[FRONT COVER]
Oppenheimer Intermediate Tax-Exempt Fund
Semiannual Report March 31, 1996
[PHOTO]Couple shopping
"We want
investment
income that
WON'T ADD
to our TAXES
... and we
need to feel
comfortable."
[LOGO]OppenheimerFunds/r/
<PAGE>
- ----
NEWS
- ----
- ----------------------
Standardized Yields(3)
- ----------------------
For the 30 Days Ended 3/31/96:
Class A
- -----
4.05%
- -----
Class B
- -----
3.24%
- -----
Class C
- -----
3.42%
- -----
The Fund's Class A shares
are ranked ****
among 848 municipal bond
funds as of 3/31/96 by
MORNINGSTAR MUTUAL FUNDS.(4)
This Fund is for people who want investment income that's EXEMPT from TAXES and
feel secure investing in a Fund designed to reduce interest rate risk.
- --------------------------------------------------------------------------------
HOW YOUR FUND IS MANAGED
- --------------------------------------------------------------------------------
Oppenheimer Intermediate Tax-Exempt Bond 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 on a dollar-weighted basis). 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 6 months ended 3/31/96 for Class A, B
and C shares were 2.79%, 2.38% and 2.40%, respectively.(1)
Your Fund's average annual total returns for Class A shares for the 1- and
5-year periods ended 3/31/96 and since inception of the Class on 11/11/86 were
4.25%, 6.61% and 6.97%, respectively. For Class B shares, cumulative total
return since inception on 9/11/95 was -1.49%. For Class C shares, average annual
total returns for the 1-year period ended 3/31/96 and since inception of the
Class on 12/1/93 were 6.17% and 3.33%, respectively.(2)
- --------------------------------------------------------------------------------
OUTLOOK
- --------------------------------------------------------------------------------
"In this environment, we believe a yield-oriented investment approach will
continue to benefit the Fund, both in terms of income and added stability."
Caryn Halbrecht, Portfolio Manager
March 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future results.
Investment return and principal value of 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 tax. 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 for the period shown,
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 3/31/95, 3/31/91
and 11/11/86 (inception of class), after deducting the current maximum initial
sales charge of 3.50%. Class B returns show results of hypothetical investments
on 9/11/95 after the deduction of the applicable contingent deferred sales
charge of 4%. Class C returns show results of hypothetical investments on
3/31/95 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.
3. Standardized yield for Class A, B and C shares is net investment income
calculated on a yield-to-maturity basis for the 30-day period ended 3/31/96,
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.
4. Source: MORNINGSTAR MUTUAL FUNDS, 3/31/96. Morningstar, Inc., an independent
mutual fund monitoring service, produces proprietary monthly rankings of funds
in broad investment categories (equity, taxable bond, tax-exempt bond, or
"hybrid") based on risk-adjusted investment return, after considering sales
charges and expenses. Investment return measures a fund's (or class's) 3-, 5-,
and 10-year (depending on the inception of the class or fund) average annual
total returns in excess of 90-day U.S. Treasury bill returns. Risk measures a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and returns are combined to produce star rankings, reflecting performance
relative to the average fund in a fund's category. Five stars is the "highest"
ranking (top 10%), four stars is "above average" (next 22.5%), and 1 star is the
lowest (bottom 1%). The 4-star current ranking is a weighted average of the 3-
and 5-year rankings for the class, which were both 4 stars, weighted 40%/60%,
respectively. There were 844 and 515 funds ranked in these respective periods.
Rankings are subject to change. The Fund's Class A, B and C shares have the same
portfolio.
2 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
[PHOTO]James C. Swain
James C. Swain
Chairman
Oppenheimer
Intermediate
Tax-Exempt Fund
[PHOTO]Bridget A. Macaskill
Bridget A. Macaskill
President
Oppenheimer
Intermediate
Tax-Exempt Fund
Dear Shareholder,
As we entered the 1996 presidential election year, the U.S. tax code had, once
again, become a major campaign issue.
While the possibility of significant tax reform that would affect municipal
bonds now appears to be fading, the downward pressure on municipal bond prices
created by those potential proposals has continued, offering a great opportunity
for investors seeking income that is exempt from federal taxes. And as you may
already know, municipal bonds are virtually unique in their ability to generate
tax-free income.
During early 1996, long-term interest rates as measured by the 30-year
Treasury bond, have been volatile, rising from 6% to almost 7%. As a result,
most fixed-income securities have offered little in the way of capital
appreciation. Therefore, the focus for bond investors has been on yield, making
the yield relationship between municipal bonds and U.S. Treasury bonds all the
more important.
