<PAGE> 1
SEMIANNUAL REPORT JANUARY 31, 1999
OPPENHEIMER
MUNICIPAL
BOND FUND
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 An Interview with Your Fund's Manager
11 Financial Statements
33 Officers and Trustees
36 Information and Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - MUNICIPAL BONDS PERFORMED WELL over the past six months in a
declining-interest-rate environment.
- - SEVERAL OF THE FUND'S HOLDINGS RECEIVED CREDIT RATING UPGRADES, which enhanced
the value of the securities.
CUMULATIVE TOTAL RETURNS
For the 6-Month Period Ended 1/31/99
CLASS A
Without With
Sales Chg.(1) Sales Chg.(2)
- ------------------------------
4.59% -0.38%
- ------------------------------
CLASS B
Without With
Sales Chg.(1) Sales Chg.(2)
- ------------------------------
4.20% -0.80%
- ------------------------------
CLASS C
Without With
Sales Chg.(1) Sales Chg.(2)
- ------------------------------
4.20% 3.20%
- ------------------------------
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. THE FUND'S
PERFORMANCE MAY FROM TIME TO TIME BE SUBJECT TO SUBSTANTIAL SHORT-TERM CHANGES,
particularly during periods of market or interest rate volatility. For updates
on the Fund's performance, please contact your financial advisor, call us at
1-800-525-7048 or visit our website, www.oppenheimerfunds.com.
1. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
2. 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%. Class B and
C shares are subject to an annual 0.75% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer Municipal Bond Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Municipal Bond Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
Contrary to what many analysts had expected, the U.S. economy appears to have
picked up steam over the past few months. The fourth quarter of 1998 posted the
fastest rate of economic growth in two years, and early indications suggest that
the first quarter of 1999 may follow suit.
With respect to the U.S. bond market, stronger than expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of longer
term taxable bonds have risen from their October 1998 lows, when investors had
bid up prices during the global "flight to quality." At the same time,
tax-exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat. What's more, the disparity
in valuations between large companies, which have led the market's advance, and
smaller ones, which have lagged, has become historically wide.
What do these observations mean for your investments? In our view,
actively managed portfolios that are closely monitored by expert money managers
are likely to provide better returns than passive index investing in 1999.
That's because selectivity is expected to be more critical to performance than
it has been over the past few years. In a potentially overvalued stock market
and rising interest-rate environment, the ability to identify the most promising
securities could become paramount.
Even though many equity investors may be tempted to jump aboard the
technology bandwagon, we suggest a more prudent course: broad diversification
beyond any single asset class, industry, capitalization range or geographic
region. We believe that the risks of this investment environment require
consideration of a broad range of investments and markets, including bonds. That
way, if one market experiences setbacks, one or more of the others may help
cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
February 22, 1999
3 Oppenheimer Municipal Bond Fund
<PAGE> 4
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD THAT ENDED JANUARY 31,
1999?
We are pleased with the Fund's performance over the past six months. Not only
has the municipal bond market rallied overall since August 1, 1998, but the Fund
also held some of the individual securities that led the market's advance. In
fact, several of our holdings received credit rating upgrades from the major
independent rating agencies, which helped to increase their investment value.
WHY DID THE MUNICIPAL BOND MARKET RALLY DURING THE SECOND HALF OF 1998?
When the reporting period began in August 1998, many financial markets around
the world were in disarray and global economic conditions were uncertain. The
U.S. stock market and the higher-yielding sectors of the U.S. bond market were
in the midst of a sharp decline triggered by the spread of the global currency
and credit crisis from Asia to Russia and Latin America. Lower overseas demand
for U.S. goods and services was expected to reduce the growth of domestic
corporate earnings, and investors became concerned that U.S. economic growth
might suffer.
4 Oppenheimer Municipal Bond Fund
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Jerry Webman
Robert E. Patterson
(Portfolio Manager)
Unlike equity investors, fixed income investors tend to welcome slower economic
growth because it helps alleviate inflationary pressures that may be present in
the economy. In addition, slower growth makes it more likely that interest rates
will decline, especially if the Federal Reserve Board cuts key short-term rates
to stimulate economic growth. As a result, prices of high quality bonds rose in
the third quarter of 1998, especially U.S. Treasury securities and highly rated
municipal bonds. However, municipal bonds lagged the performance of comparable
U.S. Treasury securities over the same period.
WHY DID U.S. TREASURY SECURITIES PROVIDE HIGHER RETURNS THAN MUNICIPAL BONDS?
In last summer's uncertain market environment, both domestic and overseas
investors sold investments they perceived as risky. Instead, they flocked to the
relative safety of triple-A-rated U.S. government bonds. Demand for U.S.
Treasury securities was rising at the same time that supply was falling because
of the federal government's success in balancing the budget. When demand for a
particular investment exceeds the available supply of securities, investors
usually bid up the price.
5 Oppenheimer Municipal Bond Fund
<PAGE> 6
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
Unlike U.S. Treasury securities, however, municipal bonds experienced relatively
steady demand for an abundant supply of securities. First, because overseas
investors and most institutions receive no tax benefits from municipal bonds,
they did not contribute to an increase in demand within this market sector.
Second, municipalities and other issuers took advantage of low interest rates
last year to finance new projects and refinance existing ones at lower costs.
With the second largest volume of new tax-exempt issuance in history entering
the market in 1998, plenty of securities were available to satisfy demand from
individual investors and mutual funds. Accordingly, while municipal bond prices
rallied when interest rates fell, they did not rise to the extent that prices of
U.S. Treasury securities did.
HOW WAS THE FUND MANAGED IN THIS ENVIRONMENT?
We remained nearly fully invested in a diversified portfolio of tax-exempt
securities from a wide variety of issuers. In fact, because we had expected the
U.S. economy to slow, we positioned the portfolio for slower growth and lower
interest rates well before the six-month reporting period began. As we stated in
our shareholder report six months ago, we focused primarily on bonds that, in
our opinion, were likely to benefit from improving credit profiles, and we
favored bonds secured by the revenues of specific projects over bonds backed by
the general taxation power of their issuers.
6 Oppenheimer Municipal Bond Fund
<PAGE> 7
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 12/31/98(1)
Class A
1 year 5 year 10 year
- -------------------------------
1.01% 4.53% 7.26%
- -------------------------------
Class B
Since
1 year 5 year Inception
- -------------------------------
0.24% 4.41% 5.40%
- -------------------------------
Class C
Since
1 year 5 year Inception
- -------------------------------
4.14% N/A 7.12%
- -------------------------------
We also emphasized bonds that provide protection against being redeemed early,
or "called," by their issuers. Because having bonds called while interest rates
are falling often requires us to reinvest the proceeds at lower yields, having
such "call protection" was an important part of our strategy over the past six
months.
