[FRONT COVER]
[OppenheimerFunds Logo] OPPENHEIMER
PENNSYLVANIA
MUNICIPAL FUND
Tax-Free Income for Pennsylvania Investors
[ARTWORK: Map of Pennsylvania]
[LOGO: Oppenheimer Pennsylvania Municipal Fund]
OPPENHEIMER
Pennsylvania
MUNICIPAL FUND
ANNUAL REPORT
July 31, 1999
[LOGO: OppenheimerFunds(R)]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
[LOGO: Oppenheimer Pennsylvania Municipal Fund]
OPPENHEIMER
Pennsylvania
MUNICIPAL FUND
Changes underway at Oppenheimer Pennsylvania Municipal Fund should bring a
breath of fresh air to the Keystone state. Tanner and Fielding's records with
their New York funds - both of which are among the best in their respective
groups - suggest that this offering will have a promising future.
Morningstar's Oppenheimer
Pennsylvania Municipal Fund Analysis
April 8, 1999
Morningstar, Inc. is a nationally recognized
mutual fund rating service.
<PAGE>
Dear Shareholder,
[PHOTO: Bridget A. Macaskill] Bridget A. Macaskill
President
Oppenheimer
Pennsylvania
Municipal Fund
In many ways, the 1999 investment environment has, so far, unfolded as many
expected it would, producing both attractive opportunities and formidable
challenges for investors.
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflation pressures, the Federal
Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed-income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of large-capitalization growth stocks,
which has driven the market's advance over the past few years, has begun to
moderate, and many previously out-of-favor value-oriented, mid-cap and small-cap
stocks have rallied. At the same time, a healthy percentage of actively managed,
diversified portfolios have once again begun to outperform unmanaged stock
indices such as the Standard & Poor's 500.
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against
inflation. In our view, history has repeatedly demonstrated that most financial
assets do best in a low-inflation environment. What's more, we believe that the
move to higher interest rates should be temporary.
One recent development is quite troublesome to us, however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing; it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue, we
are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industry-wide tests. We
intend to continue re-testing our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
August 20, 1999
1 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
[LOGO: Rochester Fund Municipals Limited Term New York Municipal Fund]
Rochester Fund Municipals
Limited Term New York Municipal Fund
[LOGO: Oppenheimer Pennsylvania Municipal Fund
OPPENHEIMER
Pennsylvania
MUNICIPAL FUND
The Rochester Way
OppenheimerFunds, Inc. has operated as an investment advisor since 1959. As of
July 31, 1999, OppenheimerFunds, Inc. (including subsidiaries) manages assets of
more than $100 billion, including investment companies with more than 4 million
shareholder accounts and private accounts.
The Rochester Division of OppenheimerFunds, Inc., located in Rochester, New
York, is dedicated to the investment management and distribution of regional
municipal bond funds. These Funds -- Rochester Fund Municipals, the Limited Term
New York Municipal Fund, and, as of January 1, 1999, the Oppenheimer
Pennsylvania Municipal Fund -- pursue an investment approach that is
intentionally limited to specific sectors and regions of the municipal
market.(1)
Refined since the inception of Rochester Fund Municipals in May of 1986,
the unique investment approach of these Funds has proven to be beneficial. By
conducting intensive research within the universe of either New York or
Pennsylvania municipal bonds, the portfolio management team has been able to
apply unique strategies relating to the municipal bond market.
1. The Oppenheimer Pennsylvania Municipal Fund is not available in all states.
Please consult your financial advisor for more details.
2 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Why Now Is a Good Time for Taxable Equivalent Yield
As of July 31, 1999, the opinion of many municipal bond fund managers --
including us -- is that municipal bonds are "cheap to Treasuries." And, while
that may be a convoluted turn of phrase, it means good news to municipal bond
and bond fund investors as they ponder investment outcomes during the coming
year.
During the later months of last year and into 1999, demand for municipal
bonds did not keep pace with the demand for U.S. Treasury bonds, as global
investors sought guaranteed investment returns secure from growing international
instabilities. This demand served to make Treasuries 'rich,' narrowing the
spread, or difference, between their yields and the yields on municipal bonds of
comparative maturities.
Consider this example: On July 31, 1999, AAA rated 30-year Pennsylvania
municipal bonds yielded 5.7%, while the 30-year Treasury yielded 6.1%. But,
while the highest rated municipal bond yields only 93% of its comparative
Treasury, this is before any tax implications. And while the income from either
investment is exempt from state and local taxes, the municipal bond's income is
also exempt from federal taxes.
Which means that, on a pre-tax basis, the taxable equivalent yield on such
a hypothetical municipal bond investment would jump to 9.7% for investors in the
highest possible tax bracket.(1)
Municipal bonds aren't typically this cheap relative to Treasuries, as the
spread between the two yields tends to be considerably wider, because both
investors and issuers of municipal debt recognize the significance of taxable
equivalent yields.
To help you appreciate the significance, refer to the chart below. It will
help you determine what you would need to earn from a taxable investment to
match the hypothetical tax-free yields shown. (The specific yields depicted are
not intended to be representative of any mutual fund, and are shown for
illustrative purposes only.)
1. The value of Treasuries, if held to maturity, is fixed; principal is
guaranteed and interest is fixed.
[START: Tabular Representation of Bar Graph]
Yield Percentage Comparison
as of 7/31/99
5.7% 6.1% 9.7%
30-Year 30-Year Taxable
Pennsylvania Treasury Equivalent
Bond Yield Yield Yield
[END: Tabular Representation of Bar Graph]
Data Source: Bloomberg Business News. Taxable Equivalent Yield assumes the
maximum combined federal and Pennsylvania income tax bracket. All figures are
calculated as of 7/31/99.
Tax Exempt vs. Taxable Yields
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Effective Effective
Tax Bracket for Taxable Rate Needed Tax Bracket for Taxable Rate Needed
Pennsylvania to Equal Current Philadelphia to Equal Current
1999 Taxable Income Residents Tax-Free Rate Residents Tax-Free Rate
- ---------------------------------------------------------------------------------------------------------------------------
Single Return Joint Return 5.0% 5.5% 5.0% 5.5%
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0 - $25,750 $0 - $43,050 17.4% 6.0% 6.7% 21.3% 6.4% 6.9%
$25,751 - $62,450 $43,051 - $104,050 30.0% 7.1% 7.9% 33.3% 7.5% 8.2%
$62,451 - $130,250 $104,051 - $158,550 32.9% 7.5% 8.2% 36.1% 7.8% 8.6%
$130,251 - $283,150 $158,551 - $283,150 37.8% 8.0% 8.8% 40.7% 8.4% 9.3%
over $283,150 over $283,150 41.3% 8.5% 9.4% 44.0% 8.9% 9.8%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The tax information and brackets listed above are believed to be current. The
table assumes that an investor's highest tax bracket applies to the change in
taxable income resulting from a switch between taxable and non-taxable
investments, that the investor is not subject to the alternative minimum tax and
that state tax payments are fully deductible from federal tax payments. Your
actual tax bracket will vary depending on your income, investments and
deductions. You should consult your tax advisor regarding current tax
legislation and how tax laws affect your own personal financial situation.
3 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
[PHOTO: Portfolio Management]
Portfolio Management (l to r)
Anthony A. Tanner, CFA
Vice President and Portfolio
Manager, Rochester Division
Ronald H. Fielding, CFA
Senior Vice President, Portfolio
Manager and Chief Strategist,
Rochester Division
August 31, 1999
Dear Shareholders:
We are pleased to provide shareholders of Oppenheimer Pennsylvania Municipal
Fund with the Fund's 1999 Annual Report -- our first such document since
assuming management of the Fund seven months ago -- January 4, 1999.
During this brief period, investors should have noticed an increase in the
monthly dividend for the Fund beginning with the June payout. For example, Class
A shareholders received a $0.002 per share increase in the monthly dividend,
from $0.049/share to $0.051/share, and other share classes had proportional
increases. (See your statement for details.)
At fiscal year end, the Fund provided Class A shareholders with a 30-day
SEC Yield of 5.10%, the highest tax-free yield available in a Pennsylvania
municipal bond fund, according to Lipper Analytical Services, Inc.1 Lipper's
ranking of this yield compared to 62 funds is impressive, as we recognize the
importance of tax-free income to our investors. Our distribution yield, the
yield reflective of the Fund's dividend payout rate, as of July 31, 1999 is
5.05%. For Pennsylvania taxpayers reporting more than $104,050 on joint returns
($62,450 for single filers) this yield is equal to at least 7.56% on a taxable
investment. And Philadelphia or Pittsburgh residents benefit even more. (See the
information regarding taxable equivalent yields enclosed within this report.)
Clearly, the Oppenheimer Pennsylvania Municipal Fund continues to offer superior
value to tax-weary Pennsylvanians.
We are also pleased to report another increase in the dividend, increasing
the monthly Class A share payout $0.003 per share, effective with the September
1999 distribution. (Please note your September statement for details, including
the proportional increase on Class B and Class C shares.)
4 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
[Highway Map of Pennsylvania]
The objective of the Fund, as stated in the Prospectus, is to seek as high
a level of current interest income exempt from federal and Pennsylvania personal
income taxes as is consistent with the preservation of capital. Most investors
recognize that the greatest advantage of mutual fund investing is professional
management: the devotion of an investment team to broadly diversify the fund's
portfolio, continually review each holding and analyze new issues. All to reduce
the potential impact of adversity and create an investment with the potential to
earn high yields.
Here in Rochester, we believe that the strengths of our portfolio
management style go even further. In addition to reviewing the broad spectrum of
Pennsylvania municipal issues generally available, the Oppenheimer Pennsylvania
Municipal Fund pursues special situations that are often overlooked by the
market in general. When properly investigated, selected for their potential and
folded into the portfolio, these issues not only broaden diversity but have the
potential to increase the Fund's yield as well.
We also look to small issues to provide the Fund with significant yield
contributions. Small issues are typically less liquid than equivalent-quality
large issues but we look to include bonds of smaller issuers, many from outside
of the Philadelphia and Pittsburgh areas, because they typically provide higher
yields than equivalent-quality large credits.
Smaller issuers are also receptive to our preference for graduated payment
of principal; creating a "sinking fund" payment schedule. This enables us to
accelerate the debt schedule, thereby increasing the return on investment and
reducing the duration of the loan.
We also believe that careful credit research on unrated issues can be very
rewarding. Unrated bonds generally involve greater risk than bonds in
higher-rated categories as determined by S&P or Moody's rating services.
However, some issuers are highly creditworthy, intentionally opting to forego
the expense of obtaining a credit rating. We analyze these unrated issues to
determine the true risks weighed against their yield, in hopes of providing
shareholders with a favorable risk-reward trade-off.
Our commitment to internal investment research also enables us to focus our
attention on premium callable bonds, delving beyond the call date and analyzing
the bond's structure and covenants. This helps us to isolate characteristics
that indicate whether the issue may go uncalled long after a stated call date,
providing above-market yields and very low price volatility.
And we "scavenger hunt" in the secondary markets, seeking to purchase bonds
in small quantities -- below $100,000 -- that may add incrementally small but
eventually significant yield to the portfolio.
Evaluating and negotiating these unique opportunities takes time and
effort, but we believe that if you are paying for portfolio management, you
should demand and receive the extra effort and resourcefulness necessary to
enhance the portfolio.
All in all, we believe it has been a good year for our shareholders.
Despite recent increases in interest rates and perceived inflationary pressures,
we believe the Oppenheimer Pennsylvania Municipal Fund is a solid, well-balanced
municipal securities portfolio.
We will continue to adhere to the Fund's goal of offering long-term
investors high tax-free yields, and look forward to reporting on the Fund's
progress in the coming quarters. In the meantime, please learn more about the
specifics of your Fund's performance and our perspective on current market
conditions by reading the "Manager's Discussion and Analysis" section
immediately following this letter.
Thank you.
/s/ Anthony A. Tanner, CFA
Anthony A. Tanner, CFA
/s/ Ronald H. Fielding, CFA
Ronald H. Fielding, CFA
1. According to Lipper Analytical Services, Inc., an independent mutual fund
monitoring service. Oppenheimer Pennsylvania Municipal Fund is categorized by
Lipper as a Pennsylvania Municipal Debt Fund. The Fund's Class A Total Returns
are ranked 16th for 1-year and 23rd for 5-year performance out of 62 and 47
Pennsylvania Municipal Debt Funds, respectively. Lipper performance does not
take sales charges into consideration and assumes the reinvestment of dividends
and capital gains distributions. Sales charges, if included, would affect
results. Past performance is not predictive of future results.
5 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Management
Discussion &
Analysis
The primary goal of Oppenheimer Pennsylvania Municipal Fund is to earn a high
level of income exempt from federal, Pennsylvania State and applicable local
personal income tax for its investors, and the Fund continued to accomplish that
goal throughout the year.(1)
The Fund's Class A shares provided an annualized tax-free dividend yield of
5.05% (computed without sales charges) as of July 31, 1999. This is the
equivalent of 7.52% in taxable yield for a Pennsylvania taxpayer in the 32.9%
combined Pennsylvania State and federal tax bracket. For taxpayers subject to
higher federal tax rates, or additional local income taxes, the equivalent yield
would make your Fund investment even more attractive.
Please note the chart indicating the 1999 fiscal year dividend history for
the Fund. While we attempt to keep the monthly dividend as high and consistent
as is prudent, dividend adjustments are made periodically.(2) The Fund's policy
of seeking to maintain a steady dividend for its Class A shares did not
materially affect portfolio strategies during its last fiscal year.
During the past twelve months, investors learned the power behind the
nuances of interest rates. Under the leadership of Chairman Alan Greenspan, the
Federal Reserve raised the target on "Fed Funds" (the overnight borrowing rate
between banks) by 0.25% on June 30, and again on August 24. Both increases were
widely anticipated: in fact, long-term bond yields generally moved lower
immediately after these announcements. However, investors should remember that
these increases only partially offset the three distinct 0.25% decreases which
occurred in the last quarter of 1998.
U.S. Treasury securities rose in the second half of 1998, only to lose
these gains during the first half of 1999 as investor confidence returned to
bolster the equity markets. During this same period, long-term bond prices
fluctuated widely and municipal bonds experienced considerably less volatility.
And, with the yield on long-term municipal issues at approximately 93% of
comparable Treasuries, before consideration of the exemption from federal income
tax, municipal bonds continued to be attractive for buyers. (Please see the
discussion on page 3 for more details.)
The Pennsylvania economy remained healthy through this reporting period,
and the state continued to maintain an AA credit rating. Pennsylvania municipal
bonds were also less volatile than other fixed income securities, including
Treasury issues, during the period.
During 1998, the Fund took advantage of existing market conditions by
increasing the number of high quality credits in the portfolio. This period also
saw a decrease in the number of new issues and, accordingly, the Fund added
bonds as undervalued situations presented themselves. The global financial
crisis at the end of 1998 was a driving force for a "flight to safety" in U.S.
Treasury instruments, creating some unusually attractive opportunities in
municipal bond markets.
[PHOTO: Rochester Funds Investment Team]
Rochester Funds Investment Team (l to r)
Ronald H. Fielding, CFA
Senior Vice President, Portfolio Manager and Chief Strategist,
Rochester Division
Founded the Rochester Funds Investment Team in May 1983
Anthony A. Tanner, CFA
Vice President and Portfolio Manager, Rochester Division
Joined the Rochester Funds Investment Team in June 1991
Daniel G. Loughran, CFA
Vice President and Senior Research Analyst, Rochester Division
Joined the Rochester Funds Investment Team in October 1994
Richard A. Stein, CFA
Vice President - Credit Analysis, Rochester Division
Joined the Rochester Funds Investment Team in May 1993
James E. Bragg
Credit Analyst, Rochester Division
Joined the Rochester Funds Investment Team in June 1999
Christopher D. Weiler
Credit Analyst, Rochester Division
Joined the Rochester Funds in January 1999
Through July 31, 1999, the Pennsylvania municipal bond market continued to
produce fewer new large issues than in past years. While this impacted the
general municipal bond market, affecting the availability of more popular
municipal bonds for all investors, such demand created buying opportunities in
both the primary and secondary markets for smaller, less-popular issues --
precisely the types of holdings we use to better diversify the portfolio
As a matter of management style in virtually any economic environment, we
seek to diversify the Fund's portfolio in an effort to minimize the potential
impact of adversity in any one particular market sector, region, maturity or
credit. Owing to the recent conditions of the Pennsylvania municipal bond
market, our successful effort to diversify the portfolio has more than doubled
the number of individual holdings: from 48 issues to 101 during this report
period.
