SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ X / Definitive proxy statement
/ X / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
--------------------
1 - Set forth the amount on which the filing fee is calculated and state
how it was determined.
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
July 1995
Dear Oppenheimer California Tax-Exempt Fund Class B Shareholder:
We have scheduled a shareholder meeting in September for you to
decide upon an important proposal for the Fund. A ballot card and a proxy
statement outlining the proposal are enclosed with this letter.
Your vote is very important because this decision will affect your
investment. So we urge you to consider this issue carefully and to make
your vote count.
What is the issue?
After consideration, the Board of Trustees, which represents your
interests in the day-to-day management of the Fund, recommends approval
of the following:
- New 12b-1 Plan for Class B Shares. Currently, the Fund's distributor
is reimbursed for a portion of its expenses by demonstrating actual
distribution costs. Your approval is requested to change the way the
distributor is paid so that it is compensated with a flat fee (as a
percentage of net assets) for its distribution efforts at the same rate
as the current plan. This is a common type of 12b-1 plan in the mutual
fund industry. Any distribution costs in excess of that rate will be the
responsibility of the distributor.
How do you vote?
To vote, simply complete the ballot by marking your choices and
return it in the postage-paid envelope provided. Remember, it can be
expensive for the Fund -- and ultimately for you as a shareholder -- to
remail ballots if not enough responses are received to conduct the
meeting.
Please contact your financial adviser or call us at 1-800-525-7048
if you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment assets.
Sincerely,
(JSF signature)
Oppenheimer California Tax- Proxy for Shareholders Meeting to
Exempt Fund - Class B Shares be held September 12, 1995
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse side,
date and sign it, and return it promptly in
the accompanying envelope, which requires
no postage if mailed in the United States.
Please detach at perforation before mailing.
Oppenheimer California Tax-Exempt Fund - Class B Shares
Proxy For Shareholders Meeting to be held September 12, 1995
The undersigned shareholder of Oppenheimer California Tax-Exempt Fund
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen, Andrew
J. Donohue and Scott Farrar, and each of them, as attorneys-in-fact and
proxies of the undersigned, with full power of substitution, to attend the
Meeting of Shareholders of the Fund to be held September 12, 1995, at 3410
South Galena Street, Denver, Colorado 80231 at 10:00 A.M., Denver time,
and at all adjournments thereof, and to vote the shares held in the name
of the undersigned on the record date for said meeting for the proposal
described on the reverse side. Said attorneys-in-fact shall vote in
accordance with their best judgment as to any other matter.
Proxy solicited on behalf of the Board Of Trustees, which recommends a
vote FOR the proposal on the reverse side. The shares represented hereby
will be voted as indicated on the reverse side or FOR if no choice is
indicated.
(over)
791
Oppenheimer California Tax- Proxy for Shareholders Meeting to
Exempt Fund - Class B Shares be held September 12, 1995
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and mail your proxy ballot
(this card) in the enclosed postage-paid
envelope today, no matter how many shares
you own. A majority of the Fund's shares
must be represented in person or by proxy.
Please vote your proxy so your Fund can
avoid the expense of another mailing.
Please detach at perforation before
mailing.
(OVER)
The Proposal:
Approval of proposed Class B 12b-1 Distribution and Service Plan and
Agreement
For ____ Against ____ Abstain ____
NOTE: Please sign exactly as your name(s) appear hereon. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.
Dated: _______________________, 1995
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
791
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Two World Trade Center, New York, New York 10048-0203
Notice Of Meeting Of Shareholders To Be Held
September 12, 1995
To The Class B Shareholders of
Oppenheimer California Tax-Exempt Fund:
Notice is hereby given that a meeting of the Class B shareholders of
Oppenheimer California Tax-Exempt Fund (the "Fund") will be held at 3410
South Galena Street, Denver, Colorado, 80231, at 10:00 A.M., Denver time,
on September 12, 1995, or any adjournments thereof (the "Meeting"), for
the following purposes:
(a) To approve the Fund's Class B 12b-1 Distribution and Service Plan
and Agreement (The Proposal); and
(b) To transact such other business as may properly come before the
Meeting.
