[COVER]
----------------------------------
Semiannual Report January 31, 1998
----------------------------------
OPPENHEIMER
Municipal
Bond Fund
[Graphic of Pencil and Checkbook]
[Oppenheimer Funds Logo]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Manager
11 Statement of Investments
20 Statement of Assets and Liabilities
22 Statement of Operations
23 Statements of Changes in Net Assets
24 Financial Highlights
27 Notes to Financial Statements
33 Officers and Trustees
36 Information and Services
Report highlights
- --------------------------------------------------------------------------------
[bullet] 1st Quartile Performance: The Fund's Class A shares were ranked in the
top quartile of tax-exempt mutual funds for the one-year period ended 12/31/97,
as measured by Lipper Analytical Services.1
[bullet] The supply of municipal bonds increased during the last twelve months,
as many municipalities took advantage of lower interest rates to finance new
projects and refinance existing debt.
[bullet] Two factors which support the possibility of a further rally in
municipal bonds: First, municipal bonds are inexpensive relative to taxable
bonds, especially in states with income taxes. And second, inflation remains
benign, and the economy looks like it may slow down from year-end 1997 levels.
- -------------------------------------
Cumulative Total Returns
- -------------------------------------
For the 6-Month Period Ended 1/31/98
Class A
Without With
Sales Chg.2 Sales Chg.3
- -------------------------------------
4.02% (0.92%)
- -------------------------------------
Class B
Without With
Sales Chg.2 Sales Chg.3
- -------------------------------------
3.63% (1.37%)
- -------------------------------------
Class C
Without With
Sales Chg.2 Sales Chg.3
- -------------------------------------
3.63% (2.63%)
- -------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
1. Source: Lipper Analytical Services, Inc., 12/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 16 of 137 (1-year), 25 of 59
(5-year) and 24 of 37 (10-year) among Municipal Bond funds for the period ended
12/31/97.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Class A returns include the current maximum initial sales charge of 4.75%.
Class B returns include the applicable contingent deferred sales charge of 5%.
Class C returns include the contingent deferred sales charge of 1%. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge.
2 Oppenheimer Municipal Bond Fund
<PAGE>
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Municipal Bond Fund
Dear shareholder,
- --------------------------------------------------------------------------------
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations to improve their bottom
lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. We look forward to helping you reach your investment goals in the
future.
/s/ Bridget A. Macaskill
- --------------------------------
Bridget A. Macaskill
February 23, 1998
3 Oppenheimer Municipal Bond Fund
<PAGE>
- ------------------------------------
Avg. Annual total Returns(1)
- ------------------------------------
For Periods Ended 12/31/97
Class A
1 Year 5 Year 10 Year
- ------------------------------------
4.18% 6.02% 7.66%
- ------------------------------------
Class B
1 Year 5 Year Since Inception
- ------------------------------------
3.58% N/A 5.28%
- ------------------------------------
Class C
1 Year 5 Year Since Inception
- ------------------------------------
7.56% N/A 7.98%
- ------------------------------------
- ------------------------------------
Cumulative Total Return(1)
- ------------------------------------
For the Period Ended 12/31/97
Class A
5 Year
- ------------------------------------
33.93% $13,394(3)
- ------------------------------------
- ------------------------------------
Standardized Yields
- ------------------------------------
For the 30 Days Ended 1/31/98(4)
Class A
- ------------------------------------
4.13%
- ------------------------------------
Class B
- ------------------------------------
3.55%
- ------------------------------------
Class C
- ------------------------------------
3.55%
- ------------------------------------
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Municipal Bond Fund has continued to perform strongly, particularly
during what has turned out to be a difficult period for municipal bonds. During
the last six months, long-term interest rates have fallen, which has caused a
decline in municipal bond yields. However, Oppenheimer Municipal Bond Fund's
Class A shares remained in the top quartile of tax-exempt mutual funds, ranking
16 of 137 for the one-year period ended 12/31/97, as measured by Lipper
Analytical Services.(2)
[MTN. CHART]
Oppenheimer
Municipal Lehman Brothers
Bond Fund Municipal Bond
Date Class A Shares Index(3)
- ---- -------------- ---------------
12/31/92 10,000 10,000
3/31/93 10,367.1 10,371.1
6/30/93 10,725.4 10,710.4
9/30/93 11,211.8 11,072.2
12/31/93 11,348 11,227.6
3/31/94 10,600.3 10,611.3
6/30/94 10,537.9 10,728.8
9/30/94 10,558.9 10,802.2
12/31/94 10,299.5 10,647.1
3/31/95 11,181.8 11,399.9
6/30/95 11,391.7 11,675.2
9/30/95 11,613.5 12,011
12/31/95 12,187.5 12,506.3
3/31/96 12,080.4 12,355.5
6/30/96 12,124.2 12,450.2
9/30/96 12,470.1 12,736.8
12/31/96 12,820.2 13,061.4
3/31/97 12,811.2 13,030.1
6/30/97 13,250.6 13,479.1
9/30/97 13,642.1 13,885.3
12/31/97 14,024.6 14,262.1
1. Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Class A returns include the current maximum initial sales charge of 4.75%. Class
A shares were first publicly offered on 10/27/76. The Fund's maximum sales
charge for Class A shares was lower prior to 5/1/86, so actual performance may
have been higher. Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (since inception on 3/16/93). Class C returns
for the one-year result include the contingent deferred sales charge of 1%.
Class C shares have an inception date of 8/29/95. An explanation of the
different performance calculations is in the Fund's prospectus. Class B and C
shares are subject to an annual 0.75% asset-based sales charge.
2. Source: Lipper Analytical Services, Inc., 12/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 16 of 137 (1-year), 25 of 59
(5-year) and 24 of 37 (10-year) among Municipal Bond funds for the period ended
12/31/97.
4 Oppenheimer Municipal Bond Fund
<PAGE>
Credit Allocations(5)
[PIE CHART AND COLOR KEYS]
AAA 45.0%
AA 12.8
A 14.2
BBB 23.3
BB 3.3
B 1.4
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Municipal Bond Fund is for investors looking for a source of income
exempt from federal income taxes.
What We Look For
[bullet] Securities that provide high current income.
[bullet] Diversification among a wide range of securities
nationwide.
[bullet] Issues with improving credit quality.
