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Registration No. 2-57116
File No. 811-2668
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 31 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 20 / X /
OPPENHEIMER TAX-FREE BOND FUND
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
212-323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ X / On May 1, 1994 pursuant to paragraph (a)
of Rule 485.
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The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended December 31, 1993, was filed on February 28, 1994.
<PAGE>
FORM N-1A
OPPENHEIMER TAX-FREE BOND FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Cover Page
2 Expenses
3 Financial History; Performance of the Fund
4 Cover Page; Investment Objectives and Policies
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes;
7 How to Exchange Shares; Special Investor Services; Service
Plan for Class A shares; Distribution and Service Plan for
Class B Shares; How to Buy Shares; How to Sell Shares
8 How to Sell Shares; How to Exchange Shares; Special Investor
Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Additional Investment
Restrictions
14 Trustees and Officers of the Fund; How the Fund is Managed
15 Trustees and Officers of the Fund - Major Shareholders; How
the Fund is Managed
16 How the Fund is Managed; Additional Information about the
Fund; Distribution and Service Plans; Back Cover
17 How the Fund is Managed
18 Additional Information about the Fund
19 Your Investment Account
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Additional Information about the
Fund - The Distributor; Distribution and Service Plans
22 Performance of the Fund
23 Financial Statements
_____________
* Not applicable or negative answer.
<PAGE>
Oppenheimer Tax-Free Bond Fund
Prospectus dated May 1, 1994
Oppenheimer Tax-Free Bond Fund (referred to in this Prospectus as the
"Fund") is a mutual fund with the investment objective of seeking as high
a level of current income which is exempt from Federal income taxes as is
available from investing in Municipal Securities, while attempting to
preserve capital. See "The Fund and Its Investment Policies."
The Fund offers two classes of shares: (1) Class A shares sold at a
public offering price that includes a front-end sales charge, and (2)
Class B shares, which are sold without a front-end sales charge, although
you may pay a sales charge when you redeem your shares, depending on how
long you own them. Class B shares are also subject to an annual "asset-
based sales charge." Each class of shares bears different expenses. In
deciding which class of shares to buy, you should consider how much you
plan to purchase, how long you plan to keep your shares, and other factors
discussed in "How to Buy Shares" on page ____.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read it carefully and keep it for future
reference. You can find more detailed information about the Fund in the
April 29, 1994, Statement of Additional Information. For a free copy,
call Oppenheimer Shareholder Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which
means that it is legally part of this Prospectus).
Shares of the Fund are not deposits or obligations of any bank, nor are
they guaranteed by any bank or insured by the F.D.I.C. or any other
agency, and involve investment risks including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
Page
INFORMATION ABOUT THE FUND
Expenses
Financial History
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
YOUR INVESTMENT ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Ratings Categories
<PAGE>
INFORMATION ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution and other services and those expenses
are reflected in the Fund's net asset value per share. As a shareholder,
you pay these expenses indirectly. Shareholders pay other expenses
directly, such as sales charges. The following tables are provided to
help you understand your direct expenses of investing and your share of
the Fund's operating expenses you might expect to bear indirectly, based
on the Fund's expenses during its fiscal year ended December 31, 1993.
-- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages ____ through _____ for
an explanation of how and when these charges apply.
Class A Class B
Shares Shares
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Maximum Sales
Charge on Purchases
(as a % of offering price) 4.75% None
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Sales Charge on
Reinvested Dividends None None
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Deferred Sales Charge 5% in the first year,
(as a % of the lower of the declining to 1% in
original purchase price or the sixth year and
redemption proceeds) None* eliminated thereafter
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Exchange Fee $5.00** $5.00**
*If you invest more than $1 million in Class A shares, you may have to pay
a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares - Class A Shares," below.
**Fee is waived for automated exchanges on PhoneLink, described in "How
to Buy Shares."
-- Annual Fund Operating Expenses are paid out of the Fund's assets.
The Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager") and other regular expenses for
services, such as transfer agent fees, custodial fees, audit, legal and
other business expenses. The following numbers are projections based on
the Fund's historical expenses and are calculated as a percentage of
average net assets. The actual numbers may be more or less, depending on
a number of factors, including the Fund's actual net assets.
Class A Class B
Shares Shares
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Management Fees % %
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12b-1 Distribution Plan Fees % %
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Shareholder Service Plan Fees % %
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Other Expenses % %
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Total Fund Operating Expenses % %
-- Examples. Assume that you made a $1,000 investment in the Fund,
that the Fund's annual return is 5% and that its operating expenses are
as described above in the charts.
If you redeemed your shares at the end of each period below, your
investment would incur the following expenses:
1 year 3 years 5 years 10 years*
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Class A Shares $ $ $ $
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Class B Shares $ $ $ $
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
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Class A Shares $ $ $ $
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Class B Shares $ $ $ $
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Long-term Class B shareholders
could pay the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations, because of the effect of the
asset-based sales charge and contingent deferred sales charge. The
automatic conversion is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - Class B Shares" for more
information.
This example illustrates the effect of expenses on an investment, but
it is not meant to state or predict actual or expected costs or investment
returns, all of which will vary.
<PAGE>
Financial History
The table on this page presents selected per share data and ratios
for the Fund. This information has been audited by KPMG Peat Marwick, the
Fund's independent auditors, whose report on the Fund's financial
statements is included in the Annual Report in the Statement of Additional
Information. No Class B shares were publicly offered prior to March 15,
1993, and therefore no information on Class B shares is reflected in the
table below or in the Fund's other financial statements.
<PAGE>
Investment Objective and Policies
Objective. The Fund's objective is to seek as high a level of current
interest income exempt from Federal income taxes as is available from
investment in Municipal Securities (defined below), while attempting to
preserve capital. Toward that objective, certain Hedging Instruments may
be used by the Fund in an effort to protect against market risks. Since
market risks are inherent in all securities to varying degrees, assurance
cannot be given that the Fund's investment objective will be met. Certain
provisions of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code") affecting income from Municipal Securities should be
considered before investing in shares of the Fund. See "Dividends,
Distributions and Taxes," below.
Investment Policies and Strategies. Under normal market conditions, the
Fund attempts to invest 100% of its assets and, as a matter of fundamental
policy, to invest at least 80% of its assets, in municipal bonds and
municipal notes (including tax anticipation notes, construction loan
notes, revenue anticipation notes, bond anticipation notes and other
short-term loans), tax-exempt commercial paper and other debt obligations
issued by or on behalf of states, the District of Columbia, any
commonwealths, territories or possessions of the United States, or their
respective political subdivisions, agencies, instrumentalities or
authorities, the interest from which is not subject to Federal individual
income tax in the opinion of bond counsel to the respective issuer at the
time of issue (collectively "Municipal Securities"). No independent
investigation has been made by the Manager as to the users of proceeds of
bond offerings or the application of such proceeds. "Municipal Bonds" are
Municipal Securities that have a maturity when issued of one year or more,
and "Municipal Notes" are Municipal Securities that have a maturity when
issued of less than one year.
The two principal classifications of Municipal Securities are
"general obligations" (secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest) and
"revenue obligations" (payable only from the revenues derived from a
particular facility or class of facilities, or a specific excise tax or
other revenue source). The Fund may invest in Municipal Securities of
both classifications. See "Investment Objective and Policies" in the
Additional Statement for further information about the Fund's investment
policies and about Municipal Securities.
Dividends paid by the Fund derived from interest attributable to
Municipal Securities will be exempt from Federal individual income taxes.
Any dividends derived from net interest income on taxable investments will
be taxable as ordinary income (and any capital gains distributions will
be taxable as capital gains) when distributed to shareholders (See
"Dividends, Distributions and Taxes," below).
Municipal Securities purchased by the Fund must be rated within the
four highest rating categories of Moody's Investor Services, Inc.
("Moody's") or Standard & Poor's Corporation ("Standard & Poor's") or, if
unrated, judged by the Manager to be of comparable quality to Municipal
Securities rated within such grades. (See Appendix A of the Additional
Statement for a description of those rating categories). Investments in
unrated Municipal Securities will not exceed 20% of the Fund's total
assets. Not more than 25% of the Fund's total assets will be invested
in Municipal Securities that are rated either "Baa" or "MIG2" by Moody's
or "BBB" or "SP-2" by Standard & Poor's or, if unrated, judged by the
Manager to be of comparable quality to Municipal Securities in those
categories, which, although investment grade, may be subject to greater
market fluctuations and risks of loss of income and principal than higher-
rated Municipal Securities, and may be considered to have speculative
characteristics. A subsequent reduction in its rating will not require
the disposition of a security. Securities which have fallen below
investment grade have a greater risk that the ability of the issuers of
such securities to meet their debt obligations will be impaired.
-- Municipal Lease Obligations. The Fund may invest in certificates
of participation that represent a proportionate interest in or right to
the lease-purchase payment made under municipal lease obligations. While
some municipal lease securities may be deemed to be "illiquid" securities
(the purchase of which would be limited as described below in "Illiquid
and Restricted Securities"), from time to time the Fund may invest more
than 5% of its net assets in municipal lease obligations that the Manager
has determined to be liquid under guidelines set by the Board of Trustees.
Those guidelines require the Manager to evaluate: (1) the frequency of
trades and price quotations for such securities; (2) the number of dealers
or other potential buyers willing to purchase or sell such securities; (3)
the availability of market-makers; and (4) the nature of the trades for
such securities. The Manager will also evaluate the likelihood of a
continuing market for such securities throughout the time they are held
by the Fund and the credit quality of the instrument. See "Investment
Objective and Policies - Municipal Securities - Municipal Lease
Obligations" in the Additional Statement for more details.
-- Inverse Floaters. From time to time the Fund may invest in
variable rate bonds having an interest rate that varies inversely with
movements in short-term tax-exempt yields. Such bonds are known as
"inverse floaters." As short-term rates rise, inverse floaters produce
less current income than conventional long-term municipal bonds having
fixed rates.
-- Effect of Interest Rate Changes. The values of Municipal
Securities will vary as a result of changing evaluations by rating
services and investors of the ability of issuers of such securities to
meet interest and principal payments. Such values will also change in
response to changes in interest rates. Should interest rates rise, the
values of outstanding Municipal Securities will probably decline and (if
purchased at principal amount) would sell at a discount; should interest
rates fall, the values of outstanding Municipal Securities will probably
increase and (if purchased at principal amount) would sell at a premium.
Changes in the value of Municipal Securities held in the Fund's portfolio
arising from these or other factors will not affect income derived from
those securities but will affect the Fund's net asset value per share.
-- Investments in Taxable Securities. The Fund may invest the
balance of its assets in investments the income from which may be taxable,
including (i) certain "Temporary Investments" (described immediately
below); (ii) covered call options and Hedging Instruments (described in
"Covered Calls and Hedging" below); (iii) repurchase agreements (explained
below); and (iv) municipal securities issued to benefit a private user
("Private Activity Municipal Securities"), the interest from which may be
subject to Federal alternative minimum tax (see "Dividends, Distributions
and Taxes," below, and "Private Activity Municipal Securities" in the
Additional Statement).
"Temporary Investments" the Fund may invest in include: (i)
obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities; (ii) corporate debt securities rated within the
three highest grades by Moody's or Standard & Poor's; (iii) commercial
paper rated "A-1" by Standard & Poor's or "Prime-1" by Moody's; and (iv)
certificates of deposit of domestic banks with assets of $1 billion or
more. The Fund may hold Temporary Investments pending the investment of
proceeds from the sale of Fund shares or portfolio securities, or to meet
anticipated redemptions. Normally the Fund will not invest more than 20%
of its total assets in Private Activity Municipal Securities and other
taxable investments described above. However, in times of unstable
economic or market conditions, when the Fund's investment adviser,
Oppenheimer Management Corporation (the "Manager") determines it advisable
to do so, the Fund may assume a temporary defensive position and invest
an unlimited amount of its assets in Temporary Investments.
-- Portfolio Turnover. The Fund generally will not engage in the
trading of securities for the purpose of realizing short-term gains, but
the Fund may sell securities as the Manager deems advisable to take
advantage of differentials in yield. While short-term trading increases
portfolio turnover, the Fund incurs little or no brokerage costs. See
"Portfolio Transactions" in the Additional Statement for further
information.
-- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies that it follows to try to achieve its objective.
Additionally, it uses certain investment techniques and strategies in
carrying out those policies. The Fund's investment policies and practices
are not "fundamental" unless a particular policy is identified in this
Prospectus as "fundamental."
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act to be a particular
level of shareholder approval (and this term is explained in the Statement
of Additional Information). The Fund's investment objective is a
"fundamental policy." The Fund's Board of Trustees may change non-
fundamental policies, strategies and techniques without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
detailed information about these practices, including limitations designed
to reduce some of the risks. For more information, please refer to the
description of these techniques under the same headings in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.
Writing Covered Calls
The Fund may write (i.e., sell) call options ("calls") to generate
income for liquidity purposes. The Fund may write calls if: (i) after any
sale, not more than 25% of the Fund's total assets are subject to calls;
(ii) the calls are listed on a domestic securities exchange or quoted on
the automatic quotation system of the National Association of Securities
Dealers, Inc. ("NASDAQ"); and (iii) the calls are "covered," i.e., the
Fund owns the securities or Futures subject to the call (or other
securities acceptable for applicable escrow arrangements) while the call
is outstanding. If a covered call written by the Fund is exercised, the
Fund foregoes any possible profit from an increase in the market price of
the underlying security over the exercise price plus the premium received.
Hedging
As noted above, the Fund may write covered calls to enhance income.
For hedging purposes as a temporary defensive maneuver, it may purchase
certain put and call options, Interest Rate Futures and Municipal Bond
Index Futures (described below), options on such Futures and municipal
bond indices and engage in Interest Rate Swap transactions (all of which
are referred to as "Hedging Instruments". Hedging Instruments may be used
to: (i) to attempt to protect against declines in the market value of the
Fund's portfolio resulting from downward trends in the debt securities
markets (generally due to a rise in interests rates), or (ii) establish
a position in the debt securities market as a temporary substitute for
purchasing particular debt securities. The Fund will not use Hedging
Instruments for speculation. The covered calls and Hedging Instruments
the Fund may use are described below.
-- Purchasing Puts and Calls. The Fund may purchase put options
("puts") which relate to a debt security, Interest Rate Future or
Municipal Bond Index Future held by the Fund. The Fund may purchase
calls: (i) as to debt securities, Interest Rate Futures or Municipal Bond
Index Futures, or (ii) to effect a "closing purchase transaction" to
terminate its obligation as to a call it has previously written. A call
or put may be purchased only if, after such purchase, the value of all
options held by the Fund would not exceed 5% of the Fund's total assets.
"Covered Calls and Hedging" in the Additional Statement contains further
information about options, including details on payment of premiums for
options trading, and on risks, tax effects, and possible benefits to the
Fund.
-- Interest Rate Futures and Municipal Bond Index Futures. The Fund
may buy and sell futures contracts only if they relate to debt securities
("Interest Rate Futures") or municipal bond indices ("Municipal Bond Index
Futures"). The Fund does not intend to enter into Interest Rate Futures,
Municipal Bond Index Futures and options on Futures if, after any such
purchase or sale, the sum of margin deposits on Futures and premiums paid
on Futures options exceeds 5% of the value of the Fund's total assets.
The Fund's potential liability generally may be significantly in excess
of such amount.
"Covered Calls and Hedging" in the Additional Statement contains
further information about the characteristics, risks, tax effects and
possible benefits of Interest Rate Futures, Municipal Bond Index Futures
and options on such Futures, and the Fund's other limitations (which are
not fundamental policies) on investment in such Futures and options
thereon. The principal risks are: (a) possible imperfect correlation
between the prices of the Futures and the market value of the Fund's
portfolio securities; (b) possible lack of a liquid secondary market for
closing out a Futures position; (c) the need for additional skills and
techniques beyond those required for normal portfolio management; and (d)
losses resulting from market or interest rate movements not anticipated
by the Manager.
-- Interest Rate Swap Transactions. The Fund may enter into interest
rate swaps. In an interest rate swap, the Fund and another party exchange
their respective commitments to pay or receive interest on a security,
(e.g., an exchange on floating rate payments for fixed rate payments).
The Fund will not use interest rate swaps for leverage. Swap transactions
will be entered into only as to security positions held by the Fund. The
Fund may not enter into swap transactions with respect to more than 50%
of its total assets.
The Fund will segregate liquid assets (e.g., cash, U.S. Government
securities or other appropriate high grade debt obligations) equal to the
net excess, if any, of its obligations over its entitlements under the
swap and will mark to market that amount daily. There is a risk of loss
on a swap equal to the net amount of interest payments that the Fund is
contractually obligated to make. The credit risk of an interest rate swap
depends on the counterparty's ability to perform. The value of the swap
may decline if the counterparty's creditworthiness deteriorates. If the
counterparty defaults, the Fund risks the loss of the net amount of
interest payments that it is contractually entitled to receive. The Fund
may be able to reduce or eliminate its exposure to losses under swap
agreements either by assignment them to another party, or by entering into
an offsetting swap agreement with the same counterparty or another
creditworthy counterparty. See "Covered Calls and Hedging" in the
Additional Statement for further details.
When-Issued and Delayed Delivery Transactions
The Fund may purchase Municipal Securities on a "when-issued" basis,
and may purchase or sell such securities on a "delayed delivery" basis.
"When-issued" or "delayed delivery" refer to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. The Fund does not intend to make such
purchases for speculative purposes. During the period between the
purchase and settlement, no payment is made for the security and no
interest accrues to the buyer from the investment. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value of
the security declines prior to the settlement date. See "Investment
Objective and Policies - When-Issued and Delayed Delivery Transactions"
in the Additional Statement for further details.
