Semiannual Report March 31, 1998
OPPENHEIMER
Intermediate
Municipal Fund
[GRAPHIC OF CHECKBOOK AND PENCIL]
[Oppenheimer Funds Logo]
<PAGE>
Report highlights
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Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's Manager
11 Statement of Investments
18 Statement of Assets and Liabilities
20 Statement of Operations
21 Statements of Changes in Net Assets
22 Financial Highlights
24 Notes to Financial Statements
29 Officers and Trustees
32 Information and Services
[bullet] 4-star Morningstar: The Fund's Class A shares have maintained an
overall 4-star Morningstar ranking for the combined 3-, 5- and 10-year periods
ended March 31, 1998, among 1,403 (3-year), 831 (5-year), and 329 (10-year)
fixed-income funds.(1)
[bullet] Interest Rates Fell--Bond Prices Rose: The key to the Fund's strong
performance was being able to adjust quickly to the changing direction of
interest rates in early 1998.
[bullet] Inflation Stays Low: The Asian economic crisis is slowing the demand
for oil and other commodities, exerting downward pressure on inflation.
Cumulative Total Returns
For the 6-month Period
Ended 3/31/98
Class A
Without With
Sales Chg.(2) Sales Chg.(3)
3.80% 0.17%
Class B
Without With
Sales Chg.(2) Sales Chg.(3)
3.41% (0.59)%
Class C
Without With
Sales Chg.(2) Sales Chg.(3)
3.42% 2.42%
Total returns include changes 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.
1. Source: Morningstar, Inc., 3/31/98. Morningstar, Inc. ranks mutual funds in
broad investment classes, based on risk-adjusted returns after considering sales
charges and expenses. Return and risk are measured as performance above and
below the 90-day U.S. Treasury bill returns, respectively. Overall star ranking
is subject to change monthly. Top 10% are ranked 5 stars, next 22.5% are 4
stars, middle 35% are 3 stars, next 22.5% are 2 stars and bottom 10% are 1 star.
2. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
3. Class A return includes the current maximum initial sales charge of 3.50%.
Class B return includes the applicable contingent deferred sales charge of 3%.
Class C return includes the contingent deferred sales charge of 1%. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge.
2 Oppenheimer Intermediate Municipal Fund
<PAGE>
Dear shareholder,
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[PHOTO]
James C. Swain
Chairman
Oppenheimer
Intermediate
Municipal Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Intermediate
Municipal Fund
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to
its lowest level in 30 years and inflation has also fallen to a record low. In
fact, long-term interest rates have fallen to their lowest level since the
government began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch farther and investors, as consumers, are able to enjoy a
higher level of dispos- able income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations to improve their bottom
lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
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, 1998
3 Oppenheimer Intermediate Municipal Fund
<PAGE>
Performance update
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Avg Annual Total Returns
For the Periods Ended 3/31/98(1)
Class A
1 year 5 year 10 year
5.85% 5.24% 7.69%
Class B
Since
1 year 5 year Inception
4.86% N/A 5.55%
Class C
1 year 5 year Inception
7.81% N/A 4.89%
Cumulative Total Return
For the Period Ended 3/31/98(1)
Class A
5 year
29.12% $12,911(3)
Standardize Yields(4)
For the 30 Days Ended 3/31/98
Class A
3.97%
Class B
3.35%
Class C
3.35%
Oppenheimer Intermediate Municipal Fund continued to perform very well during a
period of generally falling interest rates. The key to the Fund's performance
was boosting the bond portfolio's "duration"--that is, its sensitivity
to interest rates--at the right time. As a result, Oppenheimer Intermediate
Municipal Fund's Class A shares remained in the top 10% of intermediate
municipal bond funds, ranking 11 of 140 for the one-year period ended 3/31/98,
as measured by Lipper Analytical Services, Inc.(2)
Growth of $10,000
Over five year
(without sales charges)(3)
[TABULAR REPRESENTATION OF MOUNTAIN CHART]
Oppenheimer Intermediate
Municipal Fund Lehman Municipal
Class A Shares Bond Index
10000 10000
10200 10327
10511 10676
10635 10825
10140 10231
10252 10344
10307 10415
10168 10266
10668 10991
10905 11257
11213 11581
11531 12058
11526 11913
11602 12004
11822 12281
12117 12594
12161 12563
12498 12996
12856 13388
13213 13751
13348 13910
3/31/93 3/31/98
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
3.50%. Class A shares were first publicly offered on 11/11/86. The Fund's
maximum sales charge for Class A shares was higher prior to 2/1/92, so actual
performance may have been lower. Class B returns include the applicable
contingent deferred sales charge of 4% (1-year) and 2% (since inception on
9/11/95). Class C returns for the one-year result include the contingent
deferred sales charge of 1%. Class C shares have an inception date of 12/1/93.
An explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge.
4 Oppenheimer Intermediate Municipal Fund
<PAGE>
Portfolio review
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[TABULAR REPRESENTATION OF PIE CHART]
Credit Allocation(5)
AAA 42.9%
AA 3.3
A 22.7
BBB 18.7
BB 10.1
B 2.3
Oppenheimer Intermediate Municipal Fund is for investors looking for a source
of income exempt from federal income taxes with less volatility than a
long-term bond fund.
