<PAGE> 1
SEMIANNUAL REPORT MARCH 31, 1998
OPPENHEIMER
INSURED
MUNICIPAL FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Manager
10 Statement of
Investments
16 Statement of
Assets and
Liabilities
18 Statement of
Operations
19 Statements of
Changes in
Net Assets
20 Financial Highlights
22 Notes to Financial
Statements
27 Officers and Trustees
28 Information and
Services
REPORT HIGHLIGHTS
- -------------------------------------------------------------------------------
- - 1ST QUARTILE PERFORMANCE: The Fund's Class A shares were ranked in the top
quartile of insured municipal bond funds for the one-year period ended 3/31/98,
as measured by Lipper Analytical Services, Inc.(1)
- - 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.
- - INFLATION STAYS LOW: The Asian economic crisis is slowing the demand for oil
and other commodities, exerting downward pressure on inflation.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
For the 6-Month Period
Ended 3/31/98
<S> <C>
CLASS A
Without With
Sales Chg.(2) Sales Chg.(3)
4.21% (0.74)%
CLASS B
Without With
Sales Chg.(2) Sales Chg.(3)
3.82% (1.18)%
CLASS C
Without With
Sales Chg.(2) Sales Chg.(3)
3.82% 2.82%
</TABLE>
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: LipperAnalytical 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 6 of 51 (1-year), 4 of 43
(5-year) and 7 of 25 (10-year) among insured municipal bond funds for the
period ended 3/31/98.
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 4.75%.
Class B return includes the applicable contingent deferred sales charge of 2%.
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 Insured Municipal Fund
<PAGE> 3
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer
Insured Municipal Fund
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Insured Municipal Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
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 disposable 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 seeking 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 Insured Municipal Fund
<PAGE> 4
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 3/31/98(1)
CLASS A
1 year 5 year 10 year
5.99% 5.33% 7.77%
CLASS B
Since
1 year 5 year Inception
5.44% N/A 5.12%
CLASS C
Since
1 year 5 year Inception
9.50% N/A 7.53%
CUMULATIVE TOTAL RETURN
For the Period Ended 3/31/98(1)
CLASS A
5 Year
29.67% $12,966(3)
STANDARDIZED YIELDS (4)
For the 30-Days Ended 3/31/98
CLASS A
4.14%
CLASS B
3.58%
CLASS C
3.56%
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
Oppenheimer Insured 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. For the six-month period ending March 31,
1998, the Fund's Class A shares produced a cumulative total return, without
sales charges, of 4.21%(2).
<TABLE>
<CAPTION>
GROWTH OF $10,000
Over five years
(without sales charges)(3)
Oppenheimer Insured Municipal Fund Lehman Municipal Bond Index
Class A shares
<S> <C>
$10,000 $10,000
10,318.9 10,327.2
10,716.1 10,676
10,837.1 10,825.9
10,113 10,231.6
10,109.5 10,344.9
10,130.4 10,415.7
9,956.25 10,266.1
10,669 10,992
10,909.7 11,257.4
11,175.2 11,581.2
11,663.6 12,058.8
11,552.6 11,913.4
11,622.3 12,004.7
11,922.5 12,281.1
12,261.1 12,594
12,198 12,563.9
12,604 12,996.8
13,029.1 13,388.5
13,461.7 13,751.8
13,580 13,910.2
</TABLE>
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
4.75%. Class A shares were first publicly offered on 11/11/86. The Fund's
maximum sales charge for Class A shares was lower prior to 2/1/93, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 2% (since inception on
5/3/93). Class C returns for the one-year result include the contingent deferred
sales charge of 1%. Class C shares have an inception date of 8/29/95. 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 Insured Municipal Fund
<PAGE> 5
CREDIT ALLOCATION(5)
<TABLE>
<S> <C>
- - AAA 75.8%
- - AA 20.0
- - A 2.3
- - BBB 1.9
</TABLE>
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
Oppenheimer Insured Municipal Fund is for security-conscious investors seeking a
source of income exempt from federal income taxes.
WHAT WE LOOK FOR
- - Primarily insured bonds that REDUCE CREDIT RISK.
- - DIVERSIFICATION among a wide range of securities.
<TABLE>
<CAPTION>
TEN LARGEST POSITIONS BY STATE(5)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
California 14.0% District of Columbia 5.1%
- --------------------------------------------------------------------------------
Texas 11.4 Colorado 5.0
- --------------------------------------------------------------------------------
Pennsylvania 9.8 Indiana 4.5
- --------------------------------------------------------------------------------
Illinois 6.6 Washington 4.5
- --------------------------------------------------------------------------------
Florida 5.8 Georgia 4.4
- --------------------------------------------------------------------------------
</TABLE>
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
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.
