---------------------------
Annual Report July 31, 1998
---------------------------
OPPENHEIMER
Pennsylvania
Municipal Fund
[GRAPHIC OMITTED]
[LOGO]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An Interview
with Your Fund's Manager
10 Fund Performance
- -----------------------------------
15 Financial
Statements
32 Independent
Auditors' Report
- -----------------------------------
33 Federal
Income Tax
Information
34 Officers and
Trustees
36 Information and
Services
Report highlights
- --------------------------------------------------------------------------------
o A resilient domestic economy and low inflation have been good for U.S. bonds
of all kinds.
o Lower borrowing costs have caused states and municipalities to rush to finance
new projects and refinance existing debt at lower rates. As a result, the supply
of municipal bonds for the first half of 1998 was relatively high.
o Housing projects in both Pennsylvania and Guam, a U.S. territory whose
municipal bonds are tax-exempt for residents of all states, represented
attractive investment opportunities.
- ----------------------------------
Avg Annual Total Returns
- ----------------------------------
For the 1-Year Period
Ended 7/31/98
Class A
Without With
Sales Chg. (1) Sales Chg.(2)
- ----------------------------------
4.99% 0.00%
- ----------------------------------
Class B
Without With
Sales Chg. (1) Sales Chg.(2)
- ----------------------------------
4.20% (0.79)%
- ----------------------------------
Class C
Without With
Sales Chg. (1) Sales Chg.(2)
- ----------------------------------
4.20% 3.20%
- ----------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Total returns as of
7/31/98 do not reflect substantial changes that occurred as a result of market
volatility in August and September 1998.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2. Class A return includes the current maximum initial sales charge of 4.75%.
Class B return includes the applicable contingent deferred sales charge of 5%
(1-year) and 1% (since inception on 5/3/93). Class C return includes the
contingent deferred sales charge of 1%. An explanation of the different
performance calculations is in the Fund's prospectus. Class B and C shares are
subject to an annual 0.75% asset-based sales charge.
2 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Dear shareholder,
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[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Pennsylvania
Municipal Fund
The performance of the financial markets over the past several months could be
viewed as "A Tale of Two Markets." Until mid-July, the excitement surrounding
the stock market's continued ascent to new record highs overshadowed the
favorable economic environment that existed for bonds: low inflation and
declining interest rates. However, since that time, stocks have declined sharply
amid heightened volatility. Yet, the bond market remains poised to benefit from
the same positive economic conditions that existed earlier in the year.
Why have stocks faltered lately? The financial crises in Asia and Russia
have negatively affected the earnings of some large U.S. corporations and have
contributed to a slow-down in U.S. economic growth. Although slower economic
growth has been negative for stocks, it should not adversely impact bonds.
That's because slower economic growth generally means fewer inflationary
pressures and less likelihood that interest rates will rise.
What should you do during this period of relative uncertainty? If you have
well-defined long-term financial goals and an investment strategy designed to
achieve them, we encourage you to stay the course. However, if you feel your
financial plan is out-of-date or incomplete, now is the time to make
improvements. The best way to cope with short-term volatility is to adhere to a
long-term plan that contains proven strategies, such as diversification among
various financial markets, geographic regions, investment styles and individual
securities. A long-term plan will give you the focus and perspective you need to
put short-term volatility in its proper context.
As longstanding advocates of financial planning, we have been encouraged
by our shareholders' rational responses to the latest market events. Many of you
tell us that you have a long-term strategy in place, which includes diversifying
your investment portfolio among a number of different asset classes in
accordance with your tolerance for risk. At OppenheimerFunds, our portfolio
management teams include seasoned professionals who have encountered extreme
market volatility in the past, giving them the per spective required to address
risks and take advantage of opportunities in turbulent markets. In our view,
having a well-defined set of financial goals, a disciplined long-term strategy
and the help of experienced investment professionals are all fundamental parts
of The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
August 21, 1998
3 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
"For example, we've found opportunities in Pennsylvania's healthcare
industry..."
How has Oppenheimer Pennsylvania Municipal Fund performed over the past 12
months?
The Fund's Class Ashares provided an average annual total return, without
deducting sales charges, of 4.99% for the one-year period that ended July 31,
1998.(1) These results reflect both income payments and capital appreciation of
the tax-exempt fixed-income securities in which the Fund invests.
How have positive U.S. economic conditions over the past year affected
Pennsylvania's municipal bonds?
A resilient U.S. economy and low inflation have been good for domestic bonds of
all kinds, including those from Pennsylvania issuers. The state and national
economies have continued to expand, despite concerns that the Asian financial
crisis might cause growth to slow. So far, consumers appear to have picked up
any slack created by weak demand from Asia, spending freely for major purchases
such as cars, boats and second homes. Yet, inflation has remained at
historically low levels. Even the nation's record-high employment has failed to
rekindle inflationary pressures.
These economic influences, which have prevailed in Pennsylvania as well as
the rest of the country, have allowed longer-term interest rates to move lower
relative to short-term interest rates. Because bond prices rise when interest
rates decline, most sectors of the U.S. bond market provided above-average total
returns over the past year. However, taxable bonds, such as U.S. Treasury
securities, generally provided higher returns than tax-exempt bonds.
4 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Jerry Webman
Bob Patterson
(Portfolio Manager)
Why did taxable bonds outperform municipal bonds?