Top 5 Industries
(Percentage of invested assets)(6)
<TABLE>
<S> <C>
- ------------------------------
Corporate Backed 17.3%
- ------------------------------
Electric Utilities 14.7
- ------------------------------
General Obligations 13.9
- ------------------------------
Highways 9.0
- ------------------------------
Single Family Housing 8.7
- ------------------------------
</TABLE>
Top 5 States
(Percentage of invested assets)(6)
<TABLE>
<S> <C>
- ------------------------------
Texas 14.2%
- ------------------------------
California 12.1
- ------------------------------
Pennsylvania 10.0
------------------------------
New York 7.4
- ------------------------------
Michigan 7.2
- ------------------------------
</TABLE>
3. Results of a hypothetical $10,000 investment in Class A shares on 12/31/92.
Lehman Brothers Municipal Bond Index includes a broad range of municipal bonds.
It is an unmanaged index, including reinvestment of income, and cannot be
purchased directly by investors.
4. Standardized yield is based on net investment income for the 30-day period
ended 1/31/98. Falling share prices will tend to artificially raise yields.
5. Portfolio data is as of 1/31/98, is dollar-weighted based on total assets,
and is subject to change. The Fund may invest up to 25% of its assets in
below-investment-grade securities which carry greater risk that an issuer may
default on repayment of principal or interest. Securities rated by any rating
organization are included in the equivalent Standard & Poor's rating category.
Average credit quality and allocation include rated securities and those not
rated by a national rating organization (currently 5.2% of total investments)
but to which the Manager in its judgment has assigned ratings as securities
comparable to those rated by a rating agency in the same category.
6. Sector weightings are as of 1/31/98, and are subject to change.
5 Oppenheimer Municipal Bond Fund
<PAGE>
- -----------------
"We've remained
fully invested in
a diversified
portfolio of
good quality
securities
from a variety
of issuers."
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How has the Fund performed during the six months ended January 31, 1998?
Oppenheimer Municipal Bond Fund's Class A shares provided a cumulative total
return of 4.02% without sales charges for the six-month period ended January 31,
1998.(1)
How did the national municipal bond market perform over the last six months?
As we expected, yields on municipal bonds declined as long-term interest rates
fell during the final five months of 1997 and the first month of 1998. This was
the result of a continued U.S. economic expansion that is notable both for its
durability and the absence of inflationary pressures. In fact, low inflation
helped long-term interest rates fall to their lowest levels since 1977.
Municipal bond yields have fallen in concert with the yields of U.S. Treasury
securities, but the extent of that decline has not been as pronounced. As a
result, although municipal bonds did well during the period, they did not
perform as well as comparable U.S. Treasury securities.
Why did investments in municipal bonds generally underperform U.S. Treasury
securities?
It's primarily a matter of supply and demand. The supply of U.S. Treasury
securities declined as the federal government made progress toward a balanced
budget. With a robust economy supporting strong tax revenues, the U.S. Treasury
issued fewer bonds. At the same time, demand for U.S. Treasury securities rose,
especially from overseas investors who sought high-quality investments in the
wake of the turmoil in Asia.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer Municipal Bond Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Jerry Webman'
Bob Patterson
(Portfolio Manager)
Conversely, the supply of municipal bonds
increased during the period.
Municipalities took advantage of lower
interest rates to finance new projects and
refinance existing debt. But demand for
municipal bonds stayed the same, because
U.S. investors were generally more
attracted to stocks than to tax-exempt
bonds. Therefore, U.S. Treasury securities
benefited from a more favorable
relationship between supply and demand.
By the end of 1997, municipal bonds were providing about 92% of the
yield of comparable U.S. Treasuries, which is the high end of the range. History
suggests that a more normal level is about 85%. So we think that municipal bonds
are very attractively valued relative to taxable bonds.
Where have you been finding opportunities in this environment?
We've remained fully invested in a diversified portfolio of good-quality
securities from a variety of issuers. Texas represented our largest
concentration of holdings because the state reflects many of the nation's most
positive trends: Texas has managed its budget conservatively and has improved
economically. The state's municipalities have issued bonds for infrastructure
projects, such as airports, roads and schools, and those bonds have been
attractively priced.
7 Oppenheimer Municipal Bond Fund
<PAGE>
- --------------
"We are
optimistic
because
conditions
remain
favorable for
municipals..."
An interview with your Fund's manager
- --------------------------------------------------------------------------------
The same is true for our second largest source of holdings, New York. The state
is enjoying a budget surplus and is financing long-term infrastructure
investments in the tax-exempt bond market. New York City is also enjoying the
benefits of a strong economy, and the city's bonds have performed well as a
result.
We added to our position in Florida because of some of the new projects
they're financing. Rapid population growth has created a shortage of housing and
schools. We estimate that Florida will issue up to $3 billion in school debt
over the next few years, a process that has already started.
Have any issuers or market sectors been particularly unattractive?
We remain cautious about utilities. Electrical utilities are in the midst of
deregulation, which has caused quite a lot of uncertainty. Some utilities will
be more competitive than others, and we don't want to be caught with bonds from
the less competitive companies. Hospital bonds represent another area of
caution. The health care industry is experiencing turmoil as they attempt to
control costs. The industry is consolidating, so we are proceeding carefully.
What is your outlook for the rest of 1998?
We are optimistic because conditions have remained favorable for municipals.
First, as mentioned earlier, municipal bonds are inexpensive relative to taxable
bonds, especially in states with income taxes. Second, inflation remains benign,
and the economy looks like it may slow down from year-end 1997 levels. These
factors should support a further rally in municipal bonds when long-term
interest rates decline.
8 Oppenheimer Municipal Bond Fund
<PAGE>
- -----------------
"...but we don't
expect to achieve
the same level
of gains that we
have experienced
over the last
six months."
With that said, however, we don't expect to achieve the same level of gains that
we have experienced over the last six months. Inflation is low now, but we are
concerned about the potential effects of relatively full employment. Because
businesses must compete for a limited supply of workers, companies may be forced
to pay higher wages, and those costs may be passed on to consumers. As a result,
we are vigilantly watching for any changes in the economic environment. Our goal
is to anticipate those changes and position the Fund accordingly.
