Registration No. 33-371
File No. 811-4410
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 20 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 22 /X/
OPPENHEIMER DISCOVERY FUND
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------
(Address of Principal Executive Offices)
212-323-0200
- -----------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/X/ on January 15, 1997, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on ______________, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / on _______________, pursuant to paragraph (a)(2)
of Rule 485
- -----------------------------------------------------------------
The Registrant has registered an indefinite number of shares
under the Securities Act of 1933 pursuant to Rule 24f-2 promulgated
under the Investment Company Act of 1940. A Rule 24f-2 Notice for
the Registrant's fiscal year ended September 30, 1996 was filed on
November 27, 1996. <PAGE>
<PAGE>
FORM N-1A
OPPENHEIMER DISCOVERY FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed -
Organization and History; Investment Objective and
Policies;
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes; How the Fund is
Managed - Organization and History; The Transfer
Agent; Expenses
7 Shareholder Account Rules and Policies; How to Buy
Shares; How to Sell Shares; Exchanges of Shares and
Retirement Plans; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C Shares
8 How to Sell Shares
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Cover Page
12 Investment Objective and Policies
13 Investment Objective and Policies; Other Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service
Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to
Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund
22 Performance of the Fund
23 Financial Statements
- ----------------
*Not applicable or negative answer.
<PAGE>
OPPENHEIMER DISCOVERY FUND
Supplement dated January 15, 1997 to the
Prospectus dated January 15, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1) sales
of Class A shares stated in the sales charge table in "Buying Class
A Shares" on page 29, (2) sales of Class B shares described in the
third paragraph in "Distribution and Service Plans for Class B and
Class C Shares" on page 36, and (3) sales of Class C shares
described in the third paragraph in "Distribution and Service Plans
for Class B and Class C Shares" on page 36, the Distributor will
pay additional commission to each broker, dealer and financial
institution that has a sales agreement with the Distributor and
agrees to accept that additional commission (these are referred to
as "participating firms") for Class A, Class B and Class C shares
of the Fund sold in "qualifying transactions" (the "promotion").
The additional commission will be 1.00% of the offering price of
shares of the Fund sold by a registered representative or sales
representative of a participating firm during the promotion. If
the additional commission is paid on the sale of Class A shares of
$500,000 or more or the sale of Class A shares to a SEP IRA with
100 or more eligible participants and those shares are redeemed
within 13 months from the end of the month in which they were
purchased, the participating firm will be required to return the
additional commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
January 15, 1997 PS0500.010
<PAGE>
Oppenheimer
Discovery Fund
Prospectus dated January 15, 1997
Oppenheimer Discovery Fund is a mutual fund with the investment
objective of capital appreciation. Current income is not an
objective. In seeking its objective, the Fund emphasizes
investments in securities of "growth-type" companies with market
capitalization less than $1 billion, including common stocks,
preferred stocks, convertible securities, rights, warrants and
options, in proportions which may vary from time to time. In
selecting securities for their appreciation possibilities the Fund
will use the methods described in this Prospectus under "Investment
Techniques and Strategies." The Fund may also use certain hedging
instruments. In an uncertain environment, temporary defensive
investment methods may be stressed.
Some of the Fund's investment techniques may be
considered speculative. These techniques may increase the risks of
investing in the Fund and may also increase the Fund's operating
costs. You should carefully review the risks associated with an
investment in the Fund. Please refer to "Investment Objective and
Policies" for more information about the types of securities the
Fund invests in and refer to "Investment Risks" for a discussion of
the risks of investing in the Fund.
This Prospectus explains concisely what you should know
before investing in the Fund. Please read this Prospectus
carefully and keep it for future reference. You can find more
detailed information about the Fund in the January 15, 1997
Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-
7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated
into this Prospectus by reference (which means that it is legally
part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's business operating expenses that you will bear
indirectly. The numbers below are based on the Fund's expenses
during its fiscal year ended September 30, 1996.
Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your
Account," from pages 24 through 47, for an explanation of how and
when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Maximum Sales 5.75% None None None
Charge on
Purchases
(as a % of
offering price)
Maximum Deferred None(1) 5% in the first 1% if shares None
Sales Charge year, declining are redeemed
(as a % of the to 1% in the within 2\12
lower of the sixth year and months of
original offering eliminated purchase(2)
price or redemption thereafter(2)
proceeds)
Maximum Sales None None None None
Charge on
Reinvested
Dividends
Exchange Fee None None None None
Redemption Fee None(3) None(3) None(3) None(3)
</TABLE>
(1)If you invest $1 million or more ($500,000 or more for purchases
by "Retirement Plans," as defined in "Class A Contingent Deferred
Sales Charge" on page 29) in Class A shares, you may have to pay a
sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Buying Class A
Shares," below.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares," below, for more information on the
contingent deferred sales charges.
(3)There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfers through
AccountLink. See "How to Sell Shares."
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
advisor, OppenheimerFunds, Inc. (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are
set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds its portfolio
securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses
(As a Percentage of Average Net Assets)
Class A Class B Class C Class Y
Shares Shares Shares Shares
Management Fees .68% .68% .68% .68%
12b-1 Plan Fees .24% 1.00% 1.00% None
Other Expenses .30% .31% .35% .31%
Total Fund 1.22% 1.99% 2.03% .99%
Operating Expenses
The numbers for the Class A, Class B, Class C and Class Y
shares in the table above are based on the Fund's expenses in its
fiscal year ended September 30, 1996. These amounts are shown as
a percentage of the average net assets of each class of the Fund's
shares for that year. The 12b-1 Distribution Plan Fees for Class
A shares are service plan fees. For Class B and Class C shares,
the 12b-1 Distribution Plan Fees are the service plan fees and
asset-based sales charges. The maximum service fee for each class
is 0.25% of average annual net assets of the class, and the asset-
based sales charge for Class B and Class C shares is 0.75%. These
plans are described in greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years
may be more or less than the numbers in the chart, depending on a
number of factors, including the actual value of the Fund's assets
represented by each class of shares.
Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each
class of shares of the Fund, and that the Fund's annual return is
5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you
were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of 1,
3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $69 $94 $121 $197
Class B Shares $70 $92 $127 $194
Class C Shares $31 $64 $109 $236
Class Y Shares $10 $32 $55 $121
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
Class A Shares $69 $94 $121 $197
Class B Shares $20 $62 $107 $194
Class C Shares $21 $64 $109 $236
Class Y Shares $10 $32 $55 $121
* In the first example, expenses include the Class A initial sales
charge and the applicable Class B or Class C contingent deferred
sales charge. In the second example, Class A expenses include the
initial sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges. The Class B expenses in
years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into
Class A shares after 6 years. Because of the effect of the asset-
based sales charge and the contingent deferred sales charge on
Class B and Class C shares, long-term Class B and Class C
shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What Is The Fund's Investment Objective? The Fund's
investment objective is capital appreciation. Current income is not
an objective.
What Does the Fund Invest In? In seeking its objective,
the Fund emphasizes investments in securities of "growth-type"
companies with market capitalization less than $1 billion,
including common stocks, preferred stocks, convertible securities,
rights, warrants and options, in proportions which may vary from
time to time. These investments are more fully explained in
"Investment Objective and Policies," starting on page __.
Who Manages the Fund? The Fund's investment advisor is
OppenheimerFunds, Inc. (the "Manager"), which (including a
subsidiary) manages investment company portfolios having over $62
billion in assets as of December 31, 1996. The Fund's portfolio
manager, who is primarily responsible for the selection of the
Fund's securities, is Jay W. Tracey, III. The Manager is paid an
advisory fee by the Fund, based on its assets. The Fund's Board of
Trustees, elected by shareholders, oversees the investment advisor
and the portfolio manager. Please refer to "How the Fund is
Managed," starting on page __ for more information about the
Manager and its fees.
How Risky is the Fund? All investments carry risks to some
degree. The Fund is designed for investors who are willing to
accept greater risks of loss in the hopes of greater gains, and is
not intended for those who desire assured income and preservation
of capital. The Fund's investments in stocks and bonds are subject
to changes in their value from a number of factors such as changes
in general bond and stock market movements, the change in value of
particular stocks or bonds because of an event affecting the
issuer, or changes in interest rates that can affect bond prices.
The Fund's investments in foreign securities are subject to
additional risks associated with investing abroad, such as the
effect of currency rate changes on stock values. These changes
affect the value of the Fund's investments and its price per share.
In the Oppenheimer funds spectrum, the Fund is generally more
volatile than the other stock funds and growth and income funds
because it invests for capital appreciation in common stocks,
emphasizing "growth" stocks that tend to be more volatile than
other investments. While the Manager tries to reduce risks by
diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases by
using hedging techniques, there is no guarantee of success in
achieving the Fund's objective and your shares may be worth more or
less than their original cost when you redeem them. Please refer
to "Investment Objective and Policies" starting on page __ for a
more complete discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How to Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
four classes of shares. All classes have the same investment
portfolio but different expenses. Class A shares are offered with
a front-end sales charge, starting at 5.75%, and reduced for larger
purchases. Class B and Class C shares are offered without a front-
end sales charge, but may be subject to a contingent deferred sales
charge if redeemed within 6 years or 12 months of purchase,
respectively. There is also an annual asset-based sales charge on
Class B and Class C shares. Class Y shares are offered at net
asset value without sales charge only to certain institutional
investors. Please review "How to Buy Shares" starting on page __
for more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How to Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page .
How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total returns and
cumulative total returns, which measure historical performance.
Those returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's
performance can also be compared to broad market indices, which we
have done on pages 22 and 23. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal year ended September 30, 1996, is
included in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
- --------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992 1991 1990
1989
- ------------------------------------------------------------------------------------------------------------------
- -----------------
<S> <C> <C> <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 $ 24.51 $ 17.62
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Income (loss) from investment
operations:
Net investment income (loss) (.13) -- (.11) (.13) (.17) .06 .16
.29
Net realized and unrealized gain (loss) 11.26 9.46 (2.98) 12.41 3.05 8.87
(4.84) 6.74
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total income (loss) from investment
operations 11.13 9.46 (3.09) 12.28 2.88 8.93 (4.68)
7.03
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Dividends and distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.19) (.30)
(.14)
Distributions from net realized gain (3.59) (1.62) (1.00) -- (1.29) (.68)
(1.56) --
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total dividends and distributions
to shareholders (3.59) (1.62) (1.00) -- (1.29) (.87) (1.86)
(.14)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Net asset value, end of period $ 51.19 $ 43.65 $ 35.81 $ 39.90 $ 27.62 $ 26.03
$ 17.97 $ 24.51
=====================================================================
=======================
- ------------------------------------------------------------------------------------------------------------------
- -----------------
TOTAL RETURN, AT NET ASSET VALUE(4) 27.76% 28.03% (7.91)% 44.46%
11.28% 51.88% (20.34)% 40.23%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,160,087 $ 798,065 $ 613,740 $587,057 $ 294,010
$117,110 $50,357 $53,793
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Average net assets (in thousands) $ 937,563 $ 650,903 $ 588,642 $451,016 $ 218,065
$ 75,083 $54,454 $40,641
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios to average net assets:
Net investment income (loss) (0.32)% 0.00% (0.34)% (0.54)% (0.62)%
0.22% 0.83% 1.52%
Expenses 1.22% 1.33% 1.32% 1.27% 1.52% 1.42%
1.53% 1.46%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Portfolio turnover rate(6) 79.7% 105.9% 83.3% 85.2% 67.9%
158.1% 234.6% 132.0%
Average brokerage commission rate(7) $ 0.0577 -- -- -- -- -- --
--
<CAPTION>
CLASS A CLASS B CLASS C
PERIOD ENDED
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
SEPTEMBER 30,
1988 1987 1996 1995 1994(3) 1996(2)
- --------------------------------------------------------------------
- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 21.49 $ 14.21 $ 43.11 $ 35.65 $ 35.65
$ 43.20
- --------------------------------------------------------------------
- ---------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .14 .02 (.23) (.21) .03 (.21)
Net realized and unrealized gain (loss) (1.98) 7.28 10.81 9.29 (.03)
11.33
- --------------------------------------------------------------------
- ---------------------------------------------------------
Total income (loss) from investment
operations (1.84) 7.30 10.58 9.08 -- 11.12
- --------------------------------------------------------------------
- ---------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.05) (.02) -- -- -- --
Distributions from net realized gain (1.98) -- (3.59) (1.62) -- (3.59)
- --------------------------------------------------------------------
- ---------------------------------------------------------
Total dividends and distributions
to shareholders (2.03) (.02) (3.59) (1.62) -- (3.59)
- --------------------------------------------------------------------
- ---------------------------------------------------------
Net asset value, end of period $ 17.62 $ 21.49 $ 50.10 $ 43.11 $ 35.65
$ 50.73
- ------------------------------------------------------------------------------------------------------------------
- -------------
TOTAL RETURN, AT NET ASSET VALUE(4) (7.11)% 51.08% 26.77%
27.04% (1.93)% 27.96 %
- ------------------------------------------------------------------------------------------------------------------
- -------------
RATIOS/SUPPLEMENTAL DATA:
net assets, end of period (in thousands) $ 33,361 $ 35,834 $ 193,637 $ 75,062 $ 26,491
$ 17,512
- ------------------------------------------------------------------------------------------------------------------
- -------------
Average net assets (in thousands) $ 32,089 $ 21,439 $ 119,895 $ 43,301 $ 12,435
$ 7,109
- ------------------------------------------------------------------------------------------------------------------
- -------------
Ratios to average net assets:
Net investment income (loss) 0.80% 0.19% (1.06)% (0.78)% (1.06)%(5)
(1.00)%(5)
Expenses 1.52% 1.74% 1.99% 2.11% 2.36 %(5)
2.03 %(5)
- ------------------------------------------------------------------------------------------------------------------
- -------------
Portfolio turnover rate(6) 169.0% 145.4% 79.7% 105.9% 83.3 %
79.7 %
Average brokerage commission rate(7) -- -- $ 0.0577 -- -- $
0.0577
<CAPTION>
CLASS Y
-----------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 43.74 $ 35.81 $ 34.89
- -----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.10) .11
Net realized and unrealized gain (loss) 11.31 9.65 .81
- -----------------------------------------------------------------------------------
Total income (loss) from investment
operations 11.29 9.55 .92
- -----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- --
Distributions from net realized gain (3.59) (1.62) --
- -----------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (3.59) (1.62) --
- -----------------------------------------------------------------------------------
Net asset value, end of period $ 51.44 $ 43.74 $ 35.81
=====================================
- -----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 28.09% 28.28% 3.20%
- -----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 31,619 $ 9,394 $ 194
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $ 18,563 $ 3,190 $ 39
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment
income (loss) (0.04)% 0.03% (0.13)%(5)
Expenses 0.99% 1.26% 1.41%(5)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(6) 79.7% 105.9% 83.3%
Average brokerage commission rate(7) $ 0.0577 -- --
</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
September 30, 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 (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
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, 1996 were $803,223,056 and $736,912,422, 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.
Oppenheimer Discovery Fund
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation as its
investment objective. Current income is not an objective.
Investment Policies and Strategies. In seeking its objective, the
Fund will emphasize investment in securities considered by the
Manager to have appreciation possibilities. Such securities may
either be listed on securities exchanges or traded in the over-the-
counter markets in both the United States and foreign countries.
See "Over-the-Counter Securities" in the Statement of Additional
Information for further information on securities traded on the
over-the-counter market, including a discussion of the possibility
of less liquidity in trading such securities and the possibility of
greater price volatility than for securities listed on exchanges.
The Fund emphasizes investment in securities of growth-type
issuers, including emerging growth companies, described below, with
market capitalization less than $1 billion. The Fund may continue
to hold investments in issuers whose market capitalization grows in
excess of $1 billion, and may from time to time invest in companies
with market capitalization in excess of $1 billion. The Fund
invests primarily in common stocks or securities having investment
characteristics of common stocks (for example, securities
convertible into common stocks). The Fund expects a substantial
portion of its assets to be invested in over-the-counter
securities. The Fund is designed for investors who are willing to
accept greater risks of loss attributed with the possibility of
realizing greater gains, and is not intended for those who desire
assured income and conservation of capital.
Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and techniques are not "fundamental" unless
this Prospectus or the Statement of Additional Information says
that a particular policy is "fundamental." The Fund's investment
objective is a fundamental policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's investment objective is a fundamental policy. The
Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
What Are Growth-Type Issuers and Emerging Growth Companies?
In selecting investments for the Fund, the Manager will emphasize
growth-type companies with a market capitalization less than $1
billion. Typically, growth-type issuers are those whose goods or
services have relatively favorable long-term prospects for
increasing demand, or ones which develop new products, services, or
markets and normally retain a relatively large part of their
earnings for research, development and investment in capital
assets. They may also include companies in the natural resources
fields or those developing commercial applications for new
scientific knowledge having a potential for technological
innovation, such as computer software, telecommunications equipment
and services, biotechnology, and new consumer products. The Fund
may also invest from time to time in cyclical industries such as
insurance and forest products, when the Manager believes that they
present opportunities for capital appreciation.
Growth-type issuers in which the Fund may invest include
emerging growth companies, which are companies that often provide
new products or services that enable them to capture a dominant or
important market position, or have a special area of expertise, or
are able to take advantage of changes in demographic factors in a
more profitable way than other companies. The rate of growth of
such companies at times may be dramatic.
Investment Risks
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks,
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance, and the prices of its
shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective.
When you redeem your shares, they may be worth more or less than
what you paid for them.
Stock Investment Risks. Because the Fund normally invests
most, or a substantial portion, of its assets in stocks, the value
of the Fund's portfolio will be affected by changes in the stock
markets. At times, the stock markets can be volatile, and stock
prices can change substantially. This market risk will affect the
Fund's net asset values per share, which will fluctuate as the
values of the Fund's portfolio securities and other assets and
liabilities change. Not all stock prices change uniformly or at
the same time, and not all stock markets move in the same direction
at the same time. Other factors can affect a particular stock's
prices (for example, poor earnings reports by an issuer, loss of
major customers, major litigation against an issuer, or changes in
government regulations affecting an industry). Not all of these
factors can be predicted.
As discussed below, the Fund attempts to limit certain market
risks by diversifying its investments, that is, by not holding a
substantial amount of stock of any one company and by not investing
too great a percentage of the Fund's assets in any one company.
Foreign Securities Have Special Risks. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, or if the hedging instrument
does not perform as expected, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices
of its futures and options positions were not correlated with its
other investments or if it could not close out a position because
the market for the future or option was illiquid.
Investment Techniques and Strategies.
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more detailed
information about these practices, including limitations on their
use that may help reduce some of the risks.
Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in operation less than three years,
including the operations of any of their predecessors. In view of
the volatility of price movements of such securities, the Fund
currently intends, as a matter of non-fundamental policy, to invest
no more than 10% of its total assets in securities of small,
unseasoned issuers, while reserving the right to invest up to 20%
of its assets in such issuers. The securities of small, unseasoned
companies may have limited liquidity (which means that the Fund
might have difficulty selling them at an acceptable price when it
wants to) and the prices of these securities may be volatile.
Foreign Securities. As a matter of non-fundamental policy,
the Fund may invest up to 25% of its total assets in foreign
securities. The Fund may purchase securities issued by issuers in
any country, whether developed or not developed. The Fund intends
to hold foreign currency only in connection with the purchase or
sale of foreign securities. See "Foreign Securities" in the
Statement of Additional Information for more information about the
possible rewards and risks of investing in foreign securities.
Convertible Securities. Although most of the Fund's
investments will be in stocks, the Fund may invest in convertible
securities. Convertible securities are bonds, preferred stocks and
other securities that normally pay a fixed rate of interest or
dividends and give the owner the option to convert the security
into common stock. While the value of convertible securities
depends in part on interest rate changes and the credit quality of
the issuer, the price will also change based on the price of the
underlying stock. While convertible securities generally have less
potential for gain than common stock, their income provides a
cushion against the stock price declines. They generally pay less
income than non-convertible bonds. The Manager generally analyzes
these investments from the perspective of the growth potential of
the underlying stock and treats them as "equity substitutes."
Temporary Defensive Investments. When stock market prices
are falling or in other unusual economic or business circumstances
as determined by the Manager, the Fund may invest a portion of its
assets in defensive securities. As a matter of non-fundamental
policy, securities selected for defensive purposes may include debt
securities, such as rated or unrated bonds and debentures, and
preferred stocks, cash or cash equivalents, such as U.S. Treasury
Bills and other short-term obligations of the U.S. Government, its
agencies or instrumentalities, or commercial paper rated "A-1" or
better by Standard & Poor's Corporation or "P-1" or better by
Moody's Investors Service, Inc.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its investment
objective. The "Financial Highlights," above, show the Fund's
portfolio turnover rate during past fiscal years. Portfolio
turnover affects brokerage costs as well as a fund's ability to
qualify as a "regulated investment company" under the Internal
Revenue Code for tax deductions for dividends and capital gains
distributions the Fund pays to shareholders. The Fund qualified in
its last fiscal year and intends to do so in the coming year,
although it reserves the right not to qualify.
