<PAGE>
[PHOTO]
Semiannual Report January 31, 2000
Oppenheimer
MUNICIPAL BOND FUND
[LOGO]OPPENHEIMERFUNDS-Registered Trademark-
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTENTS
<TABLE>
<S> <C>
1 President's Letter
3 An Interview with Your Fund's Manager
9 Financial Statements
29 Officers and Trustees
</TABLE>
MUNICIPAL BOND PRICES GENERALLY DECLINED IN A RISING-INTEREST-RATE ENVIRONMENT
over the six-month reporting period.
WE FOCUSED PRIMARILY ON INSURED SECURITIES DURING THE PERIOD, as yield
differences had narrowed between high quality and lower quality municipal bonds.
WE BELIEVE THAT THE FUND'S UNDERVALUED HOLDINGS MAY BENEFIT AS THE INVESTMENT
ENVIRONMENT IMPROVES and demand for high yielding securities picks up.
- ----------------------------
CUMULATIVE
TOTAL RETURNS
For the 6-Month Period
Ended 1/31/00 *
<TABLE>
<CAPTION>
Class A
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
- -5.64% -10.13%
Class B
Without With
Sales Chg. Sales Chg.
- ----------------------
- -6.02% -10.59%
Class C
Without With
Sales Chg. Sales Chg.
- ----------------------
- -6.02% -6.93%
- ----------------------------
</TABLE>
- ------------------
NOT FDIC INSURED.
NO BANK GUARANTEE.
MAY LOSE VALUE.
- ------------------
*See page 7 for further details.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Municipal Bond Fund
DEAR SHAREHOLDER,
Whenever a new year begins--let alone a new decade or century--it makes sense to
pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year end, it became clearer that while the U.S. economy grew
robustly in 1999, inflation remained at low levels. Indeed, investors appeared
more comfortable with the economy after the Federal Reserve Board demonstrated
its inflation-fighting resolve by raising interest rates three times between
June and November.
As is normal in a rising-interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of large-capitalization growth companies, principally in the technology arena.
Smaller and value-oriented stocks provided particularly lackluster returns and,
overall, foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a moderate-growth,
low-inflation course. As recent revisions of 1999's economic statistics
demonstrated, the economy has defied many analysts' forecasts by growing at a
strong rate, which should be positive for the bond market. Similarly, positive
economic forces could help the stock market's performance broaden to include
value-oriented and smaller stocks.
We see particularly compelling opportunities outside of the U.S. market.
Many foreign stocks also ended 1999 more attractively valued than large-cap U.S.
stocks, and economic trends in overseas markets could lead to higher stock
prices. In Europe, corporate restructuring has just begun, giving
1 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
companies there the same potential for cost-cutting and productivity
improvements that U.S. companies enjoyed 10 years ago. In Japan and Asia,
economic recovery is expected to gain strength, which could allow stocks to
rally from relatively low levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar. Clearly,
while the Internet is here to stay, not all "dot-com" companies will survive,
and many of these high-flying Internet stocks will eventually--and perhaps very
suddenly--return to more reasonable levels. The long-term winners are most
likely to be companies that support the Internet's growth with content or
infrastructure.
What else is in store for investors in 2000? While we do not have an
infallible crystal ball, we believe that in almost any investment environment,
consistent success stems from an unwavering focus on fundamental investment
principles such as maintaining a long-term perspective, using diversification to
manage risks, and availing oneself of the services of a knowledgeable financial
advisor. Indeed, these principles serve as the foundation for every investment
we offer, helping to make OppenheimerFunds THE RIGHT WAY TO INVEST in 2000 and
beyond.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
February 22, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and
are not intended to predict or depict performance of any particular fund.
Specific discussion, as it applies to your Fund, is contained in the pages that
follow.
2 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
[PHOTO]
Portfolio Management Team (l to r)
Christian Smith
Robert Patterson
(Portfolio Manager)
HOW DID OPPENHEIMER MUNICIPAL BOND FUND PERFORM OVER THE SIX-MONTH PERIOD THAT
ENDED JANUARY 31, 2000?
A. The Fund's performance over the past six months reflected a very challenging
investment environment. During the reporting period, stronger-than-expected
economic growth in both domestic and overseas markets fueled investors' concerns
that inflationary pressures might reemerge in the U.S. economy. As a result,
interest rates and most bond yields rose. Because bond yields and prices move in
opposite directions, higher interest rates eroded the value of many fixed income
securities, including municipal bonds. In addition, the tax-exempt bond market
was subject to adverse supply-and-demand influences, which eroded returns
further.
WHAT ECONOMIC FORCES AFFECTED MUNICIPAL BONDS AND THE FUND?
When the reporting period began on July 1, 1999, the Federal Reserve Board had
just implemented its first interest rate hike of 1999. They did so in response
to concerns that unsustainable economic growth might reignite inflationary
pressures. While inflation had not yet accelerated, early warning signs included
very low unemployment, high levels of consumer spending and borrowing, and
rising commodities prices. When the economy subsequently gained momentum, the
Federal Reserve raised short-term interest rates again in August and November
for a total increase of 0.75 percentage points during the reporting period.
These increases were quickly reflected in municipal bond prices.
3 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
WHAT SUPPLY-AND-DEMAND FACTORS INFLUENCED THE FUND'S PERFORMANCE?
Higher interest rates reduced demand for municipal bonds from corporate and
institutional investors. In addition, many mutual fund shareholders shifted
assets from bond funds to stock funds because of the stock market's stellar
returns, which reduced overall demand from tax-exempt mutual funds. With these
investors effectively absent from the market, municipal bond yields rose further
than would have been expected from the Fed's interest rate increases alone.
HOW WAS THE FUND MANAGED IN THIS ENVIRONMENT?
We primarily focused on repositioning the portfolio to a more defensive posture
in order to provide a cushion against the adverse effects of a declining market.
With higher yielding securities available, we sold some of our lower yielding
holdings to enhance the Fund's income stream. Although we sold many of these
securities at a lower price than their original cost, we were able to use these
losses to offset earlier gains, helping to reduce capital gains tax liabilities
for our shareholders.
WHERE DID YOU FIND THE MOST ATTRACTIVE INVESTMENT OPPORTUNITIES?
