<PAGE>
OPPENHEIMER TAX-FREE BOND FUND
ANNUAL REPORT DECEMBER 31, 1993
[LOGO]
[Picture]
"With today's higher taxes, we worried
that the income from our investments
wouldn't be enough.
"This Fund has given us what we need--
tax-free income.
"We can keep more of what we earn,
while our investment helps build
America."
<PAGE>
FUND FACTS
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Five Facts Every Shareholder Should Know About
Oppenheimer Tax-Free Bond Fund
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1 The Fund's objective is to seek high current income
exempt from federal income taxes while attempting to
preserve capital. The portfolio consists primarily of
investment grade quality municipal securities, which
are bonds rated within the four highest rating
categories.
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2 For the 30 days ended December 31, 1993, the
In this report standardized yield for Class A shares was 5.21% and
for Class B shares was 4.60%.(1)
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Answers to three 3 Total return at net asset value for Class A shares
timely questions was 13.79% for the twelve-month period ended
you should ask your December 31, 1993. Class-B shares, which were first
Fund's managers. offered on March 16, 1993, had a total return at
net asset value of 8.49% during the period from
their inception to December 31, 1993.(2)
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// As interest rates 4 Under the new, higher federal tax rates, the value
declined during the of tax-free income has increased. The table shows
year, how did the the taxable equivalent yield required to match the
Fund maintain an Fund's current yield for the new top tax brackets.
attractive yield?
HERE IS THE TAXABLE EQUIVALENT OF THE FUND'S
YIELDS FOR AN INVESTOR IN THE:
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// Why does the FUND 31% 36% 39.6%
Fund's current strategy YIELD ON FEDERAL FEDERAL FEDERAL
emphasize investments 12/31/93 TAX BRACKET TAX BRACKET TAX BRACKET
in higher quality --------------------------------------------------
municipal bonds? CLASS A(1) 5.21% 7.55% 8.14% 8.63%
CLASS B(1) 4.60% 6.67% 7.19% 7.62%
This table assumes that an investor's highest
effective tax bracket applies to the change
in taxable income resulting from a switch between
// What effect has taxable and non-taxable investments. A portion of
the increase in federal the Fund's distributions may be subject to federal
taxs rates had on the and/or state income taxes. For investors subject
municipal bond market to alternative minimum tax, a portion of the Fund's
and the Fund? distributions may increase that tax.
--------------------------------------------------------
5 "One element of our current strategy is
to invest in high quality municipal securities.
As of December 31, 1993, 89.1% of the portfolio
is invested in bonds rated A or better. We focus
on higher quality bonds because their returns are
more dependable relative to lower-rated bonds
which provide only slightly higher yields. This
also worked to our advantage when increased demand
for higher quality bonds during the past year led
to price appreciation in the higher quality issues
in the Fund's portfolio."
PORTFOLIO MANAGER, ROBERT PATTERSON, DECEMBER 31, 1993
------------------------------------------------------
1. Standardized yield is net investment income calculated on a yield to
maturity basis for the 30-day period ended 12/31/93, divided by the maximum
offering price at the end of the period, compounded semi-annually and then
annualized.
2. Based on the change in net asset value per Class A share from 12/31/92
to 12/31/93. The Fund's average annual total returns after deducting the
current maximum sales charge of 4.75% per Class A share for the 1- and 5-year
periods and since inception of the Fund on 10/22/76 ended 12/31/93 were 8.39%,
8.82% and 7.69%, respectively. All performance figures assume reinvestment of
dividends and capital gains distributions. Total return for Class B shares
from 3/16/93 (inception of the Class) and held until 12/31/93 was 3.49%. This
reflects the change in value of a hypothetical investment made on 3/16/93 and
held until 12/31/93, with all dividends and capital gains distributions
reinvested and after applying the contingent deferred sales charge of 5%.
Past performance does not guarantee future results. The principal value and
return of an investment in the Fund will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
2 Oppenheimer Tax-Free Bond Fund
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REPORT TO SHAREHOLDERS
- -------------------------------------------------------------------------------
Oppenheimer Tax-Free Bond Fund provided shareholders with strong
tax-free yields during the year ended December 31, 1993. The Fund's
standardized yield was 5.21% for Class A shares and 4.60% for
Class B shares for the 30-day period ended December 31, 1993.(3)
For solid performance in meeting its investment objective
of seeking income exempt from federal taxes, the Fund was awarded
a **** ranking by MORNINGSTAR MUTUAL FUNDS, a well-regarded,
independent mutual fund monitoring service.(4)
During 1993, three key factors combined to create a strong
municipal bond market: declining interest rates, an increase in
federal tax rates and gradual economic growth. Declining interest
rates caused bond prices to appreciate and also led to a record
supply of new municipal bond issues used to rebuild infrastructure
and meet other obligations.
The recent increase in federal tax rates has made municipal
bonds even more attractive to investors in higher tax brackets.
This demand has increased the prices of bonds in the Fund's
portfolio. Additionally, the improving economy helped increase
prices of municipal bonds as the ability of many state and local
governments to meet their debt obligations strengthened. The
combination of these factors resulted in strong Fund performance.
In response to these market trends, the Fund's strategy
was to stay fully invested in a high quality portfolio of municipal
bonds.(5) We favor higher quality bonds because they offer more
dependable returns relative to lower-rated bonds which provide
only slightly higher yields. And with interest rates at low levels,
we sought to lock in attractive yields on the portfolio's
securities using call protection. This helps to maintain the
income available to the Fund from these investments. --------------
"The Fund
The Fund is currently well-diversified by was awarded
issuing state and by market sector. The Fund's a ****
holdings are concentrated in essential service ranking by
revenue bonds supporting utilities, transportation Morningstar."
projects and hospitals. We also emphasize bonds
from states with higher taxes or high demand for in-state bonds,
such as Massachusetts, Florida, and New York. Two recent purchases
in the Fund were Massachusetts Bay Transportation Authority and
Florida Board of Education bonds.
