<PAGE> 1
OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND
ANNUAL REPORT DECEMBER 31, 1995
[Picture of Shopping Couple]
''We want
investment
income
that won't
add to our
taxes.''
[Oppenheimer Logo]
<PAGE> 2
NEWS
STANDARDIZED YIELD
- --------------------------------------
For the 30 Days Ended 12/31/95:(4)
Class A
4.35%
- --------------------------------------
Class B
3.82%
- --------------------------------------
Class C
3.68%
- --------------------------------------
This Fund is for people who need income that's exempt from taxes.
HOW YOUR FUND IS MANAGED
- --------------------------------------------------------------------------------
Oppenheimer Pennsylvania Tax-Exempt Fund invests in a diversified portfolio of
Pennsylvania municipal bonds. As a Fund shareholder, you receive income that is
free from federal, Pennsylvania and in some cases, local school district 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.
Pennsylvania 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
- --------------------------------------------------------------------------------
Total return at net asset value for the 12 months ended 12/31/95 was 16.94% for
Class A shares and 16.06% for Class B shares.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 12/31/95 and since inception
of the Class on 9/18/89 were 11.39%, 6.98% and 7.04%, respectively. For Class
B shares, average annual total returns for the 1-year period ended 12/31/95
and since inception of the Class on 5/1/93 were 11.06% and 3.82%,
respectively.(3)
OUTLOOK
- --------------------------------------------------------------------------------
"Our outlook remains positive. We believe that with favorable economic
fundamentals such as moderate growth and low inflation, the coming year should
be a good environment for municipal bonds."
Robert Patterson, Portfolio Manager
December 31, 1995
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future
results. Investment return and principal value of 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. For more complete information, please review
the prospectus carefully before you invest.
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 for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
3. Class A returns show results of hypothetical investments on 12/31/94,
12/31/90 and 9/18/89 (inception of class), after deducting the current maximum
initial sales charge of 4.75%. Class B returns show results of hypothetical
investments on 12/31/94 and 5/1/93 (inception of class), and the deduction of
the applicable contingent deferred sales charge of 5% (1-year) and 3% (since
inception). Class C cumulative total return since inception (8/29/95) was
4.55%. An explanation of the different performance calculations is in the
Fund's prospectus.
4. Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 12/31/95, divided by the
maximum offering price at the end of the period, compounded semiannually and
then annualized. Falling net asset values will tend to artificially raise
yields.
2 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Pennsylvania
Tax-Exempt Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Pennsylvania
Tax-Exempt Fund
Dear OppenheimerFunds Shareholder,
This has been a year in which performance has been strong for municipal bonds
because potential obstacles became great opportunities for municipal bonds
investors.
Like most fixed-income securities, municipal bonds have enjoyed the
benefits of declining long-term interest rates in 1995. When interest rates
fall, outstanding municipal bonds generally appreciate in value. But what
distinguished municipal bonds in 1995 was the relationship between their yields
and taxable U.S. government bonds. Normally, a municipal bond yields about 80%
of its taxable counterpart. For example, if a 30-year Treasury yields 6%, then
a long-term municipal bond could be expected to yield about 4.80%. In 1995,
that same municipal bond would yield as much as 5.50%.
For taxpayers in the 36% income bracket, a 5.50% tax-free yield is the
equivalent of receiving more than 8.5% on a taxable investment. At the same
time, inflation is less than 3%. Indeed, municipal bonds are producing some of
the best real, inflation-adjusted tax-free yields for some time.
The reason for this opportunity is a potential obstacle to the municipal
bond marketplace. There are several proposals in Congress for a "flat" tax,
which would diminish the current advantage of municipal bonds because ordinary
income would be taxed at a lower rate. While we can't be certain where these
proposals will lead, we believe that the odds of significant tax reform
adversely affecting municipal bonds in the near future are quite low. Indeed,
the recent battles over the federal budget deficit suggest that passing
sweeping tax legislation impacting so many different parties is a difficult
proposition. In any case, the matter will almost certainly not be resolved
until well after the November presidential election.
The other potential concern in the municipal bond market was the
bankruptcy of Orange County, California. Except for a few weeks early in 1995,
most of the municipal bond market shrugged off these developments as an
isolated incident. Nevertheless, Orange County had a positive side for
municipal bond investors: there was a demand for additional financial
disclosure by professional investors, and a tightening of credit requirements
by the major rating agencies. The Orange County episode is a good reminder of
the importance of diversification.
