ROCHESTER
[LOGO] FUND
MUNICIPALS
Tax-Free Income for New York Investors
Annual Report
December 31, 1997
[GRAPHIC OMITTED]
MAP
[LOGO]OPPENHEIMERFUNDS
THE RIGHT WAY TO INVEST
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(photo of Bridget Macaskill)
Bridget A. Macaskill
President
Rochester Fund
Municipals
DEAR SHAREHOLDER,
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't because when
prices fall too low, it erodes the value of those goods to the producer. That
is, when economic conditions force a decrease in the price of goods, companies
have to sell more of those items in order to make the same amount of profit,
which translates into greater difficulties for corporations to improve their
bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation in
the United States. The fundamental factors that have driven the U.S. market
still appear in place: an economy that's in its eighth year of expansion with
moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
Thank you for your confidence in OppenheimerFunds, The Right Way to Invest.
We look forward to helping you reach your investment goals in the future.
[SIG]
Bridget A. Macaskill
January 23, 1998
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THE ROCHESTER DIVISION
(pie-chart diagram)
The Rochester Division of OppenheimerFunds, Inc. is dedicated to the
investment management and distribution of the two Rochester Funds: Rochester
Fund Municipals and the Limited Term New York Municipal Fund. Having an
investment focus which is limited to a specific sector and region of the
municipal market has historically proven to be beneficial. Not only has it
enabled portfolio management to apply intensive research to the outstanding
universe of New York State municipal bonds, but it has given them an opportunity
to develop somewhat unique strategies relative to municipal bond fund
management.
1
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ROCHESTER STYLE
The Rochester Style of management includes researching small issues, story
bonds, unrated bonds, and callable bonds in addition to the more conventional
municipal bonds. And if, through diligent credit research and active portfolio
management, we believe these bonds can enhance fund performance and/or yield,
the Rochester Style of management often includes buying them. While it is true
that these types of bonds are often not considered by other funds, Rochester
Fund Municipals is not your typical fund.
For example, it is our opinion that a portfolio of 40 AAA insured bonds of
similar maturities issued by four or five entities may look great, but that it
offers little real world diversification. Similarly, while unrated bonds may not
appeal to an individual investor, it is our opinion that there can be a
significant yield advantage inherent in them(1). That's because there has been
no fee deducted from the yield to pay for an alphabet letter rating from a
rating agency.
We firmly believe there are great, often overlooked, opportunities out
there and that in a well diversified fund (Rochester Fund Municipals has a
portfolio of 885 different securities as of 12/31/97) there can be a place for
such "alternative" holdings.
THE FUND'S BROADLY DIVERSIFIED PORTFOLIO
By Municipal Sector on 12/31/97
as a percentage of investments
(pie-chart diagram)
- ----------
(1) Small issues are typically less liquid than equivalent quality large
issues. However, issuers of comparatively smaller debt are often more flexible
in their ability to negotiate terms. And, while lower rated and unrated bonds
generally involve greater risk than bonds in the higher rated categories as
determined by S&P and Moody's rating services, in a well diversified fund, we
believe the credit risk is justified.
Hospital/Healthcare 15.2%
General Obligation 12.0%
Multi-Family Housing 11.2%
Resource Recovery 10.4%
Electric Utilities 9.2%
Single-Family Housing 7.4%
Marine/Aviation Facilities 5.2%
NonProfit Organization 3.7%
Lease Rental 3.6%
Adult Living Facilities 3.1%
Water Utilities 2.9%
Manufacturing, Non-Durable Goods 2.8%
Highways/Railways 2.8%
Higher Education 2.4%
Education 2.0%
Corporate Backed 1.7%
Manufacturing, Durable Goods 1.5%
Telephone Utilities 1.1%
Gas Utilities 0.9%
Other 0.9%
2
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(NY state graphic)
Rochester Fund Municipals (Class A Shares) have received Morningstar's
highest 5-star overall ranking at December 31, 1997. The 3-year, 5-year and
10-year Morningstar rankings for the period ended 12/31/97 are five stars, four
stars and five stars, respectively. 1494, 720 and 337 municipal funds were rated
for these 3-, 5- and 10-year periods, respectively(1).
- ----------
(1) Overall star rankings are based on a weighted average of the Fund's
3-year, 5-year and 10-year rankings. Ten percent of the funds in an investment
category receive five stars (highest), 22.5% receive four stars (above average),
35% receive three stars (average), 22.5% receive two stars (below average), and
10% receive one star (lowest). Morningstar, Inc., is a nationally recognized
mutual fund rating service. Morningstar proprietary star rankings reflect
historical risk-adjusted total return as of December 31, 1997. The rankings are
subject to change every month. Rankings are based on past performance, which is
no guarantee of future results. Morningstar rankings are calculated from the
fund's three-, five-, and ten-year average annual returns in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects fund performance below 90-day T-bill returns.
COMMUNITY SUPPORT
One positive consequence of investing in municipal bonds, over and above
the tax benefits, is the community support it can offer. That's because
investing in municipal bonds and bond funds helps to provide financing for a
variety of worthwhile projects across the state. Public and private colleges,
special education programs, housing projects for first-time home buyers and
healthcare facilities are just a few of the programs that benefit from your
investment.
3
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1997 IN REVIEW
(photo of Ronald Fielding)
Ronald H. Fielding
CFA, Senior Vice
President,
OppenheimerFunds, Inc.
and Chairman of the
Rochester Division
TO FELLOW SHAREHOLDERS,
It is a pleasure to bring you Rochester Fund Municipals' Annual Report for
the year ended December 31, 1997 and announce that the Fund was able to meet its
goal of high tax-free income during the year(1). The current distribution return
at 12/31/97 was 5.91% for shareholders who held shares for the entire year. For
those investors in the top combined New York City, New York State and federal
tax bracket, that return is equivalent to 10.96% from a taxable investment! In
addition, according to Lipper Analytical Services, Inc., ROCHESTER FUND
MUNICIPALS WAS THE TOP PERFORMING NEW YORK STATE MUNICIPAL DEBT FUND FOR THE TEN
YEAR PERIOD (among 27 funds in the category)! The Fund also ranked second for
five year return among 45 funds and ninth for one year return, among 95
funds(2).
During the year in review, the U.S. economy continued its healthy
expansion. In fact, 1997 proved to be the best of all possible worlds for
investors, with the economy characterized by low unemployment, healthy growth
and subdued inflation. Through April, there existed a sense of nervousness from
market participants and the Federal Reserve Board about potential inflationary
pressures, and the Fed raised the Federal Funds Rate a quarter of one percent in
March. Since then, however, long-term interest rates have steadily declined.
This phenomenon contributed to the Fund's significant increase in net asset
value in 1997.
The economy continues to improve for both New York State and New York City. Both
the state itself and many state agencies had their credit ratings upgraded in
1997, and with a strong economy and prudent fiscal management, we expect more
credit upgrades in 1998. The state actually recorded a budget surplus for its
fiscal year. And New York City was buoyed by strong tax revenues through the
year, driven in part by the profits registered by a record year on Wall Street.
This gave a particular boost to New York City general obligation bonds.
The Fund maintained a steady dividend rate each month in 1997. However, because
of generally declining rates over the last several years, we believe it will be
necessary to make a slight downward adjustment early in 1998 to reflect changes
in market conditions.
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(1) A portion of the Fund's income may be subject to income taxes. Though
the Fund distributed no capital gains in 1997, if any are distributed in the
future, they would be taxable as capital gains. For investors subject to the
alternative minimum tax, a portion of the Fund's distributions may increase that
tax.
(2) Based on total return as calculated by Lipper Analytical Services, Inc.
Lipper calculations do not include sales charges, which if included, would
reduce performance results.
All performance information provided represents past performance and is not
predictive of future investment performance. The investment return and principal
value of an investment in the Fund will fluctuate with market conditions, so
that shares, on any given day or when redeemed, may be worth more or less than
their original cost.
4
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ROCHESTER FUND MUNICIPALS--THE VALUE OF $10,000
INVESTED FOR 10 YEARS AND THE CPI
($000'S)
(Municipal fund values graph)
- --Rochester Fund Municipals
- --Consumer Price Index (CPI)
Total Return (12/31/97)
Cumulative Average Annual
NAV MOP NAV MOP
Class A Shares
1 Year 10.20% 4.96% 10.20% 4.96%
5 Years 44.65% 37.78% 7.66% 6.62%
10 Years 140.65% 129.22% 9.18% 8.65%
Class B Shares
Life of Fund 8.74% 3.74%
(Inception date:
3/17/97)
Class C Shares
Life of Fund 8.80% 7.80%
(Inception date:
3/17/97)
For periods ending 12/31/97. NAV stands for Net Asset Value and returns at NAV
do not reflect payment of a sales charge. The inception date of the Fund as an
open-end Fund was 5/15/86. MOP stands for Maximum Offering Price, and
calculations for Class A at MOP include the 4.75% maximum initial sales charge.
Class A returns show results of hypothetical investments on 12/31/96, 12/31/92
and 12/31/87, include change in share price and assume reinvestment of dividends
and capital gains at net asset value.
Standardized Yield
For the 30 days ended
12/31/97
Class A Class B Class C
4.90% 4.26% 4.28%
Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 12/31/97, divided by the maximum offering
price at the end of the period, compounded semiannually and then annualized.
Falling net asset values will tend to artificially raise yields.
As we enter 1998, we believe conditions for investing in municipal bonds
should remain good. Interest rate levels on municipal bonds, though lower now
than during the past few years, are still very attractive compared to taxable
bonds or low dividend levels on stocks. Municipal bonds can be a refuge for
those weary of current stock prices. Very low inflation, a benign interest rate
environment and economic growth seem likely to continue. We will continue to
monitor the New York municipal market carefully in an attempt to provide our
investors with high, current tax-free income.
We appreciate your support, welcome new shareholders, and look forward to
serving your investment needs in the years ahead.
Sincerely,
[SIG]
Ronald H. Fielding
Portfolio Manager
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THE INVESTMENT TEAM
(photo of Anthony Tanner)
Anthony A.
Tanner,
CFA; Vice
President and
Portfolio
Manager,
Rochester Division
Tony's efforts as Portfolio Manager focus on screening the universe of New
York municipal bonds available in both the secondary and primary markets and
valuing and selecting those bonds which may best enable The Rochester Funds to
achieve their objectives. He also manages the overall research efforts of the
portfolio management team.
"We believe that it is our diligent research that offers our New York investors
something different. If I can find bonds with a little more yield, and without
additional risk, I feel as though I've done my job."
(photo of Richard Stein)
Richard A.
Stein,
CFA; Vice
President - Credit
Analysis,
Rochester Division
Rich directs the credit research activities at the Rochester Division. This
primarily includes the analysis and surveillance of all high yield issues, with
a particular emphasis on unrated and unenhanced private placement bonds.
"Over the years, we have discovered that it pays to do our homework. Though
buying lower rated or non-rated bonds may scare some individual investors, we
believe that there can be a place for it in a fund. We apply a hands-on level of
research that we believe provides for a safer overall portfolio than one which
defines risk solely in terms of the ratings provided by nationally recognized
statistical rating organizations."
6
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(photo of Daniel Loughran)
Daniel G.
Loughran,
CFA;
Assistant Vice
President and
Senior Research
Analyst,
Rochester Division
Dan assists in the trading, research and credit analysis activities of the
Rochester Division. His primary responsibilities include executing investment
strategy in secondary market trading, and performing quantitative analysis of
investment opportunities.
"We also continue to seek opportunities in undervalued and/or overlooked
situations as well as researching bonds issued through smaller agencies
including industrial development agencies. We've always said that we get paid to
research bonds, and firmly adhere to that conviction."
(photo of Michael Rosen)
Michael S.
Rosen,
CFA; President,
Rochester Division
Over the years, Mike has been instrumental in establishing the Fund's
strategies and philosophies. While his direct role in managing The Rochester
Funds is minimal, his leadership and presence has been one of the reasons for
their success.
"Here in Rochester, we've always believed that investors can benefit from the
advice, resources, and experience of a knowledgeable professional. We know that
when it comes to something as important as planning your financial future, it
makes sense to get the advice of a professionally trained investment
representative."
7
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HOW ROCHESTER FUND MUNICIPALS COMPARES
The Fund's Distribution Rate and Taxable Equivalent
Yield Compared with Other Investments
(graph of Municipal fund rate and taxable yield)
Please refer to the table on page 5 for the Fund's standardized performance
figures. All data is as of 12/31/97.
Data Sources: The Wall Street Journal, January 2, 1998; Bloomberg Business News
When it jumps out at you, like on the chart to the left, you can feel good
about your investment in Rochester Fund Municipals.
To match the after-tax return of the Fund's 5.91% tax-free distribution
rate at 12/31/97, a resident of New York City in the combined federal, New York
State and New York City tax bracket of 46.1% would have to find a taxable
investment yielding 10.96%!
Your own personal financial situation and the advantages of tax-free
investing may be unique and we encourage you to discuss these issues with your
financial advisor.
Certificates of deposit are insured by the FDIC up to $100,000 and offer a fixed
rate of return. Money market funds attempt to maintain a $1.00 per share net
asset value. The value of Treasuries, if held to maturity, is fixed; principal
is guaranteed and interest is fixed. Investment return and principal value of an
investment in Rochester Fund Municipals will fluctuate with market conditions
and you may have a gain or loss when your shares are sold. Taxable equivalent
yield assumes the maximum combined federal, New York State and New York City
income tax bracket. All figures are calculated as of 12/31/97. Past performance
is not predictive of future investment results. The Fund also offers Class B and
Class C shares, which are subject to different fees and expenses. Please refer
to the prospectus for details.
A portion of the Fund's distributions in the future may be subject to federal,
state or local income taxes. Capital gains distributions, if any, are taxable as
capital gains. For investors subject to alternative minimum tax, some of the
Fund's distributions may increase that tax.
