Annual Report September 30, 1999
Oppenheimer
Intermediate Municipal Fund
OppenheimerFunds(r)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
CONTENTS
1 President's Letter
3 An Interview
with your Fund's
Manager
7 Fund Performance
12 FINANCIAL
STATEMENTS
32 INDEPENDENT
AUDITORS' REPORT
33 Federal
Income Tax
Information
34 Officers and Trustees
35 OppenheimerFunds
Family
ALTHOUGH TOTAL RETURN WAS NEGATIVE, Oppenheimer Intermediate Municipal Fund
continued to offer positive tax-free yields.
MUNICIPAL BONDS WERE LESS VOLATILE than other types of fixed income securities,
such as U.S. Treasury bonds.
THE HEALTHCARE SECTOR AND OTHER LOWER RATED SECURITIES offer significant extra
yield that we believe compensates for the additional credit risk.
AVERAGE ANNUAL
TOTAL RETURNS
For the 1-Year Period
Ended 9/30/99*
Class A
Without With
Sales Chg. Sales Chg.
- --------------------------------------
- -1.08% -4.55%
Class B
Without With
Sales Chg. Sales Chg.
- --------------------------------------
- -1.83% -5.60%
Class C
Without With
Sales Chg. Sales Chg.
- --------------------------------------
- -1.84% -2.78%
- -------------------------
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
- -------------------------
* See page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
Dear shareholder,
[photo of James C. Swain]
JAMES C. SWAIN
Chairman
Oppenheimer
Intermediate
Municipal Fund
BRIDGET A. MACASKILL
[photo of Bridget A. Macaskill]
BRIDGET A. MACASKILL
President
Oppenheimer
Intermediate
Municipal Fund
In many ways, the 1999 investment environment has, so far, unfolded as many
expected it would, producing both attractive opportunities and formidable
challenges for investors.
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflationary pressures, the
Federal Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of large-capitalization growth stocks,
which has driven the market's advance over the past few years, has begun to
moderate, and many previously out-of-favor value-oriented, mid-cap and small-cap
stocks have rallied. At the same time, a healthy percentage of actively managed,
diversified portfolios have once again begun to outperform unmanaged stock
indices such as the Standard & Poor's 500.
1 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
PRESIDENT'S LETTER
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against inflation.
In our view, history has repeatedly demonstrated that most financial assets do
best in a low-inflation environment. What's more, we believe that the move to
higher interest rates should be temporary.
One recent development IS quite troublesome to us, however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing, it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue,
we are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industrywide tests. We
intend to continue retesting our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds THE RIGHT WAY TO INVEST.
Sincerely,
/s/James C. Swain /s/Bridget A. Macaskill
- ----------------- -----------------------
James C. Swain Bridget A. Macaskill
October 21, 1999
2 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER(1)
Q
HOW DID OPPENHEIMER INTERMEDIATE MUNICIPAL FUND PERFORM DURING THE ONE-YEAR
PERIOD THAT ENDED SEPTEMBER 30, 1999?
A. The rising interest rate environment caused bond prices to fall during much
of the one-year period. As a result, the total return for most fixed income
securities was low or even negative during the period. Oppenheimer Intermediate
Municipal Fund's total return was negative, and in line with its competitors as
measured by Lipper Analytical Services, Inc.
On a tax-free yield basis, the Fund's tax-free yield, at 4.64%, was quite
attractive in relation to comparable U.S. Treasury securities. Indeed, for
investors in the top federal tax bracket, that works out to a taxable equivalent
yield of 7.68%. That type of taxable return would be very difficult to achieve
without taking substantial credit risk. Yet, during the period the municipal
bonds held in Oppenheimer Intermediate Municipal Fund's portfolio had an average
credit quality of AAA.
HOW DID MUNICIPAL BONDS PERFORM COMPARED TO U.S. TREASURY BONDS DURING THE
PERIOD?
In stark contrast to the volatile prices of U.S. Treasury securities, municipal
bonds were remarkably stable throughout the one-year reporting period. Last
fall, global economic uncertainty triggered a "flight to quality" by U.S. and
foreign investors. This created unprecedented demand for U.S. Treasury
securities, driving their prices up and their yields down. However, because
municipal bonds do not provide tax advantages to foreign investors, munis did
not benefit to the same extent.
1. Effective November 1, 1999, Christian Smith became the Portfolio Manager of
the Fund.
3 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
"MUNICIPAL BONDS CONTINUE TO BE EXTREMELY ATTRACTIVE IN RELATION TO U.S.
TREASURY BONDS. IN FACT, MUNICIPAL BONDS ARE YIELDING AS MUCH AS 95% OF A
TAXABLE SECURITY."
- --------------------------------------------------------------------------------
In 1999, the situation completely reversed. As the global economy rebounded,
investors regained their confidence and sold their Treasury bonds in order to
return to financial assets such as stocks. Meanwhile, the municipal market
maintained its value.
Unlike U.S. Treasury bonds, the most liquid market in the world, municipal
bond prices are strongly influenced by supply factors. During the fiscal year,
municipalities reduced their issuance of new bonds due to strong local economies
that generated enough tax revenues to fund projects. This reduced supply was a
positive factor for the municipal bond market.
WHAT OTHER FACTORS AFFECTED THE FUND'S PERFORMANCE?
By late summer, municipal bond prices had appreciated handsomely in relation to
U.S. Treasury bonds. Simultaneously, corporate bond prices fell sharply as the
Federal Reserve Board raised short-term interest rates, suggesting that the
economy would slow and diminish corporate credit quality. This caused many
insurance companies, which typically hold large quantities of municipals, to
sell their positions in favor of the unusual opportunity in the corporate
market. This had a negative impact on the Fund.
WHERE DID YOU FIND VALUE IN THE MARKET?
