OPPENHEIMER MUNICIPAL FUND
N-30D, 2000-06-07
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[PHOTO]

Semiannual Report March 31, 2000

Oppenheimer

Insured Municipal Fund

 

[LOGO OF OPPENHEIMER FUNDS]

REPORT HIGHLIGHTS

Although the Federal Reserve Board's interest rate hikes hurt the prices of fixed income securities, we believe these inflation-fighting actions will set the stage for improved long-term Fund performance.

Despite a difficult investment environment, which resulted in a negative total return for the Fund, we believe we have provided a consistent rate of federally tax-exempt income during the period.

We restructured the Fund's portfolio by reducing average duration and employing hedging strategies in an effort to better perform in an environment of rising interest rates.

Cumulative

  

Total Returns

For the 6-Month Period

Ended 3/31/00*

  

Class A

  

Without

With

Sales Chg.

Sales Chg.

0. 38%

-4. 39%
   

Class B

  

Without

With

Sales Chg.

Sales Chg.

-0. 01%

-4. 90%
   

Class C

  

Without

With

Sales Chg.

Sales Chg.

-0. 01%

-0. 99%

PRESIDENT'S LETTER

Dear shareholder,

[PHOTO]       [PHOTO]

James C. Swain
Chairman
Oppenheimer
Insured Municipal Fund

Bridget A. Macaskill
President
Oppenheimer
Insured Municipal Fund

For many years, we have encouraged investors to consider whether they could tolerate more risk in their long-term investments by participating in the stock market, which has historically provided higher long-term returns than any other asset class. Today, however, we have a very different concern: some investors may be assuming too much risk by concentrating their investments in just a handful of stocks or sectors or by "chasing performance. " Alan Greenspan, the Chairman of the Federal Reserve Board, has stated his view that the recent spectacular returns of some sectors of the market are partly responsible for pushing our economy to growth rates that could lead to higher inflation. The dramatic rise in the prices of a narrow segment of the market has created enormous wealth for some investors. In turn, those investors are spending at a rate that the Fed believes may threaten the healthy growth of our economy.

That's why the Fed has been raising interest rates steadily and decisively over the past year. By making borrowing more expensive, the Fed is attempting to slow economic growth. It is a precarious balancing act: too much tightening creates the risk of recession, while too little opens the door to inflation.

The implications are clear: investors must be prepared for near-term market volatility. In the bond market, higher interest rates usually lead to lower bond prices. In the stock market, slower economic growth could reduce corporate earnings and put downward pressure on stock prices. Highly valued stocks may be particularly vulnerable to a correction. The Securities and Exchange Commission Chairman, Arthur Levitt, has cautioned investors against the expectation that the types of returns seen in the recent bull market will last forever. We agree.

PRESIDENT'S LETTER

Because of the prospect of continued market volatility, we encourage you to consider diversifying your investments. Indeed, diversification may help you mitigate the effects of sharp declines in any one area. It may also help you better position your portfolio to seek greater returns over the long run.

While "new economy" stocks have risen since our last report to you, many "old economy" stocks are selling at unusually low prices. In the bond market, higher interest rates over the short term may reduce inflation concerns, which should be beneficial over the long term. By buying out-of-favor investments, you may be able to profit when and if they return to favor in the future. Of course, there is no assurance that value investing will return to favor in the market, but it may be a diversification strategy to consider for part of your portfolio.

What specific investments should you consider today so that you are prepared for tomorrow? The answer depends on your individual investing goals, risk tolerance and financial circumstances. We urge you to talk with your financial advisor about ways to diversify your portfolio. This may include considering global diversification as part of your strategy. While investing abroad has special risks, such as the effects of foreign currency fluctuation, it also offers opportunities to participate in global economic growth and to hedge against the volatility in U. S. markets.

We thank you for your continued confidence in OppenheimerFunds, The Right Way to Invest.

Sincerely,

 

/s/ James C. Swain   /s/ Bridget A. Macaskill
     
James C. Swain   Bridget A. Macaskill
April 24, 2000    

 

AN INTERVIEW WITH YOUR FUND'S MANAGER

 

[PHOTO]

Portfolio Management Team (l to r)
Christian Smith (Portfolio Manager) Robert Patterson

How would you characterize the Fund's performance during the six-month period that ended March 31, 2000?

A. The recent six-month period proved challenging for most fixed-income securities. Insured municipal bond funds suffered with the rest of the fixed income market. While it is not surprising that Oppenheimer Insured Municipal Fund's total return was negative in this difficult environment, we are nevertheless disappointed with these results.

At the same time, we are pleased that the Fund met its goal of providing investors with a consistent rate of federally tax-exempt income during the period. For investors in the top federal tax bracket, the Fund's Class A shares have a tax-free yield of 5.13%, which works out to a taxable equivalent yield of 8.02%.1 That level of taxable return would be difficult to achieve without taking substantial credit risk. Yet, during the period, the municipal bonds held in our portfolio averaged AAA credit quality.

What made this such a challenging period for municipal bond investing?

Municipal bonds, like most fixed income investments, tend to be sensitive to changing interest rates. The income yield of these securities remains fixed from the time they are issued until they mature. As a result, when interest rates rise over time, a bond's constant yield appears less attractive to investors. When interest rates fall the yield appears more attractive. That's why bond prices generally fall when interest rates rise, and rise when interest rates fall.

1. Dividend yields are calculated based on net asset value (NAV), are annualized and divided by the offering price as of the Fund's distribution date on March 10, 2000. Dividend yields at NAV do not include sales charges. Falling share prices will tend to artificially raise yields.

AN INTERVIEW WITH YOUR FUND'S MANAGER

"Municipal bonds offer attractive rates of tax-exempt income combined with less credit risk and lower volatility than many other types of bonds. "

During the period, the Federal Reserve Board (the Fed) raised interest rates in an effort to slow the pace of the U. S. economy and reduce the potential for rising inflation. Although actual inflation remained at low levels, consumer spending was exceedingly strong, prompting the Fed to signal that additional rate hikes might be necessary. The Fed's actions weakened bond prices, including prices of municipal bonds.

How did you manage the Fund under these conditions?

