<PAGE>
Oppenheimer Insured Tax-Exempt Fund
Annual Report September 30, 1995
[PHOTO]
"We want
investment
income that
won't add
to our
taxes...
and we need
to feel
comfortable."
[LOGO]
<PAGE>
This Fund is for people who want investment income that's exempt from taxes
and who feel secure investing in a fund holding a portfolio primarily of
insured bonds.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 9/30/95:(4)
Class A
4.46%
Class B
3.90%
Class C
4.34%
HOW YOUR FUND IS MANAGED
Oppenheimer Insured Tax-Exempt Fund invests primarily in a diversified
portfolio of insured municipal bonds.(1) As a Fund shareholder, you should
receive income that is free from federal income taxes. The insured bonds in
the Fund's portfolio are insured by highly rated, well financed companies,
including Municipal Bond Investors Assurance Corp. (MBIA), American Municipal
Bond Assurance Corp. (AMBAC), and Financial Guarantee Insurance Corp. (FGIC).
These private firms provide substantial assurance against default of payment
of interest and principal by the issuing municipality or government agency.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/95 for Class A
and B shares were 10.29% and 9.47%, respectively.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/95 and since
inception of the Class on 11/11/86 were 5.06%, 7.24% and 6.53%, respectively.
For Class B shares, average annual total returns for the 1-year period ended
9/30/95 and since inception of the Class on 5/3/93 were 4.47% and 2.45%,
respectively.(3)
OUTLOOK
"Our outlook for long-term insured bonds is positive for several reasons.
First, taxable equivalent yields on long-term bonds are very attractive and
more than compensate for the risk of possible tax reform. Second, supply has
been the lowest since 1989, and we expect solid demand from insurance
companies to continue. Finally, we expect the overall inflation picture to
remain benign, which is positive for bonds in general."
Caryn Halbrecht, Portfolio Manager
September 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment return and
principal value on 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. A portion of the distributions paid by the Fund may be subject to
federal and state income taxes. For investors subject to federal and/or state
alternative minimum tax (AMT), the Fund's distributions may increase this tax.
1. The payment of interest and principal on such bonds is insured. The value
of the Fund's shares is not insured.
2. Based on the change in net asset value per share from 9/30/94 to 9/30/95,
without deducting any sales charges. Such performance would have been lower
if sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 9/30/94,
9/30/90 and 11/11/86 (inception of class), after deducting the current
maximum initial sales charge of 4.75%. Class B returns show results of
hypothetical investments on 9/30/94 and 5/3/93 (inception of class) and the
deduction of the applicable contingent deferred sales charge of 5% (1-year)
and 3% (since inception). Total return information is not yet available for
Class C shares (inception 8/29/95). An explanation of the different total
returns is in the Fund's prospectus. Prior to 4/7/90, the Fund had a
different advisor.
4. Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/95, divided by the
maximum offering price at the end of the period, compounded semiannually and
then annualized. Falling net asset values will tend to artificially raise
yields.
2 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer Insured
Tax-Exempt Fund
[PHOTO]
Jon S. Fossel
President
Oppenheimer Insured
Tax-Exempt Fund
DEAR OPPENHEIMERFUNDS SHAREHOLDER,
Like nearly all fixed income securities, municipal bonds have enjoyed the
benefits of declining long-term interest rates in 1995.
Although the Federal Reserve Board did not reduce short-term interest
rates until July 6, long-term interest rates--which are driven by market
forces--had been falling for some time based on positive underlying market
fundamentals. And when interest rates fall, bonds appreciate in value. As a
result, most bond markets, including the municipal bond market, have had a
strong year thus far.
Another factor supporting the overall fixed income market has been
the continued focus in Washington on the trade imbalance and on budget
deficit reduction. This focus should further support the recently resurgent
dollar which, along with low interest rates in developed countries around the
world, has started attracting foreign investors back to U.S. fixed income
markets in search of higher yields.
One development that has sparked some concern among municipal investors,
however, is the discussion in Congress regarding possible changes to the income
tax system. There are several proposals to create a "flat" income tax, in which
the level of taxation would be changed to the same percentage for all taxpayers
in exchange for fewer tax deductions. Other proposals would exclude all
dividends and interest from taxation. If any of these proposals were to be
enacted, the relative advantage of municipal bonds over taxable bonds would
become smaller. While we can't be certain where these proposals will lead, we
believe that the odds of significant tax reform in the near future are quite
low and that the more likely scenario will be modifications to the existing
tax structure. In the meantime, the tax proposals have put some temporary
downward pressure on municipal bond prices.
Consequently, we believe municipal bonds are currently trading at very
attractive levels relative to taxable investments. Typically, we would expect
long-term municipal bonds to provide yields of about 80% of taxable bonds.
Recently, however, municipal bonds were trading at yields of more than 90% of
taxable securities. Couple that with inflation of only about 3%, and it
becomes clear that municipal bonds are producing some of the best real,
inflation-adjusted returns in some time.
Although the economy has shown a variety of mixed signals recently, we
believe the Federal Reserve Board will not return to a tightening policy
again in the near future, because the U.S. economy appears to be in a
moderate growth period with no inflation. As a result, we do not expect the
bond market to weaken any time soon and continue to be optimistic about
municipal bonds.
Your portfolio manager discusses the outlook for your Fund on the
following pages. Thank you for your confidence in OppenheimerFunds, and we
look forward to helping you reach your investment goals in the future.
