<PAGE>
Oppenheimer Intermediate Tax-Exempt Fund
Annual Report September 30, 1995
[PHOTO]
"We want
investment
income that
won't add
to our
taxes...
and we need
to feel
comfortable."
[LOGO]
<PAGE>
This Fund is for people who want investment income that's EXEMPT from TAXES
and who feel secure investing in a fund designed to limit risk.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 9/30/95:(3)
Class A
4.04%
Class B
3.26%
Class C
3.30%
HOW YOUR FUND IS MANAGED
Oppenheimer Intermediate Tax-Exempt Fund invests primarily in a diversified
portfolio of tax-exempt bonds. The Fund intends to maintain an
intermediate-term average portfolio maturity (3-10 years). The Fund's
investment strategy is to seek a high tax-free yield with less of the price
volatility typical of longer-term maturity municipal bond funds.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/95 for Class
A and C shares shares were 8.78% and 8.13%, respectively.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/95 and since
inception of the Class on 11/11/86 were 4.98%, 7.40% and 7.04%, respectively.
For Class C shares, average annual total returns for the 1-year period ended
9/30/95 and since inception of the Class on 12/1/93 were 7.13% and 2.92%,
respectively.(2)
OUTLOOK
"Our outlook for intermediate-term bonds is positive for several reasons.
First, there is a shrinking supply of bonds on the short end of the yield
curve as a record number of pre-refunded bonds mature. Second, we expect a
continuation of strong demand for intermediate bonds because they represent a
safe haven from tax reform as well as from interest rate volatility. Finally,
if the Federal Reserve continues to ease short-term interest rates, there is
the potential for additional price appreciation."
Caryn Halbrecht, Portfolio Manager
September 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment return 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. 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.
1. Based on the change in net asset value per share from 9/30/94 to 9/30/95,
without deducting any sales charges. Such performance would have been lower
if sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 9/30/94,
9/30/90 and 11/11/86 (inception of class), after deducting the current
maximum initial sales charge of 3.50%. Total return data is not yet available
for Class B shares (inception 8/29/95). Class C returns show results of
hypothetical investments on 9/30/94 and 12/1/93 (inception of class) with the
1% contingent deferred sales charge deducted for the 1-year result. An
explanation of the different total returns is in the Fund's prospectus. Prior
to 4/7/90, the Fund had a different advisor.
3. Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/95, 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.
2 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Intermediate
Tax-Exempt Fund
[PHOTO]
Jon S. Fossel
President
Oppenheimer
Intermediate
Tax-Exempt Fund
Dear OppenheimerFunds Shareholder,
Like nearly all fixed income securities, municipal bonds have enjoyed the
benefits of declining long-term interest rates in 1995.
Although the Federal Reserve Board did not reduce short-term interest
rates until July 6, long-term interest rates--which are driven by market
forces--had been falling for some time based on positive underlying market
fundamentals. And when interest rates fall, bonds appreciate in value. As a
result, most bond markets, including the municipal bond market, have had a
strong year thus far.
Another factor supporting the overall fixed income market has been the
continued focus in Washington on the trade imbalance and on budget deficit
reduction. This focus should further support the recently resurgent dollar
which, along with low interest rates in developed countries around the world,
has started attracting foreign investors back to U.S. fixed income markets in
search of higher yields.
One development that has sparked some concern among municipal investors,
however, is the discussion in Congress regarding possible changes to the
income tax system. There are several proposals to create a "flat" income tax,
in which the level of taxation would be changed to the same percentage for
all taxpayers in exchange for fewer tax deductions. Other proposals would
exclude all dividends and interest from taxation. If any of these proposals
were to be enacted, the relative advantage of municipal bonds over taxable
bonds would become smaller. While we can't be certain where these proposals
will lead, we believe that the odds of significant tax reform in the near
future are quite low and that the more likely scenario will be modifications
to the existing tax structure. In the meantime, the tax proposals have put
some temporary downward pressure on municipal bond prices.
Consequently, we believe municipal bonds are currently trading at very
attractive levels relative to taxable investments. Typically, we would expect
long-term municipal bonds to provide yields of about 80% of taxable bonds.
Recently, however, municipal bonds were trading at yields of more than 90% of
taxable securities. Couple that with inflation of only about 3%, and it
becomes clear that municipal bonds are producing some of the best real,
inflation-adjusted returns in some time.
Although the economy has shown a variety of mixed signals recently, we
believe the Federal Reserve Board will not return to a tightening policy
again in the near future, because the U.S. economy appears to be in a
moderate growth period with no inflation. As a result, we do not expect the
bond market to weaken any time soon and continue to be optimistic about
municipal bonds.