We actively managed the Fund's average duration in light of rising interest rates. Duration refers to the length of time before a bond matures, and is a measure of a bond's sensitivity to changes in interest rates. The longer a bond's duration, the greater the impact of rising or falling interest rates. For that reason, bond funds tend to benefit from holding a portfolio of securities with a longer average duration during times of falling interest rates, and shorter average duration during times of rising rates.

When I assumed leadership of the portfolio management team in November 1999, the Fund was positioned to take advantage of a decline in interest rates. However, as evidence mounted that rates were rising and would probably continue to rise, we changed that strategy in order to emphasize shorter term instruments.

Unfavorable market conditions prevented us from implementing our shorter duration strategy until the beginning of Year 2000. When market conditions improved in January, we began selling some of our longer duration bonds, replacing them with shorter duration instruments. We also employed a hedging strategy of shorting municipal bond futures to further reduce the Fund's average duration. By March 31, 2000, the end of the period, we had lowered the Fund's average duration from approximately 10 years to less than eight years, in line with most insured municipal bond funds.

Average Annual

Total Returns

  

For the Periods Ended 3/31/002

Class A

    

1-Year

5-Year

10-Year

-9. 70%

3. 91%

5. 79%
 

Class B

  

Since

1-Year

5-Year

Inception

-10. 43%

3. 80%

3. 71%
 

Class C

  

Since

1-Year

5-Year

Inception

-6. 82%

N/A

3. 83%

Because of ongoing market volatility, the Fund's returns may fluctuate and may be less than the results shown.

What is your outlook for the coming months?

Although rising interest rates hurt the Fund during the last six months, we believe the Fed's aggressive, inflation-fighting stance is likely to prove beneficial to the Fund's investors over the long term. By raising rates to slow the economy, the Fed is reducing the possibility of future inflation. Uncontrolled inflation could have an even greater adverse affect on the Fund than recent rate increases. On the other hand, if the Fed's actions lead to slowing economic growth, the result may eventually be an environment of stable or falling interest rates that would benefit the Fund's investors.

Still, we believe interest rates are likely to continue to rise in the near future while the Fed pursues its anti-inflationary course. Accordingly, for the time being we plan to persevere in our efforts to better position the Fund for an environment of rising interest rates. We also believe that insured municipal bonds will continue to provide attractive rates of tax-exempt current income with less credit risk and lower levels of volatility than many other types of bonds offering similar or even lower yields. Carefully searching for high quality investments that help investors to maximize their current income is what makes Oppenheimer Insured Municipal Fund an important part of The Right Way to Invest.

AN INTERVIEW WITH YOUR FUND'S MANAGER

Credit Allocation3

 
[GRAPH]
    
  • AAA
    		•    88. 9%
  • AA
    		•      11. 1

     

    Standardized Yields4

    For the 30 Days Ended 3/31/00

    Class A

    4. 64%

    Class B

    4. 11

    Class C

    4. 11

    Top Ten Positions by State5

    		 

    Illinois

    14. 3%

    New York

    11. 3

    Texas

    10. 0

    Pennsylvania

    9. 2

    Michigan

    8. 5

    Colorado

    5. 7

    Alaska

    5. 0

    Nevada

    4. 5

    Arizona

    4. 4

    California

    4. 3

    3. Portfolio data is subject to change. Percentages are as of March 31, 2000, and are dollar-weighted based on total market value of investments. 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 2. 66% of total investments), but which have been assigned the ratings above by the Fund's investment advisor for internal purposes as being comparable, in the advisor's judgment, to securities rated by a rating agency in the same category.
    4. Standardized yield is based on net investment income for the 30-day period ended March 31, 2000. Falling share prices will tend to artificially raise yields.
    5. Portfolio data is subject to change. Percentages are as of March 31, 2000, and are based on net assets.

    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, maybe worth more or less than the original cost. For quarterly updates on the Fund's performance, please contact your financial advisor, call us at 1. 800. 525. 7048 or visit our website at www. oppenheimerfunds. com.

    Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns and yields shown do not show the effects of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.

    Class A shares were first publicly offered on 11/11/86. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 4. 75%. The Fund's maximum sales charge for Class A shares was lower prior to 2/1/93, so actual performance may have been higher.

    Class B shares of the Fund were first publicly offered on 5/3/93. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because class B shares convert to class A shares 72 months after purchase, the "life of class" return for Class B uses Class A performance for the period after conversion. 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 8/29/95. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0. 75% asset-based sales charge.

    An explanation of the calculation of performance is in the Fund's Statement of Additional Information.

    Financials

    STATEMENT OF INVESTMENTS March 31, 2000 / Unaudited

    Ratings:
    Moody's/
    S&P/Fitch
    		  
    Principal
    Amount
    		  
    Market
    Value
    See Note 1
    		  
    Municipal Bonds and Notes1-00.4%          
    Alaska-5.0%  
    AK Export & IDAU RB, Snettisham Hydroelectric  
    Power, First Series, AMBAC Insured, 5.50%, 1/1/16  
    NR/AAA/AAA
    		   $1,145,000   $1,111,451  
    AK Export & IDAU RB, Snettisham Hydroelectric  
    Power, First Series, AMBAC Insured, 5.50%, 1/1/17  
    NR/AAA/AAA
    		   1,265,000   1,219,966  
    Anchorage, AK Water RRB, AMBAC Insured,  
    5.625%, 9/1/13  
    Aaa/AAA/AAA
    		   1,000,000   1,022,090  
    Anchorage, AK Water RRB, AMBAC Insured,  
    6%, 9/1/19  
    Aaa/AAA/AAA
    		   1,000,000   1,024,450  
    Anchorage, AK Water RRB, AMBAC Insured,  
    6%, 9/1/24  
    Aaa/AAA/AAA
    		   1,500,000   1,519,035  
               
       
    		      5,896,992  
                   
    Arizona-2.7%  
    AZ Educational LMC RRB, Series B, 7%, 3/1/05  
    Aa2/NR
    		   1,090,000   1,134,058  
    University of AZ COP, University Parking & Student  
    Housing, AMBAC Insured, 5.75%, 6/1/19  
    Aaa/AAA
    		   2,000,000   2,020,400  
               