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
October 23, 1995
3 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
CARYN HALBRECHT
Portfolio Manager
Q+A An Interview With Your Fund's Manager.
THE BOND MARKET RALLIED SUBSTANTIALLY OVER THE COURSE OF THIS YEAR. TO WHAT
EXTENT DID MUNICIPAL BONDS PARTICIPATE IN THE RALLY?
In the first quarter of this year, the municipal bond market performed the
best it has in nine years. The rally was driven primarily by the Federal
Reserve's move away from tight monetary policy. The Fed had been raising
interest rates steadily for a year out of fears that unchecked economic
growth would spark inflation.
In February 1995, on evidence that the economy's growth rate was indeed
slowing, the Fed stopped raising rates and the bond market has advanced since
that point. Municipal bond funds, which typically have longer average
maturities than the average taxable bond fund, performed well because
longer-term bonds rise faster when interest rates drop.
WHAT OTHER FACTORS INFLUENCED THIS YEAR'S MARKET?
On the positive side, fewer new bonds were issued this year compared to the
high levels of new issues we'd seen in the past several years. Combined with
an unusual number of existing bonds either being redeemed by issuers or
maturing, limited supply helped to provide support to the market. This
outweighed the effect of tax reform talk, which caused concern for some
long-term municipal bond investors.
WHAT IMPACT HAS THE TALK OF FUTURE TAX REFORM HAD SO FAR?
The impact has been to direct many investors toward bonds maturing within ten
years, causing those securities to perform well. Conversely, weaker demand
for longer-term bonds has caused those to lag, creating a buying
opportunity.(1)
Investors' focus on shorter-term bonds is primarily an effort to seek
shelter from the possibility of a tax reform plan being passed which would
affect municipal securities. Alternatively, long bond prices are being
discounted because of the potential damage tax reform could cause them.
We believe longer-term municipal bonds are currently very cheap, and
will benefit most if meaningful tax reform affecting municipal securities
does not materialize.
WHAT'S YOUR OUTLOOK FOR THE FUND?
Our outlook for long-term insured bonds is positive for several reasons.
First, taxable equivalent yields on long-term bonds are very attractive and
more than compensate for the risk of tax reform. If tax reform does not
materialize, we believe these bonds will outperform. Second, there has been
the lowest supply of municipal bonds since 1989 and we expect a continuation
of solid demand from insurance companies. And third, we expect the overall
inflation picture to remain benign, which is positive for bonds in general. / /
1. The Fund's portfolio is subject to change.
4 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
FINANCIALS
CONTENTS
STATEMENT OF INVESTMENTS 6
STATEMENT OF ASSETS & LIABILITIES 11
STATEMENT OF OPERATIONS 12
STATEMENTS OF CHANGES IN NET ASSETS 13
FINANCIAL HIGHLIGHTS 14
NOTES TO FINANCIAL STATEMENTS 16
5 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--98.2%
- -------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.2% Pelham, Alabama General Obligation
Warrants, AMBAC Insured, 7.10%,
8/1/15 Aaa/AAA/AAA $1,000,000 $1,139,782
- -------------------------------------------------------------------------------------------------------------------------
ALASKA--4.3% Alaska Energy Authority Power Revenue
Bonds, Bradley Lake Hydroelectric
Project, Series 2, MBIA Insured,
7.25%, 7/1/21 Aaa/AAA 500,000 551,141
-----------------------------------------------------------------------------------------------
North Slope Boro, Alaska General
Obligation Revenue Refunding Bonds,
Series G, FSA Insured, 8.35%, 6/30/98 Aaa/AAA/A- 3,000,000 3,322,632
----------
3,873,773
- -------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--13.4% California Pollution Control
Financing Authority Revenue Bonds,
Southern California Edison, Series
A, MBIA--IBC Insured, 6.90%, 9/1/06 Aaa/AAA 2,410,000 2,584,959
-----------------------------------------------------------------------------------------------
California Public Capital
Improvements Financing Authority
Revenue Bonds, Pooled Project, Series
B, BIG Insured, 8.10%, 3/1/18 Aaa/AAA 235,000 254,290
-----------------------------------------------------------------------------------------------
California State Public Works Board
Lease Revenue Bonds, Department of
Corrections-California State Prison,
Series B, MBIA Insured, 5.50%, 12/1/12 Aaa/AAA/A- 1,090,000 1,054,645
-----------------------------------------------------------------------------------------------
California Statewide Communities
Development Authority Hospital
Revenue Certificates of Participation,
Cedars-Sinai Medical Center, MBIA--IBC
Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,080,120
-----------------------------------------------------------------------------------------------
Los Angeles County, California
Sanitation District Financing
Authority Revenue Bonds, Capital
Projects, Series A, 5.375%, 10/1/13 Aaa/AAA 3,050,000 2,878,626
-----------------------------------------------------------------------------------------------
Los Angeles, California General
Obligation Bonds, Series A, FGIC
Insured, 6.10%, 9/1/12 Aaa/AAA 1,000,000 1,019,315
