<PAGE> 1
Oppenheimer California Tax-Exempt Fund
Annual Report December 31, 1994
[FIGURE NUMBER 1]
Photo of couple hiking
"We need
more
income,
not more
taxes."
[LOGO]
<PAGE> 2
Yield
Standardized Yield
For the 30 Days Ended 12/31/94:(4)
Class A
5.74%
Class B
5.28%
This Fund is for people who want to earn income that's exempt from taxes.
How Your Fund Is Managed
Oppenheimer California Tax-Exempt Fund invests in a diversified portfolio of
investment grade California tax-free municipal bonds. As a Fund shareholder, you
receive income that is free from federal and California income taxes(1). Your
dividends don't increase your taxable income the way taxable investments do, so
you can keep more of what you earn.
Your Fund invests in California invest-ment grade municipal bonds and
notes rated within the four highest rating categories by Moody's, Standard &
Poor's or Fitch's. In addition, California Tax-Exempt Fund is managed by an
experienced team of municipal bond specialists who research investments
thoroughly before they are included in the Fund's portfolio.
Performance
Total return at net asset value for the 12 months ended 12/31/94 was -8.49% for
Class A shares and -9.39% for Class B shares.2
The financial markets had a difficult year and, like many mutual funds,
your Fund felt the effects. While difficult years are hard to accept, they're an
inevitable part of investing. That's why keeping a long-term perspective is
crucial to getting the most from your investment.
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 12/31/94 and since inception
of the Class on 11/3/88 were -12.83%, 4.75% and 5.95%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 12/31/94 and
since inception of the Class on 5/1/93 were -13.69% and -4.19%, respectively.3
Outlook
"In line with our primary objective--providing above-average tax-free income
from an investment grade California municipal bond port-folio--the Fund's
duration is somewhat longer than those of most other municipal funds. This
hampered our performance in the short term, but we believe that, in the long
run, share-holders will benefit significantly when interest rates stabilize and
the California municipal market's positive fundamentals emerge."
Robert Patterson, Portfolio Manager
December 31, 1994
1. A portion of the distributions paid by the Fund may be subject to federal and
state income taxes. For investors subject to federal and/or state alternative
minimum tax (AMT), the Fund's distributions may increase this tax. Capital gains
distributions, if any, are taxed as capital gains.
2. Based on the change in net asset value per share from 12/31/93 to 12/31/94,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
3. Average annual total returns are based on a hypothetical investment held
until 12/31/94, after deducting the current maximum initial sales charge of
4.75% for Class A shares. Total return for Class B shares was based on a
hypothetical investment held for that period, after deducting the contingent
deferred sales charge of 5% (1 year) and 4% (since inception) for Class B
shares.
4. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 12/31/94, divided by the maximum offering
price at the end of the period, compounded semi-annually and then annualized.
Falling net asset values will tend to artificially raise yields. All figures
assume reinvestment of dividends and capital gains distributions. Past
performance is not indicative of future results. Investment and principal value
on an investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
2 Oppenheimer California Tax-Exempt Fund
<PAGE> 3
Dear OppenheimerFunds Shareholder,
The past year was marked by one of the greatest tests of the municipal bond
market in more than six decades. In 1994, the Federal Reserve undertook one of
the most aggressive inflation-fighting efforts in its history, raising interest
rates six times and driving bond prices down across the board. Then, in early
December as the market started to stabilize, Orange County, California,
defaulted on a $100 million bond issue, for reasons not related to the bonds
themselves, but rather to the aggressive use of derivatives (investments whose
value is derived from another security, currency, commodity or index) in
managing the county's portfolio. Although Orange County's problems didn't affect
OppenheimerFunds tax-free portfolios significantly, at year end, many investors
were left wondering what the future holds not only for interest rates, but for
the municipal market itself.
Looking at Orange County, there is no question that their problems have
added temporarily to the uncertainties surrounding the tax-free market. In the
near term, investors' heightened sense of caution may push new-issue prices
modestly lower and new-issue yields somewhat higher. In the longer term,
however, we expect developments in Orange County are likely to help rather than
hurt the market. The municipal bond market has always been one of the most
conservative places to invest, and with the increased attention paid to risks of
all types, we expect it to become less risky.
As for the Fed's actions to raise interest rates, changing interest rates
and fluctuating bond prices are facts of life affecting all bond markets, and
it's a bond market basic principle that when interest rates rise, bond prices
generally decline. That is why we believe the best measure for any fixed income
investment is its performance over the long term. And we believe the long-term
outlook for the municipal market is excellent, which is supported by several
considerations.
First, the Fed's attempt to fend off possible future inflation, while
temporarily disconcerting, is beginning to have its desired effect. The economy
is starting to slow, and although short-term rates may move up modestly from
their present levels, long-term interest rates should stabilize in their current
range. Long-term rates may even begin to decline as overblown concerns about
inflation abate.
Those concerns are, in fact, already fading. The inflation rate--as
measured by the Consumer Price Index--continues to run at less than 3% a year,
and there's nothing on the horizon to suggest to us that it will increase
substantially anytime soon. As a result, municipal bonds today offer some of the
highest real, inflation-adjusted returns we have seen in years. In addition,
while the economy is showing some signs of slowing, it is still growing at a
solid pace. As a result, the financial strength of many municipal issuers
continues to improve, again providing solid support for municipal bond prices.
