[COVER PAGE]
Oppenheimer Insured Tax-Exempt Fund
Semiannual Report March 31, 1996
[PHOTO]Couple Shopping
"We want
investment
income that
WON'T ADD
to our TAXES
... and we
need to feel
comfortable."
[LOGO]OppenheimerFunds/R/
<PAGE>
YIELD
- ----------------------
Standardized Yields(4)
- ----------------------
For the 30 Days Ended 3/31/96:
Class A
- -----
4.25%
- -----
Class B
- -----
3.69%
- -----
Class C
- -----
3.64%
- -----
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.
- ------------------------
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 6 months ended 3/31/96 for Class A, B
and C shares were 3.10%, 2.71% and 2.64%, 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 3/31/96 and since inception
of the Class on 11/11/86 were 2.84%, 6.51% and 6.52%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 3/31/96 and
since inception of the Class on 5/3/93 were 2.16% and 2.98%, respectively. For
Class C shares, cumulative total return since inception on 8/29/95 was 2.97%.(3)
- -------
Outlook
- -------
"After the past year's dramatic rally, we feel that this year municipal bond
investment returns will come primarily from income, rather than price
appreciation. Relative to U.S. Treasury bonds, however, we expect municipals to
outperform as the likelihood of any real tax reform should fade from the
political horizon."
Caryn Halbrecht, Portfolio Manager
March 31, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. 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. A portion of the distributions paid by the Fund may be
subject to tax. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax.
1. Under normal conditions, at least 65% of the Fund's assets will be invested
in insured municipal securities. 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 for the period shown,
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 3/31/95, 3/31/91
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 3/31/95 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). Class
C shares show results of hypothetical investments on 8/29/95 after the
deduction of the 1% contingent deferred sales charge. An explanation of the
different total returns is in the fund's prospectus.
4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/96, 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
James C. Swain
Chairman
Oppenheimer
Insured Tax-Exempt
Fund
[PHOTO]Bridget A. Macaskill
Bridget A. Macaskill
President
Oppenheimer
Insured Tax-Exempt
Fund
Dear Shareholder,
As we entered the 1996 presidential election year, the U.S. tax code had, once
again, become a major campaign issue.
While the possibility of significant tax reform that would affect municipal
bonds now appears to be fading, the downward pressure on municipal bond prices
created by those potential proposals has continued, offering a great opportunity
for investors seeking income that is exempt from federal taxes. And as you may
already know, municipal bonds are virtually unique in their ability to generate
tax-free income.
During early 1996, long-term interest rates as measured by the 30-year
Treasury bond, have been volatile, rising from 6% to almost 7%. As a result,
most fixed-income securities have offered little in the way of capital
appreciation. Therefore, the focus for bond investors has been on yield, making
the yield relationship between municipal bonds and U.S. Treasury bonds all the
more important.
Municipal bonds have been trading at yields of more than 90% of U.S.
Treasury bond yields, compared to nearly 80% prior to the tax-reform debate.
When you convert the tax-exempt rates to taxable-equivalent rates, municipal
bonds offer as much as a 30% premium over Treasurys. Few investments with the
creditworthiness of municipal bonds can claim such a high return, although, of
course, U.S. Treasury bonds are more creditworthy than municipal bonds. In
addition, with inflation at less than 3%, the inflation-adjusted returns of
municipal bonds are, indeed, compelling.
Another way of viewing high yields is that municipal bonds are
inexpensively priced, with values discounted for the risk of tax reform.
However, we have seen how difficult it is for a partisan Congress and the
President to agree on complex reform legislation, such as healthcare or a
balanced budget. If tax reform is deferred or tabled indefinitely, the value of
municipal bonds would likely readjust to normal levels. This would create an
opportunity for current investors to achieve high yields and perhaps enjoy
capital appreciation.
As interest rates fluctuate and the prospects for tax reform continue to be
unclear, the net asset value of municipal bonds will continue to be volatile.
But overall, patient municipal bond investors should continue to expect, over
time, taxable-equivalent returns which compare favorably to taxable investments
of similar risk.
