<PAGE> 1
OPPENHEIMER FLORIDA TAX-EXEMPT FUND
Annual Report December 31, 1994
[LOGO]
<PAGE> 2
This Fund is for people who want to earn income that's exempt from taxes.
STANDARDIZED YIELD
For the 30 Days Ended 12/31/94:(4)
Class A
5.72%
Class B
5.28%
HOW YOUR FUND IS MANAGED
Oppenheimer Florida Tax-Exempt Fund invests in a diversified portfolio of
investment grade tax-free Florida municipal bonds.
As a Fund shareholder, you receive income that is free from federal taxes
and the benefit of owning an investment whose shares are exempt from Florida
intangible personal prop-erty taxes(1). Your dividends don't increase your
taxable income the way taxable investments do, so you can keep more of what you
earn.
Your Fund invests in investment grade municipal bonds and notes listed
within the four highest rating categories by Moody's, Standard & Poor's or
Fitch's. In addition, Florida Tax-Exempt Fund is managed by an experienced team
of municipal bond specialists who research investments thoroughly before they
are included in the Fund's portfolio.
PERFORMANCE
Total return at net asset value for the 12 months ended 12/31/94 was -7.66% for
Class A shares and -8.42% for Class B shares(2).
The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment.
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-year period ended 12/31/94 and since inception of the
Class on 10/1/93 were -12.04% and -6.60%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 12/31/94 and since
inception of the Class on 10/1/93 were -12.77% and -6.48%, respectively(3).
OUTLOOK
"In line with our primary objective--providing an above-average level of
tax-free income from an investment grade portfolio of Florida municipal bonds,
we keep the duration of the Fund's portfolio somewhat longer than that of most
other funds. This hampered our short-term performance, but we believe that, in
the long run, shareholders will benefit significantly when interest rates
stabilize and the Florida municipal market's positive fundamentals emerge."
Robert Patterson, Portfolio Manager
December 31, 1994
1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.
2. Based on the change in net asset value per share from 12/31/93 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account. The Fund's inception date was 10/1/93.
3. Average annual total returns are based on a hypothetical investment held
until 12/31/94, after deducting the current maximum initial sales charge of
4.75% for Class A shares. Total return for Class B shares was based on a
hypothetical investment held for that period, after deducting the contingent
deferred sales charge of 5% (1 year) and 4% (since inception) for Class B
shares.
4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 12/31/94, divided by the maximum offering
price at the end of the period, compounded semi-annually and then annualized.
Falling net asset values will tend to artificially raise yields. All figures
assume reinvestment of dividends and capital gains distributions. Past
performance is not indicative of future results. Investment and principal value
on 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.
2 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 3
Dear OppenheimerFunds Shareholder,
The past year was marked by one of the greatest tests of the municipal bond
market in more than six decades. In 1994, the Federal Reserve undertook one of
the most aggressive inflation-fighting efforts in its history, raising interest
rates six times and driving bond prices down across the board. Then, in early
December as the market started to stabilize, Orange County, California,
defaulted on a $100 million bond issue, for reasons not related to the bonds
themselves, but rather to the aggressive use of derivatives (investments whose
value is derived from another security, currency, commodity or index) in
managing the county's portfolio. Although Orange County's problems didn't affect
OppenheimerFunds tax-free portfolios significantly, at year end, many investors
were left wondering what the future holds not only for interest rates, but for
the municipal market itself.
Looking at Orange County, there is no question that their problems have
added temporarily to the uncertainties surrounding the tax-free market. In the
near term, investors' heightened sense of caution may push new-issue prices
modestly lower and new-issue yields somewhat higher. In the longer term,
however, we expect developments in Orange County are likely to help rather than
hurt the market. The municipal bond market has always been one of the most
conservative places to invest, and with the increased attention paid to risks of
all types, we expect it to become less risky.
As for the Fed's actions to raise interest rates, changing interest rates
and fluctuating bond prices are facts of life affecting all bond markets, and
it's a bond market basic principle that when interest rates rise, bond prices
generally decline. That is why we believe the best measure for any fixed income
investment is its performance over the long term. And we believe the long-term
outlook for the municipal market is excellent, which is supported by several
considerations.
