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OPPENHEIMER NEW JERSEY TAX-EXEMPT FUND
Annual Report December 31, 1994
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STANDARDIZED YIELD
For the 30 Days Ended 12/31/94:(4)
Class A
5.68%
Class B
5.04%
This Fund is for people who want to earn income that's exempt from taxes.
HOW YOUR FUND IS MANAGED
Oppenheimer New Jersey Tax-Exempt Fund invests in a diversified portfolio of
investment grade New Jersey tax-free municipal bonds. As a Fund shareholder, you
receive income that is free from federal and New Jersey income taxes(1). Your
dividends don't increase your taxable income the way taxable investments do, so
you can keep more of what you earn.
Your Fund invests in investment grade municipal bonds and notes rated
within the four highest rating categories by Moody's, Standard & Poor's or
Fitch's. In addition, New Jersey Tax-Exempt Fund is managed by an experienced
team of municipal bond specialists who research investments thoroughly before
they are included in the Fund's portfolio.
PERFORMANCE
Cumulative total return at net asset value since inception was -4.63% for Class
A shares and -5.39% for Class B shares(2).
The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment and help-ing you through
short-term market fluctuations.
Cumulative total return at maximum offering price since inception for
Class A shares was -9.16% and -9.94% for Class B shares(3).
OUTLOOK
This Fund was introduced at an opportune time. Since it opened in March, we've
paced our purchases to take advantage of rising interest rates. The municipal
market overall remains challenging, but we believe that the Fund is positioned
to benefit significantly when interest rates stabilize and the New Jersey
market's positive fundamentals emerge."
Robert Patterson, Portfolio Manager
December 31, 1994
1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.
2. Based on the change in net asset value per share from 3/1/94 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account. The Fund's inception date was 3/1/94.
3. Cumulative total returns are based on a hypothetical investment held until
12/31/94, after deducting the current maximum initial sales charge of 4.75% for
Class A shares. Total return for Class B shares was based on a hypothetical
investment held for that period, after deducting the contingent deferred sales
charge of 5% (since inception) for Class B shares.
4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 12/31/94, divided by the maximum offering
price at the end of the period, compounded semi-annually and then annualized.
Falling net asset values will tend to artificially raise yields. All figures
assume reinvestment of dividends and capital gains distributions. Past
performance is not indicative of future results. Investment and principal value
on an investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
2 Oppenheimer New Jersey Tax-Exempt Fund
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Dear OppenheimerFunds Shareholder,
The past year was marked by one of the greatest tests of the municipal bond
market in more than six decades. In 1994, the Federal Reserve undertook one of
the most aggressive inflation-fighting efforts in its history, raising interest
rates six times and driving bond prices down across the board. Then, in early
December as the market started to stabilize, Orange County, California,
defaulted on a $100 million bond issue, for reasons not related to the bonds
themselves, but rather to the aggressive use of derivatives (investments whose
value is derived from another security, currency, commodity or index) in
managing the county's portfolio. Although Orange County's problems didn't affect
OppenheimerFunds tax-free portfolios significantly, at year end, many investors
were left wondering what the future holds not only for interest rates, but for
the municipal market itself.
Looking at Orange County, there is no question that their problems have
added temporarily to the uncertainties surrounding the tax-free market. In the
near term, investors' heightened sense of caution may push new-issue prices
modestly lower and new-issue yields somewhat higher. In the longer term,
however, we expect developments in Orange County are likely to help rather than
hurt the market. The municipal bond market has always been one of the most
conservative places to invest, and with the increased attention paid to risks of
all types, we expect it to become less risky.
As for the Fed's actions to raise interest rates, changing interest rates
and fluctuating bond prices are facts of life affecting all bond markets, and
it's a bond market basic principle that when interest rates rise, bond prices
generally decline. That is why we believe the best measure for any fixed income
investment is its performance over the long term. And we believe the long-term
outlook for the municipal market is excellent, which is supported by several
considerations.
First, the Fed's attempt to fend off possible future inflation, while
temporarily disconcerting, is beginning to have its desired effect. The economy
is starting to slow, and although short-term rates may move up modestly from
their present levels, long-term interest rates should stabilize in their current
range. Long-term rates may even begin to decline as overblown concerns about
inflation abate.
