DISCOVERY FUND REVISED SAI

497 1 sai500revised.htm DISCOVERY FUND REVISED SAI DISCOVERY FUND REVISED SAI

Oppenheimer Discovery Fund

6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048

Statement of Additional Information dated January 16, 2001, revised, August 13, 2001

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 16, 2001. It should be read together with the Prospectus. You can obtain
the Prospectus 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, or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks................................... 2
The Fund's Investment Policies..................................................................... 2
Other Investment Techniques and Strategies......................................................... 5
Investment Restrictions............................................................................ 16
How the Fund is Managed ................................................................................ 18
Organization and History........................................................................... 18
Trustees and Officers.............................................................................. 19
The Manager........................................................................................ 24
Brokerage Policies of the Fund.......................................................................... 26
Distribution and Service Plans.......................................................................... 28
Performance of the Fund................................................................................. 31

About Your Account
How To Buy Shares....................................................................................... 35
How To Sell Shares...................................................................................... 43
How To Exchange Shares.................................................................................. 47
Dividends, Capital Gains and Taxes...................................................................... 50
Additional Information About the Fund................................................................... 52
Financial Information About the Fund
Independent Auditors' Report............................................................................ 53
Financial Statements.................................................................................... 54

Appendix A: Industry Classifications.................................................................... A-1
Appendix B: Special Sales Charge Arrangements and Waivers............................................... B-2

ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

The investment objective, the principal investment policies and the main risks of the Fund are described in the Prospectus.
This Statement of Additional Information contains supplemental information about those policies and risks and the types of securities
that the Fund's investment Manager, OppenheimerFunds, Inc., can select for the Fund. Additional information is also provided about
the strategies that the Fund may use to try to achieve its objective.

The Fund's Investment Policies.

The composition of the Fund's portfolio and the techniques and strategies that the Manager uses in selecting portfolio securities
will vary over time. The Fund is not required to use all of the investment techniques and strategies described below in seeking its
goal. It may use some of the special investment techniques and strategies at some times or not at all.

|X| Cyclical Opportunities. The Fund might also seek to take advantage of changes in the business cycle by investing in
companies that are sensitive to those changes if the Manager believes they have growth potential. For example, when the economy is
expanding, companies in the consumer durables and technology sectors might benefit and offer long-term growth opportunities. Other
cyclical industries include insurance, for example. The fund focuses on seeking growth over the long term, but could seek to take
tactical advantage of short-term market movements or events affecting particular issuers or industries.

|X| Investments in Equity Securities. The Fund focuses its investments in equity securities of small growth companies.
Equity securities include common stocks, preferred stocks, rights and warrants, and securities convertible into common stock. The
Fund's investments will primarily include stocks of companies having a market capitalization of up to $3 billion, generally measured
at the time of the Fund's investment. However, the Fund is not required to sell securities it holds of an issuer if the issuer's
capitalization exceeds $3 billion.

The Fund can also invest a portion of its assets in securities of issuers having a market capitalization greater than $3
billion. At times, in the Manager's view, the market may favor or disfavor securities of issuers of a particular capitalization
range. Therefore the Fund may change relative emphasis on its equity investments in securities of one or more capitalization ranges,
based upon the Manager's judgment of where the best market opportunities are to seek the Fund's objective.

Growth companies might be providing new products or services that could enable them to capture a dominant or important
market position. They may have a special area of expertise or the capability to take advantage of changes in demographic factors in a
more profitable way than larger, more established companies.

Growth companies tend to retain a large part of their earnings for research, development or investment in capital assets.
Therefore, they do not tend to emphasize paying dividends, and may not pay any dividends for some time. They are selected for the
Fund's portfolio because the Manager believes the price of the stock will increase over the long term.

Current income is not a criterion used to select portfolio securities. However, certain debt securities may be selected for
the Fund's portfolio for defensive purposes (including debt securities that the Manager believes may offer some opportunities for
capital appreciation when stocks are disfavored).

In general, securities of small-cap issuers may be subject to greater price volatility in general than securities of
large-cap and mid-cap companies. Therefore, to the degree that the Fund has investments in smaller capitalization companies at times
of market volatility, the Fund's share price may fluctuate more. As noted below, the Fund limits such investments in unseasoned small
cap issuers.

|_| Over-the-Counter Securities. Small-cap growth companies that are newer companies may offer greater opportunities
for capital appreciation than securities of large, more established companies. However, securities of small-cap companies also
involve greater risks than securities of larger companies. Securities of small capitalization issuers may be traded on securities
exchanges or in the over-the-counter market. The over-the-counter markets, both in the U.S. and abroad, may have less liquidity than
securities exchanges. That lack of liquidity can affect the price the Fund is able to obtain when it wants to sell a security,
because if there are fewer buyers and less demand for a particular security, the Fund might not be able to sell it at an acceptable
price or might have to reduce the price in writing to accept in order to dispose of the security.

In the U.S., the principal over-the-counter market is the NASDAQ Stock Market, Inc., which is regulated by the National
Association of Securities Dealers, Inc. It consists of an electronic quotation system for certain securities, and a security must
have at least two market makers to be included in NASDAQ. There are other over-the-counter markets in the U.S., as well as those
abroad, as long as a dealer is willing to make a market in a particular security.

|_| Convertible Securities. While some convertible securities are a form of debt security, in many cases their
conversion feature (allowing conversion into equity securities) causes them to be regarded more as "equity equivalents." As a
result, the rating assigned to the security has less impact on the Manager's investment decision with respect to convertible
securities than in the case of non-convertible debt fixed income securities. To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the following factors:
(1) whether, at the option of the investor, the convertible security can be exchanged for a fixed number of shares of common
stock of the issuer,
(2) whether the issuer of the convertible securities has restated its earnings per share of common stock on a fully diluted
basis (considering the effect of conversion of the convertible securities), and
(3) the extent to which the convertible security may be a defensive "equity substitute," providing the ability to participate in
any appreciation in the price of the issuer's common stock.

|_| Rights and Warrants. The Fund can invest in warrants or rights, including warrants and rights the Fund has
acquired as part of units of securities or that are attached to other securities that the Fund buys. Warrants basically are options
to purchase equity securities at specific prices valid for a specific period of time. Their prices do not necessarily move parallel
to the prices of the underlying securities. Rights are similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.

|X| Foreign Securities. The Fund may purchase equity securities issued or guaranteed by foreign companies or debt securities
issued by foreign governments. "Foreign securities" include equity and debt securities of companies organized under the laws of
countries other than the United States. They may be 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 on a U.S. securities
exchange or traded in the U.S. over-the-counter markets are not considered "foreign securities" for the purpose of the Fund's
investment allocations. That is 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 potential benefits not available from investing solely in securities of domestic
issuers. They include 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. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.

|_| Risks of Foreign Investing. Investments in foreign securities may offer special opportunities for investing but also
present special additional risks and considerations not typically associated with investments in domestic securities. Some of these
additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency rates or currency control regulations (for example,
currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to those applicable
to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the U.S.;
o less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory taxation, political, financial or social instability or
adverse diplomatic developments; and
o 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.

|_| Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special opportunities for
growth investing but have greater risks than more developed foreign markets, such as those in Europe, Canada, Australia, New Zealand
and Japan. There may be even less liquidity in their securities markets, and settlements of purchases and sales of securities may be
subject to additional delays. They are subject to greater risks of limitations on the repatriation of income and profits because of
currency restrictions imposed by local governments. Those countries may also be subject to the risk of greater political and economic
instability, which can greatly affect the volatility of prices of securities in those countries.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which the Fund traded its portfolio securities during its
last fiscal year. For example, if a fund sold all of its securities during the year, its portfolio turnover rate would have been
100%. The Fund's portfolio turnover rate will fluctuate from year to year and the Fund may have a portfolio turnover rate of more
than 100% annually.

Increased portfolio turnover creates higher brokerage and transaction costs for the Fund, which may reduce its overall
performance. Additionally, the realization of capital gains from selling portfolio securities may result in distributions of taxable
long-term capital gains to shareholders, since the Fund will normally distribute all of its capital gains realized each year, to
avoid excise taxes under the Internal Revenue Code.

Other Investment Techniques and Strategies. In seeking its objective, the Fund from time to time can use the types of investment
strategies and investments described below. It is not required to use all of these strategies at all times and at times may not use
them.

|X| Investing in Small, Unseasoned Companies. The Fund can invest in securities of small, unseasoned companies. These are
companies that have been in operation for less than three years, including the operations of any predecessors. Securities of these
companies are subject to greater volatility in their prices. They may have a limited trading market, which may adversely affect the
Fund's ability to dispose of them and can reduce the price the Fund might be able to obtain for them. Other investors that own a
security issued by a small, unseasoned issuer for which there is limited liquidity might trade the security when the Fund is
attempting to dispose of its holdings of that security. In that case the Fund might receive a lower price for its holdings than might
otherwise be obtained. The Fund currently intends to invest not more than 10% of its net assets in those securities, but as a matter
of fundamental policy can increase that limit to 20%. The Manager might increase that limit, for example, if it believes that these
securities offer better capital appreciation possibilities than those of more established small-cap companies. These are more
speculative securities and can increase the Fund's overall portfolio risks.

|X| Repurchase Agreements. The Fund can acquire securities subject to repurchase agreements. It might do so for liquidity
purposes to meet anticipated redemptions of Fund shares, or pending the investment of the proceeds from sales of Fund shares, or
pending the settlement of portfolio securities transactions, or for temporary defensive purposes, as described below.

In a repurchase transaction, the Fund buys a security from, and simultaneously resells it to, an approved vendor for
delivery on an agreed-upon future date. The resale 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. Approved vendors include U.S. commercial
banks, U.S. branches of foreign banks, or broker-dealers that have been designated as primary dealers in government securities. They
must meet credit requirements set by the Fund's Board of Trustees from time to time.

The majority of these transactions run from day to day, and delivery pursuant to the resale typically occurs within one to
five days of the purchase. Repurchase agreements having a maturity beyond seven days are subject to the Fund's limits on holding
illiquid investments. There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements having
maturities of seven days or less.

Repurchase agreements, considered "loans" under the Investment Company Act, are 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. 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 Manager will impose creditworthiness requirements to confirm that the vendor is financially sound
and will continuously monitor the collateral's value.

|X| Illiquid and Restricted Securities. Under the policies and procedures established by the Fund's Board of Trustees, the
Manager determines the liquidity of certain of the Fund's investments. To enable the Fund to sell its holdings of a restricted
security not registered under the Securities Act of 1933, the Fund may have to cause those securities to be registered. The expenses
of registering restricted securities may be negotiated by the Fund with the issuer at the time the Fund buys the securities. When the
Fund must arrange registration because the Fund wishes to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered so that the Fund could sell it. The Fund would bear the
risks of any downward price fluctuation during that period.

The Fund can also acquire restricted securities through private placements. Those securities have contractual restrictions
on their public resale. Those restrictions might limit the Fund's ability to dispose of the securities and might lower the amount the
Fund could realize upon the sale.

The Fund has limitations that apply to purchases of restricted securities, as stated in the Prospectus. Those percentage
restrictions are not fundamental policies and do not limit purchases of restricted securities that are eligible for sale to qualified
institutional purchasers under Rule 144A of the Securities Act of 1933, if those securities have been determined to be liquid 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 holdings of that security may be considered to be illiquid. Illiquid securities include repurchase agreements
maturing in more than seven days and participation interests that do not have puts exercisable within seven days.

|X| Loans of Portfolio Securities. To raise cash for liquidity purposes, the Fund can lend its portfolio securities to
brokers, dealers and other types of financial institutions approved by the Fund's Board of Trustees. The Fund currently does not
intend to engage in loans of securities in the coming year, but if it does so, such loans will not likely exceed 5% of the Fund's
total assets.

There are some risks in connection with securities lending. The Fund might experience a delay in receiving additional
collateral to secure a loan, or a delay in recovery of the loaned securities if the borrower defaults. The Fund must receive
collateral for a loan. Under current applicable regulatory requirements (which are subject to change), on each business day the loan
collateral must be at least equal to the value of the loaned securities. It must consist of cash, bank letters of credit, securities
of the U.S. Government or its agencies or instrumentalities, or other cash equivalents in which the Fund is permitted to invest. To
be acceptable as collateral, letters of credit must obligate a bank to pay amounts demanded by the Fund if the demand meets the terms
of the letter. The terms of the letter of credit and the issuing bank both must be satisfactory to the Fund.

When it lends securities, the Fund receives amounts equal to the dividends or interest on loaned securities. It also
receives one or more of (a) negotiated loan fees, (b) interest on securities used as collateral, and (c) interest on any short-term
debt securities purchased with such loan collateral. Either type of interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees in connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to reacquire loaned securities on five days' notice or in
time to vote on any important matter.

|X| Borrowing for Leverage. The Fund has the ability to borrow from banks on an unsecured basis to invest the borrowed funds
in portfolio securities. This speculative technique is known as "leverage." The Fund may borrow only from banks. Under current
regulatory requirements, borrowings can be made only to the extent that the value of the Fund's assets, less its liabilities other
than borrowings, is equal to at least 300% of all borrowings (including the proposed borrowing). If the value of the Fund's assets
fails to meet this 300% asset coverage requirement, the Fund will reduce its bank debt within three days to meet the requirement. To
do so, the Fund might have to sell a portion of its investments at a disadvantageous time.

The Fund will pay interest on these loans, and that interest expense will raise the overall expenses of the Fund and reduce
its returns. If it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally, the
Fund's net asset value per share might fluctuate more than that of funds that do not borrow. Currently, the Fund does not contemplate
using this technique, but if it does so, it will not likely be to a substantial degree.

|X| Derivatives. The Fund can invest in a variety of derivative investments to seek income for liquidity needs or for
hedging purposes. Some derivative investments the Fund can use are the hedging instruments described below in this Statement of
Additional Information. However, the Fund does not use, and does not currently contemplate using, derivatives or hedging instruments
to a significant degree.

Some of the derivative investments the Fund can use include "debt exchangeable for common stock" of an issuer or
"equity-linked debt securities" of an issuer. At maturity, the debt security is exchanged for common stock of the issuer or it is
payable in an amount based on the price of the issuer's common stock at the time of maturity. Both alternatives present a risk that
the amount payable at maturity will be less than the principal amount of the debt because the price of the issuer's common stock may
not be as high as the Manager expected.

|X| Hedging. Although the Fund does not anticipate the extensive use of hedging instruments, the Fund can use hedging
instruments. To attempt to protect against declines in the market value of the Fund's portfolio, 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 could:
|_| sell futures contracts,
|_| buy puts on such futures or on securities, or
|_| write covered calls on securities or futures. Covered calls may also be used to increase the Fund's income, but the
Manager does not expect to engage extensively in that practice.

The Fund can use hedging to establish a position in the securities market as a temporary substitute for purchasing
particular securities. In that case the Fund would normally seek to purchase the securities and then terminate that hedging position.
The Fund might also use this type of hedge to attempt to protect against the possibility that its portfolio securities would not be
fully included in a rise in value of the market. To do so the Fund could:
|_| buy futures, or
|_| buy calls on such futures or on securities.

The Fund's strategy of hedging with futures and options on futures will be incidental to the Fund's activities in the
underlying cash market. The particular hedging instruments the Fund can use are described below. The Fund may employ new hedging
instruments and strategies when they are developed, if those investment methods are consistent with the Fund's investment objective
and are permissible under applicable regulations governing the Fund.

|_| Futures. The Fund can buy and sell futures contracts that relate to (1) broadly-based stock indices (these are referred
to as "stock index futures"), (2) other broadly based securities indices (these are referred to as "financial futures"), (3) debt
securities (these are referred to as "interest rate futures"), (4) foreign currencies (these are referred to as "forward contracts"),
and (5) commodities (these are referred to as "commodity futures").

A broadly-based stock index is used as the basis for trading stock index futures. They may in some cases be based on stocks
of issuers in a particular industry or group of industries. A stock index assigns relative values to the common stocks included in
the index and its value fluctuates in response to the changes in value of the underlying stocks. A stock index cannot be purchased or
sold directly. Financial futures are similar contracts based on the future value of the basket of securities that comprise the index.
These contracts obligate the seller to deliver, and the purchaser to take, cash to settle the futures transaction. There is no
delivery made of the underlying securities to settle the futures obligation. Either party may also settle the transaction by entering
into an offsetting contract.

An interest rate future obligates the seller to deliver (and the purchaser to take) cash or a specified type of debt
security to settle the futures transaction. Either party could also enter into an offsetting contract to close out the position.

The Fund can invest a portion of its assets in commodity futures contracts. Commodity futures may be based upon commodities
within five main commodity groups: (1) energy, which includes crude oil, natural gas, gasoline and heating oil; (2) livestock, which
includes cattle and hogs; (3) agriculture, which includes wheat, corn, soybeans, cotton, coffee, sugar and cocoa; (4) industrial
metals, which includes aluminum, copper, lead, nickel, tin and zinc; and (5) precious metals, which includes gold, platinum and
silver. The Fund may purchase and sell commodity futures contracts, options on futures contracts and options and futures on commodity
indices with respect to these five main commodity groups and the individual commodities within each group, as well as other types of
commodities.

No payment is paid or received by the Fund on the purchase or sale of a future. Upon entering into a futures transaction,
the Fund will be required to deposit an initial margin payment with the futures commission merchant (the "futures broker"). Initial
margin payments will be deposited with the Fund's Custodian bank in an account registered in the futures broker's name. However, the
futures broker can gain access to that account only under 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 daily.

At any time prior to 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 any additional cash must be paid by or released to the Fund. Any
loss or gain on the future is then realized by the Fund for tax purposes. All futures transactions (except forward contracts) are
effected through a clearinghouse associated with the exchange on which the contracts are traded.

|_| Put and Call Options. The Fund can buy and sell certain kinds of put options ("puts") and call options ("calls"), as
explained below. The Fund can write (that is, sell) puts. The Fund will not write puts if, as a result, more than 50% of the Fund's
net assets would be required to be segregated to cover such put options.

|_| Writing Covered Call Options. The Fund can write (that is, sell) covered calls on securities, indices or
futures. A call is covered if the Fund owns the security subject to the call while the call is outstanding, or, for certain types of
calls, the call may be covered by segregating liquid assets to enable the Fund to satisfy its obligation if the call is exercised.
Up to 25% of the Funds total assets may be subject to calls the Fund writes.

When the Fund writes a call on a security, it receives cash (a premium). The Fund agrees to sell the underlying security to
a purchaser of a corresponding call on the same security during the call period at a fixed exercise price regardless of market price
changes during the call period. The call period is usually not more than nine months. The exercise price may differ from the market
price of the underlying security. The Fund has the risk of loss that the price of the underlying security may decline during the call
period. That risk may be offset to some extent by the premium the Fund receives. If the value of the investment does not rise above
the call price, it is likely that the call will lapse without being exercised. In that case the Fund would keep the cash premium and
the investment.

When the Fund writes a call on an index, it receives cash (a premium). If the buyer of the call exercises it, the Fund will
pay an amount of cash equal to the difference between the closing price of the call and the exercise price, multiplied by a specified
multiple that determines the total value of the call for each point of difference. If the value of the underlying investment does not
rise above the call price, it is likely that the call will lapse without being exercised. In that case, the Fund would keep the cash
premium.

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 calls traded on exchanges
or as to other acceptable escrow securities. In that way, no margin will be required for such transactions. OCC will release the
securities on the expiration of the option or when the Fund enters into a closing transaction.

To terminate its obligation on a call it has written, the Fund may purchase a corresponding call in a "closing purchase
transaction." The Fund will then realize a profit or loss, depending upon whether the net of the amount of the option transaction
costs and the premium received on the call the Fund wrote is more or less than the price of the call the Fund purchases to close out
the transaction. The Fund may realize a profit if the call expires unexercised, because the Fund will retain the underlying security
and the premium it received when it wrote the call. Any such profits are considered short-term capital gains for Federal income tax
purposes, as are the premiums on lapsed calls. When distributed by the Fund they are taxable as ordinary income. If the Fund cannot
effect a closing purchase transaction due to the lack of a market, it will have to hold the callable securities until the call
expires or is exercised.

The Fund may also write calls on a futures contract without owning the futures contract or securities deliverable under the
contract. To do so, at the time the call is written, the Fund must cover the call by segregating an equivalent dollar amount of
liquid assets. The Fund will segregate additional liquid assets if the value of the segregated assets drops below 100% of the current
value of the future. Because of this segregation requirement, in no circumstances would the Fund's receipt of an exercise notice as
to that future require the Fund to deliver a futures contract. It would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.

|_| Purchasing Calls and Puts. The Fund can 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 buys a call (other than in a closing purchase
transaction), it pays a premium. The Fund then 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. The Fund benefits only if it sells the call at a profit or
if, during the call period, the market price of the underlying investment is above the sum of the call price plus the transaction
costs and the premium paid for the call and the Fund exercises the call. If the Fund does not exercise the call or sell it (whether
or not at a profit), the call will become worthless at its expiration date. In that case the Fund will have paid the premium but lost
the right to purchase the underlying investment.

The Fund can buy calls on securities, or indices, or on futures permitted by the Fund's other investment policies. The Fund
can buy and sell futures contracts that relate to (1) stock indices (these are referred to as "stock index futures"), (2) securities
indices (these are referred to as "financial futures"), (3) debt securities (these are referred to as "interest rate futures"), (4)
foreign currencies (these are referred to as "forward contracts"), and (5) commodities (these are referred to as "commodity futures").

The Fund can buy puts on securities, on indices or on futures that are permitted by the Fund's other investment policies.
When the Fund purchases a put, it pays a premium and, except as to puts on indices, has the right to sell the underlying investment
to a seller of a put on a corresponding investment during the put period at a fixed exercise price. Buying a put on securities or
futures the Fund owns 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 date. In that case the Fund will have paid the premium
but lost the right to sell the underlying investment. However, the Fund may sell the put prior to its expiration. That sale may or
may not be at a profit.

When the Fund purchases a call or put on an index or future, it pays a premium, but settlement is in cash rather than by
delivery of the underlying investment to the Fund. Gain or loss depends on changes in the index in question (and thus on price
movements in the securities market generally) rather than on price movements in individual securities or futures contracts.

The Fund can buy a put or call only if after the purchase, the value of all call and put options held by the Fund will not
exceed 5% of the Fund's total assets.

|_| Risks of Hedging with Options and Futures. 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, 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.

The Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The exercise of calls
written by the Fund might 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 could pay a brokerage commission each time it buys a call or put, sells a call, or buys or sells an underlying
investment in connection with the exercise of a call or put. Those commissions could be higher on a relative basis 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. 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
investment.

If a covered call written by the Fund is exercised on an investment that has increased in value, the Fund will be required
to sell the investment at the call price. It will not be able to realize any profit if the investment has increased in value above
the call price.

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. The Fund might experience losses if it
could not close out a position because of an illiquid market for the future or option.

There is a risk in using short hedging by selling futures or purchasing puts on broadly-based indices or futures to attempt
to protect against declines in the value of the Fund's portfolio securities. The risk is that the prices of the futures or the
applicable index will correlate imperfectly with the behavior of the cash prices of the Fund's securities. For example, it is
possible that while the Fund has used hedging instruments in a short hedge, the market may advance and the value of the securities
held in the Fund's portfolio might decline. If that occurred, the Fund would lose money on the hedging instruments and also
experience a decline in the value of 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 securities will tend to move in the same direction as the indices
upon which the hedging instruments are based.

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 portfolio securities being
hedged and movements in the price of the hedging instruments, the Fund might use hedging instruments in a greater dollar amount than
the dollar amount of portfolio securities being hedged. It might do so if the historical volatility of the prices of the portfolio
securities being hedged is more than the historical volatility of the applicable index.