Going forward, the Fund will continue to seek attractive
yield opportunities and undervalued securities in investment
grade municipal bonds, particularly in the hospital sector as
the nation's healthcare program evolves. We also believe that
investors' increasing demand for tax-free income will support
solid performance for municipal bonds in 1994.
We appreciate the confidence you have placed in the Fund's
management. We look forward to fulfilling your tax-free income
needs.
Donald W. Spiro
President, Oppenheimer Tax-Free Bond Fund
January 21, 1994
3. See footnote 1, page 2.
4. Source: MORNINGSTAR MUTUAL FUNDS 12/31/93, which ranks funds in
specific investment categories monthly by a quantitative system that uses
investment performance, risk assessment factors and adjusts returns for
fees and sales loads. One star is the lowest ranking, 5 stars the highest.
Of 2,193 funds ranked by Morningstar in that period, 197 received a 5-star
ranking and 588 funds received a 4-star ranking. Risk assessment reflects
fund performance relative to three-month Treasury bill returns. Past
performance does not guarantee future results.
5. The Fund's portfolio is subject to change.
3 Oppenheimer Tax-Free Bond Fund
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<TABLE>
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STATEMENT OF INVESTMENTS December 31, 1993
RATINGS:
MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--98.5%
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ARIZONA--0.3% Central Arizona Irrigation and Drain District General
Obligation Refunding Bonds, 7%, 6/1/98 NR/B $ 1,630,000 $ 1,616,489
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CALIFORNIA--5.5% California Health Facilities Financing Authority
Revenue Bonds:
Episcopal Homes Project, Series A, California
Mortgage Insured, 7.80%, 7/1/15 NR/A+ 1,000,000 1,145,484
Unihealth America Project, Series A, AMBAC Insured:
Prerefunded, 7.625%, 10/1/15 Aaa/AAA 1,160,000 1,362,135
7.625%, 10/1/15 Aaa/AAA 65,000 75,426
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Los Angeles, California Department of Water and
Power Electric Plant Revenue Refunding Bonds,
5.375%, 9/1/23 Aa/AA 11,000,000 10,854,469
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Paramount, California Redevelopment Agency Tax
Allocation Revenue Refunding Bonds,
Redevelopment Project No. 1, Series A, 9.65%, 6/1/16 NR/AAA/BBB 2,295,000 2,545,049
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Redding, California Electric System Revenue
Certificates of Participation, Registered Residual
Interest Certificates, FGIC Insured, 8.348%, 6/1/19(1) Aaa/AAA/AAA 6,000,000 6,193,032
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San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue Bonds,
Sr. Lien, 6.75%, 1/1/32 NR/NR/BBB 12,700,000 13,107,973
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35,283,568
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COLORADO--1.3% Colorado Health Facilities Authority Revenue Bonds:
Kaiser Permanente Medical Care Project:
9%, 8/1/03 NR/AA 1,000,000 1,107,098
9.125%, 8/1/15 NR/AA 2,000,000 2,217,870
Rocky Mountain Adventist Health System,
6.625%, 2/1/22 Baa/BBB 5,000,000 5,166,199
-----------
8,491,167
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DELAWARE--2.9% Delaware Transportation Authority Transportation
System Senior Revenue Bonds, 5.50%, 7/1/16 A1/AA- 18,440,000 18,575,090
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FLORIDA--3.9% Broward County, Florida Resource Recovery
Revenue Bonds:
Broward Waste Energy-LP North Project, 7.95%, 12/1/08 A/A- 2,500,000 2,865,505
Ses Broward Co. LP South Project, 7.95%, 12/1/08 A/A 6,605,000 7,559,785
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Florida State Board of Education Capital Outlay
Public Education Unlimited Refunding Bonds:
Series A, 7.25%, 6/1/23 Aa/AA 3,240,000 3,725,442
Series D, 5.125%, 6/1/18 Aa/AA/AA 10,000,000 9,781,399
8.40%, 6/1/07 Aa/AA 750,000 970,331
-----------
24,902,462
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GEORGIA--1.9% Georgia State Municipal Electric Authority:
Revenue Bonds, Prerefunded, 7.875%, 1/1/06 A1/AA- 1,000,000 1,101,639
Special Obligation Bonds, Fifth Crossover Series
Project One, 6.50%, 1/1/17 A1/AA- 9,750,000 11,181,124
-----------
12,282,763
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4 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
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RATINGS:
MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--0.2% Regional Transportation Authority Illinois Revenue
Bonds, Series A, AMBAC Insured, 7.20%, 11/1/20 Aaa/AAA $ 1,000,000 $ 1,263,519
- -----------------------------------------------------------------------------------------------------------------------------------
INDIANA--1.0% Indiana Health Facilities Financing Authority
Hospital Revenue Bonds, CGIC Insured, 5.50%, 8/15/22 Aaa/AAA 5,500,000 5,468,215
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Indianapolis, Indiana Airport Authority Revenue
Bonds, 9%, 7/1/15 A1/A 1,000,000 1,095,476
-----------
6,563,691
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KANSAS--2.8% Kansas State Department of Transportation Highway
Revenue Refunding Bonds, Series 1993A, 5.375%, 3/1/12 Aa/AA/AA 17,500,000 17,630,232
- -----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY--1.5% Kentucky State Turnpike Authority Toll Road Revenue
Bonds, Series A, 8.50%, 7/1/04 A/A 3,010,000 3,336,482
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Louisville, Kentucky Hospital Revenue Bonds,
Alliant Health System, Inc. Project, MBIA Insured,
10.261%, 10/1/14(1) Aaa/AAA 5,000,000 6,017,454
-----------
9,353,936
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LOUISIANA--1.6% New Orleans, Louisiana Home Mortgage Authority
