<PAGE>
Semiannual Report February 28, 1999
OPPENHEIMER
Main Street California
Municipal Fund(R)
[LOGO OF OPPENHEIMER FUNDS(R) APPEARS HERE]
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An interview with
Your Fund's Manager
9 Financial Statements
29 Officers and Directors
32 Information and Services
Report highlights
- --------------------------------------------------------------------------------
. Municipal bonds performed well over the past six months in a declining
interest-rate environment.
. Several of the Fund's holdings received credit rating upgrades, which
enhanced the value of the securities.
Cumulative Total Returns
For the 6-Month Period
Ended 2/28/99
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
2.40% -2.47%
- ----------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- ----------------------------
1.81% -3.18%
- ----------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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. The Fund's performance may from time to time be subject
to substantial short-term changes, particularly during periods of market or
interest rate volatility. For updates on the Fund's performance, please contact
your financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A return includes the current maximum initial sales charge of 4.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class B shares are subject to an annual 0.75% asset-based sales charge. An
explanation of the different performance calculations is in the Fund's
prospectus.
2 Oppenheimer Main Street California Municipal Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PICTURE OF JAMES C. SWAIN APPEARS HERE]
James C. Swain
Chairman
Oppenheimer Main Street
California Municipal Fund
[PICTURE OF BRIDGET A. MACASKILL APPEARS HERE]
Bridget A. Macaskill
President
Oppenheimer Main Street
California Municipal Fund
Contrary to what many analysts had expected, the U.S. economy appears to have
picked up steam over the past few months. The fourth quarter of 1998 posted the
fastest rate of economic growth in two years, and early indications suggest that
the first quarter of 1999 may follow suit.
With respect to the U.S. bond market, stronger-than-expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of
longer-term taxable bonds have risen from their October 1998 lows, when
investors had bid up prices during the global "flight to quality." At the same
time, tax exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat. What's more, the disparity
in valuations between large companies, which have led the market's advance, and
smaller ones, which have lagged, has become historically wide.
What do these observations mean for your investments? In our view, actively
managed portfolios that are closely monitored by expert money managers are
likely to provide better returns than passive index investing in 1999. That's
because selectivity is expected to be more critical to performance than it has
been over the past few years. In a potentially overvalued stock market and
rising interest-rate environment, the ability to identify the most promising
securities could become paramount.
Even though many equity investors may be tempted to jump aboard the
technology bandwagon, we suggest a more prudent course: broad diversification
beyond any single asset class, industry, capitalization range or geographic
region. We believe that the risks of this investment environment require
consideration of a broad range of investments and markets, including bonds. That
way, if one market experiences setbacks, one or more of the others may help
cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
Sincerely,
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
March 19, 1999
3 Oppenheimer Main Street California Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How did Oppenheimer Main Street California Municipal Fund perform during the
six-month period that ended February 28, 1999?
We are generally pleased with the Fund's performance over the past six months.
Not only has the municipal bond market rallied overall since September, but the
Fund held some of the individual securities that led the market's advance. In
fact, several of our holdings received credit rating upgrades from the major
independent rating agencies, which helped to increase their investment value.
Why did the municipal bond market rally during the second half of 1998?
When the reporting period began in September 1998, many financial markets around
the world were in disarray and global economic conditions were uncertain. The
U.S. stock market and the higher yielding sectors of the U.S. bond market were
in the midst of a sharp decline triggered by the spread of the global currency
and credit crisis from Asia to Russia and Latin America. Lower overseas demand
for U.S. goods and services was expected to reduce the growth of domestic
corporate earnings, and investors became concerned that U.S. economic growth
might suffer.
Unlike equity investors, fixed income investors tend to welcome slower
economic growth because it helps alleviate inflationary pressures that may be
present in the economy. In addition, slower growth makes it more likely that
interest rates will decline. As a result, prices of high-quality bonds rose in
the third quarter of 1998, especially U.S. Treasury securities and highly rated
municipal bonds. However, municipal bonds lagged the performance of comparable
U.S. Treasury securities over the same period.
4 Oppenheimer Main Street California Municipal Fund
<PAGE>
[GRAPHIC APPEARS HERE]
Portfolio Management Team (l to r)
Bob Patterson
Caryn Halbrecht/1/
(Portfolio Manager)
Jerry Webman
Why did U.S. Treasury securities provide higher returns than municipal bonds?
In last summer's uncertain market environment, both domestic and overseas
investors sold investments they perceived as risky. Instead, they flocked to
the relative safety of U.S. Treasury securities. These securities are backed by
the full faith and credit of the U.S. government and are considered among the
safest investments in the world. This "flight to quality" drove up the demand of
U.S. Treasury securities and, in turn, their prices.
Unlike U.S. Treasury securities, however, there was an abundant supply of
municipal bonds to meet the relatively steady level of demand. Because overseas
investors and most institutions receive no tax benefits from municipal bonds,
they did not contribute to an increase in demand within this market sector. In
addition, municipalities and other issuers took advantage of low interest rates
last year to finance new projects and refinance existing ones at lower costs.