The healthcare sector continues to be an area of opportunity for us. Many
investors are avoiding the area because of concerns over Medicare reimbursement.
When the government controls prices, healthcare facilities tend to earn less
profit. However, we analyze any potential holding very carefully, and we believe
that the yields offered by these securities more than compensate for the
additional credit risk. In fact, we see excellent opportunities in healthcare,
particularly in bond issues that are insured.
4 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
[Tabular representation of a Pie Chart]
- ----------------------------------
CREDIT ALLOCATION(2)
l AAA 42.1%
l AA 3.8
l A 20.2
l BBB 13.4
l BB 15.0
l B 5.5
- ----------------------------------
WHAT OTHER MANAGEMENT STRATEGIES HAVE YOU UTILIZED?
We have avoided discounted bonds that pay low coupons. These bonds tend to
perform poorly in a rising interest rate environment. In addition, we have been
selling high quality California bonds to brokerage firms at higher-than-average
prices because of strong demand from retail customers. We invested the proceeds
into other positions offering very attractive tax-exempt yields.
WHAT IS YOUR OUTLOOK FOR THE FUND OVER THE COMING MONTHS?
Municipal bonds continue to be extremely attractive in relation to U.S. Treasury
bonds. In fact, municipal bonds are yielding as much as 95% of a taxable
security. As we have seen during the past year, municipal bonds also tend to be
less volatile than other types of fixed income investments. Furthermore, the
national economy remains very strong, which should help reduce the risk of
potential credit downgrades in the sector. Whatever the coming months may hold
for the economy and the municipal bond market, we will continue to conduct
thorough analysis in choosing positions for the portfolio, making Oppenheimer
Intermediate Municipal Fund an important part of THE RIGHT WAY TO INVEST.
2. Portfolio data is subject to change. Percentages are as of September 30,
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 22.56% of total
investments), but which the ratings given above have been assigned by the
Manager for internal purposes as being comparable, in the Manager's judgment, to
securities rated by a rating agency in the same category.
5 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
AVERAGE ANNUAL
TOTAL RETURNS
For the Periods Ended 9/30/99(3)
Class A
1-year 5-year 10-year
- --------------------------------
- -4.55% 5.17% 6.40%
Class B Since
1-year 5-year Inception
- --------------------------------
- -5.60% N/A 4.17%
Class C Since
1-year 5-year Inception
- --------------------------------
- -2.78% 5.15% 3.95%
- --------------------------------
- --------------------------------
STANDARDIZED YIELDS(4)
For the 30 Days Ended 9/30/99
- --------------------------------
Class A 4.64%
- --------------------------------
Class B 4.04
- --------------------------------
Class C 4.05
- --------------------------------
TOP 10 LARGEST POSITIONS BY STATE(5)
- -------------------------------------------------
New York 18.7%
- -------------------------------------------------
California 16.9
- -------------------------------------------------
Illinois 12.8
- -------------------------------------------------
Pennsylvania 8.2
- -------------------------------------------------
New Jersey 6.8
- -------------------------------------------------
Michigan 4.1
- -------------------------------------------------
Ohio 3.2
- -------------------------------------------------
Connecticut 2.6
- -------------------------------------------------
Texas 2.6
- -------------------------------------------------
Arizona 2.0
- -------------------------------------------------
3. See page 10 for further details.
4. Standardized yield is based on net investment income for the 30-day period
ended September 30, 1999. Falling share prices will tend to artificially raise
yields.
5. Portfolio data is subject to change. Percentages are as of September 30,
1999, and are based on total market value of investments.
6 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FUND PERFORMANCE
HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION, BY THE MANAGER, OF THE FUND'S
PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 1999, FOLLOWED BY A
GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF PERFORMANCE. For the Fund's fiscal year that ended
September 30, 1999, Oppenheimer Intermediate Municipal Fund produced a negative
total return. In a rising interest rate environment, it is very difficult for
fixed income funds to produce a positive total return. However, the Fund's
tax-free yield was positive. To enhance yield, the portfolio manager sought
lower rated bonds that appeared attractively priced. Because of this method of
increasing yield, the Fund remained diligent in adhering to its long-standing
strategy of holding a diversified portfolio of municipal bonds selected after
extensive research into their issuers' credit quality. The Fund's portfolio
holdings, allocations and strategies are subject to change.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until September 30, 1999. In the case of Class A shares, performance
is measured over a 10-year period. In the case of Class B shares, performance is
measured from inception of the class on September 11, 1995. In the case of Class
C shares, performance is measured from inception of the class on December 1,
1993. The Fund's performance reflects the deduction of the maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B and Class C shares, and reinvestments of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of the Lehman
Brothers Municipal Bond Index, an unmanaged index of a broad range of investment
grade municipal bonds that is widely regarded as a measure of the performance of
the general municipal bond market. Index performance reflects the reinvestment
of dividends but does not consider the effect of capital gains or transaction
costs, and none of the data in the graphs that follow shows the effect of taxes.
The Fund's performance reflects the effects of Fund business and operating
expenses. While index comparisons may be useful to provide a benchmark for the
Fund's performance, it must be noted that the Fund's investments are not limited
to the securities in the index.
