<PAGE> 1
OPPENHEIMER CALIFORNIA MUNICIPAL FUND
Semiannual Report January 31, 1997
[SHOPPING COUPLE]
"WE WANT
INVESTMENT
INCOME
THAT WON'T ADD
TO OUR TAXES."
[OPPENHEIMERFUNDS LOGO]
<PAGE> 2
THIS FUND IS FOR CALIFORNIA RESIDENTS WHO NEED A SOURCE OF INCOME THAT'S EXEMPT
FROM CURRENT TAXES.
YIELD
STANDARDIZED YIELDS
For the 30 Days Ended 1/31/97:(4)
Class A
4.51%
Class B
3.96%
Class C
3.92%
HOW YOUR FUND IS MANAGED
Oppenheimer California Municipal Fund invests in a diversified portfolio of
California 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.
PERFORMANCE
Cumulative total returns for the six months ended 1/31/97 were 4.25% for Class
A shares, 3.84% for Class B shares and 3.83% for Class C shares, without
deducting sales charges.(2)
Your Fund's average annual total returns for Class A shares for the 1- and
5-year periods ended 12/31/96 and since inception on 11/3/88 were (0.20)%,
6.05% and 7.41%, respectively. For Class B shares, average annual total returns
for the 1-year period ended 12/31/96 and since inception on 5/1/93 were (0.99)%
and 4.27%, respectively. For Class C shares, average annual total returns for
the 1-year period ended 12/31/96 and since inception on 11/1/95 were 2.89% and
5.88%, respectively.(3)
OUTLOOK
"We remain optimistic and, given current market conditions, we believe that
municipal bond investments offer a good value."
Jerry Webman, Portfolio Manager
January 31, 1997
Total returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. For more complete
information, please review the prospectus carefully before you invest. As of
October 10, 1996, the Fund's name has been changed from "Oppenheimer California
Tax-Exempt Fund."
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. Includes change in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Class A returns include the current maximum initial sales charge of 4.75%.
The Fund's maximum sales charge for Class A shares was higher during a portion
of some of the periods shown, and actual investment results will be different
as a result of the change. Class B returns include the applicable contingent
deferred sales charge of 5% (1-year) and 3% (since inception). Class C returns
include the 1% contingent deferred sales charge for the 1-year result. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and Class C shares are subject to an annual 0.75%
asset-based sales charge.
4. Standardized yield is based on net investment income calculated for the
30-day period ended 1/31/97. Falling net asset values will tend to artificially
raise yields.
2 Oppenheimer California Municipal Fund
<PAGE> 3
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
California
Municipal Fund
DEAR SHAREHOLDER,
It's true that the stock market of 1996 received virtually all the recognition
this past year. While excitement during the second half of the year revolved
around equities, the bond market was experiencing a quiet, yet solid, rebound.
Some analysts anticipated that moderated economic growth and low inflation
would help stabilize interest rates, and even lower them--all factors that
would be beneficial for the bond market. During the second half of 1996, that's
exactly how events unfolded. In October, when the economy was characterized by
a firm dollar, low inflation and slow growth, the Federal Reserve responded by
maintaining its hands-off approach to interest rates. It appeared that earlier
concerns about rapid inflationary growth had been overblown, and interest rates
declined soon afterward. With continued, sustainable, non-inflationary growth
of around 2% to 2.5%, and no interest rate raises expected from the Federal
Reserve, the economy seemed to have settled into a comfortable pattern of
neither too little nor too much growth.
Moving ahead to 1997, President Clinton has pledged to focus on balancing
the federal budget during his second term. In fact, politicians from every camp
are discussing their intent to reduce the budget, perhaps through a balanced
budget amendment. Such a move should prove beneficial for the municipal bond
market. The other good news for municipal bond investors is that President
Clinton has no plans of initiating a flat tax, a proposal that would have
eliminated the tax advantages of municipal bonds.
On the other hand, investors may have experienced some volatility in the
income stream from municipal bond funds. This is primarily because the
availability of quality bonds paying high dividends has decreased over the past
few years, making it more difficult to find value bonds. We believe that over
the long term and on a tax-adjusted basis, our funds will continue to offer
value with the potential for higher total return.
When you consider the combination of these developments last year--a
sustained economic growth pattern, the assurance of a balanced federal budget
and the dissipated threat of a flat tax--the tax advantages of municipal bond
investing become much more attractive.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
February 24, 1997
3 Oppenheimer California Municipal Fund
<PAGE> 4
[PHOTO]
Q + A
Q WHAT
INVESTMENTS
MADE
POSITIVE
CONTRIBUTIONS
TO PERFORMANCE?
AN INTERVIEW WITH YOUR FUND'S MANAGERS.
HOW HAS THE FUND PERFORMED?
Our performance has been relatively strong. We attribute the Fund's success to
our strategy of mixing high-yield municipal bonds with U.S. Treasury and
municipal futures contracts that act as a hedge against rising interest rates.
As a result of this mixture, Oppenheimer California Municipal Fund finished
11th out of 95 California municipal debt funds ranked by Lipper Analytical
Services for the 1-year period ended 12/31/96.(1) This ranking places the Fund
in the first quartile of its peer group.
[PHOTO]
WHAT INVESTMENT STRATEGIES MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE?
Our concentration on high coupon bonds worked well for us throughout the period
and provided the Fund with a steady income stream. In the second quarter of
this year, we bought some attractive higher-yielding municipal bonds in land
development and healthcare that enabled the Fund to capture some unusually high
income. When the market began to rally in the second half of 1996, these bonds
were in demand, and we were able to benefit. Because high-yielding bonds often
have a lower rating, they require careful analysis of the risk of default.
In the second quarter, we bought some discount and zero coupon bonds that
were out of favor. We reduced their volatility risk by hedging them with
combinations of higher-rated Treasury and municipal futures contracts. When the
bond market rallied in the fall, these purchases worked out very well for us.
We have trimmed our position in prerefunded bonds. These bonds tend to
perform well because they have virtually no credit risk and have a shorter
known call date,
1. Source: Lipper Analytical Services 12/31/96. Oppenheimer California
Municipal Fund was ranked 22nd out of 49 funds in its category for the 5-year
period ended 12/31/96. Oppenheimer California Municipal Fund is characterized
by Lipper as a California municipal debt fund. Lipper performance is based on
total return and does not take sales charges into account.