With the second largest volume of new tax exempt issuance in history entering
the market in 1998, plenty of securities were available to satisfy demand from
individual investors and mutual funds. Accordingly, while municipal bond prices
rallied when interest rates fell, they did not rise to the extent that prices of
U.S. Treasury securities did.
1. Effective December 22, 1998, the Fund's portfolio manager is Caryn Halbrecht.
5 Oppenheimer Main Street California Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How was the Fund managed in this environment?
We remained nearly fully invested in a diversified portfolio of tax exempt
securities from a wide variety of issuers. We emphasized bonds that provide
protection against being redeemed early, or "called," by their issuers. Because
having bonds called while interest rates are falling often requires us to
reinvest the proceeds at lower yields, having such "call protection" was an
important part of our strategy over the past six months.
Later in the period, we shifted our focus to higher quality bonds,
including insured bonds. The differences in yields between highly rated bonds
and lower rated bonds had narrowed substantially during the second half of last
year. Therefore, there was little incentive to assume the additional credit
risks that lower rated bonds entail.
In what types of municipal projects did the Fund invest over the past six
months?
Over the period, we continued to hold bonds financing a wide scope of California
municipal projects, ranging from airports to convention centers. Of these
positions, several were insured bonds, which are guaranteed as to the timely
payment of interest and principal, should the issuer default on the underlying
debt. We also added some holdings in general obligation bonds, which are backed
by the general taxation power of the State of California. However, as it became
increasingly more difficult to find attractively priced bonds from California
issuers, we sought good opportunities in the bonds of Puerto Rico, which are
also exempt from California income tax.
Avg Annual Total Returns
For the Periods Ended 3/31/99/2/
Class A
Since
1 year 5 year Inception
- --------------------------
1.03% 6.78% 7.47%
- --------------------------
Class B
Since
1 year 5 year Inception
- --------------------------
0.01% 6.45% 4.99%
- --------------------------
2. 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 maximum 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 1% (since inception on
10/29/93). Class B shares are subject to an annual 0.75% asset-based sales
charge. An explanation of the different performance calculations is in the
Fund's prospectus.
6 Oppenheimer Main Street California Municipal Fund
<PAGE>
What is your outlook for the municipal bond market?
We remain very optimistic. Our outlook is especially positive for tax exempt
bonds, however, because they have become quite inexpensive relative to their
historical price relationship with U.S. Treasury securities. In fact, during
October 1998, some tax exempt bond yields equaled the yields of comparable
taxable government bonds. In effect, those who invested in municipal bonds in
October received the income tax benefits for free!
While municipal bond yields have moderated somewhat relative to U.S.
Treasury securities since this past October, they remain quite inexpensive
compared to historical norms. If the yield relationship between tax exempt and
taxable bonds returns to more normal levels, as we expect, 1999 may be a
particularly good year for municipal bonds, making these tax exempt securities
an important part of The Right Way to Invest.
Top Five Sectors5
- ------------------------------------------------------------
Single Family Housing 18.8%
- ------------------------------------------------------------
Special Assessment 18.1
- ------------------------------------------------------------
General Obligation 12.7
- ------------------------------------------------------------
Municipal Leases 8.7
- ------------------------------------------------------------
Highways 7.8
- ------------------------------------------------------------
3. Portfolio is subject to change. Percentages are as of February 28, 1999, and
are dollar-weighted based on invested assets. 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 5.89% of total investments)
but to which the Manager in its judgment has assigned ratings as securities
comparable to those rated by a rating agency in the same category.
4. Standardized yield is based on net investment income for the 30-day period
ended February 28, 1999. Falling share prices will tend to artificially raise
yields.
5. Portfolio is subject to change. Percentages are as of February 28, 1999, and
are based on total market value of investments.
