<PAGE> 1
[PHOTO]
Semiannual Report February 29, 2000
Oppenheimer
MAIN STREET(R)
CALIFORNIA MUNICIPAL FUND
[OPPENHEIMERFUNDS LOGO]
The Right Way to Invest
<PAGE> 2
CONTENTS
1 President's Letter
3 An Interview
with Your Fund's
Manager
8 Financial
Statements
25 Officers and Directors
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
RISING INTEREST RATES HURT THE PERFORMANCE OF MUNICIPAL BONDS throughout the
reporting period.
AS OF FEBRUARY 29, 2000, LONG-TERM CALIFORNIA MUNICIPAL BONDS PROVIDED OVER 90%
OF THE YIELD AVAILABLE FROM COMPARABLE U.S. TREASURIES--making them attractive
values on an after-tax basis.
- ------------------------
CUMULATIVE TOTAL RETURNS
For the 6-Month Period
Ended 2/29/00*
<TABLE>
<CAPTION>
- ------------------------
Class A
Without With
Sales Chg. Sales Chg.
- ------------------------
<S> <C>
- -1.99% -6.65%
</TABLE>
<TABLE>
<CAPTION>
Class B
Without With
Sales Chg. Sales Chg.
- ------------------------
<S> <C>
- -2.56% -7.33%
- ------------------------
</TABLE>
NOT FDIC INSURED.
NO BANK GUARANTEE.
MAY LOSE VALUE.
* See page 7 for further details.
<PAGE> 3
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer
Main Street(R) California
Municipal Fund
BRIDGET A. MACASKILL
President
Oppenheimer
Main Street(R) California
Municipal Fund
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER,
For many years, we have encouraged investors to consider whether they could
tolerate more risk in their long-term investments by participating in the stock
market, which has historically provided higher long-term returns than any other
asset class. Today, however, we have a very different concern: some investors
may be assuming too much risk by concentrating their investments in just a
handful of stocks or sectors or by "chasing performance."
Alan Greenspan, the Chairman of the Federal Reserve Board, has stated his
view that the recent spectacular returns of some sectors of the market are
partly responsible for pushing our economy to growth rates that could lead to
higher inflation. The dramatic rise in the prices of a narrow segment of the
market has created enormous wealth for some investors. In turn, those investors
are spending at a rate that the Fed believes may threaten the healthy growth of
our economy.
That's why the Fed has been raising interest rates steadily and
decisively over the past year. By making borrowing more expensive, the Fed is
attempting to slow economic growth. It is a precarious balancing act: too much
tightening creates the risk of recession, while too little opens the door to
inflation.
The implications are clear: investors must be prepared for near-term
market volatility. In the bond market, higher interest rates usually lead to
lower bond prices. In the stock market, slower economic growth could reduce
corporate earnings and put downward pressure on stock prices. Highly valued
stocks may be particularly vulnerable to a correction. The Securities and
Exchange Commission Chairman, Arthur Levitt, has cautioned investors against the
expectation that the types of returns seen in the recent bull market will last
forever. We agree.
1 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 4
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Because of the prospect of continued market volatility, we encourage you
to consider diversifying your investments. Indeed, diversification may help you
mitigate the effects of sharp declines in any one area. It may also help you
better position your portfolio to seek greater returns over the long run.
While "new economy" stocks have risen recently, many "old economy" stocks
are selling at unusually low prices. In the bond market, higher interest rates
over the short term may reduce inflation concerns, which should be beneficial
over the long term. By buying out-of-favor investments, you may be able to
profit when and if they return to favor in the future. Of course, there is no
assurance that value investing will return to favor in the market, but it may be
a diversification strategy to consider for part of your portfolio.
What specific investments should you consider today so that you are
prepared for tomorrow? The answer depends on your individual investing goals,
risk tolerance and financial circumstances. We urge you to talk with your
financial advisor about ways to diversify your portfolio. This may include
considering global diversification as part of your strategy. While investing
abroad has special risks, such as the effects of foreign currency fluctuation,
it also offers opportunities to participate in global economic growth and to
hedge against the volatility in U.S. markets.
We thank you for your continued confidence in OppenheimerFunds, The Right
Way to Invest.
Sincerely,
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
March 21, 2000
2 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Christian Smith
(Portfolio Manager)
Robert Patterson
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
Q. HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE OVER THE SIX-MONTH PERIOD
THAT ENDED FEBRUARY 29, 2000?
A. It has been a difficult period for the municipal securities market, including
Oppenheimer Main Street(R) California Municipal Fund. The rising interest rate
environment, a sharp decline in the demand for municipal bonds and a lack of
supply of new issues were some of the challenges the Fund encountered.
WHAT STEPS ARE YOU TAKING TO HELP IMPROVE THE FUND'S PERFORMANCE?
In November 1999, we began to restructure the Fund under the guidance of
Christian Smith, a money management professional with over 10 years experience
in the municipal market. This change will help us gain a fresh perspective on
the California municipal market, and proactively access the opportunities
available for the Fund.
HOW DID THE ROBUST U.S. ECONOMY AFFECT THE OVERALL MUNICIPAL MARKET?
Ongoing economic strength led to higher interest rates, which, in turn, led to
lower bond prices. With bonds becoming less attractive to investors, many turned
to the stock market for better returns.
