-----------------------------
Annual Report August 31, 1997
-----------------------------
OPPENHEIMER
Main Street
California
Municipal Fund(R)
[LOGO]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
11 Statement of Investments
16 Statement of Assets & Liabilities
18 Statement of Operations
19 Statements of Changes in Net Assets
20 Financial Highlights
22 Notes to Financial Statements
27 Independent Auditors' Report
28 Federal Income Tax Information
29 Officers & Directors
32 Information & Services
Report highlights
- --------------------------------------------------------------------------------
o California's economy improved, which generally caused the state's bonds to
gain in value.
o Investor confidence surged because state and local issuers showed an increase
in their ability to meet their obligations.
o We focused on higher-quality bonds because we believe they offered better
value when considering the risks associated with lower-rated bonds.
- -----------------------------
Total Returns
- -----------------------------
For the Period Ended 8/31/97(1)
Class A
1 year
- -----------------------------
10.24%
- -----------------------------
Class B
1 year
- -----------------------------
9.24%
- -----------------------------
Total returns include changes 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.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2 Oppenheimer Main Street California Municipal Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO]
James C. Swain
Chairman
Oppenheimer Main Street California Municipal Fund
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer Main Street California Municipal Fund
We would like to welcome you to the premier issue of our newly redesigned
shareholder reports. As you can see, we've changed the format to allow easier
access to the information you need to monitor your investments. Some notable
additions are "at-a-glance" report highlights and charts that let you quickly
assess how your Fund has performed. On the following pages, your portfolio team
discuss their current investment thinking, your Fund's strategies, and
performance. Before these commentaries, we'd like to share a few global
observations.
As we consider the world's financial markets over the past six months,
some global trends emerge. For example, inflation has hit its lowest level in
three decades worldwide, which has helped spur many bullish financial markets.
The United States has been a beneficiary of this low-inflation environment, as
well as of a strong dollar, robust corporate earnings and a healthy economy.
However, many financial analysts are now concerned that the United States has
reached a point in the business cycle where earnings could decline because
companies are unable to further reduce costs.
On the other hand, a wave of corporate restructuring throughout Europe has
resulted in some exciting changes and opportunities. Because a similar
restructuring took place in the United States ten years ago, European companies
have been able to enjoy the benefit of hindsight by following our footsteps.
Latin America, too, has begun to shift its economies more toward the U.S.
capitalist model and has reported positive earnings growth along the way.
With major changes occurring in today's economies around the globe, it's
more important than ever to maintain a diversified portfolio across different
countries and market sectors. Now is the time to speak to your financial adviser
to ensure that your assets are allocated properly, so you have the opportunity
to benefit from investments in both domestic and international funds. It's
important to remember that investing abroad can involve greater risk and
expenses--including political and economic uncertainties--and should be
undertaken with a long-term approach in mind.
To keep in touch with our views on the markets, visit our website,
www.oppenheimerfunds.com, where you can access your account information and fund
performance data, 24 hours a day. The site also features prospectuses, timely
market updates and insightful commentaries. Our new shareholder reports and
presence on the Internet are just two examples of our commitment to keeping you
well informed.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. We look forward to helping you reach your investment goals in the
future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
September 22, 1997
3 Oppenheimer Main Street California Municipal Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Main Street California Municipal Fund has performed very well over
the past twelve months. In fact, the Fund's Class A shares have remained in the
first quartile as ranked by Lipper Analytical Services since inception. The
Fund's Class A shares were ranked 13 of 101 (1-year), 8 of 77 (3-year) and 9 of
51 (5-year) among California municipal debt funds for the period ended
8/31/97.(2)
- -----------------------------
Avg Annual Total Returns
- -----------------------------
For the Period Ended 9/30/971
Class A
Since
1 year 5 year Inception
- -----------------------------
5.36% 6.49% 7.59%
- -----------------------------
Class B
Since
1 year 5 year Inception
- -----------------------------
4.52% N/A 4.21%
- -----------------------------
Growth of $10,000
Over five years
(without sales charge)(3)
[GRAPHIC OMITTED]
[The following table was represented as a mountain graph in the printed
materials.]
<TABLE>
<CAPTION>
Oppenheimer Main Street California
Municipal Fund Class A shares Lehman Brothers Municipal Bond Index
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
92 -- -- $10,000.00 $10,248.07 -- -- $10,000.00 $10,181.75
93 $10,668.72 $11,007.49 $11,424.91 $11,557.07 $10,559.58 $10,905.08 $11,273.45 $11,431.70
94 $10,905.65 $10,935.47 $10,974.19 $10,668.08 $10,804.18 $10,923.76 $10,918.51 $10,840.57
95 $11,603.79 $11,907.64 $12,197.83 $12,775.70 $11,607.05 $11,887.36 $12,229.26 $12,733.61
96 $12,634.41 $12,712.33 $13,020.95 $13,453.32 $12,580.03 $12,676.47 $12,968.32 $13,298.77
97 $13,412.34 $13,889.97 $14,407.46 -- $13,267.78 $13,725.22 $14,139.10 --
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current initial sales charge of 4.75%. Class
A shares were first publicly offered on 5/18/90. The Fund's maximum sales charge
for Class A shares was lower prior to 11/2/91, so actual performance may have
been higher. Class B returns include the applicable contingent deferred sales
charge of 5% (1-year) and 3% (since inception on 10/29/93). An explanation of
the different performance calculations is in the Fund's prospectus. Class B
shares are subject to an annual 0.75% asset-based sales charge.