First, the Fed's attempt to fend off possible future inflation, while
temporarily disconcerting, is beginning to have its desired effect. The economy
is starting to slow, and although short-term rates may move up modestly from
their present levels, long-term interest rates should stabilize in their current
range. Long-term rates may even begin to decline as overblown concerns about
inflation abate.
Those concerns are, in fact, already fading. The inflation rate--as
measured by the Consumer Price Index--continues to run at less than 3% a year,
and there's nothing on the horizon to suggest to us that it will increase
substantially anytime soon. As a result, municipal bonds today offer some of the
highest real, inflation-adjusted returns we have seen in years. In addition,
while the economy is showing some signs of slowing, it is still growing at a
solid pace. As a result, the financial strength of many municipal issuers
continues to improve, again providing solid support for municipal bond prices.
Finally, the market's supply and demand characteristics are strong. The
supply of new municipal bonds currently is running some 40% below last year's
pace, while we expect demand for tax-free bonds is likely to increase
substantially over the next few months, helped by more stable bond markets and
rising investor demand to ease their tax burdens.
Together, these factors suggest to us that 1995 will be rewarding for
municipal investors. Your portfolio manager discusses the outlook for your Fund
on the following pages. We appreciate your confidence and we look forward to
continuing to help you reach your investment goals.
Donald W. Spiro Jon S. Fossel
January 23, 1995
DONALD W. SPIRO
President
Oppenheimer
Florida Tax-Exempt
Fund
JON S. FOSSEL
Chairman and CEO
Oppenheimer
Management
Corporation
3 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 4
Q + A
WHAT WERE THE MOST IMPORTANT FACTORS AFFECTING THE FUND'S PERFORMANCE IN 1994?
Many factors combined to make 1994 one of the most challenging years tax-free
investors have seen in decades, but one stands out: the Federal Reserve's
efforts to fend off inflation by raising interest rates, which drove interest
rates up and bond prices down. The Fed's actions affected virtually all bond
funds, and this Fund was no exception.
DID THAT CAUSE YOU TO CHANGE YOUR INVESTMENT STRATEGY?
In seeking to provide an attractive level of tax-free income, our investment
strategy re-mained the same--to keep the Fund's duration, a technical measure of
a bond portfolio's sensitivity to interest rate changes, slightly longer than
those of many other funds. The effects of rising interest rates were offset to a
large degree by the timing of the Fund's introduction. By pacing our purchases,
we were able to capture rising bond yields without major declines in the Fund's
net asset value. And we believe the Fund will benefit from this longer duration
as investors recognize the fundamental positives that should drive the Florida
municipal market in the future.
Of course, within this strategic framework we made some adjustments to
position the portfolio more defensively.
WHAT PORTFOLIO ADJUSTMENTS DID YOU MAKE?
We focused our buying on bonds in the 15- to 20-year maturity range. All other
things being equal, bonds with these shorter maturities are less sensitive to
changing interest rates than longermaturity bonds. And we focused attention on
insured and prerefunded issues(1).
WHAT OTHER KINDS OF BONDS ARE YOU FOCUSING ON TODAY?
We're continuing to find good values in the Florida housing sector, as
well as in selected healthcare issues. The state's economy also continues to
strengthen and diversify, and if that trend continues we may become more
interested in general obligation issues, which we tended to avoid during the
recession.
SOME ANALYSTS ARE PREDICTING THAT A RECORD AMOUNT OF MUNICIPAL BONDS
WILL BE CALLED IN 1995. HOW ARE YOU MANAGING CALLS?
Bond calls, which allow issuers to redeem bonds before their scheduled maturity
and re-place them with lower-yielding issuers, are a fact of life in the
municipal market. Because interest rates are currently much lower than they were
in the mid-1980s when many of the municipal bonds outstanding today were issued,
it's fully possible that some of the bonds in the Fund's portfolio will be
called.
We manage calls by staying on top of the portfolio at all times, trying to
anticipate calls and seeking to buy bonds that offer both attractive yields and
significant call protection. Virtually no municipal bond fund can avoid calls
entirely. The key is to take a forward-looking view and manage them
intelligently.
WHAT'S YOUR OUTLOOK FOR THE FLORIDA MARKET GOING FORWARD?
