<PAGE> 1
[PHOTO]
OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
Semiannual Report January 31, 1997
"We want
investment
income
that won't add
to our taxes."
[OPPENHEIMERFUNDS LOGO]
<PAGE> 2
THIS FUND IS FOR PENNSYLVANIA RESIDENTS WHO NEED A SOURCE OF INCOME THAT'S
EXEMPT FROM CURRENT TAXES.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 1/31/97:(4)
Class A
4.71%
Class B
4.18%
Class C
4.05%
HOW YOUR FUND IS MANAGED
Oppenheimer Pennsylvania Municipal Fund invests in a diversified portfolio of
Pennsylvania municipal bonds. As a Fund shareholder, you receive income that is
free from federal and Pennsylvania income taxes, and in some cases, local
school district taxes.(1) Your dividends don't increase your taxable income the
way taxable investments do, so you can keep more of what you earn.
PERFORMANCE
Cumulative total returns for the six months ended 1/31/97 were 4.01% for Class
A shares, 3.61% for Class B shares and 3.59% for Class C shares, without
deducting sales charges.(2)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 12/31/96 and since inception
on 9/18/89 were (0.60)%, 5.57% and 6.67%, respectively. For Class B shares,
average annual total returns for the 1-year period and since inception on
5/1/93 were (1.36)% and 3.79%, respectively. For Class C shares, average annual
total returns for the 1-year period ended 12/31/96 and since inception on
8/29/95 were 2.42% and 6.75%, respectively.(3)
OUTLOOK
"We remain optimistic and, given current market conditions, believe that
municipal bond investments offer a good value."
Robert Patterson, Portfolio Manager
January 31, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT 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. As of
October 10, 1996, the Fund's name was changed from "Oppenheimer Pennsylvania
Tax-Exempt Fund."
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. Includes change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Class A returns include the current maximum initial sales charge of 4.75%.
Class B returns include the applicable contingent deferred sales charge of 5%
(1-year) and 3% (since inception). Class C returns include the 1% contingent
deferred sales charge for the 1-year result. An explanation of the different
performance calculations is in the Fund's prospectus. Class B and Class C
shares are subject to an annual 0.75% asset-based sales charge.
4. Standardized yield is based on net investment income calculated for the
30-day period ended 1/31/97. Falling net asset values will tend to artificially
raise yields.
2 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 3
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Pennsylvania
Municipal Fund
DEAR SHAREHOLDER,
It's true that the stock market of 1996 received virtually all the recognition
this past year. While excitement during the second half of the year revolved
around equities, the bond market was experiencing a quiet, yet solid, rebound.
Some analysts anticipated that moderated economic growth and low inflation
would help stabilize interest rates, and even lower them--all factors that
would be beneficial for the bond market. During the second half of 1996, that's
exactly how events unfolded. In October, when the economy was characterized by
a firm dollar, low inflation and slow growth, the Federal Reserve responded by
maintaining its hands-off approach to interest rates. It appeared that earlier
concerns about rapid inflationary growth had been overblown, and interest rates
declined soon afterward. With continued, sustainable, non-inflationary growth
of around 2% to 2.5%, and no interest rate raises expected from the Federal
Reserve, the economy seemed to have settled into a comfortable pattern of
neither too little nor too much growth.
Moving ahead to 1997, President Clinton has pledged to focus on balancing
the federal budget during his second term. In fact, politicians from every camp
are discussing their intent to reduce the budget, perhaps through a balanced
budget amendment. Such a move should prove beneficial for the municipal bond
market. The other good news for municipal bond investors is that President
Clinton has no plans of initiating a flat tax, a proposal that would have
eliminated the tax advantages of municipal bonds.
On the other hand, investors may have experienced some volatility in the
income stream from municipal bond funds. This is primarily because the
availability of quality bonds paying high dividends has decreased over the past
few years, making it more difficult to find value bonds. We believe that over
the long term and on a tax-adjusted basis, our funds will continue to offer
value with the potential for higher total return.
When you consider the combination of these developments last year--a
sustained economic growth pattern, the assurance of a balanced federal budget
and the dissipated threat of a flat tax--the tax advantages of municipal bond
investing become much more attractive.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues Ion the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
February 24, 1997
3 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 4
Q+A
[PHOTO]
Q WHAT
AREAS ARE YOU
CURRENTLY
TARGETING?