5 Oppenheimer Insured Municipal Fund
<PAGE> 6
"WE OWNED A LARGE PROPORTION OF NON-CALLABLE BONDS, WHICH OUTPERFORM WHEN
INTEREST RATES ARE COMING DOWN."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED DURING THE PERIOD?
The Fund, which invests primarily in insured bonds issued by municipalities
throughout the United States, performed quite well during the period. For the
six-month period ending March 31, 1998, Oppenheimer Insured Municipal Fund's
Class A shares produced a cumulative total return, without sales charges, of
4.21%.(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 fell below 5.7%, as investors
apparently became convinced that the economic turmoil in Asia would lead to even
lower inflation.
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 Insured Municipal Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Bob Patterson
Caryn Halbrecht (Portfolio Manager)
Jerry Webman
However, we were becoming increasingly concerned that the market was
overreacting to the turmoil in Asia. 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. 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.
7 Oppenheimer Insured Municipal Fund
<PAGE> 8
"WE WILL CONTINUE TO AGGRESSIVELY PURSUE ATTRACTIVELY PRICED AREAS OF THE
MUNICIPAL BOND MARKET..."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
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.
Because of falling interest rates, a number of our bonds 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 Insured Municipal Fund
<PAGE> 9
"...THAT ARE TEMPORARILY OUT OF FAVOR OR ARE THE RESULT OF EXCESS SUPPLY."
Another strategy that we employed with success was to maximize the "roll down
the yield curve." Bond prices are impacted by many things, including their time
to maturity, which is typically measured mathematically in weeks, not years. But
in the municipal bond market, the appreciation in price as maturity approaches
resets yearly. For example, when the calendar year changed from 1997 to 1998, a
bond that was 10 years old on December 31st would be considered by investors to
be nine years old on January 1, and thus worth significantly more, even though
only a day has passed. This unusual feature of the market occurs at varying
degrees for each maturity. Our challenge is to find the maturity at which this
phenomenon has the greatest impact.
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 duration municipal bond yielding 4.6% tax-free is
very attractive in relation to inflation.
9 Oppenheimer Insured Municipal Fund
<PAGE> 10
STATEMENT OF INVESTMENTS March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
=======================================================================================================
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--101.7%
- -------------------------------------------------------------------------------------------------------
ALABAMA--0.8%
AL Docks Department Facilities RRB, MBIA
Insured, 5.50%, 10/1/02 Aaa/AAA $ 1,000,000 $ 1,049,040
- -------------------------------------------------------------------------------------------------------
ARIZONA--0.9%
AZ Educational LMC RRB, Series B, 7%, 3/1/05 Aa2/NR 1,090,000 1,182,061
- -------------------------------------------------------------------------------------------------------
CALIFORNIA--14.4%
Anaheim, CA PFAU Lease RB, Sr. Public
Improvements Project, Series A, FSA Insured,
5%, 3/1/37 Aaa/AAA 3,000,000 2,895,270
- -------------------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency Toll Road
RB, CAP, Series A, FSA Insured, Zero Coupon,
5.70%, 1/1/29(1) Aaa/AAA 4,000,000 804,080
- -------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%, 8/1/12(2) Aaa/AAA 1,000,000 1,175,770
- -------------------------------------------------------------------------------------------------------
Center, CA USD CAP GOB, Series C, MBIA
Insured, Zero Coupon, 5.80%, 9/1/19(1) Aaa/AAA 2,500,000 822,275
- -------------------------------------------------------------------------------------------------------
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, 6.15%, 8/1/15 Aaa/AAA 1,000,000 1,147,250
- -------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, 3.96%, 7/8/22(3) Aaa/AAA 1,500,000 1,500,000
- -------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, Inverse Floater, 8.721%, 7/8/22(4) Aaa/AAA 1,500,000 1,944,375
- -------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Asset Leasing Corp.
