Oppenheimer Main Street California Tax-Exempt Fund
Semi-Annual Report December 31, 1993
(COVER PHOTO: MAN & WOMAN HIKING)
(OPPENHEIMER FUNDS(R) LOGO)
"With today's higher taxes, we worried that the income from our investment
wouldn't be enough.
"This Fund has given us what we need--tax-free income.
"We can keep more of what we earn, while our investment helps build California."
<PAGE>
Fund Facts
In this report:
Answers to three timely questions you should ask your Fund's managers.
* Why does the Fund's current investment strategy emphasize higher quality
bonds?
* What is the outlook for California's economic situation and state budget
difficulties?
* With interest rates at historically low levels, how has the Fund maintained
an attractive yield?
Five Facts Every Shareholder Should Know About Oppenheimer Main Street
California Tax-Exempt Fund
1 The Fund seeks high current income exempt from federal and
California state income taxes while attempting to preserve capital.
It invests principally in California municipal securities rated
within the four highest credit rating categories.
2 During the past twelve months, dividends and capital gains
distributions paid per Class A share totaled $0.829.
3 The standardized yield for the 30 days ended December 31, 1993 for
Class A shares was 5.38%.(1)
4 Under the new, higher federal tax rates, the value of tax-free
income has increased. The table shows the taxable equivalent yield
required to match the Fund's current yield for the new tax
brackets.
Here is the taxable equivalent of
the Fund's yield for a California
taxpayer, filing a joint return with
taxable income of:
Fund Yield
on 12/31/93 $92,000 $150,000 $260,000
Class A(1) 5.38% 8.60% 9.27% 9.90%
This table assumes that an investor's highest effective tax bracket
(combined federal and state) applies to the change in taxable
income resulting from a switch between taxable and non-taxable
investments. A portion of the Fund's distributions may be subject
to income taxes. For investors subject to alternative minimum tax,
a portion of the Fund's distributions may increase that tax.
5 "The California municipal bond market performed well during the
past year despite a difficult local economy, government budget
difficulties and various natural disasters. Because California is
the largest municipal bond market in the country, its size and
diversity makes it very resilient and actually quite stable. Due
to the tremendous supply of California issues during the year,
yields were higher than the national average. And declining
interest rates caused price appreciation in many California
municipal bonds. These factors led to strong total returns for Fund
shareholders."
Portfolio Manager, Robert Patterson, December 31, 1993
1. Standardized yield is net investment income calculated on a yield to
maturity basis for the 30-day period ended 12/31/93, divided by the maximum
offering price at the end of the period, compounded semi-annually and then
annualized.
2. Based on the change in net asset value per Class A share from 6/30/93 and
12/31/92 to 12/31/93. The Fund's average annual total returns after deducting
the current maximum sales charge of 4.75% per Class A share for the 1-year
period and since inception of the class on 5/18/90 ended 12/31/93 were 7.75%
and 9.25%, respectively. All performance figures assume reinvestment of
dividends and capital gains distributions. Certain Class B performance data
is not yet available as Class B shares were first publicly offered 10/29/93.
3. Source: Morningstar Mutual Funds 12/31/93, an independent mutual fund
monitoring service, which ranks funds in specific investment categories
monthly by a quantitative system that uses investment performance, risk
assessment factors and adjusts returns for fees and sales loads. One star is
the lowest ranking, five stars the highest. Of 2,160 funds ranked by
Morningstar in that period, 216 received a five-star ranking and 432 funds
received a four-star ranking. Risk assessment reflects fund performance
relative to three-month Treasury bill returns. Past performance does not
guarantee future results.
4. The Fund's portfolio is subject to change.
Past performance does not guarantee future results. The principal value and
return of an investment in the Fund will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
2 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Report to Shareholders
We would like to extend a warm welcome to all shareholders of Oppenheimer
Main Street California Tax-Exempt Fund, which recently became a member of
OppenheimerFunds.