Our long-term outlook is very constructive. The positives at work on the
national level--low inflation, reduced municipal bond supply, and rising demand
for tax-free securities driven by investors' desire to ease tax burdens--are, if
anything, even stronger here.
The Florida economy has recovered from the recession very well; its
finances are in good shape, while the supply of Florida state paper is limited.
This combination of reduced supply and mounting demand should provide support
for Florida municipal bond prices. -
An interview with your Fund's manager.
1. The Fund's portfolio is subject to change.
4 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 5
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS December 31, 1994
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
----------------- ------ ------------
<S> <C> <C> <C>
Municipal Bonds and Notes - 96.0%
Florida - 80.5%
Brevard County, Florida Housing Finance Authority Single Family
Mtg. Revenue Bonds, 6.70%, 9/1/27 Aaa/NR $ 1,000,000 $ 945,675
Broward County, Florida Resource Recovery Revenue Bonds,
Broward Waste Energy-LP North Project, 7.95%, 12/1/08 A/A 210,000 225,202
Collier County, Florida Health Facilities Authority Health Facility
Revenue Refunding Bonds, The Moorings, Inc. Project, 7%,
12/1/19 NR/BBB+/A- 1,000,000 975,776
Dade County, Florida Aviation Revenue Refunding Bonds,
Series Y, 5.50%, 10/1/11 Aa/A 600,000 533,071
Dade County, Florida General Obligation Refunding Bonds, FGIC
Insured, 12%, 10/1/04 Aaa/AAA/AAA 100,000 144,074
Florida State Board of Education Capital Outlay Public Education
General Obligation Bonds, Prerefunded, Series A, 7.25%,
6/1/23 Aaa/AAA 1,210,000 1,313,568
Florida State Board of Education Capital Outlay Public Education
General Obligation Bonds, Series A, 6.75%, 6/1/21 Aa/AA 300,000 302,759
Florida State Board of Education Capital Outlay Public Education
General Obligation Refunding Bonds, Series D, 5.125%,
6/1/22 Aa/AA/AA 700,000 566,445
Florida State Division of Finance Department Revenue Bonds,
Department of Natural Resource Preservation, Series 2000-A,
FSA Insured, 5.80%, 7/1/13 Aaa/AAA/A 750,000 686,430
Florida State Division of Finance Department Revenue Bonds,
Sunshine Skyway Project, Prerefunded, 10.25%, 6/1/08 Aaa/AAA 1,000,000 1,125,879
Florida State Turnpike Authority Revenue Bonds, Prerefunded,
Series A, FGIC Insured, 6.35%, 7/1/22 Aaa/AAA/AAA 600,000 619,688
Gainesville, Florida Utilities System Revenue Bonds, Series B,
5.50%, 10/1/13 Aa/AA 350,000 309,919
Gainesville, Florida Utilities System Revenue Bonds, Series B,
6%, 10/1/17 Aa/AA 550,000 510,127
Greater Orlando Aviation Authority Revenue Refunding Bonds,
Orlando, Florida Airport Facilities, Series A, AMBAC Insured,
5.50%, 10/1/18 Aaa/AAA/AAA 280,000 236,793
Hillsborough County, Florida Aviation Authority Revenue
Refunding Bonds, Tampa International Airport, Series B, FGIC
Insured, 5.50%, 10/1/13 Aaa/AAA/AAA 900,000 788,153
Hillsborough County, Florida Utility Revenue Refunding Bonds,
MBIA Insured, 5.50%, 8/1/16 Aaa/AAA 200,000 173,416
Jacksonville, Florida Electric Authority Revenue Bonds, Electric
Systems Project, Series Three-B, 5.25%, 10/1/19 Aa1/AA/AA+ 650,000 539,505
Kissimmee, Florida Utility Authority Electric System Improvement
Revenue Refunding Bonds, FGIC Insured, 5.50%, 10/1/15 Aaa/AAA/AAA 200,000 174,289
Orange County, Florida Housing Finance Authority Single Family
Mtg. Revenue Bonds, GNMA & FNMA Mtg.-Backed Securities
Program, 6.85%, 10/1/27 Aaa/AAA 1,000,000 974,416