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
Our performance has been relatively strong. We attribute the Fund's success to
our strategy of holding municipal bonds that offer potentially high after-tax
income. As a result of our strategic positioning, Oppenheimer Pennsylvania
Municipal Fund finished 12th out of 66 Pennsylvania municipal debt funds
ranked by Lipper Analytical Services for the 1-year period ended 12/31/96.(1)
WHAT INVESTMENT STRATEGIES MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
We prefer essential service revenue bonds--such as water and sewer, toll roads
and transportation bonds--to general obligation bonds. Revenue bonds maintain
user fees that generate a revenue stream. These bonds are more in step with
today's economic climate, where the policies coming out of Washington place
more pressure on states and localities to produce their own revenues and
services. With revenue bonds, the primary purpose is to finance an essential
service such as water and sewer, and to that extent, they encounter less
political pressure and have the capacity to charge fees necessary to maintain
the services. Because higher-yielding bonds often have a lower rating, they
require careful analysis of the risk of default.
Also, our managing of duration, which is a measure of the portfolio's
price sensitivity to changes in interest rates, was particularly helpful in a
rising rate environment. While a long-duration strategy can benefit bond
investors when rates decline, the opposite is typically true when rates rise.
And finally, a relatively limited supply of new municipal bonds coupled with
steady demand further enhanced our performance.(2)
1. Source: Lipper Analytical Services, 12/31/96. Oppenheimer Pennsylvania
Municipal Fund was ranked 19th out of 23 funds in its category for the 5-year
period ended 12/31/96. Oppenheimer Pennsylvania Municipal Fund is characterized
by Lipper as a Pennsylvania municipal debt fund. Lipper performance is based on
total return and does not take sales charges into account.
2. The Fund's portfolio is subject to change.
4 Oppenheimer Pennsylvania Municipal 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,
Member of Tax-Exempt Fixed
Income Investments Team
THIS PAGE
Top: Robert Patterson
Bottom:Caryn Halbrecht with
Donna Compert, Municipal
Securities Trader
A THE
FUND RECENTLY
ADDED SOME
HIGHER
EDUCATION
BONDS.
DID ANY INVESTMENTS LAG IN PERFORMANCE?
In the last six months, as interest rates have declined, defensively positioned
pre-refunded bonds have not performed as well as discount and zero coupon
bonds. Fortunately, we correctly anticipated the decline in interest rates and
reduced our pre-refunded bond exposure. Instead, we purchased housing bonds
that provided us with higher income.
WHAT AREAS ARE YOU CURRENTLY TARGETING?
We've recently added some higher education bonds that have performed well. In
addition, the healthcare industry has shown growth throughout Pennsylvania
and we've been able to benefit by investing in hospital bonds. And, going
forward, as cities and counties improve through restructuring in Pennsylvania,
we believe the Fund can benefit from these positive changes. We're also
considering toll-backed transportation bonds. Lastly, for diversification,
we've added some Puerto Rico highway bonds.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We continue to maintain a positive outlook. Currently, long-term interest rates
are low, there doesn't appear to be any real inflation on the horizon, and
we've seen steady, moderate economic growth in the United States for some time.
And, even if interest rates were to fall over the near term, bonds would
appreciate in value. We therefore remain optimistic and, given current market
conditions, believe that municipal bond investments offer a good value.
[PHOTO]
5 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 6
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS JANUARY 31, 1997 (UNAUDITED)
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
================================================================================================================================
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--99.3%
- --------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--90.0%
Allegheny Cnty., PA HDAU RB, Magee Women's Hospital,
FGIC Insured, 5.375%, 10/1/13 Aaa/AAA/AAA $2,000,000 $1,969,580
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC Collateral RRB,
Toledo Edison Project, Series A, 7.75%, 5/1/20 Ba2/BB 2,000,000 2,188,240
-------------------------------------------------------------------------------------------------------------------------
Beaver Cnty., PA IDAU PC RRB, Ohio Edison Project,
Series A, FGIC Insured, 7.75%, 9/1/24 Aaa/AAA/AAA 1,000,000 1,093,240
-------------------------------------------------------------------------------------------------------------------------