3 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 6
"Our focus has been to lower the portfolio's sensitivity to changes in interest
rates."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
The lengthy economic expansion has also resulted in a decrease in supply of
municipal bonds. First, government surpluses on the federal and state level
resulted in less need to issue debt to finance new projects. Second, the rise in
interest rates caused a natural decline in the refinancing of existing debt.
When interest rates are on the upswing, there is little reason for an
organization to retire existing, lower yielding debt, and introduce new
securities with higher yields. Often- times in the financial markets, a decrease
in supply of a particular security leads to higher prices. However, the decline
in the demand for municipals more than offset the falling supply.
HOW WAS THE FUND MANAGED GIVEN THIS DIFFICULT ENVIRONMENT?
Our focus has been to lower the portfolio's sensitivity to interest rates. For
example, we have been working to reduce the Fund's duration versus its benchmark
by focusing on shorter-term securities. When it appears that interest rates have
peaked, we may look to extend the Fund's duration to take advantage of rising
bond prices.
COULD YOU DESCRIBE SOME OF YOUR INVESTMENT STRATEGIES THAT HELPED PERFORMANCE
DURING THE REPORTING PERIOD?
We enhanced returns through select investments in non-rated California real
estate securities. These bonds are typically issued by smaller organizations,
and are used to help finance the infrastructure needed in new housing
developments. As non-rated securities, they generally offer attractive yields.
Once the developments are occupied by tax-paying families and organizations,
this revenue aids the financial stability of the issuer, and the securities may
then become rated--sometimes leading to capital appreciation for the Fund.
4 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 7
<TABLE>
<CAPTION>
- ----------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
For the Periods Ended 3/31/00(1)
Class A Since
1-Year 5-Year Inception
- ----------------------------------
<S> <C> <C>
- -7.98% 4.75% 6.31%
<CAPTION>
Class B Since
1-Year 5-Year Inception
- ----------------------------------
<S> <C> <C>
- -9.01% 4.36% 3.67%
- ----------------------------------
<CAPTION>
STANDARDIZED YIELDS(2)
For the 30 Days Ended 2/29/00
- ----------------------------------
<S> <C>
Class A 5.19%
- ----------------------------------
Class B 4.49
- ----------------------------------
</TABLE>
In addition, we benefited from our investment in a non-profit organization that
helps train handicapped individuals to join the mainstream workforce. This
organization has been in existence for over 30 years, it has a strong management
team in place, and is widely known by companies that are looking for its
services.
HOW DID CALIFORNIA MUNICIPAL BONDS PERFORM COMPARED TO U.S. TREASURIES?
As interest rates rose, both types of securities performed poorly. However, in
recent months investors have bid up the prices of U.S. Treasury securities in
anticipation of the Treasury Department's plan to buy back billions of dollars
of debt. By the end of the reporting period, 30-year, AAA-rated municipal bonds
from California issuers were providing over 95% of the yield of 30-year U.S.
Treasury securities. This compares to a historical average of about 88%. When
the effects of income taxes are taken into account, municipal bonds are
providing much higher levels of "take home" income than U.S. Treasury
securities. As a result, municipal bonds currently represent very attractive
values, in our opinion, especially for California residents in the higher income
tax brackets.
1. See page 7 for further details.
2. Standardized yield is based on net investment income for the 30-day period
ended February 29, 2000. Falling share prices will tend to artificially raise
yields.
5 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 8
<TABLE>
<CAPTION>
- ----------------------------------
CREDIT ALLOCATION(3)
[PIE CHART]
<S> <C>
AAA 51.0
AA 11.9
A 9.5
BBB 19.5
BB 8.1
- ----------------------------------
</TABLE>
WHAT IS YOUR OUTLOOK FOR THE ECONOMY OVER THE NEXT FEW MONTHS?
As we see it, the Federal Reserve will remain diligent in its attempt to slow
the pace of economic growth to help ward off an increase in inflation. As such,
we expect interest rates to continue rising into the summer. However, as the
year progresses, we anticipate seeing growth rates fall, as rising interest
rates should lead to a decline in consumer spending, and less dramatic stock
market gains. Ideally, this would eventually result in interest rates moving
downward.
In the meantime, we will continue to actively monitor the markets--making
careful adjustments to the Fund's portfolio as necessary. We will also work
diligently to enhance returns while being mindful of risk. These are two reasons
why Oppenheimer Main Street California Municipal Fund is an important part of
The Right Way to Invest.
<TABLE>
<CAPTION>
TOP FIVE INDUSTRIES(4)
(Percentage of market value)
- --------------------------------------------------------
<S> <C>
Special Assessment 18.8%
- --------------------------------------------------------
Single Family Housing 15.1
- --------------------------------------------------------
Highways 11.0
- --------------------------------------------------------
General Obligation 8.7
- --------------------------------------------------------
Electric Utilities 8.5
</TABLE>
3. Portfolio data are subject to change. Percentages are as of February 29,
2000, and are dollar-weighted based on invested assets. The Fund may invest up
to 25% of its assets in below-investment-grade securities which carry greater
risk of default. 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 16.0% 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. Portfolio is subject to change. Percentages are as of February 29, 2000, and
are based on total market value of investments.
6 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 9
NOTES
- --------------------------------------------------------------------------------
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 AT WWW.OPPENHEIMERFUNDS.COM.
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. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
CLASS A shares were first publicly offered on 5/18/90. Class A returns include
the current maximum initial sales charge of 4.75%. 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 shares of the Fund were first publicly offered on 10/29/93. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 1% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "life of class" return for Class B uses Class A performance
for the period after conversion. 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.
