OPPENHEIMER CALIFORNIA TAX EXEMPT FUND, N14AE24, 1995-08-31

OPPENHEIMER CALIFORNIA TAX EXEMPT FUND
N14AE24, 1995-08-31

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<PAGE>

As filed with the Securities and Exchange Commission on August 31, 1995

Registration No. 33-23566
811-5586

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. / /

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
(Exact Name of Registrant as Specified in Charter)

Two World Trade Center, New York, New York 10048-0203
(Address of Principal Executive Offices)

212-323-0200
(Registrant's Telephone Number)

Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)

As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)

It is proposed that this filing will become effective on September 30,
1995, pursuant to Rule 488.

No filing fee is due because the Registrant has previously registered an
indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice for the
year ended December 31, 1994 was filed on February 27, 1995.

<PAGE>

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following pages and documents:

Front Cover
Contents Page
Cross-Reference Sheet

Part A

Proxy Statement for California Tax-Exempt Fund,
a series of Quest for Value Family of Funds
and
Prospectus for Oppenheimer California Tax-Exempt Fund

Part B

Statement of Additional Information

Part C

Other Information
Signatures
Exhibits

<PAGE>

FORM N-14
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Cross Reference Sheet

Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of Document
- --------- ---------------------------------------------------------------
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Comparative Fee Tables
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison between
OPCA and the Fund; Miscellaneous
(b) Approval of the Reorganization - Capitalization Table
5 (a) Registrant's Prospectus; Comparison Between OPCA and the Fund
(b) *
(c) *
(d) *
(e) Miscellaneous
(f) Miscellaneous
6 (a) Prospectus of California Tax-Exempt Fund; Annual Report of
California Tax-Exempt Fund; Comparison Between OPCA and the Fund
(b) Miscellaneous
(c) *
(d) *
7 (a) Synopsis; Information Concerning the Meeting
(b) *
(c) Synopsis; Information Concerning the Meeting
8 (a) Proxy Statement
(b) *
9 *

Part B of
Form N-14
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a) Registrant's Statement of Additional Information
(b) *
(c) *
13 (a) Statement of Additional Information about California Tax-Exempt
Fund
(b) *
(c) *
14 Registrant's Statement of Additional Information; Statement of
Additional Information about California Tax-Exempt Fund; Annual
Report of California Tax-Exempt Fund at 7/31/94; Semi-Annual
Report of California Tax-Exempt Fund at 1/31/95; Registrant's
Annual Report at 12/31/94; Semi-Annual Report of Registrant at
6/30/95

Part C of
Form N-14
Item No. Other Information Heading
- --------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings

_______________
* Not Applicable or negative answer

<PAGE>

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:

/ X / Preliminary proxy statement

/ / Definitive proxy statement

/ / 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)

California Tax-Exempt Fund,
a series of Quest for Value Family of Funds
- ------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/ / $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)
- ------------------------------------------------------------------
(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:

- -----------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.

merge\790qvn14.a

<PAGE>

Preliminary Copy

QUEST FOR VALUE FAMILY OF FUNDS
CALIFORNIA TAX-EXEMPT FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1995

To the Shareholders of California Tax-Exempt Fund:

Notice is hereby given that a Special Meeting of the Shareholders of
California Tax-Exempt Fund (the "Fund"), a series of Quest for Value
Family of Funds (the "Trust"), an open-end, management investment company,
will be held at One World Financial Center, New York, New York 10281 on
the 40th Floor, at _____ A.M., New York time, on November 3, 1995, and any
adjournments thereof (the "Meeting"), for the following purposes:

1. To consider and vote upon approval of the Agreement and Plan of
Reorganization dated as of ____, 1995 (the "Reorganization
Agreement") by and among Oppenheimer California Tax-Exempt Fund
("OPCA"), the Trust, on behalf of the Fund, and Quest for Value
Advisors, investment adviser to the Fund, and the transactions
contemplated thereby (the "Reorganization"), including (i) the
transfer of substantially all the assets of the Fund to OPCA in
exchange for Class A shares of OPCA, (ii) the distribution of such
shares of OPCA to shareholders of the Fund in complete liquidation
of the Fund, and (iii) the cancellation of the outstanding shares of
the Fund (the "Proposal"); and

2. To act upon such other matters as may properly come before the
Meeting.

The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is
attached as Exhibit A thereto. Shareholders of record at the close of
business on September 7, 1995 are entitled to notice of, and to vote at,
the Meeting. Please read the Proxy Statement and Prospectus carefully
before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Trustees of the Trust recommends a vote
in favor of the Reorganization. WE URGE YOU TO SIGN, DATE AND MAIL THE
ENCLOSED PROXY PROMPTLY.

By Order of the Board of Trustees,

Deborah Kaback, Secretary

_________, 1995

Shareholders who do not expect to attend the Meeting are requested 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.

<PAGE>

Preliminary Copy

QUEST FOR VALUE FAMILY OF FUNDS
CALIFORNIA TAX-EXEMPT FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND

PROXY STATEMENT

--------------------------

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048

PROSPECTUS

This Proxy Statement and Prospectus is being furnished to shareholders of
California Tax-Exempt Fund (the "Fund"), a series of Quest for Value
Family of Funds (the "Trust"), an open-end management investment company,
in connection with the solicitation by the Board of Trustees of the Trust
(the "Board") of proxies to be used at the Special Meeting of Shareholders
of the Fund, to be held at One World Financial Center, New York, New York
10281 on the 40th Floor at ___ A.M., New York time, on ______, 1995, and
any adjournments thereof (the "Meeting"). It is expected that this Proxy
Statement and Prospectus will be mailed to shareholders on or about ____,
1995.

At the Meeting, shareholders of the Fund will be asked to consider and
vote upon approval of the Agreement and Plan of Reorganization, dated as
of _____, 1995 (the "Reorganization Agreement"), by and among Oppenheimer
California Tax-Exempt Fund ("OPCA"), an open-end, management investment
company, the Trust on behalf of the Fund, and Quest for Value Advisors
("QVA"), investment adviser to the Fund, and the transactions contemplated
by the Reorganization Agreement (the "Reorganization"). The
Reorganization Agreement provides for the transfer of substantially all
the assets of the Fund to OPCA in exchange for Class A shares of OPCA and
the assumption by OPCA of certain liabilities of the Fund, the
distribution of such shares of OPCA to shareholders of the Fund in
complete liquidation of the Fund and the cancellation of the outstanding
shares of the Fund. A copy of the Reorganization Agreement is attached
hereto as Exhibit A and is incorporated by reference herein. As a result
of the proposed Reorganization, each shareholder of the Fund will receive
that number of Class A shares of OPCA having an aggregate net asset value
equal to the aggregate net asset value of such shareholder's shares of the
Fund. This transaction is being structured as a tax-free reorganization.
See "Approval of the Reorganization."

OPCA currently offers Class A, Class B and Class C shares. Class A shares
are sold with a sales charge imposed at the time of purchase (certain
purchases aggregating $1.0 million or more are not subject to a sales
charge, but may be subject to a contingent deferred sales charge ("CDSC")
if redeemed within 18 months from the end of the calendar month when
purchased); Class B shares are sold without a front-end sales charge but
may be subject to a CDSC if redeemed within six years of the date of
purchase; and Class C shares are sold without a front end sales charge but
may be subject to a CDSC if not held for one year. Shareholders of the
Fund will receive Class A shares of OPCA and no sales charge will be
imposed on the OPCA Class A shares received by the Fund's shareholders.

OPCA is a mutual fund that seeks the maximum current income exempt from
Federal and California income taxes for individual investors that is
consistent with preservation of capital. Under normal market conditions,
OPCA invests at least 80% of its total assets in municipal securities and
at least 65% of its total assets in California municipal securities.
However, in times of unstable economic or market conditions, OPCA may deem
it advisable to invest temporarily an unlimited amount of its total assets
in certain taxable instruments. OPCA also uses hedging instruments to
seek to reduce the risks of market fluctuations that affect the value of
the securities it holds.

OPCA has filed with the U.S. Securities and Exchange Commission (the
"SEC") a Registration Statement on Form N-14 (the "Registration
Statement") relating to the registration of shares of OPCA to be offered
to the shareholders of the Fund pursuant to the Reorganization Agreement.
This Proxy Statement and Prospectus relating to the Reorganization also
constitutes a Prospectus of OPCA filed as part of such Registration
Statement. Information contained or incorporated by reference herein
relating to OPCA has been prepared by and is the responsibility of OPCA.
Information contained or incorporated by reference herein relating to the
Fund has been prepared by and is the responsibility of the Fund.

This Proxy Statement and Prospectus sets forth concisely information about
OPCA that a prospective investor should know before voting on the
Reorganization.

The following documents have been filed with the SEC, one incorporated by
reference, and are available without charge upon written request to Quest
for Value Distributions ("QVD"), the general distributor for the Fund, at
P.O. Box 3567, Church Street Station, New York, New York 10277-1296 or by
calling the toll-free number for the Fund shown above: (i) a Prospectus
for the Fund, dated December 1, 1994; and (ii) a Statement of Additional
Information about the Fund, dated December 1, 1994.

The following documents have been filed with the SEC, are incorporated by
reference, are incorporated by reference herein, and are available without
charge upon written request to the transfer and shareholder servicing
agent for OPCA, Oppenheimer Shareholder Services ("OSS"), P.O. Box 5270,
Denver, Colorado 80217, or by calling the toll-free number for OPCA shown
above: (i) a Prospectus for OPCA dated April 25, 1995, as supplements July
14, 1995; (ii) a Statement of Additional Information about OPCA, dated
April 25, 1995, as supplemented July 14, 1995 (the "OPCA Additional
Statement"), which contains more detailed information about OPCA and its
management, and a Statement of Additional Information relating to the
Reorganization described in this Proxy Statement and Prospectus (the
"Additional Statement"), dated ____, 1995 filed as part of the OPCA
Registration Statement on Form N-14.

Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.

Shares of OPCA or the Fund are not deposits or obligations of any bank,
are not guaranteed by any bank, are not insured by the FDIC or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Proxy Statement and Prospectus is dated _______, 1995.

<PAGE>

TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS

<TABLE>
<S> <C>
COMPARATIVE FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . .

SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parties to the Reorganization. . . . . . . . . . . . . . . . . . . .
The Reorganization . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Consequences of the Reorganization . . . . . . . . . . . . . . .
Investment Objectives and Policies . . . . . . . . . . . . . . . . .
Investment Advisory and Distribution Plan Fees . . . . . . . . . . .
Purchases, Exchanges and Redemptions . . . . . . . . . . . . . . . .

PRINCIPAL RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . .

APPROVAL OF THE REORGANIZATION (The Proposal). . . . . . . . . . . . .
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . .
Board Approval of the Reorganization . . . . . . . . . . . . . . . .
The Reorganization . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Aspects of the Reorganization. . . . . . . . . . . . . . . . . .
Capitalization Table (Unaudited) . . . . . . . . . . . . . . . . . .

COMPARISON BETWEEN OPCA AND THE FUND . . . . . . . . . . . . . . . . .
Comparison of Investment Objectives, Policies and Restrictions . . .
Special Investment Methods . . . . . . . . . . . . . . . . . . . . .
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . .
Additional Comparative Information . . . . . . . . . . . . . . . . .

INFORMATION CONCERNING THE MEETING . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record Date; Vote Required; Share Information. . . . . . . . . . . .
Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs of the Solicitation and the Reorganization . . . . . . . . . .

MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Information. . . . . . . . . . . . . . . . . . . . . . . .
Public Information . . . . . . . . . . . . . . . . . . . . . . . . .

OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EXHIBIT A - Agreement and Plan of Reorganization, dated as of _____,
1995, by and among Oppenheimer California Tax-Exempt Fund,
Quest for Value Family of Funds, on behalf of National Tax-
Exempt Fund, and Quest for Value Advisors. . . . . . . A-1

EXHIBIT B - Purchase Price Formula Pursuant to the Acquisition
Agreement . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>

<PAGE>

COMPARATIVE FEE TABLES

Shareholders pay certain expenses directly, such as sales charges and
account transaction charges. The schedule of such charges is
substantially the same for both OPCA and the Fund (collectively the
"Funds"), except as noted below. Shareholders of the Fund will receive
Class A shares of OPCA. OPCA also offers Class B and Class C shares.

Oppenheimer California
Tax-Exempt Fund
Class A Class B Class C

Transaction Charges

Maximum Sales Charge on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None(1) 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee None None None

California Tax-Exempt Fund

Maximum Sales Charge on Purchases 4.75%
(as a % of offering price)
Sales Charge on Reinvested Dividends None
Deferred Sales Charge None
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee $5.00

(1)If you invest more than $1 million in Class A shares, although you will
generally not pay an initial sales charge, you may have to pay a sales
charge of up to 1.0% if you sell your shares within 18 calendar months
from the end of the calendar month during which you purchased those
shares. This deferred sales charge will be waived for shares acquired
in the Reorganization.

(2)If you redeem Class B shares within six years of the beginning of the
month in which you purchase them, you may have to pay a contingent
deferred sales charge starting at 5.0% in the first year and declining
thereafter.

(3)If you redeem Class C shares within 12 months of the beginning of the
calendar month of buying them, you may have to pay a 1.0% contingent
deferred sales charge.

Expenses of the Fund and OPCA; Pro Forma Expenses

The funds each pay a variety of expenses directly for management of their
assets, administration, distribution of their shares and other services,
and those expenses are reflected in the net asset value per share of each
of OPCA and the Fund. The following calculations are based on the
expenses of the Fund and Class A expenses of OPCA for the 6 months ended
June 30, 1995 and the 12 months ended December 31, 1994. These amounts
are shown as a percentage of the average net assets of the Fund and of
Class A shares of OPCA for those periods. The pro forma fees reflect what
the fee schedule would have been at June 30, 1995 and December 31, 1994
if the Reorganization had occurred on either of those dates.

<TABLE>
<CAPTION>
6 Months Ended June 30, 199512 Months Ended December 31, 1994
Oppenheimer Oppenheimer
California Tax-California California Tax- California
Exempt Fund/ Tax-Exempt Exempt Fund/ Tax-Exempt
Class A Fund(1) Class A Fund(1)
<S> <C> <C> <C> <C>
Management Fee 0.58% 0.30% 0.59% 0.30%
12b-1 Fee 0.24% 0.10% 0.25% 0.10%
Other Expenses 0.09% 0.60% 0.12% 0.60%

Total Fund Net Operating Expenses0.91% 1.00% 0.96% 1.00%

Total Fund Gross Operating Expenses0.91% 1.21% 0.96% 1.14%
</TABLE>

<TABLE>
<CAPTION>
Pro Forma Combined Fund
6 Months Ended 12 Months Ended
June 30, 1995 December 31, 1994
<S> <C> <C>
Management Fee 0.58% 0.58%
12b-1 Fee 0.24% 0.25%
Other Expenses 0.09% 0.12%

Total Fund Operating Expenses0.91% 0.95%
</TABLE>

(1)"Management Fees" and "Other Expenses" have been restated to reflect
certain voluntary expense limitations and waivers in effect since April
30, 1995: (a) a voluntary expense undertaking by QVA to limit the
Fund's annualized operating expenses to no more than 1.00% of average
daily net assets, and (b) a waiver of a portion of the management fee
to effectuate such limitation. Expense limitations and waivers prior
to April 30, 1995 were higher, with actual management fees charged
representing 0.23% and 0.14%, respectively, of average daily net assets
for the six months ended June 30, 1995 and the year ended December 31,
1994, respectively. Actual "Other Expenses" represented 0.61% and
0.54%, respectively, of average daily net assets for such six month
and one-year periods, respectively. Without such voluntary expense
limitations and waivers, the Fund's management fee would have been
0.50% of average daily net assets for each such period. "12b-1 Fees"
have been restated to reflect the rate in effect since September 1,
1994. Actual 12b-1 fee payments were 0.10% and 0.03%, respectively,
of average daily net assets for the six months ended June 30, 1995 and
the year ended December 31, 1994, respectively. Quest for Value
Distributors, Inc. ("QFD"), the Fund's distributor, has no present
intention of charging the full service fee of 0.25% of average annual
net assets.

Hypothetical Expenses

To attempt to show the effect of these expenses on an investment over
time, the hypotheticals shown below have been created. Assume that you
make a $1,000 investment in either the Fund or OPCA or the new combined
fund and that the annual return is 5% and that the operating expenses for
each fund are the ones shown in the chart above for the 12 months ended
December 31, 1994 and the 6 months ended June 30, 1995.

For the 12 months ended December 31, 1994, if you were to redeem your
shares at the end of each period shown below, your investment would incur
the following expenses by the end of each period shown:

12 months ended December 31, 1994
1 year 3 years 5 years 10 years

Oppenheimer California
Tax-Exempt Fund
Class A Shares $57 $77 $ 98 $160
Class B Shares $68 $84 $114 $165(1)
Class C Shares $28 $54 $ 94 $204(2)

California Tax-
Exempt Fund $54 $69 $ 85 $132

Pro Forma Combined
Fund
Class A Shares $57 $76 $ 98 $159
Class B Shares $67 $84 $113 $164(1)
Class C Shares $27 $54 $ 93 $203(2)

If you did not redeem your investment, it would incur the following
expenses:

12 months ended December 30, 1994
1 year 3 years 5 years 10 years

Oppenheimer California
Tax-Exempt Fund
Class A Shares $57 $77 $98 $160
Class B Shares $18 $54 $94 $165(1)
Class C Shares $18 $54 $94 $204(2)

California Tax-
Exempt Fund $54 $69 $89 $132

Pro Forma Combined
Fund
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $164(1)
Class C Shares $17 $54 $93 $203(2)

For the six months ended June 30, 1995, if you were to redeem your shares
at the end of each period show below, your investment would incur the
following expenses by the end of each period shown:

6 months ended June 30, 1995
1 year 3 years 5 years 10 years

Oppenheimer California
Tax-Exempt Fund
Class A Shares $56 $75 $ 96 $154
Class B Shares $67 $83 $111 $159(1)
Class C Shares $27 $53 $ 91 $199(2)

California Tax-
Exempt Fund $57 $76 $ 97 $157

Pro Forma Combined
Fund
Class A Shares $56 $75 $ 96 $154
Class B Shares $67 $83 $111 $159(1)
Class C Shares $27 $53 $ 91 $199(2)

If you did not redeem your investment, it would incur the following
expenses:

6 months ended June 30, 1995
1 year 3 years 5 years 10 years

Oppenheimer California
Tax-Exempt Fund
Class A Shares $56 $75 $96 $154
Class B Shares $17 $53 $91 $159(1)
Class C Shares $17 $53 $91 $199(2)

California Tax-
Exempt Fund $57 $76 $97 $157

Pro Forma Combined
Fund
Class A Shares $56 $75 $96 $154
Class B Shares $17 $53 $91 $159(1)
Class C Shares $17 $53 $91 $199(2)

(1)The Class B expenses in years seven through ten for OPCA are based on
the OPCA Class A expenses shown above, because OPCA automatically
converts Class B shares into Class A shares after six years. Long-term
Class B shareholders of OPCA could pay the economic equivalent of more
than the maximum front-end sales charge allowed under applicable
regulations, because of the effect of the asset-based sales charge and
contingent deferred sales charge. The automatic conversion of OPCA
Class B shares to OPCA Class A shares is designed to minimize the
likelihood that this will occur.

(2)Because of the asset-based sales charge imposed on Class C shares of
OPCA, long-term shareholders of Class C shares could bear expenses that
would be the economic equivalent of an amount greater than the maximum
front-end sales charges permitted under applicable regulatory
requirements.

SYNOPSIS

The following is a synopsis of certain information contained or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained or incorporated by reference in this Proxy Statement
and Prospectus and the Exhibits hereto. Shareholders should carefully
review this Proxy Statement and Prospectus and the Exhibits hereto in
their entirety and, in particular, the current Prospectus of OPCA which
accompanies this Proxy Statement and Prospectus and is incorporated by
reference herein.

Parties to the Reorganization

OPCA is a diversified, open-end, management investment company organized
as a Massachusetts business trust in 1988. OPCA is located at Two World
Trade Center, New York, New York 10048-0203. Oppenheimer Management
Corporation ("OMC") acts as investment adviser to OPCA. Oppenheimer Funds
Distributor, Inc. ("OFDI"), a subsidiary of OMC, acts as the distributor
of OPCA's shares. Additional information about OPCA is set forth below.

The Fund is a series of Quest for Value Family of Funds (the "Trust"), an
open-end, management investment company organized as a Massachusetts
business trust in 1987. The Fund commenced operations on August 14, 1990.
The Fund is located at One World Financial Center, New York, New York
10281. QVA acts as investment adviser to the Fund. QVD acts as the
distributor of the Fund's shares. QVA and QVD are majority-owned
subsidiaries of Oppenheimer Capital, an institutional investment manager.
OMC is not related to Oppenheimer Capital, nor its affiliated, the
brokerage firm Oppenheimer & Co., Inc. Additional information about the
Fund is set forth below.

The Reorganization

The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to OPCA in exchange for Class A shares of OPCA
and the assumption by OPCA of certain liabilities of the Fund. The
Reorganization Agreement also provides for the distribution of OPCA Class
A shares to the Fund shareholders in complete liquidation of the Fund.
As a result of the Reorganization, each Fund shareholder will receive that
number of full and fractional OPCA Class A shares equal in value to such
shareholder's pro rata interest in the net assets transferred to OPCA as
of the Valuation Date (as hereinafter defined). For further information
about the Reorganization, see "Approval of the Reorganization" below.

For the reasons set forth below under "Approval of the Reorganization -
Reasons for the Reorganization," the Board, including the trustees who are
not "interested persons" of the Fund (the "Independent Trustees"), as that
term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), has concluded that the Reorganization is in the best
interests of the Fund and its shareholders and that the interests of
existing Fund shareholders will not be diluted as a result of the
Reorganization, and recommends approval of the Reorganization by Fund
shareholders. The Board of Trustees of OPCA has also approved the
Reorganization and determined that the interest of the existing
shareholders of OPCA will not be diluted as a result of the
Reorganization. If the Reorganization is not approved, the Fund will
continue in existence and the Board will determine whether to pursue
alternative actions. "Approval of the Reorganization" sets forth certain
information with respect to the background of the Reorganization,
including other transactions and agreements entered into, or contemplated
to be entered into, by OMC, QVA and their respective affiliates.

Approval of the Reorganization will require the affirmative vote of a
majority of the outstanding shares of the Fund represented in person or
by proxy at the Meeting and entitled to vote at the Meeting. See
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information."

Tax Consequences of the Reorganization

As a condition to the closing of the Reorganization, the Fund and OPCA
will have received an opinion to the effect that the Reorganization will
qualify as a tax-free reorganization for Federal income tax purposes. As
a result of such tax-free reorganization, no gain or loss would be
recognized by the Fund, OPCA, or the shareholders of either fund for
Federal income tax purposes as a result of the Reorganization. For
further information about the tax consequences of the Reorganization, see
"Approval of the Reorganization - Tax Aspects of the Reorganization"
below.

Investment Objectives and Policies

The investment objectives of OPCA and the Fund are similar. OPCA seeks
the maximum current income, and the Fund seeks as high a level of current
income, exempt from Federal and California individual income taxes as is
consistent with preservation of capital. Both funds seek their investment
objective by investing, under normal market conditions, at least 80% of
their respective total (as to OPCA) or net (as to the Fund) assets in
Municipal Obligations, and at least 65% of their respective total assets
in California Municipal Obligations.

Municipal Obligations are debt obligations issued by states, territories
and possessions of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities or multi-
state agencies or authorities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal income tax. California
Municipal Obligations are obligations of the State of California and its
political subdivisions, and their respective agencies, authorities or
instrumentalities, the interest from which is, in the opinion of bond
counsel to the issuer, not subject to California individual income tax.

The Fund invests primarily in Municipal Obligations and California
Municipal Obligations rated investment grade or, if unrated, determined
by QVA to be of comparable quality. No more than 25% of OPCA's total
assets may be invested in Municipal Obligations rated below investment
grade (or, if unrated, judged by OMC to be comparable to municipal
securities rated below investment grade).

Each of the funds may also write covered calls (and, as to the Fund, write
covered puts) to seek income. Each of the funds may use hedging
instruments to try to manage investment risks. OPCA may also use certain
derivative investments, such as inverse floating rate municipal bonds, to
seek income.

Although the respective investment objectives of the Fund and OPCA are
generally similar, shareholders of the Fund should consider certain
differences in the policies, practices and restrictions employed to seek
to achieve such objectives. See "Comparison Between OPCA and the Fund -
Investment Objectives and Policies."

Investment Advisory and Distribution Plan Fees

The funds obtain investment management services from their investment
advisers pursuant to the terms of their respective investment advisory
agreements. The management fee is payable to the investment advisers
monthly and is computed on the net asset value of each fund as of the
close of business each day.

OPCA pays a management fee which declines on additional assets as OPCA
increases its assets, at the annual rate of 0.60% of the first $200
million of net assets, 0.55% of the next $100 million, 0.50% of the next
$200 million, 0.45% of the next $250 million, 0.40% of the next $250
million, and 0.35% of net assets over $1 billion. The Fund pays QVA a
management fee at the annual rate of 0.50% of net assets.

Although the respective investment objectives of the Fund and OPCA are
comparable, shareholders of the Fund should consider certain differences
in the policies, practices and restrictions of the funds. See "Comparison
Between OPCA and the Fund - Investment Objectives and Policies."

Purchases, Exchanges and Redemptions

Purchases. Purchases of shares of OPCA may be made through the
distributor for OPCA or through any dealer, broker or financial
institution that has a sales agreement with OFDI. Initial purchases of
shares of the Fund must be made through a broker or dealer having a sales
agreement with QVD; subsequent purchases may also be made directly through
QVD by mailing payments to the Fund's transfer agent. In addition, a
shareholder of OPCA may purchase shares automatically from an account at
a domestic bank or other financial institution under the "OppenheimerFunds
AccountLink" service. Class A shares of both OPCA and the Fund are sold
subject to an initial sales charge. Class B and Class C shares of OPCA
are generally sold without a front-end sales charge but may be subject to
a CDSC upon redemption as described below. See "Comparative Fee Tables -
- - Transaction Charges," above for a complete description of such sales
charges.

The Class A shares of OPCA to be issued under the Reorganization Agreement
will be issued by OPCA at net asset value without a sales charge. The
sales charge on Class A shares of OPCA will only affect shareholders of
the Fund to the extent that they desire to make additional purchases of
Class A shares of OPCA in addition to the shares which they will receive
as a result of the Reorganization. Future dividends and capital gain
distributions of OPCA, if any, may be reinvested without sales charge into
Class A shares of OPCA or of any other fund within the OppenheimerFunds
family. OPCA has undertaken that any Fund shareholders entitled to a
waiver of sales charges or an exemption from sales charges pursuant to
Fund policy as stated in its Prospectus dated December 1, 1994 shall
continue to be entitled to such waiver or exemption as a shareholder of
OPCA, or any other Oppenheimer fund upon appropriate prospectus disclosure
by that fund, after the Reorganization so long as they continue to meet
the applicable eligibility criteria.

Exchanges. Shareholders of OPCA and the Fund may exchange their shares
at net asset value for shares of the same class of mutual funds
distributed by OFDI and QVD, respectively, subject to certain conditions.
For purposes of the exchange privilege, shares without a class designation
are considered as "Class A" shares. OPCA offers automatic exchange plans
providing for systematic exchanges from OPCA of a specified amount for
shares of other funds within the OppenheimerFunds family.

Redemptions. Class A shares of OPCA and shares of the Fund may be
redeemed without charge at their respective net asset values per share
calculated after the redemption order is received and accepted. Certain
large investments in Class A shares of OPCA that were exempt from the
front-end sales charge upon purchase may be subject to a CDSC upon
redemption. Such CDSC will be waived for shares issued pursuant to the
Reorganization. See "Comparative Fee Tables - Transaction Charges,"
above. Class B shares of OPCA may be redeemed at their net asset value
per share, subject to a maximum CDSC of 5.0% for redemptions occurring
within six years of purchase. Class C shares of OPCA may be redeemed at
their net asset value per share, subject to a CDSC of 1% if such shares
are redeemed during the first 12 months following their purchase.

Shareholders of OPCA may reinvest redemption proceeds of Class A shares
on which an initial sales charge was paid, or Class B shares that were
purchased by reinvesting dividends or distributions or that were subject
to the Class B CDSC when redeemed, within six months of a redemption at
net asset value in Class A shares of OPCA or any of numerous mutual funds
within the OppenheimerFunds family. This reinvestment privilege is not
available for Class C shares of OPCA. Shareholders of the Fund that
reinvest redemption proceeds in another fund in the Quest Funds family
within 60 days will be reinstated as a shareholder with the same
privileges regarding the non-payment of sales charges that apply to
exchanges. This reinvestment privilege may be exercised only once each
calendar year.

Shareholders of the funds may redeem their shares by written request or
by telephone request in certain stated amounts, or they may arrange to
have share redemption proceeds wired, for a fee, to a pre-designated
account at a U.S. bank or other financial institution that is an automated
clearing house ("ACH") member. Checkwriting privileges on Fund shares and
on Class A shares of OPCA are also available. Upon 30 days' notice, the
Fund may redeem accounts that, because of redemptions, are valued at less
than $500. OPCA may redeem accounts valued at less than $200 if the
account has fallen below such stated amount for reasons other than market
value fluctuations. OPCA and the Fund offer automatic withdrawal plans
providing for systematic withdrawals of a specified amount from the fund
account.

PRINCIPAL RISK FACTORS

In evaluating whether to approve the Reorganization and invest in OPCA,
shareholders should carefully consider the following summary of risk
factors relating to both OPCA and the Fund, in addition to the other
information set forth in this Proxy Statement and Prospectus. A more
complete description of risk factors for each fund is set forth in the
documents incorporated by reference herein, including the Prospectuses of
the funds and their respective Statements of Additional Information. As
a general matter, OPCA and the Fund are intended for investors seeking
current income exempt from Federal income tax and not for investors
seeking capital appreciation. There is no assurance that either OPCA or
the Fund will achieve its investment objective and investment in the funds
is subject to investment risks, including the possible loss of the
principal amount invested.

Investments in Municipal Obligations

Both funds seek their investment objective by investing at least 80% of
their respective total (as to OPCA) or net (as to the Fund) assets in
Municipal Obligations, and at least 65% of their total (as to OPCA) or net
(as to the Fund) assets in California Municipal Obligations.

Because both funds concentrate their investments in California Municipal
Obligations, a default or financial crisis relating to any of such issuers
could adversely affect the market value and marketability of such
obligations and the interest income and repayment of principal from them
to the Fund. The Fund is classified as a diversified investment company
under the Investment Company Act of 1940. OPCA is a non-diversified
investment company whereby the proportion of its assets that may be
invested in the securities of a single issuer is not limited under the
Investment Company Act. An investment in OPCA therefore will entail
greater risk than an investment in a diversified investment company, such
as the Fund, because a higher percentage of investments among fewer
issuers may result in greater fluctuation in the total market value of the
fund's portfolio, and economic, political or regulatory developments may
have a greater impact on the value of OPCA's portfolio than would be the
case if the portfolio were diversified among more issuers.

Dividends paid by either fund derived from interest attributable to
municipal obligations will be exempt from Federal and California
individual income taxes. Any dividends derived from net interest income
on taxable investments will be taxable as ordinary income (and any capital
gains distributions will be taxable as capital gains) when distributed to
shareholders.

Under normal market conditions, OPCA may invest up to 20% of its assets
in taxable investments, including certain temporary defensive investments,
hedging instruments, repurchase agreements and private activity municipal
securities (the interest from which may be subject to Federal alternative
minimum tax). The Fund expects to maintain liquidity through the purchase
of short-term municipal obligations rated at the time of purchase within
the two highest ratings assigned by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("Standard & Poor's") or Fitch
Investors Service ("Fitch"). In times of unstable economic or market
conditions, both funds may assume a temporary defensive position by
investing some or all of their assets in short-term taxable money market
instruments, including repurchase agreements. To the extent either fund
assumes a temporary defensive position, a portion of its distributions may
be subject to Federal and state income taxes and it may not achieve its
objective.

The Fund invests primarily in Municipal Obligations rated at the time of
purchase within the four highest ratings assigned by Moody's, Standard &
Poor's or Fitch. These ratings are referred to as "investment grade."
OPCA may invest up to 25% of its total assets in municipal obligations
rated less than investment grade at the time of purchase. Municipal
Obligations rated less than investment grade have an increased credit risk
that the issuer may not make interest or principal payments as they become
due. A subsequent downgrade in a rating to less than investment grade
will not require either the Fund or OPCA to dispose of a security.

Inverse Floaters. OPCA may invest in inverse floater variable rate bonds,
a type of "derivative investment." In general, a derivative investment
is a specially-designed investment whose performance is linked to the
performance of another investment or security, such as an option, future
or index. In the broadest sense, derivative investments include exchange-
traded options and futures contracts, which both OPCA and the Fund may use
for hedging purposes. Other derivative investments, such as inverse
floaters, offer the potential for increased income and principal value.
Yields on inverse floaters move in the opposite direction as short-term
interest rates change. A risk of inverse floaters is that their market
value could be expected to vary to a much greater extent than the market
value of other municipal securities that are not derivative investments
but that have similar credit quality, redemption provisions and
maturities. OPCA anticipates that under normal circumstances it will
invest no more than 10% of its total assets in inverse floaters.

Credit Risk and Interest Rate Risk

The values of municipal securities will vary as a result of changing
evaluations by rating services and investors of the ability of the issuers
of such securities to meet interest and principal payments. Such values
will also change in response to changes in prevailing interest rates.
Should interest rates rise, the values of outstanding municipal securities
will probably decline and (if purchased at principal amount) would sell
at a discount. If interest rates fall, the values of outstanding
municipal securities will probably increase and (if purchased at principal
amount) would sell at a premium. Changes in the values of municipal
securities owned by the Fund or OPCA arising from these or other factors
will not affect interest income derived from those securities but will
affect the Fund's and OPCA's net asset values per share.

Market Risk

Neither OPCA nor the Fund will invest 25% or more of its total assets in
any one industry. It is possible that the Fund from time to time will
invest more than 25% of its total assets in a particular segment of the
municipal securities market, such as hospital revenue bonds, housing
agency bonds, industrial development bonds or airport bonds, or in
securities the interest on which is paid from revenues of a similar type
of project. Both funds generally will not engage in the trading of
securities for the purpose of realizing short-term gains, but may sell
securities if respective investment adviser deems advisable to take
advantage of differentials in yield. While short-term trading increases
portfolio turnover, both funds incur little or no brokerage costs because
most of their respective portfolio transactions are principal trades
without brokerage commissions. OPCA will not invest more than 25% of its
total assets in securities paying interest from revenues of similar types
of projects. Neither the Fund nor OPCA will invest more than 25% of its
respective total assets in securities of issuers located in the same
state.

Repurchase Agreements

The funds may enter into repurchase agreements of seven days or less
without limit and may invest up to 10% of their respective net assets in
repurchase agreements having a maturity beyond seven days. Repurchase
agreements must be fully collateralized. However, if the vendor fails to
pay the resale price on the delivery date, the funds may experience costs
or delays in disposing of the collateral and may experience losses if
there is any delay in doing so. The Fund has no present intention of
entering into repurchase agreements, except for temporary defensive
purposes.

Options, Futures and Interest Rate Swaps

The funds may purchase and sell certain kinds of put and call options,
futures, and options on futures, securities and broadly-based municipal
bond indices. OPCA may also enter into interest rate swap agreements with
respect to securities it holds, for hedging purposes. These instruments
are all referred to as "hedging instruments". The funds may use certain
of these instruments, such as writing covered call and put options, to
generate income in the form of premiums received from the purchaser of the
option. Hedging instruments and their special risks are described below
in "Comparison Between OPCA and the Fund".

Loans of Portfolio Securities

To raise cash for liquidity purposes, OPCA may lend its portfolio
securities to certain types of eligible borrowers approved by the Board
of Trustees. Each loan must be collateralized in accordance with
applicable regulatory requirements. After any loan, the value of the
securities loaned must not exceed 25% of the value of OPCA's total assets.
There are some risks in connection with securities lending. OPCA might
experience a delay in receiving additional collateral to secure a loan,
or a delay in recovery of the loaned securities. OPCA presently does not
intend to engage in loans of securities in excess 5% of the value of its
total assets. The Fund is authorized to lend its portfolio securities,
but has no present intention of doing so.

APPROVAL OF THE REORGANIZATION
(The Proposal)

Background

Oppenheimer Capital, the parent of QVA, the current investment adviser to
the Trust, in the course of a review of its business, recently concluded
that it should concentrate on its core investment management business and
not continue in the retail distribution of mutual funds. The retail
mutual fund market requires significant assets per fund to cover normal
costs, significant capital, investment in new products and services,
financing for Class B and Class C shares and sales support. Certain funds
advised by QVA other than the Fund offer Class B and Class C shares.
Sometime after this determination was made, representatives of OMC
approached Oppenheimer Capital about acquiring certain of its mutual fund
assets. Representatives of OMC, Oppenheimer Capital, QVD and QVA held
meetings beginning in April, 1995. Following the negotiation of the terms
of an acquisition agreement and related agreements, an acquisition
agreement (the "Acquisition Agreement") was executed by OMC, Oppenheimer
Capital, QVD and QVA on August 17, 1995.