Borrowing. The Fund may borrow money in an amount up to 5%
of the value of its total assets for temporary purposes (for
example, for portfolio liquidity reasons). No assets of the Fund
may be pledged, mortgaged or assigned to secure a debt.
Warrants and Rights. Warrants are options to purchase stock
at set prices that are valid for a limited period of time. Rights
are similar to warrants but normally have a short duration and are
distributed directly by the issuer to its shareholders. The Fund
may invest up to 5% of its net assets in warrants. That 5%
excludes warrants the Fund has acquired in units or that are
attached to other securities. No more than 2% of the Fund's assets
may be invested in warrants that are not listed on the New York or
American Stock Exchanges. For further details, see "Warrants and
Rights" in the Statement of Additional Information.
Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, put and call options,
forward contracts, and options on futures and broadly-based stock
indices. These are all referred to as "hedging instruments." The
Fund does not use hedging instruments for speculative purposes, and
has limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater
detail in "Other Investment Techniques and Strategies" in the
Statement of Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, may hedge
the Fund's portfolio against price fluctuations to some extent.
Other hedging strategies, such as buying futures and call options,
may tend to increase the Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Writing covered call
options may also provide income to the Fund for liquidity purposes
or defensive reasons.
Futures. The Fund may buy and sell futures contracts that
relate to (1) broadly-based stock indices (these are referred to as
Stock Index Futures), and (2) other securities indices (these are
referred to as Financial Futures). At present, the Fund does not
intend to enter into Futures and options on Futures if, after any
such purchase or sale, the sum of margin deposits on Futures and
premiums paid on Futures options exceeds 5% of the value of the
Fund's total assets. These types of Futures are described in
"Hedging With Options and Futures Contracts" in the Statement of
Additional Information.
Put and Call Options. The Fund may buy and sell certain kinds
of put options (puts) and call options (calls).
The Fund may buy calls only on securities, broadly-based stock
indices or on Stock Index Futures on broadly-based stock indices,
or to terminate its obligation on a call the Fund previously wrote.
The Fund may write (that is, sell) covered call options. When the
Fund writes a call, it receives cash (called a premium). The call
gives the buyer the ability to buy the investment on which the call
was written from the Fund at the call price during the period in
which the call may be exercised. If the value of the investment
does not rise above the call price, it is likely that the call will
lapse without being exercised, while the Fund keeps the cash
premium (and the investment).
The Fund may buy and sell put options. Buying a put on an
investment gives the Fund the right to sell the investment at a set
price to a seller of a put on that investment. The Fund can buy
and sell only those puts that relate to (1) securities that the
Fund owns, (2) Stock Index Futures, or (3) broadly-based stock
indices. The Fund can buy or sell a put on a Stock Index Future
whether or not the Fund owns the particular Future in its
portfolio. The Fund may not sell or buy puts on securities not
held by it.
The Fund may buy and sell puts and calls only if certain
conditions are met: (1) after the Fund writes a call, not more than
25% of the Fund's total assets may be subject to calls; (2) calls
the Fund buys or sells must be listed on a securities or
commodities exchange, or quoted on the Automated Quotation System
of the National Association of Securities Dealers, Inc. (NASDAQ);
(3) each call the Fund writes must be "covered" while it is
outstanding: that means the Fund must own the investment on which
the call was written while the call is outstanding; (4) the Fund
may write calls on Futures contracts, but these calls must be
covered by Futures contracts or other liquid assets the Fund owns
and identifies to its custodian bank to enable it to satisfy its
obligations if the call is exercised; and (5) a call or put option
may not be purchased if the value of all of the Fund's put and call
options would exceed 5% of the Fund's total assets.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has bought or sold, or to protect
against possible losses from changes in the relative values of the
U.S. dollar and foreign currency.
Illiquid and Restricted Securities. Under the policies
established by the Fund's Board of Trustees, the Manager determines
the liquidity of certain of the Fund's investments. Investments may
be illiquid because of the absence of a trading market, making it
difficult to value them or dispose of them promptly at an
acceptable price. A restricted security is one that has a
contractual restriction on its resale or that cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund currently intends to invest no more than 10% of its net
assets in illiquid or restricted securities (the Board may increase
that limit to 15%). The Manager monitors holdings of illiquid
securities on an ongoing basis and at times the Fund may be
required to sell some holdings to maintain adequate liquidity.
Certain restricted securities, eligible for resale to qualified
institutional purchasers, are not subject to that limit.
Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. They are used primarily for cash liquidity purposes. There
is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so. The Fund will
not enter into a repurchase agreement that causes more than 10% of
its net assets to be subject to repurchase agreements having a
maturity beyond seven days (the Board may increase that limit to
15%).
Derivative Investments. In general, a "derivative
investment" is a specially-designed investment. Its performance is
linked to the performance of another investment or security, such
as an option, future, index or currency. The Fund can invest in a
number of different kinds of "derivative investments." They are
used in some cases for hedging purposes, and in others because they
offer the potential for increased income and principal value. In
the broadest sense, exchange-traded options and futures contracts
(please refer to "Hedging" above) may be considered "derivative
investments."
There are special risks in investing in derivative
investments. The company issuing the instrument might not pay the
amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based might not
perform the way the Manager expected it to perform. The
performance of derivative investments may also be influenced by
interest rate changes in the U.S. and abroad. All of these risks
mean that the Fund might realize less income than expected from its
investments, or that it can lose part of the value of its
investments, which will affect the Fund's share price. Certain
derivative investments held by the Fund may trade in the over-the-
counter markets and may be illiquid. If that is the case, the
Fund's investment in them will be limited, as discussed in
"Illiquid and Restricted Securities," above.
Other Investment Restrictions. The Fund has other investment
restrictions which, together with its investment objective, are
fundamental policies. Under some of these restrictions the Fund
cannot do any of the following:
The Fund cannot invest in securities of a single issuer
(except the U.S. Government 'or its agencies or instrumentalities)
if immediately thereafter (a) more than 5% of the Fund's total
assets would be invested in securities of that issuer, or (b) the
Fund would then own more than 10% of that issuer's voting
securities.
The Fund cannot make short sales of securities except
"short sales against-the-box."
The Fund cannot concentrate more than 25% of its total
assets in securities of companies in any one industry.
The Fund cannot deviate from the percentage requirements
listed under "Investment Techniques and Strategies" (other than
those applicable to illiquid securities), from the limitations as
to the type of calls the Fund may write in "Put and Call Options,"
or from the restrictions as to what foreign securities may be
purchased as described in "Foreign Securities."
Unless the Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1985 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of
authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees meet periodically throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund will not normally hold annual meetings of
its shareholders, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has four
classes of shares, Class A, Class B, Class C and Class Y. All
classes invest in the same investment portfolio. Each class has
its own dividends and distributions and pays certain expenses which
may be different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Shares of
each class may have separate voting rights on matters in which
interests of one class are different from interests of another
class, and only shares of a particular class vote as a class on
matters that affect that class alone. Shares are freely
transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the
Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement sets
forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Manager. The portfolio manager of the Fund is
Jay W. Tracey, III. He is a Vice President of the Manager. He has
been the person principally responsible for the day-to-day
management of the Fund's portfolio since September, 1994 and from
October, 1991 to February, 1994. In his most recent previous
position, Mr. Tracey was a managing director of Buckingham Capital
Management. Prior to initially joining the Manager, he was a
Senior Vice President of Founders Asset Management, Inc. (a mutual
fund adviser), prior to which he was a securities analyst and
portfolio manager for Berger Associates, Inc. (investment adviser).
During the past five years, Mr. Tracey has also served as an
officer and portfolio manager for other Oppenheimer funds.
Fees and Expenses. Under the investment advisory
agreement, as amended per a resolution of the Board of Trustees
dated December 14, 1995 to reduce the fee on assets in excess of
$1.5 billion (the "Investment Advisory Agreement"), the Fund pays
the Manager a monthly fee at the following annual rates (which may
be higher than the rate paid by some other mutual fund companies),
which decline on additional assets as the Fund grows: 0.75% of the
first $200 million of average annual net assets, 0.72% of the next
$200 million, 0.69% of the next $200 million, 0.66% of the next
$200 million, 0.60% of the next $700 million, and 0.58% of average
annual net assets in excess of $1.5 billion. The Fund's management
fee for its fiscal year ended September 30, 1996 was 0.68% of
average annual net assets for its Class A, Class B, Class C and
Class Y shares.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal fees
and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment adviser.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
The Transfer Agent. The Fund's Transfer Agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for other
Oppenheimer funds. Shareholders should direct inquiries about
their account to the Transfer Agent at the address and toll-free
number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
cumulative "cumulative total return" and "average annual total
return" to illustrate its performance. The performance of each
class of shares is shown separately, because the performance of
each class will usually be different as a result of the different
kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various
periods, and do not show the performance of each shareholder's
account (which will vary if dividends are received in cash or
shares are sold or purchased). The Fund's performance information
may be useful to help you see how well your investment in the Fund
has done over time and to compare it to other funds or market
indices, as has been done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. More detailed
information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B and Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. Total returns may
also be quoted "at net asset value," without considering the effect
of sales charges, and those returns would be less if sales charges
were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its fiscal year ended September 30,
1996, followed by graphical comparisons of the Fund's performance
to a broad-based market index and a sector index.
Management's Discussion of Performance. During the fiscal
year ended September 30, 1996, the Fund's positive performance was
affected principally by the overall strong performance of the U.S.
stock market, although the market experienced significant
volatility near the end of the fiscal year. The Manager sought to
identify innovative companies, with a focus on the companies'
management. The Fund's new investments included stock of companies
in health management, technology and financial services sectors.
The Fund's portfolio and its portfolio manager's categories are
subject to change.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
each class of shares of the Fund held until September 30, 1996: in
the case of Class A shares, performance is measured for the ten
years ended September 30, 1996; in the case of Class B shares, from
the inception of the Class on April 1, 1994; in the case of Class
C shares, from the inception of the Class on October 2, 1995; and
in the case of Class Y shares, from the inception of the Class on
June 1, 1994. The graphs reflect the deduction of the 5.75%
maximum initial sales charge on Class A shares, the applicable
contingent deferred sales charge on Class B and Class C shares, and
reinvestment of all dividends and capital gains distributions.
The Fund's performance is compared to the performance of the
Standard & Poor's ("S&P") 500 Index and the Russell 2000 Index.
The S&P 500 Index is a broad based index of equity securities
widely regarded as the general measure of the performance of the
U.S. equity securities market. The Russell 2000 Index is a
capitalization-weighted index of 2,000 U.S. issuers whose common
stocks are traded on the New York and American Stock Exchanges and
NASDAQ, and is widely recognized as a measure of the performance of
"mid-capitalization" stocks.
Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs,
and none of the data in the graphs below shows the effect of taxes.
Moreover, index performance data does not reflect any assessment of
the risk of the investments included in the index. The Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the indices
shown.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Discovery Fund (Class A), S&P 500 Index and Russell
2000 Index
[Graph]
Average Annual Total Return of Class A Shares of the Fund at
9/30/961
1 Year 5 Years 10 Years
20.41% 17.94% 18.47%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Discovery Fund (Class B), S&P 500 Index and Russell
2000 Index
[Graph]
Average Annual Total Reutrn of Class B Shares of the Fund at
9/30/962
1 Year Life of Class
21.77% 19.17%
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Discovery Fund (Class C), S&P 500 Index and Russell
2000 Index
[Graph]
Average Annual Total Reutrn of Class C Shares of the Fund at
9/30/963
Life of Class
26.96%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Discovery Fund (Class Y), S&P 500 Index and Russell
2000 Index
[Graph]
Average Annual Total Reutrn of Class A Shares of the Fund at
9/30/964
1 Year Life of Class
28.09% 25.43%
Total returns and the ending account values in the graphs show
change in share value and include reinvestment of all dividends and
capital gains distributions.
1The inception date of the Fund (Class A shares) was 9/11/86. The
average annual total returns and the ending account value in the
graph are shown net of the applicable 5.75% maximum initial sales
charge.
2Class B shares of the Fund were first publicly offered on 4/1/94.
The average annual total returns are shown net of the applicable 5%
and 3% contingent deferred sales charges, respectively, for the 1-
year period and the life of the class. The ending account value in
the graph is net of the applicable 3% contingent deferred sales
charge.
3Class C shares of the Fund were first publicly offered on 10/2/95.
The cumulative total return and the ending account value in the
graph are shown net of the 1% contingent deferred sales charge for
the period.
4Class Y shares of the Fund, first publicly offered on 6/1/94, are
offered at net asset value without sales charge to certain
institutional investors.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers individual investors three
different classes of shares, Class A, Class B and Class C. Only
certain institutional investors may purchase a fourth class of
shares, Class Y shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page___). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for purchases by Retirement Plans) in shares of one or
more Oppenheimer funds, you will not pay an initial sales charge,
but if you sell any of those shares within 18 months after your
purchase, you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you
invested. Sales charge rates are described in "Buying Class A
Shares," below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them, you will normally pay a contingent
deferred sales charge that varies depending on how long you own
your shares, as described in"Buying Class B Shares," below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as described in "Buying Class C
Shares," below.
Class Y Shares. Class Y Shares are sold at net asset value
per share without the imposition of a sales charge at the time of
purchase to separate accounts of insurance companies and other
institutional investors ("Class Y Sponsors") having an agreement
("Class Y Agreements") with the Manager or the Distributor. The
intent of Class Y Agreements is to allow tax qualified
institutional investors to invest indirectly (through separate
accounts of the Class Y Sponsor) in Class Y Shares of the Fund and
to allow institutional investors to invest directly in Class Y
shares of the Fund. Individual investors are not permitted to
invest directly in Class Y Shares. As of the date of this
Prospectus, Massachusetts Mutual Life Insurance Company (an
affiliate of the Manager and the Distributor) acts as Class Y
Sponsor for all outstanding Class Y Shares of the Fund. While
Class Y shares are not subject to a contingent deferred sales
charge, asset-based sales charge or service fee, a Class Y Sponsor
may impose charges on separate accounts investing in Class Y
shares.
None of the instructions described elsewhere in this
Prospectus or the Statement of Additional Information for the
purchase, redemption, reinvestment, exchange or transfer of shares
of the Fund, the selection of classes of shares or the reinvestment
of dividends apply to its Class Y shares. Clients of Class Y
Sponsors must request their Sponsor to effect all transactions in
Class Y shares on their behalf.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We assumed you are an individual investor, and therefore
ineligible to purchase Class Y shares. We used the sales charge
rates that apply to each class considering the effect of the
annual asset-based sales charges on Class B and Class C expenses
(which, like all expenses, will affect your investment return).
For the sake of comparison, we have assumed that there is a 10%
rate of appreciation in the investment each year. Of course, the
actual performance of your investment cannot be predicted and will
vary, based on the Fund's actual investment returns and the
operating expenses borne by each class of shares, and which class
of shares you invest in. The factors discussed below are not
intended to be investment advice, guidelines or recommendations,
because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different
classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect of
class-based expenses, your choice will also depend on how much you
plan to invest. For example, the reduced sales charges available
for larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 6 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater impact on
your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. For
example, Class A shares might be more advantageous than Class C (as
well as Class B) shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and B) shares. If
investing $500,000 or more, Class A shares may be more advantageous
as your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares
from a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
or Class C shares, as discussed above, because of the effect of the
expected lower expenses for Class A shares and the reduced initial
sales charges available for larger investments in Class A shares
under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
the contingent deferred sales charge) for Class B and Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.
For example, share certificates are not available for Class B or
Class C shares, and if you are considering using your shares as
collateral for a loan, that may be a factor to consider.
Additionally, the dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne
solely by that class, such as the Class B and Class C asset-based
sales charge described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charge and asset-
based sales charges is the same as the purpose of the front-end
sales charge on sales of Class A shares: to compensate the
Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing and 401(k)plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are
buying shares by reinvesting dividends from the Fund or other
Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the
Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways
- -- through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure that it is appropriate
for you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member. You can then transmit funds
electronically to purchase shares, to have the Transfer Agent send
redemption proceeds, or to transmit dividends and distributions.
Shares are purchased for your account through AccountLink the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the
Application and in the Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., but may be earlier on some days (all references to time
in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The
New York Stock Exchange is open (which is a "regular business
day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange on a regular
business day, and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which
is normally 5:00 P.M. The Distributor may reject any purchase
order for the Fund's shares, in its sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End Commission
Sales Charge Sales Charge as Percentage
as Percentage of as Percentage of of Offering
Amount of Purchase Offering Price Amount Invested Price
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
purchases aggregating $1 million or more;
purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more;
purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that (1) buys
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more; or
purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1)the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gains distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. The Class A contingent deferred sales
charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all
Oppenheimer funds you purchased subject to the Class A contingent
deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A and Class B shares of the Fund
and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of the intended purchases of both
Class A and Class B shares will determine your reduced sales charge
rate for the Class A shares purchased during that period. This can
include purchases made up to 90 days before the date of the Letter.
More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below. There
is an explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of Fund shares);
employee benefit plans purchasing shares through a
shareholder agent which the Distributor has appointed as its agent
to accept those purchase orders;
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares);
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
purchased with the proceeds of maturing principal of units
of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below;)
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program; or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions," if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may
not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. The Distributor uses all of those fees to compensate
dealers, brokers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their
customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it
has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the service
provider or its customers. The payments under the Plan increase
the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or
the original offering price (which is the original net asset
value). The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net
asset value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges," below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
<TABLE>
Years Since Beginning of Contingent Deferred Sales Charge
Month in Which Purchase On Redemptions in that Year
Order Was Accepted (As % of Amount Subject to Change)
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after
you purchase Class B shares, those shares will automatically
convert to Class A shares. This conversion feature relieves Class
B shareholders of the asset-based sales charge that applies to
Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset
value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that
were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The
conversion feature is subject to the continued availability of a
tax ruling described in "Alternative Sales Arrangements - Class A,
Class B and Class C Shares" in the Statement of Additional
Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under
"Distribution and Service Plans for Class B and Class C shares."
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will be waived under the circumstances
described below under "Waivers of Class B and Class C Sales
Charge."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Class B and Class C Distribution and Service
Plans reimburse the Distributor, in the case of Class B shares, and
to compensate the Distributor, in the case of Class C shares, for
distributing Class B and Class C shares and servicing accounts.
Under the Plans, the Fund pays the Distributor an annual "asset-
based sales charge" of 0.75% per year on Class B shares and on
Class C shares. The Distributor also receives an annual service
fee of under each plan, which is a maximum of 0.25% for Class B and
0.25% for Class C shares.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is 1.00% of the purchase
price. The Distributor plans to pay the asset-based sales charge
as an ongoing commission to the dealer on Class C shares that have
been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If the Fund terminates either Plan, the Board of Trustees
may allow the Fund to continue payments of the service fee or the
asset-based sales charge to the Distributor for certain expenses it
incurred before the Plan was terminated. At September 30, 1996,
the end of the Class B and Class C Plan year, the Distributor had
incurred unreimbursed expenses under the Plans of $4,689,052 and
$184,481, respectively (equal to 2.42% and 1.05% of the Fund's net
assets represented by Class B and Class C shares, respectively),
which, as to Class B shares, has been carried over into the present
plan years.
Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions nor will it apply
to Class B and Class C shares redeemed in certain circumstances as
described below. The reasons for this policy are in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class
B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" as permitted in Section 72(t) of the
Internal Revenue Code that do not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the
request; or
distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose;
shares issued in plans of reorganization to which the Fund
is a party; or
shares redeemed involuntarily, as described below.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up
to $100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to automatically exchange an amount you establish in advance
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the exchange
privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A shares that you purchased subject
to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must
be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the net asset value next calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call 1-
800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account if the bank is a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Please call your dealer for more
information about this procedure. Brokers or dealers may charge for
that service. Please refer to "Special Arrangements for Repurchase
of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any
exchange request that will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
The Distributor has entered into agreements with certain
dealers and investment advisers permitting them to exchange their
clients' shares by telephone. These privileges are limited under
those agreements and the Distributor has the right to reject or
suspend those privileges. As a result, those exchanges may be
subject to notice requirements, delays and other limitations that
do not apply to shareholders who exchange their shares directly by
calling or writing the Transfer Agent.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities, and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period
in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges automatically apply to each owner of the
account and the dealer representative of record for the account
unless refused on the new account Application, or, if not refused,
will apply until the Transfer Agent receives cancellation
instructions from an owner of the account.