The Fund provided shareholders with competitive tax-free yields during the
six months ended December 31, 1993. The standardized yield for Class A shares
was 5.38% for the 30 days ended December 31, 1993.(5) Total return at net
asset value for the Fund's Class A shares for the six and twelve months ended
December 31, 1993 were 5.03% and 13.13%, respectively.(6) In recognition of
its performance, the Fund was awarded a (4 stars) ranking from Morningstar
Mutual Funds.(7)
During 1993, the strong California municipal bond market was driven by three
key factors: declining interest rates, an increase in federal tax rates and
signs of economic improvement. Declining interest rates caused bond prices to
appreciate. The recent increase in federal tax rates has made municipal bonds
even more attractive to investors in higher tax brackets. This demand has
also increased the value of bonds in the Fund's portfolio.
Despite a later and deeper recession than the rest of the country, there are
signs of improvement in California's economy and the state government has
made progress in addressing its budget difficulties. This improvement
strengthened the state's ability to meet its financial obligations and
positively affected the Fund's holdings. In light of these developments, the
Fund's strategy for the past year was to stay fully invested in higher
quality securities with an emphasis on essential service revenue bonds.(8)
As of December 31, 1993, 56.4% of the portfolio was invested in top-rated
AAA bonds. These higher quality bonds offer more dependable returns relative
to lower-rated bonds which provide only slightly higher yields. We sought to
lock in current rates on the portfolio's securities using call protection.
This helps us to maintain the income available to the Fund from these
investments.
In selecting bonds, the managers diversify the portfolio's holdings by
geographic origin and by market sector, with holdings in utilities,
transportation and hospitals.
Going forward, the Fund will continue to seek attractive essential service
revenue bonds and undervalued investment grade bonds. We are optimistic that
California will continue its economic rebound due to its well-diversified
resource base and its position as a major world trade center.
Finally, as we write this letter, we are just learning of the devastating
effects of the earthquake that struck the Los Angeles area on January 17. Our
thoughts are with our shareholders who were affected by this disaster and we
wish good health and prosperity for all Californians in 1994. We appreciate
your confidence in the Fund's management. We will continue to do our best to
fulfill your financial needs.
"The Fund
was awarded
a (4 stars) ranking from Morningstar."
(James C. Swain signature) (Jon S. Fossel signature)
James C. Swain Jon S. Fossel
Chairman, Oppenheimer Main Street Funds, Inc. President, Oppenheimer Main
Street Funds, Inc.
January 21, 1994
5. See footnote 1, page 2.
6. See footnote 2, page 2.
7. See footnote 3, page 2.
8. See footnote 4, page 2.
3 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Statement of Investments
December 31, 1993 (Unaudited)
<TABLE>
<CAPTION>
Ratings: Moody's/ Face Market Value
S&P's/Fitch's Amount See Note 1
<S> <C> <C> <C>
Municipal Bonds and Notes--97.6%
California--85.7%
Alameda County, California Certificates of
Participation, BIG Insured, Prerefunded, 7.25%, 6/1/09 Aaa/AAA $ 135,000 $ 161,527
Anaheim, California Public Financing Authority Tax
Allocation Revenue Bonds, Registered Residual
Interest Tax-Exempt Securities, MBIA Insured, 10.07%,
12/28/18(1) Aaa/AAA 1,000,000 1,225,643