Leasehold RB, Riverside Cnty. Hospital Project,
MBIA Insured, Zero Coupon, 5.50%, 6/1/20(1) Aaa/AAA/AAA 5,000,000 1,581,750
- -------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, Series G,
MBIA Insured, 6.50%, 9/1/13 Aaa/AAA/A 1,000,000 1,183,650
- -------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Airport
Commission International Airport RB, Second
Series Issue 14-A, MBIA Insured, 8%, 5/1/09 Aaa/AAA 1,455,000 1,775,376
- -------------------------------------------------------------------------------------------------------
Turlock, CA Irrigation District RRB, Series A,
MBIA Insured, 5%, 1/1/13 Aaa/AAA/AAA 2,175,000 2,190,225
-----------
18,138,471
- -------------------------------------------------------------------------------------------------------
COLORADO--5.1%
Centennial Water & Sanitation District CO,
Water & Sewer RB, 5.75%, 6/15/15 Aa1/AA+ 1,775,000 1,891,440
- -------------------------------------------------------------------------------------------------------
CO Housing FAU RB, MH Insured
Mtg.-B-2, 5.90%, 10/1/38 Aa2/AA 1,000,000 1,024,200
- -------------------------------------------------------------------------------------------------------
CO Housing FAU RB, SFM, Sr. Lien, Series
C-2, 6.875%, 11/1/28 Aa2/NR 2,000,000 2,236,300
</TABLE>
10 Oppenheimer Insured Municipal Fund
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COLORADO (CONTINUED)
Douglas Cnty., CO SDI No. RE-1 Douglas &
Elbert Cntys. Improvement GOB, Series A,
MBIA Insured, 8%, 12/15/09 Aaa/AAA $1,000,000 $1,304,460
- -------------------------------------------------------------------------------------------------------
6,456,400
- -------------------------------------------------------------------------------------------------------
CONNECTICUT--3.3%
CT Housing FAU RB, Series A, Subseries A-2,
6.20%, 11/15/22 Aa3/AA 1,000,000 1,059,280
- -------------------------------------------------------------------------------------------------------
CT Housing FAU RRB, Series A, Subseries
D-2, 6.20%, 11/15/27 Aa3/AA 1,000,000 1,056,090
- -------------------------------------------------------------------------------------------------------
CT Housing FAU RRB, Subseries C-2,
5.85%, 11/15/28 Aa3/AA 2,000,000 2,075,040
----------
4,190,410
- -------------------------------------------------------------------------------------------------------
FLORIDA--4.6%
FL HFA RRB, MH, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,069,030
- -------------------------------------------------------------------------------------------------------
Lee Cnty., FL Hospital Board of Directors RRB,
MBIA Insured, Inverse Floater, 8.711%, 3/26/20(4) Aaa/AAA 1,000,000 1,170,000
- -------------------------------------------------------------------------------------------------------
Miami-Dade Cnty., FL SPO RRB, Sub. Lien, Series A,
MBIA Insured, Zero Coupon, 5.50%, 10/1/15(1) Aaa/AAA 3,000,000 1,209,270
- -------------------------------------------------------------------------------------------------------
Orange Cnty., FL HFAU RB, Orlando
Regional Healthcare, Series A, MBIA
Insured, 6.25%, 10/1/18(5) Aaa/AAA 2,000,000 2,314,940
----------
5,763,240
- -------------------------------------------------------------------------------------------------------
GEORGIA--4.6%
Dalton, GA DAU RB, MBIA Insured, 5.50%, 8/15/26 Aaa/AAA 1,000,000 1,061,130
- -------------------------------------------------------------------------------------------------------
GA MEAU RRB, Project One, Sub. Lien,
Series A, AMBAC Insured, 5.375%, 1/1/13 Aaa/AAA/AAA 2,285,000 2,357,412
- -------------------------------------------------------------------------------------------------------
Richmond Cnty., GA DAU RB, Sub. Lien,
Series C, Zero Coupon, 5.80%, 12/1/21(1) Aaa/NR 8,000,000 2,298,400
----------
5,716,942
- -------------------------------------------------------------------------------------------------------
ILLINOIS--6.8%
Chicago, IL SFM RB, Series B, 6.95%, 9/1/28 Aaa/NR 2,000,000 2,251,180
- -------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District
No. 508 Chicago COP, FGIC Insured,
8.75%, 1/1/05 Aaa/AAA/AAA 500,000 622,630
- -------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District
No. 508 Lease COP, Series C, MBIA
Insured, 7.70%, 12/1/07 Aaa/AAA 1,500,000 1,869,030
- -------------------------------------------------------------------------------------------------------
Cook Cnty., IL SDI No. 99 Cicero GOB,
FGIC Insured, 8.50%, 12/1/05 Aaa/AAA 1,170,000 1,471,369
- -------------------------------------------------------------------------------------------------------
IL HFAU RRB, Northwestern Medical
Facilities, MBIA Insured, 5%, 11/15/10 Aaa/NR/AAA 2,285,000 2,294,163
----------
8,508,372
</TABLE>
11 Oppenheimer Insured Municipal Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDIANA--4.7%
Hamilton Southeastern, IN Consolidated
School Building Corp. RRB, First Mtg.,
AMBAC Insured, 7%, 7/1/11 Aaa/AAA/AAA $ 500,000 $ 542,425
- ----------------------------------------------------------------------------------------------------
IN HFFAU Hospital RB, Clarian Health
Partners, Inc., Series A, 6%, 2/15/21 Aa3/AA/AA 2,000,000 2,121,220
- ----------------------------------------------------------------------------------------------------
IN Office Building Commission Capital Complex
RB, Series B, MBIA Insured, 7.40%, 7/1/15 Aaa/AAA 2,500,000 3,211,575
----------
5,875,220
- ----------------------------------------------------------------------------------------------------
MASSACHUSETTS--4.1%
MA Health & Educational FA RB, Mt. Auburn
Hospital Issue, Series B-1, MBIA Insured,
6.25%, 8/15/14 Aaa/AAA 1,000,000 1,102,220
- ----------------------------------------------------------------------------------------------------
MA HFA RB, Series A, AMBAC Insured,
6.60%, 7/1/14 Aaa/AAA/AAA 2,000,000 2,130,480
- ----------------------------------------------------------------------------------------------------
MA TUAU Metropolitan Highway System RRB,
Sr. Lien, Series A, MBIA Insured, 5%, 1/1/27 Aaa/AAA 2,000,000 1,931,820
----------
5,164,520
- ----------------------------------------------------------------------------------------------------
NEVADA--2.7%
Clark Cnty., NV Passenger Facility Charge RB,
Las Vegas McCarran International Airport
Project, Series B, MBIA Insured, 6.50%, 7/1/12 Aaa/AAA 2,000,000 2,180,400
- ----------------------------------------------------------------------------------------------------
Humboldt Cnty., NV PC RB, Idaho Power Co.
