OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST, 485BPOS, 1994-04-29

OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST
485BPOS, 1994-04-29

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Registration No. 33-30198
811-5867

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 11 / X /

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940

AMENDMENT NO. 13 / X /

OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST
- -------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

Two World Trade Center - Suite 3400
New York, New York 10048-0203
- -------------------------------------------------------------------------
(Address of Principal Executive Offices)

(212) 323-0200
- -------------------------------------------------------------------------
(Registrant's Telephone Number)

Andrew J. Donohue, Esq.
Oppenheimer Management Corporation
Two World Trade Center - Suite 3400
New York, New York 10048-0203
- -------------------------------------------------------------------------
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate
box):

/ / Immediately upon filing pursuant to paragraph (b)

/ X / On April 29, 1994, pursuant to paragraph (b)

/ / 60 days after filing pursuant to paragraph (a)

/ / On _____________, pursuant to paragraph (a) of Rule 485.

The Registrant has elected to register an indefinite number of its shares
under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended December 31, 1993 was filed on February 25, 1994.
<PAGE>
OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST
FORM N-1A
Cross Reference Sheet

Oppenheimer Pennsylvania Tax-Exempt Fund, a series of the Registrant

Part A of
Form N-1A
Item No. Prospectus Heading
1 Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital Gains and Taxes
7 How to Buy Shares; Special Investor Services; How to Sell
Shares; How to Exchange Shares
8 Special Investor Services; How to Sell Shares; How to
Exchange Shares
9 *

Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Other Investment Restrictions
14 Trustees and Officers of the Trust
15 Trustees and Officers of the Trust
16 How the Fund is Managed; Distribution and Service Plans;
Additional Information about the Fund
17 Brokerage Policies of the Fund
18 Additional Information about the Fund
19 Your Investment Account
20 Dividends, Capital Gains and Taxes
21 Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
_________________________________
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER MULTI-STATE TAX-EXEMPT TRUST
FORM N-1A
Cross Reference Sheet

Oppenheimer Florida Tax-Exempt Fund, a series of the Registrant

Oppenheimer New Jersey Tax-Exempt Fund, a series of the Registrant

Part A of
Form N-1A
Item No.* Prospectus Heading
1 Cover Page
2 Fund Expenses
3 Fund Performance Information
4 Cover Page; The Fund and Its Investment Policies; Special
Investment Methods; Investment Restrictions
5 Fund Expenses; Management of the Fund; Additional
Information - The
Custodian and the Transfer Agent; Back Cover
5A **
6 Fund Expenses; Management of the Fund; How to Redeem Shares;
Dividends, Distributions and Taxes; Additional Information
7 Fund Expenses; How to Buy Shares; How to Redeem Shares;
Exchanges of Shares
8 How to Redeem Shares; Exchanges of Shares
9 **

Part B of
Form N-1A
Item No.* Heading in Statement of Additional Information or Prospectus
10 Cover Page
11 Cover Page
12 **
13 Investment Objective and Policies; Special Investment
Methods; Investment Restrictions; Appendix A - Ratings of
Investments
14 Trustees and Officers; Investment Management Services
15 Investment Management Services; Trustees and Officers -
Major Shareholders
16 Investment Management Services; Additional Information;
Distribution and Service Plans
17 Investment Management Services - Portfolio Transactions
18 Additional Information - Description of the Fund
19 Purchase, Redemption and Pricing of Shares; Automatic
Withdrawal Plan Provisions; Letters of Intent
20 Yield, Total Return and Tax Information
21 Investment Management Services - Portfolio Transactions
22 Yield, Total Return and Tax Information
23 **
_________________________________
* All responses to such Items are incorporated herein by reference to the
corresponding Part of Post-Effective Amendment No. 9 to the Registration
Statement of the Registrant, File No. 33-30198/ 811-5867, as filed with
the SEC on February 25, 1994, which Registration Statement contains as
Part A the Prospectus of Oppenheimer New Jersey Tax-Exempt Fund ("ONJTEF")
and the Statement of Additional Information of ONJTEF, each effective
March 1, 1994. Such Prospectus and Statement of Additional Information
are not being amended hereby.

**Not applicable or negative answer.
<PAGE>
OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND
Supplement dated April 29, 1994
to the Prospectus dated April 29, 1994

The Prospectus is hereby amended as follows:

The following is added at the end of the text set forth in "About
Your Account - How to Buy Shares - Class A Shares - Special
Arrangements With Dealers":

In addition to paying dealers the regular commission for sales of Class
A shares stated in the sales charge table in "Class A Shares," and the
commission for sales of Class B shares described in the first paragraph
of "Distribution and Service Plan for Class B Shares," below, the
Distributor will pay the following additional commission for shares of
the Fund sold in "qualifying transactions" from March 1, 1994, through
May 31, 1994: (i) 1.00% of the offering price of Class A and/or Class
B shares sold by a representative of a broker or dealer at a branch not
in a "financial institution," such as a bank, savings and loan
association or credit union; and (ii) .50% of the offering price of
Class B shares, and the Distributor's entire retained commission on
Class A shares, sold by a sales representative of a financial
institution or by a representative of a broker or dealer firm at a
branch in a financial institution. "Qualifying transactions" are sales
by a registered representative of a broker or dealer at a branch not in
a financial institution of $200,000 or more (calculated at offering
price), and sales in any amount by a sales representative of a
financial institution or registered representative of a broker or
dealer at a branch in a financial institution, of Class A and/or Class
B shares of any one or more of the following OppenheimerFunds:
Oppenheimer Tax-Free Bond Fund, Oppenheimer Insured Tax-Exempt Bond
Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-Exempt Fund, Oppenheimer
Florida Tax-Exempt Fund, and Oppenheimer New Jersey Tax-Exempt Fund.
"Qualifying transactions" do not include sales of Class A shares (1) at
net asset value without sales charge, (2) subject to a contingent
deferred sales charge, or (3) intended under a Letter of Intent.

April 29, 1994 PS740
<PAGE>
Oppenheimer Pennsylvania Tax-Exempt Fund

Prospectus dated April 29, 1994.

Oppenheimer Pennsylvania Tax-Exempt Fund is a mutual fund that
seeks as high a level of current interest income exempt from Federal and
Pennsylvania income taxes for individual investors as is available from
municipal securities and consistent with preservation of capital. The
Fund will invest primarily in securities issued by the Commonwealth of
Pennsylvania and local governments and governmental agencies, but may also
invest in securities of other issuers. The Fund may use certain hedging
instruments in an effort to protect against market risks, but not for
speculation. The Fund is not intended to be a complete investment program,
and there is no assurance that it will achieve its objective. Please
refer to "Investment Policies and Strategies" for more information about
the types of securities the Fund invests in and the risks of investing in
the Fund.

The Fund offers two classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge,
and (2) Class B shares, which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you hold them. Class B shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different
expenses. In deciding which class of shares to buy, you should consider
how much you plan to purchase, how long you plan to keep your shares, and
other factors discussed in "How to Buy Shares" starting on page 17.

This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the April 29, 1994 Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).

Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks including possible loss of principal.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents

Page

ABOUT THE FUND

Expenses
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund

ABOUT YOUR ACCOUNT

How to Buy Shares
Class A Shares
Class B Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes

<PAGE>
ABOUT THE FUND

Expenses

The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's operating expenses that you might expect
to bear indirectly. These calculations are based on the Fund's expenses
during its fiscal year ended December 31, 1993.

- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 17 through 24 for an
explanation of how and when these charges apply.

<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Maximum Sales Charge on
Purchases
(as a % of offering price) 4.75% None
Sales Charge on Reinvested
Dividends None None
Deferred Sales Charge
(as a % of the lower of the
original purchase price or
redemption proceeds) None(1) 5% in the first
year, declining
to 1% in the
sixth year and
eliminated
thereafter

Exchange Fee $5.00(2) $5.00(2)
</TABLE>

(1) If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares" below.

(2) Fee is waived for automated exchanges on PhoneLink, described in "How
to Buy Shares."

- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager"), and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses.

The following numbers are projections of the Fund's business expenses
based on the Fund's expenses in its last fiscal year. These amounts are
shown as a percentage of the average net assets of each class of the
Fund's shares for that year. The "12b-1 Distribution Plan Fees" for Class
A shares reflect on the Service Plan Fees (which are a maximum of 0.15%
of average annual net assets of that class), and for Class B shares
include the Service Plan Fee (maximum of 0.25% but currently set at 0.15%)
and the asset-based sales charge of 0.75%. The actual expense numbers for
each class of shares in future years may be more or less, depending on a
number of factors, including the actual amount of the assets represented
by each class of shares. Class B shares were not publicly sold before May
1, 1993. Therefore the Annual Fund Operating Expenses shown for Class B
shares are based on expenses for the period from May 1, 1993 through
December 31, 1993. The Annual Fund Operating Expenses do not reflect the
voluntary assumption by the Manager of certain expenses of the Fund, which
expense assumption was terminated by the Manager as of May 26, 1993.
Additional information is contained in the Statement of Additional
Information.

<TABLE>
<CAPTION>
Class A Shares Class B Shares
<S> <C> <C>
Management Fees 0.60% 0.60%
12b-1 Distribution Plan Fees 0.15%* 0.90%**
Other Expenses 0.31% 0.28%
Total Fund Operating Expenses 1.06% 1.78%
</TABLE>

_______________________________
*Service Plan fees only
**Includes Service Plan fee and
asset-based sales charge

- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
<S> <C> <C> <C> <C>
Class A Shares $58 $80 $103 $171
Class B Shares $68 $86 $116 $173
<CAPTION>
If you did not redeem your investment, it would incur the following
expenses:

1 year 3 years 5 years 10 years(1)
Class A Shares $58 $80 $103 $171
Class B Shares $18 $56 $96 $173
</TABLE>

(1) The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and contingent deferred sales charge, long-term Class B
shareholders could pay the economic equivalent of an amount greater than
the maximum front-end sales charge permitted under applicable regulatory
requirements. The automatic conversion is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy Shares -
Class B Shares" for more information.

These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.

<PAGE>
Financial Highlights

The table on this page presents selected financial information about
the Fund, including per share data and expense ratios and other data based
on the Fund's average net assets. This information has been audited by
KPMG Peat Marwick, the Fund's independent auditors, whose report on the
Fund's financial statements for the fiscal year ended December 31, 1993
is included in the Statement of Additional Information. Class B shares
were publicly offered only during a portion of that period, commencing May
1, 1993.

<TABLE>
<CAPTION>
Class A Class B
Year Ended Period Ended
December 31, December 31,
1993 1992 1991 1990 1989(2) 1993 (1)
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning
of period $ 12.05 $ 11.93 $ 11.43 $11.58 $11.43 $12.44

Income from investment
operations:
Net investment income .69 .76 .74 .81 .18 .36
Net realized and unrealized
gain (loss) on investments .85 .17 .53 (.15) .15 .45

Total income from investment
operations 1.54 .93 1.27 .66 .33 .81

Dividends and distributions
to shareholders:
Dividends from net investment
income (.70) (.73) (.73) (.81) (.18) (.37)
Distributions from net realized
gain on investments (.04) (.08) (.04) -- -- (.04)

Total dividends and
distributions to shareholders (.74) (.81) (.77) (.81) (.18) (.41)

Net asset value, end of period $ 12.85 $ 12.05 $ 11.93 $11.43 $11.58 $12.84

Total Return, at Net Asset
Value(3) 13.12% 8.04% 11.49% 6.00% 3.25% 6.67%

Ratios/Supplemental Data
Net assets, end of period
(in thousands) $64,640 $33,290 $13,791 $8,406 $2,353 $5,576

Average net assets
(in thousands) $50,974 $21,936 $10,717 $5,170 $1,231 $2,770

Number of shares outstanding at
end of period (in thousands) 5,031 2,764 1,156 735 203 434

Ratios to average net assets:
Net investment income 5.52% 6.36% 6.30% 7.06% 6.12%(4) 4.26%(4)
Expenses, before voluntary
assumption by the Manager 1.06% 1.39% 1.29% 1.77% 2.49%(4) 1.78%(4)
Expenses, net of voluntary
assumption by the Manager .99% 1.06% N/A .59% .91%(4) 1.78%(4)

Portfolio turnover rate(5) 14.6% 29.9% 15.5% 5.3% 0.0% 14.6%
<FN>
1. For the period from May 1, 1993 (inception of offering) to December 31,
1993.
2. For the period from September 18, 1989 (commencement of operations) to
December 31, 1989.
3. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends
and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not
reflected in the total returns.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value
of portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of
one year or less are excluded from the calculation. Purchases and sales
of investment securities (excluding short-term
securities) for the year ended December 31, 1993 were $38,371,268 and
$7,343,064, respectively.

</TABLE>
<PAGE>
Investment Objective and Policies

Objective. The Fund seeks as high a level of current interest income
exempt from Federal and Pennsylvania income taxes for individual investors
as is available from Municipal Securities (which are described below) and
consistent with preservation of capital. The Fund is not intended to be
a complete investment program, and there is no assurance that it will
achieve its objective.

Investment Policies and Strategies. The Fund seeks its objective by
following the fundamental policy of investing, under normal market
conditions, at least 80% (and attempting to invest, as a non-fundamental
policy, 100%) of its total assets in Municipal Securities and making no
investment that will reduce to less than 80% the portion of its total
assets that are invested in Pennsylvania Municipal Securities (which are
described below). Under normal market conditions, the Fund may invest
the remainder of its assets in the following taxable investments:
Municipal Securities other than Pennsylvania Municipal Securities;
Municipal Securities issued to benefit a private user ("Private Activity
Municipal Securities"), the interest from which may be subject to Federal
alternative minimum tax; hedging instruments; temporary investments; and
repurchase agreements. However, during adverse market or economic
conditions, the Fund may invest for temporary defensive purposes and
invest up to 100% of its total assets in investments other than Municipal
Securities, including taxable investments.

Dividends paid by the Fund derived from interest attributable to
Pennsylvania Municipal Securities will be exempt from Federal individual
income taxes. To the extent that distributions are derived from interest
on Pennsylvania Municipal Securities and obligations of the U.S.
Government, or certain of its territories, agencies and instrumentalities,
such distributions also will be exempt from Pennsylvania personal income
taxes and, in the case of residents of Philadelphia, the investment income
tax of the School District of Philadelphia (provided at least 80% of the
Fund's assets are, at all times, invested in such obligations). Dividends
derived from interest on Municipal Securities of other governmental
issuers will be exempt from Federal individual income tax, but will be
subject to Pennsylvania individual incomes taxes. Any net interest income
on taxable investments and repurchase agreements will be taxable as
ordinary income when distributed to shareholders.

- Temporary Defensive Investment Strategy. In times of unstable
economic or market conditions, the Manager may determine that it would be
appropriate for the Fund to assume a temporary "defensive" position and
invest some or all of its assets in temporary investments. This strategy
would be implemented to attempt to reduce fluctuations in the value of the
Fund's assets. Pursuant to this strategy, the Fund may invest in the
taxable obligations described above and in temporary investments,
including the following: obligations issued or guaranteed by the U.S.
Government, its instrumentalities or agencies; "prime" commercial paper
rated "A-1" by Standard & Poor's Corporation ("S&P") or Fitch Investors
Service, Inc. ("Fitch") or "P-1" by Moody's Investors Service, Inc.
("Moody's"); corporate debt securities rated within the three highest
grades by S&P, Fitch or Moody's; or bankers acceptances, time deposits
and certificates of deposit of domestic banks with assets of $1 billion
or more. The Fund may hold temporary investments pending the investment
of proceeds from the sale of Fund shares or portfolio securities, pending
settlement of purchases of Municipal Securities, or to meet anticipated
redemptions. To the extent the Fund assumes a temporary defensive
position, a portion of the Fund's distributions may be subject to Federal
and state income taxes and the Fund may not achieve its objective.

- Credit and Interest Rate Risks. The values of Municipal
Securities will vary as a result of changing evaluations by rating
services and investors of the ability of the issuers of such securities
to meet interest and principal payments. Generally, higher-yielding,
lower-rated Municipal Securities are subject to greater credit risk than
higher-rated bonds. The values of Municipal Securities will also change
in response to changes in prevailing interest rates. Should prevailing
interest rates rise, the values of outstanding Municipal Securities will
decline and (if purchased at principal amount) would sell at a discount.
Conversely, if interest rates fall, the values of outstanding Municipal
Securities will increase and (if purchased at principal amount) would sell
at a premium. The magnitude of these fluctuations will be greater when
the average maturity of these securities is longer. It is anticipated that
the Municipal Securities purchased for the Fund's portfolio will normally
be those having longer maturities (7 to 30 years), but the Fund may invest
in Municipal Securities having a broad range of maturities. Changes in the
values of Municipal Securities owned by the Fund from these or other
factors will not affect interest income derived from these securities but
will affect the Fund's net asset value per share.

- Special Considerations - Pennsylvania Municipal Securities. The
Fund concentrates its investments in Municipal Securities issued by
Pennsylvania and its agencies, authorities, instrumentalities and
subdivisions. The market value and marketability of Pennsylvania
Municipal Securities and the interest income and repayment of principal
to the Fund from them could be adversely affected by a default or a
financial crisis relating to any of such issuers. For example, the
Commonwealth of Pennsylvania and certain of its municipalities (most
notably the City of Philadelphia) have from time to time experienced
significant budget deficits and other financial difficulties. Investors
should consider these matters as well as economic trends in Pennsylvania,
which are discussed in the Statement of Additional Information.

- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, it uses certain investment techniques and strategies in
carrying out those policies. The Fund's investment policies and practices
are not "fundamental" unless the Prospectus or Statement of Additional
Information says that a particular policy is "fundamental."

Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act"), to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Fund's investment objective is a fundamental
policy. The Board of Trustees of the Trust (as defined below) may change
non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.

Municipal Securities and Pennsylvania Municipal Securities. Municipal
Securities consist of municipal bonds, municipal notes (including tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
construction loan notes and other short-term loans), tax-exempt commercial
paper and other debt obligations issued by or on behalf of the
Commonwealth of Pennsylvania or its political subdivisions, other states
and the District of Columbia, their political subdivisions, or any
commonwealth or territory of the United States, or their respective
agencies, instrumentalities or authorities, the interest from which is not
subject to Federal income tax, in the opinion of bond counsel to the
respective issuer. Pennsylvania Municipal Securities are Municipal
Securities the interest from which is not subject to Pennsylvania personal
income tax in the opinion of bond counsel for the respective issuer. No
independent investigation has been made by the Manager as to the users of
proceeds of bond offerings or the application of such proceeds.