Class B shareholders of record at the close of business on July 14, 1995
are entitled to notice of, and to vote, at the Meeting. The Fund offers
Class A shares in addition to Class B shares. Class A shareholders of the
Fund are not eligible to vote on the Proposal and the vote of such
shareholders is not being solicited hereby. The Proposal is more fully
discussed in the accompanying Proxy Statement. Please read it carefully
before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Trustees of the Fund recommends a vote
in favor of the Proposal. WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
July 24, 1995
_______________________________________________________________________
Shareholders who do not expect to attend the Meeting are asked to indicate
voting instructions on the enclosed proxy and to date, sign and return it
in the accompanying postage-paid envelope. To avoid unnecessary duplicate
mailings, we ask your cooperation in promptly mailing your proxy no matter
how large or small your holdings may be.
791
<PAGE>
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Meeting Of Shareholders
To Be Held September 12, 1995
This proxy statement is being furnished to the Class B shareholders of
Oppenheimer California Tax-Exempt Fund (the "Fund") in connection with the
solicitation by the Fund's Board of Trustees of proxies to be used at a
meeting of the Class B shareholders of the Fund to be held at 3410 South
Galena Street, Denver, Colorado, 80231, at 10:00 A.M., Denver time, on
September 12, 1995, or any adjournments thereof (the "Meeting"). It is
expected that the mailing of this proxy statement will be made on or about
August 4, 1995.
Subject to the authority of the Fund's Board of Trustees, Oppenheimer
Management Corporation (the "Manager") is responsible for the day-to-day
management of the Fund's business pursuant to its investment advisory
agreement with the Fund. Oppenheimer Funds Distributor, Inc. (the
"Distributor"), a wholly owned subsidiary of the Manager, is the general
distributor of the Fund's shares. Both the Manager and the Distributor
are located at Two World Trade Center, New York, New York 10048-0203. For
a free copy of the annual report covering the operations of the Fund for
the fiscal year ended December 31, 1994, call Oppenheimer Shareholder
Services, the Fund's transfer agent, at 1-800-525-7048.
The enclosed proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the
choices specified thereon, and will be included in determining whether
there is a quorum to conduct the Meeting. The proxy will be voted in
favor of the Proposal unless a choice is indicated to vote against or to
abstain from voting on the Proposal. Shares owned of record by broker-
dealers for the benefit of their customers ("street account shares") will
be voted by the broker-dealer based on instructions received from its
customers. If no instructions are received, the broker-dealer may (if
permitted under applicable stock exchange rules) as record holder vote
such shares on the Proposal in the same proportion as that broker-dealer
votes street account shares for which voting instructions were received
in time to be voted.
If a shareholder executes and returns a proxy but fails to indicate how
the votes should be cast, the proxy will be voted in favor of the
Proposal.
The proxy may be revoked at any time prior to the voting by: (1) writing
to the Secretary of the Fund at Two World Trade Center, New York, New York
10048-0203; (2) attending the Meeting and voting in person; or (3) signing
and returning a new proxy (if returned and received in time to be voted).
The cost of printing and distributing these proxy materials is an expense
of the Fund. In addition to the solicitation of proxies by mail, proxies
may be solicited by officers or employees of the Fund's transfer agent,
personally or by telephone; any expenses so incurred will also be borne
by the Fund's transfer agent. Proxies may also be solicited by a proxy
solicitation firm hired at the Fund's expense for such purpose. Brokers,
banks and other fiduciaries may be required to forward soliciting material
to their principals and to obtain authorization for the execution of
proxies. For those services they will be reimbursed by the Fund for their
out-of-pocket expenses.
Class B Shares Outstanding and Entitled to Vote. As of July 14, 1995, the
record date, there were 2,395,786.247 Class B shares of the Fund issued
and outstanding. Each Class B share of the Fund has voting rights as
stated in this proxy statement and is entitled to one vote for each share
(and a fractional vote for a fractional share) held of record at the close
of business on the record date. Class A shareholders of the Fund are not
eligible to vote on the Proposal and the vote of such shareholders is not
being solicited hereby.