With a stable economy, falling long-term interest rates, low inflation,
and the high ratio of tax-free municipal bond yields to taxable U.S. government
securities, we believe that municipal bonds continue to offer an attractive
package to income-oriented investors. And a municipal bond fund offers the
additional advantage of diversification, a goal that is difficult for most
individual investors to accomplish by buying individual securities.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds, and we look forward to helping you reach your investment
goals in the future.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
- ------------------ ------------------------
James C. Swain Bridget A. Macaskill
January 22, 1996
3 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 4
Q + A
Q How did the Fund
perform?
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
1995 was a great year for munic-ipal bonds, which has translated into a great
year for the Fund. We were able to capture appreciation as the market rallied,
as well as to continue to pay tax-exempt income at a competitive rate.
WHAT FACTORS MADE POSITIVE CONTRIBUTIONS TO YOUR PERFORMANCE?
One of the ways we benefited was through the favorable supply and demand
relationship that characterized the period. While demand remained relatively
high--both from investors seeking tax-free income and those who were simply
interested in potential price appreciation--there were less new municipal bond
offerings brought to market in 1995. This relationship supported prices over
the past six months and should continue to work in favor of bondholders going
forward.
WERE THERE ANY FACTORS THAT LIMITED PERFORMANCE OVER THE PERIOD?
Throughout the year, the overriding theme has been the possibility of tax
reform. Tax reform, if it were dramatic, would have the potential to limit
municipal bonds' tax advantages. The fact that it's being discussed in
Washington has limited the rally of bond prices. And longer-term bonds have
felt pricing pressures more because they would be affected more by any such
changes. We continue to believe that any reforms that may pass in the near term
will be limited in scope, however, so we've viewed this period of nervousness
as a buying opportunity.
WHAT AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING?
In response to tax reform talks, we've focused on buying both bonds with
shorter maturities and prerefunded
4 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 5
FACING PAGE
Top left: Robert Patterson,
Portfolio Manager, with Len Darling, Executive VP, Director of Fixed Income
Investments
Top right: Michael Maciolek, Securities Analyst
Bottom: Caryn Halbrecht, Vice President, Tax-Exempt Portfolio Manager
THIS PAGE
Top right: Robert Patterson
Bottom:Caryn Halbrecht with Donna Compert, Municipal Securities Trader
A 1995
WAS A GREAT
YEAR FOR MUNICIPAL BONDS.
bonds. Because of the time it would take to change the tax laws, both of these
sectors have been less vulnerable to price pressures. We've also been buying
bonds with maturities of 15-20 years. This area of the market already reflects
the negative impact of tax reform fears to the point where we think they are
sell-ing at compelling values. Due to the current yield curve, these bonds are
paying nearly as much income as longer bonds, but with less susceptibility to
price pressures.(1)
Beyond our strategy for managing tax reform, as bonds rallied over the
year, we've been selling par bonds, or bonds that we bought at a discount, that
have realized their potential.
In the portfolio, we've also been emphasizing rev-enue bonds over general
obligation bonds. Unlike general obligations, which are reliant on the taxing
authority of the municipality issuing them, the income for revenue bonds comes
from the project being financed itself--like a bridge or toll road. As a
result, revenue bonds' income can be more measurable and predictable.
And finally, we've been buying some lower-rated, high coupon bonds that
were out of favor in recent months. In this arena, we bought some hos-pital
bonds that we think look valuable. The hospital issues we're investing in have
been aggressively improving their competitive positions, but as it's not yet
been reflected in their prices, we believe this is a market with great
potential.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our outlook remains positive. We believe that with favorable economic
fundamentals such as moderate growth and low inflation, the coming year should
be a good environment for municipal bonds. With the market having moved
dramatically over the year, however, we expect that the coming year will be a
more typical period for municipal bond investors--where bonds will continue to
perform well, but where the majority of returns will come from income. Within
that environment, we believe the investment decisions we've made will position
us to provide a competitive level of income with low relative volatility.
