<PAGE> 1
ANNUAL REPORT JULY 31, 1997
OPPENHEIMER
CALIFORNIA
MUNICIPAL FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Managers
10 Statement of
Investments
17 Statement of
Assets &
Liabilities
18 Statement of
Operations
19 Statements of
Changes in
Net Assets
20 Financial Highlights
22 Notes to Financial
Statements
27 Independent
Auditors' Report
28 Federal
Income Tax
Information
29 Officers & Trustees
32 Information &
Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - WE FOCUSED ON HIGHER-QUALITY BONDS, because investors weren't being
compensated for taking higher risks associated with lower-rated bonds.
- - CALIFORNIA'S BONDS tended to gain in value, as the state's economy improved.
- - INVESTOR CONFIDENCE SURGED because state and local issuers showed an
increase in their ability to meet their obligations.
TOTAL RETURNS
For the Year Ended 7/31/97(1)
CLASS A
1 year
11.11%
CLASS B
1 year
10.27%
CLASS C
1 year
10.26%
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
2 Oppenheimer California Municipal Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer California
Municipal Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
I'd like to welcome you to the premier issue of our newly redesigned
shareholder reports. As you can see, we've changed the format to allow easier
access to the information you need to monitor your investments. Some notable
additions are "at-a-glance" report highlights and charts that let you quickly
assess how your Fund has performed.
On the following pages, your portfolio team discuss their current
investment thinking, your Fund's strategies, and performance. Before these
commentaries, I'd like to share a few global observations.
As we consider the world's financial markets over the past twelve months,
some global trends emerge. For example, inflation has hit its lowest level in
three decades worldwide, which has helped spur many bullish financial markets.
The United States has been a beneficiary of this low-inflation environment, as
well as of a strong dollar, robust corporate earnings and a healthy economy.
However, many financial analysts are now concerned that the United States has
reached a point in the business cycle where earnings could decline because
companies are unable to further reduce costs.
On the other hand, a wave of corporate restructuring throughout Europe
has resulted in some exciting changes and opportunities. Because a similar
restructuring took place in the United States ten years ago, European companies
have been able to enjoy the benefit of hindsight by following our footsteps.
Latin America, too, has begun to shift its economies more toward the U.S.
capitalist model and has reported positive earnings growth along the way.
With major changes occurring in today's economies around the globe, it's
more important than ever to maintain a diversified portfolio across different
countries and market sectors. Now is the time to speak to your financial
adviser to ensure that your assets are allocated properly, so you have the
opportunity to benefit from investments in both domestic and international
funds. It's important to remember that investing abroad can involve greater
risk and expenses--including political and economic uncertainties--and should
be undertaken with a long-term approach in mind.
To keep in touch with our views on the markets, visit our website,
WWW.OPPENHEIMERFUNDS.COM, where you can access your account information and
fund performance data, 24 hours a day. The site also features prospectuses,
timely market updates and insightful commentaries. Our new shareholder reports
and presence on the Internet are just two examples of our commitment to keeping
you well informed.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. We look forward to helping you reach your investment goals in the
future.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill August 21, 1997
3 Oppenheimer California Municipal Fund
<PAGE> 4
AVG ANNUAL TOTAL RETURNS
For the Period Ended 6/30/97(1)
<TABLE>
<CAPTION>
CLASS A
Since
1 year 5 year Inception
<S> <C> <C>
3.84% 5.90% 7.34%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Since
1 year 5 year Inception
<S> <C> <C>
3.19% N/A 4.65%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Since
1 year 5 year Inception
<S> <C> <C>
7.18% N/A 5.74%
</TABLE>
PERFORMANCE UPDATE
Oppenheimer California Municipal Fund has performed very well over the past
twelve months. In fact, during this period, the Fund edged out many of its
peers, as ranked by Lipper Analytical Services. The Fund's Class A shares were
ranked 14 of 101 (1-year), 16 of 72 (3-year) and 6 of 50 (5-year) among
California municipal debt funds for the periods ended 6/30/97.(2)
<TABLE>
<CAPTION>
GROWTH OF $10,000
Over five years
(without sales charges)(3)
Oppenheimer California Municipal Fund Lehman Brothers Municipal
Class A shares Bond Index
<S> <C>
$ 10000 $ 10000
10222.6 10266.1
10459.6 10452.7
10915.5 10840.5
11249.6 11195.2
11692 11573.4
11818.9 11735.9
11100.6 11091.6
11101.1 11214.4
11134.2 11291.2
10809.8 11129
11743.6 11915.9
12046.7 12203.7
12325 12554.6
12952.6 13072.4
12746.4 12914.8
12824.5 13013.8
13177.5 13313.4
13573.2 13652.6
13484.3 13620.8
13982.9 14090.4
</TABLE>
1. These returns are provided as of the most recent quarter end to facilitate
comparisons. Total returns include changes in share price and reinvestment of
dividends and capital gains distributions in a hypothetical investment for the
periods shown. Class A returns include the current initial sales charge of
4.75%. Class A shares were first publicly offered on 11/3/88. Class B shares
include the applicable contingent deferred sales charge of 5% (1-year) and 2%
(since inception on 5/1/93). Class C returns include the contingent deferred
sales charge of 1% for the 1-year result. Class C shares were first offered on
11/1/95. An explanation of the different performance calculations is in the
Fund's prospectus. Class B and C shares are subject to an annual 0.75%
asset-based sales charge.