Municipal bonds have been trading at yields of more than 90% of U.S.
Treasury bond yields, compared to nearly 80% prior to the tax-reform debate.
When you convert the tax-exempt rates to taxable-equivalent rates, municipal
bonds offer as much as a 30% premium over Treasurys. Few investments with the
creditworthiness of municipal bonds can claim such a high return, although, of
course, U.S. Treasury bonds are more creditworthy than municipal bonds. In
addition, with inflation at less than 3%, the inflation-adjusted returns of
municipal bonds are, indeed, compelling.
Another way of viewing high yields is that municipal bonds are
inexpensively priced, with values discounted for the risk of tax reform.
However, we have seen how difficult it is for a partisan Congress and the
President to agree on complex reform legislation, such as healthcare or a
balanced budget. If tax reform is deferred or tabled indefinitely, the value of
municipal bonds would likely readjust to normal levels. This would create an
opportunity for current investors to achieve high yields and perhaps enjoy
capital appreciation.
As interest rates fluctuate and the prospects for tax reform continue to be
unclear, the net asset value of municipal bonds will continue to be volatile.
But overall, patient municipal bond investors should continue to expect, over
time, taxable-equivalent returns which compare favorably to taxable investments
of similar risk.
It's important to remember, however, that unlike U.S. Treasury bonds,
municipal bonds are not federally guaranteed. So whether a bond is a general
obligation of a municipality or a revenue bond used to finance education,
housing, public works or transportation, our managers perform rigorous credit
analysis of the issuer. This analysis is critical to our investment selection
process.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues 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/Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 19, 1996
3 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
CARYN HALBRECHT
Portfolio Manager
Q + A
An interview with your Fund's manager.
HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS?
The Fund has performed quite well over the period. An important part of our
investment strategy is to focus on bonds with competitive yields, an approach
that has served us well as the bond rally aged over the past six months. Through
careful research, we were able to purchase bonds that offered both strong income
and the potential for appreciation, helping us to add real value for the Fund's
investors.
WHAT INVESTMENTS HAVE MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
Most of the investments we made grew out of our dual focus on yield and value.
Because higher yielding bonds are typically less volatile than lower yielding
bonds with similar maturities, owning them has allowed us both to continue to
pay high income relative to our peers and to reduce the volatility of our
portfolio.
Our search for value has been focused on finding what we'd consider overly
discounted securities within certain sectors of the market. When a sector of the
market falls out of favor, typically all of the bonds within it are affected.
Our research has helped us to uncover solid bonds that were discounted with the
weaker ones. Two areas where we've put this strategy to work, and found value in
the current market, have been issuers of student loans and hospital bonds.
Although they involve call risk--the risk that bonds may be paid off early--we
believe student loans offer great potential benefits. We've also done well with
selected hospital bonds. They were discounted by concerns over how the deficit
reduction might impact Medicare and Medicaid. In return, however, they pay high
income and offer appreciation potential.(1)
DID ANY INVESTMENTS NOT PERFORM AS EXPECTED?
Not really. While the fact that intermediate-term bonds are less volatile
than longer-term bonds meant that the rally in intermediates was not quite as
pronounced as the rally in longer bonds, their lower volatility has certainly
offered benefits during the first half of this year. And a factor that had been
holding appreciation back in all municipal bonds--tax reform talks--has begun to
diminish now.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We continue to look for bonds with attractive relative yields, while trying to
add value through our research. One sector we're targeting is callable versus
non-callable bonds. When non-callable bonds, or bonds that can't be redeemed
before their maturity date, were selling at a discount during the rally, we
bought them. When market sentiment shifts, as it does from time to time, the
perceived value of bonds versus non-callable bonds is likely to change.
WHAT IS YOUR OUTLOOK FOR THE FUND?