The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to differences in the
nature of those markets. First, all participants in the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions
which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market 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 market could be reduced, thus producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures market may cause temporary price distortions.

The Fund can use hedging instruments to establish a position in the securities markets as a temporary substitute for the
purchase of individual securities (long hedging) by buying futures and/or calls on such futures, broadly-based indices or on
securities. It is possible that when the Fund does so the market might decline. If the Fund then concludes not to invest in
securities because of concerns that the market might decline further 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 securities purchased.

|_| 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 "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 a foreign currency. The Fund limits its exposure in foreign currency exchange contracts in a particular foreign
currency to the amount of its assets denominated in that currency or a closely-correlated currency. The Fund may also use
"cross-hedging" where the Fund hedges against changes in currencies other than the currency in which a security it holds is
denominated.

Under a forward contract, one party agrees to purchase, and another party agrees to sell, a specific currency at a future
date. That date may be any fixed number of days from the date of the contract agreed upon by the parties. The transaction price is
set at the time the contract is entered into. These contracts are traded in the inter-bank market conducted directly among currency
traders (usually large commercial banks) and their customers.

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 the risk of 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. Although forward contracts may reduce the risk of loss from a decline in the value of
the hedged currency, at the same time they limit any potential gain if the value of the hedged currency increases.

When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when it
anticipates receiving dividend payments in a foreign currency, the Fund might desire to "lock-in" the U.S. dollar price of the
security or the U.S. dollar equivalent of the dividend payments. To do so, the Fund could enter into a forward contract for the
purchase or sale of the amount of foreign currency involved in the underlying transaction, in a fixed amount of U.S. dollars per unit
of the foreign currency. This is called a "transaction hedge." The transaction hedge will protect the Fund against a loss from an
adverse change in 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 the payments are made or received.

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is called a
"position hedge." When the Fund believes that foreign currency might suffer a substantial decline against the U.S. dollar, it could
enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in that foreign currency. When the Fund believes that the U.S. dollar might suffer a substantial
decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount.
Alternatively, the Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if
the Fund believes that the U.S. dollar value of the foreign currency to be sold pursuant to its 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. That is
referred to as a "cross hedge."

The Fund will cover its short positions in these cases by identifying to its Custodian bank assets having a value equal to
the aggregate amount of the Fund's commitment under forward contracts. The Fund will not enter into forward contracts or maintain a
net exposure to such contracts if the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets denominated in that currency or another currency that is
the subject of the hedge.

However, to avoid excess transactions and transaction costs, the Fund may maintain a net exposure to forward contracts in
excess of the value of the Fund's portfolio securities or other assets denominated in foreign currencies if the excess amount is
"covered" by liquid securities denominated in any currency. The cover must be at least equal at all times to the amount of that
excess. As one alternative, the Fund may purchase a call option permitting the Fund to purchase the amount of foreign currency being
hedged by a forward sale contract at a price no higher than the forward contract price. As another alternative, the Fund may purchase
a put option permitting the Fund to sell the amount of foreign currency subject to a forward purchase contract at a price as high or
higher than the forward contact price.

The precise matching of the amounts under forward contracts and the value of the securities involved generally will not be
possible because the future value of securities denominated in foreign currencies will change as a consequence of market movements
between the date the forward contract is entered into and the date it is sold. In some cases the Manager might decide to sell the
security and deliver foreign currency to settle the original purchase obligation. If the market value of the security is less than
the amount of foreign currency the Fund is obligated to deliver, the Fund might have to purchase additional foreign currency on the
"spot" (that is, cash) market to settle the security trade. If the market value of the security instead exceeds the amount of foreign
currency the Fund is obligated to deliver to settle the trade, the Fund might have to sell on the spot market some of the foreign
currency received upon the sale of the security. There will be additional transaction costs on the spot market in those cases.

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 to pay additional transactions costs. The use of forward
contracts in this manner might reduce the Fund's performance if there are unanticipated changes in currency prices to a greater
degree than if the Fund had not entered into such contracts.

At or before the maturity of a forward contract requiring the Fund to sell a currency, the Fund might sell a portfolio
security and use the sale proceeds to make delivery of the currency. In the alternative the Fund might retain the security and offset
its contractual obligation to deliver the currency by purchasing a second contract. Under that contract the Fund will obtain, on the
same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, the Fund might 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. The gain or loss will depend on the extent to which the exchange rate or rates
between the currencies involved moved between the execution dates of the first contract and offsetting contract.

The costs 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 brokerage fees or commissions are involved. Because these contracts are not traded on an exchange, the Fund must evaluate
the credit and performance risk of the counterparty under each 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 will incur costs in doing
so. 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 might offer to sell a foreign currency to the Fund at one
rate, while offering a lesser rate of exchange if the Fund desires to resell that currency to the dealer.

|_| Regulatory Aspects of Hedging Instruments. When using futures and options on futures, the Fund is required to operate
within certain guidelines and restrictions with respect to the use of futures as established by the Commodities Futures Trading
Commission (the "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 options premiums to not more than 5% of the Fund's net assets for hedging
strategies that are not considered bona fide hedging strategies under the Rule. The Fund limits the sum of all margin deposits on
futures and premiums paid on related options to 5% of the Fund's total assets. Under the Rule, the Fund must also use short futures
and options on futures 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 the option exchanges. The exchanges limit the
maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits
apply 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 that 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.

Under the Investment Company Act, when the Fund purchases a future, it must maintain cash or readily marketable short-term
debt instruments in an amount equal to the market value of the securities underlying the future, less the margin deposit applicable
to it.

|_| Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange contracts in which the Fund may invest are
treated as "Section 1256 contracts" under the Internal Revenue Code. In general, gains or losses relating to Section 1256 contracts
are characterized as 60% long-term and 40% short-term capital gains or losses under the Code. However, foreign currency gains or
losses arising from Section 1256 contracts that are 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," and unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-to-market for purposes of determining 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 those transactions from this marked-to-market treatment.

Certain forward contracts the Fund enters into 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 making up a straddle is allowed only to the extent that the 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, the following gains or losses are treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that 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, and
(2) gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt
security denominated in a foreign currency or foreign currency forward contracts and the date of disposition.

Currency gains and losses are offset against market gains and losses on each trade before determining a net "Section 988"
gain or loss under the Internal Revenue Code for that trade, which may increase or decrease the amount of the Fund's investment
company income available for distribution to its shareholders.

|X| Temporary Defensive Investments. When market conditions are unstable, or the Manager believes it is otherwise
appropriate to reduce holdings in stocks, the Fund can invest in a variety of debt securities for defensive purposes. The Fund can
also purchase these securities for liquidity purposes to meet cash needs due to the redemption of Fund shares, or to hold while
waiting reinvest cash received from the sale of other portfolio securities. The Fund can buy:
|_| high-quality (rated in the top rating categories of nationally-recognized rating organizations or deemed by the Manager
to be of comparable quality), short-term money market instruments, including those issued by the U. S. Treasury or other
government agencies,
|_| commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the top rating
category of a nationally recognized rating organization,
|_| debt obligations of corporate issuers, rated investment grade (rated at least Baa by Moody's Investors Service, Inc. or
at least BBB by Standard& Poor's Corporation, or a comparable rating by another rating organization), or unrated
securities judged by the Manager to have a comparable quality to rated securities in those categories,
|_| referred stocks,
|_| certificates of deposit and bankers' acceptances of domestic and foreign banks and savings and loan associations, and
|_| repurchase agreements.

Short-term debt securities would normally be selected for defensive or cash management purposes because they can normally be
disposed of quickly, are not generally subject to significant fluctuations in principal value and their value will be less subject to
interest rate risk than longer-term debt securities.

Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those policies that the Fund has adopted to govern its
investments that can be changed only by the vote of a "majority" of the Fund's outstanding voting securities. Under the Investment
Company Act, a "majority" vote is defined as the vote of the holders of the lesser of:
|_| 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 represented by proxy, or
|_| more than 50% of the outstanding shares.

The Fund's investment objective is a fundamental policy. Other policies described in the Prospectus or this Statement of
Additional Information are "fundamental" only if they are identified as such. The Fund's Board of Trustees can change non-fundamental
policies without shareholder approval. However, significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as appropriate. The Fund's most significant investment
policies are described in the Prospectus.

|_| Does the Fund Have Additional Fundamental Policies? The following investment restrictions are fundamental policies of
the Fund.

|_| The Fund cannot buy securities or other instruments issued or guaranteed by any one issuer if more than 5% of its total
assets would be invested in securities or other instruments of that issuer or if it would then own more than 10% of that
issuer's voting securities. This limitation applies to 75% of the Fund's total assets. The limit does not apply to
securities issued by the U.S. government or any of its agencies or instrumentalities.
|_| The Fund may invest up to 20% of its total assets in small, unseasoned companies (which are companies that have been in
operation less than three years, including the operations of predecessors).
|_| The Fund cannot make short sales of securities except "short sales against-the-box."
|_| The Fund cannot deviate from the percentage limitations for its investment policies described as "fundamental policies" in
this Statement of Additional Information or in the Prospectus.
? The Fund cannot make loans except (a) through lending securities in an amount not to exceed 25% of its total assets, (b)
through the purchase of debt securities or similar evidences of indebtedness, (c) through an interfund lending program
(if applicable) with other affiliated funds, provided that no such loan may be made if, as a result, the aggregate of
such loans would exceed 331/3% of the value of its total assets (taken at market value at the time of such loans), and
(d) through repurchase agreements.
|_| The Fund cannot concentrate investments. That means it cannot invest 25% or more of its total assets in companies in any
one industry.
|_| The Fund cannot underwrite securities of other companies. A permitted exception is in case it is deemed to be an
underwriter under the Securities Act of 1933 when reselling any securities held in its own portfolio.
|_| The Fund cannot 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.
|_| The Fund cannot invest in or hold securities of any issuer if officers and Trustees of the Fund or the Manager
individually beneficially own more than 1/2 of 1% of the securities of that issuer and together own more than 5% of the
securities of that issuer.
|_| The Fund cannot invest in real estate or in interests in real estate. However, the Fund can purchase readily-marketable
securities of companies holding real estate or interests in real estate.
|_| The Fund cannot pledge, mortgage or hypothecate 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 policies.
|_| The Fund cannot issue "senior securities," but this does not prohibit certain investment activities for which assets of the
Fund are designated as segregated, or margin, collateral or escrow arrangements that are established to cover the
related obligations. Examples of those activities include borrowing money, reverse repurchase agreements,
delayed-delivery and when-issued arrangements for portfolio securities transactions, and contracts to buy or sell
derivatives, hedging instruments, options or futures.

|_| Non-Fundamental Investment Restrictions. The following operating policies of the Fund are not fundamental policies and,
as such, may be changed, provided such change is consistent with the Investment Company Act of 1940 and other applicable regulations
by vote of a majority of the Fund's Board of Trustees without shareholder approval. These additional restrictions provide that:

|_| The Fund cannot invest in physical commodities or commodity contracts; however, the Fund may: (1) buy and sell hedging
instruments permitted by any of its other investment policies, and (2) buy and sell options, futures, securities or other
instruments backed by, or the investment return from which is linked to changes in the price of, physical commodities.

Unless the Prospectus or this Statement of Additional Information states that a percentage restriction applies on an ongoing
basis, it applies only at the time the Fund makes an investment. 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.

For purposes of the Fund's policy not to concentrate its investments as described above, the Fund has adopted the industry
classifications set forth in Appendix A to this Statement of Additional Information. This is not a fundamental policy.

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment company with an unlimited number of authorized
shares of beneficial interest. The Fund was organized as a Massachusetts business trust in 1985.

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. 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.

|X| Classes of Shares. 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 five classes of shares: Class A, Class B, Class C,
Class N and Class Y. All classes invest in the same investment portfolio. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one class are different from interests of another class,
and
o votes as a class on matters that affect that class alone.

Shares are freely transferable, and each share of each class has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Each share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the same class.

The Trustees are authorized to create new series and classes of shares. The Trustees may reclassify unissued shares of the
Fund into additional series or classes of shares. The Trustees also may divide or combine the shares of a class into a greater or
lesser number of shares without changing the proportionate beneficial interest of a shareholder in the Fund. Shares do not have
cumulative voting rights or preemptive or subscription rights. Shares may be voted in person or by proxy at shareholder meetings.

|X| Meetings of Shareholders. 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. It will also do so 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. If the Trustees receive a request from at least 10 shareholders 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.
The shareholders making the request must have been shareholders for at least six months and must hold shares of the Fund valued at
$25,000 or more or constituting at least 1% of the Fund's outstanding shares, whichever is less. The Trustees may also take other
action as permitted by the Investment Company Act.

|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust contains an express disclaimer of shareholder or
Trustee liability for the Fund's obligations. It also provides for indemnification and reimbursement of expenses out of the Fund's
property for any shareholder held personally liable for its obligations. The Declaration of Trust also states that upon request, the
Fund shall assume the defense of any claim made against a shareholder for any act or obligation of the Fund and shall satisfy any
judgment on that claim. Massachusetts law permits a shareholder of a business trust (such as the Fund) to be held personally liable
as a "partner" under certain circumstances. However, the risk that a Fund shareholder will incur financial loss from being held
liable as a "partner" of the Fund is limited to the relatively remote circumstances in which the Fund would be unable to meet its
obligations.

The Fund's contractual arrangements state that any person doing business with the Fund (and each shareholder of the Fund)
agrees under its Declaration of Trust to look solely to the assets of the Fund for satisfaction of any claim or demand that may arise
out of any dealings with the Fund. Additionally, 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 and
occupations during the past five years are listed below. Trustees denoted with an asterisk (*) below are deemed to be "interested
persons" of the Fund under the Investment Company Act. All of the Trustees are Trustees or Directors of the following New York-based
Oppenheimer funds1:

Oppenheimer California Municipal Fund Oppenheimer International Small Company Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Large Cap Growth Fund
Oppenheimer Capital Preservation Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Discovery Fund Oppenheimer Multi-Sector Income Trust
Oppenheimer Emerging Growth Fund Oppenheimer Multi-State Municipal Trust
Oppenheimer Emerging Technologies Fund Oppenheimer Municipal Bond Fund
Oppenheimer Enterprise Fund Oppenheimer New York Municipal Fund
Oppenheimer Europe Fund Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund Oppenheimer Trinity Core Fund
Oppenheimer Global Growth&Income Fund Oppenheimer Trinity Growth Fund
Oppenheimer Gold&Special Minerals Fund Oppenheimer Trinity Value Fund
Oppenheimer Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund

Ms. Macaskill and Messrs. Spiro, Donohue, Wixted, Zack, Bishop and Farrar respectively hold the same offices with the other
New York-based Oppenheimer funds as with the Fund. As of January 5, 2001, 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. The foregoing statement does not reflect ownership of shares
of the Fund held of record by an employee benefit plan for employees of the Manager, other than the shares beneficially owned under
the plan by the officers of the Fund listed above. Ms. Macaskill and Mr. Donohue are trustees of that plan.

Leon Levy, Chairman of the Board of Trustees, Age: 75.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982) and Chairman of Avatar Holdings, Inc. (real estate
development).

Donald W. Spiro, Vice Chairman of the Board of Trustees, Age: 75.
399 Ski Trail, Smoke Rise, New Jersey 07405
Formerly he held the following positions: Chairman Emeritus (August 1991 - August 1999), Chairman (November 1987 - January 1991) and
a director (January 1969 - August 1999) of the Manager; President and Director of OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager and the Fund's Distributor (July 1978 - January 1992).

Bridget A. Macaskill*, President and Trustee; Age: 52.
Two World Trade Center, New York, New York 10048-0203
Chairman (since August 2000), Chief Executive Officer (since September 1995) and a director (since December 1994) of the Manager;
President (since September 1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the Manager's parent holding
company; President, Chief Executive Officer and a director (since March 2000) of OFI Private Investments, Inc., an investment adviser
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc. (since August 1994) and Shareholder Financial
Services, Inc. (since September 1995), transfer agent subsidiaries of the Manager; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the Manager; President and a
director (since October 1997) of OppenheimerFunds International Ltd., an offshore fund management subsidiary of the Manager and of
Oppenheimer Millennium Funds plc; a director of HarbourView Asset Management Corporation (since July 1991) and of Oppenheimer Real
Asset Management, Inc. (since July 1996), investment adviser subsidiaries of the Manager; a director (since April 2000) of
OppenheimerFunds Legacy Program, a charitable trust program established by the Manager; a director of Prudential Corporation plc (a
U.K. financial service company); President and a trustee of other Oppenheimer funds; formerly President of the Manager (June 1991 -
August 2000).

Robert G. Galli, Trustee, Age: 67.
19750 Beach Road, Jupiter, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following positions: Vice Chairman (October 1995 - December
1997) and Executive Vice President (December 1977 - October 1995) of the Manager; Executive Vice President and a director (April 1986
- October 1995) of HarbourView Asset Management Corporation.

Benjamin Lipstein, Trustee, Age: 77.
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business Administration, New York University.

Elizabeth B. Moynihan, Trustee, Age: 71.
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art (Smithsonian Institute), Executive Committee of Board of
Trustees of the National Building Museum; a member of the Trustees Council, Preservation League of New York State.

Kenneth A. Randall, Trustee, Age: 73.
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), and Prime Retail, Inc. (real estate investment trust); formerly President and Chief Executive Officer of The Conference
Board, Inc. (international economic and business research) and a director of Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company.

Edward V. Regan, Trustee, Age: 70.
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 director of RBAsset (real estate manager); a director of OffitBank; Trustee, Financial Accounting Foundation (FASB and
GASB); President, Baruch College of the City University of New York; formerly New York State Comptroller and trustee, New York State
and Local Retirement Fund.

Russell S. Reynolds, Jr., Trustee, Age: 69.
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Search Group, Inc. (corporate governance consulting and executive recruiting); a director of
Professional Staff Limited (a U.K. temporary staffing company); a life trustee of International House (non-profit educational
organization), and a trustee of the Greenwich Historical Society.

Clayton K. Yeutter, Trustee, Age: 70.
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan& Hartson (a Washington, D.C. law firm). Other directorships: Allied Zurich Pl.c; ConAgra, Inc.; FMC Corporation;
Farmers Group Inc.; Oppenheimer Funds; Texas Instruments Incorporated; Weyerhaeuser Co. and Zurich Allied AG.

Jayne M. Stevlingson, Vice President and Portfolio Manager; Age: 40.
Two World Trade Center, New York, New York - 10048-0203
Vice President (since August 1999) of the Manager; formerly a small-cap growth fund portfolio manager with Morgan Stanley Dean Witter
Advisors, Inc. (October 1992- July 1999).

Andrew J. Donohue, Secretary Age: 50.
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October 1991) and a director (since September 1995) of the
Manager; Executive Vice President and General Counsel (since September 1993) and a director (since January 1992) of OppenheimerFunds
Distributor, Inc.; Executive Vice President, General Counsel and a director (since September 1995) of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc., of OFI
Private Investments, Inc. (since March 2000), and of PIMCO Trust Company (since May 2000); President and a director of Centennial
Asset Management Corporation (since September 1995) and of Oppenheimer Real Asset Management, Inc. (since July 1996); Vice President
and a director (since September 1997) of OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc; a director (since
April 2000) of OppenheimerFunds Legacy Program; General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; an officer of other Oppenheimer funds.

Brian W. Wixted, Treasurer and Principal Financial and Accounting Officer, Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer (since March 1999) of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc., of OFI Private Investments, Inc. (since March 2000) and of OppenheimerFunds International
Ltd. and Oppenheimer Millennium Funds plc (since May 2000); Treasurer and Chief Financial Officer (since May 2000) of PIMCO Trust
Company; Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and of Centennial Asset Management Corporation; an
officer of other Oppenheimer funds; formerly Principal and Chief Operating Officer, Bankers Trust Company - Mutual Fund Services
Division (March 1995 - March 1999); Vice President and Chief Financial Officer of CS First Boston Investment Management Corp.
(September 1991 - March 1995).

Robert G. Zack, Assistant Secretary, Age: 52.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May 1981) of the Manager; Assistant Secretary of
Shareholder Services, Inc. (since May 1985), Shareholder Financial Services, Inc. (since November 1989); OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an officer of other Oppenheimer funds.

Robert J. Bishop, Assistant Treasurer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer funds; formerly an Assistant
Vice President of the Manager/Mutual Fund Accounting (April 1994 - May 1996) and a Fund Controller of the Manager.

Scott T. Farrar, Assistant Treasurer, Age: 35.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant Treasurer of Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer Funds; formerly an Assistant Vice President of the Manager/Mutual Fund Accounting
(April 1994 - May 1996), and a Fund Controller of the Manager.

|X| Remuneration of Trustees. The officers of the Fund and certain Trustees of the Fund (Ms. Macaskill and prior to July 31,
1999, Mr. Spiro) who are affiliated with the Manager receive no salary or fee from the Fund. The remaining Trustees of the Fund
received the compensation shown below. The compensation from the Fund was paid during its fiscal year ended September 30, 2000. The
compensation from all of the New York-based Oppenheimer funds (including the Fund) was received as a director, trustee or member of a
committee of the boards of those funds during the calendar year 2000.

  ----------------------------------- ------------------------ ------------------------ ---------------------------
                                                                                        Total
                                                               Retirement               Compensation
                                                               Benefits                 from all
                                      Aggregate Compensation   Accrued as Part          New York based
  Trustee's Name                      From Fund1               of Fund                  Oppenheimer
  and Other Positions                                          Expenses                 Funds (30 Funds)2
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Leon Levy                                           $21,719                   $9,050                    $171,950
  Chairman
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Robert G. Galli 3                                    $7,714                       $0                    $191,134
  Study Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Benjamin Lipstein                                   $18,694                  $10,421                    $148,639
  Study Committee Chairman
  Audit Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Elizabeth B. Moynihan                                $7,712                     $695                    $104,695
  Study Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Kenneth A. Randall                                  $12,350                   $5,587                     $96,034
  Audit Committee Chairman
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Edward V. Regan                                      $5,509                       $0                     $94,995
  Proxy Committee Chairman Audit
  Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Russell S. Reynolds, Jr.                             $6,502                   $1,690                     $71,069
  Proxy Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Donald W. Spiro                                      $3,985                       $0                     $63,435
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  Clayton K. Yeutter 4                                 $4,916                       $0                     $71,069
  Proxy Committee Member
  ----------------------------------- ------------------------ ------------------------ ---------------------------
  1Aaggregate  compensation  includes  fees,  deferred  compensation,  if any, and  retirement  plan benefits  accrued for a Trust or
  Director.
  2For the 2000 calendar year.
  3 Calendar year 2000 figures include compensation from the Oppenheimer New York, Quest and Rochester Funds.
  4 Includes $548 under Deferred Compensation Plan described below.

|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan that provides for payments to retired Trustees.
Payments are up to 80% of the average compensation paid during a Trustee's five years of service in which the highest compensation
was received. A Trustee must serve as trustee for any of the New York-based Oppenheimer funds for at least 15 years to be eligible
for the maximum payment. Each Trustee's retirement benefits will depend on the amount of the Trustee's future compensation and length
of service. Therefore the amount of those benefits cannot be determined at this time, nor can we estimate the number of years of
credited service that will be used to determine those benefits.

|X| Deferred Compensation Plan for Trustees. The Board of Trustees has adopted a Deferred Compensation Plan for
disinterested trustees that enables them to elect to defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds.

