<PAGE> 1
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
SEMIANNUAL REPORT MARCH 31, 1997
[PHOTO]
"We want
investment
income that
won't add
to our taxes
...and we
need to feel
comfortable."
[OPPENHEIMERFUNDS LOGO]
OPPENHEIMERFUNDS
THE RIGHT WAY TO INVEST
<PAGE> 2
THIS FUND IS FOR PEOPLE WHO WANT INVESTMENT INCOME THAT'S EXEMPT FROM FEDERAL
TAXES AND FEEL SECURE INVESTING IN A FUND DESIGNED TO REDUCE INTEREST RATE
RISK.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 3/31/97:(3)
Class A
4.42%
Class B
3.78%
Class C
3.82%
THE FUND'S CLASS A SHARES WERE RANKED **** BY MORNINGSTAR MUTUAL FUNDS FOR
1,237 (3-YEAR), 601 (5-YEAR) AND 267 (10-YEAR) MUNICIPAL FUNDS FOR THE COMBINED
3-, 5- AND 10-YEAR PERIODS ENDED 3/31/97.(4)
HOW YOUR FUND IS MANAGED
Oppenheimer Intermediate Municipal Fund invests primarily in a diversified
portfolio of tax-exempt bonds and intends to maintain an intermediate-term
average portfolio maturity (3-10 years on a dollar-weighted basis) under normal
circumstances. The Fund's investment strategy is to seek a high tax-free yield
with less of the price volatility typical of longer maturity municipal bond
funds.
PERFORMANCE
Total returns for the six months ended 3/31/97 were 2.88% for Class A shares,
2.48% for Class B shares and 2.50% for Class C shares, without deducting sales
charges.(1)
Your Fund's average annual total returns for Class A shares for the
1-, 5- and 10-year periods ended 3/31/97 were 1.81%, 5.73% and 6.83%,
respectively. For Class B shares, average annual total returns for the 1-year
period ended 3/31/97 and since inception on 9/11/95 were 0.67% and 2.74%,
respectively. For Class C shares, average annual total returns for the 1-year
period ended 3/31/97 and since inception on 12/1/93 were 3.72% and 3.75%,
respectively.(2)
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. 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.
2. Class A returns include the current maximum initial sales charge of 3.50%.
Class B returns include the applicable contingent deferred sales charge of 4%
(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.
3. 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.
4. Source: Morningstar Mutual Funds, 3/31/97. Morningstar, Inc. ranks mutual
funds in broad investment classes, based on risk-adjusted investment return
after considering sales charges and expenses. Return and risk are measured as
performance above and below 90-day U.S. Treasury bill returns, respectively.
Current star rankings are based on the weighted average of 3-, 5- and 10-year
(if applicable) rankings for a fund or class and are subject to change monthly.
The top 10%: 5 stars. Next 22.5%: 4 stars. Middle 35%: 3 stars. Next 22.5%: 2
stars. Bottom 10%: 1 star. The Fund's Class A shares were ranked 5 stars
(3-year), 4 stars (5-year) and 4 stars (10-year), weighted 20%/30%/50%,
respectively, and 4 stars (1-year) among 1,751 funds.
2 Oppenheimer Intermediate Municipal Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Intermediate
Municipal Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Intermediate
Municipal Fund
DEAR SHAREHOLDER,
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 Intermediate Municipal Fund
<PAGE> 4
Q + A
[PHOTO]
CARYN HALBRECHT
Portfolio Manager
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
Oppenheimer Intermediate Municipal Fund performed relatively well. In fact,
Lipper Analytical Services ranked the Fund 8th out of 146 funds in the
intermediate municipal bond fund category for the 1-year period ended
3/31/97.(1)
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 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.