8
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<TABLE>
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ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOSPITAL/HEALTHCARE (MARKET VALUE $478,466,919) - 15.5%
Albany IDA (Albany Medical Center) 8.250% 08/01/04 $ 2,560 $ 2,761,370
Beacon IDA (Craig House) 9.000 07/01/11 215 218,216
Bethany Retirement Home 7.450 02/01/24 1,000 1,160,800
Castle Rest Residential Health Care Fac. 5.750 08/01/37 6,250 6,419,938
Cayuga County COP (Auburn Hospital) 6.000 01/01/21 8,600 9,178,866
City of Port Jervis (Mercy Hospital) 5.500 11/01/16 1,200 1,209,360
Clifton Springs Hospital & Clinic 8.000 01/01/20 3,495 3,867,672
Erie IDA (Mercy Hospital) 6.250 06/01/10 1,355 1,417,818
Groton Community Health Care Center 7.450 07/15/21 2,065 2,412,705
Lyons Community Health Initiatives Corp. 6.800 09/01/24 5,350 5,854,933
Monroe IDA (Genesee Hospital) 7.000 11/01/18 14,565 15,416,179
Newark/Wayne Community Hospital 5.875 01/15/33 4,950 5,168,444
Newark/Wayne Community Hospital 7.600 09/01/15 2,365 2,559,308
NYC Health & Hospital LEVRRS 6.542f) 02/15/11 26,500 28,653,125
NYS Dorm (Bethel Springvale Home) 6.000 02/01/35 10 10,573
NYS Dorm (Center for Nursing) 5.550 08/01/37 8,435 8,495,395
NYS Dorm (Chapel Oaks, Inc.) 5.450 07/01/26 1,000 1,008,120
NYS Dorm (Cornwall Hospital) 8.750 07/01/07 675 676,553
NYS Dorm (Department of Health) 5.500 07/01/21 525 529,904
NYS Dorm (Department of Health) 6.625 07/01/24 250 280,945
NYS Dorm (Department of Health) 7.250 07/01/11 3,750 4,189,800
NYS Dorm (Department of Health) 7.350 08/01/29(p) 95 103,096
NYS Dorm (Episcopal Health Services) 7.550 08/01/29 95 101,895
NYS Dorm (German Masonic Home) 6.000 08/01/36 2,500 2,646,475
NYS Dorm (Grace Manor Health Care Fac.) 6.150 07/01/18 1,000 1,096,370
NYS Dorm (Gurwin Geriatric Home) 5.700 02/01/37 2,230 2,326,737
NYS Dorm (Hebrew Hospital) 5.900 08/01/36 10,285 10,821,980
NYS Dorm (Insured Mtg. Nursing) 6.125 02/01/36 4,200 4,512,942
NYS Dorm (KMH Homes) 6.950 08/01/31 25 27,128
NYS Dorm (Lakeside Home) 6.000 02/01/37 4,380 4,649,370
NYS Dorm (L.I. Medical Center) 7.750 08/15/27 25 25,593
NYS Dorm (Menorah Campus) 6.100 02/01/37 7,400 7,935,982
NYS Dorm (Menorah Campus) 7.300 08/01/16 20 22,490
NYS Dorm (Methodist Hospital) 6.050 02/01/34 7,230 7,880,700
NYS Dorm (Montefiore Hospital) 8.625 07/01/10 90 90,298
NYS Dorm (Niagara Nursing Home) 5.600 08/01/37 2,400 2,486,856
NYS Dorm (Park Ridge Fac.) 7.850 02/01/29 290 305,764
NYS Dorm (Presbyterian Hospital) 6.500 08/01/34 2,200 2,391,554
NYS Dorm (RGH) RITES (b) 7.110(c)(f) 08/01/33 12,750 13,307,813
NYS Dorm (Sarah Neumann Home) 5.450 08/01/27 600 613,950
NYS Dorm (Sarah Neumann Home) 5.500 08/01/37 1,000 1,024,940
NYS Dorm (St. Barnabas Hospital) 5.450 08/01/35 3,000 3,052,980
NYS Dorm (St. Vincent Hospital) 7.400 08/01/30 5 5,558
NYS HFA (H&N) 6.875 11/01/10 9 9,199
NYS HFA (H&N) 6.875 11/01/11 5 5,106
NYS HFA (H&N) 7.000 11/01/17 510 516,222
NYS HFA (H&N) 8.000 11/01/08 500 554,000
NYS Medcare (BLH) 7.100 02/15/27 6,235 6,425,168
NYS Medcare (BLH) 7.100 02/15/27 17,125 17,509,970
NYS Medcare (Brookdale Hospital) 6.850 02/15/17 4,600 5,084,334
NYS Medcare (Central Suffolk Hospital) 6.125 11/01/16 1,000 999,340
NYS Medcare (Downtown Hospital) 6.700 02/15/12 500 550,435
NYS Medcare (Downtown Hospital) 6.800 02/15/20 7,355 8,052,622
NYS Medcare (H&N) 5.750 08/15/19 45 46,292
NYS Medcare (H&N) 5.800 08/15/22 14,515 15,167,304
NYS Medcare (H&N) 5.850 02/15/33 4,690 4,870,565
NYS Medcare (H&N) 6.200 02/15/23 95 101,342
NYS Medcare (H&N) 6.375 08/15/33 1,000 1,068,950
NYS Medcare (H&N) 6.375 08/15/29 60 64,190
NYS Medcare (H&N) 6.500 02/15/34 2,215 2,408,702
NYS Medcare (H&N) 6.600 02/15/31 250 273,528
NYS Medcare (H&N) 6.650 08/15/32 12,820 13,914,187
NYS Medcare (H&N) 6.875 02/15/32 3,000 3,281,220
NYS Medcare (H&N) 7.250 02/15/24(p) 50 52,836
NYS Medcare (H&N) 7.250 02/15/24 50 52,616
</TABLE>
9
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<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NYS Medcare (H&N) 7.250 % 02/15/12 $7,355 $7,519,531
NYS Medcare (H&N) 7.400 11/01/16 5,465 5,587,908
NYS Medcare (H&N) 7.600 02/15/29 10 10,560
NYS Medcare (H&N) 7.625 02/15/23 2,240 2,293,603
NYS Medcare (H&N) 7.700 02/15/18(p) 25 25,617
NYS Medcare (H&N) 7.700 02/15/18 3,255 3,333,185
NYS Medcare (H&N) 8.000 02/15/28 240 250,219
NYS Medcare (H&N) 8.000 02/15/27 14,340 14,669,533
NYS Medcare (H&N) 9.000 02/15/26 1,610 1,614,798
NYS Medcare (H&N) 9.375 11/01/16 4,120 4,301,404
NYS Medcare (H&N) 10.000 11/01/06 3,140 3,332,482
NYS Medcare (Insured Mtg. Nursing) 5.900 08/15/33 22,230 23,738,750
NYS Medcare (Insured Mtg. Nursing) 6.375 08/15/24 2,000 2,175,020
NYS Medcare (Insured Mtg. Nursing) 6.450 08/15/34 4,000 4,357,280
NYS Medcare (Insured Mtg. Nursing) 6.500 11/01/15 70 76,952
NYS Medcare (Insured Mtg. Nursing) 6.600 02/15/11 700 788,361
NYS Medcare (Insured Mtg. Nursing) 6.900 08/15/34 15 17,143
NYS Medcare (Insured Mtg. Nursing) 7.875 02/15/07 3,000 3,068,640
NYS Medcare (Insured Mtg. Nursing) 10.250 01/01/24 1,445 1,462,947
NYS Medcare (Kingston Hospital) 8.875 11/15/17 7,800 7,831,200
NYS Medcare (Mental Health) 0.000 08/15/18 320 66,829
NYS Medcare (Mental Health) 5.500 08/15/24 250 252,755
NYS Medcare (Mental Health) 6.500 02/15/19 190 205,956
NYS Medcare (Mental Health) 7.300 02/15/21(p) 5 5,620
NYS Medcare (Mental Health) 7.500 02/15/21(p) 505 564,418
NYS Medcare (Mental Health) 7.500 02/15/21 305 336,662
NYS Medcare (Mental Health) 7.625 08/15/17 250 280,798
NYS Medcare (Mental Health) 7.625 08/15/17(p) 545 617,343
NYS Medcare (Mental Health) 7.750 08/15/11 35 39,224
NYS Medcare (Mental Health) 7.750 08/15/11(p) 60 67,495
NYS Medcare (Mental Health) 7.875 08/15/15 220 229,200
NYS Medcare (Mental Health) 7.875 08/15/20 5,100 5,661,357
NYS Medcare (Mental Health) 8.875 08/15/07 1,725 1,765,865
NYS Medcare (N. General Hospital) 7.150 02/15/01 10 10,669
NYS Medcare (N. General Hospital) 7.350 08/15/09 4,745 5,022,250
NYS Medcare (N. General Hospital) 7.400 02/15/19 2,110 2,234,912
NYS Medcare (St. Charles Hospital) 6.375 08/15/34 1,350 1,474,079
NYS Medcare (St. Charles Hospital) 6.375 02/15/35 1,650 1,801,652
NYS Medcare (St. Luke's Hospital) IVRC (b) 6.884 (f) 02/15/29 22,000 23,072,500
NYS Medcare (St. Luke's Hospital) RITES (b) 7.060 (f) 02/15/29 8,400 8,767,500
NYS Medcare (St. Luke's Hospital) RITES (b) 7.060 (f) 02/15/29 5,750 6,001,563
NYS Medcare (St. Luke's Hospital) RITES (b) 7.060 (f) 02/15/29 10,000 10,437,500
NYS Medcare (St. Luke's Hospital) RITES (b) 7.060 (f) 02/15/29 12,500 13,046,875
NYS Medcare (WHMC) 7.350 08/15/11 50 55,296
NYS Medcare (WHMC) 7.400 08/15/21 5,255 5,865,106
Oneida Healthcare Corp. 7.100 08/01/11 10 10,895
Oneida Healthcare Corp. 7.200 08/01/31 130 141,941
Onondaga IDA (CGH) 6.625 01/01/18 7,820 8,361,848
Onondaga IDA (Crouse Irving Hospital) 7.800 01/01/03 220 232,696
Oswego IDA (Seneca Hill Manor) 5.650 08/01/37 3,260 3,329,340
Puerto Rico ITEME (Ryder Hospital) 6.700 05/01/24 5,250 5,680,500
Puerto Rico TEMEC (Mennonite Hospital) 5.625 07/01/27 985 1,000,474
Puerto Rico TEMEC (Mennonite Hospital) 5.625 07/01/17 500 510,130
Puerto Rico TEMEC (Mennonite Hospital) 6.500 07/01/26 3,000 3,224,490
Rensselaer Municipal Leasing Corp. 6.900 06/01/24 15,000 16,470,300
Syracuse IDA (St. Joseph's Hospital) 7.500 06/01/18(p) 3,770 4,234,464
Tompkins Healthcare 10.800 02/01/07 135 165,042
Tompkins Healthcare 10.800 02/01/28 25 33,337
UFA Devel. Corp. (Loretto-Utica Corp.) 5.950 07/01/35 4,870 5,106,098
Valley Health Devel. Corp. 7.850 08/01/35 20 22,336
Valley Health Devel. Corp. 11.300 02/01/07 450 548,366
Valley Health Devel. Corp. 11.300 02/01/23 175 213,103
Westchester IDA (Beth Abraham Hospital) 8.375 12/01/25 1,870 2,134,287
Yonkers IDA (St. Joseph's Hospital) 7.500 12/30/03 1,000 1,064,260
Yonkers IDA (St. Joseph's Hospital) 8.500 12/30/13 3,270 3,715,832
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- --------------------------------------------------------------------------------------------------------------------------
General Obligation (market value $378,624,836) - 12.3%
<S> <C> <C> <C> <C> <C>
Cohoes GO 6.200% 03/15/13 $ 25 $ 25,668
Cohoes GO 6.200 03/15/12 35 35,935
Cohoes GO 6.250 03/15/15 25 25,666
Cohoes GO 6.250 03/15/16 25 25,625
Cohoes GO 6.250 03/15/14 25 25,666
Lowville GO 7.200 09/15/13 100 121,385
Lowville GO 7.200 09/15/12 100 121,170
Lowville GO 7.200 09/15/05 100 117,088
Lowville GO 7.200 09/15/14 100 121,996
Lowville GO 7.200 09/15/07 75 89,828
Newburgh GO 7.100 09/15/08 185 193,843
Newburgh GO 7.100 09/15/07 185 194,348
Newburgh GO 7.150 09/15/09 180 188,563
Newburgh GO 7.150 09/15/10 150 156,627
Newburgh GO 7.200 09/15/11 155 161,395
Newburgh GO 7.200 09/15/12 155 160,980
Newburgh GO 7.250 09/15/14 155 160,636
Newburgh GO 7.250 09/15/13 160 166,245
NYC GO 0.000 05/15/12 200 94,368
NYC GO 0.000(c) 08/15/16(p) 70 58,753
NYC GO 0.000 11/15/11 4,990 2,433,224
NYC GO 0.000(c) 08/01/25 100 60,114
NYC GO 0.000 10/01/12 40 18,505
NYC GO 0.000(c) 05/15/14 1,690 1,325,163
NYC GO 0.000(c) 08/01/14 500 381,040
NYC GO 0.000 05/15/11 270 135,111
NYC GO 5.125 08/01/13 1,250 1,229,538
NYC GO 5.125 02/01/11 1,285 1,275,877
NYC GO 5.250 08/01/20 7,000 6,890,520
NYC GO 5.250 08/01/12 2,060 2,061,730
NYC GO 5.800(c)(f) 08/01/14 13,640 13,848,556
NYC GO 5.875 08/01/24 2,000 2,085,560
NYC GO 5.875 08/01/24 4,865 5,203,166
NYC GO 6.000 08/01/15 100 100,090
NYC GO 6.000 10/15/16 50 52,902
NYC GO 6.000 05/15/20 270 281,224
NYC GO 6.000 02/01/11 6,000 6,417,780
NYC GO 6.000 02/15/24 90 94,736
NYC GO 6.000 10/01/26 (p) 8,170 8,637,733
NYC GO 6.000 08/01/19 10 10,009
NYC GO 6.000 02/01/25 650 680,349
NYC GO 6.125 08/01/25 (p) 8,735 9,309,938
NYC GO 6.125 02/01/25 (p) 18,600 19,666,524
NYC GO 6.250 04/15/27 12,200 13,106,094
NYC GO 6.500 08/01/15 2,000 2,223,800
NYC GO 6.500 08/01/14 500 555,950
NYC GO 6.600 02/15/10 2,000 2,231,700
NYC GO 6.625 08/01/25 2,000 2,246,300
NYC GO 6.625 02/15/25 15,580 17,408,157
NYC GO 7.000 02/01/10 5 5,060
NYC GO 7.000 02/01/20 250 274,618
NYC GO 7.000 02/01/18 25 27,462
NYC GO 7.000 02/01/22 4,595 5,067,320
NYC GO 7.000 02/01/17 (p) 55 51,900
NYC GO 7.000 02/01/20 10 10,985
NYC GO 7.000 02/01/20 (p) 400 447,120
NYC GO 7.000 02/01/22 (p) 5 5,589
NYC GO 7.000 10/01/12 625 694,150
NYC GO 7.100 02/01/09 85 93,683
NYC GO 7.100 02/01/10 (p) 3,060 3,431,821
NYC GO 7.100 02/01/10 940 1,036,021
NYC GO 7.100 02/01/11 (p) 1,555 1,743,948
NYC GO 7.100 02/01/09 (p) 860 964,499
NYC GO 7.100 02/01/11 (p) 210 231,452
NYC GO 7.200 02/01/14 (p) 3,520 3,960,810
