<PAGE> 1
OPPENHEIMER INSURED MUNICIPAL FUND
Semiannual Report March 31, 1997
[Shopping Couple]
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<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 3/31/97(4)
Class A
4.44%
Class B
3.86%
Class C
3.85%
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 for the six months ended 3/31/97 were 2.32% for Class A shares,
1.93% for Class B shares and 1.92% for Class C shares, without deducting sales
charges.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-, 5- and 10-year periods ended 3/31/97 were 0.83%,
5.85% and 6.67%, respectively.
For Class B shares, average annual total returns for the 1-year period ended
3/31/97 and since inception on 5/3/93 were 0.06% and 3.54%, respectively. For
Class C shares, average annual total returns for the 1-year period ended
3/31/97 and since inception on 8/29/95 were 4.02% and 5.69%, respectively.(3)
OUTLOOK
We plan to stick to our investment strategy of seeking tax-free income while
actively managing the overall duration of the Fund.
Caryn Halbrecht, Portfolio Manager
March 31, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods
shown. IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. A
portion of the distributions paid by the Fund may be subject to tax. For
investors subject to federal and/or state alternative minimum tax (AMT), the
Fund's distributions may increase this tax.
1. Under normal conditions, at least 65% of the Fund's assets will be invested
in insured municipal securities. The payment of interest and principal on such
bonds is insured. The value of the Fund's shares is not insured.
2. Includes change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Class A returns include the current maximum initial sales charge of 4.75%.
Class B returns include the applicable contingent deferred sales charge of 5%
(1 year) and 3% (since inception). Class C returns include the 1% contingent
deferred sales charge for the 1-year result. An explanation of the different
total returns is in the Fund's prospectus. Class B and Class C shares are
subject to an annual 0.75% asset-based sales charge.
4. Standardized yield is based on net investment income for the 30-day period
ended 3/31/97. 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,
For 1997, many industry analysts had anticipated a slow, sluggish year. This
is a prediction that just hasn't held true, due to the fact that the bond
market has continued to experience a quiet, yet solid, rebound during the
first quarter of this year.
Looking back at the second half of 1996, the sentiment was that moderate
economic growth and low inflation would help stabilize interest rates, all
factors that would be beneficial for the bond market. And that's exactly how
events unfolded. For example, in October, the economy was characterized by a
firm dollar, low inflation and slow growth. It appeared that earlier concerns
about rapid inflationary growth had been overblown, and interest rates
declined soon afterward. With continued, sustainable, non-inflationary growth
of around 2% to 2.5%, the economy seemed to have settled into a comfortable
pattern of neither too little nor too much growth.
This year has turned out to be lively, particularly in the past few
months. President Clinton released the blueprint for a five-year agreement to
balance the federal budget, as promised in his campaign for a second term.
Immediately following the plan's announcement, the U.S. Labor Department
released a report stating that the unemployment rate dropped to 4.9% of the
work force in April--the lowest level since 1973. In response to this good
news, the stock market surged to yet another record high and the yield on the
benchmark 30-year Treasury bond retreated to 6.88%, its lowest level since
early March. Finally, the other good news for municipal bond investors is that
President Clinton has no plans of initiating a flat tax, a proposal that would
have eliminated the tax advantages of municipal bonds.
On the other hand, investors may have experienced some volatility in the
income stream from municipal bond funds. This is primarily because the
availability of quality bonds paying high yields has decreased over the past
few years. However, we believe that over the long term and on a tax-adjusted
basis, our funds should continue to offer potential for value with higher
income.
When you consider the combination of these developments--a sustained
economic growth pattern, a balanced federal budget and the dissipated threat
of a flat tax--the tax advantages of municipal bond fund investing become much
more attractive.
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, The Right Way to Invest. We look forward to helping you
reach your investment goals in the future.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
April 21, 1997
3 Oppenheimer Insured Municipal Fund
<PAGE> 4
Q + A
CARYN HALBRECHT
Portfolio Manager
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
Oppenheimer Insured Municipal Fund performed relatively well. In fact, Lipper
Analytical Services ranked the Fund's Class A shares 1st out of 48 funds in
the insured municipal debt fund category for the 1-year period ended
3/31/97.(1) The Fund's performance is particularly impressive because in a
rising interest rate environment, like we've experienced during these past six
months, insured bond funds generally tend to underperform. That's because
insured bonds are highly liquid and are often sold first, enabling the seller
to buy new insured bonds and quickly take advantage of higher rates in the
market.