In addition, our higher credit risk bonds--such as hospital,
retirement center and industrial revenue bonds--performed well and benefited
the Fund. Finally, while economic recovery was strong across all states, our
California bond position, built up earlier in the year, provided strong returns
later in the year.(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 Intermediate
Municipal Fund was ranked 8th out of 35 funds in its category for the 5-year
period ended 3/31/97 and 2nd out of 19 funds for the 10-year period ended
3/31/97. Oppenheimer Intermediate Municipal Fund is characterized by Lipper as
an intermediate municipal debt fund. Lipper rankings are based on total return
and do not take sales charges into consideration.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Intermediate Municipal Fund
<PAGE> 5
STATEMENT OF INVESTMENTS 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--97.1%
- -----------------------------------------------------------------------------------------------------------------------------------
ALABAMA--0.0%
AL WPCAU RB, AMBAC Insured, 6.15%, 8/15/99 Aaa/AAA/AAA $ 35,000 $ 36,351
- -----------------------------------------------------------------------------------------------------------------------------------
ALASKA--1.1%
North Slope Borough, AK GOB, Series B, FSA Insured,
7.50%, 6/30/01 Aaa/AAA 1,000,000 1,103,800
- -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--14.3%
Berkeley, CA HF RRB, Alta Bates Medical Center,
Series A, 6.50%, 12/1/11 Baa2/BBB+ 3,000,000 3,068,250
----------------------------------------------------------------------------------------------------------------------------
CA Statewide CDAU Revenue COP,
Cedars-Sinai Medical Center:
5.40%, 11/1/15 A1/NR 2,000,000 1,822,740
MBIA Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,107,540
----------------------------------------------------------------------------------------------------------------------------
Corona, CA COP, Vista Hospital Project, Prerefunded,
Series B, 10%, 11/1/20 Aaa/AAA 1,000,000 1,269,870
----------------------------------------------------------------------------------------------------------------------------
Long Beach Aquarium of the Pacific RB, Series 1995-A,
5.75%, 7/1/05 NR/BBB 1,500,000 1,494,015
----------------------------------------------------------------------------------------------------------------------------
Pomona, CA Unified School District GORB, Series A,
MBIA Insured, 5.95%, 8/1/10 Aaa/AAA 1,000,000 1,058,260
----------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP,
Air Force Village West, Inc., Series A, 8.125%, 6/15/12 Aaa/AAA 2,290,000 2,456,254
----------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.375%, 7/1/10 NR/BBB-- 1,100,000 1,133,231
----------------------------------------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP,
Medical Center Financing Project, 6%, 8/1/09 Baa1/A-- 1,000,000 1,016,910
------------
14,427,070
- -----------------------------------------------------------------------------------------------------------------------------------
COLORADO--1.6%
Denver, CO City & Cnty. Airport RB, Series A, 7%, 11/15/99 Baa2/BBB 1,000,000 1,054,030
----------------------------------------------------------------------------------------------------------------------------
Meridian Metropolitan District, CO GORB, 7.50%, 12/1/11 A3/NR 500,000 546,005
------------
1,600,035
- -----------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--2.7%
Mashantucket, CT Western Pequot Tribe Special RB,
Series A, 6.50%, 9/1/05(1) Baa/BBB 2,500,000 2,663,900
- -----------------------------------------------------------------------------------------------------------------------------------
FLORIDA--1.0%
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,015,520
- -----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS--7.0%
Chicago, IL BOE GOB, School Reform Project,
MBIA Insured, 6.25%, 12/1/11 Aaa/AAA 1,000,000 1,073,170
----------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District No. 508
Lease COP, Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 1,000,000 1,196,250
----------------------------------------------------------------------------------------------------------------------------