Finally, the market's supply and demand characteristics are strong. The
supply of new municipal bonds currently is running some 40% below last year's
pace, while we expect demand for tax-free bonds is likely to increase
substantially over the next few months, helped by more stable bond markets and
rising investor demand to ease their tax burdens.
Together, these factors suggest to us that 1995 will be rewarding for
municipal investors. Your portfolio manager discusses the outlook for your Fund
on the following pages. We appreciate your confidence and we look forward to
continue helping you reach your investment goals.
Donald W. Spiro Jon S. Fossel
- --------------- -------------
Donald W. Spiro Jon S. Fossel
January 23, 1995
[FIGURE NUMBER 2]
Photo of Donald W. Spiro
Donald W. Spiro
President
Oppenheimer
California Tax-Exempt
Fund
[FIGURE NUMBER 3]
Photo of Jon S. Fossel
Jon S. Fossel
Chairman and CEO
Oppenheimer
Management
Corporation
3 Oppenheimer California Tax-Exempt Fund
<PAGE> 4
Q + A
[FIGURE NUMBER 4]
Photo of Robert Patterson
[FIGURE NUMBER 5]
Photo of person at trading desk
An interview with your Fund's manager.
A LOT HAPPENED IN THE CALIFORNIA MUNICIPAL MARKET OVER THE PAST YEAR. WHAT WERE
THE MOST IMPORTANT FACTORS AFFECTING THE FUND'S PERFORMANCE?
Many factors combined to make 1994 one of the most challenging years tax-free
investors have seen in decades, but one stands out: the Federal Reserve's
efforts to fend off inflation, which drove interest rates up and bond prices
down. The Fed's actions affected virtually all bond funds, and this Fund was no
exception.
DID THOSE DEVELOPMENTS CAUSE YOU TO CHANGE YOUR INVESTMENT STRATEGY?
In seeking to provide an attractive level of tax-free income, our investment
strategy remains the same--to keep the Fund's duration, a technical measure of a
bond portfolio's sensitivity to interest rate changes, slightly longer than
those of many other funds. As a result, the Fund's net asset value declined more
than some other funds, but we delivered an attractive level of tax-free income.
Over time, we expect this longer duration to benefit shareholders, as
investors recognize the fundamental positives--low inflation, reduced supply and
increasing demand, and improving issuer credit quality--at work in the
California municipal market today.
Of course, as interest rates rose, we made some adjustments to the
portfolio within this strategy to position it more defensively.
WHAT PORTFOLIO ADJUSTMENTS DID YOU MAKE?
We did reduce the Fund's average maturity somewhat, focusing on bonds in the 15-
to 20-year maturity range. All other things being equal, the shorter a bond's
maturity, the less sensitive it is to changing interest rates. We also focused
more attention on insured and prerefunded issues,
[FIGURE NUMBER 6]
Photo of Len Darling and Jon Fossel
Q Did the
Orange County
bankruptcy
have an
impact
on the Fund?
4 Oppenheimer California Tax-Exempt Fund
<PAGE> 5
FACING PAGE
Top left: Robert Patterson,
Portfolio Manager
Top right: The trading desk
Bottom left: Len Darling, Executive
VP, Director of Fixed Income
Investments, with Jon Fossel,
CEO and Chairman, Oppenheimer
Management Corporation
THIS PAGE
Robert Patterson
[FIGURE NUMBER 7]
Photo of Robert Patterson
A Because
we only had
five indirect
holdings,
three of which
were fully
insured, the
impact was
negligible.
which make up a significant portion of the portfolio today(1).
WHAT ARE PREREFUNDED BONDS AND WHAT MAKES THEM SO ATTRACTIVE?
Prerefunded bonds are municipal bonds that, as their name implies, have been
refinanced by the issuer ahead of their scheduled call or maturity dates by
bonds with a lower interest rate. What makes prerefunded bonds so attractive is
their income streams and credit quality.
When a bond is refunded in advance of what would other-wise be its
"normal" retirement date, the proceeds of the new issue are used to buy U.S.
Treasury securities sufficient to pay off the holders of the original bond issue
in full. These government securities are placed in an escrow account, and the
refunded issue automatically has the same low risk of default as a triple-A
rating. As a result, we earn above-market yields on prerefunded issues until
they are retired, and benefit from the highest credit quality.
WHAT OTHER KINDS OF BONDS ARE YOU FOCUSING ON TODAY?
We're continuing to find good values in the California housing sector as well as
in transportation issues.
SOME ANALYSTS ARE PREDICTING THAT A RECORD AMOUNT OF MUNICIPAL BONDS WILL BE
CALLED IN 1995. HOW ARE YOU MANAGING CALLS?
Bond calls, which allow issuers to redeem bonds before
their scheduled maturity and replace them with lower-yielding issues--are a fact
of life in the municipal market. Because interest rates are currently much lower
than they were in the mid-1980s when many of the municipal bonds outstanding
today were issued, it's fully possible that some of the bonds in the Fund's
port-folio will be called.