As the rally has slowed and as the market has shown increased volatility,
we've become somewhat more conservative. In this environment, we believe a
yield-oriented investment approach will continue to benefit the Fund, both in
terms of income and added stability.//
1. The Fund's portfolio is subject to change.
4 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
====================================================================================================================================
MUNICIPAL BONDS AND NOTES - 98.3%
- ------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 1.5%
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama Water Pollution Control Authority Revenue
Bonds, AMBAC Insured, 6.15%, 8/15/99 Aaa/AAA/AAA $1,350,000 $ 1,425,927
- ------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 1.2%
----------------------------------------------------------------------------------------------------------------------------
North Slope Borough, Alaska General Obligation Bonds,
Series B, CGIC Insured, 7.50%, 6/30/01 Aaa/AAA 1,000,000 1,134,858
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 10.5%
----------------------------------------------------------------------------------------------------------------------------
Berkeley, California Health Facility Revenue Bonds, Alta
Bates Medical Center, Series A, 6.50%, 12/1/11 Baa/BBB+ 1,500,000 1,512,667
----------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority Revenue
Bonds, Southern California Edison Co. Project, Series A,
MBIA Insured, 6.90%, 9/1/06 Aaa/AAA 1,000,000 1,075,268
----------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority
Revenue Certificates of Participation, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,097,692
----------------------------------------------------------------------------------------------------------------------------
Corona, California Certificates of Participation,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 1,000,000 1,319,369
----------------------------------------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor Agency California
Toll Road Revenue Bonds, Sr. Lien, Series A, 0%/6.95%,
1/1/07(1) Baa/BBB-/BBB 2,000,000 1,145,412
----------------------------------------------------------------------------------------------------------------------------
Long Beach Aquarium of the Pacific Revenue Bonds,
Series 1995-A, 5.75%, 7/1/05 NR/BBB/BBB- 1,500,000 1,474,545
----------------------------------------------------------------------------------------------------------------------------
Sacramento, California Cogeneration Authority Revenue
Bonds, Procter & Gamble Project, 6.375%, 7/1/10 NR/BBB- 1,100,000 1,122,004
----------------------------------------------------------------------------------------------------------------------------
San Bernardino County, California Certificates of
Participation, Medical Center Financing Project, 6%, 8/1/09 Baa1/A- 1,000,000 1,005,379
-----------
9,752,336
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COLORADO - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Denver, Colorado City & County Airport Revenue Bonds,
Series A, 7%, 11/15/99 Baa2/BBB/BBB- 1,000,000 1,059,071
----------------------------------------------------------------------------------------------------------------------------
Meridian Metropolitan District, Colorado General
Obligation Refunding Bonds, 7.50%, 12/1/11 A3/NR 500,000 556,235
-----------
1,615,306
- ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Florida State Board of Education Capital Outlay General
Obligation Bonds, Prerefunded, Series B, 7.625%, 6/1/09 Aaa/AAA 1,500,000 1,595,649
- ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 0.3%
----------------------------------------------------------------------------------------------------------------------------
Georgia State Residential Finance Authority Home
Ownership Mtg. Revenue Bonds, Series A-1, 7.50%, 6/1/17 Aa/AA+ 245,000 259,131
- ------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 3.6%
----------------------------------------------------------------------------------------------------------------------------
Chicago, Illinois General Obligation Refunding Bonds,
Prerefunded, Series B, 9.25%, 1/1/13 A/A 500,000 542,653
----------------------------------------------------------------------------------------------------------------------------
Du Page County, Illinois First Preservation District
General Obligation Bonds, Prerefunded, 7.70%, 11/1/00 Aaa/AAA 1,000,000 1,078,533
----------------------------------------------------------------------------------------------------------------------------
Southwestern Illinois Development Authority Hospital
Revenue Bonds, St. Elizabeth Medical Center, 8%, 6/1/10 NR/A- 500,000 534,423
----------------------------------------------------------------------------------------------------------------------------
Waukegan, Illinois General Obligation Bonds, MBIA
Insured, 7.50%, 12/30/03 A1/NR 1,000,000 1,150,323
-----------
3,305,932
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.6%
----------------------------------------------------------------------------------------------------------------------------
Indiana Bond Bank Revenue Bonds, State Revolving
Fund Program, Series A, 6.875%, 2/1/12 NR/A 1,135,000 1,229,693
----------------------------------------------------------------------------------------------------------------------------
Indiana University Revenue Bonds, Hospital Facilities
Project, 7%, 1/1/09 A1/A+ 215,000 224,738
-----------
1,454,431
</TABLE>
5 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 1.2%
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louisiana State General Obligation Bonds, Series A,
AMBAC Insured, 8%, 5/1/99 Aaa/AAA/AAA $1,000,000 $ 1,104,073
- ------------------------------------------------------------------------------------------------------------------------------------
MAINE - 1.4%
----------------------------------------------------------------------------------------------------------------------------
Maine Educational Loan Marketing Corp. Student Loan
Revenue Refunding Bonds, Series A, 6.05%, 11/1/04 Aaa/NR 750,000 780,569
----------------------------------------------------------------------------------------------------------------------------
Maine State Housing Authority Revenue Bonds, Mtg.