Du Page Cnty., IL First Preservation District GOB,
Prerefunded, 7.70%, 11/1/00 Aaa/AAA 1,000,000 1,041,970
----------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Franciscan Sisters Health Care Project,
Series C, MBIA Insured, 6%, 9/1/09 Aaa/AAA 2,000,000 2,056,440
----------------------------------------------------------------------------------------------------------------------------
Southwestern IL DAU Hospital RB,
St. Elizabeth Medical Center, 8%, 6/1/10 NR/A-- 500,000 537,505
----------------------------------------------------------------------------------------------------------------------------
Waukegan, IL GOB, MBIA Insured, 7.50%, 12/30/03 A1/NR 1,000,000 1,138,740
------------
7,044,075
- -----------------------------------------------------------------------------------------------------------------------------------
INDIANA--1.5%
IN Bond Bank RB, State Revolving Fund Program,
Series A, 6.875%, 2/1/12 NR/A 1,135,000 1,236,208
----------------------------------------------------------------------------------------------------------------------------
IN University RB, Hospital Facilities Project,
Prerefunded, 7%, 1/1/09 A1/A+ 215,000 228,485
------------
1,464,693
</TABLE>
5 Oppenheimer Intermediate Municipal Fund
<PAGE> 6
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>
LOUISIANA--1.1%
- -----------------------------------------------------------------------------------------------------------------------------------
LA GOB, Series A, AMBAC Insured, 8%, 5/1/99 Aaa/AAA/AAA $1,000,000 $1,069,520
- -----------------------------------------------------------------------------------------------------------------------------------
MAINE--1.3%
ME Educational LMC Student Loan RRB, Series A-4,
6.05%, 11/1/04 Aaa/NR 750,000 778,343
----------------------------------------------------------------------------------------------------------------------------
ME SHAU RB, Mtg. Purchase Project, Series A,
7.50%, 11/15/22 Aaa/AAA 500,000 526,670
------------
1,305,013
- -----------------------------------------------------------------------------------------------------------------------------------
MARYLAND--0.5%
Howard Cnty., MD COP, Series A, 8.05%, 2/15/21 Aa1/AA+ 350,000 447,496
- -----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--2.1%
MA Consolidated Loan RB, Series C, AMBAC Insured,
7%, 6/1/09 Aaa/AAA/AAA 2,000,000 2,146,240
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN--7.7%
Detroit, MI GORB, Series B, 7%, 4/1/04 Baa/BBB 2,000,000 2,171,160
----------------------------------------------------------------------------------------------------------------------------
Detroit, MI Self-Insurance Bonds, Series A, 5.70%, 5/1/02 NR/BBB-- 1,000,000 1,018,910
----------------------------------------------------------------------------------------------------------------------------
MI Hospital FAU RRB, Greater Detroit Sinai Hospital,
Series 1995, 6%, 1/1/08 Baa2/NR/BBB 2,500,000 2,475,750
----------------------------------------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB,
Genesee Power Station Project, 7.50%, 1/1/21 NR/NR 2,000,000 2,039,820
------------
7,705,640
- -----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA--2.0%
NE Higher Education Loan Program, Series A-6,
5.90%, 6/1/03 A/NR/A 2,000,000 2,050,640
- -----------------------------------------------------------------------------------------------------------------------------------
NEVADA--2.1%
Clark Cnty., NV School District GOB, Series A,
MBIA Insured, 9.75%, 6/1/01 Aaa/AAA 1,800,000 2,129,454
- -----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--4.0%
Hoboken, Union City & Weehawken,
NJ Sewer Authority RB, Prerefunded,
MBIA Insured, 7.25%, 8/1/19 Aaa/AAA 1,750,000 1,892,765
----------------------------------------------------------------------------------------------------------------------------
NJ Transportation Trust Fund, Transportation System RB,
Series B, 6%, 6/15/06 Aa/AA+/AA 2,000,000 2,125,460
------------
4,018,225
- -----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO--0.6%
NM Hospital Equipment Loan Council RB,
San Juan Regional Medical Center, Inc. Project,
7.90%, 6/1/11 A3/NR 500,000 551,965