Share Ownership Information. As of July 14, 1995, no entity owned or was
known by the management of the Fund to be the beneficial owner of 5% or
more of the outstanding Class A or Class B shares of the Fund. As of July
14, 1995, no Trustee or officer of the Fund owned any Class A or Class
B shares of the Fund.
APPROVAL OF THE FUND'S CLASS B 12b-1 DISTRIBUTION
AND SERVICE PLAN AND AGREEMENT
(The Proposal)
Class B shares of the Fund were first offered to the public on May 1,
1993. At that time, the Fund had adopted a Distribution Plan and
Agreement for Class B shares pursuant to Rule 12b-1 of the Investment
Company Act of 1940, as amended (the "Investment Company Act"). The Plan
provided for payment by the Fund to the Distributor of a service fee of
up to 0.25% per annum and an asset-based sales charge of up to 0.75% per
annum on Class B shares outstanding for six years or less, in each case
on the basis of average annual net assets, to compensate the Distributor
and certain brokers, dealers, banks and other persons and entities
(collectively, "Recipients") for providing distribution assistance and
administrative support services. In June of 1993, the Fund's Board of
Trustees, including a majority of the Independent Trustees (as defined
below), approved amendments to that Plan to recharacterize it as a
distribution and service plan and agreement in conformity with the
National Association of Securities Dealers, Inc. ("NASD") Rule. In
February of 1994, that distribution and service plan and agreement was
further amended by the Board of Trustees (as amended, the "Current Plan")
to eliminate a provision that had required the Fund to continue to make
payments to the Distributor for its previously expended distribution
expenses, although continuation of such payments remained discretionary
with the Trustees.
At a meeting of the Fund's Board of Trustees held March 16, 1995, the
Manager proposed the adoption of a new Distribution and Service Plan and
Agreement (the "Proposed Plan"), which is a "compensation type plan"
instead of a "reimbursement type plan." The Fund's Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Fund and who have no direct
or indirect financial interest in the operation of the Fund's current 12b-
1 plans, the Proposed Plan or in any related agreements (the "Independent
Trustees"), approved the new Proposed Plan, subject to Class B shareholder
approval, and determined to recommend the Proposed Plan for approval by
the Class B shareholders of the Fund. A copy of the Proposed Plan is
attached hereto as Exhibit A.
Description of the Distribution and Service Plans. Under both the
Proposed Plan and the Current Plan, the Fund makes payments to the
Distributor in connection with the distribution of Class B shares and the
personal service and maintenance of accounts that hold Class B shares.
The Fund pays the Distributor an asset-based sales charge of 0.75% per
annum on Class B shares outstanding for six years or less, and also pays
the Distributor a service fee of 0.25% per annum, each of which is
computed on the average annual net assets of Class B shares of the Fund.
Service Fee. Under the Proposed Plan and the Current Plan, the
Distributor pays Recipients a service fee of 0.25% for providing
administration support services to Class B shareholders and for
maintaining shareholder accounts by those Recipients. The services
rendered by Recipients may include, but are not limited to, the following:
answering routine inquiries from the Recipient's customers concerning the
Fund; assisting in the establishment and maintenance of accounts or sub-
accounts in the Fund and processing share redemption transactions; making
the Fund's investment plans and dividend payment options available; and
providing such other information and services in connection with the
rendering of personal services and/or the maintenance of accounts, as the
Distributor or the Fund may reasonably request.
Service fee payments under the Proposed Plan and the Current Plan by the
Distributor to Recipients are made (i) in advance for the first year Class
B shares are outstanding, following the purchase of shares, in an amount
equal to 0.25% of the net asset value of the shares purchased by the
Recipient or its customers and (ii) thereafter, on a quarterly basis,
computed as of the close of business each day at an annual rate of 0.25%
of the net asset value of Class B shares held in accounts of the Recipient
or its customers. In the event Class B shares are redeemed less than one
year after the date such shares were sold, the Recipient is obligated to
repay to the Distributor on demand a pro rata portion of such advance
service fee payments, based on the ratio of the remaining period to one
year.