Purchase Project, Series A, 7.50%, 11/15/22 Aaa/AAA 500,000 524,343
-----------
1,304,912
- ------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.4%
----------------------------------------------------------------------------------------------------------------------------
Howard County, Maryland Certificates of Participation,
Series A, 8.05%, 2/15/21 Aa1/AA+ 350,000 450,228
----------------------------------------------------------------------------------------------------------------------------
Maryland Water Quality Financing Administration Revenue
Bonds, Revolving Loan Fund, Series A, Zero Coupon,
5.577%, 9/1/07(2) Aa/AA/AA- 1,500,000 831,736
-----------
1,281,964
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 2.8%
----------------------------------------------------------------------------------------------------------------------------
Massachusetts State General Obligation Bonds, FGIC
Insured, 7.875%, 6/1/97 Aaa/AAA/AAA 500,000 524,312
----------------------------------------------------------------------------------------------------------------------------
Worcester, Massachusetts General Obligation Refunding
Bonds, Series G, MBIA Insured, 5.50%, 7/1/03 Aaa/AAA 2,000,000 2,079,796
-----------
2,604,108
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 6.0%
----------------------------------------------------------------------------------------------------------------------------
Detroit, Michigan General Obligation Refunding Bonds,
Series B, 7%, 4/1/04 Ba1/BBB/BBB- 2,000,000 2,153,290
----------------------------------------------------------------------------------------------------------------------------
Detroit, Michigan Self-Insurance Bonds, Series A, 5.70%,
5/1/02 NR/BBB-/BBB- 1,000,000 1,010,174
----------------------------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority Revenue
Refunding Bonds, Sinai Hospital of Greater Detroit,
Series 1995, 6%, 1/1/08 Baa/NR/BBB 2,500,000 2,432,023
-----------
5,595,487
- ------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 2.2%
----------------------------------------------------------------------------------------------------------------------------
Nebraska State Higher Education Loan Program, Series
A-6, 5.90%, 6/1/03 A/NR/A 2,000,000 2,044,332
- ------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 2.4%
----------------------------------------------------------------------------------------------------------------------------
Clark County, Nevada School District General Obligation
Bonds, Series A, MBIA Insured, 9.75%, 6/1/01 Aaa/AAA 1,800,000 2,221,249
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 3.9%
----------------------------------------------------------------------------------------------------------------------------
Hoboken, Union City & Weehawken, New Jersey Sewer
Authority Revenue Bonds, Prerefunded, MBIA Insured,
7.25%, 8/1/19 Aaa/AAA 1,900,000 2,102,909
----------------------------------------------------------------------------------------------------------------------------
Ocean County, New Jersey General Obligation Bonds,
7.40%, 10/15/00 Aa/AA-/AA 1,400,000 1,563,320
-----------
3,666,229
- ------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 0.6%
----------------------------------------------------------------------------------------------------------------------------
New Mexico State Hospital Equipment Loan Council
Revenue Bonds, San JuanRegional Medical Center,
Inc.Project, 7.90%, 6/1/11 A/NR 500,000 555,144
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 16.9%
----------------------------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds, Prerefunded,
Series F, 8.40%, 11/15/07 Aaa/BBB+ 2,140,000 2,573,318
----------------------------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds, Series B,
6.20%, 8/15/06 Baa1/BBB+/A- 1,500,000 1,520,488
----------------------------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds, Unrefunded
Balance, Series F, 8.40%, 11/15/07 Baa1/BBB+ 360,000 419,404
----------------------------------------------------------------------------------------------------------------------------
City of New York General Obligation Refunding Bonds,
Series B, MBIA Insured, 6.20%, 8/15/06 Aaa/AAA 1,500,000 1,621,528
</TABLE>
6 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
City of New York Industrial Development Agency Special
Facilities Revenue Bonds, Terminal One Group Assn.
Project, 6%, 1/1/08 A/A/A- $2,000,000 $ 2,010,040
----------------------------------------------------------------------------------------------------------------------------
City of New York Industrial Development Agency Special
Facilities Revenue Bonds, Terminal One Group Assn.