2. Source: Lipper Analytical Services, Inc., 6/30/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. Past performance does not guarantee future results.
3. Results of a hypothetical $10,000 investment in Class A shares on June 30,
1992. Lehman Brothers Municipal Bond Index includes a broad range of municipal
bonds. It is an unmanaged index, including reinvestment of income, and cannot
be purchased directly by investors. Past performance does not guarantee future
results.
4 Oppenheimer California Municipal Fund
<PAGE> 5
CREDIT ALLOCATION(5)
<TABLE>
<S> <C>
- - AAA 57.8%
- - AA 8.1
- - A 9.4
- - BBB 15.9
- - Not Rated 8.8
</TABLE>
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
Oppenheimer California Municipal Fund is for investors looking for a source of
income that's exempt from federal and California income taxes.(4)
WHAT WE LOOK FOR
- - DIVERSIFICATION among a wide range of securities.
- - Projects and regions demonstrating IMPROVING CREDIT QUALITY.
- - Securities that provide HIGH INCOME.
<TABLE>
<CAPTION>
TOP FIVE SECTORS(6)
........................................................
<S> <C>
Lease Rental 15.3%
........................................................
Hospital/Healthcare 14.7
........................................................
Special Assessment 14.5
........................................................
Single Family Housing 14.1
........................................................
Electric Utilities 12.9
........................................................
</TABLE>
4. 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.
5. Portfolio data are dollar-weighted based on total municipal investments at
value and are subject to change. The Fund may invest up to 25% of its assets in
below-investment-grade securities which carry greater risk that an issuer may
default on repayment of principal or interest. Securities rated by any rating
organization are included in the equivalent Standard & Poor's rating category.
Average credit quality and allocation include rated securities and those not
rated by a national rating organization (currently 8.8% of total investments)
but to which the ratings given above have been assigned by the Manager for
internal purposes as being comparable, in the Manager's judgment, to securities
rated by a rating agency in the same category.
6. Sector weightings are as of 7/31/97, represent a percentage of total
investments at value, and are subject to change.
5 Oppenheimer California Municipal Fund
<PAGE> 6
"OUR POSITIVE VIEW ON INFLATION HAS CAUSED US TO LENGTHEN OUR DURATIONS."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED DURING THE FISCAL YEAR ENDED JULY 31, 1997?
Oppenheimer California Municipal Fund's Class A shares have provided a total
rate of return, before sales charges, of 11.11% for the one-year period ended
July 31, 1997.(1) This competitive return helped the Fund outperform many of
its peers in the California municipal debt fund category ranked by Lipper
Analytical Services for the one-year period ended July 31, 1997.(2)
WHAT INFLUENCES AND EVENTS HAD THE GREATEST EFFECT ON THE MUNICIPAL MARKET?
Yields on municipal bonds generally followed the trends established over the
past twelve months by taxable bonds, such as U.S. Treasury securities.
However, during the twelve-month period, taxable and tax-exempt bond markets
experienced a relatively high level of volatility. Bond yields rose and fell
with investors' changing outlooks for economic growth, inflation and federal
monetary policy. When the economy appeared to be growing quickly, investors
became concerned about a resurgence of inflation and a more restrictive
monetary policy. During April, long-term interest rates peaked, then declined
by the end of July to the lowest rates during the period. When the economy
appeared to be slowing, investors seemed confident that inflation would not be
a problem.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken
into account.
2. Source: Lipper Analytical Services, Inc., 7/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 26 of 102 (1-year), 18 of 76
(3-year) and 13 of 51 (5-year) among California municipal debt funds for the
period ended 7/31/97. Past performance does not guarantee future results.
6 Oppenheimer California Municipal Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Jerry Webman
(Fund Manager)
Bob Patterson
WHAT DEVELOPMENTS IN CALIFORNIA CONTRIBUTED TO THE FUND'S PERFORMANCE?