Orlando and Orange County, Florida Expressway Authority
Revenue Refunding Bonds, Sr. Lien, AMBAC Insured, 5.25%,
7/1/14 Aaa/AAA/AAA 100,000 83,866
Orlando and Orange County, Florida Expressway Authority
Revenue Refunding Bonds, Sr. Lien, FGIC Insured, 5.50%,
7/1/18 Aaa/AAA/AAA 720,000 620,721
Palm Beach County, Florida Health Facilities Authority
Hospital Revenue Bonds, Good Samaritan Health System,
6.20%, 10/1/11 NR/A- 1,000,000 945,185
Palm Beach County, Florida Revenue Refunding Bonds, Criminal
Justice Facilities, FGIC Insured, 5.375%, 6/1/11 Aaa/AAA/AAA 250,000 218,982
</TABLE>
5 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 6
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS December 31, 1994
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
------------------ ------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA (CONTINUED)
Pinellas County, Florida Health Facilities Authority Hospital
Revenue Bonds, Bayfront Obligation Group, Series A, MBIA
Insured, 5.60%, 7/1/23 Aaa/AAA $ 500,000 $ 426,542
South Florida Water Management District Revenue Refunding
Bonds, Special Obligation Land Acquisition, AMBAC Insured,
5.25%, 10/1/15 Aaa/AAA 720,000 603,789
St. Petersburg, Florida Public Improvement Revenue Refunding
Bonds, MBIA Insured, 6.375%, 2/1/12 Aaa/AAA 750,000 737,698
St. Petersburg, Florida Public Utility Revenue Bonds, 5.60%,
10/1/18 Aa/AA- 200,000 173,791
Vero Beach, Florida Electric Revenue Refunding Bonds,
Series A, MBIA Insured, 5.375%, 12/1/21 Aaa/AAA 500,000 415,401
West Palm Beach, Florida Utility System Revenue Bonds,
Series B, FGIC Insured, 5.40%, 10/1/23 Aaa/AAA/AAA 850,000 707,903
-----------
16,079,063
U.S. POSSESSIONS - 15.5%
Puerto Rico Commonwealth Aqueduct & Sewer Authority
Revenue Bonds, Escrowed to Maturity, 10.25%, 7/1/09 Aaa/AAA 200,000 261,015
Puerto Rico Commonwealth Highway & Transportation Authority
Revenue Refunding Bonds, Series X, 5.25%, 7/1/21 Baa1/A 700,000 569,751
Puerto Rico Electric Power Authority Revenue Refunding Bonds,
Series U, 6%, 7/1/14 Baa1/A- 900,000 837,516
Puerto Rico Public Buildings Authority Guaranteed Public
Education & Health Facilities Revenue Bonds, Prerefunded,
Series L, 6.875%, 7/1/21 Aaa/AAA 600,000 645,989
Puerto Rico Public Buildings Authority Guaranteed Public
Education & Health Facilities Revenue Refunding Bonds,
Series M, 5.50%, 7/1/21 Baa1/A 300,000 251,752
Puerto Rico Public Buildings Authority Guaranteed Revenue
Bonds, Prerefunded, Series K, 6.875%, 7/1/21 Aaa/AAA 500,000 538,324
-----------
3,104,347
-----------
Total Municipal Bonds and Notes (Cost $20,848,992) 19,183,410
SHORT-TERM TAX-EXEMPT OBLIGATIONS - 1.0%
Broward County, Florida Multifamily Housing Finance Authority
Revenue Bonds, Landings Inverrary Apartments, 5.35% (Cost
$200,000) (1) 200,000 200,000
TOTAL INVESTMENTS, AT VALUE (COST $21,048,992) 97.0% 19,383,410
OTHER ASSETS NET OF LIABILITIES 3.0 600,787
----------- -----------
Net Assets 100.0% $19,984,197
=========== ===========
</TABLE>
1. Floating or variable rate obligations maturing in more
than one year. The interest rate, which is based on
specific or an index of, current market interest rates,
is subject to change periodically and is the effective
rate on December 31, 1994. This instrument may also have
a demand feature which allows the recovery of principal
at any time, or at specified intervals not exceeding one
year, on up to 30 days notice. Maturity date shown
represents effective maturity based on variable rate and,
if applicable, demand feature.
See accompanying Notes to Financial Statements.