- -----------------------------------------------------------------------------------------------------------------------------------
NEW YORK--15.1%
NYC GOB, Prerefunded, Series F, 8.40%, 11/15/07 Aaa/AAA 2,140,000 2,489,997
----------------------------------------------------------------------------------------------------------------------------
NYC GOB, Series B, 6.20%, 8/15/06 Baa1/BBB+/A-- 1,500,000 1,553,760
----------------------------------------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series F, 8.40%, 11/15/07 Baa1/BBB+ 360,000 406,033
----------------------------------------------------------------------------------------------------------------------------
NYC GORB, Series A, 7%, 8/1/07 Baa1/BBB+/A-- 2,000,000 2,184,380
----------------------------------------------------------------------------------------------------------------------------
NYC IDAU Special Facilities RB,
Terminal One Group Assn. Project, 6%, 1/1/08 A/A/A-- 2,000,000 2,019,420
----------------------------------------------------------------------------------------------------------------------------
NYC IDAU Special Facilities RB,
Terminal One Group Assn. Project, 6.10%, 1/1/09 A/A/A-- 2,000,000 2,026,140
----------------------------------------------------------------------------------------------------------------------------
NYS GORB, 7.80%, 11/15/99 A/A-- 1,000,000 1,081,000
----------------------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6.375%, 11/1/04 Baa/BBB+ 2,000,000 2,102,140
----------------------------------------------------------------------------------------------------------------------------
NYS MCFFA RB, Prerefunded, 7.80%, 2/15/19 Aaa/AAA 1,275,000 1,378,097
------------
15,240,967
- -----------------------------------------------------------------------------------------------------------------------------------
OHIO--1.6%
OH Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR 1,600,000 1,610,608
</TABLE>
6 Oppenheimer Intermediate 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>
OKLAHOMA--1.2%
OK Industrial Authority Health Systems RB, Baptist
Medical Center, Series C, AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA $ 955,000 $1,078,357
----------------------------------------------------------------------------------------------------------------------------
Oklahoma Cnty., OK Home FAU RB, 7.65%, 1/1/23 NR/AA-- 125,000 131,204
------------
1,209,561
- -----------------------------------------------------------------------------------------------------------------------------------
OREGON--1.6%
OR Emerald Peoples Utilities District RRB,
FGIC Insured, 7.20%, 11/1/04 Aaa/AAA 1,420,000 1,616,911
- -----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--7.7%
PA IDAU ED RB, Escrowed to Maturity, Series A,
6.80%, 7/1/01 NR/A--/AAA 3,000,000 3,218,970
----------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Health System Project, 6.20%, 7/1/00 NR/BBB 1,360,000 1,420,030
----------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB,
Schuylkill Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 3,265,000 3,163,034
------------
7,802,034
- -----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--2.2%
Florence Cnty., SC IDV RB,
Stone Container Project, 7.375%, 2/1/07 NR/NR 1,890,000 1,975,976
----------------------------------------------------------------------------------------------------------------------------
Richland Cnty., SC Hospital Facilities RB,
Community Provider Pooled Loan Program,
Escrowed to Maturity, Series A, FSA Insured, 7.125%, 7/1/17 Aaa/AAA 250,000 273,385
------------
2,249,361
- -----------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.5%
SD Student Loan Finance RB, Series A, 5.95%, 8/1/01 NR/A+ 1,500,000 1,543,020
- -----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE--2.8%
Chattanooga-Hamilton Cnty., TN HA RB,
Erlanger Medical Center, Prerefunded, Series B,
FSA Insured, Inverse Floater, 10.367%, 5/25/21(2) Aaa/AAA 1,500,000 1,777,500
----------------------------------------------------------------------------------------------------------------------------
Memphis Shelby Cnty., TN Airport Authority RRB,
Series A, MBIA Insured, 6.25%, 2/15/11(3) Aaa/AAA 1,000,000 1,021,540