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 reach your investment goals in the future.
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
October 23, 1995
3 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
CARYN HALBRECHT
Portfolio Manager
Q+A AN INTERVIEW WITH YOUR FUND'S MANAGER.
THE BOND MARKET RALLIED SUBSTANTIALLY OVER THE COURSE OF THE YEAR. TO WHAT
EXTENT DID INTERMEDIATE-MATURITY MUNICIPAL BONDS PARTICIPATE?
The Federal Reserve cut interest rates in February 1995, believing that the
threat of inflation they'd been fighting had diminished. This caused a
broad-based rally in the bond markets. Intermediate-term municipal bonds
participated in the rally, rising somewhat less than longer-term bonds due to
their shorter maturities.
Since the beginning of the year, however, the intermediate sector has
performed well due to strong investor demand. Investors are focusing on
shorter-term municipal bonds for two reasons--partly because of tax reform
talk and partly to limit volatility.
WHAT IMPACT HAS TAX REFORM TALK HAD ON THE MARKET AS A WHOLE?
The impact has been to direct some investors toward shorter-term bonds, which
includes the intermediate sector. The reason for investors' focus on shorter
bonds is primarily that, should any tax reform measures pass, it is likely
to take several years before the changes become effective and the shorter
bond ought to have matured by then. Alternatively, long bond prices are being
discounted because of the potential for tax reform.
WHAT OTHER FACTORS INFLUENCED YOUR MARKET?
Limited supply was a plus. Few new bonds were issued this year compared to
the high levels of new issues we'd seen in the past several years. In
addition, an unusual number of existing bonds are maturing or being redeemed
by issuers, providing price support to the market.
WHAT OTHER CHANGES IN STRATEGY HAVE YOU BEEN IMPLEMENTING?
Given the big run-up in bonds so far this year, we are planning more
emphasis on yield and less on opportunities for price appreciation.
One step we've taken is to add names selectively from the lower end of
the investment grade spectrum. We believe this area offers investors
significant benefits in terms of both value and yield because of the broad
diversification we can offer in a mutual fund. And we conduct ongoing credit
research to be sure to preserve value.1
WHAT'S YOUR OUTLOOK FOR THE FUND?
Our outlook for intermediate-term bonds is positive for several reasons.
First, the supply of bonds on the short end of the yield curve is shrinking
as a record number of prerefunded bonds mature. Second, we expect a
continuation of strong demand for intermediate bonds because they are viewed
as less susceptible than longer-term bonds to the impact of anticipated tax
reform as well as to interest rate volatility. Additionally, if the Federal
Reserve eases short-term interest rates again in the future, there is
potential for additional price appreciation. -
1. The Fund's portfolio is subject to change.
4 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--98.5%
- -------------------------------------------------------------------------------------------------------------------------
ALASKA--1.3% North Slope Boro, Alaska General Obligation Bonds,
Series B, CGIC Insured, 7.50%, 6/30/01 Aaa/AAA $1,000,000 $1,146,654
- -------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--7.5% California Pollution Control Financing Authority
Revenue Bonds, Southern California Edison,
Series A, MBIA--IBC Insured, 6.90%, 9/1/06 Aaa/AAA 1,000,000 1,072,597
-----------------------------------------------------------------------------------------------
California Statewide Communities Development
Authority Hospital Revenue Certificates of
Participation, Cedars-Sinai Medical Center,
MBIA--IBC Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,080,120
-----------------------------------------------------------------------------------------------
Corona, California Certificates of Participation,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 1,000,000 1,341,544
-----------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor Agency
California Toll Road Cv. Capital Appreciation
Revenue Bonds, Sr. Lien, Series A, 0%/6.95%,
1/1/07(1) Baa/BBB-/BBB 2,000,000 1,077,652
-----------------------------------------------------------------------------------------------
Sacramento, California Cogeneration Authority
Revenue Bonds, Procter & Gamble Project, 6.375%,
7/1/10 NR/BBB- 1,100,000 1,107,099
-----------------------------------------------------------------------------------------------
