<PAGE>
Oppenheimer Discovery Fund
Annual Report September 30, 1995
[PHOTO]
"To get high
growth,
we know we
have to invest
aggressively
for the
long term."
[LOGO]
<PAGE>
This Fund is for people who want to take
part in the investment opportunities offered
by fast-growing companies.
NEWS
"JAY TRACEY'S CONSISTENCY IS COMMENDABLE."
- --MORNINGSTAR MUTUAL FUNDS
March 31, 1995
BEAT THE AVERAGE
Total Return for the 5-Year Period
Ended 9/30/95:
Oppenheimer Discovery Fund
Class A (at NAV)(1)
187.85%
Lipper Small-Cap Growth
Fund Average(3)
182.01%
HOW YOUR FUND IS MANAGED
Oppenheimer Discovery Fund seeks capital appreciation by investing in small,
emerging growth companies, or "small-cap" stocks. These stocks are expected
to provide higher growth potential than stocks of larger, more established
companies because emerging growth businesses are often developers of new
products or services and innovators in leading edge sectors of the economy.
Although small-cap stocks may be subject to more severe price fluctuations
than the stocks of larger companies, small-cap stocks have a history of often
outperforming larger-cap, common stocks over time.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/95 for Class A
and B shares were 28.03% and 27.04%, respectively.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/95 and since
inception of the Class on 9/11/86 were 20.66%, 22.09% and 17.30%,
respectively. For Class B shares, average annual total returns for the 1-year
period and since inception of the Class on 4/1/94 were 22.04% and 13.32%,
respectively.(2)
OUTLOOK
"Over the first half of the year, the Russell 2000 smaller-cap index
underperformed the larger S&P 500 by almost half. We're seeing that gap close
quickly, and expect to continue to see the shift in the market away from the
large-cap leadership in favor of smaller stocks."
Jay Tracey, Portfolio Manager
September 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on 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.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 9/30/94, 9/30/90
and 9/11/86 (inception of class), after deducting the current maximum initial
sales charge of 5.75%. Class B returns show results of hypothetical investments
on 9/30/94 and 4/1/94 and the deduction of the applicable contingent deferred
sales charge of 5% (1-year) and 4% (since inception) for Class B shares. Certain
Class C performance is not yet available because Class C shares were first
publicly offered on 10/1/95. The Fund also offers Class Y shares, but only to
certain institutional investors and not to members of the public. For Class Y
shares, average annual total returns for the 1-year period and since inception
of the Class on 6/1/94 were 28.28% and 23.47%, respectively.
An explanation of the different total returns is in the Fund's prospectus.
3. Source: Lipper Analytical Services, 9/30/95, an independent mutual fund
monitoring service. The Lipper total return average for the 5-year period was
for 79 small-cap growth funds. The average is shown for comparative purposes
only. Oppenheimer Discovery Fund is characterized by Lipper as a small-cap
growth fund. Lipper performance does not take sales charges into consideration.
2 Oppenheimer Discovery Fund
<PAGE>
Donald W. Spiro
President
Oppenheimer
Discovery Fund
Jon S. Fossel
Chairman
Oppenheimer
Management
Corporation
Dear OppenheimerFunds Shareholder,
Overall, 1995 is turning out to be an outstanding year for the U.S. stock
market.
Driven by moderate economic growth with low inflation, falling interest
rates, and surging corporate profitability, the U.S. stock market has broken
through record levels for much of the year. Probably most satisfying is the fact
that it's been a broad market advance across all major market indices--so
whether your funds invest in the large blue chip companies generally found in
the Dow or S&P 500, small companies typically seen in the Russell 2000 index, or
technology-related companies found in the NASDAQ, you've likely participated in
the market's upswing.
Of all the factors affecting the markets, we believe the direction of
interest rates has played the largest role. Through a series of increases
beginning in February 1994 and ending in February 1995, the Federal Reserve
boosted short-term interest rates repeatedly with the goal of slowing the
economy from its rapid pace through the fourth quarter of 1994, thus helping
to lower the possibility of higher inflation in the near future.
As inflationary fears subsided when the economy began showing significant
signs of slowing, the Fed reversed its tightening strategy and cut interest
rates in July for the first time in three years. Indeed, now that U.S. economic
growth has bounced back to a more reasonable level, and with inflation almost
nonexistent and no sign of recession, it appears that the Fed has successfully
accomplished the difficult task of creating a "soft landing" for the economy.
The stock market has responded to the soft landing and the interest rate
cut, as well as extremely strong corporate earnings reports, by hitting all-time
highs. For much of the year, the markets were led by larger company stocks, due
in part to the competitive advantage offered until August by a relatively weak
dollar--which made U.S. exports less expensive, thus boosting sales of companies
that do significant business overseas. Smaller companies, which are less
dependent on exports for their revenues, have gathered momentum as the year
progressed and are positioned to make further gains now that the U.S. dollar
has rebounded. This could lead to a shift in leadership away from large
companies that do a greater percentage of their business overseas. But,
despite some recent volatility, the big winner thus far in 1995 has been
technology-related stocks, driven by increasing demand for computers,
semiconductors, and software.
Although there is some concern that corporate earnings growth may have now
peaked in the fifth year of our economic expansion, we believe that a healthy
economy and increasing demand for U.S. products overseas by developing nations
and mature countries coming out of recession will help the stock market remain
strong for some time.
Your portfolio manager discusses the outlook for your Fund on the following
pages. Thank you for your confidence in OppenheimerFunds, and we look forward to
helping you reach your investment goals in the future.
/s/ Donald W. Spiro /s/ Jon S. Fossel
Donald W. Spiro Jon S. Fossel
October 23, 1995
3 Oppenheimer Discovery Fund
<PAGE>
Q&A AN INTERVIEW WITH YOUR FUND'S MANAGER.
Q What contributed
to the Fund's outstanding
performance?
DISCOVERY FUND HAS PERFORMED QUITE WELL. WHAT CONTRIBUTED TO THIS OUTSTANDING
PERFORMANCE?
As we'd anticipated, small-cap stocks really turned around in the second half
of this year. Although the stock market enjoyed a strong rally over the
entire past year, the rally wasn't broad-based, with the market decidedly
favoring the stocks of large companies through late spring. In our opinion,
large-company stocks out-performed small-cap stocks in 1994 and the first
half of 1995 because the economic expansion promoted above-average earnings
growth for large companies during this period. Indeed, earnings growth was as
good for the average large company as for the average small one, so investors
had less incentive to seek faster-growing, but riskier, small-cap stocks.(1)
Beginning in the third quarter, however, investors began to anticipate
that the earnings growth of large companies would decelerate through the rest
of this year and through 1996, but that small companies would keep their
growth pace up. As a result, market leadership shifted back toward small-cap
stocks. The Fund benefited from this shift, as well as from above-average
stock selection.