What We Look For
[bullet] Reduced interest-rate risk.
[bullet] Diversification across a wide range of municipal securities.
[bullet] Sectors and regions with high relative value.
10 Largest Positions by State(5)
- ---------------------------------------------------
California 16.2% Texas 5.7%
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New York 15.3 South Carolina 4.0
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Illinois 7.9 Connecticut 3.6
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Michigan 7.6 Florida 3.2
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Pennsylvania 6.2 Puerto Rico 3.1
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2. Source: Lipper Analytical Services, Inc., 3/31/98. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 11 of 140 (1-year), 16 of 59
(5-year) and 1 of 23 (10-year) among intermediate municipal bond funds for the
period ended 3/31/98.
3. Results of a hypothetical $10,000 investment in Class A shares on March 31,
1993. The Lehman Municipal Bond Index includes a broad range of municipal
bonds. It is an unmanaged index, including reinvestment of income, and cannot
be purchased directly by investors.
4. Standardized yield is based on net investment income for the 30-day period
ended 3/31/98. Falling net asset values will tend to artificially raise yields.
5. Portfolio data is as of 3/31/98, and is subject to change. Portfolio data is
dollar-weighted based on investment assets. Securities rated by any rating
organization are included in the equivalent Standard & Poor's rating category.
Average credit quality and allocation include rated securities and those not
rated by a national rating organization (currently 14.1% of total investments)
but which the ratings given above have been assigned by the Manager for
internal purposes as being comparable, in the Manager's judgment, to securities
rated by a rating agency in the same category.
5 Oppenheimer Intermediate Municipal Fund
<PAGE>
An interview with your Fund's manager
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"New York City has enjoyed a well-publicized renaissance in terms of its
finances and quality of life."
How has the Fund performed during the period?
The Fund, which invests primarily in intermediate-term bonds issued by
municipalities throughout the United States, performed quite well during the
period. For the six-month period ending March 31, 1998, Oppenheimer
Intermediate Municipal Fund's Class A shares produced a cumulative total
return, without sales charges, of 3.80%.(1)
What factors affected your performance?
The biggest factor that contributed to the Fund's performance was our decision
to extend the portfolio's duration (sensitivity to interest rates) beyond the
industry average. The longer the duration, the more sensitive the bond portfolio
is to changes in interest rates. That's because longer-duration portfolios are
collecting fixed interest-rate payments for a longer period of time, while
interest rates paid on other bonds fluctuate. When interest rates on other bonds
are falling, which occurred for most of the six-month period, then bonds paying
a fixed-income stream become more valuable. A few weeks into the new year, the
yield on the benchmark 30-year U.S. Treasury bond yield fell below 5.7%, as
investors apparently became convinced that the economic turmoil in Asia would
lead to even lower inflation.
However, we were becoming increasingly concerned that the market was
overreacting to the Asia turmoil. In our experience, when there is such a strong
conviction on one side of a debate, there's greater risk that unforeseen
information can disturb the market.
1. Includes changes 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.
6 Oppenheimer Intermediate Municipal Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Bob Patterson
Caryn Halbrecht
(Portfolio Manager)
Jerry Webman
Indeed, by late January, the downward movement in interest rates began to
reverse. In this Fund, we are very attentive to changes in interest rates, and
were able to adjust the portfolio accordingly, primarily by shortening the
duration to an average level compared to our peers.
Shortly thereafter, Alan Greenspan, chairman of the Federal Reserve Board,
made several public comments that the so-called Asian flu might not have as much
of a dampening impact on the U.S. economy as most of the investment community
had expected. Those statements, as well as better-than-expected 1997 profit
results from U.S. corporations, were followed by moderately rising long-term
interest rates.
What other strategies worked well during the period?
We owned a large proportion of non-callable bonds, which outperform when
interest rates are coming down. That's because when a bond is callable, the
issuer can retire it and issue a new bond at a lower interest rate. However,
when a bond is non-callable, the investor is assured of receiving fixed
interest payments until maturity, which makes a non-callable bond more valuable
in a falling interest-rate environment. When interest rates rose somewhat late
in January, our non-callable bonds temporarily underperformed, but overall,
emphasizing the non-callable structure was a good strategy for the period.
7 Oppenheimer Intermediate Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
"We will continue to pursue attractively priced areas of the municipal bond
market . . ."
What bonds performed particularly well?
A number of our holdings were upgraded by the national credit rating agencies,
such as Standard & Poor's Corporation and Moody's Investors Service. Typically,
a credit upgrade leads to higher bond prices, because investors can worry less
about whether the issuer will be able to make interest and principal payments.
During the period, credit upgrades included bonds issued by New York City and
Michigan Sinai Hospital.
New York City has enjoyed a well-publicized renaissance in terms of its
finances and quality of life. The city's economy has been bolstered by the
booming brokerage industry. Meanwhile, the crime rate is down and tourism is
surging. Another potential turnaround story is the healthcare industry, a
troubled sector due to changes brought about by managed care. It presents
opportunities for investors willing to search for issuers such as Michigan Sinai
Hospital with improving financial strength.
