Broker/Dealer Tax-Exempt Funds Reorganization
Dear Financial Advisor:
At the beginning of 1995, we proclaimed a highly optimistic outlook for
the municipal bond market. Based on the first four months, we're off
to a strong start--a welcome change following the turbulent market
conditions we all experienced in 1994.
A difficult year like 1994 necessitates a careful evaluation of
investment policies. At OppenheimerFunds, we've been taking a hard
look at the policies of our tax-exempt funds, and we believe that now
is the time to make some important changes.
Last year when higher-grade municipal securities underperformed, the
ability to diversify holdings became critical to managing long-term
investment returns and short-term volatility. Many high-quality tax-
exempt funds have the flexibility to invest a portion, often up to 25%
or more, of assets in non-investment-grade securities. In 1994, funds
with this flexibility were able to diversify and protect assets when
the municipal market got tough.
Although none of us want to experience another year like 1994, we do
want to be prepared to best address all market conditions. Therefore,
broadening our investment flexibility, particularly with respect to
quality and maturity, is more critical than ever.
Accordingly, we have recommended and, each Fund's Board of Trustees has
approved, several proposed changes to OppenheimerFunds tax-exempt
funds. These proposed changes are outlined on the following page.
Some of these changes affect the Fund's fundamental investment
policies, and therefore require shareholder approval. Shareholders of
Oppenheimer New York Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer Intermediate Tax-Exempt Bond Fund and
Oppenheimer Insured Tax-Exempt Bond Fund will receive proxy material in
which that approval is being sought. We ask your help in encouraging
your clients to vote in favor of these proposed changes.
Other changes are non-fundamental, and do not require shareholder
approval. Shareholders will receive new prospectuses or prospectus
supplements as these changes take effect.
If you would like a copy of the supplements or proxies, or if you have
any questions regarding the proposed changes, please call your Regional
Sales Representative at 1-800-255-2750. If you are a brokerage
representative in New Jersey, Delaware or New York State area, please
call 1-800-848-5487. Financial Institution representatives, please
call 1-800-255-2770.
As always, we value your continued support. And, we strongly believe
that you and your clients will benefit from these proposed changes.
Sincerely,
Tilghman G. Pitts III
For Broker/Dealer Use Only. This material has been prepared by
Oppenheimer Funds Distributor, Inc. for dealer information only and may
not be reproduced or shown to members of the public or used orally or
in written form as sales literature. OppenheimerFunds are distributed
by Oppenheimer Funds Distributor, Inc. Two World Trade Center, New
York, NY 10048-0203.
(To be produced in chart format)
Summary of Proposed Changes To
Oppenheimer Tax-Exempt Funds
The Boards of Trustees of the Funds have approved several proposed
changes to Oppenheimer Tax-Exempt Funds as shown at right.
Some of these proposed changes affect the Funds' fundamental investment
policies, and require shareholder approval. You will be advised of the
outcome of these shareholder meetings when information is available.
Changes that are not fundamental do not require shareholder approval.
Shareholders will receive new prospectuses or prospectus supplements as
these changes take effect.
Fundamental/Shareholder Approval Required
Non-Fundamental
Column Headings For Chart In This Order (Left To Right):
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Change in Investment Policies
Broaden the Fund's investment flexibility by allowing the Fund to
invest:
- - Up to 25% of assets in below-investment-grade securities.
On chart: Fundamental - NY, PA
Non-Fundamental - CA TEF, FL TEF, NJ TEF, Tax-Free BF
At least 65% of assets in insured municipal securities, versus the
current requirement that at least 65% be in insured municipal bonds;
also allow up to 10% of assets in non-investment-grade debt securities.
On Chart: Fundamental - Insured
At least 80% of assets in investment-grade municipal securities, versus
the current requirement that at least 80% be in investment-grade
municipal securities and at least 65% be in investment-grade municipal
bonds.
On Chart: Fundamental - Intermediate
Elimination of Policy Restrictions
Eliminate restrictions required under prior Pennsylvania law.
On Chart: Fundamental - PA
New 12b-1 Plan for Class B and C Shares
Currently, the Fund's distributor is reimbursed for a portion of its
expenses by demonstrating actual distribution costs. If approved, the
distributor will be compensated with a flat fee (as a percentage of net
assets) at the same rate as the current plan. This change is not
expected to materially increase fund expenses under normal
circumstances. Any distribution costs in excess of this rate will be
the responsibility of the distributor.
On Chart: Fundamental - NY, PA, Insured, Intermediate
Election of Trustees and Ratification of Auditors
On Chart: Fundamental - NY, Insured, Intermediate
For broker/dealer use only. This material has been prepared for dealer
information only, has not been filed with the NASD, and may not be
reproduced or shown to members of the public or used orally or in
written form as sales literature.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor,
Inc., Two World Trade Center, New York, NY 10048-0203.