We manage that by staying on top of the portfolio at all times, trying to
anticipate calls and seeking to buy bonds that offer both attractive yields and
significant call protection. Virtually no municipal bond fund can avoid calls
entirely. The key is to take a forward-looking view and manage them
intelligently.
DID THE ORANGE COUNTY BANKRUPTCY HAVE AN IMPACT ON THE FUND?
While our portfolio held several securities of issuers who invested in the
County-managed investment pool, our exposure was very limited. Because we only
had five indirect holdings, three of which were fully insured, the impact was
negligible.
WHAT'S YOUR OUTLOOK FOR THE CALIFORNIA MARKET GOING FORWARD?
Our long-term outlook is very constructive. The positives at work on the
national level--low inflation, reduced municipal bond supply, and rising demand
for tax-free securities driven by rising tax burdens--are, if anything, even
stronger here.
Although the California economy faces its share of challenges, it remains
the nation's largest state economy and its single largest issuer of municipal
securities.
We believe mounting demand for tax-free securities should provide solid
support for California municipal bond prices going forward. -
1. The Fund's portfolio is subject to change.
5 Oppenheimer California Tax-Exempt Fund
<PAGE> 6
STATEMENT OF INVESTMENTS December 31, 1994
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
----------------- ------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--97.5%
CALIFORNIA--90.2% Anaheim, California Public Financing Authority
Tax Allocation Revenue Bonds, MBIA Insured,
8.37%, 12/28/18(1) Aaa/AAA $ 3,000,000 $ 2,725,323
California Educational Facilities Authority
Revenue Bonds, Stanford University Project,
Series J, 6%, 11/1/09 Aaa/AAA 2,205,000 2,110,915
California Health Facilities Financing Authority
Revenue Bonds, Children's Hospital of
Los Angeles, Prerefunded, Series A, 7.125%, 6/1/21 NR/A+ 1,000,000 1,086,512
California Health Facilities Financing Authority
Revenue Bonds, Henry Mayo Newhall Project,
Series A, OSHPD Insured, 8%, 10/1/18 NR/A 3,000,000 3,195,495
California Health Facilities Financing Authority
Revenue Bonds, La Palma Hospital Medical Center,
OSHPD Insured, 7.10%, 2/1/13 NR/A 1,875,000 1,839,345
California Health Facilities Financing Authority
Revenue Refunding Bonds, Catholic Health
Facilities, Series A, MBIA Insured, 5%, 7/1/11 Aaa/AAA 7,500,000 6,238,372
California Housing Finance Agency Revenue Bonds,
Home Mtg., Series C, 6.75%, 2/1/25 Aa/AA-- 10,000,000 9,554,669
California Housing Finance Agency Revenue Bonds,
Home Mtg., Series C, FHA Insured, 7.60%, 8/1/30 Aa/AA-- 1,655,000 1,674,746
California Pollution Control Financing Authority
Revenue Bonds, Pacific Gas and Electric Co.,
Series B, 8.875%, 1/1/10 A1/A 2,275,000 2,485,587
California Pollution Control Financing Authority
Revenue Refunding Bonds, Pacific Gas and
Electric Co., Series A, 7.50%, 5/1/16 A1/A 1,450,000 1,511,783
California State Franchise Tax Board Refunding
Certificates of Participation, 6.90%, 10/1/06 A/A-- 1,000,000 1,026,916
California State General Obligation Bonds,
FSA Insured, 5.50%, 4/1/19 Aaa/AAA/A 5,500,000 4,627,056
California State Public Works Board Lease
Revenue Bonds, Department of Corrections
California State Prison, Series B, MBIA Insured,
5.50%, 12/1/12 Aaa/AAA/A-- 4,600,000 4,024,424
California State Public Works Board Lease
Revenue Bonds, Regents of the University of
California, Prerefunded, Series A, 7%, 9/1/15 Aaa/AAA/AAA 2,650,000 2,855,836
California State Public Works Board Lease
Revenue Bonds, University of California Project,
Series A, AMBAC Insured, 6.40%, 12/1/16 Aaa/AAA/AAA 5,000,000 4,795,374
Campbell, California Certificates of Participation,
Civic Center Project, 6.75%, 10/1/17 A/A-- 1,130,000 1,092,930
Campbell, California Certificates of Participation,
Civic Center Project, Prerefunded, 6.75%, 10/1/17 Aaa/NR 1,870,000 1,994,381
</TABLE>
6 Oppenheimer California Tax-Exempt Fund
<PAGE> 7
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Capistrano, California University School District
Community Facilities Special Tax Bonds,