WHAT CHANGES HAVE YOU MADE IN THE PORTFOLIO OVER THE YEAR?
We believe that to invest successfully in the small-cap market, it is better
to identify very good individual companies that have carved out a unique
market niche, rather than bet on broad industry sectors. Our primary focus is
on a company and its management; then, only after that careful analysis do we
then look for anything on the economic horizon that might have either a
negative or positive impact.
1. The Fund's portfolio is subject to change.
4 Oppenheimer Discovery Fund
<PAGE>
FACING PAGE
Top left: Jay Tracey, Portfolio Manager, with Robert Doll, Executive VP,
Director of Equity Investments
Top right: The equity trading desk
Bottom left: Paul LaRocco, Associate Portfolio Manager
THIS PAGE
Top: Jay Tracey
Bottom: Robert Doll
A The shift toward small-cap stocks and above-average stock selection.
That understood, we've selectively increased our holdings of companies in
consumer cyclicals. An example is Tommy Hilfiger, 1.47% of net assets, an
apparel company that's capturing the growth in the men's casual wear market.
One of our big successes this year is Olympic Financial. Olympic, .53% of
net assets, is a company that works with car dealerships to arrange financing
for qualified buyers by offering faster turnaround time than banks need to
process loan applications. The company is doing well and its stock has
followed.(1)
WHAT TYPES OF COMPANIES ARE YOU MOVING OUT OF?
We've reduced our exposure to healthcare services, selling stocks of
companies that provide long-term therapy to patients outside of hospitals.
While we believe these companies fit well within the cost-sensitive future of
the healthcare system, we sold because of the uncertainty created by Medicare
and Medicaid reform talks.
On the other hand, we're buying physician practice management
companies--large networks of doctors that are becoming an important force in
directing healthcare spending. For example, we hold PhyCor, 1.16% of net
assets, which we feel is one of the highest quality companies in this growing
business.
THERE IS A GREAT DEAL OF TALK ABOUT THE TECHNOLOGY SECTOR. DID ALL TECH
STOCKS SHARE IN THE SECTOR'S RALLY THIS YEAR, OR ARE THERE STILL GOOD VALUES
OUT THERE?
There has been a dramatic run-up in technology, but we believe there is still
opportunity to be found, especially in the telecommunications field.
Glenayre Technologies, for example, supplies equipment for wireless
communications. As of September 30, 1995, this holding was 1.06% of net
assets.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Over the first half of the year, the Russell 2000 smaller-cap index
underperformed the larger S&P 500 by almost half. We're seeing that gap close
quickly, and expect to continue to see the shift in the market away from
large-cap leadership in favor of smaller stocks.
Whereas earnings growth for larger companies is tied to the rate of
economic growth, smaller companies can continue to grow rapidly as long as
the economy stays out of recession. This is a good reason to invest in
smaller stocks now, but the most important reason to include small company
stocks in your portfolio is that historically they have outperformed
large-cap stocks on a long-term basis. / /
5 Oppenheimer Discovery Fund
<PAGE>
FINANCIALS
CONTENTS
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS & LIABILITIES 15
STATEMENT OF OPERATIONS 16
STATEMENTS OF CHANGES IN NET ASSETS 17
FINANCIAL HIGHLIGHTS 18
NOTES TO FINANCIAL STATEMENTS 20
6 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS AND NOTES--1.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Genesis Health Ventures, Inc., 6% Cv. Sr. Sub. Debs., 11/30/03 $1,300,000 $ 2,034,500
-----------------------------------------------------------------------------------------------
IntelCom Group, Inc., 8% Cv. Sub. Nts., 9/24/98(3)(4) 2,000,000 1,471,095
-----------------------------------------------------------------------------------------------
IntelCom Group, Inc., 8% Simple Interest Redeemable
Cv. Sub. Nts., 9/17/98(3) 320,000 235,375
-----------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., 8.25% Cv. Sub. Debs., 8/15/01(1) 850,000 760,750
-----------------------------------------------------------------------------------------------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs.,
8/15/00(1)(2)(7) 4,000,000 1,630,000
-----------------------------------------------------------------------------------------------
Sierra On-Line, Inc., 6.50% Cv. Sub. Nts., 4/1/01(1) 1,000,000 2,767,500
---------
Total Convertible Corporate Bonds and Notes (Cost $9,870,310) 8,899,220
<CAPTION>
SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--86.5%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--0.9%
- ----------------------------------------------------------------------------------------------------------------------------------
METALS--0.9% Wolverine Tube, Inc.(5) 210,000 7,953,750
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--24.7%
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.9% Belmont Homes, Inc.(2)(5) 372,500 5,587,500
-----------------------------------------------------------------------------------------------
Credit Acceptance Corp.(5) 255,000 6,885,000
-----------------------------------------------------------------------------------------------
NHP, Inc.(5) 300,000 4,162,500
-----------
16,635,000
- ----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--5.4% Apple South, Inc. 326,400 7,425,600
-----------------------------------------------------------------------------------------------
Applebee's International, Inc. 180,000 4,905,000
-----------------------------------------------------------------------------------------------
Cinar Films, Inc., Cl. B(5) 320,000 3,960,000
-----------------------------------------------------------------------------------------------
CKE Restaurants, Inc. 350,000 4,550,000
-----------------------------------------------------------------------------------------------
Department 56, Inc.(5) 200,000 9,350,000
-----------------------------------------------------------------------------------------------
HFS, Inc. 70,000 3,666,250
-----------------------------------------------------------------------------------------------
Play By Play Toys & Novelties, Inc.(5) 150,000 1,987,500
-----------------------------------------------------------------------------------------------
Red Lion Hotels, Inc.(5) 102,200 2,146,200
-----------------------------------------------------------------------------------------------
Station Casinos, Inc.(5) 300,000 4,612,500
-----------------------------------------------------------------------------------------------
Studio Plus Hotels, Inc.(5) 90,000 2,070,000
-----------------------------------------------------------------------------------------------
Supertel Hospitality, Inc.(5) 235,000 3,172,500
-----------
47,845,550
</TABLE>
7 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA--1.8% Heartland Wireless Communications, Inc.(1)(5) 150,000 $ 3,669,375
-----------------------------------------------------------------------------------------------
Mecklermedia Corp.(5) 180,000 3,375,000
-----------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., Cl. A(5) 150,000 4,275,000
-----------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.(5) 150,000 4,312,500
------------
15,631,875
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--3.4% Authentic Fitness Corp.(5) 200,000 4,500,000
-----------------------------------------------------------------------------------------------
Fila Holding SpA, ADR 50,000 1,768,750
-----------------------------------------------------------------------------------------------
Marisa Christina, Inc.(5) 400,000 6,400,000
-----------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(5) 200,000 6,850,000
-----------------------------------------------------------------------------------------------
Quicksilver, Inc.(5) 200,000 5,425,000
-----------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 180,000 4,927,500
------------
29,871,250
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--12.2% AmeriSource Health Corp., Cl. A(5) 200,000 5,400,000
-----------------------------------------------------------------------------------------------