Because of falling interest rates, a number of our bonds, such as Berkeley
Health, a California hospital, were "refunded." In a refunding, a municipality
issues new bonds at lower interest rates. Because the original bonds have call
protection, and thus cannot be called or paid off, the issuer takes the money
from the new security, buys U.S. Treasury bonds, and places them in an escrow
account. The Treasury bonds are used to pay off the original bonds as they come
due. The original credit quality is no longer at issue, because the payments are
backed by the Treasury bonds. Part of our job is to select which bonds are
likely to be refunded, because those bonds subsequently increase in price. We
were able to anticipate a number of refundings which bolstered the Fund's value.
8 Oppenheimer Intermediate Municipal Fund
<PAGE>
" . . . that are temporarily out of favor or are the result of excess supply."
Were there any weak performers in the Fund?
We own some student loan bonds that lagged. On the plus side, student loan bonds
tend to pay higher yields, which enhances the Fund's performance. However,
because recent graduates tend to pay off their loans once they become
established in a career, student loan bonds are likely to be callable. That is,
students repay their loans, and the money is either loaned to new students or
the investors are paid off early, which means that student loan bonds typically
underperform in a period of falling interest rates.
What is your outlook?
Even before the Asian economic crisis, which is likely to slow global growth,
the outlook for inflation was that it would remain about 2%. As a result, we
remain optimistic about the bond market, which is why we continue to maintain a
portfolio that will perform best in a declining interest rate environment. The
key fundamental variable that has yet to be resolved is the extent to which the
Asian financial crisis is going to impact the U.S. economy. In the meantime, we
believe that a quality 10-year municipal bond yielding 4.6% tax-free is very
attractive in relation to inflation.
9 Oppenheimer Intermediate Municipal Fund
<PAGE>
Financials
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10 Oppenheimer Intermediate Municipal Fund
<PAGE>
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Statement of Investments March 31, 1998 (Unaudited)
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<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Bonds and Notes -- 98.8%
- ------------------------------------------------------------------------------------------
Alabama--0.9%
Huntsville, AL Health Care Authority, Series
A, MBIA Insured, 5.50%, 6/1/08 Aaa/AAA $1,000,000 $1,070,680
- ------------------------------------------------------------------------------------------
Alaska--0.9%
North Slope Borough, AK GOB, Series B, FSA
Insured, 7.50%, 6/30/01 Aaa/AAA 1,000,000 1,103,180
- ------------------------------------------------------------------------------------------
Arizona--2.7%
AZ Educational LMC RRB, Junior Subseries,
6.30%, 12/01/08 Aa2/NR/A 3,155,000 3,394,559
- ------------------------------------------------------------------------------------------
California--16.0%
Berkeley, CA HF RRB, Alta Bates Medical
Center, Series A, 6.50%, 12/1/11 A2/NR 3,000,000 3,304,080
- ------------------------------------------------------------------------------------------
CA SCDAU Revenue COP, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%,
8/1/12(1) Aaa/AAA 1,000,000 1,175,770
- ------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Inverse
Floater, 7.119%, 11/1/15(2) A1/NR 2,000,000 2,007,500
- ------------------------------------------------------------------------------------------
Long Beach, CA Aquarium of the Pacific RB,
Series 1995-A, 5.75%, 7/1/05 NR/BBB 1,500,000 1,592,865
- ------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A, FGIC
Insured, 6%, 5/15/09 Aaa/AAA 1,000,000 1,118,450
- ------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A, MBIA
Insured, 5.95%, 8/1/10 Aaa/AAA 1,000,000 1,127,430
- ------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force
Village West, Inc., Series A, 8.125%, 6/15/12 NR/NR 2,290,000 2,499,535
- ------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding
Bonds, CFD No. 1, 5.60%, 12/1/11 NR/NR 1,435,000 1,449,092
- ------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding
Bonds, CFD No. 1, 5.80%, 9/1/09 NR/NR 790,000 815,944
- ------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding
Bonds, CFD No. 1, 5.90%, 9/1/10 NR/NR 785,000 812,130
- ------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.375%, 7/1/10 NR/BBB- 1,100,000 1,210,550
- ------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road CAP RRB, Series A, MBIA