We found particularly attractive yields in insured bonds with maturities in the
20-year range. Because the yield difference between high quality and lower
quality bonds had narrowed, we believed that we would not be adequately
compensated for the extra risks that lower yielding bonds entail. We preferred
the 20-year maturity range because their prices held up better than
intermediate-term securities in the 10- to 15-year range, which were
particularly hard hit by the lack of demand from institutional buyers.
[SIDENOTE:]
"AFTER A VERY CHALLENGING 1999, WE BELIEVE THE PORTFOLIO IS WELL-POSITIONED TO
BENEFIT FROM BETTER MARKET CONDITIONS IN 2000."
[/SIDENOTE:]
4 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
On the other hand, we carefully avoided those sectors of the market that we
regarded as troublesome, including healthcare and utilities. However, we
maintained our holdings of "special situations," which are bonds that we regard
as undervalued at the time of purchase, and that we believe will benefit from
the improving credit quality of their issuers. One example of a special
situation bond is a college in Savannah, Georgia, that issued tax-exempt bonds
at an inopportune time, requiring them to offer extra yield to attract
investors' attention. When institutional demand returns to the markets, we
believe that these bonds' value will rise. However, during the past six months,
they have hurt the Fund's returns.
WHAT IS YOUR OUTLOOK FOR THE NEW YEAR?
We are cautious over the near term and optimistic over the longer term. We
expect the U.S. economy to remain strong over the next several months, which may
prompt the Federal Reserve Board to increase interest rates further.
Accordingly, we intend to maintain our defensive posture until we believe the
Fed's moves toward a more restrictive monetary policy are complete. If and when
evidence emerges that the bulk of interest rate increases are behind us, we are
likely to see better performance from our "special situations" holdings. We are
also likely to see the return of corporate and institutional buyers, which
should help support tax-exempt bond prices.
[SIDENOTE:]
- -----------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1)
For the Periods Ended 12/31/99
<TABLE>
<CAPTION>
CLASS A
1-Year 5-Year 10-Year
- -----------------------------
<S> <C> <C>
- -9.59% 5.46% 5.74%
CLASS B Since
1-Year 5-Year Inception
- -----------------------------
- -10.31% 5.35% 3.88%
CLASS C Since
1-Year 5-Year Inception
- -----------------------------
- -6.64% N/A 4.01%
- -----------------------------
<CAPTION>
STANDARDIZED YIELD(2)
For the 30 Days Ended 1/31/00
- -----------------------------
<S> <C>
CLASS A 5.40%
- -----------------------------
CLASS B 4.89
- -----------------------------
CLASS C 4.89
- -----------------------------
</TABLE>
[/SIDENOTE:]
(1) See page 7 for further details.
(2) Standardized yield is based on net investment income for the 30-day period
ended January 31, 2000. Falling share prices will tend to artificially raise
yields.
5 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
For our part, when the investment environment improves, we are prepared to seize
opportunities more aggressively, with an eye toward locking in high yields for
as long as practical and participating in the potential for capital
appreciation. In our view, this kind of active management approach is what makes
Oppenheimer Municipal Bond Fund an important part of THE RIGHT WAY TO INVEST.
<TABLE>
<CAPTION>
TOP FIVE STATES(4)
- ----------------------------------------
<S> <C>
Texas 14.1%
- ----------------------------------------
California 14.0
- ----------------------------------------
Pennsylvania 13.5
- ----------------------------------------
Michigan 7.7
- ----------------------------------------
New Jersey 5.6
- ----------------------------------------
</TABLE>
[SIDENOTE:]
- -----------------------
CREDIT ALLOCATION(3)
[GRAPH]
<TABLE>
<S> <C>
- - AAA 38.7%
- - AA 10.1
- - A 14.0
- - BBB 24.5
- - BB 11.9
- - B 0.8
</TABLE>
- -----------------------
[/SIDENOTE:]
(3) Portfolio data are as of January 31, 2000, are subject to change, and are
dollar-weighted based on total market value of investments. The Fund may invest
up to 25% of its assets in below-investment-grade securities which carry greater
risk of default. Average credit quality and ratings allocations include
securities rated by national rating organizations as well as unrated securities
(currently 10.8% of total investments) which have ratings assigned by the
Manager in categories equivalent to those of rating organizations.
(4) Portfolio is subject to change. Percentages are as of January 31, 2000, and
are based on net assets.
6 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
NOTES
- --------------------------------------------------------------------------------
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.
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized.
CLASS A shares were first publicly offered on 10/27/76. Class A returns include
the current maximum initial sales charge of 4.75%.