Diversification helps to minimize risk, but we also relied heavily on our
internal research capabilities to identify appropriate sectors and individual
issues. During 1999, opportunities in the long-term adult care sector, as well
as the economic development sector, were specifically identified.
For example, we added a bond issue for the Temple Continuing Care Center to
take advantage of strong demographic trends in Pennsylvania that make long-term
adult care facilities an attractive
6 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Total Return
(as of 6/30/99)
Cumulative Average Annual
NAV MOP NAV MOP
- -----------------------------------------------------------------------
A Shares
<S> <C> <C> <C> <C>
1-Year 1.87% -2.97% 1.87% -2.97%
5-Year 36.54% 30.05% 6.43% 5.39%
Life (9/18/89) 90.03% 81.02% 6.78% 6.25%
B Shares
1-Year 1.02% -3.83% 1.02% -3.83%
5-Year 31.37% 29.37% 5.61% 5.28%
Life (5/3/93) 30.29% 30.29% 4.39% 4.39%
C Shares
1-Year 1.10% 0.13% 1.10% 0.13%
Life (8/29/95) 21.16% 21.16% 5.13% 5.13%
- -----------------------------------------------------------------------
</TABLE>
Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. MOP stands for Maximum Offering Price, and calculations for Class A
returns at MOP include the 4.75% maximum initial sales charge. Class B returns
at MOP include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (5-year). Class C returns for the one-year period include 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.
The Fund's performance may from time to time be subject to substantial
short-term changes, particularly during periods of market or interest rate
volatility. For updates on the Fund's performance, please contact your financial
advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Dividend Distributions
8/31/98 - 7/31/99
Dividend per Share
- ------------------------------------------------------------------------
Month Class A Class B Class C
- ------------------------------------------------------------------------
<S> <C> <C> <C>
August 5.1 cents 4.4 cents 4.4 cents
September 4.9 cents 4.1 cents 4.1 cents
October 4.9 cents 4.1 cents 4.1 cents
November 4.9 cents 4.1 cents 4.1 cents
December 4.9 cents 4.1 cents 4.1 cents
January 4.9 cents 4.1 cents 4.1 cents
February 4.9 cents 4.1 cents 4.1 cents
March 4.9 cents 4.2 cents 4.2 cents
April 4.9 cents 4.1 cents 4.1 cents
May 4.9 cents 4.2 cents 4.2 cents
June 5.1 cents 4.3 cents 4.3 cents
July 5.1 cents 4.3 cents 4.3 cents
- ------------------------------------------------------------------------
</TABLE>
Assumes shares were purchased and held for the entire accrual period. Since
dividends accrue daily, your actual distributions will vary depending on the
date you purchased your shares and any account activity during the month. Income
distributions include all accrued income earned by the Fund during the reporting
period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Yields
For the 30 days ended 7/31/99
- ------------------------------------------------------------
Dividend Yield Standardized
At NAV At MOP Yield
<S> <C> <C> <C>
Class A 5.05% 4.81% 5.10%
Class B 4.27% 4.27% 4.59%
Class C 4.28% 4.28% 4.59%
- ------------------------------------------------------------
</TABLE>
Dividend yield at MOP (based on last distribution) and standardized yield
(based on net investment income for the 30-day period ended 7/31/99) are
annualized and divided by period-end offering price. Dividend yield at NAV does
not include sales charges. Falling share prices may artificially increase
yields.
long-term investment. Pennsylvania is now the second most "graying" state (after
Florida); people age eighty and over are the fastest growing segment of the
population. Estimates show that fully half of this group will need long-term
care in the years to come. With the financing assistance of municipal bonds, new
facilities of varying service levels are being built to offer Pennsylvania's
senior citizens increased living and care options in the coming years. Given
such a market demand, we consider this particular sector to be very promising in
the coming years.
As indicated, the State of Pennsylvania is benefiting from strong economic
activity. To share in its growth, we have increased our investment in
Pennsylvania Economic Development Authority (National Gypsum) bonds in the last
six months, making this the Fund's largest holding. This issue financed
construction of National Gypsum's new manufacturing facility in Shippingport.
The facility, scheduled to begin operating in the fourth quarter of 1999, is
expected to begin operating at 100% of capacity -- and will create approximately
100 new jobs.
Naturally, as we uncover new opportunities, the Fund's portfolio holdings
and allocations are subject to change, and maintaining a well balanced portfolio
also requires divesting from issues that no longer provide the risk-reward
characteristics we feel necessary to benefit our shareholders. As such, we
reduced our investments in insured issues, escrow-to-maturity bonds and
zero-coupon bonds. However, as issues were traded, the Fund remained fully
invested throughout the year.
1. A portion of the Fund's income distributions may be subject to income taxes.
Capital gains distributions, if any, are taxable as capital gains. For investors
subject to the alternative minimum tax, a portion of the Fund's distributions
may increase that tax.
2.The Fund attempts to pay dividends on Class A shares at a constant level.
There is no assurance that it will be able to do so. The Board of Trustees may
change the targeted dividend rate at any time without prior notice to
shareholders. Additionally, the amount of those dividends and the dividends paid
on Class B and Class C shares may vary over time, depending upon market
conditions, the composition of the Fund's portfolio, and expenses borne by the
particular class of shares. Dividends and distributions paid on Class A shares
will generally be higher than dividends for Class B and Class C shares, which
normally have higher expenses than Class A. The Fund cannot guarantee that it
will pay any dividends or distributions. Please refer to the table for the
Fund's standardized performance figures.
7 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Financial
Report
=============
Comparing the Fund's Performance to the Market
The graphs on this page detail the performance of a hypothetical $10,000
investment in each class of shares of the Fund held until July 31, 1999. In the
case of Class A shares, performance is measured from inception on September 18,
1989. In the case of Class B and Class C shares, performance is measured from
inception of each Class on May 3, 1993 and August 29, 1995, respectively. The
Fund's performance reflects the deduction of the 4.75% maximum initial sales
charge on Class A shares, and the applicable contingent deferred sales charge
for Class B and Class C shares. The graphs assume that all dividends and capital
gains distributions, if any, were reinvested in additional shares. Also note
that in 1996 the Fund changed its fiscal year end from December 31 to July 31.
The Fund's triple tax-free performance is compared to 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 exempt from federal tax but generally not state or
local income taxes. Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs, and none of
the data in the graphs that follow shows the effect of taxes. The Fund's
performance reflects the effects of Fund business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
securities in the index.
The performance of the Fund is also compared to the Consumer Price index, a
non-securities index which measures changes in the inflation rate and the Lipper
Pennsylvania Muni Index. The Lipper Pennsylvania Muni Index includes funds which
invest primarily in securities exempt from Pennsylvania state income taxes,
without considering sales charges; it is an unmanaged index and also cannot be
purchased directly by investors. Index performance information for Class A, B
and C shares began on 9/30/89, 4/30/93 and 8/31/95, respectively.
Comparison of Change in Value of $10,000 Hypothetical Investments in Oppenheimer
Pennsylvania Municipal Fund, the Lehman Brothers Municipal Bond Index, the
Lipper Pennsylvania Municipal Debt Fund Average, and the Consumer Price Index.