       
    		      3,154,458  
                   
    California-4.3%  
    CA SCDAU Revenue Refunding COP, Cedars-Sinai  
    Medical Center, MBIA Insured, 6.50%, 8/1/121  
    Aaa/AAA
    		   1,000,000   1,100,970  
    Pomona, CA USD GORB, Series A, MBIA Insured,  
    6.15%, 8/1/15  
    Aaa/AAA
    		   1,000,000   1,089,460  
    Redding, CA Electric System Revenue COP,  
    MBIA Insured, Inverse Floater, 8.55%, 7/8/222  
    Aaa/AAA
    		   1,500,000   1,708,125  
    Sacramento, CA MUD Electric RRB, Series G,  
    MBIA Insured, 6.50%, 9/1/13  
    Aaa/AAA/A
    		   1,000,000   1,145,820  
               
       
    		      5,044,375  
                   
    Colorado-5.7%  
    Broomfield, CO COP, 5.75%, 12/1/24  
    Aaa/AAA
    		   1,250,000   1,254,950  
    CO HFA RRB, Single Family Program, Series B-2,  
    7.10%, 4/1/173  
    Aa2/AA
    		   1,000,000   1,089,660  
    CO Housing FAU SFM RB, Sr. Lien, Series C-2,  
    6.875%, 11/1/28  
    Aa2/NR
    		   2,000,000   2,106,180  
    CO Resource & Power DA Small Water Resource RB,  
    Series A, FGIC Insured, 5.80%, 11/1/20  
    Aaa/AAA/AAA
    		   1,000,000   1,009,790  
    Douglas & Elbert Cntys., CO SDI No. RE-1,  
    Improvement GOB, Series A, MBIA Insured,  
    8%, 12/15/09  
    Aaa/AAA
    		   1,000,000   1,223,600  
               
                6,684,180  

                9  OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENT OF INVESTMENTS Unaudited / Continued

    Ratings:
    Moody's/
    S&P/Fitch
    		    
    Principal
    Amount
    		  
    		 
    Market
    Value
    See Note1
    		 
    Connecticut-1.5%          
    CT Housing FAU RB, Series A, Subseries A-2,  
    6.20%, 11/15/22  
    Aa2/AA
    		     $830,000   $841,545  
    CT Housing FAU RRB, Series A, Subseries D-2,  
    6.20%, 11/15/27  
    Aa2/AA
    		     945,000   957,115  
                   
       
    		        1,798,660  
                     
    Florida-1.8%  
    FL HFA MH RRB, Series C, 6%, 8/1/11  
    NR/AAA
    		     1,000,000   1,025,590  
    Lee Cnty., FL Hospital Board of Directors RRB,  
    MBIA Insured, Inverse Floater, 8.89%, 3/26/202  
    Aaa/AAA
    		     1,000,000   1,060,000  
                   
       
    		        2,085,590  
                     
    Hawaii-0.9%  
    Hawaii Budget & Finance Department Special  
    Purpose RRB, Prerefunded, Series D, AMBAC Insured,  
    6.15%, 1/1/20  
    Aaa/AAA
    		     1,000,000   1,019,490  
    Illinois-14.3%  
    Chicago, IL SFM RB, Series B, 6.95%, 9/1/28  
    Aaa/NR
    		     1,830,000   1,924,812  
    Chicago. IL GOUN, Series A, FGIC Insured,  
    6.75%, 1/1/35  
    Aaa/AAA/AAA
    		     2,000,000   2,179,660  
    Cook Cnty., IL Community College District  
    No. 508 Chicago COP, FGIC Insured,  
    8.75%, 1/1/05  
    Aaa/AAA/AAA
    		     500,000   577,315  
    Cook Cnty., IL Community College District  
    No. 508 Lease COP, Series C, MBIA Insured,  
    7.70%, 12/1/07  
    Aaa/AAA
    		     1,500,000   1,745,910  
    Cook Cnty., IL RB, FGIC Insured, 5.50%, 11/15/22  
    Aaa/AAA/AAA
    		     6,000,000   5,698,380  
    Cook Cnty., IL SDI No. 99 Cicero GOB,  
    FGIC Insured, 8.50%, 12/1/05  
    Aaa/NR
    		     1,170,000   1,366,958  
    Metropolitan Pier & Exposition Authority RB,  
    IL Hospitality Facilities, McCormick Plaza  
    Convention Center, Escrowed to Maturity, 7%, 7/1/26  
    A/BBB-/AAA
    		     3,000,000   3,474,300  
                   
       
    		        16,967,335  
                     
    Indiana-3.0%  
    Hamilton Southeastern, IN Consolidated School  
    Building Corp. RRB, First Mtg., AMBAC Insured,  
    7%, 7/1/11  
    Aaa/AAA/AAA
    		     500,000   519,005  
    IN Office Building Commission Capital Complex RB,  
    Series B, MBIA Insured, 7.40%, 7/1/15  
    Aaa/AAA
    		     2,500,000   3,008,075  
                   
                  3,527,080  

    10  OPPENHEIMER INSURED MUNICIPAL FUND

    Ratings:
    Moody's/
    S&P/Fitch
    Principal
    Amount
    		  
    Market
    Value
    See Note 1
    Massachusetts-2.4%          
    MA Health & Educational FA RB, Mt. Auburn Hospital  
    Issue, Series B-1, MBIA Insured, 6.25%, 8/15/14  
    Aaa/AAA
    		   $1,000,000   $1,047,160  
    MA HFA RB, Series A, AMBAC Insured,  
    6.60%, 7/1/14  
    Aaa/AAA/AAA
    		   1,750,000   1,813,980  
                 
       
    		      2,861,140  
                   
    Michigan-8.5%  
    Central Montcalm, MI Public Schools RB,  
    MBIA Insured, 5.75%, 5/1/24  
    Aaa/AAA
    		   750,000   748,500  
    Detroit, MI GOB, Series B, MBIA Insured,  
    6%, 4/1/17  
    Aaa/AAA
    		   3,035,000   3,149,450  
    Howell, MI Public Schools RB, MBIA Insured,  
    5.875%, 5/1/19  
    Aaa/AAA
    		   1,850,000   1,877,177  
    MI Building Authority RRB, Series I,  
    MBIA-IBC Insured, 6.25%, 10/1/20  
    Aaa/AAA/AA
    		   2,815,000   2,878,619  
    Romulus, MI Community Schools RB,  
    5.75%, 5/1/25  
    Aaa/AAA
    		   1,400,000   1,395,310  
                 
