<PAGE> 1
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
Annual Report September 30, 1996
[PHOTO]
"We want
investment
income that
won't add
to our taxes
...and we
need to feel
comfortable."
[OPPENHEIMER LOGO]
<PAGE> 2
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 9/30/96:(3)
Class A
4.46%
Class B
3.85%
Class C
3.86%
THIS FUND IS FOR PEOPLE WHO WANT INVESTMENT INCOME THAT'S EXEMPT FROM FEDERAL
TAXES AND FEEL SECURE INVESTING IN A FUND DESIGNED TO REDUCE INTEREST RATE
RISK.
HOW YOUR FUND IS MANAGED
Oppenheimer Intermediate Municipal Fund invests primarily in a diversified
portfolio of tax-exempt bonds and intends to maintain an intermediate-term
average portfolio maturity (3-10 years on a dollar-weighted basis) under normal
circumstances. The Fund's investment strategy is to seek a high tax-free yield
with less of the price volatility typical of longer maturity municipal bond
funds.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/96 for Class A, B
and C shares were 5.41%, 4.56% and 4.63%, respectively.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/96 and since inception
on 11/11/86 were 1.72%, 5.88% and 6.88%, respectively. For Class B shares,
average annual total returns for the 1-year period and since inception on
9/11/95 were 0.56% and 1.61%, respectively. For Class C shares, average annual
total returns for the 1-year period ended 9/30/96 and since inception on
12/1/93 were 3.63% and 3.52%, respectively.(2)
OUTLOOK
"We expect the Fund will continue to outperform because of its
lower-volatility-type design; however, we recognize a modest risk to the
portfolio if the Federal Reserve raises interest rates."
Caryn Halbrecht, Portfolio Manager
September 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. In reviewing the notes that follow on performance
and rankings, please be aware that past performance does not guarantee future
results. Investment return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than the original cost. A portion of the distributions paid by the Fund
may be subject to income tax. For investors subject to federal and/or state
alternative minimum tax (AMT), the Fund's distributions may increase this tax.
1. 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.
2. Class A returns show results of hypothetical investments on 9/30/95, 9/30/91
and 11/11/86 (inception of class), after deducting the current maximum initial
sales charge of 3.50%. Class B returns show results of hypothetical investments
on 9/30/95 and 9/11/95 (inception of class), after the deduction of the
applicable contingent deferred sales charge of 4% (1-year) and 3% (since
inception). Class C returns show results of hypothetical investments on 9/30/95
and 12/1/93 (inception of class), after the deduction of the 1% contingent
deferred sales charge for the 1-year result. An explanation of the different
total returns is in the Fund's prospectus.
3. Standardized yield for Class A, B and C shares is net investment income
calculated on a yield-to-maturity basis for the 30-day period ended 9/30/96,
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 Intermediate Municipal Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Intermediate
Municipal Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Intermediate
Municipal Fund
DEAR SHAREHOLDER,
After a turbulent beginning this year, third quarter economic indicators are
now pointing to continuing growth and low inflation. As a result, we are seeing
signs of improvement in both the government bond and the closely related
municipal markets. Most recently, the Federal Reserve again showed confidence
in the non-inflationary growth of the economy by deciding not to raise interest
rates, and we feel this current economic environment could lead to a rebound in
the bond market.
Interest rates, which have recently leveled off, rose from 6% in
January to about 7% in July, driven by investors' concerns that strong economic
growth would trigger higher inflation. This rate increase affected the
municipal market because municipal bond yields tend to track Treasuries quite
closely. Muni investors, however, were affected less severely than other
fixed-income investors because most of the income generated by municipals is
free from federal income tax, making actual yields more attractive.
Although economic factors such as declining unemployment and strong
retail sales still point toward growth, our outlook is for inflation to remain
under control for the following three reasons: the Federal Reserve's
conservative monetary policy over the last few years; the declining federal
government deficit; and higher corporate productivity that has caused unit
labor costs to grow more slowly than they have in the past.
A second development favorably impacting the municipal bond market is
the strengthening financial condition of many municipalities throughout the
United States. This trend is particularly strong in the state of California and
its subdivisions, which happen to be among the nation's largest issuers of
municipal bonds.
Finally, the tax-exempt market is also benefiting from price supports
created by a diminishing supply of securities. We continue to see fewer issues
and more redemptions as bonds mature or are "called" out of the market. This
shrinking supply dates back to 1985, when a surge of municipal bond issuance
occurred just prior to the Tax Reform Act of 1986. By today's standards, these
bonds paid very high rates of interest, and this year billions of dollars worth
of these bonds were redeemed by issuers who were contractually obligated to
wait at least ten years to "call" them. Going forward, former bondholders, who
received cash from these redemptions, may fuel bond price increases further by
reinvesting in the smaller pool of existing bonds.