[START: Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Oppenheimer Pennsylvania Lehman Brothers Lipper Pennsylvania
Date Municipal Fund Municipal Bond Index Municipal Debt Average Consumer Price Index
<S> <C> <C> <C> <C>
09/18/89 Yrs. 9525 10000* 10000 10000
12/31/89 9835 10384 10328 10088
12/31/90 10425 11140 10915 10704
12/31/91 11623 12493 12248 11032
12/31/92 12557 13594 13395 11352
12/31/93 14203 15264 15060 11664
12/31/94 13113 14475 14075 11976
12/31/95 15334 17002 16450 12280
07/31/96 (1) 15402 17079 16419 12560
07/31/97 16892 18830 17996 12840
07/31/98 17735 19959 18946 13056
07/31/99 9.87 18092 20533 19214 13336
</TABLE>
[END: Tabular Representation of Mountain Chart]
Class A Shares
- --------------
Average Annual Total Return of the Fund at 7/31/99
1 Year -2.84% 5 Year 4.94% Life of Class 6.19%
[START: Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Oppenheimer Pennsylvania Lehman Brothers Lipper Pennsylvania
Date Municipal Fund Municipal Bond Index Municipal Debt Average Consumer Price Index
<S> <C> <C> <C> <C>
05/03/93 Yrs. 10000 10000* 10000 10000
12/31/93 10659 10718 10725 10125
12/31/94 9771 10164 10024 10396
12/31/95 11342 11938 11716 10660
07/31/96 (1) 11341 11993 11694 10903
07/31/97 12345 13222 12817 11146
07/31/98 12865 14015 13493 11333
07/31/99 6.25 13014 14418 13684 11576
</TABLE>
[END: Tabular Representation of Mountain Chart]
Class B Shares
- --------------
Average Annual Total Return of the Fund at 7/31/99
1 Year -3.70% 5 Year 4.82% Life of Class 4.31%
[START: Tabular Representation of Mountain Chart]
<TABLE>
<CAPTION>
Oppenheimer Pennsylvania Lehman Brothers Lipper Pennsylvania
Date Municipal Fund Municipal Bond Index Municipal Debt Average Consumer Price Index
<S> <C> <C> <C> <C>
08/29/95 Yrs. 10000 10000* 10000 10000
12/31/95 10555 10479 10523 10039
07/31/96 (1) 10540 10526 10503 10268
07/31/97 11470 11605 11512 10497
07/31/98 11953 12301 12119 10674
07/31/99 3.92 12101 12655 12291 10903
</TABLE>
[END: Tabular Representation of Mountain Chart]
Class C Shares
- --------------
Average Annual Total Return of the Fund at 7/31/99
1 Year 0.27% Life of Class 4.98%
(1) The Fund changed its fiscal year end from December 31 to July 31.
*A, B, & C index performance information began on 09/30/89, 04/30/93, and
08/31/95, respectively. Note: Index values use end-of-month values, and are
available only in 1 month increments. In cases where a fund's inception date is
between the 1st and the 15th, the prior month-end index value will be used. When
the fund's inception date falls between the 16th and the 31st of the month, the
current month-end index value will be used.
The returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information for the Lehman Brothers Municipal Bond Index in the
graphs begins on 9/30/89 for Class A, 4/30/93 for Class B, and 8/31/95 for Class
C. The average annual total returns for Class A shares are shown net of the
applicable 4.75% maximum initial sales charge.
Class B shares of the Fund were first publicly offered on 5/3/93. The average
annual total return for the one-year period is shown net of the applicable 5%
contingent deferred sales charge.
Class C shares of the Fund were first publicly offered on 8/29/95. The
average annual total return for the one-year period is shown net of the
applicable 1% contingent deferred sales charge. Past performance is not
predictive of future performance. Please note: graphs are not drawn to the same
scale.
8 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Municipal Bonds and Notes--100.6%
- ---------------------------------------------------------------------------------------------------------------------------
Pennsylvania--91.3%
Allegheny Cnty., PA HDAU RRB, Allegheny Valley
HF Management Co., 7.375%, 8/1/04 NR/B $ 20,000 $ 20,000
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA HDAU RRB, Allegheny Valley
HF Management Co., 7.50%, 8/1/13 Caa/B 175,000 175,000
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA HDAU RRB, Allegheny Valley Hospital,
7.75%, 8/1/20(1) Caa/B 100,000 100,000
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA HDAU RRB, Presbyterian University Health
System Center, Series B, MBIA Insured, 6%, 11/1/23 Aaa/AAA 500,000 516,625
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA IDAU RRB, Environmental Improvements,
Series USX-A, 6.70%, 12/1/20 Baa2/BBB- 25,000 26,641
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RB, 5.625%, 11/1/23 Aaa/NR 15,000 14,969
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RRB, Series K, 7.75%, 12/1/22 Aaa/NR 10,000 10,212
- ---------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RRB, Series Y, 6.60%, 11/1/14 Aaa/NR 25,000 26,167
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RB, J. Ray McDermott Project, 6.80%, 2/1/09 Baa3/BBB- 65,000 65,077
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RB, St. Joe Minerals Corp. Project, 6%, 5/1/07 A2/A 20,000 20,468
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Speciality Products Corp., 6.60%, 9/1/10 Aa3/NR 50,000 50,085
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Co. Project, 7.625%, 5/1/20 Ba1/BB+/BB 105,000 116,602
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Project, 7.75%, 5/1/20 Ba1/BB+/BB 10,000 11,167
- ---------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Project,
Series A, 7.75%, 5/1/20 Ba1/BB+/BB 2,000,000 2,247,200
- ---------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, Prerefunded, FGIC Insured,
Inverse Floater, 8.68%, 11/10/20(2) Aaa/AAA/AAA 1,000,000 1,168,750
- ---------------------------------------------------------------------------------------------------------------------------
Blair Cnty., PA HA RB, Altoona Hospital Project, AMBAC Insured,
Inverse Floater, 8.043%, 7/1/14(2) Aaa/AAA/AAA 700,000 777,315
- ---------------------------------------------------------------------------------------------------------------------------
Bucks Cnty., PA IDAU RB, HCF-Chandler Hall, 6.30%, 5/1/29 NR/NR 1,900,000 1,820,200
- ---------------------------------------------------------------------------------------------------------------------------
Cambria Cnty., PA IDAU PC RRB, Bethlehem Steel Corp. Project,
7.50%, 9/1/15 NR/NR 190,000 202,762
- ---------------------------------------------------------------------------------------------------------------------------
Chester Cnty., PA Education & HFAU College RRB, Immaculata
College, 5.625%, 10/15/27 NR/BBB- 1,750,000 1,669,080
- ---------------------------------------------------------------------------------------------------------------------------
Columbia Cnty., PA HA Healthcare RRB, Bloomsburg Hospital
Project, 5.90%, 6/1/29 NR/BBB- 370,000 353,024
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA College Authority RRB, Neumann College,
Series A, 5.375%, 10/1/26 NR/BBB- 2,200,000 2,026,266
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA University Authority RB, Villanova University,
MBIA Insured, 6.90%, 8/1/16 Aaa/AAA 1,000,000 1,052,390
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Valley, PA Regional FAU RB, Series C, AMBAC Insured,
Inverse Floater, 7.719%, 8/1/18(2) Aaa/AAA/AAA 1,250,000 1,300,000
- ---------------------------------------------------------------------------------------------------------------------------
East Whiteland, PA Municipal Authority RRB,
AMBAC Insured, 6.50%, 9/1/01 Aaa/AAA/AAA 50,000 50,111
- ---------------------------------------------------------------------------------------------------------------------------
Erie, PA Municipal Airport Authority General RB,
Series B, 5.875%, 7/1/16 NR/BBB- 245,000 240,485
- ---------------------------------------------------------------------------------------------------------------------------
Erie, PA SDI GORB, CAP, FSA Insured, Zero Coupon,
5.35%, 9/1/18(3) NR/AAA/AAA 2,780,000 967,023
- ---------------------------------------------------------------------------------------------------------------------------
Lancaster Cnty., PA HA RB, St. Anne's Home Health Center,
6.625%, 4/1/28(4) NR/NR 300,000 295,611
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9 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)
Langhorne, PA St. Mary HA RRB, Franciscan Health Project,
Series B, BIG Insured, 7%, 7/1/14 Aaa/AAA/AAA $ 500,000 $ 511,235
- ---------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RB, Lehigh Valley Hospital, Inc.,
Series A, MBIA Insured, 7%, 7/1/16 Aaa/AAA 1,250,000 1,478,412
- ---------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RRB, Bible Fellowship Project-A, 6%, 12/15/23 NR/NR 1,000,000 952,050
- ---------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RRB, Kidspeace Obligation Group, 6%, 11/1/23 NR/NR 2,000,000 1,925,920
- ---------------------------------------------------------------------------------------------------------------------------
Luzerne Cnty., PA IDAU Export Facilities RRB, Pennsylvania
Gas & Water Co. Project, Series A, 7.20%, 10/1/17 A3/A 50,000 54,014
- ---------------------------------------------------------------------------------------------------------------------------
Monroeville, PA HA RRB, Forbes Health System, 6.25%, 10/1/15 Caa/B 4,000,000 3,960,000
- ---------------------------------------------------------------------------------------------------------------------------
Monroeville, PA HA RRB, Forbes Health System, 7%, 10/1/03 Ba3/B 55,000 55,000
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA Higher Education & Health Authority RB,
Temple Continuing Care Center, 6.75%, 7/1/29 NR/NR 3,500,000 3,420,655
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU PC PA Electric Co. RRB,
Series A, 7.60%, 4/1/21 Baa1/A 25,000 26,474
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU Retirement Community RRB,
Adult Communities Total Services, Series A, 5.875%, 11/15/22 NR/A- 370,000 365,342
- ---------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU RRB, 7.50%, 1/1/12 NR/A 125,000 130,201
- ---------------------------------------------------------------------------------------------------------------------------
Northeastern PA Education & HA RRB, Kings College Project,
Series B, 6%, 7/15/18 NR/BBB 25,000 25,380
- ---------------------------------------------------------------------------------------------------------------------------
Northhampton Cnty., PA IDAU RRB, PC Bethlehem Steel,