"Municipal bonds" are Municipal Securities that have a maturity when
issued of one year or more and "municipal notes" are Municipal Securities
that have a maturity when issued of less than one year. The two principal
classifications of Municipal Securities are "general obligations" (secured
by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest) and "revenue obligations" (payable only
from the revenues derived from a particular facility or class of
facilities, or specific excise tax or other revenue source). The Fund may
invest in Municipal Securities of both classifications.

- Municipal Lease Obligations. Municipal leases may take the form
of a lease or an installment purchase contract issued by state and local
government authorities to obtain funds to acquire a wide variety of
equipment and facilities. The Fund may purchase certificates of
participation that represent a proportionate interest in or right to the
lease purchase payment under the municipal lease. Certain of these
securities may be deemed to be "illiquid" securities and their purchase
would be limited as described below in "Illiquid Securities". Investment
in certificates of participation that the Manager has determined to be
liquid (under guidelines set by the Board) will not be subject to such
limitations. Those guidelines require the Manager to evaluate: (1) the
frequency of trades and price quotations for such securities, (2) the
number of dealers or other potential buyers willing to purchase or sell
such securities; (3) the availability of market-makers; and (4) the nature
of the trades for such securities. The Manager will also evaluate the
likelihood of a continuing market for such securities throughout the time
they are held by the Fund and the credit quality of the instrument.

- Floating Rate/Variable Rate Obligations. Some of the Municipal
Securities the Fund may purchase may have variable or floating interest
rates. Variable rates are adjustable at stated periodic intervals.
Floating rates are automatically adjusted according to a specified market
rate for such investments, such as the percentage of the prime rate of a
bank, or the 91-day U.S. Treasury Bill rate. Such obligations may be
secured by bank letters of credit or other credit support arrangements.

- Inverse Floaters and Other Derivative Instruments. The Fund may
invest in variable rate bonds. These bonds pay interest at a rate that
varies as the yields generally available on short-term tax-exempt bonds
change. When the yields on those bonds increase, the interest rate on the
inverse variable rate bond goes down. When the yields on short-term tax-
exempt bonds go down, the interest rate on the inverse variable rate bond
goes up. These variable rate bonds are known as "inverse floaters." As
interest rates rise, inverse floaters produce less current income.
Inverse floaters are a type of "derivative security," which is a specially
designed investment whose performance is linked to the performance of
another security or investment. The risks of investing in derivative
securities include not only the ability of the issuer of the security to
pay the amount due on the maturity of the security, but also the risk that
the underlying security or investment might not perform the way the
Manager expected it to perform. That can mean that the Fund will realize
less income than expected or none.

The Fund may also invest in municipal "derivative" securities that
pay interest that depends on an external pricing mechanism. Examples are
interest rate swaps or caps and municipal bond or swap indices. Another
risk of derivative securities is that their market value could be expected
to vary to a much greater extent than the market value of municipal
securities that are not derivatives but have similar credit quality,
redemption provisions and maturities.

- How Municipal Securities Held by the Fund are Rated. At the time
of purchase by the Fund, Municipal Securities must be rated within the
four highest rating categories of Moody's (Aaa, Aa, A and Baa), or S&P or
Fitch (AAA, AA, A and BBB) or, if unrated, judged by the Manager to be of
comparable quality to Municipal Securities rated within such grades.
Appendix A to the Statement of Additional Information describes these
rating categories. Investments in unrated Municipal Securities will not,
at the time of purchase, exceed 25% of the Fund's total assets. Not more
than 25% of the Fund's total assets will be invested in Municipal
Securities that are (i) municipal bonds rated either "Baa" by Moody's or
"BBB" by either S&P or Fitch, (ii) municipal notes rated "SP-2" by S&P,
"MIG2" by Moody's or "F-2" by Fitch, or (iii) if unrated, Municipal
Securities judged by the Manager to be of comparable quality to Municipal
Securities rated within the grades described in (i) and (ii) above,
because such Municipal Securities, although investment grade, may be
subject to greater market fluctuations and risks of loss of income and
principal than higher-rated Municipal Securities, and may be considered
to have some speculative characteristics.

A reduction in the rating of a security after its purchase by the
Fund will not require the Fund to dispose of such security. Securities
that have fallen below investment grade have a greater risk that the
ability of the issuers of such securities to meet their debt obligations
will be impaired. As of December 31, 1993, the Fund's portfolio included
Municipal Securities in the following Moody's, S&P and Fitch rating
categories (the amounts shown are dollar-weighted average values of the
Municipal Securities in each category measured as a percentage of the
Fund's total assets): AAA/Aaa, 54.7%; AA/Aa, 11.9%; A/A, 14.5%; BBB/Baa,
13.0%; and BB/Ba, 0.8%; unrated by Moody's, S&P or Fitch, 5.1%.

- Non-diversification. The Fund is a "non-diversified" investment
company under the Investment Company Act. As a result, it may invest its
assets in a single issuer or limited number of issuers without limitation
by the Investment Company Act. However, the Fund intends to qualify as
a "regulated investment company" under the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code"), pursuant to which (i) not more
than 25% of the market value of the Fund's total assets will be invested
in the securities of a single issuer, and (ii) with respect to 50% of the
market value of its total assets, not more than 5% of the market value of
its total assets may be invested in the securities of a single issuer and
the Fund must not own more than 10% of the outstanding voting securities
of a single issuer. An investment in the Fund will entail greater risk
than an investment in a diversified investment company because a higher
percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the Fund's portfolio, and
economic, political or regulatory developments may have a greater impact
on the value of the Fund's portfolio than would be the case if the
portfolio were diversified among more issuers.

Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
detailed information about these practices, including limitations designed
to reduce some of the risks. For more information, please refer to the
description of these techniques under the same headings in "Other
Investment Techniques and Strategies" in the Statement of Additional
Information.

- When-Issued Securities. The Fund may purchase Municipal
Securities on a "when-issued" basis and may purchase or sell such
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to the Fund
if the value of the security declines prior to the settlement date.

- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor fails to
pay the re-sale price on the delivery date, the Fund may experience costs
in disposing of the collateral and losses if there is any delay in doing
so.

- Illiquid Securities. Under the policies and procedures
established by the Trust's Board of Trustees, the Manager determines the
liquidity of the Fund's investments. Investments may be illiquid because
of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. The Fund will
not invest more than 10% of its net assets in illiquid investments (that
limit may increase to 15% if applicable state law permits). The Fund may
not invest any portion of its assets in restricted securities, which are
securities that contain a contractual restriction on its resale or that
cannot be sold publicly until registered under the Securities Act of 1933,
as amended.

- Loans of Portfolio Securities. The Fund may lend its portfolio
securities (other than in repurchase transactions) amounting to not more
than 25% of its total assets to brokers, dealers and other financial
institutions, subject to certain conditions described in the Statement of
Additional Information. The Fund presently does not intend to lend its
portfolio securities, but if it does, the value of securities loaned is
not expected to exceed 5% of the value of its total assets.

- Writing Covered Calls. The Fund may write (that is, sell) covered
call options (calls) on debt securities to raise cash for liquidity
purposes (for example, to meet redemption requirements) or for defensive
reasons. The Fund may write calls only if certain conditions are met:
(1) after writing any call, not more than 25% of the Fund's total assets
may be subject to calls; (2) the calls must be listed on a domestic
securities or commodities exchange or quoted on the automated quotation
system of the National Association of Securities Dealers, Inc.; and (3)
each call must be "covered" while it is outstanding; that is, the Fund
must own the securities on which the call is written or it must own other
securities that are acceptable for the escrow arrangements required for
calls. If a covered call written by the Fund is exercised on a security
that has increased in value, the Fund will be required to sell the
security at the call price and will not be able to realize any profit on
the security above the call price.

- Hedging With Options and Futures Contracts. The Fund may buy and
sell options and futures contracts and engage in interest rate swap
transactions to manage its exposure to changing interest rates and
securities prices. Some of these strategies, such as selling futures,
buying puts and writing calls, hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and calls,
tend to increase market exposure. The Fund may invest in interest rate
futures (futures contracts that relate to debt securities) and municipal
bond index futures (futures contracts that relate to municipal bond
indices), purchase put options and purchase and sell call options on debt
securities, interest rate futures, and municipal bond index futures and
engage in interest rate swap transactions. All of these are referred to
as "hedging instruments." The Fund may also purchase calls to effect a
"closing purchase transaction" to terminate its obligations as to a call
it has previously written.

The Fund may enter into a stand-by commitment, pursuant to which a
dealer agrees to purchase, at the Fund's option, specified Municipal
Securities at a stated price on same day settlement. The aggregate price
of a security subject to a stand-by commitment may be higher than the
price which would otherwise be paid for the security without such stand-by
commitment, thus increasing the cost of the security and reducing its
yield.

A call or put may not be purchased if the value of all of the Fund's
call and put options would exceed 5% of the value of the Fund's total
assets. The Fund is not permitted to write (sell) puts. The Fund does not
use hedging instruments for speculative purposes and all transactions
involving hedging instruments will be in accordance with the requirement
that the Fund invest in securities to earn income but not trade for
profit. All puts and calls on securities, futures or options on such
futures purchased or sold by the Fund will be listed on a national
securities or commodities exchange or quoted on NASDAQ. The aggregate
premiums paid on all such options which the Fund holds at any time will
be limited to 20% of the Fund's total assets and the aggregate margin
deposits on all such futures or options thereon at any time will be
limited to 5% of the Fund's total assets.

Hedging instruments can be volatile investments and may involve
special risks. If the Manager uses a hedging instrument at the wrong time
or judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market for the future or option.

Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, in writing puts, there is a risk that the Fund
may be required to buy the underlying security at a disadvantageous price.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.

Other Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies.

Under the these fundamental policies, the Fund cannot do any of the
following: (i) invest in securities or any other investment other than the
Municipal Securities, temporary investments, taxable investments and
hedging instruments described in "Investment Policies and Strategies,"
"Municipal Securities and Pennsylvania Municipal Securities" and "Other
Investment Techniques and Strategies" above; (ii) make loans, except
through the purchase of portfolio securities subject to repurchase
agreements or through loans of portfolio securities as described under
"Other Investment Techniques and Strategies"; (iii) borrow money in excess
of 10% of the value of its total assets, or make any additional
investments whenever borrowings exceed 5% of the Fund's total assets; it
may borrow only from banks as a temporary measure for extraordinary or
emergency purposes (not for the purpose of leveraging its investments);
(iv) pledge, mortgage or otherwise encumber, transfer or assign any of its
assets to secure a debt; collateral arrangements for premium and margin
payments in connection with hedging instruments are not deemed to be a
pledge of assets; (v) concentrate investments to the extent of more than
25% of its total assets in any industry; however, there is no limitation
as to investment in Municipal Securities, U.S. Government obligations or
in obligations issued by Pennsylvania or its subdivisions, agencies,
authorities or instrumentalities; or (vi) buy or sell futures contracts
other than interest rate futures or municipal bond index futures.

Under prior Pennsylvania law, in order for the Fund to qualify to
provide the Pennsylvania state and local tax benefits described above and
in the Statement of Additional Information, the Fund was required to
invest in securities to earn income but not to trade for profits. In
order to comply with this and other Pennsylvania law requirements
previously in effect, the investment policies of the Fund include, as a
fundamental policy, that the Fund will not vary its portfolio investments
except to: (i) eliminate unsafe investments and investments not consistent
with the preservation of the Fund's capital or the tax status of the
Fund's investments; (ii) honor redemption orders, meet anticipated
redemption requirements and negate gains from discount purchases; (iii)
reinvest the earnings from securities in like securities; and (iv) defray
normal administrative expenses. These limitations, applicable to the
investment policies of the Fund, including the special investment methods
described above, may cause the Fund to have less flexibility than other
mutual funds in responding to changes in market conditions, interest rates
or new investment opportunities.

All of the percentage restrictions described above and elsewhere in
this Prospectus apply to the Fund only at the time the Fund purchases a
security, and the Fund need not dispose of a security merely because the
Fund's assets have changed or the security has increased in value relative
to the size of the Fund. There are other fundamental policies discussed
in the Statement of Additional Information.

How the Fund is Managed

Organization and History. The Fund was organized in 1989 as a
Massachusetts business trust with one series, but in June 1993, that
business trust was reorganized to become a multi-series business trust
called Oppenheimer Multi-State Tax-Exempt Trust (the "Trust"), and the
Fund became a series of it. The Trust is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest. Each of the three series of the Trust is
a fund that issues its own shares, has its own investment portfolio, and
its own assets and liabilities.

The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Trust. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Declaration of Trust of the Trust.

The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has two classes of shares, Class A and
Class B. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes. Each
class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a particular class vote together on matters that affect that
class alone. Shares are freely transferrable.

The Manager and Its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities and its fees, and describes the expenses that
the Fund pays to conduct its business.

The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $27 billion as
of December 31, 1993, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.

- Portfolio Manager. The portfolio manager of the Trust (who is
also a Vice President of the Trust) is Robert E. Patterson, a Senior Vice
President of the Manager. He has been primarily responsible for the day-
to-day management of the Fund's portfolio since September 1989. Mr.
Patterson has also served as an officer and portfolio manager for other
OppenheimerFunds.

- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.60% of the first $200 million of
net assets; 0.55% of the next $100 million; 0.50% of the next $200
million; 0.45% of the next $250 million; 0.40% of the next $250 million
and 0.35% of net assets over $1 billion. The Fund's management fee for
its last fiscal year was 0.53% of average annual net assets for Class A
shares (after the voluntary expense assumption, described in the Statement
of Additional Information) of 0.07% of average annual net assets) and
0.60% for Class B shares, which may be higher than the rate paid by some
other mutual funds.

The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses affect the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the Investment Advisory
Agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.

There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. Because the Fund
purchases most of its portfolio securities directly from the sellers and
not through brokers, it therefore incurs relatively little expense for
brokerage. From time to time it may use brokers when buying portfolio
securities. When deciding which brokers to use, the Manager is permitted
by the Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves as
investment adviser.

- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.

- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus or on the back cover.

Performance of the Fund

Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return," "yield" and "tax-equivalent
yield". These terms are used to show the performance of each class of
shares separately, because the performance of each class of shares will
usually be different, as a result of the different kinds of expenses each
class bears. This performance information may be useful to help you see
how well your investment has done and to compare it to other funds or
market indices, as we have done below.

It is important to understand that the Fund's yields and total
returns represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns and
yields are calculated is contained in the Statement of Additional
Information, which also contains information about other ways to measure
and compare the Fund's performance. The Fund's investment performance will
vary, depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.

- Total Returns. There are different types of "total returns" used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.

When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may be quoted
"at net asset value," without considering the effect of the sales charge,
and these returns would be reduced if sales charges were deducted. When
total returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown, or else they may be shown based just on the change
in net asset value, without considering the effect of the contingent
deferred sales charge.

- Yield and Tax-Equivalent Yield. Each class of shares calculates
its yield by dividing the annualized net investment income per share on
the portfolio during a 30-day period by the maximum offering price on the
last day of the period. The yield of each class will differ because of the
different expenses of each class of shares. The yield data represents a
hypothetical investment return on the portfolio, and does not measure an
investment return based on dividends actually paid to shareholders. To
show that return, a dividend yield may be calculated. Dividend yield is
calculated by dividing the dividends of a class derived from net
investment income during a stated period by the maximum offering price on
the last day of the period. Yields and dividend yields for Class A shares
reflect the deduction of the maximum initial sales charge, but may also
be shown based on the Fund's net asset value per share. Yields for Class
B shares do not reflect the deduction of the contingent deferred sales
charge. The tax-equivalent yield for each class of shares shows the
effect on performance of the tax-exempt status of distributions received
from the Fund. It reflects the approximate yield that a taxable
investment must earn for shareholders at stated income levels to produce
an after-tax yield equivalent to the Fund's tax-exempt yield.

How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1993,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.

- Management's Discussion of Performance. During the Fund's fiscal
year ended December 31, 1993, the Manager emphasized investment in higher
quality Municipal Securities, with an emphasis on essential service
revenue bonds such as hospital and transportation issues, and diversified
the Fund's portfolio geographically within the Commonwealth of
Pennsylvania and by market sector. During the fiscal year, the general
municipal bond market turned in a strong performance, and the Pennsylvania
municipal bond market followed this trend, benefitting from declining
interest rates, gradual economic growth and increased federal tax rates,
which increased demand for tax-exempt securities offering after-tax yields
higher than those offered by other fixed-income alternatives.

- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each class
of shares of the Fund from the inception of the class through December 31,
1993, with all dividends and capital gains distributions reinvested in
additional shares. The graph reflects the deduction of the 4.75% maximum
initial sales charge on Class A shares and the maximum 5% contingent
deferred sales charge for Class B shares.

The Fund's performance is compared to the performance of the Lehman
Brothers Municipal Bond Index, an unmanaged index of a broad range of
investment grade municipal bonds that is widely regarded as a measure of
the performance of the general municipal bond market. Index performance
reflects the reinvestment of dividends but does not consider the effect
of capital gains or transaction costs, and none of the data below shows
the effect of taxes. Also, the Fund's performance data reflects the
effect of Fund business and operating expenses. While index comparisons
may be useful to provide a benchmark for the Fund's performance, it must
be noted that the Fund's investments are not limited to the securities in
any one index. Moreover, the index data does not reflect any assessment
of the risk of the investments included in the index.

Oppenheimer Pennsylvania Tax-Exempt Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to
Lehman Brothers Municipal Bond Index

(Graph)

Past Performance is not predictive of future performance.

Oppenheimer Pennsylvania Tax-Exempt Fund
Average Annual Total Return of Class A shares at 12/31/93
Cumulative Total Return of Class B shares at 12/31/93

1 Year Life of Class

Class A: 7.74% 8.53% (from 9/18/89)
Class B: (not applicable) 1.67% (from 5/1/93)

ABOUT YOUR ACCOUNT

How to Buy Shares

Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.

- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, and you sell any of those shares within 18
months after your purchase, you will pay a contingent deferred sales
charge, which will vary depending on the amount you invested.

- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares.

Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor:

- How Much Do You Plan to Invest? If you plan to invest a
substantial amount, the reduced sales charges available for larger
purchases of Class A shares may be more beneficial to you, and for
purchases over $1 million, the contingent deferred sales charge on Class
A shares may be more beneficial. The Distributor will not accept any order
for $1 million or more for Class B shares on behalf of a single investor
for that reason.

- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, investors who prefer
not to pay an initial sales charge and who plan to hold their shares for
more than 6 years might consider Class B shares. Investors who plan to
redeem shares within 7 years might prefer Class A shares.

- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B
shareholders, such as checkwriting, you should carefully review how you
plan to use your investment account before deciding which class of shares
is better for you. Additionally, the dividends payable to Class B
shareholders will be reduced by the additional expenses borne solely by
that class, such as the asset-based sales charge to which Class B shares
are subject, as described below and in the Statement of Additional
Information.

- How Does It Affect Payments to My Broker? A salesperson or any
other person who is entitled to receive compensation for selling Fund
shares may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the contingent deferred sales charge and asset-based sales
charge for Class B shares is the same as the purpose of the front-end
sales charge on sales of Class A shares.

How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:

With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.

There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.

- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A or Class B shares. If you do not choose, your investment
will be made in Class A shares.

- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.

- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares.

- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink," below for more details.

- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.

- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value that is next determined after
the Distributor receives the purchase order in Denver. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by 4:00 P.M., New York time (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day"). If you buy shares
through a dealer, the dealer must receive your order by 4:00 P.M. on a
regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.

Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers are as follows:

<TABLE>
<CAPTION>
_______________________________________________________________________
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_______________________________________________________________________
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%

$50,000 or more but
less than $100,000 4.50% 4.71% 4.00%

$100,000 or more but
less than $250,000 3.50% 3.63% 3.00%

$250,000 or more but
less than $500,000 2.50% 2.56% 2.25%

$500,000 or more but
less than $1 million 2.00% 2.04% 1.80%
_______________________________________________________________________
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.

- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more. However, the Distributor
pays dealers of record commissions on such purchases in an amount equal
to the sum of 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of share purchases over $5 million. However, that
commission will be paid only on the amount of those purchases in excess
of $1 million that were not previously subject to a front-end sales charge
and dealer commission.

If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.

No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.

- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. The Distributor sponsors an annual sales conference to which a
dealer firm is eligible to send, with a guest, a registered representative
who sells more than $2.5 million of Class A shares of OppenheimerFunds
(other than money market funds) in a calendar year, or the dealer may, at
its option, receive the equivalent cash value of that award as additional
commission.

Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:

- Right of Accumulation. You and your spouse can cumulate Class A
shares you purchase for your own accounts, or jointly, or on behalf of
your children who are minors, under trust or custodial accounts. A
fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.

Additionally, you can cumulate current purchases of Class A shares
of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds; the value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.

- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the aggregate
amount of the intended purchases, including purchases made up to 90 days
before the date of the Letter. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.

- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); or (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients.

Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party or (b) purchased by the
reinvestment of dividends or other distributions reinvested from the Fund
or other OppenheimerFunds (other than the Cash Reserves Funds) or unit
investment trusts for which reinvestment arrangements have been made with
the Distributor. There is a further discussion of this policy in "Reduced
Sales Charges" in the Statement of Additional Information.

The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) Automatic Withdrawal Plan
payments that are limited to no more than 12% of the original account
value annually; and (2) involuntary redemptions of shares by operation of
law or under the procedures set forth in the Trust's Declaration of Trust
or adopted by the Board of Trustees.

- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.15% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Trust's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.

Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.

To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.

The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Years Since Purchase Payment on Redemptions in that Year
Was Made (As % of Amount Subject to Charge)
<S> <C>
0 - 1 5.0%
- --------------------------------------------------------------------
1 - 2 4.0%
- --------------------------------------------------------------------
2 - 3 3.0%
- --------------------------------------------------------------------
3 - 4 3.0%
- --------------------------------------------------------------------
4 - 5 2.0%
- --------------------------------------------------------------------
5 - 6 1.0%
- --------------------------------------------------------------------
6 and following None
- --------------------------------------------------------------------
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.

- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if a request is made for redemption following
the death or disability of the shareholder (you must provide evidence of
a determination of disability by the Social Security Administration).

The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.

- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A and Class B Shares" in the
Statement of Additional Information.

- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of up to 0.25% per year. The Board has currently set the
service fee at 0.15% per year, which amount may be increased by the Board
from time to time to an amount not exceeding 0.25% per year. The service
fee and asset-based sales charge are computed on the average annual net
assets of Class B shares, determined as of the close of each regular
business day. The asset-based sales charge allows investors to buy Class
B shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell Class B shares.

The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% (currently 0.90% as described above) of
average net assets per year.

The Distributor pays the 0.15% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor currently pays sales commissions of 3.85%
of the purchase price to dealers from its own resources at the time of
sale. The Distributor retains the asset-based sales charge to recoup the
sales commissions it pays, the advances of service fee payments it makes,
and its financing costs.

Because the Distributor's actual expenses in selling Class B shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B shares, those expenses may be
carried over and paid in future years. At December 31, 1993, the end of
the Plan year, the Distributor had incurred unreimbursed expenses under
the Plan of $219,856 (equal to 3.94% of the Fund's net assets represented
by Class B shares on that date), which have been carried over into the
present Plan year. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for certain expenses it incurred before the Plan
was terminated.

Special Investor Services

AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.

AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.

- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.

- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.

- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.

- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to
"Exchange Privilege," below, for details.

- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.

Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:

- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of Withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.

- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The minimum purchase for
each other OppenheimerFunds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.

Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying
sales charge. This privilege applies to Class A shares that you sell, and
Class B shares on which you paid a contingent deferred sales charge when
you redeemed them. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.

How to Sell Shares

You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
Checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.

- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations (there
may be other situations also requiring a signature guarantee):

- You wish to redeem more than $50,000 worth of shares and receive
a check
- The check is not payable to all shareholders listed on the account
statement
- The check is not sent to the address of record on your statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)

- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, you must also include your title in the signature.

Selling Shares by Mail. Write a "letter of instructions" that includes:

- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.

Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217

Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231

Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. You may not redeem shares held under a share
certificate by telephone.

- - To redeem shares through a service representative, call 1-800-852-8457
- - To redeem shares automatically on PhoneLink, call 1-800-533-3310

Whichever method you use, you may have a check sent to the address
on the account, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that account.

- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each seven-day period. The check must be payable
to all owners of record of the shares and must be sent to the address on
the account. This service is not available within 30 days of changing the
address on an account.

- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.

CheckWriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.

- - Checks can be written to the order of whomever you wish, but may not be
cashed at the Fund's bank or custodian.
- - Checkwriting privileges are not available for accounts holding Class B
shares or Class A shares that are subject to a contingent deferred sales
charge.
- - Checks must be written for at least $100.
- - Checks cannot be paid if they are written for more than your account
value.
Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
- - You may not write a check that would require the Fund to redeem shares
that were purchased by check or Asset Builder Plan payments within the
prior 15 days.
- - Don't use your checks if you changed your Fund account number.

The Fund will charge a $10 fee for any check that is not paid because
(1) the owners of the account told the Fund not to pay the check, or (2)
the check was for more than the account balance, or (3) the check did not
have the proper signatures, (4) or the check was written for less than
$100.

How to Exchange Shares

Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges between already established
accounts on PhoneLink described below. To exchange shares, you must meet
several conditions:

- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus

Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same two classes of
shares. If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A shares and either Class B or Class C
shares, and a list can be obtained by calling the Distributor at 1-800-
525-7048. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.

Exchanges may be requested in writing or by telephone:

- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."

- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.

You can obtain a list of eligible OppenheimerFunds in the Statement
of Additional Information or by calling the Transfer Agent at 1-800-525-
7048. Exchanges of shares involve a redemption of the shares of the fund
you own and a purchase of shares of the other fund.

There are certain exchange policies you should be aware of:

- - Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which
the Transfer Agent receives an exchange request by 4:00 P.M. that is in
proper form, but either fund may delay the purchase of shares of the fund
you are exchanging into if it determines it would be disadvantaged by a
same-day transfer of the proceeds to buy shares. For example, the receipt
of multiple exchange requests from a dealer in a "market-timing" strategy
might require the disposition of securities at a time or price
disadvantageous to the Fund.

- - Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.

- - The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund will attempt to provide you notice whenever it
is reasonably able to do so, it may impose these changes at any time.

- - If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.

Shareholder Account Rules and Policies

- Net Asset Value Per Share is determined for each class of shares
as of 4:00 P.M. each day The New York Stock Exchange is open by dividing
the value of the Fund's net assets attributable to a class by the number
of shares of that class that are outstanding. The Trust's Board of
Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities, short-term obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.

- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.

- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.

- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.

- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.

- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the Dealer performs any transaction
erroneously.

- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A and Class B shares. Therefore, the redemption
value of your shares may be more or less than their original cost.

- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 15 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.

- Involuntary redemptions may be made by the Fund to repay the
Distributor for losses from the cancellation of share purchase orders.

- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.

- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.

- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.

- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report and
updated prospectus to shareholders having the same address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-800-
525-7048 to ask that copies of those materials be sent personally to that
shareholder.

Dividends, Capital Gains and Taxes

Dividends. The Fund declares dividends separately for Class A and Class
B shares from net tax-exempt income and/or net investment income each
regular business day and pays those dividends to shareholders monthly.
Normally, dividends are paid on the tenth business day of every month, but
the Board of Trustees can change that date. It is expected that
distributions paid with respect to Class A shares will generally be higher
than for Class B shares because expenses allocable to Class B shares will
generally be higher.

Prior to May 26, 1993, the Manager had undertaken to assume the
Fund's expenses to the extent required to enable the Fund to pay dividends
at a targeted level per share for Class A shares. This voluntary expense
assumption was terminated as of May 26, 1993. As a result of the
undertaking, the Fund's net asset value was higher during the period in
which the undertaking was in effect than the net asset value otherwise
would have been. There can be no assurance as to the payment of any
dividends or the realization of any capital gains and dividends and
distributions may vary from time to time, depending upon market
conditions, the composition of the Fund's portfolio and expenses borne by
the particular Class of shares. The Fund does not maintain a targeted
dividend level.

Capital Gains. Although the Fund does not seek capital gains, the Fund may
realize capital gains on the sale of portfolio securities. If it does,
it may make distributions in December out of any net short-term or long-
term capital gains. The Fund may also make supplemental distributions of
capital gains following the end of its fiscal year. Long-term capital
gains will be separately identified in the tax information the Fund sends
you after the end of the year. Short-term capital gains are treated as
dividends for tax purposes.

Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. You have four
options:

- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in
additional shares of the Fund.

- Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.

- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.

- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds
account you have established.

Taxes. You should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term capital
gains when distributed to shareholders. Dividends paid from short-term
capital gains are taxable as ordinary income. Dividends paid from net
investment income earned by the Fund on Municipal Securities will be
excludable from your gross income for Federal income tax purposes. A
portion of the dividends paid by the Fund may be an item of tax preference
if you are subject to alternative minimum tax. The treatment of tax-exempt
interest income is discussed at length in the Statement of Additional
Information. Distributions subject to federal income tax and/or state or
local taxes will be taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of any taxable distribution you
received in the previous year. Receipt of tax-exempt income must be
reported on your federal income tax return.

- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy
shares on or just before the ex-dividend date, or just before the
Fund declares a capital gains distribution, you will pay the full
price for the shares and then receive a portion of the price back as
a tax-exempt dividend or a taxable capital gain.

- Taxes on Transactions: Although the Fund seeks tax-exempt income
to distribute to shareholders, you may have a capital gain or loss
when you sell or exchange your shares. The capital gain or loss is
the difference between the price you paid for the shares and the
price you receive when you sell them. Any capital gains are subject
to capital gains tax.

- Returns of Capital: In certain cases, distributions made by the
Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders.

This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.

<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND

Graphic material included in Prospectus of Oppenheimer Pennsylvania
Tax-Exempt Fund: "Comparison of Total Return of Oppenheimer Pennsylvania
Tax-Exempt Fund with The Lehman Brothers Municipal Bond Index - Change in
Value of a $10,000 Hypothetical Investment"

A linear graph will be included in the Prospectus of Oppenheimer
Pennsylvania Tax-Exempt Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in the Fund during each of the Fund's fiscal years since the commencement
of the Fund's operations as to Class A shares (September 18, 1989) and the
initial public offering of Class B shares (May 1, 1993) and comparing such
values with the same investments over the same time periods with The
Lehman Brothers Municipal Bond Index. Set forth below are the relevant
data points that will appear on the linear graph. Additional information
with respect to the foregoing, including a description of The Lehman
Brothers Municipal Bond Index, is set forth in the Prospectus under
"Performance of the Fund - How Has the Fund Performed?"
<TABLE>
<CAPTION>
Fiscal Year Oppenheimer Pennsylvania Lehman Brothers (Period)
Ended Tax-Exempt Fund A Municipal Bond Index
<S> <C> <C>
9/18/89(1) $9,525 $10,000
12/31/89 $9,805 $10,384
12/31/90 $10,392 $11,141
12/31/91 $11,582 $12,494
12/31/92 $12,509 $13,595
12/31/93 $14,204 $15,265
<CAPTION)
Fiscal Year Oppenheimer Pennsylvania Lehman Brothers (Period)
Ended Tax-Exempt Fund B Municipal Bond Index

5/1/93(2) $10,000 $10,000
12/31/93 $10,167 $10,718

(1) The Fund commenced operations on September 18, 1989.

(2) Class B shares of the Fund were first publicly offered on May 1, 1993.

<PAGE>
Oppenheimer Pennsylvania Tax-Exempt Fund
Two World Trade Center
New York, New York 10048-0203
Telephone: 1-800-525-7048

Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203

Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203

Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048

Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043

Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given
or made, such information and representation must not be relied upon as
having been authorized by the Fund, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such offer in such state.

PR740(4/93) * Printed on recycled paper

Prospectus

OPPENHEIMER
Pennsylvania Tax-Exempt Fund

Effective April 29, 1994

(OppenheimerFunds Logo)

<PAGE>
Prospectus and
New Account Application

OPPENHEIMER
Pennsylvania Tax-Exempt Fund

Effective April 29, 1994

(OppenheimerFunds Logo)
<PAGE>
Oppenheimer Pennsylvania Tax-Exempt Fund

Two World Trade Center, New York, New York 10048-0203
1-800-525-7048

Statement of Additional Information dated April 29, 1994

This Statement of Additional Information of Oppenheimer Pennsylvania
Tax-Exempt Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus
dated April 29, 1994. It should be read together with the Prospectus,
which may be obtained by writing to the Fund's Transfer Agent, Oppenheimer
Shareholder Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above.

Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . .2
Investment Policies and Strategies. . . . . . . . . . . . . . . . . .2
Other Investment Techniques and Strategies. . . . . . . . . . . . . .9
Other Investment Restrictions . . . . . . . . . . . . . . . . . . . 17
How the Fund is Managed . . . . . . . . . . . . . . . . . . . . . . . . 18
Organization and History. . . . . . . . . . . . . . . . . . . . . . 18
Trustees and Officers of the Trust. . . . . . . . . . . . . . . . . 18
The Manager and Its Affiliates. . . . . . . . . . . . . . . . . . . 22
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . . . . . . 23
Performance of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . 25
Distribution and Service Plans . . . . . . . . . . . . . . . . . . . . . 28
About Your Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
How To Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . 39
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . . . . . . 41
Additional Information About the Fund. . . . . . . . . . . . . . . . . . 44
Financial Information About the Fund . . . . . . . . . . . . . . . . . . 45
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 46
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Appendix A: Ratings of Investments . . . . . . . . . . . . . . . . . . .A-1
Appendix B: Tax-Equivalent Yields. . . . . . . . . . . . . . . . . . . .B-1

<PAGE>
ABOUT THE FUND

Investment Objective and Policies

Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.

The Fund will not make investments with the objective of seeking
capital growth. However, the value of the securities held by the Fund may
be affected by changes in general interest rates. Because the current
value of debt securities varies inversely with changes in prevailing
interest rates, if interest rates increase after a security is purchased,
that security would normally decline in value. Conversely, should
interest rates decrease after a security is purchased, its value would
normally rise. Thus, the Fund may realize a capital gain or loss upon
disposition of a portfolio security. There are, of course, variations in
Municipal Securities, both within a particular classification and between
classifications, depending on numerous factors. The yields of Municipal
Securities depend on, among other things, general market conditions,
general conditions of the Municipal Securities market, the size of a
particular offering, the maturity of the obligation and the rating of the
issue. The market value of Municipal Securities will vary as a result of
changing evaluations of the ability of their issuers to meet interest and
principal payments, as well as changes in the interest rates payable on
new issues of Municipal Securities.

Municipal Securities and Pennsylvania Municipal Securities. The types of
Municipal Securities in which the Fund may invest are described in the
Prospectus under "Investment Objective and Policies." A discussion of the
general characteristics of types of Municipal Securities follows.

-Municipal Bonds. The principal classifications of long-term municipal
bonds are "general obligation" and "revenue" or "industrial development"
bonds.

-General Obligation Bonds. Issuers of general obligation bonds
include states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of public
projects, including construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power for the payment of principal and interest. The taxes that
can be levied for the payment of debt service may be limited or unlimited
as to the rate or amount of special assessments.

-Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility group of
facilities, or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Although the principal
security behind these bonds may vary, many provide additional security in
the form of a debt service reserve fund the money from which may be used
to make principal and interest payments on the issuer's obligations.
Housing finance authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further security in the form
of a state's ability (without obligation) to make up deficiencies in the
debt service reserve fund.

- Industrial Development Bonds. Industrial development bonds, which
are considered municipal bonds if the interest paid is exempt from federal
income tax, are issued by or on behalf of public authorities to raise
money to finance various privately operated facilities for business and
manufacturing, housing, sports, and pollution control. These bonds are
also used to finance public facilities such as airports, mass transit
systems, ports, and parking. The payment of the principal and interest
on such bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.

-Municipal Notes. Municipal Securities having a maturity when issued
of less than one year are generally known as municipal notes. Municipal
notes generally are used to provide for short-term working capital needs
and include:

-Tax Anticipation Notes. Tax anticipation notes are issued to
finance working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenue, such as income,
sales, use of business taxes, and are payable from these specific future
taxes.

-Revenue Anticipation Notes. Revenue anticipation notes are issued
in expectation of receipt of other types of revenue, such as federal
revenues available under the Federal revenue sharing programs.

-Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money for the repayment
of the notes.

-Construction Loan Notes. Construction loan notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the Federal
Housing Administration.

-Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a
short-term obligation with a stated maturity of 365 days or less. It is
issued by state and local governments or their agencies to finance
seasonal working capital needs or as short-term financing in anticipation
of longer-term financing.