When you look at all the current factors affecting this market: the
prospect of stable, lower interest rates, the strengthening economies of states
and municipalities, the shrinking supply of securities, as well as tax reform
being down on the political agenda, the outlook for municipal bond investors is
very positive.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. 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
October 21, 1996
3 Oppenheimer Intermediate Municipal Fund
<PAGE> 4
CARYN HALBRECHT
Portfolio Manager
Q + A
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED OVER THE PERIOD?
The Fund has performed very well during a tough period of volatile interest
rates. For the 1-year period ended 9/30/96, Lipper Analytical Services ranked
the Fund's Class A shares 11th out of 139 intermediate municipal bond funds.(1)
The outperformance of the Fund is due primarily to the defensive structure of
the portfolio.
WHAT INVESTMENTS HAVE MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
Active duration management played a primary role in the Fund's performance. The
market spent the last six months on an emotional roller coaster as daily
economic indicators flipped back and forth pointing to steady growth one day
and inflationary fears the next. By shortening our bonds' maturities, or
durations, we were able to reduce the Fund's exposure to interest rate shifts.
Further protection against interest rate risk was achieved through an
overweighting in high coupon bonds which are less sensitive to interest rate
fluctuations.
Finally, we invested selectively in special credit situations which
offer greater tax-free income and are also less volatile than high quality
securities. In many cases these issues were part of a sector, like hospitals or
resource recovery plants, that had fallen out of favor with the market. Using
our research we identified the good apples in the barrel and picked those
individual issuers with the highest income and appreciation potential.(2)
DID ANY INVESTMENTS NOT PERFORM AS EXPECTED?
During the period, we had invested in a resource recovery plant that
underperformed due to a short-term legal issue. We continue to like this
investment and believe the current credit concerns will be resolved in our
favor. Therefore, we have added to our position at cheaper levels.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We are beginning to identify and sell recession-sensitive bonds which have
outperformed and will be vulnerable when the economy begins to slow. In
addition, where we had shortened durations earlier, in anticipation of higher
interest rates, we are now less concerned that rates will rise and are looking
to position the Fund with more neutral durations.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We expect the Fund will continue to outperform because of its
lower-volatility-type design; however, we recognize a modest risk to the
portfolio if the Federal Reserve raises interest rates. The fourth quarter of
1996 will probably be marked by continued volatility as the markets react to
the uncertainty surrounding an election year. By the second quarter of 1997, we
expect to see a slowing economy, declining interest rates and a rebounding bond
market.
1. Source: Lipper Analytical Services, 9/30/96. Oppenheimer Intermediate
Municipal Fund is characterized by Lipper as an intermediate municipal bond
fund. Lipper does not take sales charges into consideration.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Intermediate Municipal Fund
<PAGE> 5
STATEMENT OF INVESTMENTS September 30, 1996
================================================================================
<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--98.8%
- ------------------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.5%
AL Water Pollution Control Authority RB, AMBAC
Insured, 6.15%, 8/15/99 Aaa/AAA/AAA $1,350,000 $1,414,368
- ------------------------------------------------------------------------------------------------------------------------------------
ALASKA--1.2%
North Slope Borough, AK GOB, Series B,
FSA Insured, 7.50%, 6/30/01 Aaa/AAA 1,000,000 1,119,210
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--11.2%
Berkeley, CA HF RB, Alta Bates Medical Center,
Series A, 6.50%, 12/1/11 Baa/BBB+ 3,000,000 3,047,670
----------------------------------------------------------------------------------------------------------------------------
CA Statewide CDA Revenue COP, Cedars-Sinai
Medical Center: 5.40%, 11/1/15 A1/NR 2,000,000 1,805,780
MBIA Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,113,170
----------------------------------------------------------------------------------------------------------------------------
Corona, CA COP, Prerefunded, Series
B, 10%, 11/1/20 Aaa/AAA 1,000,000 1,292,410
----------------------------------------------------------------------------------------------------------------------------
Long Beach Aquarium of the Pacific RB,
Series 1995-A, 5.75%, 7/1/05 NR/BBB/BBB-- 1,500,000 1,481,610