4 Oppenheimer California Municipal Fund
<PAGE> 5
FACING PAGE
Top left: Jerry Webman,
Portfolio Manager
Top right: Michael Maciolek,
Securities Analyst
Bottom: Len Darling, Executive
VP, Director of Fixed Income
Investments
THIS PAGE
Top: Robert Patterson, Member
of Tax-Exempt Fixed Income
Investments Team
Bottom: Caryn Halbrecht, Member
of Tax-Exempt Fixed Income Invest-
ments Team, with Donna Compert,
Municipal Securities Trader
A HIGH
COUPON
BONDS
WORKED
WELL FOR US
THROUGHOUT
THE PERIOD.
usually five to six years. However, when the market is rallying, as it did
during the second half of 1996, these bonds are poor performers.
We were able to benefit from securities that had less desirable credit
but have improved over the period. Examples include an energy generating plant
in Sacramento and the holder of some leases on downtown Los Angeles parking
facilities(2).
DID ANY INVESTMENTS PERFORM POORLY?
In the last six months, as interest rates have fallen, prerefunded bonds have
not performed as well as discount and zero coupon bonds. Fortunately, we
correctly anticipated the fourth quarter decline in interest rates and offset
our prerefunded bond exposure with long positions in Treasury futures that gave
the portfolio a boost when the market rallied.
[PHOTO]
WHAT AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING?
We believe California development districts and infrastructure financing
projects will offer some interesting opportunities during 1997. We plan to
seek those opportunities in economically strong parts of the state where the
business growth and demographic growth seem appropriate. We're looking at the
Southern California area, in Orange County, where despite political problems a
few years ago, the economics continue to appear very favorable.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We continue to maintain a positive outlook. Currently, long-term interest rates
are attractive since there doesn't appear to be any real inflation on the
horizon, and we are continuing to see steady, moderate economic growth in the
United States and weak growth abroad. Also, we will remain alert to significant
changes in those favorable conditions. In the meantime, we remain optimistic
and, given current market conditions, we believe that municipal bond
investments offer a good value.
[PHOTO]
2. The Fund's portfolio is subject to change.
5 Oppenheimer California Municipal Fund
<PAGE> 6
FINANCIALS
CONTENTS
STATEMENT OF INVESTMENTS 7
STATEMENT OF ASSETS AND LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENTS OF CHANGES IN NET ASSETS 15
FINANCIAL HIGHLIGHTS 16
NOTES TO FINANCIAL STATEMENTS 18
6 Oppenheimer California Municipal Fund
<PAGE> 7
STATEMENT OF INVESTMENTS January 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--99.3%
- ---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--90.7%
Anaheim, CA PFAU Tax Allocation RB,
MBIA Insured, 6.45%, 12/28/18 Aaa/AAA $6,000,000 $ 6,467,760
--------------------------------------------------------------------------------------------------------------------------
Avalon, CA CIA Tax Allocation Bonds,
Series A, 7.25%, 8/1/21 NR/A- 200,000 216,712
--------------------------------------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical Center,
Series A, 6.50%, 12/1/11 Baa/BBB+ 4,500,000 4,619,025
--------------------------------------------------------------------------------------------------------------------------
CA Educational FA RRB, Pooled Educational Facilities
Program, Prerefunded, MBIA Insured, 7%, 3/1/16 Aaa/AAA 100,000 108,213
--------------------------------------------------------------------------------------------------------------------------
CA Franchise Tax Board Refunding COP,
6.90%, 10/1/06 A/A- 1,000,000 1,075,390
--------------------------------------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB:
Series A, 7.35%, 8/1/11 Aa2/AA- 80,000 84,731
Series C, 6.75%, 2/1/25 Aa2/AA- 9,960,000 10,407,005
Series C, 7.60%, 8/1/30 Aa2/AA- 1,550,000 1,631,871
Series E-1, 6.45%, 2/1/12 Aa2/AA- 750,000 775,102
--------------------------------------------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series 2-A, 6.45%, 8/1/25 Aaa/AAA 8,000,000 8,265,520
--------------------------------------------------------------------------------------------------------------------------
CA HFFAU RB:
Henry Mayo Newhall Project, Series A, 8%, 10/1/18 NR/A+ 3,000,000 3,229,020
La Palma Hospital Medical Center, 7.10%, 2/1/13 NR/A+ 1,875,000 1,980,637
Los Angeles Children's Hospital, Prerefunded,
Series A, 7.125%, 6/1/21 Aaa/NR 1,000,000 1,121,450
--------------------------------------------------------------------------------------------------------------------------
CA HFFAU RRB, Catholic Health Care West,
Series A, MBIA Insured, 5%, 7/1/11 Aaa/AAA 7,975,000 7,588,850
--------------------------------------------------------------------------------------------------------------------------
CA PC FA RB, Pacific Gas & Electric Co. Project,
Series B, 8.875%, 1/1/10 A2/A 2,275,000 2,390,069
--------------------------------------------------------------------------------------------------------------------------
CA PC FA RRB, San Diego Gas & Electric Co. Project,
Series A, 5.90%, 6/1/14 A2/A 1,500,000 1,566,015
--------------------------------------------------------------------------------------------------------------------------
CA PC FA RRB, SWD, Prerefunded,
North Cnty. Recycling Center, Escrowed to Maturity,
Series A, 6.75%, 7/1/11 Aaa/AAA 500,000 579,180
--------------------------------------------------------------------------------------------------------------------------
CA PWBL RB:
Department of Corrections-Madera State Prison,
Series E, 5.50%, 6/1/15 A1/A/A- 3,000,000 2,947,110
University of California Regents,
Prerefunded, Series A, 7%, 9/1/15 Aaa/AAA/AAA 9,650,000 10,697,507
--------------------------------------------------------------------------------------------------------------------------
CA Statewide CDAU Revenue COP,
Cedars-Sinai Medical Center, 5.40%, 11/1/15 A1/NR 4,100,000 3,806,932
--------------------------------------------------------------------------------------------------------------------------
Campbell, CA Refunding COP, Civic Center Project,
Unrefunded Balance, 6.75%, 10/1/17 A/A- 1,130,000 1,204,636
--------------------------------------------------------------------------------------------------------------------------
Capistrano, CA Unified School District CFD
Special Tax Bonds:
No. 87-1, 7.60%, 9/1/14 Aaa/NR 4,000,000 4,418,480
No. 92-1, 7.10%, 9/1/21 NR/NR 3,250,000 3,267,160
--------------------------------------------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP, Community
Hospitals of Central California Project, 5%, 2/1/23 Baa1/NR/A- 8,500,000 7,167,115
</TABLE>
7 Oppenheimer California Municipal Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Clovis, CA Unified School District CAP GOB,
Series D, FGIC Insured, Zero Coupon, 5.60%, 8/1/10(1) Aaa/AAA $2,500,000 $ 1,203,375
--------------------------------------------------------------------------------------------------------------------------
Commerce, CA Joint Powers FAU Lease RB,
Community Center, Series A, 6.25%, 10/1/22(2) Baa2/NR 1,410,000 1,415,175