1. The Fund's portfolio is subject to change.
5 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 6
FINANCIALS
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS & LIABILITIES 11
STATEMENT OF OPERATIONS 12
STATEMENTS OF CHANGES IN NET ASSETS 13
FINANCIAL HIGHLIGHTS 14
NOTES TO FINANCIAL STATEMENTS 16
INDEPENDENT AUDITORS' REPORT 19
FEDERAL INCOME TAX INFORMATION 20
</TABLE>
6 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 7
STATEMENT OF INVESTMENTS December 31, 1995
<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--98.7%
============================================================================================================================
PENNSYLVANIA--94.9%
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 $2,014,930
- ----------------------------------------------------------------------------------------------------------------------------
Allegheny County, Pennsylvania Hospital Development
Authority Revenue Bonds, Presbyterian University
Hospital, Prerefunded, Series A, MBIA Insured,
7.60%, 3/1/08 Aaa/AAA 600,000 654,947
- ----------------------------------------------------------------------------------------------------------------------------
Beaver County, Pennsylvania Industrial Development
Authority Pollution Control Revenue Refunding
Collateral Bonds, Toledo Edison Project,
Series A, 7.75%, 5/1/20 Ba2/BB 2,000,000 2,174,632
- ----------------------------------------------------------------------------------------------------------------------------
Berks County, Pennsylvania General Obligation
Bonds, FGIC Insured, Inverse Floater, 8.27%, 11/10/20(1) Aaa/AAA/AAA 1,000,000 1,150,336
- ----------------------------------------------------------------------------------------------------------------------------
Blair County, Pennsylvania Hospital Authority
Revenue Bonds, Altoona Hospital Project,
AMBAC Insured, Inverse Floater, 5.755%, 7/1/14(1) Aaa/AAA/AAA 700,000 775,344
- ----------------------------------------------------------------------------------------------------------------------------
Bucks County, Pennsylvania Water & Sewer
Authority Revenue Bonds, Neshaminy Interceptor
System, Prerefunded, FGIC Insured, 7.50%, 12/1/13 Aaa/AAA/AAA 1,500,000 1,641,634
- ----------------------------------------------------------------------------------------------------------------------------
Dauphin County, Pennsylvania General Authority
Hospital Revenue Bonds, Hapsco-Western
Pennsylvania Hospital Project, Series A-1,
MBIA Insured, 5.50%, 7/1/13 Aaa/AAA 1,000,000 1,017,021
- ----------------------------------------------------------------------------------------------------------------------------
Dauphin County, Pennsylvania Hospital Authority
Revenue Refunding Bonds: Harrisburg Hospital
Project, MBIA Insured, 8.25%, 7/1/14 Aaa/AAA 1,450,000 1,558,067
- ----------------------------------------------------------------------------------------------------------------------------
Dauphin County, Pennsylvania Hospital Authority
Revenue Refunding Bonds, Polyclinic Medical
Center Project, MBIA Insured, 5.40%, 8/15/13 Aaa/AAA 2,500,000 2,520,030
- ----------------------------------------------------------------------------------------------------------------------------
Delaware County, Pennsylvania Authority
University Revenue Bonds, Villanova University,
MBIA Insured, 6.90%, 8/1/16 Aaa/AAA 1,000,000 1,086,519
- ----------------------------------------------------------------------------------------------------------------------------
Delaware County, Pennsylvania Industrial
Development Authority Revenue Refunding Bonds,
Resource Recovery Project, Series A, 8.10%, 12/1/13 Aa3/AA-- 3,200,000 3,378,604
- ----------------------------------------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission
Revenue Bonds, Interstate 78, Prerefunded,
FGIC Insured, 7.80%, 7/1/18 Aaa/AAA/AAA 1,275,000 1,411,217
- ----------------------------------------------------------------------------------------------------------------------------
Delaware River Port Authority, Delaware
River Bridges Revenue Refunding Bonds,
AMBAC Insured, 7.375%, 1/1/07 Aaa/AAA/AAA 770,000 849,535
- ----------------------------------------------------------------------------------------------------------------------------
Erie, Pennsylvania Higher Education Building
Authority College Revenue Bonds, Mercyhurst
College Project, Prerefunded, 7.85%, 9/15/19 NR/AAA 1,000,000 1,124,492
</TABLE>
7 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
============================================================================================================================
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Langhorne Manor Boro, Pennsylvania Higher
Education & Health Authority Revenue Bonds,
Woods Schools Project, Prerefunded, 8.75%, 11/15/14 NR/AAA $1,000,000 $1,178,600
- ----------------------------------------------------------------------------------------------------------------------------
Lehigh County, Pennsylvania General Purpose
Authority Revenue Bonds, Lehigh Valley
Hospital, Inc., Series A, MBIA Insured, 7%, 7/1/16 Aaa/AAA 1,250,000 1,506,695