CDW Computer Centers, Inc.(5) 80,000 4,260,000
-----------------------------------------------------------------------------------------------
CellStar Corp.(5) 200,000 6,250,000
-----------------------------------------------------------------------------------------------
Claire's Stores, Inc. 200,000 4,100,000
-----------------------------------------------------------------------------------------------
Copart, Inc.(5) 221,900 5,048,225
-----------------------------------------------------------------------------------------------
Corporate Express, Inc.(5) 250,000 6,093,750
-----------------------------------------------------------------------------------------------
Creative Computers, Inc.(5) 210,000 6,195,000
-----------------------------------------------------------------------------------------------
CUC International, Inc.(5) 150,000 5,231,250
-----------------------------------------------------------------------------------------------
Discount Auto Parts, Inc.(5) 138,100 4,177,525
-----------------------------------------------------------------------------------------------
Friedman's, Inc., Cl. A(5) 200,000 4,350,000
-----------------------------------------------------------------------------------------------
Garden Ridge Corp.(5) 150,000 4,237,500
-----------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(5) 200,000 9,100,000
-----------------------------------------------------------------------------------------------
Hollywood Entertainment Corp.(5) 117,500 2,518,906
-----------------------------------------------------------------------------------------------
Moovies, Inc.(5) 150,000 2,943,750
-----------------------------------------------------------------------------------------------
Movie Gallery, Inc.(5) 50,000 2,137,500
-----------------------------------------------------------------------------------------------
Petco Animal Supplies, Inc.(5) 200,000 5,200,000
-----------------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(2)(5) 150,000 2,587,500
-----------------------------------------------------------------------------------------------
Sunglass Hut International, Inc.(5) 200,000 10,000,000
-----------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(5) 400,000 13,000,000
-----------------------------------------------------------------------------------------------
U.S. Office Products Co.(5) 325,000 4,915,625
------------
107,746,531
</TABLE>
8 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS--22.3%
- ----------------------------------------------------------------------------------------------------------------------------------
EDUCATION--0.2% National Education Corp.(5) 250,000 $ 2,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD--1.4% JP Foodservice, Inc.(5) 550,000 9,762,500
-----------------------------------------------------------------------------------------------
Opta Food Ingredients, Inc.(5) 154,200 2,428,650
------------
12,191,150
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--5.3% Agouron Pharmaceuticals, Inc.(5) 160,000 4,600,000
-----------------------------------------------------------------------------------------------
AHI Healthcare Systems, Inc.(5) 168,600 2,613,300
-----------------------------------------------------------------------------------------------
Bio-Vascular, Inc.(5) 141,900 2,554,200
-----------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(5) 200,000 5,950,000
-----------------------------------------------------------------------------------------------
Ethical Holdings PLC, Sponsored ADR(5) 500,000 4,500,000
-----------------------------------------------------------------------------------------------
Gilead Sciences, Inc.(5) 236,700 5,207,400
-----------------------------------------------------------------------------------------------
Martek Biosciences Corp.(5) 160,000 2,600,000
-----------------------------------------------------------------------------------------------
Matrix Pharmaceutical, Inc.(5) 129,600 1,814,400
-----------------------------------------------------------------------------------------------
Ostech, Inc.(2)(5) 240,000 4,380,000
-----------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(5) 300,000 12,300,000
-----------
46,519,300
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES Apogee, Inc.(5) 185,000 3,376,250
& SERVICES--14.9% -----------------------------------------------------------------------------------------------
Bio-Plexus, Inc.(5) 150,000 1,837,500
-----------------------------------------------------------------------------------------------
EmCare Holdings, Inc.(5) 200,000 4,425,000
-----------------------------------------------------------------------------------------------
Equity Corp. International(5) 200,000 4,950,000
-----------------------------------------------------------------------------------------------
Exogen, Inc.(5) 150,000 2,212,500
-----------------------------------------------------------------------------------------------
Genesis Health Ventures, Inc.(5) 100,000 3,575,000
-----------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(5) 300,000 7,387,500
-----------------------------------------------------------------------------------------------
HealthPlan Services Corp.(5) 200,000 4,075,000
-----------------------------------------------------------------------------------------------
HemaSure, Inc.(5) 114,000 1,767,000
-----------------------------------------------------------------------------------------------
ICU Medical, Inc.(5) 130,000 1,755,000
-----------------------------------------------------------------------------------------------
Lincare Holdings, Inc.(5) 200,000 5,150,000
-----------------------------------------------------------------------------------------------
MedCath, Inc.(5) 190,000 3,515,000
-----------------------------------------------------------------------------------------------
MediSense, Inc.(5) 150,000 3,618,750
-----------------------------------------------------------------------------------------------
North American Biologicals, Inc.(5) 200,000 1,650,000
-----------------------------------------------------------------------------------------------
Northfield Laboratories, Inc.(5) 200,000 3,700,000
-----------------------------------------------------------------------------------------------
OccuSystems, Inc.(5) 100,000 2,075,000
-----------------------------------------------------------------------------------------------
Omnicare, Inc. 347,200 13,540,800
-----------------------------------------------------------------------------------------------
OrNda Healthcorp(5) 400,000 8,500,000
-----------------------------------------------------------------------------------------------
Owen Healthcare, Inc.(5) 197,000 3,213,563
</TABLE>
9 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES Pediatrix Medical Group, Inc.(5) 160,000 $ 3,280,000
& SERVICES -----------------------------------------------------------------------------------------------
(CONTINUED) Pet Practice, Inc. (The)(5) 175,000 2,329,688
-----------------------------------------------------------------------------------------------
PhyCor, Inc.(5) 300,000 10,275,000
-----------------------------------------------------------------------------------------------
Physician Reliance Network, Inc.(5) 200,000 7,400,000
-----------------------------------------------------------------------------------------------
Physicians Resource Group, Inc.(5) 200,000 4,425,000
-----------------------------------------------------------------------------------------------
Professional Sports Care Management, Inc.(5) 52,000 279,500
-----------------------------------------------------------------------------------------------
Retirement Care Associates, Inc.(5) 180,000 1,912,500
-----------------------------------------------------------------------------------------------
Rural/Metro Corp.(5) 180,000 4,365,000
-----------------------------------------------------------------------------------------------
Serologicals Corp.(5) 300,000 4,650,000
-----------------------------------------------------------------------------------------------
Spine-Tech, Inc.(5) 121,000 1,898,188
-----------------------------------------------------------------------------------------------