WHAT FACTORS CONTRIBUTED TO THE FUND'S SUCCESS?
We attribute a great deal of the portfolio's success to our quick responses to
interest rate fluctuations over much of the period. For example, in early
October when the bond market was sluggish and interest rates were rising, we
purchased relatively volatile zero coupon and discounted bonds. We also
purchased higher-yielding bonds, such as housing bonds and bonds subject to
the alternative minimum tax. However, we hedged the interest rate risk by
selling municipal and Treasury futures contracts. In late October through
mid-December, as interest rates fell and the bond market began to rally, we
responded by removing the hedges and extending the portfolio's duration, a
measure of the portfolio's price sensitivity to changes in interest rates.
And, when the market turned down again in January, we were able to protect the
Fund by putting the hedges back in place and shortening our duration.(2)
WERE THERE ANY INVESTMENTS THAT HINDERED THE PERFORMANCE OF THE FUND?
Looking back, we could have done more of what we did right. For instance, had
we reacted even more quickly to the decline in January by shortening
durations, selling more volatile bonds and putting our hedges back in place,
the Fund may have reported higher gains. But the style of this Fund is more
suited to making moves within carefully defined risks, rather than making
major leaps.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We've positioned the Fund quite defensively by shortening its duration, and
are waiting for a peak in interest rates when we can lengthen the portfolio's
duration or bring it back to a more neutral stance. We're also looking for
cheaper priced out-of-favor bonds that will perform well should interest rates
decline towards the end of the year.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We're cautiously optimistic. The economy is very strong right now and we
believe that the first interest rate hike by the Federal Reserve on March 18th
will not be the last. Hopefully, in the near term, higher interest rates will
slow the growing economy to a more manageable pace. We plan to stick to our
investment strategy of seeking tax-free income while actively managing the
overall duration of the Fund.
1. Source: Lipper Analytical Services, 3/31/97. Oppenheimer Insured Municipal
Fund was ranked 6th out of 22 funds in its category for the 5-year period
ended 3/31/97 and 4th out of 16 funds for the 10-year period ended 3/31/97.
Oppenheimer Insured Municipal Fund is characterized by Lipper as an insured
municipal debt fund. Lipper rankings are based on total return and do not take
sales charges into account.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Insured Municipal Fund
<PAGE> 5
FINANCIALS
<TABLE>
<CAPTION>
----------------------------------------------------------------------
CONTENTS
----------------------------------------------------------------------
<S> <C>
Statement of Investments 6
Statement of Assets and Liabilities 11
Statement of Operations 12
Statements of Changes in Net Assets 13
Financial Highlights 14
Notes to Financial Statements 16
</TABLE>
5 Oppenheimer Insured Municipal Fund
<PAGE> 6
STATEMENT OF INVESTMENTS March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
=================================================================================================================================
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--97.0%
- ---------------------------------------------------------------------------------------------------------------------------------
ALABAMA--3.0%
Jefferson Cnty., AL Sewer RRB, Series A,
FGIC Insured, 5.625%, 2/1/22 Aaa/AAA/AAA $2,000,000 $1,919,800
--------------------------------------------------------------------------------------------------------------------------
Pelham, AL GORB, AMBAC Insured, 7.10%, 8/1/15 Aaa/AAA/AAA 1,000,000 1,113,170
------------
3,032,970
- ---------------------------------------------------------------------------------------------------------------------------------
ALASKA--3.1%
North Slope Borough, AK GORB, Series G, FSA Insured,
8.35%, 6/30/98 Aaa/AAA/A- 3,000,000 3,154,830
- ---------------------------------------------------------------------------------------------------------------------------------
ARIZONA--1.1%
AZ Educational LMC RRB, Series B, 7%, 3/1/05 A/NR 1,090,000 1,149,361
- ---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--12.8%
Anaheim, CA PFAU Lease RB, Sr. Public Improvements
Project, Series A, FSA Insured, 5%, 3/1/37 Aaa/AAA 1,000,000 859,010
--------------------------------------------------------------------------------------------------------------------------
CA Public Capital Improvements FAU RB,
Pooled Project, Series B, BIG Insured, 8.10%, 3/1/18 Aaa/AAA 230,000 241,362
--------------------------------------------------------------------------------------------------------------------------