California Educational Facilities Authority Revenue
Bonds:
Santa Clara University Project, 6.25%, 2/1/16 A1/NR 1,000,000 1,117,646
Stanford University Project, Series G, Prerefunded,
8.50%, 12/1/15 Aaa/AAA 1,000,000 1,061,376
California Health Facilities Financing Authority
Revenue Insured Bonds:
Episcopal Homes Project, Series A,
OSHPD Insured, 7.80%, 7/1/15 NR/A+ 1,000,000 1,145,484
Henry Mayo Newhall Project, Series A,
OSHPD Insured, 8%, 10/1/18 NR/A+ 280,000 321,706
Unihealth America Project, Series A, AMBAC
Insured, Prerefunded, 7.625%, 10/1/15 Aaa/AAA 1,000,000 1,174,254
California Housing Finance Agency Revenue
Bonds, Home Mortgage, Series C, FHA Insured,
7.60%, 8/1/30 Aa/A+ 75,000 80,632
California Pollution Control Financing Authority
Revenue Bonds, Pacific Gas & Electric Co.,
Series B, 6.35%, 6/1/09 A1/A 2,000,000 2,155,064
California State Department of Water Resources
Revenue Bonds, Central Valley Water System Project,
Series L, 5.50%, 12/1/23 Aa/AA 2,000,000 2,006,412
California State General Obligation Bonds:
FSA Insured, 5.50%, 4/1/19 Aaa/AAA 2,500,000 2,526,950
7%, 8/1/09 Aa/A+/AA 1,000,000 1,201,320
California State Public Works Board Lease Revenue
Bonds:
Department of Corrections California State Prison,
Series B, MBIA Insured, 5.50%, 12/1/12 Aaa/AAA/A+ 3,000,000 3,060,339
Regents of the University of California, Series A,
Prerefunded, 7%, 9/1/15 Aaa/AAA/AAA 150,000 176,509
Capistrano, California University School District
Community Facilities District Special Tax Bonds,
No. 87-1, 7.60%, 9/1/14 NR/NR 1,000,000 1,071,139
Contra Costa, California Water District Revenue
Bonds, Series A, Prerefunded, 6.875%, 10/1/20 A/A+ 1,100,000 1,287,705
Corona, California Certificates of Participation,
Series B, Prerefunded, 10%, 11/1/20 Aaa/AAA 2,250,000 3,194,597
Cucamonga County, California Water District
Facilities Refinancing Certificates of Participation,
FGIC Insured, 6.50%, 9/1/22 Aaa/AAA/AAA 1,000,000 1,090,087
East Bay, California Municipal Utility District
Water System Revenue Bonds, AMBAC Insured,
Prerefunded, 6.375%, 6/1/21 Aaa/AAA 1,000,000 1,151,991
4 Oppenheimer Main Street California Tax-Exempt Fund<PAGE>
Ratings: Moody's/ Face Market Value
S&P's/Fitch's Amount See Note 1
California
(continued)
Kings River Conservation District, California Pine
Flat Power Revenue Bonds, Series C,
Prerefunded, 7.90%, 1/1/20 Aaa/AA $1,700,000 $1,934,396
Los Angeles, California Community Redevelopment
Agency, Community Redevelopment Financing
Authority Revenue Bonds, Grand Central Qualified
Redevelopment, Series A, 5.90%, 12/1/13 A/A 1,000,000 1,000,000
Los Angeles, California Department of Water and
Power Electric Plant:
Revenue Bonds:
Second Issue 1991 Bonds, 6%, 6/1/12 Aa/AA 500,000 530,846
7.375%, 2/1/29 Aa/AA 2,000,000 2,311,930
Revenue Refunding Bonds, 5.375%, 9/1/23 Aa/AA 1,500,000 1,480,155
Los Angeles, California Wastewater System Revenue
Refunding Bonds, Series D, FGIC Insured, 8.70%,
11/1/03 Aaa/AAA/AAA 5,115,000 6,772,745
Los Angeles County, California Certificates of
Participation, Correctional Facilities Project, MBIA
Insured, 6.50%, 9/1/13 Aaa/AAA 400,000 439,144
Los Angeles County, California Transport Commission
Sales Tax:
Revenue Bonds, Series A, Prerefunded, 6.75%, 7/1/20 Aaa/A+/A+ 600,000 697,485
Revenue Refunding Bonds, Series A,
Prerefunded, 8%, 7/1/16 Aaa/A+/A+ 1,620,000 1,878,291
Metropolitan Water District, Southern California
Waterworks Revenue Bonds:
5%, 7/1/20 Aa/AA 2,500,000 2,373,425
8.027%, 10/30/20(1) Aa/AA 1,500,000 1,524,756
6%, 7/1/21 Aa/AA 750,000 781,675
Modesto, California Irrigation District Certificates
of Participation, Geysters Geothermal Power
