<PAGE> 1
OPPENHEIMER MAIN STREET CALIFORNIA TAX-EXEMPT FUND
Semiannual Report December 31, 1994
"We need
more income,
not more
taxes."
[FIGURE NUMBER 1]
Photo of couple hiking
[logo]
<PAGE> 2
This Fund is for people who want to earn INCOME that's EXEMPT from taxes.
HOW YOUR FUND IS MANAGED
Oppenheimer Main Street California Tax-Exempt Fund invests in a diversified
portfolio of investment grade California tax-free municipal bonds. As a Fund
shareholder, you receive income that is free from federal and state income
taxes.(1) Your dividends don't increase your taxable income the way taxable
investments do, so you can keep more of what you earn.
Your Fund invests in California investment grade municipal bonds and notes
rated within the four highest rating categories by Moody's, Standard & Poor's or
Fitch's.
In addition, Main Street California Tax-Exempt Fund is managed by an
experienced team of municipal bond specialists who research investments
thoroughly before they are included in the Fund's portfolio.
YIELD
STANDARDIZED YIELD
For the 30 Days Ended 12/31/94:(4)
Class A
5.90%
Class B
5.18%
PERFORMANCE
Total return at net asset value for the 6-month period ended 12/31/94 was -2.41%
for Class A shares and -2.85% for Class B shares.(2)
The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment.
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-year period ended 12/31/94 and since inception of the
Class on 5/18/90 were -12.03% and 5.35%, respectively. For Class B shares,
average annual total returns for the 1-year period ended 12/31/94 and since
incep-tion of the Class on 10/29/93 were -13.00% and -9.96%, respectively.(3)
OUTLOOK
"Our long-term outlook is very constructive.
The positives at work on the national level--low inflation, reduced municipal
bond supply and rising demand for tax-free securities driven by investors'
desire to ease their tax burden-- are, if anything, even stronger in California.
We believe this provides solid support for California municipal bond prices."
Robert Patterson, Portfolio Manager
December 31, 1994
1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.
2. Based on the change in net asset value per share from 6/30/94 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account. 3. Average annual total returns are based
on a hypothetical investment held until 12/31/94, after deducting the current
maximum initial sales charge of 4.75% for Class A shares. Total return for Class
B shares was based on a hypothetical investment held for that period, after
deducting the contingent deferred sales charge of 5% (1 year) and 4% (since
inception) for Class B shares. 4. Standardized yield is net investment income
calculated on a yield-to-maturity basis for the 30-day period ended 12/31/94,
divided by the maximum offering price at the end of the period, compounded
semi-annually and then annualized. Falling net asset values will tend to
artificially raise yields. All figures assume reinvestment of dividends and
capital gains distributions. Past performance is not indicative of future
results. Investment and principal value on an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost.
2 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 3
Dear OppenheimerFunds Shareholder,
The past year was marked by one of the greatest tests of the municipal bond
market in more than six decades. In 1994, the Federal Reserve undertook one of
the most aggressive inflation-fighting efforts in its history, raising interest
rates six times and driving bond prices down across the board. Then, in early
December as the market started to stabilize, Orange County, California,
defaulted on a $100 million bond issue, for reasons not related to the bonds
themselves, but rather to the aggressive use of derivatives (investments whose
value is derived from another security, currency, commodity or index) in
managing the county's portfolio. Although Orange County's problems didn't affect
OppenheimerFunds tax-free portfolios significantly, at year end, many investors
were left wondering what the future holds not only for interest rates, but for
the municipal market itself.
Looking at Orange County, there is no question that their problems have
added temporarily to the uncertainties surrounding the tax-free market. In the
near term, investors' heightened sense of caution may push new-issue prices
modestly lower and new-issue yields somewhat higher. In the longer term,
however, we expect developments in Orange County are likely to help rather than
hurt the market. The municipal bond market has always been one of the most
conservative places to invest, and with the increased attention paid to risks of
all types, we expect it to become less risky.
As for the Fed's actions to raise interest rates, changing interest rates
and fluctuating bond prices are facts of life affecting all bond markets, and
it's a bond market basic principle that when interest rates rise, bond prices
generally decline. That is why we believe the best measure for any fixed income
investment is its performance over the long term. And we believe the long-term
outlook for the municipal market is excellent, which is supported by several
considerations.