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NYC GO 7.200 % 02/01/15(p) $ 2,465 $ 2,773,692
NYC GO 7.200 02/01/15 335 370,453
NYC GO 7.200 02/01/14(p) 480 530,798
NYC GO 7.250 08/15/24(p) 4,005 4,431,773
NYC GO 7.250 08/15/24 9,815 10,710,619
NYC GO 7.400 02/01/02 330 366,277
NYC GO 7.500 08/01/20 645 732,481
NYC GO 7.500 02/01/03 2,000 2,233,740
NYC GO 7.500 08/01/19(p) 160 181,701
NYC GO 7.500 08/01/21(p) 915 1,052,781
NYC GO 7.500 08/01/19(p) 1,705 1,961,739
NYC GO 7.500 08/15/20 6,180 7,347,093
NYC GO 7.500 08/01/20 p) 6,855 7,887,226
NYC GO 7.500 08/01/21 85 96,075
NYC GO 7.500 02/01/18 120 134,834
NYC GO 7.500 02/01/18(p) 1,380 1,572,124
NYC GO 7.500 02/01/16 240 269,287
NYC GO 7.500 02/01/16(p) 2,760 3,144,247
NYC GO 7.625 02/01/13(p) 3,535 4,043,616
NYC GO 7.625 02/01/14(p) 250 285,970
NYC GO 7.625 02/01/14(p) 20 22,406
NYC GO 7.625 02/01/13 310 349,630
NYC GO 7.750 08/15/17(p) 20 22,724
NYC GO 7.750 02/01/13 6,000 6,797,100
NYC GO 7.750 08/15/12(p) 90 102,260
NYC GO 7.750 02/01/10 1,500 1,702,290
NYC GO 7.750 08/15/13 60 67,341
NYC GO 7.750 08/15/13(p) 940 1,068,047
NYC GO 7.750 08/15/17 110 123,498
NYC GO 7.750 08/15/12 60 67,341
NYC GO 8.000 08/01/18 45 50,844
NYC GO 8.000 08/15/21(p) 245 280,417
NYC GO 8.000 08/15/21(p) 5 5,655
NYC GO 8.000 08/15/20 10 11,310
NYC GO 8.250 11/15/20 20 22,943
NYC GO 8.250 08/01/13 30 34,142
NYC GO 8.250 08/01/14 35 39,832
NYC GO 8.250 11/15/15 80 91,771
NYC GO 8.250 11/15/18(p) 2,760 3,206,292
NYC GO 8.250 11/15/18(p) 240 275,314
NYC GO 8.250 08/01/14(p) 1,590 1,826,926
NYC GO 8.250 08/01/12 5 5,721
NYC GO 8.250 11/15/15(p) 920 1,068,764
NYC GO CARS 7.670(f) 09/01/11 8,387 9,571,664
NYC GO CARS 7.670(f) 08/12/10 16,387 18,701,664
NYC GO RIBS 7.028(f) 07/29/10 4,200 4,483,500
NYC GO RIBS 7.028(f) 08/01/09 6,200 6,626,250
NYC GO RIBS 7.126(f) 08/22/13 5,400 5,724,000
NYC GO RIBS 7.126(f) 08/01/15 3,050 3,221,563
NYC GO RIBS 8.006(f) 08/01/13 13,150 14,695,125
NYC GO RITES 8.000(f) 10/01/11 15,000 16,674,300
Puerto Rico GO 5.875 07/01/18 30 31,755
Puerto Rico GO 5.375 07/01/25 5,000 5,050,000
Puerto Rico GO 8.000 07/01/07 715 742,349
Puerto Rico GO RITES (b) 7.821(f) 07/01/22 1,600 1,810,000
Puerto Rico GO YCN 7.782(f) 07/01/20 40,250 44,627,188
Puerto Rico GO YCN (b) 6.880(f) 07/01/15 1,000 1,123,750
Suffolk GO 6.375 11/01/16 725 762,765
Suffolk GO 6.750 08/01/10 15 15,323
Utica GO 5.900 12/01/02 100 99,111
Utica GO 6.000 01/15/06 580 565,894
Utica GO 6.250 01/15/07 560 555,078
V. I. GO (Hugo Insurance Claims Program) 7.750 10/01/06 358 398,626
V. I. Public Finance Authority 7.125 10/01/04 1,135 1,276,807
V. I. Public Finance Authority 7.250 10/01/18 28,750 32,283,663
V. I. Public Finance Authority 7.375 10/01/10 1,735 1,951,754
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Family Housing (market value $353,756,495) - 11.5%
Albany Hsg. Authority 0.000% 10/01/12(p) $ 496 $ 126,737
Albany IDA (MARA Mansion Rehab.) 6.500 02/01/23 1,715 1,774,699
Batavia Hsg. Authority (Washington Towers) 6.500 01/01/23 515 539,159
Battery Park City Authority 5.800 11/01/22 1,050 1,087,979
Battery Park City Authority 10.000 06/01/23 700 730,660
Bayshore HDC 7.500 02/01/23 1,460 1,574,756
Bleeker Terrace HDC 8.100 07/01/01 35 35,177
Bleeker Terrace HDC 8.350 07/01/04 45 45,133
Bleeker Terrace HDC 8.750 07/01/07 900 908,289
East Rochester Hsg. Authority (St. John's Meadows) 5.675 08/01/22 3,250 3,394,430
East Rochester Hsg. Authority (St. John's Meadows) 5.700 08/01/27 4,250 4,482,178
East Rochester Hsg. Authority (St. John's Meadows) 5.950 08/01/27 4,095 4,233,370
Elmira HDC 7.500 08/01/07 25 25,896
Guam Economic Devel. Authority 9.375 11/01/18 2,995 3,075,625
Guam Economic Devel. Authority 9.500 11/01/18 2,540 2,609,393
Hamilton Elderly Hsg. Corp. 11.250 01/01/15 680 711,389
Lockport HDC 6.000 10/01/18 1,200 1,224,216
Macleay Hsg. (Larchmont Woods) 8.500 01/01/31 4,640 5,009,808
Mechanicsville HDC 6.900 08/01/22 2,500 2,636,050
Monroe HDC 7.000 08/01/21 290 302,966
New Hartford HDC 7.375 01/01/24 20 21,346
New Hartford Sunset Wood Project 5.950 08/01/27 1,520 1,584,554
North Tonawanda HDC 6.800 12/15/07 585 642,687
North Tonawanda HDC 7.375 12/15/21 3,295 3,848,066
NYC HDC (Albert Einstein) 6.500 12/15/17 324 338,654
NYC HDC (Amsterdam) 6.500 08/15/18 911 911,189
NYC HDC (Atlantic Plaza) 7.034 02/15/19 1,516 1,593,983
NYC HDC (Barclay Avenue) 6.450 04/01/17 1,045 1,098,462
NYC HDC (Barclay Avenue) 6.600 04/01/33 4,055 4,260,953
NYC HDC (Boulevard) 6.500 08/15/17 2,828 2,956,484
NYC HDC (Bridgeview) 6.500 12/15/17 486 507,983
NYC HDC (Cadman Plaza) 6.500 11/15/18 1,305 1,366,028
NYC HDC (Cadman Plaza) 7.000 12/15/18 511 536,859
NYC HDC (Candia) 6.500 06/15/18 192 200,713
NYC HDC (Clinton) 6.500 07/15/17 3,681 3,847,664
NYC HDC (Contello III) 7.000 12/15/18 313 329,642
NYC HDC (Cooper Gram) 6.500 08/15/17 1,524 1,593,378
NYC HDC (Court Plaza) 6.500 08/15/17 1,163 1,216,178
NYC HDC (Crown Gardens) 7.250 01/15/19 1,723 1,814,554
NYC HDC (Esplanade Gardens) 7.000 01/15/19 3,547 3,730,453
NYC HDC (Essex) 6.500 07/15/18 84 88,408
NYC HDC (Forest Park) 6.500 12/15/17 521 545,229
NYC HDC (Gouverneur Gardens) 7.034 02/15/19 1,691 1,778,015
NYC HDC (Heywood) 6.500 10/15/17 373 389,979
NYC HDC (Hudsonview) 6.500 09/15/17 4,205 4,395,802
NYC HDC (Janel) 6.500 09/15/17 1,189 1,242,669
NYC HDC (Kings Arms) 6.500 11/15/18 236 246,564
NYC HDC (Kingsbridge) 6.500 08/15/17 415 433,891
NYC HDC (Leader) 6.500 03/15/18 1,269 1,326,942
NYC HDC (Lincoln Amsterdam) 7.250 11/15/18 1,762 1,854,964
NYC HDC (Middagh) 6.500 01/15/18 213 222,265
NYC HDC (Montefiore) 6.500 10/15/17 2,775 2,901,185
NYC HDC (Multi-Family) 5.850 05/01/26 4,390 4,529,383
NYC HDC (Multi-Family) 5.850 05/01/25 50 51,496
NYC HDC (Multi-Family) 5.850 05/01/26 1,650 1,698,362
NYC HDC (Multi-Family) 6.600 04/01/30 38,880 41,442,970
NYC HDC (Multi-Family) 7.300 06/01/10 30 32,129
NYC HDC (Multi-Family) 7.350 06/01/19 1,145 1,223,204
NYC HDC (New Amsterdam) 6.500 08/15/18 891 932,345
NYC HDC (Residential Charter) 7.375 04/01/17 3,525 3,596,417
NYC HDC (Riverbend) 6.500 11/15/18 1,110 1,161,451
NYC HDC (Riverside Park) 7.250 11/15/18 6,781 7,123,224
NYC HDC (RNA House) 7.000 12/15/18 485 510,250
NYC HDC (Robert Fulton) 6.500 12/15/17 700 731,919
NYC HDC (Rosalie Manning) 7.034 11/15/18 254 266,614
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NYC HDC (Scott Tower) 7.000% 12/15/18 $ 674 $ 709,013
NYC HDC (Seaview) 6.500 01/15/18 924 966,796
NYC HDC (Sky View) 6.500 11/15/18 1,722 1,802,137
NYC HDC (South Bronx) 8.100 09/01/23 3,210 3,429,917
NYC HDC (Stevenson) 6.500 05/15/18 1,754 1,834,613
NYC HDC (Stryckers Bay) 7.034 11/15/18 504 530,792
NYC HDC (St. Martin) 6.500 11/15/18 382 399,563
NYC HDC (Tivoli) 6.500 01/15/18 1,759 1,840,758
NYC HDC (Towers) 6.500 08/15/17 378 395,781
NYC HDC (Townhouse) 6.500 01/15/18 239 249,966
NYC HDC (Tri-Faith House) 7.000 01/15/19 367 386,279
NYC HDC (University) 6.500 08/15/17 1,562 1,633,333
NYC HDC (Washington Square) 7.000 01/15/19 468 491,557
NYC HDC (West Side) 6.500 11/15/18 422 442,068
NYC HDC (West Village) 6.500 11/15/13 4,767 5,006,112
NYC HDC (Westview) 6.500 10/15/17 272 284,718
NYC HDC (Woodstock Terrace) 7.034 02/15/19 624 656,393
NYC HDC, Series B 5.875 11/01/18 5,235 5,443,301
NYS HFA (Children's Rescue) 7.625 05/01/18 3,555 3,805,201
NYS HFA (Dominican Village) 6.600 08/15/27 2,200 2,354,550
NYS HFA (Fulton Manor) 6.100 11/15/25 4,205 4,451,455
NYS HFA (HELP/Bronx) 7.850 11/01/99 1,080 1,127,034
NYS HFA (HELP/Bronx) 7.850 05/01/99 1,040 1,073,353
NYS HFA (HELP/Bronx) 8.050 11/01/05 13,080 13,861,661
NYS HFA (HELP/Suffolk) 8.100 11/01/05 1,210 1,261,486
NYS HFA (Meadow Manor) 7.750 11/01/19 5 5,070
NYS HFA (Multi-Family) 0.000 11/01/14 15,730 6,334,314
NYS HFA (Multi-Family) 0.000 11/01/17 12,695 4,117,369
NYS HFA (Multi-Family) 0.000 11/01/15 14,590 5,522,169
NYS HFA (Multi-Family) 5.950 08/15/24 25 25,565
NYS HFA (Multi-Family) 6.050 08/15/32 2,000 2,097,260
NYS HFA (Multi-Family) 6.100 11/15/36 1,285 1,351,666
NYS HFA (Multi-Family) 6.125 08/15/38 4,700 4,917,704
NYS HFA (Multi-Family) 6.200 08/15/12 50 52,596
NYS HFA (Multi-Family) 6.300 08/15/26 5,000 5,291,550
NYS HFA (Multi-Family) 6.350 08/15/23 4,170 4,442,843
NYS HFA (Multi-Family) 6.400 11/15/27 1,175 1,249,695
NYS HFA (Multi-Family) 6.500 03/15/25 9,265 10,675,133
NYS HFA (Multi-Family) 6.500 08/15/24 2,905 3,052,690
NYS HFA (Multi-Family) 6.700 08/15/25 11,980 12,665,136
NYS HFA (Multi-Family) 6.750 11/15/36 5,725 6,179,451
NYS HFA (Multi-Family) 6.950 08/15/24 2,870 3,047,165
NYS HFA (Multi-Family) 6.950 08/15/12 75 81,186
NYS HFA (Multi-Family) 7.050 08/15/24 5,350 5,744,509
NYS HFA (Multi-Family) 7.450 11/01/28 1,586 1,669,265
NYS HFA (Multi-Family) 7.550 11/01/29 2,460 2,592,496
NYS HFA (Multi-Family) 7.700 03/15/06(p) 145 162,732
NYS HFA (Multi-Family) 7.700 03/15/06(p) 5 5,575
NYS HFA (Multi-Family) 7.850 02/15/30 50 55,576
NYS HFA (NonProfit) 6.400 11/01/10 15 15,325
NYS HFA (NonProfit) 6.400 11/01/13 25 25,540
NYS HFA (NonProfit) 6.600 11/01/10 25 25,534
NYS HFA (NonProfit) 6.600 11/01/08 20 20,428
NYS HFA (NonProfit) 6.600 11/01/13 20 20,623
NYS HFA (Phillips Village) 7.750 08/15/17 5,000 5,587,900
NYS HFA (Service Contract) 5.500 03/15/25 5,525 5,558,703
NYS HFA (Service Contract) 5.500 09/15/22 5,600 5,654,096
NYS HFA (Service Contract) 6.125 03/15/20 25 26,434
NYS HFA (Shorehill Hsg.) 7.500 05/01/08 1,210 1,224,641
NYS HFA, Series A 6.125 11/01/20 1,385 1,472,629
Pilgrim Village HDC 6.800 02/01/21 1,105 1,147,078
Portchester CDC (Southport) 7.300 08/01/11 60 62,779
Portchester CDC (Southport) 7.375 08/01/22 25 26,139
Puerto Rico HFC 7.300 10/01/06 10 10,587
Puerto Rico HFC 7.500 10/01/15 210 222,890
Puerto Rico HFC 7.500 04/01/22 6,180 6,568,784
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rensselaer Hsg. Authority (Renwyck) 7.650 % 01/01/11 $ 25 $ 27,318
Riverhead HDC 8.250 08/01/10 45 46,649
Rochester Hsg. Authority (Crossroads) 7.700 01/01/17 20,890 22,843,424
Schenectady IDA (ASSC) 6.400 05/01/14 500 536,900
Schenectady IDA (ASSC) 6.450 05/01/24 2,655 2,858,028
Scotia Hsg. Authority (Holyrood House) 7.000 06/01/09 175 187,061
Sunnybrook EHC 11.250 12/01/14 2,990 3,172,988
Syracuse IDA (James Square) 0.000 08/01/25 45,155 10,958,215
Tonawanda Senior Citizens Hsg. 7.875 02/01/11 525 543,632
Tupper Lake HDC 8.125 10/01/10 75 75,623
Union Elderly Hsg. 10.000 04/01/13 2,140 2,219,608
Utica Senior Citizen Hsg. 0.000 07/01/02 25 16,405
Utica Senior Citizen Hsg. 0.000 07/01/26 3,410 441,288
V. I. HFA 8.100 12/01/18 25 26,450
Watervliet Elderly Hsg. Corp. 8.000 11/15/07 100 101,859