CLASS B shares of the Fund were first publicly offered on 3/16/93. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 1% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "life of class" return for Class B uses Class A performance
for the period after conversion. Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 8/29/95. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class 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>
- --------------------------------------------------------------------------------
FINANCIALS
- --------------------------------------------------------------------------------
8 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF INVESTMENTS January 31, 2000 / Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--98.3%
- -----------------------------------------------------------------------------------------------------------------
ARIZONA--0.9%
Central AZ Irrigation & Drainage District GORB, Series A,
6%, 6/1/13 NR/NR $ 1,080,950 $ 928,341
- -----------------------------------------------------------------------------------------------------------------
Peoria, AZ IDAU RRB, Sierra Winds Life, Series A,
6.375%, 8/15/29 NR/NR 5,000,000 4,262,300
--------------
5,190,641
- -----------------------------------------------------------------------------------------------------------------
CALIFORNIA--14.0%
CA Foothill/Eastern Corridor Agency Toll Road RB,
Sr. Lien, Prerefunded, Series A, 6.50%, 1/1/32 Baa3/BBB-/BBB 10,500,000 11,510,415
- -----------------------------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB, Series C, 6.75%, 2/1/25 Aa2/AA- 40,000 40,000
- -----------------------------------------------------------------------------------------------------------------
CA HFA RB, Series C, 6.65%, 8/1/14(1) Aa2/AA- 5,000,000 5,060,350
- -----------------------------------------------------------------------------------------------------------------
CA HFA SFM RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,755,000 4,812,203
- -----------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Inverse Floater,
6.916%, 11/1/15(2) A1/NR 1,500,000 1,366,875
- -----------------------------------------------------------------------------------------------------------------
Foothill/Eastern Corridor Agency CA Toll Road RRB,
5.75%, 1/15/40 Baa3/BBB-/BBB 5,750,000 5,046,545
- -----------------------------------------------------------------------------------------------------------------
Industry, CA UDA TXAL Bonds, Transportation
Distribution Project No. 3, 6.90%, 11/1/07 NR/A- 500,000 529,140
- -----------------------------------------------------------------------------------------------------------------
Los Angeles, CA Regional AIC Lease RRB, 5.65%, 8/1/17 Ba2/BB 4,600,000 4,004,070
- -----------------------------------------------------------------------------------------------------------------
Los Angeles, CA Regional AIC Lease RRB, Facilities
Sublease-International Airport Project, 6.35%, 11/1/25 Baa3/BBB- 8,930,000 8,402,326
- -----------------------------------------------------------------------------------------------------------------
Palmdale, CA Community RA SFM RRB, Escrowed to
Maturity, Series A, 8%, 3/1/16 Aaa/NR/A+ 5,000,000 6,101,400
- -----------------------------------------------------------------------------------------------------------------
Perris, CA SFM RB, Escrowed to Maturity, Series A,
8.30%, 6/1/13 Aaa/AAA 7,000,000 8,691,830
- -----------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity, Series A,
7.60%, 5/1/23 Aaa/AAA 6,000,000 7,040,400
- -----------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP, FGIC Insured,
Inverse Floater, 7.788%, 6/1/19(2) Aaa/AAA/AAA 6,000,000 5,527,500
- -----------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor Agency
Toll Road RB, Sr. Lien, Prerefunded, 6.75%, 1/1/32 Aaa/AAA/AAA 12,700,000 13,682,726
--------------
81,815,780
- -----------------------------------------------------------------------------------------------------------------
COLORADO--0.7%
CO HFAU RB, Rocky Mountain Adventist Health
System, 6.625%, 2/1/22 Baa2/BB- 5,000,000 4,234,750
- -----------------------------------------------------------------------------------------------------------------
CONNECTICUT--4.5%
Mashantucket, CT Western Pequot Tribe Special RB,
Prerefunded, Series A, 6.40%, 9/1/11(3) Aaa/AAA 7,435,000 8,069,875
9 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE 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(3) NR/BBB- $ 7,565,000 $ 7,719,477
- -----------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe Special RRB,
Sub. Lien, Series B, 5.75%, 9/1/27(3) Baa3/NR 11,900,000 10,369,422
--------------
26,158,774
- -----------------------------------------------------------------------------------------------------------------
FLORIDA--3.2%
Dade Cnty., FL IDAU RB, Miami Cerebral Palsy Services
Project, 8%, 6/1/22 NR/NR 2,755,000 2,886,055
- -----------------------------------------------------------------------------------------------------------------
FL BOE Capital Outlay GORB, 8.40%, 6/1/07 Aa2/AA+ 750,000 878,332
- -----------------------------------------------------------------------------------------------------------------
FL HFA RB, Riverfront Apts., Series A, AMBAC Insured,
6.25%, 4/1/37 Aaa/AAA 40,000 40,000
- -----------------------------------------------------------------------------------------------------------------
FL HFA SFM RRB, Series A, 6.35%, 7/1/14 Aaa/AAA 630,000 636,886
- -----------------------------------------------------------------------------------------------------------------
Grand Haven, FL CDD SPAST RB, Series A, 6.30%, 5/1/02 NR/NR 1,103,000 1,099,768
- -----------------------------------------------------------------------------------------------------------------
Heritage Springs, FL CDD Capital Improvement RB, Series B,
6.25%, 5/1/05 NR/NR 2,410,000 2,377,489
- -----------------------------------------------------------------------------------------------------------------
Lee Cnty., FL Housing FAU SFM RB, Series A-2, 6.85%, 3/1/29 Aaa/NR 1,585,000 1,667,895
- -----------------------------------------------------------------------------------------------------------------
Lee Cnty., FL IDAU HCF RRB, Shell Point Village Project,
Series A, 5.50%, 11/15/21 NR/BBB- 2,000,000 1,528,160
- -----------------------------------------------------------------------------------------------------------------
Lee Cnty., FL IDAU HCF RRB, Shell Point Village Project,
Series A, 5.50%, 11/15/29 NR/BBB- 2,250,000 1,648,103
- -----------------------------------------------------------------------------------------------------------------
Miami-Dade Cnty., FL SPO RB, Sub. Lien, Series B, MBIA
Insured, Zero Coupon, 5.452%, 10/1/29(4) Aaa/AAA/AAA 25,895,000 3,921,280
- -----------------------------------------------------------------------------------------------------------------
Palm Beach Cnty., FL HFAU RB, Retirement Community,
5.125%, 11/15/29 NR/A- 3,130,000 2,259,046
--------------
18,943,014
- -----------------------------------------------------------------------------------------------------------------
GEORGIA--3.9%
GA MEAU RRB, Project One, Series X, MBIA Insured,
6.50%, 1/1/12 Aaa/AAA 500,000 540,300
- -----------------------------------------------------------------------------------------------------------------