First, the Fed's attempt to fend off possible future inflation, while
temporarily disconcerting, is beginning to have its desired effect. The economy
is starting to slow, and although short-term rates may move up modestly from
their present levels, long-term interest rates should stabilize in their current
range. Long-term rates may even begin to decline as overblown concerns about
inflation abate.
Those concerns are, in fact, already fading. The inflation rate--as
measured by the Consumer Price Index--continues to run at less than 3% a year,
and there's nothing on the horizon to suggest to us that it will increase
substantially anytime soon. As a result, municipal bonds today offer some of the
highest real, inflation-adjusted returns we have seen in years. In addition,
while the economy is showing some signs of slowing, it is still growing at a
solid pace. As a result, the financial strength of many municipal issuers
continues to improve, again providing solid support for municipal bond prices.
Finally, the market's supply and demand characteristics are strong. The
supply of new municipal bonds currently is running some 40% below last year's
pace, while we expect demand for tax-free bonds is likely to increase
substantially over the next few months, helped by more stable bond markets and
rising investor demand to ease their tax burdens.
Together, these factors suggest to us that 1995 will be rewarding for
municipal investors. Your portfolio manager discusses the outlook for your Fund
on the following pages. We appreciate your confidence and we look forward to
continue helping you reach your investment goals.
[FIGURE NUMBER 2]
Photo of James C. Swain
James C. Swain
Chairman
Oppenheimer
Main Street California
Tax-Exempt Fund
[FIGURE NUMBER 3]
Photo of Jon S. Fossel
Jon S. Fossel
President
Oppenheimer
Main Street California
Tax-Exempt Fund
James C. Swain Jon S. Fossel
______________ _____________
James C. Swain Jon S. Fossel
January 23, 1995
3 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 4
Q + A
[FIGURE NUMBER 4]
Photo of Robert Patterson
[FIGURE NUMBER 5]
Photo of person at trading desk
An interview with your Fund's manager.
A LOT HAPPENED IN THE CALIFORNIA MUNICIPAL MARKET OVER THE PAST YEAR. WHAT WERE
THE MOST IMPORTANT FACTORS AFFECTING THE FUND'S PERFORMANCE?
Many factors combined to make 1994 one of the most challenging years tax-free
investors have seen in decades, but one stands out: the Federal Reserve's
efforts to fend off inflation, which drove interest rates up and bond prices
down. The Fed's actions affected virtually all bond funds, and this Fund was no
exception.
[FIGURE NUMBER 6]
Photo of Len Darling and Jon Fossel
DID THOSE DEVELOPMENTS CAUSE YOU TO CHANGE YOUR INVESTMENT STRATEGY?
To provide an attractive level of tax-free income, our investment strategy
remains the same--to keep the Fund's duration, a technical measure of a bond
portfolio's sensitivity to interest rate changes, slightly longer than those of
many other funds. As a result, the Fund's net asset value declined more than
some other funds, but we delivered an attractive level of tax-free income.
Over time, we expect this longer duration should benefit shareholders, as
investors rec-ognize the fundamental positive--low inflation, reduced supply and
increasing demand, and improving issuer credit quality--at work in the
California municipal market today.
Of course, as interest rates rose, we made some adjustments to the
portfolio within this strategy to position the portfolio more defensively.
WHAT PORTFOLIO ADJUSTMENTS DID YOU MAKE?
We reduced the Fund's average maturity somewhat, focusing on bonds in the 15- to
20-year maturity range. All other things being equal, the shorter a bond's
maturity, the less sensitive it is to changing interest rates. We also reduced
our exposure to municipal utility issues, whose prices are extremely sensitive
to changing interest rates. And we focused more attention on insured and
Q Did the Orange County bankruptcy have an IMPACT on the Fund?
4 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 5
prerefunded issues, which make up a significant portion of the portfolio today.
WHAT ARE PREREFUNDED BONDS AND WHAT MAKES THEM SO ATTRACTIVE?