-----------------------------------------------------------------------------------------------
Northern California Power Agency
Public Power Revenue Refunding Bonds,
Hydroelectric Project No. 1,
Prerefunded, Series A, 8%, 7/1/13 A/A- 2,000,000 2,101,450
-----------------------------------------------------------------------------------------------
Sacramento, California Municipal
Utility District Electric Revenue
Refunding Bonds, Series G, MBIA
Insured, 6.50%, 9/1/13 Aaa/AAA/A- 1,000,000 1,085,499
----------
12,058,904
- -------------------------------------------------------------------------------------------------------------------------
COLORADO--5.2% Colorado Health Facilities Authority
Revenue Bonds, PSL Health System
Project, Series A, FSA Insured,
7.25%, 2/15/16 Aaa/AAA 500,000 550,389
-----------------------------------------------------------------------------------------------
Denver, Colorado City & County
Airport Revenue Bonds, Series B, MBIA
Insured, 5.75%, 11/15/17 Aaa/AAA 3,000,000 2,894,319
-----------------------------------------------------------------------------------------------
Douglas County, Colorado School
District No. RE-1 Douglas & Elbert
Counties General Obligation
Improvement Bonds, Series A, MBIA
Insured, 8%, 12/15/09 Aaa/AAA 1,000,000 1,253,266
----------
4,697,974
</TABLE>
6 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
DELAWARE--2.4% Delaware Transportation Authority
Transportation System Revenue Bonds,
Prerefunded, 7.75%, 7/1/04 Aaa/AAA $2,000,000 $2,201,786
- -------------------------------------------------------------------------------------------------------------------------
FLORIDA--1.1% Dade County, Florida Seaport Revenue
Refunding Bonds, MBIA Insured, 5.75%,
10/1/15 Aaa/AAA/AAA 1,000,000 987,135
- -------------------------------------------------------------------------------------------------------------------------
ILLINOIS--6.4% Cook County, Illinois Community
College District No. 508 Certificates
of Participation, FGIC Insured,
8.75%, 1/1/05 Aaa/AAA/AAA 500,000 635,802
-----------------------------------------------------------------------------------------------
Cook County, Illinois Community
College District No. 508 Certificates
of Participation, Lease Certificates,
Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 2,500,000 3,035,420
-----------------------------------------------------------------------------------------------
Illinois Health Facilities Authority
Revenue Bonds, Memorial Medical
Center Project, MBIA Insured, 6.75%,
10/1/11 Aaa/AAA 2,000,000 2,113,352
----------
5,784,574
- -------------------------------------------------------------------------------------------------------------------------
INDIANA--4.7% Fort Wayne, Indiana Hospital
Authority Revenue Bonds, Parkview
Memorial Hospital Project, Series A,
FGIC Insured, 7.50%, 11/15/11 Aaa/AAA/AAA 250,000 275,236
-----------------------------------------------------------------------------------------------
Hamilton Southeastern, Indiana
Consolidated School Building Corp.
Revenue Refunding Bonds, First Mtg.,
AMBAC Insured, 7%, 7/1/11 Aaa/AAA/AAA 500,000 547,537
-----------------------------------------------------------------------------------------------
Indiana State Office Building
Commission Capital Complex Revenue
Bonds, Series B, MBIA Insured, 7.40%,
7/1/15 Aaa/AAA 2,500,000 2,920,812
-----------------------------------------------------------------------------------------------
Whitko, Indiana Middle School
Building Corp. Revenue Bonds, First
Mtg., AMBAC Insured, 6.75%, 7/15/12 Aaa/AAA/AAA 500,000 530,677
----------
4,274,262
- -------------------------------------------------------------------------------------------------------------------------
KENTUCKY--1.3% Kentucky State Turnpike Authority
Economic Development Road Revenue
Refunding Bonds, Revitalization
Projects, AMBAC Insured, 6.50%, 7/1/08 Aaa/AAA/AAA 1,050,000 1,166,669
- -------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--7.4% Massachusetts State General
Obligation Bonds, FGIC Insured,
7.875%, 6/1/97 Aaa/AAA/AAA 1,500,000 1,598,140
-----------------------------------------------------------------------------------------------
Massachusetts State Health &
Educational Facilities Authority
Revenue Bonds, Lahey Clinic Medical
Center, Series B, MBIA Insured,
5.625%, 7/1/15 Aaa/AAA 2,000,000 1,946,336
-----------------------------------------------------------------------------------------------
Massachusetts State Health &
Educational Facilities Authority
Revenue Bonds, Mt. Auburn Hospital
Issue, Series B--1, MBIA Insured,
6.25%, 8/15/14 Aaa/AAA 1,000,000 1,048,186
-----------------------------------------------------------------------------------------------
Massachusetts State Housing Finance
Revenue Bonds, Series A, AMBAC
Insured, 6.60%, 7/1/14 Aaa/AAA/AAA 2,000,000 2,063,456
----------
6,656,118
</TABLE>
7 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
MICHIGAN--2.2% Michigan Municipal Board Authority
Revenue Bonds, Local Government,
Partially Prerefunded, Group 19,
AMBAC Insured, 7.50%, 11/1/09 Aaa/AAA/AAA $250,000 $271,585
-----------------------------------------------------------------------------------------------
Michigan State Hospital Finance
Authority Revenue Refunding Bonds,
Oakwood Hospital Obligation Group,
