Oppenheimer Discovery Fund
Semiannual Report March 31, 1996
[Picture of Gardening] "To get high
growth,
we know we
have to invest
aggressively
for the
long term."
OppenheimerFunds
[Oppenheimer Logo]
<PAGE>
This Fund is for people who want to take
part in the investment opportunities
offered by fast-growing companies.
News
Beat the Average
Total Return for the 5-Year
Period Ended 3/31/96:
Oppenheimer Discovery Fund
Class A (at NAV)(1)
143.26%
Lipper Small Cap Growth Fund Average(3)
119.47%
How Your Fund Is Managed
Oppenheimer Discovery Fund seeks capital appreciation by investing in
small- and medium-sized emerging growth companies, including "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 or innovators in "leading edge" sectors
of the economy. Although small-cap stocks may be subject to the risk of more
severe price fluctuations than the stocks of larger companies, small-cap stocks
have a history of often outperforming larger-cap, common stocks over long
periods of time.
Performance
Total returns at net asset value for the 6 months ended 3/31/96
for Class A, B and C shares were 11.34%, 10.90% and 11.94%, 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 3/31/96 and since inception
of the Class on 9/11/86 were 29.53%, 18.05% and 17.63%, 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 31.32% and 15.84%, respectively. For Class C shares,
cumulative total return since inception on 10/2/95 was 10.94%.(2)
Outlook
"We're optimistic. We think the economic environment will remain positive for
small company stocks, and though they've appreciated in price recently, they
still have room to grow before we'd consider them overly expensive. And we
expect more good news in small-cap stocks as long as the economy avoids
recession."
Jay Tracey, Portfolio Manager
March 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future results.
Investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost.
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 3/31/95,
3/31/91 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 3/31/95 and 4/1/94 (inception of class) and the deduction of the
applicable contingent deferred sales charge of 5% (1-year) and 4% (since
inception). Class C returns show results of hypothetical investments on 10/2/95
(inception of class) after the 1% contingent deferred sales charge. 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 37.62% and
23.67%, respectively. An explanation of the different total returns is in the
Fund's prospectus.
3. Source: Lipper Analytical Services, 3/31/96, an independent mutual fund
monitoring service. The Lipper total return average for the 5-year period was
for 84 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>
(PHOTO OF BRIDGET A. MACASKILL)
Bridget A. Macaskill
President
Oppenheimer
Discovery Fund
Dear Shareholder,
Defying the experts, the U.S. stock market rose approximately 10% in the
first quarter of 1996. A closer look at this strong performance, however,
reveals stock prices that were extremely volatile, as the Dow Jones Industrial
Average routinely fluctuated by 50 points or more from one day to the next.
This volatility was due to a combination of factors. First, because the Dow
has continued to trend up over the last 5 years, any kind of disappointment--
whether in corporate earnings, upward movements in interest rates, unexpected
economic data, or some international incident--was likely to cause a temporary
selloff.
Second, with economic growth barely positive at the end of last year, and
with unusually bad winter weather that dragged down growth, the economy entered
1996 on wobbly ground. Furthermore, growth in corporate profits appears to have
slowed to single digits.
Additionally, the presidential campaign has produced some surprises. For
example, the possibility that the Republicans' goal for a balanced budget may
not be achieved has contributed further to the increased volatility in the stock
market.
Not all the news is negative however, as inflation remained dormant, giving
the Federal Reserve Board the confidence to lower short-term interest rates by a
quarter-percentage point on January 31, 1996. As the year progressed however,
mixed economic data made the likelihood of further interest rate cuts less
certain, sending the stock market tumbling and causing the bond market yields to
rise during February and March.
Although we expect the short-term stock market volatility to continue, we
believe that the long-term case for stocks remains positive. The U.S. economy is
expected to remain in a 2% growth environment for a while. But slow growth
usually means low interest rates and low inflation, two big pluses for the stock
market.
Additionally, the demand for stocks remains high. Money continues to flow
into mutual funds, while at the same time, the supply of stocks has shrunk as
cash-rich corporations have bought back record amounts of stock. This surging
demand for stocks from Individual Retirement Accounts and 401(k) plans, combined
with the lower supply, should continue to support higher stock prices.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues 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/ Bridget A. Macaskill
Bridget A. Macaskill
April 19, 1996
3 Oppenheimer Discovery Fund
<PAGE>
Q + A
(PHOTO OF JAY TRACEY) (PHOTO OF ROBERT DOLL)
Q What
is your
outlook
for the Fund?
An interview with your Fund's managers.
How has the Fund performed over the past six months?
The Fund performed very well both in terms of pure performance and relative to
many of our competitors. This good performance, in part, reflects the fact that
the market has enjoyed tremendous appreciation over the period. But, it is also
a reflection of the higher valuations that investors have awarded to the kind of
rapidly growing companies we own.
What investments made positive contributions to performance?
The Fund's good performance has been driven primarily by the market's
increasing recognition of the Fund's emerging growth companies. Over the past
six months we've worked hard to try to find companies that offer either a unique
product or innovative approach to business that may give them an edge. With at
least half of the companies in our portfolio turning in positive earnings
surprises and another third having met expectations, our vigilance has paid off
as we've benefited from appreciation over the period.
Although our holdings are diversified across many industry sectors, we've
had a lot of success with our investments in technology and healthcare stocks.
Technology stocks were strong throughout most of 1995 and although they recently
experienced a correction, they are once again performing well. Additionally, we
expect the performance of software companies to continue as they reap the
rewards of corporate America's shift to network-computing. Finally, healthcare
stocks continue to benefit as companies in this sector, whose earnings are less
dependent on the economy for continued growth, have climbed higher over this
period.(1)
[Photo of Michael Levine]
1. The Fund's portfolio is subject to change.
4 Oppenheimer Discovery Fund
<PAGE>
Facing page
Top left: Jay Tracey,Portfolio Manager
Top right:Robert Doll, Executive VP, Director of Equity Investments
Bottom: Michael Levine, Member
of Equity Investments Team
This page
Top: Richard Rubinstein, Member
of Equity Investments Team
Bottom: Paul LaRocco, Member
of Equity Investments Team
A The environment should remain positive for small company stocks.