7.55%, 6/1/17 NR/NR 385,000 411,700
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU Facilities RB, National Gypsum Co.,
Series A, 6.25%, 11/1/27 NR/NR 2,000,000 1,997,660
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU Facilities RB, National Gypsum Co.,
Series B, 6.125%, 11/2/27 NR/NR 8,500,000 8,353,375
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project, Series D, 7.15%, 12/1/18 NR/BBB-/BBB- 2,000,000 2,196,660
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Northampton Generating, Series A, 6.50%, 1/1/13 NR/BBB-/BBB- 1,450,000 1,513,133
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU SWD RB, USD Corp. Project, 6%, 6/1/31 Baa2/BBB+ 2,000,000 1,988,560
- ---------------------------------------------------------------------------------------------------------------------------
PA EDFAU Wastewater Treatment RB, Sun Co., Inc., R & M Project,
Series A, 7.60%, 12/1/24 Baa3/BBB 2,000,000 2,219,720
- ---------------------------------------------------------------------------------------------------------------------------
PA FAU RRB, Municipal Capital Improvements Program,
6.60%, 11/1/09 NR/A 25,000 27,028
- ---------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC Insured,
Inverse Floater, 8.616%, 3/1/22(2) Aaa/AAA/AAA 1,250,000 1,393,750
- ---------------------------------------------------------------------------------------------------------------------------
PA HEAU RB, Allegheny General Hospital, Series A, 7.25%, 9/1/17 Caa1/B 100,000 100,000
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU College & University RB, Geneva College, 5.375%, 4/1/23 NR/BBB- 1,800,000 1,649,052
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU College & University RRB, Temple University,
7.40%, 10/1/10(1) NR/A 5,000 5,063
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU RB, Allegheny General Hospital,
Series A, 7.125%, 9/1/07(1) Caa1/B 460,000 460,000
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU RB, Series 1, 5.75%, 4/1/31 Aaa/AAA 200,000 201,998
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, Dickinson College, 6%, 8/1/01 NR/BBB+ 100,000 100,128
- ---------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, Unrefunded Balance, Series A, MBIA Insured,
6.625%, 8/15/09 Aaa/NR 305,000 329,370
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, 6.75%, 10/1/14 Aa2/AA+ 15,000 16,010
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, 6.85%, 4/1/16 Aa2/AA+ 200,000 207,966
</TABLE>
10 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>
- ---------------------------------------------------------------------------------------------------------------------------
Pennsylvania (continued)
PA HFA SFM RB, Inverse Floater, 10.167%, 10/3/23(2) Aa2/AA+ $1,000,000 $1,103,750
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 34B, 7%, 4/1/24 Aa2/AA+ 1,010,000 1,042,209
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 40, 6.80%, 10/1/15 Aa2/AA+ 2,000,000 2,130,680
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 40, 6.90%, 4/1/25 Aa2/AA+ 95,000 101,310
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 44C, 6.65%, 10/1/21 Aa2/AA+ 1,000,000 1,063,360
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 54A, 6.15%, 10/1/22 Aa2/AA+ 1,025,000 1,061,931
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 66A, 5.65%, 4/1/29 Aa2/AA+ 1,000,000 989,970
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series Y, 7.45%, 4/1/16 Aa2/AA+ 95,000 97,183
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 1991-31A, 6.80%, 10/1/17 Aa2/AA+ 60,000 62,188
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 33, 6.90%, 4/1/17 Aa2/AA+ 15,000 15,731
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 41B, 6.65%, 4/1/25 Aa2/AA+ 10,000 10,577
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 46, 6.30%, 10/1/27 Aa2/AA+ 20,000 20,839
- ---------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 56A, 6.15%, 10/1/27 Aa2/AA+ 100,000 103,752
- ---------------------------------------------------------------------------------------------------------------------------
PA TUCM RRB, Series L, AMBAC Insured, 6%, 6/1/15 Aaa/AAA 40,000 41,817
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Airport System RB, 6%, 6/15/15 Aaa/AAA/AAA 100,000 103,444
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Gas Works RB, Series 15, MBIA Insured,
5.25%, 8/1/15 Aaa/AAA 1,000,000 985,640
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RB, Chestnut Hill College,
6%, 10/1/29 NR/NR 1,600,000 1,535,376
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RB, Frankford Hospital,
Series A, 6%, 6/1/23 A3/NR/A 40,000 42,943
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB, Jeanes Health System
Project, 6.60%, 7/1/10 Baa3/BBB+ 3,560,000 3,780,400
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB, Jeanes Hospital Project,
5.875%, 7/1/17 Baa3/BBB+ 1,500,000 1,487,625
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB, Temple University Hospital,
Series A, 6.625%, 11/15/23 Baa1/BBB+ 4,260,000 4,438,025
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home of Philadelphia,
Series A, 5.60%, 11/15/28 NR/NR 2,450,000 2,241,848
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU RB, First Mtg.-Crime Prevention Assn.,
6.125%, 4/1/19 NR/NR 1,550,000 1,514,366
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Redevelopment Authority Home Mtg. RB,
Series A, 10.25%, 6/1/17 A1/A 65,000 69,165
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional POAU Lease RB, MBIA Insured,
Inverse Floater, 8.50%, 9/1/20(2) Aaa/AAA 2,100,000 2,352,000
- ---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB, FGIC Insured,
10%, 6/15/05 Aaa/AAA/AAA 1,900,000 2,412,107
- ---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority Mtg. RRB,
Series A, 6.05%, 10/1/26 Aa2/A 45,000 46,310
- ---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority Mtg. RRB,
Series A, 6.20%, 10/1/21 Aa2/AAA 435,000 454,244
- ---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority Mtg. RRB,
Series A, 6.25%, 10/1/28 Aa2/AAA 1,070,000 1,118,846
- ---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority Mtg. RRB,
Series C, 5.70%, 4/1/30 Aa2/AAA 1,000,000 997,030
- ---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Urban Redevelopment Authority Mtg. RRB,
Series C, 5.95%, 10/1/29 Aa2/AAA 2,600,000 2,673,658
</TABLE>
11 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)
Pittsburgh, PA Water & Sewer Authority RRB, Escrowed to Maturity,
FGIC Insured, 7.25%, 9/1/14 Aaa/AAA/AAA $1,200,000 $ 1,414,764
- ---------------------------------------------------------------------------------------------------------------------------
Reading, PA Parking Authority CAP RB, MBIA Insured,
Zero Coupon, 5.70%, 11/15/15(3) Aaa/AAA 2,345,000 970,384
- ---------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill Energy
Resources, Inc., 6.50%, 1/1/10(1) NR/NR/BB+ 4,065,000 4,123,130
- ---------------------------------------------------------------------------------------------------------------------------
Westmoreland Cnty., PA IDAU RRB, Redstone HCF, 5.85%, 11/15/29 NR/NR 2,000,000 1,858,420
------------
93,864,108
- ---------------------------------------------------------------------------------------------------------------------------
U.S. Possessions--9.3%
PR CMWLTH GORB, MBIA Insured, Inverse Floater, 7.794%, 7/1/08(2) Aaa/AAA 1,000,000 1,090,000
- ---------------------------------------------------------------------------------------------------------------------------
PR CMWLTH HTAU RB, Series Y, 5%, 7/1/36 Baa1/A 3,100,000 2,876,738
- ---------------------------------------------------------------------------------------------------------------------------
PR CMWLTH Penuelas Municipal Lease Purchase RB, 7.50%, 2/19/03 NR/NR 662,285 679,154
- ---------------------------------------------------------------------------------------------------------------------------
PR Industrial Tourist Educational Medical & Environmental Control
Facilities RRB, San Lucas & Cristo Project, Series A, 5.75%, 6/1/29 NR/BBB 2,000,000 1,926,740
- ---------------------------------------------------------------------------------------------------------------------------
PR Industrial Tourist Educational Medical & Environmental Control
Facilities RB, Polytechnic University Project, Series A, 6.50%, 8/1/24 NR/BBB- 955,000 1,014,067
- ---------------------------------------------------------------------------------------------------------------------------
PR Industrial Tourist Educational Medical & Environmental Control
Facilities RB, Polytechnic University Project, Series A, 6.50%, 8/1/24 NR/BBB- 15,000 15,000
- ---------------------------------------------------------------------------------------------------------------------------
PR POAU RB, American Airlines SPF Project, Series A, 6.25%, 6/1/26 Baa2/BBB- 675,000 709,027
- ---------------------------------------------------------------------------------------------------------------------------
PR Public Buildings Authority Guaranteed Public Education &
HF RRB, Series I, 6%, 7/1/12 Baa1/A 175,000 175,308
- ---------------------------------------------------------------------------------------------------------------------------
Rio Grande, PR CMWLTH Municipal Lease Purchase
Agreement Bonds, 8%, 12/10/03 NR/NR 1,071,767 1,109,279
------------
9,595,313
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $101,439,110) 100.6% 103,459,421
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.6) (633,915)
---------- ------------
Net Assets 100.0% $102,825,506
========== ============
</TABLE>
<TABLE>
<CAPTION>
To simplify the listings of securities, abbreviations are used per the table below:
<S> <C>
CAP -- Capital Appreciation HFA -- Housing Finance Agency
CMWLTH -- Commonwealth HFAU -- Health Facilities Authority
EDFAU -- Economic Development Finance Authority HTAU -- Highway & Transportation Authority
FAU -- Finance Authority IDAU -- Industrial Development Authority
GOB -- General Obligation Bonds PC -- Pollution Control
GORB -- General Obligation Refunding Bonds POAU -- Port Authority
GP -- General Purpose RB -- Revenue Bonds
HA -- Hospital Authority RR -- Resource Recovery
HCF -- Health Care Facilities RRB -- Revenue Refunding Bonds
HDAU -- Hospital Development Authority SDI -- School District
HEAA -- Higher Education Assistance Agency SFM -- Single Family Mtg.