9 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Financials
- -------------------------------------------------------------------------------
10 Oppenheimer Municipal Bond Fund
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments January 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
===============================================================================================
<S> <C> <C> <C>
Municipal Bonds and Notes -- 99.4%
- -----------------------------------------------------------------------------------------------
Alabama--1.2%
Huntsville, AL HCF Authority RB, Series B,
MBIA Insured, 6.625%, 6/1/23 Aaa/AAA $ 7,235,000 $ 8,328,136
- -----------------------------------------------------------------------------------------------
Arizona--0.1%
Central AZ Irrigation & Drainage District
GORB, Series A, 6%, 6/1/13 NR/NR 1,081,150 973,121
- -----------------------------------------------------------------------------------------------
California--12.0%
Anaheim, CA PFAU Lease RB, Sr. Public
Improvements Project, Series A, FSA Insured,
5%, 3/1/37 Aaa/AAA 5,250,000 5,135,077
- -----------------------------------------------------------------------------------------------
CA Foothill/Eastern Transportation Corridor
Agency Toll Road RB, Sr. Lien, Series A,
6.50%, 1/1/32 Baa/BBB-/BBB 10,500,000 11,515,035
- -----------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB, Series C, 6.65%, 8/1/14 Aa2/AA- 5,000,000 5,344,350
- -----------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,905,000 5,241,434
- -----------------------------------------------------------------------------------------------
CA HFFAU RB, Episcopal Homes Project,
Series A, 7.80%, 7/1/15 NR/A+ 1,000,000 1,034,860
- -----------------------------------------------------------------------------------------------
CA PWBL RB, University of California
Regents, Prerefunded, Series A, AMBAC
Insured, 6.40%, 12/1/16 Aaa/AAA/AAA 2,500,000 2,811,400
- -----------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Cedars-Sinai Medical Center, 5.40%, 11/1/15 A1/NR 3,000,000 3,014,790
- -----------------------------------------------------------------------------------------------
Industry, CA UDA TXAL Bonds, Transportation
Distribution Project No. 3, 6.90%, 11/1/07 NR/A- 500,000 555,805
- -----------------------------------------------------------------------------------------------
Los Angeles, CA Regional AIC Lease RRB,
Facilities Sublease-International Airport
Project, 6.35%, 11/1/25 Baa3/BB+ 8,930,000 9,814,159
- -----------------------------------------------------------------------------------------------
Perris, CA SFM RB, Escrowed to Maturity,
Series A, 8.30%, 6/1/13 Aaa/AAA 7,000,000 9,396,730
- -----------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 6,000,000 7,856,400
- -----------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
FGIC Insured, Inverse Floater, 7.393%, 6/1/19(1) Aaa/AAA/AAA 6,000,000 6,532,500
- -----------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, 6.75%, 1/1/32 Aaa/NR/BBB 12,700,000 14,444,980
-----------
82,697,520
- -----------------------------------------------------------------------------------------------
Colorado--0.9%
CO HFAU RB, Rocky Mountain Adventist
Health System, 6.625%, 2/1/22 Baa2/BBB 5,000,000 5,394,550
- -----------------------------------------------------------------------------------------------
Jefferson Cnty., CO SDI No. R-001 GOB,
AMBAC Insured, 6.25%, 12/15/12 Aaa/AAA/AAA 500,000 553,590
-----------
5,948,140
</TABLE>
11 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Connecticut--4.3% Mashantucket,
CT Western Pequot Tribe Special
RB, Prerefunded, Series A, 6.40%, 9/1/11(2) Aaa/BBB- $ 7,435,000 $ 8,626,979
- ----------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot
Tribe Special RB, Unrefunded Balance,
Series A, 6.40%, 9/1/11(2) Baa2/BBB- 7,565,000 8,494,587
- ----------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe Special
RRB, Sub. Lien, Series B, 5.75%, 9/1/27(2) Baa3/BBB- 11,900,000 12,244,267
-----------
29,365,833
- ----------------------------------------------------------------------------------------------
Florida--5.5%
Broward Cnty., FL GORB, 12.50%, 1/1/06 Aa/AA 3,000,000 4,600,740
- ----------------------------------------------------------------------------------------------
Broward Cnty., FL RR RB, Broward Waste
Energy-LP North Project, 7.95%, 12/1/08 A/A- 5,490,000 5,997,935
- ----------------------------------------------------------------------------------------------
Broward Cnty., FL RR RB, Ses Broward Co.-LP
South Project, 7.95%, 12/1/08 A/A- 9,050,000 9,887,306
- ----------------------------------------------------------------------------------------------
Dade Cnty., FL IDAU RB, Miami Cerebral
Palsy Services Project, 8%, 6/1/22 NR/NR 2,890,000 3,229,488
- ----------------------------------------------------------------------------------------------
Escambia Cnty., FL HFAU RB, Azalea Trace,
Inc., 6%, 1/1/15 NR/NR 4,000,000 4,144,040
- ----------------------------------------------------------------------------------------------
FL BOE Capital Outlay GORB, 8.40%, 6/1/07 Aa2/AA+ 750,000 970,905
- ----------------------------------------------------------------------------------------------
FL HFA RRB, SFM, Series A, 6.35%, 7/1/14 Aaa/AAA 810,000 863,160
Grand Haven, FL CDD SPAST RB, Series A,
6.30%, 5/1/02 NR/NR 1,370,000 1,404,209
- ----------------------------------------------------------------------------------------------
Hillsborough Cnty., FL IDAU PC RRB, Tampa
Electric Co. Project, Series 92, 8%, 5/1/22 Aa3/AA/AA- 4,000,000 4,654,000
- ----------------------------------------------------------------------------------------------
Lee Cnty., FL Housing FAU SFM RB,
Series A-2, 5.60%, 3/1/29 Aaa/NR 1,780,000 1,972,934
-----------
37,724,717
- ----------------------------------------------------------------------------------------------
Georgia--2.1%
GA MEAU Power SPO Refunding Bonds,
Series Y, 6.50%, 1/1/17 A3/A 10,750,000 12,547,937
- ----------------------------------------------------------------------------------------------
GA MEAU Power SPO Refunding Bonds,
Series Y, MBIA-IBC Insured, 6.50%, 1/1/17 NR/AAA 1,000,000 1,193,740
- ----------------------------------------------------------------------------------------------
GA MEAU SPO Bonds, Project One, Series X,
MBIA Insured, 6.50%, 1/1/12 Aaa/AAA 500,000 593,425
-----------
14,335,102
- ----------------------------------------------------------------------------------------------
Hawaii--0.1%
Honolulu, HI City & Cnty. GOB, Series B,
6.10%, 6/1/11 Aa2/AA 500,000 557,210
</TABLE>