Series A, FGIC Insured, 5.50%, 11/1/13 Aaa/AAA/AAA 1,785,000 1,692,853
----------
1,964,438
- -------------------------------------------------------------------------------------------------------------------------
NEBRASKA--0.6% Nebraska Investment Finance Authority
Hospital Revenue Bonds, Nebraska
Methodist Health System, MBIA
Insured, 7%, 3/1/06 Aaa/AAA 500,000 554,355
- -------------------------------------------------------------------------------------------------------------------------
NEVADA--5.9% Clark County, Nevada Passenger
Facility Charge Revenue Bonds, Las
Vegas/MacArran International Airport
Project, Series A, MBIA Insured, 6%,
7/1/17 Aaa/AAA 2,000,000 1,959,358
-----------------------------------------------------------------------------------------------
Clark County, Nevada School District
General Obligation Bonds, Series B,
MBIA Insured, 6.75%, 3/1/08 Aaa/AAA 2,000,000 2,158,892
-----------------------------------------------------------------------------------------------
Humboldt County, Nevada Pollution
Control Revenue Bonds, Idaho Power
Co. Project, AMBAC Insured, 8.30%,
12/20/14 Aaa/AAA/AAA 1,000,000 1,188,261
----------
5,306,511
- -------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.6% New Hampshire Turnpike System Revenue
Refunding Bonds, Series A, FGIC
Insured, 6.75%, 11/1/11 Aaa/AAA/AAA 500,000 552,849
- -------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--1.4% East Orange, New Jersey General Obligation Bonds,
FSA Insured, 8.40%, 8/1/06 Aaa/AAA 1,000,000 1,272,072
- -------------------------------------------------------------------------------------------------------------------------
NEW YORK--4.4% City of New York Municipal Water
Finance Authority Water & Sewer
System Revenue Bonds, Series F, AMBAC
Insured, 5.50%, 6/15/11(1) Aaa/AAA/AAA 2,000,000 1,981,156
-----------------------------------------------------------------------------------------------
New York State Medical Care
Facilities Finance Agency Revenue
Bonds, Unrefunded Balance, MBIA--IBC
Insured, 7.75%, 8/15/10 Aaa/AAA 370,000 414,872
-----------------------------------------------------------------------------------------------
Niagara Falls, New York General
Obligation Public Improvement Bonds,
MBIA Insured, 7.50%, 3/1/12 Aaa/AAA 1,340,000 1,598,125
----------
3,994,153
- -------------------------------------------------------------------------------------------------------------------------
OHIO--1.8% Cincinnati, Ohio Student Loan Funding
Corp. Revenue Bonds, Series A, AMBAC
Insured, 5.75%, 8/1/03 Aaa/AAA/AAA 1,000,000 1,042,147
-----------------------------------------------------------------------------------------------
Streetsboro, Ohio City School
District General Obligation Bonds,
AMBAC Insured, 7.125%, 12/1/10 Aaa/AAA/AAA 500,000 577,508
----------
1,619,655
</TABLE>
8 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
OKLAHOMA--4.7% Grove, Oklahoma Municipal Services
Authority Utility & Sales Tax Revenue
Bonds, Series 1991, CGIC Insured, 7%,
2/1/16 Aaa/AAA $1,115,000 $1,217,267
-----------------------------------------------------------------------------------------------
Oklahoma Baptist University Authority
Revenue Bonds, FGIC Insured, 7.10%,
8/1/09 Aaa/AAA/AAA 150,000 162,034
-----------------------------------------------------------------------------------------------
Oklahoma State Industrial Authority
Revenue Bonds, Health Systems-Baptist
Medical Center, Series C, AMBAC
Insured, 7%, 8/15/05 Aaa/AAA/AAA 2,000,000 2,293,532
-----------------------------------------------------------------------------------------------
Tulsa, Oklahoma Airports Improvement
Trust Consolidated General Revenue
Bonds, Refunding Pending, MBIA
Insured, 7.50%, 6/1/08 Aaa/AAA 500,000 538,928
----------
4,211,761
- -------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--7.5% Allegheny County, Pennsylvania
Hospital Development Authority
Revenue Bonds, Presbyterian
University Hospital, Prerefunded,
Series A, MBIA Insured, 7.60%, 3/1/08 Aaa/AAA 1,400,000 1,529,032
-----------------------------------------------------------------------------------------------
Berks County, Pennsylvania General
Obligation Bonds, FGIC Insured,
Inverse Floater, 8.487%, 11/10/20(2) Aaa/AAA/AAA 1,000,000 1,108,831
-----------------------------------------------------------------------------------------------
Pennsylvania State Higher Education
Assistance Agency Student Loan
Revenue Bonds, AMBAC Insured, Inverse
Floater, 8.099%, 3/1/22(2) Aaa/AAA/AAA 1,250,000 1,199,547
-----------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Airport
Revenue Bonds, Philadelphia Airport
System, Series A, AMBAC Insured,
5.75%, 6/15/08 Aaa/AAA/AAA 1,000,000 1,019,550
-----------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Regional
Port Authority Lease Revenue Bonds,
MBIA Insured, Inverse Floater, 8.27%,
9/1/20(2) Aaa/AAA 1,900,000 1,903,407
----------
6,760,367
- -------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--2.8% South Carolina State Public Service
Authority Revenue Refunding Bonds,
Series B, FGIC Insured, 5.875%, 1/1/23 Aaa/AAA/AAA 2,000,000 1,970,378
---------------------------------------------------------------------------------------------------
Sumter County, South Carolina School
District No. 017 Certificates of
Participation, Series A, CGIC