Were there any investments that didn't perform as well as expected?
We haven't had many disappointments, in part because we've been watching
the companies we own and scrutinizing them for any changes in their fundamental
strengths or earnings outlook. As the economy has slowed, however, we have
started to cut back on consumer cyclical stocks whose earnings tend to be more
closely tied to changes in the economy.
What types of companies are you currently targeting?
At this time, we're holding stocks of fewer issuers, but more of the
issuers we believe offer the greatest potential. This consolidation is in
preparation for a market in which we believe selectivity will continue to be
very important. Our basic strategy of emphasizing high growth should also
benefit the Fund.
What is your outlook for the Fund?
We're optimistic. We think the economic environment will remain positive
for small company stocks, and though they've appreciated in price recently, they
still have room to grow before we'd consider them overly expensive. And we
expect more good news in small-cap stocks as long as the economy avoids
recession. But again, while the economy remains supportive of small
caps--especially those with above-average growth potential--we're evaluating
companies we own and carefully researching those we're considering buying. This
is an effort to avoid disappointments and to protect the gains we've made so
far. (Solid Box)
(PHOTO OF RICHARD RUBINSTEIN)
(PHOTO OF PAUL LaROCCO)
5 Oppenheimer Discovery Fund
<PAGE>
Statement of Investments March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Convertible Corporate Bonds and Notes--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc., 8% Cv. Sub. Nts., 9/17/98(1)(2) $2,000,000 $ 2,047,995
----------------------------------------------------------------------------------------------------------
IntelCom Group, Inc., 8% Simple Interest Redeemable
Cv. Sub. Nts., 9/17/98(1) 400,000 409,599
----------------------------------------------------------------------------------------------------------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub.
Debs., 8/15/00(3)(4) 4,000,000 1,140,000
-------------
Total Convertible Corporate Bonds and Notes (Cost $6,453,530) 3,597,594
Shares
===================================================================================================================================
Common Stocks--89.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--22.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--3.0% Alrenco, Inc.(5)(6) 350,000 5,425,000
----------------------------------------------------------------------------------------------------------
Belmont Homes, Inc.(5)(6) 500,000 9,000,000
----------------------------------------------------------------------------------------------------------
ITI Technologies, Inc.(5) 300,000 8,137,500
----------------------------------------------------------------------------------------------------------
NHP, Inc.(5) 301,200 5,572,200
----------------------------------------------------------------------------------------------------------
Wilmar Industries, Inc.(5) 150,000 3,375,000
-------------
31,509,700
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure &
Entertainment--5.4% Apple South, Inc. 326,400 7,996,800
----------------------------------------------------------------------------------------------------------
Applebee's International, Inc. 130,000 3,250,000
----------------------------------------------------------------------------------------------------------
Cinar Films, Inc., Cl. B(5) 381,400 5,911,700
----------------------------------------------------------------------------------------------------------
CKE Restaurants, Inc. 550,000 9,212,500
----------------------------------------------------------------------------------------------------------
Department 56, Inc.(5) 140,000 3,062,500
----------------------------------------------------------------------------------------------------------
Galoob (Lewis) Toys, Inc.(5) 128,800 2,608,200
----------------------------------------------------------------------------------------------------------
HFS, Inc.(5) 140,000 6,807,500
----------------------------------------------------------------------------------------------------------
Longhorn Steaks, Inc. 97,900 2,251,700
----------------------------------------------------------------------------------------------------------
Play By Play Toys & Novelties, Inc.(5)(6) 258,300 3,422,475
----------------------------------------------------------------------------------------------------------
Quality Dining, Inc.(5) 220,000 6,490,000
----------------------------------------------------------------------------------------------------------
Studio Plus Hotels, Inc.(5) 123,400 3,424,350
----------------------------------------------------------------------------------------------------------
Supertel Hospitality, Inc.(5) 223,000 2,480,875
-------------
56,918,600
- -----------------------------------------------------------------------------------------------------------------------------------
Media--2.4% Chancellor Broadcasting Co., Cl. A (5) 153,900 3,385,800
----------------------------------------------------------------------------------------------------------
Heartland Wireless Communications, Inc.(5) 320,000 8,240,000
----------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., Cl. A(5) 200,000 6,825,000
----------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., Cl. A (5) 150,000 3,975,000
----------------------------------------------------------------------------------------------------------
Wireless One, Inc.(5) 200,000 3,225,000
-------------
25,650,800
</TABLE>
6 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Retail: General--4.0% Authentic Fitness Corp. 150,000 $ 3,881,250
----------------------------------------------------------------------------------------------------------
Donnkenny, Inc.(5) 200,000 3,225,000
----------------------------------------------------------------------------------------------------------
Fila Holding SpA, ADR 120,000 7,665,000
----------------------------------------------------------------------------------------------------------
Marisa Christina, Inc.(5) 262,500 5,282,812
----------------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(5) 118,300 5,648,825
----------------------------------------------------------------------------------------------------------
Quicksilver, Inc.(5) 180,000 5,715,000
----------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(5) 90,000 4,128,750
----------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 240,000 6,720,000
-------------
42,266,637
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--7.2% CDW Computer Centers, Inc.(5) 70,000 3,535,000
----------------------------------------------------------------------------------------------------------
Copart, Inc.(5) 250,000 6,187,500
----------------------------------------------------------------------------------------------------------
Corporate Express, Inc.(5) 310,000 10,230,000
----------------------------------------------------------------------------------------------------------
Creative Computers, Inc.(5) 350,000 2,362,500
----------------------------------------------------------------------------------------------------------
CUC International, Inc.(5) 120,000 3,510,000
----------------------------------------------------------------------------------------------------------
Garden Ridge Corp.(5) 160,000 7,320,000
----------------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(5) 270,000 6,750,000
----------------------------------------------------------------------------------------------------------
Moovies, Inc.(5) 380,000 5,320,000
----------------------------------------------------------------------------------------------------------