------------
2,799,040
- -----------------------------------------------------------------------------------------------------------------------------------
TEXAS--4.4%
Austin, TX Independent School District GORB,
7%, 8/1/06(4) Aaa/AAA 2,000,000 2,275,240
----------------------------------------------------------------------------------------------------------------------------
Harris Cnty., TX HFDC Hospital RB, Hermann Trust,
Prerefunded, 9%, 10/1/17 Aaa/NR 1,000,000 1,045,270
----------------------------------------------------------------------------------------------------------------------------
San Antonio, TX Airport System RRB, AMBAC Insured,
7.125%, 7/1/05 Aaa/AAA/AAA 1,000,000 1,128,310
------------
4,448,820
- -----------------------------------------------------------------------------------------------------------------------------------
UTAH--2.0%
Davis Cnty., UT Solid Waste Management &
Recovery RRB, Special Service District, 6.125%, 6/15/09 Baa2/BBB+ 2,000,000 2,011,940
- -----------------------------------------------------------------------------------------------------------------------------------
VERMONT--0.9%
VT SAC Educational Loan RB, Series A-3, FSA Insured,
6.25%, 6/15/03 Aaa/AAA 900,000 942,930
- -----------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.8%
WV School Building Authority RB, Prerefunded,
Series A, MBIA Insured, 7.25%, 7/1/15 Aaa/AAA 750,000 822,113
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--1.0%
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 6%, 8/15/12 Aaa/AAA 1,000,000 1,034,520
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--3.7%
PR Commonwealth GOB, 6.35%, 7/1/10 Baa1/A 1,500,000 1,570,830
----------------------------------------------------------------------------------------------------------------------------
PR EPAU RB, Series P, 6.75%, 7/1/03 Baa1/BBB+ 2,000,000 2,171,960
------------
3,742,790
------------
Total Municipal Bonds and Notes (Cost $96,551,617) 97,854,252
</TABLE>
7 Oppenheimer Intermediate Municipal Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
===================================================================================================================================
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--2.0%
----------------------------------------------------------------------------------------------------------------------------
East Baton Rouge Parish, LA PC RRB, Exxon Project,
Inverse Floater, 2%, 4/1/97(5) $1,000,000 $1,000,000
----------------------------------------------------------------------------------------------------------------------------
Maricopa Cnty., AZ PC Corp. RRB,
Arizona Public Service Co. Project, Series C, 2.90%, 4/1/97(5) 1,000,000 1,000,000
-------------
Total Short-Term Tax-Exempt Obligations (Cost $2,000,000) 2,000,000
===================================================================================================================================
TOTAL INVESTMENTS, AT VALUE (COST $98,551,617) 99.1% 99,854,252
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.9 924,045
------------- -------------
NET ASSETS 100.0% $100,778,297
============= =============
</TABLE>
1. 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
$2,663,900 or 2.64% of the Fund's net assets, at March 31, 1997.
2. 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 $1,777,500 or 1.76% of the Fund's net
assets at March 31, 1997.
3. When-issued security to be delivered and settled after
March 31, 1997.
4. Securities with an aggregate market value of $341,286 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
5. 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 $18,380,728 or 18.24% of the Fund's net assets.
To simplify the listings of the Oppenheimer Intermediate Municipal
Fund holdings in the Statement of Investments, we have abbreviated the
descriptions of many of the securities per the table below:
<TABLE>
<S> <C> <C> <C>
BOE -- Board of Education HFDC -- Health Facilities Development Corp.
CDAU -- Communities Development Authority IDV -- Industrial Development
COP -- Certificates of Participation IDAU -- Industrial Development Authority
DAU -- Development Authority LMC -- Loan Marketing Corp.