-Floating Rate/Variable Rate Obligations. Floating rate and variable
rate demand notes are tax-exempt obligations which may have a stated
maturity in excess of one year, but may include features that permit the
holder to recover the principal amount of the underlying security at
specified intervals not exceeding one year and upon no more than 30 days'
notice. The issuer of such notes normally has a corresponding right,
after a given period, to prepay in its discretion the outstanding
principal amount of the note plus accrued interest upon a specified number
of days notice to the holder. The interest rate on a floating rate demand
note is based on a stated prevailing market rate, such as a bank's prime
rate, the 90-day U.S. Treasury Bill rate, or some other standard, and is
adjusted automatically each time such rate is adjusted. The interest rate
on a variable rate demand note is also based on a stated prevailing market
rate but is adjusted automatically at specified intervals of no less than
one year. Generally, the changes in the interest rate on such securities
reduce the fluctuation in their market value. As interest rates decrease
or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations of the same maturity. The
Manager may determine that an unrated floating rate or variable rate
demand obligation meets the Fund's quality standards by reason of being
backed by a letter of credit or guarantee issued by a bank that meets
those quality standards. Floating rate or variable rate obligations which
do not provide for recovery of principal and interest within seven days
will be subject to the limitations applicable to illiquid securities
described in "Investment Objective and Policies - Illiquid Securities"
in the Prospectus. There is otherwise no limit on the amount of the
Fund's assets that may be invested in floating rate and variable rate
obligations.

-Municipal Lease Obligations. Municipal leases may take the form of
a lease or an installment purchase contract issued by a state or local
government authority to obtain funds to acquire a wide variety of
equipment and facilities. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's
taxing power is pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality
has no obligation to make lease or installment purchase payments in future
years unless money is appropriated for such purpose on a yearly basis.
In addition to the risk of "non-appropriation," municipal lease securities
do not yet have a highly developed market to provide the degree of
liquidity of conventional municipal bonds. Municipal leases, like other
municipal debt obligations, are subject to the risk of non-payment. The
ability of issuers of municipal leases to make timely lease payments may
be adversely affected in general economic downturns and as relative
governmental cost burdens are reallocated among federal, state and local
governmental units. Such non-payment would result in a reduction of
income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the
net asset value of the Fund.

-Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules
governing tax exemption for interest on Municipal Securities. The Tax
Reform Act generally does not change the tax treatment of bonds issued in
order to finance governmental operations. Thus, interest on obligations
issued by or on behalf of state or local government, the proceeds of which
are used to finance the operations of such governments (e.g., general
obligation bonds) continues to be tax-exempt. However, the Tax Reform Act
further limited the use of tax-exempt bonds for non-governmental (private)
purposes. More stringent restrictions were placed on the use of proceeds
of such bonds. Interest on certain private activity bonds (other than
those specified as "qualified" tax-exempt private activity bonds, e.g.,
exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, qualified
student loan bonds, etc.) is taxable under the revised rules. In
addition, the limitations as to the amount of private activity bonds which
each state may issue were revised downward, which will reduce the supply
of such bonds.

Interest on certain private activity bonds issued after August 7, 1986,
which continues to be tax-exempt, will be treated as a tax preference item
subject to the alternative minimum tax (discussed below) to which certain
taxpayers are subject. Further, a private activity bond which would
otherwise be a qualified tax-exempt private activity bond will not, under
Internal Revenue Code Section 147(a), be a qualified bond for any period
during which it is held by a person who is a "substantial user" of the
facilities or by a "related person" of such a substantial user. This
"substantial user" provision is applicable primarily to exempt facility
bonds, including industrial development bonds. The Fund may not be an
appropriate investment for entities which are "substantial users" (or
persons related thereto) of such exempt facilities, and such persons
should consult their own tax advisers before purchasing shares. A
"substantial user" of such facilities is defined generally as a "non-
exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be
a "related person" under the Internal Revenue Code unless such investor
or the investor's immediate family (spouse, brothers, sisters and
immediate descendants) own directly or indirectly in the aggregate more
than 50% in value of the equity of a corporation or partnership which is
a "substantial user" of a facility financed from the proceeds of exempt
facility bonds. In addition, the Tax Reform Act revised downward the
limitations as to the amount of private activity bonds which each state
may issue, which will reduce the supply of such bonds. The value of the
Fund's portfolio could be affected if there is a reduction in the
availability of such bonds. That value may also be affected by a 1988
U.S. Supreme Court decision upholding the constitutionality of the
imposition of a Federal tax on the interest earned on Municipal Securities
issued in bearer form.

A Municipal Security is treated as a taxable private activity bond
under a test for: (a) a trade or business use and security interest, or
(b) a private loan restriction. Under the trade or business use and
security interest test, an obligation is a private activity bond if: (i)
more than 10% of bond proceeds are used for private business purposes and
(ii) 10% or more of the payment of principal or interest on the issue is
directly or indirectly derived from such private use or is secured by the
privately used property or the payments related to the use of the
property. For certain types of uses, a 5% threshold is substituted for
this 10% threshold. (The term "private business use" means any direct or
indirect use in a trade or business carried on by an individual or entity
other than a governmental unit.) Under the private loan restriction, the
amount of bond proceeds which may be used to make private loans is limited
to the lesser of 5% or $5.0 million of the proceeds. Thus, certain issues
of Municipal Securities could lose their tax-exempt status retroactively
if the issuer fails to meet certain requirements as to the expenditure of
the proceeds of that issue or use of the bond-financed facility. The Fund
makes no independent investigation of the users of such bonds or their use
of proceeds. If the Fund should hold a bond that loses its tax-exempt
status retroactively, there might be an adjustment to the tax-exempt
income previously paid to shareholders.

The Federal alternative minimum tax is designed to ensure that all
taxpayers pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference
items in arriving at alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals
and corporations. Any exempt-interest dividend paid by a regulated
investment company will be treated as interest on a specific private
activity bond to the extent of its proportionate share of the interest on
such bonds received by the regulated investment company. The U.S.
Treasury is authorized to issue regulations implementing this provision.
In addition, corporate taxpayers subject to the alternative minimum tax
may, under some circumstances, have to include exempt-interest dividends
in calculating their alternative minimum taxable income in situations
where the "adjusted current earnings" of the corporation exceeds its
alternative minimum taxable income. The Fund may hold Municipal
Securities the interest on which (and thus a proportionate share of the
exempt-interest dividends paid by the Fund) will be subject to the Federal
alternative minimum tax on individuals and corporations. The Fund
anticipates that under normal circumstances it will not purchase any such
securities in an amount greater than 20% of its total assets.

-Changes in Ratings. Subsequent to its purchase by the Fund, a
Municipal Security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Fund. Neither event
requires the Fund to sell the security, but the Manager will consider such
events in determining whether the Fund should continue to hold the
security. To the extent that ratings given by Moody's, S&P or Fitch
change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
investments in accordance with the Fund's investment policies.

Special Considerations - Pennsylvania Municipal Securities. As explained
in the Prospectus, the Fund is highly sensitive to the fiscal stability
of Pennsylvania and its subdivisions, agencies, instrumentalities or
authorities which issue the Pennsylvania Municipal Securities in which the
Fund concentrates its investments. Investors should also consider the
factors discussed below under "Hedging With Options and Futures
Contracts."

The following information as to the fiscal condition of the
Commonwealth of Pennsylvania (the "Commonwealth") is provided in view of
the Fund's policy of investing primarily in securities of Pennsylvania
issuers. Such information is derived from sources that are generally
available to investors. Although the Fund has not independently verified
any of this information, it is not aware of any inaccuracies. Such
information constitutes only a brief summary, does not purport to be a
complete description and is based on information from official statements
relating to securities offerings of Pennsylvania issuers.

The Commonwealth and certain of its counties, cities and school
districts and public bodies have from time to time in the past encountered
financial difficulties which have adversely affected their respective
credit standings and borrowing abilities. For example, the financial
condition of the City of Philadelphia had impaired its ability to borrow
and resulted in its obligations being downgraded to below investment grade
by Moody's and S&P. Such difficulties could, of course, affect
outstanding obligations of such entities, including obligations held by
the Fund. The following are highlights of certain factors bearing on the
financial conditions of such entities.

For the fiscal year ended June 30, 1991, the Pennsylvania General Fund
(the "General Fund") experienced an $861.2 million operating deficit
(determined on a basis using generally accepted accounting principles
("GAAP")) resulting in a balance deficit of $980.9 million at June 30,
1991. On a budgetary basis, the Commonwealth experienced a budget deficit
of $453.6 million for the fiscal year ended June 30, 1991. These
operating deficits were attributed by the Commonwealth to the national
recession. During fiscal 1992, the General Fund recorded a $1.1 billion
operating surplus (determined on a GAAP basis). This operating surplus
was attributable largely to legislated tax increases and by cost reduction
measures implemented throughout the fiscal year. The General Fund balance
at June 30, 1992 (determined on a GAAP basis) was $87.5 million. Tax
increases enacted as a part of the fiscal 1992 budget are estimated to
have increased receipts for fiscal 1992 by over $2.7 billion. Cost
reductions were implemented during fiscal 1992 resulting in approximately
$296.8 million of approximation lapses, contributing to an $8.8 million
budgetary surplus at fiscal year-end.

For its fiscal year ended June 30, 1993, the Pennsylvania General Fund
increased by $611.4 million (determined on a GAAP basis). The General
Fund balance at June 30, 1993 (determined on a GAAP basis) was $698.9
million and the unreserved/undesignated balance totalled $64.4 million.
On a budgetary basis, the 1993 fiscal year closed with revenues higher
than anticipated and expenditures about as projected, resulting in an
ending unappropriated balance surplus of $242.3 million.

The enacted 1994 fiscal year budget provides for $14.995 billion of
appropriations. The budget estimates revenue growth of 3.7% over fiscal
1993 actual revenues. The revenue estimates are based upon an expectation
of continued economic recovery, but at a slow rate. In February, 1994,
the Governor recommended that $46.4 million of additional appropriations
be enacted for fiscal 1994, raising total appropriations to $15.041.7
billion.

For the fiscal year beginning July 1, 1994, the Governor has proposed
a budget containing a 4.1% increase in appropriations over the actual and
proposed supplemental appropriations for fiscal 1994. Total
appropriations recommended amount to $15.665 billion. The budget is
balanced by drawing down of a projected $267 million unappropriated
surplus for fiscal 1994. The Governor's proposal also include a
recommended reduction in the corporate net income tax rate form 12.25% to
9.99% over a three year period. The corporate tax cut and a proposed
increase in the poverty exemption for the personal income tax are
estimated to cost $124.7 million in fiscal 1995. The recommended budget
contemplates revenue growth of 4.7% without the effect of the proposed tax
reduction. The revenue estimated is based on the expectation of a
continued slow national economic recovery and continued economic growth
of the Pennsylvania economy at a rate slightly below the national rate.

Certain industries traditionally strong in Pennsylvania, such as coal,
steel and railways, have declined and account for a decreasing share of
total employment. Service industries (including trade, health care,
education and finance) have grown, however, contributing increasingly to
Pennsylvania's economy and since 1985 have exceeded the manufacturing
section as the largest single source of employment.

While the level of Pennsylvania's population basically remained
constant from 1982 through 1991, nonagricultural employment increased by
a lesser rate than that of the U.S. as a whole from 1984 through 1992.
From 1986 through 1990, Pennsylvania's unemployment rate was slightly less
than the average unemployment rate for the U.S., but from 1991 through
1993 was slightly higher than the U.S. unemployment rate. In February
1994, the most recent month for which data is available, the seasonally
adjusted unemployment rate for the Commonwealth was 5.1% compared to 6.5%
for the U.S.

Debt service on general obligation bonds of Pennsylvania, except those
issued for highway purposes or the benefit of other special revenue funds,
is payable from the General Fund, the recipient of all Commonwealth
revenues that are not required to be deposited in other funds. As of June
30, the Commonwealth had $5,038.8 million of general obligation debt
outstanding. Although Pennsylvania's Constitution permits the issuance
of an aggregate amount of capital projects debt equal to 1.75 times the
average annual tax revenues of the preceding five fiscal years, the
General Assembly may authorize and historically has authorized a smaller
amount. This constitutional limit does not apply to other types of
Pennsylvania debt such as debt approved by the electorate or debt issued
to rehabilitate areas affected by disaster. However, the former may be
incurred only after the enactment of legislation calling for a referendum
and usually specifying the purpose and amount of such debt, followed by
electoral approval. Similarly, debt issued to rehabilitate a disaster
area must be authorized by specific legislation. These statutory and
constitutional limitations imposed on bonds are also applicable to bond
and anticipation notes.

Pennsylvania cannot use tax anticipation notes or any other form of
debt to fund budget deficits between fiscal years. All year-end deficits
must be funded within the succeeding fiscal year's budget. Moreover, the
principal amount of tax anticipation notes issued and outstanding for the
account of a fund during a fiscal year may not exceed 20% of the revenues
estimated to accrue to such fund in that fiscal year.

The debt of the Pennsylvania Housing Finance Agency ("PHFA"), a state
agency which provides financing for housing for lower and moderate income
families, and certain obligations of The Hospitals and Higher Education
Facilities Authority of Philadelphia (the "Hospitals Authority") is the
only debt bearing Pennsylvania's "moral obligation." PHFA's bonds, but
not its notes, are partially secured by a capital reserve fund required
to be maintained by PHFA in an amount equal to the maximum annual debt
service on its outstanding bonds in any succeeding calendar year. If
there is a potential deficiency in the capital reserve fund or if funds
are necessary to avoid default on interest, principal or sinking fund
payments on bonds or notes of PHFA, the Governor must place in
Pennsylvania's budget for the next succeeding year an amount sufficient
to make up any such deficiency or to avoid any such default. The budget
which the General Assembly adopts may or may not include such amount.
PHFA is not permitted to borrow additional funds as long as any deficiency
exists in the capital reserve fund.

Other obligations of Pennsylvania include (i) long-term agreements of
certain Commonwealth departments and agencies, as lessees of property and
equipment, to make lease payments that are pledged as security for debt
obligations of certain public authorities or other state-related entities
and (ii) pension plans covering state public school and other employees.
The total unfunded actuarial accrued liability under these pension plans
for their fiscal years ended in 1993 was at least $4,359 million (some
information is not yet available).

Certain Pennsylvania-created agencies have statutory authorization to
incur debt for which state appropriations to pay debt service thereon is
not required. The debt of these agencies is supported by assets of, or
revenues derived from, the various projects financed and is not an
obligation of Pennsylvania. Some of these agencies, however, are
indirectly dependent on Commonwealth appropriations. These entities are
as follows: the Delaware River Joint Toll Bridge Commission, the Delaware
River Port Authority, the Pennsylvania Energy Development Authority, the
Pennsylvania Higher Education Assistance Agency, the Pennsylvania Higher
Education Facilities Authority, the Pennsylvania Industrial Development
Authority, the Pennsylvania State Public School Building Authority, the
Pennsylvania Turnpike Commission, the Pennsylvania Economic Development
Financing Authority, the Pennsylvania Infrastructure Investment Authority
and the Philadelphia Regional Port Authority.

Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist Philadelphia
in remedying fiscal emergencies was enacted by the General Assembly and
approved by the Governor in June, 1991. PICA is designed to provide
assistance through the issuance of funding debt to liquidate budget
deficits and to make factual findings and recommendations to Philadelphia
concerning its budgetary and fiscal affairs. An intergovernmental
cooperation agreement between Philadelphia and the PICA was approved by
City Counsel on January 3, 1992, and approved by the PICA Board and signed
by the Mayor on January 8, 1992. At this time, Philadelphia is operating
under a five year fiscal plan approved by PICA on April 6, 1992. Full
implementation of the five year plan was delayed due to labor negotiations
that were not completed until October 1992. The terms of the new labor
contracts are estimated to cost approximately $144 million more than what
was budgeted in the original five year plan. An amended five year plan
was approved in May 1993. Audit findings reflect a $3 million surplus for
the fiscal year ended June 30, 1993. The fiscal 1994 budget projects no
deficit and a balanced budget. The Mayor's latest update of the five year
financial plan (presented on January 13, 1994) will be considered by PICA
in the spring of 1994.

In June 1992, PICA issued $474,555,000 of its Special Tax Revenue Bonds
to provide financial assistance to Philadelphia and to liquidate the
cumulative General Fund balance deficit of $224.9. In July 1993, PICA
issued $643,430,000 of Special Tax Revenue Bonds to refund certain general
obligations bonds of the city and to fund additional capital projects.

Many factors affect the financial condition of the Commonwealth and its
counties, cities and school districts and public bodies, certain of which
may not be within the control of such entities, such as social,
environmental and economic conditions. Various litigation is pending
against the Commonwealth, its officers and employees. An adverse decision
on one or more of these cases could materially affect the Commonwealth's
governmental operations. As is the case with many states, the
continuation of many of the Commonwealth's programs, particularly its
human services programs, is dependent to a significant degree upon
continuing federal reimbursements which have been steadily declining. The
loss of grants to the Commonwealth and its political subdivisions could
slow economic development. Also, changes to the Internal Revenue Code,
by limiting certain types of tax-exempt financing, may interfere with the
ability of the Commonwealth and its political subdivisions to carry out
their programs. To the extent that such factors exist, they could have
an adverse effect on economic conditions in Pennsylvania, although the
Fund is unable to predict what effect, if any, such factors would have on
the Fund's investments.

Other Investment Techniques and Strategies

-When-Issued Securities. As stated in the Prospectus, the Fund may
purchase Municipal Securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. Payment for and
delivery of the securities generally settles within 45 days of the date
the offer is accepted. The purchase price and yield are fixed at the
time the buyer enters into the commitment. However, the Fund intends to
be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Fund makes the commitment to purchase a
Municipal Security on a when-issued basis, it will record the transaction
on its books and reflect the value of the security in determining its net
asset value. It will also segregate cash or other high quality liquid
Municipal Securities equal in value to the commitment for the when-issued
securities. While when-issued securities may be sold prior to the
settlement date, the Fund intends to acquire the securities upon
settlement unless a prior sale appears desirable for investment reasons.
There is a risk that the yield available in the market when delivery
occurs may be higher than the yield on the security acquired.

-Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the market value of
the loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities)
or other cash equivalents in which the Fund is permitted to invest. To
be acceptable as collateral, letters of credit must obligate a bank to pay
amounts demanded by the Fund if the demand meets the terms of the letter.
Such terms and the issuing bank must be satisfactory to the Fund. When
it lends securities, the Fund receives an amount equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, or
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet certain tests under the Internal
Revenue Code and must permit the Fund to reacquire loaned securities on
five days' notice or in time to vote on any important matter. Income from
securities loans is not included in the exempt-interest dividends paid by
the Fund.