Project, AMBAC Insured, 8.30%, 12/20/14 Aaa/AAA/AAA 1,000,000 1,201,350
----------
3,381,750
- ----------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.5%
NH Turnpike System RRB, Series A, FGIC
Insured, 6.75%, 11/1/11 Aaa/AAA/AAA 500,000 579,170
- ----------------------------------------------------------------------------------------------------
NEW YORK--3.7%
NY United Nations Development Corp. RRB,
Sr. Lien, Series B, 5.60%, 7/1/26 A2/NR/A 3,000,000 3,009,060
- ----------------------------------------------------------------------------------------------------
NYC MWFAU WSS RB, Series B, MBIA
Insured, 5.75%, 6/15/29 Aaa/AAA/AAA 1,500,000 1,582,815
----------
4,591,875
- ----------------------------------------------------------------------------------------------------
OHIO--3.9%
Cincinnati, OH Student Loan Funding Corp.
RB, Series A, AMBAC Insured, 5.75%, 8/1/03 Aaa/AAA/AAA 1,000,000 1,067,900
- ----------------------------------------------------------------------------------------------------
Cleveland, OH COP, Stadium Project, AMBAC
Insured, 6%, 11/15/09 Aaa/AAA 1,000,000 1,113,430
- ----------------------------------------------------------------------------------------------------
OH HFA Mtg. RB, 6.10%, 9/1/28 NR/AAA 1,990,000 2,096,943
- ----------------------------------------------------------------------------------------------------
Streetsboro, OH SDI GOB, AMBAC Insured,
7.125%, 12/1/10 Aaa/AAA/AAA 500,000 618,775
----------
4,897,048
</TABLE>
12 Oppenheimer Insured Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OKLAHOMA--1.8%
OK Industrial Authority Health Systems RB,
Baptist Medical Center, Series C, AMBAC
Insured, 7%, 8/15/05 Aaa/AAA/AAA $ 2,000,000 $ 2,316,060
- ------------------------------------------------------------------------------------------------------
PENNSYLVANIA--10.1%
Allegheny Cnty., PA Airport RRB, Pittsburgh
International Airport, Series A, MBIA Insured,
5.75%, 1/1/08 Aaa/AAA 1,000,000 1,082,510
- ------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, Prerefunded, FGIC
Insured, Inverse Floater, 8.67%, 11/10/20(4) Aaa/AAA/AAA 1,000,000 1,215,000
- ------------------------------------------------------------------------------------------------------
Chester Cnty., PA Education & HFAU RRB,
Series B, 5.375%, 5/15/27 A1/AA-/AA- 3,575,000 3,567,457
- ------------------------------------------------------------------------------------------------------
Delaware Valley, PA Regional FAU Local
Government RB, Series B, AMBAC Insured,
5.70%, 7/1/27 Aaa/AAA 2,000,000 2,194,140
- ------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC
Insured, Inverse Floater, 8.31%, 3/1/22(4) Aaa/AAA/AAA 1,250,000 1,398,438
- ------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jefferson Health System, Series A, 5%, 5/15/12 A1/AA-/AA- 1,000,000 994,440
- ------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional POAU Lease RB,
MBIA Insured, Inverse Floater, 8.50%, 9/1/20(4) Aaa/AAA 1,900,000 2,227,750
-----------
12,679,735
- ------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--1.6%
Charleston Cnty., SC RR RRB, Foster
Wheeler Charleston, AMBAC Insured,
5%, 1/1/07 Aaa/AAA 2,000,000 2,048,980
- ------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--0.9%
SD Lease Revenue Trust Certificates,
Series B, FSA Insured, 8%, 9/1/02 Aaa/AAA 1,000,000 1,148,640
- ------------------------------------------------------------------------------------------------------
TEXAS--11.8%
Cedar Hill, TX ISD CAP RRB, Zero Coupon,
6.10%, 8/15/11(1) Aaa/AAA/AAA 1,585,000 809,047
- ------------------------------------------------------------------------------------------------------
Grand Prairie, TX HFDC RRB, Dallas/Ft. Worth
Medical Center Project, AMBAC Insured,
6.875%, 11/1/10 Aaa/AAA 1,800,000 2,044,800
- ------------------------------------------------------------------------------------------------------
Harris Cnty., TX Hospital District RRB, AMBAC
Insured, 7.40%, 2/15/10 Aaa/AAA/AAA 2,000,000 2,429,120
- ------------------------------------------------------------------------------------------------------
Humble, TX ISD CAP GORB, Zero Coupon,
5.20%, 2/15/08(1) Aaa/AAA 2,365,000 1,492,149
- ------------------------------------------------------------------------------------------------------
Lower Neches Valley, TX IDV Corp.
