Semiannual Report March 31, 1999
O P P E N H E I M E R
Intermediate
Municipal Fund
[photo of financial ledger and pencil]
[logo]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An Interview with Your Fund's Manager
11 Financial Statements
31 Officers and Trustees
32 Information and Services
Report highlights
- --------------------------------------------------------------------------------
o Compared to Treasury securities which were quite volatile during the period,
municipal bond prices were very stable.
o In the current low interest-rate environment, municipalities are eager to
finance and refinance.
Cumulative Total Returns
For the 6-Month Period
Ended 3/31/99
Class A
Without With
Sales Chg.1 Sales Chg.2
- ----------------------------------
1.55% -2.01%
- ----------------------------------
Class B
Without With
Sales Chg.1 Sales Chg.2
- ----------------------------------
1.17% -2.80%
- ----------------------------------
Class C
Without With
Sales Chg.1 Sales Chg.2
- ----------------------------------
1.17% 0.18%
- ----------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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. The Fund's performance may from time to time be subject
to substantial short-term changes, particularly during periods of market or
interest rate volatility. For updates on the Fund's performance, please contact
your financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A return includes the current maximum initial sales charge of 3.50%.
Class B return includes the applicable contingent deferred sales charge of 4%.
Class C return includes the contingent deferred sales charge of 1%. Class B and
C shares are subject to an annual 0.75% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer Intermediate Municipal Fund
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[photo of James C. Swain]
James C. Swain
Chairman
Oppenheimer
Intermediate
Municipal Fund
[photo of Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer
Intermediate
Municipal Fund
Dear shareholder,
- -----------------
The strength of the U.S. economy continues to surprise and concern many
analysts. At a time when the majority of the world's economies are beleaguered
by financial strain, the U.S. economy has been growing at a remarkable rate.
With respect to the U.S. bond market, stronger-than-expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of
longer-term taxable bonds have risen from their October 1998 lows, when
investors had bid up prices during the global "flight to quality." At the same
time, tax-exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat through March 31. What's
more, the disparity in valuations between large companies, which have led the
market's advance, and smaller ones, which have lagged, has become historically
wide.
What do these observations mean for your investments? In our view, actively
managed portfolios that are closely monitored by expert money managers may
provide better returns than passive index investing in 1999. That's because
selectivity is expected to be more critical to performance than it has been over
the past few years. In a potentially overvalued stock market and rising
interest-rate environment, the ability to identify the most promising securities
could become paramount.
Even though many equity investors may be tempted to focus their portfolio
on the technology sector, we suggest a more prudent course: broad
diversification beyond any single asset class, industry, capitalization range or
geographic region. We believe that the risks of this investment environment
require consideration of a broad range of investments and markets, including
bonds. That way, if one market experiences setbacks, one or more of the others
may help cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
Sincerely,
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 22, 1999
3 Oppenheimer Intermediate Municipal Fund
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An interview with your Fund's manager
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How has the Fund performed during the period?
During the six-month period that ended March 31, 1999, Oppenheimer Intermediate
Municipal Fund continued to meet its objective of providing shareholders with
current income exempt from Federal income tax. In addition, the Fund's Class A
shares have maintained an overall 4-star rating (****) from Morningstar for the
3-, 5- and 10-year periods ended March 31, 1999, among 1,578 (3-year), 1,131
(5-year) and 368 (10-year) municipal funds.1
What factors affected the Fund's performance?
Even in a favorable marketplace, the most critical factor affecting performance
has been our active management of the portfolio. For instance, our decision to
hedge duration with Treasury futures enabled us to improve yield by investing in
longer-term securities while limiting the risk of price volatility associated
with a change in interest rates.
1. Source: Morningstar, Inc., 3/31/99. Morningstar rates 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 90-day U.S. Treasury bill returns, respectively. Current star ratings
are based on the weighted average of 3-, 5- and 10-year (if applicable) ratings
for a fund or class and are subject to change monthly. Top 10%: 5 stars. Next
22.5%: 4 stars. Middle 35%: 3 stars. Next 22.5%: 2 stars. Bottom 10%: 1 star.
The Fund's Class A shares were rated 4 stars (3-year), 5 stars (5-year) and 4
stars (10-year) weighted 20%/30%/50%, respectively.
4 Oppenheimer Intermediate Municipal Fund
<PAGE>
[photo of portfolio management team]
Portfolio Management
Team (l to r)
Bob Patterson
Caryn Halbrecht
(Portfolio Manager)
Jerry Webman
In addition, through close monitoring of the price and yield differentials of
intermediate bonds to longer securities, we were able to make a well-timed move
out of our positions in 10- and 30-year bonds and invest in bonds having a
20-year maturity, which added to the Fund's yield.
The stability of the economic environment has been a significant factor. It
meant we could judiciously add higher yielding, more credit sensitive issues to
the portfolio, which benefited our shareholders. Another favorable trend on the
part of municipalities has been the refinancing of older debt--in order to take
advantage of current low interest rates. As a result, a number of lower rated
bonds in our portfolio have been reclassified as AAA government secured bonds
and appreciated substantially in price.