-Inverse Floaters and Other Derivative Securities. The Fund will
invest in inverse floaters in the expectation that they will provide
higher expected tax-exempt yields than are available for fixed-rate bonds
having comparable credit ratings and maturity. In certain instances, the
holder of an inverse floater may have an option to convert it into a
fixed-rate bond pursuant to a "rate lock option." Inverse floaters may
produce relatively high current income, reflecting the spread between
short-term and long-term tax-exempt interest rates. As long as the
municipal yield curve remains relatively steep and short-term rates remain
relatively low, owners of inverse floaters will continue to earn above-
market interest rates because they are receiving the higher long-term
rates and have paid for bonds with lower short-term rates. If the yield
curve flattens and shifts upward, an inverse floater will lose value more
quickly than conventional long-term municipal bonds.

Investing in inverse floaters that have interest rate caps might be a
part of a portfolio strategy to try to maintain a high current yield for
the Fund when the Fund has invested in inverse floaters that expose the
Fund to the risk of short-term interest rate fluctuation. Embedded caps
may be used to hedge a portion of the Fund's exposure to rising interest
rates. When interest rates exceed the "strike" price the "cap" generates
additional cash flows that offset the decline in interest rates on the
inverse floater, and the hedge is successful. However, the Fund bears the
risk that if interest rates do not rise above the strike price, the cap
(which is purchased for additional cost) will not provide additional cash
flows and will expire worthless.

-Puts and Standby Commitments. When the Fund buys Municipal
Securities, it may obtain a standby commitment to repurchase the
securities that entitles it to achieve same-day settlement from the
repurchaser and to receive an exercise price equal to the amortized cost
of the underlying security plus accrued interest, if any, at the time of
exercise. A put purchased in conjunction with a Municipal Security
enables the Fund to sell the underlying security within a specified period
of time at a fixed exercise price. The Fund may pay for a standby
commitment or put either separately in cash or by paying a higher price
for the securities acquired subject to the standby commitment or put. The
Fund will enter into these transactions only with banks and dealers which,
in the Manager's opinion, present minimal credit risks. The Fund's
ability to exercise a put or standby commitment will depend on the ability
of the bank or dealer to pay for the securities if the put or standby
commitment is exercised. If the bank or dealer should default on its
obligation, the Fund might not be able to recover all or a portion of any
loss sustained from having to sell the security elsewhere. Puts and
standby commitments are not transferable by the Fund, and therefore
terminate if the Fund sells the underlying security to a third party. The
Fund intends to enter into these arrangements to facilitate portfolio
liquidity, although such arrangements may enable the Fund to sell a
security at a pre-arranged price which may be higher than the prevailing
market price at the time the put or standby commitment is exercised.
However, the Fund might refrain from exercising a put or standby
commitment if the exercise price is significantly higher than the
prevailing market price, to avoid imposing a loss on the seller which
could jeopardize the Fund's business relationships with the seller. Any
consideration paid by the Fund for the put or standby commitment (which
increases the cost of the security and reduces the yield otherwise
available from the security) will be reflected on the Fund's books as
unrealized depreciation while the put or standby commitment is held, and
a realized gain or loss when the put or commitment is exercised or
expires. Interest income received by the Fund from Municipal Securities
subject to puts or standby commitments may not qualify as tax exempt in
its hands if the terms of the put or standby commitment cause the Fund not
to be treated as the tax owner of the underlying Municipal Securities.

-Writing Covered Calls. As described in the Prospectus, the Fund may
write covered calls. When the Fund writes a call on an investment, it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than nine months) at a fixed exercise price (which may differ from the
market price of the underlying securities) regardless of market price
changes during the call period. To terminate its obligation on a call it
has written, the Fund may purchase a corresponding call in a "closing
purchase transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the premium
received on the call written is more or less than the price of the call
subsequently purchased. A profit may also be realized if the call lapses
unexercised because the Fund retains the underlying investment and the
premium received. Any such profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls, and when
distributed by the Fund are taxable as ordinary income. If the Fund could
not effect a closing purchase transaction due to lack of a market, it
would have to hold the callable investment until the call lapsed or was
exercised.

-Hedging With Options and Futures Contracts. The Fund may use hedging
instruments for the purposes described in the Prospectus. When hedging
to attempt to protect against declines in the market value of the Fund's
portfolio, or to permit the Fund to retain unrealized gains in the value
of portfolio securities which have appreciated, or to facilitate selling
securities for investment reasons, the Fund may: (i) sell Interest Rate
Futures or Municipal Bond Index Futures, (ii) buy puts on such Futures or
securities, or (iii) write covered calls on securities, Interest Rate
Futures or Municipal Bond Index Futures (as described in the Prospectus).
When hedging to permit the Fund to establish a position in the debt
securities market as a temporary substitute for the purchase of individual
debt securities (which the Fund will normally purchase, and then terminate
that hedging position), the Fund may: (i) buy Interest Rate Futures or
Municipal Bond Index Futures, or (ii) buy calls on such Futures or
securities (as described in the Prospectus).

The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's activities in the underlying cash market. In
the future, the Fund may employ hedging instruments and strategies that
are not presently contemplated but which may be developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the Prospectus.
Additional Information about the hedging instruments the Fund may use is
provided below.

-Interest Rate Futures. The Fund may buy and sell futures
contracts relating to debt securities ("Interest Rate Futures") and
municipal bond indices ("Municipal Bond Index Futures," discussed below).
An Interest Rate Future obligates the seller to deliver and the purchaser
to take the related debt securities at a specified price on a specified
date. No amount is paid or received upon the purchase or sale of an
Interest Rate Future. Upon entering into a Futures transaction, the Fund
will be required to deposit an initial margin payment, equal to a
specified percentage of the contract amount, with the futures commission
merchant (the "futures broker"). The initial margin will be deposited
with the Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be made to and from the futures broker on a daily basis. At
any time prior to the expiration of the Future, the Fund may elect to
close out its position by taking an opposite position, at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized. Although Interest Rate Futures by their terms call for
settlement by the delivery of debt securities, in most cases the
obligation is fulfilled by entering into an offsetting transaction. All
futures transactions are effected through a clearinghouse associated with
the exchange on which the contracts are traded.

-Municipal Bond Index Futures. A "municipal bond index" assigns
relative values to the municipal bonds in the index, and is used as the
basis for trading long-term municipal bond futures contracts. Municipal
Bond Index Futures are similar to Interest Rate Futures except that
settlement is made in cash. The obligation under such contracts may also
be satisfied by entering into an offsetting contract to close out the
Futures position. Net gain or loss on options on Municipal Bond Index
Futures depends on the price movements of the securities included in the
index. The strategies which the Fund employs regarding Municipal Bond
Index Futures are similar to those described above with regard to Interest
Rate Futures.

-Purchasing Puts and Calls. When the Fund purchases a call, it
pays a premium and has the right to buy the related investment from a
seller of a corresponding call on the same investment during the call
period at a fixed exercise price. The Fund benefits only if the call is
sold at a profit or if, during the call period, the market price of the
underlying investment is above the call price plus the transaction costs
and premium paid and the call is exercised. If the call is not exercised
or sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment.

When the Fund purchases a put, it pays a premium and has the right to
sell the related investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying a put
on a debt security, Interest Rate Future or Municipal Bond Index Future
the Fund owns (a "protective put") enables the Fund to attempt to protect
itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling such underlying
investment at the exercise price to a seller of a corresponding put. If
the market price of the underlying investment is equal to or above the
exercise price and as a result the put is not exercised or resold, the put
will become worthless at its expiration and the Fund will lose the premium
payment and the right to sell the underlying investment; the put may,
however, be sold prior to expiration (whether or not at a profit).

Puts and calls on municipal bond indices, Interest Rate Futures or
Municipal Bond Index Futures are similar to puts and calls on debt
securities or futures contracts except that all settlements are in cash
and gain or loss depends on changes in the index in question (and thus on
price movements in the debt securities market generally) rather than on
price movements in individual securities or futures contracts. When the
Fund buys a call on a municipal bond index, Interest Rate Future or
Municipal Bond Index Future, it pays a premium. During the call period,
upon exercise of a call by the Fund, a seller of a corresponding call on
the same index will pay the Fund an amount of cash to settle the call if
the closing level of the index or Future upon which the call is based is
greater than the exercise price of the call; that cash payment is equal
to the difference between the closing price of the call and the exercise
price of the call times a specified multiple (the "multiplier") which
determines the total dollar value for each point of difference. When the
Fund buys a put on an Interest Rate Future or Municipal Bond Index Future,
it pays a premium and has the right during the put period to require a
seller of a corresponding put, upon the Fund's exercise of its put, to
deliver cash to the Fund to settle the put if the closing level of the
index or Future upon which the put is based is less than the exercise
price of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.

An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance
that a liquid secondary market will exist for any particular option. The
Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise of calls written by the Fund may cause the Fund
to sell related portfolio securities, thus increasing its turnover rate.
The exercise by the Fund of puts on securities will cause the sale of
underlying investments, increasing portfolio turnover. Although such
exercise is within the Fund's control, holding a put might cause the Fund
to sell the related investments for reasons which would not exist in the
absence of the put. The Fund will pay a brokerage commission each time
it buys or sells a call, put or an underlying investment in connection
with the exercise of a put or call. Such commissions may be higher than
those which would apply to direct purchases or sales of the underlying
securities.

Premiums paid for options are small in relation to the market value of
the underlying investments and, consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes
in the value of the underlying investment.

-Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. With respect to interest rate risk,
the Fund could be obligated to pay more under its swap agreements than it
receives, as a result of interest rate changes. Credit risk arises from
the possibility that the counterparty will default. If the counterparty
to an interest rate swap defaults, the Fund's loss will consist of the net
amount of contractual interest payments that the Fund has not yet
received. The Manager will monitor the creditworthiness of counterparties
to the Fund's interest rate swap transactions on an ongoing basis. The
Fund will enter into swap transactions with appropriate counterparties
pursuant to master netting agreements. A master netting agreement
provides that all swaps done between the Fund and that counterparty under
the master agreement shall be regarded as parts of an integral agreement.
If on any date amounts are payable in the same currency in respect of one
or more swap transactions, the net amount payable on that date in that
currency shall be paid. In addition, the master netting agreement may
provide that if one party defaults generally or on one swap, the
counterparty may terminate the swaps with that party. Under such
agreements, if there is a default resulting in a loss to one party, the
measure of that party's damages is calculated by reference to the average
cost of a replacement swap with respect to each swap (i.e., the mark-to-
market value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the counterparty's
gain or loss on termination. The termination of all swaps and the netting
of gains and losses on termination is generally referred to as
"aggregation."

-Additional Information about Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written calls traded on exchanges, or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities on the expiration of the calls or upon the
Fund's entering into a closing purchase transaction. An option position
may be closed out only on a market which provides secondary trading for
options of the same series and there is no assurance that a liquid
secondary market will exist for any particular option. The Fund's option
activities may affect its portfolio turnover rate and brokerage
commissions. The exercise of calls written by the Fund may cause the
Fund to sell related portfolio securities, thus increasing its portfolio
turnover rate. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a call or put, sells a call, or buys or sells an underlying
investment in connection with the exercise of a call or put. Such
commissions may be higher on a relative basis than those which would apply
to direct purchases or sales of such underlying investments. Premiums
paid for options as to underlying investments are small in relation to the
market value of such investments and consequently, put and call options
offer large amounts of leverage. The leverage offered by trading in
options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investment.

-Regulatory Aspects of Hedging Instruments. The use of Futures and
options thereon to attempt to protect against the market risk of a decline
in the value of portfolio securities is referred to as having a "short
futures position," and the use of such instruments to attempt to protect
against the market risk that portfolio securities are not fully included
in an increase in value of the market as a whole is referred to as having
a "long futures position." The Fund must operate within certain
restrictions as to its long and short positions in Futures and options
thereon under a rule (the "CFTC Rule") adopted by the Commodity Futures
Trading Commission ("CFTC") under the Commodity Exchange Act (the "CEA"),
which excludes the Fund from registration with the CFTC as a "commodity
pool operator" (as defined under the CEA), if it complies with the CFTC
Rule. Under these restrictions, the Fund will not, as to any positions,
whether long, short or a combination thereof, enter into Futures and
options thereon for which the aggregate initial margins and premiums
exceed 5% of the fair market value of its net assets, with certain
exclusions as defined in the CFTC Rule. Under the restrictions, the Fund
also must, as to its short positions, use Futures and options thereon
solely for bona fide hedging purposes within the meaning and intent of the
applicable provisions of the CEA.

Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more different exchanges or through one
or more brokers. Thus, the number of options which the Fund may write or
hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the Fund
or an affiliated investment adviser. Position limits also apply to
Futures. An exchange may order the liquidation of positions found to be
in violation of these limits and may impose certain other sanctions. Due
to requirements under the Investment Company Act, when the Fund purchases
an Interest Rate Future or Municipal Bond Index Future, the Fund will
maintain, in a segregated account or accounts with its Custodian, cash or
readily-marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the securities
underlying such Future, less the margin deposit applicable to it.

-Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. That qualification enables the Fund to "pass through" its
income and realized capital gains to shareholders without having to pay
tax on them. This avoids a "double tax" on that income and capital gains,
since shareholders will be taxed on the dividends and capital gains they
receive from the Fund. One of the tests for the Fund's qualification is
that less than 30% of its gross income must be derived from gains realized
on the sale of securities held for less than three months. To comply with
that 30% cap, the Fund will limit the extent to which it engages in the
following activities, (but will not be precluded from them): (i) selling
investments, including Interest Rate Futures and Municipal Bond Index
Futures, held for less than three months; (ii) writing calls on
investments held less than three months; (iii) purchasing options which
expire in less than three months; (iv) effecting closing transactions with
respect to calls or puts written or purchased less than three months
previously; and (v) exercising puts or calls held by the Fund for less
than three months.

-Risks of Hedging with Options and Futures. In addition to the
risks with respect to hedging and options discussed in the Prospectus and
above, there is a risk in using short hedging by selling Interest Rate
Futures and Municipal Bond Index Futures. The risk is that the prices of
such Futures or the applicable index will correlate imperfectly with the
behavior of the cash (i.e., market value) prices of the Fund's securities.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those markets.
First, all participants in the futures markets are subject to margin
deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures market depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortion. Third, from the point
of view of speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market
may cause temporary price distortions.

The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the debt securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of debt securities being hedged if
the historical volatility of the prices of such debt securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that where the Fund has used hedging instruments in
a short hedge, the market may advance and the value of the debt securities
held in the Fund's portfolio may decline. If this occurred, the Fund
would lose money on the hedging instruments and also experience a decline
in value of its debt securities. However, while this could occur for a
very brief period or to a very small degree, over time the value of a
diversified portfolio of debt securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.

If the Fund uses hedging instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
individual debt securities (long hedging) by buying Interest Rate Futures,
Municipal Bond Index Futures and/or calls on such Futures or debt
securities, it is possible that the market may decline; if the Fund then
concludes not to invest in such securities at that time because of
concerns as to a possible further market decline or for other reasons, the
Fund will realize a loss on the hedging instruments that is not offset by
a reduction in the price of the debt securities purchased.

-Repurchase Agreements. In a repurchase transaction, the Fund acquires
a security from, and simultaneously resells it to, an approved vendor (a
U.S. commercial bank or the U.S. branch of a foreign bank with assets of
at least $1 billion or a broker-dealer with net capital of at least $50
million which has been designated a primary dealer in government
securities) for delivery on an agreed-on future date. The resale price
exceeds the purchase price in that it reflects an agreed-upon interest
rate effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and
delivery pursuant to resale typically will occur within one to five days
of the purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the loan.
Additionally, the Manager will continuously monitor the collateral's value
and will impose creditworthiness requirements to confirm that the vendor
is financially sound.

Other Investment Restrictions

The most significant investment restrictions that apply to the Fund are
described in the Prospectus. There are additional investment restrictions
that the Fund must follow that are fundamental policies of the Fund.
Fundamental policies and the Fund's investment objective, described in the
Prospectus, cannot be changed without the vote of a "majority" of the
Fund's outstanding voting securities. Under the Investment Company Act,
such a "majority" vote is defined as the vote of the holders of the lesser
of (i) 67% or more of the shares present or represented by proxy at a
shareholders' meeting, if the holders of more than 50% of the outstanding
shares are present or represented by a proxy, or (ii) more than 50% of the
outstanding shares.

Under these additional restrictions, the Fund cannot: (1) invest in
real estate, but this shall not prevent the Fund from investing in
Municipal Securities or other permitted securities secured by real estate
or interests therein; (2) purchase securities other than hedging
instruments on margin; however, the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities; (3) make short sales of securities; (4) underwrite securities
or invest in securities subject to restrictions on resale; (5) invest in
or hold securities of any "issuer" (see below) if officers and Trustees
or Directors of the Fund and the Manager individually owning more than .5%
of the securities of such issuer together own more than 5% of the
securities of such issuer; or (6) invest in securities of any other
investment company, except in connection with a merger, consolidation,
acquisition or reorganization.

Under restriction (5) above, the identification of the issuer of a
Municipal Security depends on the terms and conditions of the security.
When the assets and revenues of an agency, authority, instrumentality or
other political subdivision are separate from those of the government
creating the subdivision and the security is backed only by the assets and
revenues of the subdivision, such subdivision would be deemed to be the
sole issuer. Similarly, in the case of an industrial development bond,
if that bond is backed only by the assets and revenues of the
nongovernmental user, then such nongovernmental user would be deemed the
sole issuer. However, if in either case the creating government or some
other entity guarantees a security, such a guarantee would be considered
a separate security and is to be treated as an issue of such government
or other agency. In applying these restrictions to the Fund's investments,
the Manager will consider a nongovernmental user of facilities financed
by industrial development bonds as being in a particular industry, despite
the fact that such bonds are Pennsylvania Municipal Securities as to which
there is no industry concentration limitation. Although this application
of the restriction is not technically a fundamental policy under the
Investment Company Act, it will not be changed without shareholder
approval. The Manager has no present intention of investing more than 25%
of the total assets of the Fund in securities paying interest from
revenues of similar type projects, or in industrial development bonds.
Neither of these are fundamental policies, and therefore may be changed
without shareholder approval. Should any such change be made, the
Prospectus and/or this Additional Statement will be supplemented
accordingly.