GA MEAU SPO Refunding Bonds, Series Y, 6.50%, 1/1/17 A3/A 10,750,000 11,278,148
- -----------------------------------------------------------------------------------------------------------------
GA MEAU SPO Refunding Bonds, Series Y, MBIA Insured,
6.50%, 1/1/17 Aaa/AAA 1,000,000 1,069,710
- -----------------------------------------------------------------------------------------------------------------
Rockdale Cnty., GA DAU SWD RB, Visy Paper Inc. Project,
7.40%, 1/1/16 NR/NR 4,405,000 4,479,224
- -----------------------------------------------------------------------------------------------------------------
Rockdale Cnty., GA DAU SWD RB, Visy Paper Inc. Project,
7.40%, 1/1/16(5) NR/NR 75,000 75,000
- -----------------------------------------------------------------------------------------------------------------
Savannah, GA EDAU RB, College of Art & Design Project,
6.90%, 10/1/29 NR/BBB- 5,880,000 5,653,855
--------------
23,096,237
10 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ILLINOIS--1.6%
IL HFAU RB, Hinsdale Hospital Project, Escrowed to
Maturity, Series C, 9.50%, 11/15/19 NR/AAA $ 820,000 $ 871,307
- -----------------------------------------------------------------------------------------------------------------
IL Regional Transportation Authority RB, AMBAC
Insured, 7.20%, 11/1/20 Aaa/AAA/AAA 7,500,000 8,471,325
--------------
9,342,632
- -----------------------------------------------------------------------------------------------------------------
INDIANA--4.4%
Indianapolis, IN Airport Authority RB, SPF Federal
Express Corp. Project, 7.10%, 1/15/17 Baa2/BBB 15,500,000 15,905,480
- -----------------------------------------------------------------------------------------------------------------
Indianapolis, IN Airport Authority RB, SPF United
Airlines Project, Series A, 6.50%, 11/15/31 Baa2/BB+ 10,500,000 9,726,360
--------------
25,631,840
- -----------------------------------------------------------------------------------------------------------------
KENTUCKY--0.4%
Kenton Cnty., KY AB RB, SPF Delta Airlines Project,
Series A, 6.125%, 2/1/22 Baa3/BBB- 2,790,000 2,520,905
- -----------------------------------------------------------------------------------------------------------------
LOUISIANA--1.7%
New Orleans, LA Home Mtg. Authority SPO Refunding
Bonds, Escrowed to Maturity, 6.25%, 1/15/11 Aaa/NR 9,500,000 10,114,840
- -----------------------------------------------------------------------------------------------------------------
MARYLAND--0.1%
MD University Auxiliary Facilities & Tuition System RRB,
Series A, 5.90%, 2/1/03 Aa3/AA+/AA 500,000 515,015
- -----------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--2.3%
MA GOB, Unrefunded Balance, Series B, MBIA Insured,
6.50%, 8/1/11 Aaa/AAA/AAA 430,000 448,507
- -----------------------------------------------------------------------------------------------------------------
MA Water Resource Authority RB, Series A,
6.50%, 7/15/19 A1/A+/A+ 12,225,000 12,919,258
--------------
13,367,765
- -----------------------------------------------------------------------------------------------------------------
MICHIGAN--7.7%
Detroit, MI GORB, Series B, 6.25%, 4/1/09 Baa1/BBB+/A- 4,065,000 4,234,551
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI GORB, Series B, 6.375%, 4/1/06 Baa1/BBB+/A- 2,000,000 2,088,700
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI GORB, Series B, 6.375%, 4/1/07 Baa1/BBB+/A- 500,000 523,635
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI Sewage Disposal RB, Prerefunded,
FGIC Insured, Inverse Floater, 6.756%, 7/1/23(2) Aaa/AAA 10,100,000 10,706,000
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI Sewage Disposal RRB, Unrefunded Balance,
FGIC Insured, Inverse Floater, 6.756%, 7/1/23(2) Aaa/AAA/AAA 3,100,000 2,716,375
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB, Prerefunded,
FGIC Insured, Inverse Floater, 8.106%, 7/1/22(2) Aaa/AAA/AAA 3,700,000 4,070,000
- -----------------------------------------------------------------------------------------------------------------
Detroit, MI Water Supply System RB, Unrefunded
Balance, FGIC Insured, Inverse Floater, 8.106%, 7/1/22(2) Aaa/AAA 1,500,000 1,541,250
11 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MICHIGAN Continued
MI Hospital FAU RRB, FSA Insured, Inverse Floater,
8.514%, 2/15/22(2) Aaa/AAA/AAA $ 5,000,000 $ 4,993,750
- -----------------------------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee Power Station
Project, 7.50%, 1/1/21 NR/NR 3,650,000 3,745,557
- -----------------------------------------------------------------------------------------------------------------
Wayne Cnty., MI Airport SPF RRB, Northwest Airlines, Inc.
Project, Series 1995, 6.75%, 12/1/15 NR/NR 10,450,000 10,249,883
--------------
44,869,701
- -----------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.1%
NH Housing FAU SFM RB, Series C, 6.90%, 7/1/19 Aa2/NR 855,000 867,731
- -----------------------------------------------------------------------------------------------------------------
NEW JERSEY--5.6%
NJ EDAU RRB, First Mtg. Franciscan Oaks Project,
5.75%, 10/1/23 NR/NR 2,255,000 1,805,984
- -----------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines, 5.70%, 1/1/18 NR/NR 1,000,000 820,690
- -----------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines, 5.75%, 1/1/24 NR/NR 1,125,000 901,755
- -----------------------------------------------------------------------------------------------------------------
NJ EDAU SPF RB, Continental Airlines, Inc. Project,
6.25%, 9/15/29 Ba2/BB 13,000,000 11,451,570
- -----------------------------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, 6.50%, 1/1/16 Baa1/BBB+/A- 16,150,000 16,937,313
- -----------------------------------------------------------------------------------------------------------------
NJ TUAU RRB, Series C, MBIA Insured, 6.50%, 1/1/16 Aaa/AAA/AAA 1,100,000 1,182,104
--------------
33,099,416
- -----------------------------------------------------------------------------------------------------------------
NEW YORK--5.2%
NYC GOB, Inverse Floater, 7.582%, 8/27/15(2) A3/A-/A 3,050,000 2,897,500
- -----------------------------------------------------------------------------------------------------------------
NYC GOB, Prerefunded, Series D, 8%, 8/1/15 Aaa/A-/A 10,980,000 11,693,480
- -----------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6%, 11/1/06 Baa1/A- 4,000,000 4,094,120
- -----------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6%, 5/1/08 Baa1/A- 2,000,000 2,035,560
- -----------------------------------------------------------------------------------------------------------------
TSASC, Inc., NY RB, Series 1, 6.25%, 7/15/34 Aa2/A/A+ 10,000,000 9,493,500
--------------
30,214,160
- -----------------------------------------------------------------------------------------------------------------
OHIO--3.1%
Cleveland, OH PPS First Mtg. RB, Series A, MBIA
Insured, 7%, 11/15/16 Aaa/AAA 2,000,000 2,207,980
- -----------------------------------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB, Series B, 6.25%, 2/1/22 NR/NR 2,500,000 2,149,075
- -----------------------------------------------------------------------------------------------------------------
OH HFA SFM RB, Series B, Inverse Floater, 9.466%, 3/1/31(2) Aaa/AAA 3,130,000 3,294,325
- -----------------------------------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered Steels, Inc.