Deferral of Trustees' fees under the plan will not materially affect the Fund's assets, liabilities or net income per share.
The plan will not obligate the Fund to retain the services of any Trustee or to pay any particular level of compensation to any
Trustee. Pursuant to an Order issued by the Securities and Exchange Commission, the Fund may invest in the funds selected by the
Trustee under the plan without shareholder approval for the limited purpose of determining the value of the Trustee's deferred fee
account.

|X| Major Shareholders. As of January 5, 2001, 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:

Merrill Lynch Pierce Fenner&Smith Inc., 4800 Deer Lake Drive E., Floor 3, Jacksonville, Florida 32246-6484, which owned
1,711,787.344 Class A shares (8.97% of the Class A shares then outstanding), for the benefit of its customers.

American Express Trust Co., FBO American Express Trust, Retirement Service Plans, 996 American Express Financial Center,
Minneapolis, Minnesota 55474-0009, which owned 1,109,981.188 Class A shares (5.82% of the Class A shares then outstanding),
for the benefit of its customers.

Merrill Lynch Pierce Fenner& Smith Inc., 4800 Deer Lake Drive E., Floor 3, Jacksonville, Florida 32246-6484, which owned
67,941.083 Class C shares (6.36% of the Class C shares then outstanding), for the benefit of its customers.

Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111, which owned 1,283,063.351
Class Y shares (97.61% of the Class Y shares then outstanding), for the benefit of its clients.

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts Mutual Life
Insurance Company.

|X| Code of Ethics. The Fund, the Manager and the Distributor 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. Covered persons include persons with knowledge of the investments and investment intentions of the Fund and
other funds advised by the Manager. The Code of Ethics does permit personnel subject to the Code to invest in securities, including
securities that may be purchased or held by the Fund, subject to a number of restrictions and controls. Compliance with the Code of
Ethics is carefully monitored and enforced by the Manager.

The Code of Ethics is an exhibit to the Fund's registration statement filed with the Securities and Exchange Commission and
can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information about the hours of
operation of the Public Reference Room by calling the SEC at 1-202-942-8090. The Code of Ethics can also be viewed as part of the
Fund's registration statement on the SEC's EDGAR database at the SEC's Internet web site at http://www.sec.gov. Copies may be
obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov., or by writing
to the SEC's Public Reference Section, Washington, D.C. 20549-0102.

|X| The Investment Advisory Agreement. The Manager provides investment advisory and management services to the Fund under
an investment advisory agreement between the Manager and the Fund. The Manager selects securities for the Fund's portfolio and
handles its day-to-day business. The portfolio manager of the Fund is employed by the Manager and is the person who is principally
responsible for the day-to-day management of the Fund's portfolio. Other members of the Manager's Equity Portfolio Team provide the
portfolio managers with counsel and support in managing the Fund's portfolio.

The agreement requires the Manager, at its expense, to provide the Fund with adequate office space, facilities and
equipment. It also requires the Manager to provide and supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Fund. Those responsibilities include 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.

The Fund pays expenses not expressly assumed by the Manager under the advisory agreement. The advisory agreement lists
examples of expenses paid by the Fund. The major categories 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. The management fees paid by the Fund to the Manager are calculated at
the rates described in the Prospectus, which are applied to the assets of the Fund as a whole. The fees are allocated to each class
of shares based upon the relative proportion of the Fund's net assets represented by that class.

               --------------------------------------- -------------------------------------------
                                                       Management Fees Paid to OppenheimerFunds,
                      Fiscal Year ended 9/30:                             Inc.
               --------------------------------------- -------------------------------------------
               --------------------------------------- -------------------------------------------
                                1998                                  $10,540,204
               --------------------------------------- -------------------------------------------
               --------------------------------------- -------------------------------------------
                                1999                                   $8,072,902
               --------------------------------------- -------------------------------------------
               --------------------------------------- -------------------------------------------
                                2000                                  $10,861,232
               --------------------------------------- -------------------------------------------

         The investment  advisory  agreement  states that in the absence of willful  misfeasance,  bad faith,  gross  negligence in the
performance of its duties or reckless disregard of its obligations and duties under the investment advisory  agreement,  the Manager is
not liable for any loss the Fund sustains for any investment,  adoption of any investment  policy,  or the purchase,  sale or retention
of any security.

         The 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  Manager  may  withdraw  the right of the Fund to use the name
"Oppenheimer" as part of its name.

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 advisory  agreement  contains  provisions  relating to the  employment of
broker-dealers  to  effect  the  Fund's  portfolio  transactions.  The  Manager  is  authorized  by the  advisory  agreement  to employ
broker-dealers,  including  "affiliated"  brokers,  as that term is defined in the  Investment  Company  Act.  The  Manager  may employ
broker-dealers  that the Manager  thinks,  in its best judgment based on all relevant  factors will implement the policy of the Fund to
obtain, at reasonable expense,  the "best execution" of the Fund's portfolio  transactions.  "Best execution" means prompt and reliable
execution at the most favorable price obtainable.  The Manager need not seek competitive  commission  bidding.  However, it is expected
to be aware of the current rates of eligible brokers and to minimize the commissions  paid to the extent  consistent with the interests
and policies of the Fund as established by its Board of Trustees.

         Under the  investment  advisory  agreement,  the Manager may select  brokers (other than  affiliates)  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  concessions  paid to such brokers may be higher than another  qualified  broker would  charge,  if the Manager  makes a good faith
determination that the concession is fair and reasonable in relation to the services provided.  Subject to those  considerations,  as a
factor in  selecting  brokers for the Fund's  portfolio  transactions,  the Manager may also  consider  sales of shares of the Fund and
other investment companies for which the Manager or an affiliate serves as investment adviser.

Brokerage  Practices Followed by the Manager.  The Manager allocates brokerage for the Fund subject to the provisions of the investment
advisory agreement and the procedures and rules described above.  Generally,  the Manager's  portfolio traders allocate brokerage based
upon  recommendations  from the Manager's  portfolio managers.  In certain instances,  portfolio managers may directly place trades and
allocate brokerage. In either case, the Manager's executive officers supervise the allocation of brokerage.

         Transactions  in securities  other than those for which an exchange is the primary market are generally  done with  principals
or market makers.  In transactions  on foreign  exchanges,  the Fund may be required to pay fixed  brokerage  commissions and therefore
would not have the  benefit of  negotiated  commissions  available  in U.S.  markets.  Brokerage  commissions  are paid  primarily  for
transactions  in listed  securities or for certain  fixed-income  agency  transactions  in the secondary  market.  Otherwise  brokerage
commissions  are paid  only if it  appears  likely  that a better  price or  execution  can be  obtained  by  doing  so.  In an  option
transaction,  the Fund  ordinarily uses the same broker for the purchase or sale of the option and any transaction in the securities to
which the option relates.

         Other funds advised by the Manager have investment  policies  similar to those of the Fund.  Those other funds may purchase or
sell the same securities as the Fund at the same time as the Fund,  which could affect the supply and price of the  securities.  If two
or more funds advised by the Manager  purchase the same  security on the same day from the same dealer,  the  transactions  under those
combined  orders are  averaged as to price and  allocated  in  accordance  with the  purchase or sale orders  actually  placed for each
account.

         Most  purchases  of debt  obligations  are  principal  transactions  at net  prices.  Instead  of  using a  broker  for  those
transactions,  the Fund normally deals directly with the selling or purchasing  principal or market maker unless the Manager determines
that a better  price or  execution  can be  obtained  by using the  services  of a  broker.  Purchases  of  portfolio  securities  from
underwriters  include a commission  or  concession  paid by the issuer to the  underwriter.  Purchases  from  dealers  include a spread
between the bid and asked prices. The Fund seeks to obtain prompt execution of these orders at the most favorable net price.

         The investment  advisory  agreement  permits the Manager to allocate  brokerage for research  services.  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.  The
investment  research  received  for the  commissions  of those  other  accounts  may be useful  both to the Fund and one or more of the
Manager's  other  accounts.  Investment  research may be supplied to the Manager by a third party at the  instance of a broker  through
which trades are placed.

         Investment  research  services  include  information and analysis on particular  companies and industries as well as market or
economic trends and portfolio  strategy,  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  permits  the Manager to use stated  commissions  on  secondary  fixed-income  agency  trades to obtain
research if the broker  represents to the Manager  that:  (i) the trade is not from or for the broker's own  inventory,  (ii) the trade
was executed by the broker on an agency basis at the stated commission,  and (iii) the trade is not a riskless  principal  transaction.
The Board of Trustees  permits the Manager to use  concessions on fixed-price  offerings to obtain  research,  in the same manner as is
permitted for agency transactions.

         The research  services  provided by brokers  broadens the scope and supplements the research  activities of the Manager.  That
research  provides  additional  views and comparisons  for  consideration,  and helps the Manager to obtain market  information for the
valuation of  securities  that are either held in the Fund's  portfolio or are being  considered  for  purchase.  The Manager  provides
information to the Board about the commissions  paid to brokers  furnishing such services,  together with the Manager's  representation
that the amount of such concessions was reasonably related to the value or benefit of such services.

      --------------------------------------- ----------------------------------------------------------------
             Fiscal Year Ended 9/30:                   Total Brokerage Concessions Paid by the Fund1
      --------------------------------------- ----------------------------------------------------------------
      --------------------------------------- ----------------------------------------------------------------
                       1998                                               $1,598,284
      --------------------------------------- ----------------------------------------------------------------
      --------------------------------------- ----------------------------------------------------------------
                       1999                                               $1,843,509
      --------------------------------------- ----------------------------------------------------------------
      --------------------------------------- ----------------------------------------------------------------
                       2000                                             $3,356,2592
      --------------------------------------- ----------------------------------------------------------------
1.       Amounts do not include spreads or concessions on principal transactions on a net trade basis.
2.       In the fiscal year ended 9/30/00,  the amount of  transactions  directed to brokers for research  services was $46,299 and the
         amount of the concessions paid to broker-dealers for those services was $47,195,469.

Distribution and Service Plans

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 classes of shares.  The Distributor is not obligated to sell a specific number of shares.
Expenses normally attributable to sales are borne by the Distributor.

         The  compensation  paid to (or retained by) the Distributor  from the sale of shares or on the redemption of shares during the
Fund's three most recent fiscal years is shown in the table below.

  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
                   Aggregate            Class A            Concessions         Concessions         Concessions
    Fiscal         Front-End           Front-End           on Class A           on Class B          On Class C
     Year        Sales Charges       Sales Charges           Shares               Shares              Shares
     Ended        on Class A          Retained by          Advanced by         Advanced by         Advanced by
     9/30:          Shares            Distributor         Distributor1         Distributor1        Distributor1
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
     1998         $3,039,736            $1,011,310            $213,129          $2,695,452             $142,404
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
     1999         $1,781,549              $559,019            $200,364          $1,403,981              $73,994
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
     2000         $2,632,889           $794,399             $342,591            $3,080,610           $255,800
  ------------ ------------------ -------------------- -------------------- ------------------- -------------------
1.       The  Distributor  advances  concession  payments to dealers  for certain  sales of Class A shares and for sales of Class B and
     Class C shares from its own resources at the time of sale.

  ----------------- ------------------------------- ------------------------------- -------------------------------
    Fiscal Year           Class A Contingent              Class B Contingent              Class C Contingent
       Ended            Deferred Sales Charges          Deferred Sales Charges          Deferred Sales Charges
        9/30           Retained by Distributor         Retained by Distributor         Retained by Distributor
  ----------------- ------------------------------- ------------------------------- -------------------------------
  ----------------- ------------------------------- ------------------------------- -------------------------------
        2000                   $32,097                         $630,269                        $13,194
  ----------------- ------------------------------- ------------------------------- -------------------------------

Distribution and Service Plans. The Fund has adopted a Service Plan for Class A shares and Distribution and Service Plans for Class
B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or servicing of the shares of the particular class.

Under the plans, the Manager and the Distributor, in their sole discretion, from time to time, may use their own resources
(at no direct cost to the Fund) to make payments to brokers, dealers or other financial institutions for distribution and
administrative services they perform. The Manager may use its profits from the advisory fee it receives from the Fund. In their sole
discretion, the Distributor and the Manager may increase or decrease the amount of payments they make from their own resources to
plan recipients.

Unless a plan is terminated as described below, the plan continues in effect from year to year but only if the Fund's Board
of Trustees and its Independent Trustees specifically vote annually to approve its continuance. Approval must be by a vote cast in
person at a meeting called for the purpose of voting on continuing the plan. A 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.

The Board of Trustees and the Independent Trustees must approve all material amendments to a plan. An amendment to increase
materially the amount of payments to be made under a plan must be approved by shareholders of the class affected by the amendment.
Because Class B shares of the Fund automatically convert into Class A shares after six years, the Fund must obtain the approval of
both Class A and Class B shareholders for a proposed material amendment to the Class A Plan that would materially increase payments
under the Plan. That approval must be by a "majority" (as defined in the Investment Company Act) of the shares of each Class, voting
separately by class.

While the Plans are in effect, the Treasurer of the Fund shall provide separate written reports on the plans to the Board of
Trustees at least quarterly for its review. The Reports shall detail the amount of all payments made under a plan, the purpose for
which the payments were made and the identity of each recipient of a payment. The reports on the Class B Plan and Class C Plan shall
also include the Distributor's distribution costs for that quarter and in the case of the Class B Plan the amount of those costs for
previous fiscal periods that have been carried forward. Those reports are subject to the review and approval of the Independent
Trustees.

Each plan states 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 the selection and nomination process as long as the final decision as to selection or nomination is approved by a majority
of the Independent Trustees.

Under the plan for a class, no payment will be made to any recipient in any quarter in which the aggregate net asset value
of all Fund shares of that class held by the recipient for itself and its customers does not exceed a minimum amount, if any, that
may be set from time to time by a majority of the Independent Trustees. The Board of Trustees has set no minimum amount of assets to
qualify for payments under the plans.

|X| Class A Service Plan Fees. Under the Class A service plan, the Distributor currently uses the fees it receives from the
Fund to pay brokers, dealers and other financial institutions (they are referred to as "recipients") for personal services and
account maintenance services they provide for their customers who hold Class A shares. The services 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. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan, the Board has not yet done so. The Distributor makes
payments to plan recipients quarterly at an annual rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares acquired.

For the fiscal year ended September 30, 2000 payments under the Class A Plan totaled $2,843,155 all of which was paid by the
Distributor to recipients. That included $215,426 paid to an affiliate of the Distributor's parent company. Any unreimbursed expenses
the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. The Distributor may
not use payments received the Class A Plan to pay any of its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.

|X| Class B, Class C and Class N Service and Distribution Plan Fees. Under each plan, service fees and distribution 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 Class B plan allows the Distributor to be reimbursed for its services and costs in distributing Class B
shares and servicing accounts. The Class C and Class N plans 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 under the plan during the period for which
the fee is paid. The types of services that recipients provide are similar to the services provided under the Class A service plan,
described above.

The Class B, Class C and the Class N Plans permit the Distributor to retain both the asset-based sales charges and the
service fees or to pay recipients the service fee on a quarterly basis, without payment in advance. However, the Distributor
currently intends to pay the service fee to recipients in advance for the first year after the shares are purchased. After the first
year shares are outstanding, the Distributor makes service fee payments quarterly on those shares. The advance payment is based on
the net asset value of shares sold. Shares purchased by exchange do not qualify for the advance service fee payment. If Class B,
Class C or Class N shares are redeemed during the first year after their purchase, the recipient of the service fees on those shares
will be obligated to repay the Distributor a pro rata portion of the advance payment of the service fee made on those shares.

The Distributor retains the asset-based sales charge on Class B and Class N shares. The Distributor retains the asset-based
sales charge on Class C shares during the first year the shares are outstanding. It pays the asset-based sales charge as an ongoing
commission to the recipient on Class C shares outstanding for a year or more. If a dealer has a special agreement with the
Distributor, the Distributor will pay the Class B, Class C and/or Class N service fee and the asset-based sales charge to the dealer
quarterly in lieu of paying the sales commissions and service fee in advance at the time of purchase.

The asset-based sales charges on Class B, Class C and Class N shares allow investors to buy 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, Class C and Class N shares. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales concessions to authorized brokers and dealers at the time of sale and pays service fees as described above,
o may finance payment of sales concessions and/or the advance of the service fee payment to recipients under the plans, or may
provide such financing from its own resources or from the resources of an affiliate,
o employs personnel to support distribution of Class B, Class C and Class N shares, and
o bears the costs of sales literature, advertising and prospectuses (other than those furnished to current shareholders) and
state "blue sky" registration fees and certain other distribution expenses.

The Distributor's actual expenses in selling Class B, Class C and Class N shares may be more than the payments it receives
from the contingent deferred sales charges collected on redeemed shares and from the Fund under the plans. If either the Class B,
Class C or Class N plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the plan was terminated. The Class B plan allows for the carry-forward
of distribution expenses, to be recovered from asset based sales charges in subsequent fiscal periods.

--------------------------------------------------------------------------------------------------------------------
                    Distribution Fees Paid to the Distributor in the Fiscal Year Ended 9/30/00
--------------------------------------------------------------------------------------------------------------------
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
                                                                           Distributor's          Distributor's
                                                                             Aggregate             Unreimbursed
                                 Total                 Amount               Unreimbursed          Expenses as %
                               Payments              Retained by              Expenses            of Net Assets
         Class                Under Plan             Distributor             Under Plan              of Class
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
Class B Plan                    $3,713,228            $2,970,317             $7,572,564               1.79%
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
Class C Plan                      $551,071              $180,403               $796,157               1.14%
------------------------ ---------------------- ---------------------- ----------------------- ---------------------

         All payments under the Class B, Class C and the Class N plans 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.

Performance of the Fund

Explanation  of  Performance  Terminology.  The Fund uses a variety of terms to  illustrate  its  investment  performance.  Those terms
include  "cumulative  total return,"  "average annual total return," "average annual total return at net asset value" and "total return
at net asset  value." An  explanation  of how total  returns  are  calculated  is set forth  below.  The  charts  below show the Fund's
performance  as of the Fund's most  recent  fiscal  year end.  You can obtain  current  performance  information  by calling the Fund's
Transfer Agent at 1-800-525-7048 or by visiting the OppenheimerFunds Internet web site at http://www.oppenheimerfunds.com.

         The Fund's  illustrations  of its  performance  data in  advertisements  must comply with rules of the Securities and Exchange
Commission.  Those rules  describe  the types of  performance  data that may be used and how it is to be  calculated.  In general,  any
advertisement  by the Fund of its performance  data must include the average annual total returns for the advertised class of shares of
the Fund.  Those  returns  must be shown 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 (or its submission for publication).

         Use of  standardized  performance  calculations  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 the Fund's  performance  information
as a basis for comparison with other investments:

         |_| Total 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.  Your account's performance will vary from the model performance data if your dividends are
received in cash,  or you buy or sell  shares  during the  period,  or you bought  your  shares at a different  time and price than the
shares used in the model.
         |_| The Fund's performance returns do no reflect the effect of taxes on dividends and capital gains distributions.
         |_| An investment in the Fund is not insured by the FDIC or any other government agency.
         |_| The  principal  value of the Fund's  shares and total returns are not  guaranteed  and normally will  fluctuate on a daily
basis.
         |_| When an investor's shares are redeemed, they may be worth more or less than their original cost.
         |_| Total  returns for any given past period  represent  historical  performance  information  and are not,  and should not be
considered, a prediction of future returns.

         The performance of each class of shares is shown  separately,  because the performance of each class of shares will usually be
different.  That is because of the different kinds of expenses each class bears.  The total returns of each class of shares of the Fund
are affected by market conditions,  the quality of the Fund's investments,  the maturity of debt investments,  the types of investments
the Fund holds, and its operating expenses that are allocated to the particular class.

         |X| Total Return  Information.  There are different types of "total returns" 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  and that the  investment  is  redeemed  at the end of the  period.  Because  of
differences  in expenses for each class of shares,  the total returns for each class are  separately  measured.  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 actual  year-by-year  performance.  The Fund uses  standardized  calculations for its total returns as
prescribed by the SEC. The methodology is discussed below.

         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 without sales charge, as described below).  For Class
B shares,  payment of the  applicable  contingent  deferred  sales  charge is applied,  depending on the period for which the return is
shown:  5.0% in the first year, 4.0% in the second year, 3.0% in the third and fourth years,  2.0% in the fifth year, 1.0% in the sixth
year and none thereafter.  For Class C shares,  the 1% contingent  deferred sales charge is deducted for returns for the 1-year period.
There is no sales charge for Class Y shares.

                  |_| Average  Annual Total Return.  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" in the  formula)  to  achieve  an Ending
Redeemable Value ("ERV" in the formula) of that investment, according to the following formula:


                                  ERV -1 = AVERAGE ANNUAL TOTAL RETURN
                               ------------
                                    P

                  |_|  Cumulative  Total  Return.  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

                  |_| Total  Returns at Net Asset Value.  From time to time the Fund may also quote a cumulative  or an average  annual
total return "at net asset value" (without  deducting sales charges) for Class A, Class B, Class C or Class N 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 Fund's Total Returns for the Periods Ended 9/30/005
----------------------------------------------------------------------------------------------------------------------------
-------------- ---------------------------- --------------------------------------------------------------------------------
               Cumulative Total Returns                              Average Annual Total Returns
Class      of  (10 years or Life of Class)
Shares
-------------- ---------------------------- --------------------------------------------------------------------------------
-------------- ---------------------------- -------------------------- --------------------------- -------------------------
                                                                                 5-Year                    10-Year
                                                     1-Year                (or life-of-class)         (or life-of-class)
-------------- ---------------------------- -------------------------- --------------------------- -------------------------
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
               After Sales    Without       After       Without        After Sales   Without       After        Without
               Charge         Sales Charge  Sales       Sales Charge   Charge        Sales Charge  Sales        Sales
                                            Charge                                                 Charge       Charge
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
Class A           442.30%(1)    475.39%(1)     52.83%      62.15%         13.51%        14.86%        18.42%(1)    19.12%(1)
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
Class B           145.40%(2)    145.40%(2)     55.95%      60.95%         13.75%        13.99%        14.84%(2)    14.84%(2)
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
Class C            94.40%(3)     94.40%(3)     59.95%     60.95%(3)       14.24%(3)   14.24%(3)        N/A          N/A
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
Class Y           168.61%(4)    168.61%(4)     62.68%      62.68%         15.20%        15.20%        16.89%(4)    16.89%(4)
-------------- -------------- ------------- ----------- -------------- ------------- ------------- ------------ ------------
  1. Inception of Class A: 9/11/86
  2. Inception of Class B: 4/4/94
  3. Inception of Class C: 10/2/95
  4. Inception of Class Y: 6/1/94
  5. Class N shares were not offered for sale during the Fund's  fiscal year ended  9/30/00.  Therefore,  this  Statement of Additional
Information does not contain any performance information for that class.

Other Performance Comparisons. The Fund compares its performance annually to that of an appropriate broadly-based market index in its
Annual Report to shareholders. You can obtain that information by contacting the Transfer Agent at the addresses or telephone numbers
shown on the cover of this Statement of Additional Information. The Fund may also compare its performance to that of other
investments, including other mutual funds, or use rankings of its performance by independent ranking entities. Examples of these
performance comparisons are set forth below.

|X| Lipper Rankings. From time to time the Fund may publish the ranking of the performance of its classes of shares by
Lipper Analytical Services, Inc. Lipper is 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 in categories
based on investment styles. Lipper currently ranks the Fund's performance against all other multi-cap growth funds. 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. Lipper also publishes "peer-group" indices of the performance of all mutual
funds in a category that it monitors and averages of the performance of the funds in particular categories.

|X| Morningstar Rankings. From time to time the Fund may publish the star ranking of the performance of its classes of
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. The Fund is ranked among
domestic stock funds.