Steris Corp.(5) 160,000 6,740,000
-----------------------------------------------------------------------------------------------
United Dental Care, Inc.(5) 135,000 4,050,000
------------
131,928,739
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.5% Ultralife Batteries, Inc.(5) 170,000 4,165,000
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY--2.5%
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & Cross Timbers Oil Co. 160,000 2,280,000
PRODUCERS--1.9% -----------------------------------------------------------------------------------------------
Nabors Industries, Inc.(5) 500,000 4,718,750
-----------------------------------------------------------------------------------------------
Newfield Exploration Co.(5) 80,000 2,410,000
-----------------------------------------------------------------------------------------------
NUMAR Corp.(5) 145,000 1,576,875
-----------------------------------------------------------------------------------------------
Stone Energy Corp.(5) 200,000 2,550,000
-----------------------------------------------------------------------------------------------
Weatherford International, Inc.(5) 260,000 3,380,000
------------
16,915,625
- ----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--0.6% Core Laboratories NV(5) 100,000 1,200,000
-----------------------------------------------------------------------------------------------
Energy Ventures, Inc.(5) 170,300 3,959,475
------------
5,159,475
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--2.4%
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.9% Green Tree Financial Corp. 100,000 6,100,000
-----------------------------------------------------------------------------------------------
Olympic Financial Ltd.(5) 170,000 4,653,750
-----------------------------------------------------------------------------------------------
Renters Choice, Inc.(5) 135,000 4,134,375
-----------------------------------------------------------------------------------------------
Rockford Industries, Inc.(2)(5) 200,000 1,850,000
------------
16,738,125
</TABLE>
10 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE--0.5% Compdent Corp.(5) 152,700 $ 4,466,475
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--6.7%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.8% Plasma & Materials Technologies, Inc.(5) 100,000 1,762,500
-----------------------------------------------------------------------------------------------
Smartflex Systems, Inc.(5) 60,000 1,020,000
-----------------------------------------------------------------------------------------------
UCAR International, Inc.(5) 150,000 4,087,500
------------
6,870,000
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.3% American Buildings Co.(5) 130,000 3,071,250
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--5.1% Acxiom Corp.(5) 180,000 5,085,000
-----------------------------------------------------------------------------------------------
Alternative Resources Corp.(5) 150,000 4,800,000
-----------------------------------------------------------------------------------------------
Business Resource Group(2)(5) 260,000 1,267,500
-----------------------------------------------------------------------------------------------
Daisytek International Corp.(5) 120,000 3,945,000
-----------------------------------------------------------------------------------------------
Fritz Cos., Inc.(5) 70,000 5,158,125
-----------------------------------------------------------------------------------------------
Kent Electronics Corp.(5) 105,000 4,606,875
-----------------------------------------------------------------------------------------------
Open Environment Corp.(5) 180,000 3,150,000
-----------------------------------------------------------------------------------------------
PMT Services, Inc.(5) 57,000 1,375,125
-----------------------------------------------------------------------------------------------
Stewart Enterprises, Inc. 150,000 5,437,500
-----------------------------------------------------------------------------------------------
United Waste Systems, Inc.(5) 250,000 10,437,500
------------
45,262,625
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--0.5% Autoclave Engineers, Inc. 100,000 1,587,500
-----------------------------------------------------------------------------------------------
U.S. Filter Corp.(5) 100,000 2,400,000
------------
3,987,500
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--27.0%
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--3.5% Boca Research, Inc.(5) 220,000 5,335,000
-----------------------------------------------------------------------------------------------
Data Translation, Inc.(5) 185,000 3,283,750
-----------------------------------------------------------------------------------------------
EMC Corp.(5) 300,000 5,437,500
-----------------------------------------------------------------------------------------------
In Focus Systems, Inc.(5) 150,000 3,693,750
-----------------------------------------------------------------------------------------------
Integrated Measurement Systems, Inc.(5) 150,000 1,987,500
-----------------------------------------------------------------------------------------------
Novadigm, Inc.(5) 112,900 1,905,188
-----------------------------------------------------------------------------------------------
Number Nine Visual Technology Corp.(5) 80,000 1,320,000
-----------------------------------------------------------------------------------------------
Peak Technologies Group, Inc.(5) 100,000 2,650,000
-----------------------------------------------------------------------------------------------
Symbol Technologies, Inc.(5) 150,000 4,968,750
------------
30,581,438
</TABLE>
11 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE--11.4% 7th Level, Inc.(5) 100,000 $ 2,100,000
-----------------------------------------------------------------------------------------------
Artisoft, Inc.(5) 200,000 2,125,000
-----------------------------------------------------------------------------------------------
Aspen Technologies, Inc.(5) 100,000 3,000,000
-----------------------------------------------------------------------------------------------
Black Box Corp.(5) 109,100 2,018,350
-----------------------------------------------------------------------------------------------
Computron Software, Inc.(5) 150,000 2,587,500
-----------------------------------------------------------------------------------------------
Comverse Technology, Inc.(5) 200,000 4,350,000
-----------------------------------------------------------------------------------------------
Datalogix International, Inc.(5) 100,000 1,425,000
-----------------------------------------------------------------------------------------------
Discreet Logic, Inc.(5) 50,000 2,750,000
-----------------------------------------------------------------------------------------------
Eagle Point Software Corp.(5) 90,000 1,687,500
-----------------------------------------------------------------------------------------------
Global DirectMail Corp.(5) 230,000 5,663,750
-----------------------------------------------------------------------------------------------
Harbinger Corp.(5) 139,100 1,912,625
-----------------------------------------------------------------------------------------------
HBO & Co. 160,000 10,000,000
-----------------------------------------------------------------------------------------------
IMNET Systems, Inc.(5) 136,300 3,509,725
-----------------------------------------------------------------------------------------------
Inference Corp., Cl. A(5) 200,000 3,000,000
-----------------------------------------------------------------------------------------------
McAfee Associates, Inc.(5) 180,000 9,270,000
-----------------------------------------------------------------------------------------------
MICROS Systems, Inc.(5) 110,000 3,932,500
-----------------------------------------------------------------------------------------------
National Instruments Corp.(5) 171,000 3,462,750
-----------------------------------------------------------------------------------------------
ON Technology Corp.(5) 37,000 638,250
-----------------------------------------------------------------------------------------------