Repurchase Agreements
The Fund may acquire securities subject to repurchase agreements for
investment and liquidity purposes, to meet anticipated redemptions, or
pending the investment of proceeds from sales of Fund shares or settlement
of purchases of portfolio investments. The Fund's repurchase agreements
will be fully collateralized. However, if the vendor fails to pay the
agreed-upon repurchase price on the delivery date, the Fund's risks may
include the costs of disposing of the collateral, and any loss from any
delay in foreclosing on the collateral. The Fund will not enter into a
repurchase agreement that will cause more than 15% of the Fund's net
assets to be subject to repurchase agreements maturing in more than seven
days. There is no limit on the amount of the Fund's net assets that may
be subject to repurchase agreements maturing in seven days or less. See
"Repurchase Agreements" in "Investment Objective and Policies" in the
Additional Statement for more details.
Loans of Portfolio Securities
To attempt to increase its income, the Fund may lend its portfolio
securities (other than in repurchase transactions) to brokers, dealers and
other financial institutions meeting certain specified credit conditions
if the loan is collateralized in accordance with applicable regulatory
requirements and if, after any loan, the value of the securities loaned
does not exceed 25% of the value of the Fund's total assets. The Fund
presently does not intend that the value of securities loaned will exceed
5% of the value of the Fund's total assets. The income on such loans,
when distributed by the Fund, will be taxable. See "Loans of Portfolio
Securities" in the Additional Statement for further information on
securities loans.
Other Investment Restrictions. The Fund has other investment restrictions
which, together with its investment objective, are "fundamental policies"
changeable only by the vote of a "majority" (as defined in the Investment
Company Act of 1940 (the "Investment Company Act")) of the Fund's
outstanding voting securities.
Under some of those restrictions, the Fund cannot: (1) Invest in
securities or any other investment other than Municipal Securities,
Temporary Investments, repurchase agreements, covered calls, Private
Activity Municipal Securities and Hedging Instruments (see "The Fund and
its Investment Policies" above); (2) Lend any of its assets (repurchase
agreements or the purchase of debt securities in accordance with the
Fund's investment policies and restrictions are permitted); the Fund may
also lend its portfolio securities as described under "Loans of Portfolio
Securities"; (3) Borrow money in excess of 10% of the value of its total
assets; the Fund may borrow only from banks as a temporary measure for
extraordinary or emergency purposes (not for the purpose of leveraging its
investments); no assets of the Fund may be pledged, mortgaged or otherwise
encumbered, transferred or assigned to secure a debt, however, escrow or
other collateral arrangements in connection with Hedging Instruments are
not prohibited hereby; (4) Invest more than 5% of the value of its total
assets in the securities of any one issuer (see "Diversification" in the
Additional Statement) nor acquire more than 10% of the total value of all
outstanding securities of any one issuer (in both cases, this restriction
does not apply to securities of the U.S. Government or its agencies or
instrumentalities); (5) Concentrate investments to the extent of 25% of
its total assets in any industry (see "Diversification" in the Additional
Statement); however, there is no limitation as to investment in Municipal
Securities or in obligations issued by the U.S. Government and its
agencies or instrumentalities.
All of the percentage limitations described above and elsewhere in
this Prospectus apply to the Fund only at the time of purchasing a
security, and the Fund need not dispose of a security merely because the
Fund's assets have changed or the security has increased in value relative
to the size of the Fund. There are other fundamental policies discussed
in "Additional Investment Restrictions" the Statement of Additional
Information, along with more information about the Fund's non-fundamental
investment policies and strategies.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company presently organized as a Massachusetts business trust.
It was initially organized as a Maryland corporation in 1976.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of this Fund into two or more classes, each
having its own dividends, distributions and expenses. Each class may have
a different net asset value. The Board has done so, and the Fund
currently has two classes of shares, Class A and Class B. Each share has
one vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a class vote together on matters that
affect that class alone. Shares are freely transferrable.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet throughout the year to oversee the Fund's activities, review
performance, and review the actions of the Manager. "Trustees and
Officers of the Fund" in the Statement of Additional Information names the
Trustees and provides more information about them and the officers of the
Fund. Although the Fund is not required by law to hold annual meetings,
it may hold meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove Trustees or to
take other action described in the Declaration of Trust.
The Manager and its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities and its fees, and describes the expenses that
the Fund pays to conduct its business.
The Manager has operated as an investment adviser since April 30,
1959. The Manager and its affiliates currently manage investment
companies, including other OppenheimerFunds with assets aggregating over
$26 billion as of December 31, 1993, and having more than 1.8 million
shareholder accounts. The Manager is owned by Oppenheimer Acquisition
Corp., a holding company owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company, a mutual
life insurance company.
-- Portfolio Manager. Robert E. Patterson, a Senior Vice President
of the Manager, serves as Portfolio Manager of the Fund and has been
primarily responsible for the day-to-day management of the Fund's
portfolio since November, 1988. During the past five years, Mr. Patterson
has also served as an officer and portfolio manager for other
OppenheimerFunds. For more information about the Fund's other officers
and Trustees, see "Trustees and Officers" in the Additional Statement.
-- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.60% of the first $200 million of
the Fund's average annual net assets, 0.55% of the next $100 million,
0.50% of the next $200 million, 0.45% of the next $250 million, 0.40% of
the next $250 million, and 0.35% of net assets in excess of $1 billion.
The Fund's management fee for its last fiscal year was ____% of average
annual net assets for Class A shares and ____% for Class B shares, which
may be higher than the rate paid by some other mutual funds.
The Fund pays expenses related to its daily operations, such as
custodian fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses affect the net asset value of
shares, and therefore are indirectly borne by shareholders through their
investment. More information about the investment advisory agreement and
the other expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies and
portfolio transactions in "Brokerage Policies of the Fund" in the
Statement of Additional Information. Because the Fund purchases most of
its portfolio securities directly from the sellers and not through
brokers, it therefore incurs relatively little expense for brokerage.
From time to time it may use brokers when buying portfolio securities.
When deciding which brokers to use in those cases, the investment advisory
agreement allows the Manager to consider whether brokers have sold shares
of the Fund or any other funds for which the Manager also serves as
investment adviser.
-- The Distributor. The Fund's shares are sold through dealers or
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.
-- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries to the
Transfer Agent at the address and toll-free numbers shown elsewhere in
this Prospectus or on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return" and "yield." These terms are
used to show the performance of each class of shares separately, because
the performance of each class of shares will usually be different, as a
result of the different kinds of expenses each class bears. This
performance information may be in advertisements about the Fund or in
communications to shareholders. It may be useful to help you see how well
your investment has done and to compare it to other funds or market
indices, as we have done below.
It is important to understand that the Fund's yields and total
returns represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns and
yields are calculated is contained in the Statement of Additional
Information, which also contains information about indices and other ways
to compare the Fund's performance. The Fund's investment performance will
vary, depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
-- Total Returns. There are different types of "total returns" used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may be quoted
"at net asset value," without considering the effect of the sales charge,
and these returns would be reduced if sales charges were deducted. When
total returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown, or else they may be shown based just on the change
in net asset value, without considering the effect of the contingent
deferred sales charge.
-- Yield. Each Class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the period.
The yield of each Class will differ because of the different expenses of
each Class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a Class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B shares do not
reflect the deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1993,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
Management's Discussion of Performance
During the twelve months ended December 31, 1993, the performance of
the municipal bond market was favorably affected by low interest rates,
Federal tax increases and gradual economic growth. The Fund continued to
maintain a strong position in higher quality bonds that the Manager
considered to be related to essential services and projects that benefit
the entire community, such as utilities, toll roads and hospitals. Recent
additions to the portfolio followed this basic strategy as the Fund sought
attractive yield opportunities among undervalued investment grade
municipal bonds. The Fund also sought to lock-in attractive rates with
call protection, which prevents the issuer of the bond from calling or
redeeming it before maturity. In the opinion of the Manager, the Fund is
well diversified both by geographic location and by market sector.
-- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund from the inception of the Class held through
December 31, 1993, with all dividends and capital gains distributions
reinvested in additional shares. The graph reflects the deduction of the
4.75% maximum initial sales charge on Class A shares and the maximum 5%
contingent deferred sales charge for Class B shares.
Because the Fund invests in a variety of debt securities in domestic
and foreign markets, the Fund's performance is compared to the performance
of the Lehman Brothers Municipal Bond Fund Index. The Lehman Brothers
Municipal Bond Index is an unmanaged index of a broad range of investment
grade municipal bonds, widely regarded as a measure of the performance of
the general municipal bond market and includes a factor for the
reinvestment of interest but does not reflect expenses. Index performance
reflects reinvestment of income but not capital gains or transaction
costs, and none of the data below shows the effect of taxes. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited
to the securities in any one index and the index data does not reflect any
assessment of the risk of the investments included in the index.
Comparison of Change
In Value of $10,000
Hypothetical Investment in
Oppenheimer Tax-Free Bond
Fund and Lehman Brothers
Municipal Bond Index
Average Annual Total Return of the Fund at 12/31/93
A Shares 1 Year 5 Years 10 Years
8.39 8.82% 10.44%
Cumulative Total Return of the Fund at 12/31/93
B Shares Inception
3.49%
Oppenheimer Oppenheimer
Tax-Free Lehman Tax-Free Lehman
Bond Bros. Muni Bond Bros. Muni
Fund A Bond Index Fund B Bond Index
12/31/83 $ 9,525 $10,000
12/31/84 $10,525 $11,055
12/31/85 $12,787 $13,269
12/31/86 $15,312 $15,832
12/31/87 $15,312 $16,071
12/31/88 $16,769 $17,703
12/31/89 $18,355 $19,614
12/31/90 $19,432 $21,043
12/31/91 $21,791 $23,598
12/31/92 $23,717 $25,680
12/31/93 $26,992 $28,833
03/16/93 $10,000 $10,000
12/31/93 $10,348 $10,826
Past Performance is not predictive of future performance.
YOUR INVESTMENT ACCOUNT
How to Buy Shares
The Fund offers investors two different classes of shares. The
different classes of shares represent investments in the same portfolio
of securities but are subject to different expenses and will likely have
different share prices.
-- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, and you sell any of those shares within 18
months after your purchase, you will pay a contingent deferred sales
charge, which will vary depending on the amount you invested.
-- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares.
-- Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which class
of shares is better suited to your needs depends on a number of factors
which you should discuss with your financial advisors:
-- How much do you plan to invest? If you plan to invest a
substantial amount, the reduced sales charges available for larger
purchases of Class A shares may be more beneficial to you, and for
purchases over $1 million, the contingent deferred sales charge on Class
A shares may be more beneficial. The Distributor will not accept any order
for $1 million or more for Class B shares on behalf of a single investor
for that reason.
-- How long do you expect to hold your investment? While future
financial needs cannot be predicted with certainty, investors who prefer
not to pay an initial sales charge and who plan to hold their shares for
more than 6 years might consider Class B shares. Investors who plan to
redeem shares within 7 years might prefer Class A shares.
-- Are there differences in account features that matter to you?
Because some account features may not be available for Class B
shareholders, such as checkwriting, you should carefully review how you
plan to use your investment account before deciding which class of shares
is better for you. Additionally, the dividends payable to Class B
shareholders will be reduced by the additional expenses borne solely by
that class, such as the asset-based sales charge to which Class B shares
are subject, as described below and in the Statement of Additional
Information.
-- How does it affect payments to my broker? A salesperson or any
other person who is entitled to receive compensation for selling Fund
shares may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the contingent deferred sales charge and asset-based sales
charge for Class B shares is the same as the purpose of the front-end
sales charge on sales of Class A shares.
-- How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional investments at
any time with as little as $25. There are reduced minimum investments
under special investment plans:
-- With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments for as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
-- Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
-- There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or you
can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements with
the Distributor.
-- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A or Class B shares. If you do not choose, your investment
will be made in Class A shares.
-- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares.
-- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink," below for more details.
Shares are sold at the public offering price based on the net asset
value that is next determined after the Distributor receives the purchase
order in Denver. In most cases, to receive that day's offering price, the
Distributor must receive your order by 4:00 P.M., New York time (all
references to time in this Prospectus mean "New York time."). The net
asset value of each class of shares is determined as of that time on each
day The New York Stock Exchange is open (which is a "regular business
day"). If you buy shares through a dealer, the dealer must receive your
order by 4:00 P.M., on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. The Distributor may reject
any purchase order for the Fund's shares, in its sole discretion.
-- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. When you
invest, the Fund receives the net asset value for your account. The sales
charge varies depending on the amount of your purchase and a portion may
be retained by the Distributor and allocated to your dealer. The current
sales charge rates and commissions paid to dealers and brokers are as
follows:
- -------------------------------------------------------------------------
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- -------------------------------------------------------------------------
Less than $50,000 4.75% 4.98% 4.00%
- -------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
- -------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
- -------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- -------------------------------------------------------------------------
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
-- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more. However, the Distributor
pays dealers of record commissions on such purchases in an amount equal
to the sum of 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of share purchases over $5 million. However, that
commission will be paid only on the amount of those purchases in excess
of $1 million that were not previously subject to a front-end sales charge
and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
-- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. From time to time, the Distributor may make special arrangements
with dealers and make additional payments if the dealer meets specified
sales criteria and other requirements. Dealers whose sales of
OppenheimerFunds (other than money market funds) under OppenheimerFunds-
sponsored 403(b) custodial plans exceed $5 million per year (calculated
per quarter), will receive monthly one-half of the Distributor's retained
commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained
commission on those sales. The Distributor may sponsor an annual sales
conference to which a dealer firm is eligible to send, with a guest, a
registered representative who sells more than $2.5 million of Class A
shares of OppenheimerFunds (other than money market funds) in a calendar
year, or the dealer may, at its option, receive the equivalent cash value
of that award as additional commission.
-- Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one or
more of the following ways:
-- Right of Accumulation. You and your spouse can cumulate Class A
shares you purchase for your own accounts, or jointly, or on behalf of
your children who are minors, under trust or custodial accounts. A
fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can cumulate current purchases of Class A shares
of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds; the value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the aggregate
amount of the intended purchases, including purchases made up to 90 days
before the date of the Letter. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
-- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following persons: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) 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; (5)
employees (and their spouses) of dealers or brokers described above or
financial institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the time of
purchase that the purchase is for the purchaser's own account (or for the
benefit of such employee's spouse or minor children); (6) dealers, brokers
or registered investment advisers that have entered into an agreement with
the Distributor providing specifically for the use of shares of the Fund
in particular investment products made available to their clients.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than the Cash Reserves Funds) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. There is a further discussion of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) retirement distributions or loans
to participants or beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans ("Retirement Plans"),
(2) returns of excess contributions made to Retirement Plans, (3)
Automatic Withdrawal Plan payments that are limited to no more than 12%
of the original account value annually, and (4) involuntary redemptions
of shares by operation of law or under the procedures set forth in the
Fund's Declaration of Trust or adopted by the Board of Trustees.
-- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Purchase On Redemptions in That Year
Payment Was Made (As % of Amount Subject to Charge)
0-1 5.0%
- ------------------------------------------------------------
1-2 4.0%
- ------------------------------------------------------------
2-3 3.0%
- ------------------------------------------------------------
3-4 3.0%
- ------------------------------------------------------------
4-5 2.0%
- ------------------------------------------------------------
5-6 1.0%
- ------------------------------------------------------------
6 and following None
- ------------------------------------------------------------
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
-- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) distributions to participants or beneficiaries
from Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2, as
long as the payments are no more than 10% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary; (2) redemptions from accounts
other than Retirement Plans following the death or disability of the
shareholder (as evidenced by a determination of disability by the Social
Security Administration), and (3) returns of excess contributions to
Retirement Plans.
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) 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; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
-- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A and Class B Shares" in the
Statement of Additional Information.
-- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
If the Plan is terminated by the Fund, it provides for continuing
payments of the asset-based sales charge to the Distributor for certain
expenses already incurred. The accounting treatment for the Fund's
obligation under the Plan for those future payments is discussed in
"Distribution and Service Plans" in the Statement of Additional
Information. The accounting standards now used are currently under review
by the American Institute of Certified Public Accountants, and it is
possible that those standards will change and that the Fund's Class B Plan
would be changed as a result. At December 31, 1993, the end of the Plan
year, the Distributor had incurred unreimbursed expenses under the Plan
of $____________ (equal to ____% of the Fund's net assets represented by
Class B shares on that date), which have been carried over into the
present Plan year.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
-- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number:
1-800-533-3310.
-- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
-- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to
"Exchange Privilege," below, for details.
-- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
-- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of Withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
-- Automatic Exchange Plans. You can authorize the Transfer Agent
to exchange an amount you establish in advance automatically for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other OppenheimerFunds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying
sales charge. This privilege applies to Class A shares that you sell, and
Class B shares on which you paid a contingent deferred sales charge when
you redeemed them. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
Checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, or from a retirement plan, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
-- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations (there
may be other situations also requiring a signature guarantee):
-- You wish to redeem more than $50,000 worth of shares and receive
a check
-- The check is not payable to all shareholders listed on the
account statement
-- The check is not sent to the address of record on your statement
-- Shares are being transferred to a Fund account with a different
owner or name
-- Shares are redeemed by someone other than the owners (such as an
Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or from a foreign bank that has a U.S. correspondent
bank, or from a U.S. registered dealer or broker in securities, municipal
securities or government securities, or from a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing as a fiduciary or on behalf of a corporation, partnership
or other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
-- Your name
-- The Fund's name
-- Your Fund account number (from your statement)
-- The dollar amount or number of shares to be redeemed
-- Any special payment instructions
-- Any share certificates for the shares you are selling, and
-- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
-- To redeem shares through a service representative, call
1-800-852-8457
-- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that account.
-- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
-- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
CheckWriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.
-- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
-- Checkwriting privileges are not available for accounts holding
Class B shares or Class A shares that are subject to a contingent deferred
sales charge.
-- Checks must be written for at least $100.
-- Checks cannot be paid if they are written for more than your
account value.
Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
-- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 15 days.
-- Don't use your checks if you changed your Fund account number.