2. Source: Lipper Analytical Services, Inc., 8/31/97. Based on the comparisons
between changes in net asset value without considering sales, and with dividends
and capital gains distributions of the Fund's Class A shares reinvested. Past
performance does not guarantee future results.
4 Oppenheimer Main Street California Municipal Fund
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Main Street California Municipal Fund is for investors looking for a
source of income that's exempt from federal and California taxes.
What We Look For
o Diversification among a wide range of securities.
o Projects and regions demonstrating improving credit quality.
o Securities that provide high income.
Top Five Sectors
(Percentage of net assets)(4)
...........................................
Single Family Housing 17.7%
...........................................
Special Assessment 16.7
...........................................
Hospital/Healthcare 12.8
...........................................
Highways 9.5
...........................................
Sewer Utilities 6.4
...........................................
Credit Allocation(5)
[Graphic Omitted]
AAA 60.1%
AA 8.6
A 12.2
BBB 13.1
NR 6.0
3. Results of a hypothetical $10,000 investment in Class A shares on September
30, 1992. Lehman Brothers Municipal Bond Index includes a broad range of
municipal bonds. It is an unmanaged index, including reinvestment of income, and
cannot be purchased directly by investors. Past performance does not guarantee
future results.
4. Sector weightings are as of 8/31/97, and are subject to change.
5. Portfolio data are dollar-weighted based on market value of investments and
subject to change. Securities rated by any rating organization are included in
the equivalent Standard & Poor's rating category. Average credit quality and
allocation include rated securities and those not rated by a national rating
organization (currently 6.0% of total investments) but whose ratings given above
have been assigned by the Manager for internal purposes as being comparable, in
the Manager's judgment, to securities rated by a rating agency in the same
category.
5 Oppenheimer Main Street California Municipal Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
How has the Fund performed during the fiscal year?
Oppenheimer Main Street California Municipal Fund's Class A shares have provided
a total rate of return, before sales charges, of 10.24% for the one-year period
ended August 31, 1997.1 This return exceeded many of the Fund's peers and ranked
the Fund 13 of 101 for the one-year period ended August 31, 1997, among
California tax-exempt mutual funds, as measured by Lipper Analytical
Services.(2)
What influences and events had the greatest effect on the tax-exempt market?
Yields on municipal bonds generally followed the trends established over the
past 12 months by taxable bonds, such as U.S. Treasury securities. However,
during the 12-month period, taxable and tax-exempt bond markets experienced a
relatively high level of volatility. Bond yields rose and fell with investors'
changing outlooks for economic growth, inflation and federal monetary policy.
When the economy appeared to be growing quickly, investors became concerned
about a resurgence of inflation and a more restrictive monetary policy. During
April, long-term interest rates peaked, then declined by the end of July to the
lowest rates during the period. When the economy appeared to be slowing,
investors showed some confidence that inflation would not be a problem.
"Our positive view
on inflation has
caused us to
lengthen our
durations."
1. lncludes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2. Source: Lipper Analytical Services, Inc., 8/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, and with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 13 of 101 (1-year), 8 of 77
(3-year) and 9 of 51 (5-year) among California municipal bond funds for the
period ended 8/31/97. Past performance does not guarantee future results.
6 Oppenheimer Main Street California Municipal Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Jerry Webman
(Fund Manager)
Bob Patterson
What developments in California contributed to the Fund's performance?
As California's economy improved, its bonds tended to gain in value. Investors
became more confident in the state and local issuers' abilities to meet their
obligations, and they were therefore willing to pay more for a particular
security. This was especially true when independent bond rating agencies
upgraded their opinion of California's financial condition, as they did during
the past year.
More specifically, California's economy continues to recover nicely from a
relatively deep and long recession caused primarily by job losses in the
aerospace industry. Over the past year, many of those jobs have been replaced by
employment gains in other industries, including entertainment, engineering and
biotechnology in Southern California. Similarly, Northern California has
experienced job growth in the technology and communications industries. These
economic gains have helped California and many of its municipalities achieve
their tax and revenue projections, as evidenced by the state's budget surplus.
Some financial problems persist within the state, particularly at the county
level, but, on the whole, California's economy appears to be healthier.
How did you manage the Fund in this environment?
We continued to follow the time-tested investment strategies we have used for
years. Regardless of market conditions, we prefer to keep our shareholders'
assets as fully invested as possible in a diversified portfolio of good-quality
securities that provide competitive levels of
7 Oppenheimer Main Street California Municipal Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
income and attractive relative values. Within that invested position, we attempt
to boost returns and reduce risks.