7 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 10
STATEMENT OF INVESTMENTS February 29, 2000 / Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ PRINCIPAL VALUE
S&P/FITCH AMOUNT SEE NOTE 1
===========================================================================================================
MUNICIPAL BONDS AND NOTES--98.8%
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA--92.5%
Anaheim, CA PFAU TXAL RB, MBIA Insured,
Inverse Floater, 8.87%, 12/28/18(1) Aaa/AAA $1,000,000 $1,103,750
- -----------------------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical Center,
Prerefunded, Series A, 6.50%, 12/1/11 A2/NR 1,425,000 1,500,739
- -----------------------------------------------------------------------------------------------------------
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 1,582,378
- -----------------------------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP,
Rhonda Haas Goldman Plaza, 5.125%, 5/15/23 NR/AA- 700,000 602,217
- -----------------------------------------------------------------------------------------------------------
CA CDAU Lease RB, United Airlines,
Series A, 5.70%, 10/1/33 Baa3/BB+ 3,200,000 2,696,640
- -----------------------------------------------------------------------------------------------------------
CA CDAU MH RB, Village Riviera Hills,
Series E, 5.45%, 2/1/25 NR/AAA 1,000,000 973,160
- -----------------------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency
Toll Road RB, Sr. Lien, Prerefunded,
Series A, 6.50%, 1/1/32 Baa3/BBB-/BBB 1,400,000 1,535,114
- -----------------------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency
Toll Road RRB, Zero Coupon, 5.98%, 1/15/21(2) Aaa/AAA/AAA 5,000,000 1,295,400
- -----------------------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency
Toll Road RRB, Zero Coupon, 6%, 1/15/22(2) Baa3/BBB-/BBB 5,500,000 1,330,010
- -----------------------------------------------------------------------------------------------------------
CA GOUN, 5.75%, 3/1/30 Aa3/AA-/AA 2,000,000 1,945,700
- -----------------------------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series A-2, 6.45%, 8/1/25 Aaa/AAA 2,095,000 2,116,285
- -----------------------------------------------------------------------------------------------------------
CA HFA SFM RB, Series C, 6.75%, 2/1/25 Aa2/AA- 4,770,000 4,841,455
- -----------------------------------------------------------------------------------------------------------
CA Infrastructure & ED Bank RB,
American Center for Wine, Food & Arts, 5.55%, 12/1/12 NR/A/A 1,710,000 1,678,450
- -----------------------------------------------------------------------------------------------------------
CA PCFAU RB, Pacific Gas & Electric Co. Project,
Series B, 6.35%, 6/1/09 A1/AA- 2,000,000 2,110,480
- -----------------------------------------------------------------------------------------------------------
CA PWBL RB, State Prison Department of
Corrections, Series E, FSA Insured, 5.50%, 6/1/15 Aaa/AAA/AAA 2,000,000 2,004,940
- -----------------------------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program,
Series B, 7.75%, 9/1/26 NR/AAA 845,000 899,224
- -----------------------------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program,
Series B, 7.75%, 9/1/26 NR/AAA 5,000 5,000
- -----------------------------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB,
Mtg.-Backed Securities Program,
Series D, Cl. 5, 6.70%, 5/1/29 NR/AAA 1,890,000 1,979,359
- -----------------------------------------------------------------------------------------------------------
CA SCDAU COP, 7.25%, 11/1/29 NR/NR 2,000,000 1,949,100
- -----------------------------------------------------------------------------------------------------------
CA SCDAU COP, Winward Schools, 7.25%, 11/1/29 NR/NR 500,000 497,410
- -----------------------------------------------------------------------------------------------------------
</TABLE>
8 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ PRINCIPAL VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA Continued
CA SCDAU Revenue Refunding COP,
Inverse Floater, 7.11%, 11/1/15(1) A1/NR $1,200,000 $1,122,000
- -----------------------------------------------------------------------------------------------------------
Campbell, CA RA TXAL RB, Central Campbell
Redevelopment Project, Series B, 6.60%, 10/1/32 Baa3/BBB- 1,100,000 1,076,009
- -----------------------------------------------------------------------------------------------------------
Contra Costa Cnty., CA SPTX RRB,
CFD 91-1, 5.58%, 8/1/16 NR/NR 3,075,000 2,703,786
- -----------------------------------------------------------------------------------------------------------
Corona, CA SFM RB, Sub. Lien, Series B, 6.30%, 11/1/28 A2/NR 800,000 802,560
- -----------------------------------------------------------------------------------------------------------
East Palo Alto, CA RA TXAL RB, 6.625%, 10/1/29 NR/NR 850,000 833,943
- -----------------------------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB,
MBIA Insured, Zero Coupon, 6.20%, 11/1/19(2) Aaa/AAA 2,000,000 625,700
- -----------------------------------------------------------------------------------------------------------
Folsom, CA SPTX Bonds, CFD No. 10, 6.875%, 9/1/19 NR/NR 2,000,000 1,979,900
- -----------------------------------------------------------------------------------------------------------
Fontana, CA RA TXAL GORB,
Jurupa Hills Redevelopment Project,
Prerefunded, Series A, 7.10%, 10/1/23 NR/BBB+ 1,960,000 2,118,348
- -----------------------------------------------------------------------------------------------------------
Fresno, CA USD GORB, Series A,
MBIA Insured, 6.55%, 8/1/20 Aaa/AAA/AAA 1,225,000 1,334,968
- -----------------------------------------------------------------------------------------------------------
Fresno, CA USD GOUN, Series A,
MBIA Insured, 6.40%, 8/1/16 Aaa/AAA/AAA 1,000,000 1,092,040
- -----------------------------------------------------------------------------------------------------------