Environmental Authority RB, Mobil Oil
Refining Corp. Project, 6.35%, 4/1/26 Aa2/AA 2,170,000 2,354,472
</TABLE>
13 Oppenheimer Insured Municipal Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS (CONTINUED)
Lower Neches Valley, TX IDV Corp. Sewer
Facilities RB, Mobil Oil Refining Corp.
Project, 6.40%, 3/1/30 Aa2/AA $ 1,000,000 $ 1,087,200
- -------------------------------------------------------------------------------------------------------
Rio Grande Valley TX HFDC Retirement
Facilities RB, Golden Palms, Series B,
MBIA Insured, 6.40%, 8/1/12 Aaa/AAA 2,000,000 2,176,220
- -------------------------------------------------------------------------------------------------------
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
-----------
14,800,315
- -------------------------------------------------------------------------------------------------------
WASHINGTON--4.7%
Chelan Cnty., WA Public Utilities District No. 1
RB, Chelan Hydro Conservation
System-Division III, Series A, 5.60%, 7/1/32 Aa3/AA 2,000,000 2,051,880
- -------------------------------------------------------------------------------------------------------
Tacoma, WA Electric Systems RB, Prerefunded,
AMBAC Insured, Inverse Floater, 9.043%, 1/2/15(4) Aaa/AAA/AAA 1,000,000 1,160,000
- -------------------------------------------------------------------------------------------------------
WA PP Supply System RRB, Nuclear Project
No. 1, Series A, 5%, 7/1/13 Aa1/AA-/AA- 1,500,000 1,469,325
- -------------------------------------------------------------------------------------------------------
WA PP Supply System RRB, Nuclear Project
No. 2, Series A, FGIC Insured, Zero Coupon,
5.50%, 7/1/09(1) Aaa/AAA/AAA 2,000,000 1,165,240
-----------
5,846,445
- -------------------------------------------------------------------------------------------------------
WISCONSIN--3.6%
WI Education & HFAU RRB, Waukesha
Memorial Hospital, Series A, AMBAC
Insured, 5.25%, 8/15/19 Aaa/AAA 3,000,000 3,002,190
- -------------------------------------------------------------------------------------------------------
WI Health & Educational FA RB, Aurora
Medical Group, Inc. Project, FSA Insured,
6%, 11/15/11 Aaa/AAA 1,370,000 1,549,813
-----------
4,552,003
- -------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--5.2%
DC GORB, Series A, AMBAC Insured,
6.50%, 6/1/06 Aaa/AAA/AAA 2,915,000 3,301,033
- -------------------------------------------------------------------------------------------------------
DC GORB, Series A-1, MBIA Insured,
6%, 6/1/11 Aaa/AAA/AAA 2,000,000 2,231,040
- -------------------------------------------------------------------------------------------------------
DC Hospital RRB, Medlantic Healthcare
Group, Series A, MBIA Insured,
5.25%, 8/15/12 Aaa/AAA 1,000,000 1,016,740
-----------
6,548,813
</TABLE>
14 Oppenheimer Insured Municipal Fund
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. POSSESSIONS--1.9%
PR EPAU RB, Series DD, 5%, 7/1/28 Baa1/BBB+ $2,500,000 $ 2,391,000
-------------
Total Municipal Bonds and Notes (Cost $120,082,395) 127,826,510
===============================================================================================================
SHORT-TERM TAX-EXEMPT OBLIGATIONS--1.5%
- ---------------------------------------------------------------------------------------------------------------
Manatee Cnty., FL PC RRB, Florida Power & Light
Co. Project, 3.85%, 4/1/98(6) (Cost $1,800,000) 1,800,000 1,800,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $121,882,395) 103.2% 129,626,510
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (3.2) (3,974,618)
----------- -------------
NET ASSETS 100.0% $ 125,651,892
=========== =============
</TABLE>
To simplify the listing of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
CAP --Capital Appreciation MH --Multifamily Housing
COP --Certificates of Participation MUD --Municipal Utility District
DAU --Development Authority MWFAU --Municipal Water Finance Authority
EPAU --Electric Power Authority NYC --New York City
FA --Facilities Authority PC --Pollution Control
FAU --Finance Authority PFAU --Public Finance Authority
GOB --General Obligation Bonds POAU --Port Authority
GORB --General Obligation Refunding Bonds PP --Public Power
HEAA --Higher Education Assistance Agency RB --Revenue Bonds
HEFAU --Higher Educational Facilities Authority RR --Resource Recovery
HFA --Housing Finance Agency RRB --Revenue Refunding Bonds
HFAU --Health Facilities Authority SCDAU --Statewide Communities Development Authority
HFDC --Health Facilities Development Corp. SDI --School District
HFFAU --Health Facilities Finance Authority SFM --Single Family Mtg.
IDV --Industrial Development SPO --Special Obligations
ISD --Independent School District TUAU --Turnpike Authority
LMC --Loan Marketing Corp. USD --Unified School District
MEAU --Municipal Electric Authority WSS --Water & Sewer System
</TABLE>
1. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
2. Securities with an aggregate market value of $1,175,770 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. 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 $9,115,563 or 7.25% of the
