Oppenheimer Tax-Exempt Cash Reserves Annual Report December 31, 1993 (FULL PAGE COVER PHOTO: COUPLE ON PARK BENCH) (OPPENHEIMER FUNDS(R) LOGO) "Life is full of surprises. I need to know if I can rely on our investment money when I need it. "With this Fund, I've earned tax-free income and while having easy access to my investment." Fund Facts In this report: Answers to two timely questions you should ask your Fund's managers. * How has the Fund sought attractive yields in today's low interest rate environment? * How has the significant decline in tax-free money market yields affected the Fund? Five Facts Every Shareholder Should Know About Oppenheimer Tax-Exempt Cash Reserves 1 The Fund's objective is to seek the highest possible current income exempt from Federal income tax that is consistent with stability of principal. 2 The Fund's compounded yield for the 12 months ended December 31, 1993, was 1.81%. The corresponding yield without compounding was 1.79%. For investors in the 36% tax bracket, these yields would be equivalent to a taxable yield of 2.83% with compounding and 2.80% without compounding. 3 As of December 31, 1993, the Fund's seven-day yield was 1.87% with compounding, and 1.85% without compounding. 4 To help insulate the portfolio from volatility, the Fund's managers invest primarily in municipal obligations carrying high credit ratings from rating organizations such as Standard & Poor's and Moody's. 5 "The end of the year has brought a substantial influx of investment dollars into the municipal market, driving the prices of short-term securities up and their effective yields down. In anticipation of this trend, we had lengthened the average maturity of the Fund, locking in relatively higher interest rates through the end of the year. We anticipate a moderate rise in interest rates in early 1994 and are positioned to respond at that time." Portfolio Manager, Michael Carbuto, December 31, 1993 2 Oppenheimer Tax-Exempt Cash Reserves Report to Shareholders Oppenheimer Tax-Exempt Cash Reserves provided shareholders with a compounded annualized yield of 1.81% for the 12 months ended December 31, 1993. The corresponding yield without compounding was 1.79%. For investors in the 36% tax bracket, this equates to a taxable yield of 2.83% with compounding and 2.80% without compounding. In general, the municipal bond market has performed very well throughout 1993. The U.S. economy has remained in a slow growth mode; interest rates have remained in a relatively low range despite occasional periods of volatility; and investors have sought out the tax-exempt market in increasing numbers since the passage of the Clinton Administration's tax package. All of these factors have combined to generate above-average performance. Municipal securities with maturities of 6 to 12 months have frequently offered a significant advantage, on an after-tax basis, over equivalent taxable investments. We have maintained a relatively long average maturity in the Fund's portfolio to generate higher yields. This strategy left the Fund in a well-protected position when, in late November and early December, the short-term tax-exempt market experienced a dramatic influx of investment dollars that temporarily drove rates down to abnormally low levels. However, we expect short-term tax-exempt rates to firm somewhat in early 1994, as the imbalance between supply and demand eases. With an average maturity of 71(1) days, the Fund was able to provide attractive yields even during a period of artificially low rates, and will be in an excellent position to capitalize on higher rates in the first quarter of 1994. To ensure stability of principal, the Fund's managers continue to emphasize high quality short-term tax-exempt investments. The Fund's portfolio consisted entirely of these high quality securities at December 31, 1993. We will continue to monitor the interest rate environment on a day-to-day basis, to seek the best possible position for the Fund. We look forward to serving your investment needs in the future. (James C. Swain signature) (Jon S. Fossel signature) James C. Swain Jon S. Fossel Chairman President Oppenheimer Tax-Exempt Cash Reserves Oppenheimer Tax-Exempt Cash Reserves January 21, 1994 "The Fund was able to provide attractive yields even during a period of artificially low rates." 