Credit Allocation/3/
[PIE CHART APPEARS HERE]
AAA 50.8%
AA 13.4
A 14.0
BBB 21.8
Standardized Yields/4/
For the 30 Days Ended 2/28/99
- -----------------------------
Class A 4.35%
- -----------------------------
Class B 3.56%
- -----------------------------
7 Oppenheimer Main Street California Municipal Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
8 Oppenheimer Main Street California Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Statement of Investments February 28, 1999 (Unaudited)
- -----------------------------------------------------------------------------------------
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -----------------------------------------------------------------------------------------
Municipal Bonds and Notes--101.3%
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
California--93.7%
Alameda, CA PFAU RRB, Marina Village
Assessment District Refinancing,
6.375%, 9/2/14 NR/NR $2,100,000 $2,142,000
- -----------------------------------------------------------------------------------------
Anaheim, CA PFAU TXAL RB, MBIA Insured,
Inverse Floater, 9.48%, 12/28/18(1) Aaa/AAA 1,000,000 1,297,500
- -----------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical
Center, Prerefunded, Series A, 6.50%, 12/1/11 A2/NR 1,500,000 1,655,745
- -----------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, American
Baptist Homes, Series A, 6.20%, 10/1/27 NR/BBB 1,790,000 1,893,927
- -----------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, Episcopal
Homes Foundation, 5.125%, 7/1/18 NR/A- 1,500,000 1,476,390
- -----------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, Rhonda
Haas Goldman Plaza, 5.125%, 5/15/23 NR/A+ 700,000 692,286
- -----------------------------------------------------------------------------------------
CA CDAU Lease RB, United Airlines, Series A,
5.70%, 10/1/33 Baa3/BB+ 3,200,000 3,289,504
- -----------------------------------------------------------------------------------------
CA CDAU MH RB, Village Riviera Hills,
Series E, 5.45%, 2/1/25 NR/AAA 1,000,000 1,047,790
- -----------------------------------------------------------------------------------------
CA Foothill/Eastern Transportation Corridor
Agency Toll Road RB, Sr. Lien, Series A,
6.50%, 1/1/32 Baa/BBB-/BBB 1,400,000 1,562,890
- -----------------------------------------------------------------------------------------
CA GOB, 4.75%, 12/1/28 Aa3/AA+/AA- 1,000,000 957,690
- -----------------------------------------------------------------------------------------
CA GOB, 5%, 10/1/23 Aa3/A+/AA- 4,000,000 3,946,840
- -----------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series A-2,
6.45%, 8/1/25 Aaa/AAA 2,500,000 2,671,500
- -----------------------------------------------------------------------------------------
CA HFA SFM RB, Series A, Cl. I, 5.40%, 8/1/26 Aaa/AAA 1,810,000 1,829,295
- -----------------------------------------------------------------------------------------
CA HFA SFM RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,860,000 5,192,716
- -----------------------------------------------------------------------------------------
CA PCFAU RB, Pacific Gas & Electric Co.
Project, Series B, 6.35%, 6/1/09 A1/AA- 2,000,000 2,203,700
- -----------------------------------------------------------------------------------------
CA PWBL RB, State Prison Department of
Corrections, Series E, FSA Insured,
5.50%, 6/1/15 Aaa/AAA 2,000,000 2,179,160
- -----------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program, Series A,
5.75%, 12/1/29 NR/AAA 2,000,000 2,177,720
- -----------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program, Series B,
7.75%, 9/1/26 NR/AAA 1,340,000 1,477,356
- -----------------------------------------------------------------------------------------
</TABLE>
9 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Investments (Unaudited)(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program, Series B-5,
5.75%, 12/1/29 NR/AAA $1,500,000 $1,631,940
- -------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program,
Series D-CL. 5, 6.70%, 5/1/29 NR/AAA 1,930,000 2,209,348
- -------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP, Inverse
Floater, 7.575%, 11/1/15(1) A1/NR 1,200,000 1,249,500
- -------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP,
Community Hospitals of Central California
Project, 5%, 2/1/23 Baa1/NR 285,000 269,410
- -------------------------------------------------------------------------------------
Contra Costa Cnty., CA SPTX RRB, CFD 91-1,
5.58%, 8/1/16 NR/NR 3,075,000 3,109,840
- -------------------------------------------------------------------------------------
Corona, CA SFM RB, Sub. Lien, Series B,
6.30%, 11/1/28 A2/NR 800,000 858,648
- -------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National
Medical Center, 6.25%, 4/1/23 Baa1/NR 2,460,000 2,621,204
- -------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB,
MBIA Insured, Zero Coupon, 6.20%, 11/1/19(2) Aaa/AAA 2,000,000 698,080
- -------------------------------------------------------------------------------------
Fontana, CA RA TXAL GORB, Jurupa Hills
Redevelopment Project, Prerefunded,
Series A, 7.10%, 10/1/23 NR/BBB+ 1,960,000 2,226,129
- -------------------------------------------------------------------------------------
Fontana, CA RA TXAL Refunding Bonds,
Jurupa Hills Redevelopment Project,
Series A, 5.50%, 10/1/19 NR/BBB+ 1,185,000 1,207,337
- -------------------------------------------------------------------------------------
Fresno, CA HAU MH RB, Central Valley
Coalition Projects, Series A, 5.60%, 8/1/30 NR/AAA 3,075,000 3,200,583