Morningstar star rankings are based on risk-adjusted total investment return. Investment return measures a fund's (or
class's) 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's)
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 a fund's category. Five stars is the "highest" ranking (top 10% of funds in a category),
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's) 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 date 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
rankings, 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..

|X| Performance Rankings and Comparisons by Other Entities and Publications. From time to time the Fund may include in its
advertisements and sales literature performance information about the Fund cited in newspapers and other periodicals such as The New
York Times, The Wall Street Journal, Barron's, or similar publications. That information may include performance quotations from
other sources, including Lipper and Morningstar. The performance of the Fund's classes of shares may be compared in publications to
the performance of various market indices or other investments, and averages, performance rankings or other benchmarks prepared by
recognized mutual fund statistical services.

Investors may also wish to compare the returns on the Fund's share classes to the return on fixed-income investments
available from banks and thrift institutions. Those include certificates of deposit, ordinary interest-paying checking and savings
accounts, and other forms of fixed or variable time deposits, and various other instruments such as Treasury bills. However, the
Fund's returns and share price are not guaranteed or insured by the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed rates of return. Repayment of principal and payment of
interest on Treasury securities is backed by the full faith and credit of the U.S. government.

From time to time, the Fund may publish rankings or ratings of the Manager or Transfer Agent, and of the investor services
provided by them to shareholders of the Oppenheimer funds, other than performance rankings of the Oppenheimer funds themselves. Those
ratings or rankings of shareholder and investor services by third parties may include comparisons of their services to those provided
by other mutual fund families selected by the rating or ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys of investors, brokers, shareholders or others.

From time to time the Fund may include in its advertisements and sales literature the total return performance of a
hypothetical investment account that includes shares of the fund and other Oppenheimer funds. The combined account may be part of an
illustration of an asset allocation model or similar presentation. The account performance may combine total return performance of
the fund and the total return performance of other Oppenheimer funds included in the account. Additionally, from time to time, the
Fund's advertisements and sales literature may include, for illustrative or comparative purposes, statistical data or other
information about general or specific market and economic conditions. That may include, for example,
o information about the performance of certain securities or commodities markets or segments of those markets,
o information about the performance of the economies of particular countries or regions,
o the earnings of companies included in segments of particular industries, sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of securities,
o information relating to the gross national or gross domestic product of the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate performance, risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

Additional information is presented below about the methods that can be used to buy shares of the Fund. Appendix C contains
more information about the special sales charge arrangements offered by the Fund, and the circumstances in which sales charges may be
reduced or waived for certain classes of investors.

AccountLink. When shares are purchased through AccountLink, each purchase must be at least $25. Shares will be purchased 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 with the proceeds of ACH transfers on the business day the Fund received Federal funds from
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. The proceeds of ACH transfers are normally received by the Fund 3 days after the transfers are
initiated. If the proceeds of the ACH transfer are not received on a timely basis, the Distributor reserves the right to cancel the
purchase order. 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 Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker incurs little or no selling expenses.

|X| 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:
o Class A, Class B and Class N shares you purchase for your individual accounts (including IRAs and 403(b) plans), or for your
- -
joint accounts, or for trust or custodial accounts on behalf of your children who are minors, and
o Current purchases of Class A, Class B and Class N shares of the Fund and other Oppenheimer funds to reduce the sales charge
rate that applies to current purchases of Class A shares, and
o Class A, Class B and Class N 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.

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. The Distributor will add the value, at current offering price, of the
shares you previously purchased and currently own to the value of current purchases to determine the sales charge rate that applies.
The reduced sales charge will apply only to current purchases. You must request it when you buy shares.

|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which the Distributor acts as the distributor or
the sub-distributor and currently include the following:

Oppenheimer Bond Fund                                         Oppenheimer Main Street Growth&Income Fund
Oppenheimer California Municipal Fund                         Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Appreciation Fund                         Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Preservation Fund                         Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund                               Oppenheimer Multiple Strategies Fund
Oppenheimer Champion Income Fund                              Oppenheimer Municipal Bond Fund
Oppenheimer Convertible Securities Fund                       OSM1 - Mercury Advisors S&P 500 Index
Oppenheimer Developing Markets Fund                           OSM1 - Mercury Advisors Focus Growth Fund
Oppenheimer Disciplined Allocation Fund                       Oppenheimer New York Municipal Fund
Oppenheimer Value Fund                                        Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund                                    Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Emerging Growth Fund                              OSM1 - QM Active Balanced Fund
Oppenheimer Emerging Technologies Fund                        Oppenheimer Quest Balanced Value Fund
Oppenheimer Enterprise Fund                                   Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Europe Fund                                       Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Florida Municipal Fund                            Oppenheimer Quest Opportunity Value Fund
OSM1- Gartmore Millennium Growth Fund                         Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Fund                                       Oppenheimer Real Asset Fund
Oppenheimer Global Growth &Income Fund                       OSM1 - Salomon Brothers Capital Fund
Oppenheimer Gold&Special Minerals Fund                      Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund                                       Oppenheimer Small Cap Value Fund
Oppenheimer High Yield Fund                                   Oppenheimer Strategic Income Fund
Oppenheimer Intermediate Municipal Fund                       Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund                           Oppenheimer Trinity Core Fund
Oppenheimer International Growth Fund                         Oppenheimer Trinity Growth Fund
Oppenheimer International Small Company Fund                  Oppenheimer Trinity Value Fund
OSM1 -Jennison Growth Fund                                    Oppenheimer U.S. Government Trust
Oppenheimer Large Cap Growth Fund                             Limited-Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund                      Rochester Fund Municipals
And the following money market funds:

Centennial America Fund, L. P.                                Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust                        Centennial Tax Exempt Trust
Centennial Government Trust                                   Oppenheimer Cash Reserves
Centennial Money Market Trust                                 Oppenheimer Money Market Fund, Inc.
1 - "OSM" is Oppenheimer Select Managers

There is an initial sales charge on the purchase of Class A shares of each of the Oppenheimer funds except the money market
funds. Under certain circumstances described in this Statement of Additional Information, redemption proceeds of certain money market
fund shares may be subject to a contingent deferred sales charge.

Letters 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 your intended purchases of both Class A and Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. You can include purchases made up to 90 days before the date of the Letter.

A Letter of Intent 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"). At the
investor's request, this may 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 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. However, 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. That amount is described in "Terms of Escrow," below (those terms may be amended by the Distributor
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 a Letter of Intent. If those terms are amended, as they may be from
time to time by the Fund, the investor agrees to be bound by the amended terms and that those amendments will apply automatically to
existing Letters of Intent.

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 total 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
Prospectus, the sales charges paid will be adjusted to the lower rate. That adjustment will be made 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.

The Transfer Agent will not hold shares in escrow for purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent. If the intended purchase amount under a Letter of Intent 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.

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.

|X| 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 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 total minimum investment 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. That sales charge adjustment will apply to any shares redeemed prior to the
completion of the Letter. If the 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 Class B shares acquired by exchange of either (1) 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 (2) 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 to buy shares directly from a bank account, you must enclose a check (the
minimum is $25) for the initial purchase with your application. Shares purchased by Asset Builder Plan payments from bank accounts
are subject to the redemption restrictions for recent purchases described in the Prospectus. Asset Builder Plans are available only
if your bank is an ACH member. Asset Builder Plans may not be used to buy shares for OppenheimerFunds employer-sponsored qualified
retirement accounts. Asset Builder Plans also enable shareholders of Oppenheimer Cash Reserves to use their account in that fund to
make monthly automatic purchases of shares of up to four other Oppenheimer funds.

To make automatic payments to purchase shares of the Fund, your bank account will be debited automatically. Normally the
debit will be made two business days prior to the investment dates you selected on your Application. Neither the Distributor, the
Transfer Agent nor the Fund shall be responsible for any delays in purchasing shares that result from delays in ACH transmissions.

Before you establish Asset Builder payments, you should obtain a prospectus of the selected fund(s) from your financial
advisor (or the Distributor) and request an application from the Distributor. Complete the application and return it. You may change
the amount of your Asset Builder payment or your can terminate these automatic investments at any time by writing to the Transfer
Agent. The Transfer Agent requires a reasonable period (approximately 10 days) after receipt of your instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering Asset Builder plans at any time without prior notice.

Retirement Plans. Certain types of retirement plans are entitled to purchase shares of the Fund without sales charge or at reduced
sales charge rates, as described in Appendix B to this Statement of Additional Information. Certain special sales charge arrangements
described in that Appendix apply to retirement plans whose records are maintained on a daily valuation basis by Merrill Lynch Pierce
Fenner&Smith, Inc. or an independent record keeper that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement the plan has less than $3 million in assets (other than
assets invested in money market funds) invested in applicable investments, then the retirement plan may purchase only Class B shares
of the Oppenheimer funds. Any retirement plans in that category that currently invest in Class B shares of the Fund will have their
Class B shares converted to Class A shares of the Fund when the plan's applicable investments reach $5 million.

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.

Classes of Shares. Each class of shares of the Fund represents an interest in the same portfolio of investments of the Fund. However,
each class has different shareholder privileges and features. The net income attributable to Class B, Class C or Class N shares and
the dividends payable on Class B, Class C or Class N shares will be reduced by incremental expenses borne solely by that class. Those
expenses include the asset-based sales charges to which Class B and Class C are subject.

The availability of different classes of shares permits an investor to choose the method of purchasing shares that is more
appropriate for the investor. That may depend on the amount of the purchase, the length of time the investor expects to hold shares,
and other relevant circumstances. Class A shares normally are sold subject to an initial sales charge. While Class B, Class C and
Class N shares have no initial sales charge, the purpose of the deferred sales charge and asset-based sales charge on Class B, Class
C and Class N shares is the same as that of the initial sales charge on Class A shares - to compensate the Distributor and brokers,
dealers and financial institutions that sell shares of the Fund. A salesperson who is entitled to receive compensation from his or
her firm for selling Fund shares may receive different levels of compensation for selling one class of shares than another.

The Distributor will not accept any order in the amount of $500,000 or more for Class B shares or $1 million or more for
Class C shares on behalf of a single investor (not including dealer "street name" or omnibus accounts). That is because generally it
will be more advantageous for that investor to purchase Class A shares of the Fund.

|X| Class B Conversion. Under current interpretations of applicable federal income tax law by the Internal Revenue Service,
the conversion of Class B shares to Class A shares after six years is not treated as a taxable event for the shareholder. If those
laws or the IRS interpretation of those laws should change, the automatic conversion feature may be suspended. In that event, no
further conversions of Class B shares would occur while that 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 shareholder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six years.

|X| Availability of Class N Shares. In addition to the description of the types of retirement plans which may purchase
Class N shares contained in the prospectus, Class N shares also are offered to the following:

o to all rollover IRAs,
o to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and Ascender retirement plans,
o to all trustee-to-trustee IRA transfers,
o to all 90-24 type 403(b) transfers,
o to Group Retirement Plans (as defined in Appendix _ to this Statement of Additional Information) which have entered into a
special agreement with the Distributor for that purpose,
o to Retirement Plans qualified under Sections 401(a) or 401(k) of the Internal Revenue Code, the recordkeeper or the plan
sponsor for which has entered into a special agreement with the Distributor,
o to Retirement Plans of a plan sponsor where the aggregate assets of all such plans invested in the Oppenheimer funds is
$500,000 or more,
o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the purchase with the redemption proceeds of Class A shares
of one or more Oppenheimer funds.

|X| Allocation of Expenses. 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.

The methodology for calculating the net asset value, dividends and distributions of the Fund's share classes recognizes two
types of expenses. General expenses that do not pertain specifically to any one class are allocated pro rata to the shares of all
classes. The allocation is based on the percentage of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses, Statements of Additional Information and other materials
for current shareholders, fees to unaffiliated Trustees, custodian expenses, share issuance costs, organization and start-up costs,
interest, taxes and brokerage commissions, and non-recurring expenses, such as litigation costs.

Other expenses that are directly attributable to a particular class are allocated equally to each outstanding share within
that class. Examples of such expenses include distribution and service plan (12b-1) fees, transfer and shareholder servicing agent
fees and expenses, and shareholder meeting expenses (to the extent that such expenses pertain only to a specific class).

Determination of Net Asset Values Per Share. The net asset values per share of each class of shares of the Fund are determined as of
the close of business of The New York Stock Exchange on each day that the Exchange is open. The calculation is done 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 Exchange
normally closes at 4:00 P.M., New York time, but may close earlier on some other days (for example, in case of weather emergencies or
on days falling before a holiday). The Exchange's most recent annual announcement (which is subject to change) states that it will
close on New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other days.

Dealers other than Exchange members may conduct trading in certain securities on days on which the Exchange is closed
(including weekends and U.S. holidays) or after 4:00 P.M. on a regular business day. The Fund's net asset values will not be
calculated on those days, and the value of some of the Fund's portfolio securities may change significantly on days when shareholders
may not purchase or redeem shares. Additionally, trading on European and Asian stock exchanges and over-the-counter markets normally
is completed before the close of The New York Stock Exchange.

Changes in the values of securities traded on foreign exchanges or markets as a result of events that occur after the prices
of those securities are determined, but before the close of The New York Stock Exchange, will not be reflected in the Fund's
calculation of its net asset values that day unless the Board of Trustees determines that the event is likely to effect a material
change in the value of the security. The Manager may make that determination, under procedures established by the Board.

|X| Securities Valuation. The Fund's Board of Trustees has established procedures for the valuation of the Fund's
securities. In general those procedures are as follows:

|_| Equity securities traded on a U.S. securities exchange or on NASDAQ are valued as follows:
(1) if last sale information is regularly reported, they are valued at the last reported sale price on the principal exchange on
which they are traded or on NASDAQ, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are valued at the last reported sale price preceding the
valuation date if it is within the spread of the closing "bid" and "asked" prices on the valuation date or, if not,
at the closing "bid" price on the valuation date.
|_| Equity securities traded on a foreign securities exchange generally are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the principal exchange on which the security is traded at
its last trading session on or immediately before the valuation date, or
(3) at the mean between the "bid" and "asked" prices obtained from the principal exchange on which the security is traded or, on
the basis of reasonable inquiry, from two market makers in the security.
|_| Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the mean between the
"bid" and "asked" 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.
|_| The following securities are valued at the mean between the "bid" and "asked" 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:
(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or less when issued and which have a remaining maturity of
60 days or less.
|_| The following securities are valued at cost, adjusted for amortization of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a maturity of less than 397 days when issued that have
a remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining maturity of 397 days or less.
|_| 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, a security may
be priced at the mean between the "bid" and "asked" prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).

In the case of U.S. government securities, mortgage-backed securities, corporate bonds and foreign government securities,
when last sale information is not generally available, the Manager may use pricing services approved by the Board of Trustees. The
pricing service may use "matrix" comparisons to the prices for comparable instruments on the basis of quality, yield, and maturity.
Other special factors may be involved (such as the tax-exempt status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include comparing prices used for portfolio valuation to actual
sales prices of selected securities.

The closing prices in the London foreign exchange market on a particular business day that are provided to the Manager by a
bank, dealer or pricing service that the Manager has determined to be reliable are used to value foreign currency, including forward
contracts, and to convert to U.S. dollars securities that are denominated in foreign currency.

Puts, calls, and futures are valued at the last sale 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, they shall be valued at the last sale price on the preceding trading day if it is within the spread of the closing "bid" and
"asked" prices on the principal exchange or on NASDAQ on the valuation date. If not, the 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 by the mean between "bid" and "asked" prices obtained by the Manager from two active market makers. In certain cases that
may be at the "bid" price if no "asked" price is available.

When the Fund writes an option, an amount equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as an asset. An equivalent credit is included in the liability section. The credit is adjusted ("marked-to-market") to
reflect the current market value of the option. In determining the Fund's gain on investments, if a call or put written by the Fund
is exercised, the proceeds are increased by the premium received. If a call or put written by the Fund expires, the Fund has a gain
in the amount of the premium. If the Fund enters into a closing purchase transaction, it will have a gain or loss, depending on
whether the premium received was more or less than the cost of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is reduced by the amount of premium paid by the Fund.

How to Sell Shares

Information on how to sell shares of the Fund is stated in the Prospectus. The information below provides additional
information about the procedures and conditions for redeeming shares.

Reinvestment Privilege. Within six months of a redemption, a shareholder may reinvest all or part of the redemption proceeds of:

|_| Class A shares purchased subject to an initial sales charge or Class A shares on which a contingent deferred sales
charge was paid, or
|_| Class B shares that were subject to the Class B contingent deferred sales charge when redeemed.

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 in "How to Exchange Shares" below. Reinvestment will be at the net asset
value next computed after the Transfer Agent receives the reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class C or Class Y shares. 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.

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.

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 liquid securities from the portfolio of the Fund, in lieu of cash.

The Fund has elected to be governed by Rule 18f-1 under the Investment Company Act. Under that rule, 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 Fund will value securities used to pay redemptions in kind using the same method the Fund uses to value its portfolio
securities described above under "Determination of Net Asset Values Per Share." That valuation will be made as of the time the
redemption price is determined.

Transfers of Shares. A transfer of shares to a different registration is not an event that triggers the payment of sales charges.
Therefore, 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. It does not matter whether the transfer occurs by absolute assignment, gift or bequest, as long as
it does not involve, directly or indirectly, a public sale of the shares. When shares subject to a contingent deferred sales charge
are transferred, the transferred shares will remain subject to the contingent deferred sales charge. It will be 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, Class C or Class N contingent deferred sales charge 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:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is premature; and
(3) conform to the requirements of the plan and the Fund's other redemption requirements.

Participants (other than self-employed persons) in OppenheimerFunds-sponsored pension or profit-sharing plans with shares of
the Fund held in the name of the plan or its fiduciary may not directly request redemption of their accounts. The plan administrator
or fiduciary 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 and submitted to the Transfer Agent 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, 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. Shareholders should contact their 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 an order
placed by the dealer or broker. However, 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 customers prior to the time the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but may
do so earlier on some days. Additionally, the order must have been 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. The
signature(s) of the registered owners on the redemption documents must be guaranteed 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 (having a value of at least $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. Payments must also be sent to the address of record for the account and the address must not
have 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 Account Application or by
signature-guaranteed instructions sent to the Transfer Agent. Shares are normally redeemed pursuant to an Automatic Withdrawal Plan
three business days before the payment transmittal date you select in the Account Application. If a contingent deferred sales charge
applies to the redemption, the amount of the check or payment will be reduced accordingly.

The Fund cannot guarantee receipt of a payment on the date requested. The Fund reserves the right to amend, suspend or
discontinue offering these 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 charge on
such withdrawals (except where the contingent deferred sales charge is waived as described in Appendix B below).

By requesting an Automatic Withdrawal or Exchange Plan, the shareholder agrees to the terms and conditions that apply to
such plans, as stated below. These provisions may be amended from time to time by the Fund and/or the Distributor. When adopted, any
amendments will automatically apply to existing Plans.

|X| Automatic Exchange Plans. Shareholders can authorize the Transfer Agent 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. Instructions should be
provided on the OppenheimerFunds Application or signature-guaranteed instructions. 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.

|X| Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to meet withdrawal payments. Shares acquired
without a sales charge will be redeemed first. 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 these plans should not be considered as a yield
or income on your investment.

The Transfer Agent will administer the investor's Automatic Withdrawal Plan as agent for the shareholder(s) (the
"Planholder") who executed the Plan authorization and application submitted to the Transfer Agent. Neither the Fund nor the Transfer
Agent shall incur any liability to the Planholder for any action taken or not taken by the Transfer Agent in good faith to administer
the Plan. Share 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.

Shares will be redeemed to make withdrawal payments at the net asset value per share determined on the redemption date.
Checks or AccountLink payments representing the proceeds of Plan withdrawals will normally be transmitted three business days prior
to the date selected for receipt of the payment, according to the choice specified in writing by the Planholder. Receipt of payment
on the date selected cannot be guaranteed.

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 after 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 to redeem all, or any part of, the shares held under the Plan. That notice must be in
proper form in accordance with the requirements of the then-current Prospectus of the Fund. In that case, the Transfer Agent will
redeem the number of shares requested at the net asset value per share in effect and will mail a check for the proceeds to the
Planholder.

The Planholder may terminate a Plan at any time by writing to the Transfer Agent. The Fund may also give directions to the
Transfer Agent to terminate a Plan. The Transfer Agent will also terminate a Plan upon its receipt of evidence satisfactory to it
that the Planholder has died or is legally incapacitated. Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed will be held in uncertificated form in the name of the Planholder. The account will continue as a
dividend-reinvestment, uncertificated account unless and until proper instructions are received from the Planholder, his or her
executor or guardian, or another authorized person.

To use shares held under the Plan as collateral for a debt, the Planholder may request issuance of a portion of the shares
in certificated form. Upon written request from the Planholder, the Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to stop. 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 Oppenheimer funds that have a single class without
a class designation are deemed "Class A" shares for this purpose. You can obtain a current list showing which funds offer which
classes by calling the Distributor at 1.800.525.7048.
o All of the Oppenheimer funds currently offer Class A, B and 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, and Centennial America Fund, L.P., which only offer Class A shares.
o Class B, Class C and Class N 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.
o Only certain Oppenheimer funds currently offer Class Y shares. Class Y shares of Oppenheimer Real Asset Fund may not be
exchanged for shares of any other fund.
o Only certain Oppenheimer funds currently offer Class N shares, which are only offered to retirement plans as described in
the Prospectus. Class N shares can be exchanged only for Class N shares of other Oppenheimer funds.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for Class A shares of other Oppenheimer
funds. They may not be acquired by exchange of shares of any class of any other Oppenheimer funds except Class A shares of
Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by exchange of Class M shares.
o Class A shares of Senior Floating Rate Fund are not available by exchange of Class A shares of other Oppenheimer funds.
Class A shares of Senior Floating Rate Fund that are exchanged for shares of the other Oppenheimer funds may not be exchanged
back for Class A shares of Senior Floating Rate Fund.
o Class X shares of Limited Term New York Municipal Fund can be exchanged only for Class B shares of other Oppenheimer funds
and no exchanges may be made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be exchanged for shares of Oppenheimer Money Market Fund, Inc.,
Oppenheimer Cash Reserves or Oppenheimer Limited-Term Government Fund. Only participants in certain retirement plans may
purchase shares of Oppenheimer Capital Preservation Fund, and only those participants may exchange shares of other Oppenheimer
funds for shares of Oppenheimer Capital Preservation Fund.
o Class A shares of Oppenheimer Senior Floating Rate Fund are not available by exchange of shares of Oppenheimer Money Market
Fund or Class A shares of Oppenheimer Cash Reserves. If any Class A shares of another Oppenheimer fund that are exchanged for
Class A shares of Oppenheimer Senior Floating Rate Fund are subject to the Class A contingent deferred sales charge of the other
Oppenheimer fund at the time of exchange, the holding period for that Class A contingent deferred sales charge will carry over to
the Class A shares of Oppenheimer Senior Floating Rate Fund acquired in the exchange. The Class A shares of Oppenheimer Senior
Floating Rate Fund acquired in that exchange will be subject to the Class A Early Withdrawal Charge of Oppenheimer Senior
Floating Rate Fund if they are repurchased before the expiration of the holding period.
o Class A, Class B, Class C and Class Y Shares of Oppenheimer Select Managers Mercury Advisors S&P Index Fund and Oppenheimer
Select Managers QM Active Balanced Fund are only available to retirement plans and are available only by exchange from the same
class of shares of other Oppenheimer funds held by retirement plans.

Class A shares of Oppenheimer funds may be exchanged at net asset value for shares of any money market fund offered by the
Distributor. 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. They may also be used to purchase shares of Oppenheimer funds subject
to an early withdrawal charge or contingent deferred sales charge.

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 30 days prior to that purchase may subsequently be
exchanged for shares of other Oppenheimer funds without being subject to an initial sales charge or contingent deferred sales charge.
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. If requested, they must supply proof of entitlement to
this privilege.