Glendale, CA EU RB, MBIA Insured, 5.90%, 2/1/25 NR/AAA/AAA 5,000,000 5,004,900
- -----------------------------------------------------------------------------------------------------------
Golden West Schools FAU CAP RRB, Series A,
MBIA Insured, Zero Coupon, 6.14%, 2/1/20(2) Aaa/AAA/AAA 2,480,000 749,853
- -----------------------------------------------------------------------------------------------------------
Golden West Schools FAU CAP RRB, Series A,
MBIA Insured, Zero Coupon, 6.14%, 8/1/20(2) Aaa/AAA/AAA 2,000,000 586,840
- -----------------------------------------------------------------------------------------------------------
Irvine, CA Improvement Bond Act 1915
SPAST Bonds, Assessment District No. 94-13,
Group 2, 5.875%, 9/2/17 NR/NR 1,250,000 1,147,637
- -----------------------------------------------------------------------------------------------------------
Lake Elsinore, CA School FAU RRB,
Horsethief Canyon, 5.35%, 9/1/10 NR/NR 2,000,000 1,822,160
- -----------------------------------------------------------------------------------------------------------
Las Virgenes, CA USD CAP Bonds, Series A,
MBIA Insured, Zero Coupon, 4.95%, 11/1/12(2) Aaa/AAA/AAA 2,095,000 1,046,243
- -----------------------------------------------------------------------------------------------------------
Lincoln, CA Improvement Bond Act 1915
PFAU RB, 6.20%, 9/2/25 NR/NR 1,490,000 1,369,444
- -----------------------------------------------------------------------------------------------------------
Lincoln, CA Improvement Bond Act 1915
PFAU RB, 6.20%, 9/2/25 NR/NR 10,000 10,300
- -----------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A,
FGIC Insured, 6%, 5/15/10 Aaa/AAA 500,000 522,265
- -----------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney
Parking Project, Zero Coupon, 6.95%, 9/1/11(2) A3/BBB+/A- 2,340,000 1,201,941
- -----------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB,
Series A, FSA Insured, 5%, 7/1/14 Aaa/AAA/AAA 1,500,000 1,429,740
</TABLE>
9 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 12
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ PRINCIPAL VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA Continued
Los Angeles Cnty., CA MTAU Sales Tax RRB,
Series A, MBIA Insured, 5.25%, 7/1/15 Aaa/AAA/AAA $2,000,000 $1,935,420
- -----------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Participation
Certificates RB, Zero Coupon, 6.30%, 9/1/16(2) Aaa/AAA/AAA 1,495,000 571,195
- -----------------------------------------------------------------------------------------------------------
Los Angeles, CA Department of
Water & Power RRB, 5.50%, 10/15/12 Aa3/AAA/AAA 1,000,000 1,015,990
- -----------------------------------------------------------------------------------------------------------
Los Angeles, CA USD GOB, Series A,
FGIC Insured, 6%, 7/1/15 Aaa/AAA/AAA 1,000,000 1,053,930
- -----------------------------------------------------------------------------------------------------------
Orange Cnty., CA CFD No. 99-1 SPTX RB,
Series A, 6.70%, 8/15/29 NR/NR 650,000 643,624
- -----------------------------------------------------------------------------------------------------------
Palmdale, CA Civic Authority RRB,
Merged Redevelopment Project,
Prerefunded, Series A, 6.60%, 9/1/34 Aaa/AAA 595,000 651,555
- -----------------------------------------------------------------------------------------------------------
Palmdale, CA Civic Authority RRB,
Merged Redevelopment Project,
Unrefunded Balance, Series A, 6.60%, 9/1/34 NR/A 405,000 413,347
- -----------------------------------------------------------------------------------------------------------
Pittsburg, CA RA TXAL Refunding Bonds,
Los Medanos Community Development Project,
Sub. Lien, 6.20%, 8/1/19 NR/BBB 1,000,000 949,690
- -----------------------------------------------------------------------------------------------------------
Pittsburg, CA RA TXAL RB, Los Medanos
Community Development Project,
AMBAC Insured, 5.75%, 8/1/16 Aaa/AAA 720,000 720,857
- -----------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 2,500,000 2,976,400
- -----------------------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A,
MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 500,000 532,505
- -----------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
FGIC Insured, Inverse Floater, 7.78%, 6/1/19(1) Aaa/AAA/AAA 1,150,000 1,083,875
- -----------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, Inverse Floater, 8.69%, 7/8/22(1) Aaa/AAA 500,000 555,625
- -----------------------------------------------------------------------------------------------------------
Richmond, CA Wastewater RB,
FGIC Insured, 5.80%, 8/1/16 Aaa/AAA 765,000 777,416
- -----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD No. 88-12 SPTX Bonds,
Prerefunded, 7.55%, 9/1/17 NR/NR 1,500,000 1,556,850
- -----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA PFAU TXAL RRB,
Redevelopment Projects, Series A, 5.625%, 10/1/33 Baa2/BBB- 1,650,000 1,372,157
- -----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed
to Maturity, Series A, 7.80%, 5/1/21 Aaa/AAA 1,000,000 1,217,220
- -----------------------------------------------------------------------------------------------------------
Riverside, CA PFAU Lease RB,
AMBAC Insured, 5.25%, 10/1/17 Aaa/AAA/AAA 2,100,000 1,985,760
- -----------------------------------------------------------------------------------------------------------
Riverside, CA Water RRB, 5.375%, 10/1/12 NR/AA/AA 1,000,000 1,006,370
</TABLE>
10 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ PRINCIPAL VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA Continued
Roseville, CA SPTX RB, Woodcreek West
Community Facility No. 1 Project, 6.50%, 9/1/15 NR/NR $1,500,000 $1,474,875
- -----------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SFM RB,
Escrowed to Maturity, 8%, 7/1/16(3) Aaa/AAA 2,810,000 3,468,636
- -----------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB,