It's important to remember, however, that unlike U.S. Treasury bonds,
municipal bonds are not federally guaranteed. So whether a bond is a general
obligation of a municipality or a revenue bond used to finance education,
housing, public works or transportation, our managers perform rigorous credit
analysis of the issuer. This analysis is critical to our investment selection
process.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues 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/Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 19, 1996
3 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
Caryn Halbrecht
Portfolio Manager
Q + A
An interview with your Fund's manager.
HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS?
The Fund performed quite well over the period. Through our careful selection of
individual securities and by shortening the portfolio's average maturity, we
were able to provide shareholders with the high level of tax-free income they've
come to expect while outperforming the majority of our competitors. For the year
ended 3/31/96, the Fund was ranked 8th out of 48 insured municipal debt bonds by
Lipper Analytical Services.(1)
WHAT INVESTMENTS OR MARKET CONDITIONS MADE POSITIVE CONTRIBUTIONS TO
PERFORMANCE?
Over the past several months, increased volatility in the market created more of
an opportunity for us to identify securities that offered good relative value.
In particular, our overweighting in insured hospital bonds contributed to the
Fund's good performance. Although initially selling at a discount due to
concerns that a reduction in the Federal deficit would lead to cutbacks in
Medicare and Medicaid, these bonds rebounded as the talk of substantial cutbacks
to these programs faded. Also contributing to positive performance were our
holdings in insured California bonds. Having bought these bonds at a discount
during California's well publicized fiscal troubles, we benefited as the
state's problems began to show signs of resolution.(2)
DID ANY INVESTMENTS NOT PERFORM AS YOU'D EXPECTED?
Yes. We were overweighted in intermediate term bonds, which underperformed
longer term bonds during the rally. However, our strategy of buying non-callable
bonds in that maturity range helped to offset the negative effects of this
investment.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
Right now we're focusing on finding yield as well as relative value. In the
current market, we've found that redeemable bonds, also known as "callable"
bonds, are trading at attractive prices. This is due to the fact that many
investors want to avoid these bonds when interest rates decline.
Also we continue to find compelling value in hospital bonds. With the talk
of cutbacks to Medicare and Medicaid programs still lingering, many of these
bonds are still selling at a discount.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We're approaching the market more conservatively now that the rally has slowed
and volatility has increased. After the past year's dramatic rally, we feel that
this year municipal bond investment returns will come primarily from income,
rather than price appreciation. Relative to U.S. Treasury bonds, however, we
expect municipals to outperform as the likelihood of any real tax reform should
fade from the political horizon.//
1. Source: Lipper Analytical Services, 3/31/96, an independent mutual fund
monitoring service. Oppenheimer Insured Tax-Exempt Fund is characterized by
Lipper as an insured municipal debt fund. Lipper performance does not take sales
charges into consideration.
2. 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>
<TABLE>
<CAPTION>
=============================================================================================================================
STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
====================================================================================================================================
MUNICIPAL BONDS AND NOTES - 101.5%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA - 1.2%
----------------------------------------------------------------------------------------------------------------------------
Pelham, Alabama General Obligation Wts., AMBAC
Insured, 7.10%, 8/1/15 Aaa/AAA/AAA $1,000,000 $1,133,271
- ------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 3.4%
----------------------------------------------------------------------------------------------------------------------------
North Slope Borough, Alaska General Obligation
Revenue Refunding Bonds, Series G, FSA Insured,
8.35%, 6/30/98 Aaa/AAA/A- 3,000,000 3,265,992
- ------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.2%
----------------------------------------------------------------------------------------------------------------------------
Arizona Educational Loan Marketing Corp. Revenue
Refunding Bonds, Series B, 7%, 3/1/05 A/NR 1,090,000 1,147,158
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 9.0%
----------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority
Revenue Bonds, Southern California Edison Co.