Later in the six-month reporting period, we shifted our focus to higher
quality bonds, including insured bonds. That's because the differences in yields
between highly rated bonds and lower rated bonds had narrowed substantially
during the second half of last year, and there was little incentive to assume
the additional credit risks that lower rated bonds entail.
IN WHAT TYPES OF MUNICIPAL PROJECTS DID THE FUND INVEST OVER THE PAST SIX
MONTHS?
We continued to hold bonds financing a wide range of municipal projects, ranging
from airports to hospitals. We have also continued to find attractive
opportunities in housing bonds for the development of new communities throughout
the nation. We hold securities supporting senior citizen housing, as well as
bonds financing student and faculty housing, in Florida.
1. Total returns include changes 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 1% (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.
Class B and C shares are subject to an annual 0.75% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
7 Oppenheimer Municipal Bond Fund
<PAGE> 8
STANDARDIZED YIELDS(2)
- -------------------------------
For the 30 Days Ended 1/31/99
- -------------------------------
Class A 4.22%
- -------------------------------
Class B 3.65%
- -------------------------------
Class C 3.65%
- -------------------------------
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
During the past six months, we purchased public-benefit bonds issued by a paper
company for the construction of a new recycling plant in Georgia. Interest and
principal of these bonds are guaranteed by the issuing corporation, which our
analysts have deemed financially strong, yet, because they come from a
private-sector issuer rather than a government entity, they provide higher
yields than many comparable securities.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL BOND MARKET?
We remain very optimistic. Our outlook is especially positive for tax-exempt
bonds, however, because they have become quite inexpensive relative to their
historical relationship with U.S. Treasury securities. In fact, during October
1998, some tax-exempt bond yields equaled the yields of comparable taxable
government bonds. In effect, those who invested in municipal bonds in October
received the income-tax benefits for free!
2. Standardized yield is based on net investment income for the 30-day period
ended January 31, 1999. Falling share prices will tend to artificially raise
yields.
8 Oppenheimer Municipal Bond Fund
<PAGE> 9
CREDIT ALLOCATION(3)
[PIE CHART]
<TABLE>
<S> <C>
AAA 45.5%
AA 7.6
A 15.5
BBB 24.2
BB 5.9
B 1.3
</TABLE>
While municipal bond yields have moderated somewhat relative to U.S. Treasury
securities since this past October, they remain quite inexpensive compared to
historical norms. If the yield relationship between tax-exempt and taxable bonds
returns to more normal levels, as we expect, 1999 may be a particularly good
year for municipal bonds, making these tax-exempt securities an important part
of The Right Way to Invest.
TOP 5 INDUSTRIES
Percentage of invested assets(4)
- ------------------------------------
Corporate Backed 20.4%
- ------------------------------------
Electric Utilities 14.1
- ------------------------------------
Highways 12.6
- ------------------------------------
Single-Family Housing 9.0
- ------------------------------------
General Obligation 8.7
- ------------------------------------
3. Portfolio data are as of January 31, 1999, are dollar-weighted based on
invested assets and are subject to change. The Fund may invest up to 25% of its
assets in below-investment-grade securities which carry greater risk of default.
Securities rated by any rating organization are included in the equivalent
Standard & Poor's rating category. Average credit quality and allocations
include securities rated by national ratings organizations as well as unrated
securities (currently 7.9% of total investments) which have ratings assigned by
the Manager in categories equivalent to those of ratings organizations.
4. Industry weightings are as of January 31, 1999, and are subject to change.
9 Oppenheimer Municipal Bond Fund
<PAGE> 10
FINANCIALS
10 Oppenheimer Municipal Bond Fund
<PAGE> 11
STATEMENT OF INVESTMENTS January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
================================================================================================================
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--99.2%
- ----------------------------------------------------------------------------------------------------------------
ALABAMA--1.2%
Huntsville, AL HCF Authority RB, Prerefunded,
Series B, MBIA Insured, 6.625%, 6/1/23 Aaa/AAA $ 7,235,000 $ 8,383,629
- ----------------------------------------------------------------------------------------------------------------
ARIZONA--0.1%
Central AZ Irrigation & Drainage District
GORB, Series A, 6%, 6/1/13 NR/NR 1,080,950 1,012,266
- ----------------------------------------------------------------------------------------------------------------
CALIFORNIA--11.9%
CA Foothill/Eastern Transportation
Corridor Agency Toll Road RB, Sr. Lien,
Series A, 6.50%, 1/1/32 Baa3/BBB-/BBB 10,500,000 11,797,485
- ----------------------------------------------------------------------------------------------------------------
CA HFA RB, Series C, 6.65%, 8/1/14 Aa2/AA- 5,000,000 5,366,350
- ----------------------------------------------------------------------------------------------------------------
CA HFA RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,875,000 5,231,021
- ----------------------------------------------------------------------------------------------------------------
CA PWBL RB, University of California Regents,
Prerefunded, Series A, AMBAC Insured,
6.40%, 12/1/16 Aaa/AAA/AAA 2,500,000 2,818,825
- ----------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Cedars-Sinai Medical Center, 5.40%, 11/1/15 A1/NR 3,000,000 3,083,310
- ----------------------------------------------------------------------------------------------------------------
Industry, CA UDA TXAL Bonds, Transportation
Distribution Project No. 3, 6.90%, 11/1/07 NR/A- 500,000 558,495
- ----------------------------------------------------------------------------------------------------------------
Los Angeles, CA Regional AIC Lease RRB,