One of the ways we do this is by actively managing the portfolio's average
duration--a measure of the portfolio's sensitivity to changes in interest rates.
By modestly changing the portfolio's average duration, we have generally been
able to benefit when interest rates are falling and protect ourselves when rates
rise. For example, we've had a very positive view on inflation recently, and
that's caused us to keep the portfolio's average duration relatively long in
order to be exposed to declining interest rates. When interest rates are rising,
we try to keep our average duration relatively short. For example, when interest
rates went up over 7% this past spring, our average duration was relatively
short, and that helped us limit declines in net asset value.
What market sectors did you find attractive and which did you avoid?
While we found creditworthy investments in virtually every area of the
California bond market, we focused on those municipalities and agencies whose
bonds we believed offered the most competitive income and best values. Because
some areas of the California economy are still uncertain, we were very selective
in our purchases of new bonds. For example, the strengthening economy enabled us
to invest in relatively high-yielding bonds issued by smaller municipal issuers,
such as school districts, that are not rated by the major agencies. These bonds
were carefully researched by analysts on our staff, who deemed their credit
quality to be equal to highly rated bonds.
We also found some lower-rated bonds whose issuers' financial conditions
are improving, such as certain hospitals that appear to be well-positioned
despite the current uncertainty regarding Medicare and Medicaid
"During the past
year, many
bond rating
agencies . . ."
8 Oppenheimer Main Street California Municipal Fund
<PAGE>
payment levels. Along these lines, we invested in one hospital whose upgraded
rating helped the Fund's overall performance.
How did the Fund's credit quality change during the period?
The Fund consistently maintained an overall credit rating within the A to AA (or
Aa) range. Strong economic conditions helped produce adequate tax revenues for
California's municipal borrowers, reducing their need to finance deficits in the
public markets. In addition, the difference in yields between investment-grade
and below- investment-grade bonds narrowed considerably as more investors
reached for higher yields in the low-supply environment. When "spreads" narrow,
we tend to focus on higher-quality bonds because we believe our shareholders
would not be adequately compensated for assuming the higher risks associated
with lower-rated bonds.
What is your outlook for the California municipal bond market?
We are cautiously optimistic. Our optimism is rooted in the nation's economy,
which is in its seventh year of expansion. This economy is unusual because it
has been characterized by moderate growth without an acceleration of inflation.
As long as inflationary pressures remain benign, our outlook for interest rates
and the bond market should be positive. We are also optimistic regarding further
strengthening of California's economy on both the state and local levels. On the
other hand, we are tempering our optimism with caution because no market or
economy moves in a straight line. In our view, the risk for the foreseeable
future is that the economy will grow faster than is currently expected, causing
inflation fears to surface among bond investors. While we do not expect these
fears to persist, they may cause volatility over the short term.
". . . upgraded
their opinion
of California's
financial
condition."
9 Oppenheimer Main Street California Municipal Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
10 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments August 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
=====================================================================================================
<S> <C> <C> <C>
Municipal Bonds and Notes--96.6%
- -----------------------------------------------------------------------------------------------------
California--90.8%
Alameda, CA PFAU RRB, Marina Village
Assessment District Refinancing, 6.375%, 9/2/14 NR/NR $2,100,000 $ 2,146,536
- -----------------------------------------------------------------------------------------------------
Anaheim, CA PFAU Tax Allocation RB, MBIA
Insured, 6.45%, 12/28/18 Aaa/AAA 2,000,000 2,179,920
- -----------------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical
Center, Series A, 6.50%, 12/1/11 Baa2/BBB+ 1,500,000 1,588,395
- -----------------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,910,000 5,178,577
- -----------------------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series A-2,
6.45%, 8/1/25 Aaa/AAA 2,500,000 2,616,875
- -----------------------------------------------------------------------------------------------------
CA HFFAU RB, Episcopal Homes
Project, Series A, 7.80%, 7/1/15 NR/A+ 1,000,000 1,050,390
- -----------------------------------------------------------------------------------------------------
CA PCFAU RB, Pacific Gas & Electric Co.
