------------------
Westralian Sands Ltd. 100,000 242,138
-----------
7,622,373
-----------
16,108,744
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL--1.2%
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.2%
Anglo American Investment Trust Ltd. 100,000 1,208,646
-----------
Total Common Stocks (Cost $92,304,611) 92,181,598
=============================================================================================================================
PREFERRED STOCKS--1.6%
- -----------------------------------------------------------------------------------------------------------------------------
Ashanti GSM Ltd. Redeemable Preferred, A Shares(2) 88,888 155,554
- -----------------------------------------------------------------------------------------------------------------------------
Battle Mountain Gold Co., $3.25 Cum. Cv. 34,500 1,289,438
- -----------------------------------------------------------------------------------------------------------------------------
Resolute Ltd., Cum. Non-Vtg. Preference 137,571 163,604
-----------
Total Preferred Stocks (Cost $2,070,446) 1,608,596
<CAPTION>
FACE
AMOUNT(3)
=============================================================================================================================
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS AND NOTES--1.4%
- -----------------------------------------------------------------------------------------------------------------------------
Lonrho Finance plc, 6% Cv. Gtd. Bonds, 2/27/04(GBP) (Cost $1,526,448) 1,000,000 1,430,025
=============================================================================================================================
REPURCHASE AGREEMENTS--4.8%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 4.75%, dated 12/31/98,
to be repurchased at $4,902,586 on 1/4/99, collateralized by U.S. Treasury Nts.,
4%-8.875%, 2/15/99-7/15/06, with a value of $4,999,980 (Cost $4,900,000) $4,900,000 4,900,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $100,801,505) 97.4% 100,120,219
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.6 2,688,101
----------- ------------
NET ASSETS 100.0% $102,808,320
=========== ============
</TABLE>
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
3. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency:
GBP--British Pound Sterling.
See accompanying Notes to Financial Statements.
11 Oppenheimer Gold & Special Minerals Fund
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES December 31, 1998 (Unaudited)
<TABLE>
================================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $100,801,505)--see accompanying statement $100,120,219
- ----------------------------------------------------------------------------------------------------------------
Cash 91,485
- ----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 4,202,225
Interest and dividends 122,142
Other 14,288
------------
Total assets 104,550,359
================================================================================================================
LIABILITIES
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 1,640
- ----------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 1,236,971
Investments purchased 253,736
Trustees' fees--Note 1 106,265
Shareholder reports 62,133
Distribution and service plan fees 54,728
Custodian fees 18,271
Other 8,295
------------
Total liabilities 1,742,039
================================================================================================================
NET ASSETS $102,808,320
============
================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $131,463,805
- ----------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (102,049)
- ----------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (27,870,370)
- ----------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (683,066)
------------
Net assets $102,808,320
============
</TABLE>
12 Oppenheimer Gold & Special Minerals Fund
<PAGE> 13
<TABLE>
================================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$84,443,570 and 9,128,990 shares of beneficial interest outstanding) $9.25
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $9.81
- ----------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $12,858,127
and 1,410,682 shares of beneficial interest outstanding) $9.11
- ----------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $5,506,623
and 602,627 shares of beneficial interest outstanding) $9.14
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Gold & Special Minerals Fund
<PAGE> 14
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1998 (Unaudited)
<TABLE>
================================================================================================================
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $26,747) $ 815,501
- ----------------------------------------------------------------------------------------------------------------
Interest 138,364
-----------
Total income 953,865
================================================================================================================
EXPENSES
Management fees--Note 4 354,956
- ----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 166,546
- ----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 82,932
Class B 57,864
Class C 25,323
- ----------------------------------------------------------------------------------------------------------------
Shareholder reports 50,186
- ----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 32,197
- ----------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 16,781