Those concerns are, in fact, already fading. The inflation rate--as
measured by the Consumer Price Index--continues to run at less than 3% a year,
and there's nothing on the horizon to suggest to us that it will increase
substantially anytime soon. As a result, municipal bonds today offer some of the
highest real, inflation-adjusted returns we have seen in years. In addition,
while the economy is showing some signs of slowing, it is still growing at a
solid pace. As a result, the financial strength of many municipal issuers
continues to improve, again providing solid support for municipal bond prices.
Finally, the market's supply and demand characteristics are strong. The
supply of new municipal bonds currently is running some 40% below last year's
pace, while we expect demand for tax-free bonds is likely to increase
substantially over the next few months, helped by more stable bond markets and
rising investor demand to ease their tax burdens.
Together, these factors suggest to us that 1995 will be rewarding for
municipal investors. Your portfolio manager discusses the outlook for your Fund
on the following pages. We appreciate your confidence and we look forward to
continue helping you reach your investment goals.
Donald W. Spiro Jon S. Fossel
January 23, 1995
DONALD W. SPIRO
President
Oppenheimer
New Jersey
Tax-Exempt Fund
JON S. FOSSEL
Chairman and CEO
Oppenheimer
Management
Corporation
3 Oppenheimer New Jersey Tax-Exempt Fund
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Q + A
WHAT WERE THE MOST IMPORTANT FACTORS AFFECTING THE FUND'S PERFORMANCE IN 1994?
Many factors combined to make 1994 one of the most challenging years tax-free
investors have seen in decades, but one stands out: the Federal Reserve's effort
to fend off inflation by raising interest rates, which drove interest rates up
and bond prices down. The Fed's actions affected virtually all bond funds, and
this Fund was no exception.
DID THOSE DEVELOPMENTS AFFECT YOUR INVESTMENT STRATEGY?
In seeking to provide an attractive level of tax-free income, our investment
strategy remains the same--to keep the Fund's duration, a technical measure of a
bond portfolio's sensitivity to interest rate changes, slightly longer than
those of many other funds. The effects of rising interest rates were offset to a
large degree by the timing of the Fund's introduction. By pacing our purchases,
we were able to capture rising bond yields without major declines in the Fund's
net asset value. And we believe the Fund will benefit from this longer duration
as investors recognize the fundamental positives that should drive the New
Jersey municipal market in the future.
Of course, within this strategy we took care to position the portfolio
somewhat defensively.
HOW DID YOU POSITION THE PORTFOLIO DEFENSIVELY?
We focused our buying on bonds in the 15- to 20-year maturity range. All other
things being equal, bonds with these shorter maturities are less sensitive to
changing interest rates than longer-maturity bonds. We also focused on insured
and prerefunded issues(1).
WHAT OTHER KINDS OF BONDS ARE YOU FOCUSING ON TODAY?
We're continuing to find good values in the New Jersey housing and
transportation issues, as well as in education bonds. The state also has solid
eco-nomic resources, and if we see the kind of strengthening we expect, we may
become more interested in general obligation issues, which we tended to avoid
during the recession.
SOME ANALYSTS ARE PREDICTING THAT A RECORD AMOUNT OF
MUNICIPAL BONDS WILL BE CALLED IN 1995. HOW ARE YOU MANAGING CALLS?
Bond calls--which allow issuers to redeem bonds before their scheduled maturity
and replace them with lower-yielding issues--are a fact of life in the municipal
market because interest rates are currently much lower than they were in the
mid-1980s when many of the municipal bonds outstanding today were issued.
We manage calls by staying on top of the portfolio at all times, trying to
anticipate calls and seeking to buy bonds that offer both attractive yields and
significant call protection. Virtually no bond fund can avoid calls entirely.
The key is to take a forward-looking view and manage them intelligently.
WHAT'S YOUR OUTLOOK FOR THE NEW JERSEY MARKET GOING FORWARD?
Our long-term outlook is very constructive. The positives at work on the
national level--low inflation, reduced municipal bond supply, and rising demand
for tax-free securities driven by investor desire to ease tax burdens--are, if
anything, even stronger here.
The New Jersey econ-omy has recovered reasonably well from the recession.
Most importantly, the state has sound economic resources which should help it
participate fully in the economic recovery.
The state still needs to address some significant fiscal challenges, but
the supply of state paper is limited, while demand for its securities is rising.