Project, Prerefunded, 8.875%, 10/1/17 Aaa/AAA 500,000 557,800
Orange County, California Community Facilities
District Special Tax Bonds:
No. 87-3 Mission Viejo, Series A, 8.05%, 8/15/08 A/NR 1,480,000 1,710,949
No. 88-1 Aliso Viejo, Series A, 7.35%, 8/15/18 NR/NR 2,000,000 2,128,750
Paramount, California Redevelopment Agency Tax
Allocation Revenue Refunding Bonds, Redevelopment
Project No. 1, Series A, 9.65%, 6/1/16 NR/AAA/BBB 1,000,000 1,108,954
Pittsburg, California Improvement Bond Act of 1915
Bonds, Assessment District 1990-01, 7.75%, 9/2/20 NR/NR 100,000 103,138
Rancho, California Water District Financing Authority
Revenue Refunding Bonds, AMBAC Insured, 5%, 8/15/14 Aaa/AAA 1,250,000 1,209,062
Redding, California Electric System Revenue
Certificates of Participation, Registered Residual
Interest Certificates:
FGIC Insured, 8.348%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 1,186,998
MBIA Insured, 9.968%, 7/8/22(1) Aaa/AAA 500,000 640,603
5 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Ratings: Moody's/ Face Market Value
S&P's/Fitch's Amount See Note 1
Statement of Investments (Unaudited) (Continued)
California (continued)
Riverside County, California Community Facilities
District Bonds, Special Tax Number 88-12, 7.55%, 9/1/17 NR/NR $1,500,000 $1,623,001
Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds:
Series D, MBIA Insured, 5.25%, 11/15/20 Aaa/AAA/A- 2,000,000 1,968,730
FGIC Insured, 9.875%, 8/15/18(1) Aaa/AAA/AAA 1,500,000 1,724,640
San Diego County, California Water Authority Water
Revenue Certificates of Participation, Series B,
MBIA Insured, 9.78%, 4/8/21(1) Aaa/AAA 1,000,000 1,164,122
San Francisco, California Bay Area Rapid Transit
District Revenue Refunding Bonds,
AMBAC Insured, 6.75%, 7/1/11 Aaa/AAA 1,000,000 1,180,517
San Francisco, California City and County Airport
Commission International Airport Revenue Refunding
Bonds, Second Series, Issue I, AMBAC Insured,
6.30%, 5/1/11 Aaa/AAA 1,000,000 1,092,272
San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue Bonds, Sr. Lien,
6.75%, 1/1/32 NR/NR/BBB 3,500,000 3,612,433
Southern California Home Financing Authority Single
Family Mortgage Revenue Bonds, GNMA and FNMA
Mortgage-Backed Securities, Series A, 7.35%, 9/1/24 NR/AAA 330,000 349,106
Southern California Public Power Authority Revenue
Refunding Bonds:
Southern Transmission Project, AMBAC Insured,
Prerefunded, 8.75%, 7/1/13 Aaa/AAA 200,000 214,838
8.897%, 7/1/12(1) Aa/AA- 2,500,000 2,804,885
University of California Revenue Refunding Bonds,
Multiple Purpose Project, Series A, 6.875%, 9/1/16 A/A- 1,000,000 1,124,311
Victorville, California Special Tax Bonds, Community
Facilities District No. 90-1 (Western Addition),
Series A, 8.30%, 9/1/16 NR/NR 450,000 489,394
West Basin, California Municipal Water District
Certificates of Participation, AMBAC Insured,
Prerefunded, 6.85%, 8/1/16 Aaa/AAA 1,000,000 1,166,307
74,096,039
U.S. Possessions--11.9%
Puerto Rico Commonwealth Highway Authority
Revenue Bonds, Series P, 8.125%, 7/1/13 Aaa/AAA 2,000,000 2,384,388
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds:
Series A, Prerefunded, 7.75%, 7/1/17 UR/AAA 1,000,000 1,193,378
Prerefunded, 7.25%, 7/1/12 Baa/A 1,430,000 1,625,451
YCNS, MBIA Insured, 8.784%, 7/1/08(1) Aaa/AAA 1,500,000 1,665,702
Puerto Rico Housing Finance Corp. Single Family
Mortgage Revenue Bonds, Portfolio 1, Series B,
7.65%, 10/15/22 Aaa/AAA 480,000 507,363
6 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Ratings: Moody's/ Face Market Value
S&P's/Fitch's Amount See Note 1
U.S. Possessions
(continued)
Puerto Rico Public Buildings Authority Guaranteed