Fund's net assets at March 31, 1998.
5. 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 $2,314,940 or 1.84% of the Fund's net
assets as of March 31,1998.
6. Floating or variable rate obligation. 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, 1998. This instrument may
also have a demand feature which allows, on up to 30 days notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
As of March 31, 1998, securities subject to the alternative minimum tax amount
to $31,277,180 or 24.89% of the Fund's net assets.
See accompanying Notes to Financial Statements.
15 Oppenheimer Insured Municipal Fund
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES March 31, 1998 (Unaudited)
<TABLE>
========================================================================================
<S> <C>
ASSETS
Investments, at value (cost $121,882,395)--see accompanying statement $129,626,510
- ----------------------------------------------------------------------------------------
Cash 357,970
- ----------------------------------------------------------------------------------------
Receivables:
Investments sold 2,028,373
Interest 1,603,329
Shares of beneficial interest sold 433,909
- ----------------------------------------------------------------------------------------
Other 20,080
------------
Total assets 134,070,171
========================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 7,888,781
Dividends 295,766
Distribution and service plan fees 74,633
Shareholder reports 58,831
Daily variation on futures contracts--Note 5 47,625
Shares of beneficial interest redeemed 29,923
Transfer and shareholder servicing agent fees 16,249
Other 6,471
------------
Total liabilities 8,418,279
========================================================================================
NET ASSETS $125,651,892
============
========================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $117,162,752
- ----------------------------------------------------------------------------------------
Undistributed net investment income 157,131
- ----------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 558,207
- ----------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 7,773,802
------------
Net assets $125,651,892
============
</TABLE>
16 Oppenheimer Insured Municipal Fund
<PAGE> 17
<TABLE>
================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$97,715,504 and 5,454,783 shares of beneficial interest outstanding) $ 17.91
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 18.80
- ------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $24,323,686
and 1,357,430 shares of beneficial interest outstanding) $ 17.92
- ------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $3,612,702
and 201,702 shares of beneficial interest outstanding) $ 17.91
</TABLE>
See accompanying Notes to Financial Statements
17 Oppenheimer Insured Municipal Fund
<PAGE> 18
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1998 (Unaudited)
<TABLE>
======================================================================================
<S> <C>
INVESTMENT INCOME
Interest $3,189,643
======================================================================================
EXPENSES
Management fees--Note 4 263,557
- --------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 113,158
Class B 109,721
Class C 15,346
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 53,800
- --------------------------------------------------------------------------------------
Registration and filing fees 25,433
- --------------------------------------------------------------------------------------
Shareholder reports 22,672
- --------------------------------------------------------------------------------------
Legal and auditing fees 12,890
- --------------------------------------------------------------------------------------
Trustees' fees and expenses 2,169
- --------------------------------------------------------------------------------------
Other 4,359
----------
Total expenses 623,105
======================================================================================
NET INVESTMENT INCOME 2,566,538
======================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 861,957
Closing of futures contracts (259,147)
----------
Net realized gain 602,810
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 1,618,378
----------
Net realized and unrealized gain 2,221,188
======================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,787,726
==========
</TABLE>
See accompanying Notes to Financial Statements
18 Oppenheimer Insured Municipal Fund
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997
===================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 2,566,538 $ 5,398,040
- -------------------------------------------------------------------------------------------------------------------
Net realized gain 602,810 559,776
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 1,618,378 3,288,007