Movie Gallery, Inc.(5) 130,000 3,282,500
----------------------------------------------------------------------------------------------------------
Petco Animal Supplies, Inc.(5) 180,000 8,055,000
----------------------------------------------------------------------------------------------------------
Sunglass Hut International, Inc.(5) 340,000 11,262,500
----------------------------------------------------------------------------------------------------------
U.S. Office Products Co.(5) 250,000 7,750,000
-------------
75,565,000
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--22.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Education--0.5% National Education Corp.(5) 450,000 5,287,500
- -----------------------------------------------------------------------------------------------------------------------------------
Food--1.1% JP Foodservice, Inc.(5) 400,000 7,500,000
----------------------------------------------------------------------------------------------------------
Performance Food Group Co.(5) 146,500 3,589,250
-------------
11,089,250
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--7.0% Agouron Pharmaceuticals, Inc.(5) 160,000 6,200,000
----------------------------------------------------------------------------------------------------------
Alpha-Beta Technology, Inc.(5) 200,000 2,500,000
----------------------------------------------------------------------------------------------------------
Biocompatibles International PLC(5) 338,400 2,391,684
----------------------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(5) 200,000 9,925,000
----------------------------------------------------------------------------------------------------------
Ethical Holdings PLC, Sponsored ADR(5) 500,000 4,687,500
----------------------------------------------------------------------------------------------------------
Gilead Sciences, Inc.(5) 150,000 4,312,500
----------------------------------------------------------------------------------------------------------
Global Pharmaceutical Corp. 200,000 2,225,000
----------------------------------------------------------------------------------------------------------
Guilford Pharmaceuticals, Inc.(5) 91,600 2,049,550
----------------------------------------------------------------------------------------------------------
Integra LifeSciences Corp.(5) 157,000 1,844,750
----------------------------------------------------------------------------------------------------------
Martek Biosciences Corp.(5) 160,000 5,760,000
----------------------------------------------------------------------------------------------------------
</TABLE>
7 Oppenheimer Discovery Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Healthcare/Drugs
(continued) Matrix Pharmaceutical, Inc.(5) 250,000 $ 5,781,250
----------------------------------------------------------------------------------------------------------
Norland Medical Systems, Inc.(5)(6) 300,800 8,648,000
----------------------------------------------------------------------------------------------------------
PAREXEL International Corp.(5) 100,000 4,325,000
----------------------------------------------------------------------------------------------------------
Protein Design Labs, Inc.(5) 100,000 2,462,500
----------------------------------------------------------------------------------------------------------
SangStat Medical Corp.(5) 150,000 2,418,750
----------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(5) 200,000 8,000,000
-------------
73,531,484
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies &
Services--13.7% AHI Healthcare Systems, Inc.(5) 300,000 2,025,000
----------------------------------------------------------------------------------------------------------
AmeriSource Health Corp., Cl. A(5) 240,000 7,920,000
----------------------------------------------------------------------------------------------------------
Apogee, Inc.(5) 240,000 1,680,000
----------------------------------------------------------------------------------------------------------
ARV Assisted Living, Inc.(5) 290,000 4,930,000
----------------------------------------------------------------------------------------------------------
Bio-Plexus, Inc.(5) 100,000 975,000
----------------------------------------------------------------------------------------------------------
Compdent Corp.(5) 160,000 5,760,000
----------------------------------------------------------------------------------------------------------
Emeritus Corp.(5) 293,200 5,973,950
----------------------------------------------------------------------------------------------------------
ESC Medical Systems Ltd.(5) 37,500 1,293,750
----------------------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(5) 300,000 11,325,000
----------------------------------------------------------------------------------------------------------
HealthPlan Services Corp.(5) 200,000 4,575,000
----------------------------------------------------------------------------------------------------------
Heartstream, Inc.(5) 150,000 2,325,000
----------------------------------------------------------------------------------------------------------
Kensey Nash Corp.(5) 250,000 3,562,500
----------------------------------------------------------------------------------------------------------
MedCath, Inc.(5) 284,200 8,312,850
----------------------------------------------------------------------------------------------------------
OccuSystems, Inc.(5) 205,000 4,663,750
----------------------------------------------------------------------------------------------------------
Omnicare, Inc. 200,000 10,775,000
----------------------------------------------------------------------------------------------------------
OrNda Healthcorp(5) 300,000 8,625,000
----------------------------------------------------------------------------------------------------------
Owen Healthcare, Inc.(5) 128,000 2,992,000
----------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc.(5) 180,000 6,390,000
----------------------------------------------------------------------------------------------------------
PhyCor, Inc.(5) 200,000 8,800,000
----------------------------------------------------------------------------------------------------------
Physician Reliance Network, Inc.(5) 80,000 3,170,000
----------------------------------------------------------------------------------------------------------
Physicians Resource Group, Inc.(5) 280,000 8,050,000
----------------------------------------------------------------------------------------------------------
Rural/Metro Corp.(5) 180,000 4,815,000
----------------------------------------------------------------------------------------------------------
Serologicals Corp.(5) 335,200 9,218,000
----------------------------------------------------------------------------------------------------------
Spine-Tech, Inc.(5) 230,600 5,303,800
----------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(5) 155,000 4,824,375
----------------------------------------------------------------------------------------------------------
United Dental Care, Inc.(5) 140,000 5,425,000
-------------
143,709,975
</TABLE>
8 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Household Goods--0.2% Ultralife Batteries, Inc.(5) 180,000 $ 2,655,000
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--4.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services
& Producers--3.7% Core Laboratories NV(5) 250,000 3,062,500
----------------------------------------------------------------------------------------------------------
Cross Timbers Oil Co. 180,000 3,105,000
----------------------------------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc.(5) 153,100 6,564,163
----------------------------------------------------------------------------------------------------------