ED -- Economic Development MCFFA -- Medical Care Facilities Finance Agency
EPAU -- Electric Power Authority PC -- Pollution Control
FAU -- Finance Authority RB -- Revenue Bonds
GOB -- General Obligation Bonds RR -- Resource Recovery
GORB -- General Obligation Refunding Bonds RRB -- Revenue Refunding Bonds
HA -- Hospital Authority SAC -- Student Assistance Corporation
HF -- Health Facilities SHAU -- State Housing Authority
HEFAU -- Higher Educational Facilities Authority SWD -- Solid Waste Disposal
HFA -- Housing Finance Agency WPCAU -- Water Pollution Control Authority
HFAU -- Health Facilities Authority
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Intermediate Municipal Fund
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES March 31, 1997 (Unaudited)
<TABLE>
<S> <C>
===================================================================================================================================
ASSETS
Investments, at value (cost $98,551,617)--see accompanying statement $ 99,854,252
----------------------------------------------------------------------------------------------------------------------------
Cash 279,457
----------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest 1,700,668
Shares of beneficial interest sold 549,669
----------------------------------------------------------------------------------------------------------------------------
Other 24,509
------------
Total assets 102,408,555
===================================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 1,045,790
Dividends 300,511
Shares of beneficial interest redeemed 153,590
Distribution and service plan fees 59,335
Daily variation on futures contracts--Note 5 11,563
Transfer and shareholder servicing agent fees 9,870
Other 49,599
------------
Total liabilities 1,630,258
===================================================================================================================================
NET ASSETS $100,778,297
============
===================================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $ 99,542,926
----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 678,500
----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (988,889)
----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 1,545,760
------------
Net assets $100,778,297
============
===================================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $85,287,212 and 5,792,153 shares of beneficial interest outstanding) $14.72
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $15.25
----------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $4,094,698 and 278,161 shares of beneficial interest outstanding) $14.72
----------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $11,396,387 and 775,211 shares of beneficial interest outstanding) $14.70
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer Intermediate Municipal Fund
<PAGE> 10
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1997 (Unaudited)
<TABLE>
<S> <C>
===================================================================================================================================
INVESTMENT INCOME
Interest $3,149,647
===================================================================================================================================
EXPENSES
Management fees--Note 4 248,648
----------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 100,918
Class B 17,406
Class C 56,005
----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 47,600
----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 46,342
----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 15,336
Class B 1,001
Class C 2,054
----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 12,817
----------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,078
----------------------------------------------------------------------------------------------------------------------------
Other 854
------------
Total expenses 551,059
===================================================================================================================================
NET INVESTMENT INCOME 2,598,588
===================================================================================================================================
REALIZED AND
UNREALIZED GAIN
Net realized gain on:
Investments 97,397
Closing of futures contracts 51,279
------------
Net realized gain 148,676
----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 42,095
------------
Net realized and unrealized gain 190,771
===================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,789,359
============
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Intermediate Municipal Fund
<PAGE> 11
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 $2,598,588 $4,872,668
----------------------------------------------------------------------------------------------------------------------------
Net realized gain 148,676 635,204
----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 42,095 (734,901)
------------- --------------
Net increase in net assets resulting from operations 2,789,359 4,772,971
===================================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (2,245,573) (4,349,156)
Class B (78,617) (63,816)
Class C (254,144) (407,791)
===================================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 1,845,548 2,742,813
Class B 1,235,917 2,744,970
Class C 467,301 3,306,779
===================================================================================================================================
NET ASSETS
Total increase 3,759,791 8,746,770
----------------------------------------------------------------------------------------------------------------------------
Beginning of period 97,018,506 88,271,736
------------- --------------
End of period (including undistributed net investment
income of $678,500 and $658,246, respectively) $100,778,297 $97,018,506
============= ==============
See accompanying Notes to Financial Statements.
</TABLE>
11 Oppenheimer Intermediate Municipal Fund
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------
SIX MONTHS ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1996 1995
===========================================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $14.69 $14.69 $14.23
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .39 .79 .79
Net realized and unrealized gain (loss) .03 (.01) .42
------ ------ ------
Total income (loss) from investment operations .42 .78 1.21
- -----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.39) (.78) (.75)
Distributions from net realized gain -- -- --
Distributions in excess of net realized gain -- -- --
------ ------ ------
Total dividends and distributions to shareholders (.39) (.78) (.75)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.72 $14.69 $14.69
====== ====== ======
===========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 2.88% 5.41% 8.78%
===========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $85,287 $83,253 $80,535
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $85,175 $82,217 $79,681
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.33%(4) 5.35% 5.55%
Expenses, before voluntary assumption by the Manager(5) 0.99%(4) 1.02% 0.98%
Expenses, net of voluntary assumption by the Manager N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 8.9% 53% 55%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September
30, 1994.