FGIC Insured, Inverse Floater, 8.89%, 8/15/18(1) Aaa/AAA/AAA 1,500,000 1,578,750
- -----------------------------------------------------------------------------------------------------------
Sacramento, CA USD GOUN,
Series A, 5.875%, 7/1/21 Aa3/NR/AA 430,000 432,081
- -----------------------------------------------------------------------------------------------------------
Sacramento, CA USD GOUN,
Series A, 5.875%, 7/1/23 Aa3/NR/AA 285,000 285,675
- -----------------------------------------------------------------------------------------------------------
Salinas Valley, CA Solid Waste Authority RB,
5.80%, 8/1/27 Baa3/BBB 1,665,000 1,443,871
- -----------------------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority
Revenue COP, Prerefunded, Series 91-B,
MBIA Insured, Inverse Floater, 8.66%, 4/8/21(1) Aaa/AAA 1,000,000 1,166,250
- -----------------------------------------------------------------------------------------------------------
San Francisco, CA Bay Area Rapid Transit District
Sales Tax RRB, AMBAC Insured, 6.75%, 7/1/11 Aaa/AAA/AAA 1,000,000 1,138,350
- -----------------------------------------------------------------------------------------------------------
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 1,325,683
- -----------------------------------------------------------------------------------------------------------
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 1,500,115
- -----------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. RA Lease CAP RB,
George R. Moscone Project, Zero Coupon,
5.36%, 7/1/10(2) A1/A-/A+ 4,500,000 2,538,450
- -----------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL CAP Refunding Bonds, Redevelopment
Projects, Series C, Zero Coupon, 5.99%, 8/1/13(2) A2/A/AAA 750,000 353,888
- -----------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor Agency
Toll Road CAP RRB, Series A, 0%/5.75%, 1/15/21(4) Baa3/BBB-/BBB 3,200,000 1,895,968
- -----------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor Agency
Toll Road RB, Sr. Lien, Prerefunded, 6.75%, 1/1/32 Aaa/AAA/AAA 3,500,000 3,768,625
- -----------------------------------------------------------------------------------------------------------
South Orange Cnty., CA PFAU SPTX RB,
Foothill Area, Series C, FGIC Insured, 8%, 8/15/08 Aaa/AAA/AAA 1,500,000 1,803,315
- -----------------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB,
Series A, 7.35%, 9/1/24 NR/AAA 145,000 148,751
- -----------------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB,
Series A, 7.35%, 9/1/24 NR/AAA 15,000 15,000
- -----------------------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
RRB, Inverse Floater, 6.55%, 10/30/20(1) Aa2/AA 1,200,000 1,081,500
</TABLE>
11 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 14
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS: MARKET
MOODY'S/ PRINCIPAL VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA Continued
Southern CA PPAU Transmission Project RB,
Inverse Floater, 7.25%, 7/1/12(1) Aa3/A+ $2,100,000 $ 2,202,375
- -----------------------------------------------------------------------------------------------------------
Stanislaus, CA Waste-To-Energy Financing Agency
Solid Waste Facilities RRB,
Ogden Martin System, Inc.
Project, 7.50%, 1/1/05 NR/A- 1,105,000 1,129,277
- -----------------------------------------------------------------------------------------------------------
West Covina, CA COP, Queen of the Valley Hospital,
Prerefunded, 6.50%, 8/15/19 A2/NR 1,120,000 1,223,208
---------------
112,221,817
- -----------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--6.3%
PR CMWLTH GORB, MBIA Insured,
Inverse Floater, 7.78%, 7/1/08(1) Aaa/AAA 1,500,000 1,571,250
- -----------------------------------------------------------------------------------------------------------
PR CMWLTH HTAU RB,
Inverse Floater, 7.10%, 7/1/28(1),(5) NR/NR 5,000,000 3,620,400
- -----------------------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB,
Portfolio 1, Series B, 7.65%, 10/15/22 Aaa/AAA 65,000 66,754
- -----------------------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental PC
Facilities Tourist RB, Mennonite General
Hospital Project, Series A, 6.50%, 7/1/12 NR/BBB-/BBB 590,000 563,008
- -----------------------------------------------------------------------------------------------------------
PR Public Buildings Authority RB,
Government Facilities, Series B,
AMBAC Insured, 5%, 7/1/27 Aaa/AAA 300,000 259,548
- -----------------------------------------------------------------------------------------------------------
Virgin Islands PFAU RB, Series A, 6.375%, 10/1/19 NR/BBB- 1,515,000 1,489,958
---------------
7,570,918
---------------
Total Municipal Bonds and Notes (Cost $122,757,839) 119,792,735
===========================================================================================================
SHORT-TERM TAX-EXEMPT OBLIGATIONS--2.1%
CA PCFAU SWD RR RB, Shell Martinez
Refining, Series A, 3.15%, 3/1/00(6) 1,200,000 1,200,000
- -----------------------------------------------------------------------------------------------------------
PR CMWLTH RB, Series 1025, 3.11%, 7/1/00(6) 1,400,000 1,400,000
---------------
Total Short-Term Tax-Exempt Obligations (Cost $2,600,000) 2,600,000
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $125,357,839) 100.9% 122,392,735
- -----------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9) (1,111,294)
------------------------------------------------
NET ASSETS 100.0% $121,281,441
================================================
</TABLE>
12 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 15
FOOTNOTES TO STATEMENT OF INVESTMENTS
To simplify the listings of securities, abbreviations are used per the table
below:
CAP Capital Appreciation
CDAU Communities Development Authority
CFD Community Facilities District
CMWLTH Commonwealth
COP Certificates of Participation
ED Economic Development
EU Electric Utilities
FAU Finance Authority
GOB General Obligation Bonds
GORB General Obligation Refunding Bonds
GOUN General Obligation Unlimited Nts.