Project, 9%, 6/1/21 NR/NR 7,800,000 3,902,184
- -----------------------------------------------------------------------------------------------------------------
OH SWD RB, USG Corporate Project, 5.65%, 3/1/33 Baa2/BBB+ 8,000,000 6,558,320
--------------
18,111,884
12 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OKLAHOMA--1.6%
Tulsa, OK Municipal Airport Trust RB, American Airlines
Project, 6.25%, 6/1/20 Baa2/BBB- $ 9,820,000 $ 9,136,724
- -----------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--13.5%
Allegheny Cnty., PA HDAU RRB, Villa St. Joseph HCF,
6%, 8/15/28 NR/NR 2,000,000 1,636,860
- -----------------------------------------------------------------------------------------------------------------
Chartiers Valley, PA CD IDAU First Mtg. RRB, Asbury
Health Center, 6.375%, 12/1/19 NR/NR 1,250,000 1,099,450
- -----------------------------------------------------------------------------------------------------------------
Chartiers Valley, PA CD IDAU First Mtg. RRB, Asbury
Health Center, 6.375%, 12/1/24 NR/NR 1,500,000 1,301,175
- -----------------------------------------------------------------------------------------------------------------
PA EDFAU Facilities RB, National Gypsum Co., Series B,
6.125%, 11/2/27 NR/NR 10,000,000 8,909,400
- -----------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project, Series D,
7.15%, 12/1/18 NR/BBB-/BBB- 3,000,000 3,045,630
- -----------------------------------------------------------------------------------------------------------------
PA EDFAU SWD RB, USD Corp. Project, 6%, 6/1/31 Baa2/BBB+ 12,000,000 10,599,480
- -----------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC Insured,
Inverse Floater, 8.30%, 3/1/22(2) Aaa/AAA/AAA 17,500,000 16,712,500
- -----------------------------------------------------------------------------------------------------------------
PA TUCM RRB, Series N, 6.50%, 12/1/13 Aaa/AAA 750,000 784,125
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RB, Temple
University Children's Medical, Series A, 5.625%, 6/15/19 NR/BBB+ 1,200,000 976,140
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB, The
Philadelphia Protestant Home Project, Series A,
6.50%, 7/1/27 NR/NR 3,380,000 2,971,290
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home of
Philadelphia, Series A, 5.50%, 11/15/18 NR/NR 1,670,000 1,326,197
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home of
Philadelphia, Series A, 5.60%, 11/15/28 NR/NR 1,275,000 972,519
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB,
FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 17,600,000 21,536,768
- -----------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10 NR/NR/BB+ 7,665,000 7,497,826
--------------
79,369,360
- -----------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--0.4%
Piedmont, SC MPA RRB, Escrowed to Maturity,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 285,000 307,541
- -----------------------------------------------------------------------------------------------------------------
Piedmont, SC MPA RRB, Unrefunded Balance,
Series A, FGIC Insured, 6.50%, 1/1/16 Aaa/AAA 1,715,000 1,824,743
--------------
2,132,284
- -----------------------------------------------------------------------------------------------------------------
TEXAS--14.1%
AAAU TX SPF RB, American Airlines, Inc. Project,
7%, 12/1/11 Baa2/BBB- 3,000,000 3,099,600
13 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS Continued
Cypress-Fairbanks, TX ISD CAP GORB, Series A, Zero
Coupon, 5.89%, 2/15/14(4) Aaa/AAA $15,710,000 $ 6,748,859
- -----------------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB, Series A, Zero
Coupon, 5.85%, 2/15/15(4) Aaa/AAA 15,000,000 5,997,000
- -----------------------------------------------------------------------------------------------------------------
Cypress-Fairbanks, TX ISD CAP GORB, Series A, Zero
Coupon, 5.91%, 2/15/16(4) Aaa/AAA 16,240,000 6,061,418
- -----------------------------------------------------------------------------------------------------------------
Dallas-Fort Worth, TX International Airport Facilities
Improvement Corp. RB, American Airlines, Inc.,
7.25%, 11/1/30 Baa1/BBB- 8,000,000 8,110,560
- -----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien, Prerefunded,
6.50%, 8/15/15 Aa1/AA 215,000 227,780
- -----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORB, Toll Road, Sub. Lien, Unrefunded
Balance, 6.50%, 8/15/15 Aa1/AA 785,000 816,706
- -----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX GORRB, Toll Road, Sub. Lien, 6.75%, 8/1/14 Aa1/AA 1,000,000 1,046,160
- -----------------------------------------------------------------------------------------------------------------
Houston, TX WSS RB, Prior Lien, Unrefunded Balance,
Series B, 6.40%, 12/1/09 A3/A+ 995,000 1,047,864
- -----------------------------------------------------------------------------------------------------------------
Houston, TX WSS RB, Prior Lien, Unrefunded Balance,
Series B, 6.75%, 12/1/08 Aaa/AAA 440,000 461,195
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Prerefunded, Series B,
6.30%, 5/15/06 Aa2/AA 290,000 305,083
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Prerefunded, Series B,
6.40%, 5/15/08 Aa2/AA 480,000 505,992
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Series A, 7.25%, 11/15/19 NR/NR 2,000,000 1,842,580
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Series A, 7.50%, 11/15/29 NR/NR 3,000,000 2,788,620
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Unrefunded Balance,
Series B, 6.30%, 5/15/06 Aa2/AA 2,710,000 2,810,487
- -----------------------------------------------------------------------------------------------------------------
North Central TX HFDC RB, Unrefunded Balance,
Series B, 6.40%, 5/15/08 Aa2/AA 4,520,000 4,677,432
- -----------------------------------------------------------------------------------------------------------------
Retama, TX Development Corp. SPF RRB, Retama
Racetrack, Escrowed to Maturity, Series A, 10%, 12/15/19 Aaa/AAA 4,880,000 7,153,836
- -----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.95%, 9/1/13(4) Aaa/AAA/AAA 6,900,000 3,086,991
- -----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.93%, 9/1/14(4) Aaa/AAA/AAA 17,500,000 7,275,450
- -----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.85%, 9/1/15(4) Aaa/AAA/AAA 10,000,000 3,867,500
- -----------------------------------------------------------------------------------------------------------------
TX MPA CAP RRB, MBIA Insured, Zero Coupon,
5.98%, 9/1/16(4) Aaa/AAA/AAA 39,990,000 14,434,790
--------------
82,365,903
14 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ FACE VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VERMONT--0.2%
VT HFA Home Mtg. Purchase RB, Series A, 7.85%, 12/1/29 A1/NR $ 1,330,000 $ 1,357,903
- -----------------------------------------------------------------------------------------------------------------
VIRGINIA--4.1%
Pocahontas Parkway Assn., VA Toll Road RB, CAP, First Tier,