5 Oppenheimer Intermediate Municipal Fund
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Avg Annual Total Returns
For the Periods Ended 3/31/999(2)
Class A
1 year 5 year 10 year
- -----------------------------
2.09% 6.07% 7.19%
- -----------------------------
Class B Since
1 year 5 year Inception
- -----------------------------
1.00% N/A 5.42%
- -----------------------------
Class C Since
1 year 5 year Inception
- -----------------------------
4.01% 6.00% 4.91%
- -----------------------------
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How do you explain the changes in the municipal market in terms of the big
picture?
Compared to Treasury securities, which were quite volatile during the period,
municipal bond prices were very stable. Whereas Treasury bonds were actively
bought and sold by global investors seeking safety and liquidity as
international economic crises ebbed and flowed, the demand for munis remained
fairly constant, as investors sought to take advantage of the attractive
tax-free income. In addition, due to the limited supply of new issues and the
appetite of several large closed-end municipal funds, municipal bonds
outperformed Treasuries in January 1999.
Typically, municipal bonds yield less than U.S. Treasury bonds on an
absolute basis because the interest income they pay is generally exempt from
federal taxes. During the recent six-month period, however, muni yields hovered
near 100% of Treasury bonds. Treasury yields fell beneath those of munis because
of the surging demand for the safety of Treasury bonds during last fall's global
economic crisis.
2. 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.
Class B and C shares are subject to an annual 0.75% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
6 Oppenheimer Intermediate Municipal Fund
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What investment strategies have you employed?
Our top priority is maintaining the high credit quality of the portfolio. For
this reason, when a bond matures we look to replace it with a similar issue,
rather than add to our exposure. Or when the spreads on a certain position no
longer meet our guidelines for return, we look to exchange it for a bond that
offers more yield. A good example is our position in California exempt issues,
which we added to our 15-year maturities, when that sector was inexpensive.
During the last six months, due to strong demand and limited supply, these bonds
outperformed the broad market on price. As a result, we were able to sell the
bonds at an excellent profit and replace them with lower priced, higher yielding
issues-- a classic case of the market dictum: buy low/sell high.
What other strategies worked well?
In a declining interest rate environment, we liked using "inverse floaters" in
the portfolio. These are variable rate bonds that pay interest at rates that
move in the opposite direction of the changing yields on short-term tax-exempt
bonds. As interest rates rise, inverse floaters produce less current income, but
as interest rates decrease, inverse floaters produce more current income. At a
time when municipals were an inexpensive asset class, we were able to use these
instruments to boost tax-exempt income.
7 Oppenheimer Intermediate Municipal Fund
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Standardized Yields3
For the 30 Days Ended 3/31/99
- -----------------------------
Class A 4.09%
- -----------------------------
Class B 3.48%
- -----------------------------
Class C 3.48%
- -----------------------------
An interview with your Fund's manager
- --------------------------------------------------------------------------------
We took advantage of the surge in supply last year to restructure parts of the
portfolio--selling bonds with poor performance characteristics and buying others
with better call protection. Looking forward, we like the retirement facilities
sector and have the capacity to add more. Our positions here are improving in
value as the market begins to share our view that a strong economy plus an aging
population will increase the demand for these services. However, we reduced our
exposure to the healthcare sector, which has been coming under some pressure.
Which bonds were weak performers?
The one credit sector experiencing pressure and seeing downgrades is healthcare.
Rising costs and problems in the managed care industry are squeezing profit
margins and affecting the ability to repay debt. One of our positions, a New
Jersey hospital (representing less than 1% of the portfolio for the period) was
recently downgraded when a planned merger failed to take place. However, another
buyer has appeared and we are optimistic that this new merger will in fact
occur.
3. Standardized yield is based on net investment income for the 30-day period
ended March 31, 1999. Falling share prices will tend to artificially raise
yields.
8 Oppenheimer Intermediate Municipal Fund
<PAGE>
What is your outlook for the next six months?
We feel very positive about municipals in the next six months, and expect them
to hold their ground against the rest of the bond market. With a strong U.S.
economy leading to improved creditworthiness among municipalities, we believe
there is reason for continued optimism. We do not anticipate an increase in
interest rates in the next six months. Furthermore, we believe municipals
represent an excellent value for shareholders in terms of their tax advantages.
Our commitment to independent research and disciplined investment strategies is
what makes Oppenheimer Intermediate Municipal Fund part of The Right Way to
Invest.
[tabular representation of pie chart]
Credit Allocation(4)
AAA 44.8%
AA 0.6
A 21.8
BBB 15.7
BB 11.4
B 5.7
10 Largest Positions by State(4)
- ---------------------------------------------------------
California 20.1%
- ---------------------------------------------------------
New York 19.7
- ---------------------------------------------------------
Illinois 12.3
- ---------------------------------------------------------
Pennsylvania 9.2
- ---------------------------------------------------------
Michigan 4.3
- ---------------------------------------------------------
New Jersey 4.1
- ---------------------------------------------------------
Ohio 3.3
- ---------------------------------------------------------
Connecticut 2.8
- ---------------------------------------------------------
Texas 2.8
- ---------------------------------------------------------
Indiana 2.1
- ---------------------------------------------------------
4. Portfolio data is subject to change. Percentages are as of March 31, 1999,
and are dollar-weighted based on invested 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 23.3% 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.
