<PAGE> 1
OPPENHEIMER INSURED 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."
[OPPENHEIMERFUNDS LOGO]
<PAGE> 2
This Fund is for people who want investment income that's exempt from federal
taxes and who feel secure investing in a fund primarily holding insured bonds.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 9/30/96:(4)
Class A
4.44%
Class B
3.91%
Class C
3.89%
HOW YOUR FUND IS MANAGED
Oppenheimer Insured Municipal Fund invests primarily in a diversified portfolio
of insured municipal bonds.(1) As a Fund shareholder, you should receive income
that is free from federal income taxes. The insured bonds in the Fund's
portfolio are insured by highly rated, well-financed companies, including
Municipal Bond Investors Assurance Corp. (MBIA), American Municipal Bond
Assurance Corp. (AMBAC), and Financial Guarantee Insurance Corp. (FGIC). These
private firms provide substantial assurance against default of payment of
interest and principal by the issuing municipality or government agency.
PERFORMANCE
Total returns at net asset value for the 12 months ended 9/30/96 for Class A, B
and C shares were 6.67%, 5.87% and 5.77%, respectively.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 9/30/96 and since inception
on 11/11/86 were 1.60%, 6.00% and 6.55%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 9/30/96 and since
inception on 5/3/93 were 0.87% and 3.74%, respectively. For Class C shares,
average annual total return for the 1-year period ended 9/30/96 and since
inception on 8/29/95 were 4.77% and 6.56%, respectively.(3)
OUTLOOK
"We think that by the second quarter of next year the economy will slow,
interest rates will decline and bonds will rebound. We are beginning to
position the Fund now to be able to take full advantage of the rebound when it
comes."
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. 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 9/30/95, 9/30/91
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 9/30/95 and 5/3/93 (inception of class), after the deduction of the
applicable contingent deferred sales charge of 5% (1-year) and 3% (since
inception). Class C returns show results of hypothetical investments on 9/30/95
and 8/29/95 (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.
4. Standardized yield 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 Insured Municipal Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer Insured
Municipal Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer Insured
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 Insured Municipal Fund
<PAGE> 4
Caryn Halbrecht
Portfolio Manager
Q + A
HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
The Fund performed very well for the 1-year period ended 9/30/96, placing 8th
out of 48 funds in its category ranked by Lipper Analytical Services.(1) This
outperformance was due primarily to the fact we short-ened the port-folio's
duration in anticipation of this year's rise in interest rates.
WHAT INVESTMENTS OR MARKET CONDITIONS MADE POSITIVE CONTRIBUTIONS TO
PERFORMANCE?
The increased volatility during this period created numerous opportunities for
value added trading. For example, during market rallies we purchased housing
bonds and bonds subject to the alternative minimum tax for extra yield, and
during market pullbacks we added discount bonds with good call protection and
zero coupon bonds when these sectors had become relatively cheap.
In addition, our overweighted investment in California municipal bonds
made a positive contribution to the Fund's performance. The investment really
paid off as California's economic picture improved and the state's rating was
upgraded.
Finally, municipal bonds improved considerably versus Treasuries over
the course of the year as the prospect of significant tax reform evaporated.(2)
An interview with your Fund's managers.
DID ANY INVESTMENTS NOT PERFORM AS YOU'D EXPECTED?
During the summer, economic indicators suggested the economy was slowing. We
expected that interest rates would fall and extended the portfolio's duration.
However, interest rates did not fall and more recent indicators pointed to a
resumption in the economy's momentum. We have returned to a more defensive
posture for the fourth quarter.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We are anticipating an interest rate decline after the election, and are
therefore seeking intermediate term non-callable zero coupon municipal bonds.
These securities have terrific upside potential in a rally and are presently
trading cheaply. We like the characteristic that when rates fall, zero coupon
municipal bonds rise more rapidly in value than other municipal securities.
WHAT IS YOUR OUTLOOK FOR THE FUND?
With the uncertainty surround-ing the election and the growth of the economy,
we may be in for a rough fourth quarter. We think that by the second quarter of
next year the economy will slow, interest rates will decline and bonds will
rebound. We are beginning to position the Fund now to be able to take full
advantage of the rebound when it comes.