- ----------------------------------------------------------------------------------------------------------------------------
Monroeville, Pennsylvania Hospital Authority
Revenue Refunding Bonds, Forbes Health
System, 6.25%, 10/1/15 Baa1/BBB+ 1,000,000 1,029,261
- ----------------------------------------------------------------------------------------------------------------------------
Northampton County, Pennsylvania Higher
Education Authority Revenue Refunding Bonds,
Lehigh University, 7.10%, 9/1/05 NR/A 2,140,000 2,280,041
- ----------------------------------------------------------------------------------------------------------------------------
Northumberland County, Pennsylvania Authority
Commonwealth Lease Revenue Bonds,
MBIA Insured, 6.25%, 10/15/09 Aaa/AAA 2,000,000 2,188,346
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Convention Center Authority
Revenue Bonds, Escrowed to Maturity,
Series A, FGIC Insured, 6.70%, 9/1/16 Aaa/AAA/AAA 1,850,000 2,196,188
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing
Authority Resource Recovery Revenue Bonds,
Colver Project, Series D, 7.15%, 12/1/18 NR/BBB-- 2,000,000 2,180,594
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Economic Development Financing
Authority Wastewater Treatment Revenue Bonds,
Sun Co., Inc.-R & M Project, Series A, 7.60%, 12/1/24 Baa1/BBB+ 2,000,000 2,227,342
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Housing Finance Agency
Revenue Bonds, Single Family Mtg.:
Series 31C, Inverse Floater, 9.534%, 10/1/23(1) Aa/AA 1,000,000 1,098,710
Series 40, 6.80%, 10/1/15 Aa/AA 2,000,000 2,083,648
Series 44C, 6.65%, 10/1/21 Aa/AA 1,000,000 1,040,885
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State General Obligation Refunding
Bonds, First Series, 10%, 4/15/98 A1/AA--/AA-- 1,880,000 2,122,527
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Higher Education Assistance
Agency Student Loan Revenue Bonds, AMBAC
Insured, Inverse Floater, 8.025%, 3/1/22(1) Aaa/AAA/AAA 1,250,000 1,301,424
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Higher Educational Facilities
Authority College & University Revenue Bonds,
Hahnemann University Project,
MBIA Insured, 7.20%, 7/1/19 Aaa/AAA 1,500,000 1,657,720
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Higher Educational
Facilities Authority College & University
Revenue Bonds, Thomas Jefferson University,
Series A, 6.625%, 8/15/09 Aa/A+ 750,000 826,795
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State Industrial Development
Authority Economic Development Revenue Bonds,
Prerefunded, Series A, 7%, 1/1/11 NR/A--/AAA 1,000,000 1,144,286
</TABLE>
8 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
============================================================================================================================
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Pennsylvania State Turnpike Commission
Turnpike Revenue Bonds, Prerefunded:
Series E, MBIA Insured, 7.50%, 12/1/09 Aaa/AAA $1,000,000 $1,135,527
Series K, 7.50%, 12/1/19 Aaa/AAA 2,500,000 2,838,817
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania State University Revenue Refunding
Bonds, Series B, 5.50%, 8/15/16 A1/AA-- 2,500,000 2,532,367
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Gas Works Revenue
Bonds, 15th Series, 5.25%, 8/1/15 Baa1/BBB/A-- 1,000,000 944,999
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Hospitals & Higher
Educational Facilities Authority Revenue Bonds,
Albert Einstein Medical Center, 7.625%, 4/1/11 A/BBB+ 3,500,000 3,776,653
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Hospitals & Higher
Educational Facilities Authority Revenue Bonds,
Temple University Hospital, Series A, 6.625%, 11/15/23 Baa1/A-- 3,800,000 3,958,965
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Hospitals & Higher
Educational Facilities Authority Revenue Refunding
Bonds, Jeanes Health System Project, 6.60%, 7/1/10 NR/BBB 1,000,000 1,017,632
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Municipal Authority
Justice Lease Revenue Refunding Bonds,
Series A, FGIC Insured, 5.625%, 11/15/14 Aaa/AAA/AAA 1,000,000 1,026,617
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Regional Port
Authority Lease Revenue Bonds, MBIA Insured,
Inverse Floater, 8.02%, 9/1/20(1) Aaa/AAA 2,100,000 2,258,277
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Water & Sewer
Revenue Refunding Bonds, Escrowed to
Maturity, Tenth Series, 7.35%, 9/1/04 Aaa/AAA 245,000 285,841
- ----------------------------------------------------------------------------------------------------------------------------
Philadelphia, Pennsylvania Water & Wastewater
Revenue Bonds, FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 1,900,000 2,610,868
- ----------------------------------------------------------------------------------------------------------------------------
Pittsburgh, Pennsylvania Water & Sewer Authority
Revenue Refunding Bonds, Escrowed to
Maturity, FGIC Insured, 7.25%, 9/1/14 Aaa/AAA/AAA 1,200,000 1,432,049
- ----------------------------------------------------------------------------------------------------------------------------
Schuylkill County, Pennsylvania Industrial