Project, 6.10%, 1/1/09 A/A/A- 2,000,000 2,009,986
----------------------------------------------------------------------------------------------------------------------------
New York State General Obligation Refunding Bonds,
7.80%, 11/15/99 A/A- 1,000,000 1,111,012
----------------------------------------------------------------------------------------------------------------------------
New York State Housing Finance Agency Revenue
Refunding Bonds, New York City Health Facilities,
Series A, 6.375%, 11/1/04 Baa/BBB+ 2,000,000 2,057,072
----------------------------------------------------------------------------------------------------------------------------
New York State Medical Care Facilities Finance Agency
Revenue Bonds, Prerefunded, 7.80%, 2/15/19 Aaa/AAA 1,275,000 1,418,157
----------------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corp. Revenue Refunding
Bonds, Correctional Facilities Project, 5.25%, 1/1/02 Baa1/BBB/A 1,035,000 1,036,949
-----------
15,777,954
- ------------------------------------------------------------------------------------------------------------------------------------
OHIO - 2.2%
----------------------------------------------------------------------------------------------------------------------------
Montgomery County, Ohio Solid Waste Revenue
Refunding Bonds, MBIA Insured, 6%, 11/1/05 Aaa/AAA 1,940,000 2,090,850
- ------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.3%
----------------------------------------------------------------------------------------------------------------------------
Oklahoma County, Oklahoma Home Finance Authority
Revenue Bonds, 7.65%, 1/1/23 NR/AA- 125,000 132,452
----------------------------------------------------------------------------------------------------------------------------
Oklahoma State Industrial Authority Health Systems
Revenue Bonds, Baptist Medical Center, Series C,
AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 955,000 1,089,610
-----------
1,222,062
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 11.1%
----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development Authority
Economic Development Revenue Bonds, AMBAC
Insured, 6%, 1/1/99(3) Aaa/AAA/AAA 2,000,000 2,083,612
----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development Authority
Economic Development Revenue Bonds, Series A,
6.80%, 7/1/01 NR/A-/AAA 3,000,000 3,346,209
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Airport Revenue Bonds,
Series A, AMBAC Insured, 5.75%, 6/15/08 Aaa/AAA/AAA 1,000,000 1,023,141
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Hospitals & Higher
Educational Facilities Authority Revenue Refunding
Bonds, Jeanes Health System Project, 6.20%, 7/1/00 NR/BBB 1,360,000 1,396,063
----------------------------------------------------------------------------------------------------------------------------
Schuylkill County, Pennsylvania Industrial Development
Authority Resource Recovery Revenue Refunding Bonds,
Schuylkill Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 2,425,000 2,457,883
-----------
10,306,908
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 1.9%
----------------------------------------------------------------------------------------------------------------------------
Richland County, South Carolina Hospital Facilities
Revenue Bonds, Community Provider Pooled Loan
Program, Series A, CGIC Insured, 7.125%, 7/1/17 Aaa/AAA 250,000 271,759
----------------------------------------------------------------------------------------------------------------------------
South Carolina State Education Assistance Authority
Revenue Bonds, Insured Student Loan, 6.30%, 9/1/01 NR/AA 1,400,000 1,471,883
-----------
1,743,642
</TABLE>
7 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 1.7%
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
South Dakota Student Loan Finance Revenue Bonds,
Series A, 5.95%, 8/1/01 NR/A+ $1,500,000 $ 1,539,793
- ------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 3.6%
----------------------------------------------------------------------------------------------------------------------------
Chattanooga-Hamilton County, Tennessee Hospital Authority
Revenue Bonds, Prerefunded, Series A, 6.712%, 5/25/21 Aaa/AAA 3,000,000 3,379,581
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 7.2%
----------------------------------------------------------------------------------------------------------------------------
Harris County, Texas Flood Control Bonds, Series A,
7.125%, 10/1/98 Aa/AA+ 1,315,000 1,407,355
----------------------------------------------------------------------------------------------------------------------------
Harris County, Texas Health Facilities Development Corp.
Hospital Revenue Bonds, Hermann Trust, Prerefunded,
9%, 10/1/17 Aaa/NR 2,500,000 2,736,115
----------------------------------------------------------------------------------------------------------------------------
Harris County, Texas Toll Road Unlimited Tax & Sub. Lien
Revenue Bonds, Prerefunded, 10.375%, 8/1/14 Aaa/AAA 300,000 332,733
----------------------------------------------------------------------------------------------------------------------------
San Antonio, Texas Airport System Revenue Refunding
Bonds, AMBAC Insured, 7.125%, 7/1/05 Aaa/AAA/AAA 1,000,000 1,131,735
----------------------------------------------------------------------------------------------------------------------------
Texas National Research Laboratory Commission
Financing Corp. Lease Revenue Bonds, Escrowed to
Maturity, 6.25%, 12/1/00 Aaa/AAA/A 1,000,000 1,078,603
-----------
6,686,541
- ------------------------------------------------------------------------------------------------------------------------------------
VERMONT - 1.0%
----------------------------------------------------------------------------------------------------------------------------
Vermont State Student Assistance Corp. Educational
Loan Revenue Bonds, Series A-3, FSA Insured, 6.25%,
6/15/03 Aaa/AAA 900,000 967,891
- ------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 2.5%
----------------------------------------------------------------------------------------------------------------------------
Chesapeake, Virginia Public Improvement General
Obligation Bonds, 7%, 5/1/99 Aa/AA 2,155,000 2,324,749
- ------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.9%
----------------------------------------------------------------------------------------------------------------------------
West Virginia School Building Authority Revenue Bonds,
Prerefunded, MBIA Insured, 7.25%, 7/1/15 Aaa/AAA 750,000 841,722
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS - 4.0%
----------------------------------------------------------------------------------------------------------------------------
Puerto Rico Commonwealth General Obligation Bonds,
6.35%, 7/1/10 Baa1/A 1,500,000 1,562,935
----------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority Revenue Bonds,
Series P, 6.75%, 7/1/03 Baa1/A- 2,000,000 2,190,668
-----------
3,753,603
----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $89,988,099) 98.3% 91,556,364
----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.7 1,546,352
------- -----------
NET ASSETS 100.0% $93,102,716
======= ===========
</TABLE>
1. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
2. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
3. Securities with an aggregate market value of $1,041,820 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
As of March 31, 1996 , securities subject to the alternative minimum tax
amounted to $16,572,309 or 17.80% of the Fund's net assets.