HEAU -- Higher Education Authority SWD -- Solid Waste Disposal
HEFAU -- Higher Educational Facilities Authority TUCM -- Turnpike Commission
HF -- Health Facilities USD -- Unified School District
</TABLE>
1. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
2. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays interest at a rate that varies inversely with
short-term interest rates. As interest rates rise, inverse floaters produce less
current income. Their price may be more volatile than the price of a comparable
fixed-rate security. Inverse floaters amount to $9,185,565 or 8.93% of the
Fund's net assets as of July 31, 1999.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. When-issued security to be delivered and settled after July 31, 1999.
12 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of July 31, 1999, securities subject to the alternative minimum tax amount to
$33,694,527 or 32.77% of the Fund's net assets.
Distribution of investments by industry of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Hospital/Healthcare $ 19,622,344 19.1%
- -----------------------------------------------------------------------------------------------------------
Corporate Backed 15,756,768 15.2
- -----------------------------------------------------------------------------------------------------------
Single Family Housing 12,228,859 11.8
- -----------------------------------------------------------------------------------------------------------
Adult Living Facilities 10,588,784 10.2
- -----------------------------------------------------------------------------------------------------------
Higher Education 10,183,169 9.8
- -----------------------------------------------------------------------------------------------------------
Resource Recovery 7,963,124 7.7
- -----------------------------------------------------------------------------------------------------------
Water Utilities 3,930,997 3.8
- -----------------------------------------------------------------------------------------------------------
Not-for-Profit Organization 3,805,627 3.7
- -----------------------------------------------------------------------------------------------------------
General Obligation 3,225,773 3.1
- -----------------------------------------------------------------------------------------------------------
Highways 2,918,555 2.8
- -----------------------------------------------------------------------------------------------------------
Marine/Aviation Facilities 2,695,929 2.6
- -----------------------------------------------------------------------------------------------------------
Pollution Control 2,273,674 2.2
- -----------------------------------------------------------------------------------------------------------
Municipal Leases 1,963,741 1.9
- -----------------------------------------------------------------------------------------------------------
Student Loans 1,393,750 1.3
- -----------------------------------------------------------------------------------------------------------
Education 1,300,000 1.3
- -----------------------------------------------------------------------------------------------------------
Multi-Family Housing 1,229,665 1.2
- -----------------------------------------------------------------------------------------------------------
Gas Utilities 985,640 1.0
- -----------------------------------------------------------------------------------------------------------
Parking Fee Revenue 970,384 0.9
- -----------------------------------------------------------------------------------------------------------
Manufacturing, Durable Goods 267,840 0.3
- -----------------------------------------------------------------------------------------------------------
Electric Utilities 127,770 0.1
- -----------------------------------------------------------------------------------------------------------
Sales Tax 27,028 0.0
------------ -----
Total $103,459,421 100.0%
============ =====
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===============================================================================================================
Assets
Investments, at value (cost $101,439,110)--see accompanying statement $103,459,421
- ---------------------------------------------------------------------------------------------------------------
Cash 425,662
- ---------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 1,501,398
Shares of beneficial interest sold 179,151
Investments sold 49,645
Other 1,862
------------
Total assets 105,617,139
===============================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased (including $295,239 purchased on
a when-issued basis)--Note 1 2,192,178
Dividends 275,874
Shares of beneficial interest redeemed 183,358
Trustees' compensation--Note 1 62,205
Shareholder reports 34,283
Distribution and service plan fees 12,898
Transfer and shareholder servicing agent fees 8,432
Other 22,405
------------
Total liabilities 2,791,633
===============================================================================================================
Net Assets $102,825,506
============
===============================================================================================================
Composition of Net Assets
Paid-in capital $102,421,235
- ---------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (63,368)
- ---------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,552,672)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 2,020,311
------------
Net assets $102,825,506
============
===============================================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $72,793,663 and 6,027,762
shares of beneficial interest outstanding) $12.08
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $12.68
- ---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $24,206,090 and
2,004,804 shares of beneficial interest outstanding) $12.07
- ---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $5,825,753 and
482,748 shares of beneficial interest outstanding) $12.07
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===================================================================================
Investment Income
Interest $ 6,014,554
===================================================================================
Expenses
Management fees--Note 4 609,168
- -----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 103,736
Class B 238,384
Class C 58,651
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 79,115
- -----------------------------------------------------------------------------------
Shareholder reports 49,045
- -----------------------------------------------------------------------------------
Custodian fees and expenses 24,145
- -----------------------------------------------------------------------------------
Legal, auditing and other professional fees 23,819
- -----------------------------------------------------------------------------------
Trustees' compensation--Note 1 16,423
- -----------------------------------------------------------------------------------
Other 12,259
------------
Total expenses 1,214,745
Less reimbursement of expenses by OppenheimerFunds, Inc.--Note 4 (60,161)
Less expenses paid indirectly--Note 1 (16,547)
------------
Net expenses 1,138,037
===================================================================================
Net Investment Income 4,876,517
===================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (140,867)
Closing of futures contracts 34,169
-----------
Net realized loss (106,698)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (3,152,830)
-----------
Net realized and unrealized loss (3,259,528)
===================================================================================
Net Increase in Net Assets Resulting from Operations $ 1,616,989
===========
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended July 31,
1999 1998
<S> <C> <C>
=============================================================================================================
Operations
Net investment income $ 4,876,517 $ 4,370,631
- -------------------------------------------------------------------------------------------------------------
Net realized loss (106,698) (130,703)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (3,152,830) 172,958
------------ -----------
Net increase in net assets resulting from operations 1,616,989 4,412,886
=============================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (3,432,062) (3,520,410)
Class B (957,717) (906,174)
Class C (235,856) (174,394)
=============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 6,194,843 571,952
Class B 2,794,536 2,831,354
Class C 803,073 2,596,680
=============================================================================================================
Net Assets
Total increase 6,783,806 5,811,894
- -------------------------------------------------------------------------------------------------------------
Beginning of period 96,041,700 90,229,806
------------ -----------
End of period (including overdistributed net investment income of
$63,368 and $314,250, respectively) $102,825,506 $96,041,700
============ ===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Year Ended
Year Ended July 31, December 31,
1999 1998 1997 1996(1) 1995 1994
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.42 $12.45 $12.01 $12.36 $11.19 $12.85
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .63 .61 .70 .40 .68 .67
Net realized and unrealized gain (loss) (.37) -- .43 (.35) 1.18 (1.64)
------ ------ ------ ------ ------ ------
Total income (loss) from investment operations .26 .61 1.13 .05 1.86 (.97)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.60) (.64) (.69) (.40) (.67) (.69)
Dividends in excess of net investment income -- -- -- -- (.02) --
------ ------ ------ ------ ------ ------
Total dividends and distributions to shareholders (.60) (.64) (.69) (.40) (.69) (.69)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.08 $12.42 $12.45 $12.01 $12.36 $11.19
====== ====== ====== ====== ====== ======
==============================================================================================================================
Total Return, at Net Asset Value(2) 2.01% 4.99% 9.68% 0.44% 16.94% (7.68)%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $72,794 $68,720 $68,280 $64,391 $66,483 $60,857
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $71,835 $69,202 $65,710 $64,997 $64,901 $62,786
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.03% 4.82% 5.79% 5.71% 5.68% 5.65%
Expenses, before voluntary assumption
and indirect expenses 0.95% 1.00%(4) 0.93%(4) 1.03%(4) 1.02%(4) 0.98%
Expenses, after voluntary assumption
and indirect expenses 0.90% 0.93% 0.90% N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 35% 22% 6% 31% 37%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal
year-end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.Total
returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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, 1999 were $49,128,594 and $37,213,116, respectively.