Prerefunded bonds are municipal bonds that, as their name implies, have been
refinanced by the issuer ahead of their scheduled call or maturity dates by
bonds with a lower interest rate. What makes prerefunded bonds so attractive is
their income streams and credit quality.
When a bond is refunded in advance of what would other-wise be its
"normal" retirement date, part of the proceeds of the new issue are used to buy
U.S. Treasury securities sufficient to pay off the holders of the original bond
issue in full.
These government securities are placed in an escrow account, and the
refunded issue automatically has the same low risk of default as a triple-A
rated security. As a result, we earn above-market yields on prerefunded issues
until they are retired, and benefit from the highest credit quality.
WHAT OTHER KINDS OF BONDS ARE YOU FOCUSING ON TODAY?
We're continuing to find good values
in the California housing sector as well and in transportation issues.(1)
SOME ANALYSTS ARE PREDICTING THAT A RECORD AMOUNT OF MUNICIPAL BONDS WILL BE
CALLED IN 1995. HOW ARE YOU MANAGING CALLS?
Bond calls, which allow issuers to redeem bonds before their scheduled maturity
and replace them with lower-yielding issues--are a fact of life in the municipal
market. Because interest rates are currently much lower than they were in the
mid-1980s when many of the municipal bonds outstanding today were issued, it's
fully possible that some of the bonds in the Fund's portfolio will be called.
We manage that by staying on top of the portfolio at all times, trying to
anticipate calls and seeking to buy bonds that offer both attractive yields and
significant call protection. Virtually no municipal bond fund can avoid calls
entirely. The key is to take a forward-looking view and manage them
intelligently.
DID THE ORANGE COUNTY BANKRUPTCY HAVE AN IMPACT ON THE FUND?
While our portfolio held several securities of issuers who invested in
the County managed investment pool, our exposure was very limited. Because we
only had four indirect holdings, two of which were fully insured, the impact was
negligible.
WHAT'S YOUR OUTLOOK FOR THE CALIFORNIA MARKET GOING FORWARD?
Our long-term outlook is very constructive. The posi-tives at work on the
national level--low inflation, reduced municipal bond supply, and rising demand
for tax-free securities driven by rising tax burdens--are, if anything, even
stronger here.
[FIGURE NUMBER 7]
Photo of Robert Patterson
Although the California economy faces its share of challenges, it remains
the nation's largest state economy and its single largest issuer of municipal
securities. We believe mounting demand should provide solid support for
California municipal bond prices. []
FACING PAGE
Top left: Robert Patterson,
Portfolio Manager
Top right: The trading desk
Bottom: Len Darling, Executive VP, Director of Fixed Income Investments, with
Jon Fossel, CEOand Chairman, Oppenheimer Management Corporation
THIS PAGE
Robert Patterson
A Because we only had four indirect holdings, two of which were fully insured,
the impact was negligible.
1. The Fund's portfolio is subject to change.
5 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 6
STATEMENT OF INVESTMENTS December 31, 1994 (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--97.7%
CALIFORNIA--85.1% Alameda County, California Certificates of
Participation, Prerefunded, BIG Insured, 7.25%, 6/1/09 Aaa/AAA $1,635,000 $1,785,022
Anaheim, California Public Financing Authority
Tax Allocation Revenue Bonds, MBIA Insured,
8.37%, 12/28/18(1) Aaa/AAA 1,000,000 908,441
California Educational Facilities Authority Revenue