As California's economy improved, its bonds tended to gain in value. Investors
became more confident in the state and local issuers' abilities to meet their
obligations, and they were therefore willing to pay more for a particular
security. This was especially true when independent bond rating agencies
upgraded their opinion of California's financial condition, as they did during
the past year.
More specifically, California's economy continues to recover nicely
from a relatively deep and long recession, caused primarily by job losses in
the aerospace industry. Over the past year, many of those jobs have been
replaced by employment gains in other industries, including entertainment,
engineering and biotechnology in Southern California. Similarly, Northern
California has experienced job growth in the technology and communications
industries. These economic gains have helped California and many of its
municipalities achieve their tax revenue projections, as evidenced by the
state's budget surplus. Some financial problems persist, particularly at the
county level, but, on the whole, California's economy can now be considered
healthy.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
We continued to follow the time-tested investment strategies we have used for
years. Regardless of market conditions, we prefer to keep our shareholders'
assets fully invested in a diversified portfolio of good-quality securities
that provide competitive levels of income and attractive relative values.
Within that fully invested position, we attempt to boost returns and reduce
risks.
7 Oppenheimer California Municipal Fund
<PAGE> 8
"DURING THE PAST YEAR, MANY INDEPENDENT BOND RATING AGENCIES..."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
One of the ways we do this is by actively managing the portfolio's
effective average duration--a measure of the portfolio's sensitivity to changes
in interest rates. By changing the portfolio's average duration relative to the
Fund's investment benchmark, we have been able to benefit when interest rates
are falling and protect ourselves when rates rise. For example, we've had a
very positive view on inflation recently, and that has caused us to keep the
portfolio's average duration relatively long in order to be exposed to
declining interest rates. When interest rates are rising, we try to keep our
average duration relatively short.
WHAT MARKET SECTORS DID YOU FIND ATTRACTIVE AND WHICH DID YOU AVOID?
While we were able to find creditworthy investments in virtually every area of
the California bond market, we focused on the those municipalities, authorities
and agencies whose bonds offered the most competitive income and best values.
Because some areas of the California economy are still uncertain, we were very
selective in our purchases of new bonds. For example, the strengthening economy
enabled us to invest in relatively high-yielding bonds issued by smaller
municipal issuers, such as school districts, that are not rated by the major
agencies. These bonds were carefully researched by analysts on our staff, who
deemed their credit quality equal to highly rated bonds. On the other hand, we
found only a few good values in bonds issued to finance the operations of
hospitals and other healthcare facilities. These bonds were negatively affected
by uncertainty regarding Medicare and Medicaid payment levels, although one
hospital's upgrade helped the Fund's performance.
8 Oppenheimer California Municipal Fund
<PAGE> 9
"...UPGRADED THEIR OPINION OF CALIFORNIA'S FINANCIAL CONDITION."
HOW DID THE FUND'S CREDIT QUALITY CHANGE DURING THE PERIOD?
The Fund consistently maintained an average credit rating within the A to AA
(or Aa) range. Strong economic conditions helped produce adequate tax revenues
for many of California's municipal borrowers, reducing their need to finance
deficits in the public markets. In addition, the difference in yields between
investment-grade and below-investment-grade bonds narrowed considerably as more
investors reached for higher yields in a low-supply environment. When "spreads"
narrow, we tend to focus on higher-quality bonds because our shareholders are
not adequately compensated for assuming the higher risks associated with
lower-rated bonds.
WHAT IS YOUR OUTLOOK FOR THE CALIFORNIA MUNICIPAL BOND MARKET?
We are cautiously optimistic. Our optimism is rooted in the nation's economy,
which is in its seventh year of expansion. This economy is unusual because it
has been characterized by moderate growth without an acceleration of inflation.
As long as inflationary pressures remain benign, our outlook for interest rates
and the bond market should be positive. We are also optimistic regarding
further strengthening of California's economy on both the state and local
levels. On the other hand, we are tempering our optimism with caution because
no market or economy moves in a straight line. In our view, the risk for the
foreseeable future is that the economy will grow faster than is currently
expected, causing inflation fears to surface among bond investors. While we do
not expect these fears to persist, they may cause volatility over the short
term. Therefore, we intend to remain vigilant when it comes to protecting our
shareholders from the brunt of market declines, while enabling them to
participate in the bulk of the market's gains.
9 Oppenheimer California Municipal Fund
<PAGE> 10
STATEMENT OF INVESTMENTS July 31, 1997
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--98.3%
- -------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--92.0%
Anaheim, CA PFAU Lease RB, CAP Public
Improvements Project, Sub. Lien, Series C,
FSA Insured, