<PAGE>
OPPENHEIMER TAX-FREE BOND FUND
Semiannual Report June 30, 1995
[PHOTO]
"We want investment INCOME that won't add to our taxes."
[LOGO] OPPENHEIMERFUNDS
<PAGE>
NEWS
=================================
Standardized Yield
For the 30 Days Ended 6/30/95:(4)
Class A
- ---------------------------------
4.80%
- ---------------------------------
Class B
- ---------------------------------
4.24%
- ---------------------------------
- ---------------------------------
Beat the Average
- ---------------------------------
Total Return for the 1-Year
Period Ended 6/30/95:
Oppenheimer Tax-Free Bond Fund
(at net asset value)(2)
- ---------------------------------
8.14%
- ---------------------------------
Lipper General Municipal
Debt Fund Average(5)
- ---------------------------------
7.68%
- ---------------------------------
This Fund is for people who need INCOME that's EXEMPT from taxes.
- -------------------------------------------------------------------------------
HOW YOUR FUND IS MANAGED
- -------------------------------------------------------------------------------
Oppenheimer Tax-Free Bond Fund invests in a diversified portfolio of municipal
bonds. As a Fund shareholder, you receive income that is free from federal
income taxes.(1) Your dividends don't increase your taxable income the way
taxable investments do, so you can keep more of what you earn.
Tax-Free Bond Fund is managed by an experienced team of municipal bond
specialists who research investments thoroughly before they are included in the
Fund's portfolio.
- -------------------------------------------------------------------------------
PERFORMANCE
- -------------------------------------------------------------------------------
Total return at net asset value for the 6 months ended 6/30/95 was 10.61% for
Class A shares and 10.21% for Class B Shares.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-, 5- and 10-year periods ended 6/30/95 were 3.00%,
6.53% and 8.10%, respectively. For Class B shares, average annual total returns
for the 1-year period ended 6/30/95 and since inception of the Class on 3/16/93
were 2.21% and 2.11%, respectively.(3)
- -------------------------------------------------------------------------------
OUTLOOK
- -------------------------------------------------------------------------------
"We believe the current market is fairly valued. There are still plenty of
positives, along with a good supply and demand relationship. As far as the Fund
is concerned, in the first half of the year, we realized significant
appreciation. For the remainder of the year, we expect a stable market. Relative
to other fixed income securities and aganst a low inflation backdrop, the
outlook for municipal bonds is very good."
Robert Patterson, Portfolio Manager
June 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.
2. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 6/30/94, 6/30/90
and 6/30/85, after deducting the current maximum initial sales charge of 4.75%.
Class B returns show results of hypothetical investments on 6/30/94 and 3/16/93
(inception of class), and the deduction of the applicable contingent deferred
sales charge of 5% (1-year) and 3% (since inception). Class A and B shares were
first publicly offered 10/27/76 and 3/16/93, respectively. An explanation of the
different performance calculations is in the Fund's prospectus.
4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 6/30/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
5. Source: Lipper Analytical Services. The Lipper total return average for the
1-year period was for 201 general municipal debt funds. The average is shown for
comparative purposes only. Oppenheimer Tax-Free Bond Fund is characterized by
Lipper as a general municipal debt fund. Lipper performance does not take sales
charges into consideration.
2 Oppenheimer Tax-Free Bond Fund
<PAGE>
[PHOTO]
Donald W. Spiro
President
Oppenheimer Tax-Free Bond Fund
[PHOTO]
Jon S. Fossel
Chairman and CEO
Oppenheimer Management Corporation
Dear OppenheimerFunds Shareholder,
In contrast to last year, the first half of 1995 has been exceptionally good for
the bond market. Almost all types of bonds have participated in the upswing and,
in many cases, have more than made up for last year's declines in the first half
alone--rewarding investors who were patient through the market's short-term
difficulties. The strength of the current market adds to evidence showing, once
again, that profitable investing calls for a long-term perspective.
The single most important factor behind the rally was a change in the
Federal Reserve's monetary policy. From February 1994 to February 1995, the Fed
raised rates aggressively to preempt possible inflation by slowing the economy
to a more moderate growth rate, thus prolonging the current cycle of economic
growth. As evidence began to mount that indicated the economy was indeed
slowing, the Fed stopped raising rates.
Like most bonds, municipal bonds benefited from the Fed's moves, but they
also gained for a number of other reasons. First, the income municipal or tax-
free bonds pay is currently very attractive compared to the after-tax income
from other fixed income investments. This has made them appealing to investors
whose primary goal is income. In addition, relatively short supply and
increased demand for municipal bonds--particularly in regions with high tax
rates--have supported higher prices.
We believe the municipal bond market is strong today; however, the ongoing
congressional budget talks may have an effect as the year continues. State
governments are under financial pressure as the Federal government moves to
reduce the deficit. Thus, states and municipalities may find that although they
will be in a position of having greater say over how money is spent locally,
they will have less money overall--lowering the ratings of some bonds, thus
decreasing the number of quality issues available. Careful credit analysis will
play an even more important role in selecting investments. The good news is that
your managers have always believed in careful analysis and will continue to
steer the Fund toward promising investment opportunities.
Going forward, your Fund's management team is optimistic, but somewhat more
convervative. Municipal bonds have experienced tremendous capital appreciation
during the first half of this year, and your managers want to avoid giving back
gains the Fund has made. Our goal remains to combine the income needs of our
shareholders with a desire to limit risk. Your managers believe the Fund will be
in a strong position to do both for the remainder of the year and in the future.
Your portfolio manager discusses the outlook for your Fund on the following
pages. Thank you for your confidence in OppenheimerFunds, and we look forward to
helping you continue to reach your investment goals in the future.
/s/ Donald W. Spiro /s/ Jon S. Fossel
Donald W. Spiro Jon S. Fossel
July 24, 1995
3 Oppenheimer Tax-Free Bond Fund
<PAGE>
Q+A [PHOTO] [PHOTO]
Q What is your OUTLOOK for the municipal market?
AN INTERVIEW WITH YOUR FUND'S MANAGER.
THE FUND HAS PERFORMED VERY WELL OVER THE LAST 12 MONTHS, AS IT BEAT THE LIPPER
MUNICIPAL DEBT FUND AVERAGE FOR THE 1-YEAR PERIOD ENDED JUNE 30, 1995. WHAT
FACTORS AFFECTED THE MUNICIPAL BOND MARKET SINCE THE LAST REPORT?
Municipal bonds had a strong run since Thanksgiving of last year and
particularly in the first quarter of this year. Toward the end of last year,
interest rates began to decline and the
[PHOTO]
fixed income markets started to rally, and most bonds participated in the rally.
This, in turn, increased demand for municipal bonds and put pressure on the
already short supply. As a result, the increased demand and short supply pushed
prices higher. Thus, municipal bonds experienced significant capital
appreciation over the past six months.
Because we anticipated the rally, the Fund was well positioned, and we were
able to take advantage of the positive market environment.
WHAT CHANGES HAVE YOU MADE AS A RESULT OF THE BOND RALLY?
Most of the changes we made occurred last November, when we began to anticipate
a turnaround.
We've increased our holdings of prerefunded and insured bonds in the
portfolio--these issues were hit hardest in 1994's tough market, so they've
provided the greatest appreciation since the turnaround.
We've also been selling positions in par bonds, which we bought at a
discount and which have now reached par value. Our thinking here is that having
reached par, they may underperform in the future.
And finally, we're looking at bonds from states with high tax rates--the
underlying demand for these issues has supported prices during this time of
relatively short supply.(1)
(1) The Fund's portfolio is subject to change
4 Oppenheimer Tax-Free Bond Fund
<PAGE>
FACING PAGE
Top left: Robert Patterson, Portfolio Manager
Top right: The trading desk
Bottom: Len Darling, Executive VP, Director of Fixed Income Investments, with
Jon Fossel, CEO and Chairman, Oppenheimer Management Corporation
THIS PAGE
Right: Robert Patterson
Below: Len Darling with Caryn Halbrecht, Tax-Exempt Portfolio Manager
A The long-term outlook for the market remains POSITIVE.
WITH A RECORD NUMBER OF BOND CALLS EXPECTED THIS SUMMER, HOW ARE YOU POSITIONING
THE PORTFOLIO TO PROTECT INCOME?
The calls--or built-in opportunities for issuers to buy back bonds prior to
maturity--we expect to see will continue to bolster the favorable supply/demand
characteristics in the muni bond market.
Other than that, we don't expect to feel much effect from the number of
bond calls. We primarily invest in bonds with "call protection," a feature that
allows us to be the ones who decide how long we'll own a bond. We've always
considered call protection an important feature, so the Fund is fairly well
insulated against call risk.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL BOND MARKET?
Favorable economic fundamentals and strong technical
[PHOTO]
factors, namely the imbalance between supply and demand, continue to create a
positive environment for municipal bonds going forward.
This year, demand for municipal bonds is expected to outstrip supply, which
we believe should continue. While this "positive" for munis has been briefly
offset by concerns from various tax reform proposals, we believe that these
fears are overblown and the long-term outlook for the market remains positive.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We believe the current market is fairly valued. As stated before, there are
still plenty of positives, along with a good supply and demand relationship.
As far as the Fund is concerned, in the first half of the year, we realized
significant appreciation. For the remainder of the year, we expect a stable
market.
Relative to other fixed income securities and against a low inflation
backdrop, the outlook for the Fund is very good. Investors were well compensated
for waiting out last year's market, and we believe the current strength should
persist through 1995 and into next year.
[PHOTO]
5 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS June 30, 1995 (Unaudited)
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
==================================================================================================================================
<S> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--99.6%
- ----------------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.2% Huntsville, Alabama Health Care Authority
Health Care Facilities Revenue Bonds, Series B,
MBIA Insured, 6.625%, 6/1/23 Aaa/AAA $ 7,235,000 $ 7,601,936
- ----------------------------------------------------------------------------------------------------------------------------------
ARIZONA--0.1% Central Arizona Irrigation and Drainage District
General Obligation Refunding Bonds, 7%, 6/1/98(1) NR/D 1,385,000 656,821
- ----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--10.7% California Health Facilities Financing Authority
Revenue Bonds, Episcopal Homes Project,
Series A, OSHPD Insured, 7.80%, 7/1/15 NR/A 1,000,000 1,071,812
---------------------------------------------------------------------------------------------------------
California Housing Finance Agency Revenue
Bonds, Home Mtg., Series C, 6.75%, 2/1/25 Aa/AA- 5,000,000 5,065,770
---------------------------------------------------------------------------------------------------------
California Housing Finance Agency Revenue
Bonds, Series C, 6.65%, 8/1/14 Aa/AA- 5,000,000 5,114,034
---------------------------------------------------------------------------------------------------------
California State Public Works Board Lease
Revenue Bonds, Regents of the University of
California, Series A, AMBAC Insured, 6.40%, 12/1/16 Aaa/AAA/AAA 8,700,000 9,023,109
---------------------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor Agency
California Toll Road Revenue Bonds, Sr. Lien,
Series A, 6.50%, 1/1/32 NR/BBB- /BBB 10,500,000 10,131,785
---------------------------------------------------------------------------------------------------------
Los Angeles County, California Transportation
Commission Sales Tax Revenue Bonds, Prerefunded,
Series A, FGIC Insured, 6.75%, 7/1/18 Aaa/AAA/AAA 5,000,000 5,625,990
---------------------------------------------------------------------------------------------------------
Redding, California Electric System Revenue
Certificates of Participation, FGIC Insured,
Inverse Floater, 7.10%, 6/28/19(2) Aaa/AAA/AAA 6,000,000 5,351,286
---------------------------------------------------------------------------------------------------------
Sacramento, California Municipal Utility District
Electric Revenue Bonds, Prerefunded, Series W,
7.50%, 8/15/18 Aaa/AAA/A- 2,500,000 2,735,252
---------------------------------------------------------------------------------------------------------
San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue Bonds, Sr.