7 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FUND PERFORMANCE
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Intermediate Municipal Fund (Class A),
and Lehman Brothers Municipal Bond Index
[Tabular representation of line chart]
Oppenheimer Intermediate Municipal Fund Class A
Lehman Brothers Municipal Bond Index
Oppenheimer Lehman
9.30.89 9650 10000
9.30.90 10242 10680
9.30.91 11594 12088
9.30.92 12881 13351
9.30.93 14208 15053
9.30.94 13939 14685
9.30.95 15163 16328
9.30.96 15984 17314
9.30.97 17378 18875
9.30.98 18791 20520
9.30.99 18588 20377
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 9/30/99(1)
1-YEAR -4.55% 5-YEAR 5.17% 10-YEAR 6.40%
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Intermediate Municipal Fund (Class B),
and Lehman Brothers Municipal Bond Index
[Tabular representation of line chart]
Oppenheimer Intermediate Municipal Fund Class B
Lehman Brothers Municipal Bond Index
Oppenheimer Lehman
9.11.95 10000 10000
9.30.95 10012 10063
9.30.96 10469 10671
9.30.97 11295 11633
9.30.98 12122 12647
9.30.99 11800 12559
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 9/30/99(1)
1-YEAR -5.60% LIFE 4.17%
8 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Intermediate Municipal Fund (Class C),
and Lehman Brothers Municipal Bond Index
[Tabular representation of line chart]
Oppenheimer Intermediate Municipal Fund Class C
Lehman Brothers Municipal Bond Index
Oppenheimer Lehman
12.1.93 10000 10000
9.30.94 9748 9824
9.30.95 10541 10923
9.30.96 11029 11582
9.30.97 11894 12626
9.30.98 12766 13727
9.30.99 12532 13631
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 9/30/991
1-YEAR -2.78% 5-YEAR 5.15% LIFE 3.95%
The performance information for the Lehman Brothers Municipal Bond Index in the
graphs begins on 9/30/89 for Class A, 8/31/95 for Class B and 11/30/93 for
Class C.
1. See page 10 for further details.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
NOTES
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.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
CLASS A shares were first publicly offered on 11/11/86. The average annual total
returns are shown net of the applicable 3.50% maximum initial sales charge. The
Fund's maximum sales charge for Class A shares was lower prior to 2/1/92, so
actual performance may have been higher.
CLASS B shares of the Fund were first publicly offered on 9/11/95. The average
annual total returns are shown net of the applicable 4% and 2% contingent
deferred sales charges, respectively, for the one-year period and the life of
the class. The ending account value in the graph is net of the applicable 2%
contingent deferred sales charge. Class B shares are subject to an annual 0.75%
asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 12/1/93. The average
annual total returns are shown net of the applicable 1% contingent deferred
sales charge for the one-year period. Class 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.
10 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FINANCIALS
11 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1999
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--99.0%
- ------------------------------------------------------------------------------------------------------------------------
ALABAMA--1.4%
Huntsville, AL Health Care Authority RRB, Series A,
MBIA Insured, 5.50%, 6/1/08 Aaa/AAA $1,000,000 $ 1,032,270
- ------------------------------------------------------------------------------------------------------------------------
Lauderdale Cnty. & Florence AL Health Care Authority
RB, Coffee Health Group, Series A, 5.75%, 7/1/14 NR/AAA/AAA 1,355,000 1,371,612
------------
2,403,882
- ------------------------------------------------------------------------------------------------------------------------
ARIZONA--2.0%
AZ Educational LMC RRB, Jr. Subseries, 6.30%, 12/1/08 NR/NR/A 3,155,000 3,304,547
- ------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--16.7%
Berkeley, CA HF RRB, Alta Bates Medical Center,
Prerefunded, Series A, 6.50%, 12/1/11 A2/NR 3,000,000 3,212,430
- ------------------------------------------------------------------------------------------------------------------------
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 1,895,780
- ------------------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Cedars-Sinai
Medical Center, MBIA Insured, 6.50%, 8/1/12 Aaa/AAA 1,000,000 1,103,060
- ------------------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Inverse Floater,
7.625%, 11/1/15(1) A1/NR 3,500,000 3,180,625
- ------------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds, Series 98-2 Ladera,
5.50%, 9/1/13 NR/NR 2,000,000 1,903,700
- ------------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds, Series 98-2 Ladera,
5.60%, 9/1/14 NR/NR 1,000,000 953,020
- ------------------------------------------------------------------------------------------------------------------------
Lake Elsinore, CA School FAU RRB, Horsethief Canyon,
5.35%, 9/1/10 NR/NR 3,000,000 2,853,330
- ------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A, FGIC Insured,
6%, 5/15/09 Aaa/AAA 1,500,000 1,606,875
- ------------------------------------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A, MBIA Insured,
5.95%, 8/1/10 Aaa/AAA 1,000,000 1,087,830
- ------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force Village
West, Inc., Series A, 8.125%, 6/15/12 NR/NR 2,290,000 2,555,594
- ------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.60%, 12/1/11 NR/NR 1,435,000 1,415,843
- ------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.80%, 9/1/09 NR/NR 790,000 804,204
- ------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.90%, 9/1/10 NR/NR 785,000 799,405
- ------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration RB, Procter & Gamble
Cogeneration Project, Prerefunded, 6.375%, 7/1/10 NR/NR 600,000 667,806
- ------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration RB, Proctor & Gamble
Cogeneration Project, Unrefunded Balance,
6.375%, 7/1/10 NR/BBB-/BBB 500,000 546,215
</TABLE>
12 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA Continued
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road CAP RRB, Series A, MBIA Insured,
Zero Coupon, 5.25%, 1/15/11(2) Aaa/AAA/AAA $5,450,000 $ 3,030,745
------------
27,616,462
- ------------------------------------------------------------------------------------------------------------------------
COLORADO--0.9%
Denver, CO City & Cnty. Airport RB, Series A, 7%, 11/15/99 Baa1/BBB 1,000,000 1,003,410
- ------------------------------------------------------------------------------------------------------------------------
Meridian Metropolitan District, CO GORB, 7.50%, 12/1/11 A3/NR 500,000 530,390
------------
1,533,800
