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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE GEORGE C. BOWEN
TITLE TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> OPPENHEIMER MUNICIPAL BOND FUND - C
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Return of Capital
The Fund adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
July 31, 1998, amounts have been reclassified to reflect an increase in paid-in
capital of $1,847,476, a decrease in undistributed net investment income of
$1,680,358, and an increase in accumulated net realized loss on investments of
$167,118.
Material Reclassification
As of November 4, 1997, in order to conform book and tax bases, the Fund began
amortization of premiums on securities for book purposes. Such cumulative change
was limited to a reclassificiation adjustment and had no impact on net assets or
total increase (decrease) in net assets. Accordingly, during the year ended July
31, 1998, amounts have been reclassified to reflect an increase in net
unrealized appreciation of investments of $1,710,031. Paid-in capital was
decreased for the same amount. For bonds acquired after April 30, 1993, accrued
market discount is recognized at maturity or disposition as taxable ordinary
income. Taxable ordinary income is realized to the extent of the lesser of gain
or accrued market discount. 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 Board of Trustees and Shareholders of
Oppenheimer Municipal Bond Fund:
In planning and performing our audit of the financial statements of Oppenheimer
Municipal Bond Fund for the year ended July 31, 1998, we considered its internal
controls, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on internal controls.
The management of Oppenheimer Municipal Bond Fund is responsible for
establishing and maintaining internal controls. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control policies and procedures.
Two of the objectives of internal controls are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in internal controls, errors or irregularities
may occur and may not be detected. Also, projection of any evaluation of
internal controls to future periods is subject to the risk that they may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of internal controls would not necessarily disclose all
matters in internal controls that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of specific
internal control elements does not reduce to a relatively low level the risk
that errors or irregularities in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal controls, including
procedures for safeguarding securities, that we considered to be material
weaknesses as defined above as of July 31, 1998.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission and should not be used for any other purpose.
KPMG Peat Marwick LLP
Denver, Colorado
August 21, 1998