The Fund will charge a $10 fee for any check that is not paid because
(1) the owners of the account told the Fund not to pay the check, or (2)
the check was for more than the account balance, or (3) the check did not
have the proper signatures, (4) or the check was written for less than
$100.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges between existing accounts on
PhoneLink described below. To exchange shares, you must meet several
conditions:
-- Shares of the fund selected for exchange must be available for
sale in your state of residence
-- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
-- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
-- You must meet the minimum purchase requirements for the fund you
purchase by exchange
-- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same two classes of
shares. If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A, Class B and/or Class C shares, and a list
can be obtained by calling the Distributor at 1-800-525-7048. Please
refer to the Statement of Additional Information for more details about
this policy.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
-- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same names and address. Shares held under certificates may not
be exchanged by telephone.
You can obtain a list of eligible OppenheimerFunds in the Statement
of Additional Information or by calling the Transfer Agent at 1-800-525-
7048. Exchanges of shares involve a redemption of the shares of the fund
you own and a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
-- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request by 4:00 P.M. that
is in proper form, but either fund may delay the purchase of shares of the
fund you are exchanging into if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.
-- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
-- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
-- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
-- Net Asset Value Per Share is determined for each class of shares
as of 4:00 P.M. each day The New York Stock Exchange is open by dividing
the value of the Fund's net assets attributable to a class by the number
of shares of that class that are outstanding. The Fund's Board of
Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities, short-term obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.
-- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
-- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
-- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
-- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
-- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the Dealer performs any transaction
erroneously.
-- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A and Class B shares. Therefore, the redemption
value of your shares may be more or less than their original cost.
-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 15 days from the date the shares
were purchased. That delay may be avoided if you arrange with your bank
to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
-- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders. Under unusual circumstances,
shares of the Fund may be redeemed "in kind," which means that the
redemption proceeds will be paid with securities from the Fund's
portfolio. Please refer to the Statement of Additional Information for
more details.
-- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
-- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A and Class
B shares from net investment income each regular business day and pays
those dividends to shareholders monthly. Normally, dividends are paid on
__________________________, but the Board of Trustees can change that
date. Distributions may be made monthly from any net short-term capital
gains the Fund realizes in selling securities. It is expected that
distributions paid with respect to Class A shares will generally be higher
than for Class B shares because expenses allocable to Class B shares will
generally be higher.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
-- Reinvest all distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
-- Reinvest capital gains only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
-- Receive all distributions in cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
-- Reinvest your distributions in another OppenheimerFunds account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. Dividends paid from short-term capital gains
and net investment income are taxable as ordinary income. Distributions
are subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund will
send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
-- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, you will pay the full price for the
shares and then receive a portion of the price back as a taxable dividend.
-- Taxes on transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.
-- Returns of Capital: If distributions made by the Fund must be
recharacterized at the end of a fiscal year because of the Fund's
investment policies (for example, due to losses on foreign currency
exchange), shareholders may have a non-taxable return of capital. This
will be identified in notices to shareholders. Exempt-interest dividends
which are derived from net investment income earned by the Fund on
Municipal Securities will be excludable from gross income of shareholders
for Federal income tax purposes. Net investment income includes the
allocation of amounts of income from the Municipal Securities in the
Fund's portfolio which are free from Federal income taxes. This
allocation will be made by the use of one designated percentage applied
uniformly to all income dividends made during the Fund's tax year. Such
designation will normally be made following the end of each fiscal year
as to income dividends paid in the prior year. The percentage of income
designated as tax-exempt may substantially differ from the percentage of
the Fund's income that was tax-exempt for a given period. A portion of
the exempt-interest dividends paid by the Fund may be an item of tax
preference for shareholders subject to the alternative minimum tax. All
of the Fund's dividends (excluding capital gains distributions) paid
during 1992 were exempt from Federal income taxes, and were not tax
preference items. Corporate shareholders and "substantial users" of
facilities financed by Private Activity Municipal Securities should see
"Private Activity Municipal Securities" in the Additional Statement before
purchasing shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
advisor about the effect of an investment in the Fund on your particular
tax situation.
Appendix: Description of Ratings Categories
Municipal Bond Ratings.
Moody's Investor Services Inc. The four highest ratings of Moody's
for Municipal Securities are "Aaa," "Aa," "A" and "Baa." Moody's basis
of such ratings is as follows. Municipal Securities rated "Aaa" are
judged to be of the "best quality." The rating "Aa" is assigned to bonds
which are of "high quality by all standards," but as to which margins of
protection or other elements make long-term risks appear somewhat larger
than "Aaa" rated Municipal Securities. The "Aaa" and "Aa" rated bonds
comprise what are generally known as "high grade bonds." Municipal
Securities which are rated "A" by Moody's possess many favorable
investment attributes and are considered "upper medium grade obligations."
Factors giving security to principal and interest of bonds rated "A" are
considered adequate, but elements may be present which suggest a
susceptibility to impairment at some time in the future. Municipal
Securities rated "Baa" are considered "medium grade" obligations. They
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Those bonds in the "Aa," "A" and "Baa" groups which
Moody's believes possess the strongest attributes are designated "Aa1,"
"A1" and "Baa1."
In addition to the alphabetical rating system described above,
Municipal Securities rated by Moody's which have a demand feature that
provides the holder with the ability periodically to tender (put) the
portion of the debt covered by the demand feature, may also have a short-
term rating assigned to such demand feature. The short-term rating uses
the symbol "VMIG" to distinguish characteristics which include payment
upon periodic demand rather than fund or scheduled maturity dates and
potential reliance upon external liquidity, as well as other factors. The
highest investment quality is designated by the "VMIG 1" rating and the
lowest by "VMIG 4."
Standard & Poor's Corporation. The four highest ratings of Standard
& Poor's for Municipal Securities are "AAA" (Prime), "AA" (High Grade),
"A" (Good Grade), and "BBB" (Medium Grade). Standard & Poor's basis of
such ratings is as follows. Municipal Securities rated "AAA" are
"obligations of the highest quality." The rating "AA" is accorded issues
with investment characteristics "only slightly less marked than those of
the prime quality issues." The rating "A" describes "the third strongest
capacity for payment of debt service." Principal and interest payments
on bonds in this category are regarded as safe. It differs from the two
higher ratings because, with respect to general obligation bonds, there
is some weakness, either in the local economic base, in debt burden, in
the balance between revenues and expenditures, or in quality of
management. Under certain adverse circumstances, any one such weakness
might impair the ability of the issuer to meet debt obligations at some
future date. With respect to revenue bonds rated "A," debt service
coverage is good, but not exceptional. Stability of the pledged revenues
could show some variations because of increased competition or economic
influences on revenues. Basic security provisions, while satisfactory,
are less stringent. Management performance appears adequate. The "BBB"
rating is the lowest "investment grade" security rating. The difference
between "A" and "BBB" ratings is that the latter shows more than one
fundamental weakness, or one very substantial fundamental weakness,
whereas the former shows only one deficiency among the factors considered.
With respect to revenue bonds, debt coverage is only fair. Stability of
the pledged revenues could show variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger. The ratings
"AA," "A," and "BBB" may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
Municipal Note Ratings.
Moody's. Moody's ratings for state and Municipal Notes and other
short-term loans are designated "Moody's Investment Grade" ("MIG"). Notes
bearing the designation "MIG 1" are of the best quality, enjoying strong
protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for financing.
Notes bearing the designation "MIG 2" are of high quality, with ample
margins of protection, although not so large as notes rated "MIG 1." Such
short-term notes which have demand features may also carry a rating using
the symbol "VMIG" as described above, with the designation "MIG 1/VMIG 1"
denoting best quality, with superior liquidity support in addition to
those characteristics attributable to the designation "MIG 1."
Standard & Poor's. Standard & Poor's ratings for Municipal Notes due
in three years or less are "SP1" and "SP2." "SP1" describes issues with
a very strong or strong capacity to pay principal and interest and
compares with bonds rated "A" by Standard & Poor's; if modified by a plus
sign, it compares with bonds rated "AA" or "AAA" by Standard & Poor's.
"SP2" describes issues with a satisfactory capacity to pay principal and
interest, and compares with bonds rated "BBB" by Standard & Poor's.
Corporate Bond Ratings
Moody's Investors Service, Inc. Bonds which are rated "Aaa" by
Moody's are judged to be the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is deemed secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong positions of such issues. Bonds which are
rated "Aa" are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as "high
grade" bonds. Bonds rated "Aa" are rated lower than the best bonds
because margins of protection may not be as large as in "Aaa" bonds or
fluctuations of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat larger than with "Aaa" bonds. Bonds which are rated "A" possess
many favorable investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal and
interest are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future. Bonds which are
rated "Baa" are considered medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and have speculative characteristics as well.
Moody's applies numerical modifiers "1," "2" and "3" in each generic
rating classification from "Aa" through "B" in its corporate bond rating
system. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower
end of its generic rating category.
In addition to the alphabetical rating system described above,
Municipal Bonds rated by Moody's which have a demand feature that provides
the holder with the ability periodically to tender (put) the portion of
the debt covered by the demand feature, may also have a short-term rating
assigned to such demand feature. The short-term rating uses the symbol
"VMIG" to distinguish characteristics which include payment upon periodic
demand rather than fund or scheduled maturity dates and potential reliance
upon external liquidity, as well as other factors. The highest investment
quality is designated by the "VMIG 1" rating and the lowest by "VMIG 4."
Standard and Poor's Corporation. Bonds rated "AAA" by Standard &
Poor's have the highest rating assigned by this rating service. Capacity
to pay interest and repay principal is deemed extremely strong. Bonds
rated "AA" have a strong capacity to pay interest and repay principal and
differ from "AAA" issues only in small degrees. Bonds rated "A" have a
strong capacity to pay interest and repay principal although they are
somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than bonds in higher rated
categories. Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this capacity than for bonds in the "A" category. The ratings
from "AA" to "BB" may be modified by the addition of a plus or minus sign
to show relative standing within the major rating categories.
Commercial Paper
Moody's. Moody's commercial paper ratings are opinions of the
ability of issuers to repay punctually promissory obligations. Moody's
employs the following three designations, all judged to be investment
grade, to indicate the relative repayment capacity of rated issuers:
Prime 1 - Highest Quality; Prime 2 - Higher Quality; Prime 3 - High
Quality.
Standard & Poor's. A Standard & Poor's commercial paper rating is
a current assessment of the likelihood of timely payment. Ratings are
graded into four categories, ranging from "A" for the highest quality
obligations to "D" for the lowest. Issues assigned the highest rating,
"A," are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2, and 3 to
indicate the relative degree of safety. The designation "A1" indicates
that the degree of safety regarding timely payment is either overwhelming
or very strong. The "+" designation is applied to those issues rated "A1"
which possess safety characteristics. Capacity for timely payment on
issues with the designation "A2" is strong. However, the relative degree
of safety is not as high as for issuers designated "A1." Issues carrying
the designation "A3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of
changes in circumstances than obligations carrying the higher
designations.
<PAGE>
Investment Adviser Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services OPPENHEIMER
P.O. Box 5270 Tax-Free
Denver, Colorado 80217 Bond Fund
1-800-525-7048
Effective May 1, 1994
Custodian of Portfolio Securities
Citibank, N.A.
One Citicorp Center
New York, New York 10154
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations other than those contained in
this Prospectus or the Additional Statement, and
if given or made, such information and
representations must not be relied upon as having
been authorized by the Fund, Oppenheimer
Management Corporation, Oppenheimer Funds
Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the
securities offered hereby in any state to any
person to whom it is unlawful to make such offer
in such state.
[OppenheimerFunds Logo]
PR310 (5/94) <>Printed on recycled paper
<PAGE>
Investment Adviser Prospectus and
Oppenheimer Management Corporation New Account Application
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services OPPENHEIMER
P.O. Box 5270 Tax-Free
Denver, Colorado 80217 Bond Fund
1-800-525-7048
Effective May 1, 1994
Custodian of Portfolio Securities
Citibank, N.A.
One Citicorp Center
New York, New York 10154
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations other than those contained in
this Prospectus or the Additional Statement, and
if given or made, such information and
representations must not be relied upon as having
been authorized by the Fund, Oppenheimer
Management Corporation, Oppenheimer Funds
Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the
securities offered hereby in any state to any
person to whom it is unlawful to make such offer
in such state.
[OppenheimerFunds Logo]
PR310 (5/94) <>Printed on recycled paper
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OPPENHEIMER TAX-FREE BOND FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus dated April 29, 1994 (the "Prospectus") of Oppenheimer
Tax-Free Bond Fund (the "Fund"), which may be obtained upon written
request to Oppenheimer Shareholder Services (the "Transfer Agent"), P.O.
Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above.
TABLE OF CONTENTS
Page
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . .
Additional Investment Restrictions . . . . . . . . . . . . . . . . . . .
Trustees and Officers of the Fund. . . . . . . . . . . . . . . . . . . .
How the Fund is Managed. . . . . . . . . . . . . . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . . . . . .
Your Investment Account. . . . . . . . . . . . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and Services Plans. . . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . . . . . .
Additional Information about the Fund. . . . . . . . . . . . . . . . . .
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . .
Financial Statements of the Fund . . . . . . . . . . . . . . . . . . . .
Appendix A: Equivalent Yield Chart . . . . . . . . . . . . . . . . . . . B-1
This Additional Statement is effective May 1, 1994.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of the Fund are described in
the Prospectus. Set forth below is supplemental information about those
policies and the types of securities in which the Fund invests. Certain
capitalized terms used in this Additional Statement have the same meaning
as those terms have in the Prospectus.
Municipal Securities. The types of Municipal Securities in which the Fund
may invest are described in "The Fund and its Investment Policies" in the
Prospectus. Below is a discussion of the general characteristics of types
of Municipal Securities.
Municipal Bonds. The principal classifications of long-term
municipal bonds are "general obligation" and "revenue" or "industrial
development" bonds.
General Obligation Bonds. Issuers of general obligation bonds
include states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of public
projects, including construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power for the payment of principal and interest. The taxes that
can be levied for the payment of debt service may be limited or unlimited
as to the rate or amount of special assessments.
Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Although the principal security
behind these bonds may vary, many provide additional security in the form
of a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, and/or
the net revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
Industrial Development Bonds. Industrial development bonds,
which are considered municipal bonds if the interest paid is exempt from
federal income tax, are issued by or on behalf of public authorities to
raise money to finance various privately operated facilities for business
and manufacturing, housing, sports, and pollution control. These bonds
are also used to finance public facilities such as airports, mass transit
systems, ports, and parking. The payment of the principal and interest
on such bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.
Municipal Notes. Municipal Securities having a maturity when issued
of less than one year are generally known as municipal notes. Municipal
notes generally are used to provide for short-term working capital needs
and include:
Tax Anticipation Notes. Tax anticipation notes are issued to
finance working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenue, such as income,
sales, use or business taxes, and are payable from these specific future
taxes.
Revenue Anticipation Notes. Revenue anticipation notes are
issued in expectation of receipt of other types of revenue, such as
Federal revenues available under the Federal revenue-sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money for the repayment
of the notes.
Construction Loan Notes. Construction loan notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the Federal
Housing Administration.
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-
term obligation with a stated maturity of 365 days or less. It is issued
by state and local governments or their agencies to finance seasonal
working capital needs or as short-term financing in anticipation of
longer-term financing.
Floating Rate/Variable Rate Obligations. Floating rate and variable
rate demand notes are tax-exempt obligations which may have a stated
maturity in excess of one year, but may include features that permit the
holder to recover the principal amount of the underlying security at
specified intervals not exceeding one year and upon no more than 30 days'
notice. The issuer of such notes normally has a corresponding right,
after a given period, to prepay in its discretion the outstanding
principal amount of the note plus accrued interest upon a specified number
of days notice to the holder. The interest rate on a floating rate demand
note is based on a stated prevailing market rate, such as a bank's prime
rate, the 90-day U.S. Treasury Bill rate, or some other standard, and is
adjusted automatically each time such rate is adjusted. The interest rate
on a variable rate demand note is also based on a stated prevailing market
rate but is adjusted automatically at specified intervals of no less than
one year. Generally, the changes in the interest rate on such securities
reduce the fluctuation in their market value. As interest rates decrease
or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations of the same maturity. The
Manager may determine that an unrated floating rate or variable rate
demand obligation meets the Fund's quality standards by reason of being
backed by a letter of credit or guarantee issued by a bank that meets the
Fund's quality standards. Floating rate or variable rate obligations
which do not provide for recovery of principal and interest within seven
days will be subject to the limitations applicable to illiquid securities
described in "The Fund and Its Investment Policies - Repurchase
Agreements" in the Prospectus. There is no limit on the amount of the
Fund's assets that may be invested in floating rate and variable rate
obligations.
Municipal Lease Securities. Municipal leases may take the form of
a lease or an installment purchase contract issued by a state or local
government authority to obtain funds to acquire a wide variety of
equipment and facilities. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's
taxing power is pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality
has no obligation to make lease or installment purchase payments in future
years unless money is appropriated for such purpose on a yearly basis.
In addition to the risk of "non-appropriation," municipal lease securities
do not yet have a highly developed market to provide the degree of
liquidity of conventional municipal bonds. Municipal leases, like other
municipal debt obligations, are subject to the risk of non-payment. The
ability of issuers of municipal leases to make timely lease payments may
be adversely affected in general economic downturns and as relative
governmental cost burdens are reallocated among federal, state and local
governmental units. Such non-payment would result in a reduction of
income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the
net asset value of the Fund.
Inverse Floaters. The Fund will invest in inverse floaters in the
expectation that they will provide higher expected tax-exempt yields than
are available for fixed-rate bonds having comparable credit ratings and
maturity. In certain instances, the holder of an inverse floater may have
an option to convert it into a fixed-rate bond pursuant to a "rate lock
option." Inverse floaters may produce relatively high current income,
reflecting the spread between short-term and long-term tax-exempt interest
rates. As long as the municipal yield curve remains relatively steep and
short-term rates remain relatively low, owners of inverse floaters will
continue to earn above-market interest rates because they are receiving
the higher long-term rates and have paid for bonds with lower short-term
rates. If the yield curve flattens and shifts upward, an inverse floater
will lose value more quickly than conventional long-term municipal bonds.