Lien, 6.75%, 1/1/32 NR/NR/BBB 12,700,000 12,682,829
---------------------------------------------------------------------------------------------------------
South Orange County, California Public Financing
Authority Special Tax Revenue Bonds, Sr. Lien,
Series A, MBIA Insured, 6%, 9/1/18 Aaa/AAA/NR 10,500,000 10,093,008
------------
66,894,875
- ----------------------------------------------------------------------------------------------------------------------------------
COLORADO--1.3% Colorado Health Facilities Authority Revenue
Bonds, Kaiser Permanente Medical Care
Project, 9%, 8/1/03 NR/AA 1,000,000 1,024,149
---------------------------------------------------------------------------------------------------------
Colorado Health Facilities Authority Revenue
Bonds, Kaiser Permanente Medical Care
Project, 9.125%, 8/1/15 NR/AA 2,000,000 2,048,500
---------------------------------------------------------------------------------------------------------
Colorado Health Facilities Authority Revenue
Bonds, Rocky Mountain Adventist Health
System, 6.625%, 2/1/22 Baa/BBB 5,000,000 4,901,655
------------
7,974,304
</TABLE>
6 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DELAWARE--3.7% Delaware Transportation Authority Transportation System
Revenue Bonds, Prerefunded, Sr. Lien, 6.75%, 7/1/10 Aaa/AAA $ 5,000,000 $ 5,545,710
---------------------------------------------------------------------------------------------------------
Delaware Transportation Authority Transportation System
Revenue Bonds, Sr. Lien, 5.50%, 7/1/16 A1/AA 18,440,000 17,643,889
------------
23,189,599
- ----------------------------------------------------------------------------------------------------------------------------------
FLORIDA--5.0% Broward County, Florida Resource Recovery
Revenue Bonds, Broward Waste Energy-LP North
Project, 7.95%, 12/1/08 A/A- 1,875,000 2,063,674
---------------------------------------------------------------------------------------------------------
Broward County, Florida Resource Recovery
Revenue Bonds, Ses Broward Co.-LP South Project,
7.95%, 12/1/08 A/A- 6,415,000 7,060,515
---------------------------------------------------------------------------------------------------------
Broward County, Florida School District General
Obligation Bonds, Prerefunded, 7.125%, 2/15/08 Aaa/AAA 1,250,000 1,377,835
---------------------------------------------------------------------------------------------------------
Dade County, Florida Industrial Development
Authority Revenue Bonds, Miami Cerebral Palsy
Services Project, 8%, 6/1/22 NR/NR 1,000,000 990,084
---------------------------------------------------------------------------------------------------------
Florida State Board of Education Administration
Capital Outlay General Obligation Refunding
Bonds, 8.40%, 6/1/07 Aa/AA 750,000 947,350
---------------------------------------------------------------------------------------------------------
Florida State Board of Education Capital Outlay
Public Education General Obligation Bonds,
Prerefunded, Series A, 7.25%, 6/1/23 Aaa/AAA 1,000,000 1,129,532
---------------------------------------------------------------------------------------------------------
Florida State Board of Education Capital
Outlay Public Education Refunding Bonds,
Series D, 5.125%, 6/1/18 Aa/AA/AA 10,000,000 8,979,919
---------------------------------------------------------------------------------------------------------
Florida State Division of Finance Department
Revenue Bonds, Department of Natural Resource
Preservation, Series 2000-A, FSA Insured,
5.80%, 7/1/13 Aaa/AAA/A 4,250,000 4,226,527
---------------------------------------------------------------------------------------------------------
Hillsborough County, Florida Industrial Development
Authority Pollution Control Revenue Refunding Bonds,
Tampa Electric Project, 8%, 5/1/22 Aa3/AA 4,000,000 4,739,396
------------
31,514,832
- ----------------------------------------------------------------------------------------------------------------------------------
GEORGIA--1.8% Municipal Electric Authority of Georgia,
Special Obligation Bonds, Fifth Crossover Series,
Project One, 6.50%, 1/1/17 A/A+ 10,750,000 11,314,288
- ----------------------------------------------------------------------------------------------------------------------------------
HAWAII--0.2% Hawaii State Revenue Bonds, Prerefunded,
Series BS, 7%, 9/1/02 Aaa/AA 1,000,000 1,115,171
- ----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--1.1% Du Page County, Illinois Revenue Bonds,
Stormwater Project, Prerefunded, 6.55%, 1/1/21 Aaa/AAA/AAA 5,115,000 5,688,130
---------------------------------------------------------------------------------------------------------
Regional Transportation Authority
of Illinois Revenue Bonds, Series A,
AMBAC Insured, 7.20%, 11/1/20 Aaa/AAA/AAA 1,000,000 1,142,281
------------
6,830,411
</TABLE>
7 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDIANA--4.2% Indiana Health Facilities Financing Authority
Hospital Revenue Bonds, CGIC Insured, 5.50%, 8/15/22 Aaa/AAA $ 5,500,000 $ 5,050,991
---------------------------------------------------------------------------------------------------------
Indianapolis, Indiana Airport Authority Revenue
Bonds, 9%, 7/1/15 A1/A 1,000,000 1,046,527
---------------------------------------------------------------------------------------------------------
Indianapolis, Indiana Airport Authority Revenue
Bonds, Special Facilities-Federal Express Corp.
Project, 7.10%, 1/15/17 Baa2/BBB 10,000,000 10,323,939
---------------------------------------------------------------------------------------------------------
Indianapolis, Indiana Airport Authority Revenue
Bonds, Special Facility-United Airlines Project,
Series A, 6.50%, 11/15/31 Baa2/BB 10,500,000 10,131,082
------------
26,552,539
- ----------------------------------------------------------------------------------------------------------------------------------
KANSAS--2.7% Kansas State Department of Transportation
Highway Revenue Refunding Bonds, Series A,
5.375%, 3/1/12 Aa/AA/AA 17,500,000 16,665,388
- ----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY--0.2% Kentucky State Turnpike Authority Economic
Development Road Revenue Bonds, Revitalization
Projects, Prerefunded, 7.375%, 5/15/07 Aaa/AAA/A+ 1,000,000 1,129,810
- ----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA--1.8% Louisiana Public Facilities Authority Multifamily
Housing Revenue Bonds, One Lakeshore
Project, 9.25%, 7/20/20 NR/AAA 935,000 985,509
---------------------------------------------------------------------------------------------------------
New Orleans, Louisiana Home Mtg. Authority
Special Obligation Refunding Bonds, Escrowed
to Maturity, 6.25%, 1/15/11 Aaa/AAA 9,500,000 9,993,514
------------
10,979,023
- ----------------------------------------------------------------------------------------------------------------------------------
MARYLAND--0.1% Baltimore County, Maryland Mtg. Revenue Bonds,
Loch Raven Village Apts., GNMA Collateralized,
10.10%, 11/20/20 NR/AAA 500,000 516,114
- ----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--8.9% Massachusetts Bay Transportation Authority
Revenue Refunding Bonds, General Transportation
Systems, Series A, 5.50%, 3/1/12 A1/A+/A+ 12,000,000 11,567,928
---------------------------------------------------------------------------------------------------------
Massachusetts Municipal Wholesale Electric Co.