It's a matter of supply and demand. When the supply of municipal bonds issued is
high relative to demand from investors, higher yields may be required to attract
a limited number of investors. Conversely, when supply is low, issuers can offer
bonds with lower yields because there are more than enough buyers.
Particularly over the past six months, states and municipalities have
rushed to take advantage of lower borrowing costs by financing new projects and
refinancing existing debt at lower rates. As a result, the supply of municipal
bonds for the first half of 1998 was about 60% higher than it was in the first
half of 1997.
In contrast, the supply of U.S. Treasury securities fell because of the
federal government's progress toward achieving a balanced budget. The strong
economy has bolstered tax revenues, requiring the government to borrow less.
Yet, demand for U.S. Treasury securities has remained high, especially from
overseas investors seeking a safe haven from volatile foreign markets.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
5 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
"These economic influences have allowed longer-term interest rates...
Where did you find attractive investment opportunities under these market
conditions?
The Fund emphasized quality-rated bonds with the current tight yield spreads but
did seek out undervalued situations in higher-yielding, lower-rated credits.
Lower quality bonds usually offer higher yields than top quality bonds, and they
tend to appreciate more as the issuers' credit profiles improve. For example,
we've found opportunities in Pennsylvania's healthcare industry where
consolidation and heightened competition have benefited many hospitals. Early in
the 12-month period, we invested in bonds issued by hospitals that, in our view,
were most likely to meet successfully the challenges of the managed-care
marketplace. Through-out the period, we saw these bonds' value rise as the
healthcare industry restructured and their issuers' competitive positions
improved. We later sold some of these holdings at a profit, reinvesting the
proceeds in other areas.
We also found attractive opportunities for income and diversification from
bonds issued by U.S. territories such as Puerto Rico and Guam. Under federal
law, income from these bonds is exempt from federal and state income taxes for
residents of all states. Most sig-nificantly, during the past six months we
established a position in insured tax-exempt bonds issued by housing projects in
Guam. These projects were built in response to a housing shortage for U.S.
military personnel, tourists and retirees. As a result, these residences are
100% occupied, giving them the revenues required to repay their bonds.
6 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
"...to move lower relative to short-term interest rates."
What types of projects do the Fund's holdings help to finance?
We've invested in bonds that support a wide variety of purposes, ranging from
airports to water works. Over the past year, however, we have found particularly
attractive values in certain industries. For example, the growing need for
senior citizen housing has spurred development of adult living facilities in
Pennsylvania and elsewhere across the country. The aging of America indicates
that demand for senior housing should remain high, enhancing these projects'
ability to meet their debt obligations.
Have you avoided any areas of the municipal bond market?
We have tended to favor revenue bonds over general obligation bonds. Revenue
bonds are repaid from income generated by the underlying facility, such as sewer
systems or highways supported by fees and tolls. General obligation bonds, on
the other hand, are repaid from general tax revenues, making them more
vulnerable to credit-rating downgrades if economic conditions deteriorate.
We have also been careful with regard to electric utilities because
deregulation is changing the entire power-generation industry. We are waiting
for the competitive picture to become clearer before we invest more
substantially in this area.
7 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- ---------------------------------
Standardized Yields(2)
- ---------------------------------
For the 30 Days Ended 7/31/98
Class A
- ---------------------------------
4.45%
- ---------------------------------
Class B
- ---------------------------------
3.91%
- ---------------------------------
Class C
- ---------------------------------
3.91%
- ---------------------------------
An interview with your Fund's manager
- --------------------------------------------------------------------------------
What is your outlook for Pennsylvania's municipal bond market?
We are optimistic because we expect the Pennsylvania municipal bond market to
perform in a manner consistent with the national market. First, tax-exempt bonds
are inexpensive relative to comparable taxable securities because of higher
supply. On average, municipal bonds have historically provided about 85% of the
pre-tax yield of U.S. Treasury securities. As of July 31, municipal bonds
provided almost 95% of taxable bonds' yield. We expect municipal bond prices to
rise as yields fall when the relationship between taxable and tax-exempt bonds
returns to more normal levels. Second, we expect demand for municipal bonds to
increase when common stocks lose their luster. Many individuals, including
Pennsylvania residents, have happily remained invested in equities because
stocks have generated stellar returns over the past three years. If the stock
market corrects, we believe many of these investors will turn to the relative
safety and stability of tax-exempt bonds.
In addition, we are optimistic about the future of the U.S. economy. We
expect the slowdown in Asia to constrain U.S. economic growth, preventing the
Federal Reserve from raising short-term interest rates in an effort to forestall
an acceleration of inflation.
8 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Credit Allocation(3)
[PIE CHART OMITTED]
AAA 39.3%
AA 11.2
A 12.9
BBB 20.7
BB 15.9
No matter what the future brings, however, we intend to continue to search for
municipal bonds that pro vide high levels of income exempt from federal and
Pennsylvania personal income taxes, while attempting to preserve capital.
Top Five Industries
Percentage of invested assets(4)
- --------------------------------------------------------------------------------
Hospital/Healthcare 20.8%
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Single Family Housing 17.9
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Adult Living Facilities 9.0
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Resource Recovery 8.5
- --------------------------------------------------------------------------------
Higher Education 7.8
- --------------------------------------------------------------------------------
2. Standardized yield is based on net investment income for the 30-day period
ended 7/31/98. Falling share prices will tend to artificially raise yields.