- ------------------------------------------------------------------------------------------------------------------------
CONNECTICUT--2.6%
CT DAU RB, Mystic Marinelife Aquarium Project, Series A,
6.875%, 12/1/17 NR/NR 1,000,000 1,017,720
- ------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe Special RB,
Prerefunded, Series A, 6.50%, 9/1/05(3) Aaa/AAA 1,240,000 1,362,500
- ------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe Special RB,
Sub. Lien, Series B, 5.60%, 9/1/09(3) Baa3/NR 600,000 591,990
- ------------------------------------------------------------------------------------------------------------------------
Mashantucket, CT Western Pequot Tribe Special RB,
Unrefunded Balance, Series A, 6.50%, 9/1/05(4) NR/BBB- 1,260,000 1,352,749
------------
4,324,959
- ------------------------------------------------------------------------------------------------------------------------
DELAWARE--1.2%
DE HFAU RB, Christiana Care Health Services,
AMBAC Insured, 5.25%, 10/1/12 Aaa/AAA 2,000,000 1,973,140
- ------------------------------------------------------------------------------------------------------------------------
FLORIDA--1.6%
FL HFA MH RRB, Series C, 6%, 8/1/11 NR/AAA 1,000,000 1,042,350
- ------------------------------------------------------------------------------------------------------------------------
Grand Haven, FL CDD SPAST RB, Series A,
6.30%, 5/1/02 NR/NR 1,536,000 1,546,122
------------
2,588,472
- ------------------------------------------------------------------------------------------------------------------------
HAWAII--0.6%
HI COP, Kapolei State Office Building, Series A,
AMBAC Insured, 5%, 5/1/14 Aaa/AAA/AAA 1,000,000 925,170
- ------------------------------------------------------------------------------------------------------------------------
ILLINOIS--12.7%
Chicago, IL BOE GOB, Chicago School Reform
Project, MBIA Insured, 6.25%, 12/1/11 Aaa/AAA/A- 1,000,000 1,088,540
- ------------------------------------------------------------------------------------------------------------------------
Chicago, IL O'Hare International Airport SPF RRB,
United Air Lines Project, Series A, 5.35%, 9/1/16 Baa2/BB+ 5,100,000 4,661,859
- ------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL Community College District No. 508
Lease COP, Series C, MBIA Insured, 7.70%, 12/1/07 Aaa/AAA 1,000,000 1,184,110
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
13 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
<S> <C> <C> <C>
ILLINOIS Continued
Cook Cnty., IL High SDI Refunding CAP GOB, Series D,
FSA Insured, Zero Coupon, 5%, 12/1/08(2) Aaa/NR/AAA $5,040,000 $ 3,130,898
- ------------------------------------------------------------------------------------------------------------------------
Cook Cnty., IL RB, Series 413, Inverse Floater, 5.906%,
11/15/15(1) NR/AAA 5,000,000 4,222,900
- ------------------------------------------------------------------------------------------------------------------------
IL Development FAU SWD RB, Waste Management, Inc.
Project, 5.05%, 1/1/10 P-1/NR 1,500,000 1,388,115
- ------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Franciscan Sisters Health Care Project,
Escrowed to Maturity, Series C, MBIA Insured, 6%, 9/1/19 Aaa/AAA 2,000,000 2,101,320
- ------------------------------------------------------------------------------------------------------------------------
IL HFAU RRB, Methodist Medical Center, MBIA
Insured, 5.50%, 11/15/12 Aaa/AAA/AAA 1,500,000 1,501,620
- ------------------------------------------------------------------------------------------------------------------------
Southwestern IL DAU Hospital RB,
St. Elizabeth Medical Center, 8%, 6/1/10 NR/A 500,000 520,460
- ------------------------------------------------------------------------------------------------------------------------
Waukegan, IL GOB, MBIA Insured, 7.50%, 12/30/03 A1/NR 1,000,000 1,089,980
------------
20,889,802
- ------------------------------------------------------------------------------------------------------------------------
INDIANA--1.9%
IN Bond Bank RB, State Revolving Fund Program,
Series A, 6.875%, 2/1/12 NR/AAA 1,135,000 1,250,373
- ------------------------------------------------------------------------------------------------------------------------
IN HFFAU RRB, Holy Cross Health System Corp.,
MBIA Insured, 5.375%, 12/1/12 Aaa/AAA/AAA 2,000,000 1,979,400
------------
3,229,773
- ------------------------------------------------------------------------------------------------------------------------
MAINE--0.5%
ME Educational LMC Student Loan RRB,
Series A-4, 6.05%, 11/1/04 Aaa/NR/AAA 750,000 782,505
- ------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--1.1%
MA Education & HFAU RRB, Partners Healthcare
System, Series B, 5.25%, 7/1/15 A1/AA-/AA- 2,000,000 1,860,840
- ------------------------------------------------------------------------------------------------------------------------
MICHIGAN--4.1%
Detroit, MI GORB, Series B, FGIC Insured,
7%, 4/1/04 Aaa/AAA/AAA 2,000,000 2,192,800
MI Hospital FAU RRB, Greater Detroit Sinai Hospital,
Series 1995, 6%, 1/1/08 Baa2/NR/A- 2,500,000 2,436,350
- ------------------------------------------------------------------------------------------------------------------------
MI Strategic Fund SWD RRB, Genesee Power
Station Project, 7.50%, 1/1/21 NR/NR 2,000,000 2,095,280
------------
6,724,430
- ------------------------------------------------------------------------------------------------------------------------
NEBRASKA--1.0%
NE Higher Education Loan Program RB, Jr. Sub. Lien,
Series A-6, MBIA Insured, 5.90%, 6/1/03 Aaa/AAA/AAA 1,570,000 1,620,209
</TABLE>
14 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEVADA--1.1%
Clark Cnty., NV PC RRB, Nevada Power Co. Project,
Series D, 5.30%, 10/1/11 NR/BBB-/BBB $2,000,000 $ 1,859,580
- ------------------------------------------------------------------------------------------------------------------------
NEW JERSEY--6.7%
Bergen Cnty., NJ Utilities WPCAU RRB, Series A,
FGIC Insured, 5%, 12/15/14 Aaa/AAA/AAA 500,000 475,660
- ------------------------------------------------------------------------------------------------------------------------
East Orange, NJ BOE COP, FSA Insured, 5.50%, 8/1/12 Aaa/AAA 1,250,000 1,272,387
- ------------------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Franciscan Oaks Project,
5.60%, 10/1/12 NR/NR 2,500,000 2,393,000
- ------------------------------------------------------------------------------------------------------------------------
NJ EDAU RRB, First Mtg. Keswick Pines, 5.60%, 1/1/12 NR/NR 900,000 857,808
- ------------------------------------------------------------------------------------------------------------------------
NJ EDAU SPF RB, Continental Airlines, Inc. Project,
6.25%, 9/15/19 Ba2/BB 1,500,000 1,475,610