See accompanying Notes to Financial Statements.
8 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996(UNAUDITED)
====================================================================================================================================
<S> <C> <C>
ASSETS Investments, at value (cost $89,988,099) - see accompanying statement $91,556,364
----------------------------------------------------------------------------------------------------
Cash 329,796
----------------------------------------------------------------------------------------------------
Receivables:
Interest 1,673,099
Shares of beneficial interest sold 157,383
----------------------------------------------------------------------------------------------------
Other 25,818
------------
Total assets 93,742,460
====================================================================================================================================
LIABILITIES Payables and other liabilities:
Dividends 280,902
Shares of beneficial interest redeemed 221,817
Distribution and service plan fees 54,699
Payable for daily variation on futures contracts - Note 5 44,531
Shareholder reports 20,215
Transfer and shareholder servicing agent fees 5,728
Other 11,852
-------------
Total liabilities 639,744
====================================================================================================================================
NET ASSETS $93,102,716
============
====================================================================================================================================
COMPOSITION OF Paid-in capital $93,135,797
NET ASSETS ----------------------------------------------------------------------------------------------------
Overdistributed net investment income (62,114)
----------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,527,514)
----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments - Note 3 1,556,547
------------
Net assets $93,102,716
============
====================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on
net assets of $82,949,310 and 5,640,058 shares of beneficial interest outstanding) $14.71
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $15.24
----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,322,039 and 89,895 shares of beneficial interest outstanding) $14.71
----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $8,831,367 and 601,379 shares of beneficial interest outstanding) $14.69
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
====================================================================================================================================
<S> <C> <C>
INVESTMENT INCOME Interest $2,880,196
====================================================================================================================================
EXPENSES Management fees - Note 4 229,141
----------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 98,244
Class B 3,503
Class C 40,752
----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 46,022
----------------------------------------------------------------------------------------------------
Shareholder reports 34,333
----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 22,088
Class B 411
Class C 2,251
----------------------------------------------------------------------------------------------------
Legal and auditing fees 12,751
----------------------------------------------------------------------------------------------------
Custodian fees and expenses 3,723
----------------------------------------------------------------------------------------------------
Insurance expenses 1,957
----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,292
----------------------------------------------------------------------------------------------------
Other 6,569
------------
Total expenses 503,037
====================================================================================================================================
NET INVESTMENT INCOME 2,377,159
====================================================================================================================================
REALIZED AND Net realized gain on:
UNREALIZED GAIN (LOSS) Investments 658,580
Closing of futures contracts 80,230
------------
Net realized gain 738,810
----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (682,019)
------------
Net realized and unrealized gain 56,791
====================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,433,950
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995
====================================================================================================================================
<S> <C> <C> <C>
OPERATIONS Net investment income $ 2,377,159 $ 4,765,137
----------------------------------------------------------------------------------------------------
Net realized gain (loss) 738,810 (1,590,413)
----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (682,019) 4,069,030
------------ -------------
Net increase in net assets resulting from operations 2,433,950 7,243,754
====================================================================================================================================
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A (2,174,425) (4,224,351)
Class B (15,124) (78)
Class C (183,182) (310,776)
====================================================================================================================================
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 2,335,610 (5,399,631)
Class B 1,214,065 118,895
Class C 1,220,086 (1,122,859)
====================================================================================================================================
NET ASSETS Total increase (decrease) 4,830,980 (3,695,046)
----------------------------------------------------------------------------------------------------
Beginning of period 88,271,736 91,966,782
------------ -------------
End of period (including overdistributed net investment
income of $62,114 and $66,542, respectively) $93,102,716 $88,271,736