The Transfer Agent will record any telephone calls to
verify data concerning transactions and has adopted other
procedures to confirm that telephone instructions are genuine, by
requiring callers to provide tax identification numbers and other
account data or by using PINs, and by confirming such transactions
in writing. If the Transfer Agent does not use reasonable
procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund
will be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. If you are unable
to reach the Transfer Agent during periods of unusual market
activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B, Class
C and Class Y shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by
the Fund subject to the power and authority of the Board of
Trustees to determine whether a minimum value should apply to
accounts holding shares, to fix such minimum value and the terms,
conditions and other procedures to cause the involuntary redemption
of accounts that do not satisfy such criteria.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied
at the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B, Class C and Class Y shares from net investment income, if
any, on an annual basis and normally pays those dividends to
shareholders in December, but the Board of Trustees can change that
date. The Board may also cause the Fund to declare dividends after
the close of the Fund's fiscal year (which ends September 30th).
Because the Fund does not have an objective of seeking current
income, the amounts of dividends it pays, if any, will likely be
small. Dividends paid on Class Y shares will generally be higher
than for Class A shares and dividends paid with respect to Class A
shares will generally be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will
generally be higher than for Class A shares, and expenses allocable
to Class A shares will generally be higher than for Class Y shares.
Capital Gains. The Fund may make distributions annually in
December out of any net short-term or long-term capital gains, and
the Fund may make supplemental distributions of capital gains
following the end of its fiscal year. Long-term capital gains will
be separately identified in the tax information the Fund sends you
after the end of the year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurance that the
Fund will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
Oppenheimer funds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Funds
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend": When a fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally, capital gain or loss is the difference between the price
you paid for the shares and the price you received when you sold
them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Quest for Value Fund, Inc.,
Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value
Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Value Global
Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for
Value National Tax-Exempt Fund and Quest for Value California Tax-
Exempt Fund when those funds merged into various Oppenheimer funds
on November 24, 1995. The funds listed above are referred to in
this Prospectus as the "Former Quest for Value Funds." The waivers
of initial and contingent deferred sales charges described in this
Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds
or (ii) received by such shareholder pursuant to the merger of any
of the Former Quest for Value Funds into an Oppenheimer fund on
November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
<TABLE>
<CAPTION>
Front-End Front-End
Number of Sales Charge Sales Charge Commission as
Eligible Employees as a Percentage as a Percentage Percentage
or Members of Offering Price of Amount Invested of Offering Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not 2.00% 2.04% 1.60%
more than 49
</TABLE>
For purchases by Qualified Retirement Plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages to of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that is
not or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995 In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, Class B or Class
C shares of the Fund acquired by merger of a Former Quest for Value
Fund into the Fund or by exchange from an Oppenheimer fund that was
a Former Quest for Value Fund or into which such fund merged, if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After
March 6, 1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, Class B or Class C shares of
the Fund acquired by merger of a Former Quest for Value Fund into
the Fund or by exchange from an Oppenheimer fund that was a Former
Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or Class C shares) where the annual
withdrawals do not exceed 10% of the initial value of the account;
and (5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, Class B or Class C shares of the Fund
described in this section if within 90 days after that redemption,
the proceeds are invested in the same Class of shares in this Fund
or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (i) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER DISCOVERY FUND
Graphic material included in Prospectus of Oppenheimer Discovery
Fund: "Comparison of Change in Value of $10,000 Hypothetical
Investments In: Oppenheimer Discovery Fund, S&P 500 and Russell
2000 Index".
Linear graphs will be included in the Prospectus of Oppenheimer
Discovery Fund (the "Fund") depicting the initial account value and
subsequent account values of a hypothetical $10,000 investment in
each class of shares of the Fund. In the case of the Fund's Class
A shares, that graph will cover each of the Fund's fiscal periods
from 9/11/86 through 9/30/96. In the case of the Fund's Class B
shares the graph will cover the period from the inception of the
class (4/1/94) through 9/30/96. In the case of Class C shares the
graph will cover the period from the inception of the class on
10/2/95 through 9/30/96. Class Y shares will cover the 6/1/94
(inception date) through 9/30/96 period. Each graph will compare
such values with hypothetical $10,000 investments over the same
time periods in the S&P 500 Index and the Russell 2000 Index. Set
forth below are the relevant data points that will appear on the
linear graphs. Additional information with respect to the
foregoing, including descriptions of the S&P 500 Index and the
Russell 2000 Index, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the
Market."
Fiscal Year Oppenheimer S&P 500 Russell 2000
(Period) Ended Discovery A Index Index
09/30/86 9,425 10,000 10,000
09/30/87 14,272 14,342 12,840
09/30/88 13,257 12,585 11,541
09/30/89 18,591 16,706 14,021
09/30/90 14,810 15,162 10,213
09/30/91 22,493 19,876 14,818
09/30/92 25,029 22,071 16,143
09/30/93 36,156 24,933 21,495
09/30/94 33,298 25,850 22,070
09/30/95 42,630 33,530 27,226
09/30/96 54,464 40,344 30,802
Fiscal Year Oppenheimer S&P 500 Russell 2000
(Period) Ended Discovery B Index Index
04/01/94 10,000 10,000 10,000
09/30/94 9,807 10,532 10,278
09/30/95 12,460 13,661 12,679
09/30/96 15,495 16,437 14,344
Fiscal Year Oppenheimer S&P 500 Russell 2000
(Period) Ended Discovery C Index Index
10/02/95 10,000 10,000 10,000
09/30/96 12,696 12,032 11,313
Fiscal Year Oppenheimer S&P 500 Russell 2000
(Period) Ended Discovery Y Index Index
06/01/94 10,000 10,000 10,000
09/30/94 10,320 10,231 10,333
09/30/95 13,238 13,271 12,748
09/30/96 16,956 15,968 14,422
<PAGE>
Oppenheimer Discovery Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representation must not be relied upon as having been authorized by
the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc., or any affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
any of the securities offered hereby in any state to any person to
whom it is unlawful to make such offer in such state.
PR0500.001.0197 Printed on recycled paper
<PAGE>
Oppenheimer Discovery Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated January 15, 1997
This Statement of Additional Information is not a Prospectus.
This document contains additional information about the Fund and
supplements information in the Prospectus dated January 9, 1997.
It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling
the Transfer Agent at the toll-free number shown above.
<TABLE>
<CAPTION>
Contents
Page
<S> <C>
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . 2
Investment Policies and Strategies. . . . . . . . . 2
Other Investment Techniques and Strategies. . . . . . 3
Other Investment Restrictions . . . . . . . . . . . . 13
How the Fund is Managed . . . . . . . . . . . . . . . . . 14
Organization and History. . . . . . . . . . . . . . . 14
Trustees and Officers of the Fund . . . . . . . . . . 15
The Manager and Its Affiliates. . . . . . . . . . . . 20
Brokerage Policies of the Fund . . . . . . . . . . . . . . 22
Performance of the Fund. . . . . . . . . . . . . . . . . . 23
Distribution and Service Plans . . . . . . . . . . . . . . 26
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . 28
How To Sell Shares . . . . . . . . . . . . . . . . . . . . 35
How To Exchange Shares . . . . . . . . . . . . . . . . . . 40
Dividends, Capital Gains and Taxes . . . . . . . . . . . . 42
Additional Information About the Fund. . . . . . . . . . . 43
Independent Auditors' Report . . . . . . . . . . . . . . . 44
Financial Statements . . . . . . . . . . . . . . . . . . . 45
Appendix: Industry Classifications . . . . . . . . . . . . A-1
</TABLE>
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund invests, as well as
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meanings as those terms have in the Prospectus.
Investment policies that the Fund may use to seek the Fund's
objective encompass the selection of common stocks, preferred
stocks, convertible securities, rights, warrants, and puts and
calls in proportions which may vary from time to time. The
selection of such securities is enhanced by the methods described
in the Prospectus under "Other Investment Techniques and
Strategies," and in this Statement of Additional Information.
Securities of "Growth-Type" Issuers and Emerging Growth
Companies. Many "growth-type" issuers, including emerging growth
companies, may be small and unseasoned. Their securities, which
the Fund may purchase when they are offered to the public for the
first time, may have a limited trading market, which may adversely
affect the Fund's ability to sell them when it wants to do so and
can result in their shares being priced lower than otherwise might
be the case. While the Manager will undertake to select promising
emerging companies carefully for the Fund's investments, there is
no guarantee that such investments will achieve their potential.
"Over-the-Counter" Securities. The "over-the-counter"
market is generally defined as the market for securities that are
not listed for trading on a securities exchange. An exchange
represents an auction market consisting of competing buyers and
competing sellers. There are over-the-counter markets in the U.S.
and in foreign countries. In contrast to exchanges, the over-the-
counter market is not a centralized facility but is a negotiated
market in which transactions are done by telephone or computer
link-ups among dealers and brokers. In the U.S., the over-the-
counter market is regulated by the National Association of
Securities Dealers, which has created an Automated Quotation System
("NASDAQ") of the NASDAQ Stock Market, Inc., an electronic
quotation system for certain over-the-counter securities, allowing
subscribers to obtain data as to current bids and offers for over-
the-counter securities. A security must have at least two market
makers for initial listing on NASDAQ. Over-the-counter markets
exist apart from NASDAQ, as long as a dealer or broker is willing
to make a market in a particular security. The number of shares
traded each day may be smaller for over-the-counter securities than
for securities listed on the New York or American Stock Exchanges.
As a result, the liquidity of, or ability to sell, the over-the-
counter securities which the Fund owns may be relatively limited as
compared to listed securities which it owns. This may affect the
price the Fund receives when it sells its over-the-counter
securities. Over-the-counter securities may also be subject to
greater price volatility than listed securities due to factors
which would not ordinarily affect large, well-established companies
(such as changes in key personnel, financing difficulties or
problems with products). On January 18, 1990, the Fund's
shareholders approved the change of the Fund's name from
"Oppenheimer OTC Fund" to its current name, and at the same time
approved a proposal to change the Fund's fundamental investment
policies so that the Fund was no longer required to invest at least
65% of its total assets in over-the-counter securities.
Foreign Securities. "Foreign securities" include equity
and debt securities of companies organized under the laws of
countries other than the United States and debt securities of
foreign governments, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities
of foreign issuers that are represented by American Depository
Receipts or that are listed only on a U.S. securities exchange or
traded only in the U.S. over-the-counter markets are not considered
"foreign securities" for the purpose of the Fund's investment
allocations, because they are not subject to many of the special
considerations and risks, discussed below, that apply to foreign
securities traded and held abroad.
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, such as the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. If the Fund's portfolio
securities are held abroad, the sub-custodians or depositories
holding them must be approved by the Fund's Board of Trustees to
the extent that the approval is required under applicable rules of
the Securities and Exchange Commission. In buying foreign
securities, the Fund may convert U.S. dollars into foreign
currency, but only to effect securities transactions on foreign
securities exchanges and not to hold such currency as an
investment.
Risks of Foreign Investing. Investing in foreign
securities involves special additional risks and considerations not
typically associated with investing in securities of issuers traded
in the U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity in foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits against foreign
issuers; higher brokerage commission rates than in the U.S.;
increased risks of delays in settlement of portfolio transactions
or loss of certificates for portfolio securities; possibilities in
some countries of expropriation or nationalization of assets,
confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and unfavorable differences
between the U.S. economy and foreign economies. In the past, U.S.
Government policies have discouraged certain investments abroad by
U.S. investors, through taxation or other restrictions, and it is
possible that such restrictions could be re-imposed.
Other Investment Techniques and Strategies
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of purchases
of portfolio securities.
In a repurchase transaction, the Fund acquires a security
from, and simultaneously resells it to, an approved vendor. An
"approved vendor" is a U.S. commercial bank or the U.S. branch of
a foreign bank, or a broker-dealer which has been designated a
primary dealer in government securities and which must meet the
credit requirements set by the Fund's Board of Trustees from time
to time. The repurchase price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days
of the purchase. Repurchase agreements are considered "loans"
under the Investment Company Act, collateralized by the underlying
security. The Fund's repurchase agreements require that at all
times while the repurchase agreement is in effect, the value of the
collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager
will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the
collateral's value.
Hedging. The Fund may use hedging instruments for the
purposes described in the Prospectus. When hedging to attempt to
protect against declines in the market value of the Fund's
portfolio, or to permit the Fund to retain unrealized gains in the
value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, the Fund may:
(1) sell Futures, (2) buy puts or such Futures or securities, or
(3) write covered calls on securities or on Futures. When hedging
to establish a position in the equity securities markets as a
temporary substitute for the purchase of individual equity
securities the Fund may: (1) buy Futures, or (2) buy calls on such
Futures or securities held by it. Normally, the Fund would then
purchase the equity securities and terminate the hedging position.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be developed, to the extent such
investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
Writing Covered Calls. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised, because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by identifying
to the Custodian Bank an equivalent dollar value of deliverable
securities or liquid assets. The Fund will identify to the
Custodian Bank additional liquid assets if the value of those
segregated assets drops below 100% of the current value of the
Future. In no circumstances would an exercise notice as to a
Future put the Fund in a short futures position.
The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options that are traded
on exchanges, or as to other acceptable escrow securities, so that
no margin will be required from the Fund for such option
transactions. OCC will release the securities covering a call on
the expiration of the call or when the Fund enters into a closing
purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally
higher than on general securities transactions, are payable on
writing or purchasing a call.
Stock Index Futures and Financial Futures. The Fund may
buy and sell futures contracts relating to a securities index
("Financial Futures"), including "Stock Index Futures," a type of
Financial Future for which the index used as the basis for trading
is a broadly-based stock index (including stocks that are not
limited to issuers in a particular industry or group of
industries). A stock index assigns relative values to the common
stocks included in the index and fluctuates with the changes in the
market value of those stocks. Stock indices cannot be purchased or
sold directly. Financial futures are contracts based on the future
value of the basket of securities that comprise the underlying
index. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction or to
enter into an offsetting contract. No physical delivery of the
securities underlying the index is made on settling the futures
obligation. No monetary amount is paid or received by the Fund on
the purchase or sale of a Financial Future or Stock Index Future.
Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment, in cash or U.S.
Treasury bills, with the futures commission merchant (the "futures
broker"). Initial margin payments will be deposited with the
Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account
only under certain specified conditions. As the Future is marked
to market (that is, its value on the Fund's books is changed) to
reflect changes in its market value, subsequent margin payments,
called variation margin, will be paid to or by the futures broker
on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Financial Futures and Stock Index Futures by
their terms call for settlement by the delivery of cash, in most
cases the settlement obligation is fulfilled without such delivery
by entering into an offsetting transaction. All Futures
transactions are effected through a clearing house associated with
the exchange on which the contracts are traded.
Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When
the Fund purchases a call, it pays a premium (other than in a
closing purchase transaction) and, except as to calls on stock
indices, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the call price, transaction costs, and the premium
paid, and the call is exercised. If the call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the
right to purchase the underlying investment. When the Fund
purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Puts and calls on broadly-based stock indices or on Stock
Index Futures on broadly-based stock indices are similar to puts
and calls on securities or futures contracts except that all
settlements are in cash and gain or loss depends on changes in the
index in question (and thus on price movements in the stock market
generally) rather than on price movements of individual securities
or futures contracts. When the Fund buys a call on a stock index
or Stock Index Future, it pays a premium. If the Fund exercises
the call during the call period, a seller of a corresponding call
on the same investment will pay the Fund an amount of cash to
settle the call if the closing level of the stock index or Future
upon which the call is based is greater than the exercise price of
the call. That cash payment is equal to the difference between the
closing price of the call and the exercise price of the call times
a specified multiple (the "multiplier") which determines the total
dollar value for each point of difference. When the Fund buys a
put on a stock index or Stock Index Future, it pays a premium and
has the right during the put period to require a seller of a
corresponding put, upon the Fund's exercise of its put, to deliver
cash to the Fund to settle the put if the closing level of the
stock index or Stock Index Future upon which the put is based is
less than the exercise price of the put. That cash payment is
determined by the multiplier, in the same manner as described above
as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Forward Contracts. The Fund may enter into foreign
currency exchange contracts ("Forward Contracts"), which obligate
the seller to deliver and the purchaser to take a specific amount
of foreign currency at a specific future date for a fixed price.
A Forward Contract involves bilateral obligations of one party to
purchase, and another party to sell, a specific currency at a
future date (which may be any fixed number of days from the date of
the contract agreed upon by the parties), at a price set at the
time the contract is entered into. These contracts are traded in
the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Fund may
enter into a Forward Contract in order to "lock in" the U.S. dollar
price of a security denominated in a foreign currency which it has
purchased or sold but which has not yet settled, or to protect
against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the
gain that would otherwise result from a change in the relationship
between the U.S. dollar and a foreign currency. To attempt to
limit its exposure to loss under Forward Contracts in a particular
foreign currency, the Fund limits its use of these contracts to the
amount of its net assets denominated in that currency or
denominated in a closely-correlated foreign currency. Forward
contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter
into a forward contract to sell a foreign currency denominated in
a currency other than that in which the underlying security is
denominated. This is done in the expectation that there is a
greater correlation between the foreign currency of the forward
contract and the foreign currency of the underlying investment than
between the U.S. dollar and the foreign currency of the underlying
investment. This technique is referred to as "cross hedging." The
success of cross hedging is dependent on many factors, including
the ability of the Manager to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange
contracts. The Fund does not enter into such forward contracts or
maintain a net exposure in such contracts to the extent that the
Fund would be obligated to deliver an amount of foreign currency in
excess of the value of the Fund's assets denominated in that
currency (or another currency that is also the subject of the
hedge), or enter into a "cross hedge," unless it is denominated in
a currency or currencies that the Manager believes will have price
movements that tend to correlate closely with the currency in which
the investment being hedged is denominated. See "Tax Aspects of
Covered Calls and Hedging Instruments" below for a discussion of
the tax treatment of foreign currency exchange contracts.
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase or sale of a security denominated in a
foreign currency, or when the Fund anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment by entering into a Forward Contract, for a fixed
amount of U.S. dollars per unit of foreign currency, for the
purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared,
and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a
position hedge, for example, when the Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a
fixed dollar amount. In this situation the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated ("cross hedge").
The Fund's Custodian will earmark liquid assets of the Fund,
including debt securities of any grade and equity securities,
having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions.
If the value of the securities placed in the separate account
declines, additional liquid assets will be segregated on a daily
basis so that the value of such liquid assets will equal the amount
of the Fund's commitments with respect to such contracts.
Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into
such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e.,
cash) market (and bear the expense of such purchase), if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Because such contracts are not
traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may
convert foreign currency from time to time, and investors should be
aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to
realize a profit based on the difference between the prices at
which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of Futures and options on Futures established by
the Commodity Futures Trading Commission ("CFTC"). In particular
the Fund is exempted from registration with the CFTC as a
"commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to no
more than 5% of the Fund's total assets for hedging strategies that
are not considered bona fide hedging strategies under the Rule.
Under the Rule, the Fund also must use short Futures and Futures
options positions solely for "bona fide hedging purposes" within
the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, liquid assets equal to the
market value of the securities underlying such Future, less the
margin deposit applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (1) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (2)
purchasing options which expire in less than three months; (3)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (4)
exercising puts or calls held by the Fund for less than three
months; or (5) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts (Forward
Contracts) in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character and timing of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position(s) making up a straddle is allowed
only to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates which occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as an ordinary gain or loss. Currency gains and losses are offset
against market gains and losses before determining a net "section
988" gain or loss under the Internal Revenue Code, which may
increase or decrease the amount of the Fund's investment company
income available for distribution to its shareholders.
Risks of Hedging With Options and Futures. An option
position may be closed out only on a market that provides secondary
trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular
option. In addition to the risks associated with hedging that are
discussed in the Prospectus and above, there is a risk in using
short hedging by (i) selling Stock Index Futures or (ii) purchasing
puts on stock indices or Stock Index Futures to attempt to protect
against declines in the value of the Fund's equity securities. The
risk is that the prices of Stock Index Futures will correlate
imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's equity securities. The ordinary spreads
between prices in the cash and futures markets are subject to
distortions, due to differences in the natures of those markets.