12 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois--1.6%
IL HFAU RB, Hinsdale Hospital Project,
Escrowed to Maturity, Series C, 9.50%, 11/15/19 Baa1/BBB $ 900,000 $ 1,062,342
- ----------------------------------------------------------------------------------------------
IL Regional Transportation Authority RB,
AMBAC Insured, 7.20%, 11/1/20 Aaa/AAA/AAA 7,500,000 9,687,450
-----------
10,749,792
- ----------------------------------------------------------------------------------------------
Indiana--4.2%
Indianapolis, IN Airport Authority RB, SPF-
Federal Express Corp. Project, 7.10%, 1/15/17 Baa2/BBB 15,500,000 17,493,455
- ----------------------------------------------------------------------------------------------
Indianapolis, IN Airport Authority RB,
SPF-United Airlines Project, Series A, 6.50%,
11/15/31 Baa2/BB+ 10,500,000 11,455,605
-----------
28,949,060
- ----------------------------------------------------------------------------------------------
Kentucky--0.4%
Kenton Cnty., KY AB RB, SPF-Delta Airlines
Project, Series A, 6.125%, 2/1/22 Baa3/BB+ 2,790,000 2,868,511
- ----------------------------------------------------------------------------------------------
Louisiana--2.4%
LA GOB, Series A, AMBAC Insured, 6.50%,
5/1/11 Aaa/AAA 5,000,000 5,522,900
- ----------------------------------------------------------------------------------------------
New Orleans, LA Home Mtg. Authority SPO
Refunding Bonds, Escrowed to Maturity,
6.25%, 1/15/11 Aaa/AAA 9,500,000 10,768,250
-----------
16,291,150
- ----------------------------------------------------------------------------------------------
Maryland--0.1%
MD University System Auxiliary Facilities &
Tuition RRB, Series A, 5.90%, 2/1/03 Aa3/AA+/AA 500,000 535,360
- ----------------------------------------------------------------------------------------------
Massachusetts--3.9%
MA GOB, Unrefunded Balance, Series B,
MBIA Insured, 6.50%, 8/1/11 Aaa/AAA/AAA 430,000 468,455
- ----------------------------------------------------------------------------------------------
MA TUAU Metropolitan Highway System RRB,
Sr. Lien, Series A, MBIA Insured, 5%, 1/1/37 Aaa/AAA/AAA 7,000,000 6,801,130
- ----------------------------------------------------------------------------------------------
MA Water Resource Authority RB, Series A,
6.50%, 7/15/19 A2/A/A 12,225,000 14,730,392
- ----------------------------------------------------------------------------------------------
MA Water Resource Authority RRB, Series D,
MBIA Insured, 5%, 8/1/24 Aaa/AAA/AAA 5,000,000 4,913,500
-----------
26,913,477
- ----------------------------------------------------------------------------------------------
Michigan--7.2%
Detroit, MI GORB, Series B, 6.25%, 4/1/09 Baa2/BBB+ 4,065,000 4,437,273
- ----------------------------------------------------------------------------------------------
Detroit, MI GORB, Series B, 6.375%, 4/1/06 Baa2/BBB+ 2,000,000 2,223,180
</TABLE>
13 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michigan (continued)
Detroit, MI GORB, Series B, 6.375%, 4/1/07 Baa2/BBB+ $ 500,000 $ 554,180
- ----------------------------------------------------------------------------------------------
Detroit, MI Sewage Disposal RB, FGIC
Insured, Inverse Floater, 7.009%, 7/1/23(1) Aaa/AAA/AAA 13,200,000 14,569,500
- ----------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB,
Prerefunded, FGIC Insured, Inverse Floater,
8.359%, 7/1/22(1) Aaa/AAA/AAA 3,700,000 4,495,500
- ----------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB,
Unrefunded Balance, FGIC Insured, Inverse
Floater, 8.359%, 7/1/22(1) Aaa/AAA 1,500,000 1,783,125
- ----------------------------------------------------------------------------------------------
MI Hospital FAU RRB, FSA Insured, Inverse
Floater, 8.868%, 2/15/22(1) Aaa/AAA 5,000,000 5,850,000
- ----------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee Power
Station Project, 7.50%, 1/1/21 NR/NR 3,650,000 3,975,763
- ----------------------------------------------------------------------------------------------
Wayne Cnty., MI Special Airport Facilities
RRB, Northwest Airlines, Inc. Facilities,
Series 1995, 6.75%, 12/1/15 NR/NR 10,475,000 11,557,591
-----------
49,446,112
============================================================================================
New Hampshire--0.1%
NH Housing FAU RB, SFM, Series C, 6.90%,
7/1/19 Aa/NR 1,000,000 1,065,540
- ----------------------------------------------------------------------------------------------
New Jersey--4.9%
Bergen Cnty., NJ MUAU Water PC RB,
Prerefunded, Series A, FGIC
Insured, 6.50%,
12/15/12 Aaa/AAA/AAA 5,600,000 6,247,080
- ----------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mortgage-Keswick Pines,
5.75%, 1/1/24 NR/NR 1,125,000 1,113,750
- ----------------------------------------------------------------------------------------------
NJ EDAU RRB, Franciscan Oaks Project,
5.75%, 10/1/23 NR/NR 2,255,000 2,282,173
- ----------------------------------------------------------------------------------------------
NJ GOB, Series D, 8%, 2/15/07 Aa1/AA+/AA+ 3,100,000 3,948,997
- ----------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, 6.50%, 1/1/16 Baa1/BBB+/A- 16,150,000 19,036,813
- ----------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, MBIA Insured, 6.50%,
1/1/16 Aaa/AAA 1,100,000 1,316,348
-----------
33,945,161
- ----------------------------------------------------------------------------------------------
New York--7.6%
NYC GOB, Inverse Floater, 7.278%, 8/27/15(1) Baa1/BBB+ 3,050,000 3,263,500
- ----------------------------------------------------------------------------------------------
NYC GOB, Prerefunded, Series D, 8%, 8/1/15 Aaa/BBB+ 10,780,000 12,334,260
- ----------------------------------------------------------------------------------------------
NYC GOB, Series H, 6.125%, 8/1/25 Baa1/BBB+/A- 5,000,000 5,405,300
- ----------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series A,
7.75%, 8/15/16 Baa1/BBB+ 152,500 170,669
- ----------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series D,
8%, 8/1/15 Baa1/BBB+ 220,000 247,749
</TABLE>
14 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
============== ============== ==============
<S> <C> <C> <C>
New York (continued)
NYC GOB, Unrefunded Balance, Series G,
7.625%, 2/1/15 Baa1/BBB+/A- $ 75,000 $ 84,381
- ----------------------------------------------------------------------------------------------
NYC GORB, Series B, MBIA Insured, 6.20%,
8/15/06 Aaa/AAA 10,000,000 11,230,100
- ----------------------------------------------------------------------------------------------
NYC IDA SPF RB, Terminal One Group Assn.