Bonds, Santa Clara University Project, 6.25%, 2/1/16 A1/NR 1,000,000 910,739
California Health Facilities Financing Authority
Revenue Bonds, Episcopal Homes Project,
Series A, OSHPD Insured, 7.80%, 7/1/15 NR/A 1,000,000 1,047,599
California Health Facilities Financing Authority
Revenue Refunding Bonds, Catholic Health Facilities,
Series A, MBIA Insured, 5%, 7/1/11 Aaa/AAA 2,500,000 2,079,457
California Housing Finance Agency Revenue Bonds,
Home Mtg., Series C, 6.75%, 2/1/25 Aa/AA-- 5,000,000 4,777,335
California Pollution Control Financing Authority
Revenue Bonds, Pacific Gas and Electric Co.,
Series B, 6.35%, 6/1/09 A1/A 2,000,000 1,867,544
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 1,653,282
California State General Obligation Bonds,
FSA Insured, 5.50%, 4/1/19 Aaa/AAA/A 2,500,000 2,103,207
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 2,624,625
Capistrano, California University School District
Community Facilities Special Tax Bonds,
No. 87-1, 7.60%, 9/1/14 NR/NR 1,000,000 946,367
Contra Costa, California Water District
Revenue Bonds, Prerefunded, Series A, 6.875%, 10/1/20 A/A+ 1,100,000 1,180,971
Contra Costa, California Water District Revenue Bonds,
Series E, AMBAC Insured, 5.75%, 10/1/18 Aaa/AAA/AAA 1,200,000 1,052,411
Corona, California Certificates of Participation,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 2,250,000 2,852,005
East Bay, California Municipal Utility
District Water System Revenue Bonds, Prerefunded,
AMBAC Insured, 6.375%, 6/1/21 Aaa/AAA/AAA 1,000,000 1,046,098
Los Angeles County, California Transportation
Revenue Bonds, Commission Sales Tax,
Prerefunded, Series A, FGIC Insured, 6.75%, 7/1/18 Aaa/AAA/AAA 1,000,000 1,065,767
Los Angeles, California Community Redevelopment
Agency Finance Revenue Bonds, Grand Central
Qualified Redevelopment, Series A, 5.90%, 12/1/13 A/A 1,000,000 858,455
Los Angeles, California Department of Water
& Power Electric Plant Revenue Bonds,
Second Issue 1991, 6%, 6/1/12 Aa/AA 500,000 461,889
</TABLE>
6 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
---------------- ------- ------------
<S> <C> <C> <C>
CALIFORNIA Los Angeles, California Wastewater System Revenue
(CONTINUED) Refunding Bonds, Series D, FGIC Insured, 8.70%, 11/1/03 Aaa/AAA/AAA $5,115,000 $6,046,968
Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project, 5%, 7/1/20 Aa/AA 2,500,000 1,921,385
Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project,
6.557%, 10/30/20(1) Aa/AA 1,500,000 1,029,838
Orange County, California Community Facilities
District No. 87-3 Special Tax Bonds, Mission Viejo,
Prerefunded, Series A, 8.05%, 8/15/08 A/NR 1,480,000 1,627,193
Orange County, California Community Facilities
District Special Tax Bonds, No. 88-1 Aliso Viejo,
Prerefunded, Series A, 7.35%, 8/15/18 NR/AAA 2,000,000 2,204,102
Pittsburg, California Improvement Bond Act of 1915
Bonds, Assessment District 1990-01, 7.75%, 9/2/20 NR/NR 95,000 93,735
Rancho, California Water District Financing
Authority Revenue Refunding Bonds,
AMBAC Insured, 5%, 8/15/14 Aaa/AAA/AAA 1,500,000 1,209,709
Redding, California Electric System Revenue
Certificates of Participation, FGIC Insured,
6.279%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 837,308
Redding, California Electric System Revenue
Certificates of Participation, MBIA Insured,
8.264%, 7/8/22(1) Aaa/AAA 500,000 455,679
Riverside County, California Community Facilities
District Bonds, Special Tax No. 88-12, 7.55%, 9/1/17 NR/NR 1,500,000 1,434,147
Sacramento, California Municipal Utility
District Electric Revenue Refunding Bonds,
Series B, FGIC Insured, 7.247%, 8/15/18(1) Aaa/AAA/AAA 1,500,000 1,313,094
Sacramento, California Municipal Utility