Special Obligation Refunding Bonds, Escrowed to
Maturity, 6.25%, 1/15/11 Aaa/AAA 9,500,000 10,572,426
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MARYLAND--0.1% Baltimore County, Maryland Mortgage Revenue Bonds,
Loch Raven Village Apartments, GNMA Collateralized,
10.10%, 11/20/20 NR/AAA 500,000 526,761
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MASSACHUSETTS--12.2% Massachusetts Bay Transportation Authority
Transportation System:
Revenue Bonds, Series C, 6.10%, 3/1/23 A/A+/A+ 7,300,000 7,625,405
Revenue Refunding Bonds:
General Transportation Systems, Series A, 5.50%, 3/1/12 A/A+/A+ 12,000,000 12,109,103
Series B, 5.50%, 3/1/21 A/A+/A+ 9,250,000 9,223,351
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Massachusetts Municipal Wholesale Electric Co. Power
Supply Systems Revenue Bonds, Series B, 6.75%, 7/1/17 Baa1/BBB+/A- 10,000,000 10,972,969
---------------------------------------------------------------------------------------------------
Massachusetts State General Obligation Refunding
Bonds, Series A, 5.50%, 2/1/11 A/A+/A+ 20,000,000 20,465,799
---------------------------------------------------------------------------------------------------
Massachusetts State Health and Educational
Facilities Authority Revenue Bonds, Baystate
Medical Center, Series C, Prerefunded, 7.50%, 7/1/20 A1/A+ 2,500,000 2,948,720
---------------------------------------------------------------------------------------------------
Massachusetts State Housing Finance Agency
Revenue Bonds, Multifamily Mortgage, GNMA
Collateralized, Series A, FHA Insured, 9.125%, 12/1/20 Aaa/AAA 975,000 1,083,599
---------------------------------------------------------------------------------------------------
Massachusetts State Water Resource Authority Revenue
Bonds, Series A, 6.50%, 7/15/19 A/A/A 12,225,000 13,854,751
-----------
78,283,697
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MICHIGAN--7.6% Detroit, Michigan Sewage Disposal System Revenue
Bonds, FGIC Insured, 8.379%, 7/1/23(1) Aaa/AAA/AAA 13,200,000 13,694,708
---------------------------------------------------------------------------------------------------
Detroit, Michigan Water Supply System Revenue Bonds,
FGIC Insured, Prerefunded, 9.864%, 7/1/22(1) Aaa/AAA 5,200,000 6,449,351
</TABLE>
5 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
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STATEMENT OF INVESTMENTS (Continued)
RATINGS:
MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
Greater Detroit Resource Recovery Authority, Michigan
Revenue Bonds:
Series A, 9.25%, 12/13/08 NR/BBB- $ 1,500,000 $ 1,638,093
Series H, 9.25%, 12/13/08 NR/BBB- 500,000 546,031
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Michigan State Building Authority Revenue Refunding
Bonds, Series I, 6.25%, 10/1/20 A/AA-/AA- 16,050,000 17,235,661
---------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority Revenue
Refunding Bonds:
FSA Insured, 10.012%, 2/15/22(1) Aaa/AAA 5,000,000 5,628,069
Sisters of Mercy Hospital, Series H, MBIA Insured,
7.50%, 8/15/13 Aaa/AAA 1,000,000 1,132,650
---------------------------------------------------------------------------------------------------
Royal Oak, Michigan Hospital Finance Authority
Revenue Bonds, William Beaumont Hospital, Series C,
Prerefunded, 7.375%, 1/1/20 Aa/AA 2,000,000 2,322,654
-----------
48,647,217
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MISSOURI--0.2% Missouri State Environmental Improvement and Energy
Resource Authority Pollution Control Revenue Bonds,
Associates Electric 84 G-4, 8.25%, 11/15/14 Aa3/A+ 1,410,000 1,567,694
- -----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--1.2% Bergen County, New Jersey Utilities Authority Water
Pollution Control Revenue Bonds, Series A, FGIC
Insured, 6.50%, 12/15/12 Aaa/AAA/AAA 6,000,000 6,671,274
---------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency Multifamily Housing Revenue Bonds, Series C,
9.75%, 11/1/27 NR/A+ 1,000,000 1,093,159
-----------
7,764,433
- -----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO--0.2% Albuquerque, New Mexico Gross Receipts Tax Revenue
Bonds, Various Airport Sub-Tendered, 8.25%, 7/1/14 A1/AA 1,000,000 1,092,645
- -----------------------------------------------------------------------------------------------------------------------------------
NEW YORK--9.6% City of New York General Obligation Bonds:
Series A, 7.75%, 8/15/16 Baa1/A- 2,500,000 2,932,477
Series D, 8%, 8/1/15 Baa1/A- 11,000,000 13,089,725
7.946%, 8/1/15(1) Baa1/A- 3,050,000 3,013,714
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Dormitory Authority of the State of New York State
University Educational Facilities Revenue Bonds:
City University, Series A, Prerefunded, 7.625%, 7/1/20 Baa1/BBB 4,500,000 5,422,365
Series A, Prerefunded, 6.75%, 5/15/18 Baa1/BBB+ 10,415,000 11,707,418
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Municipal Assistance Corp. for the City of New York
Revenue Bonds, Series 58, 7.375%, 7/1/08 Aa/AA-/AA 2,500,000 2,752,665
---------------------------------------------------------------------------------------------------
New York State Housing Finance Agency
Revenue Bonds, New York City Health Facility,
Series A, 7.90%, 11/1/99 Baa/A- 7,000,000 8,026,878
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New York State Mortgage Agency Revenue Bonds,
Ninth Series B, 8.30%, 10/1/17 Aa/NR 1,980,000 2,111,395
---------------------------------------------------------------------------------------------------
New York State Power Authority Revenue Bonds,
Series V, 7.875%, 1/1/07 Aa/AA- 3,000,000 3,448,746
</TABLE>
6 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
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RATINGS:
MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<C> <S> <C> <C> <C>
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NEW YORK (CONTINUED) Port Authority of New York and New Jersey