Project, 6%, 1/1/19 A/A/A- 6,000,000 6,335,940
- ----------------------------------------------------------------------------------------------
NYS GOB, 6.875%, 3/1/12 A2/A 1,000,000 1,110,320
- ----------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6%, 11/1/06 Baa/BBB+ 4,000,000 4,387,360
- ----------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6%, 5/1/08 Baa/BBB+ 2,000,000 2,187,800
- ----------------------------------------------------------------------------------------------
NYS HFA RRB, Unrefunded Balance,
7.90%, 11/1/99 Baa2/BBB+ 3,765,000 3,946,247
- ----------------------------------------------------------------------------------------------
PAUNYNJ Consolidated RB, Series 51-E,
7%, 12/1/14 A1/AA- 1,840,000 1,895,734
-----------
52,599,360
- ----------------------------------------------------------------------------------------------
North Carolina--1.0%
NC Medical Care Commission HCF RB,
Carolina Medicorp Project, 5.25%, 5/1/26 Aa3/AA/AA 7,000,000 7,065,800
- ----------------------------------------------------------------------------------------------
Ohio--3.0%
Cleveland, OH PPS First Mtg. RB, Series A,
MBIA Insured, 7%, 11/15/16 Aaa/AAA 2,000,000 2,329,440
- ----------------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB, Series B,
6.25%, 2/1/22 NR/NR 2,500,000 2,559,375
- ----------------------------------------------------------------------------------------------
OH Building Authority RB, Juvenile
Correctional Projects, Series A, AMBAC
Insured, 6.60%, 10/1/14 Aaa/AAA/AAA 500,000 569,800
- ----------------------------------------------------------------------------------------------
OH HFA SFM RB, Series B, Inverse Floater,
9.517%, 3/1/31(1) Aaa/AAA 4,980,000 5,627,400
- ----------------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR 7,800,000 8,404,500
Summit Cnty., OH GOB, AMBAC Insured,
6.625%, 12/1/12 Aaa/AAA/AAA 1,200,000 1,321,584
-----------
20,812,099
- ----------------------------------------------------------------------------------------------
Oklahoma--1.5%
Tulsa, OK Municipal Airport Trust RB,
American Airlines Project, 6.25%, 6/1/20 Baa2/BB+ 9,820,000 10,547,858
- ----------------------------------------------------------------------------------------------
Pennsylvania--9.9%
PA EDFAU RR RB, Colver Project, Series D,
7.15%, 12/1/18 NR/BBB- 3,000,000 3,361,980
- ----------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC
Insured, Inverse Floater, 8.381%, 3/1/22(1) Aaa/AAA/AAA 17,500,000 19,709,375
</TABLE>
15 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania (continued)
PA HFA RB, SFM, Series 61A, 5.50%, 4/1/29 Aa2/AA+ $ 9,205,000 $ 9,267,318
- -------------------------------------------------------------------------------------------------------
PA TUCM RRB, Series N, 6.50%, 12/1/13 Aaa/AAA 750,000 818,790
- -------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Sewer RRB,
Escrowed to Maturity, Tenth Series,
7.35%, 9/1/04 Aaa/AAA 2,455,000 2,811,785
- -------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB,
FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 17,600,000 23,721,984
- -------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 8,565,000 8,872,227
-----------
68,563,459
- -------------------------------------------------------------------------------------------------------
South Carolina--2.0%
Piedmont, SC MPA RRB, Escrowed to Maturity,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 285,000 341,436
- -------------------------------------------------------------------------------------------------------
Piedmont, SC MPA RRB, Unrefunded Balance,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 1,715,000 2,048,859
- -------------------------------------------------------------------------------------------------------
SC Public Service Authority RB, Santee
Cooper, Prerefunded, Series D, AMBAC
Insured, 6.50%, 7/1/24 Aaa/AAA/AAA 10,000,000 11,168,900
-----------
13,559,195
- -------------------------------------------------------------------------------------------------------
Texas--14.1%
AAAU TX SPF RB, American Airlines, Inc.
Project, 7%, 12/1/11 Baa2/BBB- 3,000,000 3,544,110
- -------------------------------------------------------------------------------------------------------
AAAU TX SPF RB, Federal Express Corp.
Project, 6.375%, 4/1/21 Baa2/BBB 11,640,000 12,717,398
- -------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB,
Series A, Zero Coupon, 5.85%, 2/15/14(3) Aaa/AAA 15,710,000 7,125,271
- -------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB,
Series A, Zero Coupon, 5.85%, 2/15/15(3) Aaa/AAA 15,000,000 6,422,400
- -------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB,
Series A, Zero Coupon, 5.886%, 2/15/16(3) Aaa/AAA 16,240,000 6,557,712
- -------------------------------------------------------------------------------------------------------
Dallas-Fort Worth, TX International Airport
Facilities Improvement Corp. RB, American
Airlines, Inc., 7.25%, 11/1/30 Baa2/BB+ 8,000,000 8,956,480
- -------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien,
Prerefunded, 6.50%, 8/15/15 Aa3/AA 215,000 240,185
- -------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien,
Unrefunded Balance, 6.50%, 8/15/15 Aa3/AA 785,000 868,485
- -------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORRB, Toll Road, Sub. Lien,
6.75%, 8/1/14 Aa2/AA 1,000,000 1,101,270
- -------------------------------------------------------------------------------------------------------
Houston, TX WSS RB, Prior Lien, Unrefunded
Balance, Series B, 6.40%, 12/1/09 A3/A/A 995,000 1,096,430
</TABLE>
16 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Texas (continued)
Houston, TX WSS RB, Prior Lien, Unrefunded
Balance, Series B, 6.75%, 12/1/08 A3/A/A $ 440,000 $ 486,015