Watervliet Elderly Hsg. Corp. 8.000 11/15/03 100 101,859
Watervliet Elderly Hsg. Corp. 8.000 11/15/08 100 101,859
Watervliet Elderly Hsg. Corp. 8.000 11/15/05 95 96,766
Watervliet Elderly Hsg. Corp. 8.000 11/15/06 100 101,859
Watervliet Elderly Hsg. Corp. 8.000 11/15/09 100 101,859
Watervliet Elderly Hsg. Corp. 8.000 11/15/04 95 96,766
- --------------------------------------------------------------------------------------------------------------------------
Resource Recovery (market value $328,922,593) - 10.7%
Dutchess Res Rec (Solid Waste) 6.800 01/01/10 1,700 1,822,162
Dutchess Res Rec (Solid Waste) 7.000 01/01/10 1,805 1,954,436
Islip Res Rec 6.500 07/01/09 2,000 2,279,520
NYS Environ. (Huntington Res Rec) 7.500 10/01/12 58,860 62,754,178
NYS Environ. (Occidental Petroleum) 5.700 09/01/28 6,015 6,102,819
NYS Environ. (Occidental Petroleum) 6.100 11/01/30 9,000 9,427,410
Onondaga Res Rec 6.875 05/01/06 27,850 29,810,919
Onondaga Res Rec 7.000 05/01/15 67,435 72,885,097
Suffolk IDA (Huntington Res Rec) 5.550(w) 10/01/04 8,545 8,848,689
Suffolk IDA (Huntington Res Rec) 5.650(w) 10/01/05 9,180 9,587,225
Suffolk IDA (Huntington Res Rec) 5.750(w) 10/01/06 9,875 10,366,084
Suffolk IDA (Huntington Res Rec) 5.800(w) 10/01/07 10,615 11,161,673
Suffolk IDA (Huntington Res Rec) 5.850(w) 10/01/08 11,410 12,056,262
Suffolk IDA (Huntington Res Rec) 5.950(w) 10/01/09 12,265 13,007,033
Suffolk IDA (Huntington Res Rec) 6.000(w) 10/01/10 13,190 14,046,559
Suffolk IDA (Huntington Res Rec) 6.150(w) 10/01/11 14,170 15,269,025
Suffolk IDA (Huntington Res Rec) 6.250(w) 10/01/12 17,155 18,635,477
Ulster County Res Rec 6.000 03/01/14 2,250 2,339,303
Warren/Washington IDA (Res Rec) 8.000 12/15/12 8,730 8,802,372
Warren/Washington IDA (Res Rec) 8.200 12/15/10 8,965 9,101,447
Warren/Washington IDA (Res Rec) 8.200 12/15/10 8,535 8,664,903
- --------------------------------------------------------------------------------------------------------------------------
Electric Utilities (market value $288,748,259) - 9.4%
American Samoa Power Authority 6.800 09/01/00 400 422,432
American Samoa Power Authority 6.850 09/01/01 400 429,460
American Samoa Power Authority 6.900 09/01/02 400 436,284
American Samoa Power Authority 6.950 09/01/03 500 552,480
American Samoa Power Authority 7.000 09/01/04 500 558,455
American Samoa Power Authority 7.100 09/01/01 800 865,472
American Samoa Power Authority 7.200 09/01/02 800 882,232
Guam Power Authority 6.300 10/01/22 10 10,520
Guam Power Authority 6.625 10/01/14 450 493,241
Guam Power Authority 6.750 10/01/24 4,780 5,244,234
NYC IDA (Brooklyn Navy Yard) 5.650 10/01/28 11,490 11,642,243
NYC IDA (Brooklyn Navy Yard) 5.750 10/01/36 30,350 30,802,215
NYS ERDA (Con Ed) 6.375 12/01/27 290 312,075
NYS ERDA (Con Ed) 6.375 12/01/27 11,000 11,616,000
NYS ERDA (Con Ed) 6.750 01/15/27 4,290 4,591,115
NYS ERDA (Con Ed) 6.750 01/15/27 6,115 6,535,223
NYS ERDA (Con Ed) 7.125 03/15/22 1,405 1,436,430
NYS ERDA (Con Ed) 7.125 03/15/22 3,250 3,322,833
NYS ERDA (Con Ed) 7.250 11/01/24 16,365 16,925,338
NYS ERDA (Con Ed) 7.375 07/01/24 25 25,645
NYS ERDA (Con Ed) 7.375 07/01/24 27,850 28,561,289
NYS ERDA (Con Ed) 7.500 01/01/26 7,190 7,662,527
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NYS ERDA (Con Ed) 7.500 % 07/01/25 $ 2,740 $ 2,889,303
NYS ERDA (Con Ed) 7.500 01/01/26 4,000 4,266,840
NYS ERDA (LILCO) 6.900 08/01/22 55 59,995
NYS ERDA (LILCO) 6.900 08/01/22 275 299,973
NYS ERDA (LILCO) 7.150 06/01/20 15,750 17,217,428
NYS ERDA (LILCO) 7.150 09/01/19 16,580 18,104,034
NYS ERDA (LILCO) 7.150 12/01/20 12,305 13,451,457
NYS ERDA (LILCO) 7.150 09/01/19 14,940 16,331,960
NYS ERDA (LILCO) 7.150 02/01/22 15,295 16,720,035
NYS ERDA (LILCO) 7.150 02/01/22 11,630 12,713,567
NYS ERDA (NIMO) 8.875 11/01/25 18,500 18,931,050
NYS ERDA (NYSEG) 5.700 12/01/28 400 413,348
NYS ERDA (NYSEG) 5.950 12/01/27 30 32,005
NYS ERDA (RG&E) 5.950(w) 09/01/33 12,500 13,133,750
NYS ERDA (RG&E) 8.375 12/01/28 120 126,682
NYS Power Authority 6.000 01/01/18 670 670,951
NYS Power Authority 6.750 01/01/18 10 10,888
Puerto Rico Electric LEVRRS 7.978(f) 07/01/23 17,800 20,047,250
- --------------------------------------------------------------------------------------------------------------------------
Single-Family Housing (market value $232,389,935) - 7.6%
NYS (SONYMA) Mortgage, 1st Series 0.000 10/01/1998 95 89,388
NYS (SONYMA) Mortgage, 1st Series 0.000 10/01/14 30 6,335
NYS (SONYMA) Mortgage, 2nd Series 0.000 10/01/14 10,880 2,255,315
NYS (SONYMA) Mortgage, 6th Series 9.375 04/01/10 830 860,859
NYS (SONYMA) Mortgage, 7th Series GAINS 0.000(c) 10/01/14 1,255 1,259,229
NYS (SONYMA) Mortgage, 8th Series A 6.875 04/01/17 315 318,802
NYS (SONYMA) Mortgage, 8th Series D 8.200 10/01/06 100 102,062
NYS (SONYMA) Mortgage, 8th Series E 8.100 10/01/17 80 81,965
NYS (SONYMA) Mortgage, 8th Series F 8.000 10/01/17 15 15,180
NYS (SONYMA) Mortgage, 9th Series A 7.300 04/01/17 310 313,658
NYS (SONYMA) Mortgage, 9th Series E 8.375 04/01/18 5 5,110
NYS (SONYMA) Mortgage, Series 12 CAB 8.250 04/01/17 790 809,869
NYS (SONYMA) Mortgage, Series 2 0.000 10/01/14 220 45,846
NYS (SONYMA) Mortgage, Series 27 6.450 04/01/04 25 26,702
NYS (SONYMA) Mortgage, Series 28 6.450 10/01/20 7,705 7,983,998
NYS (SONYMA) Mortgage, Series 28 6.650 04/01/22 10,000 10,607,800
NYS (SONYMA) Mortgage, Series 28 7.050 10/01/23 8,810 9,460,178
NYS (SONYMA) Mortgage, Series 30 5.800 10/01/25 500 511,620
NYS (SONYMA) Mortgage, Series 30-A 4.375 10/01/23 15 14,751
NYS (SONYMA) Mortgage, Series 30-B 6.650 10/01/25 16,005 17,100,702
NYS (SONYMA) Mortgage, Series 36-A 6.625 04/01/25 11,500 12,386,995
NYS (SONYMA) Mortgage, Series 38 RITES (b) 7.861(f) 04/01/25 13,940 15,142,325
NYS (SONYMA) Mortgage, Series 40-A 6.700 04/01/25 7,560 8,172,587
NYS (SONYMA) Mortgage, Series 40-B 6.400 10/01/12 35 37,610
NYS (SONYMA) Mortgage, Series 40-B 6.600 04/01/25 5,795 6,240,520
NYS (SONYMA) Mortgage, Series 42 6.650 04/01/26 100 108,606
NYS (SONYMA) Mortgage, Series 42 6.650 04/01/26 13,605 14,696,257
NYS (SONYMA) Mortgage, Series 44 7.500 04/01/26 11,990 13,123,535
NYS (SONYMA) Mortgage, Series 46 6.500 04/01/13 100 108,498
NYS (SONYMA) Mortgage, Series 46 6.600 10/01/19 65 70,501
NYS (SONYMA) Mortgage, Series 46 6.650 10/01/25 24,565 26,639,514
NYS (SONYMA) Mortgage, Series 48 6.100 04/01/25 140 146,782
NYS (SONYMA) Mortgage, Series 50 6.625 04/01/25 7,470 8,113,914
NYS (SONYMA) Mortgage, Series 52 6.100 04/01/26 895 946,489
NYS (SONYMA) Mortgage, Series 54 6.200 10/01/26 25 26,455
NYS (SONYMA) Mortgage, Series 58 6.400 04/01/27 6,200 6,673,804
NYS (SONYMA) Mortgage, Series 60 6.000 10/01/22 120 126,016
NYS (SONYMA) Mortgage, Series 60 6.050 04/01/26 200 210,000
NYS (SONYMA) Mortgage, Series 63 6.125 04/01/27 9,750 10,305,458
NYS (SONYMA) Mortgage, Series 65 5.850 10/01/28 10,205 10,594,627
NYS (SONYMA) Mortgage, Series 67 5.700 10/01/17 3,000 3,082,140
NYS (SONYMA) Mortgage, Series 67 5.800 10/01/28 11,665 12,064,060
NYS (SONYMA) Mortgage, Series BB-2 7.950 10/01/15 1,845 1,914,188
NYS (SONYMA) Mortgage, Series EE-1 8.000 10/01/10 40 40,547
NYS (SONYMA) Mortgage, Series EE-2 7.450 10/01/10 95 99,852
NYS (SONYMA) Mortgage, Series EE-2 7.500 04/01/16 40 42,075
NYS (SONYMA) Mortgage, Series EE-3 7.700 10/01/10 265 281,491
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NYS (SONYMA) Mortgage, Series EE-3 7.750 % 04/01/16 $ 15 $ 15,950
NYS (SONYMA) Mortgage, Series EE-4 7.750 10/01/10 95 101,008
NYS (SONYMA) Mortgage, Series HH-2 7.700 10/01/09 395 411,827
NYS (SONYMA) Mortgage, Series HH-2 7.850 04/01/22 40 41,866
NYS (SONYMA) Mortgage, Series HH-3 7.875 10/01/09 270 285,649
NYS (SONYMA) Mortgage, Series HH-3 7.950 04/01/22 515 543,758
NYS (SONYMA) Mortgage, Series HH-4 8.050 04/01/22 65 69,070
NYS (SONYMA) Mortgage, Series II 0.000 10/01/07 100 48,844
NYS (SONYMA) Mortgage, Series II 0.000 04/01/08 170 79,813
NYS (SONYMA) Mortgage, Series II 0.000 10/01/09 180 74,462
NYS (SONYMA) Mortgage, Series II 0.000 10/01/08 120 54,185
NYS (SONYMA) Mortgage, Series II 0.000 04/01/05 100 59,599
NYS (SONYMA) Mortgage, Series II 0.000 04/01/06 90 49,611
NYS (SONYMA) Mortgage, Series JJ 7.500 10/01/17 455 480,949
NYS (SONYMA) Mortgage, Series KK 7.650 04/01/19 95 99,429
NYS (SONYMA) Mortgage, Series KK 7.800 10/01/20 285 299,717
NYS (SONYMA) Mortgage, Series MM-1 7.500 04/01/13 290 304,486
NYS (SONYMA) Mortgage, Series MM-1 7.750 10/01/05 25 26,186
NYS (SONYMA) Mortgage, Series MM-1 7.950 10/01/21 30 32,480
NYS (SONYMA) Mortgage, Series MM-2 7.700 04/01/13 3,105 3,164,274
NYS (SONYMA) Mortgage, Series MM-2 7.700 04/01/05 100 104,460
NYS (SONYMA) Mortgage, Series NN 7.550 10/01/17 60 63,494
NYS (SONYMA) Mortgage, Series OO 7.900 10/01/11 5 5,199
NYS (SONYMA) Mortgage, Series QQ 7.700 10/01/12 25 26,317
NYS (SONYMA) Mortgage, Series RR 7.700 10/01/10 105 111,784
NYS (SONYMA) Mortgage, Series RR 7.750 10/01/17 80 85,059
NYS (SONYMA) Mortgage, Series SS 7.500 10/01/19 85 87,617
NYS (SONYMA) Mortgage, Series TT 6.950 10/01/02 5 5,292
NYS (SONYMA) Mortgage, Series UU 7.150 10/01/22 105 110,142
NYS (SONYMA) Mortgage, Series UU 7.750 10/01/23 2,760 2,937,440
NYS (SONYMA) Mortgage, Series VV 0.000 10/01/23 115,222 17,519,505
NYS (SONYMA) Mortgage, Series VV 7.375 10/01/11 195 209,709
Puerto Rico HFA 0.000 08/01/26 8,690 1,249,274
Puerto Rico HFA 6.250 04/01/29 100 105,742
Puerto Rico HFA 7.650 10/15/22 80 85,371
V. I. HFA 6.450 03/01/16 165 176,152
- ---------------------------------------------------------------------------------------------------------------------------
Marine/Aviation Facilities (market value $165,347,465) - 5.4%
Albany IDA (Port of Albany) 7.250 02/01/24 1,395 1,526,186
Guam Airport 6.600 10/01/10 5,375 5,891,914
Guam Airport 6.700 10/01/23 60,730 66,391,251
Monroe County Airport 7.250 01/01/19 20 21,423
NYC IDA (American Airlines) 6.900 08/01/24 16,685 18,780,135
NYC IDA (American Airlines) 7.750 07/01/19 1,795 1,884,768
NYC IDA (American Airlines) 8.000 07/01/20 7,110 7,482,777
NYC IDA (Japan Airlines) 6.000 11/01/15 3,395 3,656,517
NYC IDA (Terminal One Group Assoc.) 6.000 01/01/19 15,050 15,799,641
NYC IDA (Terminal One Group Assoc.) 6.125 01/01/24 6,715 7,103,799
Port Authority NY/NJ (KIAC) 6.750 10/01/19 150 166,395
Port Authority NY/NJ (US Air) 9.000 12/01/10 520 587,881
Port Authority NY/NJ (US Air) 9.000 12/01/06 7,255 8,202,068
Port Authority NY/NJ (US Air) 9.125 12/01/15 22,335 25,307,342
Port Authority NY/NJ, 51st Series 7.000 12/01/14 40 41,107
Port Authority NY/NJ, 68th Series 7.250 02/15/25 105 111,818
Port Authority NY/NJ, 68th Series 7.250 02/15/25 225 239,657