Consolidated Bonds:
Interest Certificates, Series Fifty-One E, 5%, 6/1/94 A1/NR $ 1,100,000 $ 233,200
Series Fifty-One E, 7%, 12/1/18 A1/NR 2,000,000 2,114,606
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Suffolk County, New York General Obligation
Refunding Bonds, Southwest Sewer District, Series B,
Escrowed to Maturity, 22.875%, 2/1/95 NR/AAA 1,075,000 1,294,243
---------------------------------------------------------------------------------------------------
United Nations Development Corp. of New York Revenue
Refunding Bonds, Sr. Lien, Series A, 6%, 7/1/26 A/NR/A+ 5,210,000 5,457,016
-----------
61,604,448
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NORTH CAROLINA--0.8% North Carolina Municipal Power Agency Revenue
Refunding Bonds, No. 1 Catawba Electric, 6.25%, 1/1/17 A/A/A 5,000,000 5,327,699
- -----------------------------------------------------------------------------------------------------------------------------------
OHIO--2.8% Franklin County, Ohio Hospital Revenue Refunding
Bonds, Riverside United Methodist, Series A,
5.75%, 5/15/20 Aa/NR 10,000,000 10,259,610
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Ohio Housing Finance Agency Single Family Mortgage
Regular Residual Interest Revenue Bonds, GNMA
Mortgage-Backed Security, Series B, 10.906%, 3/1/31(1) Aaa/AAA 5,900,000 6,764,343
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Ohio State Higher Educational Facility Revenue Bonds,
Commission Case Western Reserve University, Series B,
6.50%, 10/1/20 Aa/AA- 750,000 873,053
-----------
17,897,006
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PENNSYLVANIA--6.8% Delaware County, Pennsylvania Industrial Development
Authority Revenue Refunding Bonds, Resource
Recovery Project, Series A, 8.10%, 12/1/13 NR/A+ 5,890,000 6,536,521
---------------------------------------------------------------------------------------------------
Pennsylvania State General Obligation Refunding
Bonds, First Series, 5%, 4/15/13 A1/AA-/AA- 9,165,000 8,910,121
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Pennsylvania State Higher Education Assistance
Agency Student Loan Residual Interest Revenue
Bonds, Series 1992B, AMBAC Insured, 9.172%, 3/1/22(1) Aaa/AAA 17,500,000 18,648,961
---------------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development Authority
Economic Development Revenue Bonds, Series A,
7%, 1/1/11 A/A-/A 2,000,000 2,210,280
---------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Gas Works Revenue Bonds,
14th Series, 6.375%, 7/1/26 Baa1/BBB/A- 3,200,000 3,348,800
---------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Hospitals and Higher
Educational Facilities Authority Hospital Revenue Bonds,
Temple University Hospital, Series A, 6.625%, 11/15/23 Baa1/BBB+ 2,200,000 2,337,524
---------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Municipal Authority Justice
Lease Revenue Bonds, Series B, FGIC Insured,
Prerefunded, 7.125%, 11/15/18 Aaa/AAA/AAA 1,255,000 1,502,564
-----------
43,494,771
</TABLE>
7 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
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Statement of Investments (Continued)
RATINGS:
MOODY'S/
S&P's/FITCH'S FACE MARKET VALUE
FACE AMOUNT SEE NOTE 1
(UNAUDITED)
<C> <S> <C> <C> <C>
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SOUTH CAROLINA--3.4% South Carolina State Public Service Authority:
Revenue Bonds, Santee Cooper, Series D, AMBAC
Insured, 6.50%, 7/1/24 Aaa/AAA/A+ $10,000,000 $11,576,320
Revenue Refunding Bonds, Series A, MBIA Insured,
5.50%, 7/1/21 Aaa/AAA/A+ 10,200,000 10,258,558
-----------
21,834,878
-----------
- ----------------------------------------------------------------------------------------------------------------------------------
TEXAS--21.7% Alliance Airport Authority, Inc., Texas Special Facility
Revenue Bonds, American Airlines, Inc. Project:
7%, 12/1/11 Baa2/BB+ 3,000,000 3,322,977
7.50%, 12/1/29 Baa2/BB+ 12,500,000 13,522,224
-------------------------------------------------------------------------------------------------
Brazos River Authority, Texas:
Pollution Control Revenue Collateral Bonds, Texas
Utilities Electric Co. Project, Series A, 8.25%, 1/1/19 Baa2/BBB/BBB 1,500,000 1,730,275
Revenue Refunding Collateral Bonds,
Houston Light & Power, Series A, 6.70%, 3/1/17 Aaa/AAA 5,000,000 5,502,895
-------------------------------------------------------------------------------------------------
Cypress-Fairbanks, Texas Independent School
District General Obligation Capital Appreciation
Refunding Bonds, Series A, 0%:
2/15/14 Aaa/AAA 15,710,000 5,262,267
2/15/15 Aaa/AAA 15,000,000 4,758,630
2/15/16 Aaa/AAA 16,240,000 4,827,210
-------------------------------------------------------------------------------------------------
Dallas-Fort Worth, Texas International Airport Facilities
Improvement Corp. Revenue Bonds, American
Airlines, Inc., 7.25%, 11/1/30 Baa2/BB+ 8,000,000 8,582,992
-------------------------------------------------------------------------------------------------
Harris County, Texas Revenue Refunding Bonds,
Toll Road Subordinated Lien, 6.75%, 8/1/14 Aa/AA+ 9,940,000 10,983,312
-------------------------------------------------------------------------------------------------
Lower Colorado River Authority, Texas Revenue
Refunding Bonds, Jr. Lien, AMBAC Insured, 6%, 1/1/17 Aaa/AAA/A 15,000,000 15,687,403
-------------------------------------------------------------------------------------------------
Matagorda County, Texas Navigation District No. 1
Revenue Refunding Collateral Bonds, Houston Light &
Power, Series A, AMBAC Insured, 6.70%, 3/1/27 Aaa/AAA 8,000,000 8,832,664
-------------------------------------------------------------------------------------------------
North Central Texas Health Facility Development Corp.