Project, Series B, 6.35%, 6/1/09 A2/A 2,000,000 2,140,180
- -----------------------------------------------------------------------------------------------------
CA PWBL RB, State Prison Department of
Corrections, Series E, FSA Insured, 5.50%, 6/1/15 Aaa/AAA 2,000,000 2,072,360
- -----------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Cedars-Sinai Medical Center, 5.40%, 11/1/15 A1/NR 1,000,000 961,880
- -----------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Inverse
Floater, 6.97%, 11/1/15(1) A1/NR 700,000 646,625
- -----------------------------------------------------------------------------------------------------
Capistrano, CA Unified School District CFD
Special Tax Bonds, No. 87-1, Prerefunded,
8.375%, 10/1/20 Aaa/NR 1,865,000 2,128,319
- -----------------------------------------------------------------------------------------------------
Castaic Lake, CA Water Agency Revenue
COP, WS Improvement Project, Prerefunded,
7.35%, 8/1/20 Aaa/NR 1,000,000 1,107,390
- -----------------------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP,
Community Hospitals of Central California
Project, 5%, 2/1/23 Baa1/NR/A- 2,050,000 1,809,720
- -----------------------------------------------------------------------------------------------------
Corona, CA COP, Vista Hospital Project,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 3,250,000 4,151,843
- -----------------------------------------------------------------------------------------------------
Corona, CA SFM RB, Sub.-Lien, Series B, 6.30%,
11/1/28 A/NR 800,000 829,144
- -----------------------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National Medical
Center, 6.25%, 4/1/23 Baa1/NR 500,000 514,705
- -----------------------------------------------------------------------------------------------------
Escondido, CA Union High School District
CAP GOB, MBIA Insured, Zero Coupon, 6.20%,
11/1/19(2) Aaa/AAA 2,000,000 582,720
- -----------------------------------------------------------------------------------------------------
Fontana, CA RA Tax Allocation GORB, Jurupa
Hills Redevelopment Project-A, 7.10%, 10/1/23 NR/BBB 1,960,000 2,137,223
- -----------------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor Agency
CA Toll Road RB, Sr. Lien, Series A, 6.50%, 1/1/32 Baa/BBB-/BBB 1,400,000 1,494,724
</TABLE>
11 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
Fresno, CA HAU MH RB, Central Valley
Coalition Projects, Series A, 5.60%, 8/1/30 NR/AAA $3,075,000 $ 3,096,125
- -----------------------------------------------------------------------------------------------------
La Quinta, CA RA Tax Allocation Refunding
Bonds, Redevelopment Project Area No. 1,
MBIA Insured, 7.30%, 9/1/09 Aaa/AAA 1,015,000 1,239,305
- -----------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB, 5.125%, 5/15/18 Aa3/AA- 1,000,000 943,280
- -----------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB, MBIA Insured,
9%, 5/15/02 Aaa/AAA 1,110,000 1,321,100
- -----------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP, Disney Parking
Project, Zero Coupon, 6.95%, 9/1/11(2) Baa1/BBB/A- 2,340,000 1,046,354
- -----------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Transition Community
Sales Tax RB, Prerefunded, Series A,
6.90%, 7/1/21 Aaa/AA-/A+ 1,800,000 2,006,316
- -----------------------------------------------------------------------------------------------------
Los Angeles, CA Unified School District
GOB, Series A, FGIC Insured, 6%, 7/1/15 Aaa/AAA/AAA 1,000,000 1,094,030
- -----------------------------------------------------------------------------------------------------
Los Angeles, CA Wastewater System RRB,
Series D, FGIC Insured, 8.70%, 11/1/03 Aaa/AAA/AAA 5,115,000 6,297,025
- -----------------------------------------------------------------------------------------------------
Newport Mesa, CA Unified School District
Special Tax Bonds, CFD No. 90-1, 6.625%,
9/1/14 NR/NR 2,000,000 2,060,740
- -----------------------------------------------------------------------------------------------------
Orange Cnty., CA CFD Special Tax Bonds,
No. 88-1, Aliso Viejo, Prerefunded, Series A,
7.35%, 8/15/18 NR/AAA 1,750,000 2,020,865
- -----------------------------------------------------------------------------------------------------
Orange Cnty., CA Local Transition Authority
Sales Tax RB, Sec. Sr. Lien-Measure M, FGIC
Insured, 9.50%, 2/15/03 Aaa/AAA/AAA 1,125,000 1,394,033
- -----------------------------------------------------------------------------------------------------
Pittsburg, CA Improvement Bond Act of 1915
Special Assessment GOB, Assessment
District 1990-01, 7.75%, 9/2/20 NR/NR 95,000 98,848
- -----------------------------------------------------------------------------------------------------
Pittsburg, CA RA Tax Allocation Refunding
Bonds,Los Medanos Community Development
Project, Sub. Lien, 6.20%, 8/1/19 NR/BBB 1,000,000 1,031,420
- -----------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 2,500,000 3,242,100
- -----------------------------------------------------------------------------------------------------
Pomona, CA Unified School District GORB,
Series A, MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 500,000 551,930
- -----------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
FGIC Insured, Inverse Floater, 7.31%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 1,150,000
- -----------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, Inverse Floater, 8.60%, 7/8/22(1) Aaa/AAA 500,000 625,000
- -----------------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD Special Tax Bonds,