3. Portfolio data are as of July 31, 1998, are dollar-weighted based on invested
assets and subject to change. The Fund may invest up to 25% of its assets in
below-investment-grade securities which carry greater risk that an issuer may
default on repayment of principal or interest. 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 9% of total investments) but
to which the Manager in its judgment has assigned ratings as securities
comparable to those rated by a rating agency in the same category.
4. Industry weightings are as of July 31, 1998, and are subject to change.
9 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its fiscal year ended July 31, 1998, followed by a graphical
comparison of the Fund's performance to an appropriate broad-based market index.
o Management's Discussion of Performance. During the Fund's fiscal year
that ended July 31, 1998, Oppenheimer Pennsylvania Municipal Fund's performance
was affected by positive domestic economic conditions and low inflation in a
declining interest-rate environment.
These economic influences have allowed longer-term interest rates to move
lower relative to short-term interest rates. Because bond prices rise when
interest rates decline, most sectors of the U.S. bond market provided
above-average total returns over the past year. However, this has also caused
yields on most fixed-income securities, including many of the Fund's
investments, to decline during the period. As a result, the Fund reduced its
dividend in December of 1997. The Manager's emphasis on quality bonds, its
investments in higher yielding, lower-rated bonds, and investments in Puerto
Rico and Guam were all contributing factors to the Fund's performance. The
Fund's portfolio holdings, allocations and strategies are subject to change.
During the Fund's fiscal year ended July 31, 1998, the Fund maintained the
practice, to the extent consistent with the amount of the Fund's net investment
income and other distributable income, of attempting to pay dividends on Class A
shares at a constant level. This practice required the Manager, consistent with
the Fund's investment objectives and investment restrictions, to monitor the
Fund's portfolio and select higher yielding securities when deemed appropriate
to maintain necessary net investment income levels.
10 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
o Comparing the Fund's Performance to the Market. The graphs that follow
show the performance of a hypothetical $10,000 investment in each class of
shares of the Fund held until July 31, 1998. In the case of Class A shares,
performance is measured from the Fund's inception on September 18, 1989, in the
case of Class B shares, from the inception of the Class on May 3, 1993, and in
the case of Class C shares, from the inception of the Class on August 29, 1995.
The Fund's performance is compared to that of the Lehman Brothers
Municipal Bond Index, an unmanaged index of a broad range of investment grade
municipal bonds that is widely regarded as a measure of the performance of the
general municipal bond market. Index performance reflects the reinvestment of
income but does not consider the effect of capital gains or transaction costs,
and none of the following data shows the effect of taxes. Also, the Fund's
performance data reflects the effect of Fund business and operating expenses.
While index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
securities in any one index. Moreover, the index performance data does not
reflect an assessment of the risk of the investments included in the index.
11 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Pennsylvania Municipal Fund (Class A) and Lehman Brothers Municipal
Bond Index
[The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman
Pennsylvania Brothers
Muni Fund Municipal
Class A Bond Index
9.18.89 9525 10000
12.31.89 9835 10384
12.31.90 10425 11140
12.31.91 11623 12493
12.31.92 12557 13594
12.31.93 14204 15264
12.31.94 13114 14474
12.31.95 15335 17003
7.31.96 15403 17080
7.31.97 16892 18834
7.31.98 17736 19959
Average Annual Total Return of Class A Shares of the Fund at 7/31/98(1)
1 Year 0.00% 5 Year 4.50% Life 6.67%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Pennsylvania Municipal Fund (Class B) and Lehman Brothers Municipal
Bond Index
[The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman
Pennsylvania Brothers
Muni Fund Municipal
Class B Bond Index
5.3.93 10000 10000
12.31.93 10659 10718
12.31.94 9772 10163
12.31.95 11342 11939
7.31.96 11341 11993
7.31.97 12345 13225
7.31.98 12765 14015
Average Annual Total Return of Class B Shares of the Fund at 7/31/98(2)
1 Year (0.79)% 5 Year 4.39% Life 4.76%
12 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Pennsylvania Municipal Fund (Class C) and Lehman Brothers Municipal
Bond Index
[The following table was originally a line graph in the printed materials.]
Oppenheimer Lehman
Pennsylvania Brothers
Muni Fund Municipal
Class C Bond Index
8.29.95 10000 10000
12.31.95 10555 10478
7.31.96 10540 10525
7.31.97 11470 11606
7.31.98 11953 12299
Average Annual Total Return of Class CShares of the Fund at 7/31/98(3)
1 Year 3.20% Life 6.29%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
1. The inception of the Fund (Class A shares) was 9/18/89. Class A returns are
shown net of the current applicable 4.75% maximum initial sales charge.
2. Class B shares of the Fund were first publicly offered on 5/3/93. The average
annual total returns reflect reinvestment of all dividends and capital gains
distributions and are shown net of the applicable 5% and 1% contingent deferred
sales charges, respectively, for the 1-year period and life of the class. The
ending account value in the graph is net of the applicable 1% contingent
deferred sales charge.