Berks Cnty., PA GOB, FGIC Insured, Inverse Floater,
8.70%, 11/10/20(1) Aaa/AAA/AAA 1,000,000 1,195,000
-------------------------------------------------------------------------------------------------------------------------
Blair Cnty., PA HA RB, Altoona Hospital Project,
AMBAC Insured, Inverse Floater, 7.663%, 7/1/14(1) Aaa/AAA/AAA 700,000 782,544
-------------------------------------------------------------------------------------------------------------------------
Bucks Cnty., PA Water & Sewer Authority RB,
Neshaminy Interceptor System, Prerefunded,
FGIC Insured, 7.50%, 12/1/13 Aaa/AAA/AAA 1,500,000 1,594,290
-------------------------------------------------------------------------------------------------------------------------
Dauphin Cnty., PA HA RRB:
Harrisburg Hospital Project, MBIA
Insured, 8.25%, 7/1/14 Aaa/AAA 1,450,000 1,505,390
Polyclinic Medical Center Project, MBIA
Insured, 5.40%, 8/15/13 Aaa/AAA/NR 1,800,000 1,790,424
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA Authority Health Care RB,
Mercy Health Corp. Southeastern,
Series B, 6%, 11/15/07 NR/BBB+ 830,000 843,504
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA IDAU RRB, RR Project,
Series A, 8.10%, 12/1/13 Aa3/AA- 3,200,000 3,343,456
-------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA University Authority RB,
Villanova University, MBIA Insured, 6.90%, 8/1/16 Aaa/AAA 1,000,000 1,084,300
-------------------------------------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission RB,
Interstate 78, Prerefunded, FGIC Insured, 7.80%, 7/1/18 Aaa/AAA/AAA 1,000,000 1,073,180
-------------------------------------------------------------------------------------------------------------------------
Delaware River Port Authority, Delaware River
Bridges RRB, AMBAC Insured, 7.375%, 1/1/07 Aaa/AAA/AAA 770,000 822,622
-------------------------------------------------------------------------------------------------------------------------
Erie, PA Higher Education Building Authority College RB,
Mercyhurst College Project, Prerefunded, 7.85%, 9/15/19 NR/AAA 1,000,000 1,091,560
-------------------------------------------------------------------------------------------------------------------------
Langhorne Manor Boro, PA Health & HEAU RB,
Woods Schools Project, Prerefunded, 8.75%, 11/15/14 NR/AAA 1,000,000 1,136,420
-------------------------------------------------------------------------------------------------------------------------
Lehigh Cnty., PA General Purpose Authority RB,
Lehigh Valley Hospital, Inc., Series A,
MBIA Insured, 7%, 7/1/16 Aaa/AAA 1,250,000 1,467,800
-------------------------------------------------------------------------------------------------------------------------
Monroeville, PA HA RRB, Forbes Health System,
6.25%, 10/1/15 A3/BBB+ 2,000,000 2,031,360
-------------------------------------------------------------------------------------------------------------------------
Northampton Cnty., PA HEAU RRB,
Lehigh University, 7.10%, 9/1/05(2) A1/A+ 2,140,000 2,211,305
-------------------------------------------------------------------------------------------------------------------------
PA Convention Center Authority RB, Escrowed
to Maturity, Series A, FGIC Insured, 6.70%, 9/1/16 Aaa/AAA/AAA 1,850,000 2,129,572
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU RR RB, Colver Project,
Series D, 7.15%, 12/1/18 NR/BBB 2,000,000 2,102,920
-------------------------------------------------------------------------------------------------------------------------
PA EDFAU Wastewater Treatment RB,
Sun Co., Inc.-R & M Project, Series A, 7.60%, 12/1/24 Baa3/BBB 2,000,000 2,230,740
-------------------------------------------------------------------------------------------------------------------------
PA GORB, First Series, 10%, 4/15/98 A1/AA-/AA- 1,880,000 2,014,458
-------------------------------------------------------------------------------------------------------------------------
PA HEAA Student Loan RB, AMBAC Insured,
Inverse Floater, 8.462%, 3/1/22(1) Aaa/AAA/AAA 1,250,000 1,287,500
</TABLE>
6 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PENNSYLVANIA
(CONTINUED)
PA HEFAU College & University RB:
Hahnemann University Project, Series 89,
MBIA Insured, 7.20%, 7/1/19 Aaa/AAA $1,500,000 $ 1,632,540
Thomas Jefferson University, Series A, 6.625%, 8/15/09 Aa/A+ 1,000,000 1,085,110
----------------------------------------------------------------------------------------------------------------------------
PA HFA RB, SFM:
Series 31C, Inverse Floater, 10.116%, 10/3/23(1) Aa/AA+ 1,000,000 1,093,750
Series 40, 6.80%, 10/1/15 Aa/AA+ 2,000,000 2,096,980
Series 44C, 6.65%, 10/1/21 Aa/AA+ 1,000,000 1,034,980
Series 54A, 6.15%, 10/1/22 Aa/AA+ 1,000,000 1,003,200
---------------------------------------------------------------------------------------------------------------------------