- ------------------------------------------------------------------------------------------------------------------------
NJ HCF FAU RB, Columbus Hospital, Series A,
7.50%, 7/1/21 B2/B 1,330,000 1,278,223
- ------------------------------------------------------------------------------------------------------------------------
NJ Transportation Trust Fund Authority RB, Series A,
5%, 6/15/12 Aa2/AA-/AA 3,500,000 3,392,515
------------
11,145,203
- ------------------------------------------------------------------------------------------------------------------------
NEW MEXICO--0.3%
NM Hospital Equipment Loan Council RB, San Juan
Regional Medical Center, Inc. Project, Prerefunded,
7.90%, 6/1/11 A3/NR 500,000 538,585
- ------------------------------------------------------------------------------------------------------------------------
NEW YORK--18.6%
NYC GOB, Prerefunded, Series F, 8.40%, 11/15/07 Aaa/AAA/AAA 2,500,000 2,749,500
- ------------------------------------------------------------------------------------------------------------------------
NYC GOB, Series H, 5.25%, 3/15/14 A3/A-/A 2,000,000 1,911,160
- ------------------------------------------------------------------------------------------------------------------------
NYC GORB, Series A, AMBAC Insured, 7%, 8/1/07 Aaa/AAA/AAA 2,000,000 2,259,740
- ------------------------------------------------------------------------------------------------------------------------
NYC GOUN, Series H, 5.25%, 3/15/15 A3/A-/A 4,000,000 3,791,000
- ------------------------------------------------------------------------------------------------------------------------
NYC IDAU SPF RB, Terminal One Group Assn.
Project, 6%, 1/1/08 A3/A/A- 2,000,000 2,057,420
- ------------------------------------------------------------------------------------------------------------------------
NYC IDAU SPF RB, Terminal One Group Assn. Project,
6.10%, 1/1/09 A3/A/A- 2,000,000 2,084,880
- ------------------------------------------------------------------------------------------------------------------------
NYS DA RRB, Second Hospital-Jamaica Hospital, Series F,
5.10%, 2/15/12 Baa1/AAA/A 3,000,000 2,849,970
- ------------------------------------------------------------------------------------------------------------------------
NYS HFA RRB, NYC HF, Series A, 6.375%,
11/1/04 Baa1/A- 2,000,000 2,146,160
- ------------------------------------------------------------------------------------------------------------------------
Oneida-Herkimer, NY Solid Waste Management
Authority RRB, FSA Insured, 5.50%, 4/1/10 Aaa/AAA/AAA 3,330,000 3,408,721
- ------------------------------------------------------------------------------------------------------------------------
Onondaga Cnty., NY IDA SWD Facility RRB, Solvay
Paperboard LLC Project, 6.80%, 11/1/14 NR/NR 5,000,000 5,011,150
</TABLE>
15 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NEW YORK Continued
PAUNYNJ RB, 117th Series, Second Installment,
FGIC Insured, 5.125%, 11/15/15 Aaa/AAA/AAA $2,500,000 $ 2,365,925
------------
30,635,626
- ------------------------------------------------------------------------------------------------------------------------
OHIO--3.2%
Dayton, OH SPF RRB, Emery Air Freight Corp., Series F,
6.05%, 10/1/09 NR/BBB 2,500,000 2,548,825
- ------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., OH HCF RRB, Series B, 6%, 2/1/10 NR/NR 1,000,000 983,310
- ------------------------------------------------------------------------------------------------------------------------
OH Solid Waste RB, Republic Engineered Steels, Inc. Project,
9%, 6/1/21 NR/NR 1,600,000 1,685,904
------------
5,218,039
- ------------------------------------------------------------------------------------------------------------------------
OKLAHOMA--0.6%
OK Industrial Authority Health Systems RB, Baptist
Medical Center, Series C, AMBAC Insured, 7%, 8/15/05 Aaa/AAA/AAA 955,000 1,059,582
- ------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--8.1%
Lehigh Cnty., PA GP RRB, Kidspeace Obligation Group, 6%,
11/1/18 NR/NR 4,165,000 3,925,846
- ------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Northampton Generating,
Sr. Lien, Series A, 6.40%, 1/1/09 NR/BBB- 2,000,000 2,032,120
- ------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Airport RB, Series 387A, Inverse Floater,
8.303%, 6/15/12(1) NR/NR 2,000,000 1,941,800
- ------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Airport RB, Series 387B, Inverse Floater,
8.303%, 6/15/14(1) NR/NR 1,960,000 1,824,486
- ------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB, Jeanes Health
System Project, 6.20%, 7/1/00 Baa3/BBB+ 700,000 703,955
- ------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill Energy
Resources, Inc., 6.50%, 1/1/10 NR/NR/BB+ 2,935,000 2,944,304
------------
13,372,511
- ------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--1.0%
Florence Cnty., SC IDV RB, Stone Container Project,
7.375%, 2/1/07 NR/NR 1,565,000 1,629,306
- ------------------------------------------------------------------------------------------------------------------------
TENNESSEE--1.7%
Chattanooga-Hamilton Cnty., TN HA RB, Erlanger
Medical Center, Prerefunded, Series B, FSA Insured,
Inverse Floater, 9.672%, 5/25/21(1) Aaa/AAA/AAA 1,500,000 1,666,875
- ------------------------------------------------------------------------------------------------------------------------
Memphis Shelby Cnty., TN Airport Authority RRB,
Series A, MBIA Insured, 6.25%, 2/15/11 Aaa/AAA 1,000,000 1,079,860
------------
2,746,735
</TABLE>
16 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS--2.6%
Port Corpus Christi, TX IDV Corp. RRB, Valero Energy
Corp., Series D, 5.125%, 4/1/09 Baa3/BBB- $2,000,000 $ 1,917,920
- ------------------------------------------------------------------------------------------------------------------------
Tarrant Cnty., TX HFDC RB, Texas Health Resources
System, Series A, MBIA Insured, 5.75%, 2/15/11 Aaa/AAA/AAA 2,330,000 2,394,890
------------
4,312,810
- ------------------------------------------------------------------------------------------------------------------------
UTAH--1.3%
Davis Cnty., UT Solid Waste Management & Recovery
RRB, Special Service District, Prerefunded, 6.125%, 6/15/09 Aaa/A 2,000,000 2,151,100
- ------------------------------------------------------------------------------------------------------------------------
VERMONT--0.6%
VT SAC Educational Loan RB, Series A-3, FSA Insured,
6.25%, 6/15/03 Aaa/AAA/AAA 900,000 941,283
- ------------------------------------------------------------------------------------------------------------------------
VIRGINIA--1.7%
Pocahontas Parkway Assn., VA Toll Road CAP RB,
Sub. Lien, Series C, 5%, 8/15/11 NR/A/A 3,000,000 2,850,180