District Electric Revenue Refunding Bonds,
Series D, MBIA Insured, 5.25%, 11/15/20 Aaa/AAA/A-- 2,000,000 1,616,504
San Bernardino County,
California Certificates of Participation,
Medical Center Financing Project, 5.50%, 8/1/17 Baa1/A-- 2,500,000 1,982,295
San Diego County, California Water Authority
Revenue Certificates of Participation,
Series B, MBIA Insured, 8.22%, 4/8/21(1) Aaa/AAA 1,000,000 880,989
San Francisco, California Bay Area Rapid Transit
District Revenue Refunding Bonds,
AMBAC Insured, 6.75%, 7/1/11 Aaa/AAA/AAA 1,000,000 1,016,957
San Joaquin Hills, California Transportation Corridor
Agency Toll Road Revenue Bonds,
Sr. Lien, 6.75%, 1/1/32 NR/NR/BBB 3,500,000 2,878,596
South Orange County, California Public Financing
Authority Special Tax Revenue Bonds, Sr. Lien,
Series A, MBIA Insured, 6.20%, 9/1/13 Aaa/AAA/NR 1,000,000 927,024
Southern California Home Financing Authority Single
Family Mtg. Revenue Bonds, GNMA and FNMA
Mtg.-Backed Securities, Series A, 7.35%, 9/1/24 NR/AAA 285,000 287,390
</TABLE>
7 Oppenheimer Main Street California Tax-Exempt 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>
CALIFORNIA Southern California Public Power Authority
(CONTINUED) Revenue Refunding Bonds, 8.012%, 7/1/12(1) Aa/AA-- $ 2,500,000 $ 2,097,060
University of California Revenue Bonds,
Multiple Purpose Projects, Prerefunded,
Series A, 6.875%, 9/1/16 NR/A-- 1,000,000 1,075,056
Victorville, California Special Tax Bonds,
Community Facilities District No. 90-1
(Western Addition), Series A, 8.30%, 9/1/16 NR/NR 450,000 403,302
West Basin, California Municipal Water District
Certificates of Participation, Prerefunded,
AMBAC Insured, 6.85%, 8/1/16 Aaa/AAA/AAA 1,000,000 1,069,401
-----------
61,628,946
U.S. POSSESSIONS Puerto Rico Commonwealth Highway Authority
- --12.6%
Revenue Bonds, Prerefunded, Series P, 8.125%, 7/1/13 Aaa/AAA 2,000,000 2,207,404
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, Prerefunded, 7.25%, 7/1/12 NR/AAA 1,430,000 1,522,425
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds,
Prerefunded, Series A, 7.75%, 7/1/17 NR/AAA 1,000,000 1,102,100
Puerto Rico Commonwealth Public Improvement
General Obligation Bonds, YCNS,
MBIA Insured, 7.384%, 7/1/08(1) Aaa/AAA 1,500,000 1,259,163
Puerto Rico Housing Finance Corp. Single Family
Mtg. Revenue Bonds, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 355,000 365,681
Puerto Rico Public Buildings Authority Guaranteed
Public Education and Health Facilities
Revenue Bonds, Prerefunded, Series H, 7.875%, 7/1/07 Aaa/AAA 2,500,000 2,695,062
-----------
9,151,835
-----------
Total Municipal Bonds and Notes (Cost $77,236,592) 70,780,781
</TABLE>
<TABLE>
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--0.8%
California Health Facilities Financing Authority
Revenue Bonds, Kaiser Permanente, Series B, 5.30%
(Cost $600,000)(2) 600,000 600,000
TOTAL INVESTMENTS, AT VALUE (COST $77,836,592) 98.5% 71,380,781
OTHER ASSETS NET OF LIABILITIES 1.5 1,077,297
---------- -----------
NET ASSETS
100.0% $72,458,078
========== ===========
</TABLE>
1. Represents the current interest rate for a variable
rate bond. Variable rate bonds known as "inverse
floaters" pay interest at a rate that varies inversely
with short-term interest rates. As interest rates rise,
inverse floaters produce less current income. Their price
may be more volatile than the price of a comparable
fixed-rate security.
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, 1994. A demand feature allows the
recovery of principal at any time, or at specified
intervals not exceeding one year, on up to 30 days'
notice.
See accompanying Notes to Financial Statements.