No. 87-1, 7.60%, 9/1/14 NR/NR $ 4,000,000 $ 3,785,467
Cathedral City, California Improvement Bond
Act of 1915 Bonds, Limited Obligation Assessment
District No. 88-3, 7.85%, 9/2/11 NR/NR 1,980,000 1,976,018
Contra Costa, California Water District Revenue
Bonds, Series E, AMBAC Insured, 5.75%, 10/1/18 Aaa/AAA/AAA 3,340,000 2,929,210
Corona, California Certificates of Participation,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 8,175,000 10,362,287
Escondido, California Joint Powers Financing Authority
Revenue Bonds, AMBAC Insured, 6.125%, 9/1/11 Aaa/AAA/AAA 3,500,000 3,327,908
Fresno, California Water System Revenue Bonds,
Prerefunded, Series A, 7.30%, 6/1/20 NR/NR 1,500,000 1,610,379
Industry, California Improvement Bond Act of
1915 Bonds, Assessment District No. 91-1, 7.65%, 9/2/21 NR/NR 1,750,000 1,749,582
Intermodal Container Transfer Facility Joint
Power Authority California Revenue Refunding
Bonds, Southern Pacific Transportation Co.,
Series A, 7.70%, 11/1/14 NR/A+ 1,000,000 1,013,241
La Quinta, California Redevelopment Agency
Refunding Tax Allocation Bonds, La Quinta Project,
Prerefunded, 8.40%, 9/1/12 Aaa/AAA 1,000,000 1,144,185
Los Angeles County, California Certificates of
Participation, 6.50%, 3/1/10 A/A 1,500,000 1,445,295
Los Angeles County, California Certificates of
Participation, Correctional Facilities Project,
MBIA Insured, 6.50%, 9/1/13 Aaa/AAA 3,600,000 3,523,503
Los Angeles County, California Transportation
Revenue Bonds, Commission Sales Tax,
Prerefunded, Series A, 6.75%, 7/1/11 Aaa/AA-- 4,260,000 4,537,778
Los Angeles County, California Transportation
Revenue Bonds, Commission Sales Tax,
Prerefunded, Series A, FGIC Insured, 6.75%, 7/1/18 Aaa/AAA/AAA 4,000,000 4,263,068
Los Angeles, California Community Redevelopment
Agency Finance Revenue Bonds, Grand Century
Qualified Redevelopment, Series A, 5.90%, 12/1/26 A/A 2,600,000 2,100,665
Los Angeles, California Community Redevelopment
Agency Refunding Tax Allocation Bonds,
North Hollywood, Series C, MBIA Insured, 7%, 7/1/15 Aaa/AAA 2,000,000 2,037,116
Los Angeles, California Department of
Water & Power Electric Plant Revenue Bonds,
Second Issue 1991, 6%, 6/1/12 Aa/AA 2,500,000 2,309,447
Los Angeles, California Department of
Water & Power Electric Plant Revenue Bonds,
Second Issue 1991, 6%, 6/1/13 Aa/AA 3,200,000 2,948,909
</TABLE>
7 Oppenheimer California Tax-Exempt Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED) M-S-R Public Power Agency of California Revenue
Bonds, San Juan Project, Series C, AMBAC Insured,
6.875%, 7/1/19 Aaa/AAA $2,000,000 $2,003,446
Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project, 5%, 7/1/20 Aa/AA 7,750,000 5,956,293
Metropolitan Water District Revenue Bonds,
Southern California Waterworks Project, 6%, 7/1/21 Aa/AA 5,000,000 4,455,845
Metropolitan Water District Revenue Bonds, Southern
California Waterworks Project, 6.557%, 10/30/20(1) Aa/AA 4,700,000 3,226,827
Oakland, California Redevelopment Agency
Tax Allocation Refunding Bonds, MBIA Insured,
7.472%, 9/1/19(1) Aaa/AAA 4,300,000 3,308,729
Oakland, California Special Edition Revenue
Refunding Bonds, Series A, FGIC Insured, 7.60%, 8/1/21 Aaa/AAA/AAA 2,000,000 2,117,466
Orange County, California Community Facilities
District No. 87-3 Special Tax Bonds, Mission Viejo,
Prerefunded, Series A, 8.05%, 8/15/08 A/NR 3,000,000 3,298,365
Orange County, California Community Facilities
District Special Tax Bonds, No. 88-1 Aliso Viejo,
Prerefunded, Series A, 7.10%, 8/15/05 NR/AAA 1,440,000 1,567,876
Orange County, California Community Facilities
District Special Tax Bonds, No. 88-1 Aliso Viejo,
Prerefunded, Series A, 7.35%, 8/15/18 NR/AAA 8,000,000 8,816,407
Paramount, California Redevelopment Agency
Tax Allocation Revenue Bonds, Redevelopment
Project No. 1, Prerefunded, Series A, 9.65%, 6/1/16 NR/AAA/BBB 6,000,000 6,240,240
Pittsburg, California Improvement Bond Act of 1915
Bonds, Assessment District 1990-01, 7.75%, 9/2/20 NR/NR 1,235,000 1,218,556
Rancho, California Water District Financing Authority
Revenue Refunding Bonds, AMBAC Insured, 5%, 8/15/14 Aaa/AAA/AAA 4,500,000 3,629,128
Redding, California Electric System Revenue Certificates
