Oppenheimer Pennsylvania Tax-Exempt Fund
Annual Report December 31, 1993
(COVER PHOTO: COUPLE ON PARK BENCH)
(OPPENHEIMER FUNDS(R) LOGO)
"With today's higher taxes we worried that the income from our investments
would not be enough.
"This Fund has given us what we need--tax-free income.
"We can keep more of what we earn, while our investment helps build
Pennsylvania."
<PAGE>
Fund Facts
In this report:
Answers to three timely questions you should ask your Fund's managers.
* With interest rates at historically low levels, how has the Fund maintained
an attractive yield?
* What is the Fund's current position on Philadelphia municipal securities?
* Why does the current Fund investment strategy emphasize higher quality
municipal bonds?
Five Facts Every Shareholder Should Know About Oppenheimer Pennsylvania Tax-
Exempt Fund
1 The Fund seeks high, current income exempt from federal and
Pennsylvania state income taxes. A substantial portion of the Fund's
dividends will also be exempt from Pennsylvania county personal
property taxes, and Philadelphia and Pittsburgh school district
taxes. The Fund consists principally of Pennsylvania municipal
securities rated in the highest four credit rating categories.
2 The standardized yield for Class A shares for the 30 days ended
December 31, 1993 was 5.08%. For Class B shares, the standardized
yield was 4.56%.(1)
3 Under the new, higher federal tax rates, the value of tax-free income
has increased. The table shows the taxable equivalent yield required
to match the Fund's current yield for the new top tax brackets.
Here is the taxable equivalent yield for a
Pennsylvania investor filing a joint return
with taxable income of:
Fund Yield
on 12/31/93 $92,000 $150,000 $255,000
Class A(1) 5.08% 7.57% 8.17% 8.65%
Class B(1) 4.56% 6.80% 7.33% 7.77%
This table assumes that an investor's highest effective tax bracket
(combined federal and state) applies to the change in taxable income
resulting from a switch between taxable and non-taxable investments.
A portion of the Fund's distributions may be subject to income
taxes. For investors subject to alternative minimum tax, a portion
of the Fund's distributions may increase that tax.
4 Total return at net asset value for the Fund's Class A shares for
the twelve months ended December 31, 1993 was 13.12%.(2) The Fund's
Class B shares total return at net asset value for the period from
inception of the Class on May 1, 1993 to December 31, 1993 was
6.67%.(2)
5 "We were proactive in our efforts to achieve an attractive yield for
the Fund as interest rates declined during the past year. Whenever
possible we purchased call protection to lock in rates on higher
yielding issues, which prevents the issuer from redeeming the bond
before maturity. This helps to maintain the income available to the
Fund from these investments."
Portfolio Manager, Robert Patterson, December 31, 1993
1. Standardized yield is net investment income calculated on a yield to
maturity basis for the 30-day period ended 12/31/93, divided by the maximum
offering price at the end of the period, compounded semi-annually and then
annualized.
2. Based on the change in net asset value per Class A share from 12/31/92 to
12/31/93. The Fund's average annual total returns after deducting the current
maximum sales charge of 4.75% per Class A share for the 1-year period and
since inception of the Fund on 9/18/89 ended 12/31/93 were 7.74% and 8.53%,
respectively. Total return for Class B shares from 5/1/93 (inception of the
Class) and held until 12/31/93 was 1.67%. This reflects the change in value
of a hypothetical investment made on 5/1/93 and held until 12/31/93, with all
dividends and capital gains distributions reinvested and after applying the
contingent deferred sales charge of 5%. All performance figures assume
reinvestment of dividends and capital gains distributions.
Past performance does not guarantee future results. The principal value and
return of an investment in the Fund will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
2 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
Report to Shareholders
Oppenheimer Pennsylvania Tax-Exempt Fund provided shareholders with
competitive tax-free yields during the year ended December 31, 1993.
Standardized yield for Class A shares was 5.08% and 4.56% for Class B shares
for the 30-day period ended December 31, 1993.(3) The Fund's performance was
recently awarded a (4 stars) ranking from Morningstar Mutual Funds.(4)
During 1993, the market for Pennsylvania municipal bonds followed many of the
trends for the municipal bond market nationwide. Three key factors combined
to create a strong municipal bond market: declining interest rates; an
increase in federal tax rates; and gradual economic growth.