HF Health Facilities
HFA Housing Finance Agency
HTAU Highway & Transportation Authority
MH Multifamily Housing
MTAU Metropolitan Transportation Authority
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
RR Resource Recovery
RRB Revenue Refunding Bonds
SCDAU Statewide Communities Development Authority
SDI School District
SFM Single Family Mtg.
SPAST Special Assessment
SPTX Special Tax
SWD Solid Waste Disposal
TXAL Tax Allocation
USD Unified School District
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 $15,085,775 or 12.44% of the
Fund's net assets as of February 29, 2000.
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 $539,000 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
4. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
5. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $3,620,400 or 2.98% of the Fund's net
assets as of February 29, 2000.
6. Represents the current interest rate for a variable or increasing rate
security.
13 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 16
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
AS OF FEBRUARY 29, 2000, SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX
AMOUNT TO $26,463,144 OR 21.81% 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>
Special Assessment $23,040,534 18.8%
Single Family Housing 18,536,644 15.1
Highways 13,445,517 11.0
General Obligation 10,602,336 8.7
Electric Utilities 10,425,525 8.5
Municipal Leases 8,561,834 7.0
Sales Tax 7,058,369 5.8
Marine/Aviation Facilities 6,044,703 4.9
Hospital/Healthcare 4,408,954 3.6
Water Utilities 4,270,110 3.5
Not-for-Profit Organization 3,627,551 3.0
Pollution Control 3,310,480 2.7
Resource Recovery 2,573,148 2.1
Education 2,551,859 2.1
Adult Living Facilities 2,184,595 1.8
Multifamily Housing 973,160 0.8
Sewer Utilities 777,416 0.6
-----------------------------
Total $122,392,735 100.0%
=============================
</TABLE>
See accompanying Notes to Financial Statements.
14 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
February 29, 2000
============================================================================================
ASSETS
<S> <C>
Investments, at value (cost $125,357,839)--see accompanying statement $ 122,392,735
- --------------------------------------------------------------------------------------------
Cash 203,722
- --------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 1,512,032
Shares of capital stock sold 341,264
Other 5,723
------------------
Total assets 124,455,476
============================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 2,657,160
Dividends 330,520
Shares of capital stock redeemed 112,671
Daily variation on futures contracts 11,500
Distribution and service plan fees 11,140
Transfer and shareholder servicing agent fees 9,845
Directors' compensation 446
Other 40,753
------------------
Total liabilities 3,174,035
============================================================================================
NET ASSETS $121,281,441
==================
============================================================================================
COMPOSITION OF NET ASSETS
Par value of shares of capital stock $ 104,257
- --------------------------------------------------------------------------------------------
Additional paid-in capital 128,864,734
- --------------------------------------------------------------------------------------------
Overdistributed net investment income (181,242)
- --------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (4,473,791)
- --------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (3,032,517)
------------------
Net assets $121,281,441
==================
============================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$94,683,004 and 8,136,732 shares of capital stock outstanding) $11.64
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $12.22
- --------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $26,598,437
and 2,288,907 shares of capital stock outstanding) $11.62
</TABLE>
See accompanying Notes to Financial Statements.
15 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 18
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended February 29, 2000
====================================================================================
INVESTMENT INCOME
<S> <C>
Interest $ 4,015,472
====================================================================================
EXPENSES
Management fees 362,042
- ------------------------------------------------------------------------------------
Distribution and service plan fees:
Class B 142,268
- ------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 35,821
- ------------------------------------------------------------------------------------
Shareholder reports 22,178
- ------------------------------------------------------------------------------------
Custodian fees and expenses 6,007
- ------------------------------------------------------------------------------------
Directors' compensation 1,515
- ------------------------------------------------------------------------------------
Other 11,207
-------------
Total expenses 581,038
Less reimbursement of expenses (98,739)
Less expenses paid indirectly (5,768)
-------------
Net expenses 476,531
====================================================================================
NET INVESTMENT INCOME 3,538,941
====================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (4,366,202)
Closing of futures contracts 528
-------------
Net realized loss (4,365,674)
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (2,236,087)
-------------
Net realized and unrealized loss (6,601,761)
====================================================================================
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,062,820)
=============
</TABLE>
See accompanying Notes to Financial Statements.
