[front cover]
[logo]Oppenheimer
Pennsylvania
Municipal Fund
[photo montage of Pennsylvania]
Tax-Free ANNUAL REPORT
Income for July 31, 2000
Pennsylvania
Investors
[logo]OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
[logo]OPPENHEIMER
Pennsylvania
MUNICIPAL FUND
"Oppenheimer Pennsylvania Municipal Fund
may be a better bet than it seems
...For those interested in an aggressive offering,
this fund bears watching."
Morningstar's Oppenheimer Pennsylvania Municipal Fund Analysis
May 8, 2000
Morningstar, Inc. is a nationally recognized mutual fund rating service.
<TABLE>
<CAPTION>
DIVIDEND DISTRIBUTIONS*
8/1/99 - 7/31/00
----------------------------------------
Dividend per Share (in cents)
Month Class A Class B Class C
<S> <C> <C> <C>
August 5.1 4.3 4.4
September 5.4 4.6 4.6
October 5.4 4.7 4.7
November 5.4 4.7 4.7
December 5.4 4.6 4.6
January 5.4 4.7 4.7
February 5.6 4.9 4.9
March 5.6 4.9 4.9
April 5.6 4.9 4.9
May 5.6 4.9 4.9
June 5.6 4.9 4.9
July 5.6 4.9 4.9
</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.
<PAGE>
DEAR SHAREHOLDER,
[photo]Bridget A. Macaskill
President
Oppenheimer Pennsylvania
Municipal Fund
The 1990s, although not free of volatility, were distinguished by an
overall bull market. In contrast, the year 2000 has been characterized so far as
a relatively difficult investment environment with high levels of volatility.
As we entered the year 2000, a vital concern weighing on investors' minds
was growing evidence of a trend toward higher inflation. While productivity
improvements and various economic forces helped keep inflation low over the last
decade, the year has seen upward pressure on wages and some prices. That's
primarily because the U.S. economy has been growing at a vigorous pace, creating
a labor shortage for businesses and high spending levels among consumers. In
response, since the summer of 1999, the Federal Reserve Board raised short-term
interest rates six times through June 30, 2000, in an attempt to forestall
inflationary pressures.
During that period, higher interest rates adversely affected many stocks
and bonds. In a dramatic decline, previously high-flying technology stocks
generally fell to more reasonable valuations. At the same time, long-neglected
value stocks began to attract investor interest. The result: narrowing of the
valuation gap between growth stocks and value stocks. Finally, in the bond
market, higher interest rates caused prices of most fixed income securities to
fall.
At OppenheimerFunds, we were not surprised by these developments, many of
which we anticipated in our recent letters to investors. What did concern us was
that, prior to the April 2000 correction, we began to see disturbing signs that
short-term trading was taking place not just in technology stocks, but also in
mutual funds. Prudent investors will understand our concern: most stock and bond
funds are carefully designed as long-term investments to help individuals and
families toward significant financial goals. In general, short-term trading is
risky and may compromise a well-planned financial strategy. It may also result
in unforeseen adverse consequences, such as unnecessarily high tax bills.
We continue to believe that maintaining a long-term perspective and
practicing diversification are the fundamental drivers of consistent performance
over time. These strategies have helped individual investors, as well as
professional investors, weather declining markets and participate in rising
ones. On the following pages, your portfolio manager discusses the long-term
strategies and particular investment decisions that affected your fund during
the reporting period.
You can remain confident that our portfolio managers will continue to
monitor areas of opportunity in the arenas in which your fund invests, as the
effects of today's changing investment environment take hold. Knowing what's
going on in the world's economies, markets and companies -- and making
investment decisions designed to try to take advantage of them over the long
term -- is central to what makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
August 21, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict or depict performance of any particular fund. Specific
discussion, as it applies to your Fund, is contained in the pages that follow.
Stocks and bonds have different types of investment risks; stocks are subject to
market volatility and bonds are subject to credit and interest rate
risks.
1 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
THE "ROCHESTER" WAY
OppenheimerFunds, Inc. has operated as an investment advisor since 1959. As
of July 31, 2000, OppenheimerFunds, Inc. (including subsidiaries) managed assets
of more than $120 billion, including investment companies with more than 5
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 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 May 1986, the unique investment approach utilized by the
Rochester Division of OppenheimerFunds, Inc. has proven to be beneficial. By
conducting intensive research within the universe of 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.
[logo]OPPENHEIMER
Pennsylvania
MUNICIPAL FUND
[logo]Rochester Fund Municipals
Limited Term New York Municipal Fund
2 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
WHY NOW IS A GOOD TIME FOR TAXABLE EQUIVALENT YIELD
As of July 31, 2000, 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 2000, 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, in part, to decrease the yield on Treasury
bonds, making Treasuries "rich" and narrowing the spread, or difference, between
their yields and the yields on municipal bonds of comparable maturities.
Consider this example: On July 31, 2000, AAA rated 30-year Pennsylvania
municipal bonds yielded 5.6%, while the 30-year Treasury yielded 5.8%. But,
while the higher rated municipal bond yields only 97% of its comparable
Treasury, this is before any tax implications. On a pretax basis, the taxable
equivalent yield on such a hypothetical municipal bond investment would jump to
9.6% 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.
[bar chart]
5.6% 5.8% 9.6%
30-Year 30-Year Taxable
Pennsylvania Treasury Equivalent
Bond Yield Yield Yield
[end bar chart]
Data source: Bloomberg Business News.
Taxable Equivalent Yield assumes the
maximum combined federal and
Pennsylvania income tax bracket.
All figures are calculated as of 7/31/00.
<TABLE>
<CAPTION>
TAX EXEMPT VS. TAXABLE YIELDS
Effective Effective
Tax Bracket for Taxable Rate Tax Bracket for Taxable Rate
Pennsylvania Needed to Equal Philadelphia Needed to Equal
2000 Taxable Income Residents Current Tax-free Rate Residents Current Tax-free Rate
<S> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return 6.0% 6.5% 6.0% 6.5%
$0 - $26,250 $0 - $43,850 17.4% 7.3% 7.9% 21.3% 7.6% 8.3%
$26,251 - $63,550 $43,851 - $105,950 30.0% 8.6% 9.3% 33.3% 9.0% 9.7%
$63,551 - $132,600 $105,951 - $161,450 32.9% 8.9% 9.7% 36.1% 9.4% 10.2%
$132,601 - $288,350 $161,451 - $288,350 37.8% 9.6% 10.5% 40.7% 10.1% 11.0%
over $288,350 over $288,350 41.3% 10.2% 11.1% 44.0% 10.7% 11.6%
</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>
DEAR SHAREHOLDERS,
[photo]
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
September 11, 2000
We are pleased to provide shareholders of Oppenheimer Pennsylvania
Municipal Fund with the Fund's 2000 Annual Report.
The Fund has provided investors with two increases in the monthly dividend
for Class A shares during the past year, raising the dividend from $.051 to
$.056 per share. Other share classes had proportional increases. On September 8,
2000, the Fund began accruing for an additional dividend increase of $.003,
which will raise the Class A dividend to $.059 per share beginning with the
October 2000 dividend payment. This will be the fourth increase in the monthly
dividend since we began managing the Fund, bringing the cumulative increase to
$.01 per share. This is a 20.4% increase and translates to 101 basis points of
additional annual yield for shareholders. Please consult your statement for
details, including the proportional increase for Class B and C shares.
On July 31, 2000, the Fund reported a distribution yield of 5.8% for Class
A shares (at Maximum Offering Price), and 30-day SEC yield of 5.6%.(1) As
always, we recognize the importance of tax-free income to our investors. For
Pennsylvania taxpayers reporting more than $105,951 on joint returns ($63,551
for single filers), 5.6% is equal to at least 8.3% on a taxable investment. And
residents of Philadelphia or Pittsburgh benefit even more. (See the information
regarding taxable equivalent yields enclosed within this report.) Clearly, the
Oppenheimer Pennsylvania Municipal Fund continues to offer value to tax-weary
Pennsylvanians.