Asset-Based Sales Charge. The Current Plan, a reimbursement type plan,
provides that the Fund will pay the Distributor on a monthly basis an
asset-based sales charge at an annual rate of 0.75% of the net asset value
of Class B shares outstanding to reimburse the Distributor for its
expenses in rendering other services in connection with the distribution
of the Fund's Class B shares. Under the Current Plan, the distribution
assistance and administrative support services rendered by the Distributor
in connection with the sales of Class B shares may include: (i) paying
sales commissions to any broker, dealer, bank or other institution that
sells the Fund's Class B shares; (ii) paying compensation to and expenses
of personnel of the Distributor who support distribution of Class B shares
by Recipients; (iii) paying or reimbursing the Distributor for interest
and other borrowing costs incurred on any unreimbursed expenses carried
forward to subsequent fiscal quarters; and (iv) paying certain other
distribution expenses.
The Proposed Plan, a compensation type plan, provides that the Fund will
pay the Distributor on a monthly basis an asset-based sales charge at an
annual rate of 0.75% of the net asset value of Class B shares outstanding
to compensate the Distributor for providing distribution assistance in
connection with the distribution of the Fund's Class B shares. Under the
Proposed Plan, the distribution assistance and administrative support
services rendered by the Distributor in connection with the distribution
of Class B shares may include: (i) paying service fees and sales
commissions to any broker, dealer, bank or other person or entity that
sells and services the Fund's Class B shares; (ii) paying compensation to
and expenses of personnel of the Distributor who support distribution of
Class B shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for interest and
other borrowing costs of the Distributor's expenses incurred in rendering
distribution assistance for Class B shares; and (iv) paying certain other
distribution expenses.
Other distribution assistance rendered by the Distributor and Recipients
under either the Current Plan or the Proposed Plan may include, but are
not limited to, the following: distributing sales literature and
prospectuses other than those furnished to current Class B shareholders,
and providing such other information and services in connection with the
distribution of Class B shares as the Distributor or the Fund may
reasonably request. The Proposed Plan further provides that such other
distribution assistance may include distribution assistance and
administrative support services rendered in connection with Class B shares
acquired (i) by purchase, (ii) in exchange for shares of another
investment company for which the Distributor serves as distributor or sub-
distributor, or (iii) pursuant to a plan of reorganization to which the
Fund is a party.
Under both the Current Plan and the Proposed Plan, the Distributor pays
sales commissions from its own resources to Recipients at the time of
sale. Currently, the Distributor pays sales commissions equal to 3.75%
of the purchase price of Fund shares sold by such Recipient, and advances
the first year service fee of 0.25%. Asset-based sales charge payments
are designed to permit an investor to purchase shares of the Fund without
paying a front-end sales load and at the same time permit the Distributor
to compensate Recipients in connection with the sale of Class B shares of
the Fund. After the first year Class B shares are outstanding, the
Distributor retains the asset-based sales charge. Under the Current Plan,
the Distributor uses the asset-based sales charge to recoup the sales
commissions it paid, the advances of the service fee payments it made, and
its financing costs. The Distributor and the Fund anticipate that under
the Current Plan it will take a number of years for the Distributor to
recoup the sales commissions paid to Recipients and other distribution-
related expenses, from the Fund's payments to the Distributor and from the
contingent deferred sales charge deducted from redemption proceeds for
Class B shares redeemed before the end of six years after their purchase,
as described in the Fund's prospectus. Under the Proposed Plan, the
asset-based sales charge is paid to compensate the Distributor for its
services, described above, to the Fund. The level of annual payments by
the Fund under the Proposed Plan will not increase over the amounts
currently paid by the Fund. Under the Proposed Plan, however, over time,
the Fund's Proposed Plan payments may exceed the amount which the Fund
might pay under the Current Plan. The length of time over which the
Fund's payments will continue under the Proposed Plan is not limited by
any reimbursement factor, and the Fund's payments may therefore continue
for a longer period of time than under the Current Plan, thus potentially
increasing the amount of Plan payments.