----------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.375%, 7/1/10 NR/BBB-- 1,100,000 1,121,736
----------------------------------------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP,
Medical Center Financing Project, 6%, 8/1/09 Baa1/A-- 1,000,000 1,015,570
----------
10,877,946
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO--1.7%
Denver, CO City & Cnty. Airport RB,
Series A, 7%, 11/15/99 Baa2/BBB/BBB 1,000,000 1,065,450
----------------------------------------------------------------------------------------------------------------------------
Meridian Metropolitan District,
CO GORB, 7.50%, 12/1/11 A3/NR 500,000 549,255
----------
1,614,705
- ------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--2.6%
Mashantucket, CT Western Pequot Tribe
Special RB, Series A, 6.50%, 9/1/05(1) Baa/BBB 2,500,000 2,560,075
- ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA--1.0%
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,020,300
- ------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--6.0%
Chicago, IL BOE GOB, School Reform Project,
6.25%, 12/1/11 Aaa/AAA 1,000,000 1,072,650
----------------------------------------------------------------------------------------------------------------------------
Du Page Cnty., IL First Preservation District
GOB, Prerefunded, 7.70%, 11/1/00 Aaa/AAA 1,000,000 1,059,110
----------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Franciscan Sisters Health Care
Project, Series C, MBIA Insured, 6%, 9/1/09 Aaa/AAA 2,000,000 2,050,500
----------------------------------------------------------------------------------------------------------------------------
Southwestern IL Development Authority
Hospital RB, St. Elizabeth Medical Center,
8%, 6/1/10 NR/A-- 500,000 541,775
----------------------------------------------------------------------------------------------------------------------------
Waukegan, IL GOB, MBIA Insured, 7.50%,
12/30/03 A1/NR 1,000,000 1,147,400
----------
5,871,435
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA--1.5%
IN Bond Bank RB, State Revolving Fund Program,
Series A, 6.875%, 2/1/12 NR/A 1,135,000 1,262,665
----------------------------------------------------------------------------------------------------------------------------
IN University RB, Hospital Facilities Project,
7%, 1/1/09 A1/A+ 215,000 226,627
----------
1,489,292
- ------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA--1.1%
LA State GOB, Series A, AMBAC Insured, 8%, 5/1/99 Aaa/AAA/AAA 1,000,000 1,084,870
- ------------------------------------------------------------------------------------------------------------------------------------
MAINE--1.3%
ME Educational LMC Student Loan RRB,
Series A, 6.05%, 11/1/04 Aaa/NR 750,000 779,977
----------------------------------------------------------------------------------------------------------------------------
ME State Housing Authority RB, Mtg.
Purchase Project, Series A, 7.50%, 11/15/22 Aaa/AAA 500,000 529,940
----------
1,309,917
</TABLE>
5 Oppenheimer Intermediate Municipal Fund
<PAGE> 6
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>
MARYLAND--1.3%
Howard Cnty., MD COP, Series A, 8.05%, 2/15/21 Aa1/AA+ $350,000 $462,959
----------------------------------------------------------------------------------------------------------------------------
MD Water Quality Financing Administration RB,
Revolving Loan Fund, Series A, Zero Coupon,
5.358%, 9/1/07(2) Aa/AA/AA-- 1,500,000 846,375
----------
1,309,334
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--2.2%
MA State Consolidated Loan RB, Series C,
AMBAC Insured, 7%, 6/1/09 Aaa/AAA/AAA 2,000,000 2,169,040
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN--7.8%
Detroit, MI:
GORB, Series B, 7%, 4/1/04 Ba1/BBB/BBB-- 2,000,000 2,156,940
Self-Insurance Bonds, Series A, 5.70%, 5/1/02 NR/BBB-/BBB-- 1,000,000 1,014,250
----------------------------------------------------------------------------------------------------------------------------
MI State:
Hospital Finance Authority RRB,
Sinai Hospital of Greater Detroit, Series 1995,
6%, 1/1/08 Baa/NR/BBB 2,500,000 2,417,050
Strategic Fund SWD RRB,
Genesee Power Station Project, 7.50%, 1/1/21 NR/NR 2,000,000 1,985,960
----------
7,574,200
- ------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA--2.1%
NE State Higher Education Loan Program,
Series A-6, 5.90%, 6/1/03 A/NR/A 2,000,000 2,058,600
- ------------------------------------------------------------------------------------------------------------------------------------
NEVADA--3.3%
Clark Cnty., NV School District GOB, Series A,
MBIA Insured, 9.75%, 6/1/01 Aaa/AAA 1,800,000 2,178,018
----------------------------------------------------------------------------------------------------------------------------
Washoe Cnty., NV Hospital Facility RRB,
Washoe Medical Center, Inc. Project, Series A,
AMBAC Insured, 6%, 6/1/09 Aaa/AAA/AAA 1,000,000 1,037,400
----------
3,215,418
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--5.1%