The dividend increases demonstrate the greatest benefit of investing
through mutual funds: active portfolio management. A portfolio management team
can closely monitor, evaluate and capitalize on unique opportunities as they
arise in the market for shareholders. During this period, for example, rising
interest rates have created opportunities to add higher yielding bonds that have
enhanced the Fund's dividend. The successful time-tested management strategies
we have been applying within the Pennsylvania municipal bond market are
unlocking value for shareholders.
The past year's market volatility has created both challenges and
opportunities for municipal bond fund investors. Portfolio duration -- a measure
of volatility -- was slightly longer than we would have preferred in the midst
of recent interest rate increases. But shareholders in the Oppenheimer
Pennsylvania Municipal Fund already have begun to experience the benefits of
maintaining a longer term perspective. The Fund's long-term Class A
4 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
[top bar]
The municipal bond market has proven volatile during 1999 and 2000. But, during
this period, the Fund's actual dividend payout has been raised a total of four
times as of the October 2000 distribution--an increase of 20.4%.
[bar graph]
Dividend History -- Oppenheimer Pennsylvania Municipal Fund
Class A Shares
Jan-99 0.049
Feb-99 0.049
Mar-99 0.049
Apr-99 0.049
May-99 0.049
Jun-99 0.051
Jul-99 0.051
Aug-99 0.051
Sep-99 0.054
Oct-99 0.054
Nov-99 0.054
Dec-99 0.054
Jan-00 0.054
Feb-00 0.056
Mar-00 0.056
Apr-00 0.056
May-00 0.056
Jun-00 0.056
Jul-00 0.056
Aug-00 0.056
Sep-00 0.056
Oct-00 0.059
[end bar graph]
While we attempt to keep the monthly dividend as high and consistent as is
prudent, dividend adjustments are made periodically. 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 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. 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.
[end top bar]
shareholders (and others not subject to current sales charges) received
cumulative total returns of 6.18% and (1.00)% for the six-month and one-year
periods ended July 31, 2000, respectively. Even those subject to maximum sales
charges realized the benefit of this year's renewed market viability, with
cumulative total returns improving to 1.14% (for the six-month period) over
(5.71)% (for the one-year period). It is important to note that during this
period the Fund experienced no credit losses -- which indicates to us that any
significant, adverse fluctuation in the share price was caused by market
conditions. Since January 1, 2000, we have improved overall credit quality in
the portfolio by adding higher quality bonds which offer good yields and
below-average volatility, increasing the Fund's average credit quality from BBB+
to A-.(2)
Despite a total of six separate short-term interest rate increases by the
Federal Reserve Board over the past year, Pennsylvania's municipal bond markets
have enjoyed the benefits of a strong U.S. economy. Short-term interest rate
increases, while initially disruptive for bond investors, are intended to
perpetuate the benefits of a strong economy over the longer term. In
orchestrating a "soft landing," the Fed must engineer an economy that's strong
enough to provide jobs for willing workers, and to prevent defaults, but not so
strong as to create inflation. Since no one can be certain whether the Fed is
through tightening interest rates, we believe that our shareholders are best
served through portfolio diversification and yield-oriented strategies intended
to make the most of a variety of market conditions.
We believe that now is an attractive time to own municipal securities. And
maintaining a long-term investment approach continues to be important for
municipal bond investors. Your financial advisor can help you to make the most
of the attractive, triple tax-free income that Oppenheimer Pennsylvania
Municipal Fund has to offer. You can learn more about the specifics of your
Fund's performance and our understanding of current market conditions by reading
the "Manager's Discussion and Analysis" section immediately following this
letter.
Thank you.
/s/ Anthony A. Tanner
Anthony A. Tanner, CFA
Vice President, Portfolio Manager
/s/ Ronald H. Fielding
Ronald H. Fielding, CFA
Senior Vice President, Portfolio Manager
1. Distribution yield at MOP (based on last distribution) is annualized and
divided by payable date offering price. Standardized yield (based on net
investment income for the 30-day period ended 7/31/00) is annualized and divided
by the period-end offering price. Past performance is not predictive of future
results.
2. Portfolio data are as of July 31, 2000, are dollar-weighted based on invested
assets and are subject to change. The Fund may invest up to 25% of its assets in
below investment-grade securities which carry greater risk that an issuer may
default on repayment of principal or interest. Securities rated by any rating
organization are included in the equivalent Standard and Poor's rating category.
Average credit quality and allocation includes securities rated by a national
rating organization as well as unrated securities (currently 35.0% of total
investments) to which the Manager in its judgment has assigned ratings as
securities comparable to those rated by a rating agency in the same
category.
5 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
[photo]
The Rochester Investment Team (l to r)
Ronald H. Fielding, CFA
Senior Vice President, Portfolio Manager and
Chief Strategist, Rochester Division
Founded the Rochester Investment Team in May 1983
Anthony A. Tanner, CFA
Vice President and Portfolio Manager, Rochester Division
Joined the Rochester Investment Team in June 1991
Daniel G. Loughran, CFA
Vice President and Assistant Portfolio Manager,
Rochester Division
Joined the Rochester Investment Team in October 1994
Richard A. Stein, CFA
Vice President-- Credit Analysis, Rochester Division
Joined the Rochester Investment Team in May 1993
James E. Bragg
Credit Analyst, Rochester Division
Joined the Rochester Investment Team in June 1999
Christopher D. Weiler, CFA
Assistant Vice President-- Credit Analysis,
Rochester Division
Joined the Rochester Investment Team in January 1999
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 Federal Reserve Board has
raised short-term interest rates six separate times during the past year. As a
result, municipal bond (and bond fund) prices have been declining for most of
this period. However, the Fund's NAV has rallied since the Fed's last rate
increase on May 16, in accordance with the market's belief that the year-long
campaign of the Fed to control inflation is working.
In our opinion, shares of the Fund currently represent a comparatively
outstanding value for investors. The taxable equivalent yields of the
Oppenheimer Pennsylvania Municipal Fund remain very attractive, especially when
compared to the current level of inflation in the U.S. economy, or against the
yields of taxable corporate or Treasury bonds.
Municipal bonds also remain an effective diversification tool. While the
S&P, Dow Industrials and NASDAQ Composite indexes have all posted declines year
to date, long-term municipal bonds have enjoyed attractive positive total
returns that have exceeded the returns on both long-term investment-grade and
lower rated corporate bonds.
Are we at the end of the Fed interest rate increase regimen? No one can be
certain. But since there are signs that recent increases have begun to slow the
economy to a pace of sustainable growth, they may well be achieving the desired
effect. And, while the effect on bonds may be painful in the short term, keeping
inflation in check ultimately benefits all fixed income investors.
The Pennsylvania economy remained healthy through this reporting period,
and the state continues to maintain a AA credit rating. The economic expansion
has boosted the finances of municipal governments, reducing their borrowing
needs. As a result, municipalities have been issuing fewer new bonds this year.
New bond issuance in Pennsylvania through July 31 was approximately 70% below
the same period last year.
We have purchased bonds in the secondary market that have improved both
quality and yield in the portfolio. The secondary market has continued to offer
a plentiful supply of previously issued bonds with advantages often overlooked
by both competing fund managers and individual investors.
One of the most compelling reasons to own municipal bonds through a mutual
fund is the opportunity for diversification. Simply put, we give investors the
opportunity to invest in a much wider range of municipal bonds than they could
obtain individually. Since this report last year we have significantly broadened
the Fund's diversification. We've reduced the average holding size and increased
the number of individual holdings in the Fund from 101 to 130 issues. To
minimize the potential impact of adversity in any one particular market sector,
region, maturity or credit, we continue to purchase bonds from many different
sectors across Pennsylvania. Especially with recent market fluctuation, we've
been able to find underappreciated credits -- at lower than normal prices --
that competing fund managers and individual investors have overlooked.