Facilities Sublease-International Airport
Project, 6.35%, 11/1/25 Baa3/BBB- 8,930,000 9,726,377
- ----------------------------------------------------------------------------------------------------------------
Palmdale, CA Community RA SFM RRB,
Prerefunded, Series A, 8%, 3/1/16 Aaa/AAA/A+ 5,000,000 6,854,550
- ----------------------------------------------------------------------------------------------------------------
Perris, CA SFM RB, Escrowed to Maturity,
Series A, 8.30%, 6/1/13 Aaa/AAA 7,000,000 9,695,700
- ----------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 6,000,000 8,016,360
- ----------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue
COP, FGIC Insured, Inverse
Floater, 7.535%, 6/1/19(1) Aaa/AAA/AAA 6,000,000 6,652,500
- ----------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, Prerefunded,
6.75%, 1/1/32 Aaa/AAA/AAA 12,700,000 14,459,458
------------
84,260,431
- ----------------------------------------------------------------------------------------------------------------
COLORADO--0.8%
CO HFAU RB, Rocky Mountain Adventist
Health System, 6.625%, 2/1/22 Baa2/BBB 5,000,000 5,356,700
- ----------------------------------------------------------------------------------------------------------------
CONNECTICUT--4.2%
Mashantucket, CT Western Pequot Tribe
Special RB, Prerefunded, Series A,
6.40%, 9/1/11(2) Aaa/AAA 7,435,000 8,759,025
</TABLE>
11 Oppenheimer Municipal Bond Fund
<PAGE> 12
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 (CONTINUED)
Mashantucket, CT Western Pequot Tribe
Special RB, Unrefunded Balance, Series A,
6.40%, 9/1/11(2) Baa2/BBB- $ 7,565,000 $ 8,458,124
- ----------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe
Special RRB, Sub. Lien, Series B, 5.75%, 9/1/27(2) Baa3/NR 11,900,000 12,432,049
-----------
29,649,198
- ----------------------------------------------------------------------------------------------------------------
FLORIDA--3.3%
Dade Cnty., FL IDAU RB, Miami Cerebral Palsy
Services Project, 8%, 6/1/22 NR/NR 2,845,000 3,134,962
- ----------------------------------------------------------------------------------------------------------------
Escambia Cnty., FL HFAU RB, Azalea
Trace, Inc., 6%, 1/1/15 NR/NR 4,000,000 4,163,600
- ----------------------------------------------------------------------------------------------------------------
Escambia Cnty., FL HFAU RRB, Baptist
Hospital, Inc. & Manor, 5.125%, 10/1/19 A3/BBB+ 6,395,000 6,298,372
- ----------------------------------------------------------------------------------------------------------------
FL BOE Capital Outlay GORB, 8.40%, 6/1/07 Aa2/AA 750,000 964,913
- ----------------------------------------------------------------------------------------------------------------
FL HFA SFM RRB, Series A, 6.35%, 7/1/14 Aaa/AAA 750,000 803,085
- ----------------------------------------------------------------------------------------------------------------
Grand Haven, FL CDD SPAST RB,
Series A, 6.30%, 5/1/02 NR/NR 1,183,000 1,214,633
- ----------------------------------------------------------------------------------------------------------------
Lee Cnty., FL Housing FAU SFM RB,
Series A-2, 6.85%, 3/1/29 Aaa/NR 1,585,000 1,807,645
- ----------------------------------------------------------------------------------------------------------------
Miami-Dade Cnty., FL SPO RB, Sub. Lien,
Series B, MBIA Insured, Zero Coupon,
5.452%, 10/1/29(3) Aaa/AAA/AAA 25,895,000 5,091,734
-----------
23,478,944
- ----------------------------------------------------------------------------------------------------------------
GEORGIA--2.8%
GA MEAU RRB, Project One, Series X, MBIA
Insured, 6.50%, 1/1/12 Aaa/AAA 500,000 602,355
- ----------------------------------------------------------------------------------------------------------------
GA MEAU SPO Refunding Bonds,
Series Y, 6.50%, 1/1/17 A3/A 10,750,000 12,768,420
- ----------------------------------------------------------------------------------------------------------------
GA MEAU SPO Refunding Bonds, Series Y,
MBIA Insured, 6.50%, 1/1/17 Aaa/AAA 1,000,000 1,211,580
- ----------------------------------------------------------------------------------------------------------------
Rockdale Cnty., GA DAU SWD RB, Visy
Paper Inc. Project, 7.40%, 1/1/16 NR/NR 4,625,000 4,943,801
-----------
19,526,156
- ----------------------------------------------------------------------------------------------------------------
ILLINOIS--1.5%
IL HFAU RB, Hinsdale Hospital Project,
Escrowed to Maturity, Series C, 9.50%, 11/15/19 Baa1/AAA 860,000 974,131
- ----------------------------------------------------------------------------------------------------------------
IL Regional Transportation Authority RB,
AMBAC Insured, 7.20%, 11/1/20 Aaa/AAA/AAA 7,500,000 9,785,550
-----------
10,759,681
</TABLE>
12 Oppenheimer Municipal Bond Fund
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
================================================================================================================
<S> <C> <C> <C>
INDIANA--4.0%
Indianapolis, IN Airport Authority RB, SPF
Federal Express Corp. Project, 7.10%, 1/15/17 Baa2/BBB $15,500,000 $17,457,650
- ----------------------------------------------------------------------------------------------------------------
Indianapolis, IN Airport Authority RB, SPF
United Airlines Project, Series A, 6.50%, 11/15/31 Baa2/BB+ 10,500,000 11,249,805
-----------
28,707,455
- ----------------------------------------------------------------------------------------------------------------
KENTUCKY--0.4%
Kenton Cnty., KY AB RB, SPF Delta Airlines
Project, Series A, 6.125%, 2/1/22 Baa3/BBB- 2,790,000 2,830,371
- ----------------------------------------------------------------------------------------------------------------
LOUISIANA--1.6%
New Orleans, LA Home Mtg. Authority SPO
Refunding Bonds, Escrowed to Maturity,
6.25%, 1/15/11 Aaa/NR 9,500,000 11,111,390
- ----------------------------------------------------------------------------------------------------------------
MARYLAND--0.1%
MD University Auxiliary Facilities & Tuition
System RRB, Series A, 5.90%, 2/1/03 Aa3/AA+/AA 500,000 532,275
- ----------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--3.8%
MA GOB, Unrefunded Balance, Series B,
MBIA Insured, 6.50%, 8/1/11 Aaa/AAA/AAA 430,000 466,348
- ----------------------------------------------------------------------------------------------------------------