1. Source: Lipper Analytical Services, 9/30/96. Oppenheimer Insured Municipal
Fund is characterized by Lipper as an insured municipal debt fund. Lipper does
not take sales charges into consideration.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Insured 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--101.0%
- -------------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.1%
Pelham, AL General Obligation Wts., AMBAC Insured,
7.10%, 8/1/15 Aaa/AAA/AAA $1,000,000 $ 1,125,350
- -------------------------------------------------------------------------------------------------------------------------------
ALASKA--3.2%
North Slope Borough, AK GORB, Series G, FSA Insured,
8.35%, 6/30/98 Aaa/AAA/A-- 3,000,000 3,210,840
- -------------------------------------------------------------------------------------------------------------------------------
ARIZONA--1.2%
AZ Educational LMC RRB, Series B, 7%, 3/1/05 A/NR 1,090,000 1,160,883
- -------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--11.6%
CA Public Capital Improvements Financing Authority RB,
Pooled Project, Series B, BIG Insured, 8.10%, 3/1/18(1) Aaa/AAA 230,000 242,696
---------------------------------------------------------------------------------------------------------------------
CA Statewide CDA Revenue COP, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%, 8/1/12(1) Aaa/AAA 1,000,000 1,113,170
---------------------------------------------------------------------------------------------------------------------
CA Statewide CDC COP, 5%, 10/1/23 Aaa/AAA 2,000,000 1,786,780
---------------------------------------------------------------------------------------------------------------------
Escondido, CA Union High School District Capital
Appreciation Bonds, Zero Coupon, 6%, 11/1/11(2) Aaa/AAA 2,200,000 934,054
---------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB, 5.125%, 5/15/18 Aa/AA-- 1,500,000 1,364,850
---------------------------------------------------------------------------------------------------------------------
Metropolitan Water District of Southern CA
Waterworks RB, 5%, 7/1/20 Aa/AA 2,000,000 1,788,980
---------------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
6.368%, 7/8/22 Aaa/AAA 3,000,000 3,259,560
---------------------------------------------------------------------------------------------------------------------
Sacramento, CA Municipal Utilities District Electric
RRB, Series G, MBIA Insured, 6.50%, 9/1/13 Aaa/AAA/A 1,000,000 1,113,270
------------
11,603,360
- -------------------------------------------------------------------------------------------------------------------------------
COLORADO--3.2%
Centennial, CO Water & Sanitation District
Water & Sewer RRB, 5.75%, 6/15/15 Aa1/AA+ 2,000,000 1,997,520
---------------------------------------------------------------------------------------------------------------------
Douglas Cnty., CO School District No. RE-1 Douglas &
Elbert Counties General Obligation Improvement Bonds,
Series A, MBIA Insured, 8%, 12/15/09 Aaa/AAA 1,000,000 1,253,480
------------
3,251,000
- -------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--2.0%
CT State HFA RB, Series A, Subseries A-2, 6.20%, 11/15/22 Aa/AA 1,000,000 1,004,020
---------------------------------------------------------------------------------------------------------------------
CT State HFA RRB, Series A, Subseries D-2, 6.20%, 11/15/27 Aa/AA 1,000,000 1,003,200
------------
2,007,220
- -------------------------------------------------------------------------------------------------------------------------------
DELAWARE--2.1%
DE Transportation Authority Transportation System RB,
Prerefunded, 7.75%, 7/1/04 Aaa/AAA 2,000,000 2,148,020
- -------------------------------------------------------------------------------------------------------------------------------
FLORIDA--9.4%
Dade Cnty., FL Special Obligation RRB,
Series B, MBIA Insured, 5%, 10/1/35 Aaa/AAA/AAA 2,000,000 1,786,080
---------------------------------------------------------------------------------------------------------------------
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,020,300
---------------------------------------------------------------------------------------------------------------------
Lakeland, FL Electric & Water RB, 5.625%, 10/1/36 Aa/AA-- 2,000,000 1,941,240