Sub. Lien, Series C, Zero Coupon, 5.60%, 8/15/05(4) Ba1/NR 2,300,000 1,534,238
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, First Tier,
Sub. Lien, Series C, Zero Coupon, 5.75%, 8/15/07(4) Ba1/NR 2,800,000 1,607,872
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, First Tier,
Sub. Lien, Series C, Zero Coupon, 5.82%, 8/15/08(4) Ba1/NR 3,000,000 1,600,500
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, First Tier,
Sub. Lien, Series C, Zero Coupon, 5.85%, 8/15/09(4) Ba1/NR 3,100,000 1,529,478
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, Sr. Lien,
Series B, Zero Coupon, 5.86%, 8/15/20(4) Baa3/A/A 25,000,000 5,912,000
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, Sr. Lien,
Series B, Zero Coupon, 5.86%, 8/15/21(4) Baa3/A/A 26,300,000 5,797,835
- -----------------------------------------------------------------------------------------------------------------
Pocahontas Parkway Assn., VA Toll Road RB, CAP, Sr. Lien,
Series B, Zero Coupon, 5.86%, 8/15/22(4) Baa3/A/A 29,900,000 6,144,450
--------------
24,126,373
- -----------------------------------------------------------------------------------------------------------------
WASHINGTON--3.3%
WA PP Supply System RRB, Nuclear Project No. 1,
5.40%, 7/1/12 Aa1/AA-/AA- 20,000,000 19,161,200
- -----------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.6%
WV Parkways ED & Tourism Authority RB, FGIC Insured,
Inverse Floater, 7.626%, 5/16/19(2) Aaa/AAA 3,600,000 3,316,500
- -----------------------------------------------------------------------------------------------------------------
WISCONSIN--1.1%
WI Health & Educational FA RB, Sinai Samaritan Medical
Center, Inc., MBIA Insured, 5.75%, 8/15/16 Aaa/AAA 6,250,000 6,046,063
- -----------------------------------------------------------------------------------------------------------------
WI Housing & EDAU Home Ownership RRB, Series A,
7.10%, 3/1/23 Aa2/AA 350,000 358,783
--------------
6,404,846
--------------
Total Municipal Bonds and Notes (Cost $599,495,218) 575,466,178
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT OBLIGATIONS--0.9%
FL BOE Public Education Capital Outlay Municipal Securities Trust Receipts,
Series SGA 67, 3.65%, 6/1/00(6) 500,000 500,000
- -----------------------------------------------------------------------------------------------------------------
Harris Cnty., TX HFDC Hospital RRB, Methodist Hospital Project, 3.60%, 2/1/00(6) 4,800,000 4,800,000
---------------
Total Short-Term Tax-Exempt Obligations (Cost $5,300,000) 5,300,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $604,795,218) 99.2% 580,766,178
- -----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.8 4,678,338
---------------------------------
NET ASSETS 100.0% $585,444,516
---------------------------------
---------------------------------
</TABLE>
15 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
AAAU Alliance Airport Authority, Inc. IDAU Industrial Development Authority
AB Airport Board ISD Independent School District
AIC Airport Improvement Corp. MEAU Municipal Electric Authority
BOE Board of Education MPA Municipal Power Agency
CAP Capital Appreciation NYC New York City
CD Commercial Development NYS New York State
CDD Community Development District PP Public Power
COP Certificates of Participation PPS Public Power System
DAU Development Authority RA Redevelopment Agency
ED Economic Development RB Revenue Bonds
EDAU Economic Development Authority RR Resource Recovery
EDFAU Economic Development Finance Authority RRB Revenue Refunding Bonds
FA Facilities Authority SCDAU Statewide Communities Development
FAU Finance Authority Authority
GOB General Obligation Bonds SFM Single Family Mtg.
GORB General Obligation Refunding Bonds SPAST Special Assessment
GORRB General Obligation Revenue Refunding Bonds SPF Special Facilities
HCF Health Care Facilities SPO Special Obligations
HDAU Hospital Development Authority SWD Solid Waste Disposal
HEAA Higher Education Assistance Agency TUAU Turnpike Authority
HEFAU Higher Educational Facilities Authority TUCM Turnpike Commission
HF Health Facilities TXAL Tax Allocation
HFA Housing Finance Agency UDA Urban Development Agency
HFAU Health Facilities Authority USD Unified School District
HFDC Health Facilities Development Corp. WSS Water & Sewer System
</TABLE>
(1) Securities with an aggregate market value of $5,060,350 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
(2) 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 $57,142,575 or 9.76% of the
Fund's net assets as of January 31, 2000.
(3) 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 $26,158,774 or 4.47% of the Fund's net
assets as of January 31, 2000.
(4) For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
(5) Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
(6) Represents the current interest rate for a variable or increasing rate
security.
AS OF JANUARY 31, 2000, SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX
AMOUNT TO $152,237,304 OR 26% OF THE FUND'S NET ASSETS.
See accompanying Notes to Financial Statements.
16 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 31, 2000
- ------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (cost $604,795,218)--see accompanying statement $ 580,766,178
- ------------------------------------------------------------------------------------------
Cash 420,939
- ------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 6,880,080
Shares of beneficial interest sold 821,033
Daily variation on futures contracts 639,063
Other 11,868
----------------
Total assets 589,539,161
- ------------------------------------------------------------------------------------------
LIABILITIES
Payables and other liabilities:
Dividends 1,822,421
Shares of beneficial interest redeemed 1,749,066
Trustees' compensation 238,649
Distribution and service plan fees 132,431
Transfer and shareholder servicing agent fees 75,989
Other 76,089
----------------
Total liabilities 4,094,645
- ------------------------------------------------------------------------------------------
NET ASSETS $585,444,516
----------------
----------------
- ------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $609,314,103
- ------------------------------------------------------------------------------------------
Overdistributed net investment income (1,331,527)
- ------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 1,454,950
- ------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (23,993,010)
----------------
Net assets $585,444,516
----------------
----------------
- ------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$502,921,568 and 54,970,822 shares of beneficial interest outstanding) $9.15
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $9.61
- ------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $68,796,736 and 7,535,681 shares of beneficial interest outstanding) $9.13
- ------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $13,726,212 and 1,503,728 shares of beneficial interest outstanding) $9.13
</TABLE>
See accompanying Notes to Financial Statements.