Insured, Zero Coupon, 5.25%, 1/15/11(3) Aaa/AAA 5,450,000 2,938,095
----------
20,051,441
</TABLE>
11 Oppenheimer Intermediate Municipal Fund
<PAGE>
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Statement of Investments (Unaudited) (Continued)
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<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Colorado--1.3%
Denver, CO City & Cnty. Airport RB, Series A,
7%, 11/15/99 Baa2/BBB $1,000,000 $1,047,380
- ----------------------------------------------------------------------------------------------
Meridian Metropolitan District, CO GORB,
7.50%, 12/1/11 A3/NR 500,000 549,260
----------
1,596,640
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Connecticut--3.6%
CT DAU RB, Mystic Marinelife Aquarium
Project, Series A, 6.875%, 12/1/17 NR/NR 1,000,000 1,070,560
- ----------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe
Special RB, Prerefunded, Series A, 6.50%,
9/1/05(4) Aaa/AAA 1,240,000 1,402,787
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Mashantucket, CT Western Pequot Tribe
Special RB, Sub. Lien, Series B, 5.60%,
9/1/09(4) Baa3/NR 600,000 627,810
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Mashantucket, CT Western Pequot Tribe
Special RB, Unrefunded Balance, Series A,
6.50%, 9/1/05(4) Baa3/BBB- 1,260,000 1,403,917
----------
4,505,074
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Florida--3.2%
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,069,030
- ----------------------------------------------------------------------------------------------
Grand Haven, FL CDD SPAST RB, Series A,
6.30%, 5/1/02 NR/NR 1,820,000 1,865,755
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Tampa, FL RRB, Catholic Health System,
Series A-1, 5.25%, 11/15/04 Aaa/AAA/AAA 1,000,000 1,054,780
----------
3,989,565
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Illinois--7.8%
Chicago, IL BOE GOB, School Reform
Project, MBIA Insured, 6.25%, 12/1/11 Aaa/AAA 1,000,000 1,148,910
- ----------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District
No. 508 Chicago COP, FGIC Insured, 8.75%,
1/1/03 Aaa/AAA 3,000,000 3,562,770
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Cook Cnty., IL Community College District
No. 508 Lease COP, Series C, MBIA Insured,
7.70%, 12/1/07 Aaa/AAA 1,000,000 1,246,020
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IL HFAU RRB, Franciscan Sisters Health Care
Project, Series C, MBIA Insured, 6%, 9/1/09 Aaa/AAA 2,000,000 2,157,580
- ----------------------------------------------------------------------------------------------
Southwestern IL DAU Hospital RB, St.
Elizabeth Medical Center, 8%, 6/1/10 NR/A 500,000 538,300
- ----------------------------------------------------------------------------------------------
Waukegan, IL GOB, MBIA Insured, 7.50%,
12/30/03 A1/NR 1,000,000 1,138,830
----------
9,792,410
</TABLE>
12 Oppenheimer Intermediate Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indiana--1.0%
IN Bond Bank RB, State Revolving Fund
Program, Series A, 6.875%, 2/1/12 NR/AAA $1,135,000 $1,295,727
- -------------------------------------------------------------------------------------------
Maine--0.6%
ME Educational LMC Student Loan RRB,
Series A-4, 6.05%, 11/1/04 Aaa/NR 750,000 790,830
- -------------------------------------------------------------------------------------------
Michigan--7.5%
Detroit, MI GORB, Series B, FGIC Insured,
7%, 4/1/04 Aaa/AAA 2,000,000 2,276,120
- -------------------------------------------------------------------------------------------
MI Hospital FAU RRB, Detroit Medical Group,
Series A, AMBAC Insured, 5%, 8/15/05 Aaa/AAA/AAA 2,180,000 2,253,161
- -------------------------------------------------------------------------------------------
MI Hospital FAU RRB, Greater Detroit Sinai
Hospital, Series 1995, 6%, 1/1/08 A2/NR/A 2,500,000 2,680,875
- -------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee Power
Station Project, 7.50%, 1/1/21 NR/NR 2,000,000 2,177,580
----------
9,387,736
- -------------------------------------------------------------------------------------------
Nebraska--1.7%
NE Higher Education Loan Program, Series
A-6, 5.90%, 6/1/03 A/NR/A 2,000,000 2,105,060
- -------------------------------------------------------------------------------------------
Nevada--1.6%
Clark Cnty., NV PC RRB, Nevada Power Co.
Project, Series D, 5.30%, 10/1/11 NR/BBB-/BBB 2,000,000 2,009,620
- -------------------------------------------------------------------------------------------
New Jersey--1.6%
NJ Building Authority RRB, 5%, 6/15/10 Aa2/AA- 2,000,000 2,044,660
- -------------------------------------------------------------------------------------------
New Mexico--0.4%
NM Hospital Equipment Loan Council RB,
San Juan Regional Medical Center, Inc.