9 Oppenheimer Intermediate Municipal Fund
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Financials
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10 Oppenheimer Intermediate Municipal Fund
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Statement of Investments March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
===================================================================================================================================
Municipal Bonds and Notes--100.4%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama--0.7%
Huntsville, AL Health Care Authority RRB,
Series A, MBIA Insured, 5.50%, 6/1/08 Aaa/AAA $1,000,000 $1,077,880
- ----------------------------------------------------------------------------------------------------------------------------------
Arizona--2.1%
AZ Educational LMC RRB, Jr. Subseries,
6.30%, 12/1/08 NR/NR/A 3,155,000 3,386,514
- ----------------------------------------------------------------------------------------------------------------------------------
California--20.2%
Berkeley, CA HF RRB, Alta Bates Medical Center,
Prerefunded, Series A, 6.50%, 12/1/11 A2/NR 3,000,000 3,296,400
- ----------------------------------------------------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, Episcopal
Homes Foundation, 5.125%, 7/1/13 NR/A- 2,000,000 2,011,740
- ----------------------------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Cedars-Sinai Medical Center, MBIA Insured,
6.50%, 8/1/12(1) Aaa/AAA 1,000,000 1,164,080
- ----------------------------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Inverse Floater, 7.63%, 11/1/15(2) A1/NR 3,500,000 3,631,250
- ----------------------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds,
Series 98-2 Ladera, 5.50%, 9/1/13(3) NR/NR 2,000,000 2,018,720
- ----------------------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds,
Series 98-2 Ladera, 5.60%, 9/1/14(3) NR/NR 1,000,000 1,001,450
- ----------------------------------------------------------------------------------------------------------------------------------
Central Valley FAU, CA Cogeneration Project
RRB, Carson Ice, MBIA Insured, 5.25%, 7/1/14 NR/AAA/AAA 2,000,000 2,081,800
- ----------------------------------------------------------------------------------------------------------------------------------
Lake Elsinore, CA School FAU RRB,
Horsethief Canyon, 5.35%, 9/1/10 NR/NR 3,000,000 2,983,410
- ----------------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A,
FGIC Insured, 6%, 5/15/09 Aaa/AAA 1,000,000 1,130,820
- ----------------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A,
FGIC Insured, 6%, 5/15/10 Aaa/AAA 2,000,000 2,261,080
- ----------------------------------------------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A,
MBIA Insured, 5.95%, 8/1/10 Aaa/AAA 1,000,000 1,139,490
- ----------------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP,
Air Force Village West, Inc., Series A,
8.125%, 6/15/12 NR/NR 2,290,000 2,505,855
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Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.60%, 12/1/11 NR/NR 1,435,000 1,482,025
11 Oppenheimer Intermediate Municipal Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
California (continued)
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.80%, 9/1/09 NR/NR $790,000 $ 840,726
- ----------------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.90%, 9/1/10 NR/NR 785,000 835,554
- ----------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration RB,
Procter & Gamble Cogeneration Project,
Prerefunded, 6.375%, 7/1/10 NR/BBB- 600,000 690,144
- ----------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration RB,
Proctor & Gamble Cogeneration Project,
Unrefunded Balance, 6.375%, 7/1/10 NR/BBB-/BBB 500,000 565,725
- ----------------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road CAP RRB, Series A, MBIA
Insured, Zero Coupon, 5.25%, 1/15/11(4) Aaa/AAA/AAA 5,450,000 3,182,745
-----------
32,823,014
- ----------------------------------------------------------------------------------------------------------------------------------
Colorado--1.0%
Denver, CO City & Cnty. Airport RB,
Series A, 7%, 11/15/99 Baa1/BBB 1,000,000 1,021,290
- ----------------------------------------------------------------------------------------------------------------------------------
Meridian Metropolitan District, CO GORB,
7.50%, 12/1/11(1) A3/NR 500,000 543,405
-----------
1,564,695
- ----------------------------------------------------------------------------------------------------------------------------------
Connecticut--2.8%
CT DAU RB, Mystic Marinelife Aquarium
Project, Series A, 6.875%, 12/1/17 NR/NR 1,000,000 1,059,120
- ----------------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe
Special RB, Prerefunded, Series A,
6.50%, 9/1/05(5) Aaa/AAA 1,240,000 1,417,258
- ----------------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe
Special RB, Sub. Lien, Series B, 5.60%, 9/1/09(5) Baa3/NR 600,000 624,474
- ----------------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe
Special RB, Unrefunded Balance, Series A,
6.50%, 9/1/05(6) Baa2/BBB- 1,260,000 1,461,600
-----------
4,562,452
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware--1.3%
DE HFAU RB, Christiana Care Health Services,
AMBAC Insured, 5.25%, 10/1/12 Aaa/AAA 2,000,000 2,077,740
- ----------------------------------------------------------------------------------------------------------------------------------
Florida--1.6%
FL HFA MH RRB, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,079,740
- ----------------------------------------------------------------------------------------------------------------------------------
Grand Haven, FL CDD SPAST RB,
Series A, 6.30%, 5/1/02 NR/NR 1,576,000 1,611,665
-----------
2,691,405
12 Oppenheimer Intermediate Municipal Fund
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Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
Illinois--12.3%
Chicago, IL BOE GOB, Chicago School Reform
Project, MBIA Insured, 6.25%, 12/1/11 Aaa/AAA/A- $1,000,000 $ 1,153,350
- ----------------------------------------------------------------------------------------------------------------------------------
Chicago, IL O'Hare International Airport