Public Education and Health Facilities Revenue Bonds,
Series H, Prerefunded, 7.875%, 7/1/07 Aaa/AAA $2,500,000 $ 2,888,654
10,264,936
Total Municipal Bonds and Notes (Cost $79,015,637) 84,360,975
Short-Term Tax-Exempt Obligations--2.3%
California Health Facilities Financing Authority Revenue
Bonds, Pooled Loan Program, Series B, 2.65%(2) 500,000 500,000
Los Angeles, California Multifamily Housing Revenue
Bonds, Series K, 2.65%(2) 1,500,000 1,500,000
Total Short-Term Tax-Exempt Obligations (Cost $2,000,000) 2,000,000
Total Investments, at Value (Cost $81,015,637) 99.9% 86,360,975
Other Assets Net of Liabilities .1 123,430
Net Assets 100.0% $86,484,405
<FN>
1. Represents the current interest rate for a variable rate security.
2. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on
December 31, 1993. A demand feature allows the recovery of principal at any
time, or at specified intervals not exceeding one year, on up to 30 days'
notice.
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Statement of Assets and Liabilities
December 31, 1993 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments, at value (cost $81,015,637)--see accompanying statement $86,360,975
Cash 74,706
Receivables:
Interest 1,651,127
Shares of capital stock sold 136,728
Deferred organization costs 2,080
Other 6,796
Total assets 88,232,412
Liabilities
Payables and other liabilities:
Investments purchased 1,209,722
Dividends 285,784
Shares of capital stock redeemed 240,098
Distribution assistance--Note 4 96
Other 12,307
Total liabilities 1,748,007
Net Assets $86,484,405
Composition of
Net Assets
Par value of shares of capital stock $ 67,225
Additional paid-in capital 81,345,053
Overdistributed net investment income (77,065)
Distributions in excess of net realized gain from investment transactions (196,146)
Net unrealized appreciation on investments--Note 3 5,345,338
Net assets $86,484,405
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$86,143,106 and 6,695,926 shares of capital stock outstanding) $ 12.87
Maximum offering price per share
(net asset value plus sales charge of 4.75% of offering price) $ 13.51
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $341,299 and 26,549 shares of capital stock outstanding) $ 12.86
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Statement of Operations
For the Six Months Ended December 31, 1993 (Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest $2,615,112
Expenses
Management fees--Note 4 152,870
Transfer and shareholder servicing agent fees--Note 4 25,367
Shareholder reports 15,123
Legal and auditing fees 7,416
Registration and filing fees:
Class A 5,761
Class B 78
Custodian fees and expenses 939
Directors' fees and expenses 710
Organization costs 707
Distribution assistance:
Class B--Note 4 330
Other 1,412
Total expenses 210,713
Net Investment Income 2,404,399
Realized and Unrealized
Gain (Loss) on Investments
Net realized loss on investments (161,032)
Net change in unrealized appreciation on investments:
Beginning of period 3,699,858
End of period--Note 3 5,345,338
Net change 1,645,480
Net realized and unrealized gain on investments 1,484,448
Net Increase in Net Assets Resulting From Operations $3,888,847
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1993 June 30,
(Unaudited) 1993
<S> <C> <C>
Operations
Net investment income $ 2,404,399 $ 3,542,119
Net realized gain (loss) on investments (161,032) 175,417
Net change in unrealized appreciation or depreciation
on investments 1,645,480 2,790,047
Net increase in net assets resulting from operations 3,888,847 6,507,583
Dividends and
Distributions to
Shareholders
Dividends from net investment income:
Class A ($.391 and $.81 per share, respectively) (2,436,792) (3,585,299)
Class B ($.089 per share) (1,492) --
Distributions from net realized gain on investments:
Class A ($.028 and $.02 per share, respectively) (186,963) (78,238)
Class B ($.028 per share) (599) --
Capital Stock
Transactions
Net increase in net assets resulting from Class A capital stock
transactions--Note 2 12,495,870 29,488,371
Net increase in net assets resulting from Class B capital stock
transactions--Note 2 338,504 --
Net Assets
Total increase 14,097,375 32,332,417
Beginning of period 72,387,030 40,054,613
End of period (including overdistributed net investment income of
$77,065 and $43,180, respectively) $86,484,405 $72,387,030
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
Six Months Ended Year Ended Period Ended
Dec. 31, 1993 June 30, Dec. 31, 1993(1)
(Unaudited) 1993 1992 1991 1990(2) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $ 12.66 $ 12.05 $ 11.61 $ 11.56 $11.43 $12.92
Income from investment operations:
Net investment income .39 .80 .82 .83(3) .06(3) .09
Net realized and unrealized gain
(loss) on investments .24 .64 .45 .05 .13 (.03)
Total income from
investment operations .63 1.44 1.27 .88 .19 .06
Dividends and distributions to shareholders:
Dividends from
net investment income (.39) (.81) (.82) (.83) (.06) (.09)
Distributions from net realized
gain on investments (.03) (.02) (.01) -- -- (.03)
Total dividends and distributions
to shareholders (.42) (.83) (.83) (.83) (.06) (.12)
Net asset value, end of period $ 12.87 $ 12.66 $ 12.05 $ 11.61 $11.56 $12.86
Total Return, at Net Asset Value(4) 5.03% 12.53% 11.21% 7.94% 1.95% .60%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $86,143 $72,387 $40,055 $13,924 $2,027 $ 341
Average net assets
(in thousands) $80,576 $54,840 $26,304 $ 6,661 $1,685 $ 225
Number of shares outstanding
at end of period (in thousands) 6,696 5,719 3,324 1,199 175 27
Ratios to average net assets:
Net investment income 5.92%(5) 6.46% 6.74% 6.94% 5.48%(5) 4.16%(5)
Expenses .52%(5) .39% .32% .33%(3) .20%(3)(5) 1.56%(5)
Portfolio turnover rate(6) 6.0% 5.8% 25.7% 14.6% 0.0% 6.0%
<FN>
1. For the period from October 29, 1993 (inception of offering) to December 31, 1993.
2. For the period from May 18, 1990 (commencement of operations) to June 30, 1990.
3. Net investment income would have been $.82 and $.04 per share in 1991 and 1990 absent the voluntary expense
assumption, resulting in an expense ratio of .42% and 1.93%, respectively.
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.
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 six months ended December 31, 1993 were $15,902,992 and
$4,562,028, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies
Oppenheimer Main Street California Tax-Exempt Fund (the Fund), formerly named
Main Street Funds, Inc.- California Tax-Exempt Fund, is a separate series of
Oppenheimer Main Street Funds, Inc., an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Fund's investment advisor is Oppenheimer Management Corporation (the
Manager). The Fund offers both Class A and Class B shares. Class A shares are
sold with a front-end sales charge. Class B shares may be subject to a
contingent deferred sales charge. Both classes of shares have identical
rights to earnings, assets and voting privileges, except that each class has
its own expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. In addition,
Class B shares have their own distribution plan and will automatically
convert to Class A shares six years after the date of purchase. The following
is a summary of significant accounting policies consistently followed by the
Fund.