First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close out
futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are
described in the Prospectus. The following are fundamental
policies, and together with the Fund's fundamental policies
described in the Prospectus cannot be changed without the vote of
a "majority" of the Fund's outstanding voting securities. Under
the Investment Company Act, such a "majority" vote is defined as
the vote of the holders of the lesser of: (i) 67% or more of the
shares present or represented by proxy at a shareholder meeting, if
the holders of more than 50% of the outstanding shares are present,
or (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
underwrite securities of other companies, except insofar as
the Fund might be deemed to be an underwriter in the resale of any
securities held in its portfolio;
invest in commodities or commodity contracts other than the
hedging instruments permitted by any of its other fundamental
policies, whether or not any such hedging instrument is considered
to be a commodity or a commodity contract;
purchase securities on margin; however, the Fund may make
margin deposits in connection with any of the hedging instruments
permitted by any of its other fundamental policies;
purchase calls, unless (i) the investments to which the call
relates are securities, broadly-based stock indices or Stock Index
Futures on broadly-based stock indices or (ii) the calls are
purchased to effect "closing purchase transactions" to terminate an
obligation with respect to a call which the Fund has previously
written; the Fund may not write puts nor purchase puts except those
which relate to (1) securities held by it, (2) Stock Index Futures,
or (3) broadly-based stock indices, in each case only to protect
against a decline in value of the entire portfolio or of specific
portfolio securities or Stock Index Futures held by the Fund, and
further provided that, after any such purchase, the value of all
options (puts and calls) held by the Fund would not exceed 5% of
the Fund's total assets (at the time of purchase); the Fund may not
write puts or purchase puts on securities not held by it;
lend money except in connection with the acquisition of that
portion of publicly-distributed debt securities which the Fund's
investment policies and restrictions permit it to purchase (see
"Investment Policies" and "Special Investment Methods" in the
Prospectus); the Fund may also make loans of portfolio securities
and enter into repurchase agreements (see "Loans of Portfolio
Securities" and "Repurchase Agreements" in the Prospectus);
mortgage, hypothecate or pledge any of its assets; however,
this does not prohibit the escrow arrangements contemplated by the
put and call activities of the Fund or other collateral or margin
arrangements in connection with any of the hedging instruments
permitted by any of its other fundamental policies;
invest in or hold securities of any issuer if officers and
Trustees or Directors of the Fund or the Manager individually
owning more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer;
invest in other open-end investment companies, or invest
more than 5% of the value of its net assets in closed-end
investment companies, including small business investment
companies, nor make any such investments at commission rates in
excess of normal brokerage commissions; to the extent the Fund does
make investments in other investment companies, the Fund's
shareholders may be subject indirectly to that company's management
fees and costs;
invest in companies for the purpose of acquiring control or
management thereof;
invest in interests in oil, gas or other mineral exploration
or development programs; or
invest in real estate or in interests in real estate, but
may purchase readily marketable securities of companies holding
real estate or interests therein.
In connection with the qualification of its shares in certain
states, the Fund has previously undertaken as a non-fundamental
policy that in addition to the above, it will not: (a) invest in
oil, gas or other mineral leases, or (b) purchase or sell real
property, including real estate limited partnership interests. Due
to changes in federal securities laws, the Fund is no longer
required to make three undertakings in connection with sales of its
shares in certain states, and these undertakings are hereby
withdrawn.
With regard to the eighth restriction above, but not as a
matter of fundamental policy, the Fund will further restrict itself
to open market purchases of closed-end investment companies, except
in connection with mergers, and will not engage in arbitrage
transactions.
For purposes of the Fund's policy not to concentrate its
assets described under the third investment restriction in the
Prospectus, the Fund has adopted the industry classifications set
forth in the Appendix to this Statement of Additional Information.
This is not a fundamental policy.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or
upon proper request of the shareholders. Shareholders have the
right, upon the declaration in writing or vote of two-thirds of the
outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of
its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders
for at least six months) holding shares of the Fund valued at
$25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all
other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the
Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and
officers and their principal occupations and business affiliations
during the past five years are set forth below. The address for
each Trustee and officer is Two World Trade Center, New York, New
York 10048-0203, unless another address is listed below. All of
the Trustees are also trustees or directors of Oppenheimer Fund,
Oppenheimer Growth Fund, Oppenheimer Enterprise Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer Capital Appreciation Fund (formerly named "Oppenheimer
Target Fund"), Oppenheimer U.S. Government Trust, Oppenheimer New
York Municipal Fund, Oppenheimer California Municipal Fund,
Oppenheimer Multi-State Municipal Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer Global Fund, Oppenheimer International Growth Fund,
Oppenheimer Developing Markets Fund, Oppenheimer Series Fund, Inc.,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global
Emerging Growth Fund, Oppenheimer Multi-Sector Income Trust and
Oppenheimer World Bond Fund (collectively, the "New York-based
Oppenheimer funds"), except that Ms. Macaskill is not a director of
Oppenheimer Money Market Fund, Inc. As of December 16,1996, the
Trustees and officers of the Fund as a group owned of record or
beneficially less than 1% of each class of shares of the Fund.
That statement does not include ownership of shares held of record
by an employee benefit plan for employees of the Manager (one of
the Trustees of the Fund listed below, Ms. Macaskill, and one of
the officers, Mr. Donohue are trustees of that plan), other than
the shares beneficially owned under that plan by officers of the
Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age: 71
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age: 63
Vice Chairman of the Manager; formerly he held the following
positions: Vice President and Counsel of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; Executive
Vice President & General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), a director
of the Manager and the Distributor, Vice President and a director
of HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment
advisory subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager and an officer
of other Oppenheimer funds.
Benjamin Lipstein, Trustee; Age: 73
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc. (Publishers of Psychology Today and Mother Earth
News) and Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age: 48
President, CEO and a Director of the Manager; Chairman and a
Director of SSI and SFSI; President and a Director of OAC and
HarbourView and Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; formerly an Executive Vice
President of the Manager.
Elizabeth B. Moynihan, Trustee; Age: 67
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the
Trustees Council, Preservation League of New York State and the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company), and
Fidelity Life Association (mutual life insurance company); formerly
Chairman of the Board of ICL, Inc. (information systems),
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research), and a director of
Lumbermen Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; Senior Fellow of Jerome Levy Economics Institute, Bard
College; a member of the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (healthcare provider); formerly New York
State Comptroller and trustee, New York State and Local Retirement
Fund.
Russell S. Reynolds, Jr., Trustee; Age: 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship, Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a
trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society.
Donald W. Spiro, Vice Chairman and Trustee;* Age: 71
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age: 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery), IMC Global, Inc. (chemicals and animal feed) and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
[FN]
- -----------------
*A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Jay W. Tracey, III, Vice President and Portfolio Manager; Age: 43
Vice President of the Manager; Vice President and portfolio manager
of other Oppenheimer funds; from February 1994 through September
1994, he was a Managing Director of Buckingham Capital Management
prior to which (in descending chronological order) he was portfolio
manager and Vice President of the Fund and other Oppenheimer funds
and a Vice President of the Manager; he was Senior Vice President
of Founders Asset Management, Inc. (a mutual fund adviser); and
prior to which he was a securities analyst and portfolio manager
for Berger Associates, Inc. (investment adviser).
Paul LaRocco, Associate Portfolio Manager; Age: 37
Assistant Vice President of the Manager; an Associate Portfolio
Manager of Oppenheimer Time Fund and Portfolio Manager of
Oppenheimer Variable Account Funds-Capital Appreciation Fund;
formerly Acting Portfolio Manager of the Fund; previously a
Securities Analyst with Columbus
Circle Investors, prior to which he was an Investment Analyst for
Chicago Title & Trust Co.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director of Centennial; Executive Vice
President, General Counsel and a director of HarbourView, SSI,
SFSI, and Oppenheimer Partnership Holdings, Inc.; President and a
director of Oppenheimer Real Asset Management, Inc.; General
Counsel of OAC; Executive Vice President, Chief Legal Officer and
a director of MultiSource Services, Inc. (a broker-dealer); an
officer of other Oppenheimer funds; formerly Senior Vice President
and Associate General Counsel of the Manager and the Distributor,
Partner in Kraft & McManimon (a law firm), an officer of First
Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser);
and director and an officer of First Investors Family of Funds and
First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 60
6803 South Tucson Way, Englewood, Colorado 80012
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer and Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and
SFSI; Treasurer of OAC; Vice President and Treasurer of Oppenheimer
Real Asset Management, Inc.; Chief Executive Officer, Treasurer and
Director of MultiSource Services, Inc. (a broker-dealer); and an
officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott T. Farrar, Assistant Treasurer; Age: 31
6803 South Tucson Way, Englewood, Colorado 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Remuneration of Trustees. The officers of the Fund and
certain Trustees of the Fund (Ms. Macaskill and Messrs. Galli and
Spiro; Ms. Macaskill is also an officer) who are affiliated with
the Manager receive no salary or fees from the Fund. The remaining
Trustees of the Fund received the compensation shown below from the
Fund. The compensation from the Fund was paid during its fiscal
year ended September 30, 1996. The compensation from all of the
New York-based Oppenheimer funds includes the Fund and is
compensation received as a director, trustee or member of a
committee of the Board of those funds during the calendar year
1996.
<TABLE>
<CAPTION> Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund(1) Fund Expenses(1) Oppenheimer Funds(2)
<S> <C> <C> <C>
Leon Levy,
Chairman and Trustee $12,513 $14,178 $152,750
Benjamin Lipstein, $7,650 $8,668 $91,350
Study Committee Chairman3,
Audit Committee Member
and Trustee (2)
Elizabeth B. Moynihan, $7,650 $8,668 $91,350
Study Committee
Member and Trustee
Kenneth A. Randall, $6,957 $7,883 $83,450
Audit Committee Chairman
and Trustee
Edward V. Regan, $6,106 $6,918 $78,150
Proxy Committee Chairman,
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr., $4,624 $5,239 $58,800
Proxy Committee Member3
and Trustee
Pauline Trigere, Trustee $4,624 $5,239 $55,300
Clayton K. Yeutter, $4,624 $5,239 $58,800
Proxy Committee Member3
and Trustee
_____________________
1 For the Fund's fiscal year ended September 30, 1996.
2 For the 1996 calendar year.
3 Committee position held during a portion of the period shown.
</TABLE>
The Fund has adopted a retirement plan that provides for
payment to a retired Trustee of up to 80% of the average
compensation paid during that Trustee's five years of service in
which the highest compensation was received. A Trustee must serve
in that capacity for any of the New York-based Oppenheimer funds
for at least 15 years to be eligible for the maximum payment.
Because each Trustee's retirement benefits will depend on the
amount of the Trustee's future compensation and length of service,
the amount of those benefits cannot be determined as of this time
nor can the Fund estimate the number of years of credited service
that will be used to determine those benefits. During the Fund's
fiscal year ended September 30, 1996, a provision of $86,789 was
made for the Fund's projected retirement benefit obligations, and
payments of $5,460 were made to retired Trustees, resulting in an
accumulated liability of $196,947 at September 30, 1996.
Major Shareholders. As of December 16, 1996, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B, Class C or Class
Y shares except the following: (1) Merrill Lynch Pierce Fenner &
Smith Inc. ("Merrill Lynch"), 4800 Deer Lake Drive East, 3rd Floor,
Jacksonville, Florida 32246-6484, which was the record owner of
33,673.000 Class C shares (equal to 7.61% of the Class C shares
then outstanding), and (2) Massachusetts Mutual Life Insurance
Company ("MassMutual"), 1295 State Street, Springfield,
Massachusetts 01111-0001; whose Separate Investment Account N3 was
the record owner of 727,228.221 Class Y shares (equal to 100% of
the Class Y shares then outstanding). The Manager has been advised
that Merrill Lynch holds such Class C shares of the Fund for the
benefit of its customers.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund, and three of whom (Ms.
Macaskill and Messrs. Spiro and Galli) serve as Trustees of the
Fund.
The Manager and the Fund have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at
its expense, to provide the Fund with adequate office space,
facilities and equipment, and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including
the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the
Investment Advisory Agreement or by the Distributor under the
General Distributor's Agreement are paid by the Fund. The
Investment Advisory Agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit
expenses, custodian and transfer agent expenses, share issuance
costs, certain printing and registration costs and non-recurring
expenses, including litigation costs. For the Fund's fiscal years
ended September 30, 1994, 1995 and 1996, the management fees paid
by the Fund to the Manager were $4,280,597, $4,952,525 and
$7,334,344, respectively.
The Investment Advisory Agreement contains no expense limitation. However,
because of state regulations limiting fund expenses that previously applied, the
Manager had voluntarily undertaken that the Fund's total expenses in any fiscal
year (including the investment advisory fee but exclusive of taxes, interest,
brokerage commissions, distribution plan payments and any extraordinary
non-recurring expenses, including litigation) would not exceed the most
stringent state regulatory limitation applicable to the Fund. Due to changes
in federal securities laws, such state regulations no longer apply and the
Manager's undertaking is therefore inapplicable and has been withdrawn.
During the Fund's last fiscal year, the Fund's expenses did not exceed the
most stringent state regulatory limit and the voluntary undertaking was not
invoked.
The Investment Advisory Agreement provides that in the absence
of willful misfeasance, bad faith, gross negligence in the
performance of its duties, or reckless disregard for its
obligations and duties thereunder, the Manager is not liable for
any loss sustained by reason of good faith errors or omissions in
connection with any matters to which the Agreement relates. The
Investment Advisory Agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to
use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment
adviser to the Fund, the right of the Fund to use the name
"Oppenheimer" as part of its name may be withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B, Class C and Class Y shares but is not obligated to sell
a specific number of shares. Expenses normally attributable to
sales (excluding payments under the Distribution and Service Plans
but including advertising and the cost of printing and mailing
prospectuses, other than those furnished to existing shareholders),
are borne by the Distributor. During the Fund's fiscal years ended
September 30, 1994, 1995 and 1996, the aggregate sales charges on
sales of the Fund's Class A shares were $5,199,808, $2,754,960 and
$4,301,367, respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $1,699,406,
$876,712 and $1,402,167 in those respective years. During the
Fund's fiscal years ended September 30, 1995 and 1996, the
contingent deferred sales charges collected on the Fund's Class B
shares totalled $85,390 and $168,972, respectively, all of which
the Distributor retained. During the Fund's fiscal year ended
September 30, 1996, contingent deferred sales charges collected on
the Fund's Class C shares totalled $2,383, all of which the
Distributor retained. For additional information about
distribution of the Fund's shares and the expenses connected with
such activities, please refer to "Distribution and Service Plans,"
below. No sales charges are assessed by OFDI on Class Y shares.
The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One
of the duties of the Manager under the Investment Advisory
Agreement is to arrange the portfolio transactions for the Fund.
The Investment Advisory Agreement contains provisions relating to
the employment of broker-dealers ("brokers") to effect the Fund's
portfolio transactions. In doing so, the Manager is authorized by
the Investment Advisory Agreement to employ broker-dealers,
including "affiliated" brokers, as that term is defined in the
Investment Company Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission
bidding but is expected to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Trustees. Purchases of securities from
underwriters include a commission or concession paid by the issuer
to the underwriter, and purchases from dealers include a spread
between the bid and asked price.
Under the Investment Advisory Agreement, the Manager is
authorized to select brokers that provide brokerage and/or research
services for the Fund and/or the other accounts over which the
Manager or its affiliates have investment discretion. The
commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination
is made by the Manager that the commission is fair and reasonable
in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of
the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the
Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the Investment Advisory Agreement, and
the procedures and rules described above, allocations of brokerage
are generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either
case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for
certain fixed-income agency transactions in the secondary market,
and are otherwise paid only if it appears likely that a better
price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager
and its affiliates, and investment research received for the
commissions of those other accounts may be useful both to the Fund
and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt
of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If
a research service also assists the Manager in a non-research
capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to
the Manager in the investment decision-making process may be paid
in commission dollars. The Board of Trustees has permitted the
Manager to use concessions on fixed price offerings to obtain
research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use
stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to the Manager
that (1) the trade is not from or for the broker's own inventory,
(2) the trade was executed by the broker on an agency basis at the
stated commission, and (3) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope
and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
by enabling the Manager to obtain market information for the
valuation of securities held in the Fund's portfolio or being
considered for purchase. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who
are not "interested persons" as defined in the Investment Company
Act, and who have no direct or indirect financial interest in the
operation of the Investment Advisory Agreement or the Distribution
Plans described below) annually reviews information furnished by
the Manager as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such
commissions was reasonably related to the value or benefit of such
services.
During the Fund's fiscal years ended September 30, 1994, 1995
and 1996, total brokerage commissions paid by the Fund (not
including spreads or concessions on principal transactions on a net
trade basis) were $5,964,989, $9,234,871 and $801,028,
respectively. During the fiscal year ended September 30, 1996,
$26,106 was paid to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was
$9,278,719. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation
procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in a class of
shares of the Fund may be advertised. An explanation of how these
total returns are calculated for each class and the components of
those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each class of shares of the
Fund for the 1, 5, and 10-year periods (or the life of the class,
if less) ending as of the most recently-ended calendar quarter
prior to the publication of the advertisement. This enables an
investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is not
insured; its returns and share prices are not guaranteed and
normally will fluctuate on a daily basis. When redeemed, an
investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each
class of shares of the Fund are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses
allocated to the particular class.
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). For Class
B shares, the payment of the applicable contingent deferred sales
charge (5.0% for the first year, 4.0% for the second year, 3.0% for
the third and fourth years, 2.0% in the fifth year, 1.0% in the
sixth year and none thereafter) is applied to the investment result
for the period shown (unless the total return is shown at net asset
value, as described below). For Class C shares, a 1.0% contingent
deferred sales charge is applied to the investment result for the
one-year period (or less). Total returns also assume that all
dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share,
and that the investment is redeemed at the end of the period.
The "average annual total return" on an investment in Class A
shares of the Fund for the one-year, five and ten-year periods
ending September 30, 1996 were 20.41%, 17.94% and 18.47%,
respectively. The average annual total returns on an investment in
Class B shares of the Fund for the one year period ended September
30, 1996 and for the period from April 1, 1994 (the inception of
the Class) were 21.77% and 19.17%, respectively. The cumulative
"total return" on Class A shares from September 11, 1986 to
September 30, 1996 was 441.58%. The cumulative total return on
Class B shares for the period from April 1, 1994 through September
30, 1996 was 54.95%. The cumulative total return on Class C shares
from the period beginning October 2, 1995 (inception of the Class)
through September 30, 1996 was 26.96%. The Fund's Class Y shares
are not subject to a sales charge. The average annual total return
on an investment in Class Y shares of the Fund for the one-year
period ended September 30, 1996 and for the period from June 1,
1994 (the commencement of the offering of shares) were 28.09% and
25.43%, respectively. The cumulative total return on Class Y
shares for the period from June 1, 1994 through September 30, 1996
was 69.57%.
Total Returns at Net Asset Value. From time to time the Fund
may also quote an average annual total return at net asset value or
a cumulative total return at net asset value for Class A, Class B
or Class C shares. Each is based on the difference in net asset
value per share at the beginning and the end of the period for a
hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and
takes into consideration the reinvestment of dividends and capital
gains distributions. The cumulative total return at net asset
value of the Fund's Class A shares for the period from September
11, 1986 to September 30, 1996 was 474.62%. The average annual
total returns at net asset value for Class A shares for the one,
five and ten-year periods ended September 30, 1996 were 27.76%,
19.35% and 19.00%, respectively. The cumulative total return at
net asset value for the Fund's Class B shares for the period from
April 1, 1994 through September 30, 1996 was 57.95%. The average
annual returns for Class B shares at net asset value for the one-
year period ended September 30, 1996 and from April 1, 1994 to
September 30, 1996 were 26.77% and 20.09%, respectively. The
cumulative total return at net asset value for the Fund's Class C
shares for the period beginning October 2, 1995 (inception of the
Class) through September 30, 1996 was 27.96%.
Total return information may be useful to investors in
reviewing the performance of the various classes of the Fund's
shares. However, when comparing total return of an investment in
the Fund with that of other alternatives, investors should
understand that as the Fund is an aggressive equity fund seeking
capital appreciation, its shares are subject to greater market
risks and volatility than shares of funds having other investment
objectives and that the Fund is designed for investors who are
willing to accept greater risk of loss in the hopes of realizing
greater gains.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B, Class C or Class Y
shares by Lipper Analytical Services, Inc. ("Lipper"), a widely-
recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods
based on categories relating to investment objectives. The
performance of the Fund is ranked against (i) all other funds, (ii)
all other small company growth funds and (iii) all other growth
funds in a specific size category. The Lipper performance rankings
are based on total returns that include the reinvestment of capital
gain distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B and Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. The Fund is ranked among international stock funds.
Investment return measures a fund's or class' one, three, five and
ten-year average annual total returns (depending on the inception
of the fund or class) in excess of 90-day U.S. Treasury bill
returns after considering the fund's sales charges and expenses.
Risk measures a fund's or class' performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to
produce star rankings reflecting performance relative to the
average fund in the fund's category. Five stars is the "highest"
ranking (top 10%), four stars is "above average" (next 22.5%),
three stars is "average" (next 35%), two stars is "below average"
(next 22.5%) and one star is "lowest" (bottom 10%). The current
star ranking is the fund's or class' 3-year ranking or its combined
3- and 5-year ranking (weighted 60%/40%, respectively, or its
combined 3-, 5- and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception of the fund or class.