Development Authority Resource Recovery
Revenue Refunding Bonds, Schuylkill Energy
Resources, Inc., 6.50%, 1/1/10 NR/NR 2,895,000 3,007,117
- ----------------------------------------------------------------------------------------------------------------------------
St. Mary Hospital Authority Langhorne,
Pennsylvania Hospital Revenue Refunding
Bonds, Franciscan Health Project,
Series B, BIG Insured, 7%, 7/1/14 Aaa/AAA 500,000 544,588
- ----------------------------------------------------------------------------------------------------------------------------
Washington County, Pennsylvania Municipal
Facility Lease Authority Revenue Bonds,
Prerefunded, AMBAC Insured, 7.45%, 12/15/12 Aaa/AAA/AAA 2,000,000 2,303,734
------------
77,094,421
</TABLE>
9 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
============================================================================================================================
<S> <C> <C> <C>
U.S. POSSESSIONS--3.8%
Puerto Rico Commonwealth General Obligation
Bonds, MBIA Insured, Inverse Floater, 7.284%, 7/1/08(1) Aaa/AAA $1,000,000 $ 1,086,833
- ----------------------------------------------------------------------------------------------------------------------------
Puerto Rico Electric Power Authority
Revenue Refunding Bonds, Series N, 5%, 7/1/12 Baa1/A-- 1,000,000 950,375
- ----------------------------------------------------------------------------------------------------------------------------
Puerto Rico Housing Bank & Finance
Agency Single Family Mtg. Revenue Bonds,
Affordable Housing Mtg.-Portfolio I, 6.25%, 4/1/29 Aaa/AAA 1,000,000 1,027,549
-----------
3,064,757
============================================================================================================================
TOTAL INVESTMENTS, AT VALUE (COST $77,090,279) 98.7% 80,159,178
============================================================================================================================
OTHER ASSETS NET OF LIABILITIES 1.3 1,053,806
--------- -----------
NET ASSETS 100.0% $81,212,984
========= ===========
</TABLE>
1. Represents the current interest rate for a variable rate bond. These
variable rate bonds known as ``inverse floaters'' pay interest at a rate that
varies inversely with short-term interest rates. As interest rates rise,
inverse floaters produce less current income. Their price may be more volatile
than the price of a comparable fixed-rate security. Inverse floaters amount to
$7,670,924 or 9.45% of the Fund's net assets at December 31, 1995.
As of December 31, 1995 , securities subject to the alternative minimum tax
amounted to $13,967,268 or 17.20% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments
at value, is as follows:
<TABLE>
<CAPTION>
INDUSTRY MARKET VALUE PERCENT
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hospitals $20,374,132 25.4%
Utilities 16,432,081 20.5
Education 10,686,535 13.3
Transportation 8,493,373 10.6
General Obligation Bonds 6,555,885 8.2
Lease/Rental 5,518,697 6.9
Housing 5,250,791 6.6
Corporate-Backed Municipals 2,227,342 2.8
Pollution Control 2,174,632 2.7
Student Loans 1,301,424 1.6
Revenue Bonds 1,144,286 1.4
----------- ------
$80,159,178 100.0%
=========== ======
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
<TABLE>
<S> <C>
============================================================================================================================
ASSETS
Investments, at value (cost $77,090,279)--see accompanying statement $80,159,178
- ----------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest 1,328,948
Shares of beneficial interest sold 367,696
- ----------------------------------------------------------------------------------------------------------------------------
Other 9,443
----------
Total assets 81,865,265
============================================================================================================================
LIABILITIES
Bank overdraft 36,369
- ----------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends 264,321
Shares of beneficial interest redeemed 217,241
Trustees' fees 38,717
Shareholder reports 36,743
Distribution and service plan fees 30,161
Transfer and shareholder servicing agent fees 4,119
Other 24,610
------------
Total liabilities 652,281
============================================================================================================================
NET ASSETS $81,212,984
============
============================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $79,444,698
- ----------------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (147,080)
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (1,153,533)
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 3,068,899
-----------
Net assets $81,212,984
===========
============================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of $66,483,283
and 5,377,105 shares of beneficial interest outstanding) $12.36
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $12.98
- ----------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $14,465,990 and 1,170,055 shares of beneficial interest outstanding) $12.36