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,787,726 9,245,823
===================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (2,241,710) (4,428,263)
Class B (433,732) (753,073)
Class C (60,154) (72,828)
- -------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (646,115) ---
Class B (149,337) ---
Class C (19,416) ---
===================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 5,667,599 4,293,559
Class B 4,133,607 3,315,084
Class C 1,034,215 1,554,898
===================================================================================================================
NET ASSETS
Total increase 12,072,683 13,155,200
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 113,579,209 100,424,009
------------- -------------
End of period (including undistributed net investment
income of $157,131 and $310,788, respectively) $ 125,651,892 $ 113,579,209
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Insured Municipal Fund
<PAGE> 20
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 $17.72 $17.07 $16.86 $16.14 $18.06 $16.92
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40 .91 .90 .90 .89 .93
Net realized and unrealized gain (loss) .34 .63 .20 .71 (1.84) 1.35
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .74 1.54 1.10 1.61 (.95) 2.28
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.43) (.89) (.89) (.89) (.89) (.96)
Distributions from net realized gain (.12) -- -- -- (.08) (.18)
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.55) (.89) (.89) (.89) (.97) (1.14)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.91 $17.72 $17.07 $16.86 $16.14 $18.06
====== ====== ====== ====== ====== ======
==============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 4.21% 9.25% 6.67% 10.29% (5.46)% 14.02%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $97,716 $91,051 $83,516 $76,691 $67,793 $62,158
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $94,596 $86,511 $81,233 $70,650 $66,953 $45,949
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.44%(5) 5.25% 5.27% 5.52% 5.23% 5.40%
Expenses(7) 0.89%(5) 0.95% 1.02% 0.95% 1.05% 1.18%(6)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 23.9% 76.5% 93% 58% 99% 7%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to September 30,
1995.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
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.
20 Oppenheimer Insured Municipal Fund
<PAGE> 21
<TABLE>
<CAPTION>
CLASS B CLASS C
- ------------------------------------------------------------------------ ----------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1998 YEAR ENDED SEPTEMBER 30, 1998 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993(3) (UNAUDITED) 1997(2) 1996 1995(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$17.73 $17.08 $16.87 $16.15 $18.07 $17.33 $17.72 $17.06 $16.86 $16.72
- --------------------------------------------------------------------------------------------------------------------------------
.32 .76 .77 .78 .77 .30 .30 .76 .75 .08
.35 .65 .20 .71 (1.86) .74 .37 .65 .21 .14
------ ------ ------ ------ ------ ------ ---- ---- ---- ----
.67 1.41 .97 1.49 (1.09) 1.04 .67 1.41 .96 .22
- --------------------------------------------------------------------------------------------------------------------------------
(.36) (.76) (.76) (.77) (.75) (.30) (.36) (.75) (.76) (.08)
(.12) -- -- -- (.08) -- (.12) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
(.48) (.76) (.76) (.77) (.83) (.30) (.48) (.75) (.76) (.08)
- --------------------------------------------------------------------------------------------------------------------------------
$17.92 $17.73 $17.08 $16.87 $16.15 $18.07 $17.91 $17.72 $17.06 $16.86
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
================================================================================================================================
3.82% 8.43% 5.87% 9.47% (6.20)% 6.04% 3.82% 8.48% 5.77% 1.30%
================================================================================================================================
$24,324 $19,974 $15,983 $13,341 $11,571 $5,104 $3,613 $2,554 $924 $ 211
- --------------------------------------------------------------------------------------------------------------------------------
$22,028 $17,309 $14,822 $11,987 $ 9,209 $2,298 $3,083 $1,720 $618 $ 1
- --------------------------------------------------------------------------------------------------------------------------------
3.76%(5) 4.48% 4.50% 4.75% 4.43% 3.99%(5) 3.85%(5) 4.45% 4.38% 4.89%(5)
1.64%(5) 1.71% 1.77% 1.71% 1.82% 1.96%(5) 1.64%(5) 1.72% 1.81% 1.07%(5)
- --------------------------------------------------------------------------------------------------------------------------------
23.9% 76.5% 93% 58% 99% 7% 23.9% 76.5% 93% 58%
</TABLE>
6. The expense ratio was 1.10% net of the voluntary assumption by the Manager.
7. Beginning in fiscal 1996, the expense ratio reflects the effect of expenses
paid indirectly by the Fund. Prior year expense ratios have not been adjusted.