Project, 7.90%, 6/1/11 A3/NR 500,000 563,540
- -------------------------------------------------------------------------------------------
New York--15.1%
NYC GOB, Prerefunded, Series F, 8.40%,
11/15/07 Aaa/AAA 2,140,000 2,477,906
- -------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series F,
8.40%, 11/15/07 A3/BBB+ 360,000 410,753
- -------------------------------------------------------------------------------------------
NYC GORB, Series A, AMBAC Insured, 7%,
8/1/07 Aaa/AAA 2,000,000 2,360,200
- -------------------------------------------------------------------------------------------
NYC GORB, Series B, AMBAC Insured, 6.20%,
8/15/06 Aaa/AAA 1,500,000 1,671,195
- -------------------------------------------------------------------------------------------
NYC GORB, Series G, 5.25%, 8/1/11 A3/BBB+/A- 2,500,000 2,528,400
</TABLE>
13 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York (continued)
NYC IDAU SPF RB, Terminal One Group
Assn. Project, 6%, 1/1/08 A3/A/A- $2,000,000 $2,149,620
- ---------------------------------------------------------------------------------------
NYC IDAU SPF RB, Terminal One Group
Assn. Project, 6.10%, 1/1/09 A3/A/A- 2,000,000 2,149,100
- ---------------------------------------------------------------------------------------
NYS DA RRB, Second Hospital-Jamaica
Hospital, Series F, 5.10%, 2/15/12 Baa1/BBB+/A 3,000,000 2,962,260
- ---------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6.375%,
11/1/04 Baa1/BBB+ 2,000,000 2,204,340
----------
18,913,774
- ---------------------------------------------------------------------------------------
Ohio--3.1%
Cleveland, OH COP, Stadium Project, AMBAC
Insured, 6%, 11/15/09 Aaa/AAA 1,000,000 1,113,430
- ---------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB, Series B,
6%, 2/1/10 NR/NR 1,000,000 1,027,500
- ---------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR 1,600,000 1,725,152
----------
3,866,082
- ---------------------------------------------------------------------------------------
Oklahoma--0.9%
OK Industrial Authority Health Systems RB,
Baptist Medical Center, Series C, AMBAC
Insured, 7%, 8/15/05 Aaa/AAA/AAA 955,000 1,105,919
- ---------------------------------------------------------------------------------------
Oregon--1.3%
OR Emerald Peoples Utilities District RRB,
FGIC Insured, 7.20%, 11/1/04 Aaa/AAA 1,420,000 1,656,160
- ---------------------------------------------------------------------------------------
Pennsylvania--6.2%
PA EDFAU RR RB, Northhampton Generating,
Sr. Lien, Series A, 6.40%, 1/1/09 NR/NR 2,000,000 2,123,780
- ---------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Health System Project, 6.20%, 7/1/00 Baa3/BBB 1,360,000 1,401,058
- ---------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jefferson Health System, Series A, 5%,
5/15/12 A1/AA-/AA- 1,000,000 994,440
- ---------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 3,095,000 3,208,803
----------
7,728,081
</TABLE>
14 Oppenheimer Intermediate Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
South Carolina--4.0%
Charleston Cnty., RR RRB, Foster Wheeler
Charleston, AMBAC Insured, 5.10%, 1/1/08 Aaa/AAA $3,000,000 $3,084,510
- ---------------------------------------------------------------------------------------------------
Florence Cnty., SC IDV RB, Stone Container
Project, 7.375%, 2/1/07 NR/NR 1,730,000 1,883,659
----------
4,968,169
- ---------------------------------------------------------------------------------------------------
South Dakota--1.3%
SD Student Loan Finance RB, Series A,
5.95%, 8/1/01 NR/A+ 1,500,000 1,580,520
- ---------------------------------------------------------------------------------------------------
Tennessee--2.3%
Chattanooga-Hamilton Cnty., TN HA RB,
Erlanger Medical Center, Prerefunded, Series
B, FSA Insured, Inverse Floater, 9.976%,
5/25/21(2) Aaa/AAA 1,500,000 1,788,750
- ---------------------------------------------------------------------------------------------------
Memphis Shelby Cnty., TN Airport Authority
RRB, Series A, MBIA Insured, 6.25%, 2/15/11 Aaa/AAA 1,000,000 1,138,490
----------
2,927,240
- ---------------------------------------------------------------------------------------------------
Texas--5.6%
Humble, TX ISD CAP GORB, Zero Coupon,
5.15%, 2/15/08(3) Aaa/AAA 2,370,000 1,495,304
- ---------------------------------------------------------------------------------------------------
Port Corpus Christi, TX IDV Corp. RRB, Valero
Energy Corp., Series D, 5.125%, 4/1/09 Baa3/BBB- 2,000,000 2,003,500
- ---------------------------------------------------------------------------------------------------
San Antonio, TX Airport System RRB, AMBAC
Insured, 7.125%, 7/1/05 Aaa/AAA/AAA 1,000,000 1,146,900
- ---------------------------------------------------------------------------------------------------
Tarrant Cnty., TX HFDC RB, Texas Health
Resources System, Series A, MBIA Insured,
5.75%, 2/15/11 Aaa/AAA 2,230,000 2,407,307
----------
7,053,011
- ---------------------------------------------------------------------------------------------------
Utah--1.7%
Davis Cnty., UT Solid Waste Management &
Recovery RRB, Special Service District,
6.125%, 6/15/09 Baa2/BBB+ 2,000,000 2,120,040
- ---------------------------------------------------------------------------------------------------
Vermont--0.8%
VT SAC Educational Loan RB, Series A-3,
FSA Insured, 6.25%, 6/15/03 Aaa/AAA 900,000 949,653
- ---------------------------------------------------------------------------------------------------
Washington--0.8%
WA PP Supply System RRB, Nuclear Project
No. 1, 5.40%, 7/1/12 Aa1/AA-/AA- 1,000,000 1,017,290
</TABLE>
15 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
District of Columbia--1.8%
DC GORB, Series A, AMBAC Insured, 6.50%,
6/1/06 Aaa/AAA/AAA $ 1,000,000 $ 1,132,430
- -----------------------------------------------------------------------------------------
DC Hospital RRB, Medlantic Healthcare
Group, Series A, MBIA Insured, 6%, 8/15/12 Aaa/AAA 1,000,000 1,109,190
------------
2,241,620
- -----------------------------------------------------------------------------------------
U.S. Possessions--3.1%
PR CMWLTH GOB, 6.35%, 7/1/10 Aaa/AAA 1,500,000 1,692,450
- -----------------------------------------------------------------------------------------
PR EPAU RB, Series P, 6.75%, 7/1/03 Baa1/BBB+ 2,000,000 2,180,540
------------
3,872,990
- -----------------------------------------------------------------------------------------
Total Investments, at Value (Cost $116,999,659) 98.8% 123,701,271
- -----------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.2 1,463,919
----------- ------------
Net Assets 100.0% $125,165,190
=========== ============
</TABLE>
16 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
To simplify the listing of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
BOE -- Board of Education IDV -- Industrial Development
CAP -- Capital Appreciation IDAU -- Industrial Development Authority
CDD -- Community Development District ISD -- Independent School District
CFD -- Community Facilities District LMC -- Loan Marketing Corp.