16 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
===========================================================================================================================
OPERATIONS
<S> <C> <C>
Net investment income $ 3,538,941 $ 6,760,089
- ---------------------------------------------------------------------------------------------------------------------------
Net realized loss (4,365,674) (27,248)
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (2,236,087) (9,255,882)
-------------------------------------------------------
Net decrease in net assets resulting from operations (3,062,820) (2,523,041)
===========================================================================================================================
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (2,805,389) (5,577,537)
Class B (630,746) (1,114,948)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (61,948) --
Class B (17,172) --
===========================================================================================================================
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) in net assets resulting from capital stock
transactions:
Class A (9,742,300) 7,019,301
Class B (1,703,755) 8,515,921
===========================================================================================================================
NET ASSETS
Total increase (decrease) (18,024,130) 6,319,696
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period 139,305,571 132,985,875
-------------------------------------------------------
End of period (including overdistributed net investment
income of $181,242 and $284,048, respectively) $121,281,441 $139,305,571
=======================================================
</TABLE>
See accompanying Notes to Financial Statements.
17 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 20
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR
ENDED ENDED ENDED
FEB. 29, 2000 AUG. 31, JUNE 30,
CLASS A (UNAUDITED) 1999 1998 1997 1996(1) 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period$ $ 12.21 $ 13.02 $ 12.64 $ 12.16 $ 12.15 $ 12.09 $11.82
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .33 .65 .65 .73 .12 .73 .73
Net realized and unrealized gain (loss) (.57) (.82) .51 .49 .01 .07 .27
-----------------------------------------------------------------------
Total income (loss) from
investment operations (.24) (.17) 1.16 1.22 .13 .80 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.32) (.64) (.67) (.74) (.12) (.73) (.69)
Dividends in excess of net
investment income -- -- -- -- -- -- (.04)
Distributions from net realized gain (.01) -- (.11) -- -- -- --
Distributions in excess of net realized gain -- -- -- -- -- (.01) --
-----------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.33) (.64) (.78) (.74) (.12) (.74) (.73)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.64 $ 12.21 $ 13.02 $ 12.64 $ 12.16 $ 12.15 $ 12.09
=======================================================================
===========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) (1.99)% (1.42)% 9.33% 10.24% 1.12% 6.73% 8.93%
===========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 94,683 $109,575 $109,811 $89,991 $76,817 $76,913 $78,134
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $103,345 $111,996 $ 99,678 $80,311 $77,584 $78,676 $76,148
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 5.61% 5.03% 5.04% 5.91% 6.00% 5.99% 6.27%
Expenses 0.68% 0.67% 0.69%(4) 0.59%(4) 0.57%(4) 0.58%(4) 0.57%(4)
Expenses, net of indirect expenses,
voluntary assumption of expenses
and/or waiver of expenses 0.52% 0.51% 0.53% N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 25% 25% 30% 46% 1% 33% 14%
</TABLE>
1. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
2. 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.
3. Annualized for periods of less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. 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 29, 2000, were $32,355,072 and $43,971,448,
respectively.
See accompanying Notes to Financial Statements.
18 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 21
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR
ENDED ENDED ENDED
FEB. 29, 2000 AUG. 31, JUNE 30,
CLASS B (UNAUDITED) 1999 1998 1997 1996(1) 1996 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period$ $ 12.20 $ 13.01 $ 12.63 $ 12.14 $ 12.14 $ 12.08 $11.80
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .53 .54 .60 .10 .61 .62
Net realized and unrealized gain (loss) (.58) (.83) .49 .50 -- .07 .27
------------------------------------------------------------------------------
Total income (loss) from
investment operations (.31) (.30) 1.03 1.10 .10 .68 .89
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.26) (.51) (.54) (.61) (.10) (.61) (.57)
Dividends in excess of net
investment income -- -- -- -- -- -- (.04)
Distributions from net realized gain (.01) -- (.11) -- -- -- --
Distributions in excess of net realized gain -- -- -- -- -- (.01) --
------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.27) (.51) (.65) (.61) (.10) (.62) (.61)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.62 $ 12.20 $ 13.01 $ 12.63 $ 12.14 $ 12.14 $ 12.08
=============================================================================
===========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) (2.56)% (2.41)% 8.24% 9.24% 0.85% 5.66% 7.90%
===========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $26,598 $29,730 $23,175 $11,919 $5,928 $5,442 $2,648
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $28,682 $28,070 $18,087 $ 8,129 $5,767 $3,848 $1,904
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.60% 4.02% 4.19% 4.85% 4.92% 4.94% 5.17%
Expenses 1.68% 1.67% 1.70%(4) 1.60%(4) 1.62%(4) 1.60%(4) 1.55%(4)
Expenses, net of indirect expenses,
voluntary assumption of expenses
and/or waiver of expenses 1.52% 1.52% 1.53% N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 25% 25% 30% 46% 1% 33% 14%
</TABLE>
1. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
2. 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.
3. Annualized for periods of less than one full year.
4. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
5. 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 29, 2000, were $32,355,072 and $43,971,448,
respectively.
See accompanying Notes to Financial Statements.