       
    		      10,049,056  
                   
    Nevada-4.5%  
    Clark Cnty. , NV Passenger Facility Charge RB,  
    Las Vegas McCarran International Airport Project,  
    Series B, MBIA Insured, 6. 50%, 7/1/12  
    Aaa/AAA
    		   2,000,000   2,091,920  
    Wahoe Cnty., NV SDI RB, FSA Insured,  
    5.875%, 6/1/20  
    Aaa/AAA/AAA
    		   3,175,000   3,207,353  
                 
       
    		      5,299,273  
    New Hampshire-0.5%  
    NH Turnpike System RRB, Series A, FGIC Insured,  
    6.75%, 11/1/11  
    Aaa/AAA/AAA
    		   500, 000   550,580  
    New Jersey-3.0%  
    NJ Transportation COP, Series 15, AMBAC Insured,  
    8.04%, 9/15/154  
    NR/AAA
    		   3,250,000   3,595,280  
    New York-11.3%  
    NYS DA RB, SUEFS, FGIC Insured,  
    5.125%, 5/15/18  
    Aaa/AAA/AAA
    		   1,000,000   956,570  
    NYS MTAU Dedicated Tax Fund RB, Series A,  
    FGIC Insured, 6.125%, 4/1/17  
    Aaa/AAA/AAA
    		   1,000,000   1,049,940  
    NYS Tollway Authority Highway & Bridge Trust  
    Fund RB, Series A, FSA Insured, 6%, 4/1/16  
    NR/AAA/AAA
    		   1,000,000   1,049,000  
    NYS UDC RB, Series C, 5.875%, 1/1/19  
    Aaa/AAA/AAA
    		   5,000,000   5,077,350  
    TSASC, Inc., NYRB, 6.25%, 7/15/27  
    Aa1/A/A+
    		   5,250,000   5,225,535  
                 
       
    		      13,358,395  

    11  OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENT OF INVESTMENTS Unaudited / Continued

    Ratings:
    Moody's/
    S&P/Fitch
    Principal
    Amount
    		  Market
    Value
    See Note 1     		 
    Ohio-2.9%          
    Mahoning Valley, OH Sanitary Distilled Water RRB,  
    FSA Insured, 5.75%, 11/15/16   Aaa/AAA/AAA     $1,450,000   $1,480,102  
    Streetsboro, OH SDI GOB, AMBAC Insured,  
    7.125%, 12/1/10   Aaa/AAA/AAA     500,000   563,220  
    Summit Cnty., OH RB, FGIC Insured,  
    6.25%, 12/1/21   Aaa/AAA/AAA     1,270,000   1,340,460  
                   
                    3,383,782  
                       
    Oklahoma-1.8%  
    OK Industrial Authority Health Systems RB,  
    Baptist Medical Center, Series C, AMBAC Insured,  
    7%, 8/15/05   Aaa/AAA/AAA     2,000,000   2,172,060  
    Pennsylvania-9.2%  
    Berks Cnty., PA GOB, Prerefunded, FGIC Insured,  
    Inverse Floater, 8.38%, 11/10/202   Aaa/AAA/AAA     1,000,000   1,107,500  
    PA Convention Center RRB, Series A,  
    MBIA-IBC Insured, 6.75%, 9/1/19   Aaa/AAA     1,150,000   1,231,915  
    PA HEAA Student Loan RB, Series B,  
    AMBAC Insured, Inverse Floater, 7.85%, 3/1/222   Aaa/AAA/AAA     1,250,000   1,275,000  
    Philadelphia, PA Airport RB, Series 387A,  
    Inverse Floater, 5.86%, 6/15/122   NR/NR     1,565,000   1,539,866  
    Philadelphia, PA Regional POAU Lease RB,  
    MBIA Insured, Inverse Floater, 8.03%, 9/1/202   Aaa/AAA     1,900,000   1,945,125  
    Pittsburgh, PA RB, Series A, 5.75%, 9/1/19   Aaa/AAA     1,000,000   1,006,080  
    Pittsburgh, PA RB, Series A, 5.75%, 9/1/20   Aaa/AAA     2,795,000   2,801,904  
                   
                  10, 907,39 0
                     
    Texas-10.0%  
    Cedar Hill, TX ISD CAP RRB, Zero Coupon,  
    6.10%, 8/15/115   Aaa/NR/AAA     1,585,000   846,707  
    Grand Prairie, TX HFDC RRB, Dallas/Ft. Worth  
    Medical Center Project, AMBAC Insured,  
    6.875%, 11/1/10   Aaa/AAA/AAA     1,800,000   1,949,130  
    Harris Cnty., TX Hospital District RRB,  
    AMBAC Insured, 7.40%, 2/15/10   Aaa/AAA/AAA     2,000,000   2,251,400  
    Harris Cnty., TX Houston Sports Authority  
    Special CAP RB, Jr. Lien, Series B, MBIA Insured,  
    Zero Coupon, 5.33%, 11/15/135   Aaa/AAA/AAA     4,360,000   2,024,958  
    Lower Colorado River Authority, TX RRB,  
    Series A, 5.875%, 5/15/17   Aaa/AAA/AAA     1,625,000   1,662,196  

    12  OPPENHEIMER INSURED MUNICIPAL FUND

    Ratings:
    Moody's/
    S&P/Fitch
    		Principal
    Amount    		     Market
    Value
    See Note 1    		  
    Texas Continued          
    Lower Neches Valley, TX IDAU Corp. Sewer  
    Facilities RB, Mobil Oil Refining Corp. Project,  
    6.40%, 3/1/30  
    Aaa/AAA
    		   $1,000,000   $1,021,910  
    Rio Grande Valley TX HFDC Retirement Facilities RB,  
    Golden Palms, Series B, MBIA Insured, 6.40%, 8/1/12  
    Aaa/AAA
    		   2,000,000   2,093,940  
                 
       
    		      11,850,241  
                   
    Washington-1.9%  
    Tacoma, WA Electric Systems RB, Prerefunded,  
    AMBAC Insured, Inverse Floater, 8.89%, 1/2/152  
    Aaa/AAA/AAA
    		   1,000,000   1,068,750  
    WA PP Supply System RRB, Nuclear Project No. 2,  
    Series A, FGIC Insured, Zero Coupon, 5.50%, 7/1/095  
    Aaa/AAA/AAA
    		   2,000,000   1,221,740  
                 