PA IDAU ED RB, Prerefunded, Series A, 7%, 1/1/11 NR/A-/AAA 1,300,000 1,446,562
---------------------------------------------------------------------------------------------------------------------------
PA State University RRB, Series B, 5.50%, 8/15/16 A1/AA- 2,500,000 2,445,775
---------------------------------------------------------------------------------------------------------------------------
PA Turnpike Commission RB, Prerefunded:
Series E, MBIA Insured, 7.50%, 12/1/19 Aaa/AAA 2,500,000 2,765,650
Series K, MBIA Insured, 7.50%, 12/1/09 Aaa/AAA 1,000,000 1,106,260
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Gas Works RB, 15th Series,
MBIA Insured, 5.25%, 8/1/15 Aaa/AAA/A- 1,000,000 958,330
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RB:
Albert Einstein Medical Center, 7.625%, 4/1/11 A3/BBB+ 3,500,000 3,698,170
Temple University Hospital, Series A, 6.625%, 11/15/23 Baa1/A- 3,800,000 3,916,774
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Hospitals & HEFAU RRB,
Jeanes Health System Project, 6.60%, 7/1/10 NR/BBB 1,000,000 1,026,650
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Regional Port Authority Lease RB,
MBIA Insured, Inverse Floater, 8.352%, 9/1/20(1) Aaa/AAA 2,100,000 2,223,375
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Sewer RRB,
Escrowed to Maturity, Tenth Series, 7.35%, 9/1/04 Aaa/AAA 244,000 278,204
---------------------------------------------------------------------------------------------------------------------------
Philadelphia, PA Water & Wastewater RB,
FGIC Insured, 10%, 6/15/05 Aaa/AAA/AAA 1,900,000 2,564,202
---------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA Water & Sewer Authority RRB,
Escrowed to Maturity, FGIC Insured, 7.25%, 9/1/14 Aaa/AAA/AAA 1,200,000 1,424,856
---------------------------------------------------------------------------------------------------------------------------
Reading, PA Parking Authority CAP RB,
MBIA Insured, Zero Coupon, 5.70%, 11/15/15(3) Aaa/AAA 2,345,000 811,253
---------------------------------------------------------------------------------------------------------------------------
Schuylkill Cnty., PA IDAU RR RRB,
Schuylkill Energy Resources, Inc., 6.50%, 1/1/10 NR/NR 3,995,000 3,838,795
---------------------------------------------------------------------------------------------------------------------------
St. Mary HA Langhorne, PA Hospital RRB,
Franciscan Health Project, Series B, BIG Insured,
7%, 7/1/14 Aaa/AAA 500,000 535,550
---------------------------------------------------------------------------------------------------------------------------
Washington Cnty., PA Municipal Facility
Lease Authority RB, Prerefunded, AMBAC Insured,
7.45%, 12/15/12 Aaa/AAA/AAA 2,000,000 2,240,560
------------
76,216,931
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--9.3%
PR Commonwealth GOB:
6.50%, 7/1/15 Baa1/A 1,200,000 1,326,708
MBIA Insured, Inverse Floater, 7.612%, 7/1/08(1) Aaa/AAA 1,000,000 1,073,750
---------------------------------------------------------------------------------------------------------------------------
PR Commonwealth HTAU RB, Series Y, 5%, 7/1/36 Baa1/A 3,100,000 2,732,278
---------------------------------------------------------------------------------------------------------------------------
PR EPAU CAP RRB, Series N, Zero Coupon,
5.93%, 7/1/17(3) Baa1/BBB+ 3,300,000 1,014,816
---------------------------------------------------------------------------------------------------------------------------
PR Industrial Tourist Educational Medical &
Environmental Control Facilities RB,
Polytechnic University Project, Series A, 6.50%, 8/1/24 NR/BBB- 1,000,000 1,044,270
</TABLE>
7 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. POSSESSIONS
(CONTINUED)
PR Port Authority RB, American Airlines
Special Facilities Project, Series A, 6.25%, 6/1/26 Baa3/BBB+ $ 675,000 $ 693,191
-----------
7,885,013
-----------
Total Municipal Bonds and Notes (Cost $82,486,256) 84,101,944
================================================================================================================================
SHORT-TERM TAX-EXEMPT OBLIGATIONS--1.4%
- --------------------------------------------------------------------------------------------------------------------------------
Delaware Cnty., PA IDAU PC RB, BP Oil, Inc.,
3.50%, 2/3/97 (Cost $1,200,000)(4) 1,200,000 1,200,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $83,686,256) 100.7% 85,301,944
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.7) (574,951)
---------- -----------
NET ASSETS 100.0% $84,726,993
========== ===========
</TABLE>
1. Represents the current interest rate for a variable rate bond. These
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 $7,655,919 or 9.04% of the Fund's net assets at
January 31, 1997.