The Reorganization described in this Proxy Statement and Prospectus is one
aspect of the overall Acquisition (as hereinafter defined) contemplated
by the Acquisition Agreement described below. The consummation of the
Acquisition is one condition, among others, to the closing of the
Reorganization. Accordingly, unless the parties otherwise agree, the
Reorganization may not be effected, despite shareholder approval, if the
Acquisition does not close. In such case, the Fund will continue in
existence and the Board will take such further action as it, in its
discretion, deems necessary or advisable.

Acquisition Agreement

The Acquisition Agreement contemplates the sale to OMC of substantially
all the assets (the "Purchased Assets") of the Companies relating to
twelve Quest For Value mutual funds (the "Acquired Funds") and the
assumption by OMC of certain liabilities of the Companies with respect to
the Acquired Funds (the "Assumed Liabilities") (the foregoing, the
"Acquisition"). The Acquisition Agreement contemplates that six of the
Acquired Funds (including the Fund) will be reorganized with certain
mutual funds currently advised by OMC (the "Reorganized Funds") and the
remaining six Acquired Funds will enter into investment advisory
agreements with OMC (or its designee) and OMC (or its designee) will
thereupon enter into subadvisory agreements with QVA for the benefit of
each such fund (the "Continuing Funds").

A condition to OMC's obligation to close under the Acquisition Agreement
(the "Acquisition Closing") is the approval of the reorganizations of the
Reorganized Funds (including the Reorganization described in this Proxy
Statement and Prospectus) and approval of the investment advisory
agreements and subadvisory agreements with the Continuing Funds by
shareholders that have in the aggregate at least 75% of the closing net
assets of all Acquired Funds. A condition to the obligation of the
Companies to close under the Acquisition Agreement is that the directors
or trustees of the Continuing Funds and the Reorganized Funds have adopted
a resolution that for a period of three years after the Acquisition
Closing, at least 75% of the members of the board of each such fund will
not be interested persons of the investment adviser or sub-adviser of such
fund or interested persons of QVA, the predecessor investment adviser as
to the Continuing Funds. The Acquisition Agreement sets forth certain
other closing conditions.

The purchase price for the Purchased Assets will be calculated pursuant
to the formula set forth in Exhibit B hereto. If the Acquisition had been
consummated on July 31, 1995, QVA estimates that the purchase price would
have been approximately $____ million. The actual purchase price may be
[higher or] lower depending upon changes in the net asset value of the
Acquired Funds.

Board Approval of the Reorganization.

At its meeting on June 22, 1995, the Board, including the Independent
Trustees, unanimously approved the Reorganization and the Reorganization
Agreement, determined that the Reorganization is in the best interests of
the Fund and its shareholders and resolved to recommend that Fund
shareholders vote for approval of the Reorganization. The Board further
determined that the Reorganization would not result in dilution of the
Fund's shareholders' interests.

In evaluating the Reorganization, the Board requested and reviewed, with
the assistance of independent legal counsel, materials furnished by OMC
and QVA. These materials included financial statements as well as other
written information regarding OMC and its personnel, operations, and
financial condition. The Board also reviewed the same type of information
about QVA. Consideration was given to comparative information concerning
other mutual funds with similar investment objectives, including
information prepared by Lipper Analytical Services, Inc. The Board also
considered information with respect to the relative performance of the
funds. The Board also reviewed and discussed the terms and provisions of
the investment advisory agreement pursuant to which OMC provides
management services to OPCA and compared it to the existing management
arrangements for the Fund as well as the management arrangements of other
mutual funds, particularly with respect to the allocation of various types
of expenses, levels of fees and resulting expense ratios.

In reaching its determination, the Board gave careful consideration to the
following factors, among others: the Reorganization would afford the
shareholders of the Fund the capabilities and resources of OMC and its
affiliates in the area of investment management, distribution, shareholder
servicing and marketing; the ability of the shareholders of the Fund to
exchange their shares for a wider variety of portfolios within the
OppenheimerFunds family with differing investment objectives than are
currently available to shareholders of the Fund; the terms and conditions
of the Reorganization (including that there would be no sales charge
imposed in effecting the Reorganization, that the Reorganization was
intended to qualify as a tax-free exchange, and that all expenses of the
Reorganization would be paid by QVA and OMC in the amounts incurred by the
respective fund); and the substantial similarity of the investment
objectives, policies and methods of the Fund and OPCA.

The Board also considered that the Class A annual operating expenses of
OPCA are lower, as a percentage of assets, and would be lower on a pro
forma basis after giving effect to the Reorganization, than the operating
expenses of the Fund, which will result in a savings to Fund shareholders.
The current expense ratio for the Fund, based on voluntary expense
limitations and fee waivers in effect since April 30, 1995, is 1.00% of
average daily net assets. For the six months ended June 30, 1995 and the
12 months ended December 31, 1994, the expense ratios for OPCA were 0.91%
and 0.95% of average annual net assets for Class A shares, respectively.

For the 12 months ended December 31, 1994 and the six months ended
June 30, 1995, on a pro forma basis, after giving effect to the
Reorganization, the expense ratios for OPCA as the surviving fund would
be 0.91% and 0.95%, respectively, of average annual net assets for Class
A shares.

In addition, the Board determined that the purchase, exchange and
redemption procedures and privileges provided by OPCA are comparable to
those of the Fund and that Fund shareholders currently exempt from payment
of certain transaction-based sales charges will continue to be so exempt
as shareholders of OPCA.

The OPCA Board of Trustees, including the trustees who are not "interested
persons" of OPCA, unanimously approved the Reorganization and the
Reorganization Agreement and determined that the Reorganization is in the
best interests of OPCA and its shareholders. The OPCA Board further
determined that the Reorganization would not result in dilution of the
OPCA's shareholders' interests. The OPCA Board considered, among other
things, that an increase in OPCA's asset base as a result of the
Reorganization should benefit OPCA shareholders due to the economies of
scale available to a larger fund. These economies of scale should result
in lower costs per account for each OPCA shareholder through lower
operating expenses and transfer agency expenses.

The Reorganization

For the reasons set forth below under "Approval of the Reorganization -
Reasons for the Reorganization," the Board, including the trustees who are
not "interested persons" of the Trust (the "Independent Trustees"), as
that term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), has concluded that the Reorganization is in the best
interests of the Fund and its shareholders and that the interests of
existing Fund shareholders will not be diluted as a result of the
Reorganization, and recommends approval of the Reorganization by Fund
shareholders. The Board of Trustees of OPCA has also approved the
Reorganization and determined that the interests of existing OPCA
shareholders will not be diluted as a result of the Reorganization. If
the Reorganization is not approved, the Fund will continue in existence
and the Board will determine whether to pursue alternative actions.
"Approval of the Reorganization" sets forth certain information with
respect to the background of the Reorganization, including other
transactions and agreements entered into, or contemplated to be entered
into, by OMC, QVA and their respective affiliates.

Tax Aspects of the Reorganization

At or prior to the Closing Date, the Fund will declare a dividend in an
amount large enough so that it will have declared a dividend of all of its
investment company taxable income and net capital gain, if any, for the
taxable period ending with its dissolution (determined without regard to
any deduction for dividends paid). Such dividends will be included in the
taxable income of the Fund's shareholders as ordinary income and capital
gain, respectively.

The exchange of the assets of the Fund for Class A shares of OPCA and the
assumption by OPCA of certain liabilities of the Fund is intended to
qualify for Federal income tax purposes as a tax-free reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund has represented to Price Waterhouse LLP, tax adviser
to the Fund, that to the Fund's best knowledge, there is no plan or
intention by any Fund shareholder who owns 5% or more of the Fund's
outstanding shares, and, to the Fund's best knowledge, there is no plan
or intention on the part of the remaining Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of OPCA shares received
in the transaction that would reduce the Fund shareholders' ownership of
Class A shares of OPCA to a number of shares having a value, as of the
Closing Date, of less than 50% of the value of all the formerly
outstanding Fund shares as of the same date. The Fund and OPCA have each
further represented to the fact that, as of the Closing Date, the Fund and
OPCA will qualify as regulated investment companies or will meet the
diversification test of Section 368(a)(2)(F)(ii) of the Code.

As a condition to the closing of the Reorganization, OPCA and the Fund
will receive the opinion of Price Waterhouse LLP to the effect that,
based on the Reorganization Agreement, the above representations, existing
provisions of the Code, Treasury Regulations issued thereunder, current
Revenue Rulings, Revenue Procedures and court decisions, for Federal
income tax purposes:

1. The transfer of substantially all of the Fund's assets in
exchange for Class A shares of OPCA and the assumption by OPCA of
certain identified liabilities of the Fund followed by the
distribution by the Fund of Class A shares of OPCA to the Fund
shareholders in exchange for their Fund shares will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code,
and the Fund and OPCA will each be a "party to the reorganization"
within the meaning of Section 368(b) of the Code.

2. No gain or loss will be recognized by OPCA upon the receipt of
the assets of the Fund solely in exchange for Class A shares of OPCA
and the assumption by OPCA of the identified liabilities of the Fund.

3. No gain or loss will be recognized by the Fund upon the transfer
of the assets of the Fund to OPCA in exchange for Class A shares of
OPCA and the assumption by OPCA of the identified liabilities or upon
the distribution of Class A shares of OPCA to the Fund shareholders
in exchange for the Fund shares.

4. No gain or loss will be recognized by the Fund shareholders upon
the exchange of the Fund shares for the Class A shares of OPCA.

5. The aggregate tax basis for Class A shares of OPCA received by
each Fund shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Fund shares held by each such Fund
shareholder immediately prior to the Reorganization.

6. The holding period of Class A shares of OPCA to be received by
each Fund shareholder will include the period during which the Fund
shares surrendered in exchange therefor were held (provided such Fund
shares were held as capital assets on the date of the
Reorganization).

7. The tax basis of the assets of the Fund acquired by OPCA will be
the same as the tax basis of such assets of the Fund immediately
prior to the Reorganization.

8. The holding period of the assets of the Fund in the hands of OPCA
will include the period during which those assets were held by the
Fund.

Shareholders of the Fund should consult their tax advisers regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the Federal
income tax consequences of the Reorganization, shareholders of the Fund
should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.

Capitalization Table (Unaudited)

The table below sets forth the capitalization of OPCA and the Fund and
indicates the pro forma combined capitalization as of June 30, 1995 as if
the Reorganization had occurred on that date.

Net Asset
Shares Value
Net Assets Outstanding Per Share

Oppenheimer California
Tax-Exempt Fund
Class A Shares 246,731,968 24,142,217 $10.22
Class B Shares 29,962,547 2,930,799 $10.22

California Tax-Exempt
Fund 24,909,398 2,362,541 $10.54

Pro Forma Combined
Fund
Class A Shares 271,641,366 26,579,536 $10.22
Class B Shares 29,962,547 2,931,767 $10.22

- ------------------
* Reflects issuance of 2,437,319 Class A shares of OPCA in a tax-free
exchange for the net assets of the Fund, aggregating $24,909,398 for
shares of the Fund.

The pro forma ratio of expenses to average annual net assets of the
combined funds at June 30, 1995 would have been 0.91% with respect to
Class A shares and 1.68% with respect to Class B shares.

COMPARISON BETWEEN OPCA AND THE FUND

Comparative information about OPCA and the Fund is presented below.
Complete information about OPCA and the Fund is set forth in their
respective Prospectuses (which, as to OPCA, accompanies this Proxy
Statement and Prospectus) and is incorporated herein by reference. To
obtain additional copies, see "Miscellaneous - Public Information."

Comparison of Investment Objectives, Policies and Restrictions

OPCA seeks the maximum current income, and the Fund seeks as high a level
of current income, exempt from Federal and California individual income
taxes as is consistent with preservation of capital. Both funds seek
their investment objective by investing, under normal market conditions,
at least 80% of their respective total (as to OPCA) or net (as to the
Fund) assets in Municipal Obligations, and at least 65% of their
respective total (as to OPCA) or net (as to the Fund) assets in California
Municipal Obligations.

Municipal Obligations are debt obligations issued by or on behalf of the
states, the District of Columbia, their political subdivisions or any
commonwealths, territories or possessions of the United States, or their
respective agencies, instrumentalities or authorities, the interest from
which is not subject to Federal individual income tax in the opinion of
bond counsel to the respective issuer at the time of issue. California
Municipal Obligations are obligations of the State of California and its
political subdivisions, and their respective agencies, authorities or
instrumentalities, the interest from which is, in the opinion of bond
counsel to the issuer, not subject to California individual income tax.

Under normal market conditions, OPCA may invest up to 20% of its assets
in taxable investments, including certain temporary defensive investments,
hedging instruments, repurchase agreements and private activity municipal
securities (the interest from which may be subject to Federal alternative
minimum tax). The Fund expects to maintain liquidity through the purchase
of short-term municipal obligations rated at the time of purchase within
the two highest ratings assigned by Moody's, Standard & Poor's or Fitch.
In times of unstable economic or market conditions, both funds may assume
a temporary defensive position by investing some or all of their assets
in short-term taxable money market instruments, including repurchase
agreements. To the extent either fund assumes a temporary defensive
position, a portion of its distributions may be subject to Federal and
state income taxes and it may not achieve its objective.

The Fund invests primarily in municipal obligations rated at the time of
purchase within the four highest ratings assigned by Moody's, Standard &
Poor's or Fitch. These ratings are referred to as "investment grade."
OPCA may invest up to 25% of its total assets in municipal obligations
rated less than investment grade at the time of purchase. Municipal
securities rated less than investment grade have an increased credit risk
that the issuer may not make interest or principal payments as they become
due. A subsequent downgrade in a rating to less than investment grade
will not require either the Fund or OPCA to dispose of a security.

Floating Rate and Variable Rate Obligations. Some of the municipal
securities both funds may purchase may have variable or floating interest
rates. Variable rates are adjustable at stated periodic intervals.
Floating rates are automatically adjusted according to a specified market
rate for such investments, such as the percentage of the prime rate of a
bank, or the 91-day U.S. Treasury Bill rate. Such obligations may be
secured by bank letters of credit or other credit support arrangements.

Inverse Floaters. OPCA may invest in inverse floater variable rate bonds,
a type of derivative investment, because they offer the potential for
increased income and principal value. Yields on inverse floaters move in
the opposite direction as short-term interest rates change. OPCA
anticipates that under normal circumstances it will invest no more than
10% of its total assets in inverse floaters. A risk of inverse floaters
is that their market value could be expected to vary to a much greater
extent than the market value of other municipal securities that are not
derivative investments but that have similar credit quality, redemption
provisions and maturities.

Municipal Lease Obligations. Both the Fund and OPCA may invest in
municipal lease obligations. Lease obligations have developed as a means
for government issuers to acquire property and equipment without the
necessity of complying with the constitutional and statutory requirements
generally applicable for the issuance of debt. Certain lease obligations
contain "non-appropriation" clauses. Consequently, continued lease
payments on those lease obligations are dependent on future legislative
actions. If such legislative actions do not occur, the holders of the
lease obligation may experience difficulty in exercising their rights,
including disposition of the property. Certain of these lease
obligations may be deemed to be "illiquid" securities and their purchase
would be limited as described below in "Special Investment Methods -
Illiquid and Restricted Securities."

Participation Interests. Both funds may purchase participation interests
in municipal securities. A participation interest gives the fund an
undivided interest in the municipal obligation in proportion to its
investment. Participation interests are primarily dependent upon the
creditworthiness of the borrower for payment of interest and principal.
Participation interests may backed by letters of credit or guarantees to
assure repayment of principal, or may be collateralized by U.S. Government
securities. Certain participation interests, other than those with puts
exercisable within seven days, may be illiquid. See "Special Investment
Methods - Illiquid and Restricted Securities," below.

Non-Diversification. OPCA is classified as a "non-diversified" investment
company under the Investment Company Act of 1940 so that the proportion
of its assets that may be invested in the securities of a single issuer
is not limited by the Investment Company Act. The Fund is a "diversified"
investment company. However, both OPCA and the Fund intend to conduct
their operations so that each will qualify as a "regulated investment
company" for purposes of the Internal Revenue Code, which will relieve
both funds from liability for Federal income tax to the extent that more
than 90% of their respective earnings are distributed to shareholders.
Among the requirements for qualification as a "regulated investment
company" are that: (1) not more than 25% of the market value of the fund's
total assets will be invested in the securities of a single issuer, and
(2) with respect to 50% of the market value of the fund's total assets,
not more than 5% of the market value of its total assets may be invested
in the securities of a single issuer and the fund must not own more than
10% of the outstanding voting securities of a single issuer.

Special Investment Methods

OPCA and the Fund may use the special investment methods summarized below.

When-Issued Securities. Both funds may purchase municipal obligations at
a stated price and yield on a "when-issued" basis, that is, for delivery
to the fund upon issuance, which may be later than the normal settlement
date for such securities. The funds generally would not pay for such
securities or start earning interest on them until they are received. At
time of delivery, the value of the securities may be more or less than
their value at the time of the transaction. Failure of the issuer to
deliver a security purchased by a fund on a when-issued basis may result
in the fund missing an opportunity to make an alternative investment. The
funds will maintain cash, U.S. Government securities or other liquid high
grade debt obligations in a segregated account with its custodian bank
equal in value to its respective obligation to purchase such securities.

Stand-By Commitments and Puts. The funds may acquire "stand-by
commitments" or "puts" with respect to municipal obligations held in their
portfolios. Under a stand-by commitment or put option, a fund would have
the right to sell specified securities at a specified price on demand to
the issuing broker-dealer or bank. The funds will acquire stand-by
commitments solely to facilitate portfolio liquidity and do not intend to
exercise their rights thereunder for trading purposes. The funds may pay
for stand-by commitments if such action is deemed necessary, thus
increasing to a degree the cost of the underlying municipal obligation and
similarly decreasing such security's yield to investors. Gains realized
in connection with stand-by commitments will be taxable. The funds may
purchase and exercise puts on municipal obligations. Puts give a fund the
right to sell securities held in the fund's portfolio at a specified
exercise price on a specified date. Any premium paid for the put is lost
if the put is not exercised.

Illiquid and Restricted Securities. Investments may be illiquid because
of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. OPCA and the
Fund will not invest more than 10% of their respective net assets in
illiquid or restricted securities. Illiquid securities include repurchase
agreements maturing in more than seven days, or certain participation
interests other than those with puts exercisable within seven days. In
addition, OPCA may not invest any portion of its assets in securities the
public sale of which would require registration under the Securities Act
of 1933.

Repurchase Agreements. Both OPCA and the Fund may enter into repurchase
agreements of seven days or less without limit, and may invest up to 10%
of their respective net assets in repurchase agreements having a maturity
beyond seven days. The Fund, however, has no present intention of entering
into repurchase agreements. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the resale price on
the delivery date, the fund may experience costs or delays in disposing
of the collateral and may experience losses if there is any delay in doing
so.

Loans of Portfolio Securities. Both funds are authorized to lend their
portfolio securities. The Fund has no present intention of doing so.
OPCA presently does not intend to engage in loans of portfolio securities
in excess of 5% of its total assets. See "Principal Risk Factors - Loans
of Portfolio Securities" on page ___, above.

Hedging. As described below, both OPCA and the Fund may purchase and sell
certain kinds of futures contracts, put and call options, and options on
futures. OPCA may (but the Fund cannot) enter into interest rate swap
agreements with respect to securities held by it. These are all referred
to as "hedging instruments." The funds do not use hedging instruments for
speculative purposes. OPCA may only purchase a call or put if, after such
purchase, the value of all call and put options held by OPCA would not
exceed 5% of OPCA's total assets. Other limits on the use of hedging
instruments are described in the funds' Prospectuses and Statements of
Additional Information.

Both funds may buy and sell options and futures to try to manage their
exposure to the possibility that the prices of their portfolio securities
may decline, or to establish a position in the market as a temporary
substitute for purchasing individual securities, or to try to manage their
exposure to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the funds'
portfolio against price fluctuations. Other hedging strategies, such as
buying futures and call options and writing put options, tend to increase
the funds' exposure to the securities market. Writing put options or
covered call options may also provide income to the fund for liquidity
purposes or raise cash for the fund to distribute to shareholders. OPCA
may purchase interest rate swaps where OPCA and another party exchange
their right to receive or their obligation to pay interest on a security.
OPCA may not enter into swaps with respect to more than 25% of its total
assets.

The use of hedging instruments requires special skills and knowledge of
investment techniques that are different than those required for normal
portfolio management. If the investment adviser to the fund uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the fund's return. The fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future or
option. Options trading involves the payment of premiums and has special
tax effects on the fund. There are also special risks in particular
hedging strategies. If a covered call written by the fund is exercised
on an investment that has increased in value, the fund will be required
to sell the investment at the call price and will not be able to realize
any profit if the investment has increased in value above the call price.
Interest rate swaps are subject to credit risks (if the other party fails
to meet its obligations) and also to interest rate risks. OPCA could be
obligated to pay more under its swap agreements than it receives under
them, as a result of interest rate changes.

Investment Restrictions

Both OPCA and the Fund have certain investment restrictions that, together
with their respective investment objectives, are fundamental policies
changeable only by shareholder approval. Their investment restrictions
are substantially the same, except as follows.

OPCA cannot:

1. borrow money in excess of 10% of the value of its total assets or make
any investment when borrowings exceed 5% of the value of its total assets;
it may borrow only as a temporary measure for extraordinary or emergency
purposes.

The Fund cannot:

1. borrow money in excess of 1/3 of the value of its total assets (the
Fund may borrow from banks only as a temporary measure for extraordinary
or emergency purposes and will make no additional investments while such
borrowings exceed 5% of its total assets); or

2. with respect to 75% of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer.

Additional Comparative Information

General

For a discussion of the organization and operation of OPCA, including
brokerage practices, see "Investment Objective and Policies" and "How the
Fund is Managed" in OPCA's current prospectus and "Brokerage Policies of
the Fund" in the OPCA current Statement of Additional Information. For
a discussion of the organization and operation of the Fund, including
brokerage practices, see "Investment Objectives of the Fund," "Investment
Restrictions and Techniques," "Investment Management Agreement" and
"Additional Information" in the Fund's current prospectus.

Financial Information

For certain financial information about OPCA and the Fund, see (as to
OPCA) "Financial Highlights" and "Performance of the Fund" in the OPCA
current prospectus and (as to the Fund) "Financial Highlights" in the Fund
current prospectus.

Management of OPCA and the Fund

For information about the management of OPCA and the Fund, including their
respective Boards of Trustees, investment advisers, portfolio managers and
distributors, see (as to OPCA) "Expenses" and "How the Fund is Managed"
in the OPCA current prospectus and (as to the Fund) "Investment Management
Agreement," Distribution Plan," "Portfolio Transactions and Turnover" and
"Additional Information" in the Fund current prospectus.

Description of Shares of OPCA and the Fund

For a description of the classes of shares of OPCA and the Fund, including
voting rights, restrictions on disposition and potential liability
associated with their ownership, see (as to OPCA) "How the Fund is
Managed" in the OPCA current prospectus and Statement of Additional
Information and (as to the Fund) "Additional Information" in the Fund
current prospectus.

Dividends, Distributions and Taxes

Both funds declare dividends from net investment income daily, distribute
dividends monthly, and distribute any net short-term or long-term capital
gains annually. For a discussion of the policies of OPCA and the Fund
with respect to dividends and distributions, and a discussion of the tax
consequences of an investment in OPCA and the Fund, see (as to OPCA)
"Dividends, Capital Gains and Taxes" in the OPCA current prospectus and
(as to the Fund) "Dividends and Distributions" and "Tax Status" in the
Fund current prospectus.

Purchases, Redemptions and Exchanges of Shares

For a discussion of how shares of OPCA and the Fund may be purchased,
redeemed and exchanged, see (as to OPCA) "How to Buy Shares," "How to Sell
Shares," "Exchanges of Shares," "Special Investor Services," "Service Plan
for Class A Shares," "Distribution and Service Plan for Class B Shares"
and "Distribution and Service Plan for Class C Shares" in the OPCA current
prospectus and "How to Buy Shares," "How to Redeem Shares," "Exchanging
Shares" and "Additional Information" in the Fund current prospectus.

Shareholder Inquiries

For a description of how shareholder inquiries should be made, see (as to
OPCA) "How the Fund is Managed" in the OPCA current prospectus and (as to
the Fund) "Additional Information" in the Fund current prospectus.

OPCA Performance

OPCA does not maintain a fixed dividend rate and there can be no assurance
as to the payment of any dividends or the realization of any capital
gains. A discussion of the performance of OPCA's Class A and Class B
shares for the fiscal year ended December 31, 1994 is set forth under
"Management's Discussion of Performance" in the OPCA prospectus that
accompanies this Proxy Statement and Prospectus. See also "Comparing the
Fund's Performance to the Market" in the OPCA prospectus for a graph of
the performance of a hypothetical $10,000 investment in Class A or Class
B shares of OPCA compared with the performance of the Lehman Brothers
Municipal Bond Index, an unmanaged index of a broad range of investment
grade municipal bonds that is widely regarded as a measure of the
performance of the general municipal bond market. Index performance
reflects the reinvestment of dividends but does not consider the effect
of capital gains or transaction costs, and none of the data above shows
the effect of taxes. Also, OPCA's performance reflects the effect of OPCA
business and operating expenses. While index comparisons may be useful
to provide a benchmark for OPCA's performance, it should be noted that
OPCA's investments are not limited to the securities in any one index and
the index data does not reflect any assessment of the risk of the
investments included in the index.

Information regarding the Fund's performance is set forth in the Fund's
Annual Report dated July 31, 1994 and Semi-Annual Report dated January 31,
1995, copies of which may be obtained from QVD (see "Miscellaneous -
Financial Information") and which are incorporated herein by reference.

INFORMATION CONCERNING THE MEETING

The Meeting

The Meeting will be held at One World Financial Center, New York, New York
10281 on the 40th Floor at _____ A.M., New York time, on ________, 1995
and any adjournments thereof. At the Meeting, shareholders of the Fund
will be asked to consider and vote upon the Reorganization Agreement, and
the transactions contemplated thereby, including the transfer of
substantially all the assets of the Fund in exchange for Class A shares
of OPCA, the distribution of such shares to the shareholders of the Fund
in complete liquidation of the Fund and the cancellation of the
outstanding shares of the Fund.

Record Date; Vote Required; Share Information

The Board has fixed the close of business on September 7, 1995 as the
record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. The affirmative vote
of a majority of the outstanding shares of the Fund represented in person
or by proxy at the Meeting and entitled to vote at the Meeting is required
for approval of the Proposal. Each shareholder will be entitled to one
vote for each share and a fractional vote for each fractional share held
of record at the close of business on the Record Date. Only shareholders
of the Fund will vote on the Reorganization. The vote of shareholders of
OPCA is not being solicited to approve the Reorganization Agreement.

At the close of business on the Record Date, there were approximately
_____________ shares of the Fund issued and outstanding. The presence in
person or by proxy of the holders of a majority of such shares constitutes
a quorum for the transaction of business at the Meeting. The Meeting will
not be held until the date and time at which a quorum exists for the
shares of the Fund. As of the close of business on the Record Date, there
were approximately ____________ shares of the Fund issued and outstanding.
[To the knowledge of the Fund, as of the Record Date, no person owned of
record or beneficially owned 5% or more of its outstanding shares.] [To
the knowledge of OPCA, as of the Record Date, no person owned of record
or beneficially owned 5% or more of its outstanding Class A, Class B or
Class C shares.] [As of the Record Date, the officers and Trustees of
OPCA, and the officers and Trustees of the Fund, beneficially owned as a
group less than 1% of the outstanding shares of each class of OPCA and of
the Fund, respectively.]

Proxies

The enclosed form of 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 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 thereof by: (i)
writing to the Secretary of the Trust at One World Financial Center, New
York, New York 10281; (ii) attending the Meeting and voting in person; or
(iii) signing and returning a new proxy (if returned and received in time
to be voted).

Costs of the Solicitation and the Reorganization

All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be evenly apportioned
between QVA and OMC. Any documents such as existing prospectuses or
annual reports that are included in that mailing will be a cost of the
fund issuing the document. In addition to the solicitation of proxies by
mail, proxies may be solicited by officers and employees of QVA, the
Trust's investment adviser, or QVA's affiliates, personally or by
telephone or telegraph. In addition to the solicitation of proxies by
mail, proxies may be solicited by officers and employees of QVA, the
Trust's investment adviser, or QVA's affiliates, personally or by
telephone or telegraph. In addition, QVA has retained D.F. King & Co.,
Inc., 77 Water Street, New York, New York 10005 to assist in the
solicitation of proxies primarily by contacting shareholders by telephone
and telegram for a fee not to exceed $____, plus reasonable out-of-pocket
expenses. The cost for such proxy solicitor will be shared by QVA and
OMC. Brokerage houses, banks and other fiduciaries may be requested to
forward soliciting material to the beneficial owners of shares of the Fund
and to obtain authorization for the execution of proxies. For those
services, if any, they will be reimbursed by the Trust for their
reasonable out-of-pocket expenses.

With respect to the Reorganization, OMC and QVA will share the cost of the
tax opinion. Any other out-of-pocket expenses of OPCA and the Fund
associated with the Reorganization, including legal, accounting and
transfer agent expenses, will be borne by OMC and QVA, respectively, in
the amounts so incurred by the respective fund.

MISCELLANEOUS

Financial Information

The Reorganization will be accounted for by the surviving fund in its
financial statements similar to a pooling without restatement. Further
financial information as to the Fund is contained in (i) its current
Prospectus, which is incorporated herein and is available without charge
upon written request to QVD, at P.O. Box 3567, Church Street Station, New
York, New York 10277-1296 or by calling the toll-free number shown on the
front cover of this Proxy Statement and Prospectus, and (ii) its audited
financial statements as of July 31, 1994 and unaudited financial
statements as of January 31, 1995, which are included in the Additional
Statement. Financial information for OPCA is contained in its current
Prospectus accompanying this Proxy Statement and Prospectus and
incorporated herein, and in its audited financial statements as of
December 31, 1994 and unaudited financial statements as of June 30, 1995
which are included in the Additional Statement.

Public Information

Additional information about OPCA and the Fund is available, as
applicable, in the following documents which are incorporated herein by
reference: (i) OPCA's Prospectus dated April 25, 1995, supplemented July
14, 1995, accompanying this Proxy Statement and Prospectus and
incorporated herein; (ii) the Fund's Prospectus dated December 1, 1994,
which may be obtained without charge by writing to QVD at the address
given in the preceding paragraph; (iii) OPCA's Annual Report as of
December 31, 1994, and Semi-Annual Report dated June 30, 1995, which may
be obtained without charge by writing to OSS at the address indicated
above; and (iv) the Fund's Annual Report as of July 31, 1994, and Semi-
Annual Report as of January 31, 1995 which may be obtained without charge
by writing to QVD. All of the foregoing documents and the Statements of
Additional Information referred to below may be obtained by calling the
toll-free number for OPCA or the Fund on the cover of this Proxy Statement
and Prospectus.

Additional information about the following matters is contained in the
Additional Statement, which incorporates by reference its OPCA Statement
of Additional Information, and the Fund's Prospectus dated December 1,
1994 and its Statement of Additional Information dated December 1, 1994:
the organization and operation of OPCA and the Fund; more information on
investment policies, practices and risks; information about OPCA's and the
Fund's respective Boards of Trustees and their responsibilities; a further
description of the services provided by OPCA's and the Fund's investment
adviser, distributor, and transfer and shareholder servicing agent;
dividend policies; tax matters; an explanation of the method of
determining the offering price of the shares of OPCA and the Fund;
purchase, redemption and exchange programs; and distribution arrangements.

OPCA and the Fund are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith,
file reports and other information with the SEC. Proxy material, reports
and other information about OPCA and the Fund which are of public record
can be inspected and copied at public reference facilities maintained by
the SEC in Washington, D.C. and certain of its regional offices, and
copies of such materials can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, Washington, D.C. 20549.

OTHER BUSINESS

Management of the Fund knows of no business other than the matters
specified above which 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 this proxy in accordance with their
judgment on such matters.

By Order of the Board of Trustees

Deborah Kaback, Secretary
_______, 1995 790

MERGE\QFVF790.D

<PAGE>

EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of this ____ day of _____, 1995, by and among Oppenheimer California Tax-
Exempt Fund ("Oppenheimer Fund"), a Massachusetts business trust, Quest
for Value Family of Funds, a Massachusetts business trust ("Quest For
Value") on behalf of California Tax-Exempt Fund ("Quest Portfolio"), a
series of Quest For Value, and Quest for Value Advisors ("Quest
Advisors"), a Delaware general partnership which serves as investment
adviser to the Quest Portfolio.

This Agreement is intended to be and is adopted as a "plan of
reorganization", within the meaning of Treas. Reg. Section 1.368-2(g), for
a reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended ("Code"). The reorganization ("Reorganization") will
consist of the transfer to the Oppenheimer Fund of substantially all of
the assets of the Quest Portfolio in exchange for the assumption by the
Oppenheimer Fund of all stated liabilities of the Quest Portfolio and the
issuance by the Oppenheimer Fund of shares of beneficial interest of the
Oppenheimer Fund ("shares") to be distributed, after the Closing Date (as
hereinafter defined), to the shareholders of the Quest Portfolio in
liquidation of the Quest Portfolio as provided herein, all upon the terms
and conditions hereinafter set forth in this Agreement. To the extent
necessary to effectuate the transactions contemplated by this Agreement,
or as the context of representations, warranties, covenants and other
agreements set forth in this Agreement may require, all references in this
Agreement to the Quest Portfolio shall include Quest For Value.

In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:

1. THE REORGANIZATION AND LIQUIDATION OF THE QUEST PORTFOLIO

1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, on the
Closing Date, the Quest Portfolio will assign, deliver and otherwise
transfer its assets as set forth in paragraph 1.2 ("Quest Portfolio
Assets") to the Oppenheimer Fund, and the Oppenheimer Fund will in
exchange therefor assume Quest Portfolio's stated liabilities on the
Closing Date as set forth in paragraph 1.3 and deliver to the Quest
Portfolio the number of each class of shares of the Oppenheimer Fund,
including fractional Oppenheimer Fund shares, determined by dividing the
value of the Quest Portfolio Assets, net of such stated liabilities,
represented by shares of each class of the Quest Portfolio computed in the
manner and as of the time and date set forth in paragraph 2.1, by the net
asset value of each class of shares of the Oppenheimer Fund, computed in
the manner and as of the time and date set forth in paragraph 2.2. Such
transactions shall take place at the closing provided for in paragraph 3.1
("Closing").

1.2 (a) The Quest Portfolio Assets shall consist of all property
and rights, including without limitation all cash, cash equivalents,
securities and dividend and interest receivables owned by the Quest
Portfolio, and any deferred or prepaid expenses shown as an asset on the
Quest Portfolio's books on the Closing Date. Notwithstanding the
foregoing, the Quest Portfolio Assets shall exclude a cash reserve (the
"Cash Reserve") to be retained by the Quest Portfolio sufficient in its
discretion for the payment of the expenses of the Quest Portfolio's
dissolution and its liabilities, but not in excess of the amount
contemplated by paragraph 7.12.

(b) Promptly following the signing of this Agreement, the Quest
Portfolio will provide the Oppenheimer Fund with a list of its assets as
of the most reasonably practical date. On the Closing Date, the Quest
Portfolio will provide the Oppenheimer Fund with a list of the Quest
Portfolio Assets to be assigned, delivered and otherwise transferred to
the Oppenheimer Fund and of the stated liabilities to be assumed by the
Oppenheimer Fund pursuant to this Agreement.

1.3 The Quest Portfolio will endeavor to discharge of all of its
liabilities and obligations when and as due prior to the Closing Date.
An unaudited Statement of Assets and Liabilities of the Quest Portfolio
will be prepared by the Treasurer of the Quest Portfolio, as of the
Valuation Date, which Statement shall be prepared in conformity with
generally accepted accounting principles consistently applied from the
prior audited period. On the Closing Date, the Oppenheimer Fund shall
assume such stated liabilities, expenses, costs, charges and reserves set
forth on such Statement as shall be agreed to by Oppenheimer Fund.

1.4 In order for the Quest Portfolio to comply with Section
852(a)(1) of the Code and to avoid having any investment company taxable
income or net capital gain (as defined in Section 852(b)(2) and 1222(11)
of the Code, respectively) in the short taxable year ending with its
dissolution, the Quest Portfolio will on or before the Closing Date (a)
declare a dividend in an amount large enough so that it will have declared
dividends of all of its investment company taxable income and net capital
gain, if any, for such taxable year (determined without regard to any
deduction for dividends paid) and (b) distribute such dividend.