6 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
<TABLE>
<S> <C> <C>
ASSETS Investments, at value (cost $21,048,992) - see accompanying statement $19,383,410
Cash 48,253
Receivables:
Shares of beneficial interest sold 553,471
Interest 395,266
Deferred organization costs 3,433
Other 7,429
------------
Total assets 20,391,262
------------
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 312,145
Dividends 68,333
Distribution and service plan fees - Note 4 7,271
Other 19,316
------------
Total liabilities 407,065
------------
NET ASSETS $19,984,197
============
COMPOSITION OF Paid-in capital $22,105,565
NET ASSETS Undistributed (overdistributed) net investment income (5,485)
Accumulated net realized gain (loss) from investment transactions (450,301)
Net unrealized appreciation (depreciation) on investments - Note 3 (1,665,582)
------------
Net assets $19,984,197
============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net
assets of $11,992,217 and 1,169,259 shares of beneficial
interest outstanding) $10.26
Maximum offering price per share (net asset value plus sales
charge of 4.75% of offering price) $10.77
Class B Shares:
Net asset value, redemption price and offering price
per share (based on net assets of $7,991,980 and
778,073 shares
of beneficial interest outstanding) $10.27
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 8
STATEMENT OF OPERATIONS For the Year Ended
December 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME Interest $ 1,032,784
------------
EXPENSES Management fees - Note 4 100,261
Distribution and service plan fees:
Class A - Note 4 14,448
Class B - Note 4 62,865
Legal and auditing fees 19,688
Trustees' fees and expenses 9,891
Shareholder reports 9,572
Transfer and shareholder servicing agent fees - Note 4 9,356
Deferred organization expenses 4,067
Registration and filing fees:
Class A 2,786
Class B 1,540
Other 9,588
------------
Total expenses 244,062
Less assumption of expenses by Oppenheimer Management
Corporation - Note 4 (144,023)
------------
Net expenses 100,039
------------
NET INVESTMENT INCOME (LOSS) 932,745
------------
REALIZED AND Net realized gain (loss) on investments (455,786)
UNREALIZED GAIN (LOSS) Net change in unrealized appreciation or depreciation on
ON INVESTMENTS investments (1,795,681)
Net realized and unrealized gain (loss) on investments (2,251,467)
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($1,318,722)
============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 9
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993(1)
------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 932,745 $ 51,670
Net realized gain (loss) on investments (455,786)
Net change in unrealized appreciation or
depreciation on investments (1,795,681) 130,099
------------ ------------
Net increase (decrease) in net assets resulting
from operations (1,318,722) 181,769
------------ ------------
DIVIDENDS TO Dividends from net investment income:
SHAREHOLDERS Class A ($.637 and $.141 per share, respectively) (574,828) (28,959)
Class B ($.556 and $.115 per share, respectively) (357,917) (22,711)
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS Class A beneficial interest transactions - Note 2 6,272,842 6,995,516
Net increase (decrease) in net assets resulting from
Class B beneficial interest transactions - Note 2 4,026,577 4,810,630
------------ ------------
NET ASSETS Total increase (decrease) 8,047,952 11,936,245
Beginning of period 11,936,245 --
------------ ------------
End of period (including overdistributed net investment
income of $5,485 for 1994) $19,984,197 $11,936,245
============ ============
</TABLE>
1. For the period from October 1, 1993 (commencement
of operations) to December 31, 1993.
See accompanying Notes to Financial Statements.
9 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 10
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Class B
---------------------------------- --------------------------------
Year Ended Period Ended Year Ended Period Ended
December 31, December 31, December 31, December 31,
1994 1993(1) 1994 1993(1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 11.79 $ 11.43 $ 11.81 $ 11.43
Income (loss) from investment operations:
Net investment income .64 .14 .56 .12
Net realized and unrealized gain (loss)
on investments (1.53) .36 (1.54) .38
-------- -------- -------- --------
Total income (loss) from investment operations (.89) .50 (.98) .50
-------- -------- -------- --------
Dividends to shareholders from net investment
income (.64) (.14) (.56) (.12)
-------- -------- -------- --------
Net asset value, end of period $10.26 $11.79 $10.27 $11.81
======== ======== ======== ========
Total Return, at Net Asset Value(2) (7.66)% 4.39% (8.42)% 4.35%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $11,992 $7,062 $7,992 $4,874
Average net assets (in thousands) $ 9,741 $2,471 $6,987 $2,304
Number of shares outstanding at end of period
(in thousands) 1,169 599 778 413
Ratios to average net assets:
Net investment income 5.90% 5.08%(3) 5.13% 4.29%(3)
Expenses, before voluntary assumption by the
Manager or Distributor 1.25% 1.89%(3) 1.99% 2.20%(3)
Expenses, net of voluntary assumption by the
Manager or Distributor .29% --%(3) 1.03% .38%(3)
Portfolio turnover rate(4) 30.4% --% 30.4% --%
</TABLE>
1. For the period from October 1, 1993 (commencement of operations) to December
31, 1993.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, 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.