MA TUAU Metropolitan Highway System
RRB, Sr. Lien, Series A, MBIA Insured, 5%, 1/1/37 Aaa/AAA/AAA 7,000,000 6,923,350
- ----------------------------------------------------------------------------------------------------------------
MA Water Resource Authority RB, Series A,
6.50%, 7/15/19 A1/A/A+ 12,225,000 14,673,423
- ----------------------------------------------------------------------------------------------------------------
MA Water Resource Authority RRB, Series D,
MBIA Insured, 5%, 8/1/24 Aaa/AAA/AAA 5,000,000 4,989,250
--------
27,052,371
- ----------------------------------------------------------------------------------------------------------------
MICHIGAN--7.7%
Detroit, MI GORB, Series B, 6.25%, 4/1/09 Baa1/BBB+ 4,065,000 4,531,052
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI GORB, Series B, 6.375%, 4/1/06 Baa1/BBB+ 2,000,000 2,242,740
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI GORB, Series B, 6.375%, 4/1/07 Baa1/BBB+ 500,000 560,685
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI Sewage Disposal RB,
Prerefunded, FGIC Insured, Inverse
Floater, 7.831%, 7/1/23(1) NR/AAA 10,100,000 11,981,125
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI Sewage Disposal RRB,
Unrefunded Balance, FGIC Insured,
Inverse Floater, 7.831%, 7/1/23(1) Aaa/AAA/AAA 3,100,000 3,487,500
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB,
Prerefunded, FGIC Insured, Inverse
Floater, 9.323%, 7/1/22(1) Aaa/AAA/AAA 3,700,000 4,463,125
- ----------------------------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB,
Unrefunded Balance, FGIC Insured, Inverse
Floater, 9.323%, 7/1/22(1) Aaa/AAA 1,500,000 1,779,375
</TABLE>
13 Oppenheimer Municipal Bond Fund
<PAGE> 14
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)
MI Hospital FAU RRB, FSA Insured, Inverse
Floater, 9.123%, 2/15/22(1) Aaa/AAA/AAA $ 5,000,000 $ 5,793,750
- ----------------------------------------------------------------------------------------------------------------
MI Hospital FAU RRB, Genesys Regional
Medical Hospital, Series A, 5.50%, 10/1/27 Baa2/BBB/BBB 4,500,000 4,435,740
- ----------------------------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee
Power Station Project, 7.50%, 1/1/21 NR/NR 3,650,000 3,945,577
- ----------------------------------------------------------------------------------------------------------------
Wayne Cnty., MI SPF Airport RRB, Northwest
Airlines, Inc. Facilities, Series 1995,
6.75%, 12/1/15 NR/NR 10,460,000 11,456,420
-----------
54,677,089
- ----------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.2%
NH Housing FAU SFM RB, Series C,
6.90%, 7/1/19 Aa3/NR 1,000,000 1,070,470
- ----------------------------------------------------------------------------------------------------------------
NEW JERSEY--4.4%
Bergen Cnty., NJ Utilities WPCAU RB,
Prerefunded, Series A, FGIC Insured,
6.50%, 12/15/12(4) Aaa/AAA/AAA 5,600,000 6,238,736
- ----------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Franciscan Oaks
Project, 5.75%, 10/1/23 NR/NR 2,255,000 2,253,309
- ----------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines,
5.70%, 1/1/18 NR/NR 1,000,000 1,004,790
- ----------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines,
5.75%, 1/1/24 NR/NR 1,125,000 1,116,259
- ----------------------------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, 6.50%, 1/1/16 Baa1/BBB+/A- 16,150,000 19,337,203
- ----------------------------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, MBIA Insured,
6.50%, 1/1/16 Aaa/AAA/AAA 1,100,000 1,343,111
-----------
31,293,408
- ----------------------------------------------------------------------------------------------------------------
NEW YORK--5.3%
NYC GOB, Inverse Floater, 7.481%, 8/27/15(1) Baa1/BBB+ 3,050,000 3,427,438
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Prerefunded, Series A, 7.75%, 8/15/16 Aaa/AAA/A- 115,000 129,021
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Prerefunded, Series D, 8%, 8/1/15 Aaa/A-/A- 10,980,000 12,367,213
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Series H, 6.125%, 8/1/25 A3/A-/A- 5,000,000 5,519,250
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series A,
7.75%, 8/15/16 A3/A-/A- 37,500 41,920
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series D,
8%, 8/1/15 A3/A-/A- 20,000 22,268
- ----------------------------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series G,
7.625%, 2/1/15 A3/A-/A- 75,000 83,728
- ----------------------------------------------------------------------------------------------------------------
NYC IDA SPF RB, Terminal One Group Assn.
Project, 6%, 1/1/19 A3/A/A- 6,000,000 6,397,500
- ----------------------------------------------------------------------------------------------------------------
NYS GOB, Prerefunded, 6.875%, 3/1/12 A2/A 1,000,000 1,116,930
- ----------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF,Series A, 6%, 11/1/06 Baa/A- 4,000,000 4,498,840
</TABLE>
14 Oppenheimer Municipal Bond Fund
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
================================================================================================================
<S> <C> <C> <C>
NEW YORK (CONTINUED)
NYS HFA RRB, NYC HF, Series A, 6%, 5/1/08 Baa/A- $2,000,000 $2,241,860
- ----------------------------------------------------------------------------------------------------------------
NYS HFA RRB, Unrefunded Balance,
7.90%, 11/1/99 Baa1/A- 1,960,000 1,989,714
-----------
37,835,682
- ----------------------------------------------------------------------------------------------------------------
OHIO--4.2%
Cleveland, OH PPS First Mtg. RB, Series A,
MBIA Insured, 7%, 11/15/16 Aaa/AAA 2,000,000 2,378,780
- ----------------------------------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB, Series B,
6.25%, 2/1/22 NR/NR 2,500,000 2,533,725
- ----------------------------------------------------------------------------------------------------------------
OH Building Authority RB, Juvenile
Correctional Projects, Series A, AMBAC
Insured, 6.60%, 10/1/14 Aaa/AAA/AAA 500,000 571,555
- ----------------------------------------------------------------------------------------------------------------
OH HFA SFM RB, Series B, Inverse Floater,
10.226%, 3/1/31(1) Aaa/AAA 4,280,000 4,777,550
- ----------------------------------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR 7,800,000 8,375,952