1.5 Contemporaneously with the Closing, the Quest Portfolio will be
liquidated (except for the Cash Reserve) and the Quest Portfolio will
distribute or cause to be distributed the Oppenheimer Fund shares of each
class received by the Quest Portfolio pursuant to paragraph 1.1 pro rata
to the appropriate shareholders of record of each class determined as of
the close of business on the Valuation Date as defined in paragraph 2.1.
Upon such liquidation all issued and outstanding shares of the Quest
Portfolio will be cancelled on the Quest Portfolio's books and the Quest
Portfolio Shareholders will have no further rights as such Shareholders.
The Oppenheimer Fund will not issue certificates representing the shares
of the Oppenheimer Fund in connection with such exchange.

1.6 After the Closing, the Quest Portfolio shall not conduct any
business except in connection with the winding up of its affairs and shall
file, or make provision for filing of, all reports it is required by law
to file. After the Closing, Quest For Value may be dissolved and
deregistered as an investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). Within one year after the Closing, the
Quest Portfolio shall (a) either pay or make provision for payment of all
of its liabilities and taxes, and (b) either (i) transfer any remaining
amount of the Cash Reserve to the Oppenheimer Fund, if such remaining
amount (as reduced by the estimated cost of distributing it to
shareholders) is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of the Quest Portfolio on the
Valuation Date. Such remaining amount shall be deemed to be material if
the amount to be distributed, after deduction of the estimated expenses
of the distribution, equals or exceeds one cent per share of the Quest
Portfolio outstanding on the Valuation Date.

1.7 Copies of all books and records of or pertaining to the Quest
Portfolio, including those in connection with its obligations under the
1940 Act, the Code, State blue sky laws or otherwise in connection with
this Agreement, will promptly after the Closing be delivered to officers
of the Oppenheimer Fund or their designee. Quest For Value and Quest
Advisors shall have access to such books and records upon reasonable
request during normal business hours.

2. THE CALCULATION

2.1 The value of the Quest Portfolio Assets shall be the value of
such assets computed as of the close of business of the New York Stock
Exchange on ___________, 1995, or at such time on such earlier or later
date as may be mutually agreed upon in writing (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Oppenheimer Fund's then current prospectus and statement
of additional information.

2.2 The net asset value of each class of shares of the Oppenheimer
Fund shall be the net asset value per share computed on the Valuation
Date, using the valuation procedures set forth in the Oppenheimer Fund's
then current prospectus and statement of additional information.

2.3 The number of each class of Oppenheimer Fund shares (including
fractional shares, if any) to be issued hereunder shall be determined by
dividing the value of the Quest Portfolio Assets, net of the liabilities
assumed by the Oppenheimer Fund pursuant to paragraph 1.1 attributable to
that class, determined in accordance with paragraph 2.1, by the net asset
value of an Oppenheimer Fund share of a similar class determined in
accordance with paragraph 2.2.

2.4 All computations of value shall be made by Oppenheimer
Management Corporation in accordance with its regular practice in pricing
the Oppenheimer Fund. The Oppenheimer Fund shall cause Oppenheimer
Management Corporation to deliver to the Quest Portfolio a copy of its
valuation report at the Closing.

3. CLOSING AND CLOSING DATE

3.1 The Closing Date (the "Closing Date") shall be the next business
day following the Valuation Date. The Closing shall be held in a location
mutually agreeable to all the parties hereto. All acts taking place at the
Closing shall be deemed to take place simultaneously as of 9:00 a.m.
Eastern time on the Closing Date unless otherwise agreed by the parties.

3.2 Portfolio securities held by the Quest Portfolio and represented
by a certificate or written instrument shall be presented by it or on its
behalf to Citibank, N.A. (the "Custodian"), custodian for the Oppenheimer
Fund, for examination no later than five business days preceding the
Valuation Date. Such portfolio securities (together with any cash or
other assets) shall be delivered by the Quest Portfolio to the Custodian
for the account of the Oppenheimer Fund on or before the Closing Date in
conformity with applicable custody provisions under the 1940 Act and duly
endorsed in proper form for transfer in such condition as to constitute
good delivery thereof in accordance with the custom of brokers. The
portfolio securities shall be accompanied by all necessary federal and
state stock transfer stamps or a check of the appropriate purchase price
of such stamps. Portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940 Act, or
with a qualified foreign custodian under Rule 17f-5 of the 1940 Act shall
be delivered on or before the Closing Date by book entry in accordance
with customary practices of such depositories and the Custodian. The cash
delivered shall be in the form of a Federal Funds wire, payable to the
order of "Citibank, N.A.", Custodian for Oppenheimer California Tax-Exempt
Fund.

3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on such Exchange or elsewhere
shall be disrupted so that, in the judgment of both the Oppenheimer Fund
and the Quest Portfolio, accurate appraisal of the value of the net assets
of the Oppenheimer Fund or the Quest Portfolio Assets is impracticable,
the Valuation Date shall be postponed until the first business day after
the day when trading shall have been fully resumed without restriction or
disruption and reporting shall have been restored.

3.4 The Quest Portfolio shall deliver to the Oppenheimer Fund or its
designee (a) at the Closing a list, certified by its Secretary, of the
names, addresses and taxpayer identification numbers of the Quest
Portfolio Shareholders (as hereinafter defined) and the number of each
class of outstanding Quest Portfolio shares owned by each such
shareholder, all as of the Valuation Date (the "Quest Portfolio
Shareholders"), and (b) as soon as practicable after the Closing all
original documentation (including Internal Revenue Service forms,
certificates, certifications and correspondence) relating to the Quest
Portfolio Shareholders' taxpayer identification numbers and their
liability for or exemption from back-up withholding. The Oppenheimer Fund
shall issue and deliver to Quest Portfolio a confirmation evidencing
delivery of each class of Oppenheimer Fund shares to be credited on the
Closing Date to the Quest Portfolio or provide evidence reasonably
satisfactory to the Quest Portfolio that such Oppenheimer Fund shares have
been credited to Quest Portfolio's account on the books of the Oppenheimer
Fund. At the Closing each party shall deliver to the other such bills of
sale, assignments, assumption agreements, receipts or other documents as
such other party or its counsel may reasonably request to effect the
consummation of the transactions contemplated by the Agreement.

4. COVENANTS OF THE OPPENHEIMER FUND AND THE QUEST PORTFOLIO

4.1 The Oppenheimer Fund will operate its business in the ordinary
course between the date hereof and the Closing Date, it being understood
that such ordinary course of business will include customary dividends and
other distributions and such changes that have been approved by
shareholders of the Oppenheimer Fund at a shareholders meeting prior to
the Closing of which Quest Portfolio has been advised.

4.2 The Oppenheimer Fund will prepare and file with the Securities
and Exchange Commission ("Commission") a registration statement on Form
N-14 under the Securities Act of 1933, as amended ("1933 Act"), relating
to the Oppenheimer Fund shares to be issued to the Quest Portfolio
Shareholders pursuant to the Reorganization ("Registration Statement").
The Quest Portfolio will provide the Oppenheimer Fund with the Proxy
Materials as described in paragraph 4.3 below, for inclusion in the
Registration Statement. The Quest Portfolio will further provide the
Oppenheimer Fund with such other information and documents relating to the
Quest Portfolio as are reasonably necessary for the preparation of the
Registration Statement.

4.3 The Quest Portfolio will call a meeting of its shareholders to
consider and act upon the Reorganization, including this Agreement, and
take all other action necessary to obtain approval of the transactions
contemplated herein. The Quest Portfolio will prepare, with such
assistance from the Oppenheimer Fund as may be mutually agreed to, the
notice of meeting, form of proxy and proxy statement and prospectus
(collectively "Proxy Materials") to be used in connection with such
meeting provided that the Oppenheimer Fund will furnish the Quest
Portfolio with a current effective prospectus relating to the Oppenheimer
Fund shares for inclusion in the Proxy Materials and with such other
information relating to the Oppenheimer Fund as is reasonably necessary
for the preparation of the Proxy Materials.

4.4 Prior to the Closing Date, the Quest Portfolio will assist the
Oppenheimer Fund in obtaining such information as the Oppenheimer Fund
reasonably requests concerning the beneficial ownership of the shares of
the Quest Portfolio.

4.5 Subject to the provisions of this Agreement, the Oppenheimer
Fund and the Quest Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.

4.6 As promptly as practicable, but in any case within 60 days after
the Closing Date, the Quest Portfolio shall furnish or cause to be
furnished to the Oppenheimer Fund, such information as the Oppenheimer
Fund reasonably requests to enable the Oppenheimer Fund to determine the
Quest Portfolio's earnings and profits for federal income tax purposes
that will be carried over to the Oppenheimer Fund pursuant to Section 381
of the Code.

4.7 As soon after the Closing Date as is reasonably practicable,
Quest for Value shall prepare and file all federal and other tax returns
and reports of the Quest Portfolio required by law to be filed with
respect to all periods ending on or before the Closing Date but not
theretofore filed.

4.8 The Oppenheimer Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940
Act and such of the state Blue Sky and securities laws as it may deem
appropriate in order to continue its operations after the Closing Date.

4.9 Until the third anniversary of the Closing Date, the Oppenheimer
Fund will use its best efforts to assure that at least 75% of the Trustees
of the Oppenheimer Fund will not be "interested persons" of the investment
adviser for the Oppenheimer Fund or Quest Advisors, as the term
"interested person" is defined by the 1940 Act.

5. REPRESENTATIONS AND WARRANTIES

5.1 The Oppenheimer Fund represents and warrants to the Quest
Portfolio as follows:

(a) The Oppenheimer Fund is an unincorporated voluntary association
validly existing and in good standing under the laws of the Commonwealth
of Massachusetts, and has the power and authority to own its properties
and to carry on its business as it is now conducted;

(b) The Oppenheimer Fund is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its shares
under the 1933 Act are in full force and effect;

(c) All of the issued and outstanding shares of each class of the
Oppenheimer Fund have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. Shares of each class of the Oppenheimer Fund are
registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings, are
complete and current, all fees required to be paid have been paid, and the
Oppenheimer Fund is not subject to any stop order and is fully qualified
to sell its shares in each state in which its shares have been registered;

(d) The current prospectus and statement of additional information
of the Oppenheimer Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;

(e) At the Closing Date, the Oppenheimer Fund will have title to the
Oppenheimer Fund's assets, subject to no liens, security interests or
other encumbrances except those incurred in the ordinary course of
business.

(f) The Oppenheimer Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of
any provision of the Oppenheimer Fund's Declaration of Trust or By-Laws
or of any material agreement, indenture, instrument, contract, lease or
other undertakings to which the Oppenheimer Fund is a party or by which
it is bound;

(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Oppenheimer Fund or
any of its properties or assets, except as previously disclosed in writing
to the Quest Portfolio. The Oppenheimer Fund knows of no facts that might
form the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or its
ability to consummate the transactions contemplated herein;

(h) The Statement of Assets and Liabilities, Statement of Operations
and Statement of Changes in Net Assets as of June 30, 1995 of the
Oppenheimer Fund examined by KPMG Peat Marwick LLP (a copy of which has
been furnished to the Quest Portfolio), fairly present, in all material
respects, the financial condition of the Oppenheimer Fund as of such date
in conformity with generally accepted accounting principles consistently
applied, and as of such date there were no known liabilities of the
Oppenheimer Fund (contingent or otherwise) not disclosed therein that
would be required in conformity with generally accepted accounting
principles to be disclosed therein;

(i) All issued and outstanding Oppenheimer Fund shares of each class
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund under
"How the Fund is Managed - Organization and History;"

(j) The Oppenheimer Fund has the power to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of the Oppenheimer Fund, and this Agreement
constitutes a valid and binding obligation of the Oppenheimer Fund
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors rights and to general equity principles;

(k) The Oppenheimer Fund shares of each class to be issued and
delivered to the Quest Portfolio, for the account of the Quest Portfolio
Shareholders, pursuant to the terms of this Agreement will at the Closing
Date have been duly authorized and, when so issued and delivered, will be
duly and validly issued Oppenheimer Fund shares, and will be fully paid
and non-assessable with no personal liability attaching to the ownership
thereof except as otherwise set forth in the current statement of
additional information for the Oppenheimer Fund under "How the Fund is
Managed - Organization and History," and no shareholder of Oppenheimer
Fund will have any preemptive right or right of subscription or purchase
in respect thereof;

(l) Since June 30, 1995, there has not been (i) any material adverse
change in the Oppenheimer Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of
business, or that have been approved by shareholders of the Oppenheimer
Fund or (ii) any incurrence by the Oppenheimer Fund of any indebtedness
except indebtedness incurred in the ordinary course of business. For the
purposes of this subparagraph, neither a decline in net asset value per
share of any class of the Oppenheimer Fund nor the redemption of
Oppenheimer Fund shares by Oppenheimer Fund shareholders, shall constitute
a material adverse change;

(m) All material Federal and other tax returns and reports of the
Oppenheimer Fund required by law to have been filed, have been filed, and
all Federal and other taxes shown as due or required to be shown as due
on said returns and reports have been paid or provision has been made for
the payment thereof, and to the best of the Oppenheimer Fund's knowledge
no such return is currently under audit and no assessment has been
asserted with respect to such returns;

(n) For each taxable year of its operation, the Oppenheimer Fund has
met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and neither the execution or
delivery of nor the performance of its obligations under this Agreement
will adversely affect, and no other events are reasonably likely to occur
which will adversely affect the ability of the Oppenheimer Fund to
continue to meet the requirements of Subchapter M of the Code;

(o) Since June 30, 1995, there has been no change by the Oppenheimer
Fund in accounting methods, principles, or practices, including those
required by generally accepted accounting principles, except as disclosed
in writing to the Quest Portfolio or as set forth in the financial
statements of the Oppenheimer Fund covering such period;

(p) The information furnished or to be furnished by the Oppenheimer
Fund for use in registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with Federal securities
and other laws and regulations applicable thereto; and

(q) The Proxy Statement and Prospectus to be included in the
Registration Statement (only insofar as it relates to the Oppenheimer
Fund) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
such statements were made, not materially misleading.

5.2 Quest for Value, on behalf of the Quest Portfolio, represents and
warrants to the Oppenheimer Fund as follows:

(a) The Quest Portfolio is a series of Quest For Value, an
unincorporated voluntary association, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts;

(b) Quest For Value is a duly registered, open-end, management
investment company, its registration with the Commission as an investment
company under the 1940 Act is in full force and effect and its current
Prospectus and Statement of Additional Information conform in all material
respects to the requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

(c) All of the issued and outstanding shares of each class of the
Quest Portfolio have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933 Act and
state securities laws. Shares of each class of the Quest Portfolio are
registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings, are
complete and current, all fees required to be paid have been paid, and the
Quest Portfolio is not subject to any stop order and is fully qualified
to sell its shares in each state in which its shares have been registered;

(d) The Quest Portfolio is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of (i) any
provision of Quest For Value's Declaration of Trust or By-Laws or (ii) of
any agreement, indenture, instrument, contract, lease or other undertaking
to which the Quest Portfolio is a party or by which it is bound (other
than any violations that individually or in the aggregate would not have
a material adverse effect on the Quest Portfolio);

(e) The Quest Portfolio has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to or as of the Closing Date;

(f) Except as otherwise disclosed in writing to and acknowledged by
the Oppenheimer Fund prior to the date of this Agreement, no litigation,
administrative proceeding, investigation, examination or inquiry of or
before any court or governmental body is presently pending, or to its
knowledge, threatened relating to the Quest Portfolio or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its financial condition or the conduct of its business.
The Quest Portfolio knows of no facts that might form the basis for the
institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body that materially and adversely affects, or is likely to materially and
adversely affect, its business or its ability to consummate the
transactions herein contemplated;

(g) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Quest Portfolio
as of October 31, 1994, and April 30, 1995 examined by Price Waterhouse
LLP (copies of which have been furnished to the Oppenheimer Fund) fairly
present, in all material respects, the Quest Portfolio's financial
condition as of such dates, its results of operations for such periods and
changes in its net assets for such periods in conformity with generally
accepted accounting principles, and as of such dates there were no known
liabilities of the Quest Portfolio (contingent or otherwise) not disclosed
therein that would be required in conformity with generally accepted
accounting principles to be disclosed therein. All liabilities
(contingent and otherwise) as of the Closing Date known to the Quest
Portfolio will be set forth on the unaudited Statement of Assets and
Liabilities referred to in paragraph 1.3.

(h) Since the date of the most recent audited financial statements,
there has not been any material adverse change in the Quest Portfolio's
financial condition, assets, liabilities or business, other than changes
occurring in the ordinary course of business, or any incurrence by the
Quest Portfolio of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed in writing
to and acknowledged by the Oppenheimer Fund prior to the date of this
Agreement and prior to the Closing Date. All liabilities of the Quest
Portfolio (contingent and otherwise) are reflected in the unaudited
statement described in paragraph 1.3 above. For the purpose of this
subparagraph (h), neither a decline in the Quest Portfolio's net asset
value per share nor a decrease in the Quest Portfolio's size due to
redemptions by Quest Portfolio shareholders shall constitute a material
adverse change;

(i) At the Closing Date, all federal and other tax returns and
reports of the Quest Portfolio required by law to be filed on or before
the Closing Date shall have been filed, there are no claims, levies,
liabilities or amounts due for corporate, excise, income or other federal,
state or local taxes outstanding or threatened against Quest Portfolio
(other than those reflected on its most recent financial statements) and
to the best of Quest For Value's knowledge there are no facts that might
form the basis for such proceedings, no such return is currently under
audit and no assessment has been asserted with respect to any such return;

(j) For each taxable year since its inception, the Quest Portfolio
has met all the requirements of Subchapter M of the Code for qualification
and treatment as a "regulated investment company" as defined therein and
will be in compliance with said requirements at and as of the Closing
Date;

(k) All issued and outstanding shares of each class of the Quest
Portfolio are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof. All such shares of each class will,
at the time of Closing, be held by the persons and in the amounts set
forth in the list of shareholders submitted to the Oppenheimer Fund
pursuant to paragraph 3.4. The Quest Portfolio does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of
its shares of any class, nor is there outstanding any security convertible
into any of its shares of any class except for class B shares of the Quest
Portfolio which convert into class A shares of the Quest Portfolio as
described in the current prospectus of the Quest Portfolio.

(l) At the Closing Date, the Quest Portfolio will have title to the
Quest Portfolio Assets, subject to no liens, security interests or other
encumbrances, and full right, power and authority to assign, deliver and
otherwise transfer the Quest Portfolio Assets hereunder, and upon delivery
and payment for the Quest Portfolio Assets, the Oppenheimer Fund will
acquire title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act;

(m) Quest For Value has the power to enter into this Agreement and
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement will have been duly authorized prior to the
Closing Date by all necessary action on the part of Quest For Value, and
subject to the approval of Quest Portfolio's shareholders, this Agreement
constitutes a valid and binding obligation of Quest For Value, enforceable
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors rights and to general equity principles. No other
consents, authorizations or approvals are necessary in connection with the
performance of this Agreement.

(n) On the effective date of the Registration Statement, at the time
of the meeting of Quest Portfolio's shareholders and on the Closing Date,
the Proxy Materials (exclusive of the currently effective Oppenheimer Fund
prospectus and statement of additional information incorporated therein)
will (i) comply in all material respects with the provisions of the 1933
Act, the Securities Exchange Act of 1934 ("1934 Act") and the 1940 Act and
the regulations thereunder and (ii) not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statement therein, in light of the
circumstances under which such statements were made, not misleading. Any
other information furnished or to be furnished by Quest Portfolio for use
in the Registration Statement or in any other manner that may be necessary
in connection with the transactions contemplated hereby shall be accurate
and complete and shall comply in all material respects with applicable
federal securities and other laws and all regulations thereunder;

(o) Quest Portfolio will, on or prior to the Closing Date, declare
one or more dividends or other distributions to shareholders that,
together with all previous dividends and other distributions to
shareholders, shall have the effect of distributing to the shareholders
all of its investment company taxable income and net capital gain, if any,
through the Closing Date (computed without regard to any deduction for
dividends paid);

(p) Quest Portfolio has maintained or has caused to be maintained
on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section 31 of
the 1940 Act and the Rules thereunder;

(q) Quest Portfolio is not acquiring Oppenheimer Fund shares to be
issued hereunder for the purpose of making any distribution thereof other
than in accordance with the terms of this Agreement;

(r) As of the Closing Date no violation of applicable federal, state
and local statute, law or regulation, exists that individually, or in the
aggregate, would have a material adverse effect on the business or
operations of Quest Portfolio;

(s) As of the Closing Date the Quest Portfolio is in compliance with
its investment objective(s), policies and restrictions as described in its
current prospectus and statement of additional information;

(t) There are no unresolved or outstanding shareholder claims or
complaints related to Quest Portfolio and there will be no such claims or
complaints as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date;

(u) Except as previously disclosed to Oppenheimer Fund in writing,
and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such calculations
have been done in accordance with the provisions of Rule 2a-4 under the
1940 Act.

5.3 Quest Advisors represents and warrants to the Oppenheimer Fund
as follows:

(a) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date no violation of applicable federal, state and local
statute, law or regulation, exists that individually, or in the aggregate,
would have a material adverse effect on the business or operations of
Quest Portfolio.

(b) To the best knowledge of Quest Advisors after due inquiry,
assuming fulfillment of the conditions precedent to the consummation of
the Reorganization, Quest Portfolio has the right, power, legal capacity
and authority to enter into the Reorganization contemplated by this
Agreement.

(c) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date Quest Portfolio is in compliance with its investment
objective(s), policies and restrictions as described in its current
prospectus and statement of additional information.

(d) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date there are no outstanding breaches by Quest Portfolio
of any agreement, indenture, instrument, contract, lease or other
undertaking to which it is a party, or by which it is bound (other than
any breaches that individually or in the aggregate would not have a
material adverse effect on the Quest Portfolio).

(e) To the best knowledge of Quest Advisors upon due inquiry, there
are no unresolved or outstanding shareholder claims or inquiries related
to Quest Portfolio and there will be no such claims or inquiries as of
the Closing Date other than as disclosed by Quest Advisors in writing to
Oppenheimer Fund prior to the Closing Date.

(f) Quest Advisors is not aware of any threatened or pending
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body relating to the Quest
Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Quest Portfolio's
business or its ability to consummate the transactions herein
contemplated.

(g) Quest Advisors is not aware of any outstanding or threatened
private claims or litigation relating to Quest Portfolio. Quest Advisors
knows of no facts that might form the basis for such proceedings.

(h) Except as previously disclosed to Oppenheimer Fund in writing,
and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such calculations
have been done in accordance with the provisions of Rule 2a-4 under the
1940 Act.

(i) There are no claims, levies or liabilities for corporate,
excise, income or other federal, state or local taxes outstanding or
threatened against Quest Portfolio, other than those reflected in its most
recent audited financial statements. Quest Advisors knows of no facts
that might form the basis for such proceedings.

(j) To the best knowledge of Quest Advisors after due inquiry, there
have been no material adverse changes in Quest Portfolio's financial
condition, assets, liabilities or business, other than those reflected in
its most recent audited financial statements and all liabilities of Quest
Portfolio (contingent and otherwise) known to Quest Advisors have been
reported in writing to and accepted by Oppenheimer Fund prior to the
Closing Date. A reduction in net assets due to shareowner redemptions
will not be deemed to be a material adverse change.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE QUEST PORTFOLIO

The obligations of Quest Portfolio to consummate the transactions
provided for herein shall be subject, at its election, to the performance
by Oppenheimer Fund of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:

6.1 All representations and warranties of Oppenheimer Fund contained
in this Agreement shall be true and correct in all material respects as
of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.

6.2 Oppenheimer Fund shall have delivered to Quest Portfolio a
certificate executed in Oppenheimer Fund's name by Oppenheimer Fund's
President, Vice President or Secretary and, Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to Quest Portfolio and dated
as of the Closing Date, to the effect that the representations and
warranties of Oppenheimer Fund made in this Agreement are true and correct
at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters
as Quest Portfolio shall reasonably request;

6.3 Quest Portfolio shall have received a favorable opinion from
Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to the Oppenheimer
Fund, dated as of the Closing Date, in a form reasonably satisfactory to
Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to Quest Portfolio,
covering the following points:

That (a) Oppenheimer Fund is a an unincorporated voluntary
association duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, and has the
power to own all of its properties and assets and to carry on its
business as presently conducted (Massachusetts counsel may be relied
upon in delivering such opinion); (b) Oppenheimer Fund is a duly
registered, open-end, management investment company and its
registration with the Commission as an investment company under the
1940 Act is in full force and effect; (c) this Agreement has been
duly authorized, executed and delivered by the Oppenheimer Fund and
assuming due authorization, execution and delivery of this Agreement
by Quest Portfolio, is a valid and binding obligation of Oppenheimer
Fund enforceable against Oppenheimer Fund in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) Oppenheimer
Fund shares to be issued to Quest Portfolio shareholders as provided
by this Agreement are duly authorized and upon delivery of such
shares to Quest Portfolio will be validly issued and outstanding and
fully paid and non-assessable (except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund
under "How the Fund is Managed - Organization and History") and no
shareholder of Oppenheimer Fund has any preemptive rights to
subscription or purchase in respect thereof (Massachusetts counsel
may be relied upon in delivering such opinion); (e) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Oppenheimer Fund's
Declaration of Trust and By-Laws or any provision of any material
agreement (known to such counsel) to which Oppenheimer Fund is a
party or by which it is bound or, to the knowledge of such counsel,
result in the acceleration of any material obligation or the
imposition of any material penalty under any agreement, judgment or
decree to which Oppenheimer Fund is a party or by which it is bound;
(f) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the
United States or any state is required for the consummation by
Oppenheimer Fund of the transactions contemplated herein, except such
as have been obtained under the 1933 Act , the 1934 Act and the 1940
Act and such as may be required under state securities laws; (g) only
insofar as they relate to Oppenheimer Fund, the descriptions in the
Proxy Materials of statutes, legal and governmental proceedings and
contracts and other documents, if any, are accurate and fairly
present the information required to be shown; (h) such counsel does
not know of any legal or governmental proceedings, only insofar as
they relate to Oppenheimer Fund, existing on or before the date of
mailing of the Proxy Materials or the Closing Date that are required
to be described in the Registration Statement or in any documents
that are required to be filed as exhibits to the Registration
Statement that are not described as required; and (i) to the best
knowledge of such counsel, no material litigation or administrative
proceedings or investigation of or before any court or governmental
body is presently pending or overtly threatened as to Oppenheimer
Fund or any of its properties or assets and Oppenheimer Fund is not
a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and
adversely affects its business, other than as previously disclosed
in the Registration Statement.

6.4 All proceedings taken by Oppenheimer Fund in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to Quest Portfolio and
its counsel, Gordon Altman Butowsky Weitzen Shalov & Wein.

6.5 As of the Closing Date, there shall be no material change in the
investment objective, policies and restrictions nor any increase in the
investment management fees, fees payable pursuant to Oppenheimer Fund's
12b-1 plans of distribution or sales loads of Oppenheimer Fund from those
described in the Prospectus and Statement of Additional Information of
Oppenheimer Fund dated May 30, 1995 as supplemented July 14, 1995, except
as may have been approved by shareholders of the Oppenheimer Fund.

6.6 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND

The obligations of Oppenheimer Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance
by Quest Portfolio of all the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following
conditions:

7.1 All representations and warranties of Quest For Value, on behalf
of Quest Portfolio, and Quest Advisors contained in this Agreement shall
be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date;

7.2 Quest Portfolio shall have delivered to Oppenheimer Fund a
statement of Quest Portfolio Assets and its liabilities, together with a
list of Quest Portfolio's securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax
purposes, as of the Closing Date, certified by the Treasurer of Quest
Portfolio;

7.3 Quest Portfolio shall have delivered to Oppenheimer Fund at the
Closing a letter from Price Waterhouse LLP dated the Closing Date stating
that (a) such firm has performed a limited review of the federal and state
income tax returns of Quest Portfolio for each of the last three taxable
years and, based on such limited review, nothing came to their attention
that caused them to believe that such returns did not properly reflect,
in all material aspects, the federal and state income tax liabilities of
Quest Portfolio for the periods covered thereby, (b) for the period
___________, 199__ to and including the Closing Date, such firm has
performed a limited review (based on unaudited financial data) to
ascertain the amount of applicable federal, state and local taxes and has
determined that same either have been paid or reserves have been
established for payment of such taxes, and, based on such limited review,
nothing came to their attention that caused them to believe that the taxes
paid or reserves set aside for payment of such taxes were not adequate in
all material respects for the satisfaction of all federal, state and local
tax liabilities for the period from ___________, 199___ to and including
the Closing Date and (c) based on such limited reviews, nothing came to
their attention that caused them to believe that Quest Portfolio would not
qualify as a regulated investment company for federal income tax purposes
for any such year or period;

7.4 Quest Portfolio shall have delivered to Oppenheimer Fund at the
Closing a certificate executed in Quest For Value's name by the President,
Vice President or Secretary and the Treasurer or Assistant Treasurer of
Quest For Value, in form and substance satisfactory to Oppenheimer Fund
and dated as of the Closing Date, to the effect that the representations
and warranties of Quest for Value, on behalf of Quest Portfolio, made in
this Agreement are true and correct at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as Oppenheimer Fund shall
reasonably request. Such a certificate shall also be delivered to
Oppenheimer Fund as executed by Quest Advisors with respect to its
representations and warranties made in paragraph 5.3.

7.5 Oppenheimer Fund shall have received at the Closing a favorable
opinion dated as of the Closing Date of Gordon Altman Butowsky Weitzen
Shalov & Wein, counsel to Quest For Value, in a form satisfactory to
Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to Oppenheimer Fund
covering the following points:

That (a) Quest Portfolio is a series of Quest For Value, an
unincorporated voluntary association, duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the power to own all of its properties and
assets and to carry on its business as presently conducted
(Massachusetts counsel may be relied upon in delivering such
opinion); (b) Quest For Value is registered as an investment company
under the 1940 Act, and its registration with the Commission as an
investment company under the 1940 Act is in full force and effect;
(c) this Agreement has been duly authorized, executed and delivered
by Quest For Value on behalf of Quest Portfolio and, assuming due
authorization, execution and delivery of this Agreement by
Oppenheimer Fund, is a valid and binding obligation of Quest For
Value enforceable against Quest For Value in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) the execution
and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Quest For Value's
Declaration of Trust or By-Laws or any provision of any material
agreement (known to such counsel) to which Quest For Value is a party
or by which it is bound or, to the knowledge of such counsel, result
in the acceleration of any material obligation or the imposition of
any material penalty under any agreement, judgment or decree to which
Quest For Value is a party or by which it is bound; (e) to the
knowledge of such counsel, no consent, approval, authorization or
order of any court or governmental authority of the United States or
any state is required for the consummation by Quest For Value of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities laws; (f) only insofar as they relate
to Quest For Value, the descriptions in the Proxy Materials of
statutes, legal and governmental proceedings and contracts and other
documents, if any, are accurate and fairly present the information
required to be shown; (g) such counsel does not know of any legal or
governmental proceedings, only insofar as they relate to Quest For
Value, existing on or before the date of mailing the Proxy Materials
or the Closing Date that are required to be described in the
Registration Statement or in any documents that are required to be
filed as exhibits to the Registration Statement that are not
described as required; and (h) to the best knowledge of such counsel,
no material litigation or administrative proceedings or investigation
of or before any court or governmental body is presently pending or
overtly threatened as to Quest For Value or any of its properties or
assets and Quest Portfolio is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business,
other than as previously disclosed in the Registration Statement.

7.6 Between the date hereof and the Closing Date, Quest For Value
shall provide Oppenheimer Fund and its representatives reasonable access
during regular business hours and upon reasonable notice to the books and
records of or relating to Quest Portfolio, including without limitation
the books and records of Quest For Value, as Oppenheimer Fund may
reasonably request. All such information obtained by Oppenheimer Fund
and its representatives shall be held in confidence and may not be used
for any purpose other than in connection with the transaction contemplated
hereby. In the event that the transaction contemplated by this Agreement
is not consummated, Oppenheimer Fund and its representatives will
promptly return to Quest For Value all documents and copies thereof with
respect to Quest Portfolio obtained from Quest For Value during the course
of such investigation.

7.7 Quest For Value, on behalf of Quest Portfolio shall have
delivered to Oppenheimer Fund, pursuant to paragraph 5.2(g), copies of the
most recent financial statements of Quest Portfolio certified by Price
Waterhouse LLP.

7.8 On the Closing Date, the Quest Portfolio Assets shall include
no assets that Oppenheimer Fund, by reason of charter limitations or
otherwise, may not properly acquire.

7.9 All proceedings taken by Quest For Value and Quest Portfolio in
connection with the transactions contemplated by the Agreement and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to Oppenheimer Fund and its counsel, Gordon Altman Butowsky
Weitzen Shalov & Wein.

7.10 The stated liabilities, expenses, costs, charges and reserves
reflected on the unaudited Statement of Assets and Liabilities of the
Quest Portfolio referred to in paragraph 1.3 shall have been agreed to by
the Oppenheimer Fund.

7.11 The Registration Statement, including the Proxy Materials filed
as a part thereof, shall have been approved by the Board of Trustees of
the Oppenheimer Fund.

7.12 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND AND
QUEST PORTFOLIO

The obligations of Quest Portfolio and Oppenheimer Fund hereunder are
each subject to the further conditions that on or before the Closing Date:

8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the outstanding
shares of Quest Portfolio and certified copies of the resolutions
evidencing such approval shall have been delivered to Oppenheimer Fund;

8.2 On the Closing Date, no action, suit or other proceeding shall
be pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;

8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the Commission and of state Blue Sky and securities authorities,
including "no-action" positions or any exemptive orders from such federal
and state authorities) deemed necessary by Oppenheimer Fund or Quest For
Value on behalf of Quest Portfolio to permit consummation, in all material
respects, of the transactions contemplated herein shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve risk of a material adverse effect on the assets or
properties of Oppenheimer Fund or Quest Portfolio.

8.4 The Registration Statement on Form N-14 shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act;

8.5 Quest Portfolio shall have declared and paid a dividend or
dividends and/or other distributions that, together with all previous such
dividends or distributions, shall have the effect of distributing to the
Quest Portfolio Shareholders all of Quest Portfolio's investment company
taxable income (computed without regard to any deduction for dividends
paid) and all of its net capital gain (after reduction for any capital
loss carry-forward and computed without regard to any deduction for
dividends paid) for all taxable years ending on or before the Closing
Date; and

8.6 The parties shall have received a favorable opinion from Price
Waterhouse LLP (based on such representations as such firm shall
reasonably request), addressed to Oppenheimer Fund and Quest Portfolio,
which opinion may be relied upon by the shareholders of Oppenheimer Fund
and Quest Portfolio, substantially to the effect that, for federal income
tax purposes:

(a) The transfer of substantially all of Quest Portfolio's assets
in exchange for Oppenheimer Fund Shares and the assumption by
Oppenheimer Fund of certain identified liabilities of Quest Portfolio
followed by the distribution by Quest Portfolio of Oppenheimer Fund
Shares to the Quest Portfolio Shareholders in exchange for their
Quest Portfolio shares will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code and Quest Portfolio and
Oppenheimer Fund will each be a "party to the reorganization" within
the meaning of Section 368(b) of the Code;

(b) No gain or loss will be recognized by Oppenheimer Fund upon the
receipt of the assets of Quest Portfolio solely in exchange for
Oppenheimer Fund Shares and the assumption by Oppenheimer Fund of the
identified liabilities of Quest Portfolio;

(c) No gain or loss will be recognized by Quest Portfolio or Quest
For Value upon the transfer of the assets of Quest Portfolio to
Oppenheimer Fund in exchange for Oppenheimer Fund Shares and the
assumption by Oppenheimer Fund of the identified liabilities or upon
the distribution of Oppenheimer Fund Shares to the Quest Portfolio
Shareholders in exchange for the Quest Portfolio shares;

(d) No gain or loss will be recognized by the Quest Portfolio
Shareholders upon the exchange of the Quest Portfolio shares for the
Oppenheimer Fund Shares;

(e) The aggregate tax basis for Oppenheimer Fund Shares received by
each Quest Portfolio Shareholder pursuant to the reorganization will
be the same as the aggregate tax basis of the Quest Portfolio Shares
held by each such Quest Portfolio Shareholder immediately prior to
the reorganization;

(f) The holding period of Oppenheimer Fund Shares to be received by
each Quest Portfolio Shareholder will include the period during which
the Quest Portfolio Shares surrendered in exchange therefor were held
(provided such Quest Portfolio Shares were held as capital assets on
the date of the Reorganization);

(g) The tax basis of the assets of Quest Portfolio acquired by
Oppenheimer Fund will be the same as the tax basis of such assets to
Quest Portfolio immediately prior to the Reorganization; and

(h) The holding period of the assets of Quest Portfolio in the hands
of Oppenheimer Fund will include the period during which those
assets were held by Quest Portfolio.