of Participation, FGIC Insured, 6.279%, 6/1/19(1) Aaa/AAA/AAA 4,000,000 2,912,375
Redding, California Electric System Revenue Certificates
of Participation, MBIA Insured, 8.264%, 7/8/22(1) Aaa/AAA 2,500,000 2,278,397
Riverside County, California Community Facilities
District Bonds, Special Tax No. 88-12, 7.55%, 9/1/17 NR/NR 3,000,000 2,868,294
Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds, Series B,
FGIC Insured, 7.247%, 8/15/18(1) Aaa/AAA/AAA 5,500,000 4,814,678
Sacramento, California Municipal Utility District
Electric Revenue Refunding Bonds, Series D,
MBIA Insured, 5.25%, 11/15/20 Aaa/AAA/A-- 2,500,000 2,020,630
</TABLE>
8 Oppenheimer California Tax-Exempt Fund
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED) Saddleback Community College District,
California Refunding Certificates of Participation,
BIG Insured, 7%, 8/1/19 Aaa/AAA $ 1,000,000 $ 1,018,614
San Bernardino County, California Certificates
of Participation, Medical Center Financing Project,
5.50%, 8/1/17 Baa1/A-- 7,500,000 5,946,885
San Diego County, California Certificates of
Participation, MBIA Insured, 7.321%, 11/18/19(1) Aaa/AAA 2,000,000 1,816,736
San Diego County, California Water Authority
Revenue Certificates of Participation, Series B,
MBIA Insured, 8.22%, 4/8/21(1) Aaa/AAA 3,000,000 2,642,967
San Francisco, California City & County Airport
Commission International Airport Revenue
Refunding Bonds, Second Series, Issue I,
AMBAC Insured, 6.30%, 5/1/11 Aaa/AAA/AAA 4,385,000 4,254,191
San Francisco, California City & County Sewer
Revenue Refunding Bonds, FGIC Insured,
5.375%, 10/1/16 Aaa/AAA/AAA 2,000,000 1,677,392
San Joaquin Hills, California Transportation Corridor
Agency Toll Road Revenue Bonds, Sr. Lien, 5%, 1/1/33 NR/NR/BBB 8,000,000 4,963,848
San Joaquin Hills, California Transportation Corridor
Agency Toll Road Revenue Bonds, Sr. Lien, 6.75%, 1/1/32 NR/NR/BBB 7,000,000 5,757,191
San Jose, California Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment
Project, MBIA Insured, 5%, 8/1/20 Aaa/AAA/A 2,000,000 1,546,236
South Orange County, California Public Financing
Authority Special Tax Revenue Bonds, Sr. Lien,
Series A, MBIA Insured, 6.20%, 9/1/13 Aaa/AAA/NR 3,000,000 2,781,072
Southern California Home Financing Authority
Single Family Mtg. Revenue Bonds, GNMA and
FNMA Mtg.-Backed Securities, Series A, 7.35%, 9/1/24 NR/AAA 1,670,000 1,684,004
Southern California Public Power Authority
Power Project Revenue Bonds, Prerefunded, 6%, 7/1/18 Aaa/AAA 5,500,000 5,576,994
Southern California Public Power Authority
Power Project Revenue Refunding Bonds,
Series A, 5.50%, 7/1/12 Aa/AA 1,000,000 863,544
Southern California Public Power Authority
Revenue Bonds, San Juan Unit 3, Series A,
MBIA Insured, 5%, 1/1/20 Aaa/AAA 3,000,000 2,325,408
Southern California Public Power Authority
Revenue Refunding Bonds, 8.012%, 7/1/12(1) Aa/AA-- 5,500,000 4,613,531
University of California Revenue Bonds,
Multiple Purpose Projects, Prerefunded,
Series A, 6.875%, 9/1/16 NR/A-- 2,200,000 2,365,123
Victorville, California Special Tax Bonds,
Community Facilities District No. 90-1
(Western Addition), Series A, 8.30%, 9/1/16 NR/NR 2,250,000 2,016,508
------------
216,487,518
</TABLE>
9 Oppenheimer California Tax-Exempt Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/
S&P'S/FITCH'S FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
---------------- ------ ------------
<S> <C> <C> <C> <C>
U.S. POSSESSIONS--7.3% Guam Power Authority Revenue Bonds, Series A,
6.625%, 10/1/14 NR/BBB $ 2,000,000 $ 1,914,920
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Prerefunded, Series T, 6.50%, 7/1/22 NR/AAA 2,250,000 2,372,316
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Prerefunded, Series T, 6.625%, 7/1/18 NR/AAA 995,000 1,056,283
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue Bonds,
Series T, 6.625%, 7/1/18 Baa1/A 4,005,000 3,957,997
Puerto Rico Commonwealth Public
Improvement General Obligation Bonds,
YCNS, MBIA Insured, 7.384%, 7/1/08(1) Aaa/AAA 3,500,000 2,938,047
Puerto Rico Electric Power Authority Revenue
Bonds, Series P, 7%, 7/1/21 Baa1/A-- 4,000,000 4,058,727
Puerto Rico Housing Finance Corp.