Additional Information. The Current Plan has the effect of increasing
annual expenses of Class B shares of the Fund by up to 1.00% of the
class's average annual net assets from what those expenses would otherwise
be. The Proposed Plan would have the effect of increasing annual expenses
of Class B shares of the Fund by 1.00% of the class's average annual net
assets from what those expenses would otherwise be. Payments by the Fund
to the Distributor under the Current Plan for the fiscal year ended
December 31, 1994 were $165,277 (1.00% of the Fund's average net assets
represented by Class B shares during that period), of which the
Distributor retained $157,962 as reimbursement for Class B sales
commissions and service fee advances, as well as financing costs; the
balance was paid to Recipients not affiliated with the Distributor.
If the Class B shareholders approve the Proposal, the Proposed Plan shall,
unless terminated as described below, become effective upon shareholder
approval and continue in effect until December 31, 1995 and from year to
year thereafter only so long as such continuance is specifically approved,
at least annually, by the Fund's Board of Trustees and its Independent
Trustees by a vote cast in person at a meeting called for the purpose of
voting on such continuance. Either the Current Plan or the Proposed Plan
may be terminated at any time by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the
Investment Company Act) of the Fund's outstanding Class B shares. Each
Plan may not be amended to increase materially the amount of payments to
be made without approval by Class B shareholders. All material amendments
must be approved by a majority of the Independent Trustees.
Each of the Proposed Plan and Current Plan provides that while it is in
effect, the selection and nomination of those Trustees of the Fund who are
not "interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on any such selection
or nomination is approved by a majority of the Independent Trustees.
Under either the Current Plan or the Proposed Plan, the Board of Trustees
may determine that no payment for service fees will be made to any
Recipient in any quarter if the aggregate net asset value of all Fund
shares held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be fixed from time to time by a
majority of the Independent Trustees. Initially, the Board of Trustees
has set the fee at the maximum rate and set no minimum amount. Each Plan
permits the Distributor and the Manager to make additional distribution
payments to Recipients from their own resources (including profits from
management fees) at no cost to the Fund. The Distributor and the Manager
may, in their sole discretion, increase or decrease the amount of
distribution assistance payments they make to Recipients from their own
assets.
The Proposed Plan and the Current Plan contain a provision which provides
that the Board may allow the Fund to continue payments to the Distributor
for Class B shares sold prior to termination of the Plan. Pursuant to
this provision, payment of the service fee and the asset-based sales
charge could be continued by the Board after termination. Class B shares
automatically convert to Class A shares six years after their purchase,
and the Class A 12b-1 plan does not provide for an asset-based sales
charge.
Analysis of the Proposed Plan by the Board of Trustees. In considering
whether to recommend the Proposed Plan for approval, the Board requested
and evaluated information it deemed necessary to make an informed
determination. The Board considered that the Proposed Plan would
eliminate the technical difficulties, discussed below, encountered by the
Distributor under the Current Plan. The Board further considered that it
would be appropriate to replace the Current Plan with the Proposed Plan
based upon the foregoing and the reasonable likelihood that the Proposed
Plan benefits the Fund and its Class B shareholders by providing financial
incentives to financial intermediaries to attract new Class B shareholders
to the Fund and by assisting the efforts of the Fund and the Distributor
to service and retain existing shareholders and attract new investors.
The Proposed Plan enables the Fund to be competitive with similar funds,
including funds that impose sales charges, provide financial incentives
to institutions that direct investors to such funds, and provide
shareholder servicing and administrative services.
In its presentation to the Board, the Distributor identified two main
difficulties with the Current Plan. These involve accurately tracking
certain distribution expenses when exchanges among the funds occur, and
the Distributor's inability to recover its distribution-related expenses
incurred when funds enter into reorganization agreements. The Distributor
advised the Board that the Distributor could not at this time design and
implement an expedient and cost-effective accounting system to track
expenses of the sales commission, service fee payment and other
distribution-related expenses among the funds as exchanges occur. Under
a reimbursement type plan, accurate recording of such expenses may be
important so that one fund is not burdened with expenses for which it no
longer has the assets.