1. The Fund's portfolio and dollar-weighted average portfolio maturity are subject to change. 3 Oppenheimer Tax-Exempt Cash Reserves Statement of Investments December 31, 1993 Face Market Value Amount See Note 1 Municipal Bonds and Notes--97.5% Alaska--5.4% Alaska Industrial Development and Export Authority Revenue Refunding Bonds, Safeway, Inc. Project, 2.75%, 6/1/94(2) $ 400,000 $ 400,080 Alaska Industrial Development Authority Revenue Bonds, Providence Medical Office Building, 2.55%(1) 885,000 885,000 1,285,080 Arizona--2.5% Tempe, Arizona Industrial Development Authority Revenue Refunding Bonds, Safeway, Inc. Project, 2.75%, 5/2/94(2) 600,000 600,000 Arkansas--3.5% Subiaco, Arkansas Industrial Development Revenue Bonds, Cloves Gear & Products, 3.36%(1) 850,000 850,000 Colorado--4.2% Arapahoe County, Colorado Multifamily Housing Revenue Refunding Bonds, Hunters Run Rental Apartments Project, 3.80%(1) 1,000,000 1,000,000 Florida--7.1% Dade County, Florida Housing Finance Authority Multifamily Mortgage Revenue Bonds, Flamingo Plaza Apartments, Series 18, 3.20%(1) 900,000 900,000 Orange County, Florida Housing Finance Authority Multifamily Housing Revenue Refunding Bonds, Monterey, Series B, 3.30%(1) 800,000 800,000 1,700,000 Hawaii--4.2% Hawaii State Department Budget and Finance Special Purpose Mortgage Revenue Bonds, Kuakini Medical Center Project, 3%(1) 1,000,000 1,000,000 Illinois--12.5% Illinois State General Obligation Certificates of Participation, 3.50%, 6/15/94 1,000,000 1,002,338 Lakemoor, Illinois Multifamily Housing Revenue Subordinated Bonds, Lakemoor Apartments, Series C, 2.90%, 3/10/94(2) 1,000,000 1,000,000 Oakbrook Terrace, Illinois Multifamily Housing Mortgage Revenue Bonds, 3.20%, 7/1/94(2) 1,000,000 1,000,000 3,002,338 Kansas--7.1% Ottawa, Kansas Industrial Revenue Refunding Bonds, Laich Project, 3.36%(1) 900,000 900,000 Wichita, Kansas Multifamily Revenue Bonds, Shore, Inc. Project, 2.60%(1) 800,000 800,000 1,700,000 Massachusetts--2.3% Massachusetts State Industrial Finance Agency Industrial Development Revenue Bonds, Hazen Paper Co., 3.55%(1) 550,000 550,000 Michigan--2.5% Madison Heights, Michigan Economic Development Corp. Revenue Bonds, Red Roof Inns Project, 2.60%(1) 100,000 100,000 Michigan State Job Development Authority Revenue Bonds, East Lansing Residence Associates Project, Series 1984, 2.90%(1) 500,000 500,000 600,000 New Jersey--6.3% New Jersey Economic Development Authority Manufacturing Facilities Revenue Bonds, VPR Commerce Center Project, 3.40%(1) 500,000 500,000 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds, Series A, 3%, 4/1/94(2) 1,000,000 1,000,000 1,500,000 4 Oppenheimer Tax-Exempt Cash Reserves Face Market Value Amount See Note 1 Ohio--9.9% Cuyahoga County, Ohio Industrial Development Revenue Bonds, Southwest Ltd. Partnership, 3%, 12/1/94(2) $ 500,000 $ 500,000 Licking County, Ohio Industrial Development Revenue Bonds, Power Industries, Inc. Project, 2.80%, 6/1/94(2) 400,000 400,000 Miami Valley, Ohio Tax-Exempt Bond Trust, 4.88%, 10/15/94(2) 1,090,000 1,090,000 Scioto County, Ohio Health Care Facilities Revenue Bonds, Hill View Retirement Center, 2.75%, 6/1/94(2) 375,000 375,000 2,365,000 Oklahoma--4.2% Cleveland County, Oklahoma Public Facilities Authority Multifamily Housing Revenue Bonds, Hunt Development Project, Series A, 3.40%(1) 1,000,000 1,000,000 Mid-West Tax-Exempt Mortgage Bond Trust Certificates, 2.50%, 1/14/94(2) 15,000 15,000 1,015,000 Pennsylvania--9.0% Chartiers Valley, Pennsylvania Industrial and Commercial Development Authority Revenue Refunding Bonds, Sycamore Creek Project, 2.70%, 3/1/94(2) 485,000 485,023 Commonwealth Tax-Exempt Mortgage Bond Trust Six-Month Demand Certificates, Series A, 2.95%, 5/1/94(2) 155,000 155,000 Pennsylvania Energy Development Authority Revenue Bonds, Continental Energy Associates Project, 3.20%(1) 900,000 900,000 Philadelphia, Pennsylvania Hospitals and Higher Educational Facilities Authority Hospital Revenue Bonds, Friends Hospital, Series A, 3.20%(1) 600,000 