Project, Series A, MBIA Insured, 6.90%, 9/1/06 Aaa/AAA 2,410,000 2,591,396
----------------------------------------------------------------------------------------------------------------------------
California Public Capital Improvements Financing
Authority Revenue Bonds, Pooled Project, Series B,
BIG Insured, 8.10%, 3/1/18 Aaa/AAA 230,000 249,404
----------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development
Authority Revenue Certificates of Participation,
Cedars-Sinai Medical Center, MBIA Insured, 6.50%,
8/1/12 Aaa/AAA 1,000,000 1,097,692
----------------------------------------------------------------------------------------------------------------------------
California Statewide Communities Development Corp.
Certificates of Participation, 5%, 10/1/23 Aaa/AAA 2,000,000 1,783,876
----------------------------------------------------------------------------------------------------------------------------
Metropolitan Water District of Southern California
Waterworks Revenue Bonds, 5%, 7/1/20 Aa/AA 2,000,000 1,802,496
----------------------------------------------------------------------------------------------------------------------------
Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds, Series G, MBIA
Insured, 6.50%, 9/1/13 Aaa/AAA/A- 1,000,000 1,098,081
---------------
8,622,945
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.4%
----------------------------------------------------------------------------------------------------------------------------
Denver, Colorado City & County Airport Revenue
Bonds, Series B, MBIA Insured, 5.75%, 11/15/17 Aaa/AAA 2,000,000 1,930,324
----------------------------------------------------------------------------------------------------------------------------
Denver, Colorado City & County Airport Revenue
Refunding Bonds, Series B, MBIA Insured, 5.75%,
11/15/11 Aaa/AAA 2,000,000 1,977,522
----------------------------------------------------------------------------------------------------------------------------
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 1,255,036
---------------
5,162,882
- ------------------------------------------------------------------------------------------------------------------------------------
DELAWARE - 2.3%
----------------------------------------------------------------------------------------------------------------------------
Delaware Transportation Authority Transportation
System Revenue Bonds, Prerefunded, 7.75%, 7/1/04 Aaa/AAA 2,000,000 2,181,116
- ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 2.1%
----------------------------------------------------------------------------------------------------------------------------
Florida State Board of Education Capital Outlay
General Obligation Bonds, Series C, 5.875%,
6/1/23 Aa/AA 2,000,000 2,016,584
</TABLE>
6 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 7.7%
----------------------------------------------------------------------------------------------------------------------------
Cook County, Illinois Community College District
No. 508 Certificates of Participation, FGIC
Insured, 8.75%, 1/1/05 Aaa/AAA/AAA $ 500,000 $ 629,951
----------------------------------------------------------------------------------------------------------------------------
Cook County, Illinois Community College District
No. 508 Lease Certificates of Participation,
Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 2,500,000 3,024,339
----------------------------------------------------------------------------------------------------------------------------
Illinois Health Facilities Authority Revenue
Bonds, Memorial Medical Center Project, MBIA
Insured, 6.75%, 10/1/11 Aaa/AAA 2,000,000 2,140,658
----------------------------------------------------------------------------------------------------------------------------
Illinois State Sales Tax Revenue Bonds,
Prerefunded, Series N, 7%, 6/15/20 Aaa/AAA 1,420,000 1,599,302
---------------
7,394,250
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 4.2%
----------------------------------------------------------------------------------------------------------------------------
Hamilton Southeastern, Indiana Consolidated
School Building Corp. Revenue Refunding Bonds,
First Mtg., AMBAC Insured, 7%, 7/1/11 Aaa/AAA/AAA 500,000 541,083
----------------------------------------------------------------------------------------------------------------------------
Indiana State Office Building Commission Capital
Complex Revenue Bonds, Series B, MBIA Insured,
7.40%, 7/1/15 Aaa/AAA 2,500,000 2,953,500
----------------------------------------------------------------------------------------------------------------------------
Whitko, Indiana Middle School Building Corp.