Single Family Mtg. Revenue Bonds, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 1,100,000 1,133,097
------------
17,431,387
------------ ------------
TOTAL INVESTMENTS, AT VALUE (COST $251,584,072) 97.5% 233,918,905
------------ ------------
OTHER ASSETS NET OF LIABILITIES 2.5 5,986,979
------------ ------------
NET ASSETS 100.0% $239,905,884
============ ============
</TABLE>
1. Represents the current interest rate for a variable
rate bond. These variable rate bonds known as "inverse
floaters" pay interest at a rate that varies inversely
with short-term interest rates. As interest rates rise,
inverse floaters produce less current income. Their
price may be more volatile than the price of a
comparable fixed-rate security. Inverse floaters amount
to $31,277,610 or 13% of the Fund's net assets, at
December 31, 1994.
See accompanying Notes to Financial Statements.
10 Oppenheimer California Tax-Exempt Fund
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994
<TABLE>
<S> <C> <C>
ASSETS Investments, at value (cost $251,584,072)--see accompanying statement $ 233,918,905
Cash 337,526
Receivables:
Interest 5,314,901
Investments sold 2,137,060
Shares of beneficial interest sold 295,248
Other 45,415
-------------
Total assets 242,049,055
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 911,990
Dividends 901,768
Distribution and service plan fees--Note 4 158,414
Other 170,999
-------------
Total liabilities 2,143,171
NET ASSETS $ 239,905,884
=============
COMPOSITION OF Paid-in capital $ 258,829,341
NET ASSETS Undistributed (overdistributed) net investment income (170,011)
Accumulated net realized gain (loss) from investment transactions (1,088,278)
Net unrealized appreciation (depreciation) on investments--Note 3 (17,665,168)
-------------
Net assets $ 239,905,884
=============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share
(based on net assets of $219,682,026 and 23,255,729
shares of beneficial interest outstanding) $9.45
Maximum offering price per share (net asset
value plus sales charge of 4.75% of offering price) $9.92
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $20,223,858 and 2,141,617 shares of beneficial interest outstanding) $9.44
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer California Tax-Exempt Fund
<PAGE> 12
STATEMENT OF OPERATIONS For the Year Ended December
31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME Interest $18,420,122
EXPENSES Management fees--Note 4 1,560,360
Distribution and service plan fees:
Class A--Note 4 611,139
Class B--Note 4 165,277
Transfer and shareholder servicing agent fees--Note 4 140,732
Trustees' fees and expenses 55,562
Shareholder reports 45,421
Legal and auditing fees 33,707
Custodian fees and expenses 23,145
Registration and filing fees--Class B 4,090
Other 32,365
------------
Total expenses 2,671,798
NET INVESTMENT INCOME (LOSS) 15,748,324
REALIZED AND UNREALIZED Net realized gain (loss) on investments (999,410)
GAIN (LOSS) ON Net change in unrealized appreciation or depreciation on investments (39,209,125)
INVESTMENTS ------------
Net realized and unrealized gain (loss) on investments (40,208,535)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(24,460,211)
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer California Tax-Exempt Fund
<PAGE> 13
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993
-----------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ 15,748,324 $ 14,239,272
Net realized gain (loss) on investments (999,410) 1,489,475
Net change in unrealized appreciation or depreciation
on investments (39,209,125) 14,305,322
------------ ------------
Net increase (decrease) in net assets resulting from operations (24,460,211) 30,034,069
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.605 and $.648 per share, respectively) (14,920,148) (14,653,931)
SHAREHOLDERS Class B ($.526 and $.361 per share, respectively) (857,567) (163,836)
Distributions from net realized gain on investments:
Class A ($.072 per share) -- (1,740,286)
Class B ($.072 per share) -- (60,371)
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 (8,912,194) 48,808,693
Net increase (decrease) in net assets resulting from Class B
beneficial interest transactions--Note 2 12,644,856 9,837,578
NET ASSETS Total increase (decrease) (36,505,264) 72,061,916
Beginning of period 276,411,148 204,349,232
------------ ------------
End of period [including undistributed (overdistributed) net investment
income of $(170,011) and $275,259, respectively] $239,905,884 $276,411,148
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer California Tax-Exempt Fund
<PAGE> 14
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.97 $ 10.35 $ 10.22 $ 9.86 $ 9.94 $ 9.58
Income (loss) from investment operations:
Net investment income .60 .62 .61 .66 .67 .71
Net realized and unrealized gain
(loss) on investments (1.51) .72 .20 .38 (.07) .37
------- ------- ------- ------- ------ -------
Total income (loss) from investment
operations (.91) 1.34 .81 1.04 .60 1.08
Dividends and distributions to shareholders:
Dividends from net investment income (.61) (.65) (.60) (.62) (.68) (.70)
Distributions from net realized
gain on investments -- (.07) (.08) (.06) -- (.02)
------- ------- ------- ------- ------ -------
Total dividends and distributions
to shareholders (.61) (.72) (.68) (.68) (.68) (.72)
Net asset value, end of period $ 9.45 $ 10.97 $ 10.35 $ 10.22 $ 9.86 $ 9.94
======= ======= ======= ======= ====== =======
TOTAL RETURN, AT NET ASSET VALUE(3) (8.49)% 13.26% 8.28% 10.93% 6.38% 11.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $219,682 $266,490 $204,349 $145,163 $92,514 $52,342
Average net assets (in thousands) $248,850 $245,193 $174,055 $115,661 $72,879 $29,308
Number of shares outstanding at
end of period (in thousands) 23,256 24,290 19,738 14,200 9,386 5,268
Ratios to average net assets:
Net investment income 5.99% 5.74% 6.07% 6.52% 6.80% 7.11%
Expenses, before voluntary
assumption by the Manager .96% .97% 1.07% 1.05% 1.05% 1.09%
Expenses, net of voluntary
assumption by the Manager N/A N/A N/A .73% .53% .16%