- ------------------------------------------------------------------------------------------------------------------------
WASHINGTON--0.6%
WA PP Supply System RRB, Nuclear Project No. 1,
5.40%, 7/1/12 Aa1/AA-/AA- 1,000,000 981,860
- ------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.3%
WV GOB, CAP-Infracture, Series A, FGIC Insured,
Zero Coupon, 5.38%, 11/1/14(2) Aa3/AAA/AAA 1,000,000 434,650
- ------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--1.3%
DC GOUN, Series A, FSA Insured, 5.50%, 6/1/09 Aaa/AAA/AAA 1,000,000 1,025,930
- ------------------------------------------------------------------------------------------------------------------------
DC Hospital RRB, Medlantic Healthcare Group,
Series A, MBIA Insured, 6%, 8/15/12 Aaa/AAA/AAA 1,000,000 1,063,210
------------
2,089,140
- ------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--1.0%
PR CMWLTH GOB, Prerefunded, 6.35%, 7/1/10 Aaa/AAA 1,500,000 1,656,330
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $165,100,778) 99.0% 163,400,511
- ------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.0 1,604,668
----------------------------------------
NET ASSETS 100.0% $165,005,179
========================================
</TABLE>
17 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
FOOTNOTES TO STATEMENT OF INVESTMENTS
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 Nts.
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
IDAU Industrial Development Authority
IDV Industrial Development
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. 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 $12,836,686 or 7.78% of the Fund's net
assets as of September 30, 1999.
2. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
3. 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 $1,954,490 or 1.18% of the Fund's net
assets as of September 30, 1999.
4. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
AS OF SEPTEMBER 30, 1999, SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX
AMOUNT TO $39,163,602 OR 23.73% OF THE FUND'S NET ASSETS.
See accompanying Notes to Financial Statements.
18 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES September 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments, at value (cost $165,100,778)--see accompanying statement $ 163,400,511
- -----------------------------------------------------------------------------------------------------------------
Cash 134,510
- -----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 2,537,344
Shares of beneficial interest sold 379,787
Other 6,648
------------
Total assets 166,458,800
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables and other liabilities:
Notes payable to bank (interest rate 5.975% at September 30, 1999)--Note 7 800,000
Dividends 418,336
Distribution and service plan fees 100,352
Shares of beneficial interest redeemed 62,501
Shareholder reports 35,555
Transfer and shareholder servicing agent fees 12,564
Trustees' compensation 65
Other 24,248
------------
Total liabilities 1,453,621
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS $165,005,179
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $165,672,469
- -----------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (2,818)
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 1,035,795
- -----------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Note 3 (1,700,267)
------------
Net assets $165,005,179
============
</TABLE>
19 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$124,273,311 and 8,418,818 shares of beneficial interest outstanding) $14.76
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $15.30
- ------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $18,856,119
and 1,277,746 shares of beneficial interest outstanding) $14.76
- ------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,875,749
and 1,484,748 shares of beneficial interest outstanding) $14.73
</TABLE>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended September 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C>
Interest $ 8,819,212
- -----------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees--Note 4 756,823
- -----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 285,289
Class B 171,884
Class C 210,249
- -----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 123,044
- -----------------------------------------------------------------------------------------------------------------
Shareholder reports 58,862
- -----------------------------------------------------------------------------------------------------------------
Registration and filing fees 43,129
- -----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 16,844
- -----------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 12,965
- -----------------------------------------------------------------------------------------------------------------
Accounting service fees--Note 4 12,000
- -----------------------------------------------------------------------------------------------------------------
Trustees' compensation 3,383
-----------
Other 11,482
- -----------------------------------------------------------------------------------------------------------------
Total expenses 1,705,954
Less expenses paid indirectly--Note 1 (13,513)
-----------
Net expenses 1,692,441
- -----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 7,126,771
- -----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on:
Investments 340,282
Closing of futures contracts 793,498
-----------
Net realized gain 1,133,780
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (10,696,534)
-----------
Net realized and unrealized loss (9,562,754)
- -----------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(2,435,983)
===========
</TABLE>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,126,771 $ 5,499,520
- ------------------------------------------------------------------------------------------------------------------
Net realized gain 1,133,780 482,575
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (10,696,534) 3,511,405
------------ ------------
Net increase (decrease) in net assets resulting from operations (2,435,983) 9,493,500
- ------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment
income:
Class A (5,534,424) (4,499,560)
Class B (668,630) (417,763)
Class C (818,168) (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 24,617,737 16,735,997
Class B 6,407,741 5,486,022
Class C 5,478,559 3,214,639
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase 26,886,842 29,377,763
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 138,118,337 108,740,574
------------ ------------
End of period (including overdistributed net investment
income of $2,818 and $108,367, respectively) $165,005,179 $138,118,337
================================
</TABLE>
See accompanying Notes to Financial Statements.