Rankings are subject to change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
ranking, Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by
Morningstar are based on the same risk and return measurements as
its star rankings but do not consider the effect of sales charges.
From time to time, the Fund may include in its advertisements
and sales literature performance information about the Fund cited
in other newspapers and periodicals, such as the New York Times,
which may include performance quotations from other sources,
including the Lipper.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or ranking of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgement, or
based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plans for Class B and Class C shares under
Rule 12b-1 of the Investment Company Act pursuant to which the Fund
will make payments to the Distributor in connection with the
distribution and/or servicing of the shares of that class, as
described in the Prospectus. No such Plan has been adopted for
Class Y shares. Each Plan has been approved by a vote of (i) the
Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the shares
of each class. For the Distribution and Service Plan for Class B
and Class C shares, that vote was cast by the Manager as the sole
initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at
a meeting called for the purpose of voting on such continuance.
Each Plan may be terminated at any time by the vote of a majority
of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. None of the Plans may be amended
to increase materially the amount of payments to be made unless
such amendment is approved by shareholders of the Class affected by
the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed amendment to the Class A Plan that would materially
increase the amount to be paid by Class A shareholders under the
Class A Plan. Such approval must be by a "majority" of the Class
A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be
approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which payments were made and the identity of
each Recipient that received any payment. Each Plan further
provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of
the Fund is committed to the discretion of the Independent
Trustees. This does not prevent the involvement of others in such
selection and nomination if the final decision as to any such
selection or nomination is approved by a majority of the Board and
the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers, did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Trustees. Initially, the
Board of Trustees has set the fees at the maximum rate and set no
requirement for a minimum amount of assets.
For the fiscal year ended September 30, 1996, payments under
the Class A Plan totalled $2,279,225, of which $164,037 was paid to
an affiliate of the Distributor. Any unreimbursed expenses
incurred by the Distributor with respect to Class A shares for any
fiscal year may not be recovered in subsequent years. Payments
received by the Distributor under the Plan for Class A shares will
not be used to pay any interest expense, carrying charge, or other
financial costs, or allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payment
to be paid by the Distributor to Recipients in advance for the
first year such shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net asset value of the shares sold. An
exchange of shares does not entitle the Recipient to an advance
service fee payment. In the event shares are redeemed during the
first year that the shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of the advance payment for
those shares to the Distributor. Payments made under the Class B
Plan during the fiscal period ended September 30, 1996 totalled
$1,197,138, of which the Distributor retained $1,040,973 and paid
$12,821 to an affiliated dealer. Payments made under the Class C
Plan for the fiscal year ended September 30, 1996 totalled $70,325,
of which the Distributor retained $53,257.
Although the Class B Plan and the Class C Plan permit the
Distributor to retain both the asset-based sales charges and the
service fee, or to pay Recipients the service fee on a quarterly
basis, without payment in advance, the Distributor intends to pay
the service fee to Recipients in the manner described above. A
minimum holding period may be established from time to time under
the Class B and the Class C Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the
Class B and the Class C Plan are subject to the limitations imposed
by the Conduct Rules of the National Association of Securities
Dealers, Inc. on payments of asset-based sales charges and service
fees.
The Class B Plan allows for the carry-forward of distribution
expenses to be recovered from asset-based sales charges in
subsequent fiscal periods. The Class C Plan provides for the
Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the
amounts paid by the Fund during that period.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without the assessment of
a front-end sales load and at the same time permit the Distributor
to compensate brokers and dealers in connection with the sale of
Class B and Class C shares of the Fund. Such payments are made in
recognition that the Distributor (i) pays sales commissions to
authorized brokers and dealers at the time of sale, as described in
the Prospectus, (ii) may finance such commissions and/or the
advance of the service fee payment to Recipients under those Plans,
(iii) employs personnel to support distribution of shares, and (iv)
may bear the costs of sales literature, advertising and
prospectuses (other than those furnished to current shareholders)
and state "blue sky" registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor will not accept any order for $500,000 or more of
Class B shares or $1 million or more of Class C shares on behalf of
a single investor (not including dealer "street name" or omnibus
accounts) because generally it will be more advantageous for that
investor to purchase Class A shares of the Fund instead. A fourth
class of shares may be purchased only by certain institutional
investors at net asset value per share (the "Class Y shares").
The four classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charge to which Class B and Class C shares are
subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B, Class C and Class
Y shares recognizes two types of expenses. General expenses that
do not pertain specifically to any class are allocated pro rata to
the shares of each class, based on the percentage of the net assets
of such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution Plan fees, (ii)
incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B, Class C and Class Y shares of the
Fund are determined as of the close of business of The New York
Stock Exchange (the "Exchange") on each day that the Exchange is
open by dividing the Fund's net assets attributable to a class by
the number of shares of that class that are outstanding. The
Exchange normally closes at 4:00 P.M. New York time, but may close
earlier on some days (for example, in case of weather emergencies
or on days falling before a holiday). The Exchange's most recent
annual holiday schedule (which is subject to change) states that it
will close on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a portion of its assets in foreign securities primarily
listed on foreign exchanges which may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
Because the Fund's net asset value will not be calculated on those
days, the Fund's net asset values per share of Class A, Class B,
Class C and Class Y shares may be affected on such days when
shareholders may not purchase or redeem shares.
The Fund's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sale prices of the preceding trading day or closing "bid"
prices that day); (ii) securities traded on a foreign securities
exchange are valued generally at the last sales price available to
the pricing service approved by the Fund's Board of Trustees or to
the Manager as reported by the principal exchange on which the
security is traded at its last trading session on or immediately
preceding the valuation date, or at the mean between "bid" and
"ask" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "ask" prices determined by a portfolio pricing service approved
by the Fund's Board of Trustees or obtained by the Manager from two
active market makers in the security on the basis of reasonable
inquiry; (iv) debt instruments having a maturity of more than 397
days when issued, and non-money market type instruments having a
maturity of 397 days or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between the
"bid" and "ask" prices determined by a pricing service approved by
the Fund's Board of Trustees or obtained by the Manager from two
active market makers in the security on the basis of reasonable
inquiry; (v) money market debt securities that had a maturity of
less than 397 days when issued that have a remaining maturity of 60
days or less are valued at cost, adjusted for amortization of
premiums and accretion of discounts; and (vi) securities (including
restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers
willing to give quotes (see (ii), (iii) and (iv) above), the
security may be priced at the mean between the "bid" and "ask"
prices provided by a single active market maker (which in certain
cases may be the "bid" price if no "ask" price is available).
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price U.S.
Government Securities for which last sale information is not
generally available. The Manager will monitor the accuracy of such
pricing services, which may include comparing prices used for
portfolio evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing "bid" and "ask"
prices on the principal exchange or on NASDAQ on the valuation
date, or, if not, value shall be the closing "bid" price on the
principal exchange or on NASDAQ on the valuation date. If the put,
call or future is not traded on an exchange or on NASDAQ, it shall
be valued at the mean between "bid" and "ask" prices obtained by
the Manager from two active market makers (which in certain cases
may be the "bid" price if no "ask" price is available).
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the ACH transfer is
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, grandparents, parents,
aunts, uncles, nieces and nephews, parents-in-law, brothers and
sisters, sons- and daughters-in-law, a sibling's spouse and a
spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California
Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth
Fund
Rochester Fund Municipals*
Rochester Fund Series - The Bond Fund for
Growth
Rochester Portfolio Series - Limited Term
New York Municipal Fund*
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government
Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth
Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Value
Fund
Oppenheimer International Growth Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
- -------------------
* Shares of the Fund are not presently exchangeable for shares of
these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares or Class A and Class B
shares of the Fund and other Oppenheimer funds during a 13-month
period (the "Letter of Intent period"), which may, at the
investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases of shares which, when
added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count
toward satisfying the amount of the Letter. A letter enables an
investor to count the Class A and Class B shares purchased under
the Letter to obtain the reduced sales charge rate on purchases of
Class A shares of the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of
Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the intended purchase amount specified under the Letter
is completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A or B shares acquired in
exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial
or contingent deferred sales charge or (ii) Class B shares of one
of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the
Class A contingent deferred sales charge, the term "employee
benefit plan" means any plan or arrangement, whether or not
"qualified" under the Internal Revenue Code, including medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Trustees has
the right to determine whether a minimum and/or maximum value
should apply to accounts holding shares, to fix such values and the
terms, conditions and other procedures to cause the involuntary
redemption of accounts that do not satisfy such criteria.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash.
However, the Board of Trustees of the Fund may determine that it
would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order
wholly or partly in cash. In that case the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind"
of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day
period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities
used to make redemptions in kind will be the same as the method the
Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation
will be made as of the time the redemption price is
determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares, or (ii) Class B shares that were subject to the
Class B contingent deferred sales charge when you redeemed them.
This privilege does not apply to Class C shares. The reinvestment
may be made without sales charge only in Class A shares of the Fund
or any of the other Oppenheimer funds into which shares of the Fund
are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order.
The shareholder must ask the Distributor for that privilege at the
time of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B and
Class C contingent deferred sales charges will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored pension, profit-sharing or 401(k) plans may not directly
redeem or exchange shares held for their account under those plans.
The employer or plan administrator must sign the request.
Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain
documents (available from the Transfer Agent) must be completed
before the distribution may be made. Distributions from retirement
plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent)
must be submitted to the Transfer Agent with the distribution
request, or the distribution may be delayed. Unless the
shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax
be withheld from any distribution even if the shareholder elects
not to have tax withheld. The Fund, the Manager, the Distributor,
the Trustee and the Transfer Agent assume no responsibility to
determine whether a distribution satisfies the conditions of
applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from a dealer or broker
after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value if
the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally 4:00 P.M., but may
be earlier some days) and the order was transmitted to and received
by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with signature(s) of the registered owners guaranteed
on the redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How to Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans because of the imposition of the
contingent deferred sales charges on such withdrawals (except where
the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Contingent Deferred Sales Charges".)
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the Fund
shall incur no liability to the Planholder for any action taken or
omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased
for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the Class A
shares in certificated form. Share certificates are not issued for
Class B or Class C shares. Upon written request from the
Planholder, the Transfer Agent will determine the number of Class
A shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated
shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, Class B and
Class C shares except Oppenheimer Money Market Fund, Inc.,
Centennial Money Market Trust, Centennial Tax Exempt Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Centennial America Fund,
L.P. and Daily Cash Accumulation Fund, Inc., which only offer Class
A shares and Oppenheimer Main Street California Municipal Fund
which only offers Class A and Class B shares (Class B and Class C
shares of Oppenheimer Cash Reserves are generally available only by
exchange from the same class of shares of other Oppenheimer funds
or through OppenheimerFunds sponsored 401 (k) plans). A current
list of funds showing which funds offer which classes can be
obtained by calling the Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except by
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of either class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within 6 years of
the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How to Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charge will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans, Checkwriting, if available, and retirement plan
contributions will be switched to the new account unless the
Transfer Agent is instructed otherwise. If all telephone lines are
busy (which might occur, for example, during periods of substantial
market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange
requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board of Trustees and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distribution.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests relating to such qualification in which the Fund derives 30%
or more of its gross income from the sale of securities held less
than three months, it may fail to qualify (see "Tax Aspects of
Covered Calls and Hedging Instruments," above). If it did not so
qualify, the Fund would be treated for tax purposes as an ordinary
corporation and receive no tax deduction for payments made to
shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on
the portfolio securities and handling the delivery of such
securities to and from the Fund. The Manager has represented to
the Fund that the banking relationships between the Manager and the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balances
in excess of $100,000 are not protected by Federal deposit
insurance. Such uninsured balances may at times be substantial.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
--------------------------------------------
INDEPENDENT AUDITORS' REPORT
--------------------------------------------
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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, 1996, 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 five year period then
ended. 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, 1996, 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, 1996, 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 five year period then ended, in
conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Denver, Colorado
October 21, 1996
<PAGE>
<TABLE>
<CAPTION>
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STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
------------------------------------------------------------------------------------------------
FACE MARKET VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM NOTES--17.3%
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<S> <C> <C> <C>
Countrywide Home Loans, 5.33%, 10/1/96 $43,000,000 $
43,000,000
-------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.35%, 10/10/96 40,000,000
39,946,500
-------------------------------------------------------------------------------------------
General Electric Capital Corp., 5.32%, 10/16/96 40,000,000
39,911,333
-------------------------------------------------------------------------------------------
Goldman Sachs Group, L.P., 5.36%, 10/7/96 40,000,000
39,964,200
-------------------------------------------------------------------------------------------
Household Finance Corp., 5.35%, 10/8/96 40,000,000
39,958,389
-------------------------------------------------------------------------------------------
New Center Asset Trust, 5.30%, 10/21/96 18,000,000
17,947,000
-------------------------------------------------------------------------------------------
New Center Asset Trust, 5.35%, 10/21/96 22,000,000
21,934,611
--------------
Total Short-Term Notes (Cost $242,662,033)
242,662,033
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
- ------------------------------------------------------------------------------------------------------------------
- ------------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs.,
8/15/00 (Cost $4,098,554)(1)(2) 4,000,000
400,000
<CAPTION>
SHARES
- ------------------------------------------------------------------------------------------------------------------
- ------------
COMMON STOCKS--78.9%
- ------------------------------------------------------------------------------------------------------------------
- ------------
CONSUMER CYCLICALS--17.8%
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
AUTOS & HOUSING--5.0% Alrenco, Inc.(3)(4) 440,000
9,240,000
-------------------------------------------------------------------------------------------
APS Holding Corp., Cl. A(3) 200,000 5,825,000
-------------------------------------------------------------------------------------------
Belmont Homes, Inc.(3)(4) 600,000 15,150,000
-------------------------------------------------------------------------------------------
Diamond Home Services, Inc.(3) 200,000
5,800,000
-------------------------------------------------------------------------------------------
ITI Technologies, Inc.(3) 300,000 10,575,000
-------------------------------------------------------------------------------------------
NHP, Inc.(3) 350,000 6,650,000
-------------------------------------------------------------------------------------------
OEA, Inc. 200,000 7,950,000
-------------------------------------------------------------------------------------------
Team Rental Group, Inc.(3) 300,000 5,700,000
-------------------------------------------------------------------------------------------
Wilmar Industries, Inc.(3) 135,000 3,071,250
--------------
69,961,250
- ------------------------------------------------------------------------------------------------------------------
- ------------
LEISURE & ENTERTAINMENT--4.2% Applebee's International, Inc.
130,000 3,445,000
-------------------------------------------------------------------------------------------
Cinar Films, Inc., Cl. B(3) 400,000 10,425,000
-------------------------------------------------------------------------------------------
CKE Restaurants, Inc. 300,000 9,225,000
-------------------------------------------------------------------------------------------
Coach USA, Inc.(3) 160,000 4,280,000
-------------------------------------------------------------------------------------------
Einstein/Noah Bagel Corp.(3) 140,000 4,305,000
-------------------------------------------------------------------------------------------
Galoob (Lewis) Toys, Inc.(3) 250,000 7,312,500
-------------------------------------------------------------------------------------------
K2, Inc. 100,000 2,612,500
-------------------------------------------------------------------------------------------
Longhorn Steaks, Inc.(3) 150,000 2,287,500
-------------------------------------------------------------------------------------------
Quality Dining, Inc.(3) 300,000 8,550,000
-------------------------------------------------------------------------------------------
Silver Diner, Inc.(1)(3)(4) 700,000 3,574,375
-------------------------------------------------------------------------------------------
Studio Plus Hotels, Inc.(3) 181,100 2,988,150
-------------
59,005,025
</TABLE>
7 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
MEDIA--3.1% Chancellor Broadcasting Co., Cl. A(3) 100,000
$ 4,150,000
-------------------------------------------------------------------------------------------
Heartland Wireless Communications, Inc.(3) 220,000
5,555,000
-------------------------------------------------------------------------------------------
Outdoor Systems, Inc.(3) 140,000 6,580,000
-------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., Cl. A(3) 211,500
9,623,250
-------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., Cl. A(3) 135,000
5,383,125
-------------------------------------------------------------------------------------------
Universal Outdoor Holdings, Inc.(3) 160,000
5,760,000
-------------------------------------------------------------------------------------------
Wireless One, Inc.(3) 260,000 3,835,000
-------------------------------------------------------------------------------------------
Young Broadcasting, Inc., Cl. A(3) 100,000
3,300,000
------------
44,186,375
- ------------------------------------------------------------------------------------------------------------------
- ------------
RETAIL: GENERAL--1.7% Fila Holding SpA, Sponsored ADR
110,000 10,573,750
-------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(3) 150,000 4,837,500
-------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 322,000 8,935,500
-------------
24,346,750
- ------------------------------------------------------------------------------------------------------------------
- ------------
RETAIL: SPECIALTY--3.8% American Pad & Paper Co.(3) 405,800
8,623,250
-------------------------------------------------------------------------------------------
Copart, Inc.(3) 225,000 4,443,750
-------------------------------------------------------------------------------------------
Corporate Express, Inc.(3) 250,000 9,718,750
-------------------------------------------------------------------------------------------
Garden Ridge Corp.(3) 220,000 3,767,500
-------------------------------------------------------------------------------------------
Moovies, Inc.(3) 380,000 2,090,000
-------------------------------------------------------------------------------------------
Movie Gallery, Inc.(3) 175,000 2,275,000
-------------------------------------------------------------------------------------------
MSC Industrial Direct Co., Inc., Cl. A(3) 300,000
10,687,500
-------------------------------------------------------------------------------------------
Petco Animal Supplies, Inc.(3) 330,000 8,992,500
-------------------------------------------------------------------------------------------
West Coast Entertainment Corp.(3) 340,000
3,442,500
----------
54,040,750
- ------------------------------------------------------------------------------------------------------------------
- ------------
CONSUMER NON-CYCLICALS--18.8%
- ------------------------------------------------------------------------------------------------------------------
- ------------
EDUCATION--0.7% National Education Corp.(3) 500,000
9,562,500
- ------------------------------------------------------------------------------------------------------------------
- ------------
FOOD--1.6% JP Foodservice, Inc.(3) 400,000
9,500,000
-------------------------------------------------------------------------------------------
Performance Food Group Co.(3) 300,000
4,950,000
-------------------------------------------------------------------------------------------
Richfood Holdings, Inc. 200,000 7,450,000
------------
21,900,000
</TABLE>
8 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
HEALTHCARE/DRUGS--5.3% Agouron Pharmaceuticals, Inc.(3)
130,000 $ 5,671,250
-------------------------------------------------------------------------------------------
Alpha-Beta Technology, Inc.(3) 250,000
2,687,500
-------------------------------------------------------------------------------------------
Applied Analytical Industries, Inc.(3) 100,000
2,275,000
-------------------------------------------------------------------------------------------
Biocompatibles International PLC(3) 394,800
3,228,274
-------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(3) 430,000 15,856,250
-------------------------------------------------------------------------------------------
Ethical Holdings PLC, Sponsored ADR(3) 500,000
3,500,000
-------------------------------------------------------------------------------------------
Global Pharmaceutical Corp.(3) 200,000
1,850,000
-------------------------------------------------------------------------------------------
Guilford Pharmaceuticals, Inc.(3) 44,800 1,232,000
-------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc.(3) 180,000 8,910,000
-------------------------------------------------------------------------------------------
Martek Biosciences Corp.(3) 100,000 2,500,000
-------------------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(3) 200,000
3,650,000
-------------------------------------------------------------------------------------------
Norland Medical Systems, Inc.(3)(4) 480,000
10,200,000
-------------------------------------------------------------------------------------------
PAREXEL International Corp.(3) 110,000
6,930,000
-------------------------------------------------------------------------------------------
SangStat Medical Corp.(3) 220,000 5,610,000
-------------
74,100,274
- ------------------------------------------------------------------------------------------------------------------
- ------------
HEALTHCARE/SUPPLIES & American HomePatient, Inc.(3)
300,000 6,675,000
SERVICES--11.2%
- -------------------------------------------------------------------------------------------
AmeriSource Health Corp., Cl. A(3) 240,000
10,680,000
-------------------------------------------------------------------------------------------
Calypte Biomedical Corp.(3) 320,000 2,800,000
-------------------------------------------------------------------------------------------
Capstone Pharmacy Services, Inc.(3) 600,000
7,425,000
-------------------------------------------------------------------------------------------
Compdent Corp.(3) 100,000 3,775,000
-------------------------------------------------------------------------------------------
Digene Corp.(3) 185,000 1,225,625
-------------------------------------------------------------------------------------------
EP MedSystems, Inc.(3)(4) 400,000 2,200,000
-------------------------------------------------------------------------------------------
ESC Medical Systems Ltd.(3) 250,000
8,000,000
-------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(3) 300,000
7,725,000
-------------------------------------------------------------------------------------------
HealthPlan Services Corp.(3) 200,000 4,375,000
-------------------------------------------------------------------------------------------
Henry Schein, Inc.(3) 220,000 8,470,000
-------------------------------------------------------------------------------------------
HumaScan, Inc.(3)(4) 600,000 3,600,000
-------------------------------------------------------------------------------------------
OccuSystems, Inc.(3) 200,000 6,000,000
-------------------------------------------------------------------------------------------
Omnicare, Inc. 400,000 12,200,000
-------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc.(3) 204,000
10,225,500
-------------------------------------------------------------------------------------------
PhyCor, Inc.(3) 290,000 11,038,125
-------------------------------------------------------------------------------------------
Physician Reliance Network, Inc.(3) 140,000
2,135,000
-------------------------------------------------------------------------------------------
Physicians Resource Group, Inc.(3) 330,000
7,796,250
-------------------------------------------------------------------------------------------
Rural/Metro Corp.(3) 230,000 8,395,000
-------------------------------------------------------------------------------------------
Serologicals Corp.(3) 300,000 10,425,000
-------------------------------------------------------------------------------------------
Spine-Tech, Inc.(3) 120,000 3,360,000
-------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(3) 200,000
7,950,000
-------------------------------------------------------------------------------------------
United Dental Care, Inc.(3) 100,000 3,612,500
-------------------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(3) 350,000
6,475,000
-------------
156,563,000
</TABLE>
9 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
ENERGY--5.2%
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
ENERGY SERVICES &
PRODUCERS--4.6% 3-D Geophysical, Inc.(3)(4) 380,000
$ 3,135,000
-------------------------------------------------------------------------------------------
Brown (Tom), Inc.(3) 255,000 4,813,125
-------------------------------------------------------------------------------------------
Core Laboratories NV(3) 250,000 3,937,500
-------------------------------------------------------------------------------------------
Cross Timbers Oil Co. 180,000 4,320,000
-------------------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc.(3) 153,100
8,420,500
-------------------------------------------------------------------------------------------
Energy Ventures, Inc.(3) 250,000 10,125,000
-------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc.(3) 140,000 3,640,000
-------------------------------------------------------------------------------------------
FX Energy, Inc.(3) 500,000 4,875,000
-------------------------------------------------------------------------------------------
HarCor Energy, Inc.(3) 350,000 1,925,000
-------------------------------------------------------------------------------------------
Nabors Industries, Inc.(3) 500,000 6,812,500
-------------------------------------------------------------------------------------------
Newfield Exploration Co.(3) 120,000 5,400,000
-------------------------------------------------------------------------------------------
NUMAR Corp.(3) 306,700 4,945,538
-------------------------------------------------------------------------------------------
Stone Energy Corp.(3) 150,000 2,775,000
-------------------------------------------------------------------------------------------
65,124,163
- ------------------------------------------------------------------------------------------------------------------
- ------------
OIL-INTEGRATED--0.6% Dailey Petroleum Services Corp.(3)(4)
300,000 2,625,000
-------------------------------------------------------------------------------------------
Rutherford-Moran Oil Corp.(3) 200,000
6,000,000
-------------------------------------------------------------------------------------------
8,625,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
FINANCIAL--3.8%
- ------------------------------------------------------------------------------------------------------------------
- ------------
DIVERSIFIED FINANCIAL--2.4% Green Tree Financial Corp.