3. Class C shares of the Fund were first publicly offered on 8/29/95. The 1-year
return is shown net of the applicable 1% contingent deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
13 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Financials
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14 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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Statement of Investments July 31, 1998
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<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
====================================================================================================================================
<S> <C> <C> <C>
Municipal Bonds and Notes--98.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania--84.8%
Beaver Cnty., PA IDAU PC Collateral RRB,
Toledo Edison Project, Series A, 7.75%, 5/1/20 Ba2/BB/BB $2,000,000 $2,308,440
- ------------------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, Prerefunded, FGIC Insured,
Inverse Floater, 8.67%, 11/10/20(1) Aaa/AAA/AAA 1,000,000 1,203,750
- ------------------------------------------------------------------------------------------------------------------------------------
Blair Cnty., PA HA RB, Altoona Hospital Project,
AMBAC Insured, Inverse Floater, 8.212%,
7/1/14(1) Aaa/AAA/AAA 700,000 814,590
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Delaware Cnty., PA College Authority RRB,
Neumann College, Series A, 5.375%, 10/1/26 NR/BBB- 2,200,000 2,159,124
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA University Authority RB,
Villanova University, MBIA Insured, 6.90%, 8/1/16 Aaa/AAA 1,000,000 1,074,200
- ------------------------------------------------------------------------------------------------------------------------------------
Erie, PA SDI GORB, CAP, FSA Insured, Zero
Coupon, 5.35%, 9/1/18(2) NR/AAA/AAA 4,780,000 1,671,757
- ------------------------------------------------------------------------------------------------------------------------------------
Langhorne, PA St. Mary HA RRB, Franciscan
Health Project, Series B, BIG Insured, 7%, 7/1/14 Aaa/AAA/AAA 500,000 522,620
- ------------------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RB, Lehigh Valley Hospital,
Inc., Series A, MBIA Insured, 7%, 7/1/16 Aaa/AAA 1,250,000 1,528,375
- ------------------------------------------------------------------------------------------------------------------------------------
Monroeville, PA HA RRB, Forbes Health System,
6.25%, 10/1/15 A3/B 4,000,000 3,731,200
- ------------------------------------------------------------------------------------------------------------------------------------
New Wilmington, PA Municipal College Authority
RB, Westminster College, 5.30%, 3/1/18 Baa1/NR 1,000,000 989,740
- ------------------------------------------------------------------------------------------------------------------------------------
PA Convention Center Authority RB, Escrowed
to Maturity, Series A, FGIC Insured, 6.70%, 9/1/16 Aaa/AAA/AAA 1,850,000 2,200,390
- ------------------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project, Series D,
7.15%, 12/1/18 NR/BBB-/BBB- 2,000,000 2,235,720
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PA EDFAU RR RB, Northampton Generating,
Series A, 6.50%, 1/1/13 NR/NR/BBB- 1,450,000 1,542,234
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PA EDFAU Wastewater Treatment RB, Sun Co.,
Inc.-R & M Project, Series A, 7.60%, 12/1/24 Baa2/BBB 2,000,000 2,336,340
- ------------------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, AMBAC
Insured, Inverse Floater, 8.346%, 3/1/22(1) Aaa/AAA/AAA 1,250,000 1,404,688
- ------------------------------------------------------------------------------------------------------------------------------------
PA HEFAU College & Universities RB, Geneva
College, 5.375%, 4/1/23 NR/BBB- 1,800,000 1,782,864
- ------------------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, Unrefunded Balance, Series A,
MBIA Insured, 6.625%, 8/15/09 Aaa/AAA 305,000 336,644
- ------------------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Inverse Floater, 9.964%,
10/3/23(1) Aa2/AA+ 1,000,000 1,135,000
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PA HFA SFM RB, Series 40, 6.80%, 10/1/15 Aa2/AA+ 2,000,000 2,162,460
- ------------------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 44C, 6.65%, 10/1/21 Aa2/AA+ 1,000,000 1,079,040
- ------------------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 54A, 6.15%, 10/1/22 Aa2/AA+ 1,000,000 1,050,810
</TABLE>
15 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
====================================================================================================================================
<S> <C> <C> <C>
Pennsylvania (continued)
PA HFA SFM RB, Series 61A, 5.50%, 4/1/29 Aa2/AA+ $1,500,000 $1,518,615
- ------------------------------------------------------------------------------------------------------------------------------------
PA IDAU ED RB, Prerefunded, Series A,
7%, 1/1/11 NR/AAA/AAA 1,000,000 1,100,030
- ------------------------------------------------------------------------------------------------------------------------------------
PA Jim Thorpe Area SDI GOB, Series A,
MBIA Insured, 5.375%, 3/15/27 Aaa/AAA 1,305,000 1,329,404
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Gas Works RB, 15th Series,
MBIA Insured, 5.25%, 8/1/15 Aaa/AAA 1,000,000 1,008,120
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Albert Einstein Medical Center, 7.625%, 4/1/11 A3/AA- 3,500,000 3,659,705
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Health System Project, 6.60%, 7/1/10 Baa3/BBB 3,560,000 3,906,993
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Hospital Project, 5.875%, 7/1/17 Baa3/BBB 1,500,000 1,540,665
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Temple University Hospital, Series A,
6.625%, 11/15/23 Baa1/A- 3,800,000 4,076,792
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home
of Philadelphia, Series A, 5.60%, 11/15/28 NR/NR 3,000,000 2,935,500
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Paul's Run,
Series A, 5.875%, 5/15/28 NR/NR 3,625,000 3,641,458
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU RRB, Franklin Institute
Project, 5.20%, 6/15/26 Baa2/NR 1,400,000 1,348,088
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional POAU Lease RB,
MBIA Insured, Inverse Floater, 8.50%, 9/1/20(1) Aaa/AAA 2,100,000 2,446,500
- ------------------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB,
FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 4,400,000 5,808,836
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority
Mtg. RRB, Series A, 6.20%, 10/1/21 Aa2/AAA 565,000 597,476
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority
Mtg. RRB, Series A, 6.25%, 10/1/28 Aa2/AAA 1,400,000 1,482,600
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority
Mtg. RRB, Series C, 5.95%, 10/1/29 Aa2/AAA 3,000,000 3,141,900
- ------------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Water & Sewer Authority RRB,
Escrowed to Maturity, FGIC Insured, 7.25%,
9/1/14 Aaa/AAA 1,200,000 1,459,008
- ------------------------------------------------------------------------------------------------------------------------------------
Reading, PA Parking Authority CAP RB, MBIA
Insured, Zero Coupon, 5.71%, 11/15/15(2) Aaa/AAA 2,345,000 955,658
- ------------------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill
Energy Resources, Inc., 6.50%, 1/1/10(3) NR/NR/BB 4,265,000 4,265,000
- ------------------------------------------------------------------------------------------------------------------------------------
Westmoreland Cnty., PA IDAU RRB, Redstone
HCF, 5.85%, 11/15/29 NR/NR 2,000,000 1,974,340
--------------------
81,466,674
</TABLE>
16 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
====================================================================================================================================
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Possessions--14.0%
Guam Housing Corp. SFM RB, Series A,
5.75%, 9/1/31 NR/AAA $4,500,000 $ 4,784,850
- --------------------------------------------------------------------------------------------------------------------------
PR CMWLTH GOB, 6.50%, 7/1/15 Baa1/A 1,200,000 1,405,320
- --------------------------------------------------------------------------------------------------------------------------
PR CMWLTH GORB, MBIA Insured, Inverse
Floater, 7.934%, 7/1/08(1) Aaa/AAA 1,000,000 1,122,500
- --------------------------------------------------------------------------------------------------------------------------
PR CMWLTH HTAU RB, Series Y, 5%, 7/1/36 Baa1/A 3,100,000 3,055,763
- --------------------------------------------------------------------------------------------------------------------------
PR EPAU CAP RRB, Series N, MBIA Insured,
Zero Coupon, 5.69%, 7/1/17(2) Aaa/AAA 3,300,000 1,291,785
- --------------------------------------------------------------------------------------------------------------------------
PR Industrial Tourist Educational Medical &
Environmental Control Facilities RB, Polytechnic
University Project, Series A, 6.50%, 8/1/24 NR/BBB- 985,000 1,070,872
- --------------------------------------------------------------------------------------------------------------------------
PR POAU RB, American Airlines SPF Project,
Series A, 6.25%, 6/1/26 Baa3/BBB+ 675,000 729,776
-----------
13,460,866
- --------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $89,754,399) 98.8% 94,927,540
- --------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.2 1,114,160
--------- -----------
Net Assets 100.0% $96,041,700
========= ===========
</TABLE>
To simplify the listings of securities, abbreviations are used per the table
below:
CAP --Capital Appreciation
CMWLTH --Commonwealth
ED --Economic Development
EDFAU --Economic Development Finance Authority
EPAU --Electric Power Authority
GP --General Purpose
GOB --General Obligation Bonds
GORB --General Obligation Refunding Bonds
HA --Hospital Authority
HCF --Health Care Facilities
HEAA --Higher Education Assistance Agency
HEFAU --Higher Educational Facilities Authority
HFA --Housing Finance Agency
HTAU --Highway & Transportation Authority
IDAU --Industrial Development Authority
PC --Pollution Control
POAU --Port Authority
RB --Revenue Bonds
RR --Resource Recovery
RRB --Revenue Refunding Bonds
SDI --School District
SFM --Single Family Mtg.
SPF --Special Facilities
1. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays interest at a rate that varies inversely with
short-term interest rates. As interest rates rise, inverse floaters produce less
current income. Their price may be more volatile than the price of a comparable
fixed-rate security. Inverse floaters amount to $8,127,028 or 8.46% of the
Fund's net assets as of July 31, 1998.
2. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
3. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
17 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of July 31, 1998, securities subject to the alternative minimum tax amount to
$24,244,533 or 25.24% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
Industry Market Value Percent
- --------------------------------------------------------------------------------
Hospital/Healthcare $19,780,940 20.8%
- --------------------------------------------------------------------------------
Single Family Housing 16,952,751 17.9
- --------------------------------------------------------------------------------
Adult Living Facilities 8,551,298 9.0
- --------------------------------------------------------------------------------
Resource Recovery 8,042,955 8.5
- --------------------------------------------------------------------------------
Higher Education 7,413,444 7.8
- --------------------------------------------------------------------------------
Water Utilities 7,267,844 7.7
- --------------------------------------------------------------------------------
General Obligation 5,403,327 5.7
- --------------------------------------------------------------------------------
Corporate Backed 4,166,146 4.4
- --------------------------------------------------------------------------------
Highways 3,055,763 3.2
- --------------------------------------------------------------------------------
Marine/Aviation Facilities 2,446,500 2.6
- --------------------------------------------------------------------------------
Pollution Control 2,308,440 2.4
- --------------------------------------------------------------------------------
Lease Rental 2,200,390 2.3
- --------------------------------------------------------------------------------
Student Loans 1,404,687 1.5
- --------------------------------------------------------------------------------
Not-for-Profit Organization 1,348,088 1.4
- --------------------------------------------------------------------------------
Education 1,329,404 1.4
- --------------------------------------------------------------------------------
Electric Utilities 1,291,785 1.3
- --------------------------------------------------------------------------------
Gas Utilities 1,008,120 1.1
- --------------------------------------------------------------------------------
Parking Fee Revenue 955,658 1.0
----------- -----
$94,927,540 100.0%
=========== =====
See accompanying Notes to Financial Statements.