- ----------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 10,149
- ----------------------------------------------------------------------------------------------------------------
Insurance expenses 3,139
- ----------------------------------------------------------------------------------------------------------------
Other 5,585
-----------
Total expenses 805,658
================================================================================================================
NET INVESTMENT INCOME 148,207
================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on:
Investments (2,331,503)
Foreign currency transactions (708,542)
-----------
Net realized loss (3,040,045)
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 8,171,904
Translation of assets and liabilities denominated in foreign currencies 2,781
-----------
Net change 8,174,685
-----------
Net realized and unrealized gain 5,134,640
================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,282,847
===========
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Gold & Special Minerals Fund
<PAGE> 15
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, YEAR ENDED
1998 JUNE 30,
(UNAUDITED) 1998
=============================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 148,207 $ 266,771
- -----------------------------------------------------------------------------------------------------------------------------
Net realized loss (3,040,045) (15,533,246)
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 8,174,685 (27,090,596)
------------ ------------
Net increase (decrease) in net assets resulting from operations 5,282,847 (42,357,071)
=============================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (152,627) (360,008)
=============================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A 2,005,849 (10,099,835)
Class B 1,535,720 5,712,711
Class C (273,628) 2,776,982
=============================================================================================================================
NET ASSETS
Total increase (decrease) 8,398,161 (44,327,221)
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 94,410,159 138,737,380
------------ ------------
End of period (including overdistributed net investment
income of $102,049 and $97,629, respectively) $102,808,320 $ 94,410,159
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Gold & Special Minerals Fund
<PAGE> 16
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1998 (UNAUDITED) 1998 1997 1996
==================================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $8.81 $12.68 $14.15 $13.48
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .02 .04 .04 .04
Net realized and unrealized
gain (loss) .44 (3.87) (1.48) .69
----- ------ ------ ------
Total income (loss) from
investment operations .46 (3.83) (1.44) .73
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.02) (.04) (.03) (.06)
----- ------ ------ ------
Total dividends and distributions
to shareholders (.02) (.04) (.03) (.06)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.25 $ 8.81 $12.68 $14.15
===== ====== ====== ======
==================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 5.21% (30.23)% (10.20)% 5.44%
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $84,444 $ 78,458 $126,086 $161,769
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $77,402 $102,501 $149,564 $171,427
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.42%(3) 0.32% 0.28% 0.25%
Expenses 1.56%(3) 1.43% 1.34% 1.38%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 19.5% 64.9% 20.5% 37.6%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
16 Oppenheimer Gold & Special Minerals Fund
<PAGE> 17
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------- ----------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1995 1994 1998 (UNAUDITED) 1998 1997 1996(1)
=============================================================================================================
<S> <C> <C> <C> <C> <C>
$13.28 $12.32 $8.70 $12.56 $14.11 $12.33
- --------------------------------------------------------------------------------------------------------------
.06 .06 (.01) (.01) (.04) (.01)
.21 .96 .42 (3.85) (1.51) 1.79
------ ------ ----- ------ ------ ------
.27 1.02 .41 (3.86) (1.55) 1.78
- -------------------------------------------------------------------------------------------------------------
(.07) (.06) -- -- -- --
------ ------ ----- ------ ------ ------
(.07) (.06) -- -- -- --
- -------------------------------------------------------------------------------------------------------------
$13.48 $13.28 $9.11 $8.70 $12.56 $14.11
====== ====== ===== ===== ====== ======
=============================================================================================================
2.03% 8.25% 4.71% (30.73)% (10.99)% 14.25%
=============================================================================================================
$171,721 $179,015 $12,858 $10,681 $8,716 $4,882
- -------------------------------------------------------------------------------------------------------------
$178,579 $175,093 $11,489 $10,150 $7,361 $2,588
- -------------------------------------------------------------------------------------------------------------
0.45% 0.50% (0.41)%(3) (0.41)% (0.48)% (0.25)%(3)
1.36% 1.31% 2.35%(3) 2.21% 2.16% 2.22%(3)
- -------------------------------------------------------------------------------------------------------------
35.8% 29.5% 19.5% 64.9% 20.5% 37.6%
</TABLE>
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998, were $17,459,455 and $19,670,679, respectively.