       
    		      2,290,490  
                   
    Wisconsin-1.2%  
    WI Health & Educational FA RB, Aurora Medical  
    Group, Inc. Project, FSA Insured, 6%, 11/15/11  
    Aaa/AAA/AAA
    		   1,370,000   1,455,392  
    District of Columbia-2.6%  
    DC Hospital RRB, Medlantic Healthcare Group,  
    Series A, MBIA Insured, 5.25%, 8/15/12  
    Aaa/AAA/AAA
    		   1,000,000   994,100  
    DC RRB, Prerefunded, Series A-1, MBIA Insured,  
    6%, 6/1/11  
    Aaa/AAA/AAA
    		   100,000   106,660  
    DC RRB, Unrefunded Balance, Series A-1,  
    MBIA Insured, 6%, 6/1/11  
    Aaa/AAA/AAA
    		   1,900,000   2,010,029  
                 
       
    		      3,110,789  
    U.S. Possessions-1.4%  
    PR Municipal FAU GOB, Series PA-638B,  
    Inverse Floater, 7.38%, 8/1/152,6  
    NR/NR
    		   1,500,000   1,675,785  
                 
    Total Municipal Bonds and Notes (Cost $115,840,298)  
    		      118,737,813  
                   
    Short-Term Tax-Exempt Obligations-1.7%  
    Maricopa Cnty., AZ PC Corp. RRB, Arizona Public  
    Service Co., Series C, 3.95%, 4/3/004 (Cost $2,000,000)  
    		  2,000,000   2,000,000  
    Total Investments, at Value (Cost $117,840,298)  
    		  102.1 % 120,737,813  
    Liabilities in Excess of Other Assets  
    		  (2.1 ) (2,479,163 )
             
    Net Assets  
    		  100.0 % $118,258,650  
             

    13  OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENTS OF INVESTMENTS Unaudited / Continued

    FOOTNOTES TO STATEMENT OF INVESTMENTS

    To simplify the listings of securities, abbreviations are used per the table below:

    CAP

    Capital Appreciation

    MTAU

    Metropolitan Transportation Authority

    COP

    Certificates of Participation

    MUD

    Municipal Utility District

    DA

    Dormitory Authority

    NYS

    New York State

    FA

    Facilities Authority

    PC

    Pollution Control

    FAU

    Finance Authority

    POAU

    Port Authority

    GOB

    General Obligation Bonds

    PP

    Public Power

    GORB

    General Obligation Refunding Bonds

    RB

    Revenue Bonds

    GOUN

    General Obligation Unlimited Nts.

    RRB

    Revenue Refunding Bonds

    HEAA

    Higher Education Assistance Agency

    SCDAU

    Statewide Communities Development

    HFA

    Housing Finance Agency

    		  

    Authority

    HFDC

    Health Facilities Development Corp.

    SDI

    School District

    IDAU

    Industrial Development Authority

    SFM

    Single Family Mtg.

    ISD

    Independent School District

    SUEFS

    State University Educational Facilities System

    LMC

    Loan Marketing Corp.

    UDC

    Urban Development Corp.

    MH

    Multi family Housing

    USD

    UniFIed School District

    1. Securities with an aggregate market value of $1,096,066 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 5 of Notes to Financial Statements.
    2. Represents the current interest rate for a variable rate bond known as an "inverse floater" which pays interest at a rate that varies inversely with short-term interest rates. As interest rates rise, inverse floaters produce less current income. Their price maybe more volatile than the price of a comparable fixed-rate security. Inverse floaters amount to $11,380,151 or 9.62% of the Fund's net assets as of March 31, 2000.
    3. When-issued security to be delivered and settled after March 31, 2000.
    4. Represents the current interest rate for a variable or increasing rate security.
    5. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase.
    6. 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 $1,675,785 or 1.42% of the Fund's net assets as of March 31, 2000.

    As of March 31, 2000, securities subject to the alternative minimum tax amount to $19,146,954 or 16.19% of the Fund's net assets.

    See accompanying Notes to Financial Statements.

    14 OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENT OF ASSETS AND LIABILITIES Unaudited

    March 31, 2000    
    Assets  
           
    Investments, at value (cost $117, 840, 298)-see accompanying statement   $120,737,813  
    Cash   349,673  
    Receivables and other assets:  
    Interest   1,743,723  
    Shares of beneficial interest sold   139,404  
    Other   7,415  
       
    Total assets   122,978,028  
           
    Liabilities  
    Payables and other liabilities:  
    Investments purchased (including $1,086,775 purchased on a   3,861,640  
    when-issued basis)  
    Dividends   352,037  
    Shares of beneficial interest redeemed   294,904  
    Distribution and service plan fees   71,632  
    Daily variation on futures contracts   48,813  
    Transfer and shareholder servicing agent fees   17,755  
    Trustees' compensation   1,589  
    Other   71,008  
       
    Total liabilities   4,719,378  
           
    Net Assets   $118,258,650  
       
    Composition of Net Assets  
    Paid-in capital   $124,639,829  
    Overdistributed net investment income   (157,797 )
    Accumulated net realized loss on investment transactions   (8,792,272 )
    Net unrealized appreciation on investments   2,568,890  
       
    Net assets   $118,258,650  
       
    Net Asset Value Per Share  
    Class A Shares:  
    Net asset value and redemption price per share (based on net assets of  
    $92,261,096 and 5,722,666 shares of beneficial interest outstanding)   $16.12  
    Maximum offering price per share (net asset value plus sales charge of  
    4.75% of offering price)   $16.92  
    Class B Shares:  
    Net asset value, redemption price (excludes applicable contingent deferred  
    sales charge) and offering price per share (based on net assets of $21,784,493  
    and 1,350,437 shares of beneficial interest outstanding)   $16.13  
    Class C Shares:  
    Net asset value, redemption price (excludes applicable contingent deferred  
    sales charge) and offering price per share (based on net assets of $4,213,061  
    and 261,373 shares of beneficial interest outstanding)   $16.12  

    See accompanying Notes to Financial Statements.