Shares of the Fund acquired by reinvestment of dividends or distributions from any of the other Oppenheimer funds 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.

The Fund may amend, suspend or terminate the exchange privilege at any time. Although the Fund may impose these changes at any time,
it will provide you with notice of those changes whenever it is required to do so by applicable law. It may be required to provide
60 days notice prior to materially amending or terminating the exchange privilege. That 60 day notice is not required in
extraordinary circumstances.

|X| How Exchanges Affect Contingent Deferred Sales Charges. No contingent deferred sales charge is imposed on exchanges of shares of
any 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. 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. With respect to Class N shares, a 1% contingent deferred sales charge will be imposed if the retirement
plan (not including IRAs and 403(b) plans) is terminated or Class N shares of all Oppenheimer funds are terminated as an investment
option of the plan and Class N shares are redeemed within 18 months after the plan's first purchase of Class N shares of any
Oppenheimer fund or with respect to an individual retirement plan or 403(b) plan, Class N shares are redeemed within 18 months of the
plan's first purchase of Class N shares of any Oppenheimer fund.

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 or the Class C contingent deferred sales charge will be followed in determining the
order in which the shares are exchanged. Before exchanging shares, shareholders should take into account how the exchange may affect
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 which class of shares they wish to exchange.

|X| Limits on Multiple Exchange Orders. 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.

|X| Telephone Exchange Requests. When you exchange some or all of your shares from one fund to another, any special account
feature such as an Asset Builder Plan or Automatic Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange features such as Automatic Exchange Plans and Automatic
Withdrawal Plans cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

|X| Processing 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 Fund may refuse the
request. For full or partial exchange of an account made by telephone, any special account features such as Asset Builder Plans and
Automatic Withdrawal Plans will be switched to the new account unless the Transfer Agent is instructed otherwise.

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.

The different Oppenheimer funds available for exchange have different investment objectives, policies and risks. 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

Dividends and Distributions. The Fund has no fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains. The dividends and distributions paid by a class of shares will 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. Dividends are calculated in the same manner, at the same time, and on the same day for each class of shares. However,
dividends on Class B, Class C and Class N shares are expected to be lower than dividends on Class A and Class Y shares. That is
because of the effect of the asset-based sales charge on Class B, Class C and Class N shares. Those dividends will also differ in
amount as a consequence of any difference in the net asset values of the different classes of shares.

Dividends, distributions and 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. Reinvestment will be made 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. Unclaimed accounts may be subject to state escheatment laws, and the Fund and the Transfer Agent will not be liable to
shareholders or their representatives for compliance with those laws in good faith.

Tax Status of the Fund's Dividends and Distributions. The Federal tax treatment of the Fund's dividends and capital gains
distributions is briefly highlighted in the Prospectus.

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. The amount of
dividends paid by the Fund that may qualify for the deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from 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. If it does not, the Fund must pay an excise tax on the amounts not distributed. It
is presently anticipated that the Fund will meet those requirements. However, the Board of Trustees and the Manager might determine
in a particular year that it would be in the best interests 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.

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). 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 distributions. The Fund qualified as a
regulated investment company in its last fiscal year. The Internal Revenue Code contains a number of complex tests relating to
qualification which the Fund might not meet in any particular year. 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.

If prior distributions made by the Fund must be re-characterized as a non-taxable return of capital at the end of the fiscal
year as a result of the effect of the Fund's investment policies, they will be identified as such in notices sent to shareholders.

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 above. Reinvestment will be made without sales
charge at the net asset value per share in effect at the close of business on the payable date of the dividend or distribution. To
elect this option, the shareholder must notify the Transfer Agent in writing and must have an existing account in the fund selected
for reinvestment. Otherwise the shareholder first must obtain a prospectus for that fund and an application from the Distributor to
establish an account. Dividends and/or distributions from shares of certain other Oppenheimer funds (other than Oppenheimer Cash
Reserves) may be invested in shares of this Fund on the same basis.

Additional Information About the Fund

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 shares of the other Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of the Manager.

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a division of the Manager. It is responsible for
maintaining the Fund's shareholder registry and shareholder accounting records, and for paying dividends and distributions to
shareholders. It also handles shareholder servicing and administrative functions. It serves as the Transfer Agent for an annual per
account fee. It also acts as shareholder servicing agent for the other Oppenheimer funds. Shareholders should direct inquiries about
their accounts to the Transfer Agent at the address and toll-free numbers shown on the back cover.

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 and handling the delivery of such securities to and from the Fund. 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 with the custodian in excess of $100,000 are not protected by Federal deposit
insurance. Those uninsured balances at times may be substantial.

Independent Auditors. KPMG LLP are the independent auditors of the Fund. They 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.

INDEPENDENT AUDITORS' REPORT
================================================================================
 THE BOARD OF TRUSTEES AND SHAREHOLDERS
 OF OPPENHEIMER DISCOVERY FUND:

 We have audited the accompanying statement of assets and liabilities, including
 the statement of investments, of Oppenheimer Discovery Fund as of September 30,
 2000, 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 auditing standards generally
 accepted in the United States of America. 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, 2000, 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, 2000, 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
 accounting principles generally accepted in the United States of America.




 KPMG LLP

 Denver, Colorado
 October 20, 2000

                         10 OPPENHEIMER DISCOVERY FUND


STATEMENT OF INVESTMENTS  SEPTEMBER 30, 2000

-------------------------------------------------------------------------------


                                                                            MARKET VALUE
                                                               SHARES         SEE NOTE 1
-------------------------------------------------------------------------------------------
 COMMON STOCKS--90.5%
-------------------------------------------------------------------------------------------
 CAPITAL GOODS--8.7%
-------------------------------------------------------------------------------------------

 AEROSPACE/DEFENSE--0.5%
 Hexcel Corp.(1)                                               345,000      $  4,614,375
-------------------------------------------------------------------------------------------
 Teledyne Technologies, Inc.(1)                                141,500         4,121,187
                                                                            ---------------
                                                                               8,735,562

-------------------------------------------------------------------------------------------
 ELECTRICAL EQUIPMENT--1.1%
 Benchmark Electronics, Inc.(1)                               400,000         20,800,000
-------------------------------------------------------------------------------------------

 INDUSTRIAL SERVICES--1.4%
 Forrester Research, Inc.(1)                                  100,000          6,375,000
-------------------------------------------------------------------------------------------
 Iron Mountain, Inc.                                          380,000         14,060,000
-------------------------------------------------------------------------------------------
 Tetra Tech,Inc.(1)                                           200,000          5,712,500
                                                                            ---------------
                                                                              26,147,500

-------------------------------------------------------------------------------------------
 MANUFACTURING--5.7%
 ATMI, Inc.(1)                                                235,000          5,493,125
-------------------------------------------------------------------------------------------
 Coherent, Inc.(1)                                            240,000         16,320,000
-------------------------------------------------------------------------------------------
 FSI International, Inc.(1)                                   445,500          6,348,375
-------------------------------------------------------------------------------------------
 Photon Dynamics, Inc.(1)                                      95,200          3,593,800
-------------------------------------------------------------------------------------------
 Plexus Corp.(1)                                               80,000          5,640,000
-------------------------------------------------------------------------------------------
 PRI Automation, Inc.(1)                                      369,700          6,747,025
-------------------------------------------------------------------------------------------
 RadiSys Corp.(1)                                              88,900          4,495,006
-------------------------------------------------------------------------------------------
 Rudolph Technologies, Inc.(1)                                129,600          4,333,500
-------------------------------------------------------------------------------------------
 Three-Five Systems, Inc.(1)                                  350,000         10,237,500
-------------------------------------------------------------------------------------------
 Veeco Instruments, Inc.(1)                                   250,000         26,566,406
-------------------------------------------------------------------------------------------
 Zygo Corp.(1)                                                192,800         16,773,600
                                                                             --------------
                                                                             106,548,337

-------------------------------------------------------------------------------------------
 COMMUNICATION SERVICES--1.5%
-------------------------------------------------------------------------------------------
 TELECOMMUNICATIONS-LONG DISTANCE--0.4%
 Cosine Communications, Inc.(1)                                20,400          1,133,475
-------------------------------------------------------------------------------------------
 Lexent, Inc.(1)                                              105,000          3,123,750
-------------------------------------------------------------------------------------------
 Powertel, Inc.(1)                                             35,000          2,662,187
                                                                              -------------
                                                                               6,919,412

-------------------------------------------------------------------------------------------
 TELEPHONE UTILITIES--0.2%
 Choice One Communications, Inc.(1)                           340,400          4,148,625
-------------------------------------------------------------------------------------------
 TELECOMMUNICATIONS-WIRELESS--0.9%
 Leap Wireless International, Inc.(1)                         115,000          7,194,687
-------------------------------------------------------------------------------------------
 Metricom, Inc.(1)                                            150,000          3,862,500
-------------------------------------------------------------------------------------------
 Pinnacle Holdings, Inc.(1)                                   103,000          2,742,375
-------------------------------------------------------------------------------------------
 Proxim, Inc.(1)                                               81,100          3,608,950
                                                                              -------------
                                                                              17,408,512


                          11 OPPENHEIMER DISCOVERY FUND
   14
STATEMENT OF INVESTMENTS  Continued

-------------------------------------------------------------------------------


                                                                            MARKET VALUE
                                                               SHARES         SEE NOTE 1
-------------------------------------------------------------------------------------------
 CONSUMER CYCLICALS--8.3%
-------------------------------------------------------------------------------------------
 CONSUMER SERVICES--0.9%
-------------------------------------------------------------------------------------------

 Getty Images, Inc.(1)                                         305,000       $ 9,283,437
-------------------------------------------------------------------------------------------
 Heidrick&Struggles International, Inc.(1)                    65,000         3,339,375
-------------------------------------------------------------------------------------------
 Macrovision Corp.(1)                                           60,000         4,860,000
                                                                              -------------
                                                                              17,482,812

-------------------------------------------------------------------------------------------
 LEISURE &ENTERTAINMENT--1.6%
 Anchor Gaming(1)                                              201,800        16,055,712
-------------------------------------------------------------------------------------------
 Orient-Express Hotel Ltd.(1)                                  225,000         4,331,250
-------------------------------------------------------------------------------------------
 Station Casinos, Inc.(1)                                      710,900        10,130,325
                                                                              -------------
                                                                              30,517,287

-------------------------------------------------------------------------------------------
 MEDIA--1.0%
 ACNielsen Corp.(1)                                            200,100         4,764,881
-------------------------------------------------------------------------------------------
 Penton Media, Inc.                                            235,000         6,462,500
-------------------------------------------------------------------------------------------
 True North Communications, Inc.                               200,000          7,150,00
                                                                              -------------
                                                                              18,377,381

-------------------------------------------------------------------------------------------
 RETAIL: SPECIALTY--3.1%
 Factory 2-U Stores, Inc.(1)                                   220,000         6,723,750
-------------------------------------------------------------------------------------------
 Footstar, Inc.(1)                                             150,000         4,846,875
-------------------------------------------------------------------------------------------
 Hot Topic, Inc.(1)                                            280,000         8,400,000
-------------------------------------------------------------------------------------------
 Skechers U.S.A., Inc., Cl. A(1)                               251,000         3,796,375
-------------------------------------------------------------------------------------------
 Tech Data Corp.(1)                                            320,000        13,680,000
-------------------------------------------------------------------------------------------
 Tweeter Home Entertainment Group, Inc.(1)                     110,000         3,994,375
-------------------------------------------------------------------------------------------
 Venator Group, Inc.(1)                                        600,000         7,425,000
-------------------------------------------------------------------------------------------
 Yankee Candle, Inc. (The)(1)                                  391,000         7,868,875
                                                                              -------------
                                                                              56,735,250

--------------------------------------------------------------------------------------------
 TEXTILE/APPAREL&HOME FURNISHINGS--1.7%
 Abercrombie&Fitch Co., Cl. A(1)                             614,400        11,712,000
-------------------------------------------------------------------------------------------
 Kenneth Cole Productions, Inc., Cl. A(1)                      138,200         4,880,187
-------------------------------------------------------------------------------------------
 Liz Claiborne, Inc.                                           220,000         8,470,000
-------------------------------------------------------------------------------------------
 Too, Inc.(1)                                                  250,000         5,937,500
                                                                               ------------
                                                                              30,999,687

-------------------------------------------------------------------------------------------
 CONSUMER STAPLES--4.0%
-------------------------------------------------------------------------------------------
 Sirius Satellite Radio, Inc.(1)                              244,000         12,901,500
-------------------------------------------------------------------------------------------
 XM Satellite Radio Holdings, Inc.(1)                         280,700         12,087,644
                                                                            ---------------
                                                                              24,989,144


                        12  OPPENHEIMER DISCOVERY FUND
   15


                                                                            MARKET VALUE
                                                               SHARES         SEE NOTE 1
-------------------------------------------------------------------------------------------

 EDUCATION--0.9%
 Career Education Corp.(1)                                   189,700        $ 8,441,650
-------------------------------------------------------------------------------------------
 Corinthian Colleges, Inc.(1)                                146,800          8,661,200
-------------------------------------------------------------------------------------------
                                                                             17,102,850

-------------------------------------------------------------------------------------------
 ENTERTAINMENT--0.5%
 California Pizza Kitchen, Inc.(1)                            39,100          1,094,800
-------------------------------------------------------------------------------------------
 P.F. Chang's China Bistro, Inc.(1)                          232,500          8,035,781
                                                                           ----------------
                                                                              9,130,581

 FOOD--0.5%
 Performance Food Group Co.(1)                               259,800          9,774,975
-------------------------------------------------------------------------------------------
 FOOD &DRUG RETAILERS--0.7%
 Pathmark Stores, Inc.(1)                                    414,600          5,104,762
-------------------------------------------------------------------------------------------
 Whole Foods Market, Inc.(1)                                 150,000          8,053,125
                                                                            ---------------
                                                                             13,157,887


-------------------------------------------------------------------------------------------
 ENERGY--8.1%
-------------------------------------------------------------------------------------------
 ENERGY SERVICES--3.8%
 Cross Timbers Oil Co.                                       798,900         15,328,894
-------------------------------------------------------------------------------------------
 Dril-Quip, Inc.(1)                                          219,100          8,736,612
-------------------------------------------------------------------------------------------
 Hanover Compressor Co.(1)                                   160,000          5,270,000
-------------------------------------------------------------------------------------------
 Marine Drilling Cos., Inc.(1)                               300,300          8,577,319
-------------------------------------------------------------------------------------------
 Parker Drilling Co.(1)                                      991,900          6,943,300
-------------------------------------------------------------------------------------------
 Pride International, Inc.(1)                                420,000         11,130,000
-------------------------------------------------------------------------------------------
 Proton Energy Systems, Inc.(1)                               13,100            374,987
-------------------------------------------------------------------------------------------
 Tidewater, Inc.                                             329,200         14,978,600
                                                                            ---------------
                                                                             71,339,712


-------------------------------------------------------------------------------------------
 OIL: DOMESTIC--3.3%
 Devon Energy Corp.                                          200,000         12,030,000
-------------------------------------------------------------------------------------------
 Forest Oil Corp.(1)                                         275,000          4,451,562
-------------------------------------------------------------------------------------------
 Frontier Oil Corp.(1)                                       450,000          3,318,750
-------------------------------------------------------------------------------------------
 Key Energy Services, Inc.(1)                                570,000          5,593,125
-------------------------------------------------------------------------------------------
 Louis Dreyfus Natural Gas Corp.(1)                          391,000         15,493,375
-------------------------------------------------------------------------------------------
 Noble Affiliates, Inc.                                      200,000          7,425,000
-------------------------------------------------------------------------------------------
 Stone Energy Corp.(1)                                       145,000          7,975,000
-------------------------------------------------------------------------------------------
 Vintage Petroleum, Inc.                                     200,000          4,550,000
                                                                            ---------------
                                                                             60,836,812

 ------------------------------------------------------------------------------------------
 OIL: INTERNATIONAL--1.0%
 Precision Drilling Corp.(1)                                 150,000          5,343,750
-------------------------------------------------------------------------------------------
 Rio Alto Exploration Ltd.(1)                                275,000          5,848,731
-------------------------------------------------------------------------------------------
 Talisman Energy, Inc.(1)                                    185,000          6,485,943
                                                                            ---------------
                                                                             17,678,424


                         13  OPPENHEIMER DISCOVERY FUND


   16
STATEMENT OF INVESTMENTS  Continued

-------------------------------------------------------------------------------


                                                                             MARKET VALUE
                                                               SHARES          SEE NOTE 1
-------------------------------------------------------------------------------------------
 FINANCIAL--4.2%
-------------------------------------------------------------------------------------------

 BANKS--2.0%
 Commerce Bancorp, Inc.                                      149,200          $  8,681,575
 ------------------------------------------------------------------------------------------
 East West Bancorp, Inc.                                     197,500             3,863,594
 ------------------------------------------------------------------------------------------
 Investors Financial Services Corp.                          300,000            18,937,500
 ------------------------------------------------------------------------------------------
 Silicon Valley Bancshares(1)                                100,000             5,823,437
                                                                              ------------
                                                                                37,306,106


-------------------------------------------------------------------------------------------
 DIVERSIFIED FINANCIAL--1.9%
 AmeriCredit Corp.(1)                                        198,400             5,716,400
-------------------------------------------------------------------------------------------
 ChoicePoint, Inc.(1)                                        300,000            13,762,500
-------------------------------------------------------------------------------------------
 eSPEED, Inc., Cl. A(1)                                      247,600             7,041,125
-------------------------------------------------------------------------------------------
 LaBranche &Co., Inc.(1)                                    265,700             8,867,737
                                                                              -------------
                                                                                35,387,762

-------------------------------------------------------------------------------------------
 INSURANCE--0.3%
 Annuity &Life RE Holdings Ltd.                             120,000             2,895,000
-------------------------------------------------------------------------------------------

 London Pacific Group Ltd., Sponsored ADR                    150,000             2,981,250
                                                                                -----------
                                                                                 5,876,250


-------------------------------------------------------------------------------------------
 HEALTHCARE--19.0%
-------------------------------------------------------------------------------------------

 HEALTHCARE/DRUGS--17.5%
 3 Dimensional Pharmaceuticals, Inc.(1)                       56,800             2,044,800
-------------------------------------------------------------------------------------------


 Accredo Health, Inc.(1)                                     217,700            10,640,087
-------------------------------------------------------------------------------------------
 Alexion Pharmaceuticals, Inc.(1)                             67,500             7,695,000
-------------------------------------------------------------------------------------------
 Alpharma, Inc., Cl. A                                       140,000             8,557,500
-------------------------------------------------------------------------------------------
 AmeriSource Health Corp., Cl. A(1)                          263,000            12,361,000
-------------------------------------------------------------------------------------------
 Arena Pharmaceuticals, Inc.(1)                               82,300             3,538,900
-------------------------------------------------------------------------------------------
 Aviron(1)                                                   219,400            12,793,762
-------------------------------------------------------------------------------------------
 Barr Laboratories, Inc.(1)                                  100,000             6,631,250
-------------------------------------------------------------------------------------------
 Caremark Rx, Inc.(1)                                      1,680,200            18,902,250
-------------------------------------------------------------------------------------------
 Cell Genesys, Inc.(1)                                       330,000             9,900,000
-------------------------------------------------------------------------------------------
 Cell Therapeutics, Inc.(1)                                   23,400             1,560,487
-------------------------------------------------------------------------------------------
 Charles River Laboratories International, Inc.(1)           260,200             8,846,800
-------------------------------------------------------------------------------------------
 Ciphergen Biosystems, Inc.(1)                                80,700             2,582,400
-------------------------------------------------------------------------------------------
 Coventry Health Care, Inc.(1)                               298,300             4,511,787
-------------------------------------------------------------------------------------------
 Cubist Pharmaceuticals, Inc.(1)                              80,000             4,165,000
-------------------------------------------------------------------------------------------
 CuraGen Corp.(1)                                            328,500            17,502,891
-------------------------------------------------------------------------------------------
 CV Therapeutics, Inc.(1)                                    257,500            20,028,672
-------------------------------------------------------------------------------------------
 Dendrite International, Inc.(1)                             189,700             5,086,331
-------------------------------------------------------------------------------------------
 Dura Pharmaceuticals, Inc.(1)                               150,000             5,306,250



                         14 OPPENHEIMER DISCOVERY FUND
   17


                                                                              MARKET VALUE
                                                               SHARES           SEE NOTE 1
-------------------------------------------------------------------------------------------

 HEALTHCARE/DRUGS Continued
 Dusa Pharmaceuticals, Inc.(1)                               285,000          $  8,781,563
-------------------------------------------------------------------------------------------

 Eden Bioscience Corp.(1)                                     69,400             2,290,200
-------------------------------------------------------------------------------------------
 Enzon, Inc.(1)                                              250,000            16,500,000
-------------------------------------------------------------------------------------------
 Illumina, Inc.(1)                                            20,800               943,800
-------------------------------------------------------------------------------------------
 Inhale Therapeutic Systems, Inc.(1)                         310,000            17,476,250
-------------------------------------------------------------------------------------------
 Inspire Pharmaceuticals, Inc.(1)                            113,600             3,408,000
-------------------------------------------------------------------------------------------
 Laboratory Corp. of America Holdings, Inc.(1)               135,000            16,166,250
-------------------------------------------------------------------------------------------
 Matrix Pharmaceutical, Inc.(1)                              287,000             4,466,438
-------------------------------------------------------------------------------------------
 Neose Technologies, Inc.(1)                                 150,000             7,256,250
-------------------------------------------------------------------------------------------
 Protein Design Labs, Inc.(1)                                210,000            25,305,000
-------------------------------------------------------------------------------------------
 Regeneron Pharmaceuticals, Inc.(1)                          150,000             4,893,750
-------------------------------------------------------------------------------------------
 RehabCare Group, Inc.(1)                                     85,000             3,612,500
-------------------------------------------------------------------------------------------
 Rosetta Inpharmatics, Inc.(1)                               119,700             3,338,508
-------------------------------------------------------------------------------------------
 SurModics, Inc.(1)                                          198,800            10,884,300
-------------------------------------------------------------------------------------------
 Syncor International Corp.(1)                               120,000             4,417,500
-------------------------------------------------------------------------------------------
 Trigon Healthcare, Inc.(1)                                  355,400            18,680,713
-------------------------------------------------------------------------------------------
 XOMA Ltd.(1)                                             1,1244,400            16,233,525
                                                                               ------------
                                                                               327,309,714


-------------------------------------------------------------------------------------------
 HEALTHCARE/SUPPLIES&SERVICES--1.5%
 PhotoMedex, Inc.(1)                                         200,000             2,575,000
-------------------------------------------------------------------------------------------
 PolyMedica Corp.(1)                                         140,000             6,002,500
-------------------------------------------------------------------------------------------
 Province Healthcare Co.(1)                                  337,500            13,478,906
-------------------------------------------------------------------------------------------
 Triad Hospitals, Inc.(1)                                    220,000             6,462,500
                                                                                -----------
                                                                                28,518,906

-------------------------------------------------------------------------------------------
 TECHNOLOGY--35.7%
-------------------------------------------------------------------------------------------
 COMPUTER HARDWARE--5.6%
 Artesyn Technologies, Inc.(1)                               331,600             9,657,850
-------------------------------------------------------------------------------------------