Revenue Bonds, Power Supply Systems, Prerefunded,
Series B, 6.75%, 7/1/17 Aaa/BBB+ 6,985,000 7,891,667
---------------------------------------------------------------------------------------------------------
Massachusetts State General Obligation Refunding
Bonds, Series A, 5.50%, 2/1/11 A1/A+/A+ 20,000,000 19,408,679
---------------------------------------------------------------------------------------------------------
Massachusetts State Health & Educational Facilities
Authority Revenue Bonds, Baystate Medical Center,
Prerefunded, Series C, 7.50%, 7/1/20 A1/A+ 2,500,000 2,811,817
---------------------------------------------------------------------------------------------------------
Massachusetts State Housing Finance Agency
Revenue Bonds, Multifamily Mtg., GNMA
Collateralized, Series A, FHA Insured,
9.125%, 12/1/20 Aaa/AAA 975,000 1,043,386
---------------------------------------------------------------------------------------------------------
Massachusetts State Water Resource Authority
Revenue Bonds, Series A, 6.50%, 7/15/19 A/A/A 12,225,000 12,932,924
------------
55,656,401
</TABLE>
8 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MICHIGAN--4.3% Detroit, Michigan Sewage Disposal Revenue Bonds,
FGIC Insured, Inverse Floater, 7.06%, 7/1/23(2) Aaa/AAA/AAA $13,200,000 $ 11,152,652
---------------------------------------------------------------------------------------------------------
Detroit, Michigan Water Supply System Revenue
Bonds, Prerefunded, FGIC Insured, Inverse Floater,
8.157%, 7/1/22(2) Aaa/AAA/AAA 3,700,000 4,283,901
---------------------------------------------------------------------------------------------------------
Detroit, Michigan Water Supply System Revenue Bonds,
Unrefunded Balance, FGIC Insured, Inverse Floater,
8.157%, 7/1/22(2) Aaa/AAA 1,500,000 1,494,000
---------------------------------------------------------------------------------------------------------
Greater Detroit, Michigan Resource Recovery Authority
Revenue Bonds, Series A, 9.25%, 12/13/08 NR/BBB- 1,500,000 1,564,018
---------------------------------------------------------------------------------------------------------
Greater Detroit, Michigan Resource Recovery
Authority Revenue Bonds, Series H, 9.25%, 12/13/08 NR/BBB- 500,000 521,339
---------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority Revenue
Refunding Bonds, FSA Insured, Inverse Floater,
8.26%, 2/15/22(2) Aaa/AAA 5,000,000 4,932,874
---------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority Revenue
Refunding Bonds, Sisters of Mercy Hospital,
Series H, MBIA Insured, 7.50%, 8/15/13 Aaa/AAA 1,000,000 1,084,805
---------------------------------------------------------------------------------------------------------
Royal Oak, Michigan Hospital Finance Authority
Revenue Bonds, William Beaumont Hospital,
Prerefunded, Series C, 7.375%, 1/1/20 Aaa/NR 2,000,000 2,215,580
------------
27,249,169
- ----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA--0.2% State of Minnesota General Obligation Bonds,
Prerefunded, 7%, 8/1/08 Aaa/AAA/AAA 1,300,000 1,437,511
- ----------------------------------------------------------------------------------------------------------------------------------
MISSOURI--0.2% Missouri State Environmental Improvement &
Energy Resource Authority Pollution Control
Revenue Bonds, Associated Electric Co-op 84G-4,
8.25%, 11/15/14 Aa3/AA- 1,390,000 1,465,171
- ----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--3.9% Bergen County, New Jersey Utilities Authority
Water Pollution Control Revenue Bonds, Series A,
FGIC Insured, 6.50%, 12/15/12 Aaa/AAA/AAA 5,600,000 5,910,716
---------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds, Prerefunded, Series C, 8.60%, 7/1/17 Aaa/AAA 1,100,000 1,212,510
---------------------------------------------------------------------------------------------------------
New Jersey State Housing & Mtg. Finance Agency
Multifamily Housing Revenue Bonds, Series C,
9.75%, 11/1/27 NR/A+ 1,000,000 1,042,911
---------------------------------------------------------------------------------------------------------
New Jersey State Turnpike Authority Revenue Bonds,
Series C, 6.50%, 1/1/16 A/A/A 15,150,000 16,260,539
------------
24,426,676
</TABLE>
9 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK--12.6% City of New York General Obligation Bonds,
Inverse Floater, 6.827%, 8/1/15(2) Baa1/A- $ 3,050,000 $ 2,465,876
---------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds,
Prerefunded, Series D, 8%, 8/1/15 Baa1/A- 10,780,000 12,845,027
---------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds,
Series A, 7.75%, 8/15/16 Baa1/A- 2,500,000 2,728,540
---------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds,
Series D, 8%, 8/1/15 Baa1/A- 220,000 242,884
---------------------------------------------------------------------------------------------------------
City of New York Industrial Development Agency
Special Facility Revenue Bonds, Terminal One Group
Assn. Project, 6%, 1/1/19 A/A/A- 6,000,000 5,724,287
---------------------------------------------------------------------------------------------------------
City of New York Municipal Water Finance Authority
Water & Sewer System Revenue Bonds, Prerefunded,
Series A, 9%, 6/15/17 Aaa/AAA 5,000,000 5,554,770
---------------------------------------------------------------------------------------------------------
Dormitory Authority of the State of New York
Revenue Bonds, City University System, Prerefunded,
Series A, 7.625%, 7/1/20 Aaa/BBB 9,500,000 10,971,311
---------------------------------------------------------------------------------------------------------
Dormitory Authority of the State of New York
Revenue Bonds, City University System, Prerefunded,
Series F, 7.875%, 7/1/07 Aaa/BBB 2,005,000 2,340,715
---------------------------------------------------------------------------------------------------------
Dormitory Authority of the State of New York
Revenue Bonds, State University Educational
Facilities, Prerefunded, Series A, 6.75%, 5/15/18 NR/AAA/A 8,415,000 9,115,052
---------------------------------------------------------------------------------------------------------
Dormitory Authority of the State of New York
Revenue Bonds, State University Educational
Facilities, Prerefunded, Series A, 7.625%, 5/15/05 NR/AAA/A 3,000,000 3,455,139
---------------------------------------------------------------------------------------------------------
Dormitory Authority of the State of New York
Revenue Bonds, State University Educational
Facilities, Series B, 6.25%, 5/15/14 Baa1/BBB+/A 6,000,000 6,037,085
---------------------------------------------------------------------------------------------------------
New York State Housing Finance Agency Revenue
Refunding Bonds, New York City Health Facility,
Series A, 7.90%, 11/1/99 Baa2/BBB+ 7,000,000 7,622,657
---------------------------------------------------------------------------------------------------------
New York State Medical Care Facilities Finance
Agency Revenue Bonds, St. Luke's Hospital,
Prerefunded, Series B, 7.40%, 2/15/09 Aaa/AAA 1,400,000 1,591,143
---------------------------------------------------------------------------------------------------------
New York State Mtg. Agency Revenue Bonds,
Ninth Series B, Verex Pool Insured, 8.30%, 10/1/17 Aa/NR 1,715,000 1,776,599
---------------------------------------------------------------------------------------------------------
New York State Power Authority Revenue Bonds,
Series V, 7.875%, 1/1/07 Aa/AA- 3,000,000 3,257,667
---------------------------------------------------------------------------------------------------------
Port Authority of New York & New Jersey Consolidated
Revenue Bonds, Series Fifty-One E, 7%, 12/1/14 A1/NR 2,000,000 2,077,290
---------------------------------------------------------------------------------------------------------
Triborough Bridge & Tunnel Authority of New York
General Purpose Revenue Bonds, Prerefunded,
Series R, 7.375%, 1/1/10 Aaa/AAA 1,220,000 1,376,792
------------
79,182,834
</TABLE>
10 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO--2.4% Franklin County, Ohio Hospital Revenue Refunding
Bonds, Riverside United Methodist, Series A,
5.75%, 5/15/20 Aa/NR $10,000,000 $ 9,384,209
---------------------------------------------------------------------------------------------------------
Ohio Housing Finance Agency Single Family Mtg.