Declining interest rates caused prices of existing bonds to appreciate and
also led to a record supply of new municipal bond issues used to rebuild
infrastructure and meet other obligations. The increase in federal tax rates
made municipal bonds even more attractive to investors in higher tax
brackets. This demand also increased the value of bonds in the Fund's
portfolio. And finally, Pennsylvania's economy exhibited solid growth during
the past year, which strengthened the state's ability to meet its financial
obligations and positively affected the Fund's holdings.
Although it made solid progress in addressing its financial difficulties, we
do not currently invest directly in City of Philadelphia bonds because they
are not rated investment grade. The Fund does hold several Philadelphia
revenue bonds, which are backed by a specific revenue stream and are not tied
to the City of Philadelphia's financial situation.
In light of recent market trends, the Fund's strategy throughout the past
year was to stay fully invested in higher quality securities with an emphasis
on essential service revenue bonds, such as hospital and transportation
issues.(5) We favor higher quality bonds because they offer more dependable
returns relative to lower-rated bonds which provide only slightly higher
yields. As of December 31, 1993, 58.5% of the Fund's portfolio was invested
in top-rated AAA bonds. We also diversify the portfolio's holdings both
geographically within the state and by market sector.
Going forward, we will continue to seek attractive yields in essential
service revenue bonds and general obligation bonds. We are optimistic that
the current economic and political environment in Pennsylvania can support
continued good performance in 1994.
We appreciate your confidence in the Fund's management. We will continue to
do our best to provide you with tax-free income.
(Donald W. Spiro signature)
Donald W. Spiro
President, Oppenheimer Multi-State Tax-Exempt Trust
January 21, 1994
"The Fund was awarded (4 stars)
from Morningstar."
3. See footnote 1, page 2.
4. Source: Morningstar Mutual Funds 12/31/93, an independent mutual fund
monitoring service, which ranks funds in specific investment categories
monthly by a quantitative system that uses investment performance, risk
assessment factors and adjusts returns for fees and sales loads. One star is
the lowest ranking, five stars the highest. Of 2,193 funds ranked by
Morningstar in that period, 197 received a 5-star ranking and 588 funds
received a 4-star ranking. Risk assessment reflects fund performance relative
to three-month Treasury bill returns. Past performance does not guarantee
future results.
5. The Fund's portfolio is subject to change.
3 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
<PAGE>
Statement of Investments
December 31, 1993
<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
4 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
Pennsylvania
(continued)
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
5 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
Ratings: Moody's/
S&P's/Fitch's Face Market Value
(Unaudited) Amount See Note 1
Pennsylvania
(continued)
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>
6 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
<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>
7 Oppenheimer Pennsylvania Tax-Exempt Fund<PAGE>
<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>
8 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
<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>
9 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
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
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.
See accompanying Notes to Financial Statements.
</TABLE>
10 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer Pennsylvania Tax-Exempt Fund (the Fund) is a separate series of
Oppenheimer Multi-State Tax-Exempt Trust, a non-diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers both Class A and Class B shares.
Class A shares are sold with a front-end sales charge. Class B shares may be
subject to a contingent deferred sales charge. Both classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class. Class B shares will automatically convert to Class
A shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York
time) on each trading day. Long-term debt securities are valued by a
portfolio pricing service approved by the Board of Trustees. Long-term debt
securities which cannot be valued by the approved portfolio pricing service
are valued by averaging the mean between the bid and asked prices obtained
from two active market makers in such securities. Short-term debt securities
having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium
or discount. Securities for which market quotes are not readily available are
valued under procedures established by the Board of Trustees to determine
fair value in good faith.
Allocation of Income, Expenses and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
Federal Income Taxes. The Fund intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required.
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service
and fees paid to each trustee during the years of service. During the year
ended December 31, 1993, a provision of $3,307 was made for the Fund's
projected benefit obligations, resulting in an accumulated liability of
$28,744 at December 31, 1993. No payments have been made under the plan.
Organization Costs. The Manager advanced $22,953 for organization and
start-up costs of the Fund. Such expenses are being amortized over a five-year
period from the date operations commenced. In the event that all or part of
the Manager's initial investment in shares of the Fund is withdrawn during
the amortization period, the redemption proceeds will be reduced to reimburse
the Fund for any unamortized expenses, in the same ratio as the number of
shares redeemed bears to the number of initial shares outstanding at the time
of such redemption.
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A and Class B shares from net investment income each
regular business day and pay such dividends monthly. Distributions from net
realized gains on investments, if any, will be declared at least once each
year.