Pairgain Technologies, Inc.(5) 150,000 5,175,000
-----------------------------------------------------------------------------------------------
Premenos Technology Corp.(5) 80,000 2,600,000
-----------------------------------------------------------------------------------------------
Project Software & Development, Inc.(5) 80,000 2,080,000
-----------------------------------------------------------------------------------------------
Pure Software, Inc.(5) 58,500 2,091,375
-----------------------------------------------------------------------------------------------
Sierra On-Line, Inc.(5) 19,000 745,750
-----------------------------------------------------------------------------------------------
Simula, Inc.(5) 127,500 3,203,438
-----------------------------------------------------------------------------------------------
Smith Micro Software, Inc.(5) 73,700 727,788
-----------------------------------------------------------------------------------------------
Softkey International, Inc.(5) 200,000 8,850,000
-----------------------------------------------------------------------------------------------
SPSS, Inc.(2)(5) 250,000 4,312,500
-----------------------------------------------------------------------------------------------
Systemsoft Corp.(5) 150,000 2,306,250
-----------------------------------------------------------------------------------------------
TouchStone Software Corp.(5) 50,000 537,500
-----------------------------------------------------------------------------------------------
Unison Software, Inc.(5) 90,000 1,350,000
-----------------------------------------------------------------------------------------------
UUNET Technologies, Inc.(5) 50,000 2,312,500
-----------------------------------------------------------------------------------------------
Vantive Corp.(5) 65,000 1,040,000
------------
100,765,051
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--3.2% Advanced Technology Materials, Inc.(5) 180,000 2,632,500
-----------------------------------------------------------------------------------------------
Euphonix, Inc.(5) 200,000 2,000,000
-----------------------------------------------------------------------------------------------
FEI Co.(5) 40,000 490,000
-----------------------------------------------------------------------------------------------
Flextronics International, Ltd.(5) 170,000 4,377,500
-----------------------------------------------------------------------------------------------
ITI Technologies, Inc.(5) 225,000 6,103,125
-----------------------------------------------------------------------------------------------
Mackie Designs, Inc.(5) 150,800 2,186,600
-----------------------------------------------------------------------------------------------
Sanmina Corp.(5) 130,000 6,207,500
-----------------------------------------------------------------------------------------------
SDL, Inc.(5) 75,000 2,118,750
-----------------------------------------------------------------------------------------------
Trimble Navigation Ltd.(5) 101,100 2,552,775
------------
28,668,750
</TABLE>
12 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS- A+ Communications, Inc.(5) 80,000 $ 1,220,000
TECHNOLOGY--8.9% ----------------------------------------------------------------------------------------------
Arch Communications Group, Inc.(5) 300,000 7,875,000
----------------------------------------------------------------------------------------------
Comdial Corp.(5) 200,000 2,500,000
----------------------------------------------------------------------------------------------
DSP Communications, Inc.(5) 70,000 2,310,000
----------------------------------------------------------------------------------------------
Glenayre Technologies, Inc.(5) 130,000 9,360,000
----------------------------------------------------------------------------------------------
IntelCom Group, Inc.(5) 250,000 3,028,125
----------------------------------------------------------------------------------------------
Inter-Tel, Inc.(5) 123,700 2,180,213
----------------------------------------------------------------------------------------------
Intertel Communications, Inc.(3)(5) 22,500 272,531
----------------------------------------------------------------------------------------------
LCI International, Inc.(5) 284,100 11,150,925
----------------------------------------------------------------------------------------------
Metrocall, Inc.(5) 131,200 3,640,800
----------------------------------------------------------------------------------------------
MobileMedia Corp., Cl. A(5) 200,000 5,400,000
----------------------------------------------------------------------------------------------
Periphonics Corp.(5) 160,000 4,600,000
----------------------------------------------------------------------------------------------
ProNet, Inc.(5) 200,000 5,825,000
----------------------------------------------------------------------------------------------
Sitel Corp.(5) 110,000 2,695,000
----------------------------------------------------------------------------------------------
Tekelec(5) 100,000 2,250,000
----------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc.(5) 250,000 3,843,750
----------------------------------------------------------------------------------------------
Teltrend, Inc.(5) 140,000 4,620,000
----------------------------------------------------------------------------------------------
Transaction Network Services, Inc.(5) 200,000 5,375,000
-------------
78,146,344
-------------
Total Common Stocks (Cost $545,140,348) 763,120,803
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--0.5%
- ---------------------------------------------------------------------------------------------------------------------------------
AirNet Communications Corp., Series C Preferred Stock(3)(5) 250,000 1,500,000
----------------------------------------------------------------------------------------------
Silicon Video Corp., $2.50 Cv., Series D(1)(5) 1,200,000 3,000,000
------------
Total Preferred Stocks (Cost $4,500,000) 4,500,000
<CAPTION>
UNITS
- ---------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ---------------------------------------------------------------------------------------------------------------------------------
China Aerospace International Holdings Wts., Exp. 12/95 2,400,000 4,034
----------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc. Wts., Exp. 12/97 40,110 --
----------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 238 --
------------
Total Rights, Warrants and Certificates (Cost $261,332) 4,034
<CAPTION>
DATE STRIKE CONTRACTS
- ---------------------------------------------------------------------------------------------------------------------------------
PUT OPTIONS PURCHASED--0.4%
- ---------------------------------------------------------------------------------------------------------------------------------
Put Option on Morgan Stanley High Tech 35 Index Dec. 95 301.359 1,261 1,081,892
----------------------------------------------------------------------------------------------
Put Option on NASDAQ 100 Index Dec. 95 540.313 2,461 2,222,762
------------
Total Put Options Purchased (Cost $7,930,000) 3,304,654
</TABLE>
13 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT--12.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
6.35%, dated 9/29/95, to be repurchased at $109,127,716
on 10/2/95, collateralized by U.S. Treasury Nts., 4.25%--8.75%,
11/30/95--8/15/00, with a value of $74,362,035, U.S. Treasury
Bills maturing 12/28/95--3/28/96, with a value of $16,882,383,
and U.S. Treasury Bonds, 8.50%--13.25%, 5/15/14--2/15/20,
with a value of $20,214,580 (Cost $109,070,000) $109,070,000 $109,070,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $676,771,990) 100.7% 888,898,711
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.7) (6,378,150)
------------ ------------
NET ASSETS 100.0% $882,520,561
------------ ------------
------------ ------------
</TABLE>
1. Represents a security sold under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended.
This security has been determined to be liquid under guidelines
established by the Board of Trustees. These securities amount to
$11,827,625 or 1.34% of the Fund's net assets, at September 30,
1995.