And we continue to "scavenger hunt" in the secondary markets, accumulating
desirable holdings through multiple purchases of bonds in smaller quantities at
discounted prices. Unlike the typical municipal bond fund, several of the Fund's
holdings are in sizes well below $1 million. That's because we believe great
value is not restricted to larger trading sizes. In fact, we often find the best
values are in "small packages".
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.
6 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
[sidebar]
<TABLE>
<CAPTION>
YIELDS
As of 7/31/00
-------------------------------------------
Distribution Yield Standardized
At NAV At MOP Yield
<S> <C> <C> <C>
Class A 6.07% 5.78% 5.58%
Class B 5.35% 5.35% 5.12%
Class C 5.36% 5.36% 5.11%
</TABLE>
Distribution yield at NAV and MOP (based on last distribution, July 10, 2000)
are annualized and divided by NAV and offering price, respectively. Distribution
yield at NAV does not include sales charges. Standardized yield is based on net
investment income for the 30-day period ended July 31, 2000. Falling share
prices will tend to artificially raise yields.
<TABLE>
<CAPTION>
TOTAL RETURN
As of 7/31/00 (1)
Cumulative Average Annual
NAV MOP NAV MOP
---------------------------------------------------
A SHARES
<S> <C> <C> <C> <C>
6-Month 6.18% 1.14% -- --
1-Year (1.00)% (5.71)% (1.00)% (5.71)%
5-Year 23.67% 17.80% 4.34% 3.33%
10-Year 75.60% 67.25% 5.79% 5.28%
B SHARES
6-Month 5.69% 0.69% -- --
1-Year (1.75)% (6.42)% (1.75)% (6.42)%
5-Year 19.00% 17.11% 3.54% 3.21%
Life (5/3/93) 29.19% 29.19% 3.60% 3.60%
C SHARES
6-Month 5.69% (4.69)% -- --
1-Year (1.75)% (2.68)% (1.75)% (2.68)%
Life (8/29/95) 18.90% 18.90% 3.58% 3.58%
</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), 2%
(5-year) and 0% (life-of-class). Because Class B shares convert to Class A
shares 72 months after purchase, the "life-of-class" return for Class B uses
Class A performance for the period after conversion. Class 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. Beginning in January, 1997, the Fund's Manager voluntarily agreed
to waive a portion of its management fee. Absent that voluntary waiver, the
Fund's total returns and yields would have been less. The Manager withdrew that
voluntary undertaking on 6/1/00.
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.
1. Class A Average Annual Total Returns at MOP for the one-year, five-year and
ten-year periods ended 6/30/00 were (8.19)%, 2.92% and 5.16%, respectively.
Class B Average Annual Total Returns (including the applicable Contingent
Deferred Sales Charge) for the periods of one-year, five-years and since
inception, ending 6/30/00, were (8.81)%, 2.81% and 3.26%, respectively. Class C
Average Annual Total Returns for the periods of one-year (including the 1%
Contingent Deferred Sales Charge) and since inception, ending 6/30/00, were
(5.26)%, and 3.10%, respectively.
[end sidebar]
The Fund's $75,000 holding of Pennsylvania Higher Education Student Loan
Revenue bonds illustrates this. These bonds are AMBAC insured and rated AAA.
They carry a 7.05% coupon, mature October 1, 2016, and are callable on October
1, 2001. We accumulated these bonds in the secondary market through two
purchases at an average yield-to-call of 5.70%. The 5.70% yield was equivalent
to the yields available on newly issued A rated general obligation bonds with
the same final maturity. The value in the student loan bonds lies in the fact
that: 1) their above-market coupon and call structure produce very little
interest rate risk and, 2) should they remain outstanding beyond the call date
(a very common occurrence), the yield the Fund earns will increase. Seeking out
bonds such as these with below-average risk and above-average yield potential is
a hallmark of our management style.
Another of our primary portfolio strategies is executing "swaps" --
exchanging selected bonds for others with different characteristics that can
benefit the portfolio. For example, the recent sale of part of the portfolio's
position in Pennsylvania Economic Development Authority (National Gypsum) bonds
benefited the portfolio in a number of ways. First, we bought the bonds of an
investment-grade nonprofit organization that provided 65 basis points of
additional yield and had a shorter maturity, enabling us to further diversify
the portfolio. Notably, we retained part of our position in National Gypsum: the
issuer has been operating successfully in a highly cyclical industry, as
evidenced, in part, by regular balance sheet improvements. We feel that the
price of these National Gypsum bonds does not yet fully reflect these and other
positive factors, and they continue to offer the potential for price
appreciation while generating attractive income for the portfolio.(2)
We have also continued to identify attractive opportunities in the
long-term adult care sector. The Fund's holdings in this sector are broadly
diversified across 11 issuers located throughout the state. One of the bonds we
purchased this year was issued by Lancaster IDAU, Garden Spot Village Project,
an adult living facility located on 104 acres of Lancaster County countryside
near New Holland. Our research indicated this community has a history of sound
financial performance, substantial community support and a growing waiting list
of prospective residents. We rely on our internal research to discern the true
values in sectors that we think offer the best long-term return prospects.
Pennsylvania is the second-fastest "graying" state (after Florida) with a
growing population over the age of 65. We feel that, in the long term, these
demographic trends will spur increased demand for the adult care services that
communities such as Garden Spot Village provide.
Our approach to the municipal bond market is decidedly bottom-up. The
combination of our internal research capabilities, diverse portfolio holdings
and opportunistic trading strategies work in concert toward our primary goal --
generating income for our shareholders. Since 84% of a bond's 10-year total
return is derived from income, according to the Lehman Brothers 10-Year
Aggregate Bond Index,(3) we feel confident that an income-oriented approach
serves Pennsylvania municipal bond investors best over the longer term.
2. See Statement of Investments for a complete listing of portfolio holdings.
3. Bonds as represented by the Lehman Brothers 10-Year Aggregate Bond Index, a
broad-based index of domestic bonds, as of ten years ended 6/30/00.
7 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
COMPARING THE FUND'S PERFORMANCE TO THE MARKET
[sidebar]
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, 2000. 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 tax-free performance is compared to the performance of the
Lehman Brothers Municipal Bond Index, an unmanaged index of a broad range of
investment-grade municipal bonds that is widely regarded as a measure of the
performance of the general municipal bond market, 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 PA Municipal Bond Fund Average, which includes funds that 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.
[end sidebar]
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Pennsylvania Municipal Fund, the Lehman Brothers Municipal Bond
Index and the Lipper Pennsylvania Municipal Bond Fund Average.
Class A Shares
<TABLE>
<CAPTION>
9/18/89 - 7/31/00
<S> <C>
Oppenheimer Pennsylvania
Municipal Fund $17,877
Lehman Brothers Municipal
Bond Index $21,354
Lipper Pennsylvania Municipal
Bond Fund Average $20,003
Consumer Price Index $13,860
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 7/31/00(1)
1-Year (5.71)% 5-Year 3.33% Life-of-Class 5.51%
Class B Shares
<TABLE>
<CAPTION>
5/3/93 - 7/31/00
<S> <C>
Oppenheimer Pennsylvania
Municipal Fund $12,905
Lehman Brothers Municipal
Bond Index $15,039
Lipper Pennsylvania Municipal
Bond Fund Average $14,175
Consumer Price Index $11,993
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 7/31/00(2)
1-Year (6.42)% 5-Year 3.21% Life-of-Class 3.60%
Class C Shares
<TABLE>
<CAPTION>
8/29/95 - 7/31/00
<S> <C>
Oppenheimer Pennsylvania
Municipal Fund $11,880
Lehman Brothers Municipal
Bond Index $13,201
Lipper Pennsylvania Municipal
Bond Fund Average $12,553
Consumer Price Index $11,295
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 7/31/00(3)
1-Year (2.68)% Life-of-Class 3.58%
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. During the period, the Manager voluntarily agreed to waive a portion of its
management fee. Absent that voluntary waiver, the Fund's total returns would
have been less. The Manager withdrew that voluntary waiver effective 6/1/00.