17 Oppenheimer Gold & Special Minerals Fund
<PAGE> 18
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1998 (UNAUDITED) 1998 1997 1996(1)
=====================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $8.72 $12.59 $14.13 $12.33
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.01) (.02) (.01)
Net realized and unrealized
gain (loss) .44 (3.86) (1.52) 1.81
----- ------ ------ ------
Total income (loss) from
investment operations .42 (3.87) (1.54) 1.80
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income -- -- -- --
----- ------ ------- ------
Total dividends and distributions
to shareholders -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.14 $ 8.72 $12.59 $14.13
===== ====== ====== ======
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 4.82% (30.74)% (10.90)% 14.41%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $5,507 $5,271 $3,935 $1,390
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,028 $4,215 $2,672 $840
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.41)%(3) (0.41)% (0.45)% (0.26)%(3)
Expenses 2.35%(3) 2.20% 2.18% 2.19%(3)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 19.5% 64.9% 20.5% 37.6%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1998, were $17,459,455 and $19,670,679, respectively.
See accompanying Notes to Financial Statements.
18 Oppenheimer Gold & Special Minerals Fund
<PAGE> 19
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 diversified, open-end
management investment company. The Fund's investment objective is to seek
capital appreciation by primarily investing in securities of companies engaged
in mining, processing, fabricating or distributing gold or other metals or
minerals in the United States and in foreign countries. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class
B and Class C shares. Class A shares are sold with a front-end sales charge.
Class B and Class C shares may be subject to a contingent deferred sales charge.
All classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service plan,
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following is
a summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
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.
19 Oppenheimer Gold & Special Minerals Fund
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of June 30, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $16,300,000, which expires between 2000 and 2006.
- --------------------------------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent Trustees. Benefits are based on years of service and
fees paid to each Trustee during the years of service. During the six months
ended December 31, 1998, a provision of $4,316 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $101,945 as of
December 31, 1998.
The Board of Trustees has adopted a deferred compensation plan
for independent Trustees that enables Trustees to elect to defer receipt of all
or a portion of annual fees they are entitled to receive from the Fund. Under
the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Trustee in shares of one or more
Oppenheimer funds selected by the Trustees. The amount paid to the Trustee under
the plan will be determined based upon the performance of the selected funds.
Deferral of Trustee's fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
income per share.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
20 Oppenheimer Gold & Special Minerals Fund
<PAGE> 21
================================================================================
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1998 YEAR ENDED JUNE 30, 1998
---------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 6,071,017 $ 54,553,067 12,853,959 $ 135,829,366
Dividends reinvested 15,568 140,419 36,061 325,275
Redeemed (5,863,360) (52,687,637) (13,929,468) (146,254,476)
---------- ------------ ----------- -------------
Net increase (decrease) 223,225 $ 2,005,849 (1,039,448) $ (10,099,835)
========== ============ =========== =============
- ------------------------------------------------------------------------------------------------------
Class B:
Sold 830,597 $ 7,264,186 1,457,504 $ 15,191,579
Redeemed (647,668) (5,728,466) (923,519) (9,478,868)
---------- ------------ ----------- -------------
Net increase 182,929 $ 1,535,720 533,985 $ 5,712,711
========== ============ =========== =============
- ------------------------------------------------------------------------------------------------------
Class C:
Sold 1,590,674 $ 14,126,795 2,406,210 $ 24,524,520
Redeemed (1,592,729) (14,400,423) (2,114,188) (21,747,538)
---------- ------------ ----------- -------------
Net increase (decrease) (2,055) $ (273,628) 292,022 $ 2,776,982
========== ============ =========== =============
</TABLE>
21 Oppenheimer Gold & Special Minerals Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of December 31, 1998, net unrealized depreciation on investments of $681,286
was composed of gross appreciation of $17,935,565, and gross depreciation of
$18,616,851.
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$200 million of aggregate net assets, 0.72% of the next $200 million, 0.69% of
the next $200 million, 0.66% of the next $200 million and 0.60% of net assets in
excess of $800 million. The Fund's management fee for the six months ended
December 31, 1998 was 0.75% of the average annual net assets for Class A, Class
B and Class C shares.