2. For the period from September 11, 1995 (inception of offering) to September
30, 1995.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
12 Oppenheimer Intermediate Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
CLASS B CLASS C
- ---------------------------- ------------------------------------------ -----------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1997 YEAR ENDED SEPTEMBER 30, MARCH 31, 1997 YEAR ENDED SEPTEMBER 30,
1994 1993 1992 (UNAUDITED) 1996 1995(2) (UNAUDITED) 1996 1995 1994(1)
=========================================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$15.34 $15.09 $14.40 $14.69 $14.69 $14.71 $14.67 $14.67 $14.18 $15.14
- -------------------------------------------------------------------------------------------------------------------------
.72 .77 .86 .33 .66 .06 .34 .68 .69 .46
(1.00) .70 .69 .03 -- (.02) .03 (.01) .43 (.83)
------ ------ ------ ------ ------ ----- ------ ------ ------ -------
(.28) 1.47 1.55 .36 .66 .04 .37 .67 1.12 (.37)
- -------------------------------------------------------------------------------------------------------------------------
(.76) (.75) (.86) (.33) (.66) (.06) (.34) (.67) (.63) (.52)
-- (.47) -- -- -- -- -- -- -- --
(.07) -- -- -- -- -- -- -- -- (.07)
------ ------ ------ ------ ------ ----- ------ ------ ------ -------
(.83) (1.22) (.86) (.33) (.66) (.06) (.34) (.67) (.63) (.59)
- -------------------------------------------------------------------------------------------------------------------------
$14.23 $15.34 $15.09 $14.72 $14.69 $14.69 $14.70 $14.67 $14.67 $14.18
====== ====== ====== ====== ====== ===== ====== ====== ====== =======
=========================================================================================================================
(1.92)% 10.31% 11.10% 2.48% 4.56% 0.83% 2.50% 4.63% 8.13% (2.54)%
=========================================================================================================================
$83,456 $70,136 $29,724 $4,095 $2,858 $119 $11,396 $10,908 $7,618 $8,511
- -------------------------------------------------------------------------------------------------------------------------
$79,076 $48,915 $25,153 $3,502 $1,440 $ 37 $11,249 $9,015 $7,437 $4,686
- -------------------------------------------------------------------------------------------------------------------------
5.05% 5.08% 5.87% 4.53%(4) 4.51% 3.87%(4) 4.55%(4) 4.56% 4.64% 3.77%(4)
1.00% 1.07% 1.25% 1.77%(4) 1.81% 1.54%(4) 1.75%(4) 1.78% 1.88% 2.24%(4)
N/A 1.05% 1.16% N/A N/A N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------
51% 21% 93% 8.9% 53% 55% 8.9% 53% 55% 51%
</TABLE>
4. Annualized.
5. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses
paid indirectly by the Fund. Prior year expense ratios have not been adjusted.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended March 31, 1997 were $10,804,038 and $8,778,703,
respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer Intermediate Municipal Fund
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Intermediate 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
intermediate term 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.
14 Oppenheimer Intermediate Municipal Fund
<PAGE> 15
================================================================================
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 608,397 $ 9,017,725 974,292 $ 14,353,015
Dividends and distributions reinvested 101,603 1,505,258 203,597 2,998,589
Redeemed (585,517) (8,677,435) (993,272) (14,608,791)
------------- ------------- ------------- -------------
Net increase 124,483 $ 1,845,548 184,617 $ 2,742,813
============= ============= ============= =============
----------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 97,071 $ 1,435,863 193,861 $ 2,852,627
Dividends and distributions reinvested 3,396 50,320 2,577 37,785
Redeemed (16,877) (250,266) (9,964) (145,442)
------------- ------------- ------------- -------------
Net increase 83,590 $ 1,235,917 186,474 $ 2,744,970
============= ============= ============= =============
----------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 184,672 $ 2,733,031 380,233 $ 5,600,605
Dividends and distributions reinvested 13,384 198,001 20,909 307,116
Redeemed (166,615) (2,463,731) (176,779) (2,600,942)
------------- ------------- ------------- -------------
Net increase 31,441 $ 467,301 224,363 $ 3,306,779
============= ============= ============= =============
</TABLE>
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At March 31, 1997, net unrealized appreciation on investments of
$1,302,635 was composed of gross appreciation of $2,370,910, and gross
depreciation of $1,068,275.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.50% on the first $100 million of average annual net assets, 0.45% on
the next $150 million, 0.425% on the next $250 million and 0.40% on net
assets in excess of $500 million.