- ----------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $263,711 and 21,337 shares of beneficial interest outstanding) $12.36
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 12
STATEMENT OF OPERATIONS For the Year Ended December 31, 1995
<TABLE>
<S> <C>
============================================================================================================================
INVESTMENT INCOME
Interest $5,156,837
============================================================================================================================
EXPENSES
Management fees--Note 4 462,471
- ----------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 95,622
Class B 121,620
Class C 165
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 84,149
- ----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 62,693
- ----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 24,550
- ----------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 22,843
- ----------------------------------------------------------------------------------------------------------------------------
Insurance expenses 6,512
- ----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 1,203
Class C 24
- ----------------------------------------------------------------------------------------------------------------------------
Other 2,628
-----------
Total expenses 884,480
Less reimbursement of expenses by OppenheimerFunds, Inc.--Note 4 (12,068)
-----------
Net expenses 872,412
============================================================================================================================
NET INVESTMENT INCOME 4,284,425
============================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized loss on investments (149,202)
- ----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 7,766,744
-----------
Net realized and unrealized gain 7,617,542
============================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,901,967
===========
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 13
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
============================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $4,284,425 $3,907,127
- ----------------------------------------------------------------------------------------------------------------------------
Net realized loss (149,202) (1,065,903)
- ----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 7,766,744 (8,445,048)
---------- ----------
Net increase (decrease) in net assets resulting from operations 11,901,967 (5,603,824)
============================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (3,637,885) (3,639,305)
Class B (583,457) (367,811)
Class C (803) --
- ----------------------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A (92,297) --
Class B (20,449) --
============================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A (796,475) 4,897,535
Class B 3,839,201 4,838,266
Class C 262,069 --
============================================================================================================================
NET ASSETS
Total increase 10,871,871 124,861
- ----------------------------------------------------------------------------------------------------------------------------
Beginning of period 70,341,113 70,216,252
----------- -----------
End of period (including overdistributed net investment
income of $147,080 and $62,280, respectively) $81,212,984 $70,341,113
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994 1993
=============================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.19 $12.85 $12.05
- ---------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .68 .67 .69
Net realized and unrealized gain (loss) 1.18 (1.64) .85
------ ------- -------
Total income (loss) from investment operations 1.86 (.97) 1.54
- ---------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.67) (.69) (.70)
Dividends in excess of net investment income (.02) -- --
Distributions from net realized gain -- -- (.04)
------ ------- -------
Total dividends and distributions to shareholders (.69) (.69) (.74)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $12.36 $11.19 $12.85
====== ======= =======
=============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 16.94% (7.68)% 13.12%
=============================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $66,483 $60,857 $64,640
- ---------------------------------------------------------------------------------------------
Average net assets (in thousands) $64,901 $62,786 $50,974
- ---------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.68% 5.65% 5.52%
Expenses, before voluntary assumption by the
Manager or Distributor 1.01% .98% 1.06%
Expenses, net of voluntary assumption by the
Manager or Distributor N/A N/A .99%
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 31.1% 37.0% 14.6%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
2. For the period from May 1, 1993 (inception of offering) to December 31,
1993.
3. For the period from September 18, 1989 (commencement of operations) to
December 31, 1989.
4. 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. Total returns are not annualized for
periods of less than one full year.