Energy Ventures, Inc.(5) 200,000 5,325,000
----------------------------------------------------------------------------------------------------------
Nabors Industries, Inc.(5) 500,000 7,125,000
----------------------------------------------------------------------------------------------------------
Newfield Exploration Co.(5) 120,000 3,660,000
----------------------------------------------------------------------------------------------------------
NUMAR Corp.(5) 250,000 3,437,500
----------------------------------------------------------------------------------------------------------
Stone Energy Corp.(5) 160,000 2,680,000
----------------------------------------------------------------------------------------------------------
Weatherford Enterra, Inc.(5) 100,000 3,487,500
-------------
38,446,663
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--1.0% 3-D Geophysical, Inc.(5) 310,000 2,790,000
----------------------------------------------------------------------------------------------------------
Brown (Tom), Inc.(5) 260,000 3,672,500
----------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc.(5) 160,000 3,560,000
-------------
10,022,500
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified
Financial--2.2% Green Tree Financial Corp. 120,000 4,125,000
----------------------------------------------------------------------------------------------------------
RAC Financial Group, Inc.(5) 200,000 4,500,000
----------------------------------------------------------------------------------------------------------
Renters Choice, Inc.(5) 270,000 4,691,250
----------------------------------------------------------------------------------------------------------
Resource Bancshares Mortgage Group, Inc.(5) 300,000 4,687,500
----------------------------------------------------------------------------------------------------------
Rockford Industries, Inc.(5)(6) 350,000 5,643,750
-------------
23,647,500
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--1.1% CapMAC Holdings, Inc. 320,000 7,840,000
----------------------------------------------------------------------------------------------------------
Meadowbrook Insurance Group, Inc. 108,000 3,456,000
-------------
11,296,000
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--12.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial
Materials--0.5% American Buildings Co.(5) 250,000 5,531,250
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial
Services--11.0% ABR Information Services, Inc.(5) 100,000 4,650,000
----------------------------------------------------------------------------------------------------------
Acxiom Corp.(5) 200,000 4,775,000
----------------------------------------------------------------------------------------------------------
Affiliated Computer Services, Inc., Cl. A 130,000 5,403,125
----------------------------------------------------------------------------------------------------------
Alternative Resources Corp.(5) 220,000 7,150,000
----------------------------------------------------------------------------------------------------------
Barnett, Inc. 64,500 1,451,250
----------------------------------------------------------------------------------------------------------
CORT Business Services Corp.(5) 300,000 5,400,000
----------------------------------------------------------------------------------------------------------
Daisytek International Corp.(5) 282,500 9,322,500
----------------------------------------------------------------------------------------------------------
Eagle USA Airfreight, Inc.(5) 164,000 4,551,000
----------------------------------------------------------------------------------------------------------
</TABLE>
9 Oppenheimer Discovery Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Industrial Services
(continued) First USA Paymentech, Inc.(5) 246,100 $ 8,675,025
----------------------------------------------------------------------------------------------------------
Fritz Cos., Inc.(5) 100,000 3,900,000
----------------------------------------------------------------------------------------------------------
Kent Electronics Corp.(5) 400,000 14,150,000
----------------------------------------------------------------------------------------------------------
May & Speh, Inc. 210,700 2,370,375
----------------------------------------------------------------------------------------------------------
PMT Services, Inc.(5) 250,000 6,000,000
----------------------------------------------------------------------------------------------------------
SITEL Corp.(5) 140,800 6,371,200
----------------------------------------------------------------------------------------------------------
Transaction Network Services, Inc.(5) 200,000 7,000,000
----------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A(5) 150,000 6,112,500
----------------------------------------------------------------------------------------------------------
United Waste Systems, Inc.(5) 200,000 10,000,000
----------------------------------------------------------------------------------------------------------
USA Waste Services, Inc.(5) 350,000 8,925,000
-------------
116,206,975
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.8% U.S. Filter Corp.(5) 250,000 7,000,000
----------------------------------------------------------------------------------------------------------
Unit Instruments, Inc. 100,000 1,400,000
-------------
8,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--24.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--2.2% Boca Research, Inc.(5) 190,000 3,467,500
----------------------------------------------------------------------------------------------------------
Data Translation, Inc.(5) 279,400 4,610,100
----------------------------------------------------------------------------------------------------------
In Focus Systems, Inc.(5) 250,000 8,765,625
----------------------------------------------------------------------------------------------------------
Integrated Measurement Systems, Inc.(5) 260,000 4,062,500
----------------------------------------------------------------------------------------------------------
Network Appliance, Inc.(5) 80,000 2,540,000
-------------
23,445,725
- -----------------------------------------------------------------------------------------------------------------------------------
Computer
Software--12.5% Arbor Software Corp.(5) 100,000 4,325,000
----------------------------------------------------------------------------------------------------------
Aspen Technologies, Inc.(5) 150,600 6,475,800
----------------------------------------------------------------------------------------------------------
Business Objects SA, Sponsored ADR(5) 120,000 10,200,000
----------------------------------------------------------------------------------------------------------
Computron Software, Inc.(5) 125,000 750,000
----------------------------------------------------------------------------------------------------------
CSG Systems International, Inc.(5) 135,000 3,105,000
----------------------------------------------------------------------------------------------------------
Datalogix International, Inc.(5) 320,000 4,320,000
----------------------------------------------------------------------------------------------------------
Discreet Logic, Inc.(5) 235,000 3,231,250
----------------------------------------------------------------------------------------------------------
Enterprise Systems, Inc.(5) 100,000 2,762,500
----------------------------------------------------------------------------------------------------------
Global DirectMail Corp.(5) 270,000 9,416,250
----------------------------------------------------------------------------------------------------------
Harbinger Corp.(5) 100,000 1,775,000