2. Securities with an aggregate market value of $31,000 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
4. Floating or variable rate obligation. The interest rate, which is
based on specific, or an index of, market interest rates, is subject to
change periodically and is the effective rate on January 31, 1997. This
instrument may also have a demand feature which allows the recovery of
principal at any time, or at specified intervals not exceeding one year,
on up to 30 days' notice. Maturity date shown represents effective
maturity based on variable rate and, if applicable, demand feature.
As of January 31, 1997, securities subject to the alternative minimum
tax amounted to $15,382,057 or 18.15% 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>
Hospital/Healthcare $19,567,746 23.0%
---------------------------------------------------------------------------------------------------------------------
Higher Education 10,594,860 12.5
---------------------------------------------------------------------------------------------------------------------
Highways 9,311,243 10.9
---------------------------------------------------------------------------------------------------------------------
Resource Recovery 9,285,171 10.9
---------------------------------------------------------------------------------------------------------------------
Water Utilities 5,861,552 6.9
---------------------------------------------------------------------------------------------------------------------
General Obligation 5,609,916 6.6
---------------------------------------------------------------------------------------------------------------------
Corporate Backed 5,570,493 6.5
---------------------------------------------------------------------------------------------------------------------
Single Family Housing 5,228,910 6.1
---------------------------------------------------------------------------------------------------------------------
Lease Rental 4,370,132 5.1
---------------------------------------------------------------------------------------------------------------------
Pollution Control 3,281,480 3.8
---------------------------------------------------------------------------------------------------------------------
Marine/Aviation Facilities 2,223,375 2.6
---------------------------------------------------------------------------------------------------------------------
Student Loans 1,287,500 1.5
---------------------------------------------------------------------------------------------------------------------
Education 1,136,420 1.3
---------------------------------------------------------------------------------------------------------------------
Electric Utilities 1,014,816 1.2
---------------------------------------------------------------------------------------------------------------------
Gas Utilities 958,330 1.1
----------- ------
$85,301,944 100.0%
=========== ======
</TABLE>
To simplify the listings of the Oppenheimer Pennsylvania Municipal Fund
holdings in the Statement of Investments, we have abbreviated the
descriptions of many of the securities per the table below:
<TABLE>
<S> <C> <C> <C>
CAP --Capital Appreciation HEFAU --Higher Educational Facilities Authority
ED --Economic Development HFA --Housing Finance Agency
EDFAU --Economic Development Finance Authority HTAU --Highway & Transportation Authority
EPAU --Electric Power Authority IDAU --Industrial Development Authority
GOB --General Obligation Bonds PC --Pollution Control
GORB --General Obligation Refunding Bonds RB --Revenue Bonds
HA --Hospital Authority RR --Resource Recovery
HDAU --Hospital Development Authority RRB --Revenue Refunding Bonds
HEAA --Higher Education Assistance Agency SFM --Single Family Mortgage
HEAU --Higher Education Authority
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES January 31, 1997 (Unaudited)
<TABLE>
<S> <C>
================================================================================================================================
ASSETS
Investments, at value (cost $83,686,256)--see accompanying statement $85,301,944
------------------------------------------------------------------------------------------------------------------------
Cash 706,516
------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest 1,291,672
Shares of beneficial interest sold 91,191
Daily variation on futures contracts--Note 5 8,750
------------------------------------------------------------------------------------------------------------------------
Other 5,204
-----------
Total assets 87,405,277
================================================================================================================================
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed 1,226,264
Investments purchased 1,008,200
Dividends 281,159
Trustees' fees 47,954
Shareholder reports 36,175
Distribution and service plan fees 10,743
Transfer and shareholder servicing agent fees 1,088
Other 66,701
-----------
Total liabilities 2,678,284
================================================================================================================================
NET ASSETS $84,726,993
===========
================================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $84,397,247
------------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (101,420)
------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,172,647)
------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 1,603,813
-----------
Net assets $84,726,993
===========
================================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of $65,925,933
and 5,429,660 shares of beneficial interest outstanding) $12.14
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $12.75
-------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $17,170,936 and 1,414,432 shares of beneficial interest outstanding) $12.14
-------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,630,124 and 134,337 shares of beneficial interest outstanding) $12.13
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 10
STATEMENT OF OPERATIONS For the Six Months Ended January 31, 1997 (Unaudited)
<TABLE>
<S> <C>