1. The average annual total returns are shown net of the applicable 4.75%
maximum initial sales charge.
2. Class B shares of the Fund were first publicly offered on 5/3/93. The average
annual total return is shown net of the applicable 5% (one-year), 2% (five-year)
and 0% (life-of-class) contingent deferred sales charge. Because Class B shares
convert to Class A shares 72 months after purchase, the "life-of-class" return
for Class B uses Class A performance for the period after conversion.
3. 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.
8 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS July 31, 2000
<TABLE>
<CAPTION>
Ratings:
Moody's/ Market
S&P/Fitch Principal Value
(Unaudited) Amount See Note 1
=========================================================================================================================
<S> <C> <C> <C>
Municipal Bonds and Notes--105.0%
-------------------------------------------------------------------------------------------------------------------------
Pennsylvania--102.0%
Allegheny Cnty., PA HDAU RB, Health System, Series A,
MBIA Insured, 6.50%, 11/15/30(1) Aaa/AAA $5,000,000 $5,261,300
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA HDAU RB, Health System,
Series B, 9.25%, 11/15/30(1) B1/B+/B+ 5,000,000 4,638,250
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA HDAU RB, Inverse Floater, 6.50%, 11/15/30(1,2,3) Aaa/AAA 1,500,000 1,678,575
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA IDAU Airport SPF RRB, USAir, Inc. Project,
Series A, 8.875%, 3/1/21 B1/B+ 40,000 41,036
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA IDAU RRB, Environmental Improvements,
Series USX-A, 6.70%, 12/1/20 Baa2/BBB- 25,000 25,418
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RB, 5.625%, 11/1/23 Aaa/NR 10,000 9,592
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RB, Series M, 7.95%, 6/1/23 Aaa/NR 45,000 46,168
-------------------------------------------------------------------------------------------------------------------------
Allegheny Cnty., PA Residential FAU SFM RRB, Series Y, 6.60%, 11/1/14 Aaa/NR 25,000 25,379
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RB, J. Ray McDermott Project, 6.80%, 2/1/09 Ba1/BBB- 65,000 65,045
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RB, St. Joe Minerals Corp. Project, 6%, 5/1/07(3) A2/A 20,000 20,030
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Colt Industries, Inc. Project, 7%, 6/1/08 Baa2/A- 40,000 40,300
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Ohio Edison Co./Mansfield,
Series A, 7%, 6/1/21 Aaa/AAA/AAA 1,055,000 1,094,468
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Speciality Products Corp., 6.60%, 9/1/10 Aa3/NR 50,000 50,048
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Co. Project, 7.625%, 5/1/20 Ba1/BB+/BB 105,000 110,538
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Co. Project, 7.75%, 5/1/20 Ba1/BB+/BB 10,000 10,601
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Toledo Edison Co. Project,
Series A, 7.75%, 5/1/20 Ba1/BB+/BB 2,000,000 2,141,680
-------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, Prerefunded, FGIC Insured,
Inverse Floater, 8.132%, 11/10/20(2) Aaa/AAA/AAA 1,000,000 1,110,000
-------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA IDAU Manufacturer Facility Development RB,
Construction Fasteners Project, 6.40%, 3/1/15 A1/NR 75,000 75,019
-------------------------------------------------------------------------------------------------------------------------
Bucks Cnty., PA IDAU RB, HCF-Chandler Hall, 6.30%, 5/1/29 NR/NR 1,300,000 1,119,703
-------------------------------------------------------------------------------------------------------------------------
Cambria Cnty., PA IDAU PC RRB, Bethlehem Steel
Corp. Project, 7.50%, 9/1/15 NR/NR 355,000 357,801
-------------------------------------------------------------------------------------------------------------------------
Carbon Cnty., PA HA RRB, Gnaden Huetten Memorial Hospital,
Series A, AMBAC Insured, 7%, 11/15/14 Aaa/AAA/AAA 140,000 143,721
-------------------------------------------------------------------------------------------------------------------------
Carbon Cnty., PA IDAU RRB, Panther Creek Partners Project,
6.65%, 5/1/10 NR/BBB- 1,500,000 1,514,460
-------------------------------------------------------------------------------------------------------------------------
Columbia Cnty., PA HA Healthcare RRB, Bloomsburg
Hospital Project, 5.90%, 6/1/29 NR/BBB- 370,000 296,825
-------------------------------------------------------------------------------------------------------------------------
Crawford Cnty., PA HA Senior Living Facilities RRB, 6.25%, 8/15/29 NR/NR/BBB 1,000,000 877,300
-------------------------------------------------------------------------------------------------------------------------
Cumberland Cnty., PA Municipal Authority RRB,
Presbyterian Homes Project, 6%, 12/1/26 NR/A /A 125,000 118,434
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA Authority First Mtg. RB, White Horse
Village Project, Series A, 7.625%, 7/1/30 NR/NR 750,000 758,835
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA Authority RB, Villanova University Project,
MBIA Insured, Prerefunded, 6.90%, 8/1/16 Aaa/AAA 230,000 235,200
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA College Authority RRB, Neumann College,
Series A, 5.375%, 10/1/26 NR/BBB- 300,000 256,950
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA IDAU PC RRB, Series A, 7.375%, 4/1/21 Baa2/A 35,000 36,152
9 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
Ratings:
Moody's/ Market
S&P/Fitch Principal Value
(Unaudited) Amount See Note 1
-------------------------------------------------------------------------------------------------------------------------
Pennsylvania Continued
Delaware Cnty., PA Regional Water & Sewer Quality Control
Authority RB, Series A, MBIA Insured, 7%, 5/1/12 Aaa/AAA $ 15,000 $ 15,030
-------------------------------------------------------------------------------------------------------------------------
Delaware Valley, PA Regional FAU RB, Series C, AMBAC Insured,
Inverse Floater, 6.152%, 8/1/18(2) Aaa/AAA/AAA 1,250,000 1,207,812
-------------------------------------------------------------------------------------------------------------------------
Erie, PA Municipal Airport Authority General RB,
Series B, 5.875%, 7/1/16 NR/BBB- 245,000 225,383
-------------------------------------------------------------------------------------------------------------------------
Lancaster Cnty., PA HA RB, St. Anne's Home
Health Center, 6.625%, 4/1/28 NR/NR 300,000 267,777
-------------------------------------------------------------------------------------------------------------------------
Lancaster, PA IDAU RRB, Garden Spot Village Project,
Series A, 7.625%, 5/1/31 NR/NR 1,650,000 1,661,962
-------------------------------------------------------------------------------------------------------------------------
Lawrence Cnty., PA IDAU PC RRB, PA Power Co. New
Castle Project, Series A, 7.15%, 3/1/17 Baa2/BB+ 20,000 20,570
-------------------------------------------------------------------------------------------------------------------------
Lebanon Cnty., PA HFAU Health Center RB, Series A, 6.625%, 12/15/29 NR/NR 440,000 404,712
-------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RRB, Bible Fellowship Project-A, 6%, 12/15/23 NR/NR 1,000,000 841,450
-------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RRB, Kidspeace Obligation Group, 6%, 11/1/18 NR/NR 4,220,000 3,564,212
-------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA GP RRB, Kidspeace Obligation Group, 6%, 11/1/23 NR/NR 3,000,000 2,469,660
-------------------------------------------------------------------------------------------------------------------------
Luzerne Cnty., PA IDAU Exempt Facilities RB, Pennsylvania
Gas & Water Co. Project, Series B, 7.125%, 12/1/22 A3/NR 25,000 26,483