120,000 4,710,000
-------------------------------------------------------------------------------------------
RAC Financial Group, Inc.(3) 140,000 6,387,500
-------------------------------------------------------------------------------------------
Renters Choice, Inc.(3) 250,000 4,687,500
-------------------------------------------------------------------------------------------
Resource Bancshares Mortgage Group, Inc. 374,500
4,868,500
-------------------------------------------------------------------------------------------
Rockford Industries, Inc.(3)(4) 350,000 6,037,500
-------------------------------------------------------------------------------------------
Winthrop Resources Corp. 250,000 6,750,000
-------------------------------------------------------------------------------------------
33,441,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
INSURANCE--1.4% CapMAC Holdings, Inc. 320,000
10,640,000
-------------------------------------------------------------------------------------------
Executive Risk, Inc. 200,000 7,700,000
-------------------------------------------------------------------------------------------
Meadowbrook Insurance Group, Inc. 26,000
728,000
------------
19,068,000
</TABLE>
10 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
INDUSTRIAL--14.3%
- ------------------------------------------------------------------------------------------------------------------
- ------------
INDUSTRIAL MATERIALS--0.5% American Buildings Co.(3)
250,000 $ 6,625,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
INDUSTRIAL SERVICES--12.5% Abacus Direct Corp.(3) 200,000
4,200,000
-------------------------------------------------------------------------------------------
ABR Information Services, Inc.(3) 100,000
7,200,000
-------------------------------------------------------------------------------------------
Acxiom Corp.(3) 260,000 10,692,500
-------------------------------------------------------------------------------------------
Affiliated Computer Services, Inc., Cl. A(3) 130,000
7,637,500
-------------------------------------------------------------------------------------------
Alternative Resources Corp.(3) 170,000 4,781,250
-------------------------------------------------------------------------------------------
Barnett, Inc.(3) 150,000 3,543,750
-------------------------------------------------------------------------------------------
Correctional Services Corp.(3) 235,000 3,319,375
-------------------------------------------------------------------------------------------
CORT Business Services Corp.(3) 400,000
8,150,000
-------------------------------------------------------------------------------------------
Daisytek International Corp.(3) 300,000 12,975,000
-------------------------------------------------------------------------------------------
DecisionOne Holdings Corp.(3) 350,000
4,900,000
-------------------------------------------------------------------------------------------
Dynamex, Inc.(3)(4) 400,000 3,700,000
-------------------------------------------------------------------------------------------
Eagle USA Airfreight, Inc.(3) 300,000 7,800,000
-------------------------------------------------------------------------------------------
First USA Paymentech, Inc.(3) 180,000
7,312,500
-------------------------------------------------------------------------------------------
International Network Services(3) 100,000
3,512,500
-------------------------------------------------------------------------------------------
Lamar Advertising Co.(3) 100,000 4,150,000
-------------------------------------------------------------------------------------------
Leap Group, Inc. (The)(3) 300,000 3,037,500
-------------------------------------------------------------------------------------------
May & Speh, Inc.(3) 260,000 5,200,000
-------------------------------------------------------------------------------------------
National Processing, Inc.(3) 200,000 3,900,000
-------------------------------------------------------------------------------------------
NuCo2, Inc.(3) 200,000 4,150,000
-------------------------------------------------------------------------------------------
PMT Services, Inc.(3) 200,000 4,050,000
-------------------------------------------------------------------------------------------
Precision Response Corp.(3) 200,000 7,700,000
-------------------------------------------------------------------------------------------
SITEL Corp.(3) 250,000 11,125,000
-------------------------------------------------------------------------------------------
Stericycle, Inc.(3) 300,000 2,737,500
-------------------------------------------------------------------------------------------
Telespectrum Worldwide, Inc.(3) 200,000
3,900,000
-------------------------------------------------------------------------------------------
Transaction Network Services, Inc.(3) 200,000
2,875,000
-------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A(3) 200,000
8,450,000
-------------------------------------------------------------------------------------------
United Waste Systems, Inc.(3) 400,000
13,900,000
-------------------------------------------------------------------------------------------
USA Waste Services, Inc.(3) 350,000 11,025,000
--------------
175,924,375
-------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
MANUFACTURING--1.0% U.S. Filter Corp.(3) 400,000
13,650,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
TRANSPORTATION--0.3% Genesee & Wyoming, Inc., Cl. A(3)
156,000 4,251,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
TECHNOLOGY--17.6%
- ------------------------------------------------------------------------------------------------------------------
- ------------
COMPUTER HARDWARE--0.7% Citrix Systems, Inc.(3) 150,000
7,687,500
-------------------------------------------------------------------------------------------
Data Translation, Inc.(3) 220,000 2,475,000
-------------
10,162,500
</TABLE>
11 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
COMPUTER SOFTWARE--10.0% Arbor Software Corp.(3)
100,000 $ 4,275,000
-------------------------------------------------------------------------------------------
Aspen Technologies, Inc.(3) 180,000 12,195,000
-------------------------------------------------------------------------------------------
Business Objects SA, Sponsored ADR(3) 250,000
4,812,500
-------------------------------------------------------------------------------------------
CSG Systems International, Inc.(3) 75,000
1,518,750
------------------------------------------------------------------------------------------
Enterprise Systems, Inc.(3) 100,000 2,575,000
-------------------------------------------------------------------------------------------
Forte Software, Inc.(3) 100,000 3,925,000
-------------------------------------------------------------------------------------------
Global DirectMail Corp.(3) 270,000 12,892,500
-------------------------------------------------------------------------------------------
HBO & Co. 140,000 9,345,000
-------------------------------------------------------------------------------------------
IDX Systems Corp.(3) 100,000 3,500,000
-------------------------------------------------------------------------------------------
Indus Group, Inc. (The)(3) 200,000 4,000,000
-------------------------------------------------------------------------------------------
Inference Corp., Cl. A(3)(4) 360,000 6,390,000
-------------------------------------------------------------------------------------------
Integrated Measurement Systems, Inc.(3) 260,000
4,290,000
-------------------------------------------------------------------------------------------
McAfee Associates, Inc.(3) 225,000 15,525,000
-------------------------------------------------------------------------------------------
National Instruments Corp.(3) 230,000 6,095,000
-------------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(3) 350,000
4,418,750
-------------------------------------------------------------------------------------------
Pure Atria Corp.(3) 100,000 3,775,000
-------------------------------------------------------------------------------------------
Rational Software Corp.(3) 160,000 5,460,000
-------------------------------------------------------------------------------------------
Siebel Systems, Inc.(3) 120,000 4,995,000
-------------------------------------------------------------------------------------------
Software 2000, Inc.(3) 350,000 3,412,500
-------------------------------------------------------------------------------------------
SPSS, Inc.(3) 330,000 9,157,500
-------------------------------------------------------------------------------------------
SQA, Inc.(3) 260,000 7,020,000
-------------------------------------------------------------------------------------------
Systemsoft Corp.(3) 300,000 10,275,000
---------------
139,852,500
- ------------------------------------------------------------------------------------------------------------------
- ------------
ELECTRONICS--1.5% Advanced Technology Materials, Inc.(3) 300,000
4,050,000
-------------------------------------------------------------------------------------------
Pittway Corp., Cl. A 150,000 6,693,750
-------------------------------------------------------------------------------------------
Sawtek, Inc.(3) 230,000 5,980,000
-------------------------------------------------------------------------------------------
SDL, Inc.(3) 200,000 4,100,000
--------------
20,823,750
- ------------------------------------------------------------------------------------------------------------------
- ------------
TELECOMMUNICATIONS- Comverse Technology, Inc.(3)
220,000 8,552,500
TECHNOLOGY--5.4%
- -------------------------------------------------------------------------------------------
DSP Communications, Inc.(3) 100,000
5,587,500
-------------------------------------------------------------------------------------------
ICG Communications, Inc.(3) 150,000
3,150,000
-------------------------------------------------------------------------------------------
ICG Communications, Inc.(1)(3) 272,500
5,436,375
-------------------------------------------------------------------------------------------
IXC Communications, Inc.(3) 400,000
8,200,000
-------------------------------------------------------------------------------------------
LCI International, Inc.(3) 500,000 15,750,000
</TABLE>
12 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
TELECOMMUNICATIONS- Lightbridge, Inc.(3) 292,000
$ 3,431,000
TECHNOLOGY
- -------------------------------------------------------------------------------------------
(CONTINUED) PageMart Wireless, Inc., Cl. A(3) 351,000
3,378,375
-------------------------------------------------------------------------------------------
Periphonics Corp.(3) 300,000 11,700,000
-------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc.(3) 250,000 7,187,500
-------------------------------------------------------------------------------------------
Teltrend, Inc.(3) 80,000 3,400,000
-----------
75,773,250
- ------------------------------------------------------------------------------------------------------------------
- ------------
UTILITIES--1.4%
- ------------------------------------------------------------------------------------------------------------------
- ------------
TELEPHONE UTILITIES--1.4% ACC CORP.(3) 135,000
6,378,750
-------------------------------------------------------------------------------------------
McLeod, Inc.(3) 270,000 8,910,000
-------------------------------------------------------------------------------------------
Telco Communications Group, Inc.(3) 200,000
3,700,000
--------------
18,988,750
--------------
Total Common Stocks (Cost $714,244,016)
1,105,975,212
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
PREFERRED STOCKS--0.8%
- ------------------------------------------------------------------------------------------------------------------
- ------------
AirNet Communications Corp., Series C(1)(3) 250,000
1,500,000
-------------------------------------------------------------------------------------------
Silicon Video Corp., $2.50 Cv., Series D(1)(3) 1,200,000
5,628,000
-------------------------------------------------------------------------------------------
Silicon Video Corp., Series E(1)(3) 800,000
4,400,000
-------------
Total Preferred Stocks (Cost $8,900,000)
11,528,000
UNITS
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ------------------------------------------------------------------------------------------------------------------
- ------------
Biocompatibles International PLC Wts., Exp. 2/97 56,400
54,672
-------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., Cl. A Wts., Exp. 12/97 40,110
--
-------------------------------------------------------------------------------------------
Windmere-Durable Holdings, Inc. Wts., Exp. 1/98 238
--
--------
Total Rights, Warrants and Certificates (Cost $291,393)
54,672
</TABLE>
13 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ------------
REPURCHASE AGREEMENT--3.3%
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
Repurchase agreement with Zion First National Bank,
5.62%, dated 9/30/96, to be repurchased at $46,307,228
on 10/1/96, collateralized by U.S. Treasury Nts.,
5.75%--8.875%, 5/15/97--8/15/04, with a value
of $47,251,925 (Cost $46,300,000) $46,300,000
$46,300,000
- ------------------------------------------------------------------------------------------------------------------
- ------------
TOTAL INVESTMENTS, AT VALUE (COST $1,016,495,996)
100.3% 1,406,919,917
- ------------------------------------------------------------------------------------------------------------------
- ------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3)
(4,065,606)
---------- --------------
NET ASSETS 100.0% $1,402,854,311
----------- ---------------
----------- ---------------
</TABLE>
1. Identifies issues considered to be illiquid--See
Note 5 of Notes to Financial Statements.
2. Non-income producing--issuer is in default of
interest payment.
3. Non-income producing security.
4. 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, 1996. The aggregate fair
value of all securities of affiliated companies as
of September 30, 1996 amounted to $65,851,875.
Transactions during the period in which the issuer
was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE
SEPTEMBER 30, 1995 GROSS ADDITIONS GROSS
REDUCTIONS
----------------------- ----------------------- --------------------------
SHARES COST SHARES COST SHARES
COST
- ------------------------------------------------------------------------------------------------------------------
- ---------------
<S> <C> <C> <C> <C> <C> <C>
Alrenco, Inc. -- $ -- 440,000 $7,038,513 -- $ --
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Belmont Homes, Inc. 372,500 4,018,062 250,000 4,720,839 22,500
288,281
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Business Resource Group 260,000 1,871,875 -- -- 260,000
1,871,875
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Dailey Petroleum Services Corp. -- -- 300,000 2,407,916 --
--
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Dynamex, Inc. -- -- 400,000 3,216,874 -- --
- ------------------------------------------------------------------------------------------------------------------
- ---------------
EP MedSystems, Inc. -- -- 400,000 2,200,000 --
--
- ------------------------------------------------------------------------------------------------------------------
- ---------------
HumaScan, Inc. -- -- 600,000 3,600,000 --
- --
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Inference Corp., Cl. A 200,000 3,063,605 160,000 3,035,761 --
--
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Norland Medical Systems, Inc. 240,000 3,041,878 240,000 1,758,550
-- --
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Rockford Industries, Inc. 200,000 1,667,500 150,000 1,647,984 --
--
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Rocky Mountain Chocolate
Factory, Inc. 150,000 2,493,750 50,000 631,250 200,000
3,125,000
- ------------------------------------------------------------------------------------------------------------------
- ---------------
Silver Diner, Inc. -- -- 700,000 3,850,000 -- --
- ------------------------------------------------------------------------------------------------------------------
- ---------------
3-D Geophysical, Inc. -- -- 380,000 2,863,675 --
--
------------- ----------- -----------
$16,156,670 $36,971,362 $5,285,156
------------ ---------- -----------
------------ ----------- -----------
<CAPTION>
BALANCE
SEPTEMBER 30, 1996
--------------------------
SHARES COST
- --------------------------------------------------------------------
<S> <C> <C>
Alrenco, Inc. 440,000 $7,038,513
- --------------------------------------------------------------------
Belmont Homes, Inc. 600,000 8,450,620
- --------------------------------------------------------------------
Business Resource Group -- --
- --------------------------------------------------------------------
Dailey Petroleum Services Corp. 300,000 2,407,916
- --------------------------------------------------------------------
Dynamex, Inc. 400,000 3,216,874
- --------------------------------------------------------------------
EP MedSystems, Inc. 400,000 2,200,000
- --------------------------------------------------------------------
HumaScan, Inc. 600,000 3,600,000
- --------------------------------------------------------------------
Inference Corp., Cl. A 360,000 6,099,366
- --------------------------------------------------------------------
Norland Medical Systems, Inc. 480,000 4,800,428
- --------------------------------------------------------------------
Rockford Industries, Inc. 350,000 3,315,484
- --------------------------------------------------------------------
Rocky Mountain Chocolate
Factory, Inc. -- --
- --------------------------------------------------------------------
Silver Diner, Inc. 700,000 3,850,000
- --------------------------------------------------------------------
3-D Geophysical, Inc. 380,000 2,863,675
--------------
$47,842,876
--------------
--------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
-------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C>
ASSETS Investments, at value--see accompanying statement:
Unaffiliated companies (cost $968,653,120)
$1,341,068,042
Affiliated companies (cost $47,842,876) 65,851,875
-------------------------------------------------------------------------------------------
Cash 1,722,403
-------------------------------------------------------------------------------------------
Receivables:
Investments sold 6,870,082
Shares of beneficial interest sold 5,489,975
Interest and dividends 99,785
-------------------------------------------------------------------------------------------
Other 17,360
-----------------
Total assets 1,421,119,522
-------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 13,143,179
Shares of beneficial interest redeemed 3,585,797
Distribution and service plan fees 763,963
Trustees' fees 228,491
Transfer and shareholder servicing agent fees 128,207
Other 415,574
------------------
Total liabilities 18,265,211
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
NET ASSETS $1,402,854,311
------------------
------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
COMPOSITION OF Paid-in capital
$923,007,741
NET ASSETS
- -------------------------------------------------------------------------------------------
Accumulated net investment loss (624,556)
-------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
90,047,205
-------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3
390,423,921
-------------------------------------------------------------------------------------------
Net Assets $1,402,854,311
------------------
------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE Class A Shares:
Net asset value and redemption price per share (based on net
assets of $1,160,086,668 and 22,661,207 shares of beneficial
interest outstanding) $51.19
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $54.31
-------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets
of $193,636,739 and 3,865,275 shares of beneficial interest outstanding)
$50.10
-------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $17,512,295 and 345,203 shares of beneficial interest
outstanding) $50.73
-------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $31,618,609 and 614,713 shares of beneficial interest
outstanding) $51.44
-------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended September 30,
1996
-------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C>
INVESTMENT INCOME Interest
$9,398,429
-------------------------------------------------------------------------------------------
Dividends 381,428
Total income 9,779,857
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
EXPENSES Management fees--Note 4
7,334,344
-------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 2,279,225
Class B 1,197,138
Class C 70,325
-------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
2,260,851
-------------------------------------------------------------------------------------------
Shareholder reports 520,617
-------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 163,385
-------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 68,330
Class B 31,298
Class C 5,384
Class Y 6,090
-------------------------------------------------------------------------------------------
Custodian fees and expenses 57,877
-------------------------------------------------------------------------------------------
Legal and auditing fees 44,617
-------------------------------------------------------------------------------------------
Other 131,674
-------------
Total expenses 14,171,155
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
NET INVESTMENT LOSS
(4,391,298)
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
REALIZED AND UNREALIZED Net realized gain (loss) on investments:
GAIN (LOSS) Unaffiliated companies
95,246,912
Affiliated companies (2,371,409)
---------------
Net realized gain 92,875,503
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
178,297,200
-------------
Net realized and unrealized gain 271,172,703
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$266,781,405
-------------
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
16 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995
- ------------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C> <C>
OPERATIONS Net investment loss $(4,391,298)
$(328,003)
-------------------------------------------------------------------------------------------
Net realized gain 92,875,503 74,810,356
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 178,297,200
113,285,741
----------- -------------
Net increase in net assets resulting from operations 266,781,405
187,768,094
- ------------------------------------------------------------------------------------------------------------------
- ------------
DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS Distributions from net investment income:
Class A -- (27,414,490)
Class B -- (1,382,289)
Class Y -- (40,545)
-------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (65,845,405) --
Class B (7,032,331) --
Class C (197,246) --
Class Y (965,392) --
- ------------------------------------------------------------------------------------------------------------------
- ------------
BENEFICIAL INTEREST
TRANSACTIONS Net increase in net assets resulting from beneficial
interest transactions--Note 2:
Class A 196,657,756 38,698,901
Class B 96,461,672 36,609,837
Class C 15,930,604 --
Class Y 18,542,687 7,856,196
- ------------------------------------------------------------------------------------------------------------------
- ------------
- ------------------------------------------------------------------------------------------------------------------
- ------------
NET ASSETS Total increase 520,333,750
242,095,704
-------------------------------------------------------------------------------------------
Beginning of period 882,520,561 640,424,857
--------------- --------------
End of period (including accumulated net
investment loss of $624,556 and
$243,227, respectively) $1,402,854,311
$882,520,561
--------------- ---------------
--------------- ---------------
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------------
CLASS A
----------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $43.65 $35.81 $39.90
---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.13) -- (.11)
Net realized and unrealized gain (loss) 11.26 9.46 (2.98)
-------- ------ ------
Total income (loss) from investment operations 11.13 9.46 (3.09)
---------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain (3.59) (1.62) (1.00)
---------------------------------------------------------------------------------------------------
Net asset value, end of period $51.19 $43.65 $35.81
-------- ------ ------
-------- ------ ------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 27.76% 28.03%
(7.91)%
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,160,087 $798,065 $613,740
---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $937,563 $650,903 $588,642
---------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.32)% 0.00% (0.34)%
Expenses 1.22% 1.33% 1.32%
---------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 79.7% 105.9% 83.3%
Average brokerage commission rate(7) $0.0577 -- --
</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
September 30, 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 (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
18 Oppenheimer Discovery Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------------
CLASS A CLASS B
---------------------- -------------------------------------------
YEAR ENDED SEPTEMBER 30,
1993 1992 1996 1995 1994(3)
- ------------------------------------------------------------------------------------------------------------------
- ---------------
- ------------------------------------------------------------------------------------------------------------------
- ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $27.62 $26.03 $43.11 $35.65
$35.65
- ------------------------------------------------------------------------------------------------------------------
- ----------
Income (loss) from investment operations:
Net investment income (loss) (.13) (.17) (.23) (.21) .03
Net realized and unrealized gain (loss) 12.41 3.05 10.81 9.29
(.03)
------- ------- ------ ------ --------
Total income (loss) from investment operations 12.28 2.88 10.58 9.08
--
- ------------------------------------------------------------------------------------------------------------------
- ----------
Distributions to shareholders from net realized gain -- (1.29) (3.59) (1.62)
--
- ------------------------------------------------------------------------------------------------------------------
- ----------
Net asset value, end of period $39.90 $27.62 $50.10 $43.11
$35.65
------- ------- ------ ------ --------
------- ------- ------ ------ --------
- ------------------------------------------------------------------------------------------------------------------
- ----------
- ------------------------------------------------------------------------------------------------------------------
- ----------
TOTAL RETURN, AT NET ASSET VALUE(4) 44.46% 11.28%
26.77% 27.04% (1.93)%
- ------------------------------------------------------------------------------------------------------------------
- ----------
- ------------------------------------------------------------------------------------------------------------------
- ----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $587,057 $294,010 $193,637 $75,062
$26,491
- ------------------------------------------------------------------------------------------------------------------
- ----------
Average net assets (in thousands) $451,016 $218,065 $119,895 $43,301
$12,435
- ------------------------------------------------------------------------------------------------------------------
- ----------
Ratios to average net assets:
Net investment income (loss) (0.54)% (0.62)% (1.06)% (0.78)%
(1.06)%(5)
Expenses 1.27% 1.52% 1.99% 2.11%
2.36%(5)
- ------------------------------------------------------------------------------------------------------------------
- ----------
Portfolio turnover rate(6) 85.2% 67.9% 79.7% 105.9%
83.3%
Average brokerage commission rate(7) -- -- $0.0577 --
--
<CAPTION>
CLASS C CLASS Y
------------- -------------------------------------------
PERIOD ENDED
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1996(2) 1996 1995 1994(1)
- ------------------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $43.20 $43.74 $35.81
$34.89
- ------------------------------------------------------------------------------------------------------------------
- ------
Income (loss) from investment operations:
Net investment income (loss) (.21) (.02) (.10) .11
Net realized and unrealized gain (loss) 11.33 11.31 9.65 .81
------- ------ ------ -------
Total income (loss) from investment operations 11.12 11.29 9.55
.92
- ------------------------------------------------------------------------------------------------------------------
- ------
Distributions to shareholders from net realized gain (3.59) (3.59) (1.62)
--
- ------------------------------------------------------------------------------------------------------------------
- ------
Net asset value, end of period $50.73 $51.44 $43.74 $35.81
------- ------ ------ -------
------- ------ ------ -------
- ------------------------------------------------------------------------------------------------------------------
- ------
- ------------------------------------------------------------------------------------------------------------------
- ------
TOTAL RETURN, AT NET ASSET VALUE(4) 27.96% 28.09%
28.28% 3.20%
- ------------------------------------------------------------------------------------------------------------------
- ------
- ------------------------------------------------------------------------------------------------------------------
- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $17,512 $31,619 $9,394
$194
- ------------------------------------------------------------------------------------------------------------------
- ------
Average net assets (in thousands) $7,109 $18,563 $3,190 $
39
- ------------------------------------------------------------------------------------------------------------------
- ------
Ratios to average net assets:
Net investment income (loss) (1.00)%(5) (0.04)% 0.03%
(0.13)%(5)
Expenses 2.03%(5) 0.99% 1.26% 1.41%(5)
- ------------------------------------------------------------------------------------------------------------------
- ------
Portfolio turnover rate(6) 79.7% 79.7% 105.9%
83.3%
Average brokerage commission rate(7) $0.0577 $0.0577 --
--
</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, 1996 were $803,223,056 and $736,912,422, 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.