- ----------------------------------------------------------------------------------------------------------------
OH SWD RB, USG Corporate Project,
5.65%, 3/1/33 Baa3/BBB 10,000,000 10,062,500
- ----------------------------------------------------------------------------------------------------------------
Summit Cnty., OH GOB, AMBAC Insured,
6.625%, 12/1/12 Aaa/AAA/AAA 1,200,000 1,329,264
-----------
30,029,326
- ----------------------------------------------------------------------------------------------------------------
OKLAHOMA--1.5%
Tulsa, OK Municipal Airport Trust RB,
American Airlines Project, 6.25%, 6/1/20 Baa/BBB- 9,820,000 10,475,485
- ----------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--11.6%
Allegheny Cnty., PA HDAU RRB, Villa
St. Joseph HCF,6%, 8/15/28 NR/NR 2,000,000 1,972,160
- ----------------------------------------------------------------------------------------------------------------
PA EDFAU Facilities RB, National Gypsum Co.,
Series B, 6.125%, 11/2/27 NR/NR 10,000,000 9,921,300
- ----------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project, Series D,
7.15%, 12/1/18 NR/BBB- 3,000,000 3,330,720
- ----------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC
Insured, Inverse Floater, 8.209%, 3/1/22(1) Aaa/AAA/AAA 17,500,000 20,015,625
- ----------------------------------------------------------------------------------------------------------------
PA TUCM RRB, Series N, 6.50%, 12/1/13 Aa3/AA- 750,000 818,400
- ----------------------------------------------------------------------------------------------------------------
Philadelphia, PA GOUN, FSA Insured,
5%, 3/15/28 Aaa/AAA/AAA 3,500,000 3,465,350
- ----------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home
of Philadelphia, Series A, 5.50%, 11/15/18 NR/NR 1,670,000 1,619,332
- ----------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home
of Philadelphia, Series A, 5.60%, 11/15/28 NR/NR 1,275,000 1,245,101
- ----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Parking Authority RRB,
AMBAC Insured, 5%, 2/1/27 Aaa/AAA/AAA 5,235,000 5,231,074
</TABLE>
15 Oppenheimer Municipal Bond Fund
<PAGE> 16
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)
Philadelphia, PA Water & Sewer RRB, Escrowed
to Maturity,Tenth Series, 7.35%, 9/1/04 Aaa/AAA $ 2,440,000 $ 2,784,918
- ----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB, FGIC
Insured, 10%, 6/15/05 Aaa/AAA/AAA 17,600,000 23,514,832
- ----------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10(5) NR/NR/BB+ 8,110,000 8,336,431
-----------
82,255,243
- ----------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--2.5%
Charleston Cnty., SC RRB, Care Alliance Health
Services, Series A, FSA Insured, 5%, 8/15/28 Aaa/AAA/AAA 4,000,000 3,960,280
- ----------------------------------------------------------------------------------------------------------------
Piedmont, SC MPA RRB, Escrowed to Maturity,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 285,000 346,475
- ----------------------------------------------------------------------------------------------------------------
Piedmont, SC MPA RRB, Unrefunded Balance,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 1,715,000 2,087,189
- ----------------------------------------------------------------------------------------------------------------
SC Public Service Authority RB, Santee
Cooper, Prerefunded, Series D, AMBAC
Insured, 6.50%, 7/1/24 Aaa/AAA/AAA 10,000,000 11,159,300
-----------
17,553,244
- ----------------------------------------------------------------------------------------------------------------
TEXAS--15.8%
AAAU TX SPF RB, American Airlines, Inc.
Project, 7%, 12/1/11 Baa1/BBB- 3,000,000 3,572,640
- ----------------------------------------------------------------------------------------------------------------
AAAU TX SPF RB, Federal Express Corp.
Project, 6.375%, 4/1/21 Baa2/BBB 11,640,000 12,632,077
- ----------------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB, Series A,
Zero Coupon, 5.886%, 2/15/14(3) Aaa/AAA 15,710,000 7,718,637
- ----------------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB, Series A,
Zero Coupon, 5.85%, 2/15/15(3) Aaa/AAA 15,000,000 6,942,150
- ----------------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB, Series A,
Zero Coupon, 5.908%, 2/15/16(3) Aaa/AAA 16,240,000 7,092,495
- ----------------------------------------------------------------------------------------------------------------
Dallas-Fort Worth, TX International Airport
Facilities Improvement Corp. RB, American
Airlines, Inc., 7.25%, 11/1/30 Baa1/BBB- 8,000,000 8,797,840
- ----------------------------------------------------------------------------------------------------------------
Gulf Coast, TX Waste Disposal Authority
RB, 5.60%, 4/1/32 Baa3/BBB- 6,000,000 5,922,840
- ----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien,
Prerefunded, 6.50%, 8/15/15 Aa2/AA 215,000 240,009
- ----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien,
Unrefunded Balance, 6.50%, 8/15/15 Aa2/AA 785,000 865,494
- ----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORRB, Toll Road, Sub. Lien,
6.75%, 8/1/14 Aa2/AA 1,000,000 1,091,720
- ----------------------------------------------------------------------------------------------------------------
Houston, TX WSS RB, Prior Lien, Unrefunded
Balance, Series B, 6.40%, 12/1/09 A3/A 995,000 1,102,629
</TABLE>
16 Oppenheimer Municipal Bond Fund
<PAGE> 17
<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 $ 440,000 $ 482,750
- ----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Prerefunded,
Series B, Inverse Floater, 8.008%, 5/15/06(1) NR/AA 290,000 324,092
- ----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Prerefunded,
Series B, Inverse Floater, 8.109%, 5/15/06(1) NR/AA 480,000 536,534
- ----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Unrefunded Balance,
Series B, Inverse Floater, 8.008%, 5/15/06(1) Aa2/AA 2,710,000 2,975,661
- ----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Unrefunded Balance,
Series B, Inverse Floater, 8.109%, 5/15/08(1) Aa2/AA 4,520,000 4,963,954
- ----------------------------------------------------------------------------------------------------------------
Retama, TX Development Corp. SPF RRB, Retama
Racetrack, Escrowed to Maturity, Series A,
10%, 12/15/19 Aaa/AAA 4,880,000 8,105,387