CA Statewide CDAU Revenue COP, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%, 8/1/12(1) Aaa/AAA 1,000,000 1,107,540
--------------------------------------------------------------------------------------------------------------------------
CA Statewide CDC COP, 5%, 10/1/23 Aaa/AAA 2,000,000 1,781,060
--------------------------------------------------------------------------------------------------------------------------
Center, CA Unified School District GOB, CAP,
Series C, MBIA Insured, Zero Coupon, 5.80%, 9/1/19(2) Aaa/AAA 2,500,000 662,925
--------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB, 5.125%, 5/15/18 Aa/AA- 1,500,000 1,334,865
--------------------------------------------------------------------------------------------------------------------------
Pomona, CA Unified School District GORB,
Series A, MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 1,000,000 1,057,560
--------------------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
6.368%, 7/8/22 Aaa/AAA 3,000,000 3,211,200
--------------------------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, Series G,
MBIA Insured, 6.50%, 9/1/13 Aaa/AAA/A 1,000,000 1,104,280
--------------------------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Airport Commission
International Airport RB, Second Series Issue 14-A,
MBIA Insured, 8%, 5/1/09 Aaa/AAA 1,455,000 1,724,568
------------
13,084,370
- ---------------------------------------------------------------------------------------------------------------------------------
COLORADO--2.9%
Centennial Water & Sanitation District,
Water & Sewer RRB, 5.75%, 6/15/15 Aa1/AA+ 1,775,000 1,745,357
--------------------------------------------------------------------------------------------------------------------------
Douglas Cnty., CO School District No. RE-1 Douglas &
Elbert Cntys. General Obligation Improvement Bonds,
Series A, MBIA Insured, 8%, 12/15/09 Aaa/AAA 1,000,000 1,243,520
------------
2,988,877
- ---------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--2.0%
CT Housing FAU RB, Series A, Subseries A-2,
6.20%, 11/15/22 Aa/AA 1,000,000 1,003,100
--------------------------------------------------------------------------------------------------------------------------
CT Housing FAU RRB, Series A, Subseries D-2,
6.20%, 11/15/27 Aa/AA 1,000,000 1,004,700
-----------
2,007,800
</TABLE>
6 Oppenheimer Insured Municipal Fund
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DELAWARE--2.1%
DE Transportation Authority System RB, Prerefunded,
7.75%, 7/1/04 Aaa/AAA $2,000,000 $2,119,820
- ---------------------------------------------------------------------------------------------------------------------------------
FLORIDA--9.2%
Dade Cnty., FL Special Obligation RRB, Series B,
AMBAC Insured, 5%, 10/1/35 Aaa/AAA/AAA 2,000,000 1,745,060
--------------------------------------------------------------------------------------------------------------------------
FL BOE Capital Outlay Public Education GOB,
Series A, 7%, 6/1/00 Aa2/AA/AA 1,500,000 1,605,795
--------------------------------------------------------------------------------------------------------------------------
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,015,520
--------------------------------------------------------------------------------------------------------------------------
Lee Cnty, FL Hospital Board of Directors RRB,
MBIA Insured, Inverse Floater, 8.711%, 4/17/20(3) Aaa/AAA 1,000,000 1,065,000
--------------------------------------------------------------------------------------------------------------------------
Orange Cnty., FL HFAU RB, Orlando Regional
Healthcare, Series A, MBIA Insured, 6.25%, 10/1/18(4) Aaa/AAA 2,000,000 2,136,640
--------------------------------------------------------------------------------------------------------------------------
Orlando, FL Utilities Commission Water & Electric RRB,
Series A, 5%, 10/1/20 Aa/AA-/AA 2,000,000 1,766,940
------------
9,334,955
- ---------------------------------------------------------------------------------------------------------------------------------
GEORGIA--0.9%
Dalton, GA DAU RB, MBIA Insured, 5.50%, 8/15/26 Aaa/AAA 1,000,000 965,360
- ---------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--5.4%
Cook Cnty., IL Community College District No. 508 COP,
FGIC Insured, 8.75%, 1/1/05 Aaa/AAA/AAA 500,000 610,255
--------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District No. 508
Lease COP, Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 1,500,000 1,794,375
--------------------------------------------------------------------------------------------------------------------------
Deerfield, IL RB, Jewish Federation of Metro Chicago,
AMBAC Insured, 5.375%, 8/15/20 Aaa/AAA/AAA 1,000,000 920,160
--------------------------------------------------------------------------------------------------------------------------
IL HFAU RB, Memorial Medical Center Project,
MBIA Insured, 6.75%, 10/1/11 Aaa/AAA 2,000,000 2,150,440
------------
5,475,230