8 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
ASSETS Investments, at value (cost $77,836,592)--see accompanying statement $ 71,380,781
Cash 153,421
Receivables:
Interest 1,617,806
Shares of capital stock sold 7,703
Deferred organization costs 672
Other 15,151
------------
Total assets 73,175,534
LIABILITIES Payables and other liabilities:
Shares of capital stock redeemed 492,818
Dividends 220,225
Distribution and service plan fees--Note 4 1,061
Other 3,352
-----------
Total liabilities 717,456
NET ASSETS $ 72,458,078
============
COMPOSITION OF Par value of shares of capital stock 64,875
NET ASSETS Additional paid-in capital 78,948,985
Undistributed (overdistributed) net investment income (59,775)
Accumulated net realized gain (loss) from investment transactions (40,196)
Net unrealized appreciation (depreciation) on investments--Note 3 (6,455,811)
------------
Net assets $ 72,458,078
============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on
net assets of $70,710,745 and
6,330,924 shares of capital
stock outstanding) $ 11.17
Maximum offering price per
share (net asset value plus
sales charge of 4.75% of
offering price) $ 11.73
Class B Shares:
Net asset value, redemption
price and offering price per
share (based on net assets of
$1,747,333 and 156,579 shares
of capital stock outstanding) $ 11.16
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 9
STATEMENT OF OPERATIONS For the Six Months Ended
December 31, 1994 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME Interest $2,735,733
EXPENSES Management fees--Note 4 156,847
Distribution and service plan fees: Class B--Note 4 6,774
Transfer and shareholder servicing agent fees--Note 4 33,891
Shareholder reports 12,537
Insurance expenses 4,387
Legal and auditing fees 3,517
Custodian fees and expenses 1,776
Directors' fees and expenses 1,390
Registration and filing fees:
Class A 1,033
Class B 227
Other 8,420
---------
Total expenses 230,799
NET INVESTMENT INCOME (LOSS) 2,504,934
REALIZED AND Net realized gain (loss) on investments (21,846)
UNREALIZED
GAIN (LOSS) ON Net change in unrealized appreciation or depreciation on investments (4,413,616)
INVESTMENTS -----------
Net realized and unrealized gain (loss) on investments (4,435,462)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(1,930,528)
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 10
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1994 YEAR ENDED
(UNAUDITED) JUNE 30, 1994
----------------- -------------
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 2,504,934 $ 4,995,312
Net realized gain (loss) on investments (21,846) (102,647)
Net change in unrealized appreciation or depreciation on investments (4,413,616) (5,742,053)
------------- ------------
Net increase (decrease) in net assets resulting from operations (1,930,528) (849,388)
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.373 and $.729 per share, respectively) (2,427,894) (4,729,265)
SHAREHOLDERS Class B ($.32 and $.37 per share, respectively) (41,047) (19,459)
Dividends in excess of net investment income:
Class A ($.028 per share) -- (179,070)
Class B ($.014 per share) -- (737)
Distributions in excess of gain on investments:
Class A ($.028 per share) -- (186,921)
Class B ($.028 per share) -- (599)
Capital Stock
Transactions
Net increase (decrease) in net assets resulting from
Class A capital stock transactions--Note 2 (4,537,419) 13,070,898
Net increase (decrease) in net assets resulting from
Class B capital stock transactions--Note 2 637,603 1,264,874
NET ASSETS Total increase (decrease) (8,299,285) 8,370,333
Beginning of period 80,757,363 72,387,030
End of period (including overdistributed net investment income
of $59,775 and $95,768, respectively) $ 72,458,078 $ 80,757,363
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 11
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------
SIX MONTHS ENDED
DEC. 31, 1994 YEAR ENDED JUNE 30,
(UNAUDITED) 1994 1993 1992
----------------- ---- ---- ----
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.82 $12.66 $12.05 $11.61
Income (loss) from investment operations:
Net investment income .37 .75 .80 .82
Net realized and unrealized
gain (loss) on investments (.65) (.80) .64 .45
------ ------ ------ ------
Total income (loss)
from investment operations (.28) (.05) 1.44 1.27
Dividends and distributions to shareholders:
Dividends from net
investment income (.37) (.73) (.81) (.82)
Dividends in excess of net
investment income -- (.03) -- --
Distributions from net realized
gain on investments -- -- (.02) (.01)
Distributions in excess of net
realized gain on investments -- (.03) -- --
------ ------ ------ ------
Total dividends and
distributions to shareholders (.37) (.79) (.83) (.83)
Net asset value, end of period $11.17 $11.82 $12.66 $12.05
====== ====== ====== ======