---------------------------------------------------------------------------------------------------------------------
Lee Cnty., FL Hospital Board of Directors RB,
6.35%, 3/26/20 Aaa/AAA 2,000,000 2,054,860
---------------------------------------------------------------------------------------------------------------------
Orlando, FL Utilities Commission Water & Electric RRB,
Series A, 5%, 10/1/20 Aa/AA--/AA 2,000,000 1,804,840
---------------------------------------------------------------------------------------------------------------------
Tampa, FL Utility Tax RB, AMBAC Insured,
Zero Coupon, 6.15%, 4/1/16(2) Aaa/AAA 2,500,000 820,975
------------
9,428,295
</TABLE>
5 Oppenheimer Insured 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>
ILLINOIS--9.8%
Cook Cnty., IL Community College District No. 508 COP,
FGIC Insured, 8.75%, 1/1/05 Aaa/AAA/AAA $ 500,000 $ 618,195
---------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District No. 508
Lease COP, Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 2,500,000 3,017,375
---------------------------------------------------------------------------------------------------------------------
Deerfield, IL RB, Jewish Federation of Metro Chicago,
AMBAC Insured, 5.375%, 8/15/20 Aaa/AAA/AAA 2,000,000 1,906,860
---------------------------------------------------------------------------------------------------------------------
IL HFAU RB, Memorial Medical Center Project,
MBIA Insured, 6.75%, 10/1/11 Aaa/AAA 2,000,000 2,167,100
---------------------------------------------------------------------------------------------------------------------
Metropolitan Pier & Exposition Authority of IL,
Dedicated State Tax RRB, McCormick Project, Series A,
MBIA Insured, Zero Coupon, 6%, 12/15/11(2)(3) Aaa/AAA/AAA 5,000,000 2,092,650
------------
9,802,180
- -------------------------------------------------------------------------------------------------------------------------------
INDIANA--4.1%
Hamilton Southeastern, IN Consolidated School Building
Corp. RRB, First Mtg., AMBAC Insured, 7%, 7/1/11 Aaa/AAA/AAA 500,000 549,680
---------------------------------------------------------------------------------------------------------------------
IN State Office Building Commission Capital Complex RB,
Series B, MBIA Insured, 7.40%, 7/1/15 Aaa/AAA 2,500,000 3,016,375
---------------------------------------------------------------------------------------------------------------------
Whitko, IN Middle School Building Corp. RB, First Mtg.,
AMBAC Insured, 6.75%, 7/15/12 Aaa/AAA/AAA 500,000 547,815
------------
4,113,870
- -------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--4.6%
MA State GOB, FGIC Insured, 7.875%, 6/1/97 Aaa/AAA/AAA 1,500,000 1,540,275
---------------------------------------------------------------------------------------------------------------------
MA State Health & Educational Facilities Authority RB,
Mt. Auburn Hospital Issue, Series B-1, MBIA Insured,
6.25%, 8/15/14 Aaa/AAA 1,000,000 1,054,530
---------------------------------------------------------------------------------------------------------------------
MA State HFA RB, Series A, AMBAC Insured,
6.60%, 7/1/14 Aaa/AAA/AAA 2,000,000 2,068,000
------------
4,662,805
- -------------------------------------------------------------------------------------------------------------------------------
MICHIGAN--2.1%
Greater Detroit, MI RR Authority RRB, Series A,
AMBAC Insured, 6.25%, 12/13/07 Aaa/AAA/AAA 2,000,000 2,153,520
- -------------------------------------------------------------------------------------------------------------------------------
NEBRASKA--0.6%
NE Investment Finance Authority Hospital RB,
NE Methodist Health System, MBIA Insured, 7%, 3/1/06 Aaa/AAA 500,000 550,685
- -------------------------------------------------------------------------------------------------------------------------------
NEVADA--3.3%
Clark Cnty., NV Passenger Facility Charge RB,
Las Vegas McCarran International Airport Project,
Series B, MBIA Insured, 6.50%, 7/1/12 Aaa/AAA 2,000,000 2,122,700
---------------------------------------------------------------------------------------------------------------------
Humboldt Cnty., NV PC RB, ID Power Co. Project,
AMBAC Insured, 8.30%, 12/20/14 Aaa/AAA/AAA 1,000,000 1,210,610