- -------------------------------------------------------------------------------------------------------
North Central TX HFDC Hospital RB, Baylor
Health Care Project, Series B, Inverse Floater,
7.85%, 5/15/06(1) Aa2/AA 3,000,000 3,343,410
- -------------------------------------------------------------------------------------------------------
North Central TX HFDC Hospital RB, Baylor
Health Care Project, Series B, Inverse Floater,
7.95%, 5/15/08(1) Aa2/AA 5,000,000 5,571,100
- -------------------------------------------------------------------------------------------------------
Retama, TX Development Corp. Special
Facilities RRB, Retama Racetrack, Escrowed
to Maturity, Series A, 10%, 12/15/19 Aaa/AAA 4,880,000 8,060,735
- -------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero
Coupon, 5.95%, 9/1/13(3) Aaa/AAA/A+ 6,900,000 3,224,991
- -------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero
Coupon, 5.93%, 9/1/14(3) Aaa/AAA/A+ 17,500,000 7,726,950
- -------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero
Coupon, 5.85%, 9/1/15(3) Aaa/AAA/A+ 10,000,000 4,167,100
- -------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero
Coupon, 5.98%, 9/1/16(3) Aaa/AAA/A+ 39,990,000 15,712,071
-----------
96,922,113
- -------------------------------------------------------------------------------------------------------
Vermont--0.2%
VT HFA Home Mtg. Purchase RB, Series A,
7.85%, 12/1/29 A1/A- 1,570,000 1,647,432
- -------------------------------------------------------------------------------------------------------
Washington--4.5%
WA Public Power Supply System RRB,
Nuclear Project No. 1, 5.40%, 7/1/12 Aa1/AA-/AA- 30,000,000 30,733,800
- -------------------------------------------------------------------------------------------------------
West Virginia--0.6%
WV Parkways ED & Tourism Authority RB, FGIC
Insured, Inverse Floater, 7.454%, 5/16/19(1) Aaa/AAA 3,600,000 4,090,500
- -------------------------------------------------------------------------------------------------------
Wisconsin--1.1%
WI Health & Educational Facilities Authority
RB, Sinai Samaritan Medical Center, Inc.,
MBIA Insured, 5.75%, 8/15/16 Aaa/AAA 6,250,000 6,651,375
- -------------------------------------------------------------------------------------------------------
WI Housing & EDAU Home Ownership RRB,
Series A, 7.10%, 3/1/23 Aa2/AA 705,000 750,621
-----------
7,401,996
- -------------------------------------------------------------------------------------------------------
U.S. Possessions--2.9%
PR CMWLTH GOB, 5.375%, 7/1/25 Baa1/A 2,200,000 2,249,654
- -------------------------------------------------------------------------------------------------------
PR CMWLTH GOB, 6.50%, 7/1/14 Baa1/A 6,690,000 7,937,819
- -------------------------------------------------------------------------------------------------------
PR CMWLTH GOB, 6.50%, 7/1/15 Baa1/A 3,310,000 3,947,208
</TABLE>
17 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Possessions (continued)
PR CMWLTH HTAU RB, Prerefunded, Series T,
6.625%, 7/1/18 Aaa/AAA $3,200,000 $ 3,582,176
- -------------------------------------------------------------------------------------------------------
PR EPAU RB, Unrefunded Balance, Series O,
7.125%, 7/1/14 Baa1/BBB+ 2,350,000 2,484,914
------------
20,201,771
- -------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $622,358,400) 99.4% 684,839,325
- -------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.6 3,906,240
---------- ------------
Net Assets 100.0% $688,745,565
========== ============
</TABLE>
To simplify the listing of securities, abbreviations are used per the table
below:
AAAU -- Alliance Airport Authority, Inc.
AB -- Airport Board
AIC -- Airports Improvement Corp.
BOE -- Board of Education
CAP -- Capital Appreciation
CDD -- Community Development District
CMWLTH -- Commonwealth
COP -- Certificates of Participation
ED -- Economic Development
EDAU -- Economic Development Authority
EDFAU -- Economic Development Finance
Authority
EPAU -- Electric Power Authority
FAU -- Finance Authority
GOB -- General Obligation Bonds
GORB -- General Obligation Refunding Bonds
GORRB -- General Obligation Revenue
Refunding Bonds
HCF -- Health Care Facilities
HEAA -- Higher Education Assistance Agency
HF -- Health Facilities
HFA -- Housing Finance Agency
HFAU -- Health Facilities Authority
HFDC -- Health Facilities Development Corp.
HFFAU -- Health Facilities Finance Authority
HTAU -- Highway & Transportation Authority
IDA -- Industrial Development Agency
IDAU -- Industrial Development Authority
ISD -- Independent School District
MEAU -- Municipal Electric Authority
MPA -- Municipal Power Agency
MUAU -- Municipal Utilities Authority
NYC -- New York City
NYS -- New York State
PAUNYNJ -- Port Authority of New York &
New Jersey
PC -- Pollution Control
PFAU -- Public Finance Authority
PPS -- Public Power System
PWBL -- Public Works Board Lease
RB -- Revenue Bonds
RR -- Resource Recovery
RRB -- Revenue Refunding Bonds
SCDAU -- Statewide Communities Development
Authority
SDI -- School District
SFM -- Single Family Mortgage
SPAST -- Special Assessment
SPF -- Special Facilities
SPO -- Special Obligations
SWD -- Solid Waste Disposal
TUAU -- Turnpike Authority
TUCM -- Turnpike Commission
TXAL -- Tax Allocation
UDA -- Urban Development Agency
WSS -- Water & Sewer System
18 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays 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 $74,835,910 or 10.87% of the
Fund's net assets at January 31, 1998.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $29,365,833 or 4.26% of the Fund's net
assets as of January 31, 1998.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
As of January 31, 1998, securities subject to the alternative minimum tax amount
to $147,258,481 or 21.38% of the Fund's net assets.
See accompanying Notes to Financial Statements.