22 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A YEAR ENDED SEPTEMBER 30, 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.65 $15.16 $14.69 $14.69 $14.23
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .72 .69 .80 .79 .79
Net realized and unrealized gain (loss) (.88) .51 .45 (.01) .42
----------------------------------------------------------------------------
Total income (loss)
from investment operations (.16) 1.20 1.25 .78 1.21
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.71) (.71) (.78) (.78) (.75)
Distributions from net realized gain (.02) -- -- -- --
----------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.73) (.71) (.78) (.78) (.75)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.76 $15.65 $15.16 $14.69 $14.69
============================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) (1.08)% 8.14% 8.72% 5.41% 8.78%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $124,273 $106,909 $87,111 $83,253 $80,535
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $118,906 $ 97,001 $85,590 $82,217 $79,681
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 4.72% 4.58% 5.35% 5.35% 5.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 0.90% 0.94%(3) 1.02%(3) 1.02%(3) 0.98%(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 10% 53% 31% 53% 55%
</TABLE>
1. 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. 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 September 30, 1999, were $51,293,384 and $15,399,370,
respectively.
See accompanying Notes to Financial Statements.
23 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
CLASS B YEAR ENDED SEPTEMBER 30, 1999 1998 1997(5) 1996 1995(6)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $15.65 $15.16 $14.69 $14.69 $14.71
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .62 .59 .67 .66 .06
Net realized and unrealized gain (loss) (.89) .50 .46 -- (.04)
----------------------------------------------------------------------------
Total income (loss) from
investment operations (.27) 1.09 1.13 .66 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.60) (.66) (.66) (.04)
Distributions from net realized gain (.02) -- -- -- --
----------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.62) (.60) (.66) (.66) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.76 $15.65 $15.16 $14.69 $14.69
----------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) (1.83)% 7.32% 7.88% 4.56% 0.13%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $18,856 $13,537 $7,690 $2,858 $119
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $17,203 $10,830 $4,763 $1,440 $ 37
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 3.96% 3.92% 4.54% 4.51% 3.87%
Expenses 1.66% 1.69%(3) 1.79%(3) 1.81%(3) 1.54%(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 10% 53% 31% 53% 55%
</TABLE>
1. 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. 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 September 30, 1999, were $51,293,384 and $15,399,370,
respectively.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. For the period from September 11, 1995 (inception of offering) to September
30, 1995.
See accompanying Notes to Financial Statements.
24 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
CLASS C YEAR ENDED SEPTEMBER 30, 1999 1998 1997 1996 1995
<S> <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
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .61 .58 .66 .68 .69
Net realized and unrealized gain (loss) (.88) .51 .47 (.01) .43
----------------------------------------------------------------------------
Total income (loss) from
investment operations (.27) 1.09 1.13 .67 1.12
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.60) (.67) (.67) (.63)
Distributions from net realized gain (.02) -- -- -- --
----------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.62) (.60) (.67) (.67) (.63)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.73 $15.62 $15.13 $14.67 $14.67
============================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) (1.84)% 7.34% 7.85% 4.63% 8.13%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $21,876 $17,673 $13,940 $10,908 $7,618
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,036 $16,367 $11,970 $ 9,015 $7,437
Ratios to average net assets:(2)
Net investment income 3.96% 3.85% 4.57% 4.56% 4.64%
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses 1.66% 1.69%(3) 1.77%(3) 1.78%(3) 1.88%(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 10% 53% 31% 53% 55%
</TABLE>
1. 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.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. 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 September 30, 1999, were $51,293,384 and $15,399,370,
respectively.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. For the period from September 11, 1995 (inception of offering) to September
30, 1995.
See accompanying Notes to Financial Statements
25 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 on investments up to $1
million. Class B and Class C shares may be subject to a contingent deferred
sales charge (CDSC). All classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own expenses
directly attributable to that class and exclusive voting rights with respect to
matters affecting that class. Classes A, B and C have separate distribution
and/or service plans. 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.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost
(or last determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, 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.
26 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date. Original
issue discount is accreted and premium is amortized in accordance with federal
income tax requirements. For municipal 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.