Port Authority NY/NJ, 69th Series 7.125 06/01/25 55 59,168
Port Authority NY/NJ, 70th Series 7.250 08/01/25 75 80,756
Port Authority NY/NJ, 70th Series 7.250 08/01/25 15 16,144
Port Authority NY/NJ, 71st Series 6.500 01/15/26 40 42,644
Port Authority NY/NJ, 73rd Series 6.750 04/15/26 35 37,704
Port Authority NY/NJ, 73rd Series 6.750 04/15/26 5 5,374
Port Authority NY/NJ, 74th Series 6.750 08/01/26 15 16,305
Port Authority NY/NJ, 76th Series 6.500 11/01/26 60 64,661
Puerto Rico Port Authority 7.300 07/01/07 25 25,040
V. I. Port Authority (CEK Airport) 8.100 10/01/05 1,670 1,738,620
Westchester IDA (Westchester Airport) 5.950 08/01/24 65 66,370
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
NonProfit Organization (market value $116,526,987) - 3.8%
<S> <C> <C> <C> <C> <C>
Albany IDA (Albany Rehab.) 8.375 % 06/01/23 $ 1,025 $ 1,129,694
Blauvelt Volunteer Fire Company 6.250 10/15/17 1,065 1,079,686
Columbia IDA (Berkshire Farms) 6.900 12/15/04 685 739,047
Columbia IDA (Berkshire Farms) 7.500 12/15/14 1,855 2,062,556
Geneva IDA (FLCP) 8.250 11/01/04 700 761,229
Monroe IDA (Al Sigl Center) 6.600 12/15/17 4,260 4,531,490
Monroe IDA (Al Sigl Center) 7.250 12/15/15 1,590 1,735,596
Monroe IDA (DePaul CF) 6.450 02/01/14 880 973,755
Monroe IDA (DePaul CF) 6.500 02/01/24 1,285 1,410,095
Monroe IDA (DePaul Properties) 8.300 09/01/02 405 438,963
Monroe IDA (DePaul Properties) 8.800 09/01/21 4,605 5,010,240
Montgomery IDA (New Dimensions in Living) 8.900 05/01/16 1,055 1,153,875
NYC IDA (Blood Center) 7.200 05/01/12(p) 500 576,670
NYC IDA (Blood Center) 7.250 05/01/22(p) 3,000 3,468,240
NYC IDA (CCM) 7.875 12/01/16 1,770 1,973,851
NYC IDA (CCM) 8.000 12/01/11 1,980 2,184,059
NYC IDA (EPG) 7.500 07/30/03 10,255 11,328,801
NYC IDA (Fund for NYC Project) 7.625 07/01/10 1,000 1,068,850
NYC IDA (Graphic Artists) 8.250 12/30/23 1,265 1,367,022
NYC IDA (JBFS) 6.750 12/15/12 6,040 6,479,712
NYC IDA (Lighthouse) 6.500 07/01/22 1,000 1,076,010
NYC IDA (NY Hostel Co.) 6.750 01/01/04 1,040 1,076,338
NYC IDA (NY Hostel Co.) 7.600 01/01/17 4,400 4,627,436
NYC IDA (OHEL) 8.250 03/15/23 3,435 3,774,378
NYC IDA (PRFFP) 7.000 10/01/16 815 889,075
NYC IDA (Psycho Therapy) 9.625 04/01/10 730 789,196
NYC IDA (St. Christoper Ottilie) 7.500 07/01/21 4,140 4,528,166
NYS Dorm (Teresian House) 5.250 07/01/17 3,500 3,470,495
Rochester Museum & Science Center 6.125 12/01/15 6,790 6,898,708
Suffolk IDA (Community Program Ctr. of L.I.) 7.250 11/01/07 425 429,488
Suffolk IDA (Community Program Ctr. of L.I.) 8.250 11/01/22 1,825 1,847,575
UCP Chemung County 6.600 08/01/22 1,000 1,115,940
United Nations Dev. Corp., Series B 5.600 07/01/26 21,590 21,657,577
United Nations Dev. Corp., Series C 5.600 07/01/26 12,450 12,492,579
Westchester IDA (JBFS) 6.750 12/15/12 2,220 2,380,595
- ---------------------------------------------------------------------------------------------------------------------------
Lease Rental (market value $112,125,629) - 3.7%
Albany IDA (Upper Hudson Library) 8.750 05/01/22 940 1,015,181
Albany IDA (Upper Hudson Library) 8.750 05/01/07 230 241,636
Albany Parking Authority 0.000 11/01/17 1,770 635,731
Amherst IDA (Amherst Rink) 5.650 10/01/22 2,000 2,034,180
Babylon IDA (WWH Ambulance) 7.375 09/15/08 1,330 1,473,002
Capital District Youth Center 6.000 02/01/17 600 636,384
Carnegie Redevelopment Corp. 7.000 09/01/21 500 548,065
Clifton Park COP (Clifton Commons) 8.500 08/01/08 5 6,644
Monroe COP 8.050 01/01/11 460 493,014
North Babylon Volunteer Fire Company 5.750 08/01/22 715 748,255
NYS COP (BOCES) (b) 7.875 10/01/00 875 911,628
NYS COP (Hanson Redevelopment) 8.250 11/01/01 250 265,468
NYS Dorm (Suffolk-Judicial) 9.500 04/15/14 31,750 37,071,935
NYS LGSC (SCSB) 7.375 12/15/16 810 882,017
NYS UDC 0.000 01/01/08(p) 900 552,465
NYS UDC 0.000 01/01/11 80 38,602
NYS UDC 0.000 01/01/11 98,200 47,383,464
NYS UDC 0.000 01/01/03 15 12,155
NYS UDC 5.500 01/01/25 1,000 1,027,860
NYS UDC 7.500 01/01/18(p) 2,000 2,231,260
Puerto Rico Public Bldgs. Authority Indexed Flt. 5.760 (c)(f) 07/01/16 7,000 7,208,180
Puerto Rico/Family Department Municipal Lease (b) 12.725 08/12/03 3,549 4,173,975
Schroon Lake Fire District (b) 7.250 03/01/09 552 583,944
Vigilant EHL (Thomatson) 7.500 11/01/12 950 1,028,518
Yonkers Parking Authority 7.750 12/01/04 860 922,066
- --------------------------------------------------------------------------------------------------------------------------------
Adult Living Facilities (market value $96,850,021) - 3.2%
Batavia Hsg. Authority (Trocaire Place) 8.750 04/01/25 3,850 4,411,600
Middleton IDA (Southwinds) 8.375 03/01/18 3,740 4,128,025
Monroe IDA (Jewish Home) 6.875 04/01/27 4,945 5,159,316
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Monroe IDA (Jewish Home) 6.875 % 04/01/17 $ 1,000 $ 1,051,310
Orange IDA (Glen Arden) 8.250 01/01/02 18,025 18,417,945
Orange IDA (Glen Arden) 8.875 01/01/25 23,985 27,645,351
Syracuse Hsg. Authority (Seneca Heights) 7.500 12/01/07 1,990 2,029,143
Syracuse Hsg. Authority (Seneca Heights) 8.500 12/01/17 4,720 4,820,536
Syracuse Hsg. Authority, Series A 5.800 08/01/37 9,590 9,987,313
Syracuse Hsg. Authority, Series B 7.500 08/01/10 625 637,381
Tompkins IDA (Ithacare Center) 6.200 02/01/37 3,750 4,075,875
Tompkins IDA (Kendall at Ithaca) 7.875 06/01/15 2,790 3,026,006
Tompkins IDA (Kendall at Ithaca) 7.875 06/01/24 5,465 5,927,284
Union Hsg. Authority (Methodist Homes) 7.625 11/01/16 2,470 2,731,771
Union Hsg. Authority (Methodist Homes) 8.050 04/01/1999 105 108,767
Union Hsg. Authority (Methodist Homes) 8.150 04/01/00 110 116,393
Union Hsg. Authority (Methodist Homes) 8.250 04/01/01 120 130,020
Union Hsg. Authority (Methodist Homes) 8.350 04/01/02 150 166,223
Union Hsg. Authority (Methodist Homes) 8.500 04/01/12 2,010 2,279,762
- --------------------------------------------------------------------------------------------------------------------------
Water Utilities (market value $92,695,963) - 3.0%
Erie County Water Revenue, 4th Series 0.000 12/01/17 16,565 3,984,876
NYC Municipal Water Finance Authority IRS 6.419 (f) 06/15/13 12,500 12,921,875
NYC Municipal Water Finance Authority IVRC (b) 7.560 (f) 06/15/17 30,000 34,050,000
NYC Municipal Water Finance Authority LEVRRS 6.915 (f) 06/15/19 10,000 10,725,000
NYS Environ. (Consolidated Water) 7.150 11/01/14 1,840 2,023,798
NYS Environ. (NYS Water Services) 8.375 01/15/20 7,500 8,181,675
Suffolk IDA (Ocean Park Water) 7.500 11/01/22 715 786,193
V. I. Water & Power Authority 7.400 07/01/11 6,215 6,816,239
V. I. Water & Power Authority 7.600 01/01/12 6,850 7,702,003
V. I. Water & Power Authority 8.500 01/01/10 5,200 5,504,304
- --------------------------------------------------------------------------------------------------------------------------
Manufacturing, Non-Durable Goods (market value $87,123,683) - 2.8%
Babylon IDA (JFB & Sons Lithographers) 7.625 12/01/06 1,100 1,146,167
Babylon IDA (JFB & Sons Lithographers) 8.625 12/01/16 2,570 2,696,984
Cattaraugus IDA (Cherry Creek) 9.800 09/01/10 1,910 2,122,010
Herkimer IDA (Burrows Paper) 7.250 01/01/01 1,465 1,496,117
Herkimer IDA (Burrows Paper) 8.000 01/01/09 2,440 2,548,116
Middleton IDA (Fleurchem) 8.000 12/01/16 905 1,001,075
Monroe IDA (Cohber) 7.550 12/01/01 10 10,275
Monroe IDA (Cohber) 7.650 12/01/02 10 10,348
Monroe IDA (Cohber) 7.700 12/01/03 10 10,357
Monroe IDA (Cohber) 7.850 12/01/09 170 177,164
Nassau IDA (RJS Scientific) 8.050 12/01/05 305 334,860
Nassau IDA (RJS Scientific) 9.050 12/01/25 2,700 3,088,044
Nassau IDA (Sharp International) 7.375 12/01/07 3,070 3,222,579
Nassau IDA (Sharp International) 7.375 12/01/07 1,950 2,047,929
Nassau IDA (Sharp International) 7.875 12/01/12 2,610 2,758,222
Nassau IDA (Sharp International) 7.875 12/01/12 1,650 1,744,248
Newburgh IDA (ARMA Textile Printers) 7.125 11/01/07 2,310 2,374,495
Newburgh IDA (ARMA Textile Printers) 8.000 11/01/17 4,880 5,047,433
NYC IDA (Allied Metal) 6.375 12/01/14 870 874,724
NYC IDA (Allied Metal) 7.125 12/01/27 1,740 1,749,013
NYC IDA (Amplaco Group) 7.250 11/01/08 1,255 1,288,182
NYC IDA (Amplaco Group) 8.125 11/01/18 2,645 2,744,822
NYC IDA (Amster Novelty) 8.000 12/01/10 530 534,913
NYC IDA (Amster Novelty) 8.375 12/01/15 790 797,142
NYC IDA (Atlantic Veal & Lamb) 8.375 12/01/16 1,160 1,220,100
NYC IDA (Display Creations) 9.250 06/01/08 1,900 1,930,761
NYC IDA (Gutmann Plastics) 7.750 12/01/07 905 942,087
NYC IDA (House of Spices) 9.000 10/15/01 410 448,925
NYC IDA (House of Spices) 9.250 10/15/11 2,140 2,372,768
NYC IDA (Novelty Cord & Tassel) 8.663 (v) 12/01/06 580 579,583
NYC IDA (Paradise Products) 7.125 11/01/07 1,125 1,139,063
NYC IDA (Paradise Products) 8.250 11/01/22 4,475 4,537,740
NYC IDA (Pop Display) 6.750 12/15/04 1,035 1,081,741
NYC IDA (Pop Display) 7.900 12/15/14 2,645 2,900,613
NYC IDA (Promotional Slideguide) 7.500 12/01/10 710 750,988
NYC IDA (Promotional Slideguide) 7.875 12/01/15 1,065 1,148,571
NYC IDA (Sequins International) 8.500 04/30/00 315 335,053
NYC IDA (Sequins International) 8.950 01/30/16 4,555 5,098,184
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NYC IDA (Streamline Plastics) 7.750 % 12/01/15 $ 585 $ 626,763
NYC IDA (Streamline Plastics) 8.125 12/01/25 1,275 1,386,346
NYC IDA (Ultimate Display) 8.750 10/15/00 240 255,811
NYC IDA (Ultimate Display) 9.000 10/15/11 1,910 2,105,221
NYC IDA (Van Blarcom Closures) 7.125 11/01/07 1,380 1,409,435
NYC IDA (Van Blarcom Closures) 8.000 11/01/17 2,965 3,040,667
NYC IDA (Visy Paper) 7.950 01/01/28 8,000 9,241,120
Putnam IDA (Brewster Plastics) 8.500 12/01/16 1,990 2,137,121
Ulster IDA (Brooklyn Bottling) 7.800 06/30/02 525 552,557
Ulster IDA (Brooklyn Bottling) 8.600 06/30/22 1,915 2,057,246
- ---------------------------------------------------------------------------------------------------------------------------
Highways/Railways (market value $86,852,116) - 2.8%
MTA IVRC (b) 6.313 (f) 07/01/11 10,000 10,975,000
MTA Service Contract, Series R 5.500 (w) 07/01/13 815 820,738
MTA Service Contract, Series R 5.500 (w) 07/01/17 4,360 4,351,280
MTA Service Contract, Series R 5.500 (w) 07/01/12 1,270 1,284,719
MTA Service Contract, Series R 5.500 (w) 07/01/17 3,320 3,313,360
MTA Service Contract, Series R 5.500 (w) 07/01/12 1,000 1,011,590
MTA Service Contract, Series R 5.500 (w) 07/01/14 2,500 2,506,275
MTA YCR (b) 6.155 (f) 07/01/13 9,400 9,881,750
MTA YCR (b) 6.155 (f) 07/01/22 3,000 3,071,250
MTA, Series C1 5.500 07/01/22 9,690 9,755,698
MTA, Series C1 5.625 07/01/27 13,480 13,760,519
NYS Thruway 0.000 01/01/04 2,000 1,513,480
NYS Thruway 0.000 01/01/05 260 186,797
NYS Thruway 0.000 01/01/03 1,000 794,660