Portfolio turnover rate(5) 21.9% 13.7% 26.8% 26.6% 14.5% 20.7%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1988(2) 1994 1993(1)
------ ---- ------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.53 $10.98 $10.72
Income (loss) from investment operations:
Net investment income .09 .54 .35
Net realized and unrealized gain
(loss) on investments .05 (1.55) .34
------ ------- ------
Total income (loss) from investment
Operations .14 (1.01) .69
Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.53) (.36)
Distributions from net realized
gain on investments -- -- (.07)
------ ------- ------
Total dividends and distributions
to shareholders (.09) (.53) (.43)
Net asset value, end of period $9.58 $ 9.44 $10.98
====== ======= ======
TOTAL RETURN, AT NET ASSET VALUE(3) 1.43% (9.39)% 6.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $5,825 $20,224 $9,921
Average net assets (in thousands) $2,377 $16,552 $5,218
Number of shares outstanding at
end of period (in thousands) 608 2,142 904
Ratios to average net assets:
Net investment income 5.95%(4) 5.17% 4.57%(4)
Expenses, before voluntary
assumption by the Manager 2.25%(4) 1.73% 1.79%(4)
Expenses, net of voluntary
assumption by the Manager --(4) N/A N/A
Portfolio turnover rate(5) 0.0% 21.9% 13.7%
</TABLE>
1. For the period from May 1, 1993 (inception of
offering) to December 31, 1993.
2. For the period from November 3, 1988 (commencement
of operations) to December 31, 1988.
3. Assumes a hypothetical initial investment on the
business day before the first day of the fiscal period,
with all dividends and distributions reinvested in
additional shares on the reinvestment date, and
redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges
are not reflected in the total returns.
4. Annualized.
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 year ended December 31,
1994 were $57,137,136 and $58,857,084, respectively.
See accompanying Notes to Financial Statements.
14 Oppenheimer California Tax-Exempt Fund
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT Oppenheimer California Tax-Exempt Fund (the Fund) is
ACCOUNTING POLICIES registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management
investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class B shares. Class A
shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical rights to
earnings, assets and voting privileges, except that
each class has its own distribution and/or service
plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to
matters affecting a single 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 4:00 p.m. (New York time) on each trading day.
Listed and unlisted securities for which such
information is regularly reported are valued at the
last sale price of the day or, in the absence of sales,
at values based on the closing bid or asked price or
the last sale price on the prior trading day. Long-term
debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Long-term
debt securities which cannot be valued by the approved
portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is
satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market
value, or under consistently applied procedures
established by the Board of Trustees to determine fair
value in good faith. Short-term debt securities having
a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
FEDERAL INCOME TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any net
realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal
income tax provision is required. At December 31, 1994,
the Fund had available for federal income tax purposes
an unused capital loss carryover of approximately
$841,000 which will expire in 2002.
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service.
During the year ended December 31, 1994, the Fund's
projected benefit obligations were reduced by $23,924,
resulting in an accumulated liability of $40,422. No
payments have been made under the plan.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class B
shares from net investment income each day the New York
Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized
gains on investments, if any, will be declared at least
once each year.
CHANGE IN ACCOUNTING CLASSIFICATION OF DISTRIBUTIONS TO
SHAREHOLDERS. Net investment income (loss) and net
realized gain (loss) may differ for financial statement
and tax purposes primarily because of premium
amortization. The character of the distributions made
during the year from net investment income or net
realized gains may differ from their ultimate
characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from
the year that the income or realized gain (loss) was
recorded by the Fund. Effective January 1, 1994, the
Fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. As a result, the
Fund changed the classification of distributions to
shareholders to better disclose the differences between
financial statement amounts and distributions
determined in accordance with income tax regulations.
Accordingly, subsequent to December 31, 1993, amounts
have been reclassified to reflect a decrease in
undistributed net investment income of $293,771 and an
increase in accumulated net realized gain on
investments of $293,771. During the year ended December
31, 1994, in accordance with Statement of Position
93-2, undistributed net investment income was decreased
by $122,108 and accumulated net realized loss on
investments was decreased by the same amount.
15 Oppenheimer California Tax-Exempt Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT OTHER. Investment transactions are accounted for on the
ACCOUNTING POLICIES date the investments are purchased or sold (trade
(CONTINUED) date). Original issue discount on securities purchased
is amortized over the life of the respective
securities, in accordance with federal income tax
requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the
same basis used for federal income tax purposes. For
bonds acquired after April 30, 1993, accrued market
discount is recognized at maturity or disposition as
taxable ordinary income. Taxable ordinary income is
realized to the extent of the lesser of gain or accrued
market discount.