Revenue Bonds, First Mtg., AMBAC Insured, 6.75%,
7/15/12 Aaa/AAA/AAA 500,000 526,307
---------------
4,020,890
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 4.9%
----------------------------------------------------------------------------------------------------------------------------
Massachusetts State General Obligation Bonds,
FGIC Insured, 7.875%, 6/1/97 Aaa/AAA/AAA 1,500,000 1,572,936
----------------------------------------------------------------------------------------------------------------------------
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 1,046,550
----------------------------------------------------------------------------------------------------------------------------
Massachusetts State Housing Finance Agency Revenue
Bonds, Series A, AMBAC Insured, 6.60%, 7/1/14 Aaa/AAA/AAA 2,000,000 2,062,860
---------------
4,682,346
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.0%
----------------------------------------------------------------------------------------------------------------------------
Greater Detroit, Michigan Resource Recovery
Authority Revenue Refunding Bonds, Series A,
AMBAC Insured, 6.25%, 12/13/07 Aaa/AAA/AAA 2,000,000 2,129,790
----------------------------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority Revenue
Refunding Bonds, Oakwood Hospital Obligated Group,
Series A, FGIC Insured, 5.50%, 11/1/13 Aaa/AAA/AAA 1,785,000 1,728,253
---------------
3,858,043
- ------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.6%
----------------------------------------------------------------------------------------------------------------------------
Nebraska Investment Finance Authority Hospital
Revenue Bonds, Nebraska Methodist Health System,
MBIA Insured, 7%, 3/1/06 Aaa/AAA 500,000 550,051
</TABLE>
7 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 5.5%
----------------------------------------------------------------------------------------------------------------------------
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 $1,997,396
----------------------------------------------------------------------------------------------------------------------------
Clark County, Nevada School District General
Obligation Bonds, Series B, MBIA Insured, 6.75%,
3/1/08 Aaa/AAA 2,000,000 2,156,656
----------------------------------------------------------------------------------------------------------------------------
Humboldt County, Nevada Pollution Control Revenue
Bonds, Idaho Power Co. Project, AMBAC Insured,
8.30%, 12/20/14 Aaa/AAA/AAA 1,000,000 1,188,126
---------------
5,342,178
- ------------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.6%
----------------------------------------------------------------------------------------------------------------------------
New Hampshire Turnpike System Revenue Refunding
Bonds, Series A, FGIC Insured, 6.75%, 11/1/11 Aaa/AAA/AAA 500,000 549,313
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 3.6%
----------------------------------------------------------------------------------------------------------------------------
East Orange, New Jersey General Obligation Bonds,
FSA Insured, 8.40%, 8/1/06 Aaa/AAA 1,000,000 1,260,667
----------------------------------------------------------------------------------------------------------------------------
Hoboken, Union City & Weehawken, New Jersey
Sewer Authority Revenue Bonds, Prerefunded,
MBIA Insured, 7.25%, 8/1/19 Aaa/AAA 2,000,000 2,213,588
---------------
3,474,255
- ------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 2.0%
----------------------------------------------------------------------------------------------------------------------------
Las Cruces, New Mexico Revenue Bonds, Series 1995,
MBIA Insured, 5.50%, 12/1/11 Aaa/AAA 2,000,000 1,952,664
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 2.2%
----------------------------------------------------------------------------------------------------------------------------
City of New York General Obligation Bonds,
Series A, FGIC Insured, 5.75%, 8/1/10 Aaa/AAA/AAA 1,125,000 1,133,788
----------------------------------------------------------------------------------------------------------------------------
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 1,000,000 995,832
---------------
2,129,620
- ------------------------------------------------------------------------------------------------------------------------------------
OHIO - 1.7%