----------------------------------------------------------------------------------------------------------
HBO & Co. 100,000 9,425,000
----------------------------------------------------------------------------------------------------------
IDX Systems Corp.(5) 100,000 2,900,000
----------------------------------------------------------------------------------------------------------
IMNET Systems, Inc.(5) 255,000 7,713,750
----------------------------------------------------------------------------------------------------------
Indus Group, Inc. (The)(5) 150,000 2,925,000
----------------------------------------------------------------------------------------------------------
Inference Corp., Cl. A(5)(6) 300,000 5,550,000
----------------------------------------------------------------------------------------------------------
</TABLE>
10 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Computer Software
(continued) McAfee Associates, Inc.(5) 200,000 $ 10,950,000
----------------------------------------------------------------------------------------------------------
MICROS Systems, Inc.(5) 25,000 625,000
----------------------------------------------------------------------------------------------------------
National Instruments Corp.(5) 230,000 4,830,000
----------------------------------------------------------------------------------------------------------
Novadigm, Inc.(5) 250,000 3,781,250
----------------------------------------------------------------------------------------------------------
Open Environment Corp.(5) 230,000 1,495,000
----------------------------------------------------------------------------------------------------------
Platinum Technology, Inc.(5) 270,000 4,083,750
----------------------------------------------------------------------------------------------------------
Project Software & Development, Inc.(5) 100,000 3,825,000
----------------------------------------------------------------------------------------------------------
Pure Software, Inc.(5) 58,500 2,018,250
----------------------------------------------------------------------------------------------------------
Rational Software Corp.(5) 90,000 3,555,000
----------------------------------------------------------------------------------------------------------
SPSS, Inc.(5) 330,000 5,898,750
----------------------------------------------------------------------------------------------------------
SQA, Inc.(5) 250,000 6,812,500
----------------------------------------------------------------------------------------------------------
Systemsoft Corp.(5) 275,000 4,400,000
----------------------------------------------------------------------------------------------------------
Verity, Inc.(5) 120,500 4,066,875
-------------
131,215,925
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--2.5% Advanced Technology Materials, Inc.(5) 300,000 3,075,000
----------------------------------------------------------------------------------------------------------
Aetrium, Inc.(5) 115,000 1,753,750
----------------------------------------------------------------------------------------------------------
Euphonix, Inc.(5)(6) 280,500 2,454,375
----------------------------------------------------------------------------------------------------------
Flextronics International, Ltd.(5) 160,000 4,880,000
----------------------------------------------------------------------------------------------------------
Mackie Designs, Inc.(5) 200,000 2,125,000
----------------------------------------------------------------------------------------------------------
Pittway Corp., Cl. A 120,000 5,940,000
----------------------------------------------------------------------------------------------------------
Sanmina Corp.(5) 200,000 5,950,000
-------------
26,178,125
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications-
Technology--7.1% A+ Network, Inc.(5) 150,000 1,687,500
----------------------------------------------------------------------------------------------------------
Arch Communications Group, Inc.(5) 300,000 6,937,500
----------------------------------------------------------------------------------------------------------
Comverse Technology, Inc.(5) 220,000 5,307,500
----------------------------------------------------------------------------------------------------------
DSP Communications, Inc.(5) 160,000 4,000,000
----------------------------------------------------------------------------------------------------------
Glenayre Technologies, Inc.(5) 100,000 3,825,000
----------------------------------------------------------------------------------------------------------
IntelCom Group, Inc.(1)(5) 272,500 4,595,031
----------------------------------------------------------------------------------------------------------
LCI International, Inc.(5) 500,000 12,250,000
----------------------------------------------------------------------------------------------------------
Metrocall, Inc.(5) 46,300 960,725
----------------------------------------------------------------------------------------------------------
MobileMedia Corp., Cl. A(5) 240,000 4,980,000
----------------------------------------------------------------------------------------------------------
Pairgain Technologies, Inc.(5) 80,000 5,180,000
----------------------------------------------------------------------------------------------------------
Periphonics Corp.(5) 290,000 6,887,500
----------------------------------------------------------------------------------------------------------
ProNet, Inc.(5) 200,000 4,937,500
----------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc.(5) 376,800 6,358,500
----------------------------------------------------------------------------------------------------------
Teltrend, Inc.(5) 142,500 6,483,750
-------------
74,390,506
-------------
Total Common Stocks (Cost $653,877,080) 936,965,115
</TABLE>
11 Oppenheimer Discovery Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C> <C>
===================================================================================================================================
Preferred Stocks and
Other Securities--0.4% AirNet Communications Corp., Series C Preferred Stock(1)(5) 250,000 $ 1,500,000
----------------------------------------------------------------------------------------------------------
Silicon Video Corp., $2.50 Cv., Series D(1) 1,200,000 3,000,000
--------------
Total Preferred Stocks and Other Securities (Cost $4,500,000) 4,500,000
Units
===================================================================================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., Cl. A Wts., Exp. 12/97 40,110 --
----------------------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 238 --
--------------
Total Rights, Warrants and Certificates (Cost $261,332) --
Face
Amount
===================================================================================================================================
Repurchase Agreement--8.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
5.375%, dated 3/29/96, to be repurchased at $90,190,380 on 4/1/96,
collateralized by U.S. Treasury Nts., 5.75%--8%, 9/30/96--9/30/97,
with a value of $75,463,325, and U.S. Treasury Bills maturing
10/17/96--11/14/96, with a value of $16,564,381 (Cost $90,150,000) $90,150,000 90,150,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $755,241,942) 98.4% 1,035,212,709
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.6 17,014,823
----------- --------------
Net Assets 100.0% $1,052,227,532
=========== ==============
</TABLE>
1. Identifies issues considered to be illiquid--See Note 5 of Notes to
Financial Statements.
2. Interest or dividend is paid in kind.
3. 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 $1,140,000 or 0.11% of the Fund's
net assets, at March 31, 1996.