The Manager 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 $70,045,
of which $35,695 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 $34,191
and $26,399. During the six months ended March 31, 1997, OFDI received
contingent deferred sales charges of $6,373 and $6,855, respectively,
upon redemption of Class B and Class C shares, as reimbursement for
sales commissions advanced by OFDI at the time of sale of such shares.
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.
15 Oppenheimer Intermediate Municipal Fund
<PAGE> 16
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 $12,355 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 $2,162 to an affiliated broker/dealer as
compensation for Class C personal service and maintenance expenses and
retained $16,169 and $26,030, 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 $75,382 for Class B and $149,884 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>
NUMBER OF VALUATION AS OF UNREALIZED
EXPIRATION DATE FUTURES CONTRACTS MARCH 31, 1997 APPRECIATION
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 10 yr. 6/97 90 $ 9,495,000 $176,719
U.S. Treasury Bonds, 30 yr. 6/97 50 5,360,938 66,406
----------- --------
$14,855,938 $243,125
=========== ========
</TABLE>
16 Oppenheimer Intermediate Municipal Fund
<PAGE> 17
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
A Series of Oppenheimer Municipal Fund
================================================================================
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Caryn R. Halbrecht, Vice President
Robert 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 Intermediate
Municipal Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Intermediate Municipal Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
17 Oppenheimer Intermediate Municipal Fund
<PAGE> 18
OPPENHEIMERFUNDS FAMILY
================================================================================
OppenheimerFunds offers over 50 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your
children's education or tax-free income, we have the funds to help you
seek your objective.
When you invest with OppenheimerFunds, you can feel comfortable
knowing that you are investing with a respected financial institution
with over 35 years of experience in helping people just like you reach
their financial goals. And you're investing with a leader in global,
growth stock and flexible fixed-income investments--with over 3 million
shareholder accounts and more than $60 billion under OppenheimerFunds'
management and that of our affiliates.
At OppenheimerFunds we don't charge a fee to exchange shares.
And you can exchange shares easily by mail or by telephone.(1) For more
information on Oppenheimer funds, please contact your financial adviser
or call us at 1-800-525-7048 for a prospectus. You may also write us at
the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
<TABLE>
<S> <C>
====================================================================================================================================
REAL ASSET FUNDS
Real Asset Fund Gold & Special Minerals Fund
====================================================================================================================================
STOCK FUNDS
Developing Markets Fund Growth Fund
Global Emerging Growth Fund Global Fund
Enterprise Fund(2) Quest Global Value Fund
International Growth Fund Disciplined Value Fund
Discovery Fund Oppenheimer Fund
Quest Small Cap Value Fund Value Stock Fund
Capital Appreciation Fund(3) Quest Value Fund
Quest Capital Value Fund
====================================================================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Multiple Strategies Fund4
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
====================================================================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
====================================================================================================================================
MUNICIPAL FUNDS
California Municipal Fund(5) Insured Municipal Fund
Florida Municipal Fund(5) Intermediate Municipal Fund
New Jersey Municipal Fund(5)
New York Municipal Fund(5) Rochester Division
Pennsylvania Municipal Fund(5) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
====================================================================================================================================
MONEY MARKET FUNDS(6)
Money Market Fund Cash Reserves
====================================================================================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may
be exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund."
5. Available only to investors in certain states.
6. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market
fund will be able to maintain a stable net asset value of $1.00 per
share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
18 Oppenheimer Intermediate Municipal Fund
<PAGE> 19
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
RS0860.001.0397 May 31, 1997
[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.
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OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
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