-------------------------------------------------------------------------------------------------------------------------
Luzerne Cnty., PA IDAU Exempt Facilities RB, Pennsylvania
Gas & Water Co. Project, Series B, AMBAC Insured, 7.125%, 12/1/22 Aaa/AAA/AAA 10,000 10,655
-------------------------------------------------------------------------------------------------------------------------
Luzerne Cnty., PA IDAU Exempt Facilities RRB, Pennsylvania
Gas & Water Co. Project, Series A, 7.20%, 10/1/17 A3/A 390,000 412,686
-------------------------------------------------------------------------------------------------------------------------
Mercer Cnty., PA IDAU RRB, Zero Coupon, 7.06%, 1/15/13(4) NR/AAA 2,430,000 1,010,224
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA Health & HEFAU RB,
Temple Continuing Care Center, 6.75%, 7/1/29 NR/NR 3,500,000 3,085,495
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA HEFAU RB, Philadelphia
Geriatric Center, 7.375%, 12/1/30 NR/NR 700,000 661,017
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA Higher Education & Health Authority RB,
Temple Continuing Care Center Project, 6.625%, 7/1/19 NR/NR 50,000 44,664
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU PC PA Electric Co. RRB,
Series A, 7.60%, 4/1/21 Baa2/A 25,000 25,866
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU PC RRB, Series B,
MBIA Insured, 6.70%, 12/1/21 Aaa/AAA 80,000 83,378
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU Retirement Community RRB,
Adult Communities Total Services, Series A, 5.875%, 11/15/22 NR/A- 370,000 335,675
-------------------------------------------------------------------------------------------------------------------------
Montgomery Cnty., PA IDAU RRB, 7.50%, 1/1/12 NR/A 1,725,000 1,772,731
-------------------------------------------------------------------------------------------------------------------------
Northampton Cnty., PA HA RB, Unrefunded Balance,
MBIA-IBC Insured, 7.875%, 1/1/19 Aaa/AAA 25,000 25,314
-------------------------------------------------------------------------------------------------------------------------
Northampton Cnty., PA HA RRB, Easton Hospital,
Series A, 6.35%, 1/1/06 Aaa/AAA 20,000 20,986
-------------------------------------------------------------------------------------------------------------------------
Northeastern PA Education & HA RRB, Kings College Project,
Series B, 6%, 7/15/18 NR/BBB 25,000 24,515
-------------------------------------------------------------------------------------------------------------------------
Northhampton Cnty., PA IDAU RRB, PC Bethlehem Steel, 7.55%, 6/1/17 NR/NR 480,000 484,147
-------------------------------------------------------------------------------------------------------------------------
Northumberland Cnty., PA Lease RB, Career & Arts Center
Project, 6.65%, 9/15/20 NR/NR 1,350,000 1,313,145
10 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
Ratings:
Moody's/ Market
S&P/Fitch Principal Value
(Unaudited) Amount See Note 1
-------------------------------------------------------------------------------------------------------------------------
Pennsylvania Continued
PA EDFAU Facilities RB, National Gypsum Co., Series A, 6.25%, 11/1/27 NR/NR $3,500,000 $3,185,980
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU Facilities RB, National Gypsum Co., Series B, 6.125%, 11/2/27 NR/NR 6,500,000 5,818,475
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project, Series D, 7.15%, 12/1/18 NR/BBB- 3,000,000 3,062,160
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Northampton Generating, Series A, 6.50%, 1/1/13 NR/BBB- 1,450,000 1,417,360
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU RRB, Colver Project, Series D, 7.125%, 12/1/15 NR/BBB- 1,500,000 1,536,075
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU Wastewater Treatment RB, Sun Co., Inc., R & M Project,
Series A, 7.60%, 12/1/24 Baa2/BBB 2,225,000 2,333,691
-------------------------------------------------------------------------------------------------------------------------
PA FAU RRB, Municipal Capital Improvements Program, 6.60%, 11/1/09 NR/A 35,000 37,210
-------------------------------------------------------------------------------------------------------------------------
PA GOUN, First Series, 6.375%, 9/15/07 Aa3/AA/AA 100,000 104,019
-------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series A, AMBAC Insured, 7.05%, 10/1/16 Aaa/AAA/AAA 75,000 80,842
-------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series B, AMBAC Insured,
Inverse Floater, 7.683%, 3/1/22(2) Aaa/AAA/AAA 1,250,000 1,289,063
-------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, Series C, AMBAC Insured, 7.15%, 9/1/21 Aaa/AAA/AAA 100,000 107,718
-------------------------------------------------------------------------------------------------------------------------
PA HEFAU College & University RRB, Temple University, 7.40%, 10/1/10 NR/A 5,000 5,020
-------------------------------------------------------------------------------------------------------------------------
PA HEFAU Health Services RRB, University of Pennyslvania
Health Services, Series A, 5.75%, 1/1/17 A3/A 35,000 31,095
-------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, Dickinson College, 6%, 8/1/01 NR/BBB+ 100,000 100,100
-------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, University of Pennsylvania Health Services,
Series B, 5.875%, 1/1/15 A3/A 10,000 9,236
-------------------------------------------------------------------------------------------------------------------------
PA HEFAU RRB, Unrefunded Balance, Series A,
MBIA Insured, 6.625%, 8/15/09 Aaa/AAA 305,000 321,891
-------------------------------------------------------------------------------------------------------------------------
PA HFA RB, Series 67A, Inverse Floater, 7.77%, 10/1/18(2,3) NR/NR 2,000,000 2,021,880
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, 6.75%, 10/1/14 Aa2/AA+ 15,000 15,517
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, 6.85%, 4/1/16 Aa2/AA+ 325,000 336,092
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Inverse Floater, 9.356%, 10/3/23(2) Aa2/AA+ 1,000,000 1,065,000
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 30, 7.30%, 10/1/17 Aa2/AA+ 30,000 30,589
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 34B, 7%, 4/1/24 Aa2/AA+ 1,315,000 1,364,562
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 40, 6.80%, 10/1/15 Aa2/AA+ 2,000,000 2,082,200
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 40, 6.90%, 4/1/25 Aa2/AA+ 145,000 151,954
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 44C, 6.65%, 10/1/21 Aa2/AA+ 1,000,000 1,043,540
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 51, 6.30%, 10/1/15 Aa2/AA+ 50,000 50,692
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series 54A, 6.15%, 10/1/22 Aa2/AA+ 25,000 25,112
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RB, Series Y, 6.60%, 4/1/27 Aa2/AA+ 25,000 25,818
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 1991-31A, 6.80%, 10/1/02 Aa2/AA+ 25,000 25,426
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 1991-31A, 6.80%, 10/1/17 Aa2/AA+ 25,000 25,351
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 1991-31A, 7%, 10/1/05 Aa2/AA+ 300,000 307,980
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 33, 6.90%, 4/1/17 Aa2/AA+ 15,000 15,377
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 39B, 6.875%, 10/1/24 Aa2/AA+ 3,015,000 3,155,710
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 41B, 6.30%, 4/1/09 Aa2/AA+ 10,000 10,078
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 41B, 6.45%, 10/1/12 Aa2/AA+ 10,000 10,208
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 41B, 6.65%, 4/1/25 Aa2/AA+ 55,000 56,425
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 42, 4/1/25 Aa2/AA+ 185,000 193,005
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 46, 6.30%, 10/1/27 Aa2/AA+ 20,000 20,170