It occasionally happens that, for various reasons, it is desirable for one
fund to reorganize into another fund when it is anticipated that such a
reorganization will benefit the funds involved. When reorganizations
occur, the Distributor currently must write off and thus is unable to
recover previously spent, but unrecovered, distribution expenses for the
fund which will go out of existence.
The Proposed Plan, a compensation type plan, will eliminate the foregoing
difficulties and allow the Distributor to continue to provide exchanges
and reorganizations without having to risk the loss of, in some cases,
substantial amounts of money previously spent for distribution. The
Proposed Plan expressly provides that the distribution and administrative
support services under the plan may be rendered in connection with Class
B shares issued by the Fund in exchanges for other OppenheimerFunds and
in a reorganization with another mutual fund.
The Board also focused on a principal difference between the Proposed Plan
and the Current Plan. As described above, the Proposed Plan provides for
compensating the Distributor for its distribution efforts rather than
reimbursing it for its costs. It is possible for the Fund's Class B 12b-1
payments to be increased or the period during which payments to the
Distributor are made extended when such payments are not limited by the
Distributor's expenses (including past expenses which were not previously
reimbursed, and which were, therefore, carried forward with interest), as
under the existing reimbursement-type plan. Under the Current Plan,
payments will remain subject to limits imposed on asset-based sales
charges by the NASD. The Board also noted that investors who purchase
Class B shares of the Fund reasonably expect that they will be paying an
asset-based sales charge of 0.75% per annum.
The Board concluded that the Proposed Plan would eliminate the
difficulties encountered by the Distributor under the Current Plan in
tracking certain distribution expenses when exchanges among funds occur
and in recovering distribution-related expenses incurred when the funds
reorganize. Accordingly, the Board determined it would be appropriate to
replace the Current Plan with the Proposed Plan provided that the Proposed
Plan is in the best interests of the Fund and that its adoption has a
reasonable likelihood of benefiting the Fund and its Class B shareholders.
In this regard the Board considered that it is likely that because the
Proposed Plan provides an alternative means for investors to acquire Fund
shares without paying an initial sales charge, it will benefit Class B
shareholders of the Fund by enabling the Fund to maintain or increase its
present asset base in the face of competition from a variety of financial
products. The Trustees recognized that payments made pursuant to the
Proposed Plan would likely be offset in part by economies of scale
associated with the growth of the Fund's assets. With larger assets, the
Class B shareholders should benefit as the Proposed Plan should help Fund
assets increase to reach breakpoints in the investment advisory fee rate.
Costs of shareholder administration and transfer agency operations will
be spread among a larger number of shareholders as the Fund grows larger,
thereby reducing the Fund's expense ratio. The Manager has advised the
Trustees that investing larger amounts of money is made more readily, more
efficiently, and at lesser cost to the Fund. The Board found that a
positive flow of new investment money is desirable primarily to offset the
potentially adverse effects that might result from a pattern of net
redemptions. Net cash outflow increases the likelihood that the Fund will
have to dispose of portfolio securities for other than investment
purposes. Net cash inflow minimizes the need to sell securities to meet
redemptions when investment considerations would dictate otherwise,
reduces daily liquidity requirements, and may assist in a prompt
restructuring of the portfolio without the need to dispose of present
holdings.
Stimulation of distribution of mutual fund shares and providing for
shareholder services and account maintenance services by payments to a
mutual fund's distributor and to brokers, dealers, banks and other
financial institutions has become common in the mutual fund industry.
Competition among brokers and dealers for these types of payments has
intensified. The Trustees concluded that promotion, sale and servicing
of mutual fund shares and shareholders through various brokers, dealers,
banks and other financial institutions is a successful way of distributing
shares of a mutual fund. The Trustees concluded that without an effective
means of selling and distributing Fund shares and servicing shareholders
and providing account maintenance, expenses may remain higher on a per
share basis than those of some competing funds. By providing an
alternative means of acquiring Fund shares, the Proposed Plan is designed
to stimulate sales by and services from many types of financial
institutions.