NYS Thruway Inflos 4.695 (f) 01/01/24 25,000 23,625,000
- ---------------------------------------------------------------------------------------------------------------------------
Higher Education (market value $76,164,648) - 2.5%
Allegany IDA (Alfred University) 7.500 09/01/11 10,070 11,098,751
Brookhaven IDA (Dowling College) 6.750 03/01/23 6,965 7,496,638
Cattaraugus IDA (St. Bonaventure University) 8.300 12/01/10 8,465 9,328,345
Dutchess IDA (Bard College) 7.000 11/01/17 3,500 3,915,415
Erie IDA (Medaille College) 8.000 12/30/22 3,230 3,567,018
Monroe IDA (Roberts Wesleyan College) 6.700 09/01/11 2,625 2,734,883
New Rochelle IDA (CNR) 6.750 07/01/22 3,000 3,237,090
NYC IDA (CNR) 5.800 09/01/26 1,500 1,548,690
NYC IDA (MMC) 7.000 07/01/23 3,500 3,765,370
NYS Dorm (City University) 5.375 07/01/24 5,650 5,622,315
NYS Dorm (Court Facility) 5.375 05/15/16 25 25,066
NYS Dorm (NY Medical College) 6.875 07/01/21 25 27,578
NYS Dorm (State University) 0.000 05/15/07 50 32,410
NYS Dorm (State University) 6.000 05/15/17 (p) 5 5,220
NYS Dorm (State University) 6.000 05/15/17 20 20,459
NYS Dorm (State University) 6.000 05/01/22 50 53,207
NYS Dorm (State University) 7.000 05/15/16 225 242,561
NYS Dorm (St. Thomas Aquinas College) 6.250 07/01/14 75 81,717
Puerto Rico ITEME (Polytech University) 5.700 08/01/13 5 5,095
Rockland IDA (DC) 8.000 03/01/13 2,090 2,306,616
Suffolk IDA (Dowling College) 6.625 06/01/24 2,000 2,108,540
Suffolk IDA (Dowling College) 6.700 12/01/20 2,870 3,076,583
Suffolk IDA (Dowling College) 8.250 12/01/20 (p) 950 1,074,175
University of V. I. 7.250 10/01/04 1,205 1,301,304
University of V. I. 7.700 10/01/19 3,570 4,076,547
University of V. I. 7.750 10/01/24 5,175 5,907,935
Yates IDA (Keuka College) 8.750 08/01/15 1,915 2,273,814
Yates IDA (Keuka College) 9.000 08/01/11 1,095 1,231,306
- ---------------------------------------------------------------------------------------------------------------------------
Education (market value $64,142,703) - 2.1%
Brookhaven IDA (Interdisciplinary School) 8.500 12/01/04 535 585,493
Brookhaven IDA (Interdisciplinary School) 9.500 12/01/19 3,220 3,631,161
Columbia IDA (ARC) 7.750 06/01/05 660 724,779
Columbia IDA (ARC) 8.650 06/01/18 2,650 2,979,528
Islip IDA (Leeway School) 9.000 08/01/21 960 1,063,142
Nassau IDA (ACLDD) 8.125 10/01/22 2,725 2,996,764
NYC IDA (BHMS) 8.400 09/01/02 200 202,552
NYC IDA (BHMS) 8.500 01/01/27 3,075 3,219,771
NYC IDA (BHMS) 8.900 09/01/11 660 712,041
NYC IDA (BHMS) 9.200 09/01/21 1,690 1,860,166
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NYC IDA (Eden II School) 7.750% 06/01/04 $ 405 $ 433,261
NYC IDA (Eden II School) 8.750 06/01/19 2,505 2,741,547
NYC IDA (Friends Seminary School) 7.000 12/01/17 3,705 3,923,817
NYC IDA (Hebrew Academy) 10.000 03/01/21 2,290 2,525,595
NYC IDA (Herbert G. Birch Childhood Project) 7.375 02/01/09 780 817,924
NYC IDA (Herbert G. Birch Childhood Project) 8.375 02/01/22 2,195 2,304,487
NYC IDA (St. Bernard's School) 7.000 12/01/21 5,115 5,505,888
NYC IDA (Summit School) 7.250 12/01/04 170 176,445
NYC IDA (Summit School) 8.250 12/01/24 1,485 1,590,554
NYC IDA (United Nations School) 6.350 12/01/15 1,000 1,057,980
Orange IDA (Mental Retardation Project) 7.800 07/01/11 495 594,475
Saratoga IDA (ARC) 8.400 03/01/13 1,395 1,538,001
Suffolk IDA (Devel. Disabilities) 7.375 03/01/03 915 957,246
Suffolk IDA (Devel. Disabilities) 8.750 03/01/23 9,675 10,976,868
Wayne IDA (ARC) 7.250 03/01/03 450 471,353
Wayne IDA (ARC) 8.375 03/01/18 2,925 3,228,469
Westchester IDA (Clearview School) 9.375 01/01/21 1,408 1,557,467
Westchester IDA (JDAM) 6.750 04/01/16 1,560 1,674,254
Yonkers IDA (Westchester School) 7.375 12/30/03 395 417,819
Yonkers IDA (Westchester School) 8.750 12/30/23 3,330 3,673,856
- ---------------------------------------------------------------------------------------------------------------------------
Corporate Backed (market value $54,138,998) - 1.8%
Albany IDA (Albany Golf) 7.500 05/01/12 400 440,916
Auburn IDA (Wegmans) 7.250 12/01/1998 65 65,648
Brookhaven IDA (Farber) 6.375 (v) 12/01/02 870 870,000
Brookhaven IDA (Farber) 6.375 (v) 12/01/04 490 490,000
Broome IDA (Industrial Park) 7.550 12/01/00 190 192,445
Broome IDA (Industrial Park) 7.600 12/01/01 195 197,564
Dutchess IDA (Merchants Press) 7.950 (d) 06/30/02 1,800 1,290,024
Dutchess IDA (Merchants Press) 9.000 (d) 06/30/22 4,590 3,277,811
Erie IDA (Affordable Hospitality) 9.250 12/01/15 3,520 3,662,067
Erie IDA (Air Cargo) 8.250 10/01/07 1,370 1,432,910
Erie IDA (Air Cargo) 8.500 10/01/15 2,380 2,532,011
Fulton IDA (Crossroads Incubator) 8.500 12/15/1998 (a) 160 162,896
Hudson IDA (Have, Inc.) 8.125 12/01/17 990 1,044,915
Hudson IDA (Northside) 9.000 12/01/09 435 470,061
Islip IDA (WJL Realty) 7.800 03/01/03 50 52,342
Islip IDA (WJL Realty) 7.850 03/01/04 100 103,406
Islip IDA (WJL Realty) 7.900 03/01/05 100 103,525
Islip IDA (WJL Realty) 7.950 03/01/10 500 532,770
Monroe IDA (Canal Ponds) 7.000 06/15/13 900 987,336
Monroe IDA (Cottrone Devel.) 9.500 12/01/10 2,280 2,504,409
Monroe IDA (De Carolis) 7.500 01/30/05 365 365,487
Monroe IDA (Morrell/Morrell) 7.000 12/01/07 2,053 2,151,010
Monroe IDA (Piano Works) 7.625 11/01/16 4,330 4,770,015
Monroe IDA (West End Business) 6.750 12/01/04 125 132,625
Monroe IDA (West End Business) 6.750 12/01/04 70 72,250
Monroe IDA (West End Business) 6.750 12/01/04 520 546,452
Monroe IDA (West End Business) 8.000 12/01/14 170 177,118
Monroe IDA (West End Business) 8.000 12/01/14 515 564,275
Monroe IDA (West End Business) 8.000 12/01/14 1,375 1,506,560
Monroe IDA (West End Business) 8.000 12/01/14 345 378,010
Niagara IDA (Maryland Maple) 10.250 11/15/09 1,000 1,048,200
Niagara IDA (Sevenson Hotel) 6.600 05/01/07 1,900 1,965,132
NYC IDA (ALA Realty) 7.500 12/01/10 1,035 1,111,393
NYC IDA (ALA Realty) 8.375 12/01/15 1,355 1,526,719
NYC IDA (Gabrielli Truck Sales) 8.125 12/01/17 3,280 3,460,269
NYC IDA (Loehmann's) 9.500 12/31/04 845 860,987
NYC IDA (Petrocelli Electric) 7.250 11/01/07 1,785 1,816,077
NYC IDA (Petrocelli Electric) 8.000 11/01/17 3,780 3,858,397
NYC IDA (Priority Mailers) 9.000 03/01/10 1,730 1,891,617
Suffolk IDA (Rimland Facilities) 6.375 (v) 12/01/09 1,670 1,636,600
Syracuse IDA (Rockwest Center II) 7.625 12/01/10 980 1,030,441
Syracuse IDA (Rockwest Center II) 8.625 12/01/15 1,470 1,625,497
Syracuse IDA (Rockwest Center I) 8.000 06/01/13 1,150 1,230,811
- ---------------------------------------------------------------------------------------------------------------------------
Manufacturing, Durable Goods (market value $46,794,312) - 1.5%
Broome IDA (Simulator) 8.250 01/01/02 645 659,616
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
ROCHESTER FUND MUNICIPALS
STATEMENT OF INVESTMENTS - DECEMBER 31, 1997
Face Amount
Description Coupon Maturity (000) Omitted Market Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
City of Port Jervis (Future Home Tech.) 10.000% 11/01/08 $ 685 $ 714,030
Cortland IDA (Paul Bunyon Products) 8.000 07/01/00 95 97,497
Erie IDA (Great Lakes Orthodontic) 12.099 05/01/00 80 88,034
Monroe IDA (Brazill Merk) 7.900 12/15/14 3,080 3,299,327
Monroe IDA (Melles Griot) 9.500 12/01/09 1,495 1,549,388
Monroe IDA (RTM Turbine) 7.750 12/01/06 3,490 2,798,806
Monroe IDA (RTM Turbine) 8.000 12/01/11 3,060 2,455,497
Monroe IDA (RTM Turbine) 8.500 12/01/16 770 618,033
Nassau IDA (Structural Industries) 7.750 02/01/12 500 564,990
NYC IDA (Koenig Iron Works) 8.375 12/01/25 1,675 1,824,326
NYC IDA (Penguin Air Conditioning) 12.222 12/01/1999 108 113,132
Oneida IDA (MCC) 8.000 11/01/08 1,265 1,287,593
Oneida IDA (MCC) 8.750 11/01/18 2,825 2,875,200
Onondaga IDA (Coltec) 7.250 06/01/08 585 593,483
Onondaga IDA (Coltec) 9.875 10/01/10 750 781,200
Onondaga IDA (Gear Motion) 8.400 12/15/01 490 500,917
Onondaga IDA (Gear Motion) 8.900 12/15/11 1,640 1,760,458
Orange IDA (Kingston Manufacturing) 8.000 11/01/17 7,600 8,022,180
Rensselaer IDA (MMP) 8.500 12/15/02 30 30,383
Suffolk IDA (Fil-Coil) 9.000 12/01/15 445 460,157
Suffolk IDA (Fil-Coil) 9.250 12/01/25 1,060 1,095,680
Suffolk IDA (Marbar Assoc.) 8.300 03/01/08 190 190,836
Suffolk IDA (Marbar Assoc.) 8.300 03/01/09 190 190,836
Suffolk IDA (Microwave Power) 7.750 06/30/02 300 316,635
Suffolk IDA (Microwave Power) 8.500 06/30/22 4,320 4,606,805
Suffolk IDA (Wireless Boulevard Realty) 7.875 12/01/12 1,365 1,444,661
Suffolk IDA (Wireless Boulevard Realty) 8.625 12/01/26 4,005 4,319,152
Syracuse IDA (Anoplate Corp.) 7.250 11/01/07 550 563,602
Syracuse IDA (Anoplate Corp.) 8.000 11/01/22 2,195 2,257,184
Syracuse IDA (Piscitell Stone) 8.400 12/01/11 660 714,674
- --------------------------------------------------------------------------------------------------------------------------
Telephone Utilities (market value $34,252,500) - 1.1%
Puerto Rico Telephone Authority RIBS 6.915 (f) 01/16/15 16,550 17,377,500
Puerto Rico Telephone Authority RIBS (b) 7.411 (f) 01/01/20 15,000 16,875,000
- --------------------------------------------------------------------------------------------------------------------------
Gas Utilities (market value $29,318,125) - 1.0%
NYS ERDA (Brooklyn Union Gas) RIBS 7.031 (f) 07/08/26 7,000 7,218,750
NYS ERDA (Brooklyn Union Gas) RIBS 8.553 (f) 04/01/20 7,000 8,645,000
NYS ERDA (Brooklyn Union Gas) RIBS 9.311 (f) 07/01/26 10,300 13,454,375
- --------------------------------------------------------------------------------------------------------------------------
Other (market value $29,564,330) - 1.0%
Franklin SWMA 6.250 06/01/15 4,245 4,402,022
Montgomery IDA (Amsterdam) 7.250 01/15/19 5,860 6,271,049
Municipal Assistance Corp. for Troy, NY 0.000 07/15/21 803 245,351
Municipal Assistance Corp. for Troy, NY 0.000 01/15/22 1,219 363,147
NYC IDA (HiTech Res Rec) 8.750 08/01/00 240 251,225
NYC IDA (HiTech Res Rec) 9.250 08/01/08 695 746,715
NYC IDA (Nekboh) 9.625 05/01/11 5,760 6,168,269
Peekskill IDA (Karta) 9.000 07/01/10 1,629 1,677,828
Puerto Rico Infrastructure 7.500 07/01/09 5,390 5,603,013
Puerto Rico Infrastructure 7.750 07/01/08 2,935 3,054,601
Puerto Rico Infrastructure 7.900 07/01/07 750 781,110
- --------------------------------------------------------------------------------------------------------------------------
Total municipal bond investments, at value (cost $2,936,875,477) - 102.7% $3,152,806,517
- --------------------------------------------------------------------------------------------------------------------------
Liabilities in excess of other assets - (2.7%) (84,179,154)
--------------
Net assets - 100.0% $3,068,627,363
==============
</TABLE>
(a) Date of mandatory put; final maturity 12/15/2008.