3. Annualized.
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 year ended December 31, 1994 were $15,467,826 and
$4,895,277, respectively.
See accompanying Notes to Financial Statements.
10 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT Oppenheimer Florida Tax-Exempt Fund (the Fund) is a
ACCOUNTING separate series of Oppenheimer Multi-State Tax-Exempt
POLICIES Trust, a non-diversified, open-end management
investment company registered under the Investment
Company Act of 1940, as amended. The Fund's
investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers both Class
A and Class B shares. Class A shares are sold with a
front-end sales charge. Class B shares may be subject
to a contingent deferred sales charge. Both classes
of shares have identical rights to earnings, assets
and voting privileges, except that each class has its
own distribution and/or service plan, expenses
directly attributable to a particular class and
exclusive voting rights with respect to matters
affecting a single class. Class B shares will
automatically convert to Class A shares six years
after the date of purchase. The following is a
summary of significant accounting policies
consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued
at 4:00 p.m. (New York time) each day on which the
New York Stock Exchange is open. 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 asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Long- term debt securities which
cannot be valued by the 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 under consistently
applied procedures established by the Board of
Trustees to determine fair value in good faith.
Short-term debt securities having a remaining
maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for
amortization to maturity of any premium or discount.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a
specific class are charged against the operations of
that class.
FEDERAL INCOME TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any
net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal
income tax provision is required. At December 31,
1994, the Fund had available for federal income tax
purposes an unused capital loss carryover of
approximately $434,000 which will expire in 2002.
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and
fees paid to each trustee during the years of
service. No payments have been made under the plan.
ORGANIZATION COSTS. The Manager advanced $7,500 for
organization and start-up costs of the Fund. Such
expenses are being amortized over a five-year period
from the effective date operations commenced. In the
event that all or part of the Manager's initial
investment in shares of the Fund is withdrawn during
the amortization period, the redemption proceeds will
be reduced to reimburse the Fund for any unamortized
expenses, in the same ratio as the number of shares
redeemed bears to the number of initial shares
outstanding at the time of such redemption.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
shares from net investment income each day the New
York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized
gains on investments, if any, will be declared at
least once each year.
11 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (Continued)
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS
TO SHAREHOLDERS. Net investment income (loss) and net
realized gain (loss) may differ for financial
statement and tax purposes primarily because of
premium amortization. The character of the
distributions made during the year from net
investment income or net realized gains may differ
from their 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 year that the income
or realized gain (loss) was recorded by the Fund.
Effective January 1, 1994, the Fund adopted Statement
of Position 93-2: Determination, Disclosure, and
Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by
Investment Companies. As a result, the Fund changed
the classification of distributions to shareholders
to better disclose the differences between financial
statement amounts and distributions determined in
accordance with income tax regulations. During the
year ended December 31, 1994, in accordance with
Statement of Position 93-2, undistributed net
investment income was decreased by $5,485 and
accumulated net realized loss on investments was
decreased by the same amount.
OTHER. Investment transactions are accounted for on
the date the investments are purchased or sold (trade
date). Original issue discount on securities
purchased is amortized over the life of the
respective securities, in accordance with federal
income tax requirements. 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. For bonds acquired after April
30, 1993, accrued market discount is recognized at
maturity or disposition as taxable ordinary income.
Taxable ordinary income is realized to the extent of
the lesser of gain or accrued market discount.
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL value shares of beneficial interest of each class.