19 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 22
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 offers Class A and Class B shares. Class A shares are sold at
their offering price, which is normally net asset value plus an initial sales
charge. Class B shares are sold without an initial sales charge but may be
subject to a contingent deferred sales charge (CDSC). Both classes of shares
have identical rights to earnings, assets and voting privileges, except that
each class has its own expenses directly attributable to that class and
exclusive voting rights with respect to matters affecting that class. Classes A
and B shares have separate distribution and/or service plans. 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.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. Securities for which quotations are readily available are
valued at the last sale price, or if in the absence of a sale, at the last sale
price on the prior trading day if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are
valued primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Directors, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Directors. Foreign currency contracts are valued
based on the closing prices of the forward currency contract rates in the
London foreign exchange markets on a daily basis as provided by a reliable
bank, dealer or pricing service. Short-term "money market type" debt securities
with remaining maturities of sixty days or less are valued at cost (or last
determined market value) and adjusted for amortization or accretion 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.
- --------------------------------------------------------------------------------
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.
20 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 23
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 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.
- -------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date. Original
issue discount is accreted and premium is amortized in accordance with federal
income tax requirements. For municipal 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.
There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related event in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
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 lia-bilities 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.
21 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 24
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 FEB. 29, 2000 YEAR ENDED AUGUST 31, 1999
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sold 613,011 $ 7,294,081 1,681,985 $ 21,674,388
Dividends and/or
distributions reinvested 156,641 1,860,329 281,702 3,627,456
Redeemed (1,604,909) (18,896,710) (1,423,149) (18,282,543)
-------------------------------------------------------
Net increase (decrease) (835,257) $ (9,742,300) 540,538 $ 7,019,301
=======================================================
- ------------------------------------------------------------------------------------
CLASS B
Sold 301,538 $ 3,575,996 964,557 $ 12,473,622
Dividends and/or
distributions reinvested 40,181 476,304 59,086 758,691
Redeemed (490,459) (5,756,055) (367,694) (4,716,392)
------------------------------------------------------
Net increase (decrease) (148,740) $(1,703,755) 655,949 $ 8,515,921
======================================================
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of February 29, 2000, net unrealized depreciation on securities of
$2,965,104 was composed of gross appreciation of $2,208,024, and gross
depreciation of $5,173,128.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. 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 or amend that undertaking
at any time. The Fund's management fee for the six months ended February 29,
2000 was 0.40% of average annual net assets for each class of shares, after
giving affect to the waiver, annualized for periods of less than one full year.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund and for
other Oppenheimer funds. OFS's total costs of providing such services are
allocated ratably to these funds.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
22 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 25
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B
SALES CHARGES SALES CHARGES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY
SIX MONTHS ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
February 29, 2000 $112,866 $12,970 $10,000 $125,396
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B shares from its own resources at the
time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B
CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES
SIX MONTHS ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
February 29, 2000 $1,790 $71,303
</TABLE>
The Fund has adopted a Service Plan for Class A shares and a Distribution
and Service Plan for Class B shares under Rule 12b-1 of the Investment Company
Act. Under those plans the Fund pays the Distributor for all or a portion of
its costs incurred in connection with the distribution and/or servicing of the
shares of the particular class.
- --------------------------------------------------------------------------------
CLASS B DISTRIBUTION AND SERVICE PLAN FEE. Under the plan, service fees and
distribution fees are computed on the average of the net asset value of shares
in the respective class, determined as of the close of each regular business
day during the period. The Class B plan provides for the Distributor to be
compensated at a flat rate, whether the Distributor's distribution expenses are
more or less than the amounts paid by the Fund under the plan during the period
for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The asset-based sales charges on Class B shares allows investors to buy shares
without a front-end sales charge while allowing the Distributor to compensate
dealers that sell those shares.
The Distributor's actual expenses in selling Class B shares may be more
than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and asset-based sales charges from the Fund under
the plans. If the plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plan
allows for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the six months ended February 29,
2000, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $142,268 $118,005 $1,081,288 4.07%
</TABLE>
23 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS Unaudited/Continued
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5. FUTURES CONTRACTS
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to 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 may recognize 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
and/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.
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE CONTRACTS FEBRUARY 29, 2000 DEPRECIATION
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
Muni Bond 3/22/00 92 $8,514,462 $67,413
</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 0.45%. 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
0.08% per annum.
The Fund had no borrowings outstanding during the six months ended
February 29, 2000.
- --------------------------------------------------------------------------------
7. SUBSEQUENT EVENT
As of April 1, 2000, the Manager withdrew its voluntary undertaking to limit
its management fees to a maximum annual rate of 0.40%.
24 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 27
OPPENHEIMER MAIN STREET(R) CALIFORNIA MUNICIPAL FUND
- --------------------------------------------------------------------------------
A Series of Oppenhemer Main Street Funds, Inc.
================================================================================
OFFICERS AND DIRECTORS James C. Swain, Director and Chairman of the Board
Bridget A. Macaskill, Director and President
Robert G. Avis, Director
William A. Baker, Director
George C. Bowen, Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
Christian D. Smith, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
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 OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
================================================================================
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
================================================================================
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein
have been taken from the records of the Fund without
examination of those records by 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 Funds, 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.
25 OPPENHEIMER MAIN STREET CALIFORNIA MUNICIPAL FUND
<PAGE> 28
INFORMATION AND SERVICES
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
- --------------------------------------------------------------------------------
INTERNET
24-hr access to account information and transactions
WWW.OPPENHEIMERFUNDS.COM
- --------------------------------------------------------------------------------
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
TELEPHONE 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
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OPPENHEIMERFUNDS INFORMATION HOTLINE
24 hours a day, timely and insightful messages on the economy and issues that
may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
- --------------------------------------------------------------------------------
[OPPENHEIMER LOGO]
Distributor, Inc.
RS0725.001.0200 April 28, 2000