- ---------------------------------------------------------------------------------------------------------------------------------
INDIANA--5.9%
Hamilton Southeastern, IN Consolidated School
Building Corp. RRB, First Mtg., AMBAC Insured, 7%, 7/1/11 Aaa/AAA/AAA 500,000 540,725
--------------------------------------------------------------------------------------------------------------------------
IN HFFAU Hospital RB, Clarian Health Partners, Inc.,
Series A, 6%, 2/15/21 Aa3/AA/AA 2,000,000 1,971,140
--------------------------------------------------------------------------------------------------------------------------
IN Office Building Commission Capital Complex RB,
Series B, MBIA Insured, 7.40%, 7/1/15 Aaa/AAA 2,500,000 2,971,925
--------------------------------------------------------------------------------------------------------------------------
Whitko, IN Middle School Building Corp. RB,
First Mtg., Prerefunded, AMBAC Insured, 6.75%, 7/15/12 Aaa/AAA/AAA 500,000 542,940
------------
6,026,730
- ---------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--3.1%
MA Health & Educational FA RB, Mt. Auburn Hospital
Issue, Series B-1, MBIA Insured, 6.25%, 8/15/14 Aaa/AAA 1,000,000 1,039,060
--------------------------------------------------------------------------------------------------------------------------
MA HFA RB, Series A, AMBAC Insured, 6.60%, 7/1/14 Aaa/AAA/AAA 2,000,000 2,078,240
------------
3,117,300
- ---------------------------------------------------------------------------------------------------------------------------------
NEBRASKA--0.5%
NE Investment FAU Hospital RB, NE Methodist
Health System, MBIA Insured, 7%, 3/1/06 Aaa/AAA 500,000 543,665
</TABLE>
7 Oppenheimer Insured Municipal Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEVADA--3.2%
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 $2,114,980
--------------------------------------------------------------------------------------------------------------------------
Humboldt Cnty., NV PC RB, IDV Power Co. Project,
AMBAC Insured, 8.30%, 12/20/14 Aaa/AAA/AAA 1,000,000 1,189,260
----------
3,304,240
- ---------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.5%
NH Turnpike System RRB, Series A, FGIC Insured,
6.75%, 11/1/11 Aaa/AAA/AAA 500,000 552,185
- ---------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--0.2%
Hoboken, Union City & Weehawken, NJ Sewer
Authority RB, Prerefunded, MBIA Insured, 7.25%, 8/1/19 Aaa/AAA 150,000 162,237
- ---------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO--2.0%
Farmington, NM PC RRB, Southern CA Edison Co.,
Series A, MBIA Insured, 5.875%, 6/1/23 Aaa/AAA 2,000,000 2,004,960
- ---------------------------------------------------------------------------------------------------------------------------------
NEW YORK--2.7%
NYS MCFFA RB, Unrefunded Balance, Series F,
MBIA Insured, 5.25%, 2/15/19 Aaa/AAA 2,000,000 1,817,340
--------------------------------------------------------------------------------------------------------------------------
TBTAU RB, General Purpose, Series B, 5.20%, 1/1/27 Aa/A+/AA 1,000,000 904,240
----------
2,721,580
- ---------------------------------------------------------------------------------------------------------------------------------
OHIO--3.5%
Cincinnati, OH Student Loan Funding Corp. RB,
Series A, AMBAC Insured, 5.75%, 8/1/03 Aaa/AAA/AAA 1,000,000 1,038,560
--------------------------------------------------------------------------------------------------------------------------
OH HFA Mtg. RB, 6.10%, 9/1/28 NR/AAA 2,000,000 1,988,800
--------------------------------------------------------------------------------------------------------------------------
Streetsboro, OH City School District GOB,
AMBAC Insured, 7.125%, 12/1/10 Aaa/AAA/AAA 500,000 582,985
----------
3,610,345
- ---------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA--2.4%
OK Baptist University Authority RB, FGIC Insured,
7.10%, 8/1/09 Aaa/AAA/AAA 150,000 160,323
--------------------------------------------------------------------------------------------------------------------------
OK Industrial Authority Health Systems RB, Baptist
Medical Center, Series C, AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 2,000,000 2,258,340
----------
2,418,663
- ---------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--8.5%
Allegheny Cnty., PA HDAU RB, Presbyterian University
Hospital, Prerefunded, Series A, MBIA Insured,
7.60%, 3/1/08 Aaa/AAA 1,400,000 1,473,962
--------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, FGIC Insured, 6.16%, 11/10/20(5) Aaa/AAA 2,000,000 2,162,780
--------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, AMBAC Insured,
Inverse Floater, 8.513%, 3/1/22(3) Aaa/AAA/AAA 1,250,000 1,232,813
--------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional Port Authority Lease RB,
MBIA Insured, 5.92%, 9/1/20 Aaa/AAA 3,800,000 3,829,868
----------
8,699,423
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--0.5%
Sumter Cnty., SC School District No. 017 COP,