--------------------------------------------------------------------------------------------------------------------------
Contra Costa, CA Transportation Authority
Sales Tax RB, Escrowed to Maturity, Series A,
FGIC Insured, 6.50%, 3/1/09 Aaa/AAA/AAA 750,000 850,710
--------------------------------------------------------------------------------------------------------------------------
Corona, CA COP, Vista Hospital Project,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 13,175,000 17,008,793
--------------------------------------------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National
Medical Center, 6.25%, 4/1/23 Baa1/NR 4,500,000 4,536,135
--------------------------------------------------------------------------------------------------------------------------
East Bay, CA Regional Park District GOB,
Series B, 6.375%, 9/1/10 Aa/AA- 500,000 525,845
--------------------------------------------------------------------------------------------------------------------------
Escondido, CA Union High School District CAP Bonds:
Zero Coupon, 6.20%, 11/1/18(1) Aaa/AAA 6,000,000 1,737,480
Zero Coupon, 6.20%, 11/1/19(1) Aaa/AAA 2,000,000 547,080
--------------------------------------------------------------------------------------------------------------------------
Fairfield, CA PFAU RRB, Municipal Park Improvement
District No. 1, FGIC Insured, 6.25%, 7/1/14 Aaa/AAA/AAA 1,000,000 1,051,640
--------------------------------------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor Agency CA
Toll Road RB, Sr. Lien, Series A, 6.50%, 1/1/32 Baa/BBB-/BBB 4,600,000 4,788,922
--------------------------------------------------------------------------------------------------------------------------
Fresno, CA Unified School District COP, 7%, 5/1/12 A/BBB+ 250,000 261,013
--------------------------------------------------------------------------------------------------------------------------
Fresno, CA WS RB, Prerefunded, Series A, 7.30%, 6/1/20 NR/NR 1,500,000 1,595,670
--------------------------------------------------------------------------------------------------------------------------
Industry, CA Improvement Bond Act of 1915 Bonds,
Assessment District No. 91-1, 7.65%, 9/2/21 NR/NR 1,750,000 1,804,933
--------------------------------------------------------------------------------------------------------------------------
Industry, CA Urban Development Agency Tax
Allocation Bonds, Transportation Distribution
Project No. 3, 6.90%, 11/1/07 NR/A- 500,000 542,885
--------------------------------------------------------------------------------------------------------------------------
Intermodal Container Transfer Facility Joint
PAU CA RRB, Southern Pacific Transportation Co.,
Series A, 7.70%, 11/1/14 NR/A 1,000,000 1,062,670
--------------------------------------------------------------------------------------------------------------------------
La Quinta, CA RA Refunding Tax Allocation Bonds,
La Quinta Project, Prerefunded, 8.40%, 9/1/12 Aaa/AAA 1,000,000 1,153,270
--------------------------------------------------------------------------------------------------------------------------
Lake Elsinore, CA Recreation Authority RB,
Public Facilities Project, Series A, 7.10%, 2/1/17 NR/NR 2,960,000 2,967,252
--------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB:
5.125%, 5/15/18 Aa/AA- 5,700,000 5,158,272
MBIA Insured, 9%, 5/15/02 Aaa/AAA 5,000,000 5,972,650
--------------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP, 6.50%, 3/1/10 Baa1/BBB 1,500,000 1,543,905
--------------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP, Disney Parking Project:
Zero Coupon, 6.924%, 9/1/10(1) Baa1/BBB/A- 5,960,000 2,563,098
Zero Coupon, 6.95%, 9/1/11(1) Baa1/BBB/A- 2,900,000 1,163,770
Zero Coupon, 7.03%, 9/1/13(1) Baa1/BBB/A- 4,500,000 1,567,890
</TABLE>
8 Oppenheimer California Municipal Fund
<PAGE> 9
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Los Angeles Cnty., CA Public Works FAU Lease RRB,
Series B, 5.25%, 9/1/15 Aaa/AAA $1,000,000 $ 967,130
-------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Community RA FAU RB,
Grand Central Square MH:
Series A, 5.90%, 12/1/13 Ba/BB 500,000 490,805
Series A, 5.90%, 12/1/26 Ba/BB 2,600,000 2,513,108
-------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Community RA Tax Allocation
Refunding Bonds, North Hollywood, Series B,
Prerefunded, MBIA Insured, 7%, 7/1/15 Aaa/AAA 2,000,000 2,174,860
-------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Convention & Exhibition Center
Authority Refunding COP, Prerefunded, Series A,
7.375%, 8/15/18 Aaa/AAA 7,400,000 8,104,110
-------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Unified School District Refunding COP,
Dr. Francisco Bravo Medical Project, 6.60%, 6/1/06 A/A-/A 250,000 269,353
-------------------------------------------------------------------------------------------------------------------------
M-S-R CA PPA RB, San Juan Project,
Series C, AMBAC Insured, 6.875%, 7/1/19 Aaa/AAA/AAA 2,000,000 2,044,460
-------------------------------------------------------------------------------------------------------------------------
M-S-R CA PPA RRB, San Juan Project,
Series C, 6.875%, 7/1/19 A/A 760,000 776,469
-------------------------------------------------------------------------------------------------------------------------
Merced, CA PFAU Tax Allocation Bonds,
Series A-1, 5.50%, 12/1/10 NR/A- 500,000 495,425
-------------------------------------------------------------------------------------------------------------------------
Metropolitan Water District of Southern CA
Waterworks RRB, 5.489%, 10/30/20 Aa/AA 6,600,000 6,407,874
-------------------------------------------------------------------------------------------------------------------------
Northern CA Transmission Agency RB,
California-Oregon Transmission Project, Prerefunded,
Series A, MBIA Insured, 7%, 5/1/24 Aaa/AAA 7,300,000 8,004,085
-------------------------------------------------------------------------------------------------------------------------
Oakland, CA RA Refunding Bonds, MBIA Insured,
Inverse Floater, 8.219%, 9/1/19(3) Aaa/AAA 4,300,000 4,402,125
-------------------------------------------------------------------------------------------------------------------------
Oakland, CA RRB, Municipal Retirement
System Pension Fund, Series A,
FGIC Insured, 7.60%, 8/1/21 Aaa/AAA/AAA 2,000,000 2,132,260
-------------------------------------------------------------------------------------------------------------------------
Orange Cnty., CA CFD Special Tax Bonds:
No. 87-3, Mission Viejo, Prerefunded,
Series A, 8.05%, 8/15/08 NR/NR 3,000,000 3,242,040
No. 88-1, Aliso Viejo, Prerefunded,
Series A, 7.10%, 8/15/05 NR/AAA 1,440,000 1,651,493
No. 88-1, Aliso Viejo, Prerefunded,
Series A, 7.35%, 8/15/18 NR/AAA 8,000,000 9,272,320
-------------------------------------------------------------------------------------------------------------------------
Orange Cnty., CA Improvement Bond Act of 1915
Assessment No. 88-1, 6.25%, 9/2/18 NR/NR 2,300,000 2,320,447
-------------------------------------------------------------------------------------------------------------------------