Hospital Revenue Bonds, Baylor Health Care Project:
Series B, 8.41%, 5/15/06(1) Aa/AA 3,000,000 3,501,858
Series B, 8.51%, 5/15/08(1) Aa/AA 5,000,000 5,813,384
-------------------------------------------------------------------------------------------------
San Antonio, Texas Electric and Gas Systems Revenue
Improvement Refunding Bonds, Series B, 6%, 2/1/14 Aa1/AA/AA+ 18,500,000 19,366,648
-------------------------------------------------------------------------------------------------
San Antonio, Texas Water Revenue Refunding Bonds,
MBIA Insured, 6%, 5/15/16 Aaa/AAA/A+ 7,000,000 7,332,170
-------------------------------------------------------------------------------------------------
Texas Municipal Power Agency Capital Appreciation
Revenue Refunding Bonds, MBIA Insured, 0%:
9/1/14 Aaa/AAA/A+ 17,500,000 5,668,074
9/1/15 Aaa/AAA/A+ 10,000,000 3,022,029
9/1/16 Aaa/AAA/A+ 39,990,000 11,486,245
-----------
139,203,257
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
UTAH--0.2% Intermountain Power Agency of Utah Special Obligation
Bonds, Second Crossover Series, 7.50%, 7/1/16 Aa/AA 1,435,000 1,556,777
8 Oppenheimer Tax-Free Bond Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------
RATINGS:
MOODY'S/
S&P's/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WASHINGTON--5.5% Washington State General Obligation Bonds,
Series A and AT-6, 5.75%, 2/1/17 Aa/AA/AA $12,500,000 $12,823,999
---------------------------------------------------------------------------------------------------
Washington State Public Power Supply System
Revenue Refunding Bonds:
Nuclear Project No. 1, Series A, Prerefunded, 7.50%,
7/1/15 Aa/AA 3,800,000 4,426,332
Nuclear Project No. 3, Series A, 6.50%, 7/1/18 Aa/AA/AA 3,750,000 4,008,075
7.57%, 7/1/12(1) Aa/AA/AA 15,000,000 14,208,433
-----------
35,466,839
- ----------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.6% West Virginia State Parkways Economic Development
& Tourism Authority Registered Residual Interest Bonds,
8.661%, 5/16/19(1) Aaa/AAA 3,600,000 3,886,949
- ----------------------------------------------------------------------------------------------------------------------------------
U. S. POSSESSIONS--2.7% Puerto Rico Commonwealth Highway &
Transportation Authority Highway Revenue Bonds,
Series T, 6.625%, 7/1/18 Baa1/AAA 7,500,000 8,390,332
--------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth Highway Authority
Revenue Bonds, Series Q, 7.75%, 7/1/10 NA/AAA 1,000,000 1,219,220
--------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Revenue
Bonds, Series O, 7.125%, 7/1/14 Baa1/A- 6,655,000 7,463,655
-----------
17,073,207
-----------
Total Municipal Bonds and Notes (Cost $577,224,638) 631,763,621
- ----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT OBLIGATIONS--0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Seneca County, New York Industrial Development Agency
Civic Facilities Revenue Bonds, New York Chiropractic
College, 2.95%(2) (Cost $300,000) 300,000 300,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $577,524,638) 98.6% 632,063,621
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.4 9,088,422
---------- -----------
NET ASSETS 100.0% $641,152,043
---------- ------------
---------- ------------
<FN>
1. Represents the current interest rate for a variable rate security.
2. Floating or variable rate obligation maturing in more than one year. The interest rate, which is
based on specific, or an index of, market interest rates, is subject to change periodically and
is the effective rate on December 31, 1993. A demand feature allows the recovery of principal at
any time, or at specified intervals not exceeding one year, on up to 30 days' notice.