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994 YEAR ENDED DECEMBER 31, 1993(1)
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A:
Sold 4,682,338 $ 47,539,656 7,029,778 $ 75,603,080
Dividends and distributions reinvested 895,069 9,014,619 913,845 9,891,046
Redeemed (6,611,428) (65,466,469) (3,391,817) (36,685,433)
---------- ------------ ---------- ------------
Net increase (decrease) (1,034,021) $ (8,912,194) 4,551,806 $ 48,808,693
========== ============ ========== ============
Class B:
Sold 1,595,370 $ 16,152,328 916,412 $ 9,977,857
Dividends and distributions reinvested 52,979 528,961 12,695 139,138
Redeemed (410,584) (4,036,433) (25,255) (279,417)
---------- ------------ ---------- ------------
Net increase 1,237,765 $ 12,644,856 903,852 $ 9,837,578
========== ============ ========== ============
</TABLE>
1. For the year ended December 31, 1993 for Class A
shares and for the period from May 1, 1993 (inception
of offering) to December 31, 1993 for Class B Shares.
3. UNREALIZED GAINS AND At December 31, 1994, net unrealized depreciation on
LOSSES ON investments of $17,665,168 was composed of gross
INVESTMENTS appreciation of $2,660,707, and gross depreciation of
$20,325,875.
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS which provides for an annual fee of .60% on the first
WITH AFFILIATES $200 million of net assets, .55% on the next $100
million, .50% on the next $200 million, .45% on the
next $250 million, .40% on the next $250 million and
.35% on net assets in excess of $1 billion. The Manager
has agreed to assume Fund expenses (with specified
exceptions) in excess of the regulatory limitation of
the State of California.
For the year ended December 31, 1994,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $999,822, of which $193,221
was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. During
the year ended December 31, 1994, OFDI received
contingent deferred sales charges of $79,893 upon
redemption of Class B shares.
Oppenheimer Shareholder Services (OSS),
a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of
providing such services are allocated ratably to these
companies.
Under separate approved plans, each
class may expend up to .25% of its net assets annually
to reimburse OFDI for costs incurred in connection with
the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to
brokers, dealers, banks and other institutions. In
addition, Class B shares are subject to an asset-based
sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing
costs. In the event of termination or discontinuance of
the Class B plan, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales
charge to OFDI for distribution expenses incurred on
Class B shares sold prior to termination or
discontinuance of the plan. During the year ended
December 31, 1994, OFDI paid $19,407 to an affiliated
broker/dealer as reimbursement for Class A personal
service and maintenance expenses and retained $157,962
as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.
16 Oppenheimer California Tax-Exempt Fund
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer
California Tax-Exempt Fund:
We have audited the accompanying statements of
investments and assets and liabilities of Oppenheimer
California Tax-Exempt Fund as of December 31, 1994, and
the related statement of operations for the year then
ended, the statements of changes in net assets for each
of the years in the two-year period then ended and the
financial highlights for each of the years in the
six-year period then ended and the period from November
3, 1988 (commencement of operations) to December 31,
1988. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance
with generally accepted auditing standards. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements and financial highlights are free of
material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures
included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian
and brokers; and where confirmations were not received
from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements
and financial highlights referred to above present
fairly, in all material respects, the financial
position of Oppenheimer California Tax-Exempt Fund as
of December 31, 1994, the results of its operations for
the year then ended, the changes in its net assets for
each of the years in the two-year period then ended,
and the financial highlights for each of the years in
the six-year period then ended and the period from
November 3, 1988 (commencement of operations) to
December 31, 1988, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
January 23, 1995
17 Oppenheimer California Tax-Exempt Fund
<PAGE> 18
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1995, shareholders will receive information
regarding all dividends and distributions paid to them
by the Fund during calendar year 1994. Regulations of
the U.S. Treasury Department require the Fund to report
this information to the Internal Revenue Service.
None of the dividends paid by the Fund
during the fiscal year ended December 31, 1994 are
eligible for the corporate dividend-received deduction.
The dividends were derived from interest on municipal
bonds and are not subject to federal income tax. To the
extent a shareholder is subject to any state or local
tax laws, some or all of the dividends received may be
taxable.
The foregoing information is presented
to assist shareholders in reporting distributions
received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations
which may affect your individual tax return and the
many variations in state and local tax regulations, we
recommend that you consult your tax advisor for
specific guidance.
18 Oppenheimer California Tax-Exempt Fund
<PAGE> 19
OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Robert E. Patterson, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR Oppenheimer Management Corporation
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of
Oppenheimer California Tax-Exempt Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer California Tax-Exempt Fund. For material
information concerning the Fund, see the Prospectus.
19 Oppenheimer California Tax-Exempt Fund
<PAGE> 20
"How may I help you?"
As an OppenheimerFunds shareholder, some special privileges are available to
you. Whether it's automatic investment plans, informative newsletters and
hotlines, or ready account access, you can benefit from services designed to
make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get auto-mated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. It also gives you the ability to make transactions using your
touch-tone phone. Of course, you can always speak with a Customer Service
Representative during business hours.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an indepen-dent, non-profit
organization made up of over 3,200 customer service management professionals
from around the country, hon-ored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
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Oppenheimer Shareholder Services
[LOGO] Bulk Rate
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