CMWLTH -- Commonwealth MH -- Multifamily Housing
COP -- Certificates of Participation NYC -- New York City
DA -- Dormitory Authority NYS -- New York State
DAU -- Development Authority PC -- Pollution Control
EDFAU -- Economic Development Finance Authority PP -- Public Power
EPAU -- Electric Power Authority RB -- Revenue Bonds
FAU -- Finance Authority RR -- Resource Recovery
GOB -- General Obligation Bonds RRB -- Revenue Refunding Bonds
GORB -- General Obligation Refunding Bonds SAC -- Student Assistance Corp.
HA -- Hospital Authority SCDAU -- Statewide Communities Development
HCF -- Health Care Facilities Authority
HEFAU -- Higher Educational Facilities Authority SPAST -- Special Assessment
HF -- Health Facilities SPF -- Special Facilities
HFA -- Housing Finance Agency SPTX -- Special Tax
HFAU -- Health Facilities Authority SWD -- Solid Waste Disposal
HFDC -- Health Facilities Development Corp. USD -- Unified School District
</TABLE>
1. Securities with an aggregate market value of $352,761 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
2. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays 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 $3,796,250 or 3.03% of the
Fund's net assets at March 31, 1998.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
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 $3,434,514 or 2.74% of the Fund's net
assets as of March 31, 1998.
As of March 31, 1998, securities subject to the alternative minimum tax amount
to $30,746,987 or 24.57% of the Fund's net assets.
See accompanying Notes to Financial Statements.
17 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost $116,999,659)--see accompanying statement $123,701,271
- ---------------------------------------------------------------------------------------
Cash 105,226
- ---------------------------------------------------------------------------------------
Receivables:
Investments sold 2,009,460
Interest 1,725,240
Shares of beneficial interest sold 484,195
Daily variation on futures contracts--Note 5 29,688
- ---------------------------------------------------------------------------------------
Other 21,314
------------
Total assets 128,076,394
- ---------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased 2,008,940
Shares of beneficial interest redeemed 372,258
Dividends 290,958
Daily variation on futures contracts -- Note 5 80,688
Distribution and service plan fees 75,744
Shareholder reports 51,582
Transfer and shareholder servicing agent fees 17,642
Other 13,392
------------
Total liabilities 2,911,204
- ---------------------------------------------------------------------------------------
Net Assets $125,165,190
============
Composition of Net Assets
Paid-in capital $118,111,860
- ---------------------------------------------------------------------------------------
Undistributed net investment income 748,411
- ---------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (402,943)
- ---------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 6,707,862
------------
Net assets $125,165,190
============
</TABLE>
18 Oppenheimer Intermediate Municipal Fund
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$97,466,813 and 6,340,533 shares of beneficial interest outstanding) $15.37
Maximum offering price per share (net asset value plus sales charge of 3.50%
of offering price) $15.93
- --------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $10,742,700
and 699,038 shares of beneficial interest outstanding) $15.37
- --------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $16,955,677 and 1,104,991 shares of beneficial interest outstanding) $15.34
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------
Investment Income
Interest $3,310,584
- ----------------------------------------------------------------------------------
Expenses
Management fees -- Note 4 290,775
- ----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 113,421
Class B 47,220
Class C 76,790
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 56,571
- ----------------------------------------------------------------------------------
Registration and filing fees 40,845
- ----------------------------------------------------------------------------------
Shareholder reports 19,819
- ----------------------------------------------------------------------------------
Legal and auditing fees 12,842
- ----------------------------------------------------------------------------------
Custodian fees and expenses 5,829
- ----------------------------------------------------------------------------------
Trustees' fees and expenses 2,013
- ----------------------------------------------------------------------------------
Other 3,097
----------
Total expenses 669,222
- ----------------------------------------------------------------------------------
Net Investment Income 2,641,362
- ----------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 556,753
Closing of futures contracts (217,716)
----------
Net realized gain 339,037
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 1,175,635
----------
Net realized and unrealized gain 1,514,672
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $4,156,034
==========
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1998 September 30,
(Unaudited) 1997
- -------------------------------------------------------------------------------------------
Operations
<S> <C> <C>
Net investment income $ 2,641,362 $ 5,342,423