INTEREST Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1994 Period Ended December 31, 1993(1)
------------------------------- ---------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 1,094,994 $11,835,206 661,945 $7,730,754
Dividends reinvested 23,730 253,862 456 5,352
Redeemed (548,471) (5,816,226) (63,395) (740,590)
---------- ------------ -------- -----------
Net increase 570,253 $ 6,272,842 599,006 $6,995,516
========== ============ ======== ===========
Class B:
Sold 481,494 $5,234,804 420,202 $4,895,857
Dividends reinvested 10,745 114,966 376 4,414
Redeemed (126,967) (1,323,193) (7,777) (89,641)
---------- ------------ -------- -----------
Net increase 365,272 $4,026,577 412,801 $4,810,630
========== ============ ======== ===========
</TABLE>
1. For the period from October 1, 1993 (commencement
of operations) to December 31, 1993.
3. UNREALIZED GAINS At December 31, 1994, net unrealized depreciation on
AND LOSSES ON investments of $1,665,582 was composed of gross
INVESTMENTS appreciation of $395, and gross depreciation of
$1,665,977.
12 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES Management fees paid to the Manager were in
AND OTHER accordance with the investment advisory agreement
TRANSACTIONS WITH with the Fund which provides for an annual fee of
AFFILIATES .60% on the first $200 million of net assets, .55% on
the next $100 million, .50% on the next $200 million,
.45% on the next $250 million, .40% on the next $250
million and .35% on net assets in excess of $1
billion. The Manager has agreed to assume Fund
expenses (with specified exceptions) in excess of the
most stringent applicable regulatory limit for Fund
expenses. In addition, the Manager has voluntarily
undertaken to assume Fund expenses to the level
needed to maintain a stable dividend.
For the year ended December 31, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $145,115, of which $24,662 was
retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer.
During the year ended December 31, 1994, OFDI
received contingent deferred sales charges of $39,328
upon redemption of Class B shares, as reimbursement
for sales commissions advanced by OFDI at the time of
sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of
the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of
providing such services are allocated ratably to
these companies.
Under separate approved plans, each class may expend
up to .25% (voluntarily reduced to .15% by the Fund's
Board) of its net assets annually to reimburse OFDI
for costs incurred in connection with the personal
service and maintenance of accounts that hold shares
of the Fund, including amounts paid to brokers,
dealers, banks and other institutions. In addition,
Class B shares are subject to an asset-based sales
charge of .75% of net assets annually, to reimburse
OFDI for sales commissions paid from its own
resources at the time of sale and associated
financing costs. In the event of termination or
discontinuance of the Class B plan, the Board of
Trustees may allow the Fund to continue payment of
the asset-based charge to OFDI for distribution
expenses incurred on Class B shares sold prior to
termination or discontinuance of the plan. During the
year ended December 31, 1994, OFDI retained $61,793
as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.
13 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer
Multi-State Tax-Exempt Trust:
We have audited the accompanying statements of
investments and assets and liabilities of Oppenheimer
Florida Tax-Exempt Fund (a series of Oppenheimer
Multi-State Tax-Exempt Trust) as of December 31,
1994, and the related statement of operations for the
year then ended, the statements of changes in net
assets and the financial highlights for the year then
ended and the period from October 1, 1993 (inception
of offering) to December 31, 1993. 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 December 31, 1994, 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, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of Oppenheimer Florida Tax-Exempt Fund as of
December 31, 1994, the results of its operations for
the year then ended, the changes in its net assets
and the financial highlights for the year then ended
and the period from October 1, 1993 (inception of
offering) to December 31, 1993, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
January 23, 1995
14 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 15
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1995, shareholders will receive information
regarding all dividends and distributions paid to
them by the Fund during calendar year 1994.
Regulations of the U.S. Treasury Department require
the Fund to report this information to the Internal
Revenue Service.
None of the dividends paid by the Fund during the
fiscal year ended December 31, 1994 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 tax regulations, we
recommend that you consult your tax advisor for
specific guidance.
15 Oppenheimer Florida Tax-Exempt Fund
<PAGE> 16
OPPENHEIMER FLORIDA TAX-EXEMPT FUND
A Series of Oppenheimer Multi-State Tax-Exempt Trust
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR Oppenheimer Management Corporation
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer Florida
Tax-Exempt Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Florida Tax-Exempt Fund. For material
information concerning the Fund, see the Prospectus.
16 Oppenheimer Florida Tax-Exempt Fund