No. 88-12, 7.55%, 9/1/17 NR/NR 1,500,000 1,586,490
- -----------------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to
Maturity, Series A, 7.80%, 5/1/21 Aaa/AAA 1,000,000 1,300,070
</TABLE>
12 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
Sacramento Cnty., CA SFM RB, Escrowed
to Maturity, 8.125%, 7/1/16(3) Aaa/AAA $2,810,000 $ 3,676,941
- -----------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, FGIC
Insured, Inverse Floater, 8.87%, 8/15/18(1) Aaa/AAA/AAA 1,500,000 1,730,625
- -----------------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority Revenue
COP, Series 91-B, MBIA Insured, Inverse
Floater, 8.62%, 4/8/21(1) Aaa/AAA 1,000,000 1,147,500
- -----------------------------------------------------------------------------------------------------
San Francisco, CA Bay Area Rapid Transit
District Sales Tax RRB, AMBAC Insured,
6.75%, 7/1/11 Aaa/AAA/AAA 1,000,000 1,180,920
- -----------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Airport
Commission International Airport RB,
Second Series Issue 13-B, MBIA Insured,
8%, 5/1/07 Aaa/AAA 1,140,000 1,395,075
- -----------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Airport
Commission International Airport RB,
Second Series Issue 14-A, MBIA Insured,
8%, 5/1/07 Aaa/AAA 1,290,000 1,578,638
- -----------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, 6.75%, 1/1/32 NR/NR/BBB 3,500,000 3,768,975
- -----------------------------------------------------------------------------------------------------
San Ysidro, CA School District GOB, AMBAC
Insured, 6.125%, 8/1/21 Aaa/AAA 700,000 759,703
- -----------------------------------------------------------------------------------------------------
South Orange Cnty., CA PFAU Special
Tax RB, Foothill Area, Series C, FGIC Insured,
8%, 8/15/08 Aaa/AAA/AAA 1,500,000 1,914,255
- -----------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB,
Series A, 7.35%, 9/1/24 NR/AAA 285,000 301,633
- -----------------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB, 5.55%, 10/30/20 Aa/AA 2,400,000 2,369,016
- -----------------------------------------------------------------------------------------------------
Southern CA PPAU Transmission Project RB,
Inverse Floater, 7.41%, 7/1/12(1) Aa3/A+ 2,100,000 2,294,250
- -----------------------------------------------------------------------------------------------------
Stanislaus, CA Waste-To-Energy Financing
Agency Solid Waste Facilities RRB, Ogden
Martin System, Inc. Project, 7.50%, 1/1/05 NR/BBB+ 1,600,000 1,717,456
- -----------------------------------------------------------------------------------------------------
West Covina, CA COP, Queen of the Valley
Hospital, 6.50%, 8/15/19 A2/A 1,120,000 1,216,342
------------
92,493,886
- -----------------------------------------------------------------------------------------------------
U.S. Possessions--5.8%
PR Commonwealth GORB, MBIA Insured,
Inverse Floater, 8%, 7/1/08(1) Aaa/AAA 1,500,000 1,655,625
- -----------------------------------------------------------------------------------------------------
PR Commonwealth Highway Authority RB,
Prerefunded, Series P, 8.125%, 7/1/13 Aaa/AAA 2,000,000 2,111,500
</TABLE>
13 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Possessions (continued)
PR Commonwealth Public Improvement
GOB, Prerefunded, Series A, 7.75%, 7/1/17 NR/AAA $1,000,000 $ 1,081,670
- -----------------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 240,000 253,229
- -----------------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental PC
Facilities Tourist RB, Mennonite General
Hospital Project, Series A, 6.50%, 7/1/12 NR/BBB-/BBB 600,000 635,418
- -----------------------------------------------------------------------------------------------------
PR Public Buildings Authority RB,
Government Facilities, Series B, AMBAC
Insured, 5%, 7/1/27 Aaa/AAA 200,000 189,324
-----------
5,926,766
-----------
Total Municipal Bonds and Notes
(Cost $95,668,810) 98,420,652
<CAPTION>
Date Strike Contracts
=====================================================================================================
<S> <C> <C> <C> <C>
Call Options Purchased--0.0%
- -----------------------------------------------------------------------------------------------------
U.S. Treasury, 30 yr. Futures, 12/97,
Call Opt. (Cost $51,481) 11/97 $120 88 9,625
- -----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $95,720,291) 96.6% 98,430,277
- -----------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 3.4 3,479,521
---------- ------------
Net Assets 100.0% $101,909,798
========== ============
</TABLE>
To simplify the listings of securities abbreviations are used per the table
below:
CAP -- Capital Appreciation
CFD -- Community Facilities District
COP -- Certificates of Participation
FAU -- Finance Authority
GOB -- General Obligation Bonds
GORB -- General Obligation Refunding Bonds
HAU -- Housing Authority
HF -- Health Facilities
HFA -- Housing Finance Agency
HFFAU -- Health Facilities Finance Authority
MH -- Multifamily Housing
MUD -- Municipal Utility District
PC -- Pollution Control
PCFAU -- Pollution Control Finance Authority
PFAU -- Public Finance Authority
PPAU -- Public Power Authority
PWBL -- Public Works Board Lease
RA -- Redevelopment Agency
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
SCDAU -- Statewide Communities Development Authority
SFM -- Single Family Mortgage
WS -- Water System
1. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays 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 $9,249,625 or 9.08% of the
Fund's net assets at August 31, 1997.
2. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
3. Securities with an aggregate market value of $418,726 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
14 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of August 31, 1997, securities subject to the alternative minimum tax
amounted to $23,548,494 or 23.11% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
Industry Market Value Percent
- --------------------------------------------------------------------------------
Single Family Housing $17,398,570 17.7%
Special Assessment 16,415,603 16.7
Hospital/Healthcare 12,575,317 12.8
Highways 9,381,515 9.5
Sewer Utilities 6,297,025 6.4
Electric Utilities 5,799,875 5.9
Marine/Aviation Facilities 5,238,092 5.3
Water Utilities 4,623,906 4.7
Education 3,982,052 4.0
General Obligation 3,871,945 3.9
Lease Rental 3,308,038 3.4
Multi-Family Housing 3,096,125 3.1
Sales Tax 2,574,953 2.6
Pollution Control 2,140,180 2.2
Resource Recovery 1,717,456 1.8
Options-Treasury 9,625 0.0
----------- -----
$98,430,277 100.0%
=========== =====
See accompanying Notes to Financial Statements.
15 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities August 31, 1997
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value (cost $95,720,291)--see
accompanying statement $ 98,430,277
- --------------------------------------------------------------------------------
Cash 2,019,892
- --------------------------------------------------------------------------------
Receivables:
Interest 1,353,286
Shares of capital stock sold 502,261
Daily variation on futures contracts--Note 5 13,149
- --------------------------------------------------------------------------------
Other 1,807
------------
Total assets 102,320,672
================================================================================
Liabilities
Payables and other liabilities:
Dividends 319,643
Shareholder reports 42,060
Shares of capital stock redeemed 20,655
Transfer and shareholder servicing agent fees 5,000
Distribution and service plan fees 4,702
Other 18,814
------------
Total liabilities 410,874
================================================================================
Net Assets $101,909,798
============
- --------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of capital stock $ 80,612
- --------------------------------------------------------------------------------
Additional paid-in capital 97,768,093
- --------------------------------------------------------------------------------
Undistributed net investment income 437,009
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 920,348
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 2,703,736
Net assets $101,909,798
============
16 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $89,990,731 and 7,117,404 shares of capital stock outstanding) $12.64
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $13.27
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $11,919,067 and 943,842
shares of capital stock outstanding) $12.63
See accompanying Notes to Financial Statements.
17 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended August 31, 1997
- --------------------------------------------------------------------------------
===============================================================================
Investment Income
Interest $ 5,741,250
===============================================================================
Expenses
Management fees--Note 4 356,873
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class B 81,178
- -------------------------------------------------------------------------------
Shareholder reports 69,467
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 56,033
- -------------------------------------------------------------------------------
Legal and auditing fees 12,485
- -------------------------------------------------------------------------------
Insurance expenses 3,028
- -------------------------------------------------------------------------------
Directors' fees and expenses 2,567
- -------------------------------------------------------------------------------
Custodian fees and expenses 998
- -------------------------------------------------------------------------------
Registration and filing fees:
Class A 17,669
Class B 2,723
- -------------------------------------------------------------------------------
Other 984
------------
Total expenses 604,005
Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 (3,737)
- -------------------------------------------------------------------------------
Net expenses 600,268
===============================================================================
Net Investment Income 5,140,982
===============================================================================
Realized and Unrealized Gain
Net realized gain on:
Investments 529,768
Closing of futures contracts--Note 5 224,908
------------
Net realized gain 754,676
------------
Net change in unrealized appreciation or depreciation on
investments 2,696,390
------------
Net realized and unrealized gain 3,451,066
===============================================================================
Net Increase in Net Assets Resulting from Operations $ 8,592,048
============
See accompanying Notes to Financial Statements.
18 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Year Ended August 31, June 30,
1997 1996(1) 1996
=================================================================================================
Operations
<S> <C> <C> <C>
Net investment income $ 5,140,982 $ 839,019 $ 4,904,243
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) 754,676 (42,708) 13,058
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation 2,696,390 52,839 446,150
------------- ------------ ------------
Net increase in net assets resulting from operations 8,592,048 849,150 5,363,451
=================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (4,733,799) (773,949) (4,694,006)
Class B (394,165) (47,009) (189,244)
- -------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (9,642) -- (11,115)
Class B (827) -- (475)
- -------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain:
Class A -- -- (60,043)
Class B -- -- (2,568)
=================================================================================================
Capital Stock Transactions
Net increase (decrease) in net assets resulting
from capital stock transactions--Note 2:
Class A 10,035,358 (125,718) (1,651,052)
Class B 5,675,756 487,540 2,817,402
=================================================================================================
Net Assets
Total increase 19,164,729 390,014 1,572,350
- -------------------------------------------------------------------------------------------------
Beginning of period 82,745,069 82,355,055 80,782,705
------------- ------------ ------------
End of period [including undistributed
(overdistributed) net investment income of
$437,009, $598,945 and $(132,853), respectively] $ 101,909,798 $ 82,745,069 $ 82,355,055
============= ============ ============
</TABLE>
1. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
See accompanying Notes to Financial Statements.