How the Fund Is Managed

Organization and History. As a series of a Massachusetts business trust,
the Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when required
to do so by the Investment Company Act or other applicable law, or when
a shareholder meeting is called by the Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Trust, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Trust valued
at $25,000 or more or holding at least 1% of the Trust's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the shareholder list available to the applicants or
mail their communication to all other shareholders at the applicants'
expense, or the Trustees may take such other action as set forth under
Section 16(c) of the Investment Company Act.

The Trust's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.

Trustees and Officers of the Trust. The Trust's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. The address of each Trustee and officer is Two
World Trade Center, New York, New York 10048-0203, unless another address
is listed below. All of the Trustees are also trustees of Oppenheimer
Fund, Oppenheimer Global Fund, Oppenheimer Time Fund, Oppenheimer Special
Fund, Oppenheimer Discovery Fund, Oppenheimer Global Growth & Income Fund,
Oppenheimer Global Bio-Tech Fund, Oppenheimer Global Environment Fund,
Oppenheimer Gold & Special Minerals Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Target Fund, Oppenheimer Asset Allocation Fund,
Oppenheimer Mortgage Income Fund, Oppenheimer U.S. Government Trust,
Oppenheimer Multi-Sector Income Trust and Oppenheimer Multi-Government
Trust (the "New York-based OppenheimerFunds"). Messrs. Spiro, Donohue,
Bishop, Bowen, Farrar and Zack respectively hold the same offices with the
other New York-based OppenheimerFunds as with the Trust. As of March 29,
1994, the Trustees and officers of the Trust as a group owned less than
1% of the outstanding Class A and Class B shares of the Trust and the
Fund.

Leon Levy, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).

Leo Cherne, Trustee
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of the Research Institute
of America.

Edmund T. Delaney, Trustee
5 Gorham Road, Chester, Connecticut 06412
Attorney-at-law; formerly a member of the Connecticut State Historical
Commission and Counsel to Copp, Berall & Hempstead (law firm).

Robert G. Galli, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp., the Manager's parent holding company;
formerly he held the following positions: a director of the Manager
and Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management Corporation
("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment advisory subsidiaries of the Manager, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of the
Manager, an officer of other OppenheimerFunds and Executive Vice
President of the Manager and the Distributor.

Benjamin Lipstein, Trustee
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.

Elizabeth B. Moynihan, Trustee
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the American Schools
of Oriental Research and of the Freer Gallery of Art, Smithsonian
Institution; a member of the Indo-U.S. Sub-Commission on Education and
Culture; a trustee of the Institute of Fine Arts, New York University;
and a trustee of the Preservation League of New York State.

Kenneth A. Randall, Trustee
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Northeast Bancorp, Inc. (bank holding company), Dominion
Resources, Inc. (electric utility holding company) and Kemper
Corporation (insurance and financial services company); formerly
Chairman of the Board of ICL, Inc. (information systems).

Edward V. Regan, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute, Bard College; a member
of the U.S. Competitiveness Policy Council; a director or GranCare,
Inc. (healthcare provider); formerly New York State Comptroller and
trustee, New York State and Local Retirement Fund.

Russell S. Reynolds, Jr., Trustee
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital and the Greenwich Historical Society.

Sidney M. Robbins, Trustee
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of
Finance, University of Hawaii; a director of The Korea Fund, Inc. and
The Malaysia Fund, Inc. (closed-end investment companies); a member of
the Board of Advisors, Olympus Private Placement Fund, L.P.; Professor
Emeritus of Finance, Adelphi University.

Donald W. Spiro, President and Trustee*
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and the Distributor.

Pauline Trigere, Trustee
550 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale
of women's fashions).

Clayton K. Yeutter, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), FMC Corp.
(chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments, Inc. (electronics); formerly (in descending chronological
order) Deputy Chairman, Bush/Quayle Presidential Campaign, Counsellor
to the President (Bush) for Domestic Policy, Chairman of the
Republican National Committee, Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative, Executive Office of the
President.

Andrew J. Donohue, Secretary
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor, prior to which he was a partner in Kraft & McManimon (a
law firm), an officer of First Investors Corporation (a broker-dealer)
and First Investors Management Company, Inc. (broker-dealer and
investment adviser), and a director and an officer of First Investors
Family of Funds and First Investors Life Insurance Company.

Robert E. Patterson, Vice President and Portfolio Manager
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.

George C. Bowen, Treasurer
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of
other OppenheimerFunds; formerly Senior Vice President/Comptroller and
Secretary of Oppenheimer Asset Management Corporation.

Robert G. Zack, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.

Robert Bishop, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an Accountant for Resolution Trust
Corporation and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.

Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman Co., a bank, and previously a
Senior Fund Accountant for State Street Bank & Trust Company, before
which he was a sales representative for Central Colorado Planning.

_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.

-Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Mr. Galli and Mr. Spiro, who is both an officer and
Trustee) receive no salary or fee from the Fund. During the Fund's fiscal
year ended December 31, 1993, the remuneration (including expense
reimbursements) paid to all Trustees of the Fund (excluding Mr. Galli and
Mr. Spiro) as a group for services as trustees and as members of one or
more committees of the Board, totalled $17,077. The Fund has adopted a
retirement plan that provides for payment to a retired Trustee of up to
80% of the average compensation paid during that Trustee's five years of
service in which the highest compensation was received. A Trustee must
serve in that capacity for any of the New York-based OppenheimerFunds for
at least 15 years to be eligible for the maximum payment. No Trustee has
retired since the adoption of the plan and no payments have been made by
the Fund under the plan. The accumulated liability for the Fund's
projected benefit obligations under the plan was $3,307 as of December 31,
1993.

-Major Shareholders. As of March 29, 1994, no person owned of record
or was known by the Trust or the Fund to own beneficially 5% or more of
the outstanding Class A shares or Class B shares of the Trust or the Fund,
respectively.

The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Messrs. Galli and Spiro)
serve as Trustees of the Fund.

-The Investment Advisory Agreement. The investment advisory agreement
between the Manager and the Fund requires the Manager, at its expense, to
provide the Fund with adequate office space, facilities and equipment, and
to provide and supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration for the
Fund, including the compilation and maintenance of records with respect
to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous
public sale of shares of the Fund.

Expenses not expressly assumed by the Manager under the investment
advisory agreement or by the Distributor under the Distribution Agreement
are paid by the Fund. The investment advisory agreement lists examples
of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain trustees, legal
and audit expenses, custodian and transfer agent expenses, share issuance
costs, certain printing and registration costs and non-recurring expenses,
including litigation costs. For the fiscal years ended December 31, 1991,
1992 and 1993, the management fees payable by the Fund to the Manager were
$64,301, $131,646 and $316,801, respectively. These amounts do not
reflect the expense assumptions of $73,040 and $39,417 by the Manager for
the fiscal year ended December 31, 1992 and the fiscal period ended
December 31, 1993 (prior to May 26, 1993), respectively.

The investment advisory agreement contains no provision limiting the
Fund's expenses. However, independently of the investment advisory
agreement, the Manager has undertaken that the total expenses of the Fund
in any fiscal year (including the management fee but excluding taxes,
interest, brokerage commissions, distribution plan payments and
extraordinary expenses such as litigation costs) shall not exceed the most
stringent expense limitation imposed under state law applicable to the
Fund. In addition, prior to May 26, 1993, independently of the investment
advisory agreement, the Manager had also voluntarily agreed to assume
expenses of the Fund (subject to the limits described in the foregoing
sentence) in an amount equal to .20% of the Fund's average annual net
assets. Effective May 26, 1993, this additional voluntary expense
assumption was terminated. The payment of the management fee will be
reduced monthly to the extent necessary so that there will not be any
accrued but unpaid liability under any expense assumption undertaking.
The Manager reserves the right to modify or terminate a voluntary expense
assumption undertaking at any time. Any assumption of the Fund's expenses
under a voluntary undertaking would lower the Fund's overall expense ratio
and increase its total return during any period in which expenses are
limited.

The investment advisory agreement provides that in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for
its obligations thereunder, the Manager is not liable for any loss
sustained by reason of any investment of Fund assets made with due care
and in good faith. The investment advisory agreement permits the Manager
to act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with one or more additional
companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser to
the Fund, the right of the Fund to use the name "Oppenheimer" as part of
its title may be withdrawn.

-The Distributor. Under its Distribution Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous
public offering of the Fund's Class A and Class B shares but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales (other than those paid under the Class B
Distribution and Service Plan), including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders, are borne by the Distributor. During the Fund's fiscal
years ended December 31, 1991, 1992 and 1993, the aggregate amount of
sales charges on sales of the Fund's shares was $193,767, $751,703 and
$939,991, respectively, of which the Distributor and an affiliated broker-
dealer retained in the aggregate $50,785, $151,644 and $252,444 in those
respective years. For additional information about distribution of the
Fund's shares and the expenses connected with such activities, please
refer to "Distribution and Service Plans," below.

-The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.

Brokerage Policies of the Fund

Portfolio Transactions. Portfolio decisions are made by portfolio
managers under the supervision of the Manager's executive officers. As
most purchases of Municipal Securities made by the Fund are principal
transactions at net prices, the Fund incurs little or no brokerage costs.
The Fund deals directly with the selling or purchasing principal or market
maker without incurring charges for the services of a broker on its behalf
unless it is determined that better price or execution may be obtained by
utilizing the services of a broker. Purchases of portfolio securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price. The Fund seeks to obtain prompt execution of orders at
the most favorable net price.

Brokerage Provisions of the Investment Advisory Agreement. The investment
advisory agreement contains provisions relating to the selection of
brokers, dealers and futures commission merchants (collectively,
"brokers") for the Fund's Futures, and put and call transactions. The
Manager is authorized by the investment advisory agreement to employ
brokers as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund.

The investment advisory agreement allows affiliates of the Manager to
act as the Fund's brokers and receive brokerage commissions. Commissions
paid to affiliates are calculated in accordance with "Procedures" adopted
pursuant to Securities and Exchange Commission ("SEC") Rule 17e-1 under
the Act, which requires that commissions paid to an affiliate or an
affiliate of an affiliate of the Manager must be "reasonable and fair
compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions
involving similar securities during a comparable period of time." When
the Fund engages in an option transaction, ordinarily the same broker will
be used for the purchase or sale of the option and any transactions in the
securities to which the option relates. Where possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each account.

Under the investment advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for the
Fund and/or the other accounts over which the Manager or its affiliates
have investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by the Manager and the commission is reasonable and
fair in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.

The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars.

The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Trust (those
Trustees of the Trust who are not "interested persons" as defined in the
Investment Company Act, and who have no direct or indirect financial
interest in the operation of the advisory agreement or the Distribution
Plans described below) annually reviews information furnished by the
Manager as to the commissions paid to brokers furnishing such services so
that the Board may ascertain whether the amount of such commissions was
reasonably related to the value or benefit of such services.

Other funds advised by the Manager have investment objectives and
policies similar to those of the Fund. Such other funds may purchase or
sell the same securities at the same time as the Fund, which could affect
the supply or price of such securities. If two or more of such funds
purchase the same security on the same day from the same dealer, the
Manager may average the price of the transactions and allocate the average
among such funds.

Performance of the Fund

Yield and Total Return Information. As described in the Prospectus, from
time to time the "standardized yield," "tax-equivalent yield," "dividend
yield," "average annual total return", "total return," and "total return
at net asset value" of an investment in each class of Fund shares may be
advertised. An explanation of how yields and total returns are calculated
for each class and the components of those calculations is set forth
below.

Yield and total return information may be useful to investors in
reviewing the Fund's performance. The Fund's advertisement of its
performance must, under applicable SEC rules, include the average annual
total returns for each class of shares of the Fund for the 1, 5 and 10-
year period (or the life of the class, if less) as of the most recently
ended calendar quarter. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its yield and total return are not
guaranteed and normally will fluctuate on a daily basis. When redeemed,
an investor's shares may be worth more or less than their original cost.
Yield and total return for any given past period are not a prediction or
representation by the Fund of future yields or rates of return on its
shares. The yield and total returns of the Class A and Class B shares of
the Fund are affected by portfolio quality, portfolio maturity, the type
of investments the Fund holds and its operating expenses.

-Standardized Yields. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated
using the following formula set forth in rules adopted by the Securities
and Exchange Commission that apply to all funds that quote yields:

a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd

The symbols above represent the following factors:

a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the
last day of the period, adjusted for undistributed net
investment income.

The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended December 31, 1993, the standardized yields for the
Fund's Class A and Class B shares were 5.08% and 4.56%, respectively.

-Tax-Equivalent Yields. The "tax-equivalent yield" of a class of
shares adjusts the yield, as calculated above, by a stated Federal tax
rate. The tax-equivalent yield is based on a 30-day period, and is
computed by dividing the tax-exempt portion of the yield (as calculated
above) by one minus a stated income tax rate and adding the result to the
portion (if any) of the yield that is not tax exempt. The tax equivalent
yield may be used to compare the tax effects of income derived from shares
of a class with income from taxable investments at the tax rates stated.
For the 30-day period ended December 31, 1993, the tax-equivalent yield
for the Fund's Class A shares and Class B shares was 8.65% and 7.77%,
respectively, for a taxpayer in the 41.29% combined effective tax bracket.
Appendix B includes a tax-equivalent yield table, based on various
effective tax brackets for individual taxpayers. Such tax brackets are
determined by a taxpayer's Federal and state taxable income (the net
amount subject to Federal income tax after deductions and exemptions).
The tax-equivalent yield table assumes that the investor is taxed at the
highest bracket, regardless of whether a switch to non-taxable investments
would cause a lower bracket to apply, and that state income tax payments
are fully deductible for income tax purposes. For taxpayers with income
above certain levels, otherwise allowable itemized deductions are limited.

-Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class.
Dividend yield is based on the Class A or Class B share dividends derived
from net investment income during a stated period. Distribution return
includes dividends derived from net investment income and from realized
capital gains declared during a stated period. Under those calculations,
the dividends and/or distributions for that class declared during a stated
period of one year or less (for example, 30 days) are added together, and
the sum is divided by the maximum offering price per share of that class)
on the last day of the period. When the result is annualized for a period
of less than one year, the "dividend yield" is calculated as follows:

Dividend Yield of the Class =

Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)

Divided by number of days (accrual period) x 365

The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price
is the net asset value per share, without considering the effect of
contingent deferred sales charges.

From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its respective
maximum offering price) at the end of the period. The dividend yields on
Class A shares for the 30-day period ended December 31, 1993, were 5.14%
and 5.40% when calculated at maximum offering price and at net asset
value, respectively. The dividend yield on Class B shares for the 30-day
period ended December 31, 1993, was 4.63% when calculated at net asset
value.

-Total Returns. The "average annual total return" of each class is an
average annual compounded rate of return for each year in a specified
number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below)
held for a number of years ("n") to achieve an Ending Redeemable Value
("ERV"), according to the following formula:

( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )

The cumulative "total return" calculation measures the change in value
of a hypothetical investment of $1,000 over an entire period of years.
Its calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual basis.
Total return is determined as follows:

ERV - P
- ------- = Total Return
P

In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as discussed below). For Class B shares, the payment of the
applicable contingent deferred sales charge (5.0% for the first year, 4.0%
for the second year, 3.0% for the third and fourth years, 2.0% in the
fifth year, 1.0% in the sixth year and none thereafter) is applied to the
investment result for the time period shown (unless the total return is
shown at net asset value, as described below). Total returns also assume
that all dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share, and that
the investment is redeemed at the end of the period. The "average annual
total returns" on an investment in Class A shares of the Fund for the one
year period ended December 31, 1993 and for the period from September 18,
1989 (commencement of operations) to December 31, 1993, were 7.74% and
8.53%, respectively. The cumulative "total return" on Class A shares for
the latter period was 42.04%. For the fiscal period from May 1, 1993
through December 31, 1993, the average annual total return and the
cumulative total return on an investment in Class B shares of the Fund
were 2.52% and 1.67%, respectively.

From time to time the Fund may also quote an "average annual total
return at net asset value" or a cumulative "total return at net asset
value" for Class A or Class B shares. It is based on the difference in
net asset value per share at the beginning and the end of the period for
a hypothetical investment in that class of shares (without considering
front-end or contingent sales charges) and takes into consideration the
reinvestment of dividends and capital gains distributions. The cumulative
"total returns at net asset value" on the Fund's Class A shares for the
fiscal year ended December 31, 1993, and for the period from September 18,
1989 to December 31, 1993 were 13.12% and 49.12%, respectively. The
cumulative total return at net asset value on the Fund's Class B shares
for the fiscal period from May 1, 1993 through December 31, 1993 was
6.67%.

Other Performance Comparisons. From time to time the Fund may publish the
ranking of the performance of its Class A or Class B shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to investment
objectives. The performance of the Fund's classes is ranked against (i)
all other fixed-income funds other than money market funds and (ii)
Pennsylvania municipal bond funds. The Lipper performance rankings are
based on total return that includes the reinvestment of capital gains
distributions and income dividends but does not take sales charges or
taxes into consideration.

From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent
mutual fund monitoring service that ranks mutual funds, including the
Fund, in broad investment categories (equity, taxable bond, tax-exempt and
other) monthly, based upon each fund's three, five and ten-year average
annual total returns (when available) and a risk adjustment factor that
reflects Fund performance relative to three-month U.S. Treasury bill
monthly returns. Such returns are adjusted for fees and sales loads.
There are five ranking categories with a corresponding number of stars:
highest (5), above average (4), neutral (3), below average (2) and lowest
(1). Morningstar ranks the Class A and Class B shares of the Fund in
relation to other rated funds.

The total return on an investment made in Class A or Class B shares of
the Fund may be compared with the performance for the same period of the
Lehman Brothers Municipal Bond Index, as described in the Prospectus.

From time to time the Fund may also include in its advertisements and
sales literature performance information about the Fund or rankings of the
Fund's performance cited in newspapers or periodicals, such as The New
York Times, Money, The Wall Street Journal, Fortune, or other
publications. These articles may include quotations of performance from
other sources, such as Lipper or Morningstar.

When comparing yield, total return and investment risk of an
investment in Class A or Class B shares of the Fund with other
investments, investors should understand that certain other investments
have different risk characteristics than an investment in shares of the
Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while the
Fund's returns will fluctuate and its share values and returns are not
guaranteed. Money market accounts offered by banks also may be insured
by the FDIC and may offer stability of principal. U.S. Treasury
securities are guaranteed as to principal and interest by the full faith
and credit of the U.S. government. Money market mutual funds may seek to
offer a fixed price per share.