For the six months ended December 31, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $129,210, of which
$32,126 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $126,515 and $16,009, respectively. During the six
months ended December 31, 1998, OFDI received contingent deferred sales charges
of $28,321 and $6,696, respectively, upon redemption of Class B and Class C
shares as reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund and for other
registered investment companies. OFS's total costs of providing such services
are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the six months
ended December 31, 1998, OFDI paid $2,076 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
22 Oppenheimer Gold & Special Minerals Fund
<PAGE> 23
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and Class C shares. Each fee
is computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. During the six months
ended December 31, 1998, OFDI retained $49,945 and $20,582, respectively, as
compensation for Class B and Class C sales commissions and service fee
advances, as well as financing costs. If either Plan is terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. As of December 31, 1998, OFDI had incurred excess distribution and
servicing costs of $631,434 for Class B and $96,367 for Class C.
================================================================================
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio currency
risk. The Fund generally enters into forward contracts as a hedge upon the
purchase or sale of a security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in designated accounts to cover net exposure
on outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized gains and losses
are reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
Risks include the potential inability of the counterparty to
meet the terms of the contract and unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
As of December 31, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION CONTRACT AMOUNT VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE (000s) DECEMBER 31, 1998 DEPRECIATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
- ---------------------
British Pound Sterling (GBP) 1/5/99 98GBP $163,674 $1,640
</TABLE>
23 Oppenheimer Gold & Special Minerals Fund
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
6. ILLIQUID AND RESTRICTED SECURITIES
As of December 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of December 31, 1998, was $155,554, which
represents 0.15% of the Fund's net assets.
================================================================================
7. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the period ended
December 31, 1998.
24 Oppenheimer Gold & Special Minerals Fund
<PAGE> 25
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
<TABLE>
=======================================================================================
<S> <C>
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Frank Jennings, Vice President
Shanquan Li, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
=======================================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
=======================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
=======================================================================================
TRANSFER AND SHAREHOLDER OppenheimerFunds Services
SERVICING AGENT
=======================================================================================
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
=======================================================================================
INDEPENDENT AUDITORS KPMG LLP
=======================================================================================
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been
taken from the records of the Fund without
examination of the independent auditors.
This is a copy of a report to shareholders of
Oppenheimer Gold & Special Minerals Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer Gold & Special Minerals Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any bank,
and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the
principal amount invested.
</TABLE>
25 Oppenheimer Gold & Special Minerals Fund
<PAGE> 26
OPPENHEIMERFUNDS FAMILY
<TABLE>
==============================================================================================
<S> <C> <C>
REAL ASSET FUNDS
- ----------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==============================================================================================
GLOBAL STOCK FUNDS
- ----------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
==============================================================================================
STOCK FUNDS
- ----------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
Large Cap Growth Fund
==============================================================================================
STOCK & BOND FUNDS
- ----------------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Disciplined Allocation Fund
Income Fund(1) Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Equity Income Fund
==============================================================================================
TAXABLE BOND FUNDS
- ----------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
==============================================================================================
MUNICIPAL BOND FUNDS
- ----------------------------------------------------------------------------------------------
California Municipal Fund(2) Pennsylvania Municipal Fund(2) Rochester Division:
Florida Municipal Fund(2) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(2) Insured Municipal Fund Limited Term New York
New York Municipal Fund(2) Intermediate Municipal Fund Municipal Fund
==============================================================================================
MONEY MARKET FUNDS(3)
- ----------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 12/22/98, the Fund's name was changed from "Main Street Income & Growth
Fund."
2. Available only to investors in certain states.
3. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
26 Oppenheimer Gold & Special Minerals Fund
<PAGE> 27
INTERNET
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- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
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And when you need help, our Customer Service Representatives are only a
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When you want to make a transaction, you can do it easily by calling our
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OPPENHEIMERFUNDS LOGO]
RS0410.001 298 March 1, 1999