    15  OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENT OF OPERATIONS Unaudited

    For the Six Months Ended March 31, 2000    
    Investment Income  
    Interest   $3,689,687  
           
    Expenses  
    Management fees   270,710  
    Distribution and service plan fees:  
    Class A   112,671  
    Class B   119,927  
    Class C   23,899  
    Shareholder reports   50,906  
           
    Transfer and shareholder servicing agent fees   50,076  
    Legal, auditing and other professional fees   33,850  
    Custodian fees and expenses   16,063  
    Accounting service fees   6,000  
    Trustees' compensation   3,462  
    Other   17,116  
           
    Total expenses   704,680  
    Less expenses paid indirectly   (6,729 )
           
    Net expenses   697,951  
           
    Net Investment Income   2,991,736  
           
    Realized and Unrealized Gain (Loss)  
    Net realized loss on:  
    Investments   (8,080,996 )
    Closing of futures contracts   (84,781 )
           
    Net realized loss   (8,165,777 )
           
    Net change in unrealized appreciation or depreciation on investments   5,338,548  
           
    Net realized and unrealized loss   (2,827,229 )
           
    Net Increase in Net Assets Resulting from Operations     $164,507  
           

    See accompanying Notes to Financial Statements.

    16  OPPENHEIMER INSURED MUNICIPAL FUND

    STATEMENTS OF CHANGES IN NET ASSETS

    Six Months
    Ended
    March 31, 2000
    (Unaudited)
    		    
    Year
    Ended
    Sept. 30,
    1999
    		  
    Operations      
    Net investment income   $2,991,736   $6,306,110  
    Net realized loss   (8,165,777 ) (352,108 )
    Net change in unrealized appreciation or depreciation   5,338,548   (12,885,535 )
    Net increase (decrease) in net assets resulting from  
    operations   164,507   (6,931,533 )
               
    Dividends and/or Distributions to Shareholders  
    Dividends from net investment income:  
    Class A   (2,444,756 ) (4,716,753 )
    Class B   (519,033 ) (1,078,468 )
    Class C   (102,941 ) (218,878 )
    Distributions from net realized gain:  
    Class A   --   (1,141,094 )
    Class B   --   (310,557 )
    Class C   --   (60,365 )
               
    Beneficial Interest Transactions  
    Net increase (decrease) in net assets resulting from  
    beneficial interest transaction:  
    Class A   (3,610,848 ) 6,192,573  
    Class B   (4,068,789 ) 2,067,306  
    Class C   (1,269,227 ) 1,305,323  
               
    Net Assets  
    Total decrease   (11,851,087 ) (4,892,446 )
    Beginning of period   130,109,737   135,002,183  
       
    End of period (including overdistributed net investment  
    income of $157,797 and $82,803, respectively)   $118,258,650   $130,109,737  
       

    See accompanying Notes to Financial Statements.

    17  OPPENHEIMER INSURED MUNICIPAL FUND

    FINANCIAL HIGHLIGHTS

    Class A

    Six Months
    Ended
    March 31, 2000
    (Unaudited)
     
     
     

    1999
     
     
     

    1998
     
     
     

    1997
     
     
     

    1996

    Year
    Ended
    Sept. 30,
    1995

    Per Share Operating Data
     
     
     
     
     
     

    Net asset value, beginning of period

    $16.48

    $18.31

    $17.72

    $17.07

    $16.86

    $16.14

    Income (loss) from investment operations:
     
     
     
     
     
     

    Net investment income

    .40

    .84

    .80

    .91

    .90

    .90

    Net realized and unrealized gain (loss)

    (.35)

    (1.67)

    .75

    .63

    .20

    .71

    Total income (loss) from
     
     
     
     
     
     

    investment operations

    .05

    (.83)

    1.55

    1.54

    1.10

    1.61

    Dividends and/or distributions
     
     
     
     
     
     

    to shareholders:
     
     
     
     
     
     

    Dividends from net investment income

    (.41)

    (.80)

    (.84)

    (.89)

    (.89)

    (.89)

    Distributions from net realized gain

    —

    (.20)

    (.12)

    —

    —

    —

    Total dividends and/or distributions
     
     
     
     
     
     

    to shareholders

    (.41)

    (1.00)

    (.96)

    (.89)

    (.89)

    (.89)

    Net asset value, end of period

    $16.12

    $16.48

    $18.31

    $17.72

    $17.07

    $16.86

    Total Return, at Net Asset Value1

    0.38%

    (4.76)%

    9.01%

    9.25%

    6.67%

    10.29%
     
     
     
     
     
     
     

    Ratios/Supplemental Data
     
     
     
     
     
     

    Net assets, end of period (in thousands)

    $92,261

    $ 98,030

    $102,687

    $91,051

    $83,516

    $76,691

    Average net assets (in thousands)

    $93,910

    $103,527

    $96,458

    $86,511

    $81,233

    $70,650

    Ratios to average net assets:2

     
     
     
     
     
     

    Net investment income

    5.04%

    4.77%

    4.49%

    5.25%

    5.27%

    5.52%

    Expenses

    0.98%

    0.89%

    0.89%3

    0.95%3

    1.02%3

    0.95%3

    Portfolio turnover rate4

    74%

    108%

    73%

    77%

    93%

    58%

     

    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 has not been grossed up to reflect the effect of expenses paid indirectly.
    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 March 31, 2000, were $86,421,498 and $94,549,491, respectively.

    See accompanying Notes to Financial Statements.