Pittsburg, CA Improvement Bond Act of 1915
Bonds Assessment District 1990-01, 7.75%, 9/2/20 NR/NR 1,235,000 1,273,421
-------------------------------------------------------------------------------------------------------------------------
Pittsburg, CA RA Tax Allocation Sub. Bonds,
Los Medanos Community Development Project,
6.20%, 8/1/19 NR/BBB 2,500,000 2,492,500
-------------------------------------------------------------------------------------------------------------------------
Placentia, CA PFAU Special Tax RB, Jr. Lien,
Series B, 6.60%, 9/1/15 NR/NR 1,600,000 1,582,176
-------------------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity:
Series A, 7.60%, 5/1/23 NR/AAA 4,500,000 5,659,965
Series B, 7.50%, 8/1/23 Aaa/AAA 500,000 623,895
-------------------------------------------------------------------------------------------------------------------------
Pomona, CA Unified School District GORB, Series A,
MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 3,000,000 3,196,770
</TABLE>
9 Oppenheimer California Municipal Fund
<PAGE> 10
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Port Oakland, CA Port RB, Series G,
MBIA Insured, 5.375%, 11/1/25 Aaa/AAA/AAA $10,650,000 $ 9,941,988
--------------------------------------------------------------------------------------------------------------------------
Rancho CA Water District FAU RRB, AMBAC Insured,
5%, 8/15/14 Aaa/AAA/AAA 4,500,000 4,231,890
--------------------------------------------------------------------------------------------------------------------------
Rancho Cucamonga, CA RA Tax Allocation Bonds,
MBIA Insured, 5.25%, 9/1/26 Aaa/AAA 2,000,000 1,884,180
--------------------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP:
FGIC Insured, Inverse Floater, 7.586%, 6/1/19(3) Aaa/AAA/AAA 4,000,000 3,830,000
MBIA Insured, Inverse Floater, 8.964%, 7/8/22(3) Aaa/AAA 2,500,000 2,993,750
--------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD Special Tax Bonds,
No. 88-12, 7.55%, 9/1/17 NR/NR 3,000,000 3,134,610
--------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to Maturity,
Series A, 7.80%, 5/1/21 Aaa/AAA 300,000 386,028
--------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SFM RB,
Escrowed to Maturity, 8.125%, 7/1/16(4) Aaa/AAA 10,000,000 12,834,800
--------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.50%, 7/1/14 NR/BBB- 5,000,000 5,189,300
--------------------------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RB, Prerefunded,
Series W, 7.50%, 8/15/18 Aaa/AAA/A- 5,000,000 5,281,550
--------------------------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, FGIC Insured,
Inverse Floater, 8.868%, 8/15/18(3) Aaa/AAA/AAA 5,500,000 6,077,500
--------------------------------------------------------------------------------------------------------------------------
Sacramento, CA PAU RB, Cogeneration Project,
6%, 7/1/22 NR/BBB- 7,300,000 7,275,983
--------------------------------------------------------------------------------------------------------------------------
Saddleback Community College District,
CA Refunding COP, BIG Insured, 7%, 8/1/19 Aaa/AAA 1,000,000 1,073,310
--------------------------------------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP, Medical Center
Financing Project, 5.50%, 8/1/17 Baa1/A- 5,250,000 5,047,350
--------------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA COP, MBIA Insured,
Inverse Floater, 8.976%, 11/18/19(3) A1/A 2,000,000 2,187,500
--------------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority Revenue COP,
Series 91-B, MBIA Insured, Inverse Floater,
8.73%, 4/8/21(3) Aaa/AAA 3,000,000 3,322,500
--------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien:
5%, 1/1/33 NR/NR/BBB 8,000,000 6,851,680
6.75%, 1/1/32 NR/NR/BBB 7,000,000 7,364,770
--------------------------------------------------------------------------------------------------------------------------
Santa Margarita/Dana Point, CA Authority RB,
Improvement Districts 3-3A-4 & 4A,
Series B, MBIA Insured, 7.25%, 8/1/14 Aaa/AAA 680,000 817,809
--------------------------------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB, Series A, 7.35%, 9/1/24 NR/AAA 1,670,000 1,746,219
--------------------------------------------------------------------------------------------------------------------------
Southern CA Public PAU Transmission Project RB,
Inverse Floater, 7.812%, 7/1/12(3) Aa/A+ 5,500,000 5,768,125
--------------------------------------------------------------------------------------------------------------------------
Tustin, CA Unified School District Special Tax RB,
CFD 88-1, Series B, 6.375%, 9/1/21 NR/NR 3,500,000 3,511,130
--------------------------------------------------------------------------------------------------------------------------
University of CA Regents RB, Multiple Purpose Projects,
Prerefunded, Series A, 6.875%, 9/1/16 NR/A 1,950,000 2,205,704
--------------------------------------------------------------------------------------------------------------------------
West & Central Basin FAU CA RRB,
West Basin Refunding Project, Series A,
AMBAC Insured, 5%, 8/1/16 Aaa/AAA/AAA 5,000,000 4,555,550
-------------
324,248,240
</TABLE>
10 Oppenheimer California Municipal Fund
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS: MOODY'S/ FACE MARKET VALUE
S&P'S/FITCH'S AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. POSSESSIONS--8.6%
- --------------------------------------------------------------------------------------------------------------------------------
Guam PAU RB, Series A, 6.625%, 10/1/14 NR/BBB $2,000,000 $ 2,077,840
-------------------------------------------------------------------------------------------------------------------------
PR Commonwealth GOB, 6.50%, 7/1/15 Baa1/A 3,000,000 3,316,770
-------------------------------------------------------------------------------------------------------------------------
PR Commonwealth GOB, MBIA Insured,
Inverse Floater, 7.612%, 7/1/08(3) Aaa/AAA 3,500,000 3,758,125
-------------------------------------------------------------------------------------------------------------------------
PR Commonwealth HTAU RB, Series Y, 5.50%, 7/1/36 Baa1/A 7,025,000 6,725,595
-------------------------------------------------------------------------------------------------------------------------
PR EPAU RB, Prerefunded, Series P, 7%, 7/1/21 Aaa/BBB+ 4,000,000 4,492,040
-------------------------------------------------------------------------------------------------------------------------
PR Housing Bank & Finance Agency SFM RB,
Affordable Housing Mtg.-Portfolio I, 6.25%, 4/1/29 Aaa/AAA 6,600,000 6,698,472
-------------------------------------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 845,000 887,630
-------------------------------------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental
PC Facilities Tourist RB, Mennonite General
Hospital Project, Series A, 6.50%, 7/1/12 NR/BBB--/BBB 2,400,000 2,457,744
-------------------------------------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental PC RB,
American Home Products, 5.10%, 12/1/18 Aaa/NR 500,000 457,800
------------
30,872,016
------------
Total Municipal Bonds and Notes (Cost $344,018,554) 355,120,256