SPF RRB, United Air Lines Project, Series A,
5.35%, 9/1/16 Baa2/BB+ 2,500,000 2,490,075
- ----------------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District
No. 508 Lease COP, Series C, MBIA Insured,
7.70%, 12/1/07 Aaa/AAA 1,000,000 1,242,510
- ----------------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL High SDI Refunding CAP GOB,
Series D, FSA Insured, Zero Coupon,
5%, 12/1/08(4) Aaa/NR/AAA 5,040,000 3,241,022
- ----------------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL RB, Series 413, Inverse Floater,
7.692%, 11/15/15(2) NR/AAA 5,000,000 5,030,100
- ----------------------------------------------------------------------------------------------------------------------------------
IL Development FAU SWD RB, Waste
Management, Inc. Project, 5.05%, 1/1/10(6) NR/BBB+ 1,500,000 1,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Franciscan Sisters Health Care
Project, Series C, MBIA Insured, 6%, 9/1/09 Aaa/AAA 2,000,000 2,159,740
- ----------------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Methodist Medical Center,
MBIA Insured, 5.50%, 11/15/12 Aaa/AAA/AAA 1,500,000 1,588,410
- ----------------------------------------------------------------------------------------------------------------------------------
Southwestern IL DAU Hospital RB, St. Elizabeth
Medical Center, 8%, 6/1/10 NR/A 500,000 530,675
- ----------------------------------------------------------------------------------------------------------------------------------
Waukegan, IL GOB, MBIA Insured,
7.50%, 12/30/03 A1/NR 1,000,000 1,125,120
-----------
20,061,002
- ----------------------------------------------------------------------------------------------------------------------------------
Indiana--2.1%
IN Bond Bank RB, State Revolving Fund
Program, Series A, 6.875%, 2/1/12 NR/AAA 1,135,000 1,298,190
- ----------------------------------------------------------------------------------------------------------------------------------
IN HFFAU RRB, Holy Cross Health System Corp.,
MBIA Insured, 5.375%, 12/1/12 Aaa/AAA/AAA 2,000,000 2,095,000
-----------
3,393,190
- ----------------------------------------------------------------------------------------------------------------------------------
Maine--0.5%
ME Educational LMC Student Loan RRB,
Series A-4, 6.05%, 11/1/04 Aaa/NR/AAA 750,000 804,098
- ----------------------------------------------------------------------------------------------------------------------------------
Michigan--4.3%
Detroit, MI GORB, Series B, FGIC Insured,
7%, 4/1/04 Aaa/AAA 2,000,000 2,266,080
- ----------------------------------------------------------------------------------------------------------------------------------
MI Hospital FAU RRB, Greater Detroit Sinai
Hospital, Series 1995, 6%, 1/1/08 Baa2/NR/A- 2,500,000 2,571,650
- ----------------------------------------------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee Power
Station Project, 7.50%, 1/1/21 NR/NR 2,000,000 2,149,240
-----------
6,986,970
13 Oppenheimer Intermediate Municipal Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
Nebraska--1.2%
NE Higher Education Loan Program RB,
Jr. Sub. Lien, Series A-6, MBIA Insured,
5.90%, 6/1/03 Aaa/AAA/AAA $1,785,000 $ 1,884,960
- ----------------------------------------------------------------------------------------------------------------------------------
Nevada--1.2%
Clark Cnty., NV PC RRB, Nevada Power Co.
Project, Series D, 5.30%, 10/1/11 NR/BBB-/BBB 2,000,000 1,990,060
- ----------------------------------------------------------------------------------------------------------------------------------
New Jersey--4.1%
Bergen Cnty., NJ Utilities WPCAU RRB,
Series A, FGIC Insured, 5%, 12/15/14 Aaa/AAA/AAA 500,000 507,845
- ----------------------------------------------------------------------------------------------------------------------------------
East Orange, NJ BOE COP, FSA Insured,
5.50%, 8/1/12 Aaa/AAA 1,250,000 1,344,938
- ----------------------------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Franciscan
Oaks Project, 5.60%, 10/1/12 NR/NR 2,500,000 2,523,950
- ----------------------------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines,
5.60%, 1/1/12 NR/NR 900,000 901,827
- ----------------------------------------------------------------------------------------------------------------------------------
NJ HCF FAU RB, Columbus Hospital,
Series A, 7.50%, 7/1/21 B2/B 1,330,000 1,363,955
-----------
6,642,515
- ----------------------------------------------------------------------------------------------------------------------------------
New Mexico--0.3%
NM Hospital Equipment Loan Council RB,
San Juan Regional Medical Center, Inc. Project,
7.90%, 6/1/11 A3/NR 500,000 552,480
- ----------------------------------------------------------------------------------------------------------------------------------
New York--19.8%
NYC GOB, Prerefunded, Series F,
8.40%, 11/15/07 Aaa/AAA/AAA 2,490,000 2,823,461
- ----------------------------------------------------------------------------------------------------------------------------------
NYC GOB, Series H, 5.25%, 3/15/15 A3/A-/A 2,000,000 2,050,880
- ----------------------------------------------------------------------------------------------------------------------------------
NYC GOB, Unrefunded Balance, Series F,
8.40%, 11/15/07 A3/A-/A 10,000 11,331
- ----------------------------------------------------------------------------------------------------------------------------------
NYC GORB, Series A, AMBAC Insured,
7%, 8/1/07 Aaa/AAA/AAA 2,000,000 2,356,300
- ----------------------------------------------------------------------------------------------------------------------------------
NYC GOUN, 5.25%, 3/15/15 A3/A-/A 4,000,000 4,080,040
- ----------------------------------------------------------------------------------------------------------------------------------
NYC IDAU SPF RB, Terminal One Group Assn
Project, 6%, 1/1/08 A3/A/A- 2,000,000 2,156,560
- ----------------------------------------------------------------------------------------------------------------------------------
NYC IDAU SPF RB, Terminal One Group Assn
Project, 6.10%, 1/1/09 A3/A/A- 2,000,000 2,165,020
- ----------------------------------------------------------------------------------------------------------------------------------