2. Affiliated company. 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 September 30, 1995. The aggregate fair value of
all securities of affiliated companies as of September 30, 1995
amounted to $17,302,500. Transactions during the period in which
the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE BALANCE
SEPTEMBER 30, 1994 GROSS ADDITIONS GROSS REDUCTIONS SEPTEMBER 30, 1995
----------------------- ---------------------- --------------------- ----------------------- INTEREST
FACE/SHARES COST FACE/SHARES COST FACE/SHARES COST FACE/SHARES COST INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Belmont Homes, Inc. -- $ -- 372,500 $ 4,018,062 -- $ -- 372,500 $ 4,018,062 $ --
- ---------------------------------------------------------------------------------------------------------------------------------
Business Resource Group -- -- 260,000 1,871,875 -- -- 260,000 1,871,875 --
- ---------------------------------------------------------------------------------------------------------------------------------
Ostech, Inc. -- -- 240,000 3,041,878 -- -- 240,000 3,041,878 --
- ---------------------------------------------------------------------------------------------------------------------------------
Physicians Clinical
Laboratory, Inc.,
7.50% Cv. Sub.Debs.,
8/15/00 4,000,000 4,040,000 -- 58,554 -- -- 4,000,000 4,098,554 170,239
- ---------------------------------------------------------------------------------------------------------------------------------
Rockford Industries, Inc. -- -- 200,000 1,667,500 -- -- 200,000 1,667,500 --
- ---------------------------------------------------------------------------------------------------------------------------------
Rocky Mountain Chocolate
Factory, Inc. -- -- 150,000 2,493,750 -- -- 150,000 2,493,750 --
- ---------------------------------------------------------------------------------------------------------------------------------
SPSS, Inc.(6) 300,000 2,400,000 85,000 966,875 135,000 1,248,750 250,000 2,118,125 --
---------- ----------- ---------- ----------- --------
$6,440,000 $14,118,494 $1,248,750 $19,309,744 $170,239
---------- ----------- ---------- ----------- --------
---------- ----------- ---------- ----------- --------
</TABLE>
3. Identifies issues considered to be illiquid--See Note 5 of
Notes to Financial Statements.
4. Interest or dividend is paid in kind.
5. Non-income producing security.
6. Not an affiliate as of September 30, 1995.
7. Non-income-producing--issuer is in default of interest payment.
See accompanying Notes to Financial Statements.
14 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (including repurchase agreement of $109,070,000)--
see accompanying statement:
Unaffiliated companies (cost $659,580,371) $871,596,211
Affiliated companies (cost $17,191,619) 17,302,500
-----------------------------------------------------------------------------------------------
Cash 5,286
-----------------------------------------------------------------------------------------------
Receivables:
Investments sold 10,911,606
Shares of beneficial interest sold 1,669,121
Interest and dividends 179,027
-----------------------------------------------------------------------------------------------
Other 121,395
------------
Total assets 901,785,146
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 14,597,686
Shares of beneficial interest redeemed 3,568,185
Distribution and service plan fees--Note 4 507,522
Shareholder reports 203,780
Transfer and shareholder servicing agent fees 151,731
Trustees' fees--Note 1 132,859
Other 102,822
------------
Total liabilities 19,264,585
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $882,520,561
------------
------------
- ---------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $599,424,991
NET ASSETS -----------------------------------------------------------------------------------------------
Accumulated net investment loss (243,227)
-----------------------------------------------------------------------------------------------
Accumulated net realized gain from investment and written option transactions 71,212,076
-----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 212,126,721
------------
Net assets $882,520,561
------------
------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE Class A Shares:
Net asset value and redemption price per share (based on net assets
of $798,064,833 and 18,283,117 shares of beneficial interest outstanding) $43.65
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $46.31
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $75,062,084 and 1,741,363 shares of beneficial interest
outstanding) $43.11
-----------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $9,393,644 and 214,774 shares of beneficial interest
outstanding) $43.74
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Discovery Fund
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest:
Unaffiliated companies $ 8,496,692
Affiliated companies 170,239
-----------------------------------------------------------------------------------------------
Dividends 580,152
------------
Total income 9,247,083
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 4,952,525
-----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,580,699
Class B 432,747
-----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,788,309
-----------------------------------------------------------------------------------------------
Shareholder reports 554,730
-----------------------------------------------------------------------------------------------
Custodian fees and expenses 95,206
-----------------------------------------------------------------------------------------------
Legal and auditing fees 65,352
-----------------------------------------------------------------------------------------------
Insurance expenses 26,839
-----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 8,906
Class B 12,850
Class Y 2,663
-----------------------------------------------------------------------------------------------
Other 54,260
-----------
Total expenses 9,575,086
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (328,003)
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain from:
GAIN ON INVESTMENTS Investments:
AND OPTIONS WRITTEN Unaffiliated companies 73,344,378
Affiliated companies 658,114
Closing of option contracts written--Note 6 807,864
-----------
Net realized gain 74,810,356
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 113,285,741
------------
Net realized and unrealized gain on investments and options written 188,096,097
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $187,768,094
------------
------------
See accompanying Notes to Financial Statements.
</TABLE>
16 Oppenheimer Discovery Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment loss $ (328,003) $ (2,044,185)
-----------------------------------------------------------------------------------------------
Net realized gain on investments and options written 74,810,356 28,310,742
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 113,285,741 (71,924,513)
------------ ------------
Net increase (decrease) in net assets resulting
from operations 187,768,094 (45,657,956)
- ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Distributions from net realized gain on investments:
DISTRIBUTIONS TO SHAREHOLDERS Class A ($1.617 and $1.00 per share, respectively) (27,414,490) (15,359,681)
Class B ($1.617 per share) (1,382,289) --
Class Y ($1.617 per share) (40,545) --
- ---------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from Class A beneficial
TRANSACTIONS interest transactions--Note 2 38,698,901 88,455,074
-----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial
interest transactions--Note 2 36,609,837 25,739,503
-----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class Y beneficial
interest transactions--Note 2 7,856,196 190,922
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 242,095,704 53,367,862
-----------------------------------------------------------------------------------------------
Beginning of period 640,424,857 587,056,995
------------ ------------
End of period (including accumulated net investment loss
of $243,227 and $115,587, respectively) $882,520,561 $640,424,857
------------ ------------
------------ ------------
See accompanying Notes to Financial Statements.