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1993
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $577,524,638)--see accompanying statement $632,063,621
---------------------------------------------------------------------------------------------------
Cash 966,300
---------------------------------------------------------------------------------------------------
Receivables:
Interest 11,424,817
Shares of beneficial interest sold 69,609
---------------------------------------------------------------------------------------------------
Other 43,907
------------
Total assets 644,568,254
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Dividends and distributions 2,247,957
Distribution assistance--Note 4 322,253
Investments purchased 300,511
Shares of beneficial interest redeemed 219,982
Other 325,508
-----------
Total liabilities 3,416,211
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $641,152,043
------------
------------
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $588,033,700
NET ASSETS ---------------------------------------------------------------------------------------------------
Undistributed net investment income 239,794
---------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain from investment transactions (1,660,434)
---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 54,538,983
------------
Net assets $641,152,043
------------
------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of $608,128,031
and 58,277,169 shares of beneficial interest outstanding) $10.44
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $10.96
---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $33,024,012 and 3,166,173 shares of beneficial interest outstanding) $10.43
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended December 31, 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $38,267,644
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 3,113,588
---------------------------------------------------------------------------------------------------
Distribution assistance:
Class A--Note 4 1,117,086
Class B--Note 4 130,628
---------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 390,817
---------------------------------------------------------------------------------------------------
Custodian fees and expenses 153,170
---------------------------------------------------------------------------------------------------
Shareholder reports 125,952
---------------------------------------------------------------------------------------------------
Trustees' fees and expenses 65,316
---------------------------------------------------------------------------------------------------
Legal and auditing fees 37,998
---------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 30,246
Class B 10,959
----------------------------------------------------------------------------------------------------
Other 58,929
----------
Total expenses 5,234,689
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 33,032,955
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on investments 12,029,869
GAIN ON INVESTMENTS ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments:
Beginning of year 25,941,357
End of year--Note 3 54,538,983
------------
Net change 28,597,626
------------
Net realized and unrealized gain on investments 40,627,495
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $73,660,450
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $33,032,955 $27,816,036
---------------------------------------------------------------------------------------------------
Net realized gain on investments 12,029,869 4,466,310
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 28,597,626 7,195,094
----------- -----------
Net increase in net assets resulting from operations 73,660,450 39,477,440
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.624 and $.579 per share, respectively) (34,167,307) (25,768,009)
SHAREHOLDERS Class B ($.420 per share) (627,087) --
----------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($.211 and $.118 per share, respectively) (12,053,200) (5,526,051)
Class B ($.211 per share) (624,908) --
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Net increase in net assets resulting from Class A beneficial interest
Transactions transactions--Note 2 85,361,641 94,330,238
-----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial interest
transactions--Note 2 32,973,976 --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 144,523,565 102,513,618
-----------------------------------------------------------------------------------------------------
Beginning of year 496,628,478 394,114,860
------------ ------------
End of year (including undistributed net investment income of
$239,794 and $2,001,233, respectively) $641,152,043 $496,628,478
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Class A Class B
--------------------------------------------------------------------------------------------
Year Ended Period Ended
December 31, December 31,
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1993(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.94 $9.77 $9.33 $9.45 9.27 $9.12 $9.81 $8.80 $7.87 $7.77 $10.22
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .59 .62 .64 .66 .65(2) .77(2) .69 .69 .70 .68 .41
Net realized and unrealized gain
(loss) on investments .74 .25 .45 (.12) .20 .07 (.70) .99 .91 .10 .43
-------- ------- ------- -------- ------- -------- ------- ------- ------- ------- --------
Total income (loss) from investment
operations 1.33 .87 1.09 .54 .85 .84 (.01) 1.68 1.61 .78 .84
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment income (.62) (.58) (.65) (.66) (.67) (.69) (.68) (.67) (.68) (.68) (.42)
Distributions from net realized gain
on investments (.21) (.12) -- -- -- -- -- -- -- -- (.21)
-------- ------- -------- -------- ------- ------ -------- ------ ------- ------ ----------
Total dividends and distributions
to shareholders (.83) (.70) (.65) (.66) (.67) (.69) (.68) (.67) (.68) (.68) (.63)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.44 $9.94 $9.77 $9.33 $9.45 $9.27 $9.12 $9.81 $8.80 $7.87 $10.43
-------- ------- -------- ------ ------ ------ ------ ----- ------ ------ ----------
-------- ------- -------- ------ ------ ------ ------ ----- ------ ------ ----------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 13.79% 9.20% 12.11% 5.93% 9.42% 10.03% .00% 19.75% 21.38% 10.60% 8.49%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $608,128 $496,628 $394,115 $256,542 $223,904 $172,227 $133,508 $132,234 $93,993 $70,103 $33,024
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $567,777 $438,684 $319,081 $238,224 $202,216 $150,901 $135,052 $112,189 $80,974 $64,474 $16,444
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 58,277 49,964 40,356 27,505 23,699 18,581 14,633 13,480 10,681 8,910 3,166
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.71% 6.34% 6.70% 7.08% 7.18% 7.48% 7.41% 7.33% 8.36% 8.91% 4.54%(4)
Expenses .88% .94% .89% .89% .82%(2) .72%(2) .78% .78% .82% .86% 1.74%(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 30.2% 34.2% 23.5% 29.3% 57.2% 22.9% 29.4% 27.8% 210.7% 385.6% 30.2%
<FN>
1. For the period from March 16, 1993 (inception of offering) to December 31, 1993.
2. Net investment income would have been $.64 and $.76 absent the voluntary assumption of expenses, resulting in an expense
ratio of .84% and .80% for 1989 and 1988, respectively.
3. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total returns.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one
year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities)
for the year ended December 31, 1993 were $258,922,750 and $173,216,958, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
13 Oppenheimer Tax-Free Bond Fund
<PAGE>
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
1. Significant
Accounting Policies
Oppenheimer Tax-Free Bond Fund (the Fund) is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment company. The Fund's investment
advisor is Oppenheimer Management Corporation (the Manager). The Fund offers both Class A and
Class B shares. Class A shares are sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge. Both classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own distribution plan,
expenses directly attributable to a particular class and exclusive voting rights with respect
to matters affecting a single class. Class B shares will automatically convert to Class A shares
six years after the date of purchase. The following is a summary of significant accounting
policies consistently followed by the Fund.
--------------------------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at 4:00 p.m. (New York time) on each trading
day. Long-term debt securities are valued by a portfolio pricing service approved by the Board of
Trustees. Long-term debt securities which cannot be valued by the approved portfolio pricing
service are valued by averaging the mean between the bid and asked prices obtained from two
active market makers in such securities. Short-term debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount. Securities for which market quotes are not
readily available are valued under procedures established by the Board of Trustees to determine
fair value in good faith.
--------------------------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES. Income, expenses (other than those
attributable to a specific class) and gains and losses are allocated daily to each class of shares
based upon the relative proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the operations of that class.
--------------------------------------------------------------------------------------------------
FEDERAL INCOME 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 tax provision is required.
------------------------------------------------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan for the Fund's
independent trustees. Benefits are based on years of service and fees paid to each trustee
during the years of service. The accumulated liability for the Fund's projected benefit
was $99,371 at December 31, 1993. No payments have been made under the plan.