Other. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
11 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
Notes to Financial Statements (Continued)
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1993(1) Year Ended December 31, 1992
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 2,598,125 $32,598,970 1,783,153 $21,329,629
Dividends and
distributions reinvested 156,253 1,972,297 80,016 957,158
Redeemed (487,470) (6,176,413) (255,436) (3,054,251)
Net increase 2,266,908 $28,394,854 1,607,733 $19,232,536
Class B:
Sold 441,757 $ 5,613,333 -- $ --
Dividends and distributions
reinvested 4,737 60,779 -- --
Redeemed (12,366) (157,224) -- --
Net increase 434,128 $ 5,516,888 -- $ --
<FN>
1. For the year ended December 31, 1993 for Class A shares and for the period from May 1, 1993
(inception of offering) to December 31, 1993 for Class B shares.
</TABLE>
3. Unrealized Gains and Losses on Investments
At December 31, 1993, net unrealized appreciation on investments of $3,747,203
was composed of gross appreciation of $3,878,041, and gross depreciation of
$130,838.
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of .60% on
the first $200 million of net assets, .55% on the next $100 million, .50% on
the next $200 million, .45% on the next $250 million, .40% on the next $250
million and .35% on net assets in excess of $1 billion. The Manager has
agreed to assume Fund expenses (with specified exceptions) in excess of the
most stringent applicable regulatory limit on Fund expenses. In addition, the
Manager had voluntarily undertaken to assume Fund expenses of .20% of average
annual net assets effective February 4, 1993 (.40% prior thereto). This
voluntary undertaking was terminated effective May 26, 1993.
For the year ended December 31, 1993, commissions (sales charges paid by
investors) on sales of Class A shares totaled $939,991, of which $252,444 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. During
the year ended December 31, 1993, OFDI received contingent deferred sales
charges of $1,853 upon redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans of distribution, the Fund may expend up to .15%
of its Class A and .25% of its Class B net assets annually to reimburse OFDI
for costs incurred in distributing shares of the Fund, including amounts paid
to brokers, dealers, banks and other institutions. The Fund's Board has
voluntarily reduced this Class B service fee to .15% per annum. In addition,
Class B shares are subject to an asset-based sales charge of .75% of net
assets annually, to reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing costs. In the event of
termination or discontinuance of the Class B plan of distribution, the Fund
would be contractually obligated to pay OFDI for any expenses not previously
reimbursed or recovered through contingent deferred sales charges. During the
year ended December 31, 1993, OFDI paid $5,626 to an affiliated broker/dealer
as reimbursement for Class A distribution-related expenses and retained
$16,447 as reimbursement for Class B distribution-related expenses and sales
commissions.
12 Oppenheimer Pennsylvania Tax-Exempt Fund
<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.
KPMG Peat Marwick
Denver, Colorado
January 21, 1994
13 Oppenheimer Pennsylvania Tax-Exempt Fund<PAGE>
Federal Income Tax Information (Unaudited)
In early 1994, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1993.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
A distribution of $.0440 per share was paid on December 10, 1993, of which
$.0439 was designated as a ``capital gain distribution'' for federal income
tax purposes. Whether received in stock or cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains). Both
short-term and long-term capital gain distributions are subject to federal,
state and local taxes.
None of the dividends paid by the Fund during the fiscal year ended December
31, 1993 are eligible for the corporate dividend-received deduction. The
dividends were derived from interest on municipal bonds and are not subject
to federal income tax. To the extent a shareholder is subject to any state or
local tax laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
14 Oppenheimer Pennsylvania Tax-Exempt Fund<PAGE>
<PAGE>
Oppenheimer Pennsylvania Tax-Exempt Fund
A Series of Oppenheimer Multi-State Tax-Exempt Trust
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Edmund T. Delaney, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Lynn M. Coluccy, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Advisor Oppenheimer Management Corporation
Distributor Oppenheimer Funds Distributor, Inc.
Transfer and Shareholder Oppenheimer Shareholder Services
Servicing Agent
Custodian of Citibank, N.A.
Portfolio Securities
Independent Auditors KPMG Peat Marwick
Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer Pennsylvania Tax-
Exempt Fund. This report must be preceded or accompanied by a Prospectus of
Oppenheimer Pennsylvania Tax-Exempt Fund. For material information concerning
the Fund, see the Prospectus.
15 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE>
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course, PhoneLink will always give you the option to speak with a Customer
Service Representative during regular business hours.
"When you invest in OppenheimerFunds, you know you'll receive a high level
of customer service. The International Customer Service Association knows
it, too, as it recently awarded Oppenheimer Shareholder Services a 1993
Award of Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
(Barbara Hennigar photo)
Barbara Hennigar
President
Oppenheimer Shareholder Services
(1993 Award of Excellence Logo)
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