Distribution and Service Plans

The Fund has adopted a Service Plan for Class A Shares and a
Distribution and Service Plan for Class B shares of the Fund under Rule
12b-1 of the Investment Company Act, pursuant to which the Fund will
reimburse the Distributor for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved by a
vote of (i) the Board of Trustees of the Trust, including a majority of
the Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a "majority" (as
defined in the Investment Company Act) of the shares of each class (for
the Distribution and Service Plan for the Class B shares, that vote was
cast by the Manager as the then-sole initial holder of Class B shares of
the Fund).

In addition, the Manager and the Distributor may, under the Plans, from
time to time from their own resources (which, as to the Manager, may
include profits derived from the advisory fee it receives from the Fund)
make payments to Recipients for distribution and administrative services
they perform. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of distribution assistance
payments they make to Recipients from their own assets. For further
details, see the discussions relating to the Plans in "How to Buy Shares"
in the Prospectus.

Unless terminated as described below, each Plan continues in effect
from year to year but only as long as such continuance is specifically
approved at least annually by the Trust's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Either Plan may be terminated at
any time by the vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. Neither Plan may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the respective class, who vote
exclusively on approval or amendment of the Plan for that class. All
material amendments must be approved by the Independent Trustees.

While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports to the Trust's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which the payment was made and the identity of each Recipient
that received any such payment. The report for the Class B Plan shall
also include the distribution costs for that quarter, and such costs for
previous fiscal periods that are carried forward, as explained in the
Prospectus and below. Those reports, including the allocations on which
they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on any such selection or nomination is approved by a
majority of the Independent Trustees.

Under the Plans, no payment will be made to any broker, dealer or other
financial institution under the Plan (each is referred to as a
"Recipient") in any quarter if the aggregate net asset value of all Fund
shares held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time by a
majority of the Fund's Independent Trustees. Initially, the Board of
Trustees has set the fee at the maximum rate allowed under the Plans and
set no minimum amount.

For the fiscal year ended December 31, 1993, payments under the Class
A Plan totaled $75,351, all of which was paid by the Distributor to
Recipients, including $5,626 paid to an affiliate of the Distributor.
Unreimbursed expenses incurred with respect to Class A shares for any
fiscal quarter by the Distributor may not be recovered under the Class A
Plan in subsequent fiscal quarters. Payments received by the Distributor
under the Class A Plan will not be used to pay any interest expense,
carrying charges, or other financial costs, or allocation of overhead by
the Distributor.

The Class B Plan allows the service fee payment to be paid by the
Distributor to Recipients in advance for the first year Class B shares are
outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net assets of the Class
B shares sold. An exchange of shares does not entitle the Recipient to
an advance payment of the service fee. In the event Class B shares are
redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of the advance of the
service fee payment to the Distributor.

Although the Class B Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class B shares, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may
be established from time to time under the Class B Plan by the Board.
Initially, the Board has set no minimum holding period. All payments
under the Class B Plan become subject to the limitations imposed by the
National Association of Securities Dealers, Inc. Rules of Fair Practice
on payments of asset based sales charges and service fees. The
Distributor anticipates that it will take a number of years for it to
recoup (from the Fund's payments to the Distributor under the Class B
Plan) the sales commissions paid to authorized brokers or dealers. For
the fiscal period from May 1, 1993 through December 31, 1993, payments
under the Class B plan totaled $16,447.

Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B shares of the Fund. The
Distributor's actual distribution expenses for any given year may exceed
the aggregate of payments received pursuant to the Class B Plan and from
contingent deferred sales charges, and such expenses will be carried
forward and paid in future years. The Fund will be charged only for
interest expenses, carrying charges or other financial costs that are
directly related to the carry-forward of actual distribution expenses.
For example, if the Distributor incurred distribution expenses of $4
million in a given fiscal year, of which $2,000,000 was recovered in the
form of contingent deferred sales charges paid by investors and $1,600,000
was reimbursed in the form of payments made by the Fund to the Distributor
under the Class B Plan, the balance of $400,000 (plus interest) would be
subject to recovery in future fiscal years from such sources.

The Class B Plan allows for the carry-forward of distribution expenses,
to be recovered from asset-based sales charges in subsequent fiscal
periods, as described in the Prospectus. The asset-based sales charge
paid to the Distributor by the Fund under the Class B Plan is intended to
allow the Distributor to recoup the cost of sales commissions paid to
authorized brokers and dealers at the time of sale, plus financing costs,
as described in the Prospectus. Such payments may also be used to pay for
the following expenses in connection with the distribution of Class B
shares: (i) financing the advance of the service fee payment to Recipients
under the Class B Plan, (ii) compensation and expenses of personnel
employed by the Distributor to support distribution of Class B shares, and
(iii) costs of sales literature, advertising and prospectuses (other than
those furnished to current shareholders) and state "blue sky" registration
fees.

ABOUT YOUR ACCOUNT

How To Buy Shares

Alternative Sales Arrangements - Class A and Class B Shares. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold
shares and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson or
other person entitled to receive compensation for selling Fund shares may
receive different compensation with respect to one class of shares than
the other. The Distributor will not accept any order for $1 million or
more of Class B shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of the Fund
instead.

The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.

The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the
effect that the conversion of Matured Class B shares does not constitute
a taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Matured
Class B shares would occur while such suspension remained in effect.
Although Matured Class B shares could then be exchanged for Class A shares
on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a
taxable event for the holder, and absent such exchange, Class B shares
might continue to be subject to the asset-based sales charge for longer
than six years.

The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class B shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total net
assets, and then equally to each outstanding share within a given class.
Such general expenses include (i) management fees, (ii) legal, bookkeeping
and audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Additional Statements and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses,
(vi) share issuance costs, (vii) organization and start-up costs, (viii)
interest, taxes and brokerage commissions, and (ix) non-recurring
expenses, such as litigation costs. Other expenses that are directly
attributable to a class are allocated equally to each outstanding share
within that class. Such expenses include (i) Distribution Plan fees, (ii)
incremental transfer and shareholder servicing agent fees and expenses,
(iii) registration fees and (iv) shareholder meeting expenses, to the
extent that such expenses pertain to a specific class rather than to the
Fund as a whole.

Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B shares of the Fund are determined as of 4:00
P.M., New York time, each day the New York Stock Exchange (the "NYSE") is
open (a "regular business day") by dividing the value of the Fund's net
assets attributable to that class by the number of shares of that class
outstanding. The NYSE's most recent annual holiday schedule (which is
subject to change) states that it will close New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The NYSE may also close on other days. Dealers
other than NYSE members may conduct trading in Municipal Securities on
certain days on which the NYSE is closed (e.g., Good Friday), so that
securities of the same type held by the Fund may be traded, and the net
asset values per share of Class A and Class B shares of the Fund may be
significantly affected, on such days when shareholders cannot purchase or
redeem shares.

The Trust's Board of Trustees has established procedures for the
valuation of its securities: (i) long-term debt securities, and short-term
debt securities having a remaining maturity in excess of 60 days, are
valued at the mean between the asked and bid prices determined by a
portfolio pricing service approved by the Board or obtained from active
market makers in the security; (ii) short-term debt securities having a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (iii) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures. In the
case of Municipal Securities, U.S. Government securities and corporate
bonds, where last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity and other
special factors involved. With the approval of the Trust's Board of
Trustees, the Manager may employ a pricing service, bank or broker-dealer
experienced in such matters to price any of the types of securities
described above. The Trustees will monitor the accuracy of pricing
services by comparing prices used for portfolio evaluation to actual sales
prices of selected securities. The Fund values puts, calls, Interest Rate
Futures and Municipal Bond Index Futures at the last sale prices on the
principal exchange or on the NASDAQ on which they are traded, or if there
are no sales that day, at values based on the last sale price of the
preceding trading day or closing bid and asked prices.

When the Fund writes a call, an amount equal to the premium received
is included in the Fund's Statement of Assets and Liabilities as an asset,
and an equivalent deferred credit is included in the liability section.
The deferred credit is "marked-to-market" to reflect the current market
value of the call. If a call written by the Fund expires or if the Fund
enters into a closing purchase transaction, the Fund has a gain or loss
from the sale of the underlying securities and the proceeds are increased
by the premium originally received. If a call written by the Fund is
exercised, the proceeds are increased by the premium originally received.
If a put held by the Fund is exercised by it, the amount the Fund receives
on its sale of the related investment is reduced by the amount of the
premium paid by the Fund.

AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.

- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:

Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Bio-Tech Fund
Oppenheimer Global Environment Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund

and the following "Money Market Funds":

Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Tax-Exempt Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.

There is an initial sales charge on the purchase of Class A shares of
each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).

-Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement of intention to purchase Class A shares of the Fund (and other
eligible OppenheimerFunds) sold with a front-end sales charge during the
13-month period from the investor's first purchase pursuant to the Letter
(the "Letter of Intent period"), which may, at the investor's request,
include purchases made up to 90 days prior to the date of the Letter. The
Letter states the investor's intention to make the aggregate amount of
purchases (excluding any purchases made by reinvestments of dividends or
distributions or purchases made at net asset value without sales charge),
which together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of the
Letter) will equal or exceed the amount specified in the Letter to obtain
the reduced sales charge rate (as set forth in the Prospectus) applicable
to purchases of shares in that amount (the "intended amount"). Each
purchase under the Letter will be made at the public offering price
applicable to a single lump-sum purchase of shares in the intended amount,
as described in the Prospectus.

In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended amount, the investor agrees to pay the additional
amount of sales charge applicable to such purchases, as set forth in
"Terms of Escrow," below (as those terms may be amended from time to
time). The investor agrees that shares equal in value to 5% of the
intended amount will be held in escrow by the Transfer Agent subject to
the Terms of Escrow. Also, the investor agrees to be bound by the terms
of the Prospectus, this Statement of Additional Information and the
Application used for such Letter of Intent, and if such terms are amended,
as they may be from time to time by the Fund, that those amendments will
apply automatically to existing Letters of Intent.

If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended amount, the commissions previously
paid to the dealer of record for the account and the amount of sales
charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during
the Letter of Intent period exceed the intended amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.

In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.

-Terms of Escrow That Apply to Letters of Intent.

1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended amount specified under the
Letter is $50,000, the escrow shall be shares valued in the amount of
$2,500 (computed at the public offering price adjusted for a $50,000
purchase). Any dividends and capital gains distributions on the escrowed
shares will be credited to the investor's account.

2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.

3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended amount
specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid
if the total amount purchased had been made at a single time. Such sales
charge adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is not paid
within twenty days after a request from the Distributor or the dealer, the
Distributor will, within sixty days of the expiration of the Letter,
redeem the number of escrowed shares necessary to realize such difference
in sales charges. Full and fractional shares remaining after such
redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.

4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.

5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of the Letter) do not include
any shares sold without a front-end sales charge or without being subject
to a Class A contingent deferred sales charge unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of one of the
OppenheimerFunds whose shares were acquired by payment of a sales charge.

6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.

Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Tax-Exempt Cash Reserves or
Oppenheimer Cash Reserves to use those accounts for monthly automatic
purchases of shares of up to four other Eligible Funds.

There is a sales charge on the purchase of certain Eligible Funds. An
application should be obtained from the Transfer Agent, completed and
returned, and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained before initiating Asset Builder payments.
The amount of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.

Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.

How to Sell Shares

Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.

-Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board
of Trustees of the Fund determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash, the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of
securities from the portfolio of the Fund, in lieu of cash, in conformity
with applicable rules of the Securities and Exchange Commission. The Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act,
pursuant to which the Fund is obligated to redeem shares solely in cash
up to the lesser of $250,000 or 1% of the net assets of the Fund during
any 90-day period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in selling
the securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to value
it portfolio securities described above under "Determination of Net Asset
Value Per Share" and such valuation will be made as of the time the
redemption price is determined.

Checkwriting. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue receiving dividends on
those shares until the check is presented to the Fund. Checks may not be
presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills
or to obtain cash at other banks. The Fund reserves the right to amend,
suspend or discontinue offering checkwriting privileges at any time
without prior notice.

Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed, in Class A shares of the Fund or any
of the other OppenheimerFunds into which shares of the Fund are
exchangeable as described below, at the net asset value next computed
after receipt by the Transfer Agent of the reinvestment order. The
shareholder must ask the Distributor for such privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the OppenheimerFunds within
90 days of payment of the sales charge, the shareholder's basis in the
shares of the Fund that were redeemed may not include the amount of the
sales charge paid. That would reduce the loss or increase the gain
recognized from the redemption. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed
after the date of such amendment, suspension or cessation.

Transfer of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name
of another person or entity (whether the transfer occurs by absolute
assignment, gift or bequest, not involving, directly or indirectly, a
public sale). The transferred shares will remain subject to the
contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.

Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received from dealers or brokers after 4:00
P.M. on a regular business day will be processed at that day's net asset
value if such orders were received by the dealer or broker from its
customers prior to 4:00 P.M., and were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required documents, with signature(s) guaranteed as
described above.

Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are by check
payable to all shareholders of record and sent to the address of record
for the account (and if the address has not been changed within the prior
30 days). Required minimum distributions from OppenheimerFunds-sponsored
retirement plans may not be arranged on this basis. Payments are normally
made by check, but shareholders having AccountLink privileges (see "How
To Buy Shares") may arrange to have Automatic Withdrawal Plan payments
transferred to the bank account designated on the OppenheimerFunds New
Account Application or signature-guaranteed instructions. The Fund cannot
guarantee receipt of the payment on the date requested and reserves the
right to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on Class A
share purchases, shareholders should not make regular additional Class A
purchases while participating in an Automatic Withdrawal Plan. Class B
shareholders should not establish withdrawal plans, because of the
imposition of the Class B contingent deferred sales charge on such
withdrawals (except where the Class B contingent deferred sales charge is
waived as described in "Class B Contingent Deferred Sales Charge").

By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated
below and in the provisions of the OppenheimerFunds Application relating
to such Plans, as well as the Prospectus. These provisions may be amended
from time to time by the Fund and/or the Distributor. When adopted, such
amendments will automatically apply to existing Plans.

-Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "Exchange Privilege"
in the Prospectus and "How to Exchange Shares" below in this Statement of
Additional Information.

-Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will
be redeemed first and thereafter shares acquired with reinvested dividends
and capital gains distributions will be redeemed next, followed by shares
acquired with a sales charge, to the extent necessary to make withdrawal
payments. Depending upon the amount withdrawn, the investor's principal
may be depleted. Payments made under such plans should not be considered
as a yield or income on your investment. It may not be desirable to
purchases additional Class A shares while making automatic withdrawals
because of the sales charges that apply to purchases when made.
Accordingly, a shareholder normally may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases of Class A
shares.

The transfer agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who
executed the Plan authorization and application submitted to the Transfer
Agent. The Transfer Agent shall incur no liability to the Planholder for
any action taken or omitted by the Transfer Agent in good faith to
administer the Plan. Certificates will not be issued for shares of the
Fund purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of
the Fund. Any share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that the
shares represented by the certificate may be held under the Plan.

For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.

Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (the date selected for receipt is an approximate
date), according to the choice specified in writing by the Planholder.

The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.

The Plan may be terminated at any time by the Planholder by writing to
the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.

To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.

If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent
to act as agent in administering the Plan.

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of another of the OppenheimerFunds. All
of the OppenheimerFunds (except Oppenheimer Strategic Diversified Income
Fund) offer Class A shares, but only the following other OppenheimerFunds
offer Class B shares:

Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Government Securities Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund

Class A shares of OppenheimerFunds may be exchanged for shares of any
Money Market Fund; shares of any Money Market Fund purchased without a
sales charge may be exchanged for shares of OppenheimerFunds offered with
a sales charge upon payment of the sales charge (or, if applicable, may
be used to purchase shares of OppenheimerFunds subject to a contingent
deferred sales charge); and shares of this Fund acquired by reinvestment
of dividends or distributions from any other of the OppenheimerFunds or
from any unit investment trust for which reinvestment arrangements have
been made with the Distributor may be exchanged at net asset value for
shares of any of the OppenheimerFunds. No contingent deferred sales
charge is imposed on exchanges of shares of either class purchased subject
to a contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months of the end
of the calendar month of the initial purchase of the exchanged Class A
shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus), and the Class B contingent deferred sales charge is imposed
on Class B shares redeemed within six years of the initial purchase of the
exchanged Class B shares.

The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or shares covered by a share
certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

When Class B shares are redeemed to effect an exchange, the priorities
described in "How To Buy Shares" in the Prospectus for the imposition of
the Class B contingent deferred sales charge will be followed in
determining the order in which the shares are exchanged. Shareholders
should take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be imposed in
the subsequent redemption of remaining shares. Shareholders owning shares
of both classes must specify whether they intend to exchange Class A or
Class B shares.

When exchanging shares by telephone, the shareholder must either have
an existing account in, or acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges
of an account made by telephone, any special account features such as
Asset Builder Plans, Automatic Withdrawal Plans and retirement plan
contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.

Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
request from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).

The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or
as otherwise described in "How to Buy Shares." Daily dividends on newly
purchased shares will not be declared or paid until such time as Federal
Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on
the next business day. Dividends will be declared on shares repurchased
by a dealer or broker for four business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
of the same class in the account will be paid together with the redemption
proceeds.

Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.

The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A and Class B
Shares," above. Dividends are calculated in the same manner, at the same
time and on the same day for shares of each class. However, dividends on
Class B shares are expected to be lower as a result of the asset-based
sales charge on Class B shares, and Class B dividends will also differ in
amount as a consequence of any difference in net asset value between Class
A and Class B shares.

Dividends will be declared from net investment income, if any. Net
investment income includes the allocation of amounts of income from the
Pennsylvania Municipal Securities in the Fund's portfolio which are free
from Federal and Pennsylvania personal income taxes. This allocation will
be made by the use of one designated percentage applied uniformly to all
income dividends made during the Fund's tax year. Such designation will
normally be made following the end of each fiscal year as to income
dividends paid in the prior year. The percentage of income designated as
tax-exempt may substantially differ from the percentage of the Fund's
income that was tax-exempt for a given period.

If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified as
a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.

Under the Internal Revenue Code, by December 31 each year the Fund must
distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in
the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. The Manager might determine in a particular year that it
might be in the best interest of shareholders for the Fund not to make
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital
gains available for distribution to shareholders.

The Internal Revenue Code requires that a holder (such as the Fund) of
a zero coupon security accrue as income each year a portion of the
discount at which the security was purchased even though the Fund receives
no interest payment in cash on the security during the year. As an
investment company, the Fund must pay out substantially all of its net
investment income each year or be subject to excise taxes, as described
above. Accordingly, when the Fund holds zero coupon securities, it may
be required to pay out as an income distribution each year an amount which
is greater than the total amount of cash interest the Fund actually
received during that year. Such distributions will be made from the cash
assets of the Fund or by liquidation of portfolio securities, if
necessary. The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution than they
would have had in the absence of such transactions.