San Bernardino County, California Certificates of
Participation, Medical Center Financing Project, 6%,
8/1/09 Baa1/A- 1,000,000 989,726
---------
6,668,738
-----------------------------------------------------------------------------------------------
COLORADO--1.8% Denver, Colorado City & County Airport Revenue
Bonds, Series A, 7%, 11/15/99 Baa/BB 1,000,000 1,062,584
-----------------------------------------------------------------------------------------------
Meridian Metropolitan District, Colorado General
Obligation Refunding Bonds, 7.50%, 12/1/11 A3/NR 500,000 553,567
---------
1,616,151
-----------------------------------------------------------------------------------------------
CONNECTICUT--2.5% Connecticut State Special Tax Revenue Bonds,
Transportation Infrastructure Project, Prerefunded,
Series A, 7.125%, 6/1/07 NR/AAA 2,000,000 2,260,124
-----------------------------------------------------------------------------------------------
FLORIDA--2.9% Florida State Board of Education Administration
Capital Outlay General Obligation Bonds,
Prerefunded, Series B, 7.625%, 6/1/09 Aaa/AAA 1,500,000 1,615,197
-----------------------------------------------------------------------------------------------
Polk County, Florida Industrial Development
Authority Revenue Bonds, Purex Corp. Project, 6.75%,
6/1/03 NR/NR 960,000 960,391
---------
2,575,588
-----------------------------------------------------------------------------------------------
GEORGIA--2.6% Georgia State Residential Finance Authority Home
Ownership Mtg. Revenue Bonds, Series A, Subseries
A--1, FHA Insured, 7.50%, 6/1/17 Aa/AA+ 245,000 257,307
-----------------------------------------------------------------------------------------------
Savannah, Georgia Hospital Authority Revenue Bonds,
Refunding & Improvement-Chandler Hospital, 7%,
1/1/11 Baa/BBB+ 2,000,000 2,024,116
---------
2,281,423
-----------------------------------------------------------------------------------------------
ILLINOIS--5.3% Chicago, Illinois General Obligation Refunding
Bonds, Prerefunded, Series B, 9.25%, 1/1/13 A/A 500,000 552,535
-----------------------------------------------------------------------------------------------
Du Page County, Illinois First Preservation District
General Obligation Bonds, Prerefunded, 7.70%,
11/1/00 NR/AAA 1,000,000 1,089,900
-----------------------------------------------------------------------------------------------
Du Page Water Commission of Illinois Water Revenue
Bonds, Prerefunded, 6.875%, 5/1/14 NR/AAA 1,000,000 1,061,052
</TABLE>
5 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ILLINOIS (CONTINUED) Illinois Development Finance Authority Pollution
Control Revenue Refunding Bonds, Central Illinois
Public Service Co., Series A, 7.60%, 3/1/14
Aa2/AA $ 250,000 $ 272,323
-----------------------------------------------------------------------------------------------
Southwestern Illinois Development Authority Hospital
Revenue Bonds, St. Elizabeth Medical Center, 8%, 6/1/10
NR/A- 500,000 535,273
-----------------------------------------------------------------------------------------------
Waukegan, Illinois General Obligation Bonds,
MBIA Insured, 7.50%, 12/30/03 Aaa/AAA 1,000,000 1,152,381
---------
4,663,464
-----------------------------------------------------------------------------------------------
INDIANA--1.6% Indiana Bond Bank Revenue Guarantee Bonds, State
Revolving Fund Program, Series A, 6.875%, 2/1/12 NR/A 1,135,000 1,203,747
-----------------------------------------------------------------------------------------------
Indiana University Revenue Bonds, Hospital
Facilities Project, 7%, 1/1/09 A1/A+ 215,000 225,330
---------
1,429,077
-----------------------------------------------------------------------------------------------
LOUISIANA--1.3% Louisiana State General Obligation Bonds, Series A,
AMBAC Insured, 8%, 5/1/99 Aaa/AAA/AAA 1,000,000 1,118,959
-----------------------------------------------------------------------------------------------
MAINE--1.5% Maine Educational Loan Marketing Corp. Student
Loan Revenue Refunding Bonds, Series A, 6.05%, 11/1/04 Aaa/NR 750,000 783,514
-----------------------------------------------------------------------------------------------
Maine State Housing Authority Revenue Bonds,
Mtg. Purchase Project, Series A, 7.50%, 11/15/22 A1/AA 500,000 527,799
---------
1,311,313
-----------------------------------------------------------------------------------------------
MARYLAND--1.4% Howard County, Maryland Certificates of