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 objective is capital
appreciation; current income is not an
objective. In seeking its objective, the Fund
emphasizes investments in securities of
"growth-type" companies, including common
stocks, preferred stocks, convertible
securities, rights, warrants and options. The
Fund's investment adviser 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 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.
--------------------------------------------
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, 1996, a
provision of $86,789 was made for the Fund's
projected benefit obligations and payments of
$5,460 were made to retired trustees,
resulting in an accumulated liability of
$196,947 at September 30, 1996.
--------------------------------------------
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 due to net operating losses. 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.
20 Oppenheimer Discovery Fund
<PAGE>
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
During the year ended September 30, 1996, the
Fund adjusted the classification of
distributions to shareholders to reflect the
differences between financial statement
amounts and distributions determined in
accordance with income tax regulations.
Accordingly, during the year ended September
30, 1996, amounts have been reclassified to
reflect a decrease in paid-in capital of
$4,009,969. Accumulated net investment loss
was decreased by the same amount.
--------------------------------------------
OTHER. Investment transactions are accounted
for on the date the investments are purchased
or sold (trade date) and dividend income is
recorded on the ex-dividend date. Realized
gains and losses on investments and
unrealized appreciation and depreciation are
determined on an identified cost basis, which
is the same basis used for federal income tax
purposes.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions that affect the
reported amounts of assets and liabilities
and disclosure of contingent assets and
liabilities at the date of the financial
statements and the reported amounts of income
and expenses during the reporting period.
Actual results could differ from those
estimates.
- --------------------------------------------------------------------------------
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number
of no par value shares of beneficial interest
of each class. Transactions in shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996(1) YEAR
ENDED SEPTEMBER 30, 1995
---------------------------------- ------------------------------
SHARES AMOUNT SHARES
AMOUNT
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 12,519,702 $569,002,600 11,835,083
$428,009,066
Distributions reinvested 1,596,700 64,139,185 821,910
26,424,457
Redeemed (9,738,312) (436,484,029) (11,512,590)
(415,734,622)
----------- ------------ ----------- ------------
Net increase 4,378,090 $196,657,756 1,144,403 $
38,698,901
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
- -----------------------------------------------------------------------------------------------
Class B:
Sold 2,852,250 $129,720,421 1,606,929
$58,824,017
Distributions reinvested 172,972 6,841,003 42,043
1,343,689
Redeemed (901,310) (40,099,752) (650,592)
(23,557,869)
----------- ------------ ----------- ------------
Net increase 2,123,912 $96,461,672 998,380
$36,609,837
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
- -----------------------------------------------------------------------------------------------
Class C:
Sold 760,144 $35,068,889 -- $ --
Distributions reinvested 4,897 196,204 --
- --
Redeemed (419,838) (19,334,489) --
- --
----------- ------------ ----------- ------------
Net increase 345,203 $15,930,604 -- $
- --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
- -----------------------------------------------------------------------------------------------
Class Y:
Sold 535,075 $24,859,892 247,309
$9,293,954
Distributions reinvested 23,960 965,392 1,260
40,545
Redeemed (159,096) (7,282,597) (39,199)
(1,478,303)
----------- ------------ ----------- ------------
Net increase 399,939 $18,542,687 209,370
$7,856,196
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
1. For the year ended September 30, 1996 for
Class A, Class B and Class Y shares, for the
period from October 2, 1995 (inception of
offering) to September 30, 1996 for Class C
shares.
- -------------------------------------------------------------------------------
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS At September 30, 1996, net unrealized
appreciation on investments of $390,423,921
was composed of gross appreciation of
$416,343,907, and gross depreciation of
$25,919,986.
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 0.75% on the first $200 million of
average annual net assets, 0.72% of the next
$200 million, 0.69% of the next $200 million,
0.66% of the next $200 million and 0.60% of
the next $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 0.58% 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 year ended September 30, 1996,
commissions (sales charges paid by investors)
on sales of Class A shares totaled
$4,301,367, of which $1,402,167 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 $3,211,860
and $132,708, of which $305,386 and $3,459,
respectively, was paid to an affiliated
broker/dealer. During the year ended
September 30, 1996, OFDI received contingent
deferred sales charges of $168,972 and $2,383
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 0.25% of the average
annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial
institutions quarterly for providing personal
service and maintenance of accounts of their
customers that hold Class A shares. During
the year ended September 30, 1996, OFDI paid
$164,037 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 0.75% per year on Class B shares. OFDI
also receives a service fee of 0.25% 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 year ended September 30, 1996,
OFDI paid $12,821 to an affiliated
broker/dealer as reimbursement for Class B
personal service and maintenance expenses and
retained $1,040,973 as reimbursement for
Class B sales commissions and service fee
advances, as well as financing costs. As of
September 30, 1996, OFDI had incurred
unreimbursed expenses of $4,689,052 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 0.75% per year on Class C shares. OFDI
also receives a service fee of 0.25% per year
to compensate dealers for providing personal
services for accounts that hold Class 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 year ended September 30, 1996,
OFDI retained $53,257 as compensation for
Class C sales commissions and service fee
advances, as well as financing costs. As of
September 30, 1996, OFDI had incurred
unreimbursed expenses of $184,481 for Class
C.
22 Oppenheimer Discovery Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. ILLIQUID AND
RESTRICTED SECURITIES At September 30, 1996, investments in
securities included issues that are illiquid
or restricted. Restricted securities are
often purchased in private placement
transactions, are not registered under the
Securities Act of 1933, may have contractual
restrictions on resale, and are valued under
methods approved by the Board of Trustees as
reflecting fair value. A security may be
considered illiquid if it lacks a
readily-available market or if its valuation
has not changed for a certain period of time.
The Fund intends to invest no more than 10%
of its net assets (determined at the time of
purchase and reviewed from time to time) in
illiquid or restricted securities. Certain
restricted securities, eligible for resale to
qualified institutional investors, are not
subject to that limit. The aggregate value of
illiquid or restricted securities subject to
this limitation at September 30, 1996 was
$20,938,750, which represents 1.49% of the
Fund's net assets. Information concerning
restricted securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATES COST PER
UNIT SEPT. 30, 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AirNet Communications Corp., Series C 7/6/95 $6.00
$6.00
- ------------------------------------------------------------------------------------------------
ICG Communications, Inc. 6/9/93--5/10/96 6.97
19.95
- ------------------------------------------------------------------------------------------------
Silicon Video Corp. Series E 4/24/96 5.50
5.50
- ------------------------------------------------------------------------------------------------
Silver Diner, Inc. 7/10/96 5.50 5.11
</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.
<PAGE>
Appendix
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
500SAI
<PAGE>
OPPENHEIMER DISCOVERY FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements:
--------------------
(1) Financial Highlights (see Parts A and B): Filed
herewith.
(2) Independent Auditors' Report (see Part B): Filed
herewith.
(3) Statement of Investments at 9/30/96 (audited) (see
Part B): Filed herewith.
(4) Statement of Assets and Liabilities at 9/30/96
(audited) (see Part B): Filed herewith.
(5) Statement of Operations at 9/30/96 (audited) (see
Part B): Filed herewith.
(6) Statement of Changes in Net Assets for the years
ended 9/30/96 and 9/30/95(audited)(see Part B): Filed herewith.
(7) Notes to Financial Statements (see Part B): Filed
herewith.
(b) Exhibits:
--------
(1) Amended and Restated Declaration of Trust made as
July 14, 1995: Filed with Registrant's Post-Effective Amendment No.
17, 7/21/95, and incorporated herein by reference.
(2) By-Laws amended as of 6/1/92: Filed with
Registrant's Post-Effective Amendment No. 12, 11/22/93, and
incorporated herein by reference.
(3) Inapplicable.
(4) (i) Specimen Class A Share Certificate: Filed
herewith.
(ii) Specimen Class B Share Certificate: Filed
herewith.
(iii) Specimen Class C Share Certificate: Filed
herewith.
(iv) Specimen Class Y Share Certificate: Filed
herewith.
(5) (i) Investment Advisory Agreement dated June 1,
1992: Filed with Registrant's Post-Effective Amendment No. 10,
12/3/92, refiled with Post-Effective Amendment No. 16, 1/13/95,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
(ii) Amendment dated as of December 14, 1995 to
the Investment Advisory Agreement dated June 1, 1992: Filed
herewith.
(6) (i) General Distributor's Agreement dated
December 10, 1992: Filed with Registrant's Post-Effective Amendment
No. 11, 1/28/93, refiled with Post-Effective Amendment No. 16,
1/13/95, pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(ii) Prototype OppenheimerFunds Distributor, Inc.
Dealer Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(iii) Prototype OppenheimerFunds Distributor, Inc.
Broker Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated by reference.
(iv) Prototype OppenheimerFunds Distributor, Inc.
Agency Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(v) Broker Agreement between OppenheimerFunds
Distributor, Inc. and Newbridge Securities, Inc. dated 10/1/86:
Filed with Post-Effective Amendment No. 25 of Oppenheimer Growth
Fund (Reg. No. 2-45272), 11/1/86, refiled with Post-Effective
Amendment No. 45 of Oppenheimer Growth Fund(Reg. No. 2-45272),
8/22/94, pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(7) Retirement Plan for Non-Interested Trustees or
Directors dated June 7, 1990: Filed with Post-Effective Amendment
No. 97 to the Registration Statement of Oppenheimer Fund (File No.
2-14586), 8/30/90, refiled with Post-Effective Amendment No. 45 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(8) Custody Agreement dated 6/10/92: Filed with
Registrant's Post- Effective Amendment No. 10, 12/3/92, refiled
with Post-Effective Amendment No. 16, 1/13/95, pursuant to Item 102
of Regulation S-T, and incorporated herein by reference.
(9) Inapplicable.
(10) Opinion and Consent of Counsel dated 8/1/86: Filed
with Registrant's Post-Effective Amendment No. 3, 1/27/88, refiled
with Post-Effective Amendment No. 16, 1/13/95, pursuant to Item 102
of Regulation S-T, and incorporated herein by reference.
(11) Independent Auditor's Consent: Filed herewith.
(12) Inapplicable.
(13) Investment Letter from OppenheimerFunds, Inc. to
Registrant dated 8/15/86: Filed with Registrant's Post-Effective
Amendment No. 5, 12/1/89, and refiled with Post-Effective Amendment
No. 16, 1/13/95, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(14) (i) Form of Individual Retirement Account (IRA)
Trust Agreement: Filed with Post-Effective Amendment No. 21 to the
Registration Statement of Oppenheimer U.S. Government Trust (File
No. 2-76645), 8/25/93, and incorporated herein by reference.
(ii) Form of Standardized and Non-Standardized
Profit-Sharing Plans and Money Purchase Plans for self-employed
persons and corporations: Filed with Post-Effective Amendment No.
7 to the Registration Statement of Oppenheimer Global Growth &
Income Fund (File No. 33-33799), 12/2/94, and incorporated herein
by reference.
(iii) Form of Tax Sheltered Retirement Plan and
Custody Agreement for employees of public schools and tax-exempt
organizations: Filed with Post-Effective Amendment No. 47 of
Oppenheimer Growth Fund (File No. 2-45272), 10/21/94, and
incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA:
Filed with Post- Effective Amendment No. 42 of Oppenheimer Equity
Income Fund (File No. 2-33043), 10/28/94, and incorporated herein
by reference.
(v) Form of Prototype 401(k) Plan: Previously
filed with Post-Effective Amendment No. 7 to the Registration
Statement of Oppenheimer Strategic Income & Growth Fund (File No.
33-47378), 9/28/95, and incorporated herein by reference.
(15) (i) Service Plan and Agreement for Class A shares
dated 6/10/93 under Rule 12b-1 of the Investment Company Act of
1940: Filed with Registrant's Post-Effective Amendment No. 13,
1/19/94, and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement
for Class B shares dated April 1, 1994 under Rule 12b-1 of the
Investment Company Act of 1940 for Class B Shares: Filed with
Registrant's Post-Effective Amendment No. 15, 3/31/94, and
incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement
for Class C Shares dated July 21, 1995, under Rule 12b-1: Filed
with Registrant's Post-Effective Amendment No. 18, 9/27/95 and
incorporated herein by reference.
(16) Performance Data Calculation Schedule: Filed
herewith.
(17) (i) Financial Data Schedule for Class A Shares as
of 9/30/96: Filed herewith.
(ii) Financial Data Schedule for Class B Shares as
of 9/30/96: Filed herewith.
(iii) Financial Data Schedule for Class C Shares as
of 9/30/96: Filed herewith.
(iv) Financial Data Schedule for Class Y Shares as
of 9/30/96: Filed herewith.
(18) Oppenheimer Funds Multiple Class Plan under Rule
18f-3 dated 10/24/95: Previously filed with Post-Effective
Amendment No.12 to the Registration Statement of Oppenheimer
California Tax-Exempt Fund (Reg. No. 33-23566), 11/1/95 and
incorporated herein by reference.
-- Powers of Attorney: Previously Filed with Registrant's
Post-Effective Amendment No. 19, 2/1/96 (Bridget A. Macaskill) and
previously filed (all other Trustees) with Registrant's Post-
Effective Amendment No. 12, 1/22/93, and incorporated herein by
reference.