Insured, 7.125%, 1/1/11 Aaa/AAA 500,000 552,694
----------
2,523,072
- -------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.3% South Dakota State Lease Revenue
Trust Certificates, Series B, CGIC
Insured, 8%, 9/1/02 Aaa/AAA 1,000,000 1,177,505
- -------------------------------------------------------------------------------------------------------------------------
TENNESSEE--2.1% Chattanooga-Hamilton County,
Tennessee Hospital Authority Revenue
Bonds, Erlanger Medical Center,
Prerefunded, Series B, FSA Insured,
Inverse Floater, 9.774%, 5/25/21(2) Aaa/AAA 1,500,000 1,868,050
</TABLE>
9 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
TEXAS--10.6% Austin, Texas Combined Utility
Systems Revenue Refunding Bonds,
Series A, MBIA Insured, Zero Coupon,
11/15/09 Aaa/AAA $3,615,000 $1,654,394
-----------------------------------------------------------------------------------------------
Grand Prairie, Texas Health
Facilities Revenue Refunding Bonds,
Dallas/Ft. Worth Medical Center
Project, AMBAC Insured, 6.875%,
11/1/10 Aaa/AAA 1,800,000 1,955,790
-----------------------------------------------------------------------------------------------
Harris County, Texas Revenue Bonds,
Toll Road Project, Prerefunded,
10.375%, 8/1/14 Aaa/NR 1,200,000 1,359,153
-----------------------------------------------------------------------------------------------
Houston, Texas Certificates of
Participation, Water Conveyance
System Project, Series J, AMBAC
Insured, 6.125%, 12/15/08 Aaa/AAA/AAA 2,345,000 2,500,490
-----------------------------------------------------------------------------------------------
Rio Grande Valley Health Facilities
Development Corp. Texas Retirement
Facility Revenue Bonds, Golden Palms,
Series B, MBIA Insured, 6.40%, 8/1/12 Aaa/AAA 2,000,000 2,088,906
----------
9,558,733
- -------------------------------------------------------------------------------------------------------------------------
WASHINGTON--3.3% Tacoma, Washington Electric Systems
Revenue Bonds, AMBAC Insured, 6.514%,
1/2/15 A1/A+/AAA 2,000,000 2,076,684
-----------------------------------------------------------------------------------------------
Washington State Public Power Supply
System Revenue Refunding Bonds,
Series A, FGIC Insured, Zero Coupon,
7/1/09 Aaa/AAA/AAA 2,000,000 882,152
----------
2,958,836
- -------------------------------------------------------------------------------------------------------------------------
WISCONSIN--1.6% Wisconsin State Health & Educational
Facilities Authority Revenue Bonds,
SSM Health Care Project, Series A,
MBIA Insured, 5.75%, 6/1/12 Aaa/AAA 1,500,000 1,468,407
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $86,347,959) 98.2% 88,631,741
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.8 1,610,965
---- ----------
NET ASSETS 100.0% $90,242,706
----- ----------
----- ----------
</TABLE>
1. Securities with an aggregate market value of
$79,576 are held in collateralized accounts to cover
initial margin requirements on open futures sales
contracts. See Note 4 of Notes to Financial
Statements.
2. Represents the current interest rate for a variable
rate bond. Variable rate bonds known as "inverse
floaters" pay 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.
The multiplier for these inverse floaters is 1.
Inverse floaters amount to $6,079,835 or 6.74% of
the Fund's net assets at September 30, 1995.
See accompanying Notes to Financial Statements.
10 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $86,347,959)--see accompanying statement $88,631,741
-----------------------------------------------------------------------------------------------
Cash 1,351,002
-----------------------------------------------------------------------------------------------
Receivables:
Interest 1,338,464
Shares of beneficial interest sold 264,018
Receivable for daily variation margin on futures contracts 1,562
-----------------------------------------------------------------------------------------------
Other 28,771
-----------
Total assets 91,615,558
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 975,562
Dividends 265,745
Distribution and service plan fees--Note 5 53,494
Shares of beneficial interest redeemed 48,089
Transfer and shareholder servicing agent fees--Note 5 4,378
Trustees' fees 147
Other 25,437
-----------
Total liabilities 1,372,852
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS $90,242,706
-----------
-----------
- ----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $89,583,798
NET ASSETS -----------------------------------------------------------------------------------------------
Undistributed net investment income 28,628
-----------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (1,655,064)
-----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 2,285,344
-----------
Net assets $90,242,706
-----------
-----------
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $76,690,551 and 4,548,054 shares of beneficial interest outstanding) $16.86
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $17.70
-----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $13,341,146 and 790,806 shares of beneficial interest
outstanding) $16.87
-----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $211,009 and 12,515 shares of beneficial interest
outstanding) $16.86
See accompanying Notes to Financial Statements.