============================================================================================================================
INVESTMENT INCOME
Interest $2,796,343
============================================================================================================================
EXPENSES
Management fees--Note 4 250,591
---------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 47,804
Class B 83,452
Class C 4,664
---------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 39,338
---------------------------------------------------------------------------------------------------------------------
Shareholder reports 22,446
---------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 8,553
---------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 5,632
---------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 4,557
---------------------------------------------------------------------------------------------------------------------
Insurance expenses 2,455
---------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 357
Class C 324
---------------------------------------------------------------------------------------------------------------------
Other 813
----------
Total expenses 470,986
Less expenses paid indirectly--Note 4 (4,310)
Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 (11,197)
----------
Net expenses 455,479
============================================================================================================================
NET INVESTMENT INCOME 2,340,864
============================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized loss on investments (11,563)
---------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 840,295
----------
Net realized and unrealized gain 828,732
============================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,169,596
==========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 11
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, DECEMBER 31,
(UNAUDITED) 1996(1) 1995
================================================================================================================================
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 2,340,864 $ 2,600,096 $ 4,284,425
-------------------------------------------------------------------------------------------------------------------------
Net realized loss (11,563) (39,279) (149,202)
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 840,295 (2,305,381) 7,766,744
----------- ----------- -----------
Net increase in net assets resulting from operations 3,169,596 255,436 11,901,967
================================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (1,853,611) (2,144,352) (3,637,885)
Class B (404,574) (430,663) (583,457)
Class C (22,124) (8,248) (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 824,899 (191,910) (796,475)
Class B 988,413 1,960,511 3,839,201
Class C 1,146,516 224,120 262,069
================================================================================================================================
NET ASSETS
Total increase (decrease) 3,849,115 (335,106) 10,871,871
-------------------------------------------------------------------------------------------------------------------------
Beginning of period 80,877,878 81,212,984 70,341,113
----------- ----------- -----------
End of period (including overdistributed net investment
income of $101,420, $147,080 and $161,975, respectively) $84,726,993 $80,877,878 $81,212,984
=========== =========== ===========
</TABLE>
1. The Fund changed its fiscal year end from December 31 to July 31.
See accompanying Notes to Financial Statements.
11 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JAN. 31, 1997 JULY 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996(2) 1995 1994
=============================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 12.01 $ 12.36 $ 11.19 $ 12.85
---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 .40 .68 .67
Net realized and unrealized gain (loss) .12 (.35) 1.18 (1.64)
------- ------- ------- -------
Total income (loss) from investment operations .47 .05 1.86 (.97)
---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) (.40) (.67) (.69)
Dividends in excess of net investment income -- -- (.02) --
Distributions from net realized gain -- -- -- --
------- ------- ------- -------
Total dividends and distributions to shareholders (.34) (.40) (.69) (.69)
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.14 $ 12.01 $ 12.36 $ 11.19
======= ======= ======= =======
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 4.01% 0.44% 16.94% (7.68)%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $65,926 $64,391 $66,483 $60,857
---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $65,576 $64,997 $64,901 $62,786
---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.75%(5) 5.71%(5) 5.68% 5.65%
Expenses, before voluntary assumption by
the Manager or Distributor(6) 0.94%(5) 1.03%(5) 1.02% 0.98%
Expenses, net of voluntary assumption by
the Manager or Distributor 0.93%(5) N/A N/A N/A
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 5.1% 5.8% 31.1% 37.0%
</TABLE>
1. For the period from August 29, 1995 (inception of offering) to
December 31, 1995.
2. The Fund changed its fiscal year end from December 31 to July 31.
3. For the period from May 1, 1993 (inception of offering) to December
31, 1993.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
12 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -------------------------- ------------------------------------------------------------------------- --------------
SIX MONTHS PERIOD SIX MONTHS
ENDED ENDED ENDED
JAN. 31, 1997 JULY 31, YEAR ENDED DECEMBER 31, JAN. 31, 1997
1993 1992 (UNAUDITED) 1996(2) 1995 1994 1993(3) (UNAUDITED)
==============================================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C>
$ 12.05 $ 11.93 $ 12.01 $ 12.36 $ 11.19 $ 12.84 $ 12.44 $ 12.00
- ------------------------------------------------------------------------------------------------------------------------------
.69 .76 .31 .35 .59 .59 .36 .30
.85 .17 .12 (.35) 1.17 (1.65) .45 .12
- ------- ------- ------- ------- ------- ------- ------- -------