================================================================================================================================
SHORT-TERM TAX-EXEMPT OBLIGATIONS--2.6%
- --------------------------------------------------------------------------------------------------------------------------------
CA GOB, Series A-3, MBIA Insured, 3.75%, 4/1/97(5) 900,000 900,000
-------------------------------------------------------------------------------------------------------------------------
CA HFFAU RRB, Catholic West Project, Series C,
MBIA Insured, 3.45%, 2/3/97(5) 5,000,000 5,000,000
-------------------------------------------------------------------------------------------------------------------------
Metropolitan Water District of Southern CA
Waterworks RRB, Series A, AMBAC Insured, 3.45%, 6/1/97(5) 3,000,000 3,000,000
-------------------------------------------------------------------------------------------------------------------------
Orange Cnty., CA Sanitation District COP,
FGIC Insured, 3.50%, 2/7/97(5) 500,000 500,000
-------------------------------------------------------------------------------------------------------------------------
Total Short-Term Tax-Exempt Obligations (Cost $9,400,000) 9,400,000
================================================================================================================================
TOTAL INVESTMENTS, AT VALUE (COST $353,418,553) 101.9% 364,520,256
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.9) (6,876,045)
------------ ------------
NET ASSETS 100.0% $357,644,211
============ ============
</TABLE>
1. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
2. When-issued security to be delivered and settled after January 31,
1997.
3. Represents the current interest rate for a variable rate bond. These
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 $32,339,625 or 9.04% of the Fund's net assets at January 31,
1997.
4. Securities with an aggregate market value of $385,044 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
5. Floating or variable rate obligation. The interest rate, which is
based on specific, or an index of, market interest rates, is subject to
change periodically and is the effective rate on January 31, 1997. This
instrument may also have a demand feature which allows the recovery of
principal at any time, or at specified intervals not exceeding one year,
on up to 30 days' notice. Maturity date shown represents effective
maturity based on variable rate and, if applicable, demand feature.
As of January 31, 1997, securities subject to the alternative minimum tax
amounted to $66,821,840 or 18.68% of the Fund's net assets.
11 Oppenheimer California Municipal Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
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>
Hospital/Healthcare $ 58,515,702 16.0%
---------------------------------------------------------------------------------------------------------------------
Special Assessment 55,834,235 15.4
---------------------------------------------------------------------------------------------------------------------
Electric Utilities 53,811,102 14.7
---------------------------------------------------------------------------------------------------------------------
Single Family Housing 50,001,239 13.7
---------------------------------------------------------------------------------------------------------------------
Lease Rental 46,114,449 12.7
---------------------------------------------------------------------------------------------------------------------
Highways 25,730,966 7.1
---------------------------------------------------------------------------------------------------------------------
Water Utilities 23,113,484 6.3
---------------------------------------------------------------------------------------------------------------------
Marine/Aviation Facilities 22,135,580 6.1
---------------------------------------------------------------------------------------------------------------------
General Obligation 15,185,445 4.2
---------------------------------------------------------------------------------------------------------------------
Higher Education 5,581,076 1.5
---------------------------------------------------------------------------------------------------------------------
Pollution Control 3,956,085 1.1
---------------------------------------------------------------------------------------------------------------------
Multi-Family Housing 3,003,913 0.8
---------------------------------------------------------------------------------------------------------------------
Resource Recovery 1,079,180 0.3
---------------------------------------------------------------------------------------------------------------------
Manufacturing, Non-Durable Goods 457,800 0.1
------------ -----
$364,520,256 100.0%
============ ======
</TABLE>
To simplify the listings of the Oppenheimer California Municipal Fund
holdings in the Statement of Investments, we have abbreviated the descriptions
of many of the securities per the table below:
<TABLE>
<S> <C> <C> <C>
CAP --Capital Appreciation MH --Multifamily Housing
CDAU --Communities Development Authority MUD --Municipal Utility District
CFD --Community Facilities District PAU --Power Authority
CIA --Community Improvement Agency PC --Pollution Control
COP --Certificates of Participation PFAU --Public Finance Authority
EPAU --Electric Power Authority PPA --Public Power Agency
FA --Facilities Authority PWBL --Public Works Board Lease
FAU --Finance Authority RA --Redevelopment Agency
GOB --General Obligation Bonds RB --Revenue Bonds
GORB --General Obligation Refunding Bonds RRB --Revenue Refunding Bonds
HF --Health Facilities SFM --Single Family Mortgage
HFA --Housing Finance Agency SWD --Solid Waste Disposal
HFFAU --Health Facilities Finance Authority WS --Water System
HTAU --Highway & Transportation Authority
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer California Municipal Fund
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES January 31, 1997 (Unaudited)
<TABLE>
<S> <C>
================================================================================================================================
ASSETS
Investments, at value (cost $353,418,553)--see accompanying statement $364,520,256
-------------------------------------------------------------------------------------------------------------------------
Cash 750,486
-------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest 5,576,012
Investments sold 1,892,911
Shares of beneficial interest sold 1,400,189
-------------------------------------------------------------------------------------------------------------------------
Other 16,525
------------
Total assets 374,156,379
================================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 14,520,254
Dividends 1,089,158
Shares of beneficial interest redeemed 621,655
Trustees' fees 118,390
Distribution and service plan fees 74,792
Daily variation on futures contracts--Note 5 38,449
Other 49,470
------------
Total liabilities 16,512,168
================================================================================================================================