(b) Illiquid security--See Note 6 of Notes to Financial Statements.
(c) Security will convert to a fixed coupon at a date prior to maturity.
(d) Non-income accruing security--Issuer is in default of interest
payment.
(f) Interest rate is subject to change periodically and inversely to th
prevailing market rate. The interest rate shown is the rate in effect
at 12/31/97.
(p) This issue has been prerefunded to an earlier date.
(v) Variable rate security that fluctuates as a percentage of prime rate.
(w) When-issued security--See Note 3 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
22
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of Rochester Fund Municipals' holdings in
the Statement of Investments, we have abbreviated the descriptions of
many of the securities per the table below:
ACLDD Adults and Children with Learning
and Developmental Disabilities
ARC Association of Retarded Citizens
ASSC Annie Schaffer Senior Center
BHMS Brooklyn Heights Montessori School
BLH Bronx Lebanon Hospital
BOCES Board of Cooperative Educational Services
CAB Capital Appreciation Bond
CARS Complimentary Auction Rate Security
CCM Comprehensive Care Management
CDC Community Development Corporation
CEK Cyril E. King
CF Community Facilities
CGH Community General Hospital
CNR College of New Rochelle
ConEd Consolidated Edison Co.
COP Certificate of Participation
DC Dominican College
EHC Elderly Housing Corporation
EHL Engine Hook and Ladder
EPG Elmhurst Parking Garage
ERDA Energy Research and
Development Authority
FLCP Finger Lakes Cerebral Palsy
GAINS Growth and Income Securities
GO General Obligation
HDC Housing Development Corporation
HELP Homeless Economic Loan Program
HFA Housing Finance Agency
HFC Housing Finance Corporation
H&N Hospital and Nursing
IDA Industrial Development Authority
IRS Inverse Rate Security
ITEME Industrial Tourist Educational Medical
and Environmental
IVRC Inverse Variable Rate Certificate
JBFS Jewish Board of Family Services
JDAM Julia Dyckman Angus Memorial
LEVRRS Leveraged Reverse Rate Security
LGSC Local Government Services Corporation
L.I. Long Island
LILCO Long Island Lighting Corporation
MCC Mobile Climate Control
MMC Marymount Manhattan College
MMP Millbrook Millwork Project
MTA Metropolitan Transit Authority
NIMO Niagara Mohawk Power Corporation
NYSEG New York State Electric and Gas
PRFFP Puerto Rican Family Foundation Project
Res Rec Resource Recovery Facility
RGH Rochester General Hospital
RG&E Rochester Gas and Electric
RIBS Residual Interest Bonds
RITES Residual Interest Tax Exempt Security
SCSB Schuyler Community Services Board
SONYMA State of New York Mortgage Agency
SWMA Solid Waste Management Authority
TEMEC Tourist, Educational, Medical and Environmental Control
UCP United Cerebral Palsy
UDC Urban Development Corporation
UFA Utica Free Academy
WHMC Wyckoff Heights Medical Center
WWH Wyandach/Wheatley Heights
YCN Yield Curve Note
YCR Yield Curve Receipt
V. I. United States Virgin Islands
- --------------------------------------------------------------------------------
ASSET COMPOSITION TABLE - DECEMBER 31, 1997 (UNAUDITED)
Percentage
Rating of
Investments
- -----------------------
AAA 27.2%
AA 13.0%
A 21.6%
BBB 21.2%
BB 3.7%
B 2.5%
CCC 0.0%
CC 0.0%
C 0.0%
Not Rated 10.8%
---------
Total 100.0%
=========
Bonds rated by any nationally recognized statistical rating organization are
included in the equivalent Standard & Poor's rating category. As a general
matter, unrated bonds may be backed by mortgage liens or equipment liens on the
underlying property, and also may be guaranteed. Bonds which are backed by a
letter of credit or by other financial institutions or agencies may be assigned
an investment grade rating by the Manager, which reflects the quality of the
guarantor, institution or agency. Unrated bonds may also be assigned a rating
when the issuer has rated bonds outstanding with comparable credit
characteristics, or when, in the opinion of the Manager, the bond itself
possesses credit characteristics which allow for rating. The unrated bonds in
the portfolio are predominantly smaller issuers which have not applied for a
bond rating. Only those unrated bonds which subsequent to purchase have not
been designated investment grade by the Manager and the Fund's Board of Trustees
are included in the "Not Rated" category. For further information see "Credit
Quality" in the Prospectus.
23
<PAGE>
<TABLE>
ROCHESTER FUND MUNICIPALS
<CAPTION>
- -------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<S> <C>
ASSETS
Investments, at value (cost $2,936,875,477)--see accompanying statement .... $3,152,806,517
Receivables:
Interest ................................................................. 50,196,791
Investments sold ......................................................... 22,134,940
Shares of beneficial interest sold ....................................... 12,155,129
Other ...................................................................... 3,074,767
--------------
Total assets ............................................................... 3,240,368,144
--------------
LIABILITIES
Bank overdraft ............................................................. 3,135,394
Payables and other liabilities:
Investments purchased .................................................... 147,792,303
Note payable to bank (interest rate 7.125% at 12/31/97)--Note 5 .......... 15,800,000
Shares of beneficial interest redeemed ................................... 2,607,175
Dividends ................................................................ 1,029,154
Trustees' fees--Note 1 ................................................... 518,065
Other .................................................................... 858,690
--------------
Total liabilities .......................................................... 171,740,781
--------------
NET ASSETS .................................................................... $3,068,627,363
==============
- -------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital ............................................................ $2,916,288,742
Undistributed net investment income ........................................ 1,380,220
Accumulated net realized loss on investment transactions ................... (64,972,639)
Net unrealized appreciation on investments--Note 3 ......................... 215,931,040
--------------
Net assets ................................................................. $3,068,627,363
==============
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
CLASS A SHARES:
Net asset value and redemption price per share (based on net assets of
$2,847,665,548 and 152,512,105 shares of beneficial interest
outstanding) ............................................................ $18.67
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) ................................................ $19.60
--------------
- -------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $171,743,931 and 9,206,795 shares of beneficial
interest outstanding) .................................................. $18.65
--------------
- -------------------------------------------------------------------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $49,217,884 and 2,637,930 shares of beneficial
interest outstanding) .................................................. $18.66
--------------
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE>
ROCHESTER FUND MUNICIPALS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
INVESTMENT INCOME:
Interest .............................................. $175,541,046
------------
EXPENSES:
Management fees--Note 4 ................................ 12,249,672
Distribution and service plan
fees--Note 4:
Class A ............................................... 3,708,931
Class B ............................................... 603,667
Class C ............................................... 165,599
Transfer and shareholder servicing
agent fees--Note 4:
Class A ............................................... 1,328,853
Class B ............................................... 35,982
Class C ............................................... 7,508
Accounting service fees--Note 4 ....................... 778,253
Shareholder reports ................................... 364,227
Registration and filing fees .......................... 335,205
Custodian fees and expenses ........................... 280,995
Trustees' fees and expenses--Note 1 ................... 103,122
Legal and auditing fees ............................... 84,056
Other ................................................. 172,318
Interest .............................................. 280,504
------------
Total expenses ....................................... 20,498,892
Less expenses paid indirectly ........................ (164,765)
------------
Total net expenses ................................... 20,334,127
------------
NET INVESTMENT INCOME................................... 155,206,919
------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments ..................... (5,735,552)
Net change in unrealized appreciation
or depreciation on investments ..................... 107,729,438
------------
Net realized and unrealized gain ..................... 101,993,886
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........................... $257,200,805
============
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1997 1996
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income ......................... $155,206,919 $ 135,835,359
Net realized loss ............................. (5,735,552) (3,568,327)
Net change in unrealized appreciation
or depreciation ............................. 107,729,438 (15,226,664)
------------- -------------
Net increase in net assets
resulting from operations ................... 257,200,805 117,040,368
---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income:
Class A ..................................... (152,050,014) (136,511,912)
Class B ..................................... (2,948,096) --
Class C ..................................... (808,459) --
--------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting
from beneficial interest
transactions--Note 2:
Class A ..................................... 443,076,063 182,057,766
Class B ..................................... 168,083,894 --
Class C ..................................... 48,222,991 --
--------------------------------------------------------------------------------------------
NET ASSETS:
Total increase .................................. 760,777,184 162,586,222
Beginning of period ............................. 2,307,850,179 2,145,263,957
--------------- --------------
End of period (including undistributed
net investment income of $1,380,220
and $1,979,870, respectively) ................. $3,068,627,363 $2,307,850,179
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE>
ROCHESTER FUND MUNICIPALS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------------------
1997 1996(g) 1995 1994 1993
------- ----------- ------ ------ ------
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $18.00 $18.18 $16.31 $19.00 $17.65
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income .......................... 1.10 1.10 1.10 1.13 1.17
Net realized and unrealized gain (loss) ........ 0.67 (0.18) 1.86 (2.68) 1.35
------ ------ ------ ------ ------
Total income (loss) from investment operations ... 1.77 0.92 2.96 (1.55) 2.52
------ ------ ------ ------ ------
Dividends and distributions to shareholders:
Dividends from net investment income ........... (1.10) (1.10) (1.09) (1.13) (1.17)
Undistributed net investment income--
prior year ................................... -- -- -- (0.01) --
------ ------ ------ ------ ------
Total dividends and distributions to
shareholders ................................... (1.10) (1.10) (1.09) (1.14) (1.17)
------ ------ ------ ------ ------
Net asset value, end of period ................... $18.67 $18.00 $18.18 $16.31 $19.00
====== ====== ====== ====== ======
TOTAL RETURN, AT NET ASSET VALUE(B) .............. 10.20% 5.37% 18.58% (8.35%) 14.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) ........ $2,848 $2,308 $2,145 $1,791 $1,794
Average net assets (in millions) ............... $2,539 $2,191 $2,005 $1,847 $1,449
Ratios to average net assets:
Net investment income ........................ 5.96% 6.20% 6.25% 6.43% 6.21%
Expenses(d) .................................. 0.76% 0.82% 0.82% 0.84% 0.75%
Expenses (excluding interest)(d)(e) .......... 0.75% 0.77% 0.78% 0.73% 0.64%
Portfolio turnover rate(f) ..................... 4.58% 13.34% 14.59% 34.39% 18.27%
- ------------------------------------------------------------------------------------------------------------------------------ -----
</TABLE>
(a) For the period from March 16, 1997 (inception of offering) to December 31,
1997.
(b) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one full year.
(c) Annualized.
(d) Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not
been adjusted.
26
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------- ------------
Period Ended Period Ended
December 31, December 31,
1997(a) 1997(a)
------------- ------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period ................................ $17.89 $17.89
------ ------
Income from investment operations:
Net investment income ............................................. 0.74 0.74
Net realized and unrealized gain .................................. 0.76 0.77
------ ------
Total income from investment operations ............................. 1.50 1.51
------ ------
Dividends and distributions to shareholders:
Dividends from net investment income .............................. (0.74) (0.74)
Undistributed net investment income--prior year ................... -- --
------ ------
Total dividends and distributions to shareholders ................... (0.74) (0.74)
------ ------
Net asset value, end of period ...................................... $18.65 $18.66
====== ======
TOTAL RETURN, AT NET ASSET VALUE(B) ................................. 8.74% 8.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) ........................... $172 $49
Average net assets (in millions) .................................. $76 $21
Ratios to average net assets:
Net investment income ........................................... 4.91%(c) 4.92%(c)
Expenses(d) ..................................................... 1.59%(c) 1.58%(c)
Expenses (excluding interest)(d)(e) ............................. 1.58%(c) 1.57%(c)
Portfolio turnover rate(f) ........................................ 4.58% 4.58%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(e) During the periods shown above, the Fund's interest expense was
substantially offset by the incremental interest income generated on bonds
purchased with borrowed funds.
(f) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended December 31, 1997 were
$865,561,192 and $122,221,207, respectively.
(g) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
Per share information has been determined based on average shares
outstanding for the period.
See accompanying Notes to Financial Statements.