This combination of reduced supply and mounting demand should provide support
for New Jersey municipal bond prices. -
1. The Fund's portfolio is subject to change.
ROBERT PATTERSON
Portfolio Manager
An interview with your Fund's manager.
4 Oppenheimer New Jersey Tax-Exempt Fund
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<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS December 31, 1994
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
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<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - 98.8%
NEW JERSEY - 79.8%
Bayonne, New Jersey General Obligation Bonds, FGIC Insured, 6%,
5/1/13 Aaa/AAA/AAA $ 100,000 $ 94,678
Camden County, New Jersey Municipal Authority Sewer Revenue
Bonds, Series A, FGIC Insured, 0%, 9/1/15 Aaa/AAA/AAA 250,000 63,390
Cape May County, New Jersey Municipal Utility Authority Revenue
Refunding Bonds, Prerefunded, MBIA Insured, 6.80%, 8/1/09 Aaa/AAA 200,000 211,571
Cape May County, New Jersey Municipal Utility Authority Revenue
Refunding Bonds, Series A, MBIA Insured, 5.75%, 1/1/16 Aaa/AAA 250,000 226,035
Edgewater, New Jersey Board of Education General Obligation
Bonds, 5.40%, 3/1/08 NR/AA 70,000 63,885
Essex County, New Jersey Improvement Authority Revenue Bonds,
Prerefunded, AMBAC Insured, 7%, 12/1/20 Aaa/AAA/AAA 150,000 161,744
Essex County, New Jersey Improvement, General Obligation Bonds,
Irvington Township School District, Prerefunded, FSA Insured,
6.55%, 10/1/09 Aaa/AAA 60,000 63,118
Hoboken Union City & Weehawken, New Jersey Sewer Authority
Revenue Refunding Bonds, MBIA Insured, 6.20%, 8/1/19 Aaa/AAA 85,000 80,886
Hudson County, New Jersey Utility Authority System Revenue
Bonds, Prerefunded, 11.875%, 7/1/06 Aaa/AAA 215,000 281,055
Mercer County, New Jersey Improvement Authority Revenue Bonds,
Custodial Receipts-Justice Complex, 6.05%, 1/1/11 Aa/AA- 250,000 235,595
Monmouth County, New Jersey Improvement Authority Revenue
Bonds, Millston Township Board of Education Project, 5.55%,
2/15/18 NR/AA 85,000 73,671
New Brunswick, New Jersey Parking Authority Revenue Refunding
Bonds, Series A, FGIC Insured, 6.50%, 9/1/19 Aaa/AAA 150,000 148,167
New Jersey Economic Development Authority Revenue Bonds, Sr.
Lien, Series A, MBIA Insured, 5.875%, 7/1/11 Aaa/AAA 200,000 187,360
New Jersey Economic Development Authority, Public Service
Electric and Gas Co. Project, MBIA Insured , 6.40%, 5/1/32 Aaa/AAA 500,000 466,586
New Jersey Health Care Facilities Finance Authority Revenue
Bonds, Prerefunded, Series C, 8.60%, 7/1/17 Aaa/AAA 620,000 676,567
New Jersey Health Care Facilities Finance Authority Revenue
Bonds, Riverview Medical Center, AMBAC Insured, 5.50%,
7/1/13 Aaa/AAA/AAA 130,000 112,850
New Jersey Health Care Facilities Finance Authority Revenue
Refunding Bonds, Wayne General Hospital, Series B, FHA Insured,
5.75% 8/1/11 NR/AAA 70,000 62,944
New Jersey Health Care Facilities Finance Revenue Bonds,
Centrastate Medical Center, Series A, AMBAC Insured, 6%,
7/1/21 Aaa/AAA/AAA 100,000 91,952
New Jersey Sports & Exposition Authority Revenue Bonds,
Convention Center Luxury Tax, Series A, MBIA Insured, 6.25%,
7/1/20 Aaa/AAA 80,000 76,095
New Jersey State Housing & Mortgage Finance Agency Revenue
Bonds, Home Buyer, Series J, MBIA Insured, 6.20%, 10/1/25 Aaa/AAA 200,000 179,641
New Jersey State Housing & Mortgage Finance Agency Revenue
Refunding Bonds, Series 1, 6.70%, 11/1/28 NR/A+ 150,000 142,879
New Jersey State Turnpike Authority Revenue Bonds, Series C,
6.50%, 1/1/16 A/A/A 600,000 597,956
Ocean County, New Jersey Utilities Authority Wastewater Revenue
Refunding Bonds, Series A, 5.75%, 1/1/18 Aa/AA- 490,000 436,303
Passaic County, New Jersey General Obligation Bonds, FGIC
Insured, 5.70%, 3/1/15 Aaa/AAA/AAA 100,000 88,612
Passaic Valley, New Jersey Community Water Supply Revenue
Bonds, Prerefunded, FGIC Insured, 6.40%, 12/15/22 Aaa/AAA/AAA 200,000 208,660
</TABLE>
5 Oppenheimer New Jersey Tax-Exempt Fund
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<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS December 31, 1994
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
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<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW JERSEY (CONTINUED)
Port Authority of New York and New Jersey Consolidated Revenue
Bonds, Ninety-Fourth Series, 6%, 12/1/14 A1/AA-/AA- 200,000 187,845
Sussex County, New Jersey General Obligation Bonds, General
Improvement, AMBAC Insured, 6%, 4/1/07 Aaa/AAA/AAA 135,000 132,691