</TABLE>
11 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $5,347,504
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 5 371,750
-----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 5:
Class A 170,117
Class B 119,807
-----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 83,373
-----------------------------------------------------------------------------------------------
Shareholder reports 54,751
-----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 24,443
Class B 4,580
-----------------------------------------------------------------------------------------------
Legal and auditing fees 22,836
-----------------------------------------------------------------------------------------------
Insurance expenses 9,363
-----------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,979
-----------------------------------------------------------------------------------------------
Other 12,433
----------
Total expenses 875,432
- ----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,472,072
- ----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) from:
GAIN (LOSS) ON INVESTMENTS Investments (908,871)
Closing of futures contracts 23,438
----------
Net realized loss (885,433)
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 4,568,736
----------
Net realized and unrealized gain on investments 3,683,303
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $8,155,375
----------
----------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $4,472,072 $3,906,344
------------------------------------------------------------------------
Net realized loss on investments (885,433) (811,863)
------------------------------------------------------------------------
Net change in unrealized appreciation
or depreciation on investments 4,568,736 (7,639,229)
---------- -----------
Net increase (decrease) in net assets
resulting from operations 8,155,375 (4,544,748)
- -------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.8916 and $.8902 per share,
SHAREHOLDERS respectively) (3,855,661) (3,458,716)
Class B ($.7687 and $.755 per share,
respectively) (562,560) (401,013)
Class C ($.075 per share) (5) --
------------------------------------------------------------------------
Distributions from net realized gain on
investments:
Class A ($.0011 and $.0763 per share,
respectively) (5,059) (279,752)
Class B ($.0011 and $.0763 per share,
respectively) (788) (27,180)
- -------------------------------------------------------------------------------------------
BENEFICIAL Net increase in net assets resulting
INTEREST from Class A beneficial interest
TRANSACTIONS transactions--Note 2 5,681,837 13,295,652
------------------------------------------------------------------------
Net increase in net assets resulting
from Class B beneficial interest
transactions--Note 2 1,255,100 7,516,981
------------------------------------------------------------------------
Net increase in net assets resulting
from Class C beneficial interest
transactions--Note 2 211,000 --
- -------------------------------------------------------------------------------------------
NET ASSETS Total increase 10,879,239 12,101,224
------------------------------------------------------------------------
Beginning of period 79,363,467 67,262,243
---------- -----------
End of period (including undistributed
net investment income of $28,628 and
$20,250, respectively) $90,242,706 $79,363,467
----------- ------------
----------- ------------
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
- -----------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $16.14 $18.06 $16.92 $16.17
- -----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .90 .89 .93 .96
Net realized and unrealized gain (loss) on
investments .71 (1.84) 1.35 .73
------ ------ ------ ------
Total income (loss) from investment operations 1.61 (.95) 2.28 1.69
- -----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.89) (.89) (.96) (.91)
Distributions from net realized gain on
investments -- (.08) (.18) (.03)
------ ------ ------ -------
Total dividends and distributions to
shareholders (.89) (.97) (1.14) (.94)
- ------------------------------------------------------------------------------------
Net asset value, end of period $16.86 $16.14 $18.06 $16.92
------ ------ ------ ------
------ ------ ------ ------
- -----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 10.29% (5.46)% 14.02% 10.74%
- -----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $76,691 $67,793 $62,158 $33,751
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $70,650 $66,953 $45,949 $27,811
- -----------------------------------------------------------------------------------
Number of shares outstanding at end of period
(in thousands) 4,548 4,201 3,442 1,995
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.52% 5.23% 5.40% 5.81%
Expenses, before voluntary assumption by the
Manager .95% 1.05% 1.18% 1.35%
Expenses, net of voluntary assumption by the
Manager N/A N/A 1.10% .95%
- ------------------------------------------------------------------------------------
Portfolio turnover rate(7) 58% 99% 7% 47%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to September
30, 1995.
2. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
3. For the period from November 11, 1986 (commencement of operations) to
September 30, 1987.
4. On April 7, 1990, Oppenheimer Management Corporation became the investment
advisor to the Fund.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, 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.
14 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR
ENDED
YEAR ENDED SEPTEMBER 30, SEPT. 30,
1991 1990(4) 1989 1988 1987(3) 1995 1994 1993(2) 1995(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $15.16 $15.27 $14.96 $13.79 $16.00 $16.15 $18.07 $17.33 $16.71
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .92 .98 1.06 1.07 .92 .78 .77 .30 .08
Net realized and unrealized gain (loss) on
investments 1.01 (.11) .31 1.17 (2.21) .71 (1.86) .74 .15
------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from investment operations 1.93 .87 1.37 2.24 (1.29) 1.49 (1.09) 1.04 .23
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.92) (.98) (1.06) (1.07) (.92) (.77) (.75) (.30) (.08)
Distributions from net realized gain on
investments -- -- -- -- -- -- (.08) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions to
shareholders (.92) (.98) (1.06) (1.07) (.92) (.77) (.83) (.30) (.08)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.17 $15.16 $15.27 $14.96 $13.79 $16.87 $16.15 $18.07 $16.86
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 13.08% 5.81% 9.37% 16.67% (8.36)% 9.47% (6.20)% 6.04% 1.30%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $23,791 $16,863 $13,105 $8,483 $5,449 $13,341 $11,571 $5,104 $211
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $19,936 $15,145 $11,200 $6,936 $5,435 $11,987 $9,209 $2,298 $1
- ---------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end of period
(in thousands) 1,471 1,113 858 567 395 791 717 282 13
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.83% 6.43% 6.87% 7.34% 6.69%(6) 4.75% 4.43% 3.99%(6) 4.89%(6)
Expenses, before voluntary assumption by the
Manager 1.60% 1.62% 2.04% 2.50% 2.98%(6) 1.71% 1.82% 1.96%(6) 1.07%(6)
Expenses, net of voluntary assumption by the
Manager .91% .62% .42% .13% .34%(6) N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 67% 62% 142% 141% 112% 58% 99% 7% 58%
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended September 30, 1995 were $54,302,795 and
$47,216,762, respectively.
See accompanying Notes to Financial Statements.
15 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Insured Tax-Exempt Fund (the Fund), operating under the name
Oppenheimer Insured Tax-Exempt Bond Fund through August 29, 1995, is a
separate series of Oppenheimer Tax-Exempt Fund, a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge. All
three classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service
plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. Class B
shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- ------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale
price of the day or, in the absence of sales, at values based on the closing
bid or asked price or the last sale price on the prior trading day. Long-term
and short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
- ------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
- ------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At September 30, 1995,
the Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $1,189,000 expiring in 2003.