Series A, FSA Insured, 7.125%, 1/1/11 Aaa/AAA 500,000 542,835
- ---------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.1%
SD Lease Revenue Trust Certificates, Series B,
FSA Insured, 8%, 9/1/02 Aaa/AAA 1,000,000 1,140,250
- ---------------------------------------------------------------------------------------------------------------------------------
TENNESSEE--1.7%
Chattanooga-Hamilton Cnty., TN HA RB,
Erlanger Medical Center, Prerefunded, Series B,
FSA Insured, Inverse Floater, 10.367%, 5/25/21(3) Aaa/AAA 1,500,000 1,777,500
</TABLE>
8 Oppenheimer Insured Municipal Fund
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS--11.2%
Cedar Hill, TX Independent School District CAP RB,
Zero Coupon, 6.10%, 8/15/11(2) Aaa/AAA/AAA $1,585,000 $ 698,827
--------------------------------------------------------------------------------------------------------------------------
Grand Prairie, TX HFDC RRB, Dallas/Ft. Worth
Medical Center Project, AMBAC Insured, 6.875%, 11/1/10 Aaa/AAA 1,800,000 1,991,502
--------------------------------------------------------------------------------------------------------------------------
Harris Cnty., TX Toll Road Sr. Lien RRB, FGIC Insured,
5%, 8/15/16 Aaa/AAA/AAA 1,000,000 907,030
--------------------------------------------------------------------------------------------------------------------------
Harris Cnty., TX Toll Road Unlimited Tax & Sub. Lien RB,
Prerefunded, 10.375%, 8/1/14 Aaa/AAA 1,500,000 1,579,065
--------------------------------------------------------------------------------------------------------------------------
Lower Neches Valley, TX IDV Corp. Environmental
Authority RB, Mobil Oil Refining Corp. Project,
6.35%, 4/1/26 Aa2/AA 2,170,000 2,208,669
--------------------------------------------------------------------------------------------------------------------------
Lower Neches Valley, TX IDV Corp. Sewer Facilities RB,
Mobil Oil Refining Corp. Project, 6.40%, 3/1/30 Aa2/AA 1,000,000 1,030,410
--------------------------------------------------------------------------------------------------------------------------
Rio Grande Valley, TX HFDC Retirement Facilities RB,
Golden Palms, Series A, MBIA Insured, 6.40%, 8/1/12 Aaa/AAA 2,000,000 2,096,800
--------------------------------------------------------------------------------------------------------------------------
Tarrant Cnty., TX HFDC RB, Harris Methodist Health
System Project, AMBAC Insured, 5.125%, 9/1/12 Aaa/AAA 1,000,000 940,510
-----------
11,452,813
- ---------------------------------------------------------------------------------------------------------------------------------
WASHINGTON--3.1%
Tacoma, WA Electric System RB, AMBAC Insured,
Prerefunded, 6.514%, 1/2/15 Aaa/AAA/AAA 2,000,000 2,152,300
--------------------------------------------------------------------------------------------------------------------------
WA Public Power Supply System RRB, Series A,
FGIC Insured, Zero Coupon, 5.50%, 7/1/09(2) Aaa/AAA/AAA 2,000,000 1,004,680
-----------
3,156,980
- ---------------------------------------------------------------------------------------------------------------------------------
WISCONSIN--1.4%
WI Health & Educational FA RB, Aurora Medical
Group, Inc. Project, FSA Insured, 6%, 11/15/11 Aaa/AAA 1,370,000 1,435,993
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--3.0%
DC GORB, Series A-1, MBIA Insured, 6%, 6/1/11 Aaa/AAA/BB 2,000,000 2,069,420
--------------------------------------------------------------------------------------------------------------------------
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 5.25%, 8/15/12 Aaa/AAA 1,000,000 955,240
-----------
3,024,660
-----------
Total Municipal Bonds and Notes (Cost $97,689,730) 99,005,932
</TABLE>
9 Oppenheimer Insured Municipal Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
=================================================================================================================================
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--1.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Maricopa Cnty., AZ PC Corp. RRB, Arizona Public
Service Co. Project:
Series F, 3.85%, 4/1/97(6) $1,100,000 $ 1,100,000
Series C, 2.90%, 4/1/97(6) 200,000 200,000
------------
Total Short-Term Tax-Exempt Obligations (Cost $1,300,000) 1,300,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $98,989,730) 98.3% 100,305,932
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.7 1,745,665
---------- ------------
NET ASSETS 100.0% $102,051,597
========== ============
</TABLE>
1. Securities with an aggregate market value of $1,107,540 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. 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 $4,075,313 or 3.99% of the Fund's net assets at March
31, 1997.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines
established by the Board of Trustees. These securities amount to
$2,136,640 or 2.09% of the Fund's net assets, at March 31, 1997.