Hoboken, Union City & Weehawken, NJ
Sewer Authority RB, Prerefunded,
MBIA Insured, 7.25%, 8/1/19 Aaa/AAA 1,900,000 2,073,926
----------------------------------------------------------------------------------------------------------------------------
NJ State Turnpike Authority RRB, Series C,
AMBAC Insured, 6.50%, 1/1/08 Aaa/AAA 2,000,000 2,209,300
----------------------------------------------------------------------------------------------------------------------------
Ocean Cnty., NJ GOB, 7.40%, 10/15/00 Aa/AA--/AA 600,000 663,186
----------
4,946,412
- ------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO--0.6%
NM State Hospital Equipment Loan Council RB,
San Juan Regional Medical Center, Inc. Project,
7.90%, 6/1/11 A/NR 500,000 558,395
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK--15.7%
NYC GOB:
Prerefunded, Series F, 8.40%, 11/15/07 Aaa/AAA/AAA 2,140,000 2,531,171
Unrefunded Balance, Series F, 8.40%, 11/15/07 Baa1/BBB+ 360,000 406,944
Series B, 6.20%, 8/15/06 Baa1/BBB+/A-- 1,500,000 1,534,095
----------------------------------------------------------------------------------------------------------------------------
NYC GORB, Series A, 7%, 8/1/07 Baa1/BBB+/A-- 2,000,000 2,169,080
----------------------------------------------------------------------------------------------------------------------------
NYC IDA Special Facilities RB,
Terminal One Group Assn. Project:
6%, 1/1/08 A/A/A-- 2,000,000 1,989,280
6.10%, 1/1/09 A/A/A-- 2,000,000 1,998,920
----------------------------------------------------------------------------------------------------------------------------
NYS GORB, 7.80%, 11/15/99 A/A-- 1,000,000 1,097,170
----------------------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6.375%, 11/1/04 Baa/BBB+ 2,000,000 2,095,600
----------------------------------------------------------------------------------------------------------------------------
NYS MCFFA RB, Prerefunded, 7.80%, 2/15/19 Aaa/AAA 1,275,000 1,399,733
----------
15,221,993
</TABLE>
6 Oppenheimer Intermediate Municipal Fund
<PAGE> 7
<TABLE>
<CAPTION>
S&P'S/FITCH'S
RATINGS: MOODY'S/ FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OHIO--1.1%
OH State Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR $1,000,000 $1,039,350
- ------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA--1.3%
OK State Industrial Authority Health Systems RB,
Baptist Medical Center, Series C, AMBAC Insured,
7%, 8/15/05 Aaa/AAA/AAA 955,000 1,085,711
----------------------------------------------------------------------------------------------------------------------------
Oklahoma Cnty., OK Home Finance Authority RB,
7.65%, 1/1/23 NR/AA-- 125,000 131,464
----------
1,217,175
- ------------------------------------------------------------------------------------------------------------------------------------
OREGON--1.7%
Emerald Peoples Utilities District of OR RRB,
FGIC Insured, 7.20%, 11/1/04 Aaa/AAA 1,420,000 1,630,813
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--8.2%
PA State IDA Economic Development RB,
Escrowed to Maturity, Series A, 6.80%, 7/1/01 NR/A--/AAA 3,000,000 3,263,280
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFA RRB,
Jeanes Health System Project, 6.20%, 7/1/00 NR/BBB 1,360,000 1,431,332
----------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDA RR RRB,
Schuylkill Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 3,425,000 3,293,001
----------
7,987,613
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--2.4%
Florence Cnty., SC Industrial Development RB,
Stone Container Project, 7.375%, 2/1/07 NR/NR 2,000,000 2,086,160
----------------------------------------------------------------------------------------------------------------------------
Richland Cnty., SC Hospital Facilities RB,
Community Provider Pooled Loan Program, Series A,
FSA Insured, 7.125%, 7/1/17 Aaa/AAA 250,000 277,445
----------
2,363,605
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.6%
SD Student Loan Finance RB, Series A, 5.95%, 8/1/01 NR/A+ 1,500,000 1,550,025
- ------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE--3.4%
Chattanooga-Hamilton Cnty., TN HA RB,
Erlanger Medical Center, Prerefunded,
6.854%, 5/25/21 Aaa/AAA/AAA 3,000,000 3,299,520
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS--5.0%
Austin, TX Independent School District
GORB, 7%, 8/1/06 Aaa/AAA 2,000,000 2,290,040
----------------------------------------------------------------------------------------------------------------------------
Harris Cnty., TX:
HFDC Hospital RB, Hermann Trust, Prerefunded,
9%, 10/1/17 Aaa/NR 1,000,000 1,069,160
Toll Road Unlimited Tax & Sub. Lien RB,
Prerefunded, 10.375%, 8/1/14 Aaa/AAA 300,000 324,387
----------------------------------------------------------------------------------------------------------------------------
San Antonio, TX Airport System RRB,
AMBAC Insured, 7.125%, 7/1/05 Aaa/AAA/AAA 1,000,000 1,144,360
----------
4,827,947
- ------------------------------------------------------------------------------------------------------------------------------------