17 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JANUARY 31, 2000
- ------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest $ 20,269,666
- ------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,695,084
- ------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 630,865
Class B 400,149
Class C 83,785
- ------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 258,420
- ------------------------------------------------------------------------------------------
Custodian fees and expenses 64,540
- ------------------------------------------------------------------------------------------
Trustees' compensation 17,251
- ------------------------------------------------------------------------------------------
Other 102,913
---------------
Total expenses 3,253,007
Less expenses paid indirectly (18,422)
---------------
Net expenses 3,234,585
- ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 17,035,081
- ------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (1,323,419)
Closing of futures contracts 4,386,672
---------------
Net realized gain 3,063,253
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (57,254,999)
---------------
Net realized and unrealized loss (54,191,746)
- ------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(37,156,665)
---------------
---------------
</TABLE>
See accompanying Notes to Financial Statements.
18 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 MOS. YEAR
ENDED ENDED
JANUARY 31, 2000 JULY 31,
(UNAUDITED) 1999
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 17,035,081 $ 34,122,316
- ------------------------------------------------------------------------------------------------------
Net realized gain 3,063,253 4,034,994
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (57,254,999) (21,131,992)
-----------------------------------
Net increase (decrease) in net assets resulting from operations (37,156,665) 17,025,318
- ------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (14,631,057) (29,412,371)
Class B (1,812,116) (4,082,909)
Class C (380,745) (714,322)
- ------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (3,065,371) --
Class B (436,022) --
Class C (87,540) --
- ------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A (16,860,522) 3,343,191
Class B (14,042,658) 748,967
Class C (3,399,185) 6,304,825
- ------------------------------------------------------------------------------------------------------
NET ASSETS
Total decrease (91,871,881) (6,787,301)
- ------------------------------------------------------------------------------------------------------
Beginning of period 677,316,397 684,103,698
-----------------------------------
End of period (including overdistributed net investment
income of $1,331,527 and $1,542,690, respectively) $585,444,516 $677,316,397
-----------------------------------
-----------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
19 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 MOS. YEAR YEAR
ENDED ENDED ENDED
JAN. 31, 2000 JULY 31, DEC. 31,
CLASS A (UNAUDITED) 1999 1998 1997 1996(1) 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.02 $10.27 $10.24 $ 9.74 $ 9.98 $ 8.93
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .52 .51 .55 .32 .54
Net realized and unrealized gain (loss) (.82) (.25) .04 .49 (.25) 1.06
----------------------------------------------------------------------
Total income (loss) from
investment operations (.55) .27 .55 1.04 .07 1.60
- -----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.26) (.52) (.52) (.54) (.31) (.54)
Dividends in excess of net investment income -- -- -- -- -- (.01)
Distributions from net realized gain (.06) -- -- -- -- --
----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.32) (.52) (.52) (.54) (.31) (.55)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.15 $10.02 $10.27 $10.24 $ 9.74 $ 9.98
----------------------------------------------------------------------
----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) (5.64)% 2.57% 5.55% 10.97% 0.77% 18.28%
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $502,922 $568,673 $579,570 $586,546 $590,299 $634,473
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $540,048 $587,197 $581,630 $582,624 $606,509 $569,859
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.44% 5.00% 5.00% 5.55% 5.58% 5.65%
Expenses 0.90% 0.87% 0.87%(4) 0.87%(4) 0.92%(4) 0.88%(4)
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 6% 18% 21% 24% 24% 25%
</TABLE>
(1) For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
(2) Assumes a $1,000 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.
(3) Annualized for periods of less than one full year.
(4) Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
(5) 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, 2000, were $40,243,147 and $94,384,512, respectively.
See accompanying Notes to Financial Statements.
20 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
<TABLE>
<CAPTION>
6 MOS. YEAR YEAR
ENDED ENDED ENDED
JAN. 31, 2000 JULY 31, DEC. 31,
CLASS B (UNAUDITED) 1999 1998 1997 1996(1) 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.00 $10.25 $10.22 $ 9.73 $9.96 $8.92
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .44 .43 .47 .27 .47
Net realized and unrealized gain (loss) (.81) (.25) .04 .48 (.23) 1.05
----------------------------------------------------------------------
Total income (loss) from
investment operations (.59) .19 .47 .95 .04 1.52
- -----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.22) (.44) (.44) (.46) (.27) (.47)
Dividends in excess of net investment income -- -- -- -- -- (.01)
Distributions from net realized gain (.06) -- -- -- -- --
----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.44) (.44) (.46) (.27) (.48)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.13 $10.00 $10.25 $10.22 $9.73 $9.96
----------------------------------------------------------------------
----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) (6.02)% 1.78% 4.75% 10.05% 0.43% 17.30%
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $68,797 $90,022 $91,677 $83,897 $74,055 $72,488
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $79,295 $96,352 $88,531 $77,881 $73,047 $63,669
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.67% 4.22% 4.21% 4.76% 4.79% 4.84%
Expenses 1.67% 1.65% 1.65%(4) 1.65%(4) 1.70%(4) 1.68%(4)
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 6% 18% 21% 24% 24% 25%
</TABLE>
(1) For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
(2) Assumes a $1,000 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.
(3) Annualized for periods of less than one full year.
(4) Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
(5) 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, 2000 were $40,243,147 and $94,384,512, respectively.
See accompanying Notes to Financial Statements.