NYS DA RRB, Second Hospital-Jamaica
Hospital, Series F, 5.10%, 2/15/12 Baa1/AAA/A 3,000,000 3,047,670
- ----------------------------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A,
6.375%, 11/1/04 Baa1/A- 2,000,000 2,210,220
14 Oppenheimer Intermediate Municipal Fund
<PAGE>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
New York (continued)
Oneida-Herkimer, NY Solid Waste
Management Authority RRB, FSA Insured,
5.50%, 4/1/10 Aaa/AAA/AAA $3,330,000 $ 3,587,942
- ----------------------------------------------------------------------------------------------------------------------------------
Onondaga Cnty., NY IDA SWD Facility RRB,
Solvay Paperboard LLC Project, 6.80%, 11/1/14 NR/NR 5,000,000 5,161,500
- ----------------------------------------------------------------------------------------------------------------------------------
PAUNYNJ RB, 117th Series, Second Installment,
FGIC Insured, 5.125%, 11/15/15 Aaa/AAA/AAA 2,500,000 2,545,925
-----------
32,196,849
- ----------------------------------------------------------------------------------------------------------------------------------
Ohio--3.3%
Dayton, OH SPF RRB, Emery Air Freight Corp.,
Series F, 6.05%, 10/1/09 NR/BBB 2,500,000 2,696,525
- ----------------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB,
Series B, 6%, 2/1/10 NR/NR 1,000,000 1,026,630
- ----------------------------------------------------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered
Steels, Inc. Project, 9%, 6/1/21 NR/NR 1,600,000 1,713,440
-----------
5,436,595
- ----------------------------------------------------------------------------------------------------------------------------------
Oklahoma--0.7%
OK Industrial Authority Health Systems RB,
Baptist Medical Center, Series C,
AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 955,000 1,102,213
- ----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania--9.2%
Lehigh Cnty., PA GP RRB, Kidspeace
Obligation Group, 6%, 11/1/18 NR/NR 4,165,000 4,181,993
- ----------------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Northampton Generating,
Sr. Lien, Series A, 6.40%, 1/1/09 NR/NR 2,000,000 2,098,420
- ----------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Airport RB, Series 387A,
Inverse Floater, 8.418%, 6/15/12(2) NR/NR 2,000,000 2,206,120
- ----------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Airport RB, Series 387B,
Inverse Floater, 8.418%, 6/15/14(2) NR/NR 1,960,000 2,120,524
- ----------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Health System Project, 6.20%, 7/1/00 Baa3/BBB+ 1,360,000 1,382,712
- ----------------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10(6) NR/NR/BB+ 2,935,000 3,004,501
-----------
14,994,270
- ----------------------------------------------------------------------------------------------------------------------------------
South Carolina--1.0%
Florence Cnty., SC IDV RB, Stone Container
Project, 7.375%, 2/1/07 NR/NR 1,565,000 1,660,997
15 Oppenheimer Intermediate Municipal Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------------------
Tennessee--1.8%
Chattanooga-Hamilton Cnty., TN HA RB,
Erlanger Medical Center, Prerefunded,
Series B, FSA Insured, Inverse Floater,
10.48%, 5/25/21(2) Aaa/AAA/AAA $1,500,000 $ 1,738,125
- ----------------------------------------------------------------------------------------------------------------------------------
Memphis Shelby Cnty., TN Airport Authority
RRB, Series A, MBIA Insured, 6.25%, 2/15/11 Aaa/AAA 1,000,000 1,141,210
-----------
2,879,335
- ----------------------------------------------------------------------------------------------------------------------------------
Texas--2.8%
Port Corpus Christi, TX IDV Corp. RRB, Valero
Energy Corp., Series D, 5.125%, 4/1/09 Baa3/BBB- 2,000,000 2,015,580
- ----------------------------------------------------------------------------------------------------------------------------------
Tarrant Cnty., TX HFDC RB, Texas Health
Resources System, Series A, MBIA Insured,
5.75%, 2/15/11 Aaa/AAA/AAA 2,330,000 2,531,102
- ----------------------------------------------------------------------------------------------------------------------------------
4,546,682
- ----------------------------------------------------------------------------------------------------------------------------------
Utah--1.4%
Davis Cnty., UT Solid Waste Management &
Recovery RRB, Special Service District,
6.125%, 6/15/09 A3/A 2,000,000 2,206,160
- ----------------------------------------------------------------------------------------------------------------------------------
Vermont--0.6%
VT SAC Educational Loan RB, Series A-3,
FSA Insured, 6.25%, 6/15/03 Aaa/AAA/AAA 900,000 964,648
- ----------------------------------------------------------------------------------------------------------------------------------
Virginia--1.8%
Pocahontas Parkway Assn., VA Toll Road
CAP RB, Sub. Lien, Series C, 5%, 8/15/11 NR/A/A 3,000,000 2,990,250
- ----------------------------------------------------------------------------------------------------------------------------------
Washington--0.6%
WA PP Supply System RRB, Nuclear
Project No. 1, 5.40%, 7/1/12 Aa1/AA-/AA- 1,000,000 1,032,480
- ----------------------------------------------------------------------------------------------------------------------------------
District of Columbia--0.7%
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 6%, 8/15/12 Aaa/AAA/AAA 1,000,000 1,130,580
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Possessions--1.0%
PR CMWLTH GOB, 6.35%, 7/1/10 Aaa/AAA 1,500,000 1,696,170
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $156,495,230) 100.4% 163,336,204
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.4) (634,205)
--------- ------------
Net Assets 100.0% $162,701,999
========= ============
</TABLE>
16 Oppenheimer Intermediate Municipal Fund
<PAGE>
To simplify the listings of securities, abbreviations are used per the table
below:
BOE -- Board of Education
CAP -- Capital Appreciation
CDD -- Community Development District
CFD -- Community Facilities District
CMWLTH -- Commonwealth
COP -- Certificates of Participation
DA -- Dormitory Authority
DAU -- Development Authority
EDAU -- Economic Development Authority