Participation, Series A, 8.05%, 2/15/21 NR/AA+ 350,000 447,792
-----------------------------------------------------------------------------------------------
Maryland Water Quality Financing Administration
Revenue Bonds, Revolving Loan Fund, Series A,
Zero Coupon, 9/1/07 Aa/AA/AA- 1,500,000 800,946
---------
1,248,738
-----------------------------------------------------------------------------------------------
MASSACHUSETTS--1.4% Massachusetts State Dedicated Income Tax Bonds,
Series A, 7.875%, 6/1/97 A1/A+/A+ 665,000 706,505
-----------------------------------------------------------------------------------------------
Massachusetts State General Obligation Bonds,
FGIC Insured, 7.875%, 6/1/97 Aaa/AAA/AAA 500,000 532,713
---------
1,239,218
------------------------------------------------------------------------------------------------
MICHIGAN--3.6% Detroit, Michigan General Obligation Refunding Bonds,
Series B, 7%, 4/1/04 Ba1/BBB 2,000,000 2,141,336
-----------------------------------------------------------------------------------------------
Detroit, Michigan Self-Insurance Bonds, Series A,
5.70%, 5/1/02 NR/BBB- 1,000,000 995,068
---------
3,136,404
-----------------------------------------------------------------------------------------------
NEVADA--2.6% Clark County, Nevada School District General
Obligation Bonds, Series A, MBIA Insured, 9.75%,
6/1/01 Aaa/AAA 1,800,000 2,263,115
-----------------------------------------------------------------------------------------------
NEW JERSEY--1.8% Ocean County, New Jersey General Obligation
Bonds, 7.40%, 10/15/00 Aa/AA-/AA 1,400,000 1,583,386
-----------------------------------------------------------------------------------------------
NEW MEXICO--0.6% New Mexico State Hospital Equipment Loan Council
Revenue Bonds, San Juan Regional Medical Center,
Inc. Project, 7.90%, 6/1/11 A/NR 500,000 551,177
</TABLE>
6 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEW YORK--16.6% City of New York General Obligation Bonds, Series B,
6.20%, 8/15/06 Baa1/BBB+/A- $3,000,000 $3,047,178
-----------------------------------------------------------------------------------------------
City of New York General Obligation Bonds,
Series F, 8.40%, 11/15/07 Aaa/BBB+/A- 4,500,000 5,396,008
-----------------------------------------------------------------------------------------------
City of New York Industrial Development Agency
Special Facility Revenue Bonds, Terminal One
Group Assn. Project, 6%, 1/1/08 A/A/A- 2,000,000 2,033,474
-----------------------------------------------------------------------------------------------
City of New York Industrial Development Agency
Special Facility Revenue Bonds, Terminal One
Group Assn. Project, 6.10%, 1/1/09 A/A/A- 2,000,000 2,033,308
-----------------------------------------------------------------------------------------------
New York State General Obligation Refunding Bonds,
7.80%, 11/15/99 A/A- 1,000,000 1,131,014
-----------------------------------------------------------------------------------------------
New York State Urban Development Corp.
Revenue Refunding Bonds, Correctional
Facilities Project, 5.25%, 1/1/02 Baa1/BBB/A 1,035,000 1,037,099
---------
14,678,081
-----------------------------------------------------------------------------------------------
OKLAHOMA--1.4% Oklahoma County, Oklahoma Home Finance
Authority Revenue Bonds, GNMA Collateral Mtg.
Program, 7.65%, 1/1/23 NR/AA- 125,000 133,082
-----------------------------------------------------------------------------------------------
Oklahoma State Industrial Authority Revenue Bonds,
Health Systems-Baptist Medical Center, Series C,
AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 955,000 1,095,161
---------
1,228,243
-----------------------------------------------------------------------------------------------
PENNSYLVANIA--10.2% Pennsylvania State Industrial Development Authority
Revenue Bonds, Economic Development Project,
AMBAC Insured, 6%, 1/1/99 Aaa/AAA/AAA 2,000,000 2,094,064
-----------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development Authority
Revenue Bonds, Economic Development Project,
Series A, 6.80%, 7/1/01 NR/A-/AAA 3,000,000 3,359,085
-----------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Airport Revenue Bonds,
Philadelphia Airport System, Series A, AMBAC Insured,
5.75%, 6/15/08 Aaa/AAA/AAA 1,000,000 1,019,550
-----------------------------------------------------------------------------------------------
Schuylkill County, Pennsylvania Industrial
Development Authority Resource Recovery Revenue
Refunding Bonds, Schuylkill Energy Resources, Inc.,