4. Non-income producing--issuer is in default of interest payment.
5. Non-income producing security.
6. 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 March 31,
1996. The aggregate fair value of all securities of affiliated companies
as of March 31, 1996 amounted to $40,143,600. Transactions during the
period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
September 30, 1995 Gross Additions Gross Reductions March 31, 1996 Dividend/
------------------------ ---------------------- --------------------- -------------------- Interest
Stocks Shares/Face Cost Shares/Face Cost Shares/Face Cost Shares/Face Cost Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Alrenco, Inc. -- $ -- 350,000 $5,187,950 -- $ -- 350,000 $ 5,187,950 $ --
- -----------------------------------------------------------------------------------------------------------------------------------
Belmont Homes, Inc. 372,500 4,018,062 150,000 2,550,938 22,500 288,282 500,000 6,280,718 --
- -----------------------------------------------------------------------------------------------------------------------------------
Business Resource
Group 260,000 1,871,875 -- -- 260,000 1,871,875 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Euphonix, Inc.(7) 200,000 1,651,250 80,500 720,725 -- -- 280,500 2,371,975 --
- -----------------------------------------------------------------------------------------------------------------------------------
Inference Corp.
Cl. A(7) 200,000 3,063,605 100,000 1,878,628 -- -- 300,000 4,942,233 --
- -----------------------------------------------------------------------------------------------------------------------------------
Norland Medical
Systems, Inc.
(Ostech, Inc.) 240,000 3,041,878 60,800 1,283,350 -- -- 300,800 4,325,228 --
- -----------------------------------------------------------------------------------------------------------------------------------
Play by Play Toys
& Novelties, Inc.(7) 150,000 1,884,121 108,300 1,572,714 -- -- 258,300 3,456,835 --
- -----------------------------------------------------------------------------------------------------------------------------------
Rockford
Industries, Inc. 200,000 1,667,500 150,000 1,647,985 -- -- 350,000 3,315,485 --
- -----------------------------------------------------------------------------------------------------------------------------------
Rocky Mountain
Chocolate
Factory, Inc. 150,000 2,493,750 50,000 631,250 200,000 3,125,000 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Bonds and Notes
- -----------------------------------------------------------------------------------------------------------------------------------
Physicians Clinical
Laboratory, Inc.,
7.50% Cv. Sub.
Debs., 8/15/00(8) 4,000,000 4,098,554 -- -- -- -- 4,000,000 4,098,554 --
----------- ----------- ---------- ----------- -------
$23,790,595 $15,473,540 $5,285,157 $33,978,978 $ --
=========== =========== ========== =========== =======
</TABLE>
7. Not an affiliate as of September 30, 1995.
8. Not an affiliate as of March 31, 1996.
12 Oppenheimer Discovery Fund
<PAGE>
Statement of Assets and Liabilities March 31, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
===================================================================================================================================
Assets Investments, at value--see accompanying statement:
Unaffiliated companies (cost $725,361,519) $ 995,069,109
Affiliated companies (cost $29,880,423) 40,143,600
---------------------------------------------------------------------------------------------------------
Cash 144,504
---------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 24,856,011
Shares of beneficial interest sold 3,938,932
Interest and dividends 129,347
---------------------------------------------------------------------------------------------------------
Other 23,399
--------------
Total assets 1,064,304,902
===================================================================================================================================
Liabilities Payables and other liabilities:
Investments purchased 7,280,162
Shares of beneficial interest redeemed 3,716,037
Distribution and service plan fees 580,900
Trustees' fees 200,748
Shareholder reports 159,601
Transfer and shareholder servicing agent fees 68,448
Other 71,474
--------------
Total liabilities 12,077,370
===================================================================================================================================
Net Assets $1,052,227,532
==============
===================================================================================================================================
Composition of Paid-in capital $ 738,325,999
Net Assets ---------------------------------------------------------------------------------------------------------
Accumulated net investment loss (3,462,928)
---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 37,393,694
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 279,970,767
--------------
Net assets $1,052,227,532
==============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$916,525,491 and 20,543,179 shares of beneficial interest outstanding) $44.61
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $47.33
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $112,952,159 and 2,577,186 shares of beneficial interest outstanding) $43.83
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $5,891,183 and 132,736 shares of beneficial interest outstanding) $44.38
---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $16,858,699 and 376,453 shares of beneficial interest outstanding) $44.78
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Discovery Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
===================================================================================================================================
Investment Income Interest $ 2,653,062
---------------------------------------------------------------------------------------------------------
Dividends 157,407
------------
Total income 2,810,469
===================================================================================================================================
Expenses Management fees--Note 4 3,184,044
---------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 988,516
Class B 439,836
Class C 12,890
---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,016,636
---------------------------------------------------------------------------------------------------------
Shareholder reports 174,522
---------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 104,870
---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 28,949
---------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 5,444
Class B 10,048
Class C 1,834
Class Y 1,964
---------------------------------------------------------------------------------------------------------
Legal and auditing fees 3,456
---------------------------------------------------------------------------------------------------------
Other 57,161
------------
Total expenses 6,030,170
===================================================================================================================================
Net Investment Loss (3,219,701)
===================================================================================================================================
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) Investments:
Unaffiliated companies 42,554,722
Affiliated companies (2,333,441)
------------
Net realized gain 40,221,281
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 67,844,046
------------
Net realized and unrealized gain 108,065,327
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $104,845,626
============
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Discovery Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30,
(Unaudited) 1995
<S> <C> <C> <C>
===================================================================================================================================
Operations Net investment loss $ (3,219,701) $ (328,003)
---------------------------------------------------------------------------------------------------------
Net realized gain 40,221,281 74,810,356
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 67,844,046 113,285,741
-------------- ------------
Net increase in net assets resulting from operations 104,845,626 187,768,094
===================================================================================================================================
Dividends and Distributions from net realized gain:
Distributions to Class A (65,844,078) (27,414,490)
Shareholders Class B (7,031,943) (1,382,289)
Class C (198,251) --
Class Y (965,391) (40,545)
===================================================================================================================================
Beneficial Interest Net increase in net assets resulting from
Transactions beneficial interest transactions--Note 2:
Class A 91,833,803 38,698,901
Class B 34,582,236 36,609,837
Class C 5,642,529 --
Class Y 6,842,440 7,856,196
===================================================================================================================================
Net Assets Total increase 169,706,971 242,095,704
---------------------------------------------------------------------------------------------------------
Beginning of period 882,520,561 640,424,857
-------------- ------------
End of period (including accumulated net investment losses
of $3,462,928 and $243,227, respectively) $1,052,227,532 $882,520,561
============== ============
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Discovery Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Six Months
Ended
March 31,
1996 Year Ended September 30,
(Unaudited) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $43.65 $35.81 $39.90 $27.62 $26.03 $17.97
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.12) -- (.11) (.13) (.17) .06
Net realized and unrealized gain (loss) 4.67 9.46 (2.98) 12.41 3.05 8.87
-------- -------- -------- -------- -------- --------
Total income (loss) from investment operations 4.55 9.46 (3.09) 12.28 2.88 8.93
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- -- -- (.19)
Diistributions from net realized gain (3.59) (1.62) (1.00) -- (1.29) (.68)
-------- -------- -------- -------- -------- --------
Total dividends and distributions to shareholders (3.59) (1.62) (1.00) -- (1.29) (.87)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $44.61 $43.65 $35.81 $39.90 $27.62 $26.03
======== ======== ======== ======== ======== ========
===================================================================================================================================
Total Return, at Net Asset Value(4) 11.34% 28.03% (7.91)% 44.46% 11.28% 51.88%
===================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $916,525 $798,065 $613,740 $587,057 $294,010 $117,110
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $817,901 $650,903 $588,642 $451,016 $218,065 $ 75,083
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.63)%(5) 0.00% (0.34)% (0.54)% (0.62)% 0.22%
Expenses 1.24%(5) 1.33% 1.32% 1.27% 1.52% 1.42%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 41.7% 105.9% 83.3% 85.2% 67.9% 158.1%
Average brokerage commission rate(7) $0.0550 -- -- -- -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to September
30, 1994.