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net investment income
each day the New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains on investments, if
any, will be declared at least once each year.
- ------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of premium amortization. The character of the
distributions made during the year from net investment income or net realized
gains may differ from their 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 year that the income or
realized gain (loss) was recorded by the Fund.
During the year ended September 30, 1995, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
September 30, 1995, amounts have been reclassified to reflect a decrease in
paid-in capital of $209, a decrease in undistributed net investment income of
$45,468 and a decrease in accumulated net realized loss on investments of
$45,677.
- ------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Original issue discount on securities
purchased is amortized over the life of the respective securities, in
accordance with federal income tax requirements. For bonds acquired after
April 30, 1993, accrued market discount is recognized at maturity or
disposition as taxable ordinary income. Taxable ordinary income is realized
to the extent of the lesser of gain or accrued market discount. Realized
gains and losses on investments and unrealized appreciation and depreciation
are determined on an identified cost basis, which is the same basis used for
federal income tax purposes.
16 Oppenheimer Insured Tax-Exempt 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>
Year Ended September 30, 1995(1) Year Ended September 30, 1994
-------------------------------- -----------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,022,063 $ 16,640,954 1,358,474 $ 23,400,749
Dividends and distributions reinvested 172,727 2,816,467 164,884 2,823,809
Redeemed (847,904) (13,775,584) (763,948) (12,928,906)
--------- ------------ --------- ------------
Net increase 346,886 $ 5,681,837 759,410 $ 13,295,652
========= ============ ========= ============
- ------------------------------------------------------------------------------------------------------------
Class B:
Sold 242,343 $ 3,984,619 503,586 $ 8,682,918
Dividends and distributions reinvested 22,203 362,232 15,806 267,832
Redeemed (190,378) (3,091,751) (85,174) (1,433,769)
--------- ------------ --------- ------------
Net increase 74,168 $ 1,255,100 434,218 $ 7,516,981
========= ============ ========= ============
- ------------------------------------------------------------------------------------------------------------
Class C:
Sold 12,515 $ 211,000 -- $ --
Dividends and distributions reinvested -- -- -- --
Redeemed -- -- -- --
--------- ------------ --------- ------------
Net increase 12,515 $ 211,000 -- $ --
========= ============ ========= ============
</TABLE>
1. For the year ended September 30, 1995 for Class A and Class B shares and
for the period from August 29, 1995 (inception of offering) to September 30,
1995 for Class C shares.
- ------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At September 30, 1995, net unrealized appreciation on investments of
$2,285,344 was composed of gross appreciation of $2,962,092, and gross
depreciation of $676,748.
- ------------------------------------------------------------------------------
4. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also
buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Fund recognizes a realized gain or loss when
the contract is closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value
of the underlying securities.
At September 30, 1995, the Fund had outstanding futures contracts to
sell debt securities as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Date Futures Contracts September 30, 1995 Appreciation
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bond Future 12/95 25 $2,852,344 $1,562
</TABLE>
17 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .45% on the
first $100 million of average annual net assets, .40% on the next $150
million, .375% on the next $250 million and .35% on net assets in excess of
$500 million. The Manager has agreed to assume Fund expenses (with specified
exceptions) in excess of the most stringent state regulatory limit on Fund
expenses.
The Manager acts as the accounting agent for the Fund at an annual fee
of $12,000, plus out-of-pocket costs and expenses reasonably incurred.
For the year ended September 30, 1995, commissions (sales charges paid
by investors) on sales of Class A shares totaled $153,803, of which $43,162
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of
the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class
B shares totaled $110,251, of which $15,611 was paid to an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of
the Fund's Class C shares totaled $2,100. During the year ended September 30,
1995, OFDI received contingent deferred sales charges of $37,243 upon
redemption of Class B shares, as reimbursement for sales commissions advanced
by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its
net assets annually to compensate OFDI for costs incurred in connection with
the personal service and maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers, banks and other
institutions. In addition, Class B and C shares are subject to an asset-based
sales charge of .75% of net assets annually, to compensate OFDI for sales
commissions paid from its own resources at the time of sale and associated
financing costs. In the event of termination or discontinuance of the Class B
or Class C plan, the Board of Trustees may allow the Fund to continue payment
of the asset-based sales charge to OFDI for distribution expenses incurred on
Class B or Class C shares sold prior to termination or discontinuance of the
plan. At September 30, 1995, OFDI had incurred unreimbursed expenses of
$522,040. During the year ended September 30, 1995, OFDI paid $6,524 and
$993, respectively, to an affiliated broker/dealer as compensation for Class
A and Class B personal service and maintenance expenses and retained $100,572
as compensation for Class B sales commissions and service fee advances, as
well as financing costs.
18 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INSURED TAX-EXEMPT FUND:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Insured Tax-Exempt
Fund as of September 30, 1995, the related statement of operations for the
year then ended, the statements of changes in net assets for the years ended
September 30, 1995 and 1994 and the financial highlights for the period
October 1, 1989 to September 30, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights (except
for total return) for the period November 11, 1986 (commencement of
operations) to September 30, 1989 were audited by other auditors whose report
dated November 2, 1989, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at September 30, 1995 by correspondence with the custodian;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Insured Tax-Exempt Fund at September 30, 1995, the results of its
operations, the changes in its net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 20, 1995
19 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
- ------------------------------------------------------------------------------
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1995.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
A distribution of $.0011 per share was paid on July 10, 1995 which was
designated as a "capital gain distribution" for federal income tax purposes.