21 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 MOS. YEAR YEAR
ENDED ENDED ENDED
JAN. 31, 2000 JULY 31, DEC. 31,
CLASS C (UNAUDITED) 1999 1998 1997 1996(1) 1995(6)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.00 $10.25 $10.22 $ 9.73 $9.96 $9.58
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .44 .43 .46 .27 .15
Net realized and unrealized gain (loss) (.81) (.25) .04 .49 (.23) .39
----------------------------------------------------------------------
Total income (loss) from
investment operations (.59) .19 .47 .95 .04 .54
- -----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.22) (.44) (.44) (.46) (.27) (.15)
Dividends in excess of net investment income -- -- -- -- -- (.01)
Distributions from net realized gain (.06) -- -- -- -- --
----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.44) (.44) (.46) (.27) (.16)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.13 $10.00 $10.25 $10.22 $9.73 $9.96
----------------------------------------------------------------------
----------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) (6.02)% 1.78% 4.75% 10.03% 0.40% 5.64%
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $13,726 $18,621 $12,857 $8,648 $4,210 $1,975
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,601 $16,868 $10,655 $5,724 $3,105 $1,506
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.68% 4.22% 4.30% 4.72% 4.72% 4.49%
Expenses 1.67% 1.65% 1.64%(4) 1.67%(4) 1.75%(4) 1.64%(4)
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 6% 18% 21% 24% 24% 25%
</TABLE>
(1) For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
(2) Assumes a $1,000 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.
(3) Annualized for periods of less than one full year.
(4) Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
(5) 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, 2000, were $40,243,147 and $94,384,512, respectively.
(6) For the period from August 29, 1995 (inception of offering) to
December 31, 1995.
See accompanying Notes to Financial Statements.
22 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Municipal Bond Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek as high a level
of current interest income exempt from federal income taxes as is available from
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 at their offering price, which is normally net asset value plus an initial
sales charge. Class B and Class C shares are sold without an initial sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C shares have separate distribution and/or service
plans. 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.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Securities for which quotations are readily available are
valued at the last sale price, or if in the absence of a sale, at the last sale
price on the prior trading day if it is within the spread of the closing bid and
asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at cost
(or last determined market value) and adjusted for amortization or accretion 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.
- --------------------------------------------------------------------------------
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.
23 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of 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, 2000, a provision of $2,871 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $238,241 as of
January 31, 2000.
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 compensation 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 Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees 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 investment income per share.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date. Original
issue discount is accreted and premium is amortized in accordance with federal
income tax requirements. For municipal bonds acquired after April 30, 1993, on
disposition or maturity, taxable ordinary income is recognized to the extent of
the lesser of gain or market discount that would have accrued over the holding
period. 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.
24 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
6 MOS. ENDED JANUARY 31, 2000 YEAR ENDED JULY 31, 1999
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sold 7,871,270 $ 75,404,958 14,899,854 $ 154,002,934
Dividends and/or
distributions reinvested 1,221,925 11,722,427 1,840,869 19,006,893
Redeemed (10,863,634) (103,987,907) (16,420,114) (169,666,636)
------------------------------------------------------------------
Net increase (decrease) (1,770,439) $(16,860,522) 320,609 $ 3,343,191
------------------------------------------------------------------
------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
CLASS B
Sold 887,101 $ 8,485,152 2,590,055 $ 26,762,743
Dividends and/or
distributions reinvested 147,981 1,416,735 246,696 2,542,377
Redeemed (2,500,873) (23,944,545) (2,778,452) (28,556,153)
------------------------------------------------------------------
Net increase (decrease) (1,465,791) $(14,042,658) 58,299 $ 748,967
------------------------------------------------------------------
------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
CLASS C
Sold 214,609 $ 2,048,503 1,026,290 $ 10,616,838
Dividends and/or
distributions reinvested 34,096 326,484 49,362 508,501
Redeemed (607,168) (5,774,172) (467,899) (4,820,514)
------------------------------------------------------------------
Net increase (decrease) (358,463) $ (3,399,185) 607,753 $ 6,304,825
------------------------------------------------------------------
------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of January 31, 2000, net unrealized depreciation on securities of $24,029,040
was composed of gross appreciation of $10,997,948, and gross depreciation of
$35,026,988.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. 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 over $1
billion. The Fund's management fee for the six months ended January 31, 2000 was
0.53% of the average annual net assets of each class of shares, annualized for
periods of less than one full year.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. 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.
25 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C
SALES CHARGES SALES CHARGES SHARES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
6 MOS. ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
January 31, 2000 $271,026 $72,029 $31,089 $198,721 $10,730
</TABLE>
(1) The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES
6 MOS. ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
January 31, 2000 $4,218 $196,674 $7,784
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
Company Act. Under those plans the Fund pays the Distributor for all or a
portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the six months ended January 31, 2000,
payments under the Class A plan totaled $630,865, all of which was paid by the
Distributor to recipients. That included $49,299 paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
26 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and asset-based sales charges from the Fund under
the plans. If any plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the six months ended
January 31, 2000, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $400,149 $325,513 $2,045,781 2.97%
Class C Plan 83,785 24,455 195,906 1.43
- --------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund may recognize 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
and/or payable for the daily mark to market for variation margin.
27 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS Continued
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of January 31, 2000, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATE CONTRACTS JANUARY 31, 2000 (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
<S> <C> <C> <C> <C>
Municipal Bond 3/22/00 600 $55,331,250 $ (993,750)
U.S. Long Bond 3/22/00 350 31,740,625 1,029,780
----------------
$ 36,030
----------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES
As of January 31, 2000, 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 also 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 or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of January 31, 2000 was $75,000, which
represents 0.01% 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 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 0.45%. 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 0.08%
per annum.
The Fund had no borrowings outstanding during the six months ended
January 31, 2000.
28 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
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
Phillip A. Griffiths, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
- --------------------------------------------------------------------------------
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 Mayer, Brown & Platt
The financial statements included herein have been
taken from the records of the Fund without
examination of 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>
29 OPPENHEIMER MUNICIPAL BOND FUND
<PAGE>
INFORMATION AND SERVICES
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
- --------------------------------------------------------------------------------
INTERNET
24-hr access to account information and transactions
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- --------------------------------------------------------------------------------
PHONELINK
24-hr automated information and automated transactions
1.800.533.3310
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OPPENHEIMERFUNDS INFORMATION HOTLINE
24 hours a day, timely and insightful messages on the economy and issues that
may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
- --------------------------------------------------------------------------------
[LOGO]OPPENHEIMERFUNDS-Registered Trademark-
Distributor, Inc.
RS0310.001.0100 March 31, 2000