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York
time) on each trading day. Long-term debt securities are valued by a
portfolio pricing service approved by the Board of Directors. Long-term debt
securities which cannot be valued by the approved portfolio pricing service
are valued by averaging the mean between the bid and asked prices obtained
from two active market makers in such securities. Short-term debt securities
having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium
or discount. Securities for which market quotes are not readily available are
valued under procedures established by the Board of Directors to determine
fair value in good faith.
Allocation of Income, Expenses and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
Federal Income Taxes. The Fund intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required.
Organization Costs. The Manager advanced $16,719 for organization and
start-up costs of the Fund. Such expenses are being amortized over a five-year
period from the date operations commenced. In the event that all or part of
the Manager's initial investment in shares of the Fund is withdrawn during
the amortization period, the redemption proceeds will be reduced to reimburse
the Fund for any unamortized expenses, in the same ratio as the number of
shares redeemed bears to the number of initial shares outstanding at the time
of such redemption.
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A and Class B shares from net investment income each
regular business day and pay such dividends monthly. Distributions from net
realized gains on investments, if any, will be declared at least once each
year.
Other. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
12 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
2. Capital Stock
The Fund has authorized 26,250,000 shares of $.01 par value capital stock of
each class. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended December 31, 1993(1) Year Ended June 30, 1993
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 1,239,250 $15,173,939 2,642,454 $32,529,648
Dividends and distributions reinvested 84,974 1,770,391 201,620 2,481,021
Redeemed (347,434) (4,448,460) (449,110) (5,522,298)
Net increase 976,790 $12,495,870 2,394,964 $29,488,371
Class B:
Sold 26,466 $ 337,434 -- $ --
Dividends and distributions reinvested 83 1,070 -- --
Net increase 26,549 $ 338,504 -- $ --
<FN>
1. For the six months ended December 31, 1993 for Class A shares and for the
period from October 29, 1993 (inception of offering) to December 31, 1993 for
Class B shares.
</TABLE>
3. Unrealized Gains and Losses on Investments
At December 31, 1993, net unrealized appreciation on investments of
$5,345,338 was composed of gross appreciation of $5,380,141, and gross
depreciation of $34,803.
4. Management Fees And Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of .55% on
net assets, with a contractual waiver when net assets are less than $100
million. Annual fees, reflecting this waiver, are .40% on net assets of $75
million or more but less than $100 million, .25% of net assets of $50 million
or more but less than $75 million, .15% of net assets of $25 million or more
but less than $50 million, and 0% on net assets less than $25 million.
The Manager has agreed to assume Fund expenses (with specified exceptions) in
excess of the regulatory limitation of the State of California.
For the six months ended December 31, 1993, commissions (sales charges paid
by investors) on sales of Class A shares totaled $505,899, of which $81,064
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of
the Manager, as general distributor.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under an approved plan of distribution, the Fund may expend up to .25% of its
Class B net assets annually to reimburse OFDI for costs incurred in
distributing Class B shares of the Fund, including amounts paid to brokers,
dealers, banks and other institutions. In addition, Class B shares are
subject to an asset-based sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own resources at the time
of sale and associated financing costs. In the event of termination or
discontinuance of the Class B plan of distribution, the Fund would be
contractually obligated to pay OFDI for any expenses not previously
reimbursed or recovered through contingent deferred sales charges. During the
six months ended December 31, 1993, OFDI retained $330 as reimbursement for
Class B distribution-related expenses and sales commissions.
13 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
Oppenheimer Main Street California Tax-Exempt Fund
A Series of Oppenheimer Main Street Funds, Inc.