============ =============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
===========================================================================
FINANCIAL HIGHLIGHTS
CLASS A
---------------------------------------------------------------------------
SIX MONTHS ENDED
MARCH 31, 1996 YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED) 1995 1994 1993 1992 1991
===========================================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.69 $14.23 $15.34 $15.09 $14.40 $13.51
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39 .79 .72 .77 .86 .83
Net realized and unrealized gain (loss) .02 .42 (1.00) .70 .69 .91
- ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .41 1.21 (.28) 1.47 1.55 1.74
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.39) (.75) (.76) (.75) (.86) (.85)
Distributions from net realized gain -- -- -- (.47) -- --
Distributions in excess of net realized gain -- -- (.07) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.39) (.75) (.83) (1.22) (.86) (.85)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.71 $14.69 $14.23 $15.34 $15.09 $14.40
============================================================================
===========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 2.79% 8.78% (1.92)% 10.31% 11.10% 13.20%
===========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $82,949 $80,535 $83,456 $70,136 $29,724 $23,675
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $82,689 $79,681 $79,076 $48,915 $25,153 $22,071
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.27%(4) 5.55% 5.05% 5.08% 5.87% 5.93%
Expenses, before voluntary assumption
the Manager 1.03%(4) 0.98% 1.00% 1.07% 1.25% 1.35%
Expenses, net of voluntary assumption
by the Manager N/A N/A N/A 1.05% 1.16% 1.16%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 25% 55% 51% 21% 93% 75%
</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. 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>
=================================================================================
FINANCIAL HIGHLIGHTS
CLASS B CLASS C
--------------------------------- -------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
MARCH 31, 1996 SEPTEMBER 30, MARCH 31, 1996 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1995(2) (UNAUDITED) 1995 1994(1)
================================================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.69 $14.62 $14.67 $14.18 $15.14
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .33 .06 .33 .69 .46
Net realized and unrealized gain (loss) .02 .07 .02 .43 (.83)
- --------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .35 .13 .35 1.12 (.37)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.33) (.06) (.33) (.63) (.52)
Distributions from net realized gain -- -- -- -- --
Distributions in excess of net realized gain -- -- -- -- (.07)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.33) (.06) (.33) (.63) (.59)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.71 $14.69 $14.69 $14.67 $14.18
=================================================================================
================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 2.38% 0.83% 2.40% 8.13% (2.54)%
================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,322 $119 $8,831 $7,618 $8,511
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 704 $ 23 $8,160 $7,437 $4,686
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.34%(4) 3.88%(4) 4.48%(4) 4.64% 3.77%(4)
Expenses, before voluntary assumption
the Manager 1.81%(4) 1.55%(4) 1.78%(4) 1.88% 2.24%(4)
Expenses, net of voluntary assumption
by the Manager N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 25% 55% 25% 55% 51%
</TABLE>
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 March 31, 1996 were $26,667,658 and $22,070,854,
respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Intermediate Tax-Exempt Fund (the Fund) 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 objective is to seek maximum current income exempt
from Federal income tax for individual investors that is consistent with
the preservation of capital. The Fund's investment advisor is
OppenheimerFunds, Inc. (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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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, on disposition or maturity, taxable ordinary
income is recognized to the extent of the lesser of gain or market discount
that would have accrued over the holding period. Realized gains and losses
on investments and unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
14 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995(1)
---------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 447,888 $ 6,655,326 1,003,900 $ 14,290,724
Dividends and distributions
reinvested 102,429 1,522,045 196,934 2,809,242
Redeemed (393,312) (5,841,761) (1,583,239) (22,499,597)
--------- ------------ ----------- -------------
Net increase (decrease) 157,005 $ 2,335,610 (382,405) $ (5,399,631)
========= ============ =========== =============
-----------------------------------------------------------------------------------------------
Class B:
Sold 81,415 $ 1,208,374 8,097 $ 118,895
Dividends and distributions
reinvested 561 8,334 -- --
Redeemed (178) (2,643) -- --
--------- ------------ ----------- -------------
Net increase 81,798 $ 1,214,065 8,097 $ 118,895
========= ============ =========== =============
-----------------------------------------------------------------------------------------------
Class C:
Sold 159,779 $ 2,376,249 208,137 $ 2,981,674
Dividends and distributions
reinvested 9,168 136,019 18,316 259,921
Redeemed (86,975) (1,292,182) (307,226) (4,364,454)
--------- ------------ ----------- -------------
Net increase (decrease) 81,972 $ 1,220,086 (80,773) $ (1,122,859)
========= ============ =========== =============
</TABLE>
1. 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 March 31, 1996, net unrealized appreciation on investments of $1,556,547
was composed of gross appreciation of $2,176,527, and gross depreciation of
$619,980.