EDFAU -- Economic Development Finance Authority
FAU -- Finance Authority
GP -- General Purpose
GOB -- General Obligation Bonds
GORB -- General Obligation Refunding Bonds
GOUN -- General Obligation Unlimited Notes
HA -- Hospital Authority
HCF -- Health Care Facilities
HEFAU -- Higher Educational Facilities Authority
HF -- Health Facilities
HFA -- Housing Finance Agency
HFAU -- Health Facilities Authority
HFDC -- Health Facilities Development Corp.
HFFAU -- Health Facilities Finance Authority
IDA -- Industrial Development Agency
IDV -- Industrial Development
IDAU -- Industrial Development Authority
LMC -- Loan Marketing Corp.
MH -- Multifamily Housing
NYC -- New York City
NYS -- New York State
PAUNYNJ -- Port Authority of New York & New Jersey
PC -- Pollution Control
PP -- Public Power
RB -- Revenue Bonds
RR -- Resource Recovery
RRB -- Revenue Refunding Bonds
SAC -- Student Assistance Corp.
SCDAU -- Statewide Communities Development Authority
SDI -- School District
SPAST -- Special Assessment
SPF -- Special Facilities
SPTX -- Special Tax
SWD -- Solid Waste Disposal
USD -- Unified School District
WPCAU -- Water Pollution Control Authority
1. Securities with an aggregate market value of $700,455 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 $14,726,119 or 9.05% of the
Fund's net assets as of March 31, 1999.
3. When-issued security to be delivered and settled after March 31, 1999.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
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 $2,041,732 or 1.25% of the Fund's net
assets as of March 31, 1999.
6. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
As of March 31, 1999, securities subject to the alternative minimum tax amount
to $41,431,448 or 25.46% 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, 1999 (Unaudited)
<TABLE>
========================================================================================
<S> <C>
Assets
Investments, at value (cost $156,495,230)--see accompanying statement $163,336,204
- ----------------------------------------------------------------------------------------
Receivables and other assets:
Interest 2,492,144
Investments sold 2,011,718
Shares of beneficial interest sold 534,567
Daily variation on futures contracts--Note 5 25,744
Other 23,385
------------
Total assets 168,423,762
========================================================================================
Liabilities
Bank overdraft 68,201
- ----------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $3,000,000 purchased
on a when-issued basis)--Note 1 5,011,718
Dividends 382,146
Shares of beneficial interest redeemed 104,406
Distribution and service plan fees 93,388
Shareholder reports 34,001
Transfer and shareholder servicing agent fees 10,110
Other 17,793
------------
Total liabilities 5,721,763
========================================================================================
Net Assets $162,701,999
=============
Composition of Net Assets
Paid-in capital $155,067,820
- ----------------------------------------------------------------------------------------
Overdistributed net investment income (40,047)
- ----------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 779,596
- ---------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 6,894,630
------------
Net assets $162,701,999
=============
18 Oppenheimer Intermediate Municipal Fund
<PAGE>
=======================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$123,289,403 and 7,944,055 shares of beneficial interest outstanding) $15.52
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $16.08
Class B Shares:
- ---------------------------------------------------------------------------------------
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $17,813,090 and
1,148,081 shares of beneficial interest outstanding) $15.52
- ---------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $21,599,506 and
1,394,319 shares of beneficial interest outstanding) $15.49
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Intermediate Municipal Fund
<PAGE>
Statement of Operations For the Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
=======================================================================================
<S> <C>
Investment Income
Interest $ 4,104,798
=======================================================================================
Expenses
Management fees--Note 4 358,700
- ---------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 134,611
Class B 77,747
Class C 100,601
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 60,165
- ---------------------------------------------------------------------------------------
Shareholder reports 27,412
- ---------------------------------------------------------------------------------------
Registration and filing fees 23,866
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 8,692
- ---------------------------------------------------------------------------------------
Legal, auditing and other professional fees 6,477
- ---------------------------------------------------------------------------------------
Accounting service fees--Note 4 6,128
- ---------------------------------------------------------------------------------------
Trustees' compensation 1,754
- ---------------------------------------------------------------------------------------
Other 6,064
------------
Total expenses 812,217
Less expenses paid indirectly--Note 4 (7,169)
------------
Net expenses 805,048
=======================================================================================
Net Investment Income 3,299,750
=======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments 632,867
Closing of futures contracts 244,714
------------
Net realized gain 877,581
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (2,101,637)
------------
Net realized and unrealized loss (1,224,056)
=======================================================================================
Net Increase in Net Assets Resulting from Operations $ 2,075,694
=============
</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, 1999 September 30,
(Unaudited) 1998
===================================================================================================
<S> <C> <C>
Operations
Net investment income $ 3,299,750 $ 5,499,520