- -------------------------------------------------------------------------------------------
Net realized gain (loss) 339,037 (151,731)
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 1,175,635 3,309,533
------------ ------------
Net increase in net assets resulting from operations 4,156,034 8,500,225
- -------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (2,198,888) (4,467,924)
Class B (185,508) (209,401)
Class C (303,010) (533,387)
- -------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial
interest transactions -- Note 2:
Class A 9,209,169 1,131,907
Class B 2,932,574 4,656,894
Class C 2,814,245 2,643,754
- -------------------------------------------------------------------------------------------
Net Assets
Total increase 16,424,616 11,722,068
- -------------------------------------------------------------------------------------------
Beginning of period 108,740,574 97,018,506
------------ ------------
End of period (including undistributed net investment
income of $748,411 and $616,172, respectively) $125,165,190 $108,740,574
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------
Six Months
Ended
March 31,
1998 Year Ended September 30,
(Unaudited) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning
of period $15.16 $14.69 $14.69 $14.23 $15.34 $15.09
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .34 .80 .79 .79 .72 .77
Net realized and unrealized
gain (loss) .23 .45 (.01) .42 (1.00) .70
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .57 1.25 .78 1.21 (.28) 1.47
- ------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.36) (.78) (.78) (.75) (.76) (.75)
Distributions from net
realized gain -- -- -- -- -- (.47)
Distributions in excess of net
realized gain -- -- -- -- (.07) --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.36) (.78) (.78) (.75) (.83) (1.22)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.37 $15.16 $14.69 $14.69 $14.23 $15.34
====== ====== ====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 3.80% 8.72% 5.41% 8.78% (1.92)% 10.31%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $97,467 $87,111 $83,253 $80,535 $83,456 $70,136
- ------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $93,663 $85,590 $82,217 $79,681 $79,076 $48,915
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.62%(5) 5.35% 5.35% 5.55% 5.05% 5.08%
Expenses(7) 0.97%(5) 1.02% 1.02% 0.98% 1.00% 1.07%(6)
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 21.8% 31.1% 53% 55% 51% 21%
</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. Per share amounts calculated based on the average shares outstanding during
the period.
4. 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.
5. Annualized.
22 Oppenheimer Intermediate Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
- -------------------------------------------------------------
Six Months
Ended
March 31,
1998 Year Ended September 30,
(Unaudited) 1997(3) 1996 1995(2)
- -------------------------------------------------------------
<S> <C> <C> <C>
$15.16 $14.69 $14.69 $14.71
- -------------------------------------------------------------
.31 .67 .66 .06
.21 .46 -- (.02)
------ ------ ------ ------
.52 1.13 .66 .04
- -------------------------------------------------------------
(.31) (.66) (.66) (.06)
-- -- -- --
-- -- -- --
------ ------ ------ ------
(.31) (.66) (.66) (.06)
- -------------------------------------------------------------
$15.37 $15.16 $14.69 $14.69
====== ====== ====== ======
- -------------------------------------------------------------
3.41% 7.88% 4.56% 0.83%
- -------------------------------------------------------------
$10,743 $7,690 $2,858 $ 119
- -------------------------------------------------------------
$ 9,487 $4,763 $1,440 $ 37
- -------------------------------------------------------------
3.95%(5) 4.54% 4.51% 3.87%(5)
1.73%(5) 1.79% 1.81% 1.54%(5)
- -------------------------------------------------------------
21.8% 31.1% 53% 55%
</TABLE>
<TABLE>
<CAPTION>
Class C
- -----------------------------------------------------------------------
Six Months
Ended
March 31,
1998 Year Ended September 30,
(Unaudited) 1997 1996 1995 1994(1)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$15.13 $14.67 $14.67 $14.18 $15.14
- ----------------------------------------------------------------------
.30 .66 .68 .69 .46
.22 .47 (.01) .43 (.83)
------ ------ ------ ------ ------
.52 1.13 .67 1.12 (.37)
- ----------------------------------------------------------------------
(.31) (.67) (.67) (.63) (.52)
-- -- -- -- --
-- -- -- -- (.07)
------ ------ ------ ------ ------
(.31) (.67) (.67) (.63) (.59)
- ----------------------------------------------------------------------
$15.34 $15.13 $14.67 $14.67 $14.18
====== ====== ====== ====== ======
- ----------------------------------------------------------------------
3.42% 7.85% 4.63% 8.13% (2.54)%
- ----------------------------------------------------------------------
$16,956 $13,940 $10,908 $7,618 $8,511
- ----------------------------------------------------------------------
$15,417 $11,970 $ 9,015 $7,437 $4,686
- ----------------------------------------------------------------------
3.88%(5) 4.57% 4.56% 4.64% 3.77%(5)
1.73%(5) 1.77% 1.78% 1.88% 2.24%(5)
- ----------------------------------------------------------------------
21.8% 31.1% 53% 55% 51%
</TABLE>
6. The expense ratio was 1.05% net of the voluntary assumption by the Manager.
7. 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.