18 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities July 31, 1998
- --------------------------------------------------------------------------------
===============================================================================
Assets
Investments, at value (cost $89,754,399)
- --see accompanying statement $94,927,540
- -------------------------------------------------------------------------------
Cash 74,094
- -------------------------------------------------------------------------------
Receivables:
Interest 1,312,310
Shares of beneficial interest sold 151,474
- -------------------------------------------------------------------------------
Other 4,301
-----------
Total assets 96,469,719
===============================================================================
Liabilities
Payables and other liabilities:
Dividends 248,757
Trustees' fees--Note 1 65,882
Shareholder reports 47,157
Shares of beneficial interest redeemed 21,854
Transfer and shareholder servicing agent fees 14,388
Distribution and service plan fees 12,440
Other 17,541
-----------
Total liabilities 428,019
===============================================================================
Net Assets $96,041,700
===========
===============================================================================
Composition of Net Assets
Paid-in capital $92,628,783
- -------------------------------------------------------------------------------
Overdistributed net investment income (314,250)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,445,974)
- -------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 5,173,141
-----------
Net assets $96,041,700
===========
===============================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $68,719,866 and 5,532,104
shares of beneficial interest outstanding) $12.42
Maximum offering price per share (net asset value
plus sales charge of 4.75% of offering price) $13.04
- -------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $22,124,164 and
1,781,337 shares of beneficial interest outstanding) $12.42
- -------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $5,197,670 and
418,707 shares of beneficial interest outstanding) $12.41
See accompanying Notes to Financial Statements.
19 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of OperationsFor the Year Ended July 31, 1998
- --------------------------------------------------------------------------------
===============================================================================
Investment Income
Interest $5,431,962
===============================================================================
Expenses
Management fees--Note 4 565,307
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 101,032
Class B 209,616
Class C 40,557
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 79,750
- -------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 57,431
- -------------------------------------------------------------------------------
Shareholder reports 35,501
- -------------------------------------------------------------------------------
Legal, auditing and other professional fees 18,802
- -------------------------------------------------------------------------------
Custodian fees and expenses 18,451
- -------------------------------------------------------------------------------
Other 6,045
-----------
Total expenses 1,132,492
Less expenses paid indirectly--Note 4 (17,879)
Less reimbursement of expenses by OppenheimerFunds, Inc.--Note 4 (53,282)
-----------
Net expenses 1,061,331
===============================================================================
Net Investment Income 4,370,631
===============================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 421,540
Closing of futures contracts (552,243)
-----------
Net realized loss (130,703)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 172,958
-----------
Net realized and unrealized gain 42,255
===============================================================================
Net Increase in Net Assets Resulting from Operations $4,412,886
===========
See accompanying Notes to Financial Statements.
20 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Year Ended July 31,
1998 1997
===============================================================================
Operations
Net Investment income $ 4,370,631 $ 4,738,653
- -------------------------------------------------------------------------------
Net realized loss (130,703) (382,487)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation 172,958 3,353,916
------------ ------------
Net increase in net assets resulting from
operations 4,412,886 7,710,082
===============================================================================
Dividends to Shareholders
Dividends from net investment income:
Class A (3,520,410) (3,716,343)
Class B (906,174) (844,253)
Class C (174,394) (67,628)
===============================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 571,952 1,518,657
Class B 2,831,354 2,681,795
Class C 2,596,680 2,069,618
===============================================================================
Net Assets
Total increase 5,811,894 9,351,928
- -------------------------------------------------------------------------------
Beginning of period 90,229,806 80,877,878
------------ ------------
End of period (including overdistributed net
investment income of $314,250 and $167,336,
respectively) $ 96,041,700 $ 90,229,806
============ ============
See accompanying Notes to Financial Statements.
21 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Year Ended
Year Ended July 31, December 31,
1998 1997 1996(2) 1995 1994
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.45 $12.01 $12.36 $11.19 $12.85
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .61 .70 .40 .68 .67
Net realized and unrealized gain (loss) -- .43 (.35) 1.18 (1.64)
------- ------- -------- ------- -------
Total income (loss) from investment
operations .61 1.13 .05 1.86 (.97)
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.64) (.69) (.40) (.67) (.69)
Dividends in excess of net investment
income -- -- -- (.02) --
Distributions from net realized gain -- -- -- -- --
------- ------- -------- ------- -------
Total dividends and distributions
to shareholders (.64) (.69) (.40) (.69) (.69)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.42 $12.45 $12.01 $12.36 $11.19
======= ======= ======== ======= =======
===========================================================================================================================
Total Return, at Net Asset Value(4) 4.99% 9.68% 0.44% 16.94% (7.68)%
===========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $68,720 $68,280 $64,391 $66,483 $60,857
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $69,202 $65,710 $64,997 $64,901 $62,786
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.82% 5.79% 5.71%(5) 5.68% 5.65%
Expenses, before voluntary assumption
by the Manager or Distributor(6) 1.00% 0.93% 1.03%(5) 1.02% 0.98%
Expenses, net of voluntary assumption
by the Manager or Distributor 0.93% 0.90% N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 34.5% 22.3% 5.8% 31.1% 37.0%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
2. For the seven months ended July 31, 1996. The Fund changed its fiscal
year-end from December 31 to July 31.