 Avid Technology, Inc.(1)                                  1,156,900            16,196,600
-------------------------------------------------------------------------------------------
 Cobalt Networks, Inc.(1)                                    200,000            11,575,000
-------------------------------------------------------------------------------------------
 Creo Products, Inc.(1)                                      100,000             3,400,000
-------------------------------------------------------------------------------------------
 Handspring, Inc.(1)                                         226,700            15,656,469
-------------------------------------------------------------------------------------------
 Mentor Graphics Corp.(1)                                    732,700            17,264,244
-------------------------------------------------------------------------------------------
 Pixelworks, Inc.(1)                                          97,900             4,668,606
-------------------------------------------------------------------------------------------
 Quantum Corp./DLT& Storage Systems Group(1)              1,002,100            15,094,131
-------------------------------------------------------------------------------------------
 Read-Rite Corp.(1)                                          732,500             8,240,625
-------------------------------------------------------------------------------------------
 Silicon Storage Technology, Inc.(1)                         100,000             2,718,750
                                                                               ------------
                                                                               104,472,275



                          15 OPPENHEIMER DISCOVERY FUND

   18
STATEMENT OF INVESTMENTS  Continued

-------------------------------------------------------------------------------


                                                                               MARKET VALUE
                                                               SHARES            SEE NOTE 1
-------------------------------------------------------------------------------------------

 COMPUTER SERVICES--4.5%
 Clarent Corp.(1)                                             120,000         $   4,725,000
-------------------------------------------------------------------------------------------
 Eclipsys Corp.(1)                                            199,600             3,193,600
-------------------------------------------------------------------------------------------
 Elastic Networks, Inc.(1)                                    112,100             1,562,394
-------------------------------------------------------------------------------------------
 HNC Software, Inc.(1)                                        274,700            22,473,894
-------------------------------------------------------------------------------------------
 OmniSky Corp.(1)                                             313,800             6,374,063
-------------------------------------------------------------------------------------------
 Packeteer, Inc.(1)                                           150,000             5,690,625
-------------------------------------------------------------------------------------------
 Shaw Communications, Inc., Cl. B                             337,950             7,749,086
-------------------------------------------------------------------------------------------
 SmartForce plc, Sponsored ADR(1)                             210,000             9,948,750
-------------------------------------------------------------------------------------------
 SynQuest, Inc.(1)                                            342,300             4,492,688
-------------------------------------------------------------------------------------------
 WebEx Communications, Inc.(1)                                268,200             9,889,875
-------------------------------------------------------------------------------------------
 WorldGate Communications, Inc.(1)                            408,400             8,576,400
                                                                            ---------------
                                                                                 84,676,375


-------------------------------------------------------------------------------------------
 COMPUTER SOFTWARE--13.3%
 Adept Technology, Inc.(1)                                     77,900             4,094,619
-------------------------------------------------------------------------------------------
 Advanced Digital Information Corp.(1)                        648,200             9,844,538
-------------------------------------------------------------------------------------------
 Advent Software, Inc.(1)                                      80,000             5,590,000
-------------------------------------------------------------------------------------------
 Aspen Technologies, Inc.(1)                                  151,200             6,822,900
-------------------------------------------------------------------------------------------
 Avant! Corp.(1)                                              300,000             5,475,000
-------------------------------------------------------------------------------------------
 Caminus Corp.(1)                                             449,900            17,883,525
-------------------------------------------------------------------------------------------
 Cognos, Inc.(1)                                              185,000             7,538,750
-------------------------------------------------------------------------------------------
 Concurrent Computer Corp.(1)                                 515,800             9,800,200
-------------------------------------------------------------------------------------------
 Corsair Communications, Inc.(1)                              400,000             3,125,000
-------------------------------------------------------------------------------------------
 Descartes Systems Group, Inc. (The)(1)                       152,400             7,543,800
-------------------------------------------------------------------------------------------
 Documentum, Inc.(1)                                          485,000            39,375,938
-------------------------------------------------------------------------------------------
 Genomica Corp.(1)                                            144,500             2,808,719
-------------------------------------------------------------------------------------------
 Informatica Corp.(1)                                         100,000             9,325,000
-------------------------------------------------------------------------------------------
 Interactive Intelligence, Inc.(1)                            100,000             3,931,250
-------------------------------------------------------------------------------------------
 Interwoven, Inc.(1)                                          130,000            14,698,125
-------------------------------------------------------------------------------------------
 Liberate Technologies, Inc.(1)                               372,200            10,770,538
-------------------------------------------------------------------------------------------
 Manugistics Group, Inc.(1)                                   200,000            19,625,000
-------------------------------------------------------------------------------------------
 NetIQ Corp.(1)                                               205,000            13,465,938
-------------------------------------------------------------------------------------------
 Peregrine Systems, Inc.(1)                                   316,400             5,991,825
-------------------------------------------------------------------------------------------
 Precise Software Solutions Ltd.(1)                             5,000               215,625
-------------------------------------------------------------------------------------------
 Quest Software, Inc.(1)                                      120,000             7,453,125
-------------------------------------------------------------------------------------------
 RSA Security, Inc.(1)                                        175,000             7,546,875
-------------------------------------------------------------------------------------------
 SignalSoft Corp.(1)                                           49,200             1,998,750
-------------------------------------------------------------------------------------------
 SonicWALL, Inc.(1)                                           278,000             7,923,000



                         16 OPPENHEIMER DISCOVERY FUND
   19


                                                                              MARKET VALUE
                                                            SHARES              SEE NOTE 1
-------------------------------------------------------------------------------------------

 COMPUTER SOFTWARE Continued
 Sybase, Inc.(1)                                           900,000            $ 20,700,000
-------------------------------------------------------------------------------------------
 Verity, Inc.(1)                                           130,000               4,639,375
                                                                              -------------
                                                                               248,187,415

-------------------------------------------------------------------------------------------
 COMMUNICATIONS EQUIPMENT--2.6%
 Computer Network Technology Corp.(1)                      320,200              13,069,375
-------------------------------------------------------------------------------------------
 Plantronics, Inc.(1)                                      300,000              11,400,000
-------------------------------------------------------------------------------------------
 Polycom, Inc.(1)                                          200,000              13,393,750
-------------------------------------------------------------------------------------------
 Tut Systems, Inc.(1)                                      130,000              11,220,625
                                                                               ------------
                                                                                49,083,750


-------------------------------------------------------------------------------------------
 ELECTRONICS--9.7%
 ACT Manufacturing, Inc.(1)                                174,800               9,220,700
-------------------------------------------------------------------------------------------

 Alpha Industries, Inc.(1)                                 300,000              10,218,750
-------------------------------------------------------------------------------------------
 Cirrus Logic, Inc.(1)                                     597,400              24,082,688
-------------------------------------------------------------------------------------------
 DDi Corp./CA(1)                                            50,000               2,212,500
-------------------------------------------------------------------------------------------
 DSP Group(1)                                              200,000               7,475,000
-------------------------------------------------------------------------------------------
 Elantec Semiconductor, Inc.(1)                             74,400               7,412,100
-------------------------------------------------------------------------------------------
 Galileo Technology Ltd.(1)                                176,900               5,616,575
-------------------------------------------------------------------------------------------
 Intersil Holding Corp.(1)                                 190,900               9,521,138
-------------------------------------------------------------------------------------------
 Lattice Semiconductor Corp.(1)                            310,000              16,662,500
-------------------------------------------------------------------------------------------
 Merix Corp.(1)                                            170,000              11,018,125
-------------------------------------------------------------------------------------------
 Methode Electronics, Inc., Cl. A                          200,000               8,862,500
-------------------------------------------------------------------------------------------
 MIPS Technologies, Inc., Cl. A(1)                         125,000               5,750,000
-------------------------------------------------------------------------------------------
 MMC Networks, Inc.(1)                                      77,500               9,803,750
-------------------------------------------------------------------------------------------
 Oak Technology, Inc.(1)                                   510,000              13,961,250
-------------------------------------------------------------------------------------------
 Park Electrochemical Corp.                                 98,400               5,473,500
-------------------------------------------------------------------------------------------
 Semtech Corp.(1)                                          300,000              12,937,500
-------------------------------------------------------------------------------------------
 SMTC Corp.(1)                                              76,100               1,636,150
-------------------------------------------------------------------------------------------
 Supertex, Inc.(1)                                         121,200               6,105,450
-------------------------------------------------------------------------------------------
 TTM Technologies, Inc.(1)                                  74,400               1,748,400
-------------------------------------------------------------------------------------------
 Virata Corp.(1)                                           177,900              11,763,638
                                                                              -------------
                                                                               181,482,214

                         17 OPPENHEIMER DISCOVERY FUND



STATEMENT OF INVESTMENTS Continued


                                                                                                  MARKET VALUE
                                                                                     SHARES         SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

 UTILITIES--1.0%
---------------------------------------------------------------------------------------------------------------
 GAS UTILITIES--1.0%
 Equitable Resources, Inc.                                                          228,100     $   14,455,838
---------------------------------------------------------------------------------------------------------------
 Western Gas Resources, Inc.                                                        175,000          4,385,938
                                                                                               ----------------
                                                                                                    18,841,776
                                                                                               ----------------
 Total Common Stocks (Cost $1,349,953,336)                                                       1,689,973,293


===============================================================================================================
 PREFERRED STOCKS--1.1%
 Candescent Technologies Corp., $2.50 Cv., Series D(1),(2)                        1,200,000         11,136,000
---------------------------------------------------------------------------------------------------------------
 Candescent Technologies Corp., Sr. Exchangeable, Series E(1),(2)                   800,000          7,824,000
---------------------------------------------------------------------------------------------------------------
 Candescent Technologies Corp., Sr. Exchangeable, Series F(1),(2)                   200,000          1,918,000
                                                                                               ----------------
                                                                                                    20,878,000
 Total Preferred Stocks (Cost $8,900,000)

                                                                                  PRINCIPAL
                                                                                     AMOUNT
---------------------------------------------------------------------------------------------------------------
 SHORT-TERM NOTES--2.7%
 CIT Group, Inc., 6.49%, 10/2/00                                               $ 25,000,000         24,995,493
---------------------------------------------------------------------------------------------------------------
 New Center Asset Trust, 6.52%, 10/19/00                                         25,000,000         24,918,500
                                                                                               ----------------
 Total Short-Term Notes (Cost $49,913,993)                                                          49,913,993


---------------------------------------------------------------------------------------------------------------
 REPURCHASE AGREEMENTS--6.2%
 Repurchase agreement with Banc One Capital Markets, Inc., 6.45%,
 dated 9/29/00, to be repurchased at $115,026,794 on 10/2/00,
 collateralized by U.S. Treasury Bonds, 5.25%-15.75%, 11/15/01-5/15/30,
 with a value of $49,014,759, U.S. Treasury Nts., 4.25%-8.50%,
 11/15/00-11/15/08, with a value of $68,345,451 and U.S. Treasury Bills,
 11/9/00, with a value of $23,552 (Cost $114,965,000)                           114,965,000       114,965,000
---------------------------------------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $1,523,732,329)                                    100.5%    1,875,730,286
---------------------------------------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                                                 (0.5)       (8,472,107)
                                                                        ---------------------------------------
 NET ASSETS                                                                           100.0%   $1,867,258,179
                                                                        =======================================



 FOOTNOTES TO STATEMENT OF INVESTMENTS

 1. Non-income-producing security.
 2. Identifies issues considered to be illiquid or restricted--See Note 6 of
 Notes to Financial Statements.

 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                         18 OPPENHEIMER DISCOVERY FUND

   21
STATEMENT OF ASSETS AND LIABILITIES  September 30, 2000


-----------------------------------------------------------------------------------------------

 ASSETS

 Investments, at value (cost $1,523,732,329)--see accompanying statement      $  1,875,730,286
-----------------------------------------------------------------------------------------------
 Cash                                                                                2,160,748
-----------------------------------------------------------------------------------------------
 Receivables and other assets:
 Investments sold                                                                   49,920,567
 Shares of beneficial interest sold                                                  3,653,002
 Interest and dividends                                                                119,785
 Other                                                                                 458,432
                                                                                 --------------
 Total assets                                                                    1,932,042,820

-----------------------------------------------------------------------------------------------
 LIABILITIES

 Payables and other liabilities:
 Investments purchased                                                              44,574,975
 Shares of beneficial interest redeemed                                             17,945,736
 Distribution and service plan fees                                                  1,052,320
 Transfer and shareholder servicing agent fees                                         287,063
 Trustees' compensation                                                                283,816
 Other                                                                                 640,731
                                                                                 --------------
 Total liabilities                                                                  64,784,641

-----------------------------------------------------------------------------------------------
 NET ASSETS                                                                   $  1,867,258,179
                                                                                 ==============
-----------------------------------------------------------------------------------------------
 COMPOSITION OF NET ASSETS

 Paid-in capital                                                              $  1,156,239,386
-----------------------------------------------------------------------------------------------
 Accumulated net investment loss                                                      (250,694)
-----------------------------------------------------------------------------------------------
 Accumulated net realized gain on investments and
 foreign currency transactions                                                     359,271,530
-----------------------------------------------------------------------------------------------
 Net unrealized appreciation on investments and translation
 of assets and liabilities denominated in foreign currencies                       351,997,957
                                                                                ---------------
 NET ASSETS                                                                   $  1,867,258,179
                                                                                ===============



                         19 OPPENHEIMER DISCOVERY FUND


   22
STATEMENT OF ASSETS AND LIABILITIES  Continued



----------------------------------------------------------------------------------------------------
 NET ASSET VALUE PER SHARE

 Class A Shares:
 Net asset value and redemption price per share (based on net assets of
 $1,286,297,575 and 19,265,911 shares of beneficial interest outstanding)                     $66.77
 Maximum offering price per share (net asset value plus sales charge of 5.75% of
 offering price)                                                                              $70.84
 ---------------------------------------------------------------------------------------------------
 Class B Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $423,689,431
 and 6,726,524 shares of beneficial interest outstanding)                                     $62.99
----------------------------------------------------------------------------------------------------
 Class C Shares:
 Net asset value, redemption price (excludes applicable contingent deferred
 sales charge) and offering price per share (based on net assets of $70,140,296
 and 1,095,952 shares of beneficial interest outstanding)                                     $64.00
----------------------------------------------------------------------------------------------------
 Class Y Shares:
 Net asset value, redemption price and offering price per share (based on net
 assets of $87,130,877 and 1,280,254 shares of beneficial interest outstanding)               $68.06




 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                          20 OPPENHEIMER DISCOVERY FUND

   23


STATEMENT OF OPERATIONS For the Year Ended September 30, 2000



------------------------------------------------------------------------------------------------

INVESTMENT INCOME
 Interest                                                                           $ 10,494,605
------------------------------------------------------------------------------------------------
 Dividends (net of foreign withholding taxes of $2,297)                                  930,958
                                                                                    ------------
 Total income                                                                         11,425,563

------------------------------------------------------------------------------------------------
 EXPENSES

 Management fees                                                                      10,861,232
------------------------------------------------------------------------------------------------
 Distribution and service plan fees:
 Class A                                                                               2,843,155
 Class B                                                                               3,713,228
 Class C                                                                                 551,071
------------------------------------------------------------------------------------------------
 Transfer and shareholder servicing agent fees:
 Class A                                                                               2,191,302
 Class B                                                                                 683,589
 Class C                                                                                  97,635
 Class Y                                                                                  65,049
------------------------------------------------------------------------------------------------
 Custodian fees and expenses                                                             102,655
------------------------------------------------------------------------------------------------
 Trustees' compensation                                                                   89,101
------------------------------------------------------------------------------------------------
 Other                                                                                 1,111,336
                                                                                    ------------
 Total expenses                                                                       22,309,353
 Less expenses paid indirectly                                                           (65,372)
                                                                                    ------------
 Net expenses                                                                         22,243,981


------------------------------------------------------------------------------------------------
 NET INVESTMENT LOSS                                                                 (10,818,418)

------------------------------------------------------------------------------------------------
 REALIZED AND UNREALIZED GAIN (LOSS)

 Net realized gain (loss) on:
 Investments                                                                         473,743,645
 Foreign currency transactions                                                          (171,938)

 Net realized gain                                                                   473,571,707
------------------------------------------------------------------------------------------------
 Net change in unrealized appreciation (depreciation) on:
 Investments                                                                         145,851,515
 Translation of assets and liabilities denominated in foreign currencies                (309,252)
                                                                                    ------------
 Net change                                                                          145,542,263
                                                                                    ------------
 Net realized and unrealized gain                                                    619,113,970


------------------------------------------------------------------------------------------------
 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                               $608,295,552
                                                                                    ============



SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                          21 OPPENHEIMER DISCOVERY FUND


   24

STATEMENTS OF CHANGES IN NET ASSETS



YEAR ENDED SEPTEMBER 30,                                                              2000               1999
----------------------------------------------------------------------------------------------------------------

 OPERATIONS

Net investment loss                                                           $(10,818,418)      $(10,452,859)
----------------------------------------------------------------------------------------------------------------
Net realized gain                                                              473,571,707         79,072,011
----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                          145,542,263         69,855,627
                                                                            ------------------------------------
Net increase in net assets resulting from operations                           608,295,552        138,474,779

----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS

Distributions from net realized gain:
Class A                                                                        (48,950,971)       (33,486,062)
Class B                                                                        (15,499,580)       (10,003,098)
Class C                                                                         (1,945,396)        (1,248,219)
Class Y                                                                         (2,425,868)        (1,407,650)

----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS

Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A                                                                        134,098,247       (265,166,206)
Class B                                                                         87,560,981        (58,016,597)
Class C                                                                         29,719,349         (8,383,628)
Class Y                                                                         34,700,391         (3,821,532)

----------------------------------------------------------------------------------------------------------------
NET ASSETS

Total increase (decrease)                                                      825,552,705       (243,058,213)
----------------------------------------------------------------------------------------------------------------
Beginning of period                                                          1,041,705,474      1,284,763,687
                                                                            ------------------------------------
End of period (including accumulated net investment
loss of $250,694 and $234,171, respectively)                                $1,867,258,179     $1,041,705,474
                                                                            ====================================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                          OPPENHEIMER DISCOVERY FUND




FINANCIAL HIGHLIGHTS



 CLASS A        YEAR ENDED SEPTEMBER 30,                 2000        1999         1998          1997          1996
----------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                    $43.26      $40.12       $51.72        $51.19        $43.65
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                       (.32)       (.28)        (.26)         (.08)         (.13)
Net realized and unrealized gain (loss)                  26.72        4.84       (10.37)         4.12         11.26
                                                        --------------------------------------------------------------------
Total income (loss) from
investment operations                                    26.40        4.56       (10.63)         4.04         11.13
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                     (2.89)      (1.42)        (.97)        (3.51)        (3.59)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $66.77      $43.26       $40.12        $51.72        $51.19
                                                        ====================================================================

TOTAL RETURN, AT NET ASSET VALUE(1)                      62.15%      11.59%      (20.78)%        9.16%        27.76%

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)                 $1,286        $750         $946        $1,330        $1,160
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                        $1,176        $875       $1,216        $1,119          $938
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss                                      (0.47)%     (0.69)%      (0.51)%       (0.17)%       (0.32)%
Expenses                                                  1.15%       1.31%        1.18%(3)      1.22%(3)      1.22%(3)
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    224%         73%          82%           69%           80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.

 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                          23 OPPENHEIMER DISCOVERY FUND

   26

FINANCIAL HIGHLIGHTS Continued



 CLASS B        YEAR ENDED SEPTEMBER 30,                2000        1999        1998        1997        1996
-----------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $41.22      $38.58      $50.15      $50.10      $43.11
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                     (.47)       (.85)       (.55)       (.23)       (.23)
Net realized and unrealized gain (loss)                25.13        4.91      (10.05)       3.79       10.81

Total income (loss) from
investment operations                                  24.66        4.06      (10.60)       3.56       10.58
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)      (1.42)       (.97)      (3.51)      (3.59)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $62.99      $41.22      $38.58      $50.15      $50.10
                                                      ===========================================================

-----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)                    60.95%      10.73%     (21.37)%      8.33%      26.77%

-----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                 $424        $225        $266        $323        $194
-----------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                        $372        $257        $319        $233        $120
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss                                    (1.22)%     (1.45)%     (1.27)%     (0.93)%     (1.06)%
Expenses                                                1.90%       2.07%       1.94%(3)    1.97%(3)    1.99%(3)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%         73%         82%         69%         80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.

 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                          24 OPPENHEIMER DISCOVERY FUND
   27



 CLASS C        YEAR ENDED SEPTEMBER 30,                2000      1999       1998       1997       1996(1)
----------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $41.85     $39.15     $50.86     $50.73     $43.20
----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                     (.24)      (.85)      (.55)      (.26)      (.21)
Net realized and unrealized gain (loss)                25.28       4.97     (10.19)      3.90      11.33
                                                       ---------------------------------------------------
Total income (loss) from
investment operations                                  25.04       4.12     (10.74)      3.64      11.12
----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)     (1.42)      (.97)     (3.51)     (3.59)
----------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $64.00     $41.85     $39.15     $50.86     $50.73
                                                      ====================================================


----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2)                    60.95%     10.73%    (21.34)%     8.39%     27.96%



RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)                  $70        $27        $33        $42        $18
----------------------------------------------------------------------------------------------------------
Average net assets (in millions)                         $55        $32        $41        $26         $7
Ratios to average net assets:(3)
Net investment loss                                    (1.20)%    (1.45)%    (1.25)%    (0.92)%    (1.00)%
Expenses                                                1.90%      2.07%      1.92%(4)   1.94%(4)   2.03%(4)
----------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%        73%        82%        69%        80%




 1. For the period from October 2, 1995 (inception of offering) to September 30,
 1996.
 2. Assumes a $1,000 hypothetical initial investment on the business day
 before the first day of the fiscal period (or inception of offering), with all
 dividends and distributions reinvested in additional shares on the reinvestment
 date, and redemption at the net asset value calculated on the last business day
 of the fiscal period. Sales charges are not reflected in the total returns.
 Total returns are not annualized for periods of less than one full year.
 3. Annualized for periods of less than one full year.
 4. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.

 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                          25 OPPENHEIMER DISCOVERY FUND

   28
FINANCIAL HIGHLIGHTS Continued



CLASS Y         YEAR ENDED SEPTEMBER 30,                2000       1999       1998       1997       1996
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $43.92     $40.63     $52.17     $51.44     $43.74
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)                            (.30)      (.17)      (.09)       .02       (.02)
Net realized and unrealized gain (loss)                27.33       4.88     (10.48)      4.22      11.31
                                                       -------------------------------------------------------
Total income (loss) from
investment operations                                  27.03       4.71     (10.57)      4.24      11.29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)     (1.42)      (.97)     (3.51)     (3.59)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $68.06     $43.92     $40.63     $52.17     $51.44
                                                      ========================================================


--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)                    62.68%     11.82%    (20.47)%     9.50%     28.09%



--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                  $87        $39        $40        $45        $32
--------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                         $77        $41        $45        $35        $19
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income (loss)                           (0.11)%    (0.48)%    (0.15)%     0.15%     (0.04)%
Expenses                                                0.80%      1.11%      0.81%(3)   0.89%(3)   0.99%(3)
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%        73%        82%        69%        80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.