University of New Jersey Medicine & Dentistry Revenue Bonds,
Series E, 5.75%, 12/1/21 A/AA 50,000 43,387
Woodbridge Township, New Jersey Revenue Refunding Bonds,
Sewer Utilities, Series B, 5%, 9/15/09 A1/NR 95,000 80,742
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5,476,865
U.S. POSSESSIONS - 19.0%
Puerto Rico Commonwealth General Obligation Refunding Bonds,
Series A, 6%, 7/1/14 Baa1/A 100,000 92,954
Puerto Rico Commonwealth Highway & Transportation Authority
Highway Revenue Refunding Bonds, Series V, 6.625%, 7/1/12 Baa1/A 300,000 296,939
Puerto Rico Commonwealth Highway & Transportation Authority
Highway Revenue Refunding Bonds, Series W, 5.25%, 7/1/20 Baa1/A 50,000 40,777
Puerto Rico Commonwealth Revenue Refunding Bonds, 5.50%,
7/1/13 Baa1/A 100,000 87,380
Puerto Rico Electric Power Authority Revenue Bonds, Unrefunded
Balance, Series 0, 7.125%, 7/1/14 Baa1/A- 540,000 555,764
Puerto Rico Electric Power Authority Revenue Refunding Bonds,
Series U, 6%, 7/1/14 Baa1/A- 200,000 186,115
Puerto Rico Public Buildings Authority Guaranteed Public Education
& Health Facilities Revenue Refunding Bonds, Series M, 5.75%,
7/1/15 Baa1/A 50,000 44,644
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1,304,573
TOTAL INVESTMENTS, AT VALUE (COST $7,073,929) 98.8% 6,781,438
OTHER ASSETS NET OF LIABILITIES 1.2 81,139
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NET ASSETS 100.0% $6,862,577
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</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer New Jersey Tax-Exempt Fund
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STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
<TABLE>
<S> <C> <C>
ASSETS Investments, at value (cost $7,073,929) - see accompanying statement $6,781,438
Cash 35,430
Receivables:
Interest 181,612
Shares of beneficial interest sold 152,788
Investment sold 99,885
Deferred organization costs 7,079
Other 7,249
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Total assets 7,265,481
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LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 239,239
Investments purchased 124,377
Dividends 20,714
Distribution and service plan fees - Note 4 1,897
Other 16,677
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Total liabilities 402,904
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NET ASSETS $6,862,577
COMPOSITION OF Paid-in capital $7,160,244
NET ASSETS Undistributed (overdistributed) net investment income 403
Accumulated net realized gain (loss) form investment transactions (5,579)
Net unrealized appreciation (depreciation) on investments - Note 3 (292,491)
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Net assets $6,862,577
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NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share
(based on net assets of $3,877,068 and 372,610 shares
of beneficial interest
outstanding) $10.41
Maximum offering price per share (net asset value plus sales
charge of 4.75% of offering price) $10.93
Class B Shares:
Net asset value, redemption price and offering price
per share (based on net assets of $2,985,509 and
287,179 shares of beneficial
interest outstanding) $10.40
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer New Jersey Tax-Exempt Fund
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STATEMENT OF OPERATIONS For the Period from March 1, 1994 (commencement of
operations) to December 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME Interest $ 214,555
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EXPENSES Management fees - Note 4 21,740
Distribution and service plan fees:
Class A - Note 4 2,285
Class B - Note 4 13,846
Legal and auditing fees 8,684
Shareholder reports 6,082
Transfer and shareholder servicing agent fees - Note 4 2,564
Trustee's fee and expenses 1,836
Custodian fees and expenses 1,548
Registration and filing fees:
Class A 1,397
Class B 1,109
Other 1,375
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Total expenses 62,466
Less assumption of expenses by Oppenheimer Management
Corporation - Note 4 (38,370)
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Net expenses 24,096
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NET INVESTMENT INCOME (LOSS) 190,459
REALIZED AND Net realized gain (loss) from investments (5,176)
UNREALIZED GAIN (LOSS) Net change in unrealized appreciation or depreciation
ON INVESTMENTS on investments (292,491)
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Net realized and unrealized gain (loss) on investments (297,667)