Revenue Bonds, GNMA Mtg.-Backed Security,
Series B, Inverse Floater, 9.294%, 3/1/31(2) Aaa/AAA 5,730,000 5,903,945
------------
15,288,154
- ----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--6.8% Delaware County, Pennsylvania Industrial
Development Authority Revenue Refunding Bonds,
Resource Recovery Project, Series A, 8.10%, 12/1/13 Aa3/A+ 3,320,000 3,496,680
---------------------------------------------------------------------------------------------------------
Pennsylvania State General Obligation Refunding
Bonds, First Series, 5%, 4/15/13 A1/AA- /AA- 9,165,000 8,309,905
---------------------------------------------------------------------------------------------------------
Pennsylvania State Higher Education Assistance
Agency Student Loan Revenue Bonds,
AMBAC Insured, Inverse Floater, 7.905%, 3/1/22(2) Aaa/AAA/AAA 17,500,000 16,088,133
---------------------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development
Authority Economic Development Revenue
Bonds, Prerefunded, Series A, 7%, 1/1/11 NR/A- /AAA 2,000,000 2,266,192
---------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Municipal Authority
Justice Lease Revenue Bonds, Prerefunded,
Series B, FGIC Insured, 7.125%, 11/15/18 Aaa/AAA/AAA 1,255,000 1,436,213
---------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Water & Wastewater
Revenue Bonds, FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 6,100,000 8,171,870
---------------------------------------------------------------------------------------------------------
Schuylkill County, Pennsylvania Industrial
Development Authority Resource Recovery
Revenue Refunding Bonds, Schuylkill Energy
Resources, Inc., 6.50%, 1/1/10 NR/NR 3,000,000 2,907,093
------------
42,676,086
- ----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--2.8% South Carolina State Public Service Authority
Revenue Bonds, Santee Cooper, Series D, AMBAC
Insured, 6.50%, 7/1/24 Aaa/AAA/AAA 10,000,000 11,150,769
---------------------------------------------------------------------------------------------------------
South Carolina State Public Service Authority
Revenue Refunding Bonds, Series B, FGIC Insured,
5.875%, 1/1/23 Aaa/AAA/AAA 6,850,000 6,694,710
------------
17,845,479
</TABLE>
11 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS--17.2% Alliance Airport Authority, Inc., Texas Special
Facility Revenue Bonds, American Airlines, Inc.
Project, 7%, 12/1/11 Baa2/BB+ $ 3,000,000 $ 3,162,282
---------------------------------------------------------------------------------------------------------
Alliance Airport Authority, Inc., Texas Special
Facility Revenue Bonds, American Airlines, Inc.
Project, 7.50%, 12/1/29 Baa2/BB+ 12,500,000 13,106,111
---------------------------------------------------------------------------------------------------------
Brazos River Authority, Texas Pollution Control
Revenue Bonds, Texas Utilities Electric
Co. Project, Series A, 8.25%, 1/1/19 Baa2/BBB/BBB 1,500,000 1,636,054
---------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, Texas Independent School
District General Obligation Capital Appreciation
Refunding Bonds, Series A, Zero Coupon, 2/15/14 Aaa/AAA 15,710,000 5,271,286
---------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, Texas Independent School
District General Obligation Capital Appreciation
Refunding Bonds, Series A, Zero Coupon, 2/15/15 Aaa/AAA 15,000,000 4,746,435
---------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, Texas Independent School
District General Obligation Capital Appreciation
Refunding Bonds, Series A, Zero Coupon, 2/15/16 Aaa/AAA 16,240,000 4,846,176
---------------------------------------------------------------------------------------------------------
Dallas-Fort Worth, Texas International Airport
Facility Improvement Corp. Revenue Bonds,
American Airlines, Inc., 7.25%, 11/1/30 Baa2/BB+ 8,000,000 8,323,303
---------------------------------------------------------------------------------------------------------
North Central Texas Health Facility Development
Corp. Hospital Revenue Bonds, Baylor Health Care
Project, Series B, Inverse Floater, 7.15%, 5/15/06(2) Aa/AA 3,000,000 3,138,657
---------------------------------------------------------------------------------------------------------
North Central Texas Health Facility Development Corp.