5. Represents the current interest rate for a variable rate security.
6. 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 March 31, 1997. 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 March 31, 1997, securities subject to the alternative minimum tax
amounted to $15,875,556 or 15.56% 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>
BOE -- Board of Education HFAU -- Health Facilities Authority
CAP -- Capital Appreciation HFFAU -- Health Facilities Finance Authority
CDAU -- Communities Development Authority HFDC -- Health Facilities Development Corp.
CDC -- Community Development Corp. IDV -- Industrial Development
COP -- Certificates of Participation LMC -- Loan Marketing Corp.
DAU -- Development Authority MCFFA -- Medical Care Facilities Finance Agency
FA -- Facilities Authority MH -- Multifamily Housing
FAU -- Finance Authority MUD -- Municipal Utility District
GOB -- General Obligation Bonds NYS -- New York State
GORB -- General Obligation Refunding Bonds PC -- Pollution Control
HA -- Hospital Authority PFAU -- Public Finance Authority
HDAU -- Hospital Development Authority RB -- Revenue Bonds
HEAA -- Higher Education Assistance Agency RRB -- Revenue Refunding Bonds
HFA -- Housing Finance Agency TBTAU -- Triborough Bridge & Tunnel Authority
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Insured Municipal Fund
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES March 31, 1997 (Unaudited)
<TABLE>
===============================================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $98,989,730)--see accompanying statement $100,305,932
------------------------------------------------------------------------------------------------------------------------
Cash 600,528
------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest 1,536,999
Shares of beneficial interest sold 358,195
Daily variation on futures contracts--Note 5 13,581
------------------------------------------------------------------------------------------------------------------------
Other 23,139
------------
Total assets 102,838,374
===============================================================================================================================
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed 355,346
Dividends 304,803
Distribution and service plan fees 61,946
Shareholder reports 50,170
Transfer and shareholder servicing agent fees 7,557
Other 6,955
------------
Total liabilities 786,777
===============================================================================================================================
NET ASSETS $102,051,597
============
===============================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $ 99,986,112
------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 548,339
------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 17,819
------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 1,499,327
------------
Net assets $102,051,597
============
===============================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $83,622,493 and 4,912,679 shares of beneficial interest outstanding) $17.02
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $17.87
------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $16,521,816 and 970,174 shares of beneficial interest outstanding) $17.03
------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,907,288 and 112,142 shares of beneficial interest outstanding) $17.01
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Insured Municipal Fund
<PAGE> 12
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1997 (Unaudited)
<TABLE>
<S> <C>
===============================================================================================================================
INVESTMENT INCOME
Interest $3,193,455
===============================================================================================================================
EXPENSES
Management fees--Note 4 230,847
------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 102,580
Class B 80,891
Class C 6,278
------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 57,423
------------------------------------------------------------------------------------------------------------------------
Shareholder reports 39,859
------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 17,979
Class B 3,641
Class C 529
------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 12,231
------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 4,361
------------------------------------------------------------------------------------------------------------------------
Insurance expenses 2,287
------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,741
------------------------------------------------------------------------------------------------------------------------
Other 889
----------
Total expenses 561,536
===============================================================================================================================
NET INVESTMENT INCOME 2,631,919
===============================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain on:
Investments 453,422
Closing of futures contracts 5,736
----------
Net realized gain 459,158
------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (786,327)
----------
Net realized and unrealized loss (327,169)