VERMONT--1.0%
VT State SAC Educational Loan RB,
Series A-3, FSA Insured, 6.25%, 6/15/03 Aaa/AAA 900,000 955,998
- ------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.9%
WV School Building Authority RB, Prerefunded,
MBIA Insured, 7.25%, 7/1/15 Aaa/AAA 750,000 832,425
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--1.1%
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 6%, 8/15/12 Aaa/AAA 1,000,000 1,024,670
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--3.9%
PR Commonwealth GOB, 6.35%, 7/1/10 Baa1/A 1,500,000 1,585,230
----------------------------------------------------------------------------------------------------------------------------
PR EPA RB, Series P, 6.75%, 7/1/03 Baa1/BBB+ 2,000,000 2,184,980
----------
3,770,210
----------
Total Municipal Bonds and Notes (Cost $94,411,196) 95,914,861
</TABLE>
7 Oppenheimer Intermediate Municipal Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
================================================================================
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
==============================================================================================================================
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--2.4%
- ------------------------------------------------------------------------------------------------------------------------------
DE State Economic Development Authority RB,
Hospital Billing Project, Series A, BIG Insured, 3.90%, 10/1/96(3) $1,500,000 $1,500,000
----------------------------------------------------------------------------------------------------------------------
Port St. Helens, OR PC RB, Portland General Electric,
Series B, 3.95%, 10/1/96(3) 800,000 800,000
----------
Total Short-Term Tax-Exempt Obligations (Cost $2,300,000) 2,300,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $96,711,196) 101.2% 98,214,861
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.2) (1,196,355)
----- ----------
NET ASSETS 100.0% $97,018,506
===== ===========
</TABLE>
1. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This
security has been determined to be liquid under guidelines established
by the Board of Trustees. These securities amount to $2,560,075 or
2.64% of the Fund's net assets, at September 30, 1996.
2. For zero coupon bonds, the interest rate shown is the effective
yield on the date of purchase.
3. Floating or variable rate obligation maturing in more than one year.
The interest rate, which is based on specific, or an index of, market
interest rates, is subject to change periodically and is the effective
rate on September 30, 1996. This instrument may also have a demand
feature which allows the recovery of principal at any time, or at
specified intervals not exceeding one year, on up to 30 days' notice.
Maturity date shown represents effective maturity based on variable
rate and, if applicable, demand feature.
As of September 30, 1996, securities subject to the alternative minimum
tax amounted to $16,848,025 or 17.37% of the Fund's net assets.
To simplify the listings of the Oppenheimer Intermediate Municipal Fund
holdings in the Statement of Investments, we have abbreviated the
descriptions of many of the securities per the table below:
<TABLE>
<S> <C>
BOE -- Board of Education HFASC -- Housing Finance Agency Service Contract
CDA -- Communities Development Authority HFAU -- Health Facilities Authority
CDC -- Community Development Corporation HFDC -- Health Facilities Development Corporation
COP -- Certificates of Participation HTA -- Highway & Transportation Authority
CUS -- City University System IDA -- Industrial Development Authority
DA -- Dormitory Authority LMC -- Loan Marketing Corporation
EFCPC -- Environmental Facilities Corporation MCFFA -- Medical Care Facilities Finance Agency
Pollution Control MH -- Multifamily Housing
EPA -- Electric Power Authority MTA -- Metropolitan Transportation Authority
ERDAEF -- Energy Research & Development MWFA -- Municipal Water Finance Authority
Authority Electric Facilities NYC -- New York City
ERDAGF -- Energy Research & Development NYS -- New York State
Authority Gas Facilities PANYNJ -- Port Authority of New York & New Jersey
FA -- Facilities Authority PAU -- Power Authority
GAC -- Government Assistance Corporation PC -- Pollution Control
GOB -- General Obligation Bonds RB -- Revenue Bonds
GORB -- General Obligation Refunding Bonds RR -- Resource Recovery
HA -- Hospital Authority RRB -- Revenue Refunding Bonds
HDA -- Hospital Development Authority SAC -- Student Assistance Corporation
HDC -- Housing Development Corporation SUEFS -- State University Educational Facilities System
HEAA -- Higher Education Assistance Agency SWD -- Solid Waste Disposal
HEFA -- Higher Educational Facilities Authority TBTA -- Triborough Bridge & Tunnel Authority
HF -- Health Facilities UDC -- Urban Development Corporation
HFA -- Housing Finance Agency WSS -- Water & Sewer System
See accompanying Notes to Financial Statements.