19 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities January 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
=======================================================================================
Assets
Investments, at value (cost $622,358,400)--see accompanying statement $684,839,325
- ---------------------------------------------------------------------------------------
Cash 213,278
- ---------------------------------------------------------------------------------------
Receivables:
Interest 7,183,747
Shares of beneficial interest sold 843,886
- ---------------------------------------------------------------------------------------
Other 23,586
------------
Total assets 693,103,822
- ---------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Dividends 1,862,534
Investments purchased 1,113,750
Shares of beneficial interest redeemed 633,943
Trustees' fees --Note 1 236,528
Daily variation on futures contracts --Note 5 162,500
Distribution and service plan fees 135,388
Transfer and shareholder servicing agent fees 60,644
Other 152,970
------------
Total liabilities 4,358,257
- ---------------------------------------------------------------------------------------
Net Assets $688,745,565
============
Composition of Net Assets
Paid-in capital $628,834,399
- ---------------------------------------------------------------------------------------
Undistributed net investment income 603,954
- ---------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (2,661,213)
- ---------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 61,968,425
------------
Net assets $688,745,565
============
</TABLE>
20 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
==========================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$587,804,951 and 56,630,151 shares of beneficial interest outstanding) $ 10.38
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $ 10.90
- ------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $90,034,437
and 8,691,329 shares of beneficial interest outstanding) $ 10.36
- ------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $10,906,177
and 1,053,008 shares of beneficial interest outstanding) $ 10.36
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended January 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
==================================================================================
Investment Income
Interest $20,623,519
==================================================================================
Expenses
Management fees -- Note 4 1,783,690
- ----------------------------------------------------------------------------------
Distribution and service plan fees -- Note 4:
Class A 637,271
Class B 434,795
Class C 47,615
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees -- Note 4 248,984
- ----------------------------------------------------------------------------------
Shareholder reports 76,125
- ----------------------------------------------------------------------------------
Trustees' fees and expenses 61,921
- ----------------------------------------------------------------------------------
Custodian fees and expenses 40,546
- ----------------------------------------------------------------------------------
Legal and auditing fees 23,344
- ----------------------------------------------------------------------------------
Other 17,729
-----------
Total expenses 3,372,020
==================================================================================
Net Investment Income 17,251,499
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 938,815
Closing of futures contracts (5,577,081)
-----------
Net realized loss (4,638,266)
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 13,653,945
-----------
Net realized and unrealized gain 9,015,679
==================================================================================
Net Increase in Net Assets Resulting from Operations $26,267,178
===========
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1998 Year Ended
(Unaudited) July 31, 1997
====================================================================================================
Operations
<S> <C> <C>
Net investment income $ 17,251,499 $ 36,303,013
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) (4,638,266) 1,258,139
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 13,653,945 31,244,641
------------ ------------
Net increase in net assets resulting from operations 26,267,178 68,805,793
===================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (14,951,098) (31,577,223)
Class B (1,896,296) (3,635,315)
Class C (205,854) (266,953)
===================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial
interest transactions -- Note 2:
Class A (6,566,498) (32,746,596)
Class B 4,899,424 5,873,351
Class C 2,108,164 4,073,296
===================================================================================================
Net Assets
Total increase 9,655,021 10,526,353
- ---------------------------------------------------------------------------------------------------
Beginning of period 679,090,544 668,564,191
------------ ------------
End of period (including undistributed net investment
income of $603,954 and $837,200, respectively) $688,745,565 $679,090,544
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
23 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Six Months
Ended
January 31, Year Ended
1998 Year Ended July 31, December 31,
(Unaudited) 1997 1996(2) 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.24 $ 9.74 $9.98 $8.93 $10.44
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .25 .55 .32 .54 .57
Net realized and
unrealized gain (loss) .15 .49 (.25) 1.06 (1.52)
------- -------- -------- ------- ---------
Total income (loss) from
investment operations .40 1.04 .07 1.60 (.95)
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.54) (.31) (.54) (.56)
Dividends in excess of net
investment income -- -- -- (.01) --
Distributions from net realized gain -- -- -- -- --
Distributions in excess of net
realized gain -- -- -- -- --(4)
-------- -------- -------- -------- ---------
Total dividends and distributions
to shareholders (.26) (.54) (.31) (.55) (.56)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.38 $10.24 $9.74 $9.98 $8.93
======== ======== ======== ======== =========
===============================================================================================================
Total Return, at Net Asset Value(5) 4.02% 10.97% 0.77% 18.28% (9.19)%
===============================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $587,805 $586,546 $590,299 $634,473 $541,161
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $579,489 $582,624 $606,509 $569,859 $582,038
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.18%(6) 5.55% 5.58%(6) 5.65% 5.94%
Expenses 0.88%(6) 0.87% 0.92%(6) 0.88% 0.88%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 6.3% 23.8% 23.9% 25.1% 21.7%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
2. For the seven months ended July 31, 1996. The Fund changed its fiscal
year end from December 31 to July 31.
3. For the period from March 16, 1993(inception of offering) to
December 31, 1993.
4. Less than $.005 per share.
24 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
- -------------------------- ------------------------------------------------------------------------------
Six Months
Ended
January 31,
1998 Year Ended July 31, Year Ended December 31,
1993 1992 (Unaudited) 1997(2) 1996(2) 1995 1994 1993(3)
=========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$9.94 $9.77 $10.22 $9.73 $9.96 $8.92 $10.43 $10.22
- ---------------------------------------------------------------------------------------------------------
.59 .62 .23 .47 .27 .47 .50 .41
.74 .25 .14 .48 (.23) 1.05 (1.52) .43
------ ----- ------ ------- ----- ----- -------- ------
1.33 .87 .37 .95 .04 1.52 (1.02) .84
- ---------------------------------------------------------------------------------------------------------
(.62) (.58) (.23) (.46) (.27) (.47) (.49) (.42)
-- -- -- -- -- (.01) -- --
(.21) (.12) -- -- -- -- -- (.21)
-- -- -- -- -- -- --(4) --
------ ----- ------ ------ ----- ----- ------ ------
(.83) (.70) (.23) (.46) (.27) (.48) (.49) (.63)
- ---------------------------------------------------------------------------------------------------------
$10.44 $9.94 $10.36 $10.22 $9.73 $9.96 $ 8.92 $10.43
====== ===== ====== ====== ===== ===== ====== ======
=========================================================================================================
13.79% 9.20% 3.63% 10.05% 0.43% 17.30% (9.91)% 8.49%
=========================================================================================================
$608,128 $496,628 $90,034 $83,897 $74,055 $72,488 $53,245 $33,024
--------------------------------------------------------------------------------------------------------
$567,777 $438,684 $86,284 $77,881 $73,047 $63,669 $46,548 $16,444
--------------------------------------------------------------------------------------------------------
5.71% 6.34% 4.39%(6) 4.76% 4.79%(6) 4.84% 5.11% 4.54%(6)
0.88% 0.94% 1.66%(6) 1.65% 1.70%(6) 1.68% 1.69% 1.74%(6)
- ---------------------------------------------------------------------------------------------------------
30.2% 34.2% 6.3% 23.8% 23.9% 25.1% 21.7% 30.2%
</TABLE>
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
25 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
--------------------------------------------------
Six Months
Ended Period
January 31, Ended
1998 Year Ended July 31, Dec. 31,
(Unaudited) 1997 1996(2) 1995(1)
============================================================================================
Per Share Operating Data
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.22 $9.73 $9.96 $9.58
- --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .46 .27 .15
Net realized and
unrealized gain (loss) .14 .49 (.23) .39
------ ------ ----- -----
Total income (loss) from
investment operations .37 .95 .04 .54
- --------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.23) (.46) (.27) (.15)
Dividends in excess of net
investment income -- -- -- (.01)
Distributions from net realized gain -- -- -- --
Distributions in excess of net
realized gain -- -- -- --
------ ------ ----- -----
Total dividends and distributions
to shareholders (.23) (.46) (.27) (.16)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $10.36 $10.22 $9.73 $9.96
====== ====== ===== =====
============================================================================================
Total Return, at Net Asset Value(5) 3.63% 10.03% 0.40% 5.64%
============================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $10,906 $8,648 $4,210 $1,975
- --------------------------------------------------------------------------------------------
Average net assets (in thousands) $9,457 $5,724 $3,105 $1,506
- --------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.40%(6) 4.72% 4.72%(6) 4.49%(6)
Expenses 1.66%(6) 1.67% 1.75%(6) 1.64%(6)
- --------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 6.3% 23.8% 23.9% 25.1%
</TABLE>
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended January 31, 1998 were $42,231,058 and $44,220,384, respectively.