When-Issued and Delayed Delivery Transactions. The Fund may purchase
Municipal Securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Payment for and delivery
of the securities generally settles within sixty days of the date the
offer is accepted. The purchase price and yield are fixed at the time
the buyer enters into the commitment. During the period between purchase
and settlement, no payment is made by the Fund to the issuer and no
interest accrues to the Fund from this investment. However, the Fund
intends to be as fully invested as possible and will not invest in when-
issued securities if its income or net asset value will be materially
adversely affected. At the time the Fund makes the commitment to purchase
a Municipal Security on a when-issued basis, it will record the
transaction on its books and reflect the value of the security in
determining its net asset value. It will also segregate cash or other
high quality liquid Municipal Securities equal in value to the commitment
for the when-issued securities. While when-issued securities may be sold
prior to settlement date, the Fund intends to acquire the securities upon
settlement unless a prior sale appears desirable for investment reasons.
There is a risk that the yield available in the market when delivery
occurs may be higher than the yield on the security acquired.
Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules
governing tax exemption for interest on Municipal Securities. The Tax
Reform Act generally did not change the tax treatment of bonds issued in
order to finance governmental operations. Thus, interest on obligations
issued by or on behalf of state or local government, the proceeds of which
are used to finance the operations of such governments (e.g., general
obligation bonds) continues to be tax-exempt. However, the Tax Reform Act
further limited the use of tax-exempt bonds for non-governmental (private)
purposes. More stringent restrictions were placed on the use of proceeds
of such bonds. Interest on certain private activity bonds (other than
those specified as "qualified" tax-exempt private activity bonds, (e.g.,
exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, qualified
student loan bonds, etc.) is taxable under the revised rules.
Interest on certain private activity bonds issued after August 7,
1986, which continues to be tax-exempt, will be treated as a tax
preference item subject to the alternative minimum tax (discussed below)
to which certain taxpayers are subject. Further, a private activity bond
which would otherwise be a qualified tax-exempt private activity bond will
not, under Internal Revenue Code Section 147(a), be a qualified bond for
any period during which it is held by a person who is a "substantial user"
of the facilities or by a "related person" of such a substantial user.
This "substantial user" provision is applicable primarily to exempt
facility bonds, including industrial development bonds. The Fund may not
be an appropriate investment for entities which are "substantial users"
(or persons related thereto) of such exempt facilities, and such persons
should consult their own tax advisers before purchasing shares. A
"substantial user" of such facilities is defined generally as a "non-
exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be
a "related person" under the Internal Revenue Code unless such investor
or the investor's immediate family (spouse, brothers, sisters and
immediate descendants) own directly or indirectly in the aggregate more
than 50% in value of the equity of a corporation or partnership which is
a "substantial user" of a facility financed from the proceeds of exempt
facility bonds. In addition, limitations as to the amount of private
activity bonds which each state may issue were revised downward by the Tax
Reform Act, which will reduce the supply of such bonds. The value of the
Fund's portfolio could be affected if there is a reduction in the
availability of such bonds. That value may also be affected by a 1988
U.S. Supreme Court decision upholding the constitutionality of the
imposition of a Federal tax on the interest earned on Municipal Securities
issued in bearer form.
A Municipal Security is treated as a taxable private activity bond
under a test for: (a) a trade or business use and security interest, or
(b) a private loan restriction. Under the trade or business use and
security interest test, an obligation is a private activity bond if: (i)
more than 10% of bond proceeds are used for private business purposes and
(ii) 10% or more of the payment of principal or interest on the issue is
directly or indirectly derived from such private use or is secured by the
privately used property or the payments related to the use of the
property. For certain types of uses, a 5% threshold is substituted for
this 10% threshold. (The term "private business use" means any direct or
indirect use in a trade or business carried on by an individual or entity
other than a governmental unit.) Under the private loan restriction, the
amount of bond proceeds which may be used to make private loans is limited
to the lesser of 5% or $5.0 million of the proceeds. Thus, certain issues
of Municipal Securities could lose their tax-exempt status retroactively
if the issuer fails to meet certain requirements as to the expenditure of
the proceeds of that issue or use of the bond-financed facility. The Fund
makes no independent investigation of the users of such bonds or their use
of proceeds. Should a Fund hold a bond that loses its tax-exempt status
retroactively, there might be an adjustment to the tax-exempt income
previously paid to shareholders.
The Federal alternative minimum tax is designed to ensure that all
taxpayers pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference
items in arriving at alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals
and corporations. Any exempt-interest dividend paid by a regulated
investment company will be treated as interest on a specific private
activity bond to the extent of its proportionate share of the interest on
such bonds received by the regulated investment company. The U.S.
Treasury is authorized to issue regulations implementing this provision.
In addition, corporate taxpayers subject to the alternative minimum tax
may, under some circumstances, have to include exempt-interest dividends
in calculating their alternative minimum taxable income in situations
where the "adjusted current earnings" of the corporation exceeds its
alternative minimum taxable income. The Fund may hold Municipal
Securities the interest on which (and thus a proportionate share of the
exempt-interest dividends paid by the Fund) will be subject to the Federal
alternative minimum tax on individuals and corporations. The Fund
anticipates that under normal circumstances it will not purchase any such
securities in an amount greater than 20% of the Fund's total assets.
Ratings of Municipal Securities. Moody's and S&P's ratings (see Appendix
A) represent their respective opinions of the quality of the Municipal
Securities they undertake to rate. However, such ratings are general and
are not absolute standards of quality. Consequently, Municipal Securities
with the same maturity, coupon and rating may have different yields, while
Municipal Securities of the same maturity and coupon with different
ratings may have the same yield. Investment in lower quality securities
may produce a higher yield than securities rated in the higher rating
categories described in the Prospectus (or judged by the Manager to be of
comparable quality). However, the added risk of lower quality securities
might not be consistent with a policy of preservation of capital.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES
Covered Calls and Hedging. As described in the Prospectus, the Fund may
write covered calls or employ one or more types of Hedging Instruments.
When hedging 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 may: (i) sell Interest
Rate Futures or Municipal Bond Index Futures, (ii) buy puts on such
Futures or securities, or (iii) write covered calls on securities,
Interest Rate Futures or Municipal Bond Index Futures (as described in the
Prospectus). When hedging to permit the Fund to establish a position in
the debt securities market as a temporary substitute for purchasing
individual debt securities (which the Fund will normally purchase, and
then terminate that hedging position), the Fund may: (i) buy Interest Rate
Futures or Municipal Bond Index Futures, or (ii) 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. Additional information about the covered calls and Hedging
Instruments the Fund may use is provided below.
Writing Covered Call Options. When the Fund writes a call on a
security, it receives a premium and agrees to sell the underlying
investment to a purchaser of a corresponding call during the call period
(usually not more than nine months) at a fixed exercise price (which may
differ from the market price of the underlying investment) regardless of
market price changes during the call period. To terminate its obligation
on a call it has written, the Fund may purchase a corresponding call in
a "closing purchase transaction." A profit or loss will be realized,
depending upon whether the net of the option transaction costs and the
premium received on the call written was more or less than the price of
the call subsequently purchased. A profit may also be realized if the
call lapses unexercised, because the Fund retains the underlying
investment and the premium received. Any such profits are considered
short-term gains for Federal tax purposes, as are premiums on lapsed
calls, and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to a lack
of a market, it would have to hold the underlying investment until the
call lapsed or were exercised.
Interest Rate Futures. The Fund may buy and sell futures contracts
relating to debt securities ("Interest Rate Futures") and municipal bond
indices ("Municipal Bond Index Futures," discussed below). Interest Rate
Futures obligates the seller to deliver and the purchaser to take a
specific debt security at a specified price on a specified date. No price
is paid or received upon the purchase or sale of an Interest Rate Future.
Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment, equal to a specified percentage of the
contract amount, with the futures commission merchant (the "futures
broker"). The initial margin will be deposited with the Fund's Custodian
in an account registered in the futures broker's name; however, the
futures broker can gain access to that account only under specified
conditions. As the Future is marked to market to reflect changes in its
market value, subsequent margin payments, called variation margin, will
be made to and from the futures broker on a daily basis. At any time
prior to the expiration of the Future, the Fund may elect to close out its
position by taking an opposite position, at which time a final
determination of variation margin is made and additional cash is required
to be paid by or released to the Fund and any gain or loss is then
realized for tax purposes. Although Interest Rate Futures by their terms
call for settlement by the delivery of debt securities, in most cases the
obligation is fulfilled by entering into an offsetting transaction. All
futures transactions are effected through a clearinghouse associated with
the exchange on which the contracts are traded.
Municipal Bond Index Futures. Municipal Bond Index Futures are
similar to Interest Rate Futures except that settlement is made in cash.
The obligation under such contracts may also be satisfied by entering into
an offsetting contract to close out the futures position. Net gain or
loss on options on Municipal Bond Index Futures depends on the price
movements of the securities included in the index. The strategies which
the Fund employs regarding Municipal Bond Index Futures are similar to
those described above with regard to Interest Rate Futures.
Purchasing Calls and Puts. When the Fund purchases a call (other
than in a closing purchase transaction), it pays a premium and, except as
to calls on Municipal Bond Index Futures, 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 the call is sold at a profit or if, during the call
period, the market price of the underlying investment is above the sum of
the call price plus the transaction costs and premium paid for the call,
and the call is exercised. If the call is not exercised or sold (whether
or not at a profit), it will become worthless at its expiration date and
the Fund will lose its premium payment and the right to purchase the
underlying investment. When the Fund purchases a call or put a municipal
bond index, Municipal Bond Index Future or Interest Rate 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 debt securities
market generally) rather than on price movements in individual futures
contracts.
When the Fund buys a put, it pays a premium and, except as to puts
on municipal bond indices, has the right to sell the underlying investment
to a seller of a corresponding put on the same investment during the put
period at a fixed exercise price. Buying a put on a debt security,
Interest Rate Future or Municipal Bond Index Future the Fund owns enables
the Fund to protect itself during the put period against a decline in the
value of the underlying investment below the exercise price by selling
such 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
and the Fund will lose its premium payment and the right to sell the
underlying investment. The put may, however, be sold prior to expiration
(whether or not at a profit).
An option position may be closed out only on a market which 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's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause it to sell underlying investments, thus increasing its turnover rate
in a manner beyond its control. The exercise by the Fund of puts may also
cause the sale of underlying investments, also causing turnover, since the
underlying investment might be sold for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a call or a put or sells a call. Premiums paid for options
are small in relation to the market value of the related investments and,
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could cause the Fund's net asset
value to be more sensitive to changes in the value of the underlying
investments.
Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
Additional Information about Hedging Instruments and Their Use. 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 securities on which the Fund has
written calls traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities on the expiration of the option or upon the
Fund's entering into a closing transaction. An option position may be
closed out only on a market which 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's option activities may affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
portfolio turnover rate in a manner beyond the Fund's control. The
exercise by the Fund of puts on securities will cause the sale of related
investments, increasing portfolio turnover. Although such exercise is
within the Fund's control, holding a put might cause the Fund to sell the
related investments for reasons which would not exist in the absence of
the put. The Fund will 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. Such commissions may be
higher on a relative basis than those which would apply to direct
purchases or sales of such underlying investments. Premiums paid for
options as to underlying investments are small in relation to the market
value of such investments and consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes
in the value of the underlying investment.
Regulatory Aspects of Hedging Instruments. The Fund must operate
within certain restrictions as to its long and short positions in Futures
and options thereon under a rule ("CFTC Rule") adopted by the Commodity
Futures Trading Commission ("CFTC") under the Commodity Exchange Act (the
"CEA"), which exempts the Fund from registration with the CFTC as a
"commodity pool operator" (as defined under the CEA), if it complies with
the CFTC Rule. Under these restrictions, the Fund will not, as to any
positions, whether long, short or a combination thereof, enter into
Futures and options thereon for which the aggregate initial margins and
premiums exceed 5% of the fair market value of its net assets, with
certain exclusions as defined in the CFTC Rule. Under the restrictions,
the Fund also must, as to its short positions, use Futures and options
thereon solely for bona fide hedging purposes within the meaning and
intent of the applicable provisions under the CEA.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same adviser as the Fund or an affiliated investment
adviser. Position limits also apply to Futures. An exchange may order
the liquidation of positions found to be in violation of those limits and
may impose certain other sanctions. Due to requirements under the
Investment Company Act, when the Fund purchases an Interest Rate Future
or Municipal Bond Index Future, the Fund will maintain, in a segregated
account or accounts with its custodian bank, cash or readily marketable
short-term (maturing in one year or less) debt instruments in an amount
equal to the market value of the investments underlying such Future, less
the margin deposit applicable to it.
Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income (irrespective of losses) must be derived from
gains realized on the sale of securities held for less than three months.
Due to this limitation, the Fund will limit the extent to which it engages
in the following activities, but will not be precluded from them: (i)
selling investments, including Interest Rate Futures and Municipal Bond
Index Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii) writing calls
on investments held less than three months; (iii) purchasing calls or puts
which expire in less than three months; (iv) effecting closing
transactions with respect to calls or puts purchased less than three
months previously; and (v) exercising puts or calls held by the Fund for
less than three months.
Possible Risk Factors in Hedging. In addition to the risks with
respect to Futures and options discussed in the Prospectus and above,
there is a risk in using short hedging by selling Interest Rate Futures
and Municipal Bond Index Futures that the prices of such Futures or the
applicable index will correlate imperfectly with the behavior of the cash
(i.e., market value) prices of the Fund's securities. The ordinary
spreads between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets. First,
all participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash
and futures markets. Second, the liquidity of the futures 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 market. Therefore, increased participation
by speculators in the futures market may cause temporary price
distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of debt securities being hedged and movements in the price of the
Hedging Instruments, the Fund may use Hedging Instruments in a greater
dollar amount than the dollar amount of debt securities being hedged if
the historical volatility of the prices of such debt securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that where the Fund has used Hedging Instruments in
a short hedge, the market may advance and the value of debt securities
held in the Fund's portfolio may decline. If this occurred, the Fund
would lose money on the Hedging Instruments and also experience a decline
in value of its debt 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 debt securities will tend to move in the same
direction as the indices upon which the Hedging Instruments are based.
If the Fund uses Hedging Instruments to establish a position in the debt
securities markets as a temporary substitute for the purchase of
individual debt securities (long hedging) by buying Interest Rate Futures,
Municipal Bond Index Futures and/or calls on such Futures or debt
securities, it is possible that the market may decline; if the Fund then
concludes not to invest in such securities at that time because of
concerns as to possible further market decline or for other reasons, the
Fund will realize a loss on the Hedging Instruments that is not offset by
a reduction in the price of the debt securities purchased.
Portfolio Turnover. The Fund may purchase or sell securities without
regard to the length of time the security has been held, to take advantage
of short-term differentials in bond yields, consistent with its objective
of seeking interest income while conserving capital. While short-term
trading increases portfolio turnover, the execution cost for Municipal
Securities is substantially less than for equivalent dollar values of
equity securities. However, short-term trading may affect the Fund's
status as an investment company under the Internal Revenue Code (see
"Dividends, Distributions and Taxes" in the Prospectus).
Repurchase Agreements. In a repurchase transaction, the Fund acquires a
security from, and simultaneously resells it to an approved vendor (a U.S.
commercial bank, U.S. branch of a foreign bank or a broker-dealer which
has been designated a primary dealer in government securities, which must
meet the credit requirements set by the Fund's Board of Trustees from time
to time) for delivery on an agreed upon future date. The sale price
exceeds the purchase price by an amount that reflects an agreed-upon
interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run from day
to day, and delivery pursuant to resale typically will occur within one
to five days of the purchase. Repurchase agreements are considered
"loans" under the Investment Company Act, collateralized by the underlying
security. The Fund's repurchase agreements require that at all times
while the repurchase agreement is in effect, the collateral's value must
equal or exceed the repurchase price to collateralize the loan fully.
Additionally, the Manager will impose creditworthiness requirements to
confirm that the vendor is financially sound and will continuously monitor
the collateral's value.
Loans of Portfolio Securities. The Fund may lend its portfolio securities
subject to the restrictions stated in the Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral
must, on each business day, at least equal the market value of the loaned
securities and must consist of cash, bank letters of credit, U.S.
Government securities, 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. Such terms and the issuing bank must be
satisfactory to the Fund. In a portfolio securities lending transaction,
the Fund receives from the borrower an amount equal to the interest paid
or the dividends declared on the loaned securities during the term of the
loan as well as the interest on the collateral securities, less any
finders' or administrative fees the Fund pays in arranging the loan. The
Fund may share the interest it receives on the collateral securities with
the borrower as long as it realizes at least a minimum amount of interest
required by the lending guidelines established by its Board of Trustees.
The Fund will not lend portfolio securities to any officer, trustee,
employee or affiliate of the Fund or the Manager. The terms of the Fund's
loans must meet certain tests under the Internal Revenue Code and must
permit the Fund to reacquire loaned securities on five business days'
notice or in time to vote on any important matter.
ADDITIONAL INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are set forth in the
Prospectus. The following investment restrictions are also fundamental
policies, and together with the fundamental policies described in the
Prospectus, cannot be changed without approval by a "majority" of the
Fund's outstanding voting securities. Under the Investment Company Act,
such a "majority" vote is defined as the vote of the holders of the lesser
of: (i) 67% or more of the shares present or represented by proxy at such
meeting, if the holders of more than 50% of the outstanding shares are
present, or (ii) more than 50% of the outstanding shares. Under these
additional restrictions, the Fund cannot: (1) Invest in real estate, but
this shall not prevent the Fund from investing in Municipal Securities or
other permitted securities secured by real estate or interests therein;
(2) Purchase securities on margin, but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities; and furthermore, the Fund may make margin deposits in
connection with the use of Hedging Instruments as permitted by any of its
other fundamental policies; (3) Make short sales of securities; (4)
Underwrite securities or invest in securities subject to restrictions on
resale; (5) Invest in or hold securities of any issuer (see
"Diversification," below) if those officers and Trustees of the Fund or
the Manager beneficially owning individually more than 1/2 of 1% of the
securities of such issuer together own more than 5% of the securities of
such issuer; (6) Invest in securities of any other investment company,
except in connection with a merger with another investment company; or (7)
Issue any bonds, debentures or senior equity securities.