- ----------------------------------------------------------------------------------------------------------------
San Antonio, TX Electric & Gas RRB, Series A,
4.50%, 2/1/21 Aa1/AA/AA+ 6,000,000 5,659,680
- ----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.95%, 9/1/13(3) Aaa/AAA/AAA 6,900,000 3,488,571
- ----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.93%, 9/1/14(3) Aaa/AAA/AAA 17,500,000 8,379,700
- ----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.85%, 9/1/15(3) Aaa/AAA/AAA 10,000,000 4,508,700
- ----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.985%, 9/1/16(3) Aaa/AAA/AAA 39,990,000 17,008,947
---------
112,412,507
- ----------------------------------------------------------------------------------------------------------------
VERMONT--0.2%
VT HFA Home Mtg. Purchase RB, Series A,
7.85%, 12/1/29 A1/A- 1,570,000 1,614,478
- ----------------------------------------------------------------------------------------------------------------
VIRGINIA--4.2%
Pocahontas Parkway Assn., VA Toll Road RB,
CAP,First Tier, Sub. Lien, Series C, Zero Coupon,
5.60%, 8/15/05(3) Ba1/NR 2,300,000 1,614,094
- ----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP,
First Tier, Sub. Lien, Series C, Zero Coupon,
5.75%, 8/15/07(3) Ba1/NR 2,800,000 1,741,600
- ----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP,
First Tier, Sub. Lien, Series C, Zero Coupon,
5.80%, 8/15/08(3) Ba1/NR 3,000,000 1,756,950
- ----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP,
First Tier, Sub. Lien, Series C, Zero Coupon,
5.85%, 8/15/09(3) Ba1/NR 3,100,000 1,707,759
- ----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB,CAP,
Sr. Lien, Series B, Zero Coupon, 5.86%, 8/15/20(3) Baa3/A/A 25,000,000 7,605,000
</TABLE>
17 Oppenheimer Municipal Bond Fund
<PAGE> 18
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
================================================================================================================
<S> <C> <C> <C>
VIRGINIA (CONTINUED)
Pocahontas Parkway Assn., VA Toll Road RB,
CAP,Sr. Lien, Series B, Zero Coupon,
5.858%, 8/15/21(3) Baa3/A/A $26,300,000 $ 7,552,308
- ----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB,
CAP,Sr. Lien, Series B, Zero Coupon, 5.856%,
8/15/22(3) Baa3/A/A 29,900,000 8,104,993
------------
30,082,704
- ----------------------------------------------------------------------------------------------------------------
WASHINGTON--2.9%
WA PP Supply System RRB, Nuclear
Project No. 1, 5.40%, 7/1/12 Aa1/AA-/AA- 20,000,000 20,879,200
- ----------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.6%
WV Parkways ED & Tourism Authority
RB, FGIC Insured, Inverse Floater, 8.135%,
5/16/19( 1) Aaa/AAA 3,600,000 4,095,000
- ----------------------------------------------------------------------------------------------------------------
WISCONSIN--1.0%
WI Health & Educational FA RB, Sinai
Samaritan Medical Center, Inc., MBIA
Insured, 5.75%, 8/15/16 Aaa/AAA 6,250,000 6,752,375
- ----------------------------------------------------------------------------------------------------------------
WI Housing & EDAU Home Ownership RRB,
Series A, 7.10%, 3/1/23 Aa2/AA 580,000 617,850
------------
7,370,225
- ----------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--1.4%
Guam Housing Corp. SFM RB, Series A,
5.75%, 9/1/31 NR/AAA 5,725,000 6,254,849
- ----------------------------------------------------------------------------------------------------------------
PR CMWLTH GOB, 5.375%, 7/1/25 Baa1/A 1,000,000 1,029,980
- ----------------------------------------------------------------------------------------------------------------
PR EPAU RB, Unrefunded Balance,
Series O, 7.125%, 7/1/14 Baa1/BBB+ 2,350,000 2,425,224
------------
9,710,053
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $638,279,374) 99.2% 704,014,981
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.8 5,749,435
-------- ------------
NET ASSETS 100.0% $709,764,416
======== ============
</TABLE>
18 Oppenheimer Municipal Bond Fund
<PAGE> 19
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C>
AAAU --Alliance Airport Authority, Inc. IDA --Industrial Development Agency
AB --Airport Board IDAU --Industrial Development Authority
AIC --Airport Improvement Corp. ISD --Independent School District
BOE --Board of Education MEAU --Municipal Electric Authority
CAP --Capital Appreciation MPA --Municipal Power Agency
CDD --Community Development District NYC --New York City
CMWLTH--Commonwealth NYS --New York State
COP --Certificates of Participation PP --Public Power
DAU --Development Authority PPS --Public Power System
ED --Economic Development PWBL --Public Works Board Lease
EDAU --Economic Development Authority RA --Redevelopment Agency
EDFAU --Economic Development Finance Authority RB --Revenue Bonds
EPAU --Electric Power Authority RR --Resource Recovery
FA --Facilities Authority RRB --Revenue Refunding Bonds
FAU --Finance Authority SCDAU--Statewide Communities Development
GOB --General Obligation Bonds Authority
GORB --General Obligation Refunding Bonds SFM --Single Family Mortgage
GORRB --General Obligation Revenue Refunding SPAST--Special Assessment
Bonds SPF --Special Facilities
GOUN --General Obligation Unlimited Notes SPO --Special Obligations
HCF --Health Care Facilities SWD --Solid Waste Disposal
HDAU --Hospital Development Authority TUAU --Turnpike Authority
HEAA --Higher Education Assistance Agency TUCM --Turnpike Commission
HF --Health Facilities TXAL --Tax Allocation
HFA --Housing Finance Agency UDA --Urban Development Agency
HFAU --Health Facilities Authority WPCAU--Water Pollution Control Authority
HFDC --Health Facilities Development Corp. WSS --Water & Sewer System
</TABLE>
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 $75,273,229 or
10.61% of the Fund's net assets as of January 31, 1999.
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 $29,649,198 or 4.18% of the Fund's net
assets as of January 31, 1999.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. Securities with an aggregate market value of $2,701,596 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
5. Identifies issues considered to be illiquid or restricted--see Note 6 of
Notes to Financial Statements.
As of January 31, 1999, securities subject to the alternative minimum tax
amount to $180,465,243 or 25.43% of the Fund's net assets.
See accompanying Notes to Financial Statements.