600,000 2,140,023 South Carolina--5.9% Florence County, South Carolina Industrial Development Revenue Bonds, Stone Container Corp., 2.75%(1) 400,000 400,000 South Carolina Jobs Economic Development Authority Industrial Development Revenue Refunding Bonds, Wellman, Inc. Project, 3.25%(1) 1,000,000 1,000,000 1,400,000 Tennessee--4.2% Knox County, Tennessee Industrial Development Board Revenue Bonds, Weisgarber Partners, 2.45%(1) 1,000,000 1,000,000 Utah--2.5% Murray City, Utah Hospital Revenue Refunding Bonds, IHC Hospital, AMBAC Insured, 3%, 5/15/94 600,000 600,313 Washington--4.2% Washington State General Obligation Refunding Bonds, Series R-94A, 3.25%, 8/1/94 1,000,000 1,001,755 Total Investments, at Value (Cost $23,309,509) 97.5% 23,309,509 Other Assets Net of Liabilities 2.5 587,398 Net Assets 100.0% $23,896,907 <FN> 1. Floating or variable rate obligation maturing in more than one year. The interest rate, which is based on specific, or an index of, market interest rates, is subject to change periodically and is the effective rate on December 31, 1993. A demand feature allows the recovery of principal at any time, or at specified intervals not exceeding one year, on up to 30 days' notice. 2. Put obligation redeemable at full face value on the date reported. See accompanying Notes to Financial Statements. 5 Oppenheimer Tax-Exempt Cash Reserves Statement of Assets and Liabilities December 31, 1993 Assets Investments, at value (cost $23,309,509)--see accompanying statement $23,309,509 Cash 351,523 Receivables: Shares of beneficial interest sold 465,701 Interest 128,155 Other 10,405 Total assets 24,265,293 Liabilities Payables and other liabilities: Shares of beneficial interest redeemed 266,974 Dividends 45,478 Distribution assistance--Note 3 20,806 Other 35,128 Total liabilities 368,386 Net Assets $23,896,907 Composition of Net Assets Paid-in capital $23,897,803 Accumulated net realized loss from investment transactions (896) Net assets--applicable to 23,897,803 shares of beneficial interest outstanding $23,896,907 Net Asset Value, Redemption Price and Offering Price Per Share $ 1.00 See accompanying Notes to Financial Statements. 6 Oppenheimer Tax-Exempt Cash Reserves Statement of Operations For the Year Ended December 31, 1993 Investment Income Interest $687,607 Expenses Management fees--Note 3 118,909 Transfer and shareholder servicing agent fees--Note 3 74,240 Distribution assistance--Note 3 42,869 Registration and filing fees 34,926 Custodian fees and expenses 23,022 Shareholder reports 20,302 Legal and auditing fees 9,810 Trustees' fees and expenses 1,596 Other 9,483 Total expenses 335,157 Less assumption of expenses by Oppenheimer Management Corporation--Note 3 (73,570) Net expenses 261,587 Net Investment Income 426,020 Net Realized Gain on Investments 452 Net Increase in Net Assets Resulting from Operations $426,472 See accompanying Notes to Financial Statements. 7 Oppenheimer Tax-Exempt Cash Reserves Statements of Changes in Net Assets Year Ended December 31, 1993 1992 Operations Net investment income $ 426,020 $ 566,929 Net realized gain on investments 452 -- Net increase in net assets resulting from operations 426,472 566,929 Dividends and Distributions to Shareholders (426,020) (567,167) Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2 (835,869) 908,869 Net Assets Total increase (decrease) (835,417) 908,631 Beginning of year 24,732,324 23,823,693 End of year $23,896,907 $24,732,324 See accompanying Notes to Financial Statements. 8 Oppenheimer Tax-Exempt Cash Reserves Financial Highlights Year Ended December 31, 1993 1992 1991 1990 1989(1) Per Share Operating Data: Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations-- net investment income and net realized gain on investments .02 .02 .04 .05 .06 Dividends and distributions to shareholders (.02) (.02) (.04) (.05) (.06) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/Supplemental Data: Net assets, end of period (in thousands) $23,897 $24,732 $23,824 $22,628 $9,383 Average net assets (in thousands) $23,781 $24,810 $25,347 $15,968 $5,207 Number of shares outstanding at end of period (in thousands) 23,898 24,734 23,825 22,628 9,383 Ratios to average net assets: Net investment income 1.79% 2.28% 4.00% 5.21% 5.72%(2) Expenses, before voluntary assumption by the Manager 1.41% 1.32% 1.22% 1.44% 1.50%(2) Expenses, net of voluntary assumption by the Manager 1.10% 1.00% 1.00% 1.00% 1.00%(2) <FN> 1. For the period from January 3, 1989 (commencement of operations) to December 31, 1989. 