NET ASSETS $357,644,211
============
================================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $345,483,439
-------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,047,746
-------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 18,386
-------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 11,094,640
------------
Net assets $357,644,211
============
================================================================================================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $287,591,896 and 27,281,127 shares of beneficial interest outstanding) $10.54
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.07
-------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $65,793,029 and 6,239,750 shares of beneficial interest outstanding) $10.54
-------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $4,259,286 and 404,424 shares of beneficial interest outstanding) $10.53
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer California Municipal Fund
<PAGE> 14
STATEMENT OF OPERATIONS For the Six Months Ended January 31, 1997 (Unaudited)
<TABLE>
<S> <C>
================================================================================================================================
INVESTMENT INCOME
Interest $11,326,002
================================================================================================================================
EXPENSES
Management fees--Note 4 1,008,805
-------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 355,444
Class B 292,310
Class C 15,725
-------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 88,333
-------------------------------------------------------------------------------------------------------------------------
Shareholder reports 51,323
-------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 40,819
-------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 19,331
-------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 11,527
-------------------------------------------------------------------------------------------------------------------------
Insurance expenses 8,084
-------------------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 4,058
Class C 670
-------------------------------------------------------------------------------------------------------------------------
Other 3,910
-----------
Total expenses 1,900,339
================================================================================================================================
NET INVESTMENT INCOME 9,425,663
================================================================================================================================
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain on:
Investments 1,214,776
Closing of futures contracts (419,880)
-----------
Net realized gain 794,896
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 4,199,614
-----------
Net realized and unrealized gain 4,994,510
================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,420,173
===========
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer California Municipal Fund
<PAGE> 15
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, DECEMBER 31,
(UNAUDITED) 1996(1) 1995
================================================================================================================================
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 9,425,663 $ 10,332,070 $ 15,558,791
-------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 794,896 350,347 (187,865)
-------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 4,199,614 (9,638,403) 33,596,236
------------ ------------ ------------
Net increase in net assets resulting from operations 14,420,173 1,044,014 48,967,162
================================================================================================================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (7,832,341) (8,865,165) (13,975,299)
Class B (1,342,452) (1,260,228) (1,412,825)
Class C (71,269) (30,161) (556)
-------------------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A -- -- (350,447)
Class B -- -- (50,636)
Class C -- -- (153)
================================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A (2,748,942) 8,617,533 35,765,117
Class B 12,929,925 12,021,290 17,684,830
Class C 2,047,441 2,058,790 122,526
================================================================================================================================
NET ASSETS
Total increase 17,402,535 13,586,073 86,749,719
-------------------------------------------------------------------------------------------------------------------------
Beginning of period 340,241,676 326,655,603 239,905,884
------------ ------------ ------------
End of period (including undistributed net investment
income of $1,047,746, $756,370 and $868,145, respectively) $357,644,211 $340,241,676 $326,655,603
============ ============ ============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to July 31.
See accompanying Notes to Financial Statements.
15 Oppenheimer California Municipal Fund
<PAGE> 16
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
SIX MONTHS PERIOD
ENDED ENDED
JANUARY 31, 1997 JULY 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996(2) 1995 1994
=============================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.39 $ 10.69 $ 9.45 $ 10.97
---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: .29 .33 .58 .60
Net investment income .14 (.30) 1.25 (1.51)
Net realized and unrealized gain (loss) ---------- ---------- -------- ---------
.43 .03 1.83 (.91)
Total income (loss) from investment operations
---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.28) (.33) (.58) (.61)
Dividends in excess of net investment income -- -- (.01) --
Distributions from net realized gain -- -- -- --
---------- ---------- -------- --------
Total dividends and distributions to shareholders (.28) (.33) (.59) (.61)
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.54 $ 10.39 $ 10.69 $ 9.45
======== ======== ======== ========
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 4.25% 0.34% 19.76% (8.49)%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $287,592 $286,033 $285,307 $219,682
---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $289,895 $279,796 $250,188 $248,850
---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.46%(5) 5.53%(5) 5.64% 5.99%
Expenses, before voluntary assumption by
the Manager 0.94%(5) 0.97%(5) 0.95% 0.96%
Expenses, net of voluntary assumption by
the Manager N/A N/A N/A N/A
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 12.0% 14.0% 23.0% 21.9%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to
December 31, 1995.
2. The Fund changed its fiscal year end from December 31 to July 31.
3. For the period from May 1, 1993 (inception of offering) to December
31, 1993.
4. Assumes a hypothetical initial investment on the business day before
the first day last business day of the fiscal period. Sales charges are
not reflected in the total 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 returns. Total returns are not annualized for periods
of less than one full year.