Diversification. For purposes of diversification under the Investment
Company Act and investment restriction (d) in the Prospectus, the
identification of the issuer of a Municipal Security depends on the terms
and conditions of the security. When the assets and revenues of an
agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the subdivision and the
security is backed only by the assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an industrial development bond, if that bond is backed only by the
assets and revenues of the nongovernmental user, then such
nongovernmental user would be deemed to be the sole issuer. However, if
in either case the creating government or some other entity guarantees the
security, such guarantee would be considered a separate security and would
be treated as an issue of such government or other agency.
In applying restriction (e) in the Prospectus, the Manager will
consider a nongovernmental user of facilities financed by industrial
development bonds as being in a particular industry, despite the fact
that such bonds are Municipal Securities as to which there is no industry
concentration limitation. Although this application of the restriction
is not technically a fundamental policy of the Fund, it will not be
changed without shareholder approval. The Manager has no present
intention of investing more than 25% of the Fund's total assets in
securities of issuers located in the same state, or in securities the
interest on which is paid from revenues of similar types of projects, or
in industrial development bonds. None of these are fundamental policies,
and therefore, any of them may be changed without shareholder approval.
Should any such change be made, the Prospectus and/or this Additional
Statement will be supplemented to reflect the change.
TRUSTEES AND OFFICERS OF THE FUND
The Fund's Trustees and officers and their principal occupations and
business affiliations during the past five years are set forth below. The
address of each, except as noted, is Two World Trade Center, New York, New
York 10048-0203. Except for Mr. Patterson, each serves in similar
capacities with Oppenheimer Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer Time Fund, Oppenheimer Special Fund, Oppenheimer New York Tax-
Exempt Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer
Pennsylvania Tax-Exempt Fund, Oppenheimer Florida Tax-Exempt Fund,
Oppenheimer New Jersey Tax-Exempt Fund, Oppenheimer Global Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Gold & Special Minerals
Fund, Oppenheimer Target Fund, Oppenheimer Asset Allocation Fund,
Oppenheimer Global Bio-Tech Fund, Oppenheimer Global Environment Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Discovery Fund,
Oppenheimer Mortgage Income Fund, Oppenheimer Multi-Sector Income Trust
and Oppenheimer Multi-Government Trust (collectively, the "New York
OppenheimerFunds"). As of _______________, all of the Trustees and
officers as a group beneficially owned less than 1% of the outstanding
shares of the Fund.
LEON LEVY, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings Inc. (real estate development).
LEO CHERNE, Trustee
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
EDMUND T. DELANEY, Trustee
5 Gorham Road, Chester, Connecticut 06412
Attorney-at-Law; formerly a member of the Connecticut State
Historical Commission and Counsel to Copp, Berall & Hempstead (a law
firm).
ROBERT G. GALLI, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC") the Manager's parent holding
company; formerly he held the following positions: a director of the
Manager and the Distributor, Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment
adviser subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager, an officer of
other OppenheimerFunds and Executive Vice President & General Counsel
of the Manager and the Distributor.
BENJAMIN LIPSTEIN, Trustee
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
ELIZABETH B. MOYNIHAN, Trustee
801 Pennsylvania Avenue, Washington, DC 20004
Author and architectural historian; a trustee of the American Schools
of Oriental Research and of the Freer Gallery of Art, Smithsonian
Institution; a member of the Indo-U.S. Sub-Commission on Education
and Culture; a trustee of the Institute of Fine Arts, New York
University, and a trustee of the Preservation League of New York
State.
KENNETH A. RANDALL, Trustee
6 Whittaker's Mill, Williamsburg, VA 23185
A director of Northeast Bancorp, Inc. (bank holding company),
Dominion Resources, Inc. (electric utility holding company) and
Kemper Corporation (insurance and financial services company);
formerly Chairman of the Board of ICL, Inc. (information systems).
EDWARD V. REGAN, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Institute, Bard College; Member of the U.S.
Competitiveness Policy Council; formerly New York State Comptroller.
RUSSELL S. REYNOLDS, Trustee
200 Park Avenue, New York, New York 10166
Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directors Publication, Inc. (consulting and publishing);
a trustee of Mystic Seaport Museum, International House and the
Greenwich Historical Society and Greenwich Hospital.
SIDNEY M. ROBBINS, Trustee
50 Overlook Road, Ossining, NY 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting Professor
of Finance, University of Hawaii; a director of The Korea Fund, Inc.
and The Malaysia Fund, Inc. (closed-end investment companies); a
member of the Board of Advisors of Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
DONALD W. SPIRO, President and Trustee*
Chairman Emeritus and a Director of the Manager; formerly Chairman
of the Manager and Oppenheimer Funds Distributor, Inc. (the
"Distributor").
PAULINE TRIGERE, Trustee
550 Seventh Avenue, New York, NY 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
CLAYTON K. YEUTTER, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), FMC
Corp. (chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Deputy Chairman, Bush/Quayle Presidential
Campaign, Counsellor to the President (Bush) for Domestic Policy,
Chairman of the Republican National Committee, Secretary of the U.S.
Department of Agriculture, and U.S. Trade Representative, Executive
Office of the President.
ROBERT E. PATTERSON, Vice President and Portfolio Manager
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.
ANDREW J. DONOHUE, Secretary
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor, partner in Kraft & McManimon (a law firm), an officer
of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser),
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
GEORGE C. BOWEN, Treasurer
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds; formerly Senior Vice
President/Comptroller and Secretary of Oppenheimer Asset Management
Corporation.
ROBERT G. ZACK, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
LYNN M. COLUCCY, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Vice President and Assistant Treasurer of the Manager; an officer of
other OppenheimerFunds; formerly Vice President/Director of Internal
Audit of the Manager.
- ----------------
[FN]
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Remuneration of Trustees. The officers of the Fund (including Mr. Spiro)
are affiliated with the Manager and receive no salary or fee from the
Fund. During the Fund's fiscal year ended December 31, 1993, the
remuneration (including expense reimbursements) paid to all Trustees of
the Fund (except Mr. Spiro) as a group for services as trustees and as
members of one or more committees totaled $________. The Fund has adopted
a retirement plan that provides for payment to a retired independent
Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the funds
listed above for at least 15 years in order to be eligible for the maximum
payment. No Trustee has retired under this plan, and therefore no
payments have been made by the Fund. In the fiscal year ended December
31, 1993, the Fund accrued $_________ for retirement plan benefits for its
Trustees under the plan.
Major Shareholders. As of ______________, no person owned of record or
was known by the management of the Fund to own beneficially 5% or more of
the Fund's outstanding shares.
HOW THE FUND IS MANAGED
The Manager is wholly-owned by Oppenheimer Acquisition Corp. ("OAC"),
a holding company controlled by Massachusetts Mutual Life Insurance
Company. OAC is also owned in part by certain of the Manager's directors
and officers, some of whom may also serve as officers of the Fund, and one
of whom (Mr. Spiro) serves as a Trustee of the Fund.
The investment advisory agreement between the Manager and the Fund
(the "Agreement") requires the Manager, at its expense, to provide the
Fund with adequate office space, facilities and equipment, and to provide
and supervise the activities of all administrative and clerical personnel
required to provide effective administration for the Fund, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of the Fund. Expenses not expressly assumed by the Manager under the
Agreement or by the Distributor are paid by the Fund. The Agreement lists
examples of expenses paid by the Fund, the major categories of which
relate to interest, taxes, brokerage commissions, fees to unaffiliated
Trustees, legal, bookkeeping and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration
costs and non-recurring expenses, including litigation.
The Agreement contains no expense limitation. However, independently
of the Agreement, the Manager has undertaken that the total expenses of
the Fund in any fiscal year (excluding taxes, interest, brokerage
commissions, distribution plan payments and extraordinary expenses such
as litigation), shall not exceed (and the Manager undertakes to reduce the
Fund's management in the amount by which such expenses shall exceed) the
most stringent applicable state regulatory limitation on fund expenses.
At present, this limitation is imposed by California, and limits such
expenses to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million, and 1.5% of average annual net assets in
excess of $100 million. The payment of the management fee at the end of
any month will be reduced so that there will not be any accrued but unpaid
liability under this expense limitation. For the fiscal years ended
December 31, 1991, 1992 and 1993, the management fees paid by the Fund to
the Manager were $1,841,215, $2,443,445 and ____________, respectively.
The Manager reserves the right to terminate or amend this undertaking at
any time. Any assumption of the Fund's expenses under this undertaking
would lower the Fund's overall expense ratio and increase its total return
during any period in which expenses are limited.
The Agreement provides that in the absence of willful misfeasance,
bad faith, gross negligence in the performance of its duties, or reckless
disregard for its obligations thereunder, the Manager shall not be liable
for any loss sustained by reason of good faith errors or omissions in
connection with any matters to which the Agreement relates. 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 or one of its
affiliates shall no longer act as investment adviser to the Fund, the
right of the Fund to use the name "Oppenheimer" as part of its name may
be withdrawn.
Portfolio Transactions. Portfolio decisions are made by portfolio
managers under the supervision of the Manager's executive officers. As
most purchases made by the Fund are principal transactions at net prices,
the Fund incurs little or no brokerage costs. The Fund usually deals
directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless it is
determined that better price or execution may be obtained by utilizing the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter,
and purchases from dealers include a spread between the bid and asked
price. The Fund seeks to obtain prompt execution of orders at the most
favorable net price.
BROKERAGE POLICIES OF THE FUND
If a broker is used for the Fund's portfolio transactions, the
Agreement contains provisions relating to the selection of brokers,
dealers and futures commission merchants (collectively referred to as
"brokers") for the Fund's futures, put and call transactions. The Manager
is authorized by the Agreement to employ brokers as may, in its best
judgment based on all relevant factors, implement the policy of the Fund
to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
but is expected to minimize the commissions paid to the extent consistent
with the interest and policies of the Fund.
The Agreement allows affiliates of the Manager to act as the Fund's
brokers and receive brokerage commissions. Commissions paid to affiliates
are calculated in accordance with "Procedures" adopted pursuant to
Securities and Exchange Commission ("SEC") Rule 17e-1 under the Act, which
requires that commissions paid to an affiliate or an affiliate of an
affiliate of the Manager must be "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar
securities during a comparable period of time." When the Fund engages in
an option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transactions in the securities to
which the option relates. Where possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account.
Under the Agreement, the Manager is authorized to select brokers
which provide brokerage and/or research services for the Fund and/or the
other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged, if a good faith determination
is made by the Manager that the commission is fair and reasonable in
relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager and its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions. Most purchases made by the Fund are principal transactions
at net prices, and the Fund incurs little or no brokerage costs.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The research services provided by brokers broaden the
scope and supplement the research activities of the Manager by making
available additional views for consideration and comparisons, and enabling
the Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The Board
of Trustees, including the "Independent Trustees" (those Trustees who are
not "interested persons," as defined in the Investment Company Act, and
who have no direct or indirect financial interest in the operation of the
Agreement, the Plans of Distribution described below or in any agreements
relating to those Plans) annually reviews information furnished by the
Manager as to the commissions paid to brokers furnishing such services so
that the Board may ascertain that the amount of such commissions was
reasonably related to the value or the benefit of such services.
YOUR INVESTMENT ACCOUNT
How the Fund Determines Net Asset Value Per Share. The net asset value
per share of Class A and Class B shares of the Fund are determined as of
4:00 P.M. (all references to time mean New York time) each day the New
York Stock Exchange (the "NYSE") is open (a "regular business day") by
dividing the value of the Fund's net assets by the total number of shares
of that class outstanding. The NYSE's most recent annual holiday schedule
(which is subject to change) states that it will close New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day; it may also close on other days.
Dealers other than Exchange members may conduct trading in Municipal
Securities on certain days on which the Exchange is closed (including
weekends and holidays or after 4:00 P.M. on a regular business day).
Because the net asset values of the Fund will not be calculated at such
times, if securities held in the Fund's portfolio are traded at such
times, the net asset value per share may be significantly affected on such
days when shareholders do not have the ability to purchase or redeem
shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities as follows: (i) securities (including
restricted securities) not having readily-available market quotations are
valued at fair value under the Board's procedures; (ii) long-term debt
securities, and short-term securities having a remaining maturity in
excess of 60 days, are valued at the mean between the asked and bid prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the
basis of reasonable inquiry; and (iii) short-term debt securities having
a remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts.
In the case of Municipal Securities, when last sale information is
not generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis of
quality, yield, maturity, and other special factors involved (such as the
tax-exempt status of the interest paid by Municipal Securities). The
Fund's Board of Trustees has authorized the Manager to employ a pricing
service, bank or broker-dealer experienced in such matters to price any
of the types of securities described above. The Trustees will monitor the
accuracy of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Calls, puts, Interest Rate Futures and Municipal Bond Index Futures
are valued at the last sales price on the principal exchange on which they
are traded. If there were no sales on the principal exchange, the last
sale on any exchange is used. In the absence of any sales that day, value
shall be the last reported sales price on the prior trading day or closing
bid or asked prices on the principal exchange closest to the last reported
sales price. When the Fund writes an option, an amount equal to the
premium received by the Fund is included in its Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included in
the liability section. The deferred credit is adjusted ("marked-to-
market") to reflect the current market value of the option.
Alternative Sales Arrangements - Class A and Class B Shares. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold
shares and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson or
other person entitled to receive compensation for selling Fund shares may
receive different compensation with respect to one class of shares than
the other. The Distributor will not accept any order for $1 million or
more of Class B shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of the Fund
instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the
effect that the conversion of Matured Class B shares does not constitute
a taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Matured
Class B shares would occur while such suspension remained in effect.
Although Matured Class B shares could then be exchanged for Class A shares
on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a
taxable event for the holder, and absent such exchange, Class B shares
might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class B shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total net
assets, and then equally to each outstanding share within a given class.
Such general expenses include (i) management fees, (ii) legal, bookkeeping
and audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Additional Statements and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses,
(vi) share issuance costs, (vii) organization and start-up costs, (viii)
interest, taxes and brokerage commissions, and (ix) non-recurring
expenses, such as litigation costs. Other expenses that are directly
attributable to a class are allocated equally to each outstanding share
within that class. Such expenses include (i) Distribution Plan fees, (ii)
incremental transfer and shareholder servicing agent fees and expenses,
(iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the
Fund as a whole.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.
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 circumstances
described in the Prospectus because the Distributor incurs little or no
selling expenses. 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 and a spouse's
siblings.
-- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-Distributor
and include the following:
ppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Government Securities Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Bio-Tech Fund
Oppenheimer Global Environment Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Tax-Exempt Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a CDSC).
LETTERS OF INTENT
In submitting a Letter of Intent to purchase Class A shares of the
Fund and other OppenheimerFunds at a reduced sales charge, the investor
agrees to the terms of the Prospectus, the Application used to buy such
shares, and the language in this Additional Statement as to Letters of
Intent, as they may be amended from time to time by the Fund. Such
amendments will apply automatically to existing Letters of Intent.
A Letter of Intent ("Letter") is the investor's statement of
intention to purchase Class A shares of the Fund (and other eligible
OppenheimerFunds sold with a sales charge) during the 13-month period from
the investor's first purchase pursuant to the Letter (the "Letter of
Intent period"), which may, at the investor's request, include purchases
made up to 90 days prior to the date of the Letter. The investor states
the intention to make the aggregate amount of purchases (excluding any
reinvestments of dividends or distributions or purchases made at net asset
value without sales charge), which together with the investor's holdings
of such funds (calculated at their respective public offering prices
calculated on the date of the Letter) will equal or exceed the amount
specified in the Letter to obtain the reduced sales charge rate (as set
forth in "How To Buy Shares" in the Prospectus) applicable to purchases
of shares in that amount (the "intended amount"). Each purchase under the
Letter will be made at the public offering price applicable to a single
lump-sum purchase of shares in the intended amount, as described in the
applicable prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of such fund shares on the last day of that period,
do not equal or exceed the intended amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below, as those terms may be amended from time
to time. The investor agrees that shares equal in value to 5% of the
intended amount will be held in escrow by the Fund's transfer agent
subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended 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 amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to refer to the Letter in placing any
purchase orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended amount specified in the Letter shall be held in
escrow by the Fund's transfer agent. For example, if the intended amount
specified under the Letter is $50,000, the escrow shall be shares valued
in the amount of $2,500 (computed at the public offering price adjusted
for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.
2. If the 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 amount
specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid
if the total amount purchased had been made at a single time. Such sales
charge adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is not paid
within twenty days after a request from the Distributor or the dealer, the
Distributor will, within sixty days of the expiration of the Letter,
redeem the number of escrowed shares necessary to realize such difference
in sales charges. Full and fractional shares remaining after such
redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the transfer agent of the Fund as attorney-in-fact to surrender
for redemption any or all escrowed shares.
5. The funds whose shares are eligible for purchase under the Letter
(or the holding of which may be counted toward completion of the Letter)
do not include any fund whose shares are sold without a front-end sales
charge or without being subject to a Class A contingent deferred sales
charge unless (for the purpose of determining completion of the obligation
to purchase shares under the Letter) the shares were acquired in exchange
for shares of a fund (described as an "Eligible Fund" in the Prospectus)
whose shares were acquired by payment of a 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 "Exchange Privilege," and the
escrow will be transferred to that other fund.
Redemptions. Information on how to redeem shares of the Fund is stated
in the Prospectus. The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, if the Board of
Trustees determines that it would be detrimental to the best interests of
the remaining shareholders of the Fund to make payment wholly or partly
in cash, the Fund may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of the Fund, in lieu
of cash, in conformity with applicable Securities and Exchange Commission
rules. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in converting the assets to cash. Any securities distributed
by the Fund pursuant to an "in-kind" redemption will be readily
marketable. The method of valuing securities used to make redemptions in
kind will be the same as the method of valuing portfolio securities
described under "Determination of Net Asset Value Per Share," and such
valuation will be made as of the same time the redemption price is
determined.