Officers and Directors James C. Swain, Chairman and Chief Executive
Officer
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director and President
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
Andrew J. Donohue, Vice President
Robert E. Patterson, Vice President
George C. Bowen, Vice President, Secretary and
Treasurer
Lynn M. Coluccy, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor Oppenheimer Management Corporation
Distributor Oppenheimer Funds Distributor, Inc.
Transfer and Shareholder Oppenheimer Shareholder Services
Servicing Agent
Custodian of The Bank of New York
Portfolio Securities
Independent Auditors Deloitte & Touche
Legal Counsel Myer, Swanson & Adams, P.C.
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 Main Street
California Tax-Exempt Fund. This report must be preceded or accompanied by a
Prospectus of Oppenheimer Main Street California Tax-Exempt Fund. For
material information concerning the Fund, see the Prospectus.
14 Oppenheimer Main Street California Tax-Exempt Fund.
<PAGE>
The Family of OppenheimerFunds
OppenheimerFunds offers over 30 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 30 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 1.7 million shareholder accounts and more
than $25 billion under Oppenheimer's management and that of our affiliates.
As an OppenheimerFunds shareholder, you can easily exchange shares of
eligible funds of the same class by mail or by telephone for a small
administrative fee.(1) For more information on OppenheimerFunds, 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.
<TABLE>
<S> <C> <C>
Specialty Stock Funds Global Bio-Tech Fund Gold & Special Minerals Fund
Global Environment Fund
Stock Funds Discovery Fund Global Fund
Time Fund Oppenheimer Fund
Target Fund Value Stock Fund
Special Fund
Stock and Bond Funds Main Street Income & Growth Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
Bond Funds High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund Investment Grade Bond Fund
Strategic Income & Growth Fund Mortgage Income Fund(3)
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Fund Government Securities Fund
Strategic Investment Grade Bond Fund
Tax-Exempt Funds New York Tax-Exempt Fund(2) Tax-Free Bond Fund
Main Street California Tax-Exempt Fund(2) Insured Tax-Exempt Bond Fund
Pennsylvania Tax-Exempt Fund(2) Intermediate Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(2)
Money Market Funds Money Market Fund Tax-Exempt Cash Reserves
Cash Reserves
<FN>
1. The fee is waived for PhoneLink exchanges between existing accounts. Exchange privileges are subject to change or termination.
2. Available only to residents of those states.
3. Formerly GNMA Fund.
</TABLE>
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1994 Oppenheimer
Management Corporation. All rights reserved.
15 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
"How may I help you?"
General Information
1-800-525-7048
Talk to a Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m.
to 2:00 p.m. ET.
Telephone Transactions
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Make account transactions with a Customer Service Representative.
Monday through Friday from
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PhoneLink
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Get automated information or make automated transactions.
24 hours a day, 7 days a week.
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OppenheimerFunds Information Hotline
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Hear timely and insightful
messages on the economy and
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24 hours a day, 7 days a week.
"Just as OppenheimerFunds offers over 30 different funds designed to help meet
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we're only a toll-free phone call away.
"For personalized assistance and account information, call our General
Information number to speak with our knowledgeable Customer Service
Representatives.
"We also make it easy for you to redeem shares, exchange shares, or conduct
AccountLink transactions, simply by calling our Telephone Transactions number.
"And for added convenience, OppenheimerFunds' PhoneLink, an automated voice
response system, is available 24 hours a day, 7 days a week. PhoneLink gives you
access to variety of fund, account, and market information. You can even make
purchases, exchanges and redemptions using your touch-tone phone. Of course,
PhoneLink will always give you the option to speak with a Customer Service
Representative during regular business hours.
"When you invest in OppenheimerFunds, you know you'll receive a high level of
customer service. The International Customer Service Association knows it, too,
as it recently awarded Oppenheimer Shareholder Services a 1993 Award of
Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
Barbara Hennigar
President
Oppenheimer Shareholder Services
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