TOTAL RETURN, AT NET ASSET VALUE(4) (2.41)% (.60)% 12.53% 11.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $70,711 $79,555 $72,387 $40,055
Average net assets (in thousands) $76,182 $81,741 $54,840 $26,304
Number of shares outstanding
at end of period (in thousands) 6,331 6,732 5,719 3,324
Ratios to average net assets:
Net investment income 6.41%(5) 6.09% 6.46% 6.74%
Expenses, before assumption
by the Manager .57%(5) .53% .39% .32%
Portfolio turnover rate(6) 1.5% 20.2% 5.8% 25.7%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------- -------------------------
SIX MONTHS PERIOD
ENDED ENDED
DEC. 31, 1994 JUNE 30,
1991 1990(2) (UNAUDITED) 1994(1)
---- ------ ------------- ------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.56 $11.43 $11.80 $12.90
Income (loss) from investment operations:
Net investment income .83(3) .06(3) .32 .38
Net realized and unrealized
gain (loss) on investments .05 .13 (.65) (1.07)
----- ------ ------ ------
Total income (loss)
from investment operations .88 .19 (.33) (.69)
Dividends and distributions to shareholders:
Dividends from net
investment income (.83) (.06) (.31) (.37)
Dividends in excess of net
investment income -- -- -- (.01)
Distributions from net realized
gain on investments -- -- -- --
Distributions in excess of net
realized gain on investments -- -- -- (.03)
----- ------ ------ ------
Total dividends and
distributions to shareholders (.83) (.06) (.31) (.41)
Net asset value, end of period $11.61 $11.56 $11.16 $11.80
====== ====== ===== ======
TOTAL RETURN, AT NET ASSET VALUE(4) 7.94% 1.95% (2.85)% (5.42)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $13,924 $2,027 $1,747 $1,203
Average net assets (in thousands) $6,661 $1,685 $1,551 $649
Number of shares outstanding
at end of period (in thousands) 1,199 175 157 102
Ratios to average net assets:
Net investment income 6.94% 5.48%(5) 5.46%(5) 4.91%(5)
Expenses, before assumption
by the Manager .33%(3) .20%(3)(5) 1.46%(5) 1.62%(5)
Portfolio turnover rate(6) 14.6% 0.0% 1.5% 20.2%
</TABLE>
1. For the period from October 29, 1993 (inception of
offering) to June 30, 1994.
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, 1994 were
$1,118,592 and $5,135,776, respectively.
See accompanying Notes to Financial Statements.
12 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 12
Notes to Financial Statements (Unaudited)
1. SIGNIFICANT Oppenheimer Main Street California Tax-Exempt Fund (the
ACCOUNTING POLICIES 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. Listed and
unlisted securities for which such information is
regularly reported are valued at the last sale price of
the day or, in the absence of sales, at values based on
the closing bid or asked price or the last sale price on
the prior trading day. Long-term debt securities are
valued by a portfolio pricing service approved by the
Board of Directors. Long-term debt securities which
cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering
the quotes is reliable and that the quotes reflect
current market value, or under consistently applied
procedures established by the Board of Directors to
determine fair value in good faith. Short-term debt
securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or
discount.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily
to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
FEDERAL INCOME TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any net
realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income
tax provision is required.
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 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.
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS TO
SHAREHOLDERS. Net investment income (loss) and net
realized gain (loss) may differ for financial statement
and tax purposes primarily because of premium
amortization. The character of the distributions made
during the year from net investment income or net
realized gains may differ from their ultimate
characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal year
in which amounts are distributed may differ from the year
that the income or realized gain (loss) was recorded by
the Fund. Effective July 1, 1993, the Fund adopted
Statement of Position 93-2: Determination, Disclosure,
and Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by Investment
Companies. As a result, the Fund changed the
classification of distributions to shareholders to better
disclose the differences between financial statement
amounts and distributions determined in accordance with
income tax regulations. Accordingly, subsequent to June
30, 1993, amounts have been reclassified to reflect a
decrease in undistributed net investment income of
$119,369, and a decrease in accumulated net realized loss
on investments of $119,369.