17 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------
Year Ended
Year Ended July 31, December 31,
1999 1998 1997 1996(1) 1995 1994
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.42 $12.45 $12.01 $12.36 $11.19 $12.84
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 .52 .61 .35 .59 .59
Net realized and unrealized gain (loss) (.38) -- .42 (.35) 1.17 (1.65)
------ ------ ------ ------ ------ ------
Total income (loss) from investment operations .15 .52 1.03 -- 1.76 (1.06)
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.50) (.55) (.59) (.35) (.57) (.59)
Dividends in excess of net investment income -- -- -- -- (.02) --
------ ------ ------ ------ ------ ------
Total dividends and distributions to shareholders (.50) (.55) (.59) (.35) (.59) (.59)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.07 $12.42 $12.45 $12.01 $12.36 $11.19
====== ====== ====== ====== ====== ======
==============================================================================================================================
Total Return, at Net Asset Value(2) 1.16% 4.20% 8.86% (0.01)% 16.06% (8.32)%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $24,206 $22,124 $19,339 $16,005 $14,466 $9,484
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $23,845 $20,969 $17,243 $15,085 $12,183 $7,329
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.26% 4.10% 5.02% 4.94% 4.89% 4.88%
Expenses, before voluntary assumption
and indirect expenses 1.80% 1.75%(4) 1.78%(4) 1.89%(4) 1.89%(4) 1.85%
Expenses, after voluntary assumption
and indirect expenses 1.65% 1.68% 1.65% 1.79% 1.78% 1.75%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 35% 22% 6% 31% 37%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal
year-end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.Total
returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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, 1999 were $49,128,594 and $37,213,116, respectively.
18 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------------------------
Period Ended
Year Ended July 31, December 31,
1999 1998 1997 1996(1) 1995(6)
<S> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $12.41 $12.44 $12.00 $12.36 $11.91
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 .51 .60 .34 .21
Net realized and unrealized gain (loss) (.37) -- .43 (.36) .45
------ ------ ------ ---- ------
Total income (loss) from investment operations .16 .51 1.03 (.02) .66
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.50) (.54) (.59) (.34) (.21)
Dividends in excess of net investment income -- -- -- -- --
------ ------ ------ ---- ------
Total dividends and distributions to shareholders (.50) (.54) (.59) (.34) (.21)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.07 $12.41 $12.44 $12.00 $12.36
====== ====== ====== ====== ======
==========================================================================================================================
Total Return, at Net Asset Value(2) 1.25% 4.20% 8.84% (0.15)% 5.55%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $5,826 $5,198 $2,611 $482 $264
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,867 $4,063 $1,390 $296 $ 51
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.26% 4.28% 4.99% 4.83% 4.40%
Expenses, before voluntary assumption
and indirect expenses 1.80% 1.76%(4) 1.79%(4) 1.97%(4) 2.07%(4)
Expenses, after voluntary assumption
and indirect expenses 1.65% 1.67% 1.66% 1.87% 1.96%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 35% 22% 6% 31%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal
year-end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.Total
returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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, 1999 were $49,128,594 and $37,213,116, respectively.
6. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
See accompanying Notes to Financial Statements.
19 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 as is
available from municipal securities, 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 on investments up to $1 million. Class B and Class C
shares may be subject to a contingent deferred sales charge (CDSC). All classes
of shares have identical rights to earnings, assets and voting privileges,
except that each class has its own expenses directly attributable to that class
and exclusive voting rights with respect to matters affecting that class.
Classes A, B and C have separate distribution and/or service plans. Class B
shares will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Fund maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Fund's net asset value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of July 31, 1999, the Fund had
entered into outstanding when-issued or forward commitments of $295,239.
- --------------------------------------------------------------------------------
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.
20 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of July 31, 1999, the
Fund had available for federal tax purposes an unused capital loss carryover of
approximately $1,552,000, which expires between 2002 and 2007.
- --------------------------------------------------------------------------------
Trustees' Compensation. 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,
1999, a credit of $2,451 was made for the Fund's projected benefit obligations
and payments of $1,928 were made to retired trustees, resulting in an
accumulated liability of $60,934 as of July 31, 1999.
The Board of Trustees has adopted a deferred compensation plan
for independent Trustees that enables Trustees to elect to defer receipt of all
or a portion of annual compensation 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 Trustees 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.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date. Original
issue discount is accreted and premium is amortized in accordance with federal
income tax requirements. For municipal bonds acquired after April 30, 1993, on
disposition or maturity, taxable ordinary income is recognized to the extent of
the lesser of gain or market discount that would have accrued over the holding
period. Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
21 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, 1999 Year Ended July 31, 1998
--------------------------- --------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,238,583 $ 15,411,150 712,372 $ 8,887,636
Dividends and/or distributions reinvested 175,431 2,182,442 173,087 2,155,632
Redeemed (918,356) (11,398,749) (839,031) (10,471,316)
--------- ------------ -------- ------------
Net increase 495,658 $ 6,194,843 46,428 $ 571,952
========= ============ ======== ============
- ---------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 568,446 $ 7,057,504 429,660 $ 5,358,387
Dividends and/or distributions reinvested 44,913 558,600 41,275 513,990
Redeemed (389,892) (4,821,568) (243,523) (3,041,023)
--------- ------------ -------- ------------
Net increase 223,467 $ 2,794,536 227,412 $ 2,831,354
========= ============ ======== ============
- ---------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 196,171 $ 2,436,879 231,025 $ 2,873,024
Dividends and/or distributions reinvested 14,078 175,032 9,616 119,808
Redeemed (146,208) (1,808,838) (31,816) (396,152)
--------- ------------ -------- ------------
Net increase 64,041 $ 803,073 208,825 $ 2,596,680
========= ============ ======== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of July 31, 1999, net unrealized appreciation on securities of $2,020,311 was
composed of gross appreciation of $3,261,417, and gross depreciation of
$1,241,106.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.60% 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. The Fund's management fee for the year ended
July 31, 1999, was 0.60% of the average annual net assets for each class of
shares, before the voluntary waiver by the Manager.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and for other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
22 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End On Class A On Class B On Class C
Sales Charges Sales Charges Shares Shares Shares
On Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 31, 1999 $242,377 $53,861 $25,160 $259,090 $20,197
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
July 31, 1999 $6,887 $45,995 $1,132
</TABLE>
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under Rule 12b-1
of the Investment Company Act. Under those plans the Fund pays the Distributor
for all or a portion of its costs incurred in connection with the distribution
and/or servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.15% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.15% of the average annual net assets consisting of Class A
shares of the Fund. For the fiscal year ended July 31, 1999, payments under the
Class A Plan totaled $103,736, all of which was paid by the Distributor to
recipients. That included $5,937 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at 0.25%(voluntarily reduced to 0.15% by the
Fund's Board), whether the Distributor's distribution expenses are more or less
than the amounts paid by the Fund under the plan during the period for which the
fee is paid.