19 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------
Year Ended August 31, Year Ended June 30,
1997 1996(2) 1996 1995 1994 1993
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 12.16 $ 12.15 $ 12.09 $ 11.82 $ 12.66 $ 12.05
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .12 .73 .73 .75 .80
Net realized and unrealized gain (loss) .49 .01 .07 .27 (.80) .64
------ ------ ------ ------ ------ ------
Total income (loss) from investment operations 1.22 .13 .80 1.00 (.05) 1.44
- ----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.74) (.12) (.73) (.69) (.73) (.81)
Dividends in excess of net investment income -- -- -- (.04) (.03) --
Distributions from net realized gain -- -- --(3) -- -- (.02)
Distributions in excess of net realized gain -- -- (.01) -- (.03) --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.74) (.12) (.74) (.73) (.79) (.83)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.64 $ 12.16 $ 12.15 $ 12.09 $ 11.82 $ 12.66
======= ======= ======= ======= ======= =======
======================================================================================================================
Total Return, at Net Asset Value(4) 10.24% 1.12% 6.73% 8.93% (0.60)% 12.53%
======================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $89,991 $76,817 $76,913 $78,134 $79,555 $72,387
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $80,311 $77,584 $78,676 $76,148 $81,741 $54,840
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.91% 6.00%(5) 5.99% 6.27% 6.09% 6.46%
Expenses(6) 0.59% 0.57%(5) 0.58% 0.57% 0.53% 0.39%
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 46.4% 1.4% 33.1% 14.2% 20.2% 5.8%
</TABLE>
1. For the period from October 29, 1993 (inception of offering) to June 30,
1994.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. Less than $.005 per share.
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.
20 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------------
Year Ended August 31, Year Ended June 30,
1997 1996(2) 1996 1995 1994(1)
======================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 12.14 $12.14 $12.08 $11.80 $12.90
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .60 .10 .61 .62 .38
Net realized and unrealized gain (loss) .50 -- .07 .27 (1.07)
------ ------ ------ ------ ------
Total income (loss) from investment operations 1.10 .10 .68 .89 (.69)
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.61) (.10) (.61) (.57) (.37)
Dividends in excess of net investment income -- -- -- (.04) (.01)
Distributions from net realized gain -- -- --(3) -- --
Distributions in excess of net realized gain -- -- (.01) -- (.03)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.61) (.10) (.62) (.61) (.41)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.63 $12.14 $12.14 $12.08 $11.80
======= ====== ====== ====== ======
======================================================================================================
Total Return, at Net Asset Value(4) 9.24% 0.85% 5.66% 7.90% (5.42)%
======================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $11,919 $5,928 $5,442 $2,648 $1,203
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 8,129 $5,767 $3,848 $1,904 $ 649
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.85% 4.92%(5) 4.94% 5.17% 4.91%(5)
Expenses(6) 1.60% 1.62%(5) 1.60% 1.55% 1.62%(5)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 46.4% 1.4% 33.1% 14.2% 20.2%
</TABLE>
5. Annualized.
6. Beginning in fiscal 1995, the expense ratios reflect 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 August 31, 1997 were $53,752,001 and
$40,699,816, respectively.
21 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Main Street California Municipal Fund (the 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 objective is to seek as high a level of current income which
is exempt from federal and California 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 and Class B shares. Class A shares are
sold with a front-end sales charge. Class B shares may be subject to a
contingent deferred sales charge. Both classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to that class
and exclusive voting rights with respect to matters affecting that 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 Directors. Such securities which cannot be valued by an
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 Directors 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.
22 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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.
- --------------------------------------------------------------------------------
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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
During the period ended August 31, 1997, the Fund adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Accordingly, during the period ended August 31,
1997, amounts have been reclassified to reflect a decrease in undistributed net
investment income of $174,954. Accumulated net realized gain on investments was
increased by the same amount.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). 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
California and, therefore, may have more credit risks related to the economic
conditions of California 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.
23 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Capital Stock
The Fund has authorized 16,250,000 shares of $.01 par value capital stock of
each class. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended Year Ended
August 31, 1997 August 31, 1996(1) June 30, 1996
------------------------ -------------------- ---------------------
Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 1,377,422 $ 17,228,574 67,135 $ 819,316 387,788 $ 4,767,548
Dividends and
distributions reinvested 233,721 2,900,249 39,490 483,642 243,712 2,993,646
Redeemed (811,980) (10,093,465) (116,433) (1,428,676) (765,193) (9,412,246)
--------- ------------ ------- ----------- ------- -----------
Net increase (decrease) 799,163 $ 10,035,358 (9,808) $ (125,718) (133,693) $(1,651,052)
========= ============ ======= =========== ======= ===========
- -----------------------------------------------------------------------------------------------------
Class B:
Sold 467,166 $ 5,821,078 44,022 $ 538,404 247,941 $ 3,048,438
Dividends and
distributions reinvested 20,557 255,214 2,450 29,980 9,629 117,946
Redeemed (32,007) (400,536) (6,620) (80,844) (28,549) (348,982)
--------- ------------ ------- ----------- ------- -----------
Net increase 455,716 $ 5,675,756 39,852 $ 487,540 229,021 $ 2,817,402
========= ============ ======= =========== ======= ===========
</TABLE>
1. The Fund changed its fiscal year end from June 30 to August 31.
================================================================================
3. Unrealized Gains and Losses on Investments
At August 31, 1997, net unrealized appreciation on investments of $2,709,986 was
composed of gross appreciation of $3,854,592, and gross depreciation of
$1,144,606.