2. For the period from October 2, 1995 (inception of offering) to March
31, 1996.
3. For the period from April 1, 1994 (inception of offering) to September
30, 1994.
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.
16 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C Class Y
----------------------------------- ----------- --------------------------------
Six Months Period Six Months
Ended Ended Ended
March 31, Year Ended March 31, March 31, Year Ended
1996 September 30, 1996(2) 1996 September 30,
(Unaudited) 1995 1994(3) (Unaudited) (Unaudited) 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $43.11 $35.65 $35.65 $43.20 $43.74 $35.81 $34.89
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.18) (.21) .03 (.15) (.06) (.10) .11
Net realized and unrealized gain (loss) 4.49 9.29 (.03) 4.92 4.69 9.65 .81
-------- ------ ------ ------ ------- ------ -----
Total income (loss) from investment operations 4.31 9.08 -- 4.77 4.63 9.55 .92
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- -- -- -- --
Distributions from net realized gain (3.59) (1.62) -- (3.59) (3.59) (1.62) --
-------- ------ ------ ------ ------- ------ -----
Total dividends and distributions to shareholders (3.59) (1.62) -- (3.59) (3.59) (1.62) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $43.83 $43.11 $35.65 $44.38 $44.78 $43.74 $35.81
======== ======= ====== ====== ======= ====== =====
===================================================================================================================================
Total Return, at Net Asset Value(4) 10.90% 27.04% (1.93)% 11.94% 11.50% 28.28% 3.20%
===================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $112,952 $75,062 $26,491 $5,891 $16,859 $9,394 $194
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 88,097 $43,301 $12,435 $2,628 $12,240 $3,190 $ 39
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (1.41)%(5) (0.78)% (1.06)%(5) (1.57)%(5) (0.34)%(5) 0.03% (0.13)%(5)
Expenses 2.01%(5) 2.11% 2.36%(5) 2.10%(5) 0.94%(5) 1.26% 1.41%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 41.7% 105.9% 83.3% 41.7% 41.7% 105.9% 83.3%
Average brokerage commission rate(7) $0.0550 -- -- $0.0550 $0.0550 -- --
</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 March 31, 1996 were $410,832,379
and $353,480,795, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of
related shares purchased and sold.
See accompanying Notes to Financial Statements.
17 Oppenheimer Discovery Fund
<PAGE>
Notes to Financial Statements (Unaudited)
===============================================================================
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 objective is capital appreciation; current income
is not an objective. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager). The Fund offers Class A, Class B, Class C and Class Y shares.
Class A shares are sold with a front-end sales charge. Class B and Class C
shares may be subject to a contingent deferred sales charge. All classes of
shares have identical rights to earnings, assets and voting privileges, except
that each class has its own expenses directly attributable to a particular class
and exclusive voting rights with respect to matters affecting a single class.
Classes A, B and C 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. Forward foreign currency exchange contracts
are valued based on the closing prices of the forward currency contract rates in
the London foreign exchange markets on a daily basis as provided by a reliable
bank or dealer. 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 six months
ended March 31, 1996, a provision of $59,264 was made for the Fund's projected
benefit obligations, and a payment of $5,460 was made to retired trustees,
resulting in an accumulated liability of $169,422 at March 31, 1996.
18 Oppenheimer Discovery Fund
<PAGE>
===============================================================================
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.
- -------------------------------------------------------------------------------
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- -------------------------------------------------------------------------------
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996(1) Year Ended September 30, 1995
---------------------------------- -----------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 5,783,423 $ 243,019,278 11,835,083 $428,009,066
Distributions reinvested 1,596,642 64,136,938 821,910 26,424,457
Redeemed (5,120,003) (215,322,413) (11,512,590) (415,734,622)
---------- ------------- ----------- -------------
Net increase 2,260,062 $ 91,833,803 1,144,403 $ 38,698,901
========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,033,516 $ 43,084,001 1,606,929 $ 58,824,017
Distributions reinvested 172,961 6,840,614 42,043 1,343,689
Redeemed (370,654) (15,342,379) (650,592) (23,557,869)
---------- ------------- ----------- -------------
Net increase 835,823 $ 34,582,236 998,380 $ 36,609,837
========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 262,091 $ 11,078,566 -- $ --
Distributions reinvested 4,923 197,209 -- --
Redeemed (134,278) (5,633,246) -- --
---------- ------------- ----------- -------------
Net increase 132,736 $ 5,642,529 -- $ --
========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------------------------------
Class Y:
Sold 199,336 $ 8,488,423 247,309 $ 9,293,954
Distributions reinvested 23,961 965,391 1,260 40,545
Redeemed (61,618) (2,611,374) (39,199) (1,478,303)
---------- ------------- ----------- -------------
Net increase 161,679 $ 6,842,440 209,370 $ 7,856,196
========== ============= =========== =============
</TABLE>
1. For the six months ended March 31, 1996 for Class A, Class B and Class Y
shares, for the period from October 2, 1995 (inception of offering) to
March 31, 1996 for Class C shares.