-------------------------------------------------------------------------------------------------------------------------
PA HFA SFM RRB, Series 50B, 6.35%, 10/1/27 Aa2/AA+ 50,000 51,709
-------------------------------------------------------------------------------------------------------------------------
PA TUCM RRB, Series L, MBIA Insured, 6%, 6/1/15 Aaa/AAA 40,000 40,635
11 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
Ratings:
Moody's/ Market
S&P/Fitch Principal Value
(Unaudited) Amount See Note 1
-------------------------------------------------------------------------------------------------------------------------
Pennsylvania Continued
Philadelphia, PA Airport RB, 6%, 6/15/15 Aaa/AAA/AAA $ 100,000 $ 102,391
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RB, Frankford Hospital,
Series A, 6%, 6/1/23 A3/NR/A 40,000 40,556
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB,
Jeanes Health System Project, 6.60%, 7/1/10 Baa3/BBB+ 3,560,000 3,441,879
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB,
Jeanes Hospital Project, 5.875%, 7/1/17 Baa3/BBB+ 1,500,000 1,285,710
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB,
Temple University Hospital, Series A, 6.50%, 11/15/08 Baa2/BBB+ 15,000 14,679
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospital & HEFAU RRB,
Temple University Hospital, Series A, 6.625%, 11/15/23 Baa2/BBB+ 4,330,000 3,988,536
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU HCF RRB, Baptist Home of Philadelphia,
Series A, 5.60%, 11/15/28 NR/NR 2,450,000 1,942,066
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA IDAU RB, First Mtg.-Crime Prevention Assn.,
6.125%, 4/1/19 NR/NR 1,550,000 1,425,566
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Redevelopment Authority Home Mtg. RB,
Series A, 10.25%, 6/1/17 A1/A 30,000 30,668
-------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional POAU Lease RB, MBIA Insured,
Inverse Floater, 8.03%, 9/1/20(2) Aaa/AAA 2,100,000 2,189,250
-------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA URDA Mtg. RRB, Series C, 6.55%, 4/1/28 Aa1/A 1,590,000 1,615,631
-------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA URDA SFM RRB, Series B, 7.125%, 4/1/15 Aa1/A 1,000,000 1,030,210
-------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA URDA Mtg. RRB, Series A, 6.05%, 10/1/26 Aa1/A 45,000 45,215
-------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA URDA Mtg. RB, FHA Insured Mtg. Loan Projects,
Series C, 7%, 8/1/06 Aa2/NR 10,000 10,293
-------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA URDA Mtg. RRB, Series H, 6.85%, 4/1/16 Aa1/AAA 25,000 25,458
-------------------------------------------------------------------------------------------------------------------------
Sayre, PA HCF Authority RB, Tioga Nursing Facility Project,
Series A, AMBAC Insured, 7.25%, 10/1/10 Aaa/AAA/AAA 300,000 306,588
-------------------------------------------------------------------------------------------------------------------------
Sayre, PA HCF Authority RRB, Guthrie Healthcare System,
Series A, AMBAC Insured, 7%, 3/1/11 Aaa/AAA 50,000 51,634
-------------------------------------------------------------------------------------------------------------------------
Sayre, PA HCF Authority RRB, Guthrie Healthcare System,
Series A, AMBAC Insured, 7.10%, 3/1/17 Aaa/AAA 60,000 61,999
-------------------------------------------------------------------------------------------------------------------------
Sayre, PA HCF Authority RRB, VHA-CAP Asset Finance Program,
Series C, AMBAC Insured, 7.70%, 12/1/15 NR/NR/AAA 10,000 10,201
-------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB, Schuylkill Energy
Resources, Inc., 6.50%, 1/1/10 NR/NR/BB+ 845,000 828,666
-------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA RA Lease RB, Series A,
FGIC Insured, 7.125%, 6/1/13 Aaa/AAA/AAA 50,000 52,028
-------------------------------------------------------------------------------------------------------------------------
St. Mary HA Langhorne, PA RB, 7%, 7/1/09 Aaa/AAA/AAA 70,000 70,832
-------------------------------------------------------------------------------------------------------------------------
St. Mary HA Langhorne, PA RRB, Franciscan Health Project,
Series B, BIG Insured, 7%, 7/1/14 Aaa/AAA/AAA 500,000 505,950
-------------------------------------------------------------------------------------------------------------------------
Westmoreland Cnty., PA IDAU RRB, Redstone HCF, 5.85%, 11/15/29 NR/NR 2,030,000 1,635,835
-----------
94,451,183
12 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
Ratings:
Moody's/ Market
S&P/Fitch Principal Value
(Unaudited) Amount See Note 1
-------------------------------------------------------------------------------------------------------------------------
U.S. Possessions--3.0%
Guam Water System RB, FSA Insured, 7%, 7/1/09 Aaa/AAA/AAA $ 100,000 $ 103,051
-------------------------------------------------------------------------------------------------------------------------
PR CMWLTH GORB, MBIA Insured, Inverse Floater, 7.284%, 7/1/08(2) Aaa/AAA 1,000,000 1,061,250
-------------------------------------------------------------------------------------------------------------------------
PR CMWLTH Infrastructure FAU Special RRB, Unrefunded Balance,
Series A, 7.90%, 7/1/07 Baa1/BBB+ 25,000 25,513
-------------------------------------------------------------------------------------------------------------------------
PR CMWLTH Urban Renewal & Housing Corp.
Refunding Bonds, 7.875%, 10/1/04 Baa3/BBB 390,000 398,662
-------------------------------------------------------------------------------------------------------------------------
PR HFA MH RRB, Portfolio A-I, 7.50%, 10/1/15 NR/AA 30,000 30,657
-------------------------------------------------------------------------------------------------------------------------
PR HFA SFM RB, Portfolio 1-C, 6.75%, 10/15/13 Aaa/AAA 10,000 10,255
-------------------------------------------------------------------------------------------------------------------------
PR POAU SPF RB, American Airlines, Series A, 6.30%, 6/1/23 Baa3/BBB- 35,000 34,912
-------------------------------------------------------------------------------------------------------------------------
PR Public Buildings Authority Public Education & HF RRB,
Series I, 6%, 7/1/12 Baa1/A 175,000 175,203
-------------------------------------------------------------------------------------------------------------------------
Rio Grande, PR CMWLTH Municipal Lease Purchase
Agreement Bonds, 8%, 12/10/03 NR/NR 970,492 982,516
-----------
2,822,019
-------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $100,211,065) 105.0% 97,273,202
-------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (5.0) (4,633,358)
---------------------------
Net Assets 100.0% $92,639,844
===========================
</TABLE>
Footnotes to Statement of Investments
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
CAP Capital Appreciation HFA Housing Finance Agency
CMWLTH Commonwealth HFAU Health Facilities Authority
EDFAU Economic Development Finance Authority IDAU Industrial Development Authority
FAU Finance Authority MH Multifamily Housing
GP General Purpose PC Pollution Control
GOB General Obligation Bonds POAU Port Authority
GORB General Obligation Refunding Bonds RA Redevelopment Agency
GOUN General Obligation Unlimited Nts. RB Revenue Bonds
HA Hospital Authority RR Resource Recovery
HCF Health Care Facilities RRB Revenue Refunding Bonds
HDAU Hospital Development Authority SFM Single Family Mtg.
HEAA Higher Education Assistance Agency SPF Special Facilities
HEFAU Higher Educational Facilities Authority TUCM Turnpike Commission
HF Health Facilities URDA Urban Redevelopment Authority
</TABLE>
1. When-issued security to be delivered and settled after July 31, 2000.
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 $11,622,830 or 12.55% of the
Fund's net assets as of July 31, 2000.