6.50%, 1/1/10 NR/NR 2,500,000 2,511,218
---------
8,983,917
-----------------------------------------------------------------------------------------------
SOUTH CAROLINA--4.4% Richland County, South Carolina Hospital Facilities
Revenue Bonds, Community Provider Pooled Loan
Program, CGIC Insured, Series A, 7.125%, 7/1/17 Aaa/AAA 250,000 272,861
-----------------------------------------------------------------------------------------------
South Carolina State Education Assistance Authority
Revenue Bonds, Insured Student Loan, 6.30%, 9/1/01 NR/AA 1,400,000 1,473,924
-----------------------------------------------------------------------------------------------
South Carolina State Public Service Authority Revenue
Refunding Bonds, Prerefunded, 8%, 7/1/04 Aaa/AA-/A+ 2,000,000 2,119,490
---------
3,866,275
</TABLE>
7 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOUTH DAKOTA--1.7% South Dakota Student Loan Finance Revenue Bonds,
Series A, 5.95%, 8/1/01 NR/A+ $1,500,000 $ 1,531,692
- -------------------------------------------------------------------------------------------------------------------------
TENNESSEE--2.1% Chattanooga-Hamilton County, Tennessee Hospital
Authority Revenue Bonds, Erlanger Medical Center,
Prerefunded, Series B, FSA Insured,
Inverse Floater, 9.774%, 5/25/21(2) Aaa/AAA 1,500,000 1,868,050
- -------------------------------------------------------------------------------------------------------------------------
TEXAS--6.4% Harris County, Texas Flood Control Bonds,
Series A, 7.125%, 10/1/98 Aa/AA+ 1,315,000 1,426,225
-----------------------------------------------------------------------------------------------
Harris County, Texas Health Facilities Development
Corp. Hospital Revenue Bonds, Hermann Trust,
Prerefunded, 9%, 10/1/17 Aaa/AAA 2,500,000 2,780,155
-----------------------------------------------------------------------------------------------
Harris County, Texas Revenue Bonds, Toll Road
Project, Prerefunded, 10.375%, 8/1/14 Aaa/NR 300,000 339,788
-----------------------------------------------------------------------------------------------
Texas National Research Laboratory Commission
Financing Corp. Lease Revenue Bonds, Superconducting
Super Collider, 6.25%, Escrowed to Maturity, 12/1/00 Aaa/AAA/A 1,000,000 1,072,831
----------
5,618,999
- -------------------------------------------------------------------------------------------------------------------------
VERMONT--1.1% Vermont State Student Assistance Corp. Educational
Loan Revenue Bonds, Finance Program, Series A--3,
FSA Insured, 6.25%, 6/15/03 Aaa/AAA 900,000 968,787
- -------------------------------------------------------------------------------------------------------------------------
VIRGINIA--2.7% Chesapeake, Virginia Public Improvement General
Obligation Bonds, 7%, 5/1/99 Aa/AA 2,155,000 2,349,480
- -------------------------------------------------------------------------------------------------------------------------
WASHINGTON--1.2% Port of Seattle, Washington Revenue Bonds,
Series B, 6.30%, 11/1/02 A1/AA-/AA- 1,000,000 1,079,834
- -------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--1.0% West Virginia School Building Authority Revenue
Bonds, Prerefunded, MBIA Insured, 7.25%, 7/1/15 Aaa/AAA 750,000 848,103
- -------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--10.0% Puerto Rico Commonwealth General Obligation
Bonds, 6.35%, 7/1/10 Baa1/A 2,000,000 2,101,598
-----------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Revenue Bonds,
Series P, 6.75%, 7/1/03 Baa1/A- 2,000,000 2,209,440
-----------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority
Revenue Refunding Bonds, Series S, 7%, 7/1/07 Baa1/A- 2,000,000 2,277,480
-----------------------------------------------------------------------------------------------
Puerto Rico Telephone Authority Revenue Bonds,
AMBAC Insured, Inverse Floater, 3.55%, 1/1/03(2) Aaa/AAA/AAA 2,400,000 2,202,895
----------
8,791,413
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $84,667,837) 98.5% 86,906,403
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.5 1,365,333
--------- -----------
NET ASSETS 100.0% $88,271,736
--------- -----------
--------- -----------
</TABLE>
1. Represents a zero coupon bond that converts to a
fixed rate of interest at a designated future date.
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. The multiplier for
these inverse floaters is 2. Inverse floaters amount
to $4,070,945 or 4.6% of the Fund's net assets at
September 30, 1995.
See accompanying Notes to Financial Statements.