</TABLE>
8 Oppenheimer Intermediate Municipal Fund
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
================================================================================
<TABLE>
<S> <C>
===========================================================================================================
ASSETS
Investments, at value (cost $96,711,196)--see accompanying statement $98,214,861
---------------------------------------------------------------------------------------------------
Cash 518,117
---------------------------------------------------------------------------------------------------
Receivables:
Investments sold 2,129,041
Interest 1,713,474
Shares of beneficial interest sold 201,266
---------------------------------------------------------------------------------------------------
Other 19,716
-----------
Total assets 102,796,475
===========================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 4,980,917
Shares of beneficial interest redeemed 366,659
Dividends 300,638
Distribution and service plan fees 57,199
Transfer and shareholder servicing agent fees 4,136
Other 68,420
-----------
Total liabilities 5,777,969
===========================================================================================================
NET ASSETS $97,018,506
===========
===========================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $95,994,160
---------------------------------------------------------------------------------------------------
Undistributed net investment income 658,246
---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,137,565)
---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 1,503,665
-----------
Net assets $97,018,506
===========
===========================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $83,252,627 and 5,667,670 shares of beneficial interest outstanding) $14.69
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $15.22
---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $2,857,513 and 194,571 shares of beneficial interest outstanding) $14.69
---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $10,908,366 and 743,770 shares of beneficial interest outstanding) $14.67
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer Intermediate Municipal Fund
<PAGE> 10
STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
================================================================================
<TABLE>
<S> <C>
===========================================================================================================
INVESTMENT INCOME
Interest $5,886,847
===========================================================================================================
EXPENSES
Management fees--Note 4 463,582
---------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 197,072
Class B 14,341
Class C 90,050
---------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 83,376
---------------------------------------------------------------------------------------------------
Shareholder reports 72,541
---------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 38,172
Class B 1,448
Class C 4,513
---------------------------------------------------------------------------------------------------
Legal and auditing fees 25,829
---------------------------------------------------------------------------------------------------
Custodian fees and expenses 22,681
---------------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,254
---------------------------------------------------------------------------------------------------
Other 11,950
-----------
---------------------------------------------------------------------------------------------------
Total expenses 1,028,809
Less expenses paid indirectly--Note 4 (14,630)
-----------
Net expenses 1,014,179
===========================================================================================================
NET INVESTMENT INCOME 4,872,668
===========================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain on:
Investments 499,453
Closing of futures contracts 135,751
-----------
Net realized gain 635,204
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (734,901)
-----------
Net realized and unrealized loss (99,697)
===========================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,772,971
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Intermediate Municipal Fund
<PAGE> 11
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1996 1995
===========================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $4,872,668 $4,765,137
---------------------------------------------------------------------------------------------------
Net realized gain (loss) 635,204 (1,590,413)
---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (734,901) 4,069,030
---------- ----------
Net increase in net assets resulting from operations 4,772,971 7,243,754
===========================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (4,349,156) (4,224,351)
Class B (63,816) (78)
Class C (407,791) (310,776)
===========================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 2,742,813 (5,399,631)
Class B 2,744,970 118,895
Class C 3,306,779 (1,122,859)
===========================================================================================================
NET ASSETS
Total increase (decrease) 8,746,770 (3,695,046)
---------------------------------------------------------------------------------------------------
Beginning of period 88,271,736 91,966,782
----------- -----------
End of period [including undistributed (overdistributed)
net investment income of $658,246 and $(66,542), respectively] $97,018,506 $88,271,736
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Intermediate Municipal Fund
<PAGE> 12
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
CLASS A
--------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994
===========================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $14.69 $14.23 $15.34
- ------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .79 .79 .72
Net realized and unrealized gain (loss) (.01) .42 (1.00)
------ ------ ------
Total income (loss) from investment operations .78 1.21 (.28)
- ------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.78) (.75) (.76)
Distributions from net realized gain -- -- --
Distributions in excess of net realized gain -- -- (.07)
------ ------ ------
Total dividends and distributions to shareholders (.78) (.75) (.83)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $14.69 $14.69 $14.23
====== ====== ======
==========================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 5.41% 8.78% (1.92)%
==========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $83,253 $80,535 $83,456
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $82,217 $79,681 $79,076
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.35% 5.55% 5.05%
Expenses, before voluntary assumption by the Manager(5) 1.02% 0.98% 1.00%
Expenses, net of voluntary assumption by the Manager N/A N/A N/A
- ------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 53% 55% 51%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September
30, 1994.