Notwithstanding anything herein to the contrary, neither Oppenheimer Fund
nor Quest Portfolio may waive the material conditions set forth in this
paragraph 8.6 although the actual wording of such opinion may differ to
the extent agreed to by Oppenheimer Fund and Quest Portfolio.

9. BROKERAGE FEES AND EXPENSES

9.1 Oppenheimer Fund and Quest For Value on behalf of Quest
Portfolio each represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.

9.2 (a) Oppenheimer Fund shall bear its expenses incurred in
connection with entering into and carrying out the provisions of this
Agreement, including legal, accounting and Commission registration fees
and Blue Sky expenses. Quest Advisors (or a party other than Oppenheimer
Fund) shall bear Quest Portfolio's expenses incurred in connection with
entering into and carrying out the provisions of this Agreement, including
legal and accounting fees, printing, filing and proxy solicitation
expenses and portfolio transfer taxes (if any) incurred in connection with
the consummation of the transactions contemplated herein.

(b) In the event the transactions contemplated herein are not
consummated by reason of Quest Portfolio's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Quest Portfolio's obligations specified in
this Agreement), Quest Advisor's (or a party other than Oppenheimer Fund)
only obligation hereunder shall be to reimburse Oppenheimer Fund for all
reasonable out-of-pocket fees and expenses incurred by Oppenheimer Fund
in connection with those transactions, including legal, accounting and
filing fees.

(c) In the event the transactions contemplated herein are not
consummated by reason of Oppenheimer Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Oppenheimer Fund's obligations specified in
the Agreement), Oppenheimer Fund's only obligations hereunder shall be to
reimburse Quest Portfolio for all reasonable out-of-pocket fees and
expenses incurred by Quest Portfolio in connection with those
transactions, including legal, accounting and filing fees, and to comply
with the provisions of paragraph 7.6 hereof.

10. ENTIRE AGREEMENT: SURVIVAL OF WARRANTIES

10.1 Oppenheimer Fund, Quest For Value, on behalf of Quest Portfolio
and Quest Advisors agree that no party has made any representation,
warranty or covenant not set forth herein and that this Agreement
constitutes the entire agreement between the parties.

10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
herein.

11. TERMINATION

11.1 This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

(a) by the mutual written consent of Quest For Value, on behalf of
Quest Portfolio, and Oppenheimer Fund;

(b) by either Oppenheimer Fund or Quest For Value, on behalf of
Quest Portfolio, by notice to the other, without liability to the
terminating party on account of such termination (providing the
termination party is not otherwise in default or in breach of this
Agreement) if the Closing shall not have occurred on or before December
31, 1995, or if later, two business days after the date of any Quest
Portfolio shareowner's meeting called for the purpose of approving the
Agreement which was convened prior to ___________, 199___ but adjourned
to a date after ____________ 199___; or

(c) by either Oppenheimer Fund or Quest For Value, on behalf of
Quest Portfolio, in writing without liability to the terminating party on
account of such termination (provided the terminating party is not
otherwise in material default or breach of the Agreement), if (i) the
other party shall fail to perform in any material respect its agreements
contained herein required to be performed on or prior to the Closing Date,
(ii) Quest Advisors, Quest For Value or the Quest Portfolio, or the
Oppenheimer Fund, respectively, materially breaches or shall have breached
any of its representations, warranties or covenants contained herein,
(iii) the Quest Portfolio Shareholders fail to approve the Agreement, (iv)
any other condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears that
it will not or cannot be met or (v) the acquisition contemplated by that
certain Acquisition Agreement (the "Acquisition Agreement") dated August
17, 1995 between Oppenheimer Management Corporation, Quest Advisors, Quest
for Value Distributors and Oppenheimer Capital is not consummated.

11.2 (a) Termination of this Agreement pursuant to paragraphs
11.1(a) or (b) shall terminate all obligations of the parties hereunder
(other than Oppenheimer Fund's obligations under paragraph 7.6) and there
shall be no liability for damages on the part of the Oppenheimer Fund,
Quest Portfolio or Quest Advisors or the trustees, directors or officers
of Oppenheimer Fund, Quest Portfolio or Quest Advisors, to any other party
or its trustees, directors or officers.

(b) Termination of this Agreement pursuant to paragraph 11.1(c)
shall terminate all obligations of the parties hereunder (other than
Oppenheimer Fund's obligations under paragraph 7.6) and there shall be no
liability for damages on the part of Oppenheimer Fund, Quest Portfolio or
Quest Advisors or the trustees, directors or officers of Oppenheimer Fund,
Quest Portfolio or Quest Advisors, to any other party or its trustees,
directors or officers, except that any party in breach of this Agreement
(or, as to a termination pursuant to paragraph 11.1(c)(v), in breach of
the Acquisition Agreement) shall, upon demand, reimburse the non-breaching
party or parties for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees. For the purposes
of this paragraph 11.2(b), the non-fulfillment of the condition set forth
in paragraph 8.1 shall not be deemed a breach entitling a party to
reimbursement of expenses and fees.

12. AMENDMENTS

This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of Quest For Value, Oppenheimer Fund and Quest Advisors;
provided, however, that following the meeting of Quest Portfolio's
shareholders called by Quest Portfolio pursuant to paragraph 4,2, no such
amendment may have the effect of changing the provisions for determining
the number of Oppenheimer Fund Shares to be issued to the Quest Portfolio
Shareholders under this Agreement to the detriment of such Shareholders
without their further approval.

13. INDEMNIFICATION

13.1 Oppenheimer Fund will indemnify and hold harmless, Quest For
Value, Quest Advisors, their trustees, directors, officers and
shareholders against any and all claims to the extent such claims are
based upon, arise out of or relate to any untruthful or inaccurate
representations made by Oppenheimer Fund in this Agreement or any breach
by Oppenheimer Fund of any warranty or any failure to perform or comply
with any of its obligations, covenants, conditions or agreements set forth
in this Agreement, including those set forth in paragraph 1.3.

13.2 Quest Advisors will indemnify and hold harmless Quest For Value,
Oppenheimer Fund and Oppenheimer Fund's trustees, officers and
shareholders against any and all claims to the extent such claims are
based upon, arise out of or relate to any untruthful or inaccurate
representation made by Quest For Value on behalf of Quest Portfolio or
Quest Advisors in this Agreement or any breach by Quest Portfolio or Quest
Advisors of any warranty or any failure by Quest Portfolio to perform or
comply with any of its obligations, covenants, conditions or agreements
set forth in this Agreement.

13.3 As used in this section 13, the word "claim" means any and all
liabilities, obligations, losses, damages, deficiencies, demands, claims,
penalties, assessments, judgments, actions, proceedings and suits of
whatever kind and nature and all costs and expenses (including, without
limitation, reasonable attorneys' fees).

13.4 Promptly after the receipt by any party (the "Indemnified
Party"), of notice of any claim by a third party which may give rise to
indemnification hereunder, the Indemnified Party shall notify the party
against whom a claim for indemnification may be made hereunder (the
"Indemnifying Party"), in reasonable detail of the nature and amount of
the claim. The Indemnifying Party shall be entitled to assume, at its
sole cost and expense (unless it is subsequently determined that the
Indemnifying Party did not have the obligation to indemnify the
Indemnified Party under such circumstances), and shall have sole control
of the defense and settlement of such action or claim; provided, however,
that:

(a) the Indemnified Party shall be entitled to participate in the
defense of such claim and, in connection therewith, to employ counsel at
its own expense; and

(b) without the prior written consent of the Indemnified Party which
shall not be unreasonably withheld, the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement that
requires any action other than the payment of money.

In the event the Indemnifying Party elects to assume control of the
defense of any such action in accordance with the foregoing provisions,
(I) the Indemnifying Party shall not be liable to Indemnified Party for
any legal fees, costs and expenses incurred by the Indemnified Party in
connection with the defense thereof arising after the date the
Indemnifying Party elects to assume control of such defense and (ii)
Indemnified Party shall fully cooperate with the Indemnifying Party in
such defense. If the Indemnifying Party does not assume control of the
defense of such claim in accordance with the foregoing provisions, the
Indemnified Party shall have the right to defend such claim, in which case
the Indemnifying Party shall pay all reasonable costs and expenses of
such defense plus interest on the cost of defense from the date paid at
a rate equal to the prime commercial rate of interest as in effect from
time to time at Citibank, N.A. The Indemnified Party shall conduct such
defense in good faith and shall have the right to settle the matter with
the prior written consent of the Indemnifying Party which shall not be
reasonably withheld.

14. NOTICES

Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail or overnight express courier
addressed to Oppenheimer Fund at Two World Trade Center, 34th Floor, New
York, New York 10048-0203 Attention: Andrew J. Donohue with a copy to
Ronald Feiman, Esq. at Gordon Altman Butowsky Weitzen Shalov & Wein, 114
West 47th Street, New York, New York 10036; to Quest For Value at One
World Financial Center, New York, New York 10281 Attention: Thomas Duggan,
with a copy to Stuart Strauss, Esq. at Gordon Altman Butowsky Weitzen
Shalov & Wein, 114 West 47th Street, New York, New York 10036.

15. HEADINGS: COUNTERPARTS: GOVERNING LAW: ASSIGNMENT, LIMITATION OF
LIABILITY

15.1 The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

15.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.

15.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
parties. Except as provided in the following sentence, nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or
by reason of this Agreement. A shareholder of Quest Portfolio who becomes
a shareholder of Oppenheimer Fund on the Closing Date and continues to be
a shareholder of Oppenheimer Fund, shall be entitled to the benefits and
may enforce the provisions of paragraph 4.9 hereof except insofar as
paragraph 4.9 relates to the election of trustees; and the persons
designated in paragraphs 13.1 and 13.2 hereof shall be entitled to the
benefits and may enforce the provisions of section 13 hereof.

15.5 The obligations and liabilities of Oppenheimer Fund hereunder
are solely those of Oppenheimer Fund. It is expressly agreed that
shareholders, trustees, nominees, officers, agents or employees of
Oppenheimer Fund shall not be personally liable hereunder. The execution
and delivery of this Agreement have been authorized by the trustees of
Oppenheimer Fund and signed by authorized by the officers of Oppenheimer
Fund acting as such, and neither such authorization by such trustees nor
such execution and delivery by such officers shall be deemed to have been
made by any of the, individually or to impose any liability on any of them
personally.

15.6 The obligations and liabilities of the Quests For Value on
behalf of Quest Portfolio hereunder are solely those of the Quest
Portfolio and not of any other series of Quest For Value. It is expressly
agreed that shareholders, trustees, nominees, officers, agents, or
employees of Quest For Value and Quest Portfolio shall not be personally
liable hereunder. The execution and delivery of this Agreement have been
authorized by the trustees of Quest For Value and signed by authorized
officers of Quest For Value acting as such, and neither such authorization
by such trustees nor such execution and delivery by such officers shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally.

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND

By: ________________________________

QUEST FOR VALUE FAMILY OF FUNDS

By: ____________________________

QUEST FOR VALUE ADVISORS

By: ____________________________

LEGAG\QUEST.CTE

<PAGE>

EXHIBIT B

The aggregate purchase price for the Purchased Assets and Assumed
Liabilities will be an amount equal to the sum of (i) the Initial Purchase
Payment (as hereinafter defined) payable in cash at the Acquisition
Closing, (ii) the aggregate amount of all unamortized prepaid commissions
as of the business day immediately preceding the Acquisition Closing which
relate to the Acquired Funds (excluding those with respect to Citibank,
N.A.) payable in cash at the Acquisition Closing, (iii) the amount payable
by OMC in respect of the right, title and interest of Citibank, N.A. to
certain commissions, (iv) the Deferred Purchase Payment (as hereinafter
defined) and (v) the aggregate amount of the Assumed Liabilities.

The "Initial Purchase Payment" shall be an amount equal to the sum of (x)
225% of the Annualized Fee Amount (as hereinafter defined) of each
Reorganized Fund and (y) 270% of the Annualized Fee Amount of each
Continuing Fund (excluding the Quest for Value Officers Fund). The
"Annualized Fee Amount" of an Acquired Fund shall equal the product of (i)
such Acquired Fund's Closing Net Assets (as hereinafter defined) and (ii)
the annual advisory fee payable to QVA by such Acquired Fund at the rate
indicated in the most recent prospectus for such Acquired Fund at the
Acquisition Closing (plus any applicable annual administrative fee)
"Closing Net Assets" for an Acquired Fund shall mean the aggregate net
asset value of such Acquired Fund as of the close of business on the last
business date preceding the Acquisition Closing.

The "Deferred Purchase Payment" shall be an amount equal to the aggregate
amounts determined for all Reorganized Funds pursuant to the following
formula: the Closing Payment (as hereinafter defined) times the
Applicable Percentage (as hereinafter defined). The "Closing Payment"
shall be the aggregate amount calculated for all Reorganized Funds
pursuant to clause (x) of the Initial Purchase Payment formula. The
"Applicable Percentage" shall be 100% if the Continuing Net Asset
Percentage (as hereinafter defined) is 75% or more, 0% if the Continuing
Net Asset Percentage is 50% or less and the percentage determined in
accordance with the following formula if the Continuing Net Asset
Percentage is between 75% and 50%: 100% - (4) (75% - Continuing Net
Asset Percentage). The "Continuing Net Asset Percentage" shall equal the
percentage obtained by dividing the Anniversary Net Assets (as hereinafter
defined) by the Closing Net Assets. The "Anniversary Net Assets" shall
mean the most recently determined aggregate net asset values of all
Reorganized Funds as of 8:00 p.m. on the first anniversary of the
Acquisition Closing of each account of the Reorganized Funds which are
eligible to be included in Anniversary Net Assets in accordance with the
principles set forth in the Acquisition Agreement.

MERGE\QFVF790.D

<PAGE>

Preliminary Copy
QUEST FOR VALUE FAMILY OF FUNDS
CALIFORNIA TAX-EXEMPT FUND

PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD NOVEMBER 3, 1995

The undersigned shareholder of California Tax-Exempt Fund (the "Fund"),
a series of Quest for Value Family of Funds (the "Trust"), does hereby
appoint _____________________, and each of them, as attorneys-in-fact and
proxies of the undersigned, with full power of substitution, to attend the
Special Meeting of Shareholders of the Fund to be held on November 3,
1995, at One World Financial Center, New York, New York 10281 on the 40th
Floor at ___ A.M., New York 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 on the Proposal specified 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, WHO 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.

Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.

The Proposal:

To approve an Agreement and Plan of Reorganization dated as of
_______, 1995 by and among Oppenheimer California Tax-Exempt Fund,
the Trust, on behalf of the Fund, and Quest for Value Advisors, and
the transactions contemplated thereby, including the transfer of
substantially all the assets of the Fund in exchange for Class A
shares of Oppenheimer California Tax-Exempt Fund and the assumption
by Oppenheimer California Tax-Exempt Fund of certain liabilities of
the Fund, the distribution of such shares to the shareholders of the
Fund in complete liquidation of the Fund, the cancellation of the
outstanding shares of the Fund.

FOR____ AGAINST____ ABSTAIN____

Dated:________________________, 1995
(Month) (Day)

______________________________
Signature(s)

Please read both sides of this ballot.

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.

MERGE\QFVF790.D

<PAGE>

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Supplement dated July 14, 1995 to the
Prospectus dated April 25, 1995

The following changes are made to the Prospectus:

1. The supplement dated April 25, 1995 to the Prospectus is replaced by
this supplement.

2. The first three paragraphs on the cover page of the Prospectus are
replaced with the following:

Oppenheimer California Tax-Exempt Fund is a mutual fund that
seeks as high a level of current interest income exempt from
Federal and California income taxes for individual investors as
is consistent with preservation of capital. Under normal market
conditions, the Fund invests at least 80% of its assets in
Municipal Securities and at least 65% of its total assets in
California Municipal Securities. However, in times of unstable
economic or market conditions, the Fund's investment manager may
deem it advisable to temporarily invest an unlimited amount of
the Fund's total assets in certain taxable instruments. The
Fund also uses "hedging" instruments, to seek to reduce the
risks of market fluctuations that affect the value of the
securities the Fund holds. You should carefully review the
risks associated with an investment in the Fund. Please refer
to "Investment Policies and Strategies" for more information
about the types of securities the Fund invests in and the risks
of investing in the Fund.

This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the April 25, 1995 Statement of
Additional Information. For a free copy, call Oppenheimer
Shareholder Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has
been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference (which means that
it is legally part of this Prospectus).

3. In "How to Buy Shares," the section entitled "Which Class of Shares
Should You Choose?" on page 22 is changed revising the final sentence of
the last paragraph of that section to read as follows:

The discussion below of the factors to consider in purchasing
a particular class of shares assumes that you will purchase only
one class of shares and not a combination of shares of different
classes.

4. In "Reduced Sales Charges for Class A Share Purchases" on page 27,
the first sentence of the section "Right of Accumulation" is changed to
read as follows:

To qualify for the lower sales charge rates that apply to larger
purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your
individual accounts, or jointly, or for trust or custodial
accounts on behalf of your children who are minors.

The first two sentences of the second paragraph of that section are
revised to read as follows:

Additionally, you can add together current purchases of
Class A and Class B shares of the Fund and other
OppenheimerFunds to reduce the sales charge rate that applies
to current purchases of Class A shares. You can also count Class
A and Class B shares of OppenheimerFunds you previously
purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold that investment in
one of the OppenheimerFunds.

5. The first sentence of the section entitled "Letter of Intent" on page
27 is revised to read as follows:

Under a Letter of Intent, if you purchase Class A shares or
Class A shares and Class B shares of the Fund and other
OppenheimerFunds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A
shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period.

6. In the section entitled "Waivers of Class A Sales Charges" on page
28, the following changes are made:

The first sentence of the first paragraph is replaced by a new
introductory paragraph set forth below and the list of circumstances
describing the sales charge waivers follows a new initial sentence:

-- Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is
an explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.

Waivers of Initial and Contingent Deferred Sales Charges
for Certain Purchasers. Class A shares purchased by the
following investors are not subject to any Class A sales
charges:

The introductory phrase preceding the list of sales charge waivers in the
second paragraph and subsection (c) of that paragraph are replaced by the
following:

Waivers of Initial and Contingent Deferred Sales Charges
in Certain Transactions. Class A shares issued or purchased in
the following transactions are not subject to Class A sales
charges:
. . . .

(c) shares purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund (other than
a fund managed by the Manager or any of its subsidiaries) on
which an initial sales charge or contingent deferred sales
charge was paid (this waiver also applies to shares purchased
by exchange of shares of Oppenheimer Money Market Fund, Inc.
that were purchased and paid for in this manner); this waiver
must be requested when the purchase order is placed for your
shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver.

The third paragraph of that section is revised to read as follows:

Waivers of the Class A Contingent Deferred Sales Charge.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value without sales
charge as described in the two sections above. It is also waived
if shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
- to make Automatic Withdrawal Plan payments that are
limited annually to no more than 12% of the original account
value; or
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder
Account Rules and Policies," below); or
- if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees to accept the dealer's
portion of the commission payable on the sale in installments
of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of
purchase).

7. The first paragraph of the section entitled "Waivers of Class B Sales
Charge" on page 30 is amended by replacing the introductory phrase of
that paragraph with the sentences below and adding a new section at the
end of that paragraph as follows:

-- Waivers of Class B Sales Charge. The Class B contingent
deferred sales charge will not be applied to shares purchased
in certain types of transactions nor will it apply to Class B
shares redeemed in certain circumstances as described below. The
reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.

Waivers for Redemptions of Shares in Certain Cases. The
Class B contingent deferred sales charge will be waived for
redemptions of shares in the following cases:

8. A new final paragraph is added to the section captioned "Distribution
and Service Plan for Class B Shares" on page 30 as follows:

The Fund's Board of Trustees has determined that it is in the
best interest of the Fund's shareholders to adopt a new
Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class
B shares and servicing accounts. Under the new plan, the
Distributor would be compensated with a fixed fee (1.00% per
annum of average annual net assets, which is the maximum rate
under the current Plan). Details about the proposed plan will
be contained in a proxy statement to be sent to the Fund's Class
B shareholders of record as of July 14, 1995, the record date
for the Class B shareholder meeting to vote on the proposed
plan.

9. In the section entitled "Reinvestment Privilege" on page 33, the
first three sentences are revised to read as follows:

If you redeem some or all of your Class A or B shares of the
Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other
OppenheimerFunds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an
initial sales charge and to Class A or B shares on which you
paid a contingent deferred sales charge when you redeemed them.

July 14, 1995 PS0790.002

<PAGE>

Oppenheimer California Tax-Exempt Fund

Prospectus dated April 25, 1995

Oppenheimer California Tax-Exempt Fund is a mutual fund that seeks as high
a level of current interest income exempt from Federal and California
income taxes for individual investors as is consistent with preservation
of capital. Under normal market conditions, the Fund invests at least 80%
of its assets in Municipal Securities and at least 65% of its total assets
in California Municipal Securities. However, in times of unstable
economic or market conditions, the Fund's investment manager may deem it
advisable to temporarily invest an unlimited amount of the Fund's total
assets in certain taxable instruments. The Fund also uses "hedging"
instruments, to seek to reduce the risks of market fluctuations that
affect the value of the securities the Fund holds. You should carefully
review the risks associated with an investment in the Fund. Please refer
to "Investment Policies and Strategies" for more information about the
types of securities the Fund invests in and the risks of investing in the
Fund.

The Fund offers two classes of shares: (1) Class A shares sold at a
public offering price that includes a front-end sales charge, and (2)
Class B shares, which are sold without a front-end sales charge, although
you may pay a sales charge when you redeem your shares, depending on how
long you hold them. Class B shares are also subject to an annual "asset-
based sales charge." Each class of shares bears different expenses. In
deciding which class of shares to buy, you should consider how much you
plan to purchase, how long you plan to keep your shares, and other factors
discussed in "How to Buy Shares" starting on page .

This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the April 25, 1995 Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference
(which means that it is legally part of this Prospectus).

Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank and are not insured by the F.D.I.C. or any other
agency, and involve investment risks including possible loss of the
principal amount invested.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>
Contents

ABOUT THE FUND

Expenses

Overview of the Fund

Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund

ABOUT YOUR ACCOUNT

How to Buy Shares
Class A Shares
Class B Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes

<PAGE>

ABOUT THE FUND

Expenses

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended December 31, 1994.

- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages through for an explanation of how and when these charges
apply.

Class A Class B
Shares Shares

Maximum Sales 4.75% None
Charge on Purchases
(as a % of offering price)

Sales Charge on None None
Reinvested Dividends

Deferred Sales Charge None(1) 5% in the first year,
(as a % of the lower of the declining to 1% in
original purchase price or the sixth year and
redemption proceeds) eliminated thereafter

Exchange Fee None None

(1)
If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Class A Shares,"
below.

- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal expenses. Those
expenses are detailed in the Fund's Financial Statements in the Statement
of Additional Information.

The numbers in the chart below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The 12b-1 Distribution Plan Fees for
Class A shares are Service Plan Fees (which are a maximum of 0.25% of
average annual net assets of that class), and for Class B shares the 12b-1
Fees are the Distribution and Service Plan Fees. The service fee is a
maximum of 0.25% and the asset-based sales charge is 0.75%. These plans
are described in greater detail in "How to Buy Shares."

The actual expenses for each class of shares in future years may be
more or less than the number in the chart, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares.
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
<S> <C> <C>
Management Fees 0.59 % 0.59%

12b-1 Service and/or 0.25% 1.00%
Distribution Plan Fees

Other Expenses 0.12% 0.14%
Total Fund Operating Expenses 0.96% 1.73%
</TABLE>

- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses chart above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:

1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------------------
Class A Shares $57 $77 $98 $160
Class B Shares $68 $84 $114 $165

If you did not redeem your investment, it would incur the following
expenses:

1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------------------
Class A Shares $57 $77 $98 $160
Class B Shares $18 $54 $94 $165

(1) The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Long-term Class B
shareholders could pay the economic equivalent of more than the maximum
front-end sales charge allowed under applicable regulations, because
of the effect of the asset-based sales charge and contingent deferred
sales charge. The automatic conversion of Class B shares to Class A
shares is designed to minimize the likelihood that this will occur.
Please refer to "How to Buy Shares - Class B Shares" for more
information.

These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.

Overview of the Fund

Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing. Keep the Prospectus for
reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.

- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek as high a level of current interest income exempt
from Federal and California income taxes for individual investors as is
consistent with preservation of capital.

- What Does the Fund Invest In? To seek its objective, the Fund
primarily invests in municipal securities the interest of which is exempt
from Federal and California individual income tax. The Fund may also use
hedging instruments and certain derivative investments to try to manage
investment risks. These investments are more fully explained in
"Investment Objective and Policies" starting on page __.

- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation, which (including a
subsidiary) advises investment company portfolios currently having over
$30 billion in assets. The Fund's portfolio manager is Robert E.
Patterson. He is primarily responsible for the selection of the Fund's
securities. The Manager is paid an advisory fee by the Fund, based on its
assets. The Fund's Board of Trustees, elected by shareholders, oversees
the investment adviser and the portfolio manager. Please refer to "How
the Fund is Managed," starting on page ___ for more information about the
Manager and its fees.

- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in municipal bonds are subject to changes
in their value from a number of factors such as changes in general bond
market movements, the change in value of particular bonds because of an
event affecting the issuer, or changes in interest rates that can affect
bond prices. These changes affect the value of the Fund's investments and
its price per share. The fact that the Fund concentrates it investments
in California Municipal Securities or the Fund's ability to invest in a
single issuer or limited number of issuers entails greater risk than an
investment in a diversified investment company. In the OppenheimerFunds
spectrum, the Fund is generally more conservative than high yield bond
funds, but more aggressive than money market funds. While the Manager
tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's objectives and your shares may be worth
more or less than their original cost when you redeem them. Please refer
to "Investment Objective and Policies" starting on page for a more
complete discussion.

- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using
an Automatic Investment Plan under AccountLink. Please refer to "How To
Buy Shares" on page ___ for more details.

- Will I Pay a Sales Charge to Buy Shares? The Fund has two classes
of shares. Class A shares are offered with a front-end sales charge,
starting at 4.75%, and reduced for larger purchases. Class B shares are
offered without a front-end sales charge, but may be subject to a
contingent deferred sales charge (starting at 5% and declining as shares
are held longer) if redeemed within 6 years of purchase. There is also
an annual asset-based sales charge on Class B shares. Please review "How
To Buy Shares" starting on page ___ for more details, including a
discussion about factors you and your financial advisor should consider
in determining which class may be appropriate for you.

- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page ___.

- How Has the Fund Performed? The Fund measures its performance by
quoting its yield, average annual total return and cumulative total
return, which measure historical performance. Those yields and returns
can be compared to the yields and returns (over similar periods) of other
funds. Of course, other funds may have different objectives, investments,
and levels of risk. The Fund's performance can also be compared to broad
market indices, which we have done on page ___. Please remember that past
performance does not guarantee future results.

Financial Highlights

The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios
and other data based on the Fund's average net assets. This information
has been audited by KPMG Peat Marwick LLP, the Fund's independent
auditors, whose report on the Fund's financial statements for the fiscal
year ended December 31, 1994, is included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

CLASS A
------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.97 $ 10.35 $ 10.22 $ 9.86 $ 9.94 $ 9.58

Income (loss) from investment operations:
Net investment income .60 .62 .61 .66 .67 .71
Net realized and unrealized gain
(loss) on investments (1.51) .72 .20 .38 (.07) .37
------- ------- ------- ------- ------ -------
Total income (loss) from investment
operations (.91) 1.34 .81 1.04 .60 1.08

Dividends and distributions to shareholders:
Dividends from net investment income (.61) (.65) (.60) (.62) (.68) (.70)
Distributions from net realized
gain on investments -- (.07) (.08) (.06) -- (.02)
------- ------- ------- ------- ------ -------
Total dividends and distributions
to shareholders (.61) (.72) (.68) (.68) (.68) (.72)

Net asset value, end of period $ 9.45 $ 10.97 $ 10.35 $ 10.22 $ 9.86 $ 9.94
======= ======= ======= =======
====== =======
TOTAL RETURN, AT NET ASSET VALUE(3) (8.49)% 13.26% 8.28% 10.93% 6.38%
11.62%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $219,682 $266,490 $204,349 $145,163 $92,514 $52,342

Average net assets (in thousands) $248,850 $245,193 $174,055 $115,661 $72,879 $29,308

Number of shares outstanding at
end of period (in thousands) 23,256 24,290 19,738 14,200 9,386 5,268

Ratios to average net assets:
Net investment income 5.99% 5.74% 6.07% 6.52% 6.80% 7.11%
Expenses, before voluntary
assumption by the Manager .96% .97% 1.07% 1.05% 1.05% 1.09%
Expenses, net of voluntary
assumption by the Manager N/A N/A N/A .73% .53% .16%

Portfolio turnover rate(5) 21.9% 13.7% 26.8% 26.6% 14.5% 20.7%

1. For the period from May 1, 1993 (inception of
offering) to December 31, 1993.

2. For the period from November 3, 1988 (commencement
of operations) to December 31, 1988.

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.

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 year ended December 31,
1994 were $57,137,136 and $58,857,084, respectively.
</TABLE>

<PAGE>
Investment Objective and Policies

Objective. The Fund's objective is to seek as high a level of current
interest income exempt from Federal and California income taxes for
individual investors as is available from investment in Municipal
Securities (defined below), consistent with preservation of capital. The
Fund is not intended to be a complete investment program, and there is no
assurance that it will achieve its objective.

Investment Policies and Strategies. Under normal market conditions, the
Fund attempts to invest 100% of its total assets, and, as a matter of
fundamental policy, to invest at least 80% of its total assets, in
Municipal Securities. In addition, under normal market conditions, the
Fund will invest at least 65% of its total assets in California Municipal
Securities.

Dividends paid by the Fund derived from interest attributable to
California Municipal Securities will be exempt from Federal individual
income taxes. Such dividends will also be exempt from California
individual income taxes provided that at the close of each quarter, at
least 50% of the value of the Fund's assets are invested in obligations
the interest of which is exempt from taxation under California law when
held by an individual. Dividends derived from interest on Municipal
Securities of other governmental issuers will be exempt from Federal
individual income tax, but will be subject to California individual income
taxes. Any net interest income on taxable investments and repurchase
agreements will be taxable as ordinary income when distributed to
shareholders.

- Municipal Securities. Municipal Securities are municipal bonds and
municipal notes and municipal commercial paper, certificates of
participation and other debt obligations issued by or on behalf of the
State of California, other states and the District of Columbia, their
political subdivisions or any commonwealth, territory or possession of the
United States, or their respective agencies, instrumentalities or
authorities, the interest from which is, in the opinion of bond counsel
to the respective issuer at the time of issue, not subject to Federal
individual income tax. California Municipal Securities are obligations
of the State of California and its political subdivisions, and their
respective agencies, authorities or instrumentalities, the interest from
which is, in the opinion of bond counsel to the respective issuer at the
time of issue, not subject to California individual income tax. No
independent investigation has been made by the Manager as to the users of
proceeds of bond offerings or the application of such proceeds. It is
anticipated that the Municipal Securities purchased for the Fund's
portfolio will normally be those having relatively longer maturities
(approximately 7 to 30 years), but the Fund may invest in Municipal
Securities having a broad range of maturities.

"Municipal bonds" are Municipal Securities that have a maturity when
issued of one year or more and "municipal notes" are Municipal Securities
that have a maturity when issued of less than one year. The two principal
classifications of Municipal Securities are "general obligations" (secured
by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest) and "revenue obligations" (payable only
from the revenues derived from a particular facility or class of
facilities, or specific excise tax or other revenue source). The Fund may
invest in municipal securities of both classifications.

- Special Considerations - California Municipal Securities. Because
the Fund concentrates its investments in California Municipal Securities,
the market value and marketability of such Municipal Securities and the
interest income to the Fund from them could be adversely affected by a
default or a financial crisis relating to any of such issuers. Investors
should consider these matters as well as economic trends in California,
summarized in the Statement of Additional Information under "Special
Investment Considerations - California Municipal Securities."

- Interest Rate Risks. In addition to credit risks, described
below, Municipal Securities are subject to changes in value due to changes
in prevailing interest rates. When prevailing interest rates fall, the
values of outstanding Municipal Securities generally rise and (if
purchased at principal amount) would sell at a premium. Conversely, when
interest rates rise, the values of outstanding Municipal Securities
generally decline and (if purchased at principal amount) would sell at a
discount. The magnitude of these fluctuations will be greater when the
average maturity of the portfolio is longer.

- Credit Risks. Municipal Securities are also subject to credit
risks. Credit risk relates to the ability of the issuer of a Municipal
Security to make interest or principal payments on the security as they
become due. The economic and other factors that can affect that ability
are summarized in the Statement of Additional Information under "Special
Investment Considerations-California Municipal Securities." While the
Manager may rely to some extent on credit ratings by nationally recognized
rating agencies, such as Standard & Poor's or Moody's, in evaluating the
credit risk of securities selected for the Fund's portfolio, it may also
use its own research and analysis. However, many factors affect an
issuer's ability to make timely payments, and there can be no assurance
that the credit risks of a particular security will not change over time.

- Municipal Lease Obligations. The Fund may invest in certificates
of participation which are tax-exempt obligations that evidence the
holder's right to share in lease, installment loan or other financing
payments by a public entity. Projects financed with certificates of
participation generally are not subject to state constitutional debt
limitations or other statutory requirements that may be applicable to
Municipal Securities. Payments by the public entity on the obligation
underlying the certificates are derived from available revenue sources,
such revenue may be diverted to the funding of other municipal service
projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed. While some municipal lease securities
may be deemed to be "illiquid" securities (the purchase of which would be
limited as described below in "Illiquid and Restricted Securities"), from
time to time the Fund may invest more than 5% of its net assets in
municipal lease obligations that the Manager has determined to be liquid
under guidelines set by the Board of Trustees. See "Investment Objective
and Policies-Municipal Securities-Municipal Lease Obligations" in the
Statement of Additional Information for more details.

- Investments in Taxable Securities and Temporary Defensive
Investment Strategy. Under normal market conditions, the Fund may invest
up to 20% of its assets in taxable investments, including (i) certain
"Temporary Investments" (described immediately below); (ii) covered call
options and Hedging Instruments (described in "Hedging" below); (iii)
repurchase agreements (explained below); and (iv) municipal securities
issued to benefit a private user ("Private Activity Municipal
Securities"), the interest from which may be subject to Federal
alternative minimum tax (see "Dividends, Capital Gains and Taxes," below,
and "Private Activity Municipal Securities" in the Statement of Additional
Information).

For temporary defensive purposes, the Fund may invest up to 100% of
its total assets in "Temporary Investments," including: (i) obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; (ii) corporate debt securities rated within the three
highest grades by Moody's or Standard & Poor's; (iii) commercial paper
rated "A-1" by Standard & Poor's or "Prime-1" by Moody's; and (iv)
certificates of deposit of domestic banks with assets of $1 billion or
more. The Fund may hold Temporary Investments pending the investment of
proceeds from the sale of Fund shares or portfolio securities, or to meet
anticipated redemptions.

- Floating Rate/Variable Rate Obligations. Some of the Municipal
Securities the Fund may purchase may have variable or floating interest
rates. Variable rates are adjusted at stated periodic intervals.
Floating rates are automatically adjusted according to a specified market
rate for such investments, such as the percentage of the prime rate of a
bank, or the 91-day U.S. Treasury Bill rate. Such obligations may be
secured by bank letters of credit or other credit support arrangements.
See "Floating Rate/Variable Rate Obligations" in the Statement of
Additional Information for more details.

- Inverse Floaters and Other Derivative Investments. The Fund may
invest in variable rate bonds known as "inverse floaters." These bonds
pay interest at a rate that varies as the yields generally available on
short-term tax-exempt bonds change. However, the yields on inverse
floaters move in the opposite direction of yields on short-term bonds in
response to market changes. When the yields on short-term tax-exempt
bonds go up, the interest rate on the inverse floater goes down. When the
yields on short-term tax-exempt bonds go down, the interest rate on the
inverse floater goes up. As interest rates rise, inverse floaters produce
less current income. Inverse floaters are a type of "derivative
security," which is a specially designed investment whose performance is
linked to the performance of another security or investment. Some inverse
floaters have a "cap" whereby if interest rates rise above the "cap," the
security pays additional interest income. If rates do not rise above the
"cap," the Fund will have paid an additional amount for a feature that
proves worthless.

The Fund may also invest in municipal derivative securities that pay
interest that depends on an external pricing mechanism. Examples are
interest rate swaps or caps and municipal bond or swap indices. The Fund
anticipates that it would invest no more than 10% of its total assets in
inverse floaters.

The risks of investing in derivative investments include not only the
ability of the issuer of the derivative investment to pay the amount due
on the maturity of the investment, but also the risk that the underlying
security or investment might not perform the way the Manager expected it
to perform. That can mean that the Fund will realize less income than
expected. Another risk of investing in derivative investments is that
their market value could be expected to vary to a much greater extent than
the market value of municipal securities that are not derivative
investments but have similar credit quality, redemption provisions and
maturities.