- ---------------------------------------------------------------------------------------------------
Net realized gain 877,581 482,575
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (2,101,637) 3,511,405
------------ ------------
Net increase in net assets resulting from operations 2,075,694 9,493,500
===================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment
income:
Class A (2,557,600) (4,499,560)
Class B (293,643) (417,763)
Class C (380,187) (635,072)
- ---------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (120,985) --
Class B (16,601) --
Class C (22,404) --
===================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 17,376,690 16,735,997
Class B 4,417,456 5,486,022
Class C 4,105,242 3,214,639
===================================================================================================
Net Assets
Total increase 24,583,662 29,377,763
- ---------------------------------------------------------------------------------------------------
Beginning of period 138,118,337 108,740,574
----------- -----------
End of period (including overdistributed net
investment income of $40,047 and $108,367,
respectively) $162,701,999 $138,118,337
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Intermediate Municipal Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------
Six Months
Ended
March 31, Year Ended September 30,
1999 (Unaudited) 1998 1997 1996
========================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.65 $15.16 $14.69 $14.69
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 .69 .80 .79
Net realized and unrealized gain (loss) (.12) .51 .45 (.01)
------- ------- ------- -------
Total income (loss) from investment
operations .24 1.20 1.25 .78
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.35) (.71) (.78) (.78)
Distributions from net realized gain (.02) -- -- --
Distributions in excess of net realized gain -- -- -- --
------- ------- ------- -------
Total dividends and distributions
to shareholders (.37) (.71) (.78) (.78)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.52 $15.65 $15.16 $14.69
======= ======= ======= =======
========================================================================================================
Total Return, at Net Asset Value(4) 1.55% 8.14% 8.72% 5.41%
========================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $123,289 $106,909 $87,111 $83,253
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $113,072 $ 97,001 $85,590 $82,217
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.63%(5) 4.58% 5.35% 5.35%
Expenses(6) 0.91%(5) 0.94% 1.02% 1.02%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 7% 53% 31% 53%
</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 $1,000 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, Year Ended September 30,
1995 1994 1999 (Unaudited) 1998 1997(3) 1996 1995(2)
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
$14.23 $15.34 $15.65 $15.16 $14.69 $14.69 $14.71
- -------------------------------------------------------------------------------------------
.79 .72 .31 .59 .67 .66 .06
.42 (1.00) (.13) .50 .46 -- (.04)
------ ------- ------- ------ ------ ------ ------
1.21 (.28) .18 1.09 1.13 .66 .02
- -------------------------------------------------------------------------------------------
(.75) (.76) (.29) (.60) (.66) (.66) (.04)
-- -- (.02) -- -- -- --
-- (.07) -- -- -- --
------ ------- ------- ------ ------ ------ ------
(.75) (.83) (.31) (.60) (.66) (.66) (.04)
- -------------------------------------------------------------------------------------------
$14.69 $14.23 $15.52 $15.65 $15.16 $14.69 $14.69
====== ======= ======= ====== ====== ====== ======
===========================================================================================
8.78% (1.92)% 1.17% 7.32% 7.88% 4.56% 0.13%
===========================================================================================
$80,535 $83,456 $17,813 $13,537 $7,690 $2,858 $119
- -------------------------------------------------------------------------------------------
$79,681 $79,076 $15,615 $10,830 $4,763 $1,440 $ 37
- -------------------------------------------------------------------------------------------
5.55% 5.05% 3.86%(5) 3.92% 4.54% 4.51% 3.87%(5)
0.98% 1.00% 1.67%(5) 1.69% 1.79% 1.81% 1.54%(5)
- -------------------------------------------------------------------------------------------
55% 51% 7% 53% 31% 53% 55%
</TABLE>
6. 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.
7. 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, 1999, were $37,408,455 and $10,173,010, respectively.
23 Oppenheimer Intermediate Municipal Fund
<PAGE>
Financial Highlights (Continued)
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------
Six Months
Ended
March 31,
1999 Year Ended September 30,
(Unaudited) 1998 1997 1996 1995 1994(1)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.62 $15.13 $14.67 $14.67 $14.18 $15.14
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .58 .66 .68 .69 .46
Net realized and unrealized gain (loss) (.12) .51 .47 (.01) .43 (.83)
Total income (loss) from investment
operations .18 1.09 1.13 .67 1.12 (.37)
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.29) (.60) (.67) (.67) (.63) (.52)
Distributions from net realized gain (.02) -- -- -- -- --
Distributions in excess of net realized gain -- -- -- -- -- (.07)
Total dividends and distributions
to shareholders (.31) (.60) (.67) (.67) (.63) (.59)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.49 $15.62 $15.13 $14.67 $14.67 $14.18
=========================================================================================================================
Total Return, at Net Asset Value(4) 1.17% 7.34% 7.85% 4.63% 8.13% (2.54)%
=========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $21,600 $17,673 $13,940 $10,908 $7,618 $8,511
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $20,197 $16,367 $11,970 $ 9,015 $7,437 $4,686
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.86%(5) 3.85% 4.57% 4.56% 4.64% 3.77%(5)
Expenses(6) 1.67%(5) 1.69% 1.77% 1.78% 1.88% 2.24%(5)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 7% 53% 31% 53% 55% 51%
</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 $1,000 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.