Hospital Revenue Bonds, Baylor Health Care Project,
Series B, Inverse Floater, 7.25%, 5/15/08(2) Aa/AA 5,000,000 5,194,870
---------------------------------------------------------------------------------------------------------
Northside Texas Independent School District General
Obligation Bonds, PSFG Insured, 6.70%, 2/1/06 Aaa/AAA 1,400,000 1,493,618
---------------------------------------------------------------------------------------------------------
San Antonio, Texas Electric & Gas Improvement
Revenue Refunding Bonds, 5%, 2/1/14 Aa1/AA/AA+ 13,150,000 11,810,408
---------------------------------------------------------------------------------------------------------
San Antonio, Texas Electric & Gas Improvement
Revenue Refunding Bonds, Series B, 6%, 2/1/14 Aa1/AA/AA+ 18,500,000 18,533,558
---------------------------------------------------------------------------------------------------------
San Antonio, Texas Water Revenue Refunding Bonds,
MBIA Insured, 6%, 5/15/16 Aaa/AAA/A+ 7,000,000 6,982,906
---------------------------------------------------------------------------------------------------------
Texas Municipal Power Agency Capital Appreciation
Revenue Refunding Bonds, MBIA Insured,
Zero Coupon, 9/1/14 Aaa/AAA/A+ 17,500,000 5,459,316
---------------------------------------------------------------------------------------------------------
Texas Municipal Power Agency Capital
Appreciation Revenue Refunding Bonds,
MBIA Insured, Zero Coupon, 9/1/15 Aaa/AAA/A+ 10,000,000 2,935,680
---------------------------------------------------------------------------------------------------------
Texas Municipal Power Agency Capital
Appreciation Revenue Refunding Bonds,
MBIA Insured, Zero Coupon, 9/1/16 Aaa/AAA/A+ 39,990,000 11,047,634
------------
107,688,294
</TABLE>
12 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTAH--0.2% Intermountain Power Agency of Utah Special Obligation
Bonds, Second Crossover Series, 7.50%, 7/1/16 Aa/AA $ 1,435,000 $ 1,419,272
- ----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON--2.2% Washington State Public Power Supply System Revenue
Refunding Bonds, Inverse Floater, 5.12%, 7/1/12(2) Aa/AA/AA 15,000,000 12,209,940
---------------------------------------------------------------------------------------------------------
Washington State Public Power Supply System
Revenue Refunding Bonds, Nuclear Project No. 1,
Series A, 7.50%, 7/1/15 NR/AAA 1,500,000 1,611,010
------------
13,820,950
- ----------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.5% West Virginia State Parkways Economic
Development & Tourism Authority Revenue Bonds,
Inverse Floater, 7.423%, 5/16/19(2) Aaa/AAA 3,600,000 3,392,564
- ----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN--0.1% Wisconsin Housing Finance Authority Revenue
Bonds, 9.875%, 11/1/03 NR/A 560,000 575,328
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--3.2% Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Prerefunded, Series S, 6.625%, 7/1/18 NR/AAA 5,000,000 5,640,565
---------------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Series T, 6.625%, 7/1/18 Baa1/A 6,000,000 6,238,943
---------------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth Highway Authority
Revenue Bonds, Series Q, 7.75%, 7/1/10 NR/AAA 1,000,000 1,160,642
---------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Revenue Bonds,
Prerefunded, Series O, 7.125%, 7/1/14 Baa1/AAA 4,000,000 4,447,300
---------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Revenue Bonds,
Unrefunded Balance, Series O, 7.125%, 7/1/14 Baa1/A- 2,350,000 2,496,950
------------
19,984,400
------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $615,171,246) 99.6% 625,043,400
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.4 2,583,628
---------- ------------
NET ASSETS 100.0% $627,627,028
---------- ------------
---------- ------------
<FN>
1. Non-income producing--issuer is in default of interest payment.
2. Represents the current interest rate for a variable rate bond. Variable rate bonds known as "inverse
floaters" pay interest at a rate that varies inversely with short-term interest rates. As interest rates
rise, inverse floaters produce less current income. Their price may be more volatile than the price of a
comparable fixed-rate security. Inverse floaters amount to $75,608,698 or 12% of the Fund's net assets, at
June 30, 1995.
See accompanying Notes to Financial Statements.
</TABLE>
13 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (Unaudited)
---------------------------------------------------------------------------------------------------------
==================================================================================================================================
<C> <S> <C>
ASSETS Investments, at value (cost $615,171,246)--see accompanying statement $625,043,400
---------------------------------------------------------------------------------------------------------
Cash 446,629
---------------------------------------------------------------------------------------------------------
Receivables:
Interest 11,240,712
Shares of beneficial interest sold 735,816
---------------------------------------------------------------------------------------------------------
Other 24,813
------------
Total assets 637,491,370
==================================================================================================================================
LIABILITIES Payables and other liabilities:
Investments purchased 5,708,296
Dividends 2,091,822
Shares of beneficial interest redeemed 1,196,157
Distribution and service plan fees--Note 4 343,079
Payable for daily variation on futures contracts--Note 6 281,250
Transfer and shareholder servicing agent fees 12,831
Trustees' fees 9,260
Other 221,647
------------
Total liabilities 9,864,342
==================================================================================================================================
NET ASSETS $627,627,028
==================================================================================================================================
COMPOSITION OF Paid-in capital $626,877,719
NET ASSETS ---------------------------------------------------------------------------------------------------------
Overdistributed net investment income (1,558,602)
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (8,070,493)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 10,378,404
------------
Net assets $627,627,028
------------
------------
==================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of
$564,021,382 and 58,807,401 shares of beneficial interest outstanding) $ 9.59
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $10.07
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $63,605,646 and 6,639,809 shares of beneficial interest
outstanding) $ 9.58
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1995 (Unaudited)
---------------------------------------------------------------------------------------------------------
==================================================================================================================================
<C> <S> <C>
INVESTMENT INCOME Interest $ 20,364,299
==================================================================================================================================
EXPENSES Management fees--Note 4 1,635,863
---------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 602,547
Class B--Note 4 297,217
---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 146,635
---------------------------------------------------------------------------------------------------------
Shareholder reports 108,851
---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 34,709
---------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 24,766
---------------------------------------------------------------------------------------------------------
Legal and auditing fees 21,685
---------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 3,154
Class B 1,987
---------------------------------------------------------------------------------------------------------
Other 34,205
-----------
Total expenses 2,911,619
==================================================================================================================================
NET INVESTMENT INCOME 17,452,680
==================================================================================================================================
REALIZED AND Net realized loss on investments (7,752,962)
UNREALIZED GAIN (LOSS) ---------------------------------------------------------------------------------------------------------
ON INVESTMENTS Net change in unrealized appreciation or depreciation on investments 51,960,576
------------
Net realized and unrealized gain on investments 44,207,614
==================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 61,660,294
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
==================================================================================================================================
<C> <S> <C> <C>
OPERATIONS Net investment income $ 17,452,680 $ 36,938,871
---------------------------------------------------------------------------------------------------------
Net realized loss on investments (7,752,962) (507,588)
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments 51,960,576 (97,929,896)
------------ ------------
Net increase (decrease) in net assets resulting from operations 61,660,294 (61,498,613)
==================================================================================================================================