The Distributor retains the asset-based sales charge on Class B
shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding. The asset-based sales charges
on Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the plan was terminated. The
plans allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
23 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
Distribution fees paid to the Distributor for the year ended July 31, 1999 were
as follows:
<TABLE>
<CAPTION>
Distributor's
Distributor's Aggregate Unreimbursed
Total Payments Amount Retained Unreimbursed Expenses as % of
Class Under Plan By Distributor Expenses Under Plan Net Assets of Class
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $238,384 $186,250 $744,166 3.07%
- -------------------------------------------------------------------------------------------------------------------------------
Class C Plan $ 58,651 $ 32,072 $ 64,791 1.11%
</TABLE>
================================================================================
5. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund may recognize a realized gain or loss when the
contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
================================================================================
6. Illiquid or Restricted Securities
As of July 31, 1999, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid securities and no more than 10% of its net assets in
restricted securities. Certain restricted securities, eligible for resale to
qualified institutional investors, are not subject to that limitation. The
aggregate value of illiquid or restricted securities subject to this limitation
as of July 31, 1999, was $4,688,193, which represents 4.56% of the Fund's net
assets.
================================================================================
7. Bank Borrowings
The Fund may borrow up to 10% of its total assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. 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
$100 million, collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.625%. 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 0.07% per annum. The commitment fee
allocated to the Fund for the year ended July 31, 1999 was $2,181.
The Fund had no borrowings outstanding at July 31, 1999. For the
year ended July 31, 1999, the average monthly loan balance was $121,000 at an
average interest rate of 5.65%. The interest expense for the year ended July 31,
1999, was $6,930.
24 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditor's Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees and Shareholders of Oppenheimer Pennsylvania Municipal
Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Pennsylvania Municipal Fund as of
July 31, 1999, and 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
three-year period then ended, the seven-month period ended July 31, 1996, and
each of the years in the two-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, 1999, by correspondence with the custodian and brokers; and
where confirmations were not received from brokers, we performed other auditing
procedures. 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, 1999, 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 three-year period then ended, the
seven-month period ended July 31, 1996, and each of the years in the two-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
KPMG LLP
Denver, Colorado
August 20, 1999
25 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year
ended July 31, 1999, are eligible for the corporate dividend-received deduction.
The dividends were derived from interest on municipal bonds and are not subject
to federal income tax. To the extent a shareholder is subject to any state or
local tax laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
26 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Meeting (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
On June 18, 1999, a shareholder meeting was held at which the following items
and proposals were approved, as described in the Trust's proxy statement for
that meeting. The following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Nominee/Proposal For Against Abstain Non-Votes Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert G. Galli 4,114,472 34,208 4,148,680
Leon Levy 4,111,435 37,245 4,148,680
Benjamin Lipstein 4,106,125 42,555 4,148,680
Bridget A. Macaskill 4,106,498 42,182 4,148,680
Elizabeth B. Moynihan 4,112,770 35,910 4,148,680
Kenneth A. Randall 4,109,571 39,109 4,148,680
Edward V. Regan 4,114,843 33,837 4,148,680
Russell S. Reynolds, Jr. 4,112,770 35,910 4,148,680
Donald W. Spiro 4,088,771 59,909 4,148,680
Pauline Trigere 4,114,318 34,362 4,148,680
Clayton K. Yeutter 4,115,252 33,428 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 1
Ratification of the selection of KPMG LLP as independent auditors of the Fund for the fiscal year beginning August 1, 1998.
4,029,509 32,707 86,464 -- 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2a
Approval to eliminate the Fund's fundamental policy on purchasing securities on margin.
3,050,285 193,269 197,253 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2b
Approval to eliminate the Fund's fundamental policy on selling securities short.
3,013,554 219,069 208,184 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2c
Approval to eliminate the Fund's fundamental policy on investing in other investment companies.
3,033,071 215,136 192,600 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2d
Approval to eliminate the Fund's fundamental policy on purchasing securities of issuers in which
officers or trustees have an interest.
2,997,041 267,303 176,463 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2e
Approval to eliminate the Fund's fundamental policy on restricted securities.
3,060,683 179,495 200,629 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2f
Approval to eliminate the Fund's fundamental policy on the types of securities it may purchase.
2,819,683 393,835 227,289 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2g
Approval to eliminate the Fund's fundamental policy on futures contracts.
2,855,779 346,081 238,947 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 2h
Approval to eliminate the Fund's fundamental policy on pledging of assets.
2,840,698 369,483 230,626 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 3a
Approval to amend the Fund's fundamental policy on borrowing.
3,059,065 245,544 136,198 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 3b
Approval to amend the Fund's fundamental policy on underwriting securities.
3,001,037 239,640 200,130 707,873 4,148,680
- ---------------------------------------------------------------------------------------------------------------------------
Proposal No. 3c
Approval to amend the Fund's fundamental policy on lending.
2,988,713 202,338 249,756 707,873 4,148,680
</TABLE>
27 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Pennsylvania Municipal Fund
- --------------------------------------------------------------------------------
A Series of Oppenheimer Multi-State Municipal Trust
<TABLE>
<S> <C>
================================================================================
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
Phillip A. Griffiths, 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
Ronald H. Fielding, Vice President
Anthony A. Tanner, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
================================================================================
Independent Auditors KPMG LLP
================================================================================
Legal Counsel Mayer, Brown & Platt
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, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
</TABLE>
28 Oppenheimer Pennsylvania Municipal Fund
<PAGE>
Municipal Bonds - The Community Investment
When you invest in municipal securities through a mutual fund, your dollars are
being put to work primarily in your state's communities --buildings and school
systems, homes for the elderly and fire districts. To encourage and reward
private investor support of these municipal activities, the interest paid on
them is often exempt from federal and state personal income taxes. In
Pennsylvania, the interest is also free from Philadelphia school district income
taxes and Pittsburgh local income taxes.
Many investors consider this the primary advantage of a municipal bond fund
like the Oppenheimer Pennsylvania Municipal Fund. But it should also be
acknowledged that municipal bonds provide financing for much of the
infrastructure of the communities in which we live.
During the past year, your investment in the Fund helped provide financing
for a wide variety of worthwhile projects in Pennsylvania. Private colleges,
primary schools for special education, waste water treatment facilities and
mortgages for first-time home buyers are just a few of the programs that benefit
from your investment.
When you review the enclosed listing of the Fund's portfolio of issues,
you're likely to find many projects that help to improve the standard of living
in your community. It's one of the -- admittedly few -- advantages of the
current tax code: the ability to earn tax-free income and be supportive of the
great state of Pennsylvania.(1)
1. A portion of the Fund's income may be subject to income taxes. Capital gains
distributions, if any, are taxable as capital gains. For investors subject to
the alternative minimum tax, a portion of the Fund's distributions may increase
that tax. Return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Information and Services
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website -- we're here to
help.
Internet: www.oppenheimerfunds.com
24-hr access to account information and transactions
General Information: 1-800-525-7048
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
Telephone Transactions: 1-800-852-8457
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
Phone Link: 1-800-533-3310
24-hr automated information and automated transactions
Telecommunications Device for the Deaf (TDD): 1-800-843-4461
Mon-Fri 8:30am-6pm ET
OppenheimerFunds Information Hotline: 1-800-835-3104
24 hours a day, timely and insightful messages on the
economy and issues that affect your investments
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services,
P.O. Box 5270, Denver, CO 80217-5270
<PAGE>
[BACK COVER]
[LOGO: Oppenheimer Pennsylvania Municipal Fund]
Oppenheimer
Pennsylvania
Municipal Fund
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Investment Advisor
OppenheimerFunds, Inc.
350 Linden Oaks
Rochester, New York 14625-2807
716-383-1300
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, NY 10048-0203
Independent Auditors
KPMG LLP
707 Seventeenth Street, Suite 2300
Denver, CO 80202-3499
Custodian
Citibank, N.A.
New York, NY
Transfer and Shareholder
Services Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, CO 80217-5270
800-552-1129
Inv.Code #: RA0740.001.0799
September 29, 1999
This Annual Report is for the information of shareholders of Oppenheimer
Pennsylvania Municipal Fund. It must be preceded or accompanied by a current
prospectus for the Fund.
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 the possible loss of the
principal amount invested.
Call our Toll-Free Customer Service today at 1-800-525-7048 for more
information on how to take advantage of your financial relationship with the
OppenheimerFunds Family.
================================================================================
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