19 Oppenheimer Municipal Bond Fund
<PAGE> 20
STATEMENT OF ASSETS AND LIABILITIES January 31, 1999 (Unaudited)
<TABLE>
================================================================================================================
<S> <C>
ASSETS
- ----------------------------------------------------------------------------------------------------------------
Investments, at value (cost $638,279,374)--see accompanying statement $704,014,981
- ----------------------------------------------------------------------------------------------------------------
Cash 783,583
- ----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 7,411,865
Shares of beneficial interest sold 554,006
Other 10,565
------------
Total assets 712,775,000
================================================================================================================
LIABILITIES
Payables and other liabilities:
Dividends 1,921,157
Shares of beneficial interest redeemed 526,707
Trustees' compensation--Note 1 260,246
Distribution and service plan fees 135,305
Daily variation on futures contracts--Note 5 87,500
Other 79,669
------------
Total liabilities 3,010,584
================================================================================================================
NET ASSETS $709,764,416
============
================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $644,632,159
- ----------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (1,438,960)
- ----------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 923,110
Net unrealized appreciation on investments--Notes 3 and 5 65,648,107
------------
Net assets $709,764,416
============
</TABLE>
20 Oppenheimer Municipal Bond Fund
<PAGE> 21
<TABLE>
================================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$593,163,710 and 56,575,862 shares of beneficial interest outstanding) $10.48
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.00
- ----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $99,112,055
and 9,473,299 shares of beneficial interest outstanding) $10.46
- ----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $17,488,651
and 1,671,821 shares of beneficial interest outstanding) $10.46
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Municipal Bond Fund
<PAGE> 22
STATEMENT OF OPERATIONS For the Six Months Ended January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
================================================================================================================
<S> <C>
INVESTMENT INCOME
Interest $20,523,230
================================================================================================================
EXPENSES
Management fees--Note 4 1,842,748
- ----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 652,494
Class B 486,176
Class C 78,303
- ----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 223,006
- ----------------------------------------------------------------------------------------------------------------
Shareholder reports 54,430
- ----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 41,255
- ----------------------------------------------------------------------------------------------------------------
Trustees' compensation--Note 1 39,422
- ----------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 14,838
- ----------------------------------------------------------------------------------------------------------------
Other 20,197
Total expenses 3,452,869
Less expenses paid indirectly--Note 4 (20,050)
-----------
Net expenses 3,432,819
================================================================================================================
NET INVESTMENT INCOME 17,090,411
================================================================================================================
REALIZED AND UNREALIZED GAIN
Net realized gain on:
Investments 2,189,474
Closing of futures contracts 788,000
-----------
Net realized gain 2,977,474
Net change in unrealized appreciation or depreciation on investments 11,254,126
-----------
Net realized and unrealized gain 14,231,600
================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $31,322,011
===========
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer Municipal Bond Fund
<PAGE> 23
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 17,090,411 $ 33,251,946
- ----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 2,977,474 (3,864,299)
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 11,254,126 6,481,326
--------- ---------
Net increase in net assets resulting from operations 31,322,011 35,868,973
================================================================================================================
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income:
Class A (14,713,013) (29,581,175)
Class B (2,033,892) (3,825,603)
Class C (327,062) (457,414)
================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A 1,562,782 (8,655,646)
Class B 5,504,911 7,490,759
Class C 4,344,981 4,173,260
================================================================================================================
NET ASSETS
Total increase 25,660,718 5,013,154
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 684,103,698 679,090,544
------------ ------------
End of period (including overdistributed net investment
income of $1,438,960 and $1,455,404, respectively) $709,764,416 $684,103,698
============ ============
See accompanying Notes to Financial Statements.
</TABLE>
23 Oppenheimer Municipal Bond Fund
<PAGE> 24
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
SIX MONTHS
ENDED
JANUARY 31,
1999 YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(2) 1995 1994
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.27 $10.24 $ 9.74 $9.98 $8.93 $10.44
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 .51 .55 .32 .54 .57
Net realized and unrealized
gain (loss) .21 .04 .49 (.25) 1.06 (1.52)
------- ------- ------ ----- ----- ------
Total income (loss) from
investment operations .47 .55 1.04 .07 1.60 (.95)
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.52) (.54) (.31) (.54) (.56)
Dividends in excess of net
investment income -- -- -- -- (.01) --
Distributions from net realized gain -- -- -- -- -- --
------- ------- ------ ----- ----- ------
Total dividends and distributions
to shareholders (.26) (.52) (.54) (.31) (.55) (.56)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.48 $10.27 $10.24 $9.74 $9.98 $ 8.93
======= ======= ====== ===== ===== ======
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 4.59% 5.55% 10.97% 0.77% 18.28% (9.19)%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $593,164 $579,570 $586,546 $590,299 $634,473 $541,161
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $589,307 $581,630 $582,624 $606,509 $569,859 $582,038
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.96%(4) 5.00% 5.55% 5.58%(4) 5.65% 5.94%
Expenses(5) 0.85%(4) 0.87% 0.87% 0.92%(4) 0.88% 0.88%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 7% 21% 24% 24% 25% 22%
</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.
24 Oppenheimer Municipal Bond Fund
<PAGE> 25
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
JANUARY 31,
1999 YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(2) 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C>
$10.25 $10.22 $ 9.73 $9.96 $8.92 $10.43
---------------------------------------------------------------------------------------------------------------
.22 .43 .47 .27 .47 .50
.21 .04 .48 (.23) 1.05 (1.52)
------ -------- -------- ------- ------- --------
.43 .47 .95 .04 1.52 (1.02)
---------------------------------------------------------------------------------------------------------------
(.22) (.44) (.46) (.27) (.47) (.49)
-- -- -- -- (.01) --
-- -- -- -- -- --
------ -------- -------- ------- ------- --------
(.22) (.44) (.46) (.27) (.48) (.49)
---------------------------------------------------------------------------------------------------------------
$10.46 $10.25 $10.22 $9.73 $9.96 $ 8.92
====== ======== ======== ======= ======= ========
===============================================================================================================
4.20% 4.75% 10.05% 0.43% 17.30% (9.91)%
===============================================================================================================
$99,112 $91,677 $83,897 $74,055 $72,488 $53,245
---------------------------------------------------------------------------------------------------------------
$96,483 $88,531 $77,881 $73,047 $63,669 $46,548
---------------------------------------------------------------------------------------------------------------
4.18%(4) 4.21% 4.76% 4.79%(4) 4.84% 5.11%
1.63%(4) 1.65% 1.65% 1.70%(4) 1.68% 1.69%
---------------------------------------------------------------------------------------------------------------
7% 21% 24% 24% 25% 22%
</TABLE>
3. 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.
4. Annualized.
5. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
25 Oppenheimer Municipal Bond Fund
<PAGE> 26
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
JANUARY 31, ENDED
1999 YEAR ENDED JULY 31, DEC. 31,
(UNAUDITED) 1998 1997 1996(2) 1995(1)
================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.25 $10.22 $ 9.73 $9.96 $9.58
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .43 .46 .27 .15
Net realized and unrealized
gain (loss) .20 .04 .49 (.23) .39
-------- -------- -------- ------- -------
Total income (loss) from
investment operations .43 .47 .95 .04 .54
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.44) (.46) (.27) (.15)
Dividends in excess of net
investment income -- -- -- -- (.01)
Distributions from net realized gain -- -- -- -- --
-------- -------- -------- ------- -------
Total dividends and distributions
to shareholders (.22) (.44) (.46) (.27) (.16)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.46 $10.25 $10.22 $9.73 $9.96
======== ======== ======== ======= =======
================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 4.20% 4.75% 10.03% 0.40% 5.64%
================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $17,488 $12,857 $8,648 $4,210 $1,975
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $15,559 $10,655 $5,724 $3,105 $1,506
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.18%(4) 4.30% 4.72% 4.72%(4) 4.49%(4)
Expenses(5) 1.62%(4) 1.64% 1.67% 1.75%(4) 1.64%(4)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 7% 21% 24% 24% 25%
</TABLE>
6. 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, 1999, were $59,587,144 and $49,769,751, respectively.