8 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value (cost $84,667,837)--see accompanying statement $86,906,403
-----------------------------------------------------------------------------------------------
Cash 159,192
-----------------------------------------------------------------------------------------------
Receivables:
Interest 1,602,440
Shares of beneficial interest sold 13,929
-----------------------------------------------------------------------------------------------
Other 26,516
-----------
Total assets 88,708,480
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Dividends 261,786
Shares of beneficial interest redeemed 88,154
Distribution and service plan fees--Note 4 52,252
Shareholder reports 13,807
Transfer and shareholder servicing agent fees--Note 4 3,579
Trustees' fees 63
Other 17,103
-----------
Total liabilities 436,744
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $88,271,736
-----------
-----------
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $88,366,036
NET ASSETS -----------------------------------------------------------------------------------------------
Overdistributed net investment income (66,542)
-----------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (2,266,324)
-----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 2,238,566
-----------
Net assets $88,271,736
-----------
-----------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $80,535,209 and 5,483,053 shares of beneficial interest outstanding) $14.69
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $15.22
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $118,918 and 8,097 shares of beneficial interest outstanding) $14.69
-----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $7,617,609 and 519,407 shares of beneficial interest outstanding) $14.67
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $5,684,381
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 435,665
---------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 187,036
Class B 15
Class C 74,513
----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 78,432
----------------------------------------------------------------------------------------------
Shareholder reports 52,243
----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 21,316
Class C 12,030
----------------------------------------------------------------------------------------------
Legal and auditing fees 24,847
----------------------------------------------------------------------------------------------
Custodian fees and expenses 11,833
----------------------------------------------------------------------------------------------
Insurance expenses 6,727
----------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,071
----------------------------------------------------------------------------------------------
Other 13,516
-----------
Total expenses 919,244
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,765,137
- ------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized loss from:
GAIN (LOSS) ON INVESTMENTS Investments (1,421,045)
Closing of futures contracts (169,368)
-----------
Net realized loss (1,590,413)
----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 4,069,030
-----------
Net realized and unrealized gain on investments 2,478,617
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,243,754
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 4,765,137 $ 4,139,249
--------------------------------------------------------------------------------------------------
Net realized loss on investments (1,590,413) (1,005,299)
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 4,069,030 (4,866,867)
----------- ------------
Net increase (decrease) in net assets resulting from operations 7,243,754 (1,732,917)
- ----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.7524 and $.7572 per share, respectively) (4,224,351) (4,028,765)
SHAREHOLDERS Class B ($.0571 per share) (78) --
Class C ($.6332 and $.5157 per share, respectively) (310,776) (164,731)
--------------------------------------------------------------------------------------------------
Distributions in excess of gain on investments:
Class A ($.0698 per share) -- (340,993)
Class C ($.0698 per share) -- (271)
- ----------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 (5,399,631) 19,304,315
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 118,895 --
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from Class C
beneficial interest transactions--Note 2 (1,122,859) 8,794,633
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase (decrease) (3,695,046) 21,831,271
--------------------------------------------------------------------------------------------------
Beginning of period 91,966,782 70,135,511
----------- -----------
End of period (including overdistributed net investment
income of $66,542 and $142,634, respectively) $88,271,736 $91,966,782
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
- ----------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 14.23 $ 15.34 $ 15.09 $ 14.40
- ----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .79 .72 .77 .86
Net realized and unrealized gain (loss)
on investments .42 (1.00) .70 .69
------- ------- ------- -------
Total income (loss) from investment
operations 1.21 (.28) 1.47 1.55
- ----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.75) (.76) (.75) (.86)
Distributions from net realized gain
on investments -- -- (.47) --
Distributions in excess of net realized gain
on investments -- (.07) -- --
------- ------- ------- -------
Total dividends and distributions
to shareholders (.75) (.83) (1.22) (.86)
- ----------------------------------------------------------------------------------------
Net asset value, end of period $ 14.69 $ 14.23 $ 15.34 $ 15.09
------- ------- ------- -------
------- ------- ------- -------
- ----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 8.78% (1.92)% 10.31% 11.10%
- ----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $80,535 $83,456 $70,136 $29,724
- ----------------------------------------------------------------------------------------
Average net assets (in thousands) $79,681 $79,076 $48,915 $25,153
- ----------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 5,483 5,865 4,571 1,970
- ----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.55% 5.05% 5.08% 5.87%
Expenses, before voluntary assumption
by the Manager .98% 1.00% 1.07% 1.25%
Expenses, net of voluntary assumption
by the Manager N/A N/A 1.05% 1.16%
- ----------------------------------------------------------------------------------------
Portfolio turnover rate(7) 55% 51% 21% 93%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September
30, 1994.
2. For the period from August 29, 1995 (inception of offering) to September
30, 1995.
3. For the period from November 11, 1986 (commencement of operations) to
September 30, 1987.
4. On April 7, 1990, Oppenheimer Management Corporation became the investment
advisor to the Fund.
5. 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.