--------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately for Class A and
Class B shares from net investment income each regular business day and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared at least once each
year.
--------------------------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are purchased or sold
(trade date). Discount on securities purchased is amortized over the life of the respective
securities, in accordance with federal income tax requirements. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
</TABLE>
14 Oppenheimer Tax-Free Bond Fund
<PAGE>
-----------------------------------------------
- -------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of
BENEFICIAL INTEREST no par value shares of beneficial interest of
each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1993(1) Year Ended December 31, 1992
------------------------------- ----------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 16,347,891 $168,337,919 16,325,099 $160,197,278
Dividends and distributions
reinvested 3,051,532 31,643,836 2,233,560 21,978,434
Issued in connection with the
acquisition of Main Street
Tax-Free Income Fund--Note 5 -- -- 85,627 842,569
Redeemed (11,086,654) (114,620,114) (9,036,199) (88,688,043)
------------ ------------ ----------- -----------
Net increase 8,312,769 $85,361,641 9,608,087 $94,330,238
------------ ------------ ----------- -----------
------------ ------------ ----------- ----------
--------------------------------------------------------------------------------------------------
Class B:
Sold 3,182,952 $33,155,886 -- $ --
Dividends and distributions
reinvested 85,584 893,967 -- --
Redeemed (102,363) (1,075,877) -- --
---------- ---------- ---------- ----------
Net increase 3,166,173 $32,973,976 -- $ --
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
<FN>
1. For the year ended December 31, 1993 for Class A shares and for the period from March 16, 1993
(inception of offering) to December 31, 1993 for Class B shares.
- -----------------------------------------------------------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At December 31, 1993, net unrealized appreciation of investments of $54,538,983 was composed of
LOSSES ON INVESTMENTS gross appreciation of $56,350,198, and gross depreciation of $1,811,215.
- -----------------------------------------------------------------------------------------------------------------------------------
4. MANAGEMENT FEES AND Management fees paid to the Manager were in accordance with the investment advisory agreement with
OTHER TRANSACTIONS WITH the Fund which provides for an annual fee of .60% on the first $200 million of net assets, .55% on
AFFILIATES the next $100 million, .50% on the next $200 million, .45% on the next $250 million, .40% on the
next $250 million and .35% on net assets in excess of $1 billion. The Manager has agreed to assume
Fund expenses (with specified exceptions) in excess of the most stringent applicable regulatory
limit on Fund expenses.
For the year ended December 31, 1993, commissions (sales charges paid by
investors) on sales of Class A shares totaled $4,020,669, of which $1,150,057 was retained by
Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor,
and by an affiliated broker/dealer. During the year ended December 31, 1993, OFDI received
contingent deferred sales charges of $24,041 upon redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing such services are allocated ratably to these
companies.
Under separate approved plans of distribution, each class may expend up
to .25% of its net assets annually to reimburse OFDI for costs incurred in distributing shares
of the Fund (sold subsequent to March 31, 1988 for Class A), including amounts paid to brokers,
dealers, banks and other financial institutions. In addition, Class B shares are subject to an
asset-based sales charge of .75% of net assets annually, to reimburse OFDI for sales commissions
paid from its own resources at the time of sale and associated financing costs. In the event of
termination or discontinuance of the Class B plan of distribution, the Fund would be contractually
obligated to pay OFDI for any expenses not previously reimbursed or recovered through contingent
deferred sales charges. During the year ended December 31, 1993, OFDI paid $121,448 to an
affiliated broker/dealer as reimbursement for Class A distribution-related expenses and retained
$130,628 as reimbursement for Class B distribution-related expenses and sales commissions.
- ----------------------------------------------------------------------------------------------------------------------------------
5. ACQUISITION OF MAIN STREET On October 16, 1992, the Fund acquired all of the net assets of Main Street Tax-Free Income Fund
TAX-FREE INCOME FUND (MSTFIF), pursuant to an Agreement and Plan of Reorganization approved by the MSTFIF shareholders
on October 9, 1992. The Fund issued 85,627 shares of beneficial interest, valued at $842,569,
in exchange for the net assets, resulting in combined net assets of $465,396,049 on
October 16, 1992. The net assets acquired included net unrealized appreciation of $27,124 and
capital loss carryovers for federal income tax purposes of $3,847. The exchange was tax-free.
</TABLE>
15 Oppenheimer Tax-Free Bond Fund
<PAGE>
-----------------------------------------------
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Tax-Free Bond Fund:
We have audited the accompanying statements of
investments and assets and liabilities of
Openheimer Tax-Free Bond Fund as of
December 31, 1993, 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 ten-year period then ended. These
financial statements and financial highlights
are the responsibility of the Fund's management.
Our responsibility is to express an opinion on
these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance
with generally accepted auditing standards.
Those standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement. An
audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements and financial
highlights. Our procedures included confirmation
of securities owned as of December 31, 1993, 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 Tax-Free Bond
Fund as of December 31, 1993, 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 ten-year
period then ended, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK
Denver, Colorado
January 21, 1994
16 Oppenheimer Tax-Free Bond Fund
<PAGE>
-----------------------------------------------
FEDERAL INCOME TAX INFORMATION (Unaudited)
- -------------------------------------------------------------------------------
In early 1994, shareholders will receive
information regarding all dividends and
distributions paid to them by the Fund during
calendar year 1993. Regulations of the U.S.
Treasury Department require the Fund to report
this information to the Internal Revenue
Service.
A distribution of $.211 per share was
paid on December 10, 1993, of which $.162 was
designated as a "capital gain distribution" for
federal income tax purposes. Whether received in
stock or cash, the capital gain distribution
should be treated by shareholders as a gain from
the sale of capital assets held for more than
one year (long-term capital gains). Both
short-term and long-term capital gain
distributions are subject to federal, state,
and local taxes.