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 $35,581,224 and $29,063,119, respectively.
See accompanying Notes to Financial Statements.
21 Oppenheimer Insured Municipal Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Insured Municipal Fund (the Fund) is a separate series of
Oppenheimer Municipal Fund, a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to provide a high level of current income exempt
from Federal income tax by investing primarily in insured 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.
- --------------------------------------------------------------------------------
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.
22 Oppenheimer Insured Municipal Fund
<PAGE> 23
================================================================================
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, 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 a decrease in undistributed net investment
income of $15,401, an increase in unrealized appreciation on investments of
$581,763 and an increase in paid-in capital of $597,164. 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.
23 Oppenheimer Insured Municipal Fund
<PAGE> 24
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 MONTH ENDED MARCH 31, 1998 YEAR ENDED SEPTEMBER 30, 1997
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 508,759 $ 9,114,664 925,621 $ 16,067,826
Dividends and distributions
reinvested 119,433 2,131,749 190,616 3,300,646
Redeemed (311,610) (5,578,814) (870,242) (15,074,913)
-------- ----------- -------- ------------
Net increase 316,582 $ 5,667,599 245,995 $ 4,293,559
======== =========== ======== ============
- ----------------------------------------------------------------------------------------------------------------------
Class B:
Sold 295,797 $ 5,303,772 328,196 $ 5,695,198
Dividends and distributions
reinvested 22,092 394,334 28,559 494,913
Redeemed (87,227) (1,564,499) (165,697) (2,875,027)
------- ----------- -------- ------------
Net increase 230,662 $ 4,133,607 191,058 $ 3,315,084
======= =========== ======== ============
- ----------------------------------------------------------------------------------------------------------------------
Class C:
Sold 64,395 $ 1,156,643 106,290 $ 1,838,223
Dividends and distributions
reinvested 3,576 63,809 2,660 46,164
Redeemed (10,440) (186,237) (18,976) (329,489)
------- ----------- -------- -----------
Net increase 57,531 $ 1,034,215 89,974 $ 1,554,898
======= =========== ======== ===========
</TABLE>
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At March 31, 1998, net unrealized appreciation on investments of $7,744,115 was
composed of gross appreciation of $7,838,223, and gross depreciation of $94,108.
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.45% on the first
$100 million of average annual net assets, 0.40% on the next $150 million,
0.375% on the next $250 million and 0.35% on 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.
24 Oppenheimer Insured Municipal Fund
<PAGE> 25
================================================================================
For the six months ended March 31, 1998, commissions (sales charges paid
by investors) on sales of Class A shares totaled $108,661, of which $28,499 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 $199,124 and $11,491, respectively, of which $4,106 was
paid to an affiliated broker/dealer for Class B shares. During the six months
ended March 31, 1998, OFDI received contingent deferred sales charges of $36,992
upon redemption of Class B shares, as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
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 $5,467 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 $1,250 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and retained
$90,803 and $11,049, 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 $826,849 for Class B and $48,643 for Class
C.
25 Oppenheimer Insured Municipal Fund
<PAGE> 26
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.
At March 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE CONTRACTS MARCH 31, 1998 APPRECIATION
- -----------------------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
- -----------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 30 yr. 6/98 50 $6,012,500 $29,687
</TABLE>
===============================================================================
6. 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.
26 Oppenheimer Insured Municipal Fund
<PAGE> 27
OPPENHEIMER INSURED MUNICIPAL FUND
A series of Oppenheimer Municipal Fund
===============================================================================
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief
Executive Officer
Bridget A. Macaskill, Trustee and
President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Trustee, 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 OppenheimerFunds Services
SERVICING AGENT
===============================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
===============================================================================
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 of the independent
auditors. This is a copy of a report
to shareholders of Oppenheimer Insured
Municipal Fund. This report must be
preceded or accompanied by a
Prospectus of Oppenheimer Insured
Municipal Fund. For material
information concerning the Fund, see
the Prospectus.
Shares of Oppenheimer funds are not
deposits or obligations of any bank,
are not guaranteed by any bank, and
are not insured by the FDIC or any
other agency, and involve investment
risks, including possible loss of the
principal amount invested.
27 Oppenheimer Insured Municipal Fund
<PAGE> 28
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As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
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And when you need help, our Customer Service Representatives are only a
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When you want to make a transaction, you can do it easily by calling our
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
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So call us today, or visit us at our website at
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[OPPENHEIMERFUNDS LOGO]
RS0865.001.0396 May 29, 1998