------------
3,333,310
- -------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.6%
NH Turnpike System RRB, Series A, FGIC Insured,
6.75%, 11/1/11 Aaa/AAA/AAA 500,000 565,950
- -------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--0.7%
East Orange, NJ GOB, FSA Insured, 8.40%, 8/1/06 Aaa/AAA 550,000 687,747
- -------------------------------------------------------------------------------------------------------------------------------
OHIO--1.6%
Streetsboro, OH City School District GOB,
AMBAC Insured, 7.125%, 12/1/10 Aaa/AAA/AAA 500,000 587,055
---------------------------------------------------------------------------------------------------------------------
Student Loan Funding Corp. of Cincinnati, OH RB,
Series A, AMBAC Insured, 5.75%, 8/1/03 Aaa/AAA/AAA 1,000,000 1,043,490
------------
1,630,545
</TABLE>
6 Oppenheimer Insured Municipal Fund
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OKLAHOMA--2.4%
OK Baptist University Authority RB, FGIC Insured,
7.10%, 8/1/09 Aaa/AAA/AAA $ 150,000 $ 163,055
---------------------------------------------------------------------------------------------------------------------
OK State Industrial Authority Health Systems RB,
Baptist Medical Center, Series C, AMBAC Insured,
7%, 8/15/05 Aaa/AAA/AAA 2,000,000 2,273,740
------------
2,436,795
- -------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--11.9%
Allegheny Cnty., PA HDA RB, Presbyterian
University Hospital, Prerefunded, Series A,
MBIA Insured, 7.60%, 3/1/08 Aaa/AAA 1,400,000 1,493,646
---------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, FGIC Insured, Inverse Floater,
8.681%, 11/10/20(4) Aaa/AAA/AAA 1,000,000 1,183,750
---------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA HA RB, Memorial Hospital
Delaware Cnty., MBIA Insured, 5.50%, 8/15/19 Aaa/AAA 1,000,000 966,490
---------------------------------------------------------------------------------------------------------------------
Keystone Oaks, PA School District RB,
AMBAC Insured, 5.829%, 9/1/16 Aaa/AAA/AAA 2,000,000 1,994,980
---------------------------------------------------------------------------------------------------------------------
PA State HEAA Student Loan RB,
AMBAC Insured, 6.173%, 3/1/22 Aaa/AAA/AAA 2,500,000 2,501,375
---------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional Port Authority Lease RB,
Kidder Milled, MBIA Insured, 6.20%, 9/1/20 Aaa/AAA 3,800,000 3,838,760
------------
11,979,001
- -------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND--1.9%
RI Depositors Economic Protection Corp.
Special Obligation RB, Prerefunded, Series A,
MBIA Insured, 7.50%, 8/1/14 Aaa/AAA 1,700,000 1,928,004
- -------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--0.6%
Sumter Cnty., SC School District No. 017 COP,
Series A, FGIC Insured, 7.125%, 1/1/11 Aaa/AAA 500,000 551,245
- -------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.1%
SD State Lease Revenue Trust Certificates,
Series B, FSA Insured, 8%, 9/1/02 Aaa/AAA 1,000,000 1,150,370
- -------------------------------------------------------------------------------------------------------------------------------
TENNESSEE--3.3%
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--10.2%
Cedar Hill, TX Independent School District Capital
Appreciation RB, Zero Coupon Bonds, 6.10%, 8/15/11(2)(3) Aaa/AAA/AAA 1,585,000 661,658
---------------------------------------------------------------------------------------------------------------------
Grand Prairie, TX HF RRB, Dallas/Ft. Worth Medical
Center Project, AMBAC Insured, 6.875%, 11/1/10 Aaa/AAA 1,800,000 2,001,042
---------------------------------------------------------------------------------------------------------------------
Harris Cnty., TX Toll Road Unlimited Tax & Sub. Lien RB,
Prerefunded, 10.375%, 8/1/14 Aaa/AAA 1,200,000 1,297,548
---------------------------------------------------------------------------------------------------------------------
Lower Neches Valley, TX Industrial Development Corp.
Environmental Authority RB, Mobil Oil Refining
Corp. Project, 6.35%, 4/1/26 Aa2/AA 2,170,000 2,235,187
---------------------------------------------------------------------------------------------------------------------
Lower Neches Valley, TX Industrial Development
Corp. Sewer Facilities RB, Mobil Oil Refining Corp.