Whether received in stock or cash, the capital gain distribution should be
treated by shareholders as a gain from the sale of capital assets held for
more than one year (long-term capital gains). Both short-term and long-term
capital gain distributions are subject to federal, state and local taxes.
None of the dividends paid by the Fund during the fiscal year ended
September 30, 1995 are eligible for the corporate dividend-received
deduction. The dividends were derived from interest on municipal bonds and
are not subject to federal income tax. To the extent a shareholder is subject
to any state or local tax laws, some or all of the dividends received may be
taxable.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue
Service. Because of the complexity of the federal regulations which may
affect your individual tax return and the many variations in state and local
tax regulations, we recommend that you consult your tax advisor for specific
guidance.
20 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
SHAREHOLDER MEETING (UNAUDITED)
- ------------------------------------------------------------------------------
On July 10, 1995, a special shareholder meeting was held at which the nine
Trustees identified below were elected, the selection of Deloitte & Touche
LLP as the independent certified public accountants and auditors of the Fund
for the fiscal year beginning October 1, 1994 was ratified (Proposal No. 1),
the proposed changes in the Fund's investment policies were approved
(Proposal No. 2), the Fund's amended Class B 12b-1 Distribution and Service
Plan was approved by Class B shareholders (Proposal No. 3), as described in
the Fund's proxy statement for that meeting. The following is a report of the
votes cast:
<TABLE>
<CAPTION>
NOMINEE FOR AGAINST TOTAL
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert G. Avis 2,608,734.763 69,193.202 2,677,927.965
William A. Baker 2,596,669.339 81,258.626 2,677,927.965
Charles Conrad, Jr. 2,610,878.344 67,049.621 2,677,927.965
Jon S. Fossel 2,613,025.541 64,902.424 2,677,927.965
Raymond J. Kalinowski 2,610,276.566 67,651.399 2,677,927.965
C. Howard Kast 2,607,687.223 70,240.742 2,677,927.965
Robert M. Kirchner 2,603,800.546 74,127.419 2,677,927.965
Ned M. Steel 2,602,792.407 75,135.558 2,677,927.965
James C. Swain 2,613,519.405 64,408.560 2,677,927.965
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST WITHHELD/ABSTAIN BROKER NON-VOTES TOTAL
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Proposal No. 1 2,539,529.413 42,194.772 96,203.780 215,171 2,677,927.965
Proposal No. 2 2,344,630.966 175,412.102 157,884.897 215,171 2,677,927.965
Proposal No. 3 358,473.349 1,155.492 26,317.058 1,070 385,945.899
</TABLE>
21 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
OPPENHEIMER INSURED TAX-EXEMPT FUND
A Series of Oppenheimer Tax-Exempt Fund
<TABLE>
- ------------------------------------------------------------------------------------------
<S> <C>
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
Caryn R. Halbrecht, Vice President
Robert E. Patterson, Vice President
George C. Bowen, Vice President, Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- -----------------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
- ------------------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
- ------------------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
- ------------------------------------------------------------------------------------------
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
- ------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS Deloitte & Touche LLP
- ------------------------------------------------------------------------------------------
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer
Insured Tax-Exempt Fund. This report must be preceded or
accompanied by a Prospectus of Oppenheimer Insured Tax-Exempt
Fund. For material information concerning the Fund, see the
Prospectus. Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any bank, and
are not insured by the FDIC or any other agency, and involve
investment risks, including possible loss of the principal
amount invested.
</TABLE>
22 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
OppenheimerFunds offers over 30 funds designed to fit virtually every investment goal.
Whether you're investing for retirement, your children's education or tax-free income,
we have the funds to help you seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable knowing that you
are investing with a respected financial institution with over 35 years of experience in
helping people just like you reach their financial goals. And you're investing with a
leader in global, growth stock and flexible fixed income investments--with over 2.8
million shareholder accounts and more than $38 billion under Oppenheimer's management
and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to exchange shares. And you can exchange
shares easily by mail or by telephone.(1) For more information on Oppenheimer funds,
please contact your financial advisor or call us at 1-800-525-7048 for a prospectus. You
may also write us at the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
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STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund Oppenheimer Fund
Target Fund Value Stock Fund
Growth Fund Gold & Special Minerals Fund
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STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund Strategic Income & Growth Fund
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BOND FUNDS High Yield Fund Bond Fund
Champion Income Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
International Bond Fund
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TAX-EXEMPT FUNDS New York Tax-Exempt Fund(2) New Jersey Tax-Exempt Fund(2)
California Tax-Exempt Fund(2) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(2) Insured Tax-Exempt Fund
Florida Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
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MONEY MARKET FUNDS Money Market Fund Cash Reserves
</TABLE>
1. Exchange privileges are subject to change or
termination. Shares may be exchanged only to the
same class of eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by Oppenheimer
Funds Distributor, Inc., Two World Trade Center,
New York, NY 10048-0203. -C- Copyright 1995
Oppenheimer Management Corporation. All rights
reserved.
23 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RA0380.001.0995 November 30, 1995
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
"How may I help you?"
As an Oppenheimer funds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or
ready account access, you can benefit from services designed to make
investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account
and handle administrative requests. You can reach them at our General
Information number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
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Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
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