Shares of the Fund will be exempt from Pennsylvania county personal
property taxes, and the personal property taxes of the City and School
District of Pittsburgh to the extent that the Fund's assets consist of
Pennsylvania Municipal Securities, obligations of the U.S. Government,
certain of its agencies and instrumentalities, and certain other exempt
obligations on the annual assessment date. Dividends derived from
interest on Municipal Securities other than Pennsylvania Municipal
Securities will be exempt from Federal income tax for individuals, but
will be subject to the Pennsylvania personal income tax and, in the case
of residents of Philadelphia, the investment income tax of the City of
Philadelphia.

The Fund intends to qualify under the Internal Revenue Code during each
fiscal year to pay "exempt-interest dividends" to its shareholders.
Exempt-interest dividends which are derived from net income earned by the
Fund on Municipal Securities will be excludable from the gross income of
shareholders for Federal income tax purposes. To the extent that
distributions are derived from interest on Pennsylvania Municipal
Securities, obligations of the U.S. Government and certain of its
territories, agencies and instrumentalities, such distributions will also
be exempt from Pennsylvania personal income tax and, in the case of
residents of the City of Philadelphia, the investment income tax of the
School District of Philadelphia (provided at least 80% of the Fund's
assets are at all times invested in such obligations). All of the Fund's
dividends (excluding distributions) paid during 1993 were exempt from such
Federal and Pennsylvania income taxes. A portion of the exempt-interest
dividends paid by the Fund may be an item of tax preference for
shareholders subject to the alternative minimum tax. 7.02% of the Fund's
dividends (excluding distributions) paid during 1993 were a tax preference
item for such shareholders. Corporate shareholders and "substantial
users" of facilities financed by Private Activity Municipal Securities
should read "Investment Objective and Policies" above before purchasing
shares.

Pennsylvania has recently enacted legislation which eliminated the
necessity for certain investment restrictions which the Fund has adopted
as fundamental policies and which are described in the Prospectus. These
investment restrictions had been required under prior law in order to
enable a fund (such as the Fund) to pass-through to investors the tax-
exempt nature of its income for purposes of the Pennsylvania personal
income tax. The tax-exempt nature of such income may now be passed-
through to investors generally without restriction for purposes of the
Pennsylvania personal income tax. The Fund continues to be governed by
these restrictions but, as a result of the recent Pennsylvania
legislation, could consider eliminating the restrictions. The
Pennsylvania legislation also repeals the Pennsylvania personal income tax
exemption for gains from the sale of tax-exempt obligations. Thus,
capital gain distributions from the Fund will be fully taxable for
purposes of the Pennsylvania personal income tax.

For Federal income tax purposes, a shareholder receiving a dividend
from income earned by the Fund from one or more of: (i) certain taxable
temporary investments, (ii) income from securities loans, (iii) income or
gains from hedging instruments, and (iv) an excess of net short-term
capital gain over net long-term capital loss from the Fund, treats the
dividend as a receipt of ordinary income in the computation of gross
income, regardless of whether the dividend is reinvested. The Fund's
dividends will not be eligible for the dividends-received deduction for
corporations. Shareholders receiving Social Security benefits should be
aware that exempt-interest dividends are a factor in determining whether
such benefits are subject to Federal income tax. Losses realized by
shareholders on the redemption of Fund shares within six months of
purchase (which period may be shortened by regulation) will be disallowed
for Federal income tax purposes to the extent of exempt-interest dividends
received on such shares.

Individual shareholders of the Fund will be exempt from Pennsylvania
county personal property taxes, the personal property tax of the City of
Pittsburgh, and the personal property tax of the School District of
Pittsburgh as to their shares of the Fund to the extent that the Fund's
portfolio securities consist of Pennsylvania Municipal Securities and
obligations of the U.S. Government, and certain of its territories,
agencies and instrumentalities, and certain other obligations that are not
subject to such personal property taxes on the annual assessment date.
Corporations are not subject to Pennsylvania personal property taxes.
Information will be provided to shareholders each year regarding the
portion of the value of their shares, if any, that is subject to
Pennsylvania personal property taxes.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges" above at net asset value without sales charge. Not all
OppenheimerFunds currently offer Class B shares. The names of Funds that
offer Class B shares can be obtained by calling the Distributor at 1-800-
525-7048. To elect this option, the shareholder must notify the Transfer
Agent in writing and either must have an existing account in the fund
selected for reinvestment or must obtain a prospectus for that fund and
an application from the Distributor to establish an account. The
investment will be made at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution.

Additional Information About the Fund

The Custodian. The Custodian of the assets of the Fund is Citibank, N.A.
The Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities, collecting income on the portfolio securities
and handling the delivery of such securities to and from the Fund. The
Manager has represented to the Fund that the banking relationships between
the Manager and the Custodian have been and will continue to be unrelated
to and unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates.

Independent Auditors. The independent auditors of the Fund examine the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds advised
by the Manager and its affiliates.
<PAGE>
Independent Auditors' Report

The Board of Trustees and Shareholders of Oppenheimer Pennsylvania Tax-Exempt
Fund:

We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Pennsylvania Tax-Exempt Fund as of December 31,
1993, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
four-year period then ended and the period from September 18, 1989
(commencement of operations) to December 31, 1989. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1993, by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer Pennsylvania Tax-Exempt Fund as of December 31, 1993, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the four-year period then ended and the
period from September 18, 1989 (commencement of operations) to December 31,
1989, in conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick
KPMG Peat Marwick
Denver, Colorado
January 21, 1994
<PAGE>
Statement of Investments
December 31, 1993

</TABLE>
<TABLE>
<CAPTION>
Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
Municipal Bonds and Notes--95.7%

Pennsylvania--92.8%

Allegheny County, Pennsylvania Hospital
Development Authority Revenue Bonds:
Magee Women's Hospital, FGIC Insured,
5.375%, 10/1/13 Aaa/AAA/AAA $2,000,000 $1,973,474
Presbyterian University Health Center Project,
Series A, MBIA Insured, 6.25%, 11/1/23 Aaa/AAA 2,000,000 2,128,116
Presbyterian University Hospital, Series A,
MBIA Insured, 7.60%, 3/1/08 Aaa/AAA 600,000 671,345

Beaver County, Pennsylvania Hospital Authority
Revenue Bonds, Medical Center Beaver,
Pennsylvania, Inc., AMBAC Insured, 6.625%, 7/1/10 Aaa/AAA 1,000,000 1,116,822

Beaver County, Pennsylvania Industrial
Development Authority Pollution Control Revenue
Refunding Bonds, Ohio Edison Project, Series A,
7.75%, 9/1/24 Baa3/BB+ 500,000 565,881

Berks County, Pennsylvania General Obligation
Bonds, FGIC Insured, 9.475%, 11/15/20(1) Aaa/AAA 1,000,000 1,190,528

Berks County, Pennsylvania Municipal Authority
Hospital Revenue Bonds, Reading Hospital Medical
Center Project, MBIA Insured, 5.70%, 10/1/14 Aaa/AAA 1,250,000 1,286,856

Blair County, Pennsylvania Hospital Authority
Revenue Bonds, Altoona Hospital Project,
AMBAC Insured, 9.21%, 7/1/14(1) Aaa/AAA 700,000 803,480

Dauphin County, Pennsylvania General Authority
Hospital Revenue Bonds, Hapsco-Western
Pennsylvania Hospital Project A-1, MBIA Insured,
5.50%, 7/1/13 Aaa/AAA 1,000,000 1,006,780

Delaware County, Pennsylvania Authority Revenue
Bonds, Villanova University, MBIA Insured,
6.90%, 8/1/16 Aaa/AAA 1,000,000 1,112,641

Delaware County, Pennsylvania Industrial
Development Authority Revenue Refunding Bonds,
Resource Recovery Project, Series A, 8.10%, 12/1/13 NR/A+ 630,000 699,153

Lehigh County, Pennsylvania Industrial
Development Authority Pollution Control Revenue
Refunding Bonds, Pennsylvania Power & Light Co.
Project, Series A, 6.40%, 11/1/21 Aaa/AAA 1,000,000 1,088,563

North Allegheny, Pennsylvania School District
General Obligation Refunding Bonds, Series A,
AMBAC Insured, 6.35%, 11/1/12 Aaa/AAA 1,500,000 1,637,454

Northampton County, Pennsylvania Hospital
Authority Revenue Bonds, Easton Hospital, Series A,
MBIA Insured, 6.25%, 1/1/19 Aaa/AAA 1,000,000 1,075,753

Pennsylvania Convention Center Authority Revenue
Bonds, Series A, FGIC Insured, 6.70%, 9/1/16 Aaa/AAA/AAA 1,850,000 2,164,770

Pennsylvania Housing Finance Agency:
Rental Housing Refunding Bonds, 6.40%, 7/1/12 Aaa/AAA 2,400,000 2,541,103
Single Family Mortgage:
Residual Interest Bonds, Series 1991-31C, 10.978%,
10/1/23(1) Aa/AA 1,000,000 1,152,167
Revenue Bonds, Series 36, 5.45%, 10/1/14 Aa/AA 1,000,000 998,676

Pennsylvania Intergovernmental Cooperative
Authority Special Tax Revenue Bonds,
City of Philadelphia Funding Program,
MBIA Insured, 5.60%, 6/15/15 Aaa/AAA/BBB+ $1,000,000 $1,016,850

Pennsylvania State Certificates of Participation,
Series A, AMBAC Insured, 5%, 7/1/15 Aaa/AAA 3,500,000 3,336,025

Pennsylvania State General Obligation Refunding
Bonds, First Series, 5%, 4/15/13 A1/AA-/AA- 2,500,000 2,430,475

Pennsylvania State Higher Education Assistance
Agency Student Loan Residual Interest
Revenue Bonds, Series 1992B, AMBAC Insured,
9.172%, 3/1/22(1) Aaa/AAA 1,250,000 1,332,069

Pennsylvania State Higher Educational Facilities
Authority College and University Revenue Bonds:
Hahnemann University Project, MBIA Insured,
7.20%, 7/1/19 Aaa/AAA 1,500,000 1,690,669
RIDC Regional Growth Fund--Carnegie, 9%, 11/1/09 NR/A+ 1,250,000 1,375,507
Thomas Jefferson University, Series A, 6.625%,
8/15/09 Aa/A+ 750,000 851,369

Pennsylvania State Industrial Development
Authority Economic Development Revenue Bonds,
Series A, 7%, 1/1/11 A/A-/A 1,000,000 1,105,140

Pennsylvania State Turnpike Commission
Revenue Bonds:
Series N, 6.50%, 12/1/13 A1/A 1,000,000 1,099,496
Series P, AMBAC Insured, 6%, 12/1/17 Aaa/AAA 2,000,000 2,142,236

Pennsylvania State University Revenue
Refunding Bonds:
Series B, 5.50%, 8/15/16 A1/AA- 1,500,000 1,511,040
5.50%, 8/15/16 A1/AA- 1,000,000 1,007,360

Philadelphia, Pennsylvania Gas Works Revenue
Bonds, 14th Series, 6.375%, 7/1/26 Baa1/BBB/A- 1,800,000 1,883,700

Philadelphia, Pennsylvania Hospitals and Higher
Educational Facilities Authority:
Hospital Revenue Bonds:
Albert Einstein Medical Center, 7.625%, 4/1/11 A/BBB+ 3,500,000 3,888,297
Temple University Hospital, Series A, 6.625%,
11/15/23 Baa1/BBB+ 1,800,000 1,912,520
Hospital Revenue Refunding Bonds, St. Agnes
Medical Center Project, 7.25%, 8/15/31 Aa/NR 945,000 1,072,567

Philadelphia, Pennsylvania Municipal Authority
Justice Lease:
Revenue Bonds, Series B, FGIC Insured,
7.125%, 11/15/18 Aaa/AAA/AAA 700,000 838,083
Revenue Refunding Bonds, Series A, FGIC Insured,
Prerefunded, 5.625%, 11/15/18 Aaa/AAA/AAA 2,750,000 2,795,089

Philadelphia, Pennsylvania Regional Port Authority
Lease Revenue Bonds, MBIA Insured,
9.198%, 9/1/20(1) Aaa/AAA 2,100,000 2,438,249

Philadelphia, Pennsylvania Water and Sewer
Revenue Bonds:
Tenth Series, Prerefunded, 7.35%, 9/1/04 Aaa/AAA/BBB $ 245,000 $ 292,353
Twelfth Series, MBIA Insured, Prerefunded,
7.25%, 7/1/14 Aaa/AAA/BBB 275,000 301,683

Philadelphia, Pennsylvania Water and Wastewater
Revenue Bonds, 5.75%, 6/15/13 Baa/BBB/BBB 1,000,000 1,004,630

Salem Township, Pennsylvania General Obligation
Bonds, Prerefunded, 11.50%, 5/1/09 NR/NR 975,000 1,023,336

Schuylkill County, Pennsylvania Industrial
Development Authority Resource Recovery Revenue
Refunding Bonds, Schuylkill Energy Resources, Inc.,
6.50%, 1/1/10 NR/NR/BBB- 2,500,000 2,526,980

South Fork Municipal Authority Pennsylvania
Hospital Revenue Bonds, Lee Hospital Project,
Series A, 5.50%, 7/1/23 NR/A- 2,000,000 1,971,288

St. Mary Hospital Authority Langhorne,
Pennsylvania Hospital Revenue Refunding Bonds,
Franciscan Health, Series B, BIG Insured, 7%,
7/1/14 Aaa/AAA 500,000 556,469

University of Pittsburgh, Pennsylvania Higher
Education Revenue Bonds, University Capital
Project, Series A, MBIA Insured, 6.125%, 6/1/21 Aaa/AAA 500,000 539,116

65,156,158

U.S. Possessions--2.9%
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, YCNS, MBIA Insured,
8.784%, 7/1/08(1) Aaa/AAA 1,000,000 1,110,468

Puerto Rico Electric Power Authority Revenue
Refunding Bonds, Series N, 5%, 7/1/12 Baa1/A- 1,000,000 960,347

2,070,815

Total Municipal Bonds and Notes (Cost $63,479,770) 67,226,973

Short-Term Tax-Exempt Obligations--2.9%

Philadelphia, Pennsylvania Authority for Industrial
Development Revenue Bonds, Franklin Institute
Project, 3.35%(2) (Cost $2,000,000) 2,000,000 2,000,000

Total Investments, at Value (Cost $65,479,770) 98.6% 69,226,973

Other Assets Net of Liabilities 1.4 989,279
Net Assets 100.0% $70,216,252

<FN>
1. Represents the current interest rate for a variable rate security.
2. Floating or variable rate obligation maturing in more than one year. The interest rate, which is
based on specfic, or an index of, market interest rates, is subject to change periodically and is
the effective rate on December 31, 1993. A demand feature allows the recovery of principal at any
time, or at specified intervals not exceeding one year, on up to 30 days' notice.
See accompanying Notes to Financial Statements.

</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities December 31, 1993
<S> <S> <C>
Assets Investments, at value (cost $65,479,770)--see accompanying statement $69,226,973

Cash 138,175

Receivables:
Interest 1,159,962
Shares of beneficial interest sold 363,068
Deferred organization costs 3,552

Other 11,117

Total assets 70,902,847

Liabilities Payables and other liabilities:
Dividends 371,737
Shares of beneficial interest redeemed 206,606
Distribution assistance--Note 4 24,892
Other 83,360

Total liabilities 686,595

Net Assets $70,216,252

Composition of
Net Assets Paid-in capital $66,426,819

Undistributed net investment income 96,255

Distributions in excess of net realized gain from investment transactions (54,025)

Net unrealized appreciation on investments--Note 3 3,747,203

Net assets $70,216,252

Net Asset Value
Per Share Class A Shares:
Net asset value and redemption price per share (based
on net assets of $64,639,906 and 5,030,639 shares of beneficial interest outstanding) $12.85
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $13.49

Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$5,576,346 and 434,128 shares of beneficial interest outstanding) $12.84

See accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended December 31, 1993
<S> <S> <C>
Investment Income Interest $3,426,841

Expenses Management fees--Note 4 316,801

Distribution assistance:
Class A--Note 4 75,351
Class B--Note 4 16,447

Transfer and shareholder servicing agent fees--Note 4 45,134

Shareholder reports 39,535

Trustees' fees and expenses 20,384

Legal and auditing fees 18,376

Registration and filing fees:
Class A 8,711
Class B 1,755

Custodian fees and expenses 9,214

Other 22,618

Total expenses 574,326
Less assumption of expenses by Oppenheimer Management
Corporation--Note 4 (39,417)

Net expenses 534,909

Net Investment
Income 2,891,932

Realized and
Unrealized
Gain on
Investments
Net realized gain on investments 206,077

Net change in unrealized appreciation on investments:
Beginning of year 717,236
End of year--Note 3 3,747,203

Net change 3,029,967

Net realized and unrealized gain on investments 3,236,044

Net Increase in Net Assets Resulting from Operations $6,127,976

See accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Year Ended December 31,
1993 1992
<S> <S> <C> <C>
Operations Net investment income $2,891,932 $ 1,394,814

Net realized gain on investments 206,077 136,127

Net change in unrealized appreciation or depreciation on
investments 3,029,967 211,711

Net increase in net assets resulting from operations 6,127,976 1,742,652

Dividends and
Distributions
to
Shareholders
Dividends from net investment income:
Class A ($.702 and $.731 per share, respectively) (2,800,212) (1,311,813)
Class B ($.368 per share) (80,782) --

Distributions from net realized gain on investments:
Class A ($.044 and $.075 per share, respectively) (215,004) (164,010)
Class B ($.044 per share) (17,419) --

Beneficial
Interest
Transactions
Net increase in net assets resulting from Class A beneficial
interest transactions--Note 2 28,394,854 19,232,536

Net increase in net assets resulting from Class B beneficial
interest
transactions--Note 2 5,516,888 --

Net Assets Total increase 36,926,301 19,499,365

Beginning of year 33,289,951 13,790,586

End of year (including undistributed net investment income of
$96,255 and $85,317, respectively) $70,216,252 $33,289,951

See accompanying Notes to Financial Statements.
</TABLE>

Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
Year Ended Period Ended
December 31, December 31,
1993 1992 1991 1990 1989(2) 1993 (1)
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning
of period $ 12.05 $ 11.93 $ 11.43 $11.58 $11.43 $12.44