Project, 6.40%, 3/1/30 Aa2/AA 1,000,000 1,030,200
---------------------------------------------------------------------------------------------------------------------
Rio Grande Valley HFDC TX Retirement Facilities RB,
Golden Palms, Series A, MBIA Insured, 6.40%, 8/1/12 Aaa/AAA 2,000,000 2,116,420
---------------------------------------------------------------------------------------------------------------------
Tarrant Cnty., TX HFDC RB, Harris Methodist Health
System Project, AMBAC Insured, 5.125%, 9/1/12 Aaa/AAA 1,000,000 933,360
------------
10,275,415
</TABLE>
7 Oppenheimer Insured Municipal Fund
<PAGE> 8
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>
WASHINGTON--2.1%
Tacoma, WA Electric Systems RB, AMBAC Insured,
Inverse Floater, 9.092%, 1/2/15(4) Aaa/AAA/AAA $1,000,000 $ 1,088,750
---------------------------------------------------------------------------------------------------------------------
WA State Public Power Supply System RRB, Series A,
FGIC Insured, Zero Coupon, 5.50%, 7/1/09(2) Aaa/AAA/AAA 2,000,000 975,480
------------
2,064,230
- -------------------------------------------------------------------------------------------------------------------------------
WISCONSIN--1.4%
WI State Health & Educational Facilities Authority RB,
Aurora Medical Group, Inc. Project, FSA Insured,
6%, 11/15/11 Aaa/AAA 1,370,000 1,409,771
- -------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--3.0%
DC GORB, Series A-1, MBIA Insured, 6%, 6/1/11 Aaa/AAA/BB 2,000,000 2,092,420
---------------------------------------------------------------------------------------------------------------------
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 5.25%, 8/15/12 Aaa/AAA 1,000,000 935,480
------------
3,027,900
- -------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--1.9%
PR Commonwealth HTA RB, Series Y, 5.50%, 7/1/36 Baa1/A 2,000,000 1,899,600
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $99,155,526) 101.0% 101,457,431
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.0) (1,033,422)
---------- ------------
NET ASSETS 100.0% $100,424,009
========== ============
</TABLE>
1. Securities with an aggregate market value of $1,355,866 are held
in collateralized accounts to cover initial margin requirements on
open futures sales contracts. See Note 5 of Notes to Financial
Statements.
2. For zero coupon bonds, the interest rate shown is the effective
yield on the date of purchase.
3. When-issued security to be delivered and settled after September
30, 1996.
4. Represents the current interest rate for a variable rate bond.
These 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 $2,272,500 or 2.26% of the Fund's net
assets at September 30, 1996.
As of September 30, 1996, securities subject to the alternative
minimum tax amounted to $13,499,685 or 13.44% of the Fund's net
assets.
To simplify the listings of the Oppenheimer Insured 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> <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
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Insured Municipal Fund
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
<TABLE>
<S> <C>
============================================================================================================
ASSETS
Investments, at value (cost $99,155,526)--see accompanying statement $101,457,431
--------------------------------------------------------------------------------------------------
Cash 65,147
--------------------------------------------------------------------------------------------------
Receivables:
Interest 1,466,172
Shares of beneficial interest sold 4,888
Daily variation on futures contracts--Note 5 3,750
--------------------------------------------------------------------------------------------------
Other 21,815
------------
Total assets 103,019,203
============================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 2,037,350
Dividends 298,672
Shares of beneficial interest redeemed 146,381
Distribution and service plan fees 60,289
Transfer and shareholder servicing agent fees 3,554
Other 48,948
------------
Total liabilities 2,595,194
============================================================================================================
NET ASSETS $100,424,009
============
============================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $98,057,439
--------------------------------------------------------------------------------------------------
Undistributed net investment income 522,255
--------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (441,339)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 2,285,654
------------
Net assets $100,424,009
============
============================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $83,516,386 and 4,892,206 shares of beneficial interest outstanding) $17.07
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $17.92
--------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $15,983,143 and 935,710 shares of beneficial interest outstanding) $17.08
--------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $924,480 and 54,197 shares of beneficial interest outstanding) $17.06
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Insured Municipal Fund
<PAGE> 10
STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
<TABLE>
<S> <C>
============================================================================================================
INVESTMENT INCOME
Interest $6,054,686
============================================================================================================
EXPENSES
Management fees--Note 4 435,183
--------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 195,544
Class B 147,766
Class C 6,146
--------------------------------------------------------------------------------------------------
Shareholder reports 107,234
--------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 94,951
--------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 40,288
Class B 8,033
Class C 729
--------------------------------------------------------------------------------------------------