================================================================================
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 applicable 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.
For the six months ended March 31, 1996, commissions (sales charges
paid by investors) on sales of Class A shares totaled $85,660, of which
$47,048 was retained by OppenheimerFunds 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 $25,929 and $23,049, of which
$461 was paid to an affiliated broker/dealer for Class C shares. During the
six months ended March 31, 1996, OFDI received contingent deferred sales
charges of $78 and $3,444, respectively, upon redemption of Class B and
Class C shares, as reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed .25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee
to reimburse brokers, dealers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares. During the six months ended March
31, 1996, OFDI paid $10,367 to an affiliated broker/dealer as reimbursement
for Class A personal service and maintenance expenses.
15 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the
Plans, the Fund pays OFDI an annual asset-based sales charge of .75% per
year on Class B shares that are outstanding for 6 years or less and on
Class C shares, as compensation for sales commissions paid from its own
resources at the time of sale and associated financing costs. If the Plans
are terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plans were terminated. OFDI also receives a
service fee of .25% per year as compensation 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 financial institutions. Both fees are computed on the average annual
net assets of Class B and Class C shares, determined as of the close of
each regular business day. During the six months ended March 31, 1996, OFDI
paid $1,834 to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $3,503 and $15,341,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. At March 31, 1996, OFDI
had incurred unreimbursed expenses of $21,099 for Class B and $102,938 for
Class C.
5. 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 March 31, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALZIED
CONTRACTS TO SELL DATE FUTURES CONTRACTS MARCH 31, 1996 DEPRECIATION
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 6/96 50 $5,347,656 $11,718
</TABLE>
16 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
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, Trustee and President
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President and Secretary
Caryn R. Halbrecht, Vice President
Robert E. Patterson, Vice President
George C. Bowen, Vice President and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER
SERVICING AGENT
================================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
================================================================================
LEGAL COUNSEL Myer, Swanson, Adams and Wolf, P.C.
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 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.
17 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
- -----------------------
OPPENHEIMERFUNDS FAMILY
- -----------------------
================================================================================
OppenheimerFunds offers over 50 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 comfor-
table knowing that you are investing with a respected financial
institution with over 35 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 2.8 million shareholder accounts and more
than $50 billion under Oppenheimer's management and that of our
affiliates.
At OppenheimerFunds, we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by tele-
phone.(1) For more information on Oppenheimer funds, please con-
tact 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.
================================================================================
STOCK FUNDS Disciplined Value Fund Oppenheimer Fund
Discovery Fund Quest Global Value Fund
Enterprise Fund Quest Small Cap Value Fund
Global Emerging Growth Fund Quest Value Fund
Global Fund Target Fund
Gold & Special Minerals Fund Value Stock Fund
Growth Fund
================================================================================
STOCK & BOND Asset Allocation Fund Main Street Income & Growth Fund
FUNDS Bond Fund for Growth Quest Growth & Income Value Fund
Disciplined Allocation Fund Quest Opportunity Value Fund
Equity Income Fund Strategic Income & Growth Fund
Global Growth & Income Fund Total Return Fund
================================================================================
BOND FUNDS Bond Fund Limited-Term Government Fund
Champion Income Fund Strategic Income Fund
High Yield Fund U.S. Government Trust
International Bond Fund
================================================================================
TAX-EXEMPT California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
FUNDS Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
Insured Tax-Exempt Fund
Intermediate Tax-Exempt Fund Rochester Division
New Jersey Tax-Exempt Fund(2) Limited-Term N.Y. Municipal Fund
New York Tax-Exempt Fund(2) Rochester Fund Municipals
================================================================================
MONEY MARKET Cash Reserves Money Market Fund
FUNDS
================================================================================
LIFESPAN Balanced Fund Income Fund
Growth Fund
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only for shares of the same class of
eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
-c-Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
18 Oppenheimer Intermediate Tax-Exempt Fund
<PAGE>
This page was blank.
<PAGE>
[BACK COVER]
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
- --------------
RS0860.001.0396 May 31, 1996
- ------------------------------------------------------------------------------
"HOW MAY I HELP YOU?" [PHOTO]Jennifer Leonard
Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
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 fund's transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- ------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS-R- --------------
OppenheimerFunds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
--------------