1.54 .93 .43 -- 1.76 (1.06) .81 .42
- ------------------------------------------------------------------------------------------------------------------------------
(.70) (.73) (.30) (.35) (.57) (.59) (.37) (.29)
-- -- -- -- (.02) -- -- --
(.04) (.08) -- -- -- -- (.04) --
- ------- ------- ------- ------- ------- ------- ------- -------------
(.74) (.81) (.30) (.35) (.59) (.59) (.41) (.29)
- ------------------------------------------------------------------------------------------------------------------------------
$ 12.85 $ 12.05 $ 12.14 $ 12.01 $ 12.36 $ 11.19 $ 12.84 $ 12.13
======= ======= ======= ======= ======= ======= ======= =======
==============================================================================================================================
13.12% 8.04% 3.61% (0.01)% 16.06% (8.32)% 6.67% 3.59%
==============================================================================================================================
$64,640 $33,290 $17,171 $16,005 $14,466 $ 9,484 $ 5,576 $ 1,630
- ------------------------------------------------------------------------------------------------------------------------------
$50,974 $21,936 $16,554 $15,085 $12,183 $ 7,329 $ 2,770 $ 925
- ------------------------------------------------------------------------------------------------------------------------------
5.52% 6.36% 4.99%(5) 4.94%(5) 4.89% 4.88% 4.26%(5) 4.91%(5)
1.06% 1.39% 1.78%(5) 1.89%(5) 1.89% 1.85% 1.88%(5) 1.83%(5)
0.99% 1.06% 1.68%(5) 1.79%(5) 1.78% 1.75% 1.78%(5) 1.73%(5)
- ------------------------------------------------------------------------------------------------------------------------------
14.6% 29.9% 5.1% 5.8% 31.1% 37.0% 14.6% 5.1%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
- --------------------------
PERIOD ENDED
JULY 31, DEC. 31,
1996(2) 1995(1)
==========================
<C> <C>
$ 12.36 $ 11.91
- --------------------------
.34 .21
(.36) .45
------- -------
(.02) .66
- --------------------------
(.34) (.21)
-- --
-- --
------- -------
(.34) (.21)
- --------------------------
$ 12.00 $ 12.36
======= =======
==========================
(0.15)% 5.55%
==========================
$ 482 $ 264
- --------------------------
$ 296 $ 51
- --------------------------
4.83%(5) 4.40%(5)
1.97%(5) 2.07%(5)
1.87%(5) 1.96%(5)
- --------------------------
5.8% 31.1%
</TABLE>
5. Annualized.
6. Beginning in fiscal 1995, the expense ratio reflects the effect of
gross expenses paid indirectly by the Fund. Prior year expense ratios
have not been adjusted.
7. 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
January 31, 1997 were $7,772,997 and $4,152,078, respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Pennsylvania Municipal Fund (the Fund), formerly named
Oppenheimer Pennsylvania Tax-Exempt Fund, is a separate series of
Oppenheimer Multi-State Municipal 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 as is available from municipal
securities and consistent with preservation of capital. The Fund's
investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with
a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical
rights to earnings, assets and voting privileges, except that each class
has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with
respect to matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
------------------------------------------------------------------------
INVESTMENT VALUATION. 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 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.
------------------------------------------------------------------------
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 six months ended January 31, 1997, a reduction of $479 was
made for the Fund's projected benefit obligations, and payments of
$1,509 were made to retired trustees, resulting in an accumulated
liability of $43,416 at January 31, 1997.
------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net investment
income each day the New York Stock Exchange is open for business and pay
such dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of premium amortization for tax
purposes. 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.
14 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 15
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
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>
SIX MONTHS ENDED JANUARY 31, 1997 PERIOD ENDED JULY 31, 1996(2) YEAR ENDED DECEMBER 31, 1995(1)
--------------------------------- ------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 495,703 $6,008,320 444,071 $5,368,304 825,097 $ 9,802,254
Dividends reinvested 96,114 1,164,638 113,937 1,371,426 199,971 2,384,211
Redeemed (524,278) (6,348,060) (572,992) (6,931,640) (1,088,358) (12,982,940)
-------- ---------- -------- ---------- ---------- -----------
Net increase (decrease) 67,539 $ 824,898 (14,984) $ (191,910) (63,290) $ (796,475)
======== ========== ======== ========== ========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 145,880 $1,768,909 224,245 $2,699,403 359,124 $ 4,282,282
Dividends reinvested 18,966 229,814 21,125 254,088 30,661 366,174
Redeemed (83,329) (1,010,310) (82,510) (992,980) (67,574) (809,255)
-------- ---------- -------- ---------- ---------- -----------
Net increase 81,517 $ 988,413 162,860 $1,960,511 322,211 $ 3,839,201
======== ========== ======== ========== ========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 97,738 $1,189,454 29,594 $ 355,700 21,431 $ 263,229
Dividends reinvested 1,255 15,205 608 7,281 31 377
Redeemed (4,792) (58,142) (11,403) (138,861) (125) (1,537)
-------- ---------- -------- ---------- ---------- -----------
Net increase 94,201 $1,146,517 18,799 $ 224,120 21,337 $ 262,069
======== ========== ======== ========== ========== ===========
</TABLE>
1. For the year ended December 31, 1995 for 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.
2. The Fund changed its fiscal year end from December 31 to July 31.
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At January 31, 1997, net unrealized appreciation on investments of
$1,615,688 was composed of gross appreciation of $2,430,837, and gross
depreciation of $815,149.