Legal and auditing fees 23,790
--------------------------------------------------------------------------------------------------
Custodian fees and expenses 16,739
--------------------------------------------------------------------------------------------------
Trustees' fees and expenses 3,170
--------------------------------------------------------------------------------------------------
Other 18,791
----------
Total expenses 1,098,364
Less expenses paid indirectly--Note 4 (17,043)
----------
Net expenses 1,081,321
============================================================================================================
NET INVESTMENT INCOME 4,973,365
============================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss) on:
Investments 1,277,107
Closing of futures contracts (193,848)
----------
Net realized gain 1,083,259
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 310
----------
Net realized and unrealized gain 1,083,569
============================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,056,934
==========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Insured 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 $ 4,973,365 $ 4,472,072
------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,083,259 (885,433)
------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 310 4,568,736
------------ ------------
Net increase in net assets resulting from operations 6,056,934 8,155,375
===============================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (4,254,496) (3,855,661)
Class B (663,202) (562,560)
Class C (27,218) (5)
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (5,059)
Class B -- (788)
===============================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 5,885,988 5,681,837
Class B 2,468,411 1,255,100
Class C 714,886 211,000
===============================================================================================================================
NET ASSETS
Total increase 10,181,303 10,879,239
------------------------------------------------------------------------------------------------------------------------
Beginning of period 90,242,706 79,363,467
------------ -----------
End of period (including undistributed net investment income
of $522,255 and $28,628, respectively) $100,424,009 $90,242,706
============ ===========
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Insured 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 $16.86 $16.14 $18.06
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .90 .90 .89
Net realized and unrealized gain (loss) .20 .71 (1.84)
------ ------ ------
Total income (loss) from investment operations 1.10 1.61 (.95)
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.89) (.89) (.89)
Distributions from net realized gain -- -- (.08)
------ ------ ------
Total dividends and distributions to shareholders (.89) (.89) (.97)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.07 $16.86 $16.14
====== ====== ======
===============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 6.67% 10.29% (5.46)%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $83,516 $76,691 $67,793
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $81,233 $70,650 $66,953
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.27% 5.52% 5.23%
Expenses, before voluntary assumption by the Manager(5) 1.02% 0.95% 1.05%
Expenses, net of voluntary assumption by the Manager N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 93% 58% 99%
</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 (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 Insured Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------- --------------------------------------------------- ---------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1993 1992 1996 1995 1994 1993(2) 1996 1995(1)
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$16.92 $16.17 $16.87 $16.15 $18.07 $17.33 $16.86 $16.72
- -----------------------------------------------------------------------------------------------------------------------------
.93 .96 .77 .78 .77 .30 .75 .08
1.35 .73 .20 .71 (1.86) .74 .21 .14
- ------- ------ ------ ------ ------ ------ ------ ------
2.28 1.69 .97 1.49 (1.09) 1.04 .96 .22
- -----------------------------------------------------------------------------------------------------------------------------
(.96) (.91) (.76) (.77) (.75) (.30) (.76) (.08)
(.18) (.03) -- -- (.08) -- -- --
- ------- ------ ------ ------ ------ ------ ------ ------
(1.14) (.94) (.76) (.77) (.83) (.30) (.76) (.08)
- -----------------------------------------------------------------------------------------------------------------------------
$18.06 $16.92 $17.08 $16.87 $16.15 $18.07 $17.06 $16.86
======= ====== ====== ====== ====== ====== ====== ======
=============================================================================================================================
14.02% 10.74% 5.87% 9.47% (6.20)% 6.04% 5.77% 1.30%
=============================================================================================================================
$62,158 $33,751 $15,983 $13,341 $11,571 $5,104 $924 $ 211
- -----------------------------------------------------------------------------------------------------------------------------
$45,949 $27,811 $14,822 $11,987 $ 9,209 $2,298 $618 $ 1
- -----------------------------------------------------------------------------------------------------------------------------
5.40% 5.81% 4.50% 4.75% 4.43% 3.99%(4) 4.38% 4.89%(4)
1.18% 1.35% 1.77% 1.71% 1.82% 1.96%(4) 1.81% 1.07%(4)
1.10% 0.95% N/A N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
7% 47% 93% 58% 99% 7% 93% 58%
</TABLE>
4. Annualized.
5. Beginning in fiscal 1996, 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 $101,039,632 and $89,667,451,
respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer Insured Municipal Fund
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Insured Municipal Fund (the Fund), operating under the
name Oppenheimer Insured 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 $458,000,
which expires in 2003.