 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                          26 OPPENHEIMER DISCOVERY FUND

   29
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 an open-end management investment company.
 The Fund's investment objective is to seek capital appreciation. The Fund's
 investment advisor is OppenheimerFunds, Inc. (the Manager).
    The Fund offers Class A, Class B, Class C and Class Y shares. Class A shares
 are sold at their offering price, which is normally net asset value plus a
 front-end sales charge. Class B and Class C shares are sold without a front-end
 sales charge but may be subject to a contingent deferred sales charge (CDSC).
 Class Y shares are sold to certain institutional investors without either a
 front-end sales charge or a CDSC. All classes of shares have identical rights
 to earnings, assets and voting privileges, except that each class has its own
 expenses directly attributable to that class and exclusive voting rights with
 respect to matters affecting that 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.
--------------------------------------------------------------------------------
 SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges
 or other domestic or foreign exchanges are valued based on the last sale price
 of the security traded on that exchange prior to the time when the Fund's
 assets are valued. In the absence of a sale, the security is valued at the last
 sale price on the prior trading day, if it is within the spread of the closing
 bid and asked prices, and if not, at the closing bid price. Securities
 (including restricted securities) for which quotations are not readily
 available are valued primarily using dealer-supplied valuations, a portfolio
 pricing service authorized by the Board of Trustees, or at their fair value.
 Fair value is determined in good faith under consistently applied procedures
 under the supervision of the Board of Trustees. Short-term "money market type"
 debt securities with remaining maturities of sixty days or less are valued at
 amortized cost (which approximates market value).
--------------------------------------------------------------------------------
 FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
 in U.S. dollars. Prices of securities denominated in foreign currencies are
 translated into U.S. dollars at the closing rates of exchange. Amounts related
 to the purchase and sale of foreign securities and investment income are
 translated at the rates of exchange prevailing on the respective dates of such
 transactions.
     The effect of changes in foreign currency exchange rates on  investments
 is separately identified from the fluctuations arising from changes in market
 values of securities held and reported with all other foreign currency gains
 and losses in the Fund's Statement of Operations.


                         27 OPPENHEIMER DISCOVERY FUND
   30
NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
 1. SIGNIFICANT ACCOUNTING POLICIES  Continued
 REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
 have legally segregated in the Federal Reserve Book Entry System or to have
 segregated within the custodian's vault, all securities held as collateral for
 repurchase agreements. The market value of the underlying securities is
 required to be at least 102% of the resale price at the time of purchase. If
 the seller of the agreement defaults and the value of the collateral declines,
 or if the seller enters an insolvency proceeding, realization of the value of
 the collateral by the Fund may be delayed or limited.
--------------------------------------------------------------------------------
 ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
 those attributable to a specific class), gains and losses are allocated daily
 to each class of shares based upon the relative proportion of net assets
 represented by such class. Operating expenses directly attributable to a
 specific class are charged against the operations of that class.
--------------------------------------------------------------------------------
 FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
 Internal Revenue Code applicable to regulated investment companies and to
 distribute all of its taxable income, including any net realized gain on
 investments not offset by loss carryovers, to shareholders. Therefore, no
 federal income or excise tax provision is required.
--------------------------------------------------------------------------------
 TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for
 the Fund's independent Board of 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, 2000, a provision of $27,443 was made for the Fund's
 projected benefit obligations and payments of $10,918 were made to retired
 trustees, resulting in an accumulated liability of $252,850 as of September 30,
 2000.
    The Board of Trustees has adopted a deferred compensation plan for
 independent trustees that enables trustees to elect to defer receipt of all or
 a portion of annual compensation they are entitled to receive from the Fund.
 Under the plan, the compensation deferred is periodically adjusted as though an
 equivalent amount had been invested for the Board of Trustees in shares of one
 or more Oppenheimer funds selected by the trustee. The amount paid to the Board
 of Trustees under the plan will be determined based upon the performance of the
 selected funds. Deferral of trustees' fees under the plan will not affect the
 net assets of the Fund, and will not materially affect the Fund's assets,
 liabilities or net investment income per share.
--------------------------------------------------------------------------------
 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
 shareholders, which are determined in accordance with income tax regulations,
 are recorded on the ex-dividend date.

                         28 OPPENHEIMER DISCOVERY FUND
   31

--------------------------------------------------------------------------------
 CLASSIFICATION OF DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment
 income (loss) and net realized gain (loss) may differ for financial statement
 and tax purposes. The character of dividends and distributions made during the
 fiscal year from net investment income or net realized gains may differ from
 its ultimate characterization for federal income tax purposes. Also, due to
 timing of dividends and distributions, the fiscal year in which amounts are
 distributed may differ from the fiscal year in which the income or realized
 gain was recorded by the Fund.
    The Fund adjusts 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, 2000, amounts have been reclassified to reflect an
 increase in paid-in capital of $101,090,271, a decrease in accumulated net
 investment loss of $10,801,895, and a decrease in accumulated net realized gain
 on investments of $111,892,166. This reclassification includes $101,090,271
 distributed in connection with Fund share redemptions which increased paid-in
 capital and reduced accumulated net realized gain. Net assets of the Fund were
 unaffected by the reclassifications.
--------------------------------------------------------------------------------
 EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
 custodian fees for earnings on cash balances maintained by the Fund.
--------------------------------------------------------------------------------
 OTHER. Investment transactions are accounted for as of trade date and dividend
 income is recorded on the ex-dividend date. Certain dividends from foreign
 securities will be recorded as soon as the Fund is informed of the dividend if
 such information is obtained subsequent to 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.

                         29 OPPENHEIMER DISCOVERY FUND
   32

NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
 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:



                                YEAR ENDED SEPTEMBER 30, 2000      YEAR ENDED SEPTEMBER 30, 1999
                                      SHARES           AMOUNT           SHARES            AMOUNT
------------------------------------------------------------------------------------------------------------------------------------

 CLASS A
 Sold                             10,572,195    $ 700,492,924        7,340,366    $  305,832,917
 Dividends and/or
 distributions reinvested            835,171       47,755,057          780,123        31,868,038
 Redeemed                         (9,489,580)    (614,149,734)     (14,350,871)     (602,867,161)
                                  --------------------------------------------------------------------
 Net increase (decrease)           1,917,786     $134,098,247       (6,230,382)    $(265,166,206)
                                  ====================================================================

------------------------------------------------------------------------------------------------------------------------------------
 CLASS B
 Sold                              3,332,677    $ 214,014,951        1,771,225      $ 70,895,318
 Dividends and/or
 distributions reinvested            279,543       15,170,839          249,023         9,751,761
 Redeemed                         (2,336,781)    (141,624,809)      (3,455,595)     (138,663,676)
                                  --------------------------------------------------------------------
 Net increase (decrease)           1,275,439     $ 87,560,981       (1,435,347)    $ (58,016,597)
                                  ====================================================================

------------------------------------------------------------------------------------------------------------------------------------
 CLASS C
 Sold                              1,784,337    $ 112,381,786        1,894,040    $   76,754,870
 Dividends and/or
 distributions reinvested             34,336        1,893,313           30,536         1,214,123
 Redeemed                         (1,377,721)     (84,555,750)      (2,123,773)      (86,352,621)
                                  -------------------------------------------------------------------
 Net increase (decrease)             440,952     $ 29,719,349         (199,197)      $(8,383,628)
                                  ===================================================================

------------------------------------------------------------------------------------------------------------------------------------
 CLASS Y
 Sold                              1,639,835    $ 118,744,235          453,623    $   19,236,361
 Dividends and/or
 distributions reinvested             41,732        2,425,868           34,009         1,407,649
 Redeemed                         (1,293,525)     (86,469,712)        (571,735)      (24,465,542)
                                  -------------------------------------------------------------------
 Net increase (decrease)             388,042     $ 34,700,391          (84,103)    $  (3,821,532)
                                  ===================================================================

====================================================================================================================================

 3. PURCHASES AND SALES OF SECURITIES
 The aggregate cost of purchases and proceeds from sales of securities, other
 than short-term obligations, for the year ended September 30, 2000, were
 $3,634,297,821 and $3,327,383,050, respectively.

 As of September 30, 2000, unrealized appreciation (depreciation) based on cost
 of securities for federal income tax purposes of $1,528,354,760 was:

 Gross unrealized appreciation         $ 412,482,160
 Gross unrealized depreciation           (65,106,634)
                                       --------------
 Net unrealized appreciation           $ 347,375,526
                                       =============

                         30 OPPENHEIMER DISCOVERY FUND
   33

================================================================================
 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
 MANAGEMENT FEES. Management fees paid to the Manager were in accordance with
 the investment advisory agreement with the Fund which provides for a fee of
 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 the year ended September 30,
 2000, was an annualized rate of 0.65%, before any waiver by the Manager if
 applicable.
--------------------------------------------------------------------------------
 TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the
 Manager, acts as the transfer and shareholder servicing agent for the Fund on
 an "at-cost" basis. OFS also acts as the transfer and shareholder servicing
 agent for the other Oppenheimer funds.
--------------------------------------------------------------------------------
 DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
 with the Manager, the Distributor acts as the Fund's principal underwriter in
 the continuous public offering of the different classes of shares of the Fund.

 The compensation paid to (or retained by) the Distributor from the sale of
 shares or on the redemption of shares is shown in the table below for the
 period indicated.



                            AGGREGATE        CLASS A   COMMISSIONS    COMMISSIONS   COMMISSIONS
                            FRONT-END      FRONT-END    ON CLASS A     ON CLASS B    ON CLASS C
                        SALES CHARGES  SALES CHARGES        SHARES         SHARES        SHARES
                           ON CLASS A    RETAINED BY   ADVANCED BY    ADVANCED BY   ADVANCED BY
 YEAR ENDED                    SHARES    DISTRIBUTOR  DISTRIBUTOR(1) DISTRIBUTOR(1)DISTRIBUTOR(1)
------------------------------------------------------------------------------------------------------------------------------------

 September 30, 2000        $2,632,889       $794,399      $342,591     $3,080,610      $255,800


 1. The Distributor advances commission payments to dealers for certain sales of
 Class A shares and for sales of Class B and Class C shares from its own
 resources at the time of sale.



                              CLASS A                      CLASS B                      CLASS C
                  CONTINGENT DEFERRED          CONTINGENT DEFERRED          CONTINGENT DEFERRED
                        SALES CHARGES                SALES CHARGES                SALES CHARGES
 YEAR ENDED   RETAINED BY DISTRIBUTOR      RETAINED BY DISTRIBUTOR      RETAINED BY DISTRIBUTOR
------------------------------------------------------------------------------------------------------------------------------------

 September 30, 2000           $32,097                     $630,269                      $13,194


    The Fund has adopted a Service Plan for Class A shares and Distribution and
 Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
 Company Act. Under those plans the Fund pays the Distributor for all or a
 portion of its costs incurred in connection with the distribution and/or
 servicing of the shares of the particular class.

--------------------------------------------------------------------------------
 CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
 currently uses the fees it receives from the Fund to pay brokers, dealers and
 other financial institutions. The Class A service plan permits reimbursements
 to the Distributor at a rate of up to 0.25% of average annual net assets of
 Class A shares purchased. The Distributor makes payments to plan recipients
 quarterly at an annual rate not to exceed 0.25% of the average annual net
 assets consisting of Class A shares of the Fund. For the year ended September
 30, 2000, payments under the Class A plan totaled $2,843,155 prior to Manager
 waiver if applicable, all of which were paid by the Distributor to recipients,
 and included $215,426 paid to an affiliate of the Manager. Any unreimbursed
 expenses the

                         31 OPPENHEIMER DISCOVERY FUND
   34

NOTES TO FINANCIAL STATEMENTS Continued

================================================================================
 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES  Continued
 Distributor incurs with respect to Class A shares in any fiscal year cannot be
 recovered in subsequent years.
--------------------------------------------------------------------------------
 CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan,
 service fees and distribution 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 Class B and Class C plans provide
 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 under
 the plan during the period for which the fee is paid.
    The Distributor retains the asset-based sales charge on Class B shares. The
 Distributor retains the asset-based sales charge on Class C shares during the
 first year the shares are outstanding. The asset-based sales charges on Class B
 and Class C shares allow investors to buy shares without a front-end sales
 charge while allowing the Distributor to compensate dealers that sell those
 shares.
    The Distributor's actual expenses in selling Class B and Class C shares may
 be more than the payments it receives from the contingent deferred sales
 charges collected on redeemed shares and asset-based sales charges from the
 Fund under the plans. If any plan is terminated by the Fund, the Board of
 Trustees may allow the Fund to continue payments of the asset-based sales
 charge to the Distributor for distributing shares before the plan was
 terminated. The plans allow for the carry-forward of distribution expenses, to
 be recovered from asset-based sales charges in subsequent fiscal periods.

 Distribution fees paid to the Distributor for the year ended September 30,
 2000, were as follows:



                                                                 DISTRIBUTOR'S     DISTRIBUTOR'S
                                                                     AGGREGATE      UNREIMBURSED
                                                                  UNREIMBURSED     EXPENSES AS %
                              TOTAL PAYMENTS  AMOUNT RETAINED         EXPENSES     OF NET ASSETS
                                  UNDER PLAN   BY DISTRIBUTOR       UNDER PLAN          OF CLASS
--------------------------------------------------------------------------------------------------------

 Class B Plan                     $3,713,228       $2,970,317       $7,572,564                1.79%
 Class C Plan                        551,071          180,403          796,157                1.14
========================================================================================================



 5. FOREIGN CURRENCY CONTRACTS
 A foreign currency contract is a commitment to purchase or sell a foreign
 currency at a future date, at a negotiated rate. The Fund may enter into
 foreign currency contracts for operational purposes and to seek to protect
 against adverse exchange rate fluctuations. Risks to the Fund include the
 potential inability of the counterparty to meet the terms of the contract.
    The net U.S. dollar value of foreign currency underlying all contractual
 commitments held by the Fund and the resulting unrealized appreciation or
 depreciation are determined using foreign currency exchange rates as provided
 by a reliable bank, dealer or pricing service. Unrealized appreciation and
 depreciation on foreign currency contracts are reported in the Statement of
 Assets and Liabilities.

                         32 OPPENHEIMER DISCOVERY FUND
   35

--------------------------------------------------------------------------------
    The Fund may realize a gain or loss upon the closing or settlement of the
 foreign currency transactions. Realized gains and losses are reported with all
 other foreign currency gains and losses in the Statement of Operations.
    Securities denominated in foreign currency to cover net exposure on
 outstanding foreign currency contracts are noted in the Statement of
 Investments where applicable.

================================================================================
 6. ILLIQUID OR RESTRICTED SECURITIES
 As of September 30, 2000, investments in securities included issues that are
 illiquid or restricted. Restricted securities are often purchased in private
 placement transactions, are not registered under the Securities Act of 1933,
 may have contractual restrictions on resale, and are valued under methods
 approved by the Board of Trustees as reflecting fair value. A security may also
 be considered illiquid if it lacks a readily available market or if its
 valuation has not changed for a certain period of time. The Fund intends to
 invest no more than 10% of its net assets (determined at the time of purchase
 and reviewed periodically) in illiquid or restricted securities. Certain
 restricted securities, eligible for resale to qualified institutional
 investors, are not subject to that limitation. The aggregate value of illiquid
 or restricted securities subject to this limitation as of September 30, 2000,
 was $20,878,000, which represents 1.12% of the Fund's net assets, all of which
 is considered restricted. Information concerning restricted securities is as
 follows:



                                                                                     VALUATION
                                                                                  PER UNIT AS OF
 SECURITY                                    ACQUISITION DATE    COST PER UNIT     SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------------------------------

 STOCKS AND WARRANTS
 Candescent Technologies Corp., 2.50% Cv.,
 Series D                                                   3/31/95         $2.50             $9.28
------------------------------------------------------------------------------------------------------------------------------------
 Candescent Technologies Corp., Sr. Exchangeable,
 Series E                                                   4/24/96          5.50              9.78
------------------------------------------------------------------------------------------------------------------------------------
 Candescent Technologies Corp., Sr. Exchangeable,
 Series F                                                   6/11/97          7.50              9.59


 7. BANK BORROWINGS
================================================================================
 The Fund may borrow from a bank for temporary or emergency purposes including,
 without limitation, funding of shareholder redemptions provided asset coverage
 for borrowings exceeds 300%. The Fund has entered into an agreement which
 enables it to participate with other Oppenheimer funds in an unsecured line of
 credit with a bank, which permits borrowings up to $400 million, collectively.
 Interest is charged to each fund, based on its borrowings, at a rate equal to
 the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
 loan is executed. The Fund also pays a commitment fee equal to its pro rata
 share of the average unutilized amount of the credit facility at a rate of
 0.08% per annum.
    The Fund had no borrowings outstanding during the year ended September 30,
 2000.

                         33 OPPENHEIMER DISCOVERY FUND







FINANCIAL HIGHLIGHTS



 CLASS A        YEAR ENDED SEPTEMBER 30,                 2000        1999         1998          1997          1996
----------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                    $43.26      $40.12       $51.72        $51.19        $43.65
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                       (.32)       (.28)        (.26)         (.08)         (.13)
Net realized and unrealized gain (loss)                  26.72        4.84       (10.37)         4.12         11.26
                                                        --------------------------------------------------------------------
Total income (loss) from
investment operations                                    26.40        4.56       (10.63)         4.04         11.13
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                     (2.89)      (1.42)        (.97)        (3.51)        (3.59)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                          $66.77      $43.26       $40.12        $51.72        $51.19
                                                        ====================================================================

TOTAL RETURN, AT NET ASSET VALUE(1)                      62.15%      11.59%      (20.78)%        9.16%        27.76%

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)                 $1,286        $750         $946        $1,330        $1,160
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                        $1,176        $875       $1,216        $1,119          $938
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss                                      (0.47)%     (0.69)%      (0.51)%       (0.17)%       (0.32)%
Expenses                                                  1.15%       1.31%        1.18%(3)      1.22%(3)      1.22%(3)
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                    224%         73%          82%           69%           80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.




                          OPPENHEIMER DISCOVERY FUND



FINANCIAL HIGHLIGHTS Continued



 CLASS B        YEAR ENDED SEPTEMBER 30,                2000        1999        1998        1997        1996
-----------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $41.22      $38.58      $50.15      $50.10      $43.11
-----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                     (.47)       (.85)       (.55)       (.23)       (.23)
Net realized and unrealized gain (loss)                25.13        4.91      (10.05)       3.79       10.81

Total income (loss) from
investment operations                                  24.66        4.06      (10.60)       3.56       10.58
-----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)      (1.42)       (.97)      (3.51)      (3.59)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $62.99      $41.22      $38.58      $50.15      $50.10
                                                      ===========================================================

-----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)                    60.95%      10.73%     (21.37)%      8.33%      26.77%

-----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                 $424        $225        $266        $323        $194
-----------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                        $372        $257        $319        $233        $120
-----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment loss                                    (1.22)%     (1.45)%     (1.27)%     (0.93)%     (1.06)%
Expenses                                                1.90%       2.07%       1.94%(3)    1.97%(3)    1.99%(3)
-----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%         73%         82%         69%         80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.



                           OPPENHEIMER DISCOVERY FUND




 CLASS C        YEAR ENDED SEPTEMBER 30,                2000      1999       1998       1997       1996(1)
----------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $41.85     $39.15     $50.86     $50.73     $43.20
----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss                                     (.24)      (.85)      (.55)      (.26)      (.21)
Net realized and unrealized gain (loss)                25.28       4.97     (10.19)      3.90      11.33
                                                       ---------------------------------------------------
Total income (loss) from
investment operations                                  25.04       4.12     (10.74)      3.64      11.12
----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)     (1.42)      (.97)     (3.51)     (3.59)
----------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $64.00     $41.85     $39.15     $50.86     $50.73
                                                      ====================================================


----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2)                    60.95%     10.73%    (21.34)%     8.39%     27.96%



RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)                  $70        $27        $33        $42        $18
----------------------------------------------------------------------------------------------------------
Average net assets (in millions)                         $55        $32        $41        $26         $7
Ratios to average net assets:(3)
Net investment loss                                    (1.20)%    (1.45)%    (1.25)%    (0.92)%    (1.00)%
Expenses                                                1.90%      2.07%      1.92%(4)   1.94%(4)   2.03%(4)
----------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%        73%        82%        69%        80%




 1. For the period from October 2, 1995 (inception of offering) to September 30,
 1996.
 2. Assumes a $1,000 hypothetical initial investment on the business day
 before the first day of the fiscal period (or inception of offering), with all
 dividends and distributions reinvested in additional shares on the reinvestment
 date, and redemption at the net asset value calculated on the last business day
 of the fiscal period. Sales charges are not reflected in the total returns.
 Total returns are not annualized for periods of less than one full year.
 3. Annualized for periods of less than one full year.
 4. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.



                           OPPENHEIMER DISCOVERY FUND


FINANCIAL HIGHLIGHTS Continued



CLASS Y         YEAR ENDED SEPTEMBER 30,                2000       1999       1998       1997       1996
--------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period                  $43.92     $40.63     $52.17     $51.44     $43.74
--------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)                            (.30)      (.17)      (.09)       .02       (.02)
Net realized and unrealized gain (loss)                27.33       4.88     (10.48)      4.22      11.31
                                                       -------------------------------------------------------
Total income (loss) from
investment operations                                  27.03       4.71     (10.57)      4.24      11.29
--------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain                   (2.89)     (1.42)      (.97)     (3.51)     (3.59)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period                        $68.06     $43.92     $40.63     $52.17     $51.44
                                                      ========================================================


--------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1)                    62.68%     11.82%    (20.47)%     9.50%     28.09%



--------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in millions)                  $87        $39        $40        $45        $32
--------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                         $77        $41        $45        $35        $19
--------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income (loss)                           (0.11)%    (0.48)%    (0.15)%     0.15%     (0.04)%
Expenses                                                0.80%      1.11%      0.81%(3)   0.89%(3)   0.99%(3)
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  224%        73%        82%        69%        80%




 1. Assumes a $1,000 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.
 2. Annualized for periods of less than one full year.
 3. Expense ratio has not been grossed up to reflect the effect of expenses paid
 indirectly.




                           OPPENHEIMER DISCOVERY FUND










                                                                  A-1
                                                              Appendix A

                                                       Industry Classifications
                                                       ------------------------


Aerospace/Defense                                            Food and Drug Retailers
Air Transportation                                           Gas Utilities
Asset-Backed                                                 Health Care/Drugs
Auto Parts and Equipment                                     Health Care/Supplies&Services
Automotive                                                   Homebuilders/Real Estate
Bank Holding Companies                                       Hotel/Gaming
Banks                                                        Industrial Services
Beverages                                                    Information Technology
Broadcasting                                                 Insurance
Broker-Dealers                                               Leasing& Factoring
Building Materials                                           Leisure
Cable Television                                             Manufacturing
Chemicals                                                    Metals/Mining
Commercial Finance                                           Nondurable Household Goods
Communication Equipment                                      Office Equipment
Computer Hardware                                            Oil - Domestic
Computer Software                                            Oil - International
Conglomerates                                                Paper
Consumer Finance                                             Photography
Consumer Services                                            Publishing
Containers                                                   Railroads&Truckers
Convenience Stores                                           Restaurants
Department Stores                                            Savings& Loans
Diversified Financial                                        Shipping
Diversified Media                                            Special Purpose Financial
Drug Wholesalers                                             Specialty Printing
Durable Household Goods                                      Specialty Retailing
Education                                                    Steel
Electric Utilities                                           Telecommunications - Long Distance
Electrical Equipment                                         Telephone - Utility
Electronics                                                  Textile, Apparel& Home Furnishings
Energy Services                                              Tobacco
Entertainment/Film                                           Trucks and Parts
Environmental                                                Wireless Services
Food







                                                                 B-15
                                                              Appendix B

                                    OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A shares2 of the Oppenheimer funds or the contingent
deferred sales charge that may apply to Class A, Class B or Class C shares may be waived.3  That is because of the economies of sales
efforts realized by OppenheimerFunds Distributor, Inc., (referred to in this document as the "Distributor"), or by dealers or other
financial institutions that offer those shares to certain classes of investors.

Not all waivers apply to all funds. For example, waivers relating to Retirement Plans do not apply to Oppenheimer municipal funds,
because shares of those funds are not available for purchase by or on behalf of retirement plans. Other waivers apply only to
shareholders of certain funds.