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(107,208)
==========
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer New Jersey Tax-Exempt Fund
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STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1994(1)
------------
<S> <C> <C>
OPERATIONS Net investment income (loss) $ 190,459
Net realized gain (loss) on investments (5,176)
Net change in unrealized appreciation or
depreciation on investments (292,491)
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Net increase (decrease) in net assets resulting
from operations (107,208)
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DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.493 per share) (116,609)
SHAREHOLDERS Class B ($.416 per share) (73,850)
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS Class A beneficial interest transactions - Note 2 4,048,476
Net increase (decrease) in net assets resulting from
Class B beneficial interest transactions - Note 2 3,111,768
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NET ASSETS Total increase (decrease) 6,862,577
Beginning of period --
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End of period (including undistributed net investment
income of $403) $ 6,862,577
===========
1. For the period from March 1, 1994 (commencement of
operations) to December 31, 1994.
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer New Jersey Tax-Exempt Fund
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FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B
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PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1994(1) 1994(1)
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<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.43 $11.43
Income (loss) from investment operations:
Net investment income .49 .41
Net realized and unrealized gain (loss)
on investments (1.02) (1.02)
------- -------
Total income (loss) from investment operations (.53) (.61)
------- -------
Dividends to shareholders:
Dividends from net investment income (.49) (.42)
------- -------
Total dividends to shareholders (.49) (.42)
Net asset value, end of period $10.41 $10.40
======= ======
TOTAL RETURN, AT NET ASSET VALUE(2) (4.63)% (5.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,877 $2,986
Average net assets (in thousands) $2,506 $1,841
Number of shares outstanding at end of period
(in thousands) 373 287
Ratios to average net assets:
Net investment income 5.57%(3) 4.76%(3)
Expenses, before voluntary assumption by the
Manager or Distributor 1.46%(3) 2.29%(3)
Expenses, net of voluntary assumption by the
Manager or Distributor .31%(3) 1.14%(3)
Portfolio turnover rate(4) 17.3% 17.3%
</TABLE>
1. For the period from March 1, 1994 (commencement of operations) to December
31, 1994.
2. Assumes a hypothetical initial investment on March 1, 1994, 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 year. Sales charges are not reflected in the
total returns.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended December 31, 1994 were $7,840,507 and
$765,543, respectively.
See accompanying Notes to Financial Statements.
10 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT Oppenheimer New Jersey Tax-Exempt Fund (the Fund) is a
ACCOUNTING separate series of Oppenheimer Multi- State Tax-Exempt
POLICIES 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. Listed
and unlisted securities for which such information is
regularly reported are valued at the last sale price of
the day or, in the absence of sales, at values based on
the closing bid or asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Directors. Long-term debt securities which
cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes
reflect current market value, or under consistently
applied procedures established by the Board of Directors
to determine fair value in good faith. 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.
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.
No payments have been made under the plan.
ORGANIZATION COSTS. The Manager advanced $8,500 for
organization and start-up costs of the Fund. Such
expenses are being amortized over a five-year period
from the effective date of the initial prospectus. 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 day the New York
Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains
on investments, if any, will be declared at least once
each year.