15 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.60% on the first $200 million of average annual net assets, 0.55% on
the next $100 million, 0.50% on the next $200 million, 0.45% on the next
$250 million, 0.40% on the next $250 million and 0.35% on net assets in
excess of $1 billion. Effective January 1, 1997, the Manager has
voluntarily undertaken to waive a portion of its management fee, whereby
the Fund pays a fee not to exceed 0.57% of average annual net assets.
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 six months ended January 31, 1997, commissions
(sales charges paid by investors) on sales of Class A shares totaled
$119,311, of which $20,932 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 $67,560
and $10,705, of which $1,220 was paid to an affiliated broker/dealer for
Class B. During the six months ended January 31, 1997, OFDI received
contingent deferred sales charges of $20,911 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.
Expenses paid indirectly represent a reduction of custodian
fees for earnings on cash balances maintained by the Fund.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with
the personal service and maintenance of accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not
exceed 0.15% of the average annual net assets of Class A shares of the
Fund. OFDI uses the service fee to reimburse brokers, dealers, banks
and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares. During the six months ended January 31, 1997, OFDI paid
$3,483 to an affiliated broker/dealer as reimbursement for Class A
personal service and maintenance expenses.
The Fund has adopted compensation type Distribution and
Service Plans for Class B and Class C shares to compensate OFDI for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C
shares, as compensation for sales commissions paid from its own
resources at the time of sale and associated financing costs. OFDI also
receives a service fee of 0.25% (voluntarily reduced to 0.15% by the
Fund's Board) per year as compensation 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
financial institutions. Both fees are computed on the average annual net
assets of Class B and Class C shares, determined as of the close of each
regular business day. During the six months ended January 31, 1997, OFDI
retained $65,131 and $3,139, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as
financing costs. If the Plans are terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plans
were terminated. At January 31, 1997, OFDI had incurred unreimbursed
expenses of $514,185 for Class B and $22,196 for Class C.
16 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 17
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the
value of fixed rate portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in interest rates as it
may be more efficient or cost effective than actually buying fixed
income securities.
Upon entering into a futures contract, the Fund is required
to deposit either cash or securities in an amount (initial margin) equal
to a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract
value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or
expired.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement
of Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related
options) include the possibility that there may be an illiquid market
and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
At January 31, 1997, the Fund had outstanding futures contracts to sell
debt securities as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUATION AS OF UNREALIZED
EXPIRATION DATE FUTURES CONTRACTS JANUARY 31, 1997 DEPRECIATION
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bond Futures 3/97 10 $1,152,500 $11,875
</TABLE>
17 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 18
OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND
A Series of Oppenheimer Multi-State Municipal Trust
================================================================================
OFFICERS AND TRUSTEES
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISER
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
The financial statements included herein have been taken from the
records of the Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer Pennsylvania
Municipal Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Pennsylvania Municipal 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.
18 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 19
OPPENHEIMERFUNDS FAMILY
================================================================================
OppenheimerFunds offers over 50 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 3
million shareholder accounts and more than $60 billion under
OppenheimerFunds' 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
adviser 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.
<TABLE>
====================================================================================
STOCK FUNDS
<S> <C>
Developing Markets Fund Quest Capital Value Fund
Global Emerging Growth Fund Growth Fund
Enterprise Fund(2) Global Fund
International Growth Fund Quest Global Value Fund
Discovery Fund Disciplined Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Capital Appreciation Fund(3) Quest Value Fund
====================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Multiple Strategies Fund(4)
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
====================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
====================================================================================
MUNICIPAL FUNDS
California Municipal Fund(5) Insured Municipal Fund
Florida Municipal Fund(5) Intermediate Municipal Fund
New Jersey Municipal Fund(5)
New York Municipal Fund(5) Rochester Division
Pennsylvania Municipal Fund(5) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
====================================================================================
MONEY MARKET FUNDS(6)
Money Market Fund Cash Reserves
====================================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may
be exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund."
5. Available only to investors in certain states.
6. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market
fund will be able to maintain a stable net asset value of $1.00 per
share.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
19 Oppenheimer Pennsylvania Municipal Fund
<PAGE> 20
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
RS0740.001.0197 March 31, 1997
[PHOTO]
CUSTOMER SERVICE REPRESENTATIVE
OPPENHEIMERFUNDS SERVICES
"HOW MAY I HELP YOU?"
As an Oppenheimer fund 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.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
- -------------------
Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
- -------------------