12 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- ---------------------------------------------- --------- ------------------------
Period
Ended
Sept. 30, Year Ended September 30,
1991 1990(4) 1989 1988 1987(3) 1995(2) 1995 1994(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.51 $ 13.57 $ 13.33 $ 12.56 $ 14.00 $14.62 $14.18 $15.14
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .83 .90 .98 1.05 .90 .06 .69 .46
Net realized and unrealized gain (loss)
on investments .91 (.08) .24 .77 (1.44) .07 .43 (.83)
------- ------- ------- ------- ------- ------ ------ ------
Total income (loss) from investment
operations 1.74 .82 1.22 1.82 (.54) .13 1.12 (.37)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders
Dividends from net investment income (.85) (.88) (.98) (1.05) (.90) (.06) (.63) (.52)
Distributions from net realized gain
on investments -- -- -- -- -- -- -- --
Distributions in excess of net realized gain
on investments -- -- -- -- -- -- -- (.07)
------- ------- ------- ------- ------- ------ ------ ------
Total dividends and distributions
to shareholders (.85) (.88) (.98) (1.05) (.90) (.06) (.63) (.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.40 $ 13.51 $ 13.57 $ 13.33 $ 12.56 $14.69 $14.67 $14.18
------- ------- ------- ------- ------- ------ ------ ------
------- ------- ------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 13.20% 6.14% 9.54% 14.96% (4.11)% 0.83% 8.13% (2.54)%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $23,675 $20,287 $19,350 $13,480 $10,228 $ 119 $7,618 $8,511
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $22,071 $20,576 $17,188 $12,220 $11,152 $ 23 $7,437 $4,686
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 1,644 1,502 1,426 1,011 814 8 519 600
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.93% 6.56% 7.09% 8.01% 7.39%(6) 3.88%(6) 4.64% 3.77%(6)
Expenses, before voluntary assumption
by the Manager 1.35% 1.41% 1.56% 1.75% 1.95%(6) 1.55%(6) 1.88% 2.24%(6)
Expenses, net of voluntary assumption
by the Manager 1.16% .66% .23% N/A .40%(6) N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 75% 102% 180% 148% 98% 55% 55% 51%
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended September 30, 1995 were $47,459,869 and
$52,812,094, respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Intermediate Tax-Exempt Fund (the Fund), operating under the name
Oppenheimer Intermediate Tax-Exempt Bond Fund through August 29, 1995, is a
separate series of Oppenheimer Tax-Exempt Fund, a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge. All
three 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 are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
- -------------------------------------------------------------------------------
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. At September 30, 1995,
the Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $975,000 expiring in 2003.
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C 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.
During the year ended September 30, 1995, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
September 30, 1995, amounts have been reclassified to reflect a decrease in
undistributed net investment income of $153,840. Accumulated net realized
loss on investments was decreased by the same amount.
14 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
1. SIGNIFICANT
ACCOUNTING POLICIES
(continued)
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Original issue discount on securities
purchased 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
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1995(2) SEPTEMBER 30, 1994(1)
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,003,900 $ 14,290,724 2,161,013 $ 32,133,399
Dividends and distributions reinvested 196,934 2,809,242 201,137 2,968,987
Redeemed (1,583,239) (22,499,597) (1,067,987) (15,798,071)
---------- ------------ ---------- ------------
Net increase (decrease) (382,405) $ (5,399,631) 1,294,163 $ 19,304,315
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
- --------------------------------------------------------------------------------------------------
Class B:
Sold 8,097 $ 118,895 -- $ --
Dividends reinvested -- -- -- --
Redeemed -- -- -- --
---------- ------------ ---------- ------------
Net increase 8,097 $ 118,895 -- $ --
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
- --------------------------------------------------------------------------------------------------
Class C:
Sold 208,137 $ 2,981,674 664,985 $ 9,719,514
Dividends and distributions reinvested 18,316 259,921 8,536 122,637
Redeemed (307,226) (4,364,454) (73,341) (1,047,518)
---------- ------------ ---------- ------------
Net increase (decrease) (80,773) $ (1,122,859) 600,180 $ 8,794,633
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
1. For the year ended September 30, 1994 for Class A shares and for the
period from December 1, 1993 (inception of offering) to September 30, 1994
for Class C shares.
2. For the year ended September 30, 1995 for Class A and Class C shares and
for the period from August 29, 1995 (inception of offering) to September 30,
1995 for Class B shares.
- -------------------------------------------------------------------------------
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1995, net unrealized appreciation on investments of
$2,238,566 was composed of gross appreciation of $2,897,673, and gross
depreciation of $659,107.
- -------------------------------------------------------------------------------
4. MANAGEMENT FEES AND
OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .50% on the
first $100 million of average annual net assets, .45% on the next $150
million, .425% on the next $250 million and .40% on net assets in excess of
$500 million. The Manager has agreed to assume Fund expenses (with specified
exceptions) in excess of the most stringent state regulatory limit on Fund
expenses.
The Manager acts as the accounting agent for the Fund at an annual fee of
$12,000, plus out-of-pocket costs and expenses reasonably incurred.