See accompanying Notes to Financial Statements.
26 Oppenheimer Municipal Bond Fund
<PAGE> 27
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 current income
exempt from federal income taxes by investing in municipal securities, while
attempting to preserve 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, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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.
27 Oppenheimer Municipal Bond Fund
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
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. As of July 31, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $2,058,000, which expires between 2003 and 2006.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. 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, 1999, a provision of $3,625 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $252,996 as of
January 31, 1999.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or
a portion of annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Trustee in shares of one or more
Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under
the plan will be determined based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
income per share.
- --------------------------------------------------------------------------------
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.
28 Oppenheimer Municipal Bond Fund
<PAGE> 29
================================================================================
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Original issue discount on securities purchased
is amortized over the life of the respective securities, in accordance with
federal income tax requirements. 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 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.
================================================================================
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 JANUARY 31, 1999 YEAR ENDED JULY 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 6,411,979 $ 66,630,841 7,539,023 $ 77,439,740
Dividends reinvested 910,346 9,441,708 1,883,571 19,274,883
Redeemed (7,167,115) (74,509,767) (10,278,245) (105,370,269)
---------- ------------ ----------- -------------
Net increase (decrease) 155,210 $ 1,562,782 (855,651) $ (8,655,646)
========== ============ =========== =============
- ----------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,364,445 $ 14,162,157 2,062,272 $ 21,072,590
Dividends reinvested 123,306 1,276,074 230,245 2,351,819
Redeemed (957,625) (9,933,320) (1,556,731) (15,933,650)
---------- ------------ ----------- -------------
Net increase 530,126 $ 5,504,911 735,786 $ 7,490,759
========== ============ =========== =============
- ----------------------------------------------------------------------------------------------------------------
Class C:
Sold 603,210 $ 6,271,438 679,752 $ 6,954,811
Dividends reinvested 22,851 236,486 30,969 316,430
Redeemed (208,678) (2,162,943) (302,537) (3,097,981)
---------- ------------ ----------- -------------
Net increase 417,383 $ 4,344,981 408,184 $ 4,173,260
========== ============ =========== =============
</TABLE>
29 Oppenheimer Municipal Bond Fund
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of January 31, 1999, net unrealized appreciation on investments of
$65,735,607 was composed of gross appreciation of $66,011,110, and gross
depreciation of $275,503.
================================================================================
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. The
Fund's management fee for the six months ended January 31, 1999 was 0.52% of the
average annual net assets of Class A, Class B and Class C shares.
For the six months ended January 31, 1999, commissions (sales charges
paid by investors) on sales of Class A shares totaled $374,356, of which
$89,729 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
A, Class B and Class C shares totaled $37,348, $351,275 and $35,284,
respectively. Amounts paid to an affiliated broker/dealer for Class B and Class
C shares were $22,449 and $2,051, respectively. During the six months ended
January 31, 1999, OFDI received contingent deferred sales charges of $138,335
and $3,067, 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 Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
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, 1999, OFDI paid $54,817 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
30 Oppenheimer Municipal Bond Fund
<PAGE> 31
==============================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs 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 Class C shares. Each fee
is computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the six months
ended January 31, 1999, OFDI paid $5,293 and $1,594, respectively, to an
affiliated broker/dealer as compensation for Class B and Class C personal
service and maintenance expenses and retained $385,873 and $56,851,
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. As of January 31, 1999, OFDI had incurred excess distribution
and servicing costs of $2,365,090 for Class B and $196,156 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 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.
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.
31 Oppenheimer Municipal Bond Fund
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
==============================================================================
5. FUTURES CONTRACTS(CONTINUED)
As of January 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE CONTRACTS JANUARY 31, 1999 DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO SELL
- -----------------
U.S. Treasury Bonds, 20 yr. 3/99 700 $89,600,000 $87,500
</TABLE>
==============================================================================
6. ILLIQUID AND RESTRICTED SECURITIES
As of January 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of January 31, 1999 was $8,336,431, which
represents 1.17% of the Fund's net assets.
==============================================================================
7. 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 of 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, 1999.
32 Oppenheimer Municipal Bond Fund
<PAGE> 33
OPPENHEIMER MUNICIPAL BOND FUND
<TABLE>
=============================================================================================
<S> <C>
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
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 SHAREHOLDER OppenheimerFunds Services
SERVICING AGENT
=============================================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
=============================================================================================
INDEPENDENT AUDITORS KPMG 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, are not
insured by the FDIC or any other agency,
and involve investment risks, including
the possible loss of the principal amount
invested.
</TABLE>
33 Oppenheimer Municipal Bond Fund
<PAGE> 34
OPPENHEIMERFUNDS FAMILY
<TABLE>
======================================================================================================
<S> <C> <C>
REAL ASSET FUNDS
- ------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
======================================================================================================
GLOBAL STOCK FUNDS
- ------------------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund Europe Fund
======================================================================================================
STOCK FUNDS
- ------------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
Large Cap Growth Fund
======================================================================================================
STOCK & BOND FUNDS
- ------------------------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Disciplined Allocation Fund
Income Fund(1) Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Equity Income Fund
======================================================================================================
TAXABLE BOND FUNDS
- ------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
======================================================================================================
MUNICIPAL BOND FUNDS
- ------------------------------------------------------------------------------------------------------
California Municipal Fund(2) Pennsylvania Municipal Fund(2) Rochester Division:
Florida Municipal Fund(2) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(2) Insured Municipal Fund Limited Term New York
New York Municipal Fund(2) Intermediate Municipal Fund Municipal Fund
======================================================================================================
MONEY MARKET FUNDS(3)
- ------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 12/22/98, the Fund's name was changed from "Main Street Income & Growth
Fund."
2. Available only to investors in certain states.
3. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
34 Oppenheimer Municipal Bond Fund
<PAGE> 35
INTERNET
24-hr access to account
information. Online transactions
now available
www.oppenheimerfunds.com
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET
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1-800-525-7048
ACCOUNT TRANSACTIONS
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1-800-835-3104
IFORMATION 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 or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website 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.
[OPPENHEIMERFUNDS LOGO]
RS0310.001.0199 April 1, 1999