11 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (Continued)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes
primarily because of premium amortization. The character
of the distributions made during the year from net
investment income or net realized gains may differ from
their ultimate characterization for federal income tax
purposes. Also, due to timing of dividend distributions,
the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain
(loss) was recorded by the Fund. The Fund follows
Statement of Position 93-2: Determination, Disclosure,
and Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by Investment
Companies. As a result, the Fund changed the
classification of distributions to shareholders to
better disclose the differences between financial
statement amounts and distributions determined in
accordance with income tax regulations. During the
period ended December 31, 1994, in accordance with
Statement of Position 93-2, undistributed net investment
income was increased by $403 and accumulated net
realized loss on investments was increased by the same
amount.
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date).
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. Original issue discount on
securities purchased is amortized over the life of the
respective securities, in accordance with federal income
tax requirements. For bonds acquired after April 30,
1993, accrued market discount is recognized at maturity
or disposition as taxable ordinary income. Taxable
ordinary income is realized to the extent of the lesser
of gain or accrued market discount.
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL value shares of beneficial interest of each class.
INTEREST Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31, 1994(1)
SHARES AMOUNT
---------------------------------
<S> <C> <C>
Class A:
Sold 447,660 $4,853,160
Dividends reinvested 6,784 72,067
Redeemed (81,834) (876,751)
--------- -----------
Net increase 372,610 $4,048,476
========= ===========
Class B:
Sold 294,677 $3,191,135
Dividends reinvested 4,335 45,898
Redeemed (11,833) (125,265)
--------- -----------
Net increase 287,179 $3,111,768
========= ===========
</TABLE>
1. For the period from March 1, 1994 (commencement of
operations) to December 31, 1994 for both Class A and
Class B Shares.
3. UNREALIZED GAINS At December 31, 1994, net unrealized depreciation on
AND LOSSES ON investments of $292,491 was composed of gross
INVESTMENTS appreciation of $18,409, and gross depreciation of
$310,900.
12 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS WITH which provides for an annual fee of .60% on the first
AFFILIATES $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 has voluntarily undertaken to assume Fund
expenses to the level needed to maintain a stable
dividend.
For the period ended December 31, 1994, commissions
(sales charges paid by investors) on sales of Class A
shares totaled $102,836, of which $19,169 was retained
by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and
by an affiliated broker/dealer.
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, each class may expend up
to .25% (voluntarily reduced to .15% by the Fund's
Board) of its net assets annually to reimburse OFDI for
costs incurred in connection with the personal service
and maintenance of accounts that hold shares of the
Fund, including amounts paid to brokers, dealers, banks
and other institutions. 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, the Board of
Trustees may allow the Fund to continue payment of the
asset-based sales charge to OFDI for distribution
expenses incurred on Class B shares sold prior to
termination or discontinuance of the plan. During the
period ended December 31, 1994, OFDI retained $13,748 as
reimbursement for Class B sales commissions and service
fee advances, as well as financing costs.
13 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer
Multi-State Tax-Exempt Trust:
We have audited the accompanying statements of
investments and assets and liabilities of Oppenheimer
New Jersey Tax-Exempt Fund (a series of Oppenheimer
Multi-State Tax-Exempt Trust) as of December 31, 1994,
and the related statements of operations and changes in
net assets and the financial highlights for the period
from March 1, 1994 (commencement of operations) to
December 31, 1994. 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 audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1994, by
correspondence with the custodian and brokers; where
replies were not received from brokers, we performed
other auditing procedures. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe
that our audit provides 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
New Jersey Tax-Exempt Fund as of December 31, 1994, the
results of its operations, changes in its net assets and
its financial highlights for the period from March 1,
1994 (commencement of operations) to December 31, 1994,
in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
January 23, 1995
14 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 15
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1995, shareholders will receive information
regarding all dividends and distributions paid to them
by the Fund during calendar year 1994. Regulations of
the U.S. Treasury Department require the Fund to report
this information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal
year ended December 31, 1994 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.
15 Oppenheimer New Jersey Tax-Exempt Fund
<PAGE> 16
OPPENHEIMER NEW JERSEY 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
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
Robert J. Bishop, Assistant
Treasurer
Scott Farrar, Assistant
Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant
Secretary
INVESTMENT ADVISOR Oppenheimer Management
Corporation
DISTRIBUTOR Oppenheimer Funds Distributor,
Inc.
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen
Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer New Jersey Tax-Exempt Fund. This report must
be preceded or accompanied by a Prospectus of
Oppenheimer New Jersey Tax-Exempt Fund. For material
information concerning the Fund, see the Prospectus.
16 Oppenheimer New Jersey Tax-Exempt Fund