----------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net
investment income each day the New York Stock Exchange is open for
business and pay such dividends monthly. Distributions from net
realized gains on investments, if any, will be declared at least once
each year.
----------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment
income (loss) and net realized gain (loss) may differ for financial
statement and tax purposes primarily because of premium amortization
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 distributed may 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
$595,644, an increase in undistributed net investment income of
$465,178 and a decrease in accumulated net realized loss on
investments of $130,466.
14 Oppenheimer Insured 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 1,069,278 $ 18,269,113 1,022,063 $ 16,640,954
Dividends and distributions reinvested 184,862 3,140,861 172,727 2,816,467
Redeemed (909,988) (15,523,986) (847,904) (13,775,584)
--------- ------------- --------- -------------
Net increase 344,152 $ 5,885,988 346,886 $ 5,681,837
========= ============= ========= =============
-------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 287,568 $ 4,899,080 242,343 $ 3,984,619
Dividends and distributions reinvested 24,663 419,151 22,203 362,232
Redeemed (167,327) (2,849,820) (190,378) (3,091,751)
--------- ------------- --------- -------------
Net increase 144,904 $ 2,468,411 74,168 $ 1,255,100
========= ============= ========= =============
-------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 48,380 $826,936 12,515 $ 211,000
Dividends and distributions reinvested 290 4,884 -- --
Redeemed (6,988) (116,934) -- --
--------- ------------- --------- -------------
Net increase 41,682 $ 714,886 12,515 $ 211,000
========= ============= ========= =============
</TABLE>
1. For the year ended September 30, 1995 for Class A and Class B
shares and for the period from August 29, 1995 (inception of
offering) to September 30, 1995 for Class C shares.
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1996, net unrealized appreciation on investments of
$2,301,905 was composed of gross appreciation of $3,303,709, and
gross depreciation of $1,001,804.
================================================================================
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 0.45% on the first $100 million of average annual net assets,
0.40% on the next $150 million, 0.375% on the next $250 million and
0.35% 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 year ended September 30, 1996,
commissions (sales charges paid by investors) on sales of Class A
shares totaled $180,294, of which $41,099 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 $164,506 and $8,276, of
which $5,171 and $100, respectively, was paid to an affiliated
broker/dealer. During the year ended September 30, 1996, OFDI
received contingent deferred sales charges of $31,295 upon redemption
of Class B shares, as reimbursement for sales commissions advanced by
OFDI at the time of sale of such shares.
15 Oppenheimer Insured 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 $7,947 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 $2,071, to an affiliated broker/dealer as compensation for Class
B and Class C personal service and maintenance expenses and retained
$120,185 and $6,138, 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 $590,704 for Class B and $13,289 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 September 30, 1996, the Fund had outstanding futures contracts to
sell debt securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE FUTURES CONTRACTS SEPTEMBER 30, 1996 DEPRECIATION
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds 12/96 20 $2,278,750 $16,251
</TABLE>
16 Oppenheimer Insured Municipal Fund
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Insured
Municipal Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Insured
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 Insured 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 Insured 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 Insured Municipal Fund
<PAGE> 19
OPPENHEIMER INSURED 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 Insured
Municipal Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Insured 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 Insured Municipal Fund
<PAGE> 20
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
RA0865.001.0996 November 30, 1996
[PHOTO]
Customer Service Representative
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
simple.
And when you need help, our Customer Service Representatives are only
a toll-free phone call away. They can provide information about your account
and handle administrative requests. You can reach them at our General
Information number.
When you want to make a transaction, you can do it easily by calling
our toll-free Telephone Transactions number. And, by enrolling in AccountLink,
a convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