----------------------------------------------------------------------------------------------------------------------------
Streetsboro, Ohio City School District General
Obligation Bonds, AMBAC Insured, 7.125%, 12/1/10 Aaa/AAA/AAA 500,000 578,584
----------------------------------------------------------------------------------------------------------------------------
Student Loan Funding Corp. of Cincinnati, Ohio
Revenue Bonds, Series A, AMBAC Insured, 5.75%,
8/1/03 Aaa/AAA/AAA 1,000,000 1,046,150
---------------
1,624,734
- ------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 2.5%
----------------------------------------------------------------------------------------------------------------------------
Oklahoma Baptist University Authority Revenue
Bonds, FGIC Insured, 7.10%, 8/1/09 Aaa/AAA/AAA 150,000 160,716
----------------------------------------------------------------------------------------------------------------------------
Oklahoma State Industrial Authority Health
Systems Revenue Bonds, Baptist Medical Center,
Series C, AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 2,000,000 2,281,906
---------------
2,442,622
</TABLE>
8 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 13.4%
----------------------------------------------------------------------------------------------------------------------------
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 $1,514,433
----------------------------------------------------------------------------------------------------------------------------
Berks County, Pennsylvania General Obligation
Bonds, FGIC Insured, Inverse Floater, 8.84%,
11/10/20(2) Aaa/AAA/AAA 1,000,000 1,061,914
----------------------------------------------------------------------------------------------------------------------------
Delaware County, Pennsylvania Authority Hospital
Revenue Bonds, Delaware County Memorial Hospital,
MBIA Insured, 5.50%, 8/15/19 Aaa/AAA 1,000,000 938,707
----------------------------------------------------------------------------------------------------------------------------
Keystone Oaks, Pennsylvania School District General
Obligation Bonds, AMBAC Insured, 5.829%, 9/1/16 Aaa/AAA/AAA 2,000,000 2,003,874
----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Higher Education Assistance
Agency Student Loan Revenue Bonds, AMBAC Insured,
6.031%, 3/1/22 Aaa/AAA/AAA 2,500,000 2,477,205
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Airport Revenue Bonds,
Series A, AMBAC Insured, 5.75%, 6/15/08 Aaa/AAA/AAA 1,000,000 1,023,141
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Regional Port Authority
Lease Revenue Refunding Bonds, MBIA Insured,
5.92%, 9/1/20 Aaa/AAA 3,800,000 3,884,386
---------------
12,903,660
- ------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.0%
----------------------------------------------------------------------------------------------------------------------------
Rhode Island Depositors Economic Protection Corp.
Special Obligation Revenue Bonds, Prerefunded,
Series A, MBIA Insured, 7.50%, 8/1/14 Aaa/AAA 1,700,000 1,958,429
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 0.6%
----------------------------------------------------------------------------------------------------------------------------
Sumter County, South Carolina School District
No. 017 Certificates of Participation, Series A,
CGIC Insured, 7.125%, 1/1/11 Aaa/AAA 500,000 549,323
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 1.2%
----------------------------------------------------------------------------------------------------------------------------
South Dakota State Lease Revenue Trust
Certificates, Series B, CGIC Insured, 8%, 9/1/02 Aaa/AAA 1,000,000 1,163,604
- ------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 3.5%
----------------------------------------------------------------------------------------------------------------------------
Chattanooga-Hamilton County, Tennessee Hospital
Authority Revenue Bonds, Prerefunded, Series A,
6.712%, 5/25/21 Aaa/AAA 3,000,000 3,379,581
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 9.2%
----------------------------------------------------------------------------------------------------------------------------
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 1,952,165
----------------------------------------------------------------------------------------------------------------------------
Harris County, Texas Toll Road Unlimited Tax & Sub.