16 Oppenheimer California Municipal Fund
<PAGE> 17
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------- --------------------------
SIX MONTHS PERIOD
ENDED ENDED
JANUARY 31, 1997 JULY 31,
1993 1992 (UNAUDITED) 1996(2)
==============================================================
<S> <C> <C> <C>
$ 10.35 $ 10.22 $ 10.39 $ 10.69
- --------------------------------------------------------------
.62 .61 .24 .28
.72 .20 .15 (.30)
-------- -------- -------- --------
1.34 .81 .39 (.02)
- --------------------------------------------------------------
(.65) (.60) (.24) (.28)
-- -- -- --
(.07) (.08) -- --
-------- -------- -------- --------
(.72) (.68) (.24) (.28)
- --------------------------------------------------------------
$ 10.97 $ 10.35 $ 10.54 $ 10.39
======== ======== ======== =======
==============================================================
13.26% 8.28% 3.84% (0.12)%
==============================================================
$266,490 $204,349 $65,793 $52,038
- --------------------------------------------------------------
$245,193 $174,055 $58,187 $46,422
- --------------------------------------------------------------
5.74% 6.07% 4.67%(5) 4.74%(5)
0.97% 1.07% 1.70%(5) 1.74%(5)
N/A N/A N/A N/A
- ---------------------------------------------------------------
13.7% 26.8% 12.0% 14.0%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS C
----------------------------------------- -------------- -------------------------
SIX MONTHS
ENDED PERIOD ENDED
YEAR ENDED DECEMBER 31, JANUARY 31, 1997 JULY 31, DEC. 31,
1995 1994 1993(3) (UNAUDITED) 1996(2) 1995(1)
==================================================================================================
<S> <C> <C> <C> <C> <C>
$ 9.44 $ 10.98 $ 10.72 $ 10.38 $ 10.68 $ 10.46
- --------------------------------------------------------------------------------------------------
.51 .54 .35 .24 .27 .08
1.25 (1.55) .34 .15 (.30) .22
---------- ---------- ---------- ------- -------- ---------
1.76 (1.01) .69 .39 (.03) .30
- --------------------------------------------------------------------------------------------------
(.50) (.53) (.36) (.24) (.27) (.07)
(.01) -- -- -- -- (.01)
-- -- (.07) -- -- --
---------- ---------- ---------- ---------- -------- ---------
(.51) (.53) (.43) (.24) (.27) (.08)
- --------------------------------------------------------------------------------------------------
$ 10.69 $ 9.44 $10.98 $10.53 $ 10.38 $ 10.68
========== ========== ========== =========== ======== =========
==================================================================================================
18.97% (9.39)% 6.66% 3.83% (0.19)% 2.90%
==================================================================================================
$41,224 $20,224 $9,921 $4,259 $ 2,171 $ 125
- --------------------------------------------------------------------------------------------------
$29,918 $16,552 $5,218 $3,138 $ 1,156 $ 91
- --------------------------------------------------------------------------------------------------
4.82% 5.17% 4.57%(5) 4.60%(5) 4.54%(5) 4.56%(5)
1.72% 1.73% 1.79%(5) 1.72%(5) 1.80%(5) 1.68%(5)
N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------
23.0% 21.9% 13.7% 12.0% 14.0% 23.0%
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the period ended January
31, 1997 were $60,104,966 and $41,745,208, respectively.
See accompanying Notes to Financial Statements.
17 Oppenheimer California Municipal Fund
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer California Municipal Fund (the Fund), formerly named
Oppenheimer California Tax-Exempt Fund, is registered under the
Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Fund's investment objective
is to seek as high a level of current interest income exempt from federal
and California income taxes for individual investors as is available from
municipal securities and consistent with preservation of capital. The
Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The
Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject
to a contingent deferred sales charge. All 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 the close of the
New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued at
the last sale price of the day or, in the absence of sales, at values
based on the closing bid or the last sale price on the prior trading day.
Long-term and short-term "non-money market" debt securities are valued by
a portfolio pricing service approved by the Board of Trustees. Such
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 are valued under consistently
applied procedures established by the Board of Trustees to determine fair
value in good faith. Short-term "money market type" debt securities
having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of
any premium or discount.
-------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
-------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized
gain on investments not offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision is required.
-------------------------------------------------------------------------
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 six months ended January 31, 1997, a provision of $14,542 was made
for the Fund's projected benefit obligations, and payments of $7,544 were
made to retired trustees, resulting in an accumulated liability of
$113,274 at January 31, 1997.
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C 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.
18 Oppenheimer California Municipal Fund
<PAGE> 19
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of premium amortization for tax
purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from 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.
-------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Original issue discount
on securities purchased is amortized over the life of the respective
securities, in accordance with federal income tax requirements. For bonds
acquired after April 30, 1993, on disposition or maturity, taxable
ordinary income is recognized to the extent of the lesser of gain or
market discount that would have accrued over the holding period. Realized
gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes. The Fund concentrates
its investments in California and, therefore, may have more credit risks
related to the economic conditions of California than a portfolio with a
broader geographical diversification.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
================================================================================
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 31, 1997 PERIOD ENDED JULY 31, 1996(2) YEAR ENDED DECEMBER 31, 1995(1)
--------------------------------- ----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 1,842,916 $ 19,350,626 3,209,059 $ 33,325,829 5,047,063 $ 51,814,441
Issued in connection with the
acquisition of Quest California
Tax-Exempt Fund--Note 6 -- -- -- -- 1,757,696 18,455,811
Dividends and distributions
reinvested 426,911 4,480,898 487,581 5,059,245 805,760 8,234,996
Redeemed (2,528,696) (26,580,466) (2,856,210) (29,767,541) (4,166,682) (42,740,131)
---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease) (258,869) $ (2,748,942) 840,430 $ 8,617,533 3,443,837 $ 35,765,117
========== ============ ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,473,504 $ 15,473,066 1,589,523 $ 16,574,775 1,996,884 $ 20,575,685
Dividends and distributions
reinvested 73,934 776,381 69,259 717,798 80,329 824,085
Redeemed (316,599) (3,319,522) (506,438) (5,271,283) (362,263) (3,714,940)
---------- ------------ ---------- ------------ ---------- ------------
Net increase 1,230,839 $ 12,929,925 1,152,344 $ 12,021,290 1,714,950 $ 17,684,830
========== ============ ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 235,517 $ 2,468,690 213,392 $ 2,220,863 11,729 $ 123,162
Dividends and distributions
reinvested 4,090 42,910 1,712 17,557 36 383
Redeemed (44,373) (464,159) (17,583) (179,630) (96) (1,019)
---------- ------------ ---------- ------------ ---------- ------------
Net increase 195,234 $ 2,047,441 197,521 $ 2,058,790 11,669 $ 122,526
========== ============ ========== ============ ========== ============
</TABLE>
1. For the year ended December 31, 1995 for both Class A and Class B
shares and for the period from November 1, 1995 (inception of offering)
to December 31, 1995 for Class C shares.
2. The Fund changed its fiscal year end from December 31 to July 31.
19 Oppenheimer California Municipal Fund
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At January 31, 1997, net unrealized appreciation on investments of
$11,101,703 was composed of gross appreciation of $13,503,116, and gross
depreciation of $2,401,413.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.60% on the first $200 million of average annual net assets, 0.55% on
the next $100 million, 0.50% on the next $200 million, 0.45% on the next
$250 million, 0.40% on the next $250 million and 0.35% 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 six months ended January 31, 1997, commissions
(sales charges paid by investors) on sales of Class A shares totaled
$485,866, of which $80,521 was retained by OppenheimerFunds Distributor,
Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by
an affiliated broker/dealer. Sales charges advanced to broker/dealers by
OFDI on sales of the Fund's Class B and Class C shares totaled $588,209
and $21,301. During the six months ended January 31, 1997, OFDI received
contingent deferred sales charges of $77,804 and $1,445, respectively,
upon redemption of Class B and Class C shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund, and for
other registered investment companies. OFS's total costs of providing
such services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund.