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.28 and $.561 per share, respectively) (16,552,728) (34,265,091)
SHAREHOLDERS Class B ($.244 and $.487 per share, respectively) (1,536,508) (2,383,056)
---------------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments:
Class A ($.004 per share) -- (261,506)
Class B ($.004 per share) -- (19,061)
==================================================================================================================================
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Notes 2 and 5 (16,679,399) 24,534,984
---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 6,330,064 27,145,605
==================================================================================================================================
NET ASSETS Total increase (decrease) 33,221,723 (46,746,738)
---------------------------------------------------------------------------------------------------------
Beginning of period 594,405,305 641,152,043
------------ ------------
End of period (including overdistributed net investment
income of $1,558,602 and $922,046, respectively) $627,627,028 $594,405,305
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Tax-Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1995 YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 (UNAUDITED) 1994 1993(1)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $ 8.93 $10.44 $ 9.94 $ 9.77 $ 9.33 $ 9.45 $ 8.92 $10.43 $10.22
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .27 .57 .59 .62 .64 .66 .23 .50 .41
Net realized and
unrealized gain (loss)
on investments .67 (1.52) .74 .25 .45 (.12) .67 (1.52) .43
------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .94 (.95) 1.33 .87 1.09 .54 .90 (1.02) .84
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.28) (.56) (.62) (.58) (.65) (.66) (.24) (.49) (.42)
Distributions from net
realized gain on
investments -- -- (.21) (.12) -- -- -- -- (.21)
Distributions in excess
of net realized gain on
investments -- --(2) -- -- -- -- -- --(2) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions
to shareholders (.28) (.56) (.83) (.70) (.65) (.66) (.24) (.49) (.63)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 9.59 $ 8.93 $10.44 $ 9.94 $ 9.77 $ 9.33 $ 9.58 $ 8.92 $10.43
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
==================================================================================================================================
TOTAL RETURN, AT
NET ASSET VALUE(3) 10.61% (9.19)% 13.79% 9.20% 12.11% 5.93% 10.21% (9.91)% 8.49%
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period,
(in thousands) $564,021 $541,161 $608,128 $496,628 $394,115 $256,542 $63,606 $53,245 $33,024
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $562,164 $582,038 $567,777 $438,684 $319,081 $238,224 $59,933 $46,548 $16,444
- ----------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
period (in thousands) 58,807 60,634 58,277 49,964 40,356 27,505 6,640 5,972 3,166
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment income 5.74%(4) 5.94% 5.71% 6.34% 6.70% 7.08% 4.92%(4) 5.11% 4.54%(4)
Expenses .87%(4) .88% .88% .94% .89% .89% 1.66%(4) 1.69% 1.74%(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 9.5% 21.7% 30.2% 34.2% 23.5% 29.3% 9.5% 21.7% 30.2%
<FN>
1. For the period from March 16, 1993 (inception of offering) to December 31, 1993.
2. Less than $.005 per share.
3. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period,
with all dividends and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for periods of less than one full
year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of
the market value of portfolio securities owned during the period. Securities with a maturity or expiration
date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales
of investment securities (excluding short-term securities) for the period ended June 30, 1995 were
$58,224,352 and $77,221,344, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Tax-Free Bond Fund
<PAGE>
-------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
-------------------------------------------------------
================================================================================
1. SIGNIFICANT Oppenheimer Tax-Free Bond Fund (the Fund) is registered
ACCOUNTING under the Investment Company Act of 1940, as amended,
POLICIES as a diversified, open-end management investment
company. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers
both Class A and Class B shares. Class A shares are
sold with a front-end sales charge. Class B shares may
be subject to a contingent deferred sales charge. Both
classes of shares have identical rights to earnings,
assets and voting privileges, except that each class
has its own distribution and/or service plan, expenses
directly attributable to a particular class and
exclusive voting rights with respect to matters
affecting a single class. Class B shares will
automatically convert to Class A shares six years after
the date of purchase. The following is a summary of
significant accounting policies consistently followed
by the Fund.
-------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which
such information is regularly reported are valued at
the last sale price of the day or, in the absence of
sales, at values based on the closing bid or asked
price or the last sale price on the prior trading day.
Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities
which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that the
firm rendering the quotes is reliable and that the
quotes reflect current market value, or under
consistently applied procedures established by the
Board of Trustees to determine fair value in good
faith. Short-term "money market type" debt securities
having a remaining maturity of 60 days or less are
valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or
discount.
-------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
-------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply
with provisions of the Internal Revenue Code applicable
to regulated investment companies and to distribute all
of its taxable income, including any net realized gain
on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income or excise
tax provision is required.
-------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service.
During the six months ended June 30, 1995, a provision
of $26,688 was made for the Fund's projected benefit
obligations, and a payment of $2,280 was made to a
retired trustee, resulting in an accumulated liability
of $127,932 at June 30, 1995.
-------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
shares from net investment income each day the New York
Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized
gains on investments, if any, will be declared at least
once each year.
-------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes
primarily because of premium amortization. The
character of the distributions made during the year
from net investment income or net realized gains may
differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund.
18 Oppenheimer Tax-Free Bond Fund
<PAGE>
-------------------------------------------------------
-------------------------------------------------------
================================================================================
1. SIGNIFICANT OTHER. Investment transactions are accounted for on the
ACCOUNTING date the investments are purchased or sold (trade
POLICIES date). Original issue discount on securities purchased
(CONTINUED) is amortized over the life of the respective
securities, in accordance with federal income tax
requirements. For bonds acquired after April 30, 1993,
accrued market discount is recognized at maturity or
disposition as taxable ordinary income. Taxable
ordinary income is realized to the extent of the lesser
of gain or accrued market discount. Realized gains and
losses on investments and unrealized appreciation and
depreciation are determined on an identified cost
basis, which is the same basis used for federal income
tax purposes.
================================================================================
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED DECEMBER 31, 1994
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 4,322,445 $ 41,055,616 11,090,618 $ 105,903,608
Issued in connection with the
acquisition of MI Fund, Inc.--Note 5 -- -- 3,087,731 29,920,109
Dividends and distributions reinvested 1,153,897 10,934,962 2,417,816 22,986,092
Redeemed (7,302,538) (68,669,977) (14,239,737) (134,274,825)
---------- ------------ ----------- -------------
Net increase (decrease) (1,826,196) $(16,679,399) 2,356,428 $ 24,534,984
---------- ------------ ----------- -------------
---------- ------------ ----------- -------------
---------------------------------------------------------------------------------------------------------
Class B:
Sold 1,190,426 $ 11,334,365 3,851,883 $ 36,866,795
Dividends and distributions reinvested 108,165 1,024,692 167,254 1,573,591
Redeemed (630,762) (6,028,993) (1,213,330) (11,294,781)
---------- ------------ ----------- -------------
Net increase 667,829 $ 6,330,064 2,805,807 $ 27,145,605
---------- ------------ ----------- -------------
---------- ------------ ----------- -------------
</TABLE>
================================================================================
3. UNREALIZED GAINS At June 30, 1995, net unrealized appreciation on
AND LOSSES ON investments of $10,378,404 was composed of gross
INVESTMENTS appreciation of $23,026,540, and gross depreciation of
$12,648,136.