===============================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,304,750
==========
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Insured Municipal Fund
<PAGE> 13
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30,
(UNAUDITED) 1996
===============================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 2,631,919 $ 4,973,365
------------------------------------------------------------------------------------------------------------------------
Net realized gain 459,158 1,083,259
------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (786,327) 310
------------ ------------
Net increase in net assets resulting from operations 2,304,750 6,056,934
===============================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (2,220,223) (4,254,496)
Class B (358,091) (663,202)
Class C (27,521) (27,218)
===============================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 346,174 5,885,988
Class B 588,752 2,468,411
Class C 993,747 714,886
===============================================================================================================================
NET ASSETS
Total increase 1,627,588 10,181,303
------------------------------------------------------------------------------------------------------------------------
Beginning of period 100,424,009 90,242,706
------------ ------------
End of period (including undistributed net investment income
of $548,339 and $522,255, respectively) $102,051,597 $100,424,009
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Insured Municipal Fund
<PAGE> 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995 1994
===============================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $17.07 $16.86 $16.14 $18.06
------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .90 .90 .89
Net realized and unrealized gain (loss) (.05) .20 .71 (1.84)
------ ------ ------ ------
Total income (loss) from investment operations .40 1.10 1.61 (.95)
------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.45) (.89) (.89) (.89)
Distributions from net realized gain -- -- -- (.08)
------ ------ ------ ------
Total dividends and distributions to shareholders (.45) (.89) (.89) (.97)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.02 $17.07 $16.86 $16.14
====== ====== ====== ======
========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 2.32% 6.67% 10.29% (5.46)%
========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $83,622 $83,516 $76,691 $67,793
------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $85,891 $81,233 $70,650 $66,953
------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.24%(4) 5.27% 5.52% 5.23%
Expenses, before voluntary assumption by the Manager(5) 0.96%(4) 1.02% 0.95% 1.05%
Expenses, net of voluntary assumption by the Manager N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 37.3% 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.
14 Oppenheimer Insured Municipal Fund
<PAGE> 15
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------- --------------------------------------------------------------- --------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30, MARCH 31, 1997 SEPTEMBER 30,
1993 1992 (UNAUDITED) 1996 1995 1994 1993(2) (UNAUDITED) 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$16.92 $16.17 $17.08 $16.87 $16.15 $18.07 $17.33 $17.06 $16.86 $16.72
- ------------------------------------------------------------------------------------------------------------------------------
.93 .96 .38 .77 .78 .77 .30 .38 .75 .08
1.35 .73 (.05) .20 .71 (1.86) .74 (.05) .21 .14
------ ------ ------ ------ ------ ------ ------- -------- ------ -------
2.28 1.69 .33 .97 1.49 (1.09) 1.04 .33 .96 .22
- ------------------------------------------------------------------------------------------------------------------------------
(.96) (.91) (.38) (.76) (.77) (.75) (.30) (.38) (.76) (.08)
(.18) (.03) -- -- -- (.08) -- -- -- --
------ ------ ------ ------ ------ ------- ----- ------- ----- ------
(1.14) (.94) (.38) (.76) (.77) (.83) (.30) (.38) (.76) (.08)
- ------------------------------------------------------------------------------------------------------------------------------
$18.06 $16.92 $17.03 $17.08 $16.87 $16.15 $18.07 $17.01 $17.06 $16.86
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
==============================================================================================================================
14.02% 10.74% 1.93% 5.87% 9.47% (6.20)% 6.04% 1.92% 5.77% 1.30%
==============================================================================================================================
$62,158 $33,751 $16,522 $15,983 $13,341 $11,571 $5,104 $1,907 $924 $211
- ------------------------------------------------------------------------------------------------------------------------------
$45,949 $27,811 $16,248 $14,822 $11,987 $ 9,209 $2,298 $1,266 $618 $ 1
- ------------------------------------------------------------------------------------------------------------------------------
5.40% 5.81% 4.47%(4) 4.50% 4.75% 4.43% 3.99%(4) 4.40%(4) 4.38% 4.89%(4)
1.18% 1.35% 1.72%(4) 1.77% 1.71% 1.82% 1.96%(4) 1.75%(4) 1.81% 1.07%(4)
1.10% 0.95% N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
7% 47% 37.3% 93% 58% 99% 7% 37.3% 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 March 31, 1997 were $38,134,041 and
$40,207,079, respectively.