15 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
4. MANAGEMENT FEES AND
OTHER TRANSACTIONS
WITH AFFILIATES
(continued)
For the year ended September 30, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $160,045, of which $62,159 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 and
Class C shares totaled $1,830 and $28,282, respectively, of which $6,183 was
paid to an affiliated broker/dealer for Class C shares. During the year ended
September 30, 1995, OFDI received contingent deferred sales charges of
$10,384 upon redemption of Class C shares, as reimbursement for sales
commissions advanced by OFDI at the time of sale of such 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 compensate 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 and Class C shares are subject to an
asset-based sales charge of .75% of net assets annually, to compensate 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 or Class C 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 or Class C shares sold prior to termination or
discontinuance of the plan. At September 30, 1995, OFDI had incurred
unreimbursed expenses of $74,888. During the year ended September 30, 1995,
OFDI paid $19,264 to an affiliated broker/dealer as compensation for Class A
personal service and maintenance expenses and retained $54,543 as
compensation for Class C sales commissions and service fee advances, as well
as financing costs.
16 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERMEDIATE TAX-EXEMPT
FUND:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Intermediate
Tax-Exempt Fund as of September 30, 1995, the related statement of operations
for the year then ended, the statements of changes in net assets for the
years ended September 30, 1995 and 1994, and the financial highlights for the
period October 1, 1989 to September 30, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights (except
for total return) for the period November 11, 1986 (commencement of
operations) to September 30, 1989 were audited by other auditors whose report
dated November 2, 1989, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at September 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Intermediate Tax-Exempt Fund at September 30, 1995, the results
of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 20, 1995
17 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
- -------------------------------------------------------------------------------
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1995.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended
September 30, 1995 are eligible for the corporate dividend-received
deduction. The dividends were derived from interest on municipal bonds and
are not subject to federal income tax. To the extent a shareholder is subject
to any state or local tax laws, some or all of the dividends received may be
taxable.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue
Service. Because of the complexity of the federal regulations which may
affect your individual tax return and the many variations in state and local
tax regulations, we recommend that you consult your tax advisor for specific
guidance.
SHAREHOLDER MEETING (UNAUDITED)
- -------------------------------------------------------------------------------
On July 10, 1995, a special shareholder meeting was held at which the nine
Trustees identified below were elected, the selection of Deloitte & Touche
LLP as the independent certified public accountants and auditors of the Fund
for the fiscal year beginning October 1, 1994 was ratified (Proposal No. 1),
the proposed changes in the Fund's investment policies were approved
(Proposal No. 2), the Fund's amended Class C 12b-1 Distribution and Service
Plan was approved by Class C shareholders (Proposal No. 3), as described in
the Fund's proxy statement for that meeting. The following is a report of the
votes cast:
<TABLE>
<CAPTION>
NOMINEE FOR AGAINST TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert G. Avis 3,621,033.129 34,885.925 3,655,919.054
William A. Baker 3,613,442.531 42,476.523 3,655,919.054
Charles Conrad, Jr. 3,621,882.845 34,036.209 3,655,919.054
Jon S. Fossel 3,622,376.938 33,542.116 3,655,919.054
Raymond J. Kalinowski 3,623,060.141 32,858.913 3,655,919.054
C. Howard Kast 3,618,852.759 37,066.295 3,655,919.054
Robert M. Kirchner 3,618,872.520 37,046.534 3,655,919.054
Ned M. Steel 3,622,951.425 32,967.629 3,655,919.054
James C. Swain 3,619,244.355 36,674.699 3,655,919.054
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST WITHHELD/ABSTAIN BROKER NON-VOTES TOTAL
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Proposal No. 1 3,548,685.910 19,897.005 87,336.139 106,319 3,655,919.054
Proposal No. 2 3,415,327.584 92,067.290 148,524.180 106,319 3,655,919.054
Proposal No. 3 285,504.097 3,632.606 9,793.125 -- 298,929.828
</TABLE>
18 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
OPPENHEIMER INTERMEDIATE TAX-EXEMPT FUND
A SERIES OF OPPENHEIMER TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
Caryn R. Halbrecht, Vice President
Robert E. Patterson, Vice President
George C. Bowen, Vice President, Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
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 Deloitte & Touche LLP
- -------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Intermediate
Tax-Exempt Fund. This report must be preceded or accompanied by a Prospectus
of Oppenheimer Intermediate Tax-Exempt 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.
19 Oppenheimer Intermediate Tax-Exempt 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
RAO500.001.0995 November 30, 1995
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
"How may I help you?"
As an Oppenheimer funds 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 Oppenheimer funds 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
information. 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 Oppenheimer funds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- -------------------------------------------------------------------------------
[LOGO] --------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
--------------