    18 OPPENHEIMER INSURED MUNICIPAL FUND

     

    Six Months
    Ended
    March 31, 2000
    (Unaudited)

    		        
    Year
    Ended
    Sept. 30,
    1995
             
             

    Class B

    1999

    1998

    1997

    1996

    Per Share Operating Data
     
     
     
     
     
     

    Net asset value, beginning of period

    $16. 49

    $18. 32

    $17. 73

    $17. 08

    $16. 87

    $16. 15

    Income (loss) from investment operations:
     
     
     
     
     
     

    Net investment income

    . 33

    . 71

    . 67

    . 76

    . 77

    . 78

    Net realized and unrealized gain (loss)

    (. 34)

    (1. 67)

    . 74

    . 65

    . 20

    . 71
     

    Total income (loss) from
     
     
     
     
     
     

    investment operations

    (. 01)

    (. 96)

    1. 41

    1. 41

    . 97

    1. 49

    Dividends and/or distributions
     
     
     
     
     
     

    to shareholders:
     
     
     
     
     
     

    Dividends from net investment income
    (. 35)
    (. 67)
    (. 70)
    (. 76)
    (. 76)
    (. 77)

    Distributions from net realized gain
    --
    (. 20)
    (. 12)
    --
    --
    --
     

    Total dividends and/or distributions
     
     
     
     
     
     

    to shareholders

    (. 35)

    (. 87)

    (. 82)

    (. 76)

    (. 76)

    (. 77)

    Net asset value, end of period

    $16. 13

    $16. 49

    $18. 32

    $17. 73

    $17. 08

    $16. 87
     

    Total Return, at Net Asset Value1

    (0. 01)%

    (5.47)%

    8. 18%

    8. 43%

    5. 87%

    9. 47%

    Ratios/Supplemental Data
     
     
     
     
     
     

    Net assets, end of period (in thousands)
    $21, 784
    $26, 468
    $27, 392
    $19, 974
    $15, 983
    $13, 341

    Average net assets (in thousands)

    $23, 926

    $28, 562

    $23, 817

    $17, 309

    $14, 822

    $11, 987

    Ratios to average net assets:2

     
     
     
     
     
     

    Net investment income

    4. 28%

    4. 00%

    3. 76%

    4. 48%

    4. 50%

    4. 75%

    Expenses

    1. 74%

    1. 65%

    1. 64%3

    1. 71%3

    1. 77%3

    1. 71%3

    Portfolio turnover rate4

    74%

    108%

    73%

    77%

    93%

    58%

    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 has not been grossed up to reflect the effect of expenses paid indirectly.
    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 March 31, 2000, were $86,421,498 and $94,549,491, respectively.

    See accompanying Notes to Financial Statements.

    19   OPPENHEIMER INSURED MUNICIPAL FUND

     

    FINANCIAL HIGHLIGHTS Continued

    Class C
    		  
    Six Months
    Ended
    March 31, 2000     (Unaudited)
          1999
         

    1998
          1995
         

    1996

    Year
    Ended
    Sept. 30,     19956

    Per Share Operating Data

    		  
     
     
     
     
     
       

    Net asset value, beginning of period

    		  

    $16. 48

    $18. 31

    $17. 72

    $17. 06

    $16. 86

    $16. 72

    Income (loss) from investment operations:

    		  
     
     
     
     
     
       
    Net investment income  
    . 34
    . 71
    . 70
    . 76
    . 75
      . 08
    Net realized and unrealized gain (loss)  
    (. 35)
    (1. 67)
    . 71
    . 65
    . 21
      . 14
       
    Total income (loss) from investment operations  
      (. 01)
      (. 96)
      1. 41
      1. 41
      . 96
          . 22
    Dividends and/or distributions to shareholders:  
     
     
     
     
     
       
     
     
     
     
     
     
       
    Dividends from net investment income  
    (. 35)
    (. 67)
    (. 70)
    (. 75)
    (. 76)
      (. 08)
    Distributions from net realized gain  
    --
    (. 20)
    (. 12)
    --
    --
      --
       
    Total dividends and/or distributions to shareholders  
    (. 35)
    (. 87)
    (. 82)
    (. 75)
    (. 76)
    (.08 )

    Net asset value, end of period

    		  

    $16. 12

    $16. 48

    $18. 31

    $17. 72

    $17. 06

    $16. 86
       
    Total Return, at Net Asset Value1  
    (0.01)%
    (5.48)%
    8.18%
    8.48%
    5.77%
    1.30%
       
     
     
     
     
     
       

    Ratios/Supplemental Data

    		  
     
     
     
     
     
       
    Net assets, end of period (in thousands)  
    $4, 213
    $5, 611
    $4, 923
    $2, 554
    $924
    $211
    Average net assets (in thousands)  
    $4, 766
    $5, 775
    $3, 661
    $1, 720
    $618
    $1

    Ratios to average net assets:2

    		 
     
     
     
     
     
       
    Net investment income  
    4. 30%
    4. 01%
    3. 82%
    4. 45%
    4. 38%
    4. 89%

    Expenses

    		  
    1. 74%
    1. 65%
    1. 64%3
    1. 72%3
    1. 81%3
    1. 07%3
    Portfolio turnover rate4  
    74%
    108%
    73%
    77%
    93%
      58%

    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 has not been grossed up to reflect the effect of expenses paid indirectly.
    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 March 31, 2000, were $86,421,498 and $94,549,491, respectively.
    5. Per share amounts calculated based on the average shares outstanding during the period.
    6. For the period from August 29, 1995 (inception of offering) to September 30, 1995.

    See accompanying Notes to Financial Statements.

    20   OPPENHEIMER INSURED MUNICIPAL FUND

     

    NOTES TO FINANCIAL STATEMENTS Unaudited

    1. Significant Accounting Policies

    Oppenheimer Insured Municipal Fund (the Fund) is a separate series of Oppenheimer Municipal Fund, an 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 at their offering price, which is normally net asset value plus an initial sales charge. Class B and Class C shares are sold without an initial sales charge but 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 shares 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. Securities for which quotations are readily available are valued at the last sale price, or if in the absence of a sale, at the last sale price on the prior trading day if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at cost (or last determined market value) and adjusted for amortization or accretion to maturity of any premium or discount.
    Securities Purchased on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Fund on a forward commitment or when-issued basis can take place a month or more after the transaction date. Normally the settlement date occurs within six months after the transaction date; however, the Fund may, from time to time, purchase securities whose settlement date extends beyond six months and possibly as long as two years or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Fund's net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of March 31, 2000, the Fund had entered into net outstanding when-issued or forward commitments of $1,086,775.

    21   OPPENHEIMER INSURED MUNICIPAL FUND

    NOTES TO FINANCIAL STATEMENTS Unaudited / Continued

    1. Significant Accounting Policies Continued

    In connection with its ability to purchase securities on a when-issued or forward commitment basis, the Fund may enter into mortgage dollar-rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Fund records each dollar-roll as a sale and a new purchase transaction.
    Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.
    Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carry-overs, 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.