3. For the period from May 3, 1993 (inception of offering) to December 31, 1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
22 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
------- -------------------------------------------------------------------
Year Ended July 31, Year Ended December 31,
1993 1998 1997 1996(2) 1995 1994 1993(3)
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.05 $12.45 $12.01 $12.36 $11.19 $12.84 $12.44
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .69 .52 .61 .35 .59 .59 .36
Net realized and unrealized gain (loss) .85 -- .42 (.35) 1.17 (1.65) .45
------- ------- ------- ------- ------- ------- -------
Total income (loss) from investment
operations 1.54 .52 1.03 -- 1.76 (1.06) .81
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.70) (.55) (.59) (.35) (.57) (.59) (.37)
Dividends in excess of net investment
income -- -- -- -- (.02) -- --
Distributions from net realized gain (.04) -- -- -- -- -- (.04)
------- ------- ------- ------- ------- ------- -------
Total dividends and distributions
to shareholders (.74) (.55) (.59) (.35) (.59) (.59) (.41)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.85 $12.42 $12.45 $12.01 $12.36 $11.19 $12.84
======= ======= ======= ======= ======= ======= =======
==============================================================================================================================
Total Return, at Net Asset Value(4) 13.12% 4.20% 8.86% (0.01)% 16.06% (8.32)% 6.67%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $64,640 $22,124 $19,339 $16,005 $14,466 $9,484 $5,576
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $50,974 $20,969 $17,243 $15,085 $12,183 $7,329 $2,770
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.52% 4.10% 5.02% 4.94%(5) 4.89% 4.88% 4.26%(5)
Expenses, before voluntary assumption
by the Manager or Distributor(6) 1.06% 1.75% 1.78% 1.89%(5) 1.89% 1.85% 1.88%(5)
Expenses, net of voluntary assumption
by the Manager or Distributor 0.99% 1.68% 1.65% 1.79%(5) 1.78% 1.75% 1.78%(5)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 14.6% 34.5% 22.3% 5.8% 31.1% 37.0% 14.6%
</TABLE>
5. Annualized.
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended July 31, 1998 were $38,215,812 and $32,089,176, respectively.
23 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------
Period
Ended
Year Ended July 31, Dec. 31,
1998 1997 1996(2) 1995(1)
=======================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.44 $12.00 $12.36 $11.91
- -------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .51 .60 .34 .21
Net realized and unrealized gain (loss) -- .43 (.36) .45
--------- --------- --------- ---------
Total income (loss) from investment operations .51 1.03 (.02) .66
- -------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.59) (.34) (.21)
Dividends in excess of net investment income -- -- -- --
Distributions from net realized gain -- -- -- --
--------- --------- --------- ---------
Total dividends and distribution to shareholders (.54) (.59) (.34) (.21)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.41 $12.44 $12.00 $12.36
========= ========= ========= =========
=======================================================================================================
Total Return, at Net Asset Value(4) 4.20% 8.84% (0.15)% 5.55%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $5,198 $2,611 $482 $264
- -------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,063 $1,390 $296 $51
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.28% 4.99% 4.83%(5) 4.40%(5)
Expenses, before voluntary assumption
by the Manager or Distributor(6) 1.76% 1.79% 1.97%(5) 2.07%(5)
Expenses, net of voluntary assumption
by the Manager or Distributor 1.67% 1.66% 1.87%(5) 1.96%(5)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 34.5% 22.3% 5.8% 31.1%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
2. For the seven months ended July 31, 1996. The Fund changed its fiscal
year-end from December 31 to July 31.
3. For the period from May 3, 1993 (inception of offering) to December 31, 1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. Annualized.
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended July 31, 1998 were $38,215,812 and $32,089,176, respectively.
See accompanying Notes to Financial Statements.
24 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Pennsylvania Municipal Fund (the Fund) is a separate series of
Oppenheimer Multi-State Municipal Trust, a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek as high a level of current
interest income exempt from Federal and Pennsylvania personal income taxes for
individual investors as is available from Municipal Securities and consistent
with preservation of capital. The Fund's investment advisor is OppenheimerFunds,
Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount.
25 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At July 31, 1998, the Fund
had available for federal income tax purposes an unused capital loss carryover
of approximately $1,446,000, which expires between 2002 and 2006.
- --------------------------------------------------------------------------------
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. During the year ended
July 31, 1998, a provision of $38,681 was made for the Fund's projected benefit
obligations, and payments of $3,017 were made to retired trustees, resulting in
an accumulated liability of $65,313 at July 31, 1998.