OFDI uses the service fee to reimburse brokers, dealers, banks and other
financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares.
During the six months ended January 31, 1997, OFDI paid $10,717 to an
affiliated broker/dealer as reimbursement for Class A personal service
and maintenance expenses.
The Fund has adopted compensation type Distribution and
Service Plans for Class B and Class C shares to compensate OFDI for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares,
as compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. If the Plans are terminated
by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for certain expenses it
incurred before the Plans were terminated. OFDI also receives a service
fee of 0.25% per year as compensation 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
financial institutions. Both fees are computed on the average annual net
assets of Class B and Class C shares, determined as of the close of each
regular business day. During the six months ended January 31, 1997, OFDI
retained $249,893 and $14,546, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as
financing costs. At January 31, 1997, OFDI had incurred unreimbursed
expenses of $2,259,003 for Class B and $54,823 for Class C.
20 Oppenheimer California Municipal Fund
<PAGE> 21
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the
value of fixed rate portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in interest rates as it may
be more efficient or cost effective than actually buying fixed income
securities.
Upon entering into a futures contract, the Fund is required
to deposit either cash or securities in an amount (initial margin) equal
to a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract
value and are recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is closed or
expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement
of Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related
options) include the possibility that there may be an illiquid market and
that a change in the value of the contract or option may not correlate
with changes in the value of the underlying securities.
At January 31, 1997, the Fund had outstanding futures contracts to sell
debt securities as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUATION AS OF UNREALIZED
EXPIRATION DATE FUTURES CONTRACTS JANUARY 31, 1997 DEPRECIATION
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 3/97 35 $3,900,313 $7,063
</TABLE>
================================================================================
6. ACQUISITION OF
QUEST CALIFORNIA
TAX-EXEMPT FUND
On November 24, 1995, Oppenheimer California Municipal Fund acquired all
of the net assets of Quest California Tax-Exempt Fund, pursuant to an
Agreement and Plan of Reorganization approved by the Quest California
Tax-Exempt Fund shareholders on November 16, 1995. The Fund issued
1,757,696 shares of beneficial interest, valued at $18,455,811, in
exchange for the net assets, resulting in combined net assets of
$319,511,243 on November 24, 1995. The net assets acquired included net
unrealized appreciation of $602,361. The exchange was tax-free.
21 Oppenheimer California Municipal Fund
<PAGE> 22
OPPENHEIMER CALIFORNIA MUNICIPAL FUND
================================================================================
OFFICERS AND TRUSTEES
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Jerry A. Webman, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISER
OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND SHAREHOLDER
SERVICING AGENT
OppenheimerFunds Services
================================================================================
CUSTODIAN OF
PORTFOLIO SECURITIES
Citibank, N.A.
================================================================================
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
================================================================================
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken from the records
of the Fund without examination by the independent auditors. This is a
copy of a report to shareholders of Oppenheimer California Municipal
Fund. This report must be preceded or accompanied by a Prospectus of
Oppenheimer California Municipal Fund. For material information
concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including possible loss of
the principal amount invested.
22 Oppenheimer California Municipal Fund
<PAGE> 23
OPPENHEIMERFUNDS FAMILY
================================================================================
OppenheimerFunds offers over 50 funds designed to fit virtually every
investment goal. Whether you're investing for retirement, your children's
education or tax-free income, we have the funds to help you seek your
objective.
When you invest with OppenheimerFunds, you can feel
comfortable knowing that you are investing with a respected financial
institution with over 35 years of experience in helping people just like
you reach their financial goals. And you're investing with a leader in
global, growth stock and flexible fixed-income investments--with over 3
million shareholder accounts and more than $60 billion under
OppenheimerFunds' management and that of our affiliates.
At OppenheimerFunds we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by telephone.(1)
For more information on Oppenheimer funds, please contact your financial
adviser or call us at 1-800-525-7048 for a prospectus. You may also write
us at the address shown on the back cover. As always, please read the
prospectus carefully before you invest.
<TABLE>
=========================================================================================
<S> <C>
STOCK FUNDS
Developing Markets Fund Quest Capital Value Fund
Global Emerging Growth Fund Growth Fund
Enterprise Fund(2) Global Fund
International Growth Fund Quest Global Value Fund
Discovery Fund Disciplined Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Capital Appreciation Fund(3) Quest Value Fund
=========================================================================================
STOCK & BOND FUNDS
Main Street Income & Growth Fund Equity Income Fund
Quest Opportunity Value Fund Disciplined Allocation Fund
Total Return Fund Multiple Strategies Fund(4)
Quest Growth & Income Value Fund Strategic Income & Growth Fund
Global Growth & Income Fund Bond Fund for Growth
=========================================================================================
BOND FUNDS
International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Champion Income Fund Limited-Term Government Fund
Strategic Income Fund
=========================================================================================
MUNICIPAL FUNDS
California Municipal Fund(5) Insured Municipal Fund
Florida Municipal Fund(5) Intermediate Municipal Fund
New Jersey Municipal Fund(5)
New York Municipal Fund(5) Rochester Division
Pennsylvania Municipal Fund(5) Rochester Fund Municipals
Municipal Bond Fund Limited Term New York Municipal Fund
=========================================================================================
MONEY MARKET FUNDS(6)
Money Market Fund Cash Reserves
=========================================================================================
LIFESPAN
Growth Fund Income Fund
Balanced Fund
</TABLE>
1. Exchange privileges are subject to change or termination. Shares may
be exchanged only for shares of the same class of eligible funds.
2. Effective 4/1/96, the Fund is closed to new investors.
3. On 12/18/96, the Fund's name was changed from "Target Fund."
4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund."
5. Available only to investors in certain states.
6. An investment in money market funds is neither insured nor guaranteed
by the U.S. government and there can be no assurance that a money market
fund will be able to maintain a stable net asset value of $1.00 per
share. Oppenheimer funds are distributed by OppenheimerFunds Distributor,
Inc., Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
23 Oppenheimer California Municipal Fund
<PAGE> 24
[BACK COVER]
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-9 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
RS0790.001.0197 March 31, 1997
[PHOTO]
CUSTOMER SERVICE REPRESENTATIVE
OPPENHEIMERFUNDS SERVICES
"HOW MAY I HELP YOU?"
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[OPPENHEIMERFUNDS LOGO]
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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PAID
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Denver, CO
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