The Fund's Board of Trustees has the right to cause the involuntary
redemption of the shares held in any account if the aggregate net asset
value of such shares is less than $200 or such lesser amount as the Board
may fix. The Fund's Board of Trustees will not cause the involuntary
redemption of shares held in any account if the aggregate net asset value
of such shares has fallen below the stated minimum solely as result of
market fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or may set requirements for permission to allow
the shareholder to increase the investment so that the shares would not
be involuntarily redeemed.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Tax-Exempt Cash Reserves or
Oppenheimer Cash Reserves to use those accounts for monthly automatic
purchases of shares of up to four other Eligible Funds.
There is a sales charge on the purchase of certain Eligible Funds.
An application should be obtained from the Transfer Agent, completed and
returned, and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained before initiating Asset Builder payments.
The amount of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the date of cancellation is less than on the purchase
date; that loss is equal to the amount of such decline in 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 by seeking other redress.
Checkwriting. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue receiving dividends on
those shares until the check is presented to the Fund. Checks may not be
presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills
or to obtain cash at other banks. The Fund reserves the right to amend,
suspend or discontinue offering checkwriting privileges at any time
without prior notice.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed, in Class A shares of the Fund or any
of the other OppenheimerFunds into which shares of the Fund are
exchangeable as described below, at the net asset value next computed
after receipt by the Transfer Agent of the reinvestment order. The
shareholder must ask the Distributor for such privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the OppenheimerFunds 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. 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.
Transfer of Shares. Shareholders owning shares of both classes must
specify whether they intend to transfer Class A or Class B shares. Shares
are not subject to the payment of a CDSC of either class at the time of
transfer (by absolute assignment, gift or bequest, not involving, directly
or indirectly, a public sale). The transferred shares will remain subject
to the CDSC, 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 all shares in the account would be subject to
a CDSC 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 CDSC will be followed in determining the order in which shares are
transferred.
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. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received from dealers or brokers after 4:00
P.M. on a regular business day will be processed at that day's net asset
value if such orders were received by the dealer or broker from its
customers prior to 4:00 P.M., and were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required documents, with signature(s) guaranteed as
described above.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are by check
payable to all shareholders of record and sent to the address of record
for the account (and if the address has not been changed within the prior
30 days). Required minimum distributions from OppenheimerFunds-sponsored
retirement plans may not be arranged on this basis. Payments are normally
made by check, but shareholders having AccountLink privileges (see "How
To Buy Shares") may arrange to have Automatic Withdrawal Plan payments
transferred to the bank account designated on the OppenheimerFunds New
Account Application or signature-guaranteed instructions. The Fund cannot
guarantee receipt of the payment on the date requested and reserves the
right to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on Class A
share purchases, shareholders should not make regular additional Class A
purchases while participating in an Automatic Withdrawal Plan. Class B
shareholders should not establish withdrawal plans, because of the
imposition of the Class B CDSC on such withdrawals (except where the Class
B CDSC is waived as described in "Class B Contingent Deferred Sales
Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "Exchange Privilege"
in the Prospectus and "How to Exchange Shares" below in this Statement of
Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and thereafter 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
such plans should not be considered as a yield or income on your
investment. It may not be desirable to purchases additional Class A
shares while making automatic withdrawals because of the sales charges
that apply to purchases when made. Accordingly, a shareholder normally
may not maintain an Automatic Withdrawal Plan while simultaneously making
regular purchases of Class A shares.
The transfer agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (the date selected for receipt is an approximate
date), according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the 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 because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How to Exchange Shares. The list of OppenheimerFunds to which exchanges
of shares may be made (subject to restrictions in the Prospectus and in
this Statement of Additional Information) is contained in "Reduced Sales
Charges," above.
Class A shares of OppenheimerFunds may be exchanged for shares of any
Money Market Fund; shares of any Money Market Fund purchased without a
sales charge may be exchanged for shares of OppenheimerFunds offered with
a sales charge upon payment of the sales charge (or, if applicable, may
be used to purchase shares of OppenheimerFunds subject to a CDSC); and
shares of this Fund acquired by reinvestment of dividends or distributions
from any other of the OppenheimerFunds 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
OppenheimerFunds. No CDSC is imposed on exchanges of shares of either
class purchased subject to a CDSC. However, when Class A shares acquired
by exchange of Class A shares purchased subject to a Class A CDSC 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 CDSC is imposed on
the redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus), and the Class B CDSC is imposed on Class B shares redeemed
within six years of the initial purchase of the exchanged Class B shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or shares covered by a share
certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.
When Class B 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 contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class B shares.
When exchanging shares by telephone, the shareholder must either have
an existing account in, or acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges
of an account made by telephone, any special account features such as
Asset Builder Plans, Automatic Withdrawal Plans and retirement plan
contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
request from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal 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
transaction.
Exchanges of Class B Shares. As stated in the Prospectus, shares of
a particular class of OppenheimerFunds having more than one class of
shares may be exchanged only for shares of the same class of another of
the OppenheimerFunds. All of the OppenheimerFunds (except Oppenheimer
Strategic Diversified Income Fund) offer Class A shares; if the shares of
a fund offering one class are not denominated with a class designation in
the Prospectus, they are considered "Class A" shares. Only the following
other OppenheimerFunds offer Class B shares as of the date of this
Statement of Additional Information (this list may change from time to
time, and to obtain a current list, please call the Transfer Agent at 1-
800-525-7048):
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Government Securities Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by
exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
The Transfer Agent. Oppenheimer Shareholder Services, as transfer agent,
is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions. For information about your account, call the
toll-free number or write to the address of the Transfer Agent on the
front cover.
PERFORMANCE OF THE FUND
As described in the Prospectus, from time to time the "standardized
yield," "tax-equivalent yield," "dividend yield," "average annual total
return," "total return" and "total return at net asset value" of an
investment in each class of Fund shares may be advertised. An explanation
of how standardized yield, tax-equivalent yield, average annual total
return and total return are calculated for each class and the components
of those calculations are set forth below.
Yield and total return information may be useful to investors in
reviewing the Fund's performance. However, a number of factors should be
considered before using such information as a basis for comparison with
other investments. An investment in the Fund is not insured; its yield
and total return are not guaranteed and normally will fluctuate on a daily
basis. Yield and total return for any given past period are not an
indication or representation by the Fund of future yields or rates of
return on its shares. The Fund's yield and total return of the Class A
and Class B shares of the Fund is affected by portfolio quality, portfolio
maturity, type of investments held and operating expenses. When comparing
yield, total return and investment risk of an investment in Class A or
Class B shares of the Fund with those of other investment instruments,
investors should understand that certain other investment alternatives
such as certificates of deposit (CDs"), U.S. Government securities, bank
accounts, provide yields that are fixed or that may vary above stated
minimum, and may be insured or guaranteed. In order to compare the Fund's
dividends to the rate of return on taxable investments, Federal income
taxes on such investments should be considered.
The Fund's "standardized yield" for a given 30-day period for a class
of shares is 5.96%, calculated using the following formula set forth in
the SEC rules:
(a-b) 6
Standardized Yield = 2 [(--- + 1) - 1]
(cd )
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
assumptions).
c = the average daily number of shares outstanding during the
30-day period that were entitled to receive dividends.
d = the Fund's maximum offering price (including sales charge)
per share on the last day of the period, adjusted for
undistributed net investment income.
The yield for a 30-day period may differ from its yield for any other
period. The SEC formula assumes that the yield for a 30-day period occurs
at a constant rate for a six-month period and is annualized at the end of
the six-month period. The "standardized" yield is not based on
distributions paid by the Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the return on the Fund's portfolio
investments, and may differ from the "dividend yield" described below.
For the 30-day period ended December 31, 1993, the standardized yield for
the Fund's Class A shares was ____ and the standardized yield for the
Fund's Class B shares was _____.
The Fund's "tax-equivalent yield" adjusts the Fund's current yield,
as calculated above, by a stated Federal tax rate. The tax-equivalent
yield is based on a 30-day period, and is computed by dividing the tax-
exempt portion of the Fund's yield (as calculated above) by one minus a
stated income tax rate and adding the result to the portion (if any) of
the Fund's yield that is not tax-exempt. The tax-equivalent yield may be
used to compare the tax effects of income derived from the Fund with
income from taxable investments at the tax rates stated. For the 30-day
period ended December 31, 1993, the Fund's tax-equivalent yield for an
individual in the 31% Federal tax bracket was ____ for an investment in
Class A shares of the Fund and ____ for an investment in Class B shares
of the Fund. Appendix B includes a tax-equivalent yield table, based on
various effective tax brackets for individual taxpayers. Such tax
brackets are determined by a taxpayer's Federal taxable income (the net
amount subject to Federal income tax after deductions and exemptions).
The tax-equivalent yield table assumes that the investor is taxed at the
highest bracket, regardless of whether a switch to non-taxable investments
would cause a lower bracket to apply. For taxpayers with income above
certain levels, otherwise allowable itemized deductions are limited.
The Fund's "average annual total return" is an average annual
compounded rate of return. It is the rate of return based on factors
which include a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") with an Ending Redeemable
Value ("ERV") of that investment, according to the following formula:
l/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
The "total return" calculation uses some of the same factors, but
does not average the rate of return on an annual basis. Total return
measures the cumulative (rather than the average) change in value of a
hypothetical investment over a stated period. Total return is determined
as follows:
ERV - P
------- = Total Return
P
Both formulas assume (i) for the Class A shares, the payment of the
Fund's current maximum sales charge of 4.75% (as a percentage of the
offering price) on the initial investment ("P"), and (ii) for Class B
shares, the payment of contingent deferred sales charge of 5.0% for the
first year, 4.0% for the second year, 3.0% for the third and fourth years,
2.0% for the fifth year, 1.0% in the sixth year and none thereafter,
applied as described in the Prospectus. The formulas also assume that all
dividends and capital gains distributions during the period are reinvested
at net asset value per share, and that the investment is redeemable at the
end of the period. The "average annual total return" on an investment in
Class A shares of the Fund (using the method described above) for the one,
five and ten year periods ended December 31, 1993 were ____%, ____% and
_____%, respectively. The total return for the 10-year period ended
December 31, 1993, was ______%. For the fiscal period ______________
through December 31, 1993, the average annual total return and the
cumulative total return on an investment in Class B shares of the Fund was
_____ and _____, respectively.
From time to time the Fund may quote a "dividend yield" or a
"distribution return" for each class. Dividend yield is based on the
Class A or Class B dividends derived from net investment income during
a stated period and distribution return includes dividends derived from
net investment income and from realized gains declared during a stated
period. Under those calculations, the dividends and/or distributions for
a class declared during a stated period of one year or less (for example,
30 days) are added together, and the sum is divided by the Fund's maximum
offering price per share of that class on the last day of the period.
When the result is annualized for a period of less than one year, the
"dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
-----------------------------------------------------
Max. Offering Price of the Class (last day of period)
divided by Number of days (accrual period) x 365
From time to time similar calculations may also be made using the
Class A or Class B share net asset value (instead of their respective
maximum offering price) at the end of the period. The dividend yield on
Class A shares for the 30-day period ended December 31, 1993, was ____%
and ____% when calculated at maximum offering price and at net asset
value, respectively. The dividend yield on Class B shares for the 30-day
period ended December 31, 1993 was _____ and _____ when calculated at
maximum offering price and at net asset value, respectively.
From time to time the Fund may also quote a "total return at net
asset value" for Class A or Class B shares. It is based on the difference
in net asset value per share at the beginning and the end of the period
(without considering sales charge) and takes into consideration the
reinvestment of dividends and capital gains (as with total return,
described above). The "total return at net asset value" on the Fund's
Class A shares for the fiscal year ended December 31, 1993, was ____%.
The "total return at net asset value" on the Fund's Class B shares for the
fiscal period _________ through December 31, 1993 was ________.
For comparison, investments made at various assumed average annual
rates of return for a ten-year period are:
Value on December 31, 1992
Amount at Assumed Average Annual Return
of Investment 5% 10% 15%
Single $1,000 $ 1,629 $ 2,594 $ 4,046
Annual $1,000 $13,208 $17,533 $23,350
Other Performance Comparisons. From time to time the Fund may publish its
ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to investment
objectives. The performance of the Fund's classes is ranked against (i)
all other funds, and (ii) all general municipal bond funds. The Lipper
performance analysis includes the reinvestment of capital gain
distributions and income dividends but does not take sales charge or taxes
into consideration. From time to time the Fund may include in its
advertisements and sales literature performance information about the Fund
cited in other newspapers and periodicals, such as The New York Times,
which may include performance quotations from other sources, including
Lipper and Morningstar.
From time to time the Fund may publish the ranking of the
performance of its Class A or Class B shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, based upon the Fund's three , five and ten-year
average annual total returns (when available) and a risk factor that
reflects fund performance relative to three-month U.S. Treasury bill
monthly returns. Such returns are adjusted for fees and sales loads.
There are five ranking categories with a corresponding number of stars:
highest (5), above average (4), neutral (3), below average (2) and lowest
(1). Morningstar ranks the Class A and Class B shares of the Fund in
relation to other rated municipal bond funds.
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted a Service Plan for the Fund's Class A
Shares and a Distribution and Service Plan for and Class B Shares of the
Fund under Rule 12b-1 of the Investment Company Act, pursuant to which the
Fund will reimburse the Distributor quarterly for all or a portion of its
costs incurred in connection with the distribution and/or servicing of the
shares of that class. The Class A Plan and the Class B Plan have been,
approved by a vote of the Board of Trustees of the Fund, including a
majority of the "Independent Trustees" (those Trustees of the Fund who are
not "interested persons," as defined in the Investment Company Act, and
who have no direct or indirect financial interest in the operation of the
Plans or in any agreements relating to the Plans), cast in person at a
meeting called for the purpose of voting on that Plan. The Class A Plan
has been approved by the Fund's Class A shareholders. Each Plan shall,
unless terminated as described below, continue in effect from year to year
but only as long as such continuance is specifically approved at least
annually by the Fund's Board of Trustees and its Independent Trustees by
a vote cast in person at a meeting called for the purpose of voting on
such continuance. Either 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 the respective class. Neither Plan may be amended
to increase materially the amount of payments to be made, unless such
amendment is approved by shareholders of the respective class, who vote
exclusively on approval or amendment of the Plan for that class. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to the Plan, the
purpose for which each payment was made and the identity of each Recipient
of a payment. The report for the Class B Plan shall also include the
distribution costs for that quarter, and such costs for previous fiscal
periods that are carried forward, as explained in the Prospectus and
below. Those reports, including the allocations on which they are based,
will be subject to the review and approval of the Independent Trustees in
the exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those Trustees of
the Fund who are not "interested persons" of the Fund is committed to the
discretion of the Independent Trustees. This does not prevent the
involvement of others in such selection and nomination if the final
decision on any such selection or nomination is approved by a majority of
the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount. The Plans permit the
Distributor and the Manager to make additional distribution payments to
Recipients from their own resources (including profits from previous
management fees) at no cost to the Fund. The Distributor and the Manager
may, in their sole discretion, increase or decrease the amount of
distribution assistance payments they make to Recipients from their own
assets.
For the fiscal year ended December 31, 1993, payments under the
Class A Plan totaled $____________, all of which was paid by the
Distributor to Recipients, including $_________ paid to an affiliate of
the Distributor. Any unreimbursed expenses incurred with respect to Class
A shares for any fiscal quarter by the Distributor may not be recovered
under the Class A Plan in subsequent fiscal quarters. Payments received
by the Distributor under the Class A Plan will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
The Class B Plan allows the service fee payment to be paid by
the Distributor to Recipients in advance for the first year Class B shares
are outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net assets of the Class
B shares sold. An exchange of shares does not entitle the Recipient to
an advance service fee payment. In the event Class B shares are redeemed
during the first year such shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of such advance payment to the
Distributor. Although the Class B Plan permits the Distributor to retain
both the asset-based sales charges and the service fee on Class B shares,
or to pay Recipients the service fee on a quarterly basis, without payment
in advance, the Distributor intends to pay the service fee to Recipients
in the manner described above. A minimum holding period may be
established from time to time under the Class B Plan by the Board.
Initially, the Board has set no minimum holding period. All payments
under the Class B Plan become subject to the limitations on such plans
imposed by the National Association of Securities Dealers, Inc. Rules of
Fair Practice. The Class B Plan allows for the carry-forward of
distribution expenses, to be recovered from asset-based sales charges in
subsequent fiscal periods, as described in the Prospectus. In the event
the Class B Plan is terminated, the Distributor is entitled to continue
to receive the asset-based sales charge of 0.75% per annum on Class B
shares sold prior to termination until the Distributor has recovered its
Class B distribution expenses incurred prior to termination from such
payments and from the Class B CDSC. For the fiscal period from __________
through December 31, 1993, payments under the Class B plan totaled
__________.
The asset-based sales charge paid to the Distributor by the Fund
under the Class B Plan is intended to allow the Distributor to recoup the
cost of sales commissions paid to authorized brokers and dealers at the
time of sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses in connection
with the distribution of Class B shares: (i) financing the advance of the
service fee payment to Recipients under the Class B Plan, (ii)
compensation and expenses of personnel employed by the Distributor to
support distribution of Class B shares, and (iii) costs of sales
literature, advertising and prospectuses (other than those furnished to
current shareholders) and state "blue sky" registration fees.
The Glass-Steagall Act and other applicable laws and
regulations, among other things generally prohibit Federally-chartered or
supervised banks from engaging in the business of underwriting, selling
or distributing securities as principals. It is the understanding of the
Manager and the Distributor that the Glass-Steagall Act and other
applicable laws and regulations do not prohibit banks and other financial
institutions from providing the services required of a Recipient.