14 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 15
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
1992 1991 1990 1989(3)
==================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.93 $11.43 $11.58 $11.43
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .76 .74 .81 .18
Net realized and unrealized gain (loss) .17 .53 (.15) .15
------- ------- ------ -------
Total income (loss) from investment operations .93 1.27 .66 .33
- --------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.73) (.73) (.81) (.18)
Dividends in excess of net investment income -- -- -- --
Distributions from net realized gain (.08) (.04) -- --
------- ------- ------ -------
Total dividends and distributions to shareholders (.81) (.77) (.81) (.18)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $12.05 $11.93 $11.43 $11.58
======= ======= ====== =======
==================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 8.04% 11.49% 6.00% 3.25%
==================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $33,290 $13,791 $8,406 $2,353
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $21,936 $10,717 $5,170 $1,231
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.36% 6.30% 7.06% 6.12%(5)
Expenses, before voluntary assumption by the
Manager or Distributor 1.39% 1.29% 1.77% 2.49%(5)
Expenses, net of voluntary assumption by the
Manager or Distributor 1.06% N/A .59% .91%(5)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 29.9% 15.5% 5.3% 0.0%
<CAPTION>
CLASS B CLASS C
--------------------------------------------
PERIOD ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
1995 1994 1993(2) 1995(1)
==================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.19 $12.84 $12.44 $11.91
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .59 .36 .21
Net realized and unrealized gain (loss) 1.17 (1.65) .45 .45
------- ------ -------- -------
Total income (loss) from investment operations 1.76 (1.06) .81 .66
- --------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.57) (.59) (.37) (.21)
Dividends in excess of net investment income (.02) -- -- --
Distributions from net realized gain -- -- (.04) --
------- ------ -------- -------
Total dividends and distributions to shareholders (.59) (.59) (.41) (.21)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $12.36 $11.19 $12.84 $12.36
======= ====== ======== =======
==================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 16.06% (8.32)% 6.67% 5.55%
==================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $14,466 $9,484 $5,576 $264
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $12,183 $7,329 $2,770 $ 51
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.89% 4.88% 4.26%(5) 4.40%(5)
Expenses, before voluntary assumption by the
Manager or Distributor 1.88% 1.85% 1.88%(5) 2.06%(5)
Expenses, net of voluntary assumption by the
Manager or Distributor 1.78% 1.75% 1.78%(5) 1.96%(5)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 31.1% 37.0% 14.6% 31.1%
</TABLE>
5. Annualized.
6. 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, 1995 were $27,338,414 and $23,642,998,
respectively.
See accompanying Notes to Financial Statements.
15 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 16
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 objective is to seek the maximum
current income exempt from federal and Pennsylvania personal income taxes for
individual investors that is consistent with the preservation of capital. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters affecting
a single class. Class B shares will automatically convert to Class A shares six
years after the date of purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange 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 and
short-term ``non-money market'' debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such 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 are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term ``money
market type'' 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 TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At December 31, 1995, the
Fund had available for federal income tax purposes an unused capital loss
carryover of $1,133,000, which expires in 2002 and 2003.
- --------------------------------------------------------------------------------
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, 1995, a provision of $16,971 was made for the Fund's projected
benefit obligations, and a payment of $507 was made to a retired trustee,
resulting in an accumulated liability of $31,137 at December 31, 1995.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
16 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 17
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(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.
During the year ended December 31, 1995, 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. Accordingly, during the year ended
December 31, 1995, amounts have been reclassified to reflect a decrease in
paid-in capital of $17, an increase in overdistributed net investment income of
$34,334, and a decrease in accumulated net realized loss on investments of
$34,351.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). 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, on disposition or maturity, taxable ordinary income is
recognized to the extent of the lesser of gain or market discount that would
have accrued over the holding period. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes. The
Fund concentrates its investments in Pennsylvania and, therefore, may have more
credit risks related to the economic conditions of Pennsylvania than a
portfolio with a broader geographical diversification.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995(1) YEAR ENDED DECEMBER 31, 1994
-------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 825,097 $9,802,254 1,479,731 $17,605,222
Dividends reinvested 199,971 2,384,211 200,372 2,359,317
Redeemed (1,088,358) (12,982,940) (1,270,347) (15,067,004)
---------- ----------- ---------- -----------
Net increase (decrease) (63,290) $ (796,475) 409,756 $ 4,897,535
========== =========== ========== ===========
- ---------------------------------------------------------------------------------------------
Class B:
Sold 359,124 $4,282,282 442,928 $ 5,204,609
Dividends reinvested 30,661 366,174 19,685 230,132
Redeemed (67,574) (809,255) (48,897) (596,475)
---------- ----------- ---------- -----------
Net increase 322,211 $3,839,201 413,716 $ 4,838,266
========== =========== ========== ===========
- ---------------------------------------------------------------------------------------------
Class C:
Sold 21,431 $ 263,229 -- $ --
Dividends reinvested 31 377 -- --
Redeemed (125) (1,537) -- --
---------- ----------- ---------- -----------
Net increase 21,337 $ 262,069 -- $ --
========== =========== ========== ===========
</TABLE>
1. For the year ended December 31, 1995 for both Class A and Class B shares and
for the period from August 29, 1995 (inception of offering) to December 31,
1995 for Class C shares.