Lien Revenue Bonds, Prerefunded, 10.375%, 8/1/14 Aaa/AAA 1,200,000 1,330,932
----------------------------------------------------------------------------------------------------------------------------
Houston, Texas Certificates of Participation, Water
Conveyance System Project, Series J, AMBAC Insured,
6.125%, 12/15/08 Aaa/AAA/AAA 2,345,000 2,496,379
----------------------------------------------------------------------------------------------------------------------------
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 2,107,978
----------------------------------------------------------------------------------------------------------------------------
Tarrant County, Texas Health Facilities Development
Corp. Revenue Bonds, Harris Methodist Health System
Project, AMBAC Insured, 5.125%, 9/1/12 Aaa/AAA 1,000,000 938,629
---------------
8,826,083
</TABLE>
9 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 2.1%
----------------------------------------------------------------------------------------------------------------------------
Tacoma, Washington Electric Systems Revenue
Bonds, AMBAC Insured, Inverse Floater, 8.81%,
1/2/15(2 ) Aaa/AAA/AAA $1,000,000 $ 1,066,211
----------------------------------------------------------------------------------------------------------------------------
Washington State Public Power Supply System
Revenue Refunding Bonds, Series A, FGIC Insured,
Zero Coupon, 5.50%, 7/1/09(3) Aaa/AAA/AAA 2,000,000 922,940
---------------
1,989,151
- ------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 4.4%
----------------------------------------------------------------------------------------------------------------------------
Wisconsin Center District Senior Dedicated Tax
Revenue Bonds, Series 1996A, MBIA Insured, Zero
Coupon, 5.50%, 12/15/11(3) Aaa/AAA 3,410,000 1,376,125
----------------------------------------------------------------------------------------------------------------------------
Wisconsin State Health & Educational Facilities
Authority Revenue Bonds, Aurora Medical Group,
Inc. Project, FSA Insured, 6%, 11/15/11 Aaa/AAA 1,370,000 1,423,567
----------------------------------------------------------------------------------------------------------------------------
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 1,492,059
---------------
4,291,751
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.0%
----------------------------------------------------------------------------------------------------------------------------
District of Columbia Hospital Revenue Refunding
Bonds, Medlantic Healthcare, Series A, MBIA
Insured, 5.25%, 8/15/12 Aaa/AAA 1,000,000 944,298
----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $96,148,298) 101.5% 97,556,794
----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.5) (1,438,124)
------ ------------
NET ASSETS 100.0% $96,118,670
====== ============
</TABLE>
1. Securities with an aggregate market value of $199,166 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.
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. Inverse
floaters amount to $2,128,125 or 2.21% of the Fund's net assets at
March 31, 1996.
3. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
As of March 31, 1996, securities subject to the alternative minimum tax
amounted to $18,205,816 or 18.94% of the Fund's net assets.
See accompanying Notes to Financial Statements.
10 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
==============================================================
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996(UNAUDITED)
<S> <C> <C>
====================================================================================================================================
ASSETS Investments, at value (cost $96,148,298) - see accompanying statement $ 97,556,794
------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 2,152,059
Interest 1,215,142
Shares of beneficial interest sold 83,262
-------------------------------------------------------------------------------------------------------
Other 26,942
--------------
Total assets 101,034,199
====================================================================================================================================
LIABILITIES Bank overdraft 410,583
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 3,831,634
Dividends 290,447
Shares of beneficial interest redeemed 259,793
Distribution and service plan fees 58,687
Payable for daily variation on futures contracts - Note 5 18,750
Transfer and shareholder servicing agent fees 3,622
Other 42,013
--------------
Total liabilities 4,915,529
====================================================================================================================================
NET ASSETS $ 96,118,670
==============
====================================================================================================================================
COMPOSITION OF Paid-in capital $ 95,134,557
NET ASSETS -------------------------------------------------------------------------------------------------------
Undistributed net investment income 26,866
-------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (433,279)
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments - Note 3 1,390,526
--------------
Net assets $ 96,118,670
==============
====================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $80,746,222 and 4,765,463 shares of beneficial interest outstanding) $16.94
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $17.78
-------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $14,630,809 and 862,997 shares of beneficial interest outstanding) $16.95
-------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $741,639 and 43,799 shares of beneficial interest outstanding) $16.93
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
===========================================================================
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1996(UNAUDITED)
<S> <C> <C>
====================================================================================================================================
INVESTMENT INCOME Interest $2,974,314
====================================================================================================================================
EXPENSES Management fees - Note 4 214,909
-------------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 96,836
Class B 70,565
Class C 2,045
-------------------------------------------------------------------------------------------------------