See accompanying Notes to Financial Statements.
26 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- -------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Municipal Bond Fund (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 objective is to seek the maximum
current income exempt from federal income taxes for individual investors as is
available from municipal securities that is consistent with preservation of
capital. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All 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 that class
and exclusive voting rights with respect to matters affecting that class. Class
B shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost
(or last determined market value) adjusted for amortization to maturity of any
premium or discount.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At July 31, 1997 the Fund
had available for federal income tax purposes an unused capital loss carryover
of $1,147,000, which expires between 2003 and 2005.
27 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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 six months
ended January 31, 1998, a provision of $30,969 was made for the Fund's
projected benefit obligations resulting in an accumulated liability of $229,529
at January 31, 1998.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its 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 fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Original issue discount or premiums on
securities purchased are amortized over the life of the respective securities,
in accordance with federal income tax requirements. As of November 4, 1997, in
order to conform book and tax bases, the Fund began amortization of premiums on
securities for book purposes. Accordingly, during the six months ended January
31, 1998, amounts have been reclassified to reflect an increase in undistributed
net investment income of $1,680,358. Paid-in capital was decreased by the same
amount. For bonds acquired after April 30, 1993, on disposition or maturity,
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. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
28 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Jan. 31, 1998 Year Ended July 31, 1997
------------------------------ --------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 2,627,854 $ 26,849,253 4,946,747 $ 48,948,803
Dividends reinvested 962,061 9,787,880 2,089,594 20,654,651
Redeemed (4,236,067) (43,203,635) (10,346,905) (102,350,050)
---------- ------------ ----------- ------------
Net decrease (646,152) $ (6,566,498) (3,310,564) $(32,746,596)
========== ============ =========== ============
- ----------------------------------------------------------------------------------------
Class B:
Sold 998,213 $ 10,151,282 1,596,575 $ 15,764,185
Dividends reinvested 113,796 1,155,591 233,176 2,301,877
Redeemed (628,067) (6,407,449) (1,234,381) (12,192,711)
---------- ------------ ----------- ------------
Net increase 483,942 $ 4,899,424 595,370 $ 5,873,351
========== ============ =========== ============
- ----------------------------------------------------------------------------------------
Class C:
Sold 292,898 $ 2,986,039 519,375 $ 5,132,628
Dividends reinvested 14,061 142,815 17,317 171,212
Redeemed (100,205) (1,020,690) (123,236) (1,230,544)
---------- ------------ ----------- ------------
Net increase 206,754 $ 2,108,164 413,456 $ 4,073,296
========== ============ =========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
At January 31, 1998, net unrealized appreciation on investments of $62,480,925
was composed of gross appreciation of $62,588,954, and gross depreciation of
$108,029.
29 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.60% of the first
$200 million of 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 average annual net assets in excess of $1 billion.
For the six months ended January 31, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $405,231, of which
$95,504 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $334,679 and $27,393, respectively, of which $23,172
and $1,298, respectively, was paid to an affiliated broker/dealer for Class B
and Class C. During the six months ended January 31, 1998, OFDI received
contingent deferred sales charges of $100,689 and $1,055, respectively, upon
redemption of Class B and Class C shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder 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. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the six months
ended January 31, 1998, OFDI paid $52,359 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
30 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its cost in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares, for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. During the six months
ended January 31, 1998, OFDI paid $5,348 and $1,260, respectively, to an
affiliated broker/dealer as compensation for Class B and Class C personal
service and maintenance expenses and retained $343,853 and $29,135,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan
was terminated. At January 31, 1998, OFDI had incurred unreimbursed expenses of
$2,355,890 for Class B and $135,185 for Class C.
================================================================================
5. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the contract
is closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
31 Oppenheimer Municipal Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Futures Contracts (continued)
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
At January 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Expiration Date Contracts January 31, 1998 Depreciation
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 30 yr. 3/98 400 $48,912,500 $ 512,500
</TABLE>
================================================================================
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months ended
January 31, 1998.
32 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
Oppenheimer Municipal Bond Fund
- -------------------------------------------------------------------------------
================================================================================
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Jerry A. Webman, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and OppenheimerFunds Services
Shareholder
Servicing Agent
================================================================================
Custodian of Portfolio Citibank, N.A.
Securities
================================================================================
Independent Auditors KPMG Peat Marwick LLP
================================================================================
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken
from the records of the Fund without examination by the
independent auditors. This is a copy of a report to
shareholders of Oppenheimer Municipal Bond Fund. This
report must be preceded or accompanied by a Prospectus
of Oppenheimer Municipal Bond Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any bank,
and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the
principal amount invested.
33 Oppenheimer Municipal Bond Fund
<PAGE>
- -------------------------------------------------------------------------------
OppenheimerFunds Family
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
==========================================================================================
Real Asset Funds
- ------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==========================================================================================
Stock Funds
- ------------------------------------------------------------------------------------------
Developing Markets Fund Discovery Fund Growth Fund
International Small Quest Small Cap Value Fund Global Fund
Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
==========================================================================================
Stock & Bond Funds
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==========================================================================================
Bond Funds
- ------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==========================================================================================
Municipal Funds
- ------------------------------------------------------------------------------------------
California Municipal Fund(1) Pennsylvania Municipal Fund1 Rochester Division:
Florida Municipal Fund(1) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(1) Insured Municipal Fund Limited Term New York
New York Municipal Fund(1) Intermediate Municipal Fund Municipal Fund
==========================================================================================
Money Market Funds(2)
- ------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==========================================================================================
LifeSpan
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. Available only to investors in certain states.
2. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
34 Oppenheimer Municipal Bond Fund
<PAGE>
<PAGE>
Internet
24-hr access to account information
- -----------------------------
www.oppenheimerfunds.com
- -----------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- -----------------------------
1-800-525-7048
- -----------------------------
Account Transactions
Mon-Fri 8:30am-8pm ET
- -----------------------------
1-800-852-8457
- -----------------------------
PhoneLink
24-hr automated information
and automated transactions
- -----------------------------
1-800-533-3310
- -----------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
- -----------------------------
1-800-843-4461
- -----------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
- -----------------------------
1-800-835-3104
- -----------------------------
Information and services
- ----------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[Oppenheimer Funds Logo]
Distributor, Inc.
RS0310.001.0198 April 1, 1998