19 Oppenheimer Discovery Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
===============================================================================
3. Unrealized Gains and
Losses on Investments
At March 31, 1996, net unrealized appreciation on investments of
$279,970,767 was composed of gross appreciation of $307,173,185, and gross
depreciation of $27,202,418.
- -------------------------------------------------------------------------------
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 voluntarily undertaken to waive a portion of its
management fee, whereby the Fund shall pay an annual management fee of .58% of
its net assets in excess of $1.5 billion. 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 six months ended March 31, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $1,648,445, of which $524,126 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $1,049,182 and $32,697, of which $77,749 and $72,
respectively, was paid to an affiliated broker/dealer. During the six months
ended March 31, 1996, OFDI received contingent deferred sales charges of $69,398
and $306 upon redemption of Class B and Class C shares, as reimbursement for
sales commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed .25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the six months ended March 31, 1996, OFDI paid $71,148 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted a reimbursement type Distribution and Service Plan for
Class B shares to reimburse OFDI for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of .75% per year on Class B shares that are
outstanding for 6 years or less. OFDI also receives a service fee of .25% per
year to reimburse dealers for providing personal services for accounts that hold
Class B shares. Both fees are computed on the average annual net assets of Class
B shares, determined as of the close of each regular business day. If the Plan
is terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for certain expenses it
incurred before the Plan was terminated. During the six months ended March 31,
1996, OFDI paid $4,443 to an affiliated broker/dealer as reimbursement for Class
B personal service and maintenance expenses and retained $383,004 as
reimbursement for Class B sales commissions and service fee advances, as well as
financing costs. As of March 31, 1996, OFDI had incurred unreimbursed expenses
of $2,997,583 for Class B.
The Fund has adopted a compensation type Distribution and Service Plan for
Class C shares to compensate OFDI for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of .75% per year on Class C shares. OFDI also
receives a service fee of .25% per year to compensate dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plan was terminated.
During the six months ended March 31, 1996, OFDI retained $12,890 as
compensation for Class C sales commissions and service fee advances, as well as
financing costs. As of March 31, 1996, OFDI had incurred unreimbursed expenses
of $64,631 for Class C.
20 Oppenheimer Discovery Fund
<PAGE>
===============================================================================
5. Illiquid and
Restricted Securities
At March 31, 1996, 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 March 31, 1996 was $11,552,625, which represents 1.10% 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 March 31, 1996
- ----------------------------------------------------------------------------------------------------------------------------
<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--3/1/96 $ 84.37 $102.40
- ----------------------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc.,
8% Cv. Sub. Nts., 9/17/98 9/23/93 $ 100.00 $102.40
- ----------------------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc. 6/9/93--5/10/95 $ 6.97 $ 16.86
- ----------------------------------------------------------------------------------------------------------------------------
Silicon Video Corp., $2.50 Cv., Series D 3/31/95 $ 2.50 $ 2.50
</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.
21 Oppenheimer Discovery Fund
<PAGE>
Oppenheimer Discovery Fund
===============================================================================
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Jay W. Tracey, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
===============================================================================
Investment Advisor OppenheimerFunds, Inc.
===============================================================================
Distributor OppenheimerFunds Distributor, Inc.
===============================================================================
Transfer and OppenheimerFunds Services
Shareholder
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
The financial statements included herein have been
taken from the records of the Fund without examination
by the independent auditors. 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.
22 Oppenheimer Discovery Fund
<PAGE>
OppenheimerFunds Family
OppenheimerFunds offers over 50 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 $50
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 Disciplined Value Fund Oppenheimer Fund
Discovery Fund Quest Global Value Fund
Enterprise Fund Quest Small Cap Value Fund
Global Emerging Growth Fund Quest Value Fund
Global Fund Target Fund
Gold & Special Minerals Fund Value Stock Fund
Growth Fund
===============================================================================
Stock & Asset Allocation Fund Main Street Income & Growth Fund
Bond Funds Bond Fund for Growth Quest Growth & Income Value Fund
Disciplined Allocation Fund Quest Opportunity Value Fund
Equity Income Fund Strategic Income & Growth Fund
Global Growth & Income Fund Total Return Fund
===============================================================================
Bond Funds Bond Fund Limited-Term Government Fund
Champion Income Fund Strategic Income Fund
High Yield Fund U.S. Government Trust
International Bond Fund
===============================================================================
Tax-Exempt California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
Funds Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
Insured Tax-Exempt Fund
Intermediate Tax-Exempt Fund Rochester Division
New Jersey Tax-Exempt Fund(2) Limited-Term N.Y. Municipal Fund
New York Tax-Exempt Fund(2) Rochester Fund Municipals
===============================================================================
Money Market Cash Reserves Money Market Fund
Funds
===============================================================================
Lifespan Balanced Fund Income Fund
Growth Fund
1. Exchange privileges are subject to change or termination. Shares may be
exchanged only for shares of the same class of eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
23 Oppenheimer Discovery Fund
<PAGE>
Information
General Information
Monday-Friday 8:30 a.m.-9 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
RS0500.001.0396 May 31, 1996
[Picture of Jennifer Leonard]
[Caption] Jennifer Leonard, Customer Service Representative
OppenheimerFunds Service
"How may I help you?"
As an Oppenheimer fund 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,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
===============================================================================
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OppenheimerFunds Distributor, Inc.
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