================================================================================
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS which provides for a fee of .60% on the first $200
WITH AFFILIATES million of average annual net assets, .55% on the next
$100 million, .50% on the next $200 million, .45% on
the next $250 million, .40% on the next $250 million
and .35% on net assets in excess of $1 billion. The
Manager has agreed to assume Fund expenses (with
specified exceptions) in excess of the most stringent
applicable regulatory limit on Fund expenses.
For the six months ended June 30, 1995,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $540,887, of which $179,465
was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of
the Fund's Class B shares totaled $309,087, of which
$21,614 was paid to an affiliated broker/dealer. During
the six months ended June 30, 1995, OFDI received
contingent deferred sales charges of $139,224 upon
redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a
division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of
providing such services are allocated ratably to these
companies.
Under separate approved plans, each class may
expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection with
the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to
brokers, dealers, banks and other institutions. In
addition, Class B shares are subject to an asset-based
sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing
costs. In the event of termination or discontinuance of
the Class B plan, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales
charge to OFDI for distribution expenses incurred on
Class B shares sold prior to termination or
discontinuance of the plan. During the six months ended
June 30, 1995, OFDI paid $53,576 and $3,331 to an
affiliated broker/dealer as reimbursement for Class A
and Class B personal service and maintenance expenses,
respectively, and retained $250,983 as reimbursement
for Class B sales commissions and service fee advances,
as well as financing costs.
19 Oppenheimer Tax-Free Bond Fund
<PAGE>
-------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
-------------------------------------------------------
================================================================================
5. ACQUISITION OF On March 31, 1994, Oppenheimer Tax-Free Bond acquired
MI FUND, INC. all of the net assets of MI Fund, Inc. (MI Fund),
pursuant to an Agreement and Plan of Reorganization
approved by the MI shareholders on March 18, 1994. The
Fund issued 3,087,731 shares of beneficial interest,
valued at $29,920,109, in exchange for the net assets,
resulting in combined net assets of $636,205,208 on
March 31, 1994. The net assets acquired included net
unrealized appreciation of $1,808,741. The exchange was
tax-free.
================================================================================
6. FUTURES CONTRACTS The Fund may buy and sell interest rate futures
contracts in order to gain exposure to or protect
against changes in interest rates. The Fund may also
buy or write put or call options on these futures
contracts.
The Fund generally sells futures contracts to
hedge against increases in interest rates and the
resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in
interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the
Fund is required to deposit either cash or securities
in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund
each day. The variation margin payments are equal to
the daily changes in the contract value and are
recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to
cover initial margin requirements on open futures
contracts are noted in the Statement of Investments.
The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for
variation margin.
Risks of entering into futures contracts (and
related options) include the possibility that there may
be an illiquid market and that a change in the value of
the contract or option may not correlate with changes
in the value of the underlying securities.
At June 30, 1995, the Fund had outstanding futures
contracts to sell debt securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE FUTURES CONTRACTS JUNE 30, 1995 APPRECIATION
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 9/95 600 $68,118,750 $506,250
</TABLE>
20 Oppenheimer Tax-Free Bond Fund
<PAGE>
-------------------------------------------------------
OPPENHEIMER TAX-FREE BOND FUND
-------------------------------------------------------
================================================================================
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISOR Oppenheimer Management Corporation
================================================================================
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
================================================================================
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
================================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
================================================================================
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been
taken from the records of the Fund without examination
by the independent auditors.
This is a copy of a report to shareholders of
Oppenheimer Tax-Free Bond Fund. This report must be
preceded or accompanied by a Prospectus of Oppenheimer
Tax-Free Bond Fund. For material information concerning
the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the
FDIC or any other agency, and involve investment risks,
including possible loss of the principal amount
invested.
21 Oppenheimer Tax-Free Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
OPPENHEIMERFUNDS FAMILY
- --------------------------------------------------------------------------------
================================================================================
OppenheimerFunds offers over 30 funds designed to fit virtually every investment
goal. Whether you're investing for retirement, your children's education or tax-
free income, we have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable knowing
that you are investing with a respected financial institution with over 30 years
of experience in helping people just like you reach their financial goals. And
you're investing with a leader in global, growth stock and flexible fixed income
investments--with over 2.6 million shareholder accounts and more than $35
billion under Oppenheimer's management and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to exchange shares of eligible
funds of the same class. And you can exchange shares easily by mail or by
telephone.(1) For more information on OppenheimerFunds, please contact your
financial advisor or call us at 1-800-525-7048 for a prospectus. You may also
write us at the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Target Fund Value Stock Fund
Growth Fund(3) Gold & Special Minerals Fund
- -----------------------------------------------------------------------------------------------
STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
- -----------------------------------------------------------------------------------------------
BOND FUNDS High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund International Bond Fund
Strategic Income & Growth Fund Bond Fund(4)
Strategic Income Fund U.S. Government Trust
Strategic Investment Grade Bond Fund Limited-Term Government Fund
- -----------------------------------------------------------------------------------------------
TAX-EXEMPT FUNDS New York Tax-Exempt Fund(5) New Jersey Tax-Exempt Fund(5)
California Tax-Exempt Fund(5) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(5) Insured Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(5) Intermediate Tax-Exempt Bond Fund
- -----------------------------------------------------------------------------------------------
MONEY MARKET FUNDS Money Market Fund Cash Reserves
<FN>
1. Exchange privileges are subject to change or termination.
2. Formerly Global Bio-Tech Fund.
3. Formerly Special Fund.
4. Formerly Investment Grade Bond Fund.
5. Available only to residents of certain states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
-C- Copyright 1995 Oppenheimer Management Corporation. All rights reserved.
</TABLE>
22 Oppenheimer Tax-Free Bond Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE FOR THE
DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS INFORMATION
HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RSO310001.0695 AUGUST 31, 1995
- --------------------------------------------------------------------------------
"HOW MAY I HELP YOU?"
As an OppenheimerFunds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market informa-
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
tion. Of course, you can always speak with a Customer Service Representative
during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the OppenheimerFund's transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- --------------------------------------------------------------------------------
--------------
[LOGO] OPPENHEIMERFUNDS. Bulk Rate
Oppenheimer Funds Distributor, Inc. U.S. Postage
P.O. Box 5270 PAID
Denver, CO 80217-5270 Permit No. 469
Denver, CO
--------------