27 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS 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>
YEAR ENDED SEPTEMBER 30, 1999 YEAR ENDED SEPTEMBER 30, 1998
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C>
Sold 3,070,665 $ 47,404,468 2,064,197 $ 31,773,631
Dividends and/or distributions reinvested 256,517 3,932,257 206,433 3,166,314
Redeemed (1,738,667) (26,718,988) (1,186,120) (18,203,948)
-----------------------------------------------------------------------------------------
Net increase 1,588,515 $24,617,737 1,084,510 $16,735,997
=========================================================================================
CLASS B
Sold 631,307 $ 9,725,674 412,276 $ 6,321,930
Dividends and/or distributions reinvested 30,406 465,950 18,206 279,283
Redeemed (249,024) (3,783,883) (72,787) (1,115,191)
-----------------------------------------------------------------------------------------
Net increase 412,689 $ 6,407,741 357,695 $ 5,486,022
=========================================================================================
CLASS C
Sold 626,045 $ 9,634,721 517,496 $ 7,934,925
Dividends and/or distributions reinvested 37,914 580,815 32,194 492,861
Redeemed (310,316) (4,736,977) (339,701) (5,213,147)
-----------------------------------------------------------------------------------------
Net increase 353,643 $ 5,478,559 209,989 $ 3,214,639
=========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of September 30, 1999, net unrealized depreciation on securities of
$1,700,267 was composed of gross appreciation of $3,281,947, and gross
depreciation of $4,982,214.
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. 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 year ended
September 30, 1999, was 0.48% of average annual net assets for each class of
shares.
- --------------------------------------------------------------------------------
ACCOUNTING FEES. 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.
28 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. 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.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C
SALES CHARGES SALES CHARGES SHARES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 1999 $368,060 $78,085 $168,115 $184,312 $79,689
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES
YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
September 30, 1999 $3,362 $35,208 $6,754
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements
to the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the fiscal year ended September 30, 1999,
payments under the Class A Plan totaled $285,289, all of which was paid by the
Distributor to recipients. That included $36,054 paid to an affiliate of the
Distributor's parent company. Any unreimbursed expenses the Distributor incurs
with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years.
29 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan,
service fees and distribution fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The Class B and Class C plans provide
for the Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the plan was
terminated. The plans allow for the carry-forward of distribution expenses, to
be recovered from asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended September 30,
1999, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $171,884 $143,358 $338,433 1.79%
Class C Plan 210,249 106,410 334,692 1.53
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. FUTURES CONTRACTS
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to 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.
30 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
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 may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
- --------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES
As of September 30, 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 limitation. The aggregate value of illiquid
or restricted securities subject to this limitation as of September 30, 1999,
was $1,352,749, which represents 0.82% 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 borrowings outstanding of $800,000 at September 30, 1999.
31 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Intermediate Municipal Fund as of
September 30, 1999, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended September
30, 1999 and 1998, and the financial highlights for the period October 1, 1994
to September 30, 1999. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Intermediate Municipal Fund as of September 30, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1999
32 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
- -------------------------------------------------------------------------------
In early 2000, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1999.
Regulations of the U.S. Treasury Department require the Fund to report
information to the Internal Revenue Service.
Distributions of $0.0760, $0.0663 and $0.0664 per share were paid to
Class A, Class B and Class C shareholders, respectively, on December 10, 1998,
of which $0.0173 was designated as a "capital gain distribution" for federal
income tax purposes. Whether received in stock or in cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
None of the dividends paid by the Fund during the fiscal year ended
September 30, 1999, are eligible for the corporate dividend-received deduction.
The dividends were derived from interest on municipal bonds and are not subject
to federal income tax. To the extent a shareholder is subject to any state or
local tax laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local regulations,
we recommend that you consult your tax advisor for specific guidance.
33 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
A SERIES OF OPPENHEIMER MUNICIPAL FUND
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, Trustee and President
William H. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Caryn R. Halbrecht, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
- --------------------------------------------------------------------------------
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.
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.
34 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
OPPENHEIMERFUNDS FAMILY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL EQUITY
Developing Markets Fund Global Fund
International Small Company Fund Quest Global Value Fund
Europe Fund Global Growth & Income Fund
International Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY
Stock Stock & Bond
Enterprise Fund(1) Main Street(R)Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street(R)Small Cap Fund Total Return Fund
Quest Small Cap Value Fund Quest Balanced Value Fund
MidCap Fund Capital Income Fund(2)
Capital Appreciation Fund Multiple Strategies Fund
Growth Fund Disciplined Allocation Fund
Disciplined Value Fund Convertible Securities Fund
Quest Value Fund
Trinity Growth Fund Specialty
Trinity Core Fund Real Asset Fund
Trinity Value Fund Gold & Special Minerals Fund
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME
Taxable Municipal
International Bond Fund California Municipal Fund(3)
World Bond Fund Main Street California Municipal Fund3
High Yield Fund Florida Municipal Fund3
Champion Income Fund New Jersey Municipal Fund3
Strategic Income Fund New York Municipal Fund3
Bond Fund Pennsylvania Municipal Fund3
Senior Floating Rate Fund Municipal Bond Fund
U.S. Government Trust Insured Municipal Fund
Limited-Term Government Fund Intermediate Municipal Fund
Rochester Division
Rochester Fund Municipals
Limited Term New York Municipal Fund
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET(4)
Money Market Fund Cash Reserves
</TABLE>
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus
for details.
2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity
Income Fund."
3. Available to investors only in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
35 OPPENHEIMER INTERMEDIATE MUNICIPAL FUND
<PAGE>
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<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
- --------------------------------------------------------------------------------
INTERNET
24-hr access to account information and transactions
WWW.OPPENHEIMERFUNDS.COM
- --------------------------------------------------------------------------------
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- --------------------------------------------------------------------------------
PHONELINK
24-hr automated information and automated transactions
1.800.533.3310
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OPPENHEIMERFUNDS INFORMATION HOTLINE
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
[LOGO] OPPENHEIMERFUNDS (R)
DISTRIBUTOR, INC.
RA0860.001.0999 November 29, 1999