17 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At December 31, 1995, net unrealized appreciation on investments of $3,068,899
was composed of gross appreciation of $3,200,658, and gross depreciation of
$131,759.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .60% on the first
$200 million of average annual 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.
For the year ended December 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $234,306, of which $62,669 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $112,289 and $1,306, of which $13,630 was paid to an
affiliated broker/dealer. During the year ended December 31, 1995, OFDI
received contingent deferred sales charges of $22,836 upon redemption of Class
B shares as reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are
allocated ratably to these companies.
Under separate approved plans, Class A may expend up to .15% of its net
assets, and Class B and Class C may expend up to .25% (voluntarily reduced to
.15% by the Fund's Board) of their net assets annually to compensate 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 and Class C shares
are subject to an asset-based sales charge of .75% of net assets annually, to
compensate 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 or Class C 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 or Class C shares sold prior to
termination or discontinuance of the plan. At December 31, 1995, OFDI had
incurred unreimbursed expenses of $473,840 for Class B and $2,309 for Class C.
During the year ended December 31, 1995, OFDI paid $7,550 and $1,792,
respectively, to an affiliated broker/dealer as compensation for Class A and
Class B personal service and maintenance expenses, and retained $98,080 as
compensation for Class B sales commissions and service fee advances, as well as
financing costs.
18 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 19
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,
1995, 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
six-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. Our procedures included confirmation of securities owned as of
December 31, 1995, 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, 1995, 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 six-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 LLP
Denver, Colorado
January 22, 1996
19 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 20
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1995.
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, 1995 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.
20 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 21
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
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Bridget A. Macaskill, Trustee and President
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
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
OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND SHAREHOLDER
SERVICING AGENT
OppenheimerFunds Services
================================================================================
CUSTODIAN OF
PORTFOLIO SECURITIES
Citibank, N.A.
================================================================================
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 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.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the principal
amount invested.
21 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 22
Oppenheimer Funds Family
================================================================================
OppenheimerFunds offers over 35 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your children's
education or tax-free income, we have the funds to help you seek your
objective.
When you invest with OppenheimerFunds, you can feel comfortable knowing
that you are investing with a respected financial institution with over 35
years of experience in helping people just like you reach their financial
goals. And you're investing with a leader in global, growth stock and flexible
fixed-income investments--with over 2.8 million shareholder accounts and more
than $41 billion under Oppenheimer's management and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to exchange shares. And you can
exchange shares easily by mail or by telephone.(1) For more information on
Oppenheimer funds, please contact your financial advisor or call us at
1-800-525-7048 for a prospectus. You may also write us at the address shown on
the back cover. As always, please read the prospectus carefully before you
invest.
================================================================================
STOCK FUNDS
Global Emerging Growth Fund Growth Fund
Enterprise Fund Global Fund
Discovery Fund Quest Global Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Target Fund Quest Value Fund
================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Global Growth & Income Fund
Quest Opportunity Value Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Quest Growth & Income Value Fund Strategic Income & Growth Fund
================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
Champion Income Fund
================================================================================
TAX-EXEMPT FUNDS
California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
New Jersey Tax-Exempt Fund(2) Insured Tax-Exempt Fund
New York Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
================================================================================
MONEY MARKET FUNDS
Money Market Fund Cash Reserves
1. Exchange privileges are subject to change or termination. Shares may be
exchanged only for shares of the same class of eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY10048-0203.
(C) Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
22 Oppenheimer Pennsylvania Tax-Exempt Fund
<PAGE> 23
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
- ---------------------------------------
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
- ---------------------------------------
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
- ---------------------------------------
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
- ---------------------------------------
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
- ---------------------------------------
RA0740.001.1295 February 28, 1996
[Picture of Jennifer Leonard]
[Caption] Jennifer Leonard, Customer Service Representative
OppenheimerFunds Service
''How may I help you?''
As an Oppenheimer funds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing
simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling
our toll-free Telephone Transactions number. And, by enrolling in AccountLink,
a convenient service that ''links'' your Oppenheimer funds accounts and your
bank checking or savings account, you can use the Telephone Transactions number
to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMER LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
- ---------------------------------------------
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
- ---------------------------------------------