- -------------------------------------------------------------------------------------
Fresno, CA USD GORB, Series A,
MBIA Insured, 6.55%, 8/1/20 Aaa/AAA/AAA 1,225,000 1,453,622
- -------------------------------------------------------------------------------------
Fresno, CA USD GOUN, Series A,
MBIA Insured, 6.40%, 8/1/16 Aaa/AAA/AAA 1,000,000 1,182,870
- -------------------------------------------------------------------------------------
Lake Elsinore, CA PFAU TXAL Bonds,
Series A, 5.50%, 9/1/30 NR/BBB 2,500,000 2,498,125
- -------------------------------------------------------------------------------------
Lake Elsinore, CA School FAU RRB,
Horsethief Canyon, 5.35%, 9/1/10 NR/NR 1,015,000 1,011,975
- -------------------------------------------------------------------------------------
Las Virgenes, CA USD CAP Bonds, Series A,
MBIA Insured, Zero Coupon, 4.95%, 11/1/12(2) Aaa/AAA/AAA 2,095,000 1,116,300
- -------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A,
FGIC Insured, 6%, 5/15/09 Aaa/AAA 500,000 568,105
- -------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A,
FGIC Insured, 6%, 5/15/10 Aaa/AAA 500,000 570,915
</TABLE>
10 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
Los Angeles Cnty., CA CAP COP, Disney
Parking Project, Zero Coupon, 6.95%, 9/1/11(2) Baa1/BBB/A- $2,340,000 $1,262,079
- -------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP,
Disney Parking Project, Zero Coupon,
5.67%, 9/1/16(2) Baa1/BBB/A- 1,745,000 688,053
- -------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB,
Series A, FSA Insured, 5%, 7/1/12(3) Aaa/AAA/AAA 2,000,000 2,078,740
- -------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB,
Series A, FSA Insured, 5%, 7/1/19(3) Aaa/AAA/AAA 2,000,000 1,971,320
- -------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Public Works FAU RRB,
Regional Park & Open Space District,
Series A, 5%, 10/1/16 Aa3/AA 1,900,000 1,920,957
- -------------------------------------------------------------------------------------------
Los Angeles, CA USD GOB, Series A,
FGIC Insured, 6%, 7/1/15 Aaa/AAA/AAA 1,000,000 1,145,240
- -------------------------------------------------------------------------------------------
Modesto, CA Irrigation District Refunding COP,
Capital Improvements, Series A, AMBAC
Insured, 4.75%, 7/1/26 Aaa/AAA/AAA 2,300,000 2,209,679
- -------------------------------------------------------------------------------------------
Palmdale, CA Civic Authority RRB, Merged
Redevelopment Project, Prerefunded,
Series A, 6.60%, 9/1/34 Aaa/AAA 595,000 689,908
- -------------------------------------------------------------------------------------------
Palmdale, CA Civic Authority RRB, Merged
Redevelopment Project, Unrefunded Balance,
Series A, 6.60%, 9/1/34 Aaa/AAA 405,000 447,744
- -------------------------------------------------------------------------------------------
Pittsburg, CA RA TXAL Refunding Bonds,
Los Medanos Community Development
Project, Sub. Lien, 6.20%, 8/1/19 NR/BBB 1,000,000 1,090,890
- -------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 2,500,000 3,291,875
- -------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A,
MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 500,000 575,810
- -------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
FGIC Insured, Inverse Floater, 8.164%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 1,260,687
- -------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, Inverse Floater, 9.461%, 7/8/22(1) Aaa/AAA 500,000 660,000
- -------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD No. 88-12 SPTX Bonds,
Prerefunded, 7.55%, 9/1/17 NR/NR 1,500,000 1,624,080
- -------------------------------------------------------------------------------------------
Riverside Cnty., CA PFAU TXAL RRB,
Redevelopment Projects, Series A,
5.625%, 10/1/33 Baa2/BBB- 1,650,000 1,691,712
- -------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to
Maturity, Series A, 7.80%, 5/1/21 Aaa/AAA 1,000,000 1,345,270
- -------------------------------------------------------------------------------------------
Riverside, CA PFAU Lease RB, AMBAC
Insured, 5.25%, 10/1/17 Aaa/AAA 2,100,000 2,169,741
</TABLE>
11 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Investments (Unaudited)(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
Sacramento Cnty., CA SFM RB, Escrowed to
Maturity, 8.125%, 7/1/16(4) Aaa/AAA $2,810,000 $3,805,190
- -------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB,
FGIC Insured, Inverse Floater, 9.477%, 8/15/18(1) Aaa/AAA/AAA 1,500,000 1,777,500
- -------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RRB,
MBIA Insured, 5.25%, 7/1/12 NR/AAA/AAA 250,000 265,320
- -------------------------------------------------------------------------------------------
Salinas Valley, CA Solid Waste Authority RB,
5.80%, 8/1/27 Baa3/BBB 1,665,000 1,700,231
- -------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority
Revenue COP, Prerefunded, Series 91-B,
MBIA Insured, Inverse Floater, 9.12%, 4/8/21(1) Aaa/AAA 1,000,000 1,276,250
- -------------------------------------------------------------------------------------------
San Diego, CA Convention Center Expansion
FAU Lease RB, Series A, 5.25%, 4/1/15 Aaa/AAA/AAA 3,000,000 3,148,920
- -------------------------------------------------------------------------------------------
San Francisco, CA Bay Area Rapid Transit
District Sales Tax RRB, AMBAC Insured,
6.75%, 7/1/11 Aaa/AAA/AAA 1,000,000 1,227,880
- -------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. International
Airport Commission RB, Second Series Issue
13-B, MBIA Insured, 8%, 5/1/07 Aaa/AAA 1,140,000 1,413,292