    22   OPPENHEIMER INSURED MUNICIPAL FUND

    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:

     

     
    Six Months Ended March 31, 2000
    Year Ended September 30, 1999
     
    Shares
      Amount
    Shares
      Amount
    Class A        
    Sold
    465,595
    $7,458,447
    1,139,629
    $20,168,330
    Dividends and/or distributions reinvested
    106,954
    1,719,700
    246,492
    4,359,639
    Redeemed
    (797,926)
    (12,788,995)
      (1,046,047)
    (18,335,396)
     
    Net increase (decrease)
    (225,377)
    $(3,610,848)
    340,074
    $6,192,573
     

    Class B

    		            
    Sold
    111,517
    $1,800,044
    483,752
    $8,559,831
    Dividends and/or distributions reinvested
    19,163
      308,216
    50,736
    898,692
    Redeemed
    (385,760)
    (6,177,049)
    (424,380)
    (7,391,217)
     
    Net increase (decrease)
    (255,080)
    $(4,068,789)
    110,108
    $ 2,067,306
     

    Class C

    		            
    Sold
    21,161

    $ 339,255

    140,475

    $ 2,501, 020

    Dividends and/or distributions reinvested
    4,058
     
    65,286
    11,966
      211,869
    Redeemed
    (104,393)
    (1,673,768)
    (80,811)
    (1,407,566)
     
    Net increase (decrease)
    (79,174)
    $(1,269,227)
    71,630
    $ 1,305,323
     

    3. Unrealized Gains and Losses on Securities

    As of March 31, 2000, net unrealized appreciation on securities of $2,897,515 was composed of gross appreciation of $3,403,511, and gross depreciation of $505,996.

    4. 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 0.45% of the first $100 million of average annual net assets, 0.40% of the next $150 million, 0.375% of the next $250 million and 0.35% of average annual net assets in excess of $500 million. The Fund's management fee for the six months ended March 31, 2000, was 0. 44% of average annual net assets for each class of shares, annualized for periods of less than one full year.

    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.

    23   OPPENHEIMER INSURED MUNICIPAL FUND

    NOTES TO FINANCIAL STATEMENTS Unaudited / Continued

    4. Fees and Other Transactions with affiliates Continued

    Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and for 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.

    Six Months
    E nded
    Aggregate
    Front-End
    Sales Charges
    on Class A
    Shares
    Class A
    Front-End
    Sales Charges
    Retained by
    Distributor
    Commissions
    on Class A
    Shares
    Advanced by
    Distributor1
    Commissions
    on Class B
    Shares
    Advanced by
    Distributor1
    Commissionson
    on Class C
    Shares
    Advanced by
    Distributor1

    March 31, 2000

    $52,018

    $10,692

    $--

    $62,801

    $1,769

    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.

    Six Months
    Ended
    Class A
    Contingent Deferred
    Sales Charges
    Retained by Distributor
    Class B
    Contingent Deferred
    Sales Charges
    Retained by Distributor
    Class C
    Contingent Deferred
    Sales Charges
    Retained by Distributor

    March 31, 2000

    $--

    $34,924

    $2,099

    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 purchased. 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 six months ended March 31, 2000, payments under the Class A plan totaled $112,671, all of which was paid by the Distributor to recipients. That included $5,321 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years.

    24   OPPENHEIMER INSURED MUNICIPAL FUND

    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 asset-based sales charges from the Fund under the plans. If any 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 six months ended March 31, 2000, were as follows:

             
          Total Payments
    Under Plan
          Amount Retained
    by Distributor
    Distributor's Aggregate
    Unreimbursed Expenses
    Under Plan
    Distributor's Unreimbursed
    Expenses as %
    of Net Assets
    of Class

    Class B Plan

    $119,927

    $98,167

    $905,651

    4.16
    %

    Class C Plan

    23,899

    6,419

    76,734

    1.82

    		  

    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.

    25   OPPENHEIMER INSURED MUNICIPAL FUND

    NOTES TO FINANCIAL STATEMENTS Unaudited / Continued

    5. Futures Contracts Continued

    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.

    As of March 31, 2000, the Fund had outstanding futures contracts as follows:

    Contract Description
    Expiration
    Date
    Number of
    Contracts
    Valuation as of
    March 31, 2000
    Unrealized
    Depreciation

    Contracts to Sell

    		        

    Municipal Bond

    6/21/00

    142

    $13, 538, 813

    $328, 625

    6. Bank Borrowings

    The Fund may borrow from a bank for temporary or emergency purposes including, with-out 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. 45%. 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. 08% per annum.

    The Fund had no borrowings outstanding during the six months ended March 31, 2000.

    26 OPPENHEIMER INSURED MUNICIPAL FUND

    OPPENHEIMER INSURED 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
      Edward L. Cameron, Trustee
      Jon S. Fossel, Trustee
      Sam Freedman, Trustee
      Raymond J. Kalinowski, Trustee
     

    C. Howard Kast, Trustee
      Robert M. Kirchner, Trustee
     

    Ned M. Steel, Trustee

     

    Christian D. Smith, Vice President
      Andrew J. Donohue, Vice President and Secretary
      Brian W. Wixted, Treasurer
      Robert J. Bishop, Assistant Treasurer
      Scott T. Farrar, Assistant Treasurer
      Robert G. Zack, Assistant Secretary
    Investment Advisor OppenheimerFunds, Inc.
    Distributor OppenheimerFunds Distributor, Inc.

    Transfer and Shareholder
    Servicing Agent

    		 OppenheimerFunds Services
    Custodian ofPortfolio Securities Citibank, N. A.
    Independent Auditors Deloitte & Touche LLP
    Legal Counsel Myer, Swanson, Adams & Wolf, P. C.
       
      The financial statements included herein have been taken from the records of the
    fund without examination of the independent auditors.
       
     

    This is a copy of a report to shareholders of Oppenheimer Insured Municipal Fund.
    This report must be preceded or accompanied by a Prospectus of Oppenheimer
    Insured Municipal Fund. For more complete 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.

     

    27 OPPENHEIMER INSURED MUNICIPAL FUND

    OPPENHEIMERFUNDS FAMILY

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    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, NY 10048-0203.

    © Copyright 2000 OppenheimerFunds, Inc. All rights reserved.

    28 OPPENHEIMER INSURED MUNICIPAL FUND

    INFORMATION AND SERVICES

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    Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET

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