Item 25. Persons Controlled by or under Common Control
with Registrant
- -------- ---------------------------------------------
None
Item 26. Number of Holders of Securities
- -------- -------------------------------
Number of Record
Holders as of
Title of Class December 16, 1996
- -------------- -----------------------
Class A Shares of Beneficial Interest 109,501
Class B Shares of Beneficial Interest 32,447
Class C Shares of Beneficial Interest 2,625
Class Y Shares of Beneficial Interest 1
Item 27. Indemnification
- -------- ---------------
Reference is made to parts (c) through (g) of Section 7(c) of
Article SEVENTH of Registrant's Declaration of Trust.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Senior
Vice President of HarbourView;
prior to March, 1996 he was the
senior equity portfolio manager for
the Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock
department and common stock
investments of Connecticut Mutual
Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly a Vice President and
Senior Portfolio Manager at First
of America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab & Co.,
Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President &
Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer
of the Denver-based Oppenheimer
Funds. Vice President and Treasurer
of OppenheimerFunds Distributor,
Inc. (the "Distributor") and
HarbourView Asset Management
Corporation ("HarbourView"), an
investment adviser subsidiary of
the Manager; Senior Vice President,
Treasurer, Assistant Secretary and
a director of Centennial Asset
Management Corporation
("Centennial"), an investment
adviser subsidiary of the Manager;
Vice President, Treasurer and
Secretary of Shareholder Services,
Inc. ("SSI") and Shareholder
Financial Services, Inc. ("SFSI"),
transfer agent subsidiaries of the
Manager; Director, Treasurer and
Chief Executive Officer of
MultiSource Services, Inc.; Vice
President and Treasurer of
Oppenheimer Real Asset Management,
Inc.; President, Treasurer and
Director of Centennial Capital
Corporation; Vice President and
Treasurer of Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D. Vest
Investment Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President &
Director An officer and/or portfolio manager
of certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel & Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of the
Oppenheimer Quest and Oppenheimer
Rochester Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; Chief Legal Officer and
a Director of MultiSource Services,
Inc.; President and a Director of
Oppenheimer Real Asset Management,
Inc.; Executive Vice President,
General Counsel and Director of
SFSI and SSI; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
George Evans,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
Katherine P. Feld,
Vice President & Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset
Management Corporation, MultiSource
Services, Inc. and Centennial Asset
Management Corporation; Secretary,
Vice President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President;
Chairman: Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"), President and
Director of Fielding Management
Company, Inc. ("FMC"), President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"), Managing
Partner of Rochester Capital
Advisors, L.P., President and
Director of Rochester Fund
Services, Inc. ("RFS"), President
and Director of Rochester Tax
Managed Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and
General Counsel of Rochester
Capital Advisors, L.P. and
Secretary of Rochester Tax Managed
Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellermann,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar,
Executive Vice President &
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was the senior bond
portfolio manager for Panorama
Series Fund, Inc., other mutual
funds and pension accounts managed
by G.R. Phelps; was also
responsible for managing the public
fixed-income securities department
at Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI;
Chairman and Director of SSI; a
Director of Oppenheimer Real Asset
Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Consultant for Prudential Insurance
on behalf of the General Motors
Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly Vice President of RFS,
President and Director of RFD, Vice
President and Director of FMC, Vice
President and director of RCAI,
General Partner of RCA, an officer
and/or portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the
New York-based Oppenheimer Funds;
formerly Chairman of the Manager
and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension accounts managed
by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director of Centennial;
formerly President and Director of
OAMC, and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund,
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly Managing Director
and Chief Fixed Income Strategist
at Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension funds managed by
G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting
and member of the Board of
Directors of the Junior League of
Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds, and the Quest/Rochester
Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Oppenheimer Real Asset Management,
Inc. is 6803 South Tucson Way, Englewood, Colorado 80012.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of is Bond Fund Series - Oppenheimer Bond Fund For
Growth, Rochester Fund Municipals and Rochester Portfolio Series -
Limited Term New York Municipal Fund 350 Linden Oaks, Rochester,
New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds /
Vice President,
Secretary and
Treasurer of the
Denver-based
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425-1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of the
President, General New York-based
Counsel and Director Oppenheimer funds /
Vice President of
the Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tucson Way, Englewood, CO 80012
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of OppenheimerFunds, Inc. at its offices at 3410
South Galena Street, Denver, Colorado 80231.
Item 31. Management Services
- -------- -------------------
Not applicable.
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that
it meets all the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York and State of New York on the 13th day of
January, 1997.
OPPENHEIMER DISCOVERY FUND
By: /s/ Bridget A. Macaskill *
---------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the January 13, 1997
- -------------- Board of Trustees
Leon Levy
/s/ Bridget A. Macaskill* President, Chief January 13, 1997
- ------------------------ Executive Officer
Bridget A. Macaskill and Trustee
/s/ George Bowen* Treasurer and January 13, 1997
- ----------------- Principal Financial
George Bowen and Accounting
Officer
/s/ Robert G. Galli* Trustee January 13, 1997
- --------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee January 13, 1997
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee January 13, 1997
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee January 13, 1997
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee January 13, 1997
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee January 13, 1997
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Donald W. Spiro* Trustee January 13, 1997
- --------------------
Donald W. Spiro
/s/ Pauline Trigere* Trustee January 13, 1997
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee January 13, 1997
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack<PAGE>
OPPENHEIMER DISCOVERY FUND
Registration No. 33-371
Post-Effective Amendment No. 20
Index to Exhibits
-----------------
Exhibit No. Description
- ----------- -----------
24(b)(4)(i) Specimen Class A Share Certificate
24(b)(4)(ii) Specimen Class B Share Certificate
24(b)(4)(iii) Specimen Class C Share Certificate
24(b)(4)(iv) Specimen Class Y Share Certificate
24(b)(5) Amendment dated as of 12/14/95 to the
Investment Advisory Agreement dated 6/1/92
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule as of 9/30/96 for
Class A Shares
24(b)(17)(ii) Financial Data Schedule as of 9/30/96 for
Class B Shares
24(b)(17)(iii) Financial Data Schedule as of 9/30/96 for
Class C Shares
24(b)(17)(iv) Financial Data Schedule as of 9/30/9 for
Class Y Shares
OPPENHEIMER DISCOVERY FUND
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-5/16" x 10-5/8" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no. XX-000000
(upper right box with heading: CLASS A SHARES below cert. no.)
(centered below boxes): OPPENHEIMER DISCOVERY FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number) CUSIP ______________
(at left) _________________________ is the owner of
(centered) FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DISCOVERY FUND
(hereinafter called the "Fund", transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by
acceptance hereof assents. This certificate is not valid
until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget A. Macaskill
---------------------- ------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DISCOVERY FUND
SEAL
1985
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Englewood (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian ___________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above
list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_____________________________________________________
Please print or type name and address of assignee)
_____________________________________________________
__________________________________________ Class A Shares of
beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint ____________________
Attorney to transfer the said shares on the books of the within
named Fund with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
__________________________
(Both must sign if joint owners)
Signature(s) ___________________
guaranteed Name of Guarantor
by: ___________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to correspond with the name(s) as written upon the
right of above face of the certificate in every particular
paragraph) without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
this watermark: logotype
- ------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER DISCOVERY FUND
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-5/16" x 10-5/8" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no. XX-000000
(upper right box with heading: CLASS B SHARES below cert. no.)
(centered below boxes): OPPENHEIMER DISCOVERY FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number) CUSIP ______________
(at left) _________________________ is the owner of
(centered) FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DISCOVERY FUND
(hereinafter called the "Fund", transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by
acceptance hereof assents. This certificate is not valid
until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget A. Macaskill
---------------------- ------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DISCOVERY FUND
SEAL
1985
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Englewood (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian ___________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above
list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_____________________________________________________
Please print or type name and address of assignee)
_____________________________________________________
__________________________________________ Class B Shares of
beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint ____________________
Attorney to transfer the said shares on the books of the within
named Fund with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
__________________________
(Both must sign if joint owners)
Signature(s) ___________________
guaranteed Name of Guarantor
by: ___________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to correspond with the name(s) as written upon the
right of above face of the certificate in every particular
paragraph) without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
this watermark: logotype
- ------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER DISCOVERY FUND
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-5/16" x 10-5/8" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no. XX-000000
(upper right box with heading: CLASS C SHARES below cert. no.)
(centered below boxes): OPPENHEIMER DISCOVERY FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number) CUSIP ______________
(at left) _________________________ is the owner of
(centered) FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DISCOVERY FUND
(hereinafter called the "Fund", transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by
acceptance hereof assents. This certificate is not valid
until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget A. Macaskill
---------------------- ------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DISCOVERY FUND
SEAL
1985
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Englewood (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian ___________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above
list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_____________________________________________________
Please print or type name and address of assignee)
_____________________________________________________
__________________________________________ Class C Shares of
beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint ____________________
Attorney to transfer the said shares on the books of the within
named Fund with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
__________________________
(Both must sign if joint owners)
Signature(s) ___________________
guaranteed Name of Guarantor
by: ___________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to correspond with the name(s) as written upon the
right of above face of the certificate in every particular
paragraph) without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
this watermark: logotype
- ------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER DISCOVERY FUND
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-5/16" x 10-5/8" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no. XX-000000
(upper right box with heading: CLASS Y SHARES below cert. no.)
(centered below boxes): OPPENHEIMER DISCOVERY FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number) CUSIP ______________
(at left) _________________________ is the owner of
(centered) FULLY PAID CLASS Y SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DISCOVERY FUND
(hereinafter called the "Fund", transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by
acceptance hereof assents. This certificate is not valid
until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget A. Macaskill
---------------------- ------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DISCOVERY FUND
SEAL
1985
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Englewood (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian ___________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above
list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_____________________________________________________
Please print or type name and address of assignee)
_____________________________________________________
__________________________________________ Class Y Shares of
beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint ____________________
Attorney to transfer the said shares on the books of the within
named Fund with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
__________________________
(Both must sign if joint owners)
Signature(s) ___________________
guaranteed Name of Guarantor
by: ___________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to correspond with the name(s) as written upon the
right of above face of the certificate in every particular
paragraph) without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
this watermark: logotype
- ------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
AMENDMENT DATED AS OF DECEMBER 14, 1995 TO
INVESTMENT ADVISORY AGREEMENT
DATED JUNE 1, 1992
WHEREAS, Oppenheimer Discovery Fund, (hereinafter referred to
as the "Fund"), and OppenheimerFunds, Inc., formerly Oppenheimer
Management Corporation (hereinafter referred to as "OFI"), have
agreed, per a resolution dated December 14, 1995 of the Fund's
Board of Trustees, to reduce the Fund's management fee on assets in
excess of $1.5 billion;
NOW, THEREFORE, the Fund and OFI agree as follows:
PARAGRAPH 5. of the Investment Advisory Agreement dated June
1, 1992 between the Fund and OFI is deleted and replaced with the
following:
5. Compensation of OFI.
The Fund agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a
management fee computed on the aggregate net assets of the Fund as
of the close of each business day and payable monthly at the
following annual rates:
.75% of the first $200 million of aggregate net assets;
.72% of the next $200 million of aggregate net assets;
.69% of the next $200 million of aggregate net assets;
.66% of the next $200 million of aggregate net assets;
.60% of the next $700 million of aggregate net assets; and
.58% of aggregate net assets in excess of $1.5 billion.
ALL OTHER PROVISIONS of the Investment Advisory Agreement dated
June 1, 1992, between the Fund and OFI shall remain in full force
and effect.
Oppenheimer Discovery Fund
/s/ Andrew J. Donohue
By:_____________________________
Andrew J. Donohue, Secretary
OppenheimerFunds, Inc.
/s/ Katherine P. Feld
By:________________________________
Katherine P. Feld, Vice President
advisory\500.ame
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Discovery Fund:
We consent to the use of our report dated October 21, 1996 and to
the reference to our firm under the heading "Financial Highlights,"
included in the Registration Statement.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Denver, Colorado
January 13, 1997
Oppenheimer Discovery Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the past
10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
01/09/87 0.0200 0.0000 16.190
12/24/87 0.0500 1.9750 15.230
12/23/88 0.1430 0.0000 17.670
12/22/89 0.3000 1.5600 21.490
12/21/90 0.1900 0.6750 17.830
12/20/91 0.0000 1.2900 26.480
12/28/93 0.0000 1.0000 38.300
12/20/94 0.0000 1.6170 32.150
12/21/95 0.0000 3.5916 40.170
Class B Shares
12/20/94 0.0000 1.6170 31.960
12/21/95 0.0000 3.5916 39.550
Class C Shares
12/21/95 0.0000 3.5916 40.060
Class Y Shares
12/20/94 0.0000 1.6170 32.190
12/21/95 0.0000 3.5916 40.290
<PAGE>
Oppenheimer Discovery Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 09/30/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,204.09 1 $2,282.15 .2
(---------) - 1 = 20.41% (---------) - 1 = 17.94%
$1,000 $1,000
Ten Year
$5,446.41 .1
(---------) - 1 = 18.47%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the first year and 3.00% for the inception year:
One Year Inception
$1,217.68 1 $1,549.49 .4004
(---------) - 1 = 21.77% (---------) - 1 = 19.17%
$1,000 $1,000
Class Y Shares
Examples, assuming a maximum sales charge of 0.00%:
One Year Inception
$1,280.86 1 $1,695.67 .4291
(---------) - 1 = 28.09% (---------) - 1 = 25.43%
$1,000 $1,000
Oppenheimer Discovery Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 09/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,277.60 1 $2,421.39 .2
(---------) - 1 = 27.76% (---------) - 1 = 19.35%
$1,000 $1,000
Ten Year
$5,778.48 .1
(---------) - 1 = 19.17%
$1,000
Class B Shares
One Year Inception
$1,267.68 1 $1,579.50 .4004
(---------) - 1 = 26.77% (---------) - 1 = 20.09%
$1,000 $1,000
Class Y Shares
One Year Inception
$1,280.86 1 $1,695.67 .4291
(---------) - 1 = 28.09% (---------) - 1 = 25.43%
$1,000 $1,000
Oppenheimer Discovery Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 09/30/96:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,204.09 - $1,000 $2,282.15 - $1,000
------------------ = 20.41% ------------------ = 128.22%
$1,000 $1,000
Ten Year
$5,446.41 - $1,000
------------------ = 444.64%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the first year and 3.00% for the inception year.
One Year Inception
$1,217.68 - $1,000 $1,549.49 - $1,000
------------------ = 21.77% ------------------ = 54.95%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00% for
the inception year.
Inception
$1,269.57- $1,000
----------------- = 26.96%
$1,000
Class Y Shares
Examples, assuming a maximum sales charge of 0.00%:
One Year Inception
$1,280.86 - $1,000 $1,695.67 - $1,000
------------------ = 28.09% ------------------ = 69.57%
$1,000 $1,000
Oppenheimer Discovery Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 09/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,277.60 - $1,000 $2,421.39 - $1,000
------------------ = 27.76% ------------------ = 142.14%
$1,000 $1,000
Ten Year
$5,778.48 - $1,000
------------------ = 477.85%
$1,000
Class B Shares
One Year Inception
$1,267.68 - $1,000 $1,579.50 - $1,000
------------------ = 26.77% ------------------ = 57.95%
$1,000 $1,000
Class C Shares
Inception
$1,279.56 - $1,000
------------------ = 27.96%
$1,000
Class Y Shares
One Year Inception
$1,280.86 - $1,000 $1,695.67 - $1,000
------------------ = 28.09% ------------------ = 69.57%
$1,000 $1,000
[ARTICLE] 6
[CIK] 777547
[NAME] Oppenheimer Discovery Fund - Class A
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-START] OCT-01-1995
[PERIOD-END] SEP-30-1996
[INVESTMENTS-AT-COST] 1,016,495,996
[INVESTMENTS-AT-VALUE] 1,406,919,917
[RECEIVABLES] 12,459,842
[ASSETS-OTHER] 17,360
[OTHER-ITEMS-ASSETS] 1,722,403
[TOTAL-ASSETS] 1,421,119,522
[PAYABLE-FOR-SECURITIES] 13,143,179
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 5,122,032
[TOTAL-LIABILITIES] 18,265,211
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 923,007,741
[SHARES-COMMON-STOCK] 22,661,207
[SHARES-COMMON-PRIOR] 18,283,117
[ACCUMULATED-NII-CURRENT] (624,556)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 90,047,205
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 390,423,921
[NET-ASSETS] 1,160,086,668
[DIVIDEND-INCOME] 381,428
[INTEREST-INCOME] 9,398,429
[OTHER-INCOME] 0
[EXPENSES-NET] 14,171,155
[NET-INVESTMENT-INCOME] (4,391,298)
[REALIZED-GAINS-CURRENT] 92,875,503
[APPREC-INCREASE-CURRENT] 178,297,200
[NET-CHANGE-FROM-OPS] 266,781,405
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 65,845,405
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 12,519,702
[NUMBER-OF-SHARES-REDEEMED] 9,738,312
[SHARES-REINVESTED] 1,596,700
[NET-CHANGE-IN-ASSETS] 520,333,750
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 71,212,076
[OVERDISTRIB-NII-PRIOR] 243,227
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 7,334,344
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14,171,155
[AVERAGE-NET-ASSETS] 937,563,000
[PER-SHARE-NAV-BEGIN] 43.65
[PER-SHARE-NII] (0.13)
[PER-SHARE-GAIN-APPREC] 11.26
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 3.59
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 51.19
[EXPENSE-RATIO] 1.22
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 777547
<NAME> Oppenheimer Discovery Fund - Class B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,016,495,996
<INVESTMENTS-AT-VALUE> 1,406,919,917
<RECEIVABLES> 12,459,842
<ASSETS-OTHER> 17,360
<OTHER-ITEMS-ASSETS> 1,722,403
<TOTAL-ASSETS> 1,421,119,522
<PAYABLE-FOR-SECURITIES> 13,143,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,122,032
<TOTAL-LIABILITIES> 18,265,211
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 923,007,741
<SHARES-COMMON-STOCK> 3,865,275
<SHARES-COMMON-PRIOR> 1,741,363
<ACCUMULATED-NII-CURRENT> (624,556)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90,047,205
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 390,423,921
<NET-ASSETS> 193,636,739
<DIVIDEND-INCOME> 381,428
<INTEREST-INCOME> 9,398,429
<OTHER-INCOME> 0
<EXPENSES-NET> 14,171,155
<NET-INVESTMENT-INCOME> (4,391,298)
<REALIZED-GAINS-CURRENT> 92,875,503
<APPREC-INCREASE-CURRENT> 178,297,200
<NET-CHANGE-FROM-OPS> 266,781,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,032,331
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,852,250
<NUMBER-OF-SHARES-REDEEMED> 901,310
<SHARES-REINVESTED> 172,972
<NET-CHANGE-IN-ASSETS> 520,333,750
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 71,212,076
<OVERDISTRIB-NII-PRIOR> 243,227
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,334,344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,171,155
<AVERAGE-NET-ASSETS> 119,895,000
<PER-SHARE-NAV-BEGIN> 43.11
<PER-SHARE-NII> (0.23)
<PER-SHARE-GAIN-APPREC> 10.81
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 50.10
<EXPENSE-RATIO> 1.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 777547
<NAME> Oppenheimer Discovery Fund - Class C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-02-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,016,495,996
<INVESTMENTS-AT-VALUE> 1,406,919,917
<RECEIVABLES> 12,459,842
<ASSETS-OTHER> 17,360
<OTHER-ITEMS-ASSETS> 1,722,403
<TOTAL-ASSETS> 1,421,119,522
<PAYABLE-FOR-SECURITIES> 13,143,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,122,032
<TOTAL-LIABILITIES> 18,265,211
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 923,007,741
<SHARES-COMMON-STOCK> 345,203
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (624,556)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90,047,205
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 390,423,921
<NET-ASSETS> 17,512,295
<DIVIDEND-INCOME> 381,428
<INTEREST-INCOME> 9,398,429
<OTHER-INCOME> 0
<EXPENSES-NET> 14,171,155
<NET-INVESTMENT-INCOME> (4,391,298)
<REALIZED-GAINS-CURRENT> 92,875,503
<APPREC-INCREASE-CURRENT> 178,297,200
<NET-CHANGE-FROM-OPS> 266,781,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 197,246
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 760,144
<NUMBER-OF-SHARES-REDEEMED> 419,838
<SHARES-REINVESTED> 4,897
<NET-CHANGE-IN-ASSETS> 520,333,750
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 71,212,076
<OVERDISTRIB-NII-PRIOR> 243,227
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,334,344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,171,155
<AVERAGE-NET-ASSETS> 7,109,000
<PER-SHARE-NAV-BEGIN> 43.20
<PER-SHARE-NII> (0.21)
<PER-SHARE-GAIN-APPREC> 11.33
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 50.73
<EXPENSE-RATIO> 2.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 777547
<NAME> Oppenheimer Discovery Fund - Y Shares
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,016,495,996
<INVESTMENTS-AT-VALUE> 1,406,919,917
<RECEIVABLES> 12,459,842
<ASSETS-OTHER> 17,360
<OTHER-ITEMS-ASSETS> 1,722,403
<TOTAL-ASSETS> 1,421,119,522
<PAYABLE-FOR-SECURITIES> 13,143,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,122,032
<TOTAL-LIABILITIES> 18,265,211
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 923,007,741
<SHARES-COMMON-STOCK> 614,713
<SHARES-COMMON-PRIOR> 214,774
<ACCUMULATED-NII-CURRENT> (624,556)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90,047,205
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 390,423,921
<NET-ASSETS> 31,618,609
<DIVIDEND-INCOME> 381,428
<INTEREST-INCOME> 9,398,429
<OTHER-INCOME> 0
<EXPENSES-NET> 14,171,155
<NET-INVESTMENT-INCOME> (4,391,298)
<REALIZED-GAINS-CURRENT> 92,875,503
<APPREC-INCREASE-CURRENT> 178,297,200
<NET-CHANGE-FROM-OPS> 266,781,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 965,392
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 535,075
<NUMBER-OF-SHARES-REDEEMED> 159,096
<SHARES-REINVESTED> 23,960
<NET-CHANGE-IN-ASSETS> 520,333,750
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 71,212,076
<OVERDISTRIB-NII-PRIOR> 243,227
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,334,344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,171,155
<AVERAGE-NET-ASSETS> 18,563,000
<PER-SHARE-NAV-BEGIN> 43.74
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 11.31
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 51.44
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