2. For the period from September 11, 1995 (inception of offering) to September
30, 1995.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
12 Oppenheimer Intermediate Municipal Fund
<PAGE> 13
================================================================================
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------- ------------------------ -------------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1993 1992 1996 1995(2) 1996 1995 1994(1)
================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$15.09 $14.40 $14.69 $14.71 $14.67 $14.18 $15.14
- ----------------------------------------------------------------------------------------------
.77 .86 .66 .06 .68 .69 .46
.70 .69 -- (.02) (.01) .43 (.83)
------ ------ ------ ------ ------ ------ ------
1.47 1.55 .66 .04 .67 1.12 (.37)
- ----------------------------------------------------------------------------------------------
(.75) (.86) (.66) (.06) (.67) (.63) (.52)
(.47) -- -- -- -- -- --
-- -- -- -- -- -- (.07)
------ ------ ------ ------ ------ ------ ------
(1.22) (.86) (.66) (.06) (.67) (.63) (.59)
- ----------------------------------------------------------------------------------------------
$15.34 $15.09 $14.69 $14.69 $14.67 $14.67 $14.18
====== ====== ====== ====== ====== ====== ======
==============================================================================================
10.31% 11.10% 4.56% 0.83% 4.63% 8.13% (2.54)%
==============================================================================================
$70,136 $29,724 $2,858 $119 $10,908 $7,618 $8,511
- ----------------------------------------------------------------------------------------------
$48,915 $25,153 $1,440 $ 37 $ 9,015 $7,437 $4,686
- ----------------------------------------------------------------------------------------------
5.08% 5.87% 4.51% 3.87%(4) 4.56% 4.64% 3.77%(4)
1.07% 1.25% 1.81% 1.54%(4) 1.78% 1.88% 2.24%(4)
1.05% 1.16% N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------
21% 93% 53% 55% 53% 55% 51%
</TABLE>
4. Annualized.
5. Begining in fiscal 1995, the expense ratio reflects the effect of expenses
paid indirectly by the Fund. Prior year expense ratios have not been adjusted.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended September 30, 1996 were $57,514,179 and $48,400,755,
respectively. See accompanying Notes to Financial Statements.
13 Oppenheimer Intermediate Municipal Fund
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Intermediate Municipal Fund (the Fund), operating under the
name Oppenheimer Intermediate Tax-Exempt Fund through October 9, 1996,
is a separate series of Oppenheimer Municipal Fund, operating under the
name Oppenheimer Tax-Exempt Fund through October 9, 1996, 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 adviser 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 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, 1996, the Fund had available for federal
income tax purposes an unused capital loss carryover of approximately
$1,138,000, expiring in 2003 and 2004.
------------------------------------------------------------------------
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 for tax
purposes. 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
distributedmay differ from the year that the income or realized gain
(loss) was recorded by the Fund.
During the year ended September 30, 1996, the Fund
adjusted the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly,
during the year ended September 30, 1996, amounts have been
reclassified to reflect a decrease in paid-in capital of $1,166,438, a
decrease in overdistributed income of $672,883, and a decrease in
accumulated net realized loss on investments of $493,555.
14 Oppenheimer Intermediate Municipal Fund
<PAGE> 15
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
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.