- -------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. International
Airport Commission RB, Second Series Issue
14-A, MBIA Insured, 8%, 5/1/07 Aaa/AAA 1,290,000 1,599,252
- -------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. International
Airport Commission RRB, Second Series Issue
15-A, FSA Insured, 5%, 5/1/21 Aaa/AAA/AAA 1,000,000 980,880
- -------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. RA Lease RB,
CAP, George R. Moscone Project, Zero Coupon,
5.36%, 7/1/10(2) A1/A-/A+ 4,500,000 2,672,550
- -------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL CAP Refunding Bonds,
Redevelopment Projects, Series C,
Zero Coupon, 5.20%, 8/1/13(2) A2/A 2,350,000 1,137,000
- -------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, Prerefunded,
6.75%, 1/1/32 Aaa/AAA/AAA 3,500,000 3,963,785
- -------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RRB, CAP, Series A,
0%/5.75%, 1/15/21(5) Baa3/BBB-/BBB 3,200,000 2,282,944
- -------------------------------------------------------------------------------------------
San Ysidro, CA SDI GOB, AMBAC Insured,
6.125%, 8/1/21 Aaa/AAA 700,000 795,298
- -------------------------------------------------------------------------------------------
South Orange Cnty., CA PFAU SPTX RB,
Foothill Area, Series C, FGIC Insured,
8%, 8/15/08 Aaa/AAA/AAA 1,500,000 1,946,325
</TABLE>
12 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California (continued)
Southern CA Home FAU SFM RB, Series A,
7.35%, 9/1/24 NR/AAA $ 265,000 $ 274,248
- ---------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB, 5.55%, 10/30/20 Aa2/AA 2,400,000 2,494,488
- ---------------------------------------------------------------------------------------------
Southern CA PPAU Transmission Project RB,
Inverse Floater, 8.025%, 7/1/12(1) Aa3/A+ 2,100,000 2,399,250
- ---------------------------------------------------------------------------------------------
Stanislaus, CA Waste-To-Energy Financing
Agency Solid Waste Facilities RRB, Ogden
Martin System, Inc. Project, 7.50%, 1/1/05 NR/BBB+ 1,285,000 1,344,753
- ---------------------------------------------------------------------------------------------
Suisun City, CA PFAU TXAL RB, Suisun
City Redevelopment Project, Series A,
5.20%, 10/1/28 NR/A- 2,500,000 2,483,050
- ---------------------------------------------------------------------------------------------
Temecula, CA CFD 88-12-A SPTX Refunding
Bonds, 5.625%, 9/1/17 NR/NR 535,000 541,784
- ---------------------------------------------------------------------------------------------
West Covina, CA COP, Queen of the Valley
Hospital, Prerefunded, 6.50%, 8/15/19 A2/NR 1,120,000 1,292,010
------------
132,323,925
- ---------------------------------------------------------------------------------------------
U.S. Possessions--7.6%
PR CMWLTH GOB, 5%, 7/1/27 Baa1/A 3,000,000 2,944,050
- ---------------------------------------------------------------------------------------------
PR CMWLTH GOB, 5.375%, 7/1/25 Baa1/A 1,650,000 1,684,353
- ---------------------------------------------------------------------------------------------
PR CMWLTH GORB, MBIA Insured,
Inverse Floater, 8.344%, 7/1/08(1) Aaa/AAA 1,500,000 1,698,750
- ---------------------------------------------------------------------------------------------
PR CMWLTH HTAU RRB, Series A,
AMBAC Insured, 5.50%, 7/1/13 Aaa/AAA/AAA 1,500,000 1,651,350
- ---------------------------------------------------------------------------------------------
PR CMWLTH HTAU RRB, Series A,
AMBAC Insured, 5.50%, 7/1/14 Aaa/AAA/AAA 1,500,000 1,643,010
- ---------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB,
Portfolio 1, Series B, 7.65%, 10/15/22 Aaa/AAA 125,000 131,490
- ---------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental PC
Facilities Tourist RB, Mennonite General
Hospital Project, Series A, 6.50%, 7/1/12 NR/BBB-/BBB 595,000 642,255
- ---------------------------------------------------------------------------------------------
PR Public Buildings Authority RB,
Government Facilities, Series B,
AMBAC Insured, 5%, 7/1/27 Aaa/AAA 300,000 299,754
------------
10,695,012
- ---------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $135,053,593) 101.3% 143,018,937
- ---------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.3) (1,857,874)
----------- ------------
Net Assets 100.0% $141,161,063
=========== ============
</TABLE>
13 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Investments (Unaudited)(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
To simplify the listings of securities, abbreviations are used per the table below:
<S> <C> <C> <C>
CAP -Capital Appreciation PC -Pollution Control
CDAU -Communities Development Authority PCFAU -Pollution Control Finance Authority
CFD -Community Facilities District PFAU -Public Finance Authority
CMWLTH -Commonwealth PPAU -Public Power Authority
COP -Certificates of Participation PWBL -Public Works Board Lease
FAU -Finance Authority RA -Redevelopment Agency
GOB -General Obligation Bonds RB -Revenue Bonds
GORB -General Obligation Refunding Bonds RRB -Revenue Refunding Bonds
GOUN -General Obligation Unlimited Notes SCDAU -Statewide Communities Development
HAU -Housing Authority Authority
HF -Health Facilities SDI -School District
HFA -Housing Finance Agency SFM -Single Family Mortgage
HTAU -Highway & Transportation Authority SPTX -Special Tax
MH -Multifamily Housing TXAL -Tax Allocation
MTAU -Metropolitan Transportation Authority USD -Unified School District
MUD -Municipal Utility District
</TABLE>
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 $11,619,437 or 8.23% of the
Fund's net assets as of February 28, 1999.
2. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
3. When-issued security to be delivered and settled after February 28, 1999.
4. Securities with an aggregate market value of $460,414 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
14 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of February 28, 1999, securities subject to the alternative minimum tax
amount to $39,188,834 or 27.76% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
- ---------------------------------------------------------------------------------
<S> <C> <C>
Single Family Housing $ 26,896,594 18.8%
Special Assessment 25,928,704 18.1
General Obligation 18,198,903 12.7
Municipal Leases 12,420,258 8.7
Highways 11,103,979 7.8
Electric Utilities 8,572,437 6.0
Hospital/Healthcare 7,730,124 5.4
Sales Tax 6,415,592 4.5
Marine/Aviation Facilities 5,132,444 3.6
Multifamily Housing 4,248,373 3.0
Adult Living Facilities 4,062,603 2.9
Water Utilities 3,770,738 2.6
Corporate Backed 3,289,504 2.3
Resource Recovery 3,044,984 2.1
Pollution Control 2,203,700 1.5
------------ -----
Total $143,018,937 100.0%
============ =====
</TABLE>
See accompanying Notes to Financial Statements
15 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------
<S> <C>
Investments, at value (cost $135,053,593)--see accompanying statement $143,018,937
- ----------------------------------------------------------------------------------------
Cash 741,386
- ----------------------------------------------------------------------------------------
Receivables and other assets:
Interest 1,694,201
Shares of capital stock sold 134,445
Other 16,065
------------
Total assets 145,605,034
- ----------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased 3,967,678
Dividends 355,739
Shareholder reports 50,646
Daily variation on futures contracts--Note 5 36,094
Distribution and service plan fees 11,277
Shares of capital stock redeemed 5,991
Transfer and shareholder servicing agent fees 5,580
Other 10,966
------------
Total liabilities 4,443,971
- ----------------------------------------------------------------------------------------
Net Assets $141,161,063
============
- ----------------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of capital stock $ 108,512
- ----------------------------------------------------------------------------------------
Additional paid-in capital 133,109,086
- ----------------------------------------------------------------------------------------
Overdistributed net investment income (361,560)
- ----------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 392,533
- ----------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 7,912,492
------------
Net assets $141,161,063
============
</TABLE>
16 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Net Asset Value Per Share
<S> <C>
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$112,259,965 and 8,627,161 shares of capital stock outstanding) $13.01
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $13.66
- --------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $28,901,098
and 2,224,080 shares of capital stock outstanding) $12.99
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest $3,696,408
- ----------------------------------------------------------------------------------
Expenses
Management fees--Note 4 373,771
- ----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class B 128,746
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 37,118
- ----------------------------------------------------------------------------------
Shareholder reports 22,346
- ----------------------------------------------------------------------------------
Registration and filing fees:
Class A 6,972
Class B 2,974
- ----------------------------------------------------------------------------------
Legal, auditing and other professional fees 5,743
- ----------------------------------------------------------------------------------
Custodian fees and expenses 5,551
- ----------------------------------------------------------------------------------
Directors' compensation 1,108
- ----------------------------------------------------------------------------------
Other 2,895
----------
Total expenses 587,224
Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 (101,938
Less expenses paid indirectly--Note 4 (5,265)
----------
Net expenses 480,021
- ----------------------------------------------------------------------------------
Net Investment Income 3,216,387
- ----------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments 235,731
Closing of futures contracts 158,551
----------
Net realized gain 394,282
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (546,960)
----------
Net realized and unrealized loss (152,678)
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $3,063,709
==========
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1999 Year Ended
(Unaudited) August 31, 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,216,387 $ 5,785,304
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) 394,282 (147,181)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (546,960) 4,576,330
------------ ------------
Net increase in net assets resulting from operations 3,063,709 10,214,453
- ----------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (2,721,080) (5,113,266)
Class B (505,215) (736,400)
- ----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (802,490)
Class B -- (131,382)
- ----------------------------------------------------------------------------------------------
Capital Stock Transactions
Net increase in net assets resulting from
capital stock transactions--Note 2:
Class A 2,558,924 16,887,977
Class B 5,778,850 10,757,185
- ----------------------------------------------------------------------------------------------
Net Assets
Total increase 8,175,188 31,076,077
- ----------------------------------------------------------------------------------------------
Beginning of period 132,985,875 101,909,798
------------ ------------
End of period (including overdistributed net investment
income of $361,560 and $351,652, respectively) $141,161,063 $132,985,875
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------
Six Months Year
Ended Ended
February 28, August 31,
Year Ended June 30,
1999 (Unaudited) 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 13.02 $ 12.64
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .32 .65
Net realized and unrealized gain (loss) (.01) .51
-------- --------
Total income (loss) from investment operations .31 1.16
- --------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.32) (.67)
Dividends in excess of net investment income -- --
Distributions from net realized gain -- (.11)
Distributions in excess of net realized gain -- --
-------- --------
Total dividends and distributions
to shareholders (.32) (.78)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 13.01 $ 13.02
======== ========
- --------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 2.40% 9.33%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $112,260 $109,811