27
<PAGE>
ROCHESTER FUND MUNICIPALS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Rochester Fund Municipals (the Fund), which is organized as a business trust
under the laws of the Commonwealth of Massachusetts, conducted operations as a
closed-end investment company from December, 1982 until May, 1986, at which time
it commenced operations as an open-end investment company. The Fund's investment
objective is to provide as high a level of interest income exempt from federal,
New York State and New York City personal income taxes as is consistent with its
investment policies and prudent investment management while seeking preservation
of shareholders' capital. The Fund's investment adviser is OppenheimerFunds,
Inc. (the Manager).
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to matters affecting a single
class. Class B shares will automatically convert to Class A shares six years
after the date of purchase. The following is a summary of significant accounting
policies consistently followed by the Fund.
INVESTMENT VALUATION AND TRANSACTIONS. Portfolio securities are valued at the
close of the New York Stock Exchange on each trading day. Long-term debt
securities are valued at the mean between the bid and asked price using
information available from a portfolio pricing service approved by the Board of
Trustees, dealer-supplied valuations, provided the Manager is satisfied that the
firm rendering the quotes is reliable and that the quotes reflect current value,
or analysis of various relationships between comparable securities. Securities
for which market quotations are not readily available are valued at fair value
under consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Investment transactions are accounted for on
the date the investments are purchased or sold (trade date). Cost is determined
and realized gains and losses are based upon the specific identification method
for both financial statement and federal income tax purposes. Interest income is
recorded on the accrual basis. In computing net investment income, the Fund
amortizes premiums and accretes original issue discount. For municipal bonds
purchased after April 30, 1993 and subsequently sold at a gain, market discount
is accreted at the time of sale (to the extent of the lesser of the accrued
market discount or the disposition gain) and is treated as taxable income,
rather than capital gain.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months of the purchase of municipal bonds and
notes. However, the Fund may, from time to time, purchase municipal 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, in a segregated account with
its custodian, 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.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At December 31, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $64,546,000, which expires between 2000 and 2005.
TRUSTEES' FEES AND EXPENSES. In January, 1995, the Board of Trustees of the Fund
adopted a retirement plan for its independent trustees. Upon retirement,
eligible trustees receive annual payments based upon their years of service. The
plan is not funded. In connection with the sale of certain assets of Rochester
Capital Advisors, L.P. (the Fund's former investment advisor) to the Manager,
all but one of the existing independent trustees retired effective January 4,
1996. The retirement plan, as amended and restated on October 16, 1995, provides
that no independent trustee of the Fund who is elected after September 30, 1995
may be eligible to receive benefits thereunder. The retirement plan expense,
which is included in trustees' fees and expenses, amounted to $61,806 for the
year ended December 31, 1997. Payments of $54,000 were made to retired trustees
during the year ended December 31, 1997. At December 31, 1997, the Fund had
recognized an accumulated liability of $507,306.
28
<PAGE>
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain (loss) was
recorded by the Fund.
CONCENTRATION IN NEW YORK ISSUERS. There are certain risks arising from
geographic concentration in any state. Certain revenue or tax related events in
a state may impair the ability of certain issuers of municipal securities to pay
principal and interest on their obligations.
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
OTHER. 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.
NOTE 2. SHARES OF BENEFICIAL INTEREST:
The Fund has authorized an unlimited number of shares of beneficial interest,
par value $.01 per share. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 (1) DECEMBER 31, 1996
---------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
CLASS A:
Sold ................................. 35,581,801 $648,373,849 20,027,352 $355,593,044
Dividends and distributions
reinvested ......................... 4,372,465 79,564,502 4,049,796 71,854,295
Redeemed ............................. (15,687,966) (284,862,288) (13,850,487) (245,389,573)
----------- ------------ ----------- ------------
Net increase ......................... 24,266,300 $443,076,063 10,226,661 $182,057,766
=========== ============ =========== ============
CLASS B:
Sold ................................. 9,239,870 $168,687,731 -- $ --
Dividends and distributions
reinvested ........................... 101,107 1,860,790 -- --
Redeemed ............................. (134,182) (2,464,627) -- --
----------- ------------ ----------- ------------
Net increase ......................... 9,206,795 $168,083,894 -- $ --
=========== ============ =========== ============
CLASS C:
Sold ................................. 2,680,454 $ 49,004,451 -- $ --
Dividends and distributions
reinvested ......................... 28,231 520,244 -- --
Redeemed ............................. (70,755) (1,301,704) -- --
----------- ------------ ----------- ------------
Net increase ......................... 2,637,930 $ 48,222,991 -- $ --
=========== ============ =========== ============
</TABLE>
(1) For the year ended December 31, 1997 for Class A shares and for the period
from March 16, 1997 (inception of offering) to December 31, 1997 for Class
B and Class C shares.
NOTE 3. PORTFOLIO INFORMATION:
The Fund held $455,612,688 in inverse floating rate municipal bonds at December
31, 1997, which represents 14.85% of the Fund's net assets.
29
<PAGE>
During 1997, 10.54% of interest income was derived from investments in U.S.
territories which are exempt from federal, all states, and New York City income
taxes.
At December 31, 1997, net unrealized appreciation on investments of $215,931,040
was composed of gross appreciation of $219,895,364, and gross depreciation of
$3,964,324.
Unrealized appreciation (depreciation) at December 31, 1997 based on cost of
investments for federal income tax purposes of $2,937,016,583 was:
Gross unrealized appreciation .............................. $219,756,060
Gross unrealized depreciation .............................. (3,966,126)
------------
Net unrealized appreciation ................................ $215,789,934
============
At December 31, 1997, investments in securities included issues that were
purchased on a when-issued or delayed delivery basis. The Fund has recorded
these commitments and is valuing the when-issued securities at current market
value on each trading day. In addition, the Fund has segregated sufficient
liquid debt securities with its custodian to cover these commitments. The Fund
intends to invest no more than 10% of its net assets in when-issued or delayed
delivery securities. The aggregate cost of securities purchased on a when-issued
or delayed delivery basis at December 31, 1997 was $131,936,453, which
represents 4.30% of the Fund's net assets. Information concerning these
securities is as follows:
<TABLE>
<CAPTION>
VALUATION PER UNIT
FACE AMOUNT ACQUISITION DELIVERY COST PER AS OF
SECURITY (IN THOUSANDS) DATE DATE UNIT DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MTA Service Contract,
Series R:
5.50% due 7/1/12 1,000 10/31/97 4/2/98 98.535% 101.159%
5.50% due 7/1/12 1,270 10/31/97 4/2/98 98.535 101.159
5.50% due 7/1/13 815 10/31/97 4/2/98 98.170 100.704
5.50% due 7/1/14 2,500 10/31/97 4/2/98 97.579 100.251
5.50% due 7/1/17 3,320 10/31/97 4/2/98 96.763 99.800
5.50% due 7/1/17 4,360 10/31/97 4/2/98 96.763 99.800
- ----------------------------------------------------------------------------------------------------------------------
NYS ERDA (RG&E):
5.95% due 9/1/33 7,000 9/3/97 9/2/98 100.000 105.070
5.95% due 9/1/33 5,500 9/29/97 9/2/98 102.250 105.070
- ----------------------------------------------------------------------------------------------------------------------
Suffolk IDA
(Huntington Res Rec):
5.55% due 10/1/04 8,545 1/28/97 7/29/99 100.000 103.554
5.65% due 10/1/05 9,180 1/28/97 7/29/99 100.000 104.436
5.75% due 10/1/06 9,875 1/28/97 7/29/99 100.000 104.973
5.80% due 10/1/07 10,615 1/28/97 7/29/99 100.000 105.150
5.85% due 10/1/08 11,410 1/28/97 7/29/99 100.000 105.664
5.95% due 10/1/09 12,265 1/28/97 7/29/99 100.000 106.050
6.00% due 10/1/10 13,190 1/28/97 7/29/99 100.000 106.494
6.15% due 10/1/11 14,170 1/28/97 7/29/99 100.000 107.756
6.25% due 10/1/12 17,155 1/28/97 7/29/99 100.000 108.630
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.54% on the first
$100 million of average annual net assets, 0.52% of the next $150 million, 0.47%
of the next $1,750 million, 0.46% of the next $3 billion, and 0.45% on net
assets in excess of $5 billion. During 1997, the Fund paid $12,249,672 to the
Manager for management and investment advisory services.
Accounting fees paid to the Manager were in accordance with the accounting
services agreement with the Fund which provides for an annual fee of $12,000 for
the first $30 million of net assets and $9,000 for each additional $30 million
of net assets. During 1997, the Fund paid $778,253 to the Manager for accounting
and pricing services.
OppenhimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and
30
<PAGE>
for other registered investment companies. The Fund pays OFS an annual
maintenance fee for each Fund shareholder account and reimburses OFS for its
out-of-pocket expenses. During 1997, the Fund paid a total of $1,372,343 to OFS
for transfer and shareholder servicing agent fees.
For the year ended December 31, 1997, commissions (sales charges paid by
investors) on sales of Class A shares totaled $15,588,173, of which $2,324,962
was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to brokers/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $6,618,261 and $478,210, respectively, of which $16,585
and $4,335, respectively, were paid to an affiliated broker/dealer. During the
year ended December 31,1997, OFDI received contingent deferred sales charges of
$86,086 and $11,324, respectively, upon redemption of Class B and Class C
shares, as reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a
portion of its costs incurred in connection with the personal service and
maintenance of shareholder accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the average annual
net assets of Class A shares of the Fund. Currently, the Board of Trustees has
limited the rate to 0.15% per year on Class A shares. OFDI uses the service fee
to reimburse brokers, dealers, banks and other financial institutions quarterly
for providing personal service and maintaining accounts of their customers that
hold Class A shares. During the year ended December 31, 1997, OFDI paid $17,494
to an affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is computed
on the average annual net assets of Class B and Class C shares, determined as of
the close of each regular business day. During the year ended December 31, 1997,
OFDI retained $603,626 and $164,399, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as financing
costs. If either Plan is terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales charge to OFDI for
distributing shares before the Plan was terminated. At December 31, 1997, OFDI
had incurred unreimbursed expenses of $7,678,515 for Class B and $775,680 for
Class C.
NOTE 5. BANK BORROWINGS:
The Fund may borrow up to 5% 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 two other funds
managed by the Manager in an unsecured line of credit with a bank, which permits
borrowings up to $50 million, collectively. Interest is charged to each fund,
based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.625%.
In addition, a commitment fee of 0.07% is allocated among the three
participating funds at the end of each quarter, based on the average daily
unused portion of the committed line. The commitment fee is allocated among the
three funds based upon their respective average net assets for the period. The
commitment fee allocated to the Fund for the year ended December 31, 1997 was
$785.
The Fund had borrowings outstanding of $15,800,000 at December 31, 1997. For the
year ended December 31, 1997, the average monthly loan balance was $4,377,935 at
an average interest rate of 6.325%. The maximum amount of borrowings outstanding
at any month-end was $21,500,000.
NOTE 6. ILLIQUID AND RESTRICTED SECURITIES:
At December 31, 1997, 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. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limit. The aggregate value of illiquid securities
subject to this limitation at December 31, 1997 was $173,232,373, which
represents 5.65% of the Fund's net assets.
31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Rochester Fund Municipals
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Rochester Fund Municipals (the
Fund) at December 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as financial
statements) are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where securities purchased had not been received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
January 28, 1998
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED)
In early 1998, shareholders received information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. 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 December 31, 1997
are eligible for the corporate dividend-received deduction. 100% of the
dividends were derived from interest on municipal bonds and are not subject to
federal, New York State and New York City income taxes. For the state income tax
reporting purposes of non-New York State shareholders, the distribution breaks
down as follows: New York State (89.46%), Guam (3.03%), Puerto Rico (4.65%),
Virgin Islands (2.70%), American Samoa (0.16%).
During 1997, 37.64% of this tax-exempt income was derived from "private activity
bonds". These are municipal bonds used to finance privately operated facilities.
The interest on these bonds is not taxable for most investors. For the few
investors subject to the alternative minimum tax, the interest from these bonds
is considered a preference item.
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.
32
<PAGE>
<TABLE>
OPPENHEIMERFUNDS FAMILY
<S> <C> <C>
REAL ASSET FUNDS
Real Asset Fund Gold & Special Minerals Fund
STOCK FUNDS
Developing Markets Fund Quest Small Cap Value Fund Global Fund
International Small Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund(1) Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
Discovery Fund Growth Fund
STOCK & BOND FUNDS
Main Street Income & Growth Fund Quest Growth & Income Value Fund Disciplined Allocation Fund
Quest Opportunity Value Fund Global Growth & Income Fund Multiple Strategies Fund2
Total Return Fund Equity Income Fund Bond Fund for Growth
BOND FUNDS
International Bond Fund Champion Income Fund U.S.Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
MUNICIPAL FUNDS
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York Municipal Fund
New York Municipal Fund(3) Intermediate Municipal Fund
MONEY MARKET FUNDS(4)
Money Market Fund Cash Reserves
LIFESPAN
Growth Fund Balanced Fund
</TABLE>
- ----------
(1) On 12/18/96, the Fund's name was changed from "Target Fund".
(2) On 3/16/97, the Fund's name was changed from "Asset Allocation Fund".
(3) Available only to investors in certain states.
(4) An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market fund
will be able to maintain a stable net asset value of $1.00 per share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, NY, NY 10048-0203
(C)Copyright 1998 OppenheimerFunds, Inc. All rights reserved
[LOGO] OPPENHEIMERFUNDS[SM]
THE RIGHT TO INVEST
<PAGE>
ROCHESTER
[LOGO] FUND
MUNICIPALS
THE ROCHESTER FUNDS
A Division of OppenheimerFunds, Inc
350 Linden Oaks
Rochester, NY 14625-2807
1-716-383-1300
INVESTMENT ADVISOR
OppenheimerFunds, Inc.
Two World Trade Center
New York, NY 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, NY 10048-0203
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
950 Seventeenth Street, Suite 2500
Denver, CO 80202-2872
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
PO Box 5270
Denver, CO 80217-5270
RAO365.001.0198 February 28, 1998
This Annual Report is for the information of shareholders of Rochester Fund
Municipals. It must be preceded or accompanied by a current prospectus for the
Fund.
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency and
involve investment risks, including the possible loss of the principal amount
invested.
CALL OUR TOLL-FREE CUSTOMER SERVICE TODAY AT 1-800-525-7048 FOR MORE
INFORMATION ON HOW TO TAKE ADVANTAGE OF YOUR FINANCIAL RELATIONSHIP WITH THE
OPPENHEIMERFUNDS FAMILY.
- --------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS[SM]
OppenheimerFunds Distributor, Inc.
Rochester Division
350 Linden Oaks
Rochester, NY 14625-2807
Bulk Rate
US Postage
PAID
Rochester, NY
Permit No. 491