13 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
1. SIGNIFICANT OTHER. Investment transactions are accounted for on the
ACCOUNTING date the investments are purchased or sold (trade date)
POLICIES and dividend income is recorded on the ex-dividend date.
(CONTINUED) Original issue 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. For bonds acquired after
April 30, 1993, accrued market discount is recognized at
maturity or disposition as taxable ordinary income.
Taxable ordinary income is realized to the extent of the
lesser of gain or accrued market discount.
2. 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, 1994
----------------------------------
SHARES AMOUNT
------- -------
<S> <C> <C>
Class A
Sold 207,069 $ 2,393,403
Dividends and distributions reinvested 138,903 1,597,865
Redeemed (746,784) (8,528,687)
-------- -----------
Net increase (decrease) (400,812) $(4,537,419)
======== ===========
Class B
Sold 55,897 $ 650,686
Dividends and distributions reinvested 2,139 24,492
Redeemed (3,363) (37,575)
-------- -----------
Net increase 54,673 $ 637,603
======== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994(1)
---------------------------
SHARES AMOUNT
------ ------
<S> <C> <C>
Class A
Sold 1,640,622 $20,818,911
Dividends and distributions reinvested 275,074 3,448,622
Redeemed (903,096) (11,196,635)
--------- -----------
Net increase (decrease) 1,012,600 $13,070,898
========= ===========
Class B
Sold 101,400 $ 1,258,622
Dividends and distributions reinvested 1,061 12,907
Redeemed (555) (6,655)
--------- -----------
Net increase 101,906 $ 1,264,874
========= ===========
</TABLE>
1. For the year ended June 30, 1994 for Class A shares
and for the period from October 29, 1993 (inception of
offering) to June 30, 1994 for Class B shares.
3. UNREALIZED GAINS At December 31, 1994, net unrealized depreciation on
AND LOSSES ON investments of $6,455,811 was composed of gross
INVESTMENTS appreciation of $589,275, and gross depreciation of
$7,045,086.
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS WITH which provides for an annual fee of .55% of net assets,
AFFILIATES with a contractual waiver when net assets are less than
$100 million. Annual fees, reflecting this waiver, are
.40% of 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% of 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, 1994,
commissions (sales charges paid by investors) on sales of
Class A shares totaled $75,072, of which $13,967 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by
an affiliated broker/dealer. During the six months ended
December 31, 1994, OFDI received contingent deferred
sales charges of $1,766 upon redemption of Class B
shares.
Oppenheimer Shareholder Services (OSS), a
division of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing such
services are allocated ratably to these companies.
Under a separate approved plan, the Fund may
expend up to .25% of its Class B net assets annually to
reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold
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, the Board of Directors may allow the Fund to
continue payment of the asset-based sales charge to OFDI
for distribution expenses incurred on Class B shares sold
prior to termination or discontinuance of the plan.
During the six months ended December 31, 1994, OFDI
retained $7,683 as reimbursement for Class B sales
commissions and service fee advances, as well as
financing costs.
14 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 14
OPPENHEIMER MAIN STREET CALIFORNIA TAX-EXEMPT FUND
A Series of Oppenheimer Main Street Funds, Inc.
OFFICERS AND James C. Swain, Chairman and Chief Executive Officer
DIRECTORS Robert G. Avis, Director
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
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR Oppenheimer Management Corporation
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
CUSTODIAN OF The Bank of New York
PORTFOLIO
SECURITIES
INDEPENDENT AUDITORS Deloitte & Touche LLP
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, 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.
15 Oppenheimer Main Street California Tax-Exempt Fund
<PAGE> 15
"How may I help you?"
As an OppenheimerFunds shareholder, some special privileges are available to
you. 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 OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get auto-mated 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 infor-
mation. It also gives you the ability to make transactions using your touch-tone
phone. Of course, you can always speak with a Customer Service Representative
during business hours.
[FIGURE NUMBER 8]
Photo of Jennifer Leonard
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an indepen-dent, non-profit
organization made up of over 3,200 customer service management professionals
from around the country, hon-ored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
INFORMATION
GENERAL INFORMATION
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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
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that affect your investments
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