- --------------------------------------------------------------------------------
Average net assets (in thousands) $111,096 $ 99,678
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.93%(4) 5.04%
Expenses, before voluntary assumption by
the Manager(5) 0.67%(4) 0.69%
Expenses, net of voluntary assumption by
the Manager 0.52%(4) 0.53%
- --------------------------------------------------------------------------------
Portfolio turnover rate(6) 5% 30%
</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. Assumes a $1,000 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>
- ---------------------------------------------------------------------------------------------------------------------------
Year Ended June 30,
1997 1996(2) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <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
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .12 .73 .73 .75
Net realized and unrealized gain (loss) .49 .01 .07 .27 (.80)
------- ------- ------- ------- -------
Total income (loss) from investment operations 1.22 .13 .80 1.00 (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.74) (.12) (.73) (.69) (.73)
Dividends in excess of net investment income -- -- -- (.04) (.03)
Distributions from net realized gain -- -- -- -- --
Distributions in excess of net realized gain -- -- (.01) -- (.03)
------- ------- ------- ------- -------
Total dividends and distributions
to shareholders (.74) (.12) (.74) (.73) (.79)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.64 $ 12.16 $ 12.15 $ 12.09 $ 11.82
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 10.24% 1.12% 6.73% 8.93% (0.60)%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $89,991 $76,817 $76,913 $78,134 $79,555
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $80,311 $77,584 $78,676 $76,148 $81,741
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.91% 6.00%(4) 5.99% 6.27% 6.09%
Expenses, before voluntary assumption by
the Manager(5) 0.59% 0.57%(4) 0.58% 0.57% 0.53%
Expenses, net of voluntary assumption by
the Manager N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 46% 1% 33% 14% 20%
</TABLE>
4. Annualized.
5. 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.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended February 28, 1999, were $16,716,490 and $7,141,476, respectively.
21 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
----------------------------
Six Months Year
Ended Ended
February 28, August 31,
Year Ended
1999 (Unaudited) 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $13.01 $12.63
- -------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 .54
Net realized and unrealized gain (loss) (.02) .49
----- ------
Total income (loss) from investment operations .24 1.03
- -------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.54)
Dividends in excess of net investment income -- --
Distributions from net realized gain -- (.11)
Distributions in excess of net realized gain -- --
----- ------
Total dividends and distributions
to shareholders (.26) (.65)
- -------------------------------------------------------------------------------
Net asset value, end of period $12.99 $13.01
====== ======
- -------------------------------------------------------------------------------
Total Return, at Asset Value(3) 1.81% 8.24%
- -------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) 28,902 $23,175
- -------------------------------------------------------------------------------
Average net assets (in thousands) 26,002 $18,087
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.90%(4) 4.19%
Expenses, before voluntary assumption by
the Manager(5) 1.68%(4) 1.70%
Expenses, net of voluntary assumption by
the Manager 1.52%(4) 1.53%
- -------------------------------------------------------------------------------
Portfolio turnover rate(6) 5% 30%
</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. Assumes a $1,000 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.
22 Oppenheimer Main Street California Municipal Fund
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
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 -- -- -- -- --
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 Asset Value(3) 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%(4) 4.94% 5.17% 4.91%(4)
Expenses, before voluntary assumption by
the Manager(5) 1.60% 1.62%(4) 1.60% 1.55% 1.62%(4)
Expenses, net of voluntary assumption by
the Manager N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 46% 1% 33% 14% 20%
</TABLE>
4. Annualized.
5. 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.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended February 28, 1999, were $16,716,490 and $7,141,476, respectively.
See accompanying Notes to Financial Statements.
23 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 exempt
from Federal and California personal income taxes as is available from investing
in municipal securities while attempting to preserve capital. The Fund's
investment advisor 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, except for purchases greater than $1 million. Class A and 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, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
24 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. As of August 31, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $11,000, which expires in 2006.
- --------------------------------------------------------------------------------
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. 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.
- --------------------------------------------------------------------------------
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,
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 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.
25 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (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>
Six Months Ended February 28, 1999 Year Ended August 31, 1998
---------------------------------- ---------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 775,992 $10,133,225 2,165,645 $27,847,918
Dividends and
distributions reinvested 135,029 1,763,249 290,138 3,721,102
Redeemed (715,311) (9,337,550) (1,141,736) (14,681,043)
-------- ---------- ---------- -----------
Net increase 195,710 $2,558,924 1,314,047 $16,887,977
======== ========== ========== ===========
- -------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 567,498 $7,412,488 931,591 $11,964,499
Dividends and distributions
reinvested 25,467 332,135 44,882 575,114
Redeemed (150,583) (1,965,773) (138,617) (1,782,428)
-------- ---------- ---------- -----------
Net increase 442,382 $5,778,850 837,856 $10,757,185
======== ========== ========== ===========
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. Unrealized Gains and Losses on Investments As of February 28, 1999, net
unrealized appreciation on investments of $7,965,344 was composed of gross
appreciation of $8,027,744, and gross depreciation of $62,400.