Shareholder reports 61,672
-------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 50,322
-------------------------------------------------------------------------------------------------------
Legal and auditing fees 11,920
-------------------------------------------------------------------------------------------------------
Insurance expenses 1,989
-------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,252
-------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 25,665
Class B 5,042
Class C 326
-------------------------------------------------------------------------------------------------------
Other 9,894
------------
Total expenses 552,437
====================================================================================================================================
NET INVESTMENT INCOME 2,421,877
====================================================================================================================================
REALIZED AND Net realized gain (loss) on:
UNREALIZED GAIN (LOSS) Investments 1,343,095
Closing of futures contracts (121,310)
------------
Net realized gain 1,221,785
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (894,818)
------------
Net realized and unrealized gain 326,967
====================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,748,844
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
====================================
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995
<S> <C> <C> <C>
====================================================================================================================================
OPERATIONS Net investment income $ 2,421,877 $ 4,472,072
-------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,221,785 (885,433)
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (894,818) 4,568,736
------------ -------------
Net increase in net assets resulting from operations 2,748,844 8,155,375
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A (2,100,912) (3,855,661)
Class B (313,810) (562,560)
Class C (8,917) (5)
------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (5,059)
Class B -- (788)
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 3,764,250 5,681,837
Class B 1,246,620 1,255,100
Class C 539,889 211,000
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 5,875,964 10,879,239
-------------------------------------------------------------------------------------------------------
Beginning of period 90,242,706 79,363,467
------------ -------------
End of period (including undistributed net
investment income of $26,866 and $28,628, respectively) $96,118,670 $90,242,706
============ =============
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, 1996 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
=====================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $16.86 $16.14 $18.06 $16.92 $16.17 $15.16
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .45 .90 .89 .93 .96 .92
Net realized and unrealized gain (loss) .08 .71 (1.84) 1.35 .73 1.01
- ---------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .53 1.61 (.95) 2.28 1.69 1.93
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.45) (.89) (.89) (.96) (.91) (.92)
Distributions from net realized gain -- -- (.08) (.18) (.03) --
- ---------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.45) (.89) (.97) (1.14) (.94) (.92)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.94 $16.86 $16.14 $18.06 $16.92 $16.17
======= ======= ======= ======= ======= =======
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 3.10% 10.29% (5.46)% 14.02% 10.74% 13.08%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $80,746 $76,691 $67,793 $62,158 $33,751 $23,791
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $80,823 $70,650 $66,953 $45,949 $27,811 $19,936
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.20%(4) 5.52% 5.23% 5.40% 5.81% 5.83%
Expenses, before voluntary assumption
by the Manager 1.04%(4) 0.95% 1.05% 1.18% 1.35% 1.60%
Expenses, net of voluntary assumption
by the Manager N/A N/A N/A 1.10% 0.95% 0.91%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 50% 58% 99% 7% 47% 67%
</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. 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>
====================
FINANCIAL HIGHLIGHTS
CLASS B CLASS C
------------------------------------------------ ---------------------------
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, 1996 YEAR ENDED SEPTEMBER 30, MARCH 31, 1996 SEPT. 30,
(UNAUDITED) 1995 1994 1993(2) (UNAUDITED) 1995(1)
<S> <C> <C> <C> <C> <C> <C>
==========================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $16.87 $16.15 $18.07 $17.33 $16.86 $16.71
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .38 .78 .77 .30 .37 .08
Net realized and unrealized gain (loss) .08 .71 (1.86) .74 .08 .15
- --------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .46 1.49 (1.09) 1.04 .45 .23
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.38) (.77) (.75) (.30) (.38) (.08)
Distributions from net realized gain -- -- (.08) -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.38) (.77) (.83) (.30) (.38) (.08)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.95 $16.87 $16.15 $18.07 $16.93 $16.86
======= ======= ======= ======= ======= =======
==========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 2.71% 9.47% (6.20)% 6.04% 2.64% 1.30%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $14,631 $13,341 $11,571 $5,104 $ 742 $ 211
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $14,176 $11,987 $ 9,209 $2,298 $ 416 $ 1
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.42%(4) 4.75% 4.43% 3.99%(4) 4.15%(4) 4.89%(4)
Expenses, before voluntary assumption
by the Manager 1.80%(4) 1.71% 1.82% 1.96%(4) 1.84%(4) 1.07%(4)
Expenses, net of voluntary assumption
by the Manager N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 50% 58% 99% 7% 50% 58%
</TABLE>
4. Annualized.
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 March 31, 1996 were $56,091,288 and $47,736,064, respectively.
See accompanying Notes to Financial Statements.
15 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
=========================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Insured Tax-Exempt Fund (the Fund) 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 objective is to seek maximum current income exempt
from Federal income tax for individual investors that is consistent with
the preservation of capital. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge.