The Trustees recognize that the Manager will benefit from the Proposed
Plan through larger investment advisory fees resulting from an increase
in Fund assets, since its fees are based upon a percentage of net assets
of the Fund. The Board, including each of the Independent Trustees,
determined that the Proposed Plan is in the best interests of the Fund,
and that its adoption has a reasonable likelihood of benefiting the Fund
and its Class B shareholders. In its annual review of the Proposed Plan,
the Board will consider the continued appropriateness of the Distribution
and Service Plan, including the level of payments provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act,
an affirmative vote of the holders of a "majority" (as defined in the
Investment Company Act) of the Fund's Class B voting securities is
required for approval of the Proposed Plan. With respect to such Class
B voting securities, a "majority" vote is defined in the Investment
Company Act as the vote of the holders of the lesser of: (i) 67% or more
of the voting securities present or represented by proxy at the
shareholders meeting, if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (ii) more than
50% of the outstanding voting securities. A vote in favor of the Proposal
shall be deemed a vote to approve the prior plans and the Proposed Plan.
The Board of Trustees recommends a vote in favor of approving this
Proposal.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular basis.
Special meetings of shareholders may be called from time to time by either
the Fund or the shareholders (under special conditions described in the
Fund's Statement of Additional Information). Under the proxy rules of the
Securities and Exchange Commission, shareholder proposals which meet
certain conditions may be included in the Fund's proxy statement and proxy
for a particular meeting. Those rules require that for future meetings
the shareholder must be a record or beneficial owner of Fund shares with
a value of at least $1,000 at the time the proposal is submitted and for
one year prior thereto, and must continue to own such shares through the
date on which the meeting is held. Another requirement relates to the
timely receipt by the Fund of any such proposal. Under those rules, a
proposal submitted for inclusion in the Fund's proxy material for the next
meeting after the meeting to which this proxy statement relates must be
received by the Fund a reasonable time before the solicitation is made.
The fact that the Fund receives a proposal from a qualified shareholder
in a timely manner does not ensure its inclusion in the proxy material,
since there are other requirements under the proxy rules for such
inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matter
specified above that will be presented at the Meeting. Since matters not
known at the time of the solicitation may come before the Meeting, the
proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote the proxy in accordance with their
judgment on such matters.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
July 24, 1995
PROXY/31095.1
<PAGE>
EXHIBIT A
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the ___ day
of September, 1995, by and between OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
(the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for its
services in connection with the distribution of Shares, and the personal
service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative support
services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares
computed as of the close of each business day (the "Asset-Based Sales
Charge") outstanding for six years or less (the "Maximum Holding
Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing
administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees
still is not satisfied, either may take appropriate steps to
terminate the Recipient's status as such under the Plan, whereupon
such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand
a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings, Maximum Holding Period and Minimum Holding
Period, if any, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person" (as
defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits
to which the Distributor is, or may become, subject under Article
III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may
include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity
that sells Shares, and/or paying such persons Advance Service Fee
Payments in advance of, and/or greater than, the amount provided for
in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state "blue sky" registration expenses;
and (v) any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered
in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (ii) pursuant to a plan
of reorganization to which the Fund is a party. In the event that
the Board should have reason to believe that the Distributor may not
be rendering appropriate distribution assistance or administrative
support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board
with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied
with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on March 16, 1995, for the purpose of voting
on this Plan, and shall take effect after approval by the Class B
shareholders of the Fund, at which time it shall replace the Fund's
Distribution and Service Plan and Agreement dated February 10, 1994.
Unless terminated as hereinafter provided, it shall continue in effect
until December 31, 1995 and from year to year thereafter or as the Board
may otherwise determine only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such continuance. This Plan may not be amended to increase materially the
amount of payments to be made without approval of the Class B
Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be
entitled to payment from the Fund of all or a portion of the Service Fee
and/or the Asset-Based Sales Charge in respect of Shares sold prior to the
effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder and Trustee liability for acts or obligations of
the Fund.
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
By:/s/ Robert G. Zack
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:/s/ Katherine P. Feld
Katherine P. Feld, Vice President
& Secretary