</TABLE>
17 Oppenheimer Discovery Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $35.81 $39.90 $27.62 $26.03 $17.97 $24.51 $17.62 $21.49 $ 14.21 $14.29
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) -- (.11) (.13) (.17) .06 .16 .29 .14 .02 .02
Net realized and unrealized
gain (loss) on investments
and options written 9.46 (2.98) 12.41 3.05 8.87 (4.84) 6.74 (1.98) 7.28 (.10)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations 9.46 (3.09) 12.28 2.88 8.93 (4.68) 7.03 (1.84) 7.30 (.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income -- -- -- -- (.19) (.30) (.14) (.05) (.02) --
Distributions from net realized
gain on investments and options
written (1.62) (1.00) -- (1.29) (.68) (1.56) -- (1.98) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.62) (1.00) -- (1.29) (.87) (1.86) (.14) (2.03) (.02) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $43.65 $35.81 $39.90 $27.62 $26.03 $17.97 $24.51 $17.62 $21.49 $14.21
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(4) 28.03% (7.91)% 44.46% 11.28% 51.88% (20.34)% 40.23% (7.11)% 51.08% (.56)%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $798,065 $613,740 $587,057 $294,010 $117,110 $50,357 $53,793 $33,361 $35,834 $1,353
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in
thousands) $650,903 $588,642 $451,016 $218,065 $ 75,083 $54,454 $40,641 $32,089 $21,439 $1,173
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in
thousands) 18,283 17,139 14,713 10,647 4,499 2,802 2,195 1,894 1,667 95
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .00% (.34)% (.54)% (.62)% .22% .83% 1.52% .80% .19% 3.55%(5)
Expenses 1.33% 1.32% 1.27% 1.52% 1.42% 1.53% 1.46% 1.52% 1.74% 1.50%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 105.9% 83.3% 85.2% 67.9% 158.1% 234.6% 132.0% 169.0% 145.4% 0.0%
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to
September 30, 1994.
2. For the period from April 1, 1994 (inception of offering) to
September 30, 1994.
3. For the period from September 11, 1986 (commencement of operations) to
September 30, 1986.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at
the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns. Total returns are not
annualized for periods of less than one full year.
18 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS Y
------------------------ ------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1995 1994(2) 1995 1994(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $35.65 $35.65 $35.81 $34.89
- -----------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) (.21) .03 (.10) .11
Net realized and unrealized
gain (loss) on investments
and options written 9.29 (.03) 9.65 .81
----- ----- ------ ------
Total income (loss) from
investment operations 9.08 -- 9.55 .92
- -----------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income -- -- -- --
Distributions from net realized
gain on investments and options
written (1.62) -- (1.62) --
----- ----- ------ ------
Total dividends and distributions
to shareholders (1.62) -- (1.62) --
- -----------------------------------------------------------------------------------
Net asset value, end of period $43.11 $35.65 $43.74 $35.81
------ ------ ------ ------
------ ------ ------ ------
- -----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(4) 27.04% (1.93)% 28.28% 3.20%
- -----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $ 75,062 $ 26,491 $9,394 $ 194
- -----------------------------------------------------------------------------------
Average net assets (in
thousands) $ 43,301 $ 12,435 $3,190 $ 39
- -----------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in
thousands) 1,741 743 215 5
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (.78)% (1.06)%(5) .03% (.13)%(5)
Expenses 2.11% 2.36%(5) 1.26% 1.41%(5)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(6) 105.9% 83.3% 105.9% 83.3%
</TABLE>
5. Annualized.
6. 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 September 30, 1995 were $684,272,979 and $617,473,225, respectively. See
accompanying Notes to Financial Statements.
19 Oppenheimer Discovery Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Discovery 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 advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers Class A, Class B and Class Y
shares. Class A shares are sold with a front-end sales charge. Class B shares
may be subject to a contingent deferred sales charge. All three classes of
shares have identical rights to earnings, assets and voting privileges,
except that each class has its own expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class. Classes A and B have separate distribution and/or
service plans. No such plan has been adopted for Class Y shares. Class B
shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- -------------------------------------------------------------------------------
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 asked price 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 the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount. Options are valued based
upon the last sale price on the principal exchange on which the option is
traded or, in the absence of any transactions that day, the value is based
upon the last sale price on the prior trading date if it is within the spread
between the closing bid and asked prices. If the last sale price is outside
the spread, the closing bid or asked price closest to the last reported sale
price is used.
- -------------------------------------------------------------------------------
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 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.
- -------------------------------------------------------------------------------
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, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and 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.
- -------------------------------------------------------------------------------
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 year
ended September 30, 1995, a provision of $17 was made for the Fund's
projected benefit obligations, and a payment of $2,280 was made to a retired
trustee, resulting in an accumulated liability of $115,618 at September 30,
1995.
20 Oppenheimer Discovery Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
- -------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because net operating losses were offset against
short-term capital gains. The character of the distributions made during the
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 dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss)
was recorded by the Fund.
During the year ended September 30, 1995,
the Fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the year ended September 30, 1995, amounts have been
reclassified to reflect a decrease in accumulated net realized gain on
investments of $270,463, an increase in paid-in capital of $70,100, and a
decrease in accumulated net investment loss of $200,363.
- -------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life
of the respective securities, in accordance with federal income tax
requirements. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
- -------------------------------------------------------------------------------
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1995 YEAR ENDED SEPTEMBER 30, 1994(1)
----------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 11,835,083 $ 428,009,066 10,323,810 $ 381,892,840
Distributions reinvested 821,910 26,424,457 384,457 14,724,695
Redeemed (11,512,590) (415,734,622) (8,282,662) (308,162,461)
----------- ------------- ---------- -------------
Net increase 1,144,403 $ 38,698,901 2,425,605 $ 88,455,074
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
- ----------------------------------------------------------------------------------------------
Class B:
Sold 1,606,929 $ 58,824,017 961,766 $ 33,185,516
Distributions reinvested 42,043 1,343,689 -- --
Redeemed (650,592) (23,557,869) (218,783) (7,446,013)
----------- ------------- ---------- -------------
Net increase 998,380 $ 36,609,837 742,983 $ 25,739,503
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
- ----------------------------------------------------------------------------------------------
Class Y:
Sold 247,309 $ 9,293,954 5,405 $ 190,967
Distributions reinvested 1,260 40,545 -- --
Redeemed (39,199) (1,478,303) (1) (45)
----------- ------------- ---------- -------------
Net increase 209,370 $ 7,856,196 5,404 $ 190,922
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
1. For the year ended September 30, 1994 for Class A shares, for the period
from April 1, 1994 (inception of offering) to September 30, 1994 for Class B
shares, and for the period from June 1, 1994 (inception of offering) to
September 30, 1994 for Class Y shares.
- -------------------------------------------------------------------------------
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1995, net unrealized appreciation on investments of
$212,126,721 was composed of gross appreciation of $228,365,213, and gross
depreciation of $16,238,492.