8. 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, 1998 were $32,039,470 and $25,935,104,
respectively.
See accompanying Notes to Financial Statements.
23 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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 provide a high level of current income exempt
from Federal income tax by investing primarily in intermediate term municipal
bonds. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All 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 that class
and exclusive voting rights with respect to matters affecting that 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 an
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. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
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.
24 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At September 30, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $742,000, expiring in 2003 and 2004.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net investment income
each day the New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains on investments, if
any, will be declared at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its 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 fiscal year in which 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 using the
effective yield method, in accordance with federal income tax requirements. As
of November 4, 1997, in order to conform book and tax bases, the Fund began
amortization of premiums on securities for book purposes. Accordingly, during
the six months ended March 31, 1998, amounts have been reclassified to reflect
an increase in undistributed net investment income of $178,283, an increase in
unrealized appreciation on investments of $719,029 and a decrease in paid-in
capital of $897,312. 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.
25 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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, 1998 Year Ended September 30, 1997
------------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,200,192 $ 18,509,660 1,232,638 $ 18,373,341
Dividends and distributions
reinvested 99,437 1,523,115 202,901 3,016,871
Redeemed (704,889) (10,823,606) (1,357,416) (20,258,305)
--------- ------------- ---------- -------------
Net increase 594,740 $ 9,209,169 78,123 $ 1,131,907
========= ============= ========== =============
- --------------------------------------------------------------------------------------------
Class B:
Sold 217,055 $ 3,321,618 337,796 $ 5,030,661
Dividends and distributions
reinvested 8,052 123,351 8,821 131,375
Redeemed (33,431) (512,395) (33,826) (505,142)
--------- ------------- ---------- -------------
Net increase 191,676 $ 2,932,574 312,791 $ 4,656,894
========= ============= ========== =============
- --------------------------------------------------------------------------------------------
Class C:
Sold 313,636 $ 4,806,574 397,151 $ 5,901,848
Dividends and distributions
reinvested 15,455 236,260 27,933 414,837
Redeemed (145,216) (2,228,589) (247,738) (3,672,931)
--------- ------------- ---------- -------------
Net increase 183,875 $ 2,814,245 177,346 $ 2,643,754
========= ============= ========== =============
</TABLE>
- --------------------------------------------------------------------------------
3. Unrealized Gains and Losses on Investments
At March 31, 1998, net unrealized appreciation on investments of $6,701,612 was
composed of gross appreciation of $6,741,545, and gross depreciation of
$39,933.
- --------------------------------------------------------------------------------
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 average annual 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, 1998, commissions (sales charges paid
by investors) on sales of Class A shares totaled $181,379, of which $27,749 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer.
26 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $83,384 and $46,547, respectively, of which $2,723
was paid to an affiliated broker/dealer for Class C shares. During the six
months ended March 31, 1998, OFDI received contingent deferred sales charges of
$9,410 and $7,131, 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.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of shareholder 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, 1998, OFDI paid $15,372 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its 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 and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and C shares. Each fee is computed on
the average annual net assets of Class B or Class C shares, determined as of the
close of each regular business day. During the six months ended March 31, 1998,
OFDI paid $1,926, to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $42,088 and $36,216,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. At March 31, 1998, OFDI had incurred excess distribution and
servicing costs of $222,478 for Class B and $240,980 for Class C.
27 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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 (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of March 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Expiration Date Contracts March 31, 1998 Appreciation
- --------------------------------------------------------------------------------------------------
Contracts to Purchase
- -----------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 30 yr. 6/98 50 $6,012,500 $6,250
- --------------------------------------------------------------------------------------------------
</TABLE>
Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months ended March
31, 1998.
28 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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 Advisor 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 and Wolf, P.C.
The financial statements included herein have been
taken from the records of the Fund without examination
of 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, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
29 Oppenheimer Intermediate Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Real Asset Funds
- ---------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
- ---------------------------------------------------------------------------------------
Global Stock Funds
- ---------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
- ---------------------------------------------------------------------------------------
Stock Funds
- ---------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
- ---------------------------------------------------------------------------------------
Stock & Bond Funds
- ---------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund1 Convertible Securities Fund(2)
Value Fund Equity Income Fund
- ---------------------------------------------------------------------------------------
Taxable Bond Funds
- ---------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
- ---------------------------------------------------------------------------------------
Municipal Bond Funds
- ---------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
- ---------------------------------------------------------------------------------------
Money Market Funds(4)
- ---------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds seek to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer Intermediate Municipal Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
Internet
24-hr access to account information.
Online transactions now available
www.oppenheimerfunds.com
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
Account Transactions
Mon-Fri 8:30am-8pm ET
1-800-852-8457
PhoneLink
24-hr automated information
and automated transactions
1-800-533-3310
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm 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
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 or by visiting our website. 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 or website 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, or visit us at our website at www.oppenheimerfunds.com--
we're here to help.
[OPPENHEIMERFUNDS LOGO]
RS0860.001.0398 May 29, 1998