- Ratings of Municipal Securities; Special Risks of Lower Rated
Municipal Securities. No more than 25% of the Fund's total assets will
be invested in Municipal Securities that at the time of purchase are not
"investment grade." Securities that are not investment grade are rated
below the four highest rating categories of Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") or Fitch Investors
Service, Inc. ("Fitch"). If the securities are not rated, the Manager will
determine the equivalent rating category for the purposes of this
limitation. (See Appendix A to the Statement of Additional Information
for a description of the rating categories of the three rating services.)
A reduction of the rating of a security after the Fund buys it will not
require the Fund to sell the security.

Municipal Securities that are below investment grade are sometimes
called "municipal junk bonds." They may be subject to greater market
fluctuations and are subject to greater risks of loss of income and
principal than higher-rated Municipal Securities. They may also be
considered to have some speculative characteristics. Securities that are
or that have fallen below investment grade entail a greater risk that the
issuers of those securities may not be able to meet their debt
obligations. There may be less of a market for lower-grade Municipal
Securities and therefore when the Fund wants to sell them, they may be
harder to sell at an acceptable price. These risks mean that the Fund may
not achieve the expected income from lower-grade Municipal Securities, and
that the Fund's income and net asset values per share may be affected by
declines in value of these securities. However, the Fund's limitations
on investing in Municipal Securities below investment grade may limit the
degree of those risks.

- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund ordinarily does not engage in
the trading of securities for the purpose of realizing short-term gains,
but the Fund may sell securities as the Manager deems advisable to take
advantage of differentials in yield to accomplish the Fund's investment
objective. The "Financial Highlights," above, show the Fund's portfolio
turnover rate during the past fiscal years. While short-term trading
increases portfolio turnover, the Fund incurs little or no brokerage costs
because most of the Fund's portfolio transactions are principal trades
without brokerage commissions.

- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, described above, as well as investment
policies that it follows to try to achieve its objective. Additionally,
the Fund uses certain investment techniques and strategies in carrying out
those policies. The Fund's investment policies and techniques are not
"fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental."

The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to the Prospectus. Fundamental policies are those
that cannot be changed without the approval of a "majority" of the Fund's
outstanding voting shares. The term "majority" is defined in the
Investment Company Act to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information). The Fund's investment objective is a "fundamental policy."
The Fund's Board of Trustees may change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus.

Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use
that are designed to reduce some of the risks.

- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, debt securities,
and options on futures and municipal bond indices, or enter into interest
rate swap agreements. These are referred to as "hedging instruments."
The Fund does not use hedging instruments for speculative purposes, and
has limits on the use of them, described below. The hedging instruments
the Fund may use are described below and in greater detail in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.

The Fund may buy and sell options and futures for a number of
purposes. It may do so to establish a position in the securities market
as a temporary substitute for purchasing individual securities. It may
do so to try to manage its exposure to changing interest rates. Some of
these strategies, such as selling futures, buying puts and writing covered
calls, hedge the Fund's portfolio against price fluctuations.

Other hedging strategies, such as buying futures and call options,
tend to increase the Fund's exposure to the securities market. Writing
covered call options may also provide income to the Fund for liquidity
purposes or to raise cash to distribute to shareholders.

Futures. The Fund may buy and sell futures contracts that relate to
(1) interest rates (these are referred to as Interest Rate Futures); and
(2) municipal bond indices (these are referred to as Municipal Bond Index
Futures). The Fund may buy and sell Futures contracts in an attempt to
benefit from any performance of the Future purchased relative to the
performance of the Future sold. These types of Futures are described in
"Hedging" in the Statement of Additional Information.

Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls). </R.

The Fund may buy calls only on debt securities, municipal bond
indices, Municipal Bond Index Futures and Interest Rate Futures, or to
terminate its obligation on a call the Fund previously wrote. The Fund
may write (that is, sell) covered call options. When the Fund writes a
call, it receives cash (called a premium). The call gives the buyer the
ability to buy the investment on which the call was written from the Fund
at the call price during the period in which the call may be exercised.
If the value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the Fund
keeps the cash premium (and the investment).

The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a seller
of a put on that investment. The Fund can buy only those puts that relate
to (1) securities that the Fund owns, (2) municipal bond indices, and (3)
Interest Rate Futures and Municipal Bond Index Futures whether or not the
Fund owns the particular Future in its portfolio. The Fund may not sell
a put other than a put that it previously purchased.

The Fund may buy and sell puts and calls only if certain conditions
are met: (1) after the Fund writes a call, not more than 25% of the
Fund's total assets may be subject to calls; (2) calls the Fund buys or
sells must be listed on a domestic securities exchange or quoted on the
Automated Quotation System of the National Association of Securities
Dealers, Inc. (NASDAQ); (3) each call the Fund writes must be "covered"
while it is outstanding: that means the Fund must own the investment on
which the call was written or it must own other securities that are
acceptable for the escrow arrangements required for calls; (4) the Fund
may write calls on Futures contracts it owns, but these calls must be
covered by securities or other liquid assets the Fund owns and segregates
to enable it to satisfy its obligations if the call is exercised; and (5)
a call or put option may not be purchased if the value of all of the
Fund's put and call options would exceed 5% of the Fund's total assets.

Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest
on a security. For example, they may swap a right to receive floating
rate payments for fixed rate payments. The Fund enters into swaps only
on securities it owns. The Fund may not enter into swaps with respect to
more than 25% of its total assets. Also, the Fund will segregate liquid
assets (such as cash or U.S. Government securities) to cover any amounts
it could owe under swaps that exceed the amounts it is entitled to
receive, and it will adjust that amount daily, as needed. The credit risk
of an interest rate swap depends on the counterparty's ability to perform.

Hedging instruments can be volatile investments and may involve
special risks. If the Manager uses a hedging instrument at the wrong time
or judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market for the future or option.

Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. These risks and the hedging strategies the Fund may use are
described in greater detail in the Statement of Additional Information.

- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase Municipal Securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. These terms refer
to securities that have been created and for which a market exists, but
which are not available for immediate delivery. The Fund does not intend
to make such purchases for speculative purposes. During the period
between the purchase and settlement, no payment is made for the security
and no interest accrues to the buyer from the investment. There may be
a risk of loss if the value of the security declines prior to the
settlement date.

- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor of the
securities under a repurchase agreement fails to pay the resale price on
the delivery date, the Fund may incur costs in disposing of the collateral
and may experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement which causes more than
10% of its net assets to be subject to repurchase agreements having a
maturity beyond seven days.

- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of the Fund's investments. Investments may be
illiquid because of the absence of an active trading market, making it
difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction
on its resale or which cannot be publicly sold until it is registered
under the Securities Act of 1933. The Fund will not invest more than 10%
of its net assets in illiquid or restricted securities (that limit may
increase to 15%). The Fund's percentage limitation on these investments
does not apply to certain restricted securities that are eligible for
resale to qualified institutional buyers.

- Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers, dealers
and other financial institutions. These loans are limited to not more
than 25% of the value of the Fund's total assets and are subject to other
conditions described in the Statement of Additional Information. There
are some risks in connection with securities lending. The Fund might
experience a delay in receiving additional collateral to secure a loan,
or a delay in recovery of the loaned securities. The Fund presently does
not intend to engage in loans of securities that will exceed 5% of the
value of the Fund's total assets in the coming year.

- Non-diversification. The Fund is classified as a "non-diversified"
investment company under the Investment Company Act of 1940 so that the
proportion of the Fund's assets that may be invested in the securities of
a single issuer is not limited by the Investment Company Act. An
investment in the Fund therefore will entail greater risk than an
investment in a diversified investment company because a higher percentage
of investments among fewer issuers may result in greater fluctuation in
the total market value of the Fund's portfolio, and economic, political
or regulatory developments may have a greater impact on the value of the
Fund's portfolio than would be the case if the portfolio were diversified
among more issuers. However, the Fund intends to conduct its operations
so as to qualify as a "regulated investment company" for purposes of the
Internal Revenue Code, which will relieve the Fund from liability for
Federal income tax to the extent that more than 90% of its earnings are
distributed to shareholders. Among the requirements for such
qualification are that: (1) not more than 25% of the market value of the
Fund's total assets will be invested in the securities of a single issuer,
and (2) with respect to 50% of the market value of its total assets, not
more than 5% of the market value of its total assets may be invested in
the securities of a single issuer and the Fund must not own more than 10%
of the outstanding voting securities of a single issuer.

Other Investment Restrictions. The Fund has other investment restrictions
that are fundamental policies. Under these fundamental policies, the Fund
cannot do any of the following: (1) invest in securities or any other
investment other than Municipal Securities, the taxable securities and
Hedging Instruments described in "Investment Objective and Policies"
above; (2) make loans, except through the purchase of portfolio securities
subject to repurchase agreements or through loans of portfolio securities
as described under "Loans of Portfolio Securities"; (3) borrow money in
excess of 10% of the value of its total assets, or make any additional
investments whenever borrowings exceed 5% of the Fund's assets; it may
borrow only from banks as a temporary measure for extraordinary or
emergency purposes (not for the purpose of leveraging its investments);
(4) pledge, mortgage or otherwise encumber, transfer or assign any of its
assets to secure a debt; collateral arrangements for premium and margin
payments in connection with Hedging Instruments are not deemed to be a
pledge of assets; (5) concentrate investments to the extent of more than
25% of its total assets in any industry (see "Diversification" in the
Statement of Additional Information); however, there is no limitation as
to investment in Municipal Securities, U.S. Government obligations or
California Municipal Securities; or (6) buy or sell futures contracts
other than Interest Rate Futures or Municipal Bond Index Futures.

All of the percentage restrictions described above and elsewhere in
this Prospectus, other than those that apply to borrowing, apply only at
the time the Fund purchases a security, and the Fund need not dispose of
a security merely because the Fund's assets have changed or the security
has increased in value relative to the size of the Fund. There are other
fundamental policies discussed in the Statement of Additional Information.

How the Fund is Managed

Organization and History. The Fund is an open-end, non-diversified
management investment company organized as a Massachusetts business trust
in July, 1988.

The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.

The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has two classes of shares, Class A and
Class B. Each class has its own dividends and distributions, and pays
certain expenses which may be different for different classes. Each class
may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a class vote together on matters that affect that class alone.
Shares are freely transferrable.

The Manager and its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities and its fees, and describes the expenses that
the Fund pays to conduct its business.

The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $30 billion as
of March 31, 1995, and with more than 2.4 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.

- Portfolio Manager. The Portfolio Manager of the Fund (who is also
a Vice President of the Fund) is Robert E. Patterson, a Senior Vice
President of the Manager. He has been responsible for the day-to-day
management of the Fund's portfolio since November, 1988. He also serves
as an officer and portfolio manager for other OppenheimerFunds.

- Fees and Expenses. Under the investment advisory agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.60% of the first $200 million of
the Fund's average annual net assets, 0.55% of the next $100 million,
0.50% of the next $200 million, 0.45% of the next $250 million, 0.40% of
the next $250 million, and 0.35% of net assets in excess of $1 billion.
The Fund's management fee for its last fiscal year was 0.59% of average
annual net assets for Class A and 0.59% for Class B shares.

The Fund pays expenses related to its daily operations, such as
custodian fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of
shares, and therefore are indirectly borne by shareholders through their
investment. More information about the investment advisory agreement and
the other expenses paid by the Fund is contained in the Statement of
Additional Information.

There is also information about the Fund's brokerage policies and
portfolio transactions in "Brokerage Policies of the Fund" in the
Statement of Additional Information. Because the Fund purchases most of
its portfolio securities directly from the sellers and not through
brokers, it therefore incurs relatively little expense for brokerage.
From time to time it may use brokers when buying portfolio securities.
When deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold shares
of the Fund or any other funds for which the Manager also serves as
investment adviser.

- The Distributor. The Fund's shares are sold through dealers or
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.

- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.

Performance of the Fund

Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return," "average annual total return,"
and "yield." The performance of each class of shares is shown separately,
because the performance of each class of shares will usually be different,
as a result of the different kinds of expenses each class bears. This
performance information may be useful to help you see how well your
investment has done and to compare it to other funds or market indices,
as we have done below.

It is important to understand that the Fund's yields and total
returns represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns and
yields are calculated is contained in the Statement of Additional
Information, which also contains information about indices and other ways
to measure and compare the Fund's performance. The Fund's investment
performance will vary, depending on market conditions, the composition of
the portfolio, expenses and which class of shares you purchase.

- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.

When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. When total returns are shown
for Class B shares, they reflect the effect of the contingent deferred
sales charge. Total returns may be quoted "at net asset value," without
considering the effect of the sales charge, and those returns would be
reduced if sales charges were deducted.

- Yield. Each Class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the period.
Tax-equivalent yield is the equivalent yield that would be earned in the
absence of taxes. It is calculated by dividing that portion of the yield
that is tax-exempt by a factor equal to one minus the applicable tax rate.
The yield of each Class will differ because of the different expenses of
each Class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a Class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B shares do not
reflect the deduction of the contingent deferred sales charge.

How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.

- Management's Discussion of Performance. During the fiscal year
ended December 31, 1994, the performance of the California municipal bond
market was affected by the broad decline in bond prices that followed
increases in short-term interest rates by the Federal Reserve Board. As
a result, the average maturity of the Fund's portfolio was reduced, in an
effort to decrease the portfolio's sensitivity to changing short-term
interest rates. The Fund also acquired insured and pre-refunded issues,
and California municipal bonds in the housing sector as well as
transportation issues.

- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund from the inception of the Class held through
December 31, 1994. In both cases, all dividends and capital gains
distributions reinvested in additional shares. The graph reflects the
deduction of the 4.75% maximum initial sales charge on Class A shares and
the maximum 5% contingent deferred sales charge for Class B shares.

Because the Fund invests in a variety of Municipal Securities, the
Fund's performance is compared to the performance of the Lehman Brothers
Municipal Bond Index. The Lehman Brothers Municipal Bond Index is an
unmanaged index of a broad range of investment grade municipal bonds,
widely regarded as a measure of the performance of the general municipal
bond market.

Index performance reflects reinvestment of income but does not
consider the effect of capital gains or transaction costs, and none of the
data below shows the effect of taxes. Also, the Fund's performance data
reflects the effect of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited
to the securities in any one index and the index data does not reflect any
assessment of the risk of the investments included in the index.

Comparison of Change
In Value of $10,000
Hypothetical Investments in:
Oppenheimer California
Tax-Exempt Fund (Class A) and Lehman
Brothers Municipal Bond Index

(Graph)(with Class A shares of the Fund)

Avg Annual Total Return of the Fund at 12/31/941
A Shares 1 Year 5 Year Life
-12.83% 4.75% 5.95%

Comparison of Change
In Value of $10,000
Hypothetical Investments in:
Oppenheimer California
Tax-Exempt Fund (Class B) and Lehman
Brothers Municipal Bond Index

(Graph)(with Class B shares of the Fund)

Average Annual Total Return of the Fund at 12/31/942
B Shares 1 Year Life
-13.69% -4.19%

1. The inception date of the Fund (Class A shares) was 11/3/88. The
average annual total returns and the ending account value in the graphs
reflect reinvestment of all dividends and capital gains distributions and
are shown net of the applicable 4.75% maximum sales charge.
2. Class B shares of the Fund were first publicly offered on 5/1/93. The
average annual total returns reflect reinvestment of all dividends and
capital gains distributions and are shown net of the applicable 5% and 4%
contingent deferred sales charges respectively for the 1-year period and
life-of-the-class. The ending account value in the graph is net of the
applicable 4% sales charge.

Past Performance is not predictive of future performance.
Graphs are not drawn to same scale.

ABOUT YOUR ACCOUNT

How to Buy Shares

Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.

- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, and you sell any of those shares within 18
months of the end of the calendar month of your purchase, you may pay a
contingent deferred sales charge, which will vary depending on the amount
you invested.

- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years, you
will normally pay a contingent deferred sales charge that varies depending
on how long you own your shares.

Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisors. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which currently offer Class B shares). If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.

In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to Classes A and B, considering the effect
of the annual asset-based sales charge on Class B expenses (which, like
all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class of
shares, and which class you invest in. The results could differ if
different assumptions were used about rates of return, or if varying rates
are used.

The factors discussed below are not intended to be investment advice
or recommendations, because each investor's financial considerations are
different. The assumptions we have made in assessing the factors to
consider in purchasing a particular class of shares assume that you will
purchase only one class of shares, and not a combination of shares of
different classes.

- How long do you expect to hold your investment? The Fund is
designed for long-term investment. While future financial needs cannot
be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares.
The effect of the sales charge over time, using our assumptions, will
generally depend on the amount invested. Because of the effect of class-
based expenses, your choice will also depend on how much you invest.

- How much do you plan to invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges available
for larger purchases of Class A shares may offset the effect of paying an
initial sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher expenses on Class B, for which no initial sales
charge is paid. Additionally, dividends payable to Class B shareholders
will be reduced by the additional expenses borne solely by Class B, such
as the asset-based sales charge described below.

In general, if you plan to invest less than $100,000, Class B shares
may be more advantageous than Class A shares, using the assumptions in our
hypothetical example. However, if you plan to invest more than $100,000
(not only in the Fund, but possibly in other OppenheimerFunds as well),
then Class A shares generally will be more advantageous than Class B,
because of the effect of the reduction of initial sales charges on larger
purchases of Class A shares (described in "Reduced Sales Charges for Class
A Share Purchases," below). That is also the case because the annual
asset-based sales charge on Class A shares will have a greater impact on
larger investments than the initial sales charge on Class A shares,
because of the reduction of initial sales charge available for larger
purchases.

And for investors who invest $500,000 or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold our shares. For that reason, the Distributor normally will
not accept purchase orders of $500,000 or more of Class B shares from a
single investor.

Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumptions stated above. Therefore, these examples
should not be relied on as rigid guidelines.

- Are there differences in account features that matter to you?
Because some account features may not be available for Class B
shareholders, such as checkwriting, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
contingent deferred sales charges for Class B shareholders) you should
carefully review how you plan to use your investment account before
deciding which class of shares to buy. Also, because not all
OppenheimerFunds currently offer Class B shares, and because exchanges are
permitted only to the same class of shares in other OppenheimerFunds, you
should consider how important the exchange privilege is likely to be for
you.

- How Does It Affect Payments To My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class than for selling another class. It is important that investors
understand that the purpose of the contingent deferred sales charge and
asset-based sales charge for Class B shares is the same as the purpose of
the front-end sales charge on sales of Class A shares: to compensate the
Distributor for commissions it pays to dealers and financial institutions
for selling shares.

How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:

With Asset Builder Plans, Automatic Exchange Plans and military
allotment plans, you can make initial and subsequent investments for as
little as $25. Subsequent purchases of at least $25 can be made by
telephone through AccountLink.

There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.

How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with
the Distributor, or directly through the Distributor, or automatically
from your bank account through an Asset Builder Plan under the
OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A or Class B shares. If you do not choose, your investment
will be made in Class A shares.

- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.

- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares.

- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
or have the Transfer Agent send redemption proceeds or transmit dividends
and distributions to your bank account.

Shares are purchased for your account on the regular business day the
Distributor is instructed by you to initiate the ACH transfer to buy
shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink," below for more details.

- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.

- At What Price Are Share Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver. In most cases, to enable you to receive that
day's offering price, the Distributor must receive your order by the time
of day the New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of the close of The New York Stock Exchange on
each day the Exchange is open (which is a "regular business day").

If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.

Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers are as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
<S> <C> <C> <C>

Less than $50,000 4.75% 4.98% 4.00%

$50,000 or more but
less than $100,000 4.50% 4.71% 4.00%

$100,000 or more but
less than $250,000 3.50% 3.63% 3.00%

$250,000 or more but
less than $500,000 2.50% 2.56% 2.25%

$500,000 or more but
less than $1 million 2.00% 2.04% 1.80%

</TABLE>

The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.

- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of other
OppenheimerFunds that offer only one class of shares that has no class
designation are considered "Class A shares" for this purpose). However,
the Distributor pays dealers of record commissions on such purchases in
an amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50%
of the next $2.5 million, plus 0.25% of share purchases over $5 million.
That commission will be paid only on the amount of those purchases in
excess of $1 million that were not previously subject to a front-end sales
charge and dealer commission.

If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all OppenheimerFunds you purchased subject to
the Class A contingent deferred sales charge.

In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.

- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.

Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:

- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A shares you purchase for your individual accounts, or
jointly, or on behalf of your children who are minors, under trust or
custodial accounts. A fiduciary can cumulate shares purchased for a trust,
estate or other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.

Additionally, you can add together current purchases of Class A
shares of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.

- Letter of Intent. Under a Letter of Intent, you may purchase Class
A shares of the Fund and other OppenheimerFunds during a 13-month period
at the reduced sales charge rate that applies to the aggregate amount of
the intended purchases. This can include purchases made up to 90 days
before the date of the Letter. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.

- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients; or (7) dealers, brokers or
registered investment advisers that have entered into an agreement with
the Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administrative services.

Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party, or (b) purchased by the
reinvestment of dividends or other distributions reinvested from the Fund
or other OppenheimerFunds (other than the Cash Reserves Funds) or unit
investment trusts for which reinvestment arrangements have been made with
the Distributor, or (c) purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund on which an initial
sales charge or contingent deferred sales charge was paid (other than a
fund managed by the Manager or any of its affiliates); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver. There is a further discussion of this policy in "Reduced
Sales Charges" in the Statement of Additional Information.

The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) Automatic Withdrawal Plan
payments that are limited to no more than 12% of the original account
value annually, (2) involuntary redemptions of shares by operation of law
or under the procedures set forth in the Fund's Declaration of Trust or
adopted by the Board of Trustees, and (3) Class A shares that would
otherwise be subject to the Class A contingent deferred sales charge are
redeemed, but at the time the purchase order for your shares was placed,
the dealer agreed to accept the dealer's portion of the commission payable
on the sale in installments of 1/18th of the commission per month (and
that no further commission would be payable if the shares were redeemed
within 18 months of purchase).

- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.

Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.

Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.

To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.

The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:

Years Since Beginning of Contingent Deferred Sales Charge
Month in Which Purchase On Redemptions in that Year
Order Was Accepted (As % of Amount Subject to Charge)

0-1 5.0%

1-2 4.0%

2-3 3.0%

3-4 3.0%

4-5 2.0%

5-6 1.0%

6 and following None

In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.

- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for redemptions
following the death or disability of the shareholder (the disability must
have occurred after the account was established and you must provide
evidence of a determination of disability by the Social Security
Administration).

The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.

- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A and Class
B Shares" in the Statement of Additional Information.

- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net asset value of Class B shares, determined as of the close of
each regular business day. The asset-based sales charge allows investors
to buy Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.

The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% of average net assets per year.

The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge (and the first year's
service fee) to recoup the sales commissions it pays, the advances of
service fee payments it makes, and its financing costs.

The Distributor's actual expenses in selling Class B shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plan for Class B shares. Therefore, those expenses may be carried
over and paid in future years. At December 31, 1994, the end of the Plan
year, the Distributor had incurred unreimbursed expenses under the Plan
of $915,997 (equal to 5.53% of the Fund's net assets represented by Class
B shares on that date), which have been carried over into the present Plan
year. If the Plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for certain expenses it incurred before the Plan was
terminated.

Special Investor Services

AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.

AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.

- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.

- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number:
1-800-533-3310.

- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.

- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.

- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.

Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:

- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.

- Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each OppenheimerFunds account is $25. These exchanges are subject to
the terms of the Exchange Privilege, described below.

Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying
sales charge. This privilege applies to Fund shares that you purchased
with an initial sales charge. It also applies to shares on which you paid
a contingent deferred sales charge when you redeemed them. You must be
sure to ask the Distributor for this privilege when you send your payment.
Please consult the Statement of Additional Information for more details.

How to Sell Shares

You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.

- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):

- You wish to redeem more than $50,000 worth of shares and receive
a check
- A redemption check is not payable to all shareholders listed on the
account statement
- A redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)

- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other business,
you must also include your title in the signature.

Selling Shares by Mail. Write a "letter of instructions" that includes:

- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,

- The signatures of all registered owners exactly as the account is
registered, and

- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.

Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217

Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231

Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of the New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. You may not redeem
shares held under a share certificate by telephone.

- To redeem shares through a service representative, call
1-800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310

Whichever method you use, you may have a check sent to the address
on the account, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank
account.

- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.

- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.

Checkwriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.

- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares or Class A shares that are subject to a contingent deferred
sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value.

Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 10 days.
- Don't use your checks if you changed your Fund account number.

Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:

- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus

Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. Certain
OppenheimerFunds offer Class A, Class B and/or Class C shares, and a list
can be obtained by calling the Distributor at 1-800-525-7048. In some
cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

Exchanges may be requested in writing or by telephone:

- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."

- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.

You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.

There are certain exchange policies you should be aware of:

- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form, by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into if
it determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the Fund.

- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.

- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.

- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.

Shareholder Account Rules and Policies

- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange on each regular business
day by dividing the value of the Fund's net assets attributable to a class
by the number of shares of that class that are outstanding. The Fund's
Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.

- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.

- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.

- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.

- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.

- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A and Class B shares. Therefore, the redemption
value of your shares may be more or less than their original cost.

- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. Effective June 7, 1995,
for accounts registered in the name of a broker-dealer, payment will be
forwarded within 3 business days. The Transfer Agent may delay forwarding
a check or processing a payment via AccountLink for recently purchased
shares, but only until the purchase payment has cleared. That delay may
be as much as 10 days from the date the shares were purchased. That delay
may be avoided if you purchase shares by certified check or arrange to
have your bank provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.

- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.

- Under unusual circumstances, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell Shares"
in the Statement of Additional Information for more details.

- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.

- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.

- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A and Class
B shares from net investment income on each regular business day and pays
those dividends to shareholders monthly. Normally, dividends are paid on
or about the tenth business day every month, but the Board of Trustees can
change that date. However, the amount of dividends and distributions may
vary from time to time, depending upon market conditions, the composition
of the Fund's portfolio, and expenses borne by that Class. Also,
dividends paid on Class A shares generally are expected to be higher than
for Class B shares because expenses allocable to Class B shares will
generally be higher.

Capital Gains. Although the Fund does not seek capital gains, it may
realize capital gains on the sale of portfolio securities. If it does,
it may make distributions annually in December out of any net short-term
or long-term capital gains and the Fund may make supplemental
distributions of dividends and capital gains following the end of its
fiscal year. Long-term capital gains will be separately identified in the
tax information the Fund sends you after the end of the year. Short-term
capital gains are treated as dividends for tax purposes. There can be no
assurance that the Fund will pay any capital gains distributions in a
particular year.

Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:

- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.

Taxes. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you held
your shares. Dividends paid from short-term capital gains are taxable as
ordinary income. Dividends paid from net investment income earned by the
Fund on Municipal Securities will be excludable from your gross income for
Federal income tax purposes. A portion of the dividends paid by the Fund
may be an item of tax preference if you are subject to alternative minimum
tax. Distributions are subject to federal income tax and may be subject
to state or local taxes. Whether you reinvest your distributions in
additional shares or take them in cash, the tax treatment is the same.
Every year the Fund will send you and the IRS a statement showing the
amount of each taxable distribution you received in the previous year as
well as the amount of your tax-exempt income.

- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or a
capital gain.

- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. Even though the Fund
seeks tax-exempt income for distribution to shareholders, you may have a
capital gain or loss when you sell or exchange your shares. A capital
gain or loss is the difference between the price you paid for the shares
and the price you received when you sold them. Any capital gain is
subject to capital gains tax.

- Returns of Capital. In certain cases, distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.

This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.

<PAGE>

APPENDIX TO PROSPECTUS OF
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND

Graphic material included in Prospectus of Oppenheimer California
Tax-Exempt Fund: "Comparison of Total Return of Oppenheimer California
Tax-Exempt Fund and the Lehman Brothers Municipal Bond Index - Change in
Value of a $10,000 Hypothetical Investment"

A linear graph will be included in the Prospectus of Oppenheimer
California Tax-Exempt Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in the Fund. In the case of the Fund's class A shares, that graph will
cover the period from the commencement of the Fund's operations (11/3/88)
through 12/31/94 and in the case of the Fund's Class B shares will cover
the period from the inception of the class (May 1, 1993) through December
31, 1994. The graph will compare such values with hypothetical $10,000
investments over the same time periods in the Lehman Brothers Municipal
Bond Index. Set forth below are the relevant data points that will appear
on the linear graph. Additional information with respect to the
foregoing, including a description of the Lehman Brothers Municipal Bond
Index, is set forth in the Prospectus under "How Has the Fund Performed -
Management's Discussion of Performance."

Fiscal Year Oppenheimer California Lehman Brothers
(Period) Ended Tax-Exempt Fund A Municipal Bond Index

11/3/88 $9,525 $10,000
12/31/88 $9,661 $10,102
12/31/89 $10,783 $11,192
12/31/90 $11,468 $12,008
12/31/91 $12,719 $13,466
12/31/92 $13,768 $14,653
12/31/93 $15,557 $16,453
12/31/94 $14,279 $15,602

Fiscal Year Oppenheimer California Lehman Brothers
(Period) Ended Tax-Exempt Fund B Municipal Bond
Index

5/1/93 $10,000 $10,000
12/31/93 $10,638 $10,718
12/31/94 $9,312 $10,164

Oppenheimer California Tax-Exempt Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048

Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203

Distributor O P P E N H E I M E R
Oppenheimer Funds Distributor, Inc. California
Two World Trade Center Tax-Exempt
New York, New York 10048-0203 Fund

Transfer Agent
Oppenheimer Shareholder Services Prospectus
P.O. Box 5270 Effective April 25, 1995
Denver, Colorado 80217
1-800-525-7048

Custodian of Portfolio Securities
Citibank, N.A.
One Citicorp Center
New York, New York 10154

Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036

No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information
and, if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc., or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in
any state to any person to whom it is unlawful to make such offer in such
state.

(OppenheimerFunds logo)
PR0790.001.0495 Printed on recycled paper

<PAGE>

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048-0203
1-800-525-7048

PART B

STATEMENT OF ADDITIONAL INFORMATION
September __, 1995

___________________________________

This Statement of Additional Information of Oppenheimer
California Tax-Exempt Fund consists of this cover page and the following
documents:

1. Statement of Additional Information of Oppenheimer California Tax-
Exempt Fund dated April 25, 1995, supplemented July 14, 1995, filed
herewith and incorporated herein by reference.

2. Oppenheimer California Tax-Exempt Fund's Annual Report as of December
31, 1994 and its Semi-Annual Report as of June 30, 1995, filed herewith
and incorporated herein by reference.

3. Prospectus of California Tax-Exempt Fund dated December 1, 1994, filed
herewith and incorporated herein by reference.

4. Statement of Additional Information of California Tax-Exempt Fund dated
December 1, 1994, filed herewith and incorporated herein by reference.

5. California Tax-Exempt Fund's Annual Report as of July 31, 1994 and its
Semi-Annual Report as of January 1, 1995, filed herewith and incorporated
herein by reference.

This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read in
conjunction with the Proxy Statement and Prospectus, which may be obtained
by written request to Oppenheimer Shareholder Services ("OSS"), P.O. Box
5270, Denver, Colorado 80217, or by calling OSS at the toll-free number
shown above.

merge\790ptb

<PAGE>

OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
Supplement dated July 14, 1995 to the
Statement of Additional Information dated April 25, 1995

The Statement of Additional Information is amended as follows:

1. In the section entitled "Letters of Intent" on page 34, the first two
sentences of the first paragraph in that section are replaced by the
following:

A Letter of Intent (referred to as a "Letter") is an investor's
statement in writing to the Distributor of the intention to purchase
Class A shares or Class A and Class B shares of the Fund (and other
OppenheimerFunds) during a 13-month period (the "Letter of Intend
period"), which may, at the investor's request, include purchases
made up to 90 days prior to the date of the Letter. The Letter
states the investor's intention to make the aggregate amount of
purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in
the Letter. Purchases made by reinvestment of dividends or
distributions of capital gains and purchases made at net asset value
without sales charge do not count toward satisfying the amount of
the Letter. A Letter enables an investor to count the Class A and
Class B shares purchased under the Letter to obtain the reduced
sales charge rate on purchases of Class A shares of the Fund (and
other OppenheimerFunds) that applies under the Right of Accumulation
to current purchases of Class A shares.

2. In the section entitled "Terms of Escrow That Apply to Letters of
Intent" on page 35, item 5 of that section is replaced by the following:

5.The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a
Class A contingent deferred sales charge, (b) Class B shares
acquired subject to a contingent deferred sales charge, and (c)
Class A or B shares acquired in exchange for either (i) Class A
shares of one of the other OppenheimerFunds that were acquired
subject to a Class A initial or contingent deferred sales charge or
(ii) Class B shares of one of the other OppenheimerFunds that were
acquired subject to a contingent deferred sales charge.

3. In the section entitled "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" on page 38, the last sentence of that
section is revised to read as follows:

Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the
shares have been redeemed upon the Distributor's receipt the
required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as
described in the Prospectus.

4. In the section entitled "How To Exchange Shares" on page 40, the
second full paragraph is changed by adding new second and third sentences
as follows:

However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other
than funds managed by the Manager or its subsidiaries) redeemed
within the 12 months prior to that purchase may subsequently be
exchanged for shares of other OppenheimerFunds without being subject
to an initial or contingent deferred sales charge, whichever is
applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for
this privilege at the time the shares of Oppenheimer Money Market
Fund, Inc. are purchased, and, if requested, must supply proof of
entitlement to this privilege.

July 14, 1995 PX0790.002

<PAGE>

Oppenheimer California Tax-Exempt Fund

Two World Trade Center, New York, New York 10048-0203
1-800-525-7048

Statement of Additional Information dated April 25, 1995

This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated April 25, 1995. It should be read
together with the Prospectus which may be obtained by writing to the
Fund's Transfer Agent, Oppenheimer Shareholders Services at P.O. Box 5270,
Denver, Colorado 80217 or by calling the Transfer Agent at the toll free
number shown above.

Contents
Page

About the Fund 2
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 10
Other Investment Restrictions 15
How the Fund is Managed 16
Organization and History 16
Trustees and Officers of the Fund 17
The Manager and Its Affiliates 22
Brokerage Policies of the Fund 23
Performance of the Fund 25
Distribution and Service Plans 29
About Your Account 31
How To Buy Shares 31
How To Sell Shares 36
How To Exchange Shares 40
Dividends, Capital Gains and Taxes 42
Additional Information About the Fund 45
Financial Information About the Fund
Independent Auditors' Report 46
Financial Statements 47
Appendix A: Municipal Bond Ratings A-1
Appendix B: Equivalent Yield Chart B-1
Appendix C: Industry Classifications C-1

<PAGE>
ABOUT THE FUND

Investment Objective and Policies

Investment Policies and Strategies. The investment objective and policies
of the Fund are discussed in the Prospectus. Set forth below is
supplemental information about those policies. Capitalized terms used in
this Statement of Additional Information have the same meanings as those
terms have in the Prospectus.

The Fund does not make investments with the objective of seeking
capital growth. However, the value of the securities held by the Fund may
be affected by changes in interest rates. Because the current value of
debt securities varies inversely with changes in prevailing interest
rates, if interest rates increase after a security is purchased, that
security would normally decline in value. Conversely, should interest
rates decrease after a security is purchased, normally its value would
rise. However, those fluctuations in value will not generally result in
realized gains or losses to the Fund since the Fund does not usually
intend to dispose of securities prior to their maturity. A debt security
held to maturity is redeemable by its issuer at full principal value plus
accrued interest. To a limited degree, the Fund may engage in short-term
trading to attempt to take advantage of short-term market variations, or
may dispose of a portfolio security prior to its maturity if, on the basis
of a revised credit evaluation of the issuer or other considerations, the
Fund believes such disposition advisable or it needs to generate cash to
satisfy redemptions. In such cases, the Fund may realize a capital gain
or loss. The annual rate of portfolio turnover is not expected to exceed
100%.

There are, of course, variations in the security of Municipal
Securities, both within a particular classification and between
classifications, depending on numerous factors. The yields of Municipal
Securities depend on, among other things, general conditions of the
Municipal Securities market, size of a particular offering, the maturity
of the obligation and rating of the issue.

Municipal Securities. The types of Municipal Securities in which the Fund
may invest are described in the Prospectus under "Investment Objective and
Policies." A discussion of the general characteristics of types of
Municipal Securities follows below.

- Municipal Bonds. The principal classifications of long-term
municipal bonds are "general obligation" and "revenue" or "industrial
development" bonds. In California, municipal bonds may also be funded by
property taxes in specially created districts, (Mello-Roos or Special
Assessment Bonds), tax allocations based on increased property tax
assessments over a specified period (frequently for redevelopment
projects) or specified redevelopment area sales allocations.

- General Obligation Bonds. Issuers of general obligation bonds
include states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of public
projects, including construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power for the payment of principal and interest. The taxes that
can be levied for the payment of debt service may be limited or unlimited
as to the rate or amount of special assessments.

- Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Although the principal security
behind these bonds may vary, many provide additional security in the form
of a debt service reserve fund whose money may be used to make principal
and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, and/or
the net revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.

- Industrial Development Bonds. Industrial development bonds, which
are considered municipal bonds if the interest paid is exempt from federal
income tax, are issued by or on behalf of public authorities to raise
money to finance various privately operated facilities for business and
manufacturing, housing, sports, and pollution control. These bonds are
also used to finance public facilities such as airports, mass transit
systems, ports, and parking. The payment of the principal and interest
on such bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.

- Mello-Roos Bonds. Bonds issued pursuant to the California Mello-
Roos Community Facilities Act ("Mello-Roos bonds") are used to finance
infrastructure projects (such as roads or sewage treatment plants) and are
primarily secured by real estate taxes levied on property located in the
same community as that project. Mello-Roos bond financing arose in
response to limitations contained in California's statutory limitations
on real property taxes (see "Special Investment Considerations --
California Municipal Securities" below), and do not constitute obligations
of a municipality. Timely payment of such bonds depends on the developer
or other property owners' ability to pay their real estate taxes which
could be adversely affected by a declining economy and/or real estate
market.

- Municipal Notes. Municipal Securities having a maturity when
issued of less than one year are generally known as municipal notes.
Municipal notes generally are used to provide for short-term working
capital needs and include:

- Tax Anticipation Notes. Tax anticipation notes are issued to
finance working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenue, such as income,
sales, use of business taxes, and are payable from these specific future
taxes.

- Revenue Anticipation Notes. Revenue anticipation notes are
issued in expectation of receipt of other types of revenue, such as
federal revenues available under the Federal revenue sharing programs.

- Bond Anticipation Notes. Bond anticipation notes are issued
to provide interim financing until long-term financing can be arranged.
In most cases, the long-term bonds then provide the money for the
repayment of the notes.

- Construction Loan Notes. Construction loan notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the Federal
Housing Administration.

- Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a
short-term obligation with a stated maturity of 365 days or less. It is
issued by state and local governments or their agencies to finance
seasonal working capital needs or as short-term financing in anticipation
of longer-term financing.

- Floating Rate/Variable Rate Obligations. Floating rate and
variable rate demand notes are tax-exempt obligations which may have a
stated maturity in excess of one year, but may include features that
permit the holder to recover the principal amount of the underlying
security at specified intervals not exceeding one year and upon no more
than 30 days' notice. The issuer of such notes normally has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the note plus accrued interest upon a
specified number of days notice to the holder. The interest rate on a
floating rate demand note is based on a stated prevailing market rate,
such as a bank's prime rate, the 90-day U.S. Treasury Bill rate, or some
other standard, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand note is also based
on a stated prevailing market rate but is adjusted automatically at
specified intervals of no less than one year. Generally, the changes in
the interest rate on such securities reduce the fluctuation in their
market value. As interest rates decrease or increase, the potential for
capital appreciation or depreciation is less than that for fixed-rate
obligations of the same maturity. The Fund's investment adviser,
Oppenheimer Management Corporation (the "Manager"), may determine that an
unrated floating rate or variable rate demand obligation meets the Fund's
quality standards by reason of being backed by a letter of credit or
guarantee issued by a bank that meets those quality standards.

- Inverse Floaters and Other Derivative Investments. Some inverse
floaters have a feature known as an interest rate "cap" as part of the
terms of the investment. Investing in inverse floaters that have interest
rate caps might be part of a portfolio strategy to try to maintain a high
current yield for the Fund when the Fund has invested in inverse floaters
that expose the Fund to the risk of short-term interest rate fluctuation.
Embedded caps hedge a portion of the Fund's exposure to rising interest
rates. When interest rates exceed the pre-determined rate, the cap
generates additional cash flows that offset the decline in interest rates
on the inverse floater, and the hedge is successful. However, the Fund
bears the risk that if interest rates do not rise above the pre-determined
rate, the cap (which is purchased for additional cost) will not provide
additional cash flows and will expire worthless.

- Municipal Lease Obligations. While some municipal lease
obligations purchased by the Fund may be deemed to be illiquid securities
(the purchases of which will be limited as described in the Prospectus),
from time to time the Fund may invest more than 5% of its net assets in
municipal lease obligations that the Manager has determined to be liquid
under guidelines set by the Board of Trustees. Those guidelines require
the Manager to evaluate: (1) the frequency of trades and price quotations
for such securities; (2) the number of dealers or other potential buyers
willing to purchase or sell such securities; (3) the availability of
market-makers; and (4) the nature of the trades for such securities. The
Manager will also evaluate the likelihood of a continuing market for such
securities throughout the time they are held by the Fund and the credit
quality of the instrument. Municipal leases may take the form of a lease
or an installment purchase contract issued by a state or local government
authority to obtain funds to acquire a wide variety of equipment and
facilities. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power
is pledged, a lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate and make the payments due under the
lease obligation. However, certain lease obligations contain "non-
appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Projects
financed with certificates of participation generally are not subject to
state constitutional debt limitations or other statutory requirements that
may be applicable to Municipal Securities. Payments by the public entity
on the obligation underlying the certificates are derived from available
revenue sources; such revenue may be diverted to the funding of other
municipal service projects. Payments of interest and/or principal with
respect to the certificates are not guaranteed and do not constitute an
obligation of the State of California or any of its political
subdivisions.

In addition to the risk of "non-appropriation," municipal lease
securities do not yet have a highly developed market to provide the degree
of liquidity of conventional municipal bonds. Municipal leases, like
other municipal debt obligations, are subject to the risk of non-payment.
The ability of issuers of municipal leases to make timely lease payments
may be adversely affected in general economic downturns and as relative
governmental cost burdens are reallocated among federal, state and local
governmental units. Such non-payment would result in a reduction of
income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the
net asset value of the Fund.

- Puts and Standby Commitments. When the Fund buys Municipal
Securities, it may obtain a standby commitment to repurchase the
securities that entitles it to achieve same-day settlement from the
purchaser and to receive an exercise price equal to the amortized cost of
the underlying security plus accrued interest, if any, at the time of
exercise. A put purchased in conjunction with a Municipal Security
enables the Fund to sell the underlying security within a specified period
of time at a fixed exercise price. The Fund may pay for a standby
commitment or put either separately in cash or by paying a higher price
for the securities acquired subject to the standby commitment or put. The
Fund will enter into these transactions only with banks and dealers which,
in the Manager's opinion, present minimal credit risks. The Fund's
ability to exercise a put or standby commitment will depend on the ability
of the bank or dealer to pay for the securities if the put or standby
commitment is exercised. If the bank or dealer should default on its
obligation, the Fund might not be able to recover all or a portion of any
loss sustained from having to sell the security elsewhere. Puts and
standby commitments are not transferrable by the Fund, and therefore
terminate if the Fund sells the underlying security to a third party. The
Fund intends to enter into these arrangements to facilitate portfolio
liquidity, although such arrangements may enable the Fund to sell a
security at a pre-arranged price which may be higher than the prevailing
market price at the time the put or standby commitment is exercised.
However, the Fund might refrain from exercising a put or standby
commitment if the exercise price is significantly higher than the
prevailing market price, to avoid imposing a loss on the seller which
could jeopardize the Fund's business relationships with the seller. Any
consideration paid by the Fund for the put or standby commitment (which
increases the cost of the security and reduces the yield otherwise
available from the security) will be reflected on the Fund's books as
unrealized depreciation while the put or standby commitment is held, and
a realized gain or loss when the put or commitment is exercised or
expires. Interest income received by the Fund from Municipal Securities
subject to puts or stand-by commitments may not qualify as tax exempt in
its hands if the terms of the put or stand-by commitment cause the Fund
not to be treated as the tax owner of the underlying Municipal Securities.

- When-Issued and Delayed Delivery Transactions. The Fund may
purchase Municipal Securities on a "when-issued" basis, and may buy or
sell such securities on a "delayed delivery" basis. Although the Fund
will enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. When such transactions are negotiated,
the price (which is generally expressed in yield terms) is fixed at the
time the commitment is made, but delivery and payment for the securities
take place at a later date. The Fund does not intend to make such
purchases for speculative purposes. The commitment to purchase a security
for which payment will be made on a future date may be deemed a separate
security and involve risk of loss if the value of the security declines
prior to the settlement date. During the period between commitment by the
Fund and settlement (generally within two months but not to exceed 120
days), no payment is made for the securities purchased by the purchaser,
and no interest accrues to the purchaser from the transaction. Such
securities are subject to market fluctuation; the value at delivery may
be less than the purchase price. The Fund will maintain a segregated
account with its Custodian, consisting of cash, U.S. Government securities
or other high grade debt obligations at least equal to the value of
purchase commitments until payment is made.

The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss.

To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although (as noted above), when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates before settlement in a direction other than that
expected by the Manager will affect the value of such securities and may
cause a loss to the Fund.

When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.

- Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules
governing tax exemption for interest on Municipal Securities. The Tax
Reform Act generally did not change the tax treatment of bonds issued to
finance governmental operations. Thus, interest on obligations issued by
or on behalf of state or local governments, the proceeds of which are used
to finance the operations of such governments (e.g., general obligation
bonds) continues to be tax-exempt. However, the Tax Reform Act further
limited the use of tax-exempt bonds for non-governmental (private)
purposes. More stringent restrictions were placed on the use of proceeds
of such bonds. Interest on certain private activity bonds (other than
those specified as "qualified" tax-exempt private activity bonds, e.g.,
exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, qualified
student loan bonds, etc.) is taxable under the revised rules.

Interest on certain private activity bonds issued after August 7,
1986, which continues to be tax-exempt will be treated as a tax preference
item subject to the alternative minimum tax (discussed below) to which
certain taxpayers are subject. Furthermore, a private activity bond which
would otherwise be a qualified tax-exempt private activity bond will not,
under Internal Revenue Code Section 147(a), be a qualified bond for any
period during which it is held by a person who is a "substantial user" of
the facilities or by a "related person" of such a substantial user. This
"substantial user" provision is applicable primarily to exempt facility
bonds and industrial development bonds. The Fund may not be an
appropriate investment for entities which are "substantial users" (or
persons related thereto) of such exempt facilities, and such persons
should consult their own tax advisers before purchasing shares. A
"substantial user" of such facilities is defined generally as a "non-
exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be
a "related person" under the Internal Revenue Code unless such investor
or the investor's immediate family (spouse, brothers, sisters and
immediate descendants) own directly or indirectly in the aggregate more
than 50% in value of the equity of a corporation or partnership which is
a "substantial user" of a facility financed from the proceeds of exempt
facility bonds. In addition, the limitations as to the amount of private
activity bonds which each state may issue were reduced, which will reduce
the supply of such bonds. The value of the Fund's portfolio could be
affected if there is a reduction in the availability of such bonds. That
value may also be affected by a 1988 U.S. Supreme Court decision upholding
the constitutionality of the imposition of a Federal tax on the interest
earned on Municipal Securities issued in bearer form.

A Municipal Security is treated as a taxable private activity bond
under a test for (a) a trade or business use and security interest, or (b)
a private loan restriction. Under the trade or business use and security
interest test, an obligation is a private activity bond if (i) more than
10% of bond proceeds are used for private business purposes and (ii) 10%
or more of the payment of principal or interest on the issue is directly
or indirectly derived from such private use or is secured by the privately
used property or the payments related to the use of the property. For
certain types of users, a 5% threshold is substituted for the 10%
threshold. (The term "private business use" means any direct or indirect
use in a trade or business carried on by an individual or entity other
than a state or municipal governmental unit.) Under the private loan
restriction, the amount of bond proceeds that may be used to make private
loans is limited to the lesser of 5% or $5 million of the proceeds. Thus,
certain issues of Municipal Securities could lose their tax-exempt status
retroactively if the issuer fails to meet certain requirements as to the
expenditure of the proceeds of that issue or use of the bond-financed
facility. The Fund makes no independent investigation of the users of
such bonds or their use of proceeds. If the Fund should hold a bond that
loses the tax exempt status retroactively, there might be an adjustment
to the tax-exempt income previously paid to shareholders.

The Federal alternative minimum tax is designed to ensure that all
taxpayers pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference
items in arriving at alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals
and corporations. Any exempt-interest dividend paid by a regulated
investment company will be treated as interest on a specific private
activity bond to the extent of its proportionate share of the interest on
such bonds received by the regulated investment company. The U.S.Treasury
is authorized to issue regulations implementing this provision. In
addition, corporate taxpayers subject to the alternative minimum tax may,
under some circumstances, have to include exempt-interest dividends in
calculating their alternative minimum taxable income in situations where
the "adjusted current earnings" of the corporation exceeds its alternative
minimum taxable income. The Fund may hold Municipal Securities the
interest on which (and thus a proportionate share of the exempt-interest
dividends paid by the Fund) will be subject to the Federal alternative
minimum tax on individuals and corporations. The Fund anticipates that
under normal circumstances it will not purchase any such securities in an
amount greater than 20% of its total assets.

- Ratings of Municipal Securities. Ratings by Moody's, S&P and Fitch
(see Appendix A) represent their respective opinions of the quality of the
Municipal Securities they undertake to rate. However, such ratings are
general and are not absolute standards of quality. Consequently, Municipal
Securities with the same maturity, coupon and rating may have different
yields, while Municipal Securities of the same maturity and coupon with
different ratings may have the same yield. Investment in lower quality
securities may produce a higher yield than securities rated in the higher
rating categories described in the Prospectus (or judged by the Manager
to be of comparable quality). However, the added risk of lower quality
securities might not be consistent with a policy of preservation of
capital.

Subsequent to its purchase by the Fund, a Municipal Security may
cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. Neither event requires the Fund to sell the
security, but the Manager will consider such events in determining whether
the Fund should continue to hold the security. To the extent that ratings
given by Moody's, Standard & Poor's, or Fitch change as a result of
changes in such organizations or their rating systems, the Fund will
attempt to use comparable ratings as standards for investments in
accordance with the Fund's investment policies.

Special Investment Considerations - California Municipal Securities. As
stated in the Prospectus, the values of the Fund's California Municipal
Securities are highly sensitive to the fiscal stability of California and
its subdivisions, agencies, instrumentalities or authorities, which issue
the Municipal Securities in which the Trust concentrates its investments.
Certain amendments to the California State constitution, legislative
measures, executive orders, civil actions and voter initiatives in recent
years that could adversely affect the ability of California issuers to pay
interest and principal on Municipal Securities are described below. The
following constitutes only a brief summary, and is based on information
drawn from the relevant statutes and certain other publicly available
information. The Fund has not independently verified such information.

Changes in California constitutional and other laws during the last
several years have caused concerns about the ability of California state
and municipal issuers to obtain sufficient revenue to pay their bond
obligations. In 1978, California voters approved an amendment to the
California Constitution known as Proposition 13, which added Article XIIIA
to the California Constitution. Article XIIIA limits ad valorem taxes on
real property and restricts the ability of taxing entities to increase
real property taxes. However, legislation passed subsequent to
Proposition 13 provided for the redistribution of California's General
Fund surplus to local agencies, the reallocation of revenues to local
agencies and the assumption of certain local obligations by the state so
as to help California municipal issuers raise revenue to pay their bond
obligations. It is unknown whether additional revenue redistribution
legislation will be enacted in the future and whether, if enacted, such
legislation will provide sufficient revenue for such California issuers
to pay their obligations.

The state is also subject to another constitutional amendment,
Article XIIIB, which may have an adverse impact on California state and
municipal issuers. Article XIIIB restricts the state from spending
certain appropriations in excess of an appropriations limit imposed for
each state and local government entity. If revenues exceed such
appropriations limit, such revenues must be returned either as revisions
in the tax rates or fee schedules. In 1988, California voters approved
an initiative known as Proposition 98, which in addition to amending
Article XIIIB, amended Article XVI to require a minimum level of funding
for public schools and community colleges. In 1992-93 and 1993-94, the
state budget met part of its commitment to education through $1.8 billion
in off-book loans. The legality of these loans was challenged in a
lawsuit by the California Teachers Association. A lower court in
California has ruled against the state, and under this decision the
schools would not be required to repay these loans. If upheld on appeal,
the ruling would increase the state's officially recognized 1994-95 year-
end deficit by $1.8 billion.

Because of the uncertain impact of the aforementioned legislation,
the possible inconsistencies in the respective terms of the statutes and
the impossibility of predicting the level of future appropriations and
applicability of related statutes to such questions, it is not currently
possible to assess the impact of such legislation and policies on the long
term ability of the State of California and California municipal issuers
to pay interest or repay principal on their obligations.

Although the national economic recovery is continuing at a strong
pace, California is still experiencing the effects of a recession.
Unemployment has remained above the national average since 1990.
Substantial contracting in California's defense related industries,
overbuilding in commercial real estate, and consolidation and decline in
the state's financial services industry will likely produce slower overall
growth in 1995 and 1996. The earthquake which struck Northridge,
California on January 17, 1994 is not expected to derail the state's
economic recovery, although it may carry long-term implications for the
City of Los Angeles.

These economic difficulties have exacerbated the budget imbalance
which has been evident since 1985-86. Since that time, the state has
recorded General Fund operating deficits in five of the past six fiscal
years. Many of these problems have been attributable to a great
population increase which has increased demand for educational and social
services at a pace far greater than the growth in revenues.

By June, 1994, the General Fund had an accumulated deficit, on a
budgeted basis, of approximately $2.4 billion. In addition, the deficit
over the previous three years had exhausted the state's available cash
reserves and resources. In July and August, 1994, the state was required
to issue a total of $7 billion of short-term revenue anticipation warrants
to fund, in part, the state's management flow it needs for the 1994-95
fiscal year.

On July 8, 1994, the Governor signed into law a new $57.5 billion
budget which includes General Fund spending of $40.9 billion, up 4.2% from
the level of spending during the 1993-94 fiscal year. The budget also
envisions General Fund spending climbing another 8.4% in the 1995-96
fiscal year. The budget forecasts levels of revenue and expenditures
which will result in operating surpluses in both 1994-95 and 1995-96,
leading to the elimination of the budget deficit by June 30, 1996.

Because of the State of California's continuing budget problems, the
state's General Obligation bonds were downgraded in July 1994 from Aa to
A1 by Moody's, from A+ to A by Standard & Poor's and from AA to A by
Fitch. All three rating agencies expressed uncertainty in the state's
ability to balance its budget by 1996.

On December 6, 1994, Orange County (California) became the largest
municipality in the United States to file for protection under the Federal
bankruptcy laws. The filing stemmed from approximately $1.7 billion in
losses suffered by the County's investment pool due to investments in high
risk "derivative" securities. Over 185 public agencies had funds invested
in the pool, and these funds may be accessed only with permission of the
bankruptcy court. It is unclear whether the state will lend financial or
other assistance to Orange County to prevent the County from defaulting
on its other obligations.

Other Investment Techniques and Strategies

- Repurchase Agreements. In a repurchase transaction, the Fund
purchases a security from, and simultaneously resells it to, an approved
vendor (a U.S. commercial bank, the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet the credit requirements set by the Fund's
Board of Trustees from time to time) for delivery on an agreed-on future
date. The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during
which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the resale
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase
price to fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.

- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day at least equal the market value of
the loaned securities and must consist of cash, bank letters of credit or
U.S. Government securities, or other cash equivalents in which the Fund
is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. In a portfolio securities lending transaction,
the Fund receives from the borrower amounts equal to the dividends or
interest on loaned securities during the term of the loan as well as the
interest on the collateral securities, less any finders' or administrative
fees. The Fund pays in arranging the loan. The Fund may share the
interest it receives on the collateral securities with the borrower as
long as it realizes at least a minimum amount of interest required by the
lending guidelines established by its Board of Trustees. The Fund will
not lend its portfolio securities to any officer, trustee, employee or
affiliate of the Fund or its Manager. The terms of the Fund's loans must
meet certain tests under the Internal Revenue Code and permit the Fund to
reacquire loaned securities on five business days' notice or in time to
vote on any important matter.

- Hedging. The Fund may use hedging instruments for the purposes
described in the Prospectus. When hedging to attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund
to retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons,
the Fund may: (i) sell Interest Rate Futures or Municipal Bond Index
Futures, (ii) buy puts, or (iii) write covered calls on securities,
Interest Rate Futures or Municipal Bond Futures (as described in the
Prospectus). When hedging to establish a position in the debt securities
markets as a temporary substitute for the purchase of individual debt
securities (which the Fund will normally purchase, and then terminate that
hedging position), the Fund may: (i) buy Interest Rate Futures or
Municipal Bond Index Futures, or (ii) buy calls on such Futures or on
securities.

The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's investment activities in the underlying
cash market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated, but which may be
developed, to the extent such investment methods are consistent with the
Fund's investment objective and are legally permissible and disclosed in
the Prospectus. Additional information about the hedging instruments the
Fund may use is provided below.

- Writing Covered Calls. As described in the Prospectus, the Fund
may write covered calls. When the Fund writes a call on an investment,
it receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than nine months) at a fixed exercise price (which may differ from the
market price of the underlying investment) regardless of market price
changes during the call period. The Fund has retained the risk of loss
should the price of the underlying security decline during the call
period, which may be offset by the premium.

To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of option transaction costs and the premium received on the call
the Fund has written is more or less than the price of the call the Fund
subsequently purchased. A profit may also be realized if the call lapses
unexercised, because the Fund retains the related investments and the
premium received. Any such profits are considered short-term capital
gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. An option position may be closed out only
on a market which provides secondary trading for options of the same
series, and there is no assurance that a liquid secondary market will
exist for any particular option. If the Fund could not effect a closing
purchase transaction due to a lack of a market, it would have to hold the
callable securities until the call lapsed or was exercised.

The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar value of liquid assets. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice as to
that Future put the Fund in a short futures position.

- Interest Rate Futures. The Fund may buy and sell futures contracts
relating to debt securities ("Interest Rate Futures") and municipal bond
indices ("Municipal Bond Index Futures," discussed below). No price is
paid or received upon the purchase or sale of an Interest Rate Future.
An Interest Rate Future obligates the seller to deliver and the purchaser
to take a specific type of debt security or cash to settle the futures
transaction, or to enter into an offsetting contract. Upon entering into
a Futures transaction, the Fund will be required to deposit an initial
margin payment in cash or U.S. Treasury bills, with the futures commission
merchant (the "futures broker"). Initial margin payments will be
deposited with the Fund's Custodian in an account registered in the
futures broker's name; however, the futures broker can gain access to that
account only under certain specified conditions. As the Future is marked
to market to reflect changes in its market value, (that is, its value on
the Fund's books is changed) subsequent margin payments, called variation
margin, will be paid to or by the futures broker on a daily basis.

At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the Future for tax purposes. Although Interest
Rate Futures by their terms call for settlement by the delivery of debt
securities, in most cases the obligation is fulfilled without such
delivery by entering into an offsetting transaction. All futures
transactions are effected through a clearing house associated with the
exchange on which the contracts are traded.

- Municipal Bond Index Futures. A "municipal bond index" assigns
relative values to the municipal bonds included in that index, and is used
to serve as the basis for trading long-term municipal bond futures
contracts. Municipal Bond Index Futures are similar to Interest Rate
Futures except that settlement is made in cash. No physical delivery is
made of the underlying bonds in the index. The obligation under such
contracts may also be satisfied by entering into an offsetting contract
to close out the futures position. Net gain or loss on options on
Municipal Bond Index Futures depends on the price movements of the
securities included in the index. The strategies which the Fund employs
regarding Municipal Bond Index Futures are similar to those described
above with regard to Interest Rate Futures.

- Purchasing Calls and Puts. When the Fund purchases a call (other
than in a closing purchase transaction), it pays a premium and, except as
to calls on Municipal Bond Index Futures, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs
and premium paid for the call, and the call is exercised. If the call is
not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When the
Fund purchases a call or put a municipal bond index, Municipal Bond Index
Future or Interest Rate Future, it pays a premium, but settlement is in
cash rather than by delivery of the underlying investment to the Fund.
Gain or loss depends on changes in the index in question (and thus on
price movements in the debt securities market generally) rather than on
price movements in individual futures contracts.

When the Fund purchases a put, it pays a premium and, except as to
puts on municipal bond indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same investment
during the put period at a fixed exercise price. Buying a put on a debt
security, Interest Rate Future or Municipal Bond Index Future the Fund
owns enables the Fund to protect itself during the put period against a
decline in the value of the underlying investment below the exercise price
by selling such underlying investment at the exercise price to a seller
of a corresponding put. If the market price of the underlying investment
is equal to or above the exercise price and as a result the put is not
exercised or resold, the put will become worthless at its expiration date
and the Fund will lose its premium payment and the right to sell the
underlying investment. The put may, however, be sold prior to expiration
(whether or not at a profit).

- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.

A master netting agreement provides that all swaps done between the
Fund and that counterparty under the master agreement shall be regarded
as parts of an integral agreement. If on any date amounts are payable in
the same currency in respect of one or more swap transactions, the net
amount payable on that date in that currency shall be paid. In addition,
the master netting agreement may provide that if one party defaults
generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in a
loss to one party, the measure of that party's damages is calculated by
reference to the average cost of a replacement swap with respect to each
swap (i.e., the mark-to-market value at the time of the termination of
each swap). The gains and losses on all swaps are then netted, and the
result is the counterparty's gain or loss on termination. The termination
of all swaps and the netting of gains and losses on termination is
generally referred to as "aggregation." The Fund will not invest more
than 25% of its assets in interest rate swap transactions.

- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges, or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities covering a call on the expiration of the call
or when the Fund enters into a closing purchase transaction. Call writing
affects the Fund's turnover rate and the brokerage commissions it pays.
Commissions are payable on writing or purchasing a call.

The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause it to sell underlying investments, thus increasing its turnover rate
in a manner beyond its control. The exercise by the Fund of puts may also
cause the sale of underlying investments, also causing turnover, since the
underlying investment might be sold for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a call or a put or sells a call. Premiums paid for options
are small in relation to the market value of the related investments and,
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could cause the Fund's net asset
value to be more sensitive to changes in the value of the underlying
investments.

- Regulatory Aspects of Hedging Instruments. The use of Futures and
options thereon to attempt to protect against the market risk of a decline
in the value of portfolio securities is referred to as having a "short
futures position," and the use of such instruments to attempt to protect
against the market risk that portfolio securities are not fully included
in an increase in value of the market as a whole is referred to as having
a "long futures position." The Fund must operate within certain
restrictions as to its long and short positions in Futures and options
thereon under a rule ("CFTC Rule") adopted by the Commodity Futures
Trading Commission ("CFTC") under the Commodity Exchange Act (the "CEA"),
which excludes the Fund from registration with the CFTC as a "commodity
pool operator" (as defined under the CEA), if it complies with the CFTC
Rule. The Rule does not limit the percentage of the Fund's assets that
may be used for Futures margin and related options premiums for a bona
fide hedging position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to not more
than 5% of the Fund's net assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule. Under the Rule,
the Fund also must, as to its short positions, use Futures and options
thereon solely for bona fide hedging purposes within the meaning and
intent of the applicable provisions of the CEA.

Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more different exchanges or through one
or more brokers. Thus, the number of options which the Fund may write or
hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the Fund
or an affiliated investment adviser. Position limits also apply to
Futures. An exchange may order the liquidation of positions found to be
in violation of these limits and may impose certain other sanctions. Due
to requirements under the Investment Company Act, when the Fund purchases
an Interest Rate Future or Municipal Bond Index Future, the Fund will
maintain, in a segregated account or accounts with its Custodian, cash or
readily-marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the investments
underlying such Future, less the margin deposit applicable to it.

- Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income must be derived from gains realized on the sale
of securities held for less than three months. Due to this limitation,
the Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including Interest Rate Futures and Municipal Bond Index Futures, held for
less than three months, whether or not they were purchased on the exercise
of a call held by the Fund; (ii) writing calls on investments held less
than three months; (iii) purchasing calls or puts which expire in less
than three months; (iv) effecting closing transactions with respect to
calls or puts purchased less than three months previously; and (v)
exercising puts or calls held by the Fund for less than three months.

- Risks of Hedging with Options and Futures. In addition to the
risks with respect to hedging discussed in the Prospectus and above, there
is a risk in using short hedging by (i) selling Interest Rate Futures and
Municipal Bond Index Futures or (ii) purchasing puts on municipal bond
indices or Futures to attempt to protect against declines in the value of
the Fund's securities. The risk is that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's securities. The ordinary spreads between prices in
the cash and futures markets are subject to distortions due to
differences in the natures of those markets. First, all participants in
the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close out futures contracts through offsetting transactions
which could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market may cause temporary price
distortions.

The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the debt securities being hedged and movements in the price of
the Hedging Instruments, the Fund may use Hedging Instruments in a greater
dollar amount than the dollar amount of debt securities being hedged if
the historical volatility of the prices of such debt securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that when the Fund has used Hedging Instruments in a
short hedge, the market may advance and the value of the debt securities
held in the Fund's portfolio may decline. If this occurred, the Fund
would lose money on the Hedging Instruments and also experience a decline
in value of its debt securities. However, while this could occur for a
very brief period or to a very small degree, over time the value of a
diversified portfolio of debt securities will tend to move in the same
direction as the indices upon which the Hedging Instruments are based.

If the Fund uses Hedging Instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
particular debt securities (long hedging) by buying Interest Rate Futures,
Municipal Bond Index Futures and/or calls on such Futures or debt
securities, it is possible that the market may decline; if the Fund then
concludes not to invest in such securities at that time because of
concerns as to possible further market decline or for other reasons, the
Fund will realize a loss on the Hedging Instruments that is not offset by
a reduction in the price of the debt securities purchased.

Other Investment Restrictions

The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of (1) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (2) more than 50% of the
outstanding shares.

Under these additional restrictions, the Fund cannot: (1) invest in
real estate, but this shall not prevent the Fund from investing in
Municipal Securities or other permitted securities secured by real estate
or interests therein; (2) purchase securities other than Hedging
Instruments on margin; however, the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities; (3) make short sales of securities; (4) underwrite securities
or invest in securities subject to restrictions on resale; (5) invest in
or hold securities of any "issuer" (see "Diversification," below) if
officers and Trustees or Directors of the Fund and the Manager
individually owning more than 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities of such issuer; or (6) invest
in securities of any other investment company, except in connection with
a merger with another investment company.

- Diversification. For purposes of diversification under the
Investment Company Act and investment restriction (5) above, the
identification of the issuer of a Municipal Security depends on the terms
and conditions of the security. When the assets and revenues of an
agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the subdivision and the
security is backed only by the assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an industrial development bond, if that bond is backed only by the
assets and revenues of the nongovernmental user, then such nongovernmental
user would be deemed the sole issuer. However, if in either case the
creating government or some other entity guarantees a security, such a
guarantee would be considered a separate security and is to be treated as
an issue of such government or other agency.

In applying restriction (5) in the Prospectus, the Manager will
consider a nongovernmental user of facilities financed by industrial
development bonds as being in a particular industry, despite the fact that
such bonds are Municipal Securities as to which there is no industry
concentration limitation. Although this application of the restriction
is not technically a fundamental policy under the Investment Company Act,
it will not be changed without shareholder approval. The Manager has no
present intention of investing more than 25% of the total assets of the
Fund in securities the interest on which is paid from revenues of similar
types of projects or in industrial development bonds. Neither of these
are fundamental policies, and therefore either of them may be changed
without shareholder approval. Should any such change be made, the
Prospectus and/or this Additional Statement will be supplemented to
reflect the change.

For purposes of the Fund's policy not to concentrate described under
investment restriction (5) in the Prospectus, the Fund has adopted the
industry classifications set forth in Appendix C to the Statement of
Additional Information. This is not a fundamental policy.

How the Fund Is Managed

Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.

The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.

Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. The address of each Trustee and officer is Two
World Trade Center, New York, New York 10048-0203, unless another address
is listed below. All of the Trustees are also trustees or directors of
Oppenheimer Fund, Oppenheimer Time Fund, Oppenheimer Growth Fund,
Oppenheimer Global Fund, Oppenheimer Money Market Fund, Inc., Oppenheimer
U.S. Government Trust, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer Discovery Fund, Oppenheimer Target Fund, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Global
Emerging Growth Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Tax-Free Bond Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
Pennsylvania Tax-Exempt Fund, Oppenheimer Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust (collectively, the "New York-based
OppenheimerFunds). Messrs. Spiro, Donohue, Bowen, Zack, Bishop and Farrar
respectively, hold the same offices with the other New York-based
OppenheimerFunds as with the Fund. As of March 29, 1995, the Trustees and
officers of the Fund as a group owned of record or beneficially less than
1% of each class of shares of the Fund. The foregoing statement does not
reflect ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan one of the officers listed below,
Mr. Donohue, is a trustee), other than the shares beneficially owned under
the plan by the officers of the Fund listed above.

Leon Levy, Chairman of the Board of Trustees; Age 69
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings Inc. (real estate development).

Leo Cherne, Trustee; Age 82
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of The Research Institute of
America.

Robert G. Galli, Trustee; Age 61*
Vice Chairman of the Manager and Vice President and Counsel of Oppenheimer
Acquisition Corp. ("OAC") the Manager's parent holding company; formerly
he held the following positions: a director of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), Vice President and
a director of HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment adviser
subsidiaries of the Manager, a director of Shareholder Financial Services,
Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager, an officer of other OppenheimerFunds and
Executive Vice President & General Counsel of the Manager and the
Distributor.

Benjamin Lipstein, Trustee; Age 71
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; Director of Sussex Publishers, Inc.
(Publishers of Psychology Today and Mother Earth News) and Director of Spy
Magazine, L.P.

Elizabeth B. Moynihan, Trustee; Age 65
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York
University), National Building Museum; a member of the Trustees Council,
the Preservation League of New York State; a member of the Indo-U.S. Sub-
Commission on Education and Culture.

Kenneth A. Randall, Trustee; Age 67
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil and gas producer), Enron-
Dominion Cogen Corp. (cogeneration company), Kemper Corporation
(insurance and financial services company), Fidelity Life Association
(mutual life insurance company); formerly Chairman of the Board of ICL,
Inc. (information systems), and President and Chief Executive Officer of
The Conference Board, Inc. (international economic and business research).

Edward V. Regan, Trustee; Age 64
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc. (health care
provider); formerly New York State Comptroller and a trustee, New York
State and Local Retirement Fund.

Russell S. Reynolds, Jr., Trustee; Age 63
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Historical Society and Greenwich Hospital.

Sidney M. Robbins, Trustee; Age 83
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of Finance,
University of Hawaii; a director of The Korea Fund, Inc. and The Malaysia
Fund, Inc. (closed-end investment companies); a member of the Board of
Advisors, Olympus Private Placement Fund, L.P.; Professor Emeritus of
Finance, Adelphi University.

Donald W. Spiro, President and Trustee; Age 69*
Chairman Emeritus and a director of the Manager; formerly Chairman of the
Manager and Oppenheimer Funds Distributor, Inc. (the "Distributor").

Pauline Trigere, Trustee; Age 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).

Clayton K. Yeutter, Trustee; Age 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), Farmers
Insurance Company (insurance), FMC Corp. (chemicals and machinery),
Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments, Inc.
(electronics) and the Vigoro Corporation (fertilizer manufacturer);
formerly (in descending chronological order) Counsellor to the President
(Bush) for Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.

Robert E. Patterson, Vice President and Portfolio Manager; Age 51
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.

Andrew J. Donohue, Secretary; Age 44
Executive Vice President and General Counsel of Oppenheimer Management
Corporation ("OMC") (the "Manager") and Oppenheimer Funds Distributor,
Inc. (the "Distributor"); an officer of other OppenheimerFunds; formerly
Senior Vice President and Associate General Counsel of the Manager and the
Distributor, partner in Kraft & McManimon (a law firm), an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser), director
and an officer of First Investors Family of Funds and First Investors Life
Insurance Company.

George C. Bowen, Treasurer; Age 58
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Secretary and Treasurer of SSI and SFSI; an officer of other
OppenheimerFunds.

Robert G. Zack, Assistant Secretary; Age 46
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI, SFSI; an officer of other OppenheimerFunds.

Robert Bishop, Assistant Treasurer; Age 46
3410 South Galena Street, Denver, Colorado, 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an Accountant for Resolution Trust Corporation and
previously an Accountant and Commissions Supervisor for Stuart James
Company Inc., a broker-dealer.

Scott Farrar, Assistant Treasurer; Age 29
3410 South Galena Street, Denver, Colorado, 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman Co., a bank, and previously a Senior Fund Accountant for
State Street Bank & Trust Company.
___________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.

- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Messrs. Galli and Spiro; Mr. Spiro is also an officer)
receive no salary or fee from the Fund. The Trustees of the Fund
(including Mr. Delaney, a former Trustee, but excluding Messrs. Galli and
Spiro) received the total amounts shown below (i) from the Fund, during
its fiscal year ended December 31, 1994, and (ii) from all 19 of the New
York-based OppenheimerFunds (including the Fund) listed in the first
paragraph of this section (and from Oppenheimer Global Environment Fund,
a former New York-based OppenheimerFund), for services in the positions
shown:
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation From All
Name and from New York-based
Position Fund OppenheimerFunds1
<S> <C> <C>
Leon Levy $9,151 $141,000.00
Chairman and
Trustee

Leo Cherne $4,467 $ 68,800.00
Audit Committee
Member and
Trustee

Edmund T. Delaney $5,595 $ 86,200.00
Study Committee
Member and Trustee2

Benjamin Lipstein $5,595 $ 86,200.00
Study Committee
Member and Trustee

Elizabeth B. Moynihan $3,934 $ 60,625.00
Study Committee
Member3 and Trustee

Kenneth A. Randall $5,089 $ 78,400.00
Audit Committee
Member and Trustee

Edward V. Regan $3,650 $ 56,275.00
Audit Committee
Member and Trustee

Russell S. Reynolds, Jr. $3,384 $ 52,100.00
Trustee

Sidney M. Robbins $7,929 $122,100.00
Study Committee
Chairman, Audit
Committee Vice-Chairman
and Trustee

Pauline Trigere $3,384 $ 52,100.00
Trustee

Clayton K. Yeutter $3,384 $ 52,100.00
Trustee
______________________
1 For the 1994 calendar year.
2 Board and committee positions held during a portion of the period
shown.
3 Committee position held during a portion of the period shown.
</TABLE>

The Fund has adopted a retirement plan that provides for payment to
a retired Trustee of up to 80% of the average compensation paid during
that Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the New York-
based OppenheimerFunds for at least 15 years to be eligible for the
maximum payment. Because each Trustee's retirement benefits will be depend
on the amount of the Trustee's future compensation and length of service,
the amount of those benefits cannot be determined at this time, nor can
we estimate the number of years of credited service that will be used to
determine those benefits. No provision was made during the fiscal year
ended December 31, 1994 for the Fund's projected retirement benefit
obligations. No payments have been made by the Fund under the plan as of
December 31, 1994.

- Major Shareholders. As of March 29, 1995, no person owned of
record or was known by the Fund to own beneficially 5% or more shares of
the Fund as a whole or either class of the Fund's outstanding shares.

The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom may also
serve as officers of the Fund, and two of whom (Messrs. Galli and Spiro)
serve as Trustees of the Fund.

The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced.

- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and the composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.

Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
fees to certain Trustees, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration
costs, brokerage commissions, and non-recurring expenses, such as
litigation.

The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has voluntarily undertaken that the total expenses of the Fund in any
fiscal year (including the management fee, but excluding taxes, interest,
brokerage commissions, distribution plan payments and extraordinary
expenses such as litigation costs) shall not exceed the most stringent
expense limitation imposed under state law applicable to the Fund.
Currently, the most stringent state expense limitation is imposed by
California, and limits the Fund's expenses (with specified exclusions) to
2.5% of the first $30 million of average annual net assets, 2% of the next
$70 million, and 1.5% of average annual net assets in excess of $100
million. The Manager reserves the right to terminate or amend the
undertaking at any time. Any assumption of the Fund's expenses under this
limitation would lower the Fund's overall expense ratio and increase its
total return during any period in which expenses are limited. Prior to
November 1, 1993, independently of the Agreement, the Manager had
undertaken to assume the Fund's expenses (exclusive of any non-recurring
expenses, such as litigation) to the extent required to maintain the
Fund's dividend rate at $.0498 per share every 28 days. Effective
November 1, 1993, the Manager terminated this undertaking.

For the fiscal years ended December 31, 1992, 1993, and 1994 there
were no assumption of expenses, and the management fees were $1,044,275,
$1,467,574, and $1,560,360, respectively.

The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder, the Manager is not liable for any loss sustained
by reason of any investment of Fund assets made with due care and in good
faith. The advisory agreement permits the Manager to act as investment
adviser for any other person, firm or corporation and to use the name
"Oppenheimer" in connection with one or more additional companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.

- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A and Class B shares, but
is not obligated to sell a specific number of shares. Expenses normally
attributable to sales, (excluding payments under the Distribution and
Service Plan, but including advertising and the cost of printing and
mailing prospectuses other than those furnished to existing shareholders),
are borne by the Distributor. During the fiscal years ended 1992, 1993,
and 1994 the aggregate sales charges on sales of the Fund's Class A shares
were $1,863,832, $1,831,469, and $999,822 respectively, of which the
Distributor and an affiliated broker-dealer retained $400,938, $368,898
and $193,221 in those respective years. During the Fund's fiscal year
ended December 31, 1994, the contingent deferred sales charge on the
Fund's Class B shares totaled $609,226, of which $10,619 was paid to an
affiliated broker-dealer. For additional information about distribution
of the Fund's shares and the expenses connected with such activities,
please refer to "Distribution and Service Plans," below.

- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and the asked price.

Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.

Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the Manager's
portfolio managers. In certain instances, portfolio managers may directly
place trades and allocate brokerage, also subject to the provisions of the
advisory agreement and the procedures and rules described above.
Regardless, brokerage is allocated under the supervision of the Manager's
executive officers. As most purchases made by the Fund are principal
transactions at net prices, the Fund incurs little or no brokerage costs.
The Fund usually deals directly with the selling or purchasing principal
or market maker without incurring charges for the services of a broker on
its behalf unless it is determined that better price or execution may be
obtained by utilizing the services of a broker. Purchases of portfolio
securities from underwriters include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of orders at the most favorable net price. When the Fund
engages in an option transaction, ordinarily the same broker will be used
for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each account.

The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions.

The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.

Performance of the Fund

Yield and Total Return Information. As described in the Prospectus,
from time to time the "standardized yield," "dividend yield," "average
annual total return", "cumulative total return," and "cumulative total
return at net asset value" of an investment in a class of shares of the
Fund may be advertised. An explanation of how yields and total returns
are calculated for each class and the components of those calculations is
set forth below.

The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of Class A and
Class B shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.

- Standardized Yields

- Yield. The Fund's "yield" (referred to as "standardized yield")
for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds that quote yields:

The symbols above represent the following factors:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd

a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, adjusted for undistributed net investment
income.

The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended December 31, 1994, the standardized yields for the
Fund's Class A and Class B shares were 5.74% and 5.28%, respectively.

- Tax-Equivalent Yield. The Fund's "tax-equivalent yield" adjusts
the Fund's current yield, as calculated above, by a stated combined
Federal and state tax rate. The tax equivalent yield is based on a 30-day
period, and is computed by dividing the tax-exempt portion of the Fund's
current yield (as calculated above) by one minus a stated income tax rate
and adding the result to the portion (if any) of the Fund's current yield
that is not tax exempt. The tax equivalent yield may be used to compare
the tax effects of income derived from the Fund with income from taxable
investments at the tax rates stated. Appendix B includes a tax equivalent
yield table, based on various effective tax brackets for individual
taxpayers. Such tax brackets are determined by a taxpayer's Federal and
state taxable income (the net amounts subject to Federal and state income
taxes after deductions and exemptions). The tax equivalent yield table
assumes that the investor is taxed at the highest bracket, regardless of
whether a switch to non-taxable investments would cause a lower bracket
to apply. For taxpayers with income above certain levels, otherwise
allowable itemized deductions are limited. The Fund's tax-equivalent
yield (after expense assumptions by the Manager) for its Class A and Class
B shares for the 30-day period ended December 31, 1994, for an investor
in the California/Federal 46.24% effective tax bracket were 10.68% and
9.82%, respectively.

- Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class.
Dividend yield is based on the share dividends paid on shares of a class
from net investment income during a stated period. Distribution return
includes dividends derived from net investment income and from realized
capital gains declared during a stated period. Under those calculations,
the dividends and/or distributions for that class declared during a stated
period of one year or less (for example, 30 days) are added together, and
the sum is divided by the maximum offering price per share of that class
on the last day of the period. When the result is annualized for a period
of less than one year, the "dividend yield" is calculated as follows:

Dividend Yield of the Class =

Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)

Divided by number of days (accrual period) x 365

The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price
is the net asset value per share, without considering the effect of
contingent deferred sales charges.

From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its
respective maximum offering price) at the end of the period. The dividend
yields on Class A shares for the 30-day period ended December 31, 1994,
were 6.31% and 6.63% when calculated at maximum offering price and at net
asset value, respectively. The dividend yield on Class B shares for the
30-day period ended December 31, 1994, was 5.86% when calculated at net
asset value.

- Total Return Information

- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:

( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )

- Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over
an entire period of years. Its calculation uses some of the same factors
as average annual total return, but it does not average the rate of return
on an annual basis. Cumulative total return is determined as follows:

ERV - P
- ------- = Total Return
P

In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, payment of contingent
deferred sales charge of 5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% for the fifth year, and
1.0% for the sixth year, and none thereafter is applied, as described in
the Prospectus. Total returns also assume that all dividends and capital
gains distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is redeemed
at the end of the period. The average annual total returns on an
investment in Class A shares of the Fund for the one and five year periods
ended December 31, 1994 and for the period from November 3, 1988
(commencement of operations) to December 31, 1994, were -12.83%, 4.75% and
5.95%, respectively. The cumulative "total return" on Class A shares for
the latter period was 42.79%. The average annual total return on an
investment in Class B shares for the fiscal year ended December 31, 1994
and for the period May 1, 1993 (inception of class) to December 31, 1994
were -13.69% and -6.88%. For the fiscal period from May 1, 1993, through
December 31, 1994, the cumulative total return on an investment in Class
B shares of the Fund was -4.19%.

- Total Returns At Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A or Class B shares.
Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred
sales charges) and takes into consideration the reinvestment of dividends
and capital gains distributions. The cumulative total returns at net
asset value on the Fund's Class A shares for the fiscal year ended
December 31, 1994 and for the period from November 3, 1988 (commencement
of operations) through December 31, 1994 were -8.49% and 49.92%,
respectively. The cumulative total return at net asset value on the
Fund's Class B shares for the fiscal year ended December 31, 1994 and for
the period from May 3, 1993 (commencement of operations) through December
31, 1994 were -9.39% and -3.36%, respectively.

Total return information may be useful to investors in reviewing the
performance of the Fund's Class A or Class B shares. However, when
comparing total return of an investment in Class A or Class B shares of
the Fund, a number of factors should be considered before using such
information as a basis for comparison before using such information as a
basis for comparison with other investments.

- Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A or Class B shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent service.
Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based
on categories relating to investment objectives. The performance of the
Fund is ranked against (1) all other funds, excluding money market funds,
and (ii) all other California municipal bond funds. The Lipper
performance rankings are based on total returns that include the
reinvestment of capital gains distributions and income dividends but do
not take sales charges or taxes into consideration.

From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals such as The New York Times, which may include
performance quotations from other sources, including Lipper and
Morningstar.

From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent
mutual fund monitoring service that ranks mutual funds, including the
Fund, monthly in broad investment categories (equity, taxable bond,
municipal bond and hybrid) based on risk-adjusted investment return.
Investment return measures fund's three, five and ten-year average annual
total returns (when available). Risk reflects fund performance below 90-
day U.S. Treasury bill monthly returns. Risk and return 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%), three stars is "average" (next
35%), two stars is "below average" (next 22.5%) and one star is "lowest"
(bottom 10%). Morningstar ranks the Fund in relation to other rated
municipal bond funds.

Investors may also wish to compare the Fund's Class A or Class B
return to the returns on fixed income investments available from banks and
thrift institutions, such as certificates of deposit, ordinary interest-
paying checking and savings accounts, and other forms of fixed or variable
time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed by the FDIC
or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of
return, and Treasury bills are guaranteed as to principal and interest by
the U.S. government. When redeemed, an investor's shares may be worth
more or less than their original cost. Returns for any given past period
are not a prediction or representation by the Fund of future returns. The
returns of Class A and Class B shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to a particular class.

Distribution and Service Plans

The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class B shares under Rule 12b-1 of the
Investment Company Act pursuant to which the Fund will reimburse the
Distributor for all or a portion of its costs incurred in connection with
the distribution and/or servicing of the shares of that class as described
in the Prospectus. Each Plan has been approved by a vote of (i) the Board
of Trustees of the Fund, including a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on that Plan,
and (ii) the holders of a "majority" (as defined in the Investment Company
Act) of the shares of each class.

In addition, under the Plans the Manager and the Distributor, in
their sole discretion from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.

Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Either Plan may be terminated at
any time by the vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. Neither Plan may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. All material amendments must be approved by the Independent
Trustees.

While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The report for the Class B Plan shall also
include the Distributor's distribution costs for that quarter, and such
costs for previous fiscal periods that have been carried forward, as
explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Trustees.

Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fees at the maximum rate allowed under the Plans and set no minimum
amount. For the fiscal year ended December 31, 1994, payments under the
Plan for Class A shares totaled $611,139, all of which was paid by the
Distributor to Recipients, including $19,407 paid to an affiliate of the
Distributor.

Any unreimbursed expenses by the Distributor incurred with respect
to Class A shares for any fiscal year by the Distributor may not be
recovered in subsequent fiscal years. Payments received by the
Distributor under the Plan for Class A shares will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor. The Class B Plan allows the
service fee payment to be paid by the Distributor to Recipients in advance
for the first year Class B shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance payment is
based on the net assets of the Class B shares sold. An exchange of shares
does not entitle the Recipient to an advance service fee payment. In the
event Class B shares are redeemed during the first year such shares are
outstanding, the Recipient will be obligated to repay a pro rata portion
of such advance payment to the Distributor. Payments made under the Class
B Plan for the fiscal year ended December 31, 1994, totalled $165,277, of
which $157,962 was retained by the Distributor.

Although the Class B Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class B shares, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor intends to pay the service fee to Recipients in
the manner described above. A minimum holding period may be established
from time to time under the Class B Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class B
plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees. The Distributor anticipates
that it will take a number of years for it to recoup (from the Fund's
payments to the Distributor under the Class B Plan and recoveries of the
contingent deferred sales charge) the sales commissions paid to authorized
brokers and dealers.

Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B shares of the Fund. The
Distributor's actual distribution expenses for any given year may exceed
the aggregate of payments received pursuant to the Class B Plan and from
contingent deferred sales charges, and such expenses will be carried
forward and paid in future years. The Fund will be charged only for
interest expenses, carrying charges or other financial costs that are
directly related to the carry-forward of actual distribution expenses.
For example, if the Distributor incurred distribution expense of $4
million in a given fiscal year, of which $2,000,000 was reimbursed in the
form of payments made by the Fund to the Distributor under the Class B
Plan, the balance of $400,00 (plus interest) would be subject to recovery
in future years from such sources.

The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
intended to allow the Distributor to recoup the cost of sales commissions
paid to authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be used to
pay for the following expenses in connection with the distribution of
Class B shares: (i) financing the advance of the service fee payment to
Recipients under the Class B Plan, (ii) compensation and expenses of
personnel employed by the Distributor to support distribution of Class B
shares, and (iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.

ABOUT YOUR ACCOUNT

How To Buy Shares

Alternative Sales Arrangements - Class A and Class B Shares. The
availability of two classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. The Distributor will not accept any order for
$1 million or more of Class B shares on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it
will be more advantageous for that investor to purchase Class A shares of
the Fund instead.

The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.

The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of Class B shares does not constitute a
taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class
B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event for
the holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class B shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to unaffiliated Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution Plan
fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses,
to the extent that such expenses pertain to a specific class rather than
to the Fund as a whole.

Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B shares of the Fund are determined as of the
close of business of the New York Stock Exchange on each day the Exchange
is open, by dividing the Fund's net assets attributable to a class by the
number of shares of that class that are outstanding. The Exchange
normally closes at 4:00 P.M., New York time, but may close earlier on some
days (for example, in case of weather emergencies or on days falling
before a holiday). The Exchange's most recent annual announcement (which
is subject to change) states that it will close on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other days.
Dealers may conduct trading in Municipal Securities at times when the
Exchange is closed (including weekends and holidays). Because the Fund's
net asset value will not be calculated on those days, the Fund's net asset
value per share may be significantly affected, on such days when
shareholders may not purchase or redeem shares.

The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) long-term
debt securities, and short-term debt securities having a remaining
maturity in excess of 60 days, are valued at the mean between the bid and
asked prices determined by a portfolio pricing service approved by the
Fund's Board or obtained from active market makers in the security on the
basis of reasonable inquiry; (ii) short-term debt securities having a
remaining maturity of 60 days or less when purchased or which currently
have maturities of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (iii) securities
or assets for which market quotations are not readily available are valued
at their fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of the
Fund's Board of Trustees.

In the case of Municipal Securities, when last sale information is
not generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis of
quality, yield, maturity, and other special factors involved (such as the
tax-exempt status of the interest paid by Municipal Securities). The
Fund's Board of Trustees has authorized the Manager to employ a pricing
service, bank or broker-dealer experienced in such matters to price any
of the types of securities described above. The Trustees will monitor the
accuracy of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.

Puts, calls, Interest Rate Futures and Municipal Bond Index Futures
are valued at the last sales price on the principal exchange on which they
are traded. If there were no sales on the principal exchange, the last
sale on any exchange is used. In the absence of any sales that day, value
shall be the last reported sales price on the prior trading day or closing
bid or asked prices on the principal exchange closest to the last reported
sales price. When the Fund writes an option, an amount equal to the
premium received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included in
the liability section. The deferred credit is adjusted ("marked-to-
market") to reflect the current market value of the call.

AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy shares. Dividends will begin to accrue on shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of the New York Stock Exchange. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund three days after the transfers are initiated. The Distributor and
the Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
expenses realized by the Distributor, dealers and brokers making such
sales. No sales charge is imposed in certain circumstances described in
the Prospectus because the Distributor or dealer or broker incurs little
or no selling expenses. The term "immediate family" refers to one's
spouse, children, grandchildren, grandparents, parents, parents-in-law,
sons-and daughters-in-law, siblings, a spouse's siblings and a sibling's
spouse.

- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-Distributor
and include the following:

Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund

Oppenheimer Growth Fund

Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust

Oppenheimer Limited-Term Government Fund

Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund

Oppenheimer Global Emerging Growth Fund

Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund

and the following "Money Market Funds":

Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.

There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).

- Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement of intention to purchase Class A shares of the Fund (and other
eligible OppenheimerFunds) sold with a front-end sales charge during the
13-month period from the investor's first purchase pursuant to the Letter
(the "Letter of Intent period"), which may, at the investor's request,
include purchases made up to 90 days prior to the date of the Letter. The
Letter states the investor's intention to make the aggregate amount of
purchases (excluding any purchases made by reinvestments of dividends or
distributions or purchases made at net asset value without sales charge),
which together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of the
Letter) will equal or exceed the amount specified in the Letter. This
enables the investor to obtain the reduced sales charge rate (as set forth
in the Prospectus) applicable to purchases of shares in that amount (the
"intended purchase amount"). Each purchase under the Letter will be made
at the public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the Prospectus.

In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.

If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended amount and exceed
the purchase amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.

In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.

- Terms of Escrow That Apply to Letters of Intent.

1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow
by the Transfer Agent. For example, if the intended purchase amount is
$50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the public offering price adjusted for a $50,000 purchase).
Any dividends and capital gains distributions on the escrowed shares will
be credited to the investor's account.

2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.

3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.

4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.

5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of the Letter) do not include
any shares sold without a front-end sales charge or without being subject
to a Class A contingent deferred sales charge unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of one of the
OppenheimerFunds whose shares were acquired by payment of a sales charge.

6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "How to Exchange Shares," and
the escrow will be transferred to that other fund.

Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
OppenheimerFunds.

There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) (available from the Distributor) or your financial
adviser before initiating Asset Builder payments. The amount of the Asset
Builder investment may be changed or the automatic investments may be
terminated at any time by writing to the Transfer Agent. A reasonable
period (approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves the
right to amend, suspend, or discontinue offering such plans at any time
without prior notice.

Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.

Checkwriting. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue receiving dividends on
those shares until the check is presented to the Fund. Checks may not be
presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills
or to obtain cash at other banks. The Fund reserves the right to amend,
suspend or discontinue offering checkwriting privileges at any time
without prior notice.

How To Sell Shares

Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.

- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board
of Trustees of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash. In that case, the Fund
may pay the redemption proceeds in whole or in part by a distribution "in
kind" of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Value Per Share" and that valuation will be
made as of the time the redemption price is determined.

- Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of these shares is less than $200 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.

Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the OppenheimerFunds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of transfer
to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.

Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the receipt of an order placed by such
dealer or broker, except that if the Distributor receives a repurchase
order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally, that is 4:00
P.M., but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Payment ordinarily will be made within seven days
after the Distributor's receipt of the required redemption documents, with
signature(s) guaranteed as described in the Prospectus.

Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B shareholders should not establish withdrawal
plans. That would require the redemption of shares purchased subject to
a contingent deferred sales charge and held less than 6 years, because of
the imposition of the Class B contingent deferred sales charge on such
withdrawals (except where the Class B contingent deferred sales charge is
waived as described in the Prospectus under "Waivers of Class B Sales
Charges").

By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.

- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" int he Prospectus and below in this Statement of Additional
Information.

- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.

The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent and the Fund shall incur no liability
to the Planholder for any action taken or omitted by the Transfer Agent
in good faith to administer the Plan. Certificates will not be issued for
shares of the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.

For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.

Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.

The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.

The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.

To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.

If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.

How To Exchange Shares

As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All OppenheimerFunds offer
Class A shares (except Oppenheimer Strategic Diversified Income Fund) but
only the following other OppenheimerFunds currently offer Class B shares:

Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund

Oppenheimer New Jersey Tax-Exempt Fund

Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund

Oppenheimer Main Street Income & Growth Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund

Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by
exchange)

Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund

Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
B contingent deferred sales charge is imposed on Class B shares acquired
by exchange if they are redeemed within six years of the initial purchase
of the exchanged Class B shares.

The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or shares covered by a share
certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

When Class B shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class B shares.

When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.

Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).

The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or
as otherwise described in "How to Buy Shares." Daily dividends on newly
purchased shares will not be declared or paid until such time as Federal
Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on
the next business day. Dividends will be declared on shares repurchased
by a dealer or broker for four business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
of the same class in the account will be paid together with the redemption
proceeds.

Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent in order to enable the investor to earn a return on
otherwise idle funds.

The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A and Class B
Shares," above. Dividends are calculated in the same manner, at the same
time and on the same day for shares of each class. However, dividends on
Class B shares are expected to be lower as a result of the asset-based
sales charge on Class B shares, and Class B dividends will also differ in
amount as a consequence of any difference in net asset value between Class
A and Class B shares.

Distributions may be made annually in December out of any net short-
term or long-term capital gains realized from the sale of securities,
premiums from expired calls written by the Fund and net profits from
Hedging Instruments and closing purchase transactions realized in the
twelve months ending on October 31 of the current year. Any difference
between the net asset value of Class A and Class B shares will be
reflected in such distributions. Distributions from net short-term
capital gains are taxable to shareholders as ordinary income and when paid
by the Fund are considered "dividends." The Fund may make a supplemental
distribution of capital gains and ordinary income following the end of its
fiscal year. Long-term capital gains distributions, if any are taxable
as long-term capital gains whether received in cash or reinvested and
regardless of how long Fund shares have been held. There is no fixed
dividend rate (although the Fund may have a targeted dividend rate for
Class A shares) and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.

Tax Status of the Fund's Dividends and Distributions. The Fund intends
to qualify under the Internal Revenue Code during each fiscal year to pay
"exempt-interest dividends" to its shareholders. Exempt-interest
dividends which are derived from net investment income earned by the Fund
on Municipal Securities will be excludable from gross income of
shareholders for Federal income tax purposes. Net investment income
includes the allocation of amounts of income from the Municipal Securities
in the Fund's portfolio which are free from Federal income taxes. This
allocation will be made by the use of one designated percentage applied
uniformly to all income dividends made during the Fund's tax year. Such
designation will normally be made following the end of each fiscal year
as to income dividends paid in the prior year. The percentage of income
designated as tax-exempt may substantially differ from the percentage of
the Fund's income that was tax-exempt for a given period. A portion of
the exempt-interest dividends paid by the Fund may be an item of tax
preference for shareholders subject to the alternative minimum tax. All
of the Fund's dividends (excluding capital gains distributions) paid
during 1994 were exempt from Federal and California income taxes. The
amount of any dividends attributable to tax preference items for purposes
of the alternative minimum tax will be identified when tax information is
distributed by the Fund. 3.2% of the Fund's dividends (excluding
distributions) paid during 1994 were a tax preference item for
shareholders subject to the alternative minimum tax.

A shareholder receiving a dividend from income earned by the Fund
from one or more of: (1) certain taxable temporary investments (such as
certificates of deposit, repurchase agreements, commercial paper and
obligations of the U.S. government, its agencies and instrumentalities);
(2) income from securities loans; (3) income or gains from options or
Futures; or (4) an excess of net short-term capital gain over net long-
term capital loss from the Fund, treats the dividend as a receipt of
either ordinary income or long-term capital gain in the computation of
gross income, regardless of whether the dividend is reinvested. The
Fund's dividends will not be eligible for the dividends-received deduction
for corporations. Shareholders receiving Social Security benefits should
be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject to Federal income tax. Losses realized
by shareholders on the redemption of Fund shares within six months of
purchase (which period may be shortened by regulation) will be disallowed
for Federal income tax purposes to the extent of exempt-interest dividends
received on such shares.

If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified as
a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.

In any year in which the Fund qualifies as a regulated investment
company under the Internal Revenue Code and is exempt from Federal income
tax, (1) the Fund will also be exempt from the California corporate income
and franchise taxes and (2) the Fund will be qualified under California
law to pay certain exempt interest dividends which will be exempt from the
California personal income tax. Individual shareholders of the Fund will
generally not be subject to California personal income tax on exempt-
interest dividends received from the Fund to the extent such distributions
are attributable to interest on California Municipal Securities (and
qualifying obligations of the United States Government), provided that at
least 50% of the Fund's assets at the close of each quarter of its taxable
year are invested in such obligations. Distributions from the Fund
attributable to sources other than California Municipal Securities will
generally be taxable to such shareholders as ordinary income. In
addition, certain distributions to corporate shareholders may be
includable in income subject to the California alternative minimum tax.

Under the Internal Revenue Code, by December 31 each year the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.

Distributions by the Fund from investment income and long-term and
short-term capital gains will generally not be excludable from taxable
income in determining the California corporate franchise or income tax for
corporate shareholders of the Fund. Certain distributions may also be
includable in income subject to the corporate alternative minimum tax.

The Internal Revenue Code requires that a holder (such as the Fund)
of a zero coupon security accrue as income each year a portion of the
discount at which the security was purchased even though the Fund receives
no interest payment in cash on the security during the year. As an
investment company, the Fund must pay out substantially all of its net
investment income each year or be subject to excise taxes, as described
above. Accordingly, when the Fund holds zero coupon securities, it may
be required to pay out as an income distribution each year an amount which
is greater than the total amount of cash interest the Fund actually
received during that year. Such distributions will be made from the cash
assets of the Fund or by liquidation of portfolio securities, if
necessary. The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution than they
would have had in the absence of such transactions.

The Fund had an unused capital loss carryover of approximately
$841,000 at December 31, 1994. It will expire in 2002.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. Class B
shareholders should be aware that as of the date of this Statement of
Additional Information, not all of the OppenheimerFunds offer Class B
shares. To elect this option, a shareholder must notify the Transfer
Agent in writing and either have an existing account in the fund selected
for reinvestment or must obtain a prospectus for that fund and an
application from the Distributor to establish an account. The investment
will be made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other OppenheimerFunds may be invested
in shares of this Fund on the same basis.

Additional Information About the Fund

The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities, securities and handling the delivery of such
securities to and from the Fund. The Manager has represented to the Fund
that the banking relationships with the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.

Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholders of Oppenheimer
California Tax-Exempt Fund:

We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer California Tax-Exempt Fund as of December 31,
1994, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in
the six-year period then ended and the period from November 3, 1988
(commencement of operations) to December 31, 1988. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994, by
correspondence with the custodian and brokers; and where confirmations
were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Oppenheimer California Tax-Exempt Fund as of December 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the six-year period then
ended and the period from November 3, 1988 (commencement of operations)
to December 31, 1988, in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

January 23, 1995
<PAGE>

STATEMENT OF INVESTMENTS December 31, 1994

<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
----------------- ------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--97.5%

CALIFORNIA--90.2% Anaheim, California Public Financing Authority
Tax Allocation Revenue Bonds, MBIA Insured,
8.37%, 12/28/18(1) Aaa/AAA $ 3,000,000 $ 2,725,323

California Educational Facilities Authority
Revenue Bonds, Stanford University Project,
Series J, 6%, 11/1/09 Aaa/AAA 2,205,000 2,110,915

California Health Facilities Financing Authority
Revenue Bonds, Children's Hospital of
Los Angeles, Prerefunded, Series A, 7.125%, 6/1/21 NR/A+ 1,000,000 1,086,512

California Health Facilities Financing Authority
Revenue Bonds, Henry Mayo Newhall Project,
Series A, OSHPD Insured, 8%, 10/1/18 NR/A 3,000,000 3,195,495

California Health Facilities Financing Authority
Revenue Bonds, La Palma Hospital Medical Center,
OSHPD Insured, 7.10%, 2/1/13 NR/A 1,875,000 1,839,345

California Health Facilities Financing Authority
Revenue Refunding Bonds, Catholic Health
Facilities, Series A, MBIA Insured, 5%, 7/1/11 Aaa/AAA 7,500,000 6,238,372

California Housing Finance Agency Revenue Bonds,
Home Mtg., Series C, 6.75%, 2/1/25 Aa/AA-- 10,000,000 9,554,669

California Housing Finance Agency Revenue Bonds,
Home Mtg., Series C, FHA Insured, 7.60%, 8/1/30 Aa/AA-- 1,655,000 1,674,746

California Pollution Control Financing Authority
Revenue Bonds, Pacific Gas and Electric Co.,
Series B, 8.875%, 1/1/10 A1/A 2,275,000 2,485,587

California Pollution Control Financing Authority
Revenue Refunding Bonds, Pacific Gas and
Electric Co., Series A, 7.50%, 5/1/16 A1/A 1,450,000 1,511,783

California State Franchise Tax Board Refunding
Certificates of Participation, 6.90%, 10/1/06 A/A-- 1,000,000 1,026,916

California State General Obligation Bonds,
FSA Insured, 5.50%, 4/1/19 Aaa/AAA/A 5,500,000 4,627,056

California State Public Works Board Lease
Revenue Bonds, Department of Corrections
California State Prison, Series B, MBIA Insured,
5.50%, 12/1/12 Aaa/AAA/A-- 4,600,000 4,024,424

California State Public Works Board Lease
Revenue Bonds, Regents of the University of
California, Prerefunded, Series A, 7%, 9/1/15 Aaa/AAA/AAA 2,650,000 2,855,836

California State Public Works Board Lease
Revenue Bonds, University of California Project,
Series A, AMBAC Insured, 6.40%, 12/1/16 Aaa/AAA/AAA 5,000,000 4,795,374

Campbell, California Certificates of Participation,
Civic Center Project, 6.75%, 10/1/17 A/A-- 1,130,000 1,092,930

Campbell, California Certificates of Participation,
Civic Center Project, Prerefunded, 6.75%, 10/1/17 Aaa/NR 1,870,000 1,994,381

</TABLE>

<PAGE>

RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------

<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)

Capistrano, California University School District
Community Facilities Special Tax Bonds,
No. 87-1, 7.60%, 9/1/14 NR/NR $ 4,000,000 $ 3,785,467

Cathedral City, California Improvement Bond
Act of 1915 Bonds, Limited Obligation Assessment
District No. 88-3, 7.85%, 9/2/11 NR/NR 1,980,000 1,976,018

Contra Costa, California Water District Revenue
Bonds, Series E, AMBAC Insured, 5.75%, 10/1/18 Aaa/AAA/AAA 3,340,000
2,929,210

Corona, California Certificates of Participation,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 8,175,000 10,362,287

Escondido, California Joint Powers Financing Authority
Revenue Bonds, AMBAC Insured, 6.125%, 9/1/11 Aaa/AAA/AAA 3,500,000
3,327,908

Fresno, California Water System Revenue Bonds,
Prerefunded, Series A, 7.30%, 6/1/20 NR/NR 1,500,000 1,610,379

Industry, California Improvement Bond Act of
1915 Bonds, Assessment District No. 91-1, 7.65%, 9/2/21 NR/NR 1,750,000 1,749,582

Intermodal Container Transfer Facility Joint
Power Authority California Revenue Refunding
Bonds, Southern Pacific Transportation Co.,
Series A, 7.70%, 11/1/14 NR/A+ 1,000,000 1,013,241

La Quinta, California Redevelopment Agency
Refunding Tax Allocation Bonds, La Quinta Project,
Prerefunded, 8.40%, 9/1/12 Aaa/AAA 1,000,000 1,144,185

Los Angeles County, California Certificates of
Participation, 6.50%, 3/1/10 A/A 1,500,000 1,445,295

Los Angeles County, California Certificates of
Participation, Correctional Facilities Project,
MBIA Insured, 6.50%, 9/1/13 Aaa/AAA 3,600,000 3,523,503

Los Angeles County, California Transportation
Revenue Bonds, Commission Sales Tax,
Prerefunded, Series A, 6.75%, 7/1/11 Aaa/AA-- 4,260,000 4,537,778

Los Angeles County, California Transportation
Revenue Bonds, Commission Sales Tax,
Prerefunded, Series A, FGIC Insured, 6.75%, 7/1/18 Aaa/AAA/AAA 4,000,000
4,263,068

Los Angeles, California Community Redevelopment
Agency Finance Revenue Bonds, Grand Century
Qualified Redevelopment, Series A, 5.90%, 12/1/26 A/A 2,600,000 2,100,665

Los Angeles, California Community Redevelopment
Agency Refunding Tax Allocation Bonds,
North Hollywood, Series C, MBIA Insured, 7%, 7/1/15 Aaa/AAA 2,000,000
2,037,116

Los Angeles, California Department of
Water & Power Electric Plant Revenue Bonds,
Second Issue 1991, 6%, 6/1/12 Aa/AA 2,500,000 2,309,447

Los Angeles, California Department of
Water & Power Electric Plant Revenue Bonds,
Second Issue 1991, 6%, 6/1/13 Aa/AA 3,200,000 2,948,909

</TABLE>

<PAGE>

STATEMENT OF INVESTMENTS (Continued)

RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------

<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED) M-S-R Public Power Agency of California Revenue
Bonds, San Juan Project, Series C, AMBAC Insured,
6.875%, 7/1/19 Aaa/AAA $2,000,000 $2,003,446

Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project, 5%, 7/1/20 Aa/AA 7,750,000 5,956,293

Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project, 6%, 7/1/21 Aa/AA 5,000,000 4,455,845

Metropolitan Water District Revenue Bonds, Southern
California Waterworks Project, 6.557%, 10/30/20(1) Aa/AA 4,700,000 3,226,827

Oakland, California Redevelopment Agency
Tax Allocation Refunding Bonds, MBIA Insured,
7.472%, 9/1/19(1) Aaa/AAA 4,300,000 3,308,729

Oakland, California Special Edition Revenue
Refunding Bonds, Series A, FGIC Insured, 7.60%, 8/1/21 Aaa/AAA/AAA 2,000,000
2,117,466

Orange County, California Community Facilities
District No. 87-3 Special Tax Bonds, Mission Viejo,
Prerefunded, Series A, 8.05%, 8/15/08 A/NR 3,000,000 3,298,365

Orange County, California Community Facilities
District Special Tax Bonds, No. 88-1 Aliso Viejo,
Prerefunded, Series A, 7.10%, 8/15/05 NR/AAA 1,440,000 1,567,876

Orange County, California Community Facilities
District Special Tax Bonds, No. 88-1 Aliso Viejo,
Prerefunded, Series A, 7.35%, 8/15/18 NR/AAA 8,000,000 8,816,407

Paramount, California Redevelopment Agency
Tax Allocation Revenue Bonds, Redevelopment
Project No. 1, Prerefunded, Series A, 9.65%, 6/1/16 NR/AAA/BBB 6,000,000 6,240,240

Pittsburg, California Improvement Bond Act of 1915
Bonds, Assessment District 1990-01, 7.75%, 9/2/20 NR/NR 1,235,000 1,218,556

Rancho, California Water District Financing Authority
Revenue Refunding Bonds, AMBAC Insured, 5%, 8/15/14 Aaa/AAA/AAA 4,500,000
3,629,128

Redding, California Electric System Revenue Certificates
of Participation, FGIC Insured, 6.279%, 6/1/19(1) Aaa/AAA/AAA 4,000,000 2,912,375

Redding, California Electric System Revenue Certificates
of Participation, MBIA Insured, 8.264%, 7/8/22(1) Aaa/AAA 2,500,000 2,278,397

Riverside County, California Community Facilities
District Bonds, Special Tax No. 88-12, 7.55%, 9/1/17 NR/NR 3,000,000 2,868,294

Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds, Series B,
FGIC Insured, 7.247%, 8/15/18(1) Aaa/AAA/AAA 5,500,000 4,814,678

Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds, Series D,
MBIA Insured, 5.25%, 11/15/20 Aaa/AAA/A-- 2,500,000 2,020,630
</TABLE>

<PAGE>

RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------

<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED) Saddleback Community College District,
California Refunding Certificates of Participation,
BIG Insured, 7%, 8/1/19 Aaa/AAA $ 1,000,000 $ 1,018,614

San Bernardino County, California Certificates
of Participation, Medical Center Financing Project,
5.50%, 8/1/17 Baa1/A-- 7,500,000 5,946,885

San Diego County, California Certificates of
Participation, MBIA Insured, 7.321%, 11/18/19(1) Aaa/AAA 2,000,000 1,816,736

San Diego County, California Water Authority
Revenue Certificates of Participation, Series B,
MBIA Insured, 8.22%, 4/8/21(1) Aaa/AAA 3,000,000 2,642,967

San Francisco, California City & County Airport
Commission International Airport Revenue
Refunding Bonds, Second Series, Issue I,
AMBAC Insured, 6.30%, 5/1/11 Aaa/AAA/AAA 4,385,000 4,254,191

San Francisco, California City & County Sewer
Revenue Refunding Bonds, FGIC Insured,
5.375%, 10/1/16 Aaa/AAA/AAA 2,000,000 1,677,392

San Joaquin Hills, California Transportation Corridor
Agency Toll Road Revenue Bonds, Sr. Lien, 5%, 1/1/33 NR/NR/BBB 8,000,000
4,963,848

San Joaquin Hills, California Transportation Corridor
Agency Toll Road Revenue Bonds, Sr. Lien, 6.75%, 1/1/32 NR/NR/BBB 7,000,000
5,757,191

San Jose, California Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment
Project, MBIA Insured, 5%, 8/1/20 Aaa/AAA/A 2,000,000 1,546,236

South Orange County, California Public Financing
Authority Special Tax Revenue Bonds, Sr. Lien,
Series A, MBIA Insured, 6.20%, 9/1/13 Aaa/AAA/NR 3,000,000 2,781,072

Southern California Home Financing Authority
Single Family Mtg. Revenue Bonds, GNMA and
FNMA Mtg.-Backed Securities, Series A, 7.35%, 9/1/24 NR/AAA 1,670,000
1,684,004

Southern California Public Power Authority
Power Project Revenue Bonds, Prerefunded, 6%, 7/1/18 Aaa/AAA 5,500,000
5,576,994

Southern California Public Power Authority
Power Project Revenue Refunding Bonds,
Series A, 5.50%, 7/1/12 Aa/AA 1,000,000 863,544

Southern California Public Power Authority
Revenue Bonds, San Juan Unit 3, Series A,
MBIA Insured, 5%, 1/1/20 Aaa/AAA 3,000,000 2,325,408

Southern California Public Power Authority
Revenue Refunding Bonds, 8.012%, 7/1/12(1) Aa/AA-- 5,500,000 4,613,531

University of California Revenue Bonds,
Multiple Purpose Projects, Prerefunded,
Series A, 6.875%, 9/1/16 NR/A-- 2,200,000 2,365,123

Victorville, California Special Tax Bonds,
Community Facilities District No. 90-1
(Western Addition), Series A, 8.30%, 9/1/16 NR/NR 2,250,000 2,016,508

------------
216,487,518

</TABLE>

<PAGE>

STATEMENT OF INVESTMENTS (Continued)

RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------

<S> <C> <C> <C> <C>
U.S. POSSESSIONS--7.3% Guam Power Authority Revenue Bonds, Series A,
6.625%, 10/1/14 NR/BBB $ 2,000,000 $ 1,914,920

Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Prerefunded, Series T, 6.50%, 7/1/22 NR/AAA 2,250,000 2,372,316

Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Prerefunded, Series T, 6.625%, 7/1/18 NR/AAA 995,000 1,056,283

Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Series T, 6.625%, 7/1/18 Baa1/A 4,005,000 3,957,997

Puerto Rico Commonwealth Public
Improvement General Obligation Bonds,
YCNS, MBIA Insured, 7.384%, 7/1/08(1) Aaa/AAA 3,500,000 2,938,047

Puerto Rico Electric Power Authority Revenue
Bonds, Series P, 7%, 7/1/21 Baa1/A-- 4,000,000 4,058,727

Puerto Rico Housing Finance Corp.
Single Family Mtg. Revenue Bonds, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 1,100,000 1,133,097
------------
17,431,387
------------ ------------
TOTAL INVESTMENTS, AT VALUE (COST $251,584,072) 97.5% 233,918,905
------------ ------------
OTHER ASSETS NET OF LIABILITIES 2.5 5,986,979
------------ ------------
NET ASSETS 100.0% $239,905,884
============
============
</TABLE>

1. Represents the current interest rate for a variable
rate bond. These variable rate bonds known as "inverse
floaters" pay interest at a rate that varies inversely
with short-term interest rates. As interest rates rise,
inverse floaters produce less current income. Their
price may be more volatile than the price of a
comparable fixed-rate security. Inverse floaters amount
to $31,277,610 or 13% of the Fund's net assets, at
December 31, 1994.