See accompanying Notes to Financial Statements.
15 Oppenheimer Insured Municipal Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Insured Municipal Fund (the Fund) is a separate series of
Oppenheimer Municipal Fund, a diversified, open-end management
investment company registered under the Investment Company Act of 1940,
as amended. The Fund's investment objective is to seek maximum current
income exempt from federal income tax for individual investors that is
consistent with the preservation of capital by investing primarily in
insured municipal bonds. 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 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.
-------------------------------------------------------------------------
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
was recorded by the Fund.
-------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Original issue discount
on securities purchased is amortized over the life of the respective
securities, in accordance with federal income tax requirements. For bonds
acquired after April 30, 1993, on disposition or maturity, taxable
ordinary income is recognized to the extent of the lesser of gain or
market discount that would have accrued over the holding period. Realized
gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
16 Oppenheimer Insured Municipal Fund
<PAGE> 17
================================================================================
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, 1997 YEAR ENDED SEPTEMBER 30, 1996
-------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 459,496 $ 7,930,646 1,069,278 $ 18,269,113
Dividends and distributions reinvested 96,263 1,661,163 184,862 3,140,861
Redeemed (535,286) (9,245,635) (909,988) (15,523,986)
-------- ----------- --------- ------------
Net increase 20,473 $ 346,174 344,152 $ 5,885,988
======== =========== ========= ============
-----------------------------------------------------------------------------------------------------------------------
Class B:
Sold 133,311 $ 2,301,223 287,568 $ 4,899,080
Dividends and distributions reinvested 13,649 235,662 24,663 419,151
Redeemed (112,496) (1,948,133) (167,327) (2,849,820)
-------- ----------- --------- ------------
Net increase 34,464 $ 588,752 144,904 $ 2,468,411
======== =========== ========= ============
-----------------------------------------------------------------------------------------------------------------------
Class C:
Sold 61,034 $ 1,047,118 48,380 $ 826,936
Dividends and distributions reinvested 783 13,504 290 4,884
Redeemed (3,872) (66,875) (6,988) (116,934)
-------- ----------- --------- ------------
Net increase 57,945 $ 993,747 41,682 $ 714,886
======== =========== ========= ============
</TABLE>
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At March 31, 1997, net unrealized appreciation on investments of
$1,316,202 was composed of gross appreciation of $2,493,256, and gross
depreciation of $1,177,054.
================================================================================
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 acts as the accounting agent for the Fund at an
annual fee of $12,000, plus out-of-pocket costs and expenses reasonably
incurred.
For the six months ended March 31, 1997, commissions (sales
charges paid by investors) on sales of Class A shares totaled $60,440,
of which $18,440 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 $88,098
and $10,464, of which $1,283 was paid to an affiliated broker/dealer for
Class C shares. During the six months ended March 31, 1997, OFDI
received contingent deferred sales charges of $40,451 upon redemption of
Class B shares, as reimbursement for sales commissions advanced by OFDI
at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
17 Oppenheimer Insured Municipal Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
(CONTINUED)
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 six months ended March 31, 1997, OFDI paid $4,871 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 and Class C shares, as
compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. 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 six months ended
March 31, 1997, OFDI paid $1,181, to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and
retained $66,075 and $4,646, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as
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. At March 31, 1997, OFDI had incurred unreimbursed
expenses of $603,149 for Class B and $28,834 for Class C.
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the
value of fixed rate portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in interest rates as it
may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities in an amount (initial margin) equal to
a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract
value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or
expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement
of Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with
changes in the value of the underlying securities.
At March 31, 1997, the Fund had outstanding futures contracts to sell
debt securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE FUTURES CONTRACTS MARCH 31, 1997 APPRECIATION
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 10 yr. 6/97 25 $ 2,637,500 $ 46,875
U.S. Treasury Bonds, 30 yr. 6/97 75 8,041,406 136,250
----------- --------
$10,678,906 $183,125
=========== ========
</TABLE>
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 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.
The financial statements included herein have been taken from the
records of the Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Insured
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, 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
RS0865.001.0397 May 31, 1997
[Picture of Woman]
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
- --------------------