6. 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.
7. 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, 1999, were $37,408,455 and $10,173,010, respectively.
See accompanying Notes to Financial Statements.
24 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 seek a high level of current income exempt
from Federal income tax. 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.
25 Oppenheimer Intermediate Municipal Fund
<PAGE>
Notes to Financial Statements (Unaudited)(Continued)
================================================================================
1. Significant Accounting Policies (continued)
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of March 31, 1999,
the Fund had entered into outstanding when-issued or forward commitments of
$3,000,000.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. 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.
26 Oppenheimer Intermediate Municipal Fund
<PAGE>
================================================================================
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. For bonds
acquired after April 30, 1993, on disposition or maturity, taxable ordinary
income is recognized to the extent of the lesser of gain or market discount that
would have accrued over the holding period. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1999 Year Ended September 30, 1998
------------------------------- ------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,833,719 $ 28,615,857 2,064,197 $ 31,773,631
Dividends and
distributions reinvested 114,419 1,782,647 206,433 3,166,314
Redeemed (834,386) (13,021,814) (1,186,120) (18,203,948)
--------- ------------ ---------- ------------
Net increase 1,113,752 $ 17,376,690 1,084,510 $ 16,735,997
========= ============ ========== ============
- ------------------------------------------------------------------------------------------------------
Class B:
Sold 327,064 $ 5,104,743 412,276 $ 6,321,930
Dividends and
distributions reinvested 13,616 212,066 18,206 279,283
Redeemed (57,656) (899,353) (72,787) (1,115,191)
--------- ------------ ---------- ------------
Net increase 283,024 $ 4,417,456 357,695 $ 5,486,022
========= ============ ========== ============
- ------------------------------------------------------------------------------------------------------
Class C:
Sold 363,362 $ 5,663,751 517,496 $ 7,934,925
Dividends and
distributions reinvested 18,291 284,427 32,194 492,861
Redeemed (118,439) (1,842,936) (339,701) (5,213,147)
--------- ------------ ---------- ------------
Net increase 263,214 $ 4,105,242 209,989 $ 3,214,639
========= ============ ========== ============
</TABLE>
27 Oppenheimer Intermediate Municipal Fund
<PAGE>
Notes to Financial Statements (Unaudited)(Continued)
================================================================================
3. Unrealized Gains and Losses on Investments
As of March 31, 1999, net unrealized appreciation on investments of $6,840,974
was composed of gross appreciation of $6,971,435, and gross depreciation of
$130,461.
================================================================================
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% of the first $100 million of average
annual net assets, 0.45% of the next $150 million, 0.425% of the next $250
million and 0.40% of average annual net assets in excess of $500 million. The
Fund's management fee for the six months ended March 31, 1999, was 0.48% of
average annual net assets for each class of shares.
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, 1999, commissions (sales charges paid by
investors) on sales of Class A shares totaled $200,679, of which $30,420 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 A, Class
B and Class C shares totaled $102,204, $92,652 and $45,523, respectively. During
the six months ended March 31, 1999, OFDI received contingent deferred sales
charges of $7,773 and $4,867, 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 other Oppenheimer funds. OFS's
total costs of providing such services are allocated ratably to these funds.
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, 1999, OFDI paid $16,818 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
28 Oppenheimer Intermediate Municipal Fund
<PAGE>
================================================================================
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 Class 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,
1999, OFDI paid $2,270, to an affiliated broker/dealer as compensation for Class
C personal service and maintenance expenses and retained $65,391 and $60,563,
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. As of March 31, 1999, OFDI had incurred excess distribution and
servicing costs of $325,338 for Class B and $301,796 for Class C.
================================================================================
5. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (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.
29 Oppenheimer Intermediate Municipal Fund
<PAGE>
Notes to Financial Statements (Unaudited)(Continued)
================================================================================
5. Futures Contracts (continued)
As of March 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts March 31, 1999 Appreciation
- ----------------------------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 20 yr. 6/99 160 $19,290,000 $53,656
</TABLE>
================================================================================
6. Illiquid and Restricted Securities
As of March 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of March 31, 1999, was $5,966,101, which
represents 3.67% of the Fund's net assets.
================================================================================
7. 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, 1999.
30 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, 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 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, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible
loss of the principal amount invested.
31 Oppenheimer Intermediate Municipal Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
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 assis- tance. 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.
[logo] OppenheimerFunds(R)
Distributor, Inc.
Internet 24-hr access to account
information. Online
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www.oppenheimerfunds.com
General Information
Mon-Fri 8:30am-9pm ET
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Account Transactions
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RS0860.001.0399 May 28, 1999