2. Annualized. See accompanying Notes to Financial Statements. 9 Oppenheimer Tax-Exempt Cash Reserves Notes to Financial Statements 1. Significant Accounting Policies Oppenheimer Tax-Exempt Cash Reserves (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment advisor is Oppenheimer Management Corporation (the Manager). The following is a summary of significant accounting policies consistently followed by the Fund. Investment Valuation. Portfolio securities are valued on the basis of amortized cost, which approximates market value. 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 to shareholders. Therefore, no federal income tax provision is required. Distributions to Shareholders. The Fund intends to declare dividends from net investment income each regular business day and pay such dividends monthly. To effect its policy of maintaining a net asset value of $1.00 per share, the Fund may withhold dividends or make distributions of net realized gains. Other. Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Realized gains and losses on investments are determined on an identified cost basis, which is the same basis used for federal income tax purposes. 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows: Year Ended December 31, 1993 Year Ended December 31, 1992 Shares Amount Shares Amount Sold 38,650,212 $ 38,650,212 40,632,217 $ 40,632,217 Dividends and distributions reinvested 356,917 356,917 547,727 547,727 Redeemed (39,842,998) (39,842,998) (40,271,075) (40,271,075) Net increase (decrease) (835,869) $ (835,869) 908,869 $ 908,869 3. 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 .50% on the first $250 million of net assets with a reduction of .025% on each $250 million thereafter, to .40% on net assets in excess of $1 billion. The Manager has agreed to assume Fund expenses (with specified exceptions) in excess of the most stringent applicable regulatory limit on Fund expenses. In addition, the Manager has voluntarily undertaken to assume Fund expenses in excess of 1.10% of average annual net assets. This voluntary undertaking was terminated, effective January 22, 1994. 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 an approved plan of distribution, the Fund may expend up to .20% of its net assets annually to reimburse Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, for amounts paid to brokers, dealers, banks and other institutions for costs incurred in distributing shares of the Fund. During the year ended December 31, 1993, OFDI paid $7,202 to an affiliated broker/dealer as reimbursement for distribution-related expenses. 10 Oppenheimer Tax-Exempt Cash Reserves Independent Auditors' Report The Board of Trustees and Shareholders of Oppenheimer Tax-Exempt Cash Reserves: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Tax-Exempt Cash Reserves as of December 31, 1993, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 1993 and 1992, and the financial highlights for the period January 3, 1989 (commencement of operations) to December 31, 1993. 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at December 31, 1993 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer Tax-Exempt Cash Reserves at December 31, 1993, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE Denver, Colorado January 21, 1994 11 Oppenheimer Tax-Exempt Cash Reserves Federal Income Tax Information (Unaudited) In early 1994, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1993. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. None of the dividends paid by the Fund during the fiscal year ended December 31, 1993 are eligible for the corporate dividend-received deduction. The dividends were derived from interest on municipal bonds and are not subject to federal income tax. To the extent a shareholder is subject to any state or local tax laws, some or all of the dividends received may be taxable. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 12 Oppenheimer Tax-Exempt Cash Reserves Oppenheimer Tax-Exempt Cash Reserves Officers and Trustees James C. Swain, Chairman and Chief Executive Officer William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee and President Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Michael A. Carbuto, Vice President Andrew J. Donohue, Vice President George C. Bowen, Vice President, Secretary and Treasurer Lynn M. Coluccy, Assistant Treasurer Robert G. Zack, Assistant Secretary Investment Advisor Oppenheimer Management Corporation Distributor Oppenheimer Funds Distributor, Inc. Transfer and Shareholder Oppenheimer Shareholder Services Servicing Agent Custodian of Citibank, N.A. Portfolio Securities Independent Auditors Deloitte & Touche Legal Counsel Meyer, Swanson & Adams, P.C. This is a copy of a report to shareholders of Oppenheimer Tax-Exempt Cash Reserves. This report must be preceded or accompanied by a Prospectus of Oppenheimer Tax-Exempt Cash Reserves. For material information concerning the Fund, see the Prospectus. 13 Oppenheimer Tax-Exempt Cash Reserves The Family of OppenheimerFunds OppenheimerFunds offers over 30 funds designed to fit virtually every investment goal. Whether you're investing for retirement, your children's education, or tax-free income, we have the funds to help you seek your objective. When you invest with OppenheimerFunds, you can feel comfortable knowing that you are investing with a respected financial institution with over 30 years of experience in helping people just like you reach their financial goals. And you're investing with a leader in global, growth stock, and flexible fixed income investments-with over 1.7 million shareholder accounts and more than $25 billion under Oppenheimer's management and that of our affiliates. As an OppenheimerFunds shareholder, you can easily exchange shares of eligible funds of the same class by mail or by telephone for a small administrative fee.(1) For more information on OppenheimerFunds, please contact your financial advisor or call us at 1-800-525-7048 for a prospectus. You may also write us at the address shown on the back cover. As always, please read the prospectus carefully before you invest. 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The fee is waived for PhoneLink exchanges between existing accounts. Exchange privileges are subject to change or termination. 2. Available only to residents of those states. 3. Formerly GNMA Fund. OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1994 Oppenheimer Management Corporation. All rights reserved. 14 Oppenheimer Tax-Exempt Cash Reserves Fund "How may I help you?" General Information 1-800-525-7048 Talk to a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m. to 2:00 p.m. ET. Telephone Transactions 1-800-852-8457 Make account transactions with a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m. ET. PhoneLink 1-800-533-3310 Get automated information or make automated transactions. 24 hours a day, 7 days a week. Telecommunication Device for the Deaf 1-800-843-4461 Service for the hearing impaired. 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PhoneLink gives you access to variety of fund, account, and market information. You can even make purchases, exchanges and redemptions using your touch-tone phone. Of course, PhoneLink will always give you the option to speak with a Customer Service Representative during regular business hours. "When you invest in OppenheimerFunds, you know you'll receive a high level of customer service. The International Customer Service Association knows it, too, as it recently awarded Oppenheimer Shareholder Services a 1993 Award of Excellence for consistently demonstrating superior customer service. "Whatever your needs, we're ready to assist you." (PHOTO OF BARBARA HENNIGAR) Barbara Hennigar President Oppenheimer Shareholder Services 1993 AWARD OF EXCELLENCE INTERNATIONAL CUSTOMER SERVICE ASSOCIATION RA770.0294.R Bulk Rate U.S. Postage PAID Permit No. 469 Denver, CO (OPPENHEIMER FUNDS(R) LOGO) Oppenheimer Funds Distributor, Inc. P.O. Box 5270 Denver, CO 80217-5270