Accordingly, the Distributor may pay banks only for sales made on an
agency basis or for the performance of administrative and shareholder
servicing functions. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either Federal or
state statutes or regulations relating to the permissible activities of
banks or their subsidiaries or affiliates, could prevent certain banks
from continuing to perform all or a part of these services. If a bank
were so prohibited, shareholders of the Fund who were clients of such bank
would be permitted to remain as shareholders, and if that bank could no
longer provide those service functions, alternate means for continuing the
servicing of such shareholders would be sought. In such event,
shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being
provided by such bank. The Fund's Board of Trustees will consider
appropriate modifications to the Fund's operations, including
discontinuance of payments under the Plans to such institutions, in the
event of any future change in such laws or regulations that may adversely
affect the ability of such institutions to provide those services. It is
not expected that shareholders would suffer any adverse financial
consequences as a result of any of those occurrences. In addition,
certain banks and financial institutions may be required to register as
dealers under state law.
DIVIDENDS, CAPITAL GAINS AND TAXES
Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or
as otherwise described in "How to Buy Shares." An investor purchasing
shares immediately prior to the declaration of a capital gins
distribution, which has the effect of reducing the Fund's net asset value
per share by the amount of the distribution, should consider the tax
consequences of receiving such distribution. Daily dividends on newly
purchased shares will not be declared or paid until such time as Federal
Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on
the next business day. Dividends will be declared on shares repurchased
by a dealer or broker for four business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
of the same class in the account will be paid together with the redemption
proceeds.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of Oppenheimer
Money Market Fund, Inc., as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends (generally dividends from domestic
corporations) which the Fund derives from its portfolio investments held
for a minimum period, usually 46 days. A corporate shareholder will not
be eligible for the deduction on dividends paid on shares held by that
shareholder for 45 days or less. To the extent the Fund's dividends are
derived from its gross income from option premiums, interest income or
short-term capital gains from the sale of securities, or dividends from
foreign corporations, its dividends will not qualify for the deduction.
It is expected that for the most part the Fund's dividends will not
qualify, because of the nature of the investments held by the Fund in its
portfolio.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A and Class B
Shares," above. Dividends are calculated in the same manner, at the same
time and on the same day for shares of each class. However, dividends on
Class B shares are expected to be lower as a result of the asset-based
sales charge on Class B shares, and Class B dividends will also differ in
amount as a consequence of any difference in net asset value between Class
A and Class B shares.
Distributions may be made annually in December out of any net
short-term or long-term capital gains realized from the sale of
securities, premiums from expired calls written by the Fund and net
profits from Hedging Instruments and closing purchase transactions
realized in the twelve months ending on October 31 of the current year.
Any difference between the net asset value of Class A and Class B shares
will be reflected in such distributions. Distributions from net short-
term capital gains are taxable to shareholders as ordinary income and when
paid by the Fund are considered "dividends." The Fund may make a
supplemental distribution of capital gains and ordinary income following
the end of its fiscal year. Any long-term capital gains distributions
will be identified separately when paid and when tax information is
distributed by the Fund. If prior distributions must be re-characterized
at the end of the fiscal year as a result of the effect of the Fund's
investment policies, shareholders may have a non-taxable return of
capital, which will be identified in notices to shareholders. There is
no fixed dividend rate (although the Fund may have a targeted dividend
rate for Class A shares) and there can be no assurance as to the payment
of any dividends or the realization of any capital gains.
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 and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. In order to qualify as a "regulated investment
company," at the end of each quarter of its taxable year, at least 50% of
the aggregate value of the Fund's total assets must consist of cash, cash
items, government securities and other securities, limited with respect
to each issuer at the time of purchase to not more than 5% of the Fund's
total assets. If it does not qualify, the Fund will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year, 98%
of the Fund's taxable investment income earned from January 1 through
December 31 of that year and 98% of its capital gains realized in the
period from the prior November 1 of the prior year through October 31 of
that year, or else the Fund must pay an excise tax on the amounts not
distributed. The Manager might determine that in a particular year it
would be in the best interests of the shareholders not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts, which would reduce the amount available for
distribution 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 funds listed in the Prospectus as
"Eligible Funds" at net asset value without sales charge. Class B
shareholders should be aware that as of the date of this Additional
Statement, not all Eligible Funds offer Class B shares. The names of the
Funds can be obtained by calling the Distributor at 1-800-525-7048; see
also "Exchanges on Class B Shares." above. To elect this option, a
shareholder must notify the Transfer Agent in writing, and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Distributor to
establish an account. The investment will be made at the net asset value
per share in effect at the close of business on the payable date of the
dividend or distribution.
ADDITIONAL INFORMATION ABOUT THE FUND
Information about the Fund's Declaration of Trust and Business Structure.
Shares of the Fund represent an interest in the Fund proportionately equal
to the interest of each other share of the same class and entitle their
holders to one vote per share (and a proportional vote for a fractional
share) on matters submitted to their vote at shareholder meetings. Only
shareholders of a particular class vote on matters affecting only that
class. The Trustees may divide or combine the shares of a class into a
greater or lesser number of shares without thereby changing the
proportionate beneficial interest in the Fund. Shares do not have
cumulative voting rights or preemptive or subscription rights. The
Trustees may authorize additional classes of shares without shareholder
approval.
While Massachusetts law permits a shareholder of a trust (such
as the Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is highly unlikely and is limited to the
relatively remote circumstances in which the Fund would be unable to meet
the obligations described above. The Fund's Declaration of Trust contains
an express disclaimer of shareholder or Trustee liability for the Fund's
obligations, and provides for indemnification and reimbursement of
expenses out of its property for any shareholder held personally liable
for its obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume a defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any judgment
thereon. Any person doing business with the Fund and any shareholder of
the Fund agrees under the Fund's Declaration of Trust to look solely to
the assets of the Fund for satisfaction of any claim or demand which may
arise out of any dealings with the Fund, and the Trustees shall have no
personal liability to any such person, to the extent permitted by law.
It is not contemplated that regular annual meetings of
shareholders will be held. The Fund will hold meetings when required to
do so by the Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the
shareholders of 10% of its outstanding shares. In addition, if the
Trustees receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding in the aggregate shares of
the Fund valued at $25,000 or more or holding 1% or more of the Fund's
outstanding shares, whichever is less, that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either give the applicants access to the Fund's shareholder
list, mail their communication to all other shareholders at the
applicants' expense, or take alternative action as set forth in Section
16(c) of the Investment Company Act.
The Distributor. Under the General Distributor's Agreement between the
Fund and the Distributor, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class A and
Class B shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under the
Plan's of Distribution), including advertising and the cost of printing
and mailing prospectuses (other than those furnished to existing
shareholders), are borne by the Distributor. During the fiscal years
ended December 31, 1991, 1992 and 1993, the aggregate sales charges on
sales of the Fund's shares were $2,419,747, $3,542,900 and $____________,
respectively, of which the Distributor retained an affiliated broker-
dealer retained in the aggregate $672,336, $1,077,669 and $________ in
1991, 1992 and 1993, respectively.
Information About the Custodian of the Fund's Portfolio Securities. The
Custodian of the assets of the Fund is Citibank, N.A. 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. The Manager and its affiliates have banking relationships with the
Custodian. The Manager has represented to the Fund that its banking
relationships with the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund and the
Custodian. It will be the practice of the Fund to deal with the Custodian
in a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balances with
the custodian in excess of $100,000 are not protected by Federal deposit
insurance. Such uninsured balances may at times be substantial.
Independent Auditors. The independent auditors of the Fund examine the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds advised
by the Manager and its affiliates.
<PAGE>
Appendix B
TAX EXEMPT/TAX EQUIVALENT YIELDS
The equivalent yield table below compares tax-free income with taxable
income under Federal income tax rates effective in 1993. The tables
assume that an investor's highest tax bracket applies to the change in
taxable income resulting from a switch between taxable and non-taxable
investments, that the investor is not subject to the Alternative Minimum
Tax, and that the state income tax payments are fully deductible for
Federal income tax purposes. The income tax brackets are subject to
indexing in future years to reflect changes in the Consumer Price Index.
Example: Assuming a 6% tax-free yield, the equivalent taxable yield would
be 8.70% of a person in the 31% tax bracket.
<TABLE>
<CAPTION>
Federal Effective Oppenheimer Tax-Free Bond Fund Yield of:
Taxable Tax 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
Income Bracket Is Approximately Equivalent To a Taxable Yield of:
JOINT RETURN
Over Not over
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $36,800 15% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$36,900 $89,150 28% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$89,150 and above 31% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
SINGLE RETURN
Over Not over
$ 0 $22,100 15% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$22,100 $53,500 28% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$53,500 and above 31% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
</TABLE>
<PAGE>
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
One Citicorp Center
New York, New York 10154
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER TAX-FREE BOND FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Condensed Financial Information (See Part A): To be filed
by amendment.
(2) Independent Auditors' Report (See Part B): To be filed by
amendment.
(3) Statement of Investments (See Part B): To be filed by
amendment.
(4) Statement of Assets and Liabilities (See Part B): To be
filed by amendment.
(5) Statement of Operations (See Part B): To be filed by
amendment.
(6) Statements of Changes in Net Assets (See Part B): To be
filed by amendment.
(7) Per Share Data and Ratios (See Part B): To be filed by
amendment.
(8) Notes to Financial Statements (See Part B): To be filed by
amendment.
(9) Consent of Independent Auditor: To be filed by amendment.
(b) Exhibits
(1) (i) Declaration of Trust dated February 25, 1987:
Filed with Post-Effective Amendment No. 22 to its
Registrant's Registration Statement and
incorporated herein by reference.
(ii) Amended and Restated Declaration of Trust dated
March 12, 1993: Filed with Post-Effective
Amendment No. 30 to Registrant's Registration
Statement, 3/16/93, and incorporated herein by
reference.
(2) (i) Amended By-Laws of Registrant as of May 1, 1987:
Filed with Post-Effective Amendment No. 22 to its
Registrant's Registration Statement and
incorporated herein by reference.
(ii) Amended By-Laws of Registrant as of August 6,
1987: Filed with Form SE to Registrant's Form N-
SAR for the fiscal year ended 12/31/87 and
incorporated herein by reference.
(3) Not applicable
(4) (i) Specimen Class A Share Certificate: Filed with
Post-Effective Amendment No. 22 to Registrant's
Registration Statement and incorporated herein by
reference.
(ii) Specimen Class B Share Certificate: Filed
herewith.
(5) Investment Advisory Agreement dated October 22, 1990:
Filed with Post-Effective Amendment No. 27 to Registrant's
Registration Statement, 3/1/91, and incorporated herein by
reference.
(6) (i) General Distributor's Agreement dated December 10,
1992: Filed with Post-Effective Amendment No. 30
to Registrant's Registration Statement, 3/16/93,
and incorporated herein by reference.
(ii) Form of Oppenheimer Fund Management, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No.
12 to the Registration Statement of Oppenheimer
Government Securities Fund (Reg. No. 33-02769),
12/2/92, and incorporated herein by reference.
(iii) Form of Oppenheimer Fund Management, Inc. Broker
Agreement: Filed with Post-Effective Amendment No.
12 to the Registration Statement of Oppenheimer
Government Securities Fund (Reg. No. 33-02769),
12/2/92, and incorporated herein by reference.
(iv) Form of Oppenheimer Fund Management, Inc. Agency
Agreement: Filed with Post-Effective Amendment No.
12 to the Registration Statement of Oppenheimer
Government Securities Fund (Reg. No. 33-02769),
12/2/92, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities, Inc.
dated October 1, 1986: Previously filed with Post-
Effective Amendment No. 25 to the Registration
Statement of Oppenheimer Special Fund (File No. 2-
45272), 11/1/86, and incorporated herein by
reference.
(7) Retirement Plan for Non-Interested Trustees or Directors
(adopted 6/7/90): Filed with Post-Effective Amendment No.
97 of Oppenheimer Fund (Reg. No. 2-14586), and
incorporated herein by reference.
(8) (i) Custodian Agreement dated October 7, 1976: Filed
with Post-Effective Amendment No.2 to Registrant's
Registration Statement and incorporated herein by
reference.
(ii) Assignment and Amendment dated May 1, 1987 of
Custody Agreement dated October 7, 1976 among
Oppenheimer Tax-Free Bond Fund, Inc., Citibank,
N.A., and Oppenheimer Tax-Free Bond Fund: Filed
with Post-Effective Amendment No. 22 to
Registrant's Registration Statement and
incorporated herein by reference.
(iii) Amendment dated as of March, 1978 to Custody
Agreement of Oppenheimer Tax-Free Bond Fund, Inc.:
Filed with Post-Effective Amendment No. 24 to
Registrant's Registration Statement, 4/29/88, and
incorporated herein by reference.
(iv) Amendment dated as of August 13, 1980 to Custody
Agreement of Oppenheimer Tax-Free Bond Fund, Inc.:
Filed with Post-Effective Amendment No. 24 to
Registrant's Registration Statement, 4/29/88, and
incorporated herein by reference.
(v) Amendment dated September 28, 1984 to Custody
Agreement of Oppenheimer Tax-Free Bond Fund, Inc.:
Filed with Post-Effective Amendment No. 24 to
Registrant's Registration Statement, 4/29/88, and
incorporated herein by reference.
(vi) Amendment dated June 16, 1986 to Custody Agreement
of Oppenheimer Tax-Free Bond Fund, Inc.: Filed
with Post-Effective Amendment No. 24 to
Registrant's Registration Statement, 4/29/88, and
incorporated herein by reference.
(9) (i) Agreement and Plan of Reorganization and
Liquidation dated 2/12/87 by and between
Registrant and Oppenheimer Tax-Free Bond Fund,
Inc.: Filed with Post-Effective Amendment No. 24
to Registrant's Registration Statement, 4/29/88,
and incorporated herein by reference.
(ii) Articles of Transfer dated 4/30/87 of the
Registrant and Oppenheimer Tax-Free Bond Fund,
Inc.: Filed with Post-Effective Amendment No. 24
to Registrant's Registration Statement, 4/29/88,
and incorporated herein by reference.
(iii) Agreement and Plan of Reorganization dated 2/28/91
between Registrant and MassMutual Tax-Exempt Bond
Fund: Filed with Post-Effective Amendment No. 30
to Registrant's Registration Statement, 3/16/93,
and incorporated herein by reference.
(iv) Agreement and Plan of Reorganization dated 8/5/91
between Registrant and Advance America Funds, Inc.
on behalf of Tax-Free Income Fund: Filed with
Post-Effective Amendment No. 30 to Registrant's
Registration Statement, 3/16/93, and incorporated
herein by reference.
(10) Opinion and Consent of Counsel dated 5/1/87: Filed with
Post-Effective Amendment No. 22 to Registrant's
Registration Statement and incorporated herein by
reference.
(11) Not applicable.
(12) Not applicable.
(13) Investment Letter dated 12/23/83 from Oppenheimer
Management Corporation to Registrant: Filed with Post-
Effective Amendment No.2 to Registrant's Registration
Statement and incorporated herein by reference.
(14) Not applicable.
(15) (i) Service Plan and Agreement for Class A shares
dated 6/10/93 pursuant to Rule 12b-1 under the
Investment Company Act of 1940: Filed herewith.
(ii) Distribution and Service Plan and Agreement for
Class B shares under Rule 12b-1 dated 6/10/93:
Filed herewith.
(16) Performance computation schedule: To be filed by
amendment.
-- Powers of Attorney, including Certified Board Resolutions:
Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
None
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of February 18, 1994
Class A Shares of Beneficial Interest 19,395
Class B Shares of Beneficial Interest 1,393
Item 27. Indemnification
Reference is made to paragraphs (c) through (g) of Section 12 of
Article SEVENTH of Registrant's Declaration of Trust filed as Exhibit
24(b)(1) to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of
the Registrant; it and certain subsidiaries act in the same
capacity for other registered investment companies as described
in Parts A and B hereof.
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of Oppenheimer Management Corporation, reference is
made to Part B of this Registration Statement and to the
registration on Form ADV filed by Oppenheimer Management
Corporation under the Investment Advisers Act of 1940, which
filing is incorporated herein by reference.
Item 29. Principal Underwriter
(a) Oppenheimer Fund Management, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of certain of
the other registered open-end investment companies for which
Oppenheimer Management Corporation is the investment adviser,
as described in Parts A and B of this Registration Statement.
(b) The information contained in the registration on Form BD of
Oppenheimer Fund Management, Inc., filed under the Securities
Exchange Act of 1934, is incorporated herein by reference.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act and
rules promulgated thereunder are in possession of Oppenheimer Management
Corporation at its offices at 3410 South Galena Street, Denver, Colorado
80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York
on the 28th day of February, 1994.
OPPENHEIMER TAX-FREE BOND FUND
By: /s/ Donald W. Spiro*
----------------------------------------
Donald W. Spiro, President
Attest:
/s/ Andrew J. Donohue*
- ----------------------------
Andrew J. Donohue, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the
- -------------- Board of Trustees February 28, 1994
Leon Levy
/s/ Donald W. Spiro* President, Principal
- -------------------- Executive Officer
Donald W. Spiro and Trustee February 28, 1994
/s/ George Bowen* Treasurer and
- ----------------- Principal Financial
George Bowen and Accounting
Officer February 28, 1994
/s/ Leo Cherne* Trustee February 28, 1994
- ---------------
Leo Cherne
/s/ Edmund T. Delaney* Trustee February 28, 1994
- ----------------------
Edmund T. Delaney
/s/ Robert G. Galli* Trustee February 28, 1994
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee February 28, 1994
- ----------------------
Benjamin Lipstein
/s/ Kenneth A. Randall* Trustee February 28, 1994
- -----------------------
Kenneth A. Randall
/s/ Sidney M. Robbins* Trustee February 28, 1994
- ----------------------
Sidney M. Robbins
/s/ Russell S. Reynolds, Jr.* Trustee February 28, 1994
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee February 28, 1994
- --------------------
Pauline Trigere
/s/ Elizabeth B. Moynihan* Trustee February 28, 1994
- --------------------------
Elizabeth B. Moynihan
/s/ Clayton K. Yeutter* Trustee February 28, 1994
- -----------------------
Clayton K. Yeutter
/s/ Edward V. Regan* Trustee February 28, 1994
- --------------------
Edward V. Regan
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
24(b)(4)(ii) Specimen Class B Share Certificate
25(b)(15)(i) Service Plan and Agreement for Class A
shares under rule 12b-1 dated
June 10, 1993
25(b)(15)(ii) Distribution and Service Plan and Agreement
for Class B shares under rule 12b-1 dated
June 10, 1993
- -- Powers of Attorney, including Certified
Board Resolutions
<PAGE>
Exhibit 24(b)(ii)
OPPENHEIMER TAX-FREE BOND FUND
Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within 8-1/4"
x 10-3/4" decorative border, 5/16" wide)
(upper left corner) share certificate no.