================================================================================
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 0.55% of average
annual net assets, with a contractual waiver when net assets are less than $100
million. Annual fees, reflecting this waiver, are 0.40% of net assets of $75
million or more but less than $100 million, 0.25% of net assets of $50 million
or more but less than $75 million, 0.15% of net assets of $25 million or more
but less than $50 million, and 0% of net assets less than $25 million. In
addition, the Manager has voluntarily undertaken to waive a portion of its
management fee, whereby the Fund shall pay an annual management fee of 0.40% of
its average annual net assets in excess of $100 million.
For the year ended August 31, 1997, commissions (sales charges paid by
investors) on sales of Class A shares totaled $293,130, of which $46,207 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 shares
totaled $213,863. During the year ended August 31, 1997, OFDI received
contingent deferred sales charges of $5,160 upon redemption of Class B shares.
24 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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.
The Fund has adopted a Distribution and Service Plan for Class
B shares to reimburse OFDI for its services and costs in distributing Class B
shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B shares. OFDI also receives
a service fee of 0.25% per year to reimburse dealers for providing personal
services for accounts that hold Class B shares. Both fees are computed on the
average annual net assets of Class B shares, determined as of the close of each
regular business day. During the year ended August 31, 1997, OFDI retained
$69,604 as reimbursement for Class B sales commissions and service fee advances,
as well as financing costs. If the Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the asset-based sales
charge to OFDI for distributing shares before the Plan was terminated. As of
August 31, 1997, OFDI had incurred unreimbursed expenses of $384,028 for Class
B.
================================================================================
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 (initial margin) in an amount 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 expires.
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.
25 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Futures Contracts (continued)
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 August 31, 1997, the Fund had outstanding futures contracts to sell
debt securities as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Contracts to Sell Expiration Date Contracts August 31, 1997 Depreciation
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds, 30 yr. 12/97 20 $2,255,000 $6,250
</TABLE>
26 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Directors and Shareholders of Oppenheimer
Main Street California Municipal Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Main Street California Municipal
Fund as of August 31, 1997, the related statement of operations for the year
then ended, the statements of changes in net assets for the year then ended, for
the two months ended August 31, 1996 and the year ended June 30, 1996, and the
financial highlights for the period July 1, 1992 to August 31, 1997. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1997 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Main
Street California Municipal Fund at August 31, 1997, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
September 22, 1997
27 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
None of the dividends paid by the Fund during the year ended August 31,
1997 are eligible for the corporate dividend-received deduction. The dividends
were derived from interest on municipal bonds and are not subject to federal
income tax. To the extent a shareholder is subject to any state or local tax
laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax adviser for specific guidance.
28 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Main Street California Municipal Fund
- --------------------------------------------------------------------------------
A series of Oppenheimer Main Street Funds, Inc.
================================================================================
Officers and Directors James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Director and President
Robert G. Avis, Director
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
George C. Bowen, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Jerry A. Webman, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Adviser OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Main Street California Municipal Fund. This
report must be preceded or accompanied by a Prospectus
of Oppenheimer Main Street California 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.
29 Oppenheimer Main Street California Municipal Fund
<PAGE>
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OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
==========================================================================================
<S> <C> <C>
Real Asset Funds
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Real Asset Fund Gold & Special Minerals Fund
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Stock Funds
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Developing Markets Fund Quest Small Cap Value Fund Global Fund
Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund
International Growth Fund Quest Capital Value Fund Disciplined Value Fund
Discovery Fund Growth Fund Quest Value Fund
==========================================================================================
Stock & Bond Funds
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==========================================================================================
Bond Funds
- ------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==========================================================================================
Municipal Funds
- ------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==========================================================================================
Money Market Funds(4)
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Money Market Fund Cash Reserves
==========================================================================================
LifeSpan
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. 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.
30 Oppenheimer Main Street California Municipal Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
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, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
Internet
24-hr access to account information
- -------------------------------
www.oppenheimerfunds.com
- -------------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- -------------------------------
1-800-525-7048
- -------------------------------
Account Transactions
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- -------------------------------
1-800-852-8457
- -------------------------------
PhoneLink
24-hr automated information
and automated transactions
- -------------------------------
1-800-533-3310
- -------------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm 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
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1-800-835-3104
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[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RA0725.001.0897 October 30, 1997