- --------------------------------------------------------------------------------
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 if the Fund's net assets are $100 million or more (it is
reduced if assets are less). The Manager has voluntarily undertaken to limit its
fees to 0.40% of average annual net assets if the Fund's assets are $100 million
or more. The Manager can terminate the waiver at any time. The Fund's management
fee for the six months ended February 28, 1999 was 0.40% of average annual net
assets for Class A and Class B shares, after giving affect to the waiver.
26 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the six months ended February 28, 1999, commissions (sales charges paid by
investors) on sales of Class A shares totaled $146,835, of which $32,512 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 A and
Class B shares were $6,536 and $246,897, respectively. During the six months
ended February 28, 1999, OFDI received contingent deferred sales charges of
$4,038 and $38,637, respectively, upon redemption of Class A and Class B shares,
as reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund and other Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on cash balances maintained by the Fund.
The Fund has adopted a Distribution and Service Plan for Class B
shares to reimburse OFDI for its 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 for its services rendered in distributing 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. Each fee
is computed on the average annual net assets of Class B shares, determined as of
the close of each regular business day. During the six months ended February 28,
1999, OFDI retained $110,285 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 February 28, 1999, OFDI had incurred excess distribution and
servicing costs of $1,024,629 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.
27 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Futures Contracts (continued)
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.
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.
As of February 28, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts February 28, 1999 Depreciation
- --------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond 6/99 55 $6,653,281 $52,852
- --------------------------------------------------------------------------------------
</TABLE>
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months
ended February 28, 1999.
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, Director, Vice President,
Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Caryn Halbrecht, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- --------------------------------------------------------------------------------
Investment Advisor 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.
The financial statements included herein have been
taken from the records of the Fund without examination
of the independent auditors.
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, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible
loss of the principal amount invested.
29 Oppenheimer Main Street California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Real Asset Funds
- ---------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
- ---------------------------------------------------------------------------------------------
Global Stock Funds
- ---------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Global Growth & Income Fund
International Small Global Fund Europe Fund
Company Fund Quest Global Value Fund
- ---------------------------------------------------------------------------------------------
Stock Funds
- ---------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Large Cap Growth Fund
Quest Small Cap Value Fund Quest Capital Value Fund Disciplined Value Fund
Quest Value Fund
- ---------------------------------------------------------------------------------------------
Stock & Bond Funds
- ---------------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Multiple Strategies Fund
Income Fund1 Quest Balanced Disciplined Allocation Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Capital Income Fund2
- ---------------------------------------------------------------------------------------------
Taxable Bond Funds
- ---------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
- ---------------------------------------------------------------------------------------------
Municipal Bond Funds
- ---------------------------------------------------------------------------------------------
California Municipal Fund3 Pennsylvania Municipal Fund3 Rochester Division:
Florida Municipal Fund3 Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund3 Insured Municipal Fund Limited Term New York
New York Municipal Fund3 Intermediate Municipal Fund Municipal Fund
- ---------------------------------------------------------------------------------------------
Money Market Funds4
- ---------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 12/22/98, the Fund's name was changed from "Main Street Income & Growth
Fund."
2. On 4/1/99, the Fund's name was changed from "Equity Income Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer Main Street California Municipal Fund
<PAGE>
This Page is Intentionally Left Blank
<PAGE>
Information and services
- --------------------------------------------------------------------------------
Internet As an Oppenheimer fund shareholder, you have
24-hr access to account some special privileges. Whether it's automatic
information. Online investment plans, informative newsletters and
transactions now available hotlines, or ready account access, you can
benefit from services designed to make investing
www.oppenheimerfunds.com simple.
And when you need help, our Customer
General Information Service Representatives are only a toll-free
Mon-Fri 8:30am-9pm ET phone call away. They can provide information
Sat 10am-4pm ET about your account and handle administrative
requests. You can reach them at our General
1-800-525-7048 Information number.
When you want to make a transaction, you
Account Transactions can do it easily by calling our toll-free
Mon-Fri 8:30am-9pm ET Telephone Transactions number or by visiting our
Sat 10am-4pm ET website. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer
1-800-852-8457 funds accounts and your bank checking or savings
account, you can use the Telephone Transactions
number or website to make investments.
PhoneLink For added convenience, you can get
24-hr automated information automated information with OppenheimerFunds
and automated transactions PhoneLink service, available 24 hours a day, 7
days a week. PhoneLink gives you access to a
1-800-533-3310 variety of fund, account, and market
information. Of course, you can always speak to
a Customer Service Representative during the
General Information hours shown at the left.
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-6pm ET You can count on us whenever you need
assistance. That's why the International
1-800-843-4461 Customer Service Association, an independent,
nonprofit organization made up of over 3,200
OppenheimerFunds customer service management professionals from
Information Hotline around the country, honored the Oppenheimer
24 hours a day, timely and funds' transfer agent, OppenheimerFunds
insightful messages on the Services, with their Award of Excellence in
economy and issues that 1993.
affect your investments
1-800-835-3104 So call us today, or visit us at our
website at www.oppenheimerfunds.com--we're here
to help.
RS 0725.001.0299 April 29, 1999
[LOGO OF OPPENHEIMER FUNDS(R) DISTRIBUTOR, INC. APPEARS HERE]