3. Identifies issues considered to be illiquid or restricted--See Note 5 of
Notes to Financial Statements.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
13 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
Footnotes to Statement of Investments Continued
As of July 31, 2000, securities subject to the alternative minimum tax amount
to $33,469,423 or 36.13% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
----------------------------------------------------------------------------
<S> <C> <C>
Hospital/Healthcare $23,012,523 23.7%
Adult Living Facilities 13,256,152 13.6
Single Family Housing 13,144,036 13.5
Resource Recovery 12,465,144 12.8
Manufacturing, Durable Goods 9,427,301 9.7
Not-for-Profit Organization 7,795,113 8.0
Pollution Control 2,850,837 2.9
Marine/Aviation Facilities 2,700,690 2.8
Municipal Leases 2,522,892 2.6
General Obligation 2,275,269 2.3
Multi-Family Housing 2,238,577 2.3
Student Loans 1,369,905 1.4
Electric Utilities 1,272,328 1.3
Education 1,207,813 1.2
Higher Education 988,340 1.0
Water Utilities 530,768 0.5
Manufacturing, Non-Durable Goods 75,019 0.1
Sales Tax 62,722 0.1
Gas Utilities 37,138 0.1
Highways 40,635 0.1
-------------------------------
Total $97,273,202 100.0%
===============================
</TABLE>
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENT OF ASSETS & LIABILITIES July 31, 2000
<TABLE>
=========================================================================================================================
<S> <C>
Assets
Investments, at value (cost $100,211,065)--see accompanying statement $ 97,273,202
-------------------------------------------------------------------------------------------------------------------------
Cash 743,918
-------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $577,567 sold on a when-issued basis) 13,359,196
Interest 1,493,186
Shares of beneficial interest sold 104,633
Other 598
------------
Total assets 112,974,733
=========================================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased (including $11,525,561 purchased on a when-issued basis) 19,769,841
Dividends 298,228
Shares of beneficial interest redeemed 107,459
Trustees' compensation 80,109
Transfer and shareholder servicing agent fees 12,073
Distribution and service plan fees 10,652
Other 56,527
------------
Total liabilities 20,334,889
=========================================================================================================================
Net Assets $ 92,639,844
============
=========================================================================================================================
Composition of Net Assets
Paid-in capital $ 99,202,436
-------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 5,968
-------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (3,630,697)
-------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (2,937,863)
------------
Net Assets $ 92,639,844
============
=========================================================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $64,336,138
and 5,704,930 shares of beneficial interest outstanding) $11.28
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $11.84
-------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,696,363
and 1,924,591 shares of beneficial interest outstanding) $11.27
-------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $6,607,343
and 586,410 shares of beneficial interest outstanding) $11.27
</TABLE>
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended July 31, 2000
<TABLE>
=========================================================================================================================
<S> <C>
Investment Income
Interest $ 6,577,521
=========================================================================================================================
Expenses
Management fees 565,820
-------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 96,428
Class B 214,013
Class C 55,459
-------------------------------------------------------------------------------------------------------------------------
Interest expense 129,262
-------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 69,222
-------------------------------------------------------------------------------------------------------------------------
Shareholder reports 61,571
-------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 27,363
-------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 13,842
-------------------------------------------------------------------------------------------------------------------------
Other 29,773
-----------
Total expenses 1,262,753
Less expenses paid indirectly (7,853)
Less waiver of expenses (50,719)
-----------
Net expenses 1,204,181
=========================================================================================================================
Net Investment Income 5,373,340
=========================================================================================================================
Realized and Unrealized Loss
Net realized loss on investments (2,078,025)
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (4,958,174)
-----------
Net realized and unrealized loss (7,036,199)
=========================================================================================================================
Net Decrease in Net Assets Resulting from Operations $(1,662,859)
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended July 31, 2000 1999
=========================================================================================================================
<S> <C> <C>
Operations
Net investment income $ 5,373,340 $ 4,876,517
-------------------------------------------------------------------------------------------------------------------------
Net realized loss (2,078,025) (106,698)
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (4,958,174) (3,152,830)
-----------------------------
Net increase (decrease) in net assets resulting from operations (1,662,859) 1,616,989
=========================================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (3,934,408) (3,432,062)
Class B (1,086,946) (957,717)
Class C (282,650) (235,856)
=========================================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A (3,393,495) 6,194,843
Class B (944,328) 2,794,536
Class C 1,119,024 803,073
=========================================================================================================================
Net Assets
Total increase (decrease) (10,185,662) 6,783,806
-------------------------------------------------------------------------------------------------------------------------
Beginning of period 102,825,506 96,041,700
-----------------------------
End of period [including undistributed (overdistributed) net investment
income of $5,968 and $(63,368), respectively] $ 92,639,844 $102,825,506
=============================
</TABLE>
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Year
Ended Ended
July 31, Dec. 31,
Class A 2000 1999 1998 1997 1996(1) 1995
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.08 $12.42 $12.45 $12.01 $12.36 $11.19
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .67 .63 .61 .70 .40 .68
Net realized and unrealized gain (loss) (.81) (.37) -- .43 (.35) 1.18
---------------------------------------------------------------------
Total income (loss) from investment operations (.14) .26 .61 1.13 .05 1.86
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.66) (.60) (.64) (.69) (.40) (.67)
Dividends in excess of net investment income -- -- -- -- -- (.02)
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.66) (.60) (.64) (.69) (.40) (.69)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.28 $12.08 $12.42 $12.45 $12.01 $12.36
=====================================================================
============================================================================================================================
Total Return, at Net Asset Value(2) (1.00)% 2.01% 4.99% 9.68% 0.44% 16.94%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $64,336 $72,794 $68,720 $68,280 $64,391 $66,483
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $67,252 $71,835 $69,202 $65,710 $64,997 $64,901
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.93% 5.03% 4.82% 5.79% 5.71% 5.68%
Expenses 1.10% 0.95% 1.00%(4) 0.93%(4) 1.03%(4) 1.02%(4)
Expenses, net of indirect expenses and
waiver of expenses 1.06% 0.90% 0.93% 0.90% N/A N/A
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Year Year
Ended Ended
July 31, Dec. 31,
Class B 2000 1999 1998 1997 1996(1) 1995
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.07 $12.42 $12.45 $12.01 $12.36 $11.19
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .58 .53 .52 .61 .35 .59
Net realized and unrealized gain (loss) (.81) (.38) -- .42 (.35) 1.17
---------------------------------------------------------------------
Total income (loss) from investment operations (.23) .15 .52 1.03 -- 1.76
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.57) (.50) (.55) (.59) (.35) (.57)
Dividends in excess of net investment income -- -- -- -- -- (.02)
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.57) (.50) (.55) (.59) (.35) (.59)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.27 $12.07 $12.42 $12.45 $12.01 $12.36
=====================================================================
============================================================================================================================
Total Return, at Net Asset Value(2) (1.75)% 1.16% 4.20% 8.86% (0.01)% 16.06%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $21,696 $24,206 $22,124 $19,339 $16,005 $14,466
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,368 $23,845 $20,969 $17,243 $15,085 $12,183
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.16% 4.26% 4.10% 5.02% 4.94% 4.89%
Expenses 1.96% 1.80% 1.75%(4) 1.78%(4) 1.89%(4) 1.89%(4)
Expenses, net of indirect expenses and
waiver of expenses 1.82% 1.65% 1.68% 1.65% 1.79% 1.78%
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
Year Year
Ended Ended
July 31, Dec. 31,
Class C 2000 1999 1998 1997 1996(1) 1995(2)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $12.07 $12.41 $12.44 $12.00 $12.36 $11.91
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 .53 .51 .60 .34 .21
Net realized and unrealized gain (loss) (.80) (.37) -- .43 (.36) .45
---------------------------------------------------------------------
Total income (loss) from investment operations (.23) .16 .51 1.03 (.02) .66
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.57) (.50) (.54) (.59) (.34) (.21)
Dividends in excess of net investment income -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.57) (.50) (.54) (.59) (.34) (.21)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.27 $12.07 $12.41 $12.44 $12.00 $12.36
=====================================================================
============================================================================================================================
Total Return, at Net Asset Value(3) (1.75)% 1.25% 4.20% 8.84% (0.15)% 5.55%
============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $6,607 $5,826 $5,198 $2,611 $482 $264
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $5,542 $5,867 $4,063 $1,390 $296 $ 51
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income 5.16% 4.26% 4.28% 4.99% 4.83% 4.40%
Expenses 1.95% 1.80% 1.76%(5) 1.79%(5) 1.97%(5) 2.07%(5)
Expenses, net of indirect expenses and
waiver of expenses 1.81% 1.65% 1.67% 1.66% 1.87% 1.96%
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 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. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. 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.
4. Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
20 | 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, an 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 at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. Class
B shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
--------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer- supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a when-issued basis can take place a
month or more after the trade date. Normally the settlement date occurs within
six months after the trade 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, 2000, the Fund had entered into outstanding net
when-issued or forward commitments of $10,947,994.
--------------------------------------------------------------------------------
Non-Diversification Risk. The Fund is "non-diversified" and can invest in the
securities of a single issuer without limit. To the extent the Fund invests a
relatively high percentage of its assets in the obligations of a single issuer
or a limited number of issuers, the Fund is subject to additional risk of loss
if those obligations lose market value or the borrower or issuer of those
obligations defaults.
--------------------------------------------------------------------------------
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.
21 | 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, 2000, the
Fund had available for federal tax purposes an unused capital loss carryover as
follows:
<TABLE>
<CAPTION>
Expiring
------------------------------------------------
<S> <C>
2002 $834,493
------------------------------------------------
2003 290,707
------------------------------------------------
2004 27,458
------------------------------------------------
2006 292,959
------------------------------------------------
2007 106,698
------------------------------------------------
2008 321,862
</TABLE>
--------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of 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, 2000, a provision of $11,622 was made for the Fund's projected benefit
obligations and payments of $2,133 were made to retired trustees, resulting in
an accumulated liability of $70,423 as of July 31, 2000.
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 Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees 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 investment 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 Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal 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 dividends and 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.
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related event in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
22 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
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.
================================================================================
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, 2000 Year Ended July 31, 1999
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 1,513,143 $ 17,156,475 1,238,583 $ 15,411,150
Dividends and/or distributions reinvested 205,734 2,324,177 175,431 2,182,442
Redeemed (2,041,709) (22,874,147) (918,356) (11,398,749)
-----------------------------------------------------------------
Net increase (decrease) (322,832) $ (3,393,495) 495,658 $ 6,194,843
=================================================================
-------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 625,212 $ 7,034,655 568,446 $ 7,057,504
Dividends and/or distributions reinvested 52,212 589,440 44,913 558,600
Redeemed (757,637) (8,568,423) (389,892) (4,821,568)
-----------------------------------------------------------------
Net increase (decrease) (80,213) $ (944,328) 223,467 $ 2,794,536
=================================================================
-------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 333,624 $ 3,727,992 196,171 $ 2,436,879
Dividends and/or distributions reinvested 18,259 205,216 14,078 175,032
Redeemed (248,221) (2,814,184) (146,208) (1,808,838)
-----------------------------------------------------------------
Net increase 103,662 $ 1,119,024 64,041 $ 803,073
=================================================================
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended July 31, 2000, were $95,947,343
and $94,782,604, respectively.
As of July 31, 2000, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $100,211,425 was:
Gross unrealized appreciation $ 1,318,249
Gross unrealized depreciation (4,257,054)
-----------
Net unrealized depreciation $(2,938,805)
===========
23 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.60% 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 had 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. Effective June 1, 2000, the voluntary waiver
was withdrawn. The Fund's management fee for the year ended July 31, 2000, was
an annualized rate of 0.60%, before any waiver by the Manager if applicable.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund on an
"at-cost" basis. OFS also acts as the transfer and shareholder servicing agent
for the other Oppenheimer funds.
--------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End On Class A On Class B On Class C
Sales Charges Sales Charges Shares Shares Shares
On Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 31, 2000 $281,206 $53,378 $8,876 $250,985 $30,866
</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, 2000 $-- $80,345 $4,406
</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 purchased. 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 year ended July 31, 2000, payments under
the Class A plan totaled $96,428 prior to Manager waivers if applicable, all of
which were paid by the Distributor to recipients, and included $5,685 paid to an
affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years.
24 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates Continued
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and asset-based sales charges from the Fund under
the plans. If any plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended July 31, 2000, were
as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $214,013 $171,009 $801,015 3.69%
Class C Plan 55,459 21,828 102,309 1.55
</TABLE>
================================================================================
5. Illiquid Securities
As of July 31, 2000, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of July 31,
2000, was $3,720,485, which represents 4.02% of the Fund's net assets. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limit.
================================================================================
6. Bank Borrowings
The Fund may borrow up to a certain percentage 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 certain
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 0.09% per annum.
The Fund had no borrowings outstanding at July 31, 2000. For the year ended
July 31, 2000, the average monthly loan balance was $2,043,686 at an average
interest rate of 6.388%. The maximum amount of borrowings outstanding at any
month-end was $5,700,000. The interest expense for the year ended July 31, 2000,
was $129,262.
25 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
INDEPENDENT AUDITORS' 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, 2000, 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
four-year period then ended, the seven-month period ended July 31, 1996, and the
year 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 auditing standards generally
accepted in the United States of America. 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, 2000, 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, 2000, 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 four-year period then ended, the seven-month period
ended July 31, 1996, and the year ended December 31, 1995, in conformity with
accounting principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
August 21, 2000
26 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2001, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2000. 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 year ended July 31, 2000
are eligible for the corporate dividend-received deduction. The dividends were
derived from interest on municipal bonds and are not subject to federal income
taxes. 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.
27 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<PAGE>
OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
<TABLE>
<CAPTION>
A Series of Oppenheimer Multi-State Municipal Trust
========================================================================================
<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
Clayton K. Yeutter, Trustee
Ronald H. Fielding, Vice President
Anthony A. Tanner, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
========================================================================================
Investment Advisor OppenheimerFunds, Inc.
========================================================================================
Distributor OppenheimerFunds Distributor, Inc.
========================================================================================
Transfer and Shareholder 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. For other
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.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
(C)Copyright 2000 OppenheimerFunds, Inc. All rights
reserved.
</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 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,
community-based nonprofit organizations, 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 holdings,
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.
YOUR FUND'S ALLOCATION OF CREDITS
By combining 79% investment-grade municipal bonds with carefully
researched unrated issues, which may be comparable to below-investment-grade
issues, we enhance yield while diversifying the Fund's portfolio.
[pie chart]
AAA 21.7%
AA 12.7%
A 3.2%
BBB 41.3%
BB 3.2%
B 4.8%
Not Rated 13.1%
[end pie chart]
Sector allocation data are as of 7/31/00, and are subject to change. Data are
dollar-weighted based on total market value of investments. Securities rated by
a rating organization other than Standard and Poor's rating group are included
in the equivalent Standard and Poor's rating category. The allocation includes
rated securities and those not rated by a national rating organization, but to
which the ratings given above have been assigned by the Manager as being
comparable, in the Manager's judgment, to securities rated by a rating agency in
the same category.
<PAGE>
[back cover]
[logo]Oppenheimer
Pennsylvania
Municipal Fund
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
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General Information 1.800.525.7048
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Transfer and Shareholder Servicing Agent
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Ticker Symbols Class A: OPATX Class B: OPABX Class C: OPACX
RA0740.001.0700 September 29, 2000
[sidebar]
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, 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.
[end sidebar]
================================================================================
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