See accompanying Notes to Financial Statements.

<PAGE>

STATEMENT OF ASSETS AND LIABILITIES December 31, 1994

<TABLE>

<S> <C> <C>
ASSETS Investments, at value (cost $251,584,072)--see accompanying statement $ 233,918,905

Cash 337,526

Receivables:

Interest 5,314,901
Investments sold 2,137,060
Shares of beneficial interest sold 295,248

Other 45,415

-------------
Total assets 242,049,055

LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 911,990
Dividends 901,768
Distribution and service plan fees--Note 4 158,414
Other 170,999
-------------
Total liabilities 2,143,171

NET ASSETS $ 239,905,884
=============

COMPOSITION OF Paid-in capital $ 258,829,341
NET ASSETS Undistributed (overdistributed) net investment income (170,011)
Accumulated net realized gain (loss) from investment transactions (1,088,278)
Net unrealized appreciation (depreciation) on investments--Note 3 (17,665,168)
-------------
Net assets $ 239,905,884
=============

NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share
(based on net assets of $219,682,026 and 23,255,729
shares of beneficial interest outstanding) $9.45
Maximum offering price per share (net asset
value plus sales charge of 4.75% of offering price) $9.92

Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $20,223,858 and 2,141,617 shares of beneficial interest outstanding) $9.44
</TABLE>

See accompanying Notes to Financial Statements.

<PAGE>

STATEMENT OF OPERATIONS For the Year Ended December
31, 1994

<TABLE>

<S> <C> <C>
INVESTMENT INCOME Interest $18,420,122

EXPENSES Management fees--Note 4 1,560,360

Distribution and service plan fees:
Class A--Note 4 611,139
Class B--Note 4 165,277

Transfer and shareholder servicing agent fees--Note 4 140,732

Trustees' fees and expenses 55,562

Shareholder reports 45,421

Legal and auditing fees 33,707

Custodian fees and expenses 23,145

Registration and filing fees--Class B 4,090

Other 32,365

------------
Total expenses 2,671,798

NET INVESTMENT INCOME (LOSS) 15,748,324

REALIZED AND UNREALIZED Net realized gain (loss) on investments (999,410)
GAIN (LOSS) ON Net change in unrealized appreciation or d
depreciation on investments
(39,209,125)
INVESTMENTS ------------
Net realized and unrealized gain (loss)
on investments (40,208,535)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$(24,460,211)
============
</TABLE>

See accompanying Notes to Financial Statements.

<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,
1994 1993

-----------------------------

<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 15,748,324 $ 14,239,272

Net realized gain (loss) on investments (999,410) 1,489,475

Net change in unrealized appreciation or depreciation

on investments (39,209,125) 14,305,322
------------ ------------
Net increase (decrease) in net assets resulting from operations (24,460,211) 30,034,069

DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.605 and $.648 per share, respectively) (14,920,148)
(14,653,931)
SHAREHOLDERS Class B ($.526 and $.361 per share, respectively) (857,567) (163,836)

Distributions from net realized gain on investments:
Class A ($.072 per share) -- (1,740,286)
Class B ($.072 per share) -- (60,371)

BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 (8,912,194) 48,808,693

Net increase (decrease) in net assets resulting from Class B
beneficial interest transactions--Note 2 12,644,856 9,837,578

NET ASSETS Total increase (decrease) (36,505,264) 72,061,916

Beginning of period 276,411,148 204,349,232
------------ ------------
End of period [including undistributed (overdistributed) net investment
income of $(170,011) and $275,259, respectively] $239,905,884 $276,411,148
============
============
</TABLE>

See accompanying Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

Net asset value, end of period $ 9.45 $ 10.97 $ 10.35 $ 10.22 $ 9.86 $ 9.94
======= ======= ======= =======
====== =======
TOTAL RETURN, AT NET ASSET VALUE(3) (8.49)% 13.26% 8.28% 10.93% 6.38%
11.62%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $219,682 $266,490 $204,349 $145,163 $92,514 $52,342

Average net assets (in thousands) $248,850 $245,193 $174,055 $115,661 $72,879 $29,308

Number of shares outstanding at
end of period (in thousands) 23,256 24,290 19,738 14,200 9,386 5,268

Portfolio turnover rate(5) 21.9% 13.7% 26.8% 26.6% 14.5% 20.7%
</TABLE>

CLASS B
--------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1988(2) 1994 1993(1)
------ ---- ------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.53 $10.98 $10.72

Income (loss) from investment operations:
Net investment income .09 .54 .35
Net realized and unrealized gain
(loss) on investments .05 (1.55) .34
------ ------- ------
Total income (loss) from investment
Operations .14 (1.01) .69

Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.53) (.36)
Distributions from net realized
gain on investments -- -- (.07)
------ ------- ------
Total dividends and distributions
to shareholders (.09) (.53) (.43)

Net asset value, end of period $9.58 $ 9.44 $10.98
====== ======= ======
TOTAL RETURN, AT NET ASSET VALUE(3) 1.43% (9.39)% 6.66%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $5,825 $20,224 $9,921

Average net assets (in thousands) $2,377 $16,552 $5,218

Number of shares outstanding at
end of period (in thousands) 608 2,142 904

Ratios to average net assets:
Net investment income 5.95%(4) 5.17% 4.57%(4)
Expenses, before voluntary
assumption by the Manager 2.25%(4) 1.73% 1.79%(4)
Expenses, net of voluntary
assumption by the Manager --(4) N/A N/A

Portfolio turnover rate(5) 0.0% 21.9% 13.7%

1. For the period from May 1, 1993 (inception of
offering) to December 31, 1993.

2. For the period from November 3, 1988 (commencement
of operations) to December 31, 1988.

4. Annualized.

See accompanying Notes to Financial Statements.
</TABLE>

<PAGE>

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT
ACCOUNTING POLICIES

Oppenheimer California Tax-Exempt Fund (the Fund) is
registered under the Investment Company Act of 1940,
as amended, as a non-diversified, open-end management
investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class B shares. Class A
shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical rights to
earnings, assets and voting privileges, except that
each class has its own distribution and/or service
plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to
matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after
the date of purchase. The following is a summary of
significant accounting policies consistently followed
by the Fund.

INVESTMENT VALUATION. Portfolio securities are valued
at 4:00 p.m. (New York time) 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
debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Long-term
debt securities which cannot be valued by the approved
portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is
satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market
value, or under consistently applied procedures
established by the Board of Trustees to determine fair
value in good faith. Short-term 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 INCOME 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 tax provision is required. At December 31, 1994,
the Fund had available for federal income tax purposes
an unused capital loss carryover of approximately
$841,000 which will expire in 2002.

TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service.
During the year ended December 31, 1994, the Fund's
projected benefit obligations were reduced by $23,924,
resulting in an accumulated liability of $40,422. No
payments have been made under the plan.

DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
shares from net investment income each day the New York
Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized
gains on investments, if any, will be declared at least
once each year.

CHANGE IN ACCOUNTING 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. Effective January 1, 1994, the
Fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. As a result, the
Fund changed the classification of distributions to
shareholders to better disclose the differences between
financial statement amounts and distributions
determined in accordance with income tax regulations.
Accordingly, subsequent to December 31, 1993, amounts
have been reclassified to reflect a decrease in
undistributed net investment income of $293,771 and an
increase in accumulated net realized gain on
investments of $293,771. During the year ended December
31, 1994, in accordance with Statement of Position
93-2, undistributed net investment income was decreased
by $122,108 and accumulated net realized loss on
investments was decreased by the same amount.

1. OTHER
SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
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. 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. For
bonds acquired after April 30, 1993, accrued market
discount is recognized at maturity or disposition as
taxable ordinary income. Taxable ordinary income is
realized to the extent of the lesser of gain or accrued
market discount.

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:

YEAR ENDED DECEMBER 31, 1994 YEAR ENDED DECEMBER 31, 1993(1)
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>

Class A:
Sold 4,682,338 $ 47,539,656 7,029,778 $ 75,603,080
Dividends and distributions reinvested 895,069 9,014,619 913,845 9,891,046
Redeemed (6,611,428) (65,466,469) (3,391,817) (36,685,433)
---------- ------------ ---------- ------------
Net increase (decrease) (1,034,021) $ (8,912,194) 4,551,806 $ 48,808,693
========== ============
========== ============
Class B:
Sold 1,595,370 $ 16,152,328 916,412 $ 9,977,857
Dividends and distributions reinvested 52,979 528,961 12,695 139,138
Redeemed (410,584) (4,036,433) (25,255) (279,417)
---------- ------------ ---------- ------------
Net increase 1,237,765 $ 12,644,856 903,852 $ 9,837,578
========== ============
========== ============

1. For the year ended December 31, 1993 for Class A
shares and for the period from May 1, 1993 (inception
of offering) to December 31, 1993 for Class B Shares.

3. UNREALIZED GAINS AND LOSSED ON INVESTMENTS
At December 31, 1994, net unrealized depreciation
on investments of $17,665,168 was composed of gross
appreciation of $2,660,707, and gross depreciation of
$20,325,875.

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 an annual fee of .60% on the first $200 million
of net assets, .55% on the next $100 million, .50% on the
next $200 million, .45% on the next $250 million, .40%
on the next $250 million and
35% on net assets in excess of $1 billion. The Manager
has agreed to assume Fund expenses (with specified
exceptions) in excess of the regulatory limitation of
the State of California.

For the year ended December 31, 1994,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $999,822, of which $193,221
was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. During
the year ended December 31, 1994, OFDI received
contingent deferred sales charges of $79,893 upon
redemption of Class B shares.

Oppenheimer Shareholder Services (OSS),
a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of
providing such services are allocated ratably to these
companies.

Under separate approved plans, each
class may expend up to .25% of its net assets annually
to reimburse OFDI for costs incurred in connection with
the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to
brokers, dealers, banks and other institutions. In
addition, Class B shares are subject to an asset-based
sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing
costs. In the event of termination or discontinuance of
the Class B plan, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales
charge to OFDI for distribution expenses incurred on
Class B shares sold prior to termination or
discontinuance of the plan. During the year ended
December 31, 1994, OFDI paid $19,407 to an affiliated
broker/dealer as reimbursement for Class A personal
service and maintenance expenses and retained $157,962
as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.
</TABLE>

<PAGE>
APPENDIX A

Description of Ratings Categories

Municipal Bonds

- - Moody's Investor Services, Inc. The ratings of Moody's Investors
Service, Inc. ("Moody's") for Municipal Bonds are Aaa, Aa, A, Baa, Ba,
B, Caa, Ca and C. Municipal Bonds rated "Aaa" are judged to be of the
"best quality." The rating of Aa is assigned to bonds which are of "high
quality by all standards," but as to which margins of protection or other
elements make long-term risks appear somewhat larger than "Aaa" rated
Municipal Bonds. The "Aaa" and "Aa" rated bonds comprise what are
generally known as "high grade bonds." Municipal Bonds which are rated
"A"
by Moody's possess many favorable investment attributes and are considered
"upper medium grade obligations." Factors giving security to principal
and interest of A rated bonds are considered adequate, but elements may
be present which suggest a susceptibility to impairment at some time in
the future. Municipal Bonds rated "Baa" are considered "medium grade"
obligations. They are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well. Bonds which are rated "Ba" are judged to have
speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this
class. Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small. Bonds which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest. Bonds which are rated "Ca" represent
obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. Bonds which are rated
"C" are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing. Those bonds in the Aa, A, Baa, Ba and B groups
which Moody's believes possess the strongest investment attributes are
designated Aa1, A1, Baa1, Ba1 and B1 respectively.

In addition to the alphabetic rating system described above, Municipal
Bonds rated by Moody's which have a demand feature that provides the
holder with the ability to periodically tender ("put") the portion of the
debt covered by the demand feature, may also have a short-term rating
assigned to such demand feature. The short-term rating uses the symbol
VMIG to distinguish characteristics which include payment upon periodic
demand rather than fund or scheduled maturity dates and potential reliance
upon external liquidity, as well as other factors. The highest investment
quality is designated by the VMIG 1 rating and the lowest by VMIG 4.

- - Standard & Poor's Corporation. The ratings of Standard & Poor's
Corporation ("S&P") for Municipal Bonds are AAA (Prime), AA (High Grade),
A (Good Grade), BBB (Medium Grade), BB, B, CCC, CC, and C (speculative
grade). Bonds rated in the top four categories (AAA, AA, A, BBB) are
commonly referred to as "investment grade." Municipal Bonds rated AAA are
"obligations of the highest quality." The rating of AA is accorded
issues with investment characteristics "only slightly less marked than
those of the prime quality issues." The rating of A describes "the third
strongest capacity for payment of debt service." Principal and interest
payments on bonds in this category are regarded as safe. It differs from
the two higher ratings because, with respect to general obligations bonds,
there is some weakness, either in the local economic base, in debt burden,
in the balance between revenues and expenditures, or in quality of
management. Under certain adverse circumstances, any one such weakness
might impair the ability of the issuer to meet debt obligations at some
future date. With respect to revenue bonds, debt service coverage is
good, but not exceptional. Stability of the pledged revenues could show
some variations because of increased competition or economic influences
on revenues. Basic security provisions, while satisfactory, are less
stringent. Management performance appears adequate. The BBB rating is
the lowest "investment grade" security rating. The difference between A
and BBB ratings is that the latter shows more than one fundamental
weakness, or one very substantial fundamental weakness, whereas the former
shows only one deficiency among the factors considered. With respect to
revenue bonds, debt coverage is only fair. Stability of the pledged
revenues could show variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger. Bonds rated "BB"
have less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which would lead to
inadequate capacity to meet timely interest and principal payments. Bonds
rated "B" have a greater vulnerability to default, but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. Bonds rated "CCC"
have a current identifiable vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. Bonds noted "CC" typically
are debt subordinated to senior debt which is assigned on actual or
implied "CCC" debt rating. Bonds rated "C" typically are debt
subordinated to senior debt which is assigned an actual or implied "CCC-"
debt rating. The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are
continued. Bonds rated "D" are in payment default. The "D" rating
category is used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during the grace
period. The "D" rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.

The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.

- - Fitch. The ratings of Fitch Investors Service, Inc. for Municipal Bonds
are AAA, AA, A, BBB, BB, B, CCC, CC, C, DDD, DD, and D. Municipal Bonds
rated AAA are judged to be of the "highest credit quality." The rating
of AA is assigned to bonds of "very high credit quality." Municipal Bonds
which are rated A by Fitch are considered to be of "high credit quality."
The rating of BBB is assigned to bonds of "satisfactory credit quality."
The A and BBB rated bonds are more vulnerable to adverse changes in
economic conditions than bonds with higher ratings. Bonds rated AAA, AA,
A and BBB are considered to be of investment grade quality. Bonds rated
below BBB are considered to be of speculative quality. The ratings of
"BB" is assigned to bonds considered by Fitch to be "speculative." The
rating of "B" is assigned to bonds considered by Fitch to be "highly
speculative." Bonds rated "CCC" have certain identifiable characteristics
which, if not remedied, may lead to default. Bonds rated "CC" are
minimally protected. Default in payment of interest and/or principal
seems probable over time. Bonds rated "C" are in imminent default in
payment of interest or principal. Bonds rated "DDD", "DD" and "D" are in
default on interest and/or principal payments. DDD represents the highest
potential for recovery on these bonds, and D represents the lowest
potential for recovery.

Municipal Notes

- Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG"). Notes bearing the
designation MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established
and broad-based access to the market for financing. Notes bearing the
designation "MIG-2" are of high quality with ample margins of protection,
although not as large as notes rated "MIG." Such short-term notes which
have demand features may also carry a rating using the symbol VMIG as
described above, with the designation MIG-1/VMIG 1 denoting best quality,
with superior liquidity support in addition to those characteristics
attributable to the designation MIG-1.

- S&P's rating for Municipal Notes due in three years or less are SP-1,
SP-2, and SP-3. SP-1 describes issues with a very strong capacity to pay
principal and interest and compares with bonds rated A by S&P; if modified
by a plus sign, it compares with bonds rated AA or AAA by S&P. SP-2
describes issues with a satisfactory capacity to pay principal and
interest, and compares with bonds rated BBB by S&P. SP-3 describes issues
that have a speculative capacity to pay principal and interest.

- Fitch's rating for Municipal Notes due in three years or less are F-
1+, F-1, F-2, F-3, F-S and D. F-1+ describes notes with an exceptionally
strong credit quality and the strongest degree of assurance for timely
payment. F-1 describes notes with a very strong credit quality and
assurance of timely payment is only slightly less in degree than issues
rated F-1+. F-2 describes notes with a good credit quality and a
satisfactory assurance of timely payment, but the margin of safety is not
as great for issues assigned F-1+ or F-1 ratings. F-3 describes notes
with a fair credit quality and an adequate assurance of timely payment,
but near-term adverse changes could cause such securities to be rated
below investment grade. F-S describes notes with weak credit quality.
Issues rated D are in actual or imminent payment default.

Corporate Debt

The "other debt securities" included in the definition of temporary
investments are corporate (as opposed to municipal) debt obligations. The
Moody's, S&P and Fitch corporate debt ratings shown do not differ
materially from those set forth above for Municipal Bonds.

Commercial Paper

- Moody's The ratings of commercial paper by Moody's are Prime-1,
Prime-2, Prime-3 and Not Prime. Issuers rated Prime-1 have a superior
capacity for repayment of short-term promissory obligations. Issuers
rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. Issuers rated Prime-3 have an acceptable capacity
for repayment of short-term promissory obligations. Issuers rated Not
Prime do not fall within any of the Prime rating categories.

- S&P The ratings of commercial paper by S&P are A-1, A-2, A-3, B, C,
and D. A-1 indicates that the degree of safety regarding timely payment
is strong.A-2 indicates capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues
designated A-1. A-3 indicates an adequate capacity for timely payments.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. B
indicates only speculative capacity for timely payment. C indicates a
doubtful capacity for payment. D is assigned to issues in default.

- Fitch The ratings of commercial paper by Fitch are similar to its
ratings of Municipal Notes, above.

<PAGE>
APPENDIX B

TAX-EQUIVALENT YIELDS

The equivalent yield tables below compare tax-free income with taxable
income under Federal individual income tax rates, and California state
individual income tax rates effective January 1, 1995 (California tax
brackets are generally adjusted for inflation sometime between June 1 and
August 1 each year). "Combined Taxable Income" refers to the net amount
subject to Federal and California income taxes after deductions and
exemptions. The tables assume that an investor's highest tax bracket
applies to the change in taxable income resulting from a switch between
taxable and non-taxable investments, and that state tax payments are
currently deductible for Federal tax purposes and that the investor is not
subject to Federal or state alternative minimum tax. The income tax
brackets are subject to indexing in future years to reflect changes in the
Consumer Price Index. The brackets do not reflect the phaseout of
itemized deductions and personal exemptions at higher income levels,
resulting in higher effective tax rates (and tax equivalent yields).

Combined Taxable Income
Oppenheimer California Tax-Exempt Fund Yield of:
Joint Return Effective Tax Bracket3.0%3.5%4.0%4.5%5.0%5.5%6.0%
But
Over Not Over Federal Cal. Combined Is Approximately Equivalent to a Taxable Yield of:

<S> <C> <C> <C> <C> <C> <C> <C> <C><C>
<C> <C>
$ 22,384$ 35,324 15.00% 4.00%18.40% 3.68%4.29%4.90%5.51%6.13%6.74%7.35%
$ 35,324$ 39,000 15.00% 6.00%20.10% 3.75%4.38%5.01%5.63%6.26%6.88%7.51%
$ 39,000$ 49,038 28.00% 6.00%32.32% 4.43%5.17%5.91%6.65%7.39%8.13%8.87%
$ 49,038$ 61,974 28.00% 8.00%33.76% 4.53%5.28%6.04%6.79%7.55%8.30%9.06%
$ 61,974$ 94,250 28.00% 9.30%34.70% 4.59%5.36%6.13%6.89%7.66%8.42%9.19%
$ 94,250$143,600 31.00% 9.30%37.42% 4.79%5.59%6.39%7.19%7.99%8.79%9.59%
$143,600$214,928 36.00% 9.30%41.95% 5.17%6.03%6.89%7.75%8.61%9.47%10.34%
$214,928$256,500 36.00% 10.00% 42.40% 5.21%6.08%6.94%7.81%8.68%9.55%10.42%
$256,500$429,858 39.60% 10.00% 45.64% 5.52%6.44%7.36%8.28%9.20%10.12%11.04%
$429,858 39.60% 11.00% 46.24% 5.58%6.51%7.44%8.37%9.30%10.23%11.16%

</TABLE>

Combined Taxable Income
Oppenheimer California Tax-Exempt Fund Yield of:
Joint Return Effective Tax Bracket6.5%7.0%
But
Over Not Over Federal Cal. Combined Is Approximately Equivalent to a Taxable Yield of:

Single Return:

Oppenheimer California Tax-Exempt Fund Yield of:
Effective Tax Bracket3.0%3.5%4.0%4.5%5.0%5.5%6.0%
But
Over Not Over Federal Cal. Combined Is Approximately Equivalent to a Taxable Yield of:

<TABLE>
<CAPTION>
Single Return:

Oppenheimer California Tax-Exempt Fund Yield of:
Effective Tax Bracket6.5%7.0%
But
Over Not Over Federal Cal. Combined Is Approximately Equivalent to a Taxable Yield of:

<PAGE>

Appendix C

Industry Classifications

Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking

<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203

Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203

Transfer Agent and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048

Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043

Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202

Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036

<PAGE>

Oppenheimer California Tax-Exempt Fund
Annual Report December 31, 1994

[FIGURE NUMBER 1]
Photo of couple hiking

"We need
more
income,
not more
taxes."

[LOGO]

<PAGE>

Yield

Standardized Yield

For the 30 Days Ended 12/31/94:(4)

Class A

5.74%

Class B

5.28%

This Fund is for people who want to earn income that's exempt from taxes.

How Your Fund Is Managed

Oppenheimer California Tax-Exempt Fund invests in a diversified portfolio of
investment grade California tax-free municipal bonds. As a Fund shareholder, you
receive income that is free from federal and California income taxes(1). Your
dividends don't increase your taxable income the way taxable investments do, so
you can keep more of what you earn.

Your Fund invests in California invest-ment grade municipal bonds and
notes rated within the four highest rating categories by Moody's, Standard &
Poor's or Fitch's. In addition, California Tax-Exempt Fund is managed by an
experienced team of municipal bond specialists who research investments
thoroughly before they are included in the Fund's portfolio.

Performance

Total return at net asset value for the 12 months ended 12/31/94 was -8.49% for
Class A shares and -9.39% for Class B shares.2

The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment.

Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 12/31/94 and since inception
of the Class on 11/3/88 were -12.83%, 4.75% and 5.95%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 12/31/94 and
since inception of the Class on 5/1/93 were -13.69% and -4.19%, respectively.3

Outlook

"In line with our primary objective--providing above-average tax-free income
from an investment grade California municipal bond port-folio--the Fund's
duration is somewhat longer than those of most other municipal funds. This
hampered our performance in the short term, but we believe that, in the long
run, share-holders will benefit significantly when interest rates stabilize and
the California municipal market's positive fundamentals emerge."

Robert Patterson, Portfolio Manager
December 31, 1994

1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.

2. Based on the change in net asset value per share from 12/31/93 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.

3. Average annual total returns are based on a hypothetical investment held
until 12/31/94, after deducting the current maximum initial sales charge of
4.75% for Class A shares. Total return for Class B shares was based on a
hypothetical investment held for that period, after deducting the contingent
deferred sales charge of 5% (1 year) and 4% (since inception) for Class B
shares.

4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 12/31/94, divided by the maximum offering
price at the end of the period, compounded semi-annually and then annualized.
Falling net asset values will tend to artificially raise yields. All figures
assume reinvestment of dividends and capital gains distributions. Past
performance is not indicative of future results. Investment and principal value
on an investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.

2 Oppenheimer California Tax-Exempt Fund
<PAGE>

Dear OppenheimerFunds Shareholder,

The past year was marked by one of the greatest tests of the municipal bond
market in more than six decades. In 1994, the Federal Reserve undertook one of
the most aggressive inflation-fighting efforts in its history, raising interest
rates six times and driving bond prices down across the board. Then, in early
December as the market started to stabilize, Orange County, California,
defaulted on a $100 million bond issue, for reasons not related to the bonds
themselves, but rather to the aggressive use of derivatives (investments whose
value is derived from another security, currency, commodity or index) in
managing the county's portfolio. Although Orange County's problems didn't affect
OppenheimerFunds tax-free portfolios significantly, at year end, many investors
were left wondering what the future holds not only for interest rates, but for
the municipal market itself.

Looking at Orange County, there is no question that their problems have
added temporarily to the uncertainties surrounding the tax-free market. In the
near term, investors' heightened sense of caution may push new-issue prices
modestly lower and new-issue yields somewhat higher. In the longer term,
however, we expect developments in Orange County are likely to help rather than
hurt the market. The municipal bond market has always been one of the most
conservative places to invest, and with the increased attention paid to risks of
all types, we expect it to become less risky.

As for the Fed's actions to raise interest rates, changing interest rates
and fluctuating bond prices are facts of life affecting all bond markets, and
it's a bond market basic principle that when interest rates rise, bond prices
generally decline. That is why we believe the best measure for any fixed income
investment is its performance over the long term. And we believe the long-term
outlook for the municipal market is excellent, which is supported by several
considerations.

First, the Fed's attempt to fend off possible future inflation, while
temporarily disconcerting, is beginning to have its desired effect. The economy
is starting to slow, and although short-term rates may move up modestly from
their present levels, long-term interest rates should stabilize in their current
range. Long-term rates may even begin to decline as overblown concerns about
inflation abate.

Those concerns are, in fact, already fading. The inflation rate--as
measured by the Consumer Price Index--continues to run at less than 3% a year,
and there's nothing on the horizon to suggest to us that it will increase
substantially anytime soon. As a result, municipal bonds today offer some of the
highest real, inflation-adjusted returns we have seen in years. In addition,
while the economy is showing some signs of slowing, it is still growing at a
solid pace. As a result, the financial strength of many municipal issuers
continues to improve, again providing solid support for municipal bond prices.

Finally, the market's supply and demand characteristics are strong. The
supply of new municipal bonds currently is running some 40% below last year's
pace, while we expect demand for tax-free bonds is likely to increase
substantially over the next few months, helped by more stable bond markets and
rising investor demand to ease their tax burdens.

Together, these factors suggest to us that 1995 will be rewarding for
municipal investors. Your portfolio manager discusses the outlook for your Fund
on the following pages. We appreciate your confidence and we look forward to
continue helping you reach your investment goals.

- --------------- -------------
Donald W. Spiro Jon S. Fossel
January 23, 1995

[FIGURE NUMBER 2]
Photo of Donald W. Spiro

Donald W. Spiro
President
Oppenheimer
California Tax-Exempt
Fund

[FIGURE NUMBER 3]
Photo of Jon S. Fossel

Jon S. Fossel
Chairman and CEO
Oppenheimer
Management
Corporation

3 Oppenheimer California Tax-Exempt Fund
<PAGE>

Q + A

[FIGURE NUMBER 4]
Photo of Robert Patterson

[FIGURE NUMBER 5]
Photo of person at trading desk

An interview with your Fund's manager.

A LOT HAPPENED IN THE CALIFORNIA MUNICIPAL MARKET OVER THE PAST YEAR. WHAT WERE
THE MOST IMPORTANT FACTORS AFFECTING THE FUND'S PERFORMANCE?

Many factors combined to make 1994 one of the most challenging years tax-free
investors have seen in decades, but one stands out: the Federal Reserve's
efforts to fend off inflation, which drove interest rates up and bond prices
down. The Fed's actions affected virtually all bond funds, and this Fund was no
exception.

DID THOSE DEVELOPMENTS CAUSE YOU TO CHANGE YOUR INVESTMENT STRATEGY?

In seeking to provide an attractive level of tax-free income, our investment
strategy remains the same--to keep the Fund's duration, a technical measure of a
bond portfolio's sensitivity to interest rate changes, slightly longer than
those of many other funds. As a result, the Fund's net asset value declined more
than some other funds, but we delivered an attractive level of tax-free income.

Over time, we expect this longer duration to benefit shareholders, as
investors recognize the fundamental positives--low inflation, reduced supply and
increasing demand, and improving issuer credit quality--at work in the
California municipal market today.

Of course, as interest rates rose, we made some adjustments to the
portfolio within this strategy to position it more defensively.

WHAT PORTFOLIO ADJUSTMENTS DID YOU MAKE?

We did reduce the Fund's average maturity somewhat, focusing on bonds in the 15-
to 20-year maturity range. All other things being equal, the shorter a bond's
maturity, the less sensitive it is to changing interest rates. We also focused
more attention on insured and prerefunded issues,

[FIGURE NUMBER 6]
Photo of Len Darling and Jon Fossel

Q Did the
Orange County
bankruptcy
have an
impact
on the Fund?

4 Oppenheimer California Tax-Exempt Fund
<PAGE>
FACING PAGE
Top left: Robert Patterson,
Portfolio Manager

Top right: The trading desk

Bottom left: Len Darling, Executive
VP, Director of Fixed Income
Investments, with Jon Fossel,
CEO and Chairman, Oppenheimer
Management Corporation

THIS PAGE
Robert Patterson

[FIGURE NUMBER 7]
Photo of Robert Patterson

A Because
we only had
five indirect
holdings,
three of which
were fully
insured, the
impact was
negligible.

which make up a significant portion of the portfolio today(1).

WHAT ARE PREREFUNDED BONDS AND WHAT MAKES THEM SO ATTRACTIVE?

Prerefunded bonds are municipal bonds that, as their name implies, have been
refinanced by the issuer ahead of their scheduled call or maturity dates by
bonds with a lower interest rate. What makes prerefunded bonds so attractive is
their income streams and credit quality.

When a bond is refunded in advance of what would other-wise be its
"normal" retirement date, the proceeds of the new issue are used to buy U.S.
Treasury securities sufficient to pay off the holders of the original bond issue
in full. These government securities are placed in an escrow account, and the
refunded issue automatically has the same low risk of default as a triple-A
rating. As a result, we earn above-market yields on prerefunded issues until
they are retired, and benefit from the highest credit quality.

WHAT OTHER KINDS OF BONDS ARE YOU FOCUSING ON TODAY?

We're continuing to find good values in the California housing sector as well as
in transportation issues.

SOME ANALYSTS ARE PREDICTING THAT A RECORD AMOUNT OF MUNICIPAL BONDS WILL BE
CALLED IN 1995. HOW ARE YOU MANAGING CALLS?

Bond calls, which allow issuers to redeem bonds before
their scheduled maturity and replace them with lower-yielding issues--are a fact
of life in the municipal market. Because interest rates are currently much lower
than they were in the mid-1980s when many of the municipal bonds outstanding
today were issued, it's fully possible that some of the bonds in the Fund's
port-folio will be called.

We manage that by staying on top of the portfolio at all times, trying to
anticipate calls and seeking to buy bonds that offer both attractive yields and
significant call protection. Virtually no municipal bond fund can avoid calls
entirely. The key is to take a forward-looking view and manage them
intelligently.

DID THE ORANGE COUNTY BANKRUPTCY HAVE AN IMPACT ON THE FUND?

While our portfolio held several securities of issuers who invested in the
County-managed investment pool, our exposure was very limited. Because we only
had five indirect holdings, three of which were fully insured, the impact was
negligible.

WHAT'S YOUR OUTLOOK FOR THE CALIFORNIA MARKET GOING FORWARD?

Our long-term outlook is very constructive. The positives at work on the
national level--low inflation, reduced municipal bond supply, and rising demand
for tax-free securities driven by rising tax burdens--are, if anything, even
stronger here.

Although the California economy faces its share of challenges, it remains
the nation's largest state economy and its single largest issuer of municipal
securities.

We believe mounting demand for tax-free securities should provide solid
support for California municipal bond prices going forward. -

1. The Fund's portfolio is subject to change.

5 Oppenheimer California Tax-Exempt Fund
<PAGE>

STATEMENT OF INVESTMENTS December 31, 1994

RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
----------------- ------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--97.5%