(upper left, box with heading: NUMBER [of shares]
below cert no.)
(upper right) box with heading: CLASS B SHARES
(centered
below boxes) OPPENHEIMER TAX-FREE BOND FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 683805105
(at left) is the owner of
(centered) FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST
OPPENHEIMER TAX-FREE BOND FUND
(hereinafter called the "Fund"), transferable only on the
books of the Fund By the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by acceptance
hereof assents. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(at left Dated: (at right
of seal) of seal)
(signature) (signature)
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER TAX-FREE BOND FUND
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
[A DIVISION OF OPPENHEIMER MANAGEMENT
CORPORATION]
Denver (CO.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not on above list.
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class B Shares of
beneficial interest represented by the within certificate, and do hereby
irrevocably constitute and appoint ___________________________ Attorney
to transfer the said shares on the books of the within named Fund with
full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
______________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 25(b)(15)(i)
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER TAX-FREE BOND FUND
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT (the "Plan") dated the 10th day of June, 1993,
by and between OPPENHEIMER TAX-FREE BOND FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its Class
A Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Article III,
Section 26 of the Rules of Fair Practice of the National Association of
Securities Dealers, pursuant to which the Fund will reimburse the
Distributor for a portion of its costs incurred in connection with the
personal service and the maintenance of shareholder accounts ("Accounts")
that hold Class A Shares (the "Shares") of such series and class of the
Fund. The Fund may be deemed to be acting as distributor of securities
of which it is the issuer, pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"), according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering services and for the maintenance of
Accounts. Such Recipients are intended to have certain rights as third-
party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a)"Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered services in connection with the
personal service and maintenance of Accounts; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning such service; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Fund's Board of Trustees (the "Board")
who are not "interested persons" (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this
Plan or in any agreements relating to this Plan (the "Independent
Trustees") may remove any broker, dealer, bank or other institution
as a Recipient, whereupon such entity's rights as a third-party
beneficiary hereof shall terminate.
(b)"Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that two entities would otherwise qualify as Recipients as to
the same Shares, the Recipient which is the dealer of record on the
Fund's books shall be deemed the Recipient as to such Shares for
purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor,
within forty-five (45) days of the end of each calendar quarter, in
the amount of the lesser of: (i) .0625% (.25% on an annual basis) of
the average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day of
Qualified Holdings that are attributable to sales made on or after
April 1, 1988, or (ii) the Distributor's actual expenses under the
Plan for that quarter of the type approved by the Board. The
Distributor will use such fee received from the Fund in its entirety
to reimburse itself for payments to Recipients and for its other
expenditures and costs of the type approved by the Board incurred in
connection with the personal service and maintenance of Accounts
including, but not limited to, the services described in the following
paragraph. The Distributor may make Plan payments to any "affiliated
person" (as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of Accounts
may include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Fund,
providing such customers with information on their investment in
shares, assisting in the establishment and maintenance of accounts or
sub-accounts in the Fund, making the Fund's investment plans and
dividend payment options available, and providing such other
information and customer liaison services and the maintenance of
Accounts as the Distributor or the Fund may reasonably request. It
may be presumed that a Recipient has provided services qualifying for
compensation under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either the
Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may not
be rendering appropriate services, then the Distributor, at the
request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate services in this regard. If the Distributor still is not
satisfied, it may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such entity's rights as a
third-party beneficiary hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan
will not be used to pay any interest expense, carrying charges or
other financial costs, or allocation of overhead by the Distributor,
or for any other purpose other than for the payments described in this
Section 3. The amount payable to the Distributor each quarter will
be reduced to the extent that reimbursement payments otherwise
permissible under the Plan have not been authorized by the Board of
Trustees for that quarter. Any unreimbursed expenses incurred for any
quarter by the Distributor may not be recovered in later periods.
(b)The Distributor shall make payments to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at
a rate not to exceed .0625% (.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day of Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers that are attributable to sales made on and after April 1,
1988 (excluding Shares acquired in reorganizations with investment
companies for which Oppenheimer Management Corporation or an affiliate
acts as investment adviser and which have not adopted a distribution
plan at the time of the reorganization with the Fund). However, no
such payments shall be made to any Recipient for any such quarter in
which its Qualified Holdings do not equal or exceed, at the end of
such quarter, the minimum amount ("Minimum Qualified Holdings"), if
any, to be set from time to time by a majority of the Independent
Trustees. A majority of the Independent Trustees may at any time or
from time to time increase or decrease and thereafter adjust the rate
of fees to be paid to the Distributor or to any Recipient, but not to
exceed the rate set forth above, and/or increase or decrease the
number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified
Holdings and the rate of payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice.
(c)Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection or replacement of Independent Trustees and the nomination
of those persons to be Trustees of the Fund who are not "interested
persons" of the Fund shall be committed to the discretion of the
Independent Trustees. Nothing herein shall prevent the Independent
Trustees from soliciting the views or the involvement of others in such
selection or nomination if the final decision on any such selection and
nomination is approved by a majority of the incumbent Independent
Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, and the purposes
for which the payments were made. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year with respect to the personal service and
maintenance of Accounts in conjunction with the Board's annual review of
the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its "assignment" (as defined in the 1940 Act); (iii) it shall
go into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has
been approved by a vote of the Independent Trustees cast in person at a
meeting called on June 10, 1993 for the purpose of voting on this Plan,
and takes effect as of July 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect until December 31, 1993 and from
year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by the
Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance. This Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. This Plan may not be
amended to increase materially the amount of payments to be made without
approval of the Class A Shareholders, in the manner described above, and
all material amendments must be approved by a vote of the Board and of the
Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder and Trustee liability for acts or obligations of
the Fund.
OPPENHEIMER TAX-FREE BOND FUND
By: /s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
------------------------------------
Katherine P. Feld
Vice President & Secretary
Exhibit 25(b)(15)(ii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER TAX-FREE BOND FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 10th
day of June, 1993 by and between OPPENHEIMER TAX-FREE BOND FUND (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for a
portion of its costs incurred in connection with the distribution of
Shares, and the personal service and maintenance of shareholder accounts
that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to
the terms of this Plan. The Distributor is authorized under the Plan to
pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended
to have certain rights as third-party beneficiaries under this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the
1940 Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., or
its successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a)"Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation
of this Plan or in any agreements relating to this Plan (the
"Independent Trustees") may remove any broker, dealer, bank or other
institution as a Recipient, whereupon such entity's rights as a third-
party beneficiary hereof shall terminate.
(b)"Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that two entities would otherwise qualify as Recipients as to
the same Shares, the Recipient which is the dealer of record on the
Fund's books shall be deemed the Recipient as to such Shares for
purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a)The Fund will make payments to the Distributor, (i) within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount of 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Service Fee"),
plus (ii) within ten (10) days of the end of each month, in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average
during the month of the aggregate net asset value of Shares computed
as of the close of each business day (the "Asset Based Sales Charge")
outstanding for six years or less (the "Maximum Holding Period").
Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support
services of the type approved by the Board with respect to Accounts.
Such Asset Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sales of Shares.
The administrative support services in connection with the Accounts
to be rendered by Recipients may include, but shall not be limited to,
the following: answering routine inquiries concerning the Fund,
assisting in the establishment and maintenance of accounts or sub-
accounts in the Fund and processing Share redemption transactions,
making the Fund's investment plans and dividend payment options
available, and providing such other information and services in
connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably
request.
The distribution assistance in connection with the sale of Shares
to be rendered by the Distributor and Recipients may include, but
shall not be limited to, the following: distributing sales literature
and prospectuses other than those furnished to current holders of the
Fund's Shares ("Shareholders"), and providing such other information
and services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it to
payments under the Plan. In the event that either the Distributor or
the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor still is not satisfied,
it may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
(b)The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis) of
the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum
period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees. Alternatively, the
Distributor may, at its sole option, make service fee payments
("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate
not to exceed (i) 0.25% of the average during the calendar quarter of
the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified
Holdings sold by the Recipient during that quarter and owned
beneficially or of record by the Recipient or by its Customers, plus
(ii) 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed
as of the close of each business day, constituting Qualified Holdings
owned beneficially or of record by the Recipient or by its Customers
for a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed the
limits on payments to Recipients that are, or may be, imposed by
Article III, Section 26, of the NASD Rules of Fair Practice. In the
event Shares are redeemed less than one year after the date such
Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee
Payments, based on the ratio of the time such shares were held to one
(1) year. The Advance Service Fee Payments described in part (i) of
the preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient for
any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees. A majority of the Independent
Trustees may at any time or from time to time decrease and thereafter
adjust the rate of fees to be paid to the Distributor or to any
Recipient, but not to exceed the rate set forth above, and/or direct
the Distributor to increase or decrease the Maximum Holding Period,
the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified
Holdings, Maximum Holding Period or Minimum Holding Period, if any,
and the rate of payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions or
a change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan payments
to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
(c)The Distributor is entitled to retain from the payments described
in Section 3(a) the aggregate amount of (i) the Service Fee on Shares
outstanding for less than the Minimum Holding Period plus (ii) the
Asset-Based Sales Charge on Shares outstanding for not more than the
Maximum Holding Period, in each case computed as of the close of each
business day during that period and subject to reduction or
elimination of such amounts under the limits to which the Distributor
is, or may become, subject under Article III, Section 26, of the NASD
Rules of Fair Practice. Such amount is collectively referred to as
the "Quarterly Limitation." The distribution assistance and
administrative support services in connection with the sale of Shares
to be rendered by the Distributor may include, but shall not be
limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other institution that sell Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater
than, the amount provided for in Section 3(a) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) paying of or
reimbursing the Distributor for interest and other borrowing costs on
unreimbursed Carry Forward Expenses (as hereafter defined) at the rate
paid by the Distributor or, if such amounts are financed by the
Distributor from its own resources or by an affiliate, at the rate of
1% per annum above the prime rate (which shall mean the most
preferential interest rate on corporate loans at large U.S. money
center commercial banks) then being reported in the Eastern edition of
the Wall Street Journal (or if such prime rate is no longer so
reported, such other rate as may be designated from time to time by
the Distributor with the approval of the Independent Trustees); (iv)
other direct distribution costs of the type approved by the Board,
including without limitation the costs of sales literature,
advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. The Distributor's costs of
providing the above-mentioned services are hereinafter collectively
referred to as "Distribution and Service Costs." "Carry Forward
Expenses" are Distribution and Service Costs that are not paid in the
fiscal quarter in which they arise because they exceed the Quarterly
Limitation. In the event that the Board should have reason to believe
that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the
sale of Shares, then the Distributor, at the request of the Board,
shall provide the Board with a written report or other information to
verify that the Distributor is providing appropriate services in this
regard.
(d)The excess in any fiscal quarter of (i) the Quarterly Limitation
plus any contingent deferred sales charge ("CDSC") payments recovered
by the Distributor on the proceeds of redemption of Shares over (ii)
Distribution and Service Costs during that quarter, shall be applied
in the following order of priority: first to interest on unreimbursed
Carry Forward Expenses, second to reduce any unreimbursed Carry
Forward Expenses, third to reduce Distribution and Service Costs
during that quarter, and fourth, to reduce the Asset Based Sales
Charge payments by the Fund to the Distributor in that quarter. Carry
Forward Expenses shall be carried forward by the Fund until payment
can be made under the Quarterly Limitation.
(e)Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources, from Asset Based Sales Charge payments or from its
borrowings.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing distribution expenditures properly attributable to
the Shares, including the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, the amount paid
to the Distributor and the Distribution and Service Costs and Carry
Forward Expenses for that period. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year and its total expenses incurred in prior years
and not previously recovered with respect to the distribution of Shares
in conjunction with the Board's annual review of the continuation of the
Plan.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has
been approved by a vote of the Board and its Independent Trustees cast in
person at a meeting called on June 10, 1993 for the purpose of voting on
this Plan, and takes effect as of July 1, 1993. Unless terminated as
hereinafter provided, it shall continue in effect until December 31, 1993
and from year to year thereafter or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of payments
to be made without approval of the Class B Shareholders, in the manner
described above, and all material amendments must be approved by a vote
of the Board and of the Independent Trustees. This Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. Notwithstanding any
such termination, the Distributor shall be entitled to payment from the
Fund of all Carry Forward Expenses properly incurred in respect of Shares
sold prior to the effective date of such termination, and the Fund shall
continue to make payment to the Distributor in the amount the Distributor
is entitled to retain under part (c) of Section 3 hereof, until such time
as the Distributor has been reimbursed for all such amounts by the Fund
and by retaining CDSC payments.
8. Disclaimer of Shareholder Liability. The Distributor understands that
the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and
the Fund's property. The Distributor represents that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
and Trustee liability for acts or obligations of the Fund.
OPPENHEIMER TAX-FREE BOND FUND
By: /s/ Robert G. Zack
-----------------------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
------------------------------------
Katherine P. Feld
Vice President & Secretary
<PAGE>
OPPENHEIMER ASSET ALLOCATION FUND
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
OPPENHEIMER DISCOVERY FUND
OPPENHEIMER GLOBAL BIO-TECH FUND
OPPENHEIMER GLOBAL ENVIRONMENT FUND
OPPENHEIMER GLOBAL FUND
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
OPPENHEIMER MONEY MARKET FUND, INC.
OPPENHEIMER MORTGAGE INCOME FUND
OPPENHEIMER MULTI-GOVERNMENT TRUST
OPPENHEIMER MULTI-SECTOR INCOME TRUST
OPPENHEIMER NEW YORK TAX-EXEMPT FUND
OPPENHEIMER FUND
OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND
OPPENHEIMER SPECIAL FUND
OPPENHEIMER TARGET FUND
OPPENHEIMER TAX-FREE BOND FUND
OPPENHEIMER TIME FUND
OPPENHEIMER U.S. GOVERNMENT TRUST
CERTIFIED RESOLUTIONS OF THE BOARDS
June 10, 1993
At a meeting of the Boards for the above referenced funds (the
"Funds") held on June 10, 1993, the members thereof by unanimous vote of
those present adopted and approved the following resolutions:
"RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G.
Zack, and each of them, be, and the same hereby is, appointed the
attorney-in-fact and agent of Donald W. Spiro, as President of the Funds,
Robert G. Galli, as Secretary of the Funds, and George C. Bowen, as
Treasurer of the Funds (Principal Financial and Accounting Officer), with
full power of substitution and resubstitution, to sign on the behalf of
such officers of each of the Funds any and all Registration Statements
(including any post-effective amendments to such Registration Statements)
under the Securities Act of 1933 and the Investment Company Act of 1940
and any amendments and supplements thereto, and other documents in
connection thereunder, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission; and be it further
RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G.
Zack, and each of them, hereby is authorized, empowered and directed, in
the name and on behalf of the Funds, to take such additional action and
to execute and deliver such additional documents and instruments as any
of them may deem necessary or appropriate to implement the provisions of
the foregoing resolution, the authority for the taking of such action and
the execution and delivery of such documents and instruments of such
documents and instruments to be conclusively evidenced thereby."
In witness whereof, the undersigned has hereunto set his hand this
26th day of July, 1993.
/s/ ROBERT G. ZACK
- -------------------------------------
Robert G. Zack
Assistant Secretary
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ LEON LEVY
---------------------------------
Leon Levy
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ DONALD W. SPIRO
--------------------------
Donald W. Spiro
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ LEO CHERNE
---------------------------
Leo Cherne
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ EDMUND T. DELANEY
-------------------------------
Edmund T. Delaney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ BENJAMIN LIPSTEIN
---------------------------------
Benjamin Lipstein
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ KENNETH A. RANDALL
-------------------------------------
Kenneth A. Randall
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ SIDNEY M. ROBBINS
------------------------------
Sidney M. Robbins
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ RUSSELL S. REYNOLDS, JR.
-----------------------------------
Russell S. Reynolds, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 12th day of June, 1993.
/S/ PAULINE TRIGERE
-----------------------------
Pauline Trigere
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ ELIZABETH B. MOYNIHAN
-----------------------------------
Elizabeth B. Moynihan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ CLAYTON YEUTTER
-------------------------------
Clayton Yeutter
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his capacity as the
Treasurer (Principal Financial and Accounting Officer) of OPPENHEIMER TAX-
FREE BOND FUND, a Massachusetts business trust (the "Fund"), to sign on
his behalf any and all Registration Statements (including any post-
effective amendments to Registration Statements) under the Securities Act
of 1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, and
each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 13th day of July, 1993.
/S/ GEORGE BOWEN
----------------------------
George Bowen
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his capacity as the
President of OPPENHEIMER TAX-FREE BOND FUND, a Massachusetts business
trust (the "Fund"), to sign on his behalf any and all Registration
Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, the Investment Company Act
of 1940 and any amendments and supplements thereto, and other documents
in connection thereunder, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, and each of them, may lawfully do or cause to be done by
virtue hereof.
Dated this 13th day of July, 1993.
/S/ DONALD W. SPIRO
-----------------------------
Donald W. Spiro
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his capacity as the Secretary of
OPPENHEIMER TAX-FREE BOND FUND, a Massachusetts business trust (the
"Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and other documents in connection
thereunder, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully as to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue
hereof.
Dated this 13th day of July, 1993.
/S/ ROBERT G. GALLI
-----------------------------
Robert G. Galli
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each
of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his
or her capacities as a trustee of OPPENHEIMER TAX-FREE BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on his (her) behalf any
and all Registration Statements (including any post-effective amendments
to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully as to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, may lawfully do
or cause to be done by virtue hereof.
Dated this 10th day of June, 1993.
/S/ EDWARD V. REGAN
-------------------------------
Edward V. Regan