The Board of Trustees had adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustee in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
26 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders
to reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended July 31, 1998, amounts have been reclassified to reflect a decrease
in overdistributed net investment income of $83,433, a decrease in accumulated
net realized losses of $112,510, and a decrease in paid-in capital of $195,943.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Original issue discount on securities purchased
is amortized over the life of the respective securities, in accordance with
federal income tax requirements. As of November 4, 1997, in order to conform
book and tax bases, the Fund began amortization of premiums on securities for
book purposes. Such cumulative change was limited to a reclassification
adjustment and had no impact on net assets or total increase (decrease) in net
assets. Accordingly, during the year ended July 31, 1998, amounts have been
reclassified to reflect an increase in net unrealized appreciation of
investments of $882,749. Paid-in capital was decreased for the same amount. For
bonds acquired after April 30, 1993, on disposition or maturity, taxable
ordinary income is recognized to the extent of the lesser of gain or market
discount that would have accrued over the holding period. Realized gains and
losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
The Fund concentrates its investments in Pennsylvania and,
therefore, may have more credit risks related to the economic conditions of
Pennsylvania than a portfolio with a broader geographical diversification.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
27 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended July 31, 1998 Year Ended July 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 712,372 $ 8,887,636 903,722 $ 10,967,827
Dividends reinvested 173,087 2,155,632 191,572 2,323,665
Redeemed (839,031) (10,471,316) (971,739) (11,772,835)
------------ ------------ ------------ ------------
Net increase 46,428 $ 571,952 123,555 $ 1,518,657
============ ============ ============ ============
- -----------------------------------------------------------------------------------
Class B:
Sold 429,660 $ 5,358,387 347,074 $ 4,208,953
Dividends reinvested 41,275 513,990 39,450 478,556
Redeemed (243,523) (3,041,023) (165,514) (2,005,714)
------------ ------------ ------------ ------------
Net increase 227,412 $ 2,831,354 221,010 $ 2,681,795
============ ============ ============ ============
- -----------------------------------------------------------------------------------
Class C:
Sold 231,025 $ 2,873,024 184,614 $ 2,249,660
Dividends reinvested 9,616 119,808 3,565 43,275
Redeemed (31,816) (396,152) (18,433) (223,317)
------------ ------------ ------------ ------------
Net increase 208,825 $ 2,596,680 169,746 $ 2,069,618
============ ============ ============ ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
At July 31, 1998, net unrealized appreciation on investments of $5,173,141 was
composed of gross appreciation of $5,461,655, and gross depreciation of
$288,514.
28 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.60% of the first
$200 million of average annual net assets, 0.55% of the next $100 million, 0.50%
of the next $200 million, 0.45% of the next $250 million, 0.40% of the next $250
million and 0.35% of average annual net assets in excess of $1 billion.
Effective January 1, 1997, the Manager has voluntarily undertaken to waive a
portion of its management fee, whereby the Fund pays a fee not to exceed 0.57%
of average annual net assets.
For the year ended July 31, 1998, commissions (sales charges paid by
investors) on sales of Class A shares totaled $250,587, of which $48,212 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $205,688 and $24,690, respectively, of which $4,164 was
paid to an affiliated broker/dealer for Class B. During the year ended July 31,
1998, OFDI received contingent deferred sales charges of $48,900 upon redemption
of Class B shares as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.15% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended July 31, 1998, OFDI paid $6,691 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
29 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares, for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% (voluntarily reduced to 0.15% by the Fund's
Board) per year to compensate dealers for providing personal services for
accounts that hold Class B and Class C shares. Each fee is computed on the
average annual net assets of Class B and Class C shares, determined as of the
close of each regular business day. During the year ended July 31, 1998, OFDI
paid $1,930 to an affiliated broker/dealer as compensation for Class B personal
service and maintenance expenses and retained $164,757 and $27,981,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. At July 31, 1998, OFDI had incurred excess distribution and
servicing costs of $597,509 for Class B and $51,599 for Class C.
================================================================================
5. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient than
actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the contract
is closed or expires.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
30 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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6. Illiquid and Restricted Securities
At July 31, 1998, investments in securities included issues that are illiquid or
restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid and restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at July 31, 1998, was $4,265,000, which represents
4.44% of the Fund's net assets.
================================================================================
7. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended July
31, 1998.
31 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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Independent Auditors' Report
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================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Pennsylvania Municipal Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Pennsylvania Municipal Fund (a series of Oppenheimer
Multi-State Municipal Trust) as of July 31, 1998, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the two-year period then ended, the
seven-month period ended July 31, 1996 and for each of the years in the
three-year period ended December 31, 1995. 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 July 31, 1998, 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 Pennsylvania Municipal Fund as of July 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the two-year period then ended, the
seven-month period ended July 31, 1996, and for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
August 21, 1998
32 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1999, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1998. 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
July 31, 1998, 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.
33 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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Oppenheimer Pennsylvania Municipal Fund
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A Series of Oppenheimer Multi-State Municipal Trust
================================================================================
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
================================================================================
Independent Auditors KPMG Peat Marwick LLP
================================================================================
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer Pennsylvania Municipal Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer Pennsylvania Municipal Fund. For material
information concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
34 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
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OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
==================================================================================================
Real Asset Funds
- --------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==================================================================================================
Global Stock Funds
- --------------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
==================================================================================================
Stock Funds
- --------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
==================================================================================================
Stock & Bond Funds
- --------------------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund(1) Convertible Securities Fund(2)
Value Fund Equity Income Fund
==================================================================================================
Taxable Bond Funds
- --------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
==================================================================================================
Municipal Bond Funds
- --------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==================================================================================================
Money Market Funds(4)
- --------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors 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.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
35 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Internet
24-hr access to account
information. Online
transactions now available
- -----------------------------
www.oppenheimerfunds.com
- -----------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- -----------------------------
1-800-525-7048
- -----------------------------
Account Transactions
Mon-Fri 8:30am-8pm ET
- -----------------------------
1-800-852-8457
- -----------------------------
PhoneLink
24-hr automated information
and automated transactions
- -----------------------------
1-800-533-3310
- -----------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
- -----------------------------
1-800-843-4461
- -----------------------------
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
- -----------------------------
1-800-835-3104
- -----------------------------
Information and services
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[LOGO] OppenheimerFunds(R)
Distributor, Inc.
RA0740.001.0798 September 29, 1998