================================================================================
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, 1996 YEAR ENDED SEPTEMBER 30, 1995(1)
------------------------------ --------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 974,292 $ 14,353,015 1,003,900 $ 14,290,724
Dividends and distributions reinvested 203,597 2,998,589 196,934 2,809,242
Redeemed (993,272) (14,608,791) (1,583,239) (22,499,597)
--------- ------------ ----------- ------------
Net increase (decrease) 184,617 $ 2,742,813 (382,405) $ (5,399,631)
========= ============ =========== ============
---------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 193,861 $ 2,852,627 8,097 $ 118,895
Dividends and distributions reinvested 2,577 37,785 -- --
Redeemed (9,964) (145,442) -- --
--------- ------------ ----------- ------------
Net increase 186,474 $ 2,744,970 8,097 $ 118,895
========= ============ =========== ============
---------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 380,233 $ 5,600,605 208,137 $ 2,981,674
Dividends and distributions reinvested 20,909 307,116 18,316 259,921
Redeemed (176,779) (2,600,942) (307,226) (4,364,454)
--------- ------------ ----------- ------------
Net increase (decrease) 224,363 $ 3,306,779 (80,773) $ (1,122,859)
========= ============ =========== ============
</TABLE>
1. For the year ended September 30, 1995 for Class A and Class C shares
and for the period from September 11, 1995 (inception of offering) to
September 30, 1995 for Class B shares.
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1996, net unrealized appreciation on investments of
$1,503,665 was composed of gross appreciation of $2,312,769, and gross
depreciation of $809,104.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.50% on the first $100 million of average annual net assets, 0.45% on
the next $150 million, 0.425% on the next $250 million and 0.40% 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 year ended September 30, 1996, commissions
(sales charges paid by investors) on sales of Class A shares totaled
$160,206, of which $85,052 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 $69,798 and $54,827, of which $1,320 and $1,905,
respectively, was paid to an affiliated broker/dealer. During the year
ended September 30, 1996, OFDI received contingent deferred sales
charges of $3,038 and $6,670, respectively upon redemption of Class B
and Class C shares, as reimbursement for sales commissions advanced by
OFDI at the time of sale of such shares.
15 Oppenheimer Intermediate Municipal Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND
OTHER TRANSACTIONS
WITH AFFILIATES
(CONTINUED)
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.
Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
The Fund has adopted a Service Plan for Class A
shares to reimburse OFDI for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that
hold Class A shares. Reimbursement is made quarterly at an annual rate
that may not exceed 0.25% of the average annual net assets of Class A
shares of the Fund. OFDI uses the service fee to reimburse brokers,
dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended September 30, 1996, OFDI
paid $21,448 to an affiliated broker/dealer as reimbursement for Class
A personal service and maintenance expenses.
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 0.75% 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
0.25% 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 year ended September 30, 1996,
OFDI paid $3,824 to an affiliated broker/dealer as compensation for
Class C personal service and maintenance expenses and retained $13,506
and $38,414, respectively, as compensation for Class B and Class C
sales commissions and service fee advances, as well as financing costs.
At September 30, 1996, OFDI had incurred unreimbursed expenses of
$55,247 for Class B and $131,404 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.
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.
16 Oppenheimer Intermediate Municipal Fund
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Intermediate
Municipal Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Intermediate
Municipal Fund as of September 30, 1996, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended September 30, 1996 and 1995, and the
financial highlights for the period October 1, 1991 to September 30,
1996. 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.
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,
1996 by correspondence with the custodian and brokers; 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 Intermediate Municipal Fund at
September 30, 1996, 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 21, 1996
17 Oppenheimer Intermediate Municipal Fund
<PAGE> 18
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1997, shareholders will receive information regarding all
dividends and distributions paid to them by the Fund during calendar
year 1996. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
None of the dividends paid by the Fund during the
fiscal year ended September 30, 1996 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, or to
alternative minimum tax, 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 adviser for specific guidance.
18 Oppenheimer Intermediate Municipal Fund
<PAGE> 19
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
================================================================================
A Series of Oppenheimer Municipal Fund
================================================================================
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Caryn R. Halbrecht, Vice President
Robert E. Patterson, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISER
OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND SHAREHOLDER
SERVICING AGENT
OppenheimerFunds Services
================================================================================
CUSTODIAN OF
PORTFOLIO SECURITIES
Citibank, N.A.
================================================================================
INDEPENDENT AUDITORS
Deloitte & Touche LLP
================================================================================
LEGAL COUNSEL
Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Intermediate
Municipal Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Intermediate Municipal 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 Intermediate Municipal Fund
<PAGE> 20
[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
RA0860.001.0996 November 30, 1996
[PHOTO]
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OppenheimerFunds Services
"How may I help you?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing
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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
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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
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For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMER LOGO]
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P.O. Box 5270
Denver, CO 80217-5270
- ----------------
Bulk Rate
U.S. Postage
PAID
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- ----------------