Class B and Class C shares may be subject to a contingent deferred sales
charge. All 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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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, 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.
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>
Six Months Ended March 31, 1996 Year Ended September 30, 1995 (1)
------------------------------- ---------------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 647,315 $11,162,159 1,022,063 $ 16,640,954
Dividends and distributions
reinvested 89,231 1,533,840 172,727 2,816,467
Redeemed (519,137) (8,931,749) (847,904) (13,775,584)
--------- ------------ ---------- -------------
Net increase 217,409 $ 3,764,250 346,886 $ 5,681,837
========= ============ ========== =============
----------------------------------------------------------------------------------------------------------
Class B:
Sold 141,374 $ 2,436,832 242,343 $ 3,984,619
Dividends and distributions
reinvested 11,620 199,843 22,203 362,232
Redeemed (80,803) (1,390,055) (190,378) (3,091,751)
--------- ------------ ---------- -------------
Net increase 72,191 $ 1,246,620 74,168 $ 1,255,100
========= ============ ========== =============
----------------------------------------------------------------------------------------------------------
Class C:
Sold 31,280 $ 539,828 12,515 $ 211,000
Dividends and distributions
reinvested 13 219 -- --
Redeemed (9) (158) -- --
--------- ------------ ---------- -------------
Net increase 31,284 $ 539,889 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 March 31, 1996, net unrealized appreciation on investments of $1,390,526
was composed of gross appreciation of $2,430,452, and gross depreciation of
$1,039,926.
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .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 applicable 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 six months ended March 31, 1996, commissions (sales charges
paid by investors) on sales of Class A shares totaled $102,400, of which
$19,495 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of
the Fund's Class B and Class C shares totaled $72,881 and $5,409, of which
$1,519 was paid to an affiliated broker/dealer for Class B shares. During
the six months ended March 31, 1996, OFDI received contingent deferred
sales charges of $10,675 upon redemption of Class B shares, as
reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed .25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee
to reimburse brokers, dealers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares. During the six months ended March
31, 1996, OFDI paid $3,621 to an affiliated broker/dealer as reimbursement
for Class A personal service and maintenance expenses.
17 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
=====================================================
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
===========================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the
Plans, the Fund pays OFDI an annual asset-based sales charge of .75% per
year on Class B shares that are outstanding for 6 years or less and on
Class C shares, as compensation for sales commissions paid from its own
resources at the time of sale and associated financing costs. If the Plans
are terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plans were terminated. OFDI also receives a
service fee of .25% per year as compensation 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 financial institutions. Both fees are computed on the average annual
net assets of Class B and Class C shares, determined as of the close of
each regular business day. During the six months ended March 31, 1996, OFDI
paid $993 to an affiliated broker/dealer as compensation for Class B
personal service and maintenance expenses and retained $56,910 and $2,045,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. At March 31, 1996, OFDI
had incurred unreimbursed expenses of $572,323 for Class B and $11,753 for
Class C.
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also
buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of fixed
rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or
cost effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities 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 March 31, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACTS TO SELL DATE FUTURES CONTRACTS MARCH 31, 1996 DEPRECIATION
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 6/96 25 $2,786,719 $17,970
</TABLE>
18 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
===================================
OPPENHEIMER INSURED TAX-EXEMPT FUND
A Series of Oppenheimer Tax-Exempt Fund
===========================================================================
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
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, Trustee and President
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President and Secretary
Caryn R. Halbrecht, Vice President
Robert E. Patterson, Vice President
George C. Bowen, Vice President and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
===========================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
===========================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
===========================================================================
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER
SERVICING AGENT
===========================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
===========================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
===========================================================================
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records
of the Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer 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.
19 Oppenheimer Insured Tax-Exempt Fund
<PAGE>
[BACK COVER}
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
- --------------
RS0865.001.0396 May 31, 1996
- ------------------------------------------------------------------------------
"HOW MAY I HELP YOU?" [PHOTO]Jennifer Leonard
Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
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 fund's transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- ------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS-R- --------------
OppenheimerFunds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
--------------