None of the dividends paid by the Fund
during the fiscal year ended December 31, 1993
are eligible for the corporate dividend-received
deduction. The dividends were derived from
interest on municipal bonds and are not subject
to federal income tax. To the extent a
shareholder is subject to any state or local tax
laws, some or all of the dividends received may
be taxable.
The foregoing information is
presented to assist shareholders in reporting
distributions received from the Fund to the
Internal Revenue Service. Because of the
complexity of the federal regulations
which may affect your individual tax return and
the many variations in state and local tax
regulations, we recommend that you consult your
tax advisor for specific guidance.
17 Oppenheimer Tax-Free Bond Fund
<PAGE>
--------------------------------------------
OPPENHEIMER TAX-FREE BOND FUND
- -------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Edmund T. Delaney, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Lynn M. Coluccy, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
--------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
--------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
--------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
--------------------------------------------------------------------------
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
--------------------------------------------------------------------------
INDEPENDENT AUDITORS KPMG Peat Marwick
--------------------------------------------------------------------------
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer Tax-Free Bond
Fund. This report must be preceded or accompanied by a Prospectus of
Oppenheimer Tax-Free Bond Fund. For material information concerning the
Fund, see the Prospectus.
18 Oppenheimer Tax-Free Bond Fund
<PAGE>
------------------------------------------------------
THE FAMILY OF OPPENHEIMERFUNDS
- -------------------------------------------------------------------------------
OppenheimerFunds offers over 30 funds designed to fit
virtually every investment goal. Whether you're
investing for retirement, your children's
education, or tax-free income, we have the funds
to help you seek your objective.
When you invest with OppenheimerFunds,
you can feel comfortable knowing that you are
investing with a respected financial institution
with over 30 years of experience in helping people
just like you reach their financial goals. And
you're investing with a leader in global, growth
stock, and flexible fixed income investments--
with over 1.7 million shareholder accounts and
more than $25 billion under Oppenheimer's management
and that of our affiliates.
As an OppenheimerFunds shareholder, you
can easily exchange shares of eligible funds of
the same class by mail or by telephone for a small
administrative fee. 1 For more information on
OppenheimerFunds, please contact your financial
advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address
shown on the back cover. As always, please read
the prospectus carefully before you invest.
- -------------------------------------------------------------------------------
SPECIALTY STOCK FUNDS Global Bio-Tech Fund Gold & Special Minerals Fund
Global Environment
Fund
- -------------------------------------------------------------------------------
STOCK FUNDS Discovery Fund Global Fund
Time Fund Oppenheimer Fund
Target Fund Value Stock Fund
Special Fund
- -------------------------------------------------------------------------------
STOCK AND BOND FUNDS Main Street Income
& Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth &
Income Fund
- -------------------------------------------------------------------------------
BOND FUNDS High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Investment Grade Bond Fund
Fund
Strategic Income & Mortgage Income Fund3
Growth Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Government Securities
Income Fund Fund
Strategic Investment
Grade Bond Fund
- -------------------------------------------------------------------------------
TAX-EXEMPT FUNDS New York Tax-Exempt Tax-Free Bond Fund
Fund2
California Tax-Exempt Insured Tax-Exempt Bond Fund
Fund2
Pennsylvania Tax-Exempt Intermediate Tax-Exempt Bond
Fund2 Fund
Florida Tax-Exempt
Fund2
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS Money Market Fund Tax-Exempt Cash Reserves
Cash Reserves
1. The fee is waived for PhoneLink exchanges between
existing accounts. Exchange privileges are subject to
change or termination.
2. Available only to residents of those states.
3. Formerly GNMA Fund.
Oppenheimer Funds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203. Copyright 1994 Oppenheimer Management
Corporation. All rights reserved.
19 Oppenheimer Tax Free Bond Fund
<PAGE>
HOW MAY I HELP YOU?
GENERAL INFORMATION
1-800-525-7048
TALK TO A CUSTOMER SERVICE REPRESENTATIVE.
Monday through Friday from 8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m.
to 2:00 p.m. ET.
TELEPHONETRANSACTIONS
1-800-852-8457
Make account transactions with a Customer Service Representative.
Monday through Friday from 8:30 a.m. to 8:00 p.m. ET.
PHONELINK
1-800-533-3310
Get automated information or make automated transactions.
24 hours a day, 7 days a week.
TELECOMMUNICATION
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Service for the hearing impaired.
Monday through Friday from 8:30 a.m. to 8:00 p.m. ET.
OPPENHEIMERFUNDS INFORMATION HOTLINE
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Hear timely and insightful messages on the economy and issues that affect your
finances.
24 hours a day, 7 days a week.
RA210.0294.R
"Just as OppenheimerFunds offers over 30 different funds designed to help meet
virtually every investment need, Oppenheimer Shareholder Services offers a
variety of services to satisfy your individual needs. Whenever you require help,
we're only a toll-free phone call away.
"For personalized assistance and account information,
call our General Information number to speak with our [Picture]
knowledgeable Customer Service Representatives. Barbara Hennigar
President
"We also make it easy for you to redeem shares, exchange Oppenheimer
shares, or conduct AccountLink transactions, simply by Shareholder
calling our Telephone Transactions number. Services
"And for added convenience, OppenheimerFunds' PhoneLink, an automated voice
response system, is available 24 hours a day,7 days a week. PhoneLink gives you
access to variety of fund, account, and market information. You can even make
purchases, exchanges and redemptions using your touch-tone phone. Of course,
PhoneLink will always give you the option to speak with a Customer Service
Representative during regular business hours.
"When you invest in OppenheimerFunds, you know you'll receive a high level of
customer service. The International Customer Service Association knows it, too,
as it recently awarded Oppenheimer Shareholder Services a 1993 Award of
Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
12345
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