For the purposes of some of the waivers described below and in the Prospectus and Statement of Additional Information of the
applicable Oppenheimer funds, the term "Retirement Plan" refers to the following types of plans:
(1)      plans qualified under Sections 401(a) or 401(k) of the Internal Revenue Code,
(2)      non-qualified deferred compensation plans,
(3)      employee benefit plans4
(4)      Group Retirement Plans5
(5)      403(b)(7) custodial plan accounts
(6)      Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

The interpretation of these provisions as to the applicability of a special arrangement or waiver in a particular case is in the sole
discretion of the Distributor or the transfer agent (referred to in this document as the "Transfer Agent") of the particular
Oppenheimer fund. These waivers and special arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the "Manager").

Waivers that apply at the time shares are redeemed must be requested by the shareholder and/or dealer in the redemption request.

I.                                Applicability of Class A Contingent Deferred Sales Charges in Certain Cases

Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial Sales Charge but May Be Subject to the Class A
Contingent Deferred Sales Charge (unless a waiver applies).

         There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the cases listed below.
However, these purchases may be subject to the Class A contingent deferred sales charge if redeemed within 18 months of the end of
the calendar month of their purchase, as described in the Prospectus (unless a waiver described elsewhere in this Appendix applies to
the redemption). Additionally, on shares purchased under these waivers that are subject to the Class A contingent deferred sales
charge, the Distributor will pay the applicable concession described in the Prospectus under "Class A Contingent Deferred Sales
Charge."6 This waiver provision applies to:
-        Purchases of Class A shares aggregating $1 million or more.
-        Purchases of Class A shares by a Retirement Plan that was permitted to purchase such shares at net asset value but subject
         to a contingent deferred sales charge prior to March 1, 2001.
-        Purchases by an OppenheimerFunds-sponsored 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
              those 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.
      -           Purchases of Class A shares by Retirement Plans that have any of the following record-keeping arrangements:
(1)      The record keeping is performed by Merrill Lynch Pierce Fenner&Smith, Inc. ("Merrill Lynch") on a daily valuation basis
              for the Retirement Plan. On the date the plan sponsor signs the record-keeping service agreement with Merrill Lynch, the
              Plan must have $3 million or more of its assets invested in (a) mutual funds, other than those advised or managed by
              Merrill Lynch Investment Management, L.P. ("MLIM"), that are made available under a Service Agreement between Merrill
              Lynch and the mutual fund's principal underwriter or distributor, and  (b) funds advised or managed by MLIM (the funds
              described in (a) and (b) are referred to as "Applicable Investments").
(2)      The record keeping for the Retirement Plan is performed on a daily valuation basis by a record keeper whose services are
              provided under a contract or arrangement between the Retirement Plan and Merrill Lynch. On the date the plan sponsor
              signs the record keeping service agreement with Merrill Lynch, the Plan must have $3 million or more of its assets
              (excluding assets invested in money market funds) invested in Applicable Investments.
(3)      The record keeping for a Retirement Plan is handled under a service agreement with Merrill Lynch and on the date the plan
              sponsor signs that agreement, the Plan has 500 or more eligible employees (as determined by the Merrill Lynch plan
              conversion manager).
      -           Purchases by a Retirement  Plan whose record keeper had a  cost-allocation  agreement  with the Transfer  Agent on or
      before March 1, 2001.

II.                                          Waivers of Class A Sales Charges of Oppenheimer Funds

A.  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 (and no concessions are paid by the
Distributor on such purchases):
-        The Manager or its affiliates.
-




     Present or former officers, directors, trustees and employees (and their "immediate families") of the Fund, the Manager and its
         affiliates, and retirement plans established by them for their employees. The term "immediate family" refers to one's
         spouse, children, grandchildren, grandparents, parents, parents-in-law, brothers and sisters, sons- and daughters-in-law, a
         sibling's spouse, a spouse's siblings, aunts, uncles, nieces and nephews; relatives by virtue of a remarriage
         (step-children, step-parents, etc.) are included.
-        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 which are identified as such 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, banks or registered investment advisors 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, bank or advisor for the purchase or sale of Fund shares.
-        Investment advisors and financial planners who have entered into an agreement for this purpose with the Distributor and who
         charge an advisory, consulting or other fee for their services and buy shares for their own accounts or the accounts of
         their clients.
-        "Rabbi trusts" that buy shares for their own accounts, if the purchases are made through a broker or agent or other
         financial intermediary that has made special arrangements with the Distributor for those purchases.
-        Clients of investment advisors or financial planners (that have entered into an agreement for this purpose with the
         Distributor) 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 (or its successor) is the investment advisor (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.
-        A unit investment trust that has entered into an appropriate agreement with the Distributor.
-        Dealers, brokers, banks, or registered investment advisers that have entered into an agreement with the Distributor to sell
         shares to defined contribution employee retirement plans for which the dealer, broker or investment adviser provides
         administration services.
-        Retirement Plans and deferred compensation plans and trusts used to fund those plans (including, for example, plans
         qualified or created under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code), in each case if those
         purchases are made through a broker, agent or other financial intermediary that has made special arrangements with the
         Distributor for those purchases.
-        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 Class C TRAC-2000
         program on November 24, 1995.
-        A qualified Retirement Plan 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, if that arrangement was consummated and share purchases commenced by December 31, 1996.
B.  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 sales charges (and no concessions are paid by the
Distributor on such purchases):
      -           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 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 through a broker-dealer that has entered into a special agreement with the Distributor to allow the
         broker's customers to purchase and pay for shares of Oppenheimer funds using the proceeds of shares redeemed in the prior 30
         days 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 shares of the Fund, and the Distributor may require evidence of qualification for this waiver.
-        Shares purchased with the proceeds of maturing principal units of any Qualified Unit Investment Liquid Trust Series.
-        Shares purchased by the reinvestment of loan repayments by a participant in a Retirement Plan for which the Manager or an
         affiliate acts as sponsor.

C.  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 account  value
      adjusted annually.
-        Involuntary redemptions of shares by operation of law or involuntary redemptions of small accounts (please refer to
         "Shareholder Account Rules and Policies," in the applicable fund Prospectus).
-        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.7
(5)      Under a Qualified Domestic Relations Order, as defined in the Internal Revenue Code, or, in the case of an IRA, a divorce or
                separation agreement described in Section 71(b) of the Internal Revenue Code.
(6)      To meet the minimum distribution requirements of the Internal Revenue Code.
(7)      To make "substantially equal periodic payments" as described in Section 72(t) of the Internal Revenue Code.
(8)      For loans to participants or beneficiaries.
(9)      Separation from service.8
(10)     Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by the Manager or a
                subsidiary of the Manager) if the plan has made special arrangements with the Distributor.
(11)




         Plan termination or "in-service distributions," if the redemption proceeds are rolled over directly to an
                OppenheimerFunds-sponsored IRA.
      -           For distributions  from 401(k) plans sponsored by broker-dealers  that have entered into a special agreement with the
      Distributor allowing this waiver.

                            III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds

The Class B, Class C and Class N contingent deferred sales charges will not be applied to shares purchased in certain types of
transactions or redeemed in certain circumstances described below.

A.  Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for redemptions of shares in the following cases:
-        Shares redeemed involuntarily, as described in "Shareholder Account Rules and Policies," in the applicable Prospectus.
-        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.
-        Distributions from accounts for which the broker-dealer of record has entered into a special agreement with the Distributor
         allowing this waiver.
-        Redemptions of Class B shares held by Retirement Plans whose records are maintained on a daily valuation basis by Merrill
         Lynch or an independent record keeper under a contract with Merrill Lynch.
-        Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of clients of financial institutions that
         have entered into a special arrangement with the Distributor for this purpose.
-        Redemptions requested in writing by a Retirement Plan sponsor of Class C shares of an Oppenheimer fund in amounts of
         $500,000 or more and made more than 12 months after the Retirement Plan's first purchase of Class C shares, if the
         redemption proceeds are invested in Class N shares of one or more Oppenheimer funds.
-        Distributions9 from Retirement 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 in an Oppenheimer fund.
(2)      To return excess contributions made to a participant's account.
(3)      To return contributions made due to a mistake of fact.
(4)      To make hardship withdrawals, as defined in the plan.10
(5)      To make distributions required under a Qualified Domestic Relations Order or, in the case of an IRA, a divorce or separation
                agreement described in Section 71(b) of the Internal Revenue Code.
(6)      To meet the minimum distribution requirements of the Internal Revenue Code.
(7)      To make "substantially equal periodic payments" as described in Section 72(t) of the Internal Revenue Code.
(8)      For loans to participants or beneficiaries.11
(9)




         On account of the participant's separation from service.12
(10)     Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by the Manager or a
                subsidiary of the Manager) offered as an investment option in a Retirement Plan if the plan has made special
                arrangements with the Distributor.
(11)     Distributions made on account of a plan termination or "in-service" distributions, if the redemption proceeds are rolled
                over directly to an OppenheimerFunds-sponsored IRA.
(12)     For distributions from a participant's account under an Automatic Withdrawal Plan after the participant reaches age 59 1/2, as
                long as the aggregate value of the distributions does not exceed 10% of the account's value, adjusted annually.
         (13)   Redemptions of Class B shares under an Automatic Withdrawal Plan for an account other than a Retirement Plan, if the
                aggregate value of the redeemed shares does not exceed 10% of the account's value, adjusted annually.
         (14)   For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special arrangement with the
                Distributor allowing this waiver.
         -    Redemptions  of Class B shares  or Class C shares  under an  Automatic  Withdrawal  Plan  from an  account  other  than a
Retirement Plan if the aggregate value of the redeemed shares does not exceed 10% of the account's value annually.

B.  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.
-        Shares sold to present or former officers, directors, trustees or employees (and their "immediate families" as defined above
              in Section I.A.) of the Fund, the Manager and its affiliates and retirement plans established by them for their
              employees.

IV.        Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of Former Quest for
                                                                  Value Funds

The initial and contingent deferred sales charge rates and waivers for Class A, Class B and Class C shares described in the
Prospectus or Statement of Additional Information of the Oppenheimer funds are modified as described below for certain persons who
were shareholders of the former Quest for Value Funds.  To be eligible, those persons must have been shareholders on November 24,
1995, when OppenheimerFunds, Inc. became the investment advisor to those former Quest for Value Funds.  Those funds include:

    Oppenheimer Quest Value Fund, Inc.                     Oppenheimer Small Cap Value Fund
    Oppenheimer Quest Balanced Value Fund                  Oppenheimer Quest Global Value Fund, Inc.
    Oppenheimer Quest Opportunity Value Fund

         These arrangements also apply to shareholders of the following funds when they merged (were reorganized) into various
Oppenheimer funds on November 24, 1995:

  Quest for Value U.S. Government Income Fund               Quest for Value New York Tax-Exempt Fund
  Quest for Value Investment Quality Income Fund            Quest for Value National Tax-Exempt Fund
  Quest for Value Global Income Fund                        Quest for Value California Tax-Exempt Fund

         All of the funds listed above are referred to in this Appendix as the "Former Quest for Value Funds."  The waivers of
initial and contingent deferred sales charges described in this Appendix apply to shares of an Oppenheimer fund that are either:
      -           acquired by such  shareholder  pursuant to an  exchange of shares of an  Oppenheimer  fund that was one of the Former
      Quest for Value Funds, or
         -        purchased by such shareholder by exchange of shares of another  Oppenheimer  fund that were acquired  pursuant to the
merger of any of the Former Quest for Value Funds into that other Oppenheimer fund on November 24, 1995.

A.  Reductions or Waivers of Class A Sales Charges.

         - -  Reduced Class A Initial Sales Charge Rates for Certain Former Quest for Value Funds Shareholders.

Purchases by Groups and Associations.  The following table sets forth the initial sales charge rates for Class A shares purchased by
members of "Associations" formed for any purpose other than the purchase of securities. The rates in the table apply if 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.

------------------------------ ---------------------------- ---------------------------- ----------------------------
Number of Eligible Employees   Initial Sales Charge as a    Initial Sales Charge as a    Concession as % of
or Members                     % of Offering Price          % of Net Amount Invested     Offering Price
------------------------------ ---------------------------- ---------------------------- ----------------------------
------------------------------ ---------------------------- ---------------------------- ----------------------------
9 or Fewer                                2.50%                        2.56%                        2.00%
------------------------------ ---------------------------- ---------------------------- ----------------------------
------------------------------ ---------------------------- ---------------------------- ----------------------------
At  least  10  but  not  more             2.00%                        2.04%                        1.60%
than 49
------------------------------ ---------------------------- ---------------------------- ----------------------------

         For purchases by 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 in the applicable fund's
Prospectus.

         Purchases made under this arrangement qualify for the lower of either the sales charge rate in the table based on the number
of members of an Association, or the sales charge rate that applies under the Right of Accumulation described in the applicable
fund's Prospectus and Statement of Additional Information. Individuals who qualify under this arrangement for reduced sales charge
rates as members of Associations also may purchase shares for their individual or custodial accounts at these reduced sales charge
rates, upon request to the Distributor.

         - -  Waiver of Class A Sales Charges for Certain Shareholders.  Class A shares purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
              -   Shareholders 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 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 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 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.
B.  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 an Oppenheimer fund. The shares must have been
acquired by the 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. Those shares must have been purchased prior to March 6, 1995 in connection with:
                  -        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 value, adjusted annually, and
                  -        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 an Oppenheimer
fund. The shares must have been acquired by the 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 Former Quest for Value Fund merged. Those shares must have
been purchased on or after March 6, 1995, but prior to November 24, 1995:
-        redemptions  following the death or disability of the  shareholder(s)  (as evidenced by a determination of total disability by
                  the U.S. Social Security Administration);
-        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 value; adjusted annually, and
                  -        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 Oppenheimer fund described in this section if the proceeds are invested in the same
Class of shares in that fund or another Oppenheimer fund within 90 days after redemption.

    V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
                                                       Investment Accounts, Inc.

The initial and contingent deferred sale charge rates and waivers for Class A and Class B shares described in the respective
Prospectus (or this Appendix) of the following Oppenheimer funds (each is referred to as a "Fund" in this section):
     Oppenheimer U. S. Government Trust,
     Oppenheimer Bond Fund,
     Oppenheimer Value Fund and
     Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were shareholders of the following funds (referred to as the "Former
Connecticut Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the investment adviser to the Former Connecticut
Mutual Funds:

Connecticut Mutual Liquid Account                             Connecticut Mutual Total Return Account
Connecticut Mutual Government Securities Account              CMIA LifeSpan Capital Appreciation Account
Connecticut Mutual Income Account                             CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account                             CMIA Diversified Income Account


A.  Prior Class A CDSC and Class A Sales Charge Waivers.

         -    Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund and the other Former Connecticut Mutual Funds
are entitled to continue to make additional purchases of Class A shares at net asset value without a Class A initial sales charge,
but subject to the Class A contingent deferred sales charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one year of purchase, they will be assessed a 1% contingent
deferred sales charge on an amount equal to the current market value or the original purchase price of the shares sold, whichever is
smaller (in such redemptions, any shares not subject to the prior Class A CDSC will be redeemed first).

         Those shareholders who are eligible for the prior Class A CDSC are:
(1)      persons whose purchases of Class A shares of a Fund and other Former Connecticut Mutual Funds were $500,000 prior to March
                18, 1996, as a result of direct purchases or purchases pursuant to the Fund's policies on Combined Purchases or Rights
                of Accumulation, who still hold those shares in that Fund or other Former Connecticut Mutual Funds, and
(2)      persons whose intended purchases under a Statement of Intention entered into prior to March 18, 1996, with the former
                general distributor of the Former Connecticut Mutual Funds to purchase shares valued at $500,000 or more over a
                13-month period entitled those persons to purchase shares at net asset value without being subject to the Class A
                initial sales charge.

         Any of the Class A shares of a Fund and the other Former Connecticut Mutual Funds that were purchased at net asset value
prior to March 18, 1996, remain subject to the prior Class A CDSC, or if any additional shares are purchased by those shareholders at
net asset value pursuant to this arrangement they will be subject to the prior Class A CDSC.

         -    Class A Sales Charge Waivers. Additional Class A shares of a Fund may be purchased without a sales charge, by a person
who was in one (or more) of the categories below and acquired Class A shares prior to March 18, 1996, and still holds Class A shares:
(1)      any purchaser, provided the total initial amount invested in the Fund or any one or more of the Former Connecticut Mutual
                Funds totaled $500,000 or more, including investments made pursuant to the Combined Purchases, Statement of Intention
                and Rights of Accumulation features available at the time of the initial purchase and such investment is still held in
                one or more of the Former Connecticut Mutual Funds or a Fund into which such Fund merged;
(2)      any participant in a qualified plan, provided that the total initial amount invested by the plan in the Fund or any one or
                more of the Former Connecticut Mutual Funds totaled $500,000 or more;
(3)      Directors of the Fund or any one or more of the Former Connecticut Mutual Funds and members of their immediate families;
(4)      employee benefit plans sponsored by Connecticut Mutual Financial Services, L.L.C. ("CMFS"), the prior distributor of the
                Former Connecticut Mutual Funds, and its affiliated companies;
(5)      one or more members of a group of at least 1,000 persons (and persons who are retirees from such group) engaged in a common
                business, profession, civic or charitable endeavor or other activity, and the spouses and minor dependent children of
                such persons, pursuant to a marketing program between CMFS and such group; and
(6)      an institution acting as a fiduciary on behalf of an individual or individuals, if such institution was directly compensated
                by the individual(s) for recommending the purchase of the shares of the Fund or any one or more of the Former
                Connecticut Mutual Funds, provided the institution had an agreement with CMFS.






         Purchases of Class A shares made pursuant to (1) and (2) above may be subject to the Class A CDSC of the Former Connecticut
Mutual Funds described above.

         Additionally, Class A shares of a Fund may be purchased without a sales charge by any holder of a variable annuity contract
issued in New York State by Connecticut Mutual Life Insurance Company through the Panorama Separate Account which is beyond the
applicable surrender charge period and which was used to fund a qualified plan, if that holder exchanges the variable annuity
contract proceeds to buy Class A shares of the Fund.

B.  Class A and Class B Contingent Deferred Sales Charge Waivers.

In addition to the waivers set forth in the Prospectus and in this Appendix, above, the contingent deferred sales charge will be
waived for redemptions of Class A and Class B shares of a Fund and exchanges of Class A or Class B shares of a Fund into Class A or
Class B shares of a Former Connecticut Mutual Fund provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by exchange from an Oppenheimer fund that was a Former
Connecticut Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund must have been purchased prior to March 18,
1996:
(1)      by the estate of a deceased shareholder;
(2)      upon the disability of a shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code;
(3)      for retirement distributions (or loans) to participants or beneficiaries from retirement plans qualified under Sections
                401(a) or 403(b)(7)of the Code, or from IRAs, deferred compensation plans created under Section 457 of the Code, or
                other employee benefit plans;
(4)      as tax-free returns of excess contributions to such retirement or employee benefit plans;
(5)      in whole or in part, in connection with shares sold to any state, county, or city, or any instrumentality, department,
                authority, or agency thereof, that is prohibited by applicable investment laws from paying a sales charge or
                concession in connection with the purchase of shares of any registered investment management company;
(6)      in connection with the redemption of shares of the Fund due to a combination with another investment company by virtue of a
                merger, acquisition or similar reorganization transaction;
(7)      in connection with the Fund's right to involuntarily redeem or liquidate the Fund;
(8)      in connection with automatic redemptions of Class A shares and Class B shares in certain retirement plan accounts pursuant
                to an Automatic Withdrawal Plan but limited to no more than 12% of the original value annually; or
(9)      as involuntary redemptions of shares by operation of law, or under procedures set forth in the Fund's Articles of
                Incorporation, or as adopted by the Board of Directors of the Fund.

VI.                           Special Reduced Sales Charge for Former Shareholders of Advance America Funds, Inc.

Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government Trust, Oppenheimer Strategic Income Fund and Oppenheimer
Capital Income Fund who acquired (and still hold) shares of those funds as a result of the reorganization of series of Advance
America Funds, Inc. into those Oppenheimer funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on March 30,
1990, may purchase Class A shares of those four Oppenheimer funds at a maximum sales charge rate of 4.50%.

                  VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer Convertible Securities Fund

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this section) may sell Class M shares at net asset value
without any initial sales charge to the classes of investors listed below who, prior to March 11, 1996, owned shares of the Fund's
then-existing Class A and were permitted to purchase those shares at net asset value without sales charge:
-        the Manager and its affiliates,
-        present or former officers, directors, trustees and employees (and their "immediate families" as defined in the Fund's
         Statement of Additional Information) of the Fund, the Manager and its affiliates, and retirement plans established by them
         or the prior investment advisor of the Fund for their employees,
-        registered management investment companies or separate accounts of insurance companies that had an agreement with the Fund's
         prior investment advisor or 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 in the preceding section or
         financial institutions that have entered into sales arrangements with those dealers or brokers (and whose identity is made
         known to the Distributor) or with the Distributor, but only if the purchaser certifies to the Distributor at the time of
         purchase that the purchaser meets these qualifications,
-        dealers, brokers, or registered investment advisors that had entered into an agreement with the Distributor or the prior
         distributor of the Fund specifically providing for the use of Class M shares of the Fund in specific investment products
         made available to their clients, and
-        dealers, brokers or registered investment advisors that had entered into an agreement with the Distributor or prior
         distributor of the Fund's shares to sell shares to defined contribution employee retirement plans for which the dealer,
         broker, or investment advisor provides administrative services.








---------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Discovery Fund
---------------------------------------------------------------------------------------------------------------------------------------

Internet Web Site:
         WWW.OPPENHEIMERFUNDS.COM
         ------------------------

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
         OppenheimerFunds Services
         P.O. Box 5270
         Denver, Colorado 80217
         1-800-525-7048

Custodian Bank
         The Bank of New York
         One Wall Street
         New York, New York 10015

Independent Auditors
         KPMG LLP
         707 Seventeenth Street
         Denver, Colorado 80202

Legal Counsel
         Mayer, Brown, &Platt
         1675 Broadway
         New York, New York 10019

1234

PX500.0301

--------
1 Ms. Macaskill is not a Director of Oppenheimer Money Market Fund, Inc.
2 Certain waivers also apply to Class M shares of Oppenheimer Convertible Securities Fund.
3 In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end fund, references to contingent deferred
sales charges mean the Fund's Early Withdrawal Charges and references to "redemptions" mean "repurchases" of shares.
4 An "employee benefit plan" means any plan or arrangement, whether or not it is "qualified" under the Internal Revenue Code, under
which Class N shares of an Oppenheimer fund or funds are purchased by a fiduciary or other administrator for the account of
participants who are employees of a single employer or of affiliated employers. These may include, for example, medical savings
accounts, payroll deduction plans or similar plans. The fund accounts must be registered in the name of the fiduciary or
administrator purchasing the shares for the benefit of participants in the plan.
5 The term "Group Retirement Plan" means any qualified or non-qualified retirement plan for employees of a corporation or 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
(or who are eligible to participate in) the plan purchase shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and
403(b) plans other than plans for public school employees. The term "Group Retirement Plan" also includes qualified retirement plans
and non-qualified deferred compensation plans and IRAs that purchase shares of an Oppenheimer fund or funds through a single
investment dealer, broker or other financial institution that has made special arrangements with the Distributor.
6 However, that concession will not be paid on purchases of shares in amounts of $1 million or more (including any right of
accumulation) by a Retirement Plan that pays for the purchase with the redemption proceeds of Class C shares of one or more
Oppenheimer funds held by the Plan for more than one year.
7 This provision does not apply to IRAs.
8 This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.
9 The distribution must be requested prior to Plan termination or the elimination of the Oppenheimer funds as an investment option
under the Plan.
10 This provision does not apply to IRAs.
11 This provision does not apply to loans from 403(b)(7) custodial plans.
12 This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.