21 Oppenheimer Discovery Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
4. MANAGEMENT FEES AND
OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .75% on the
first $200 million of average annual net assets with a reduction of .03% on
each $200 million thereafter to $800 million, and .60% on net assets in
excess of $800 million. The Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses.
For the year ended September 30, 1995, commissions (sales charges paid by
investors) on sales of Fund shares totaled $2,754,960, of which $876,712 was
retained by Oppenheimer Funds 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
shares totaled $1,336,982, of which $121,170 was paid to an affiliated
broker/dealer. During the year ended September 30, 1995, OFDI received
contingent deferred sales charges of $85,390 upon redemption of Class B
shares, as reimbursement for sales commissions advanced by OFDI at the time
of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other financial
institutions. In addition, Class B shares are subject to an asset-based sales
charge of .75% of net assets annually, to reimburse OFDI for sales
commissions paid from its own resources at the time of sale and associated
financing costs. In the event of termination or discontinuance of the Class B
plan, the Board of Trustees may allow the Fund to continue payment of the
asset-based sales charge to OFDI for distribution expenses incurred on Class
B shares sold prior to termination or discontinuance of the plan. At
September 30, 1995, OFDI had incurred unreimbursed expenses of $2,000,262.
During the year ended September 30, 1995, OFDI paid $112,737 and $2,122,
respectively, to an affiliated broker/dealer as reimbursement for Class A and
Class B personal service and maintenance expenses and retained $406,187 as
reimbursement for Class B sales commissions and service fee advances, as well
as financing costs.
- -------------------------------------------------------------------------------
5. ILLIQUID AND
RESTRICTED SECURITIES
At September 30, 1995, investments in securities included issues that are
illiquid or restricted. The 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. The Fund intends
to invest no more than 10% of its net assets (determined at the time of
purchase) in illiquid and restricted securities. The aggregate value of these
securities subject to this limitation at September 30, 1995 was $3,479,001,
which represents .39% of the Fund's net assets. Information concerning these
securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT SEPT 30, 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AirNet Communications Corp.,
Series C Preferred Stock 7/6/95 $ 6.00 $ 6.00
- ------------------------------------------------------------------------------------------------
IntelCom Group, Inc., 8% Simple Interest
Redeemable Cv. Sub. Nts., 9/17/98 3/17/94--9/1/95 $ 0.82 $ 0.74
- ------------------------------------------------------------------------------------------------
IntelCom Group, Inc.,
8% Cv. Sub. Nts., 9/24/98 9/23/93 $ 1.00 $ 0.74
- ------------------------------------------------------------------------------------------------
Intertel Communications, Inc. 6/9/93 $13.89 $12.11
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
22 Oppenheimer Discovery Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
6. PUT OPTION ACTIVITY
The Fund may buy and sell put and call options, or write covered put and call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell
or purchase the underlying security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium
whether or not the option is exercised. The Fund also has the additional risk
of not being able to enter into a closing transaction if a liquid secondary
market does not exist.
Written put option activity for the year ended September 30, 1995 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
- ------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at September 30, 1994 13,000 $ 2,540,763
- ------------------------------------------------------------------------------
Options canceled in closing purchase transactions (13,000) (2,540,763)
------- -----------
Options outstanding at September 30, 1995 -- $ --
------- -----------
------- -----------
</TABLE>
23 Oppenheimer Discovery Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Discovery Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Discovery Fund as of September 30, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the nine-year period
then ended and the period from September 11, 1986 (commencement of
operations) to September 30, 1986. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 1995, by correspondence with the
custodian and brokers; and where confirmations were not received from
brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Discovery Fund as of September 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the nine-year period then ended and the period from
September 11, 1986 (commencement of operations) to September 30, 1986, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 20, 1995
24 Oppenheimer Discovery Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1995.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
A distribution of $1.617 was paid on December 21, 1994 which was
designated as a "capital gain distribution" for federal income tax purposes.
Whether received in stock or in cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets held for
more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended September 30, 1995
which are not designated as capital gain distributions should be multiplied
by 7.13% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
25 Oppenheimer Discovery Fund
<PAGE>
OPPENHEIMER DISCOVERY FUND
- -------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Bridget A. Macaskill, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Jay W. Tracey, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
- -------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
- -------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
- -------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
- -------------------------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
- -------------------------------------------------------------------------------
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Discovery Fund. This report must be
preceded or accompanied by a Prospectus of
Oppenheimer Discovery 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.
26 Oppenheimer Discovery Fund
<PAGE>
OPPENHEIMERFUNDS FAMILY
- -------------------------------------------------------------------------------
OppenheimerFunds offers over 30 funds designed to fit
virtually every investment goal. Whether you're investing for
retirement, your children's education or tax-free income, we
have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel
comfortable knowing that you are investing with a respected
financial institution with over 35 years of experience in
helping people just like you reach their financial goals. And
you're investing with a leader in global, growth stock and
flexible fixed income investments--with over 2.8 million
shareholder accounts and more than $38 billion under
Oppenheimer's management and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by
telephone.(1) For more information on Oppenheimer funds, please
contact your financial advisor or call us at 1-800-525-7048
for a prospectus. You may also write us at the address shown
on the back cover. As always, please read the prospectus
carefully before you invest.
- --------------------------------------------------------------------------------
STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund Oppenheimer Fund
Target Fund Value Stock Fund
Growth Fund Gold & Special Minerals Fund
- --------------------------------------------------------------------------------
STOCK & BOND Main Street Income & Growth Fund Equity Income Fund
FUNDS Total Return Fund Asset Allocation Fund
Global Growth & Income Fund Strategic Income & Growth Fund
- --------------------------------------------------------------------------------
BOND FUNDS High Yield Fund Bond Fund
Champion Income Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
International Bond Fund
- --------------------------------------------------------------------------------
TAX-EXEMPT New York Tax-Exempt Fund(2) New Jersey Tax-Exempt Fund(2)
FUNDS California Tax-Exempt Fund(2) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(2) Insured Tax-Exempt Fund
Florida Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
- --------------------------------------------------------------------------------
MONEY MARKET Money Market Fund Cash Reserves
FUNDS
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only to the same class of eligible
funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
-C- Copyright 1995 Oppenheimer Management Corporation. All
rights reserved.
27 Oppenheimer Discovery Fund
[NOTE: BACK COVER HAD NO DATA]
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RAO500.007.0995 November 30, 1995
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
"How may I help you?"
As an Oppenheimer funds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or
ready account access, you can benefit from services designed to make
investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account
and handle administrative requests. You can reach them at our General
Information number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- -------------------------------------------------------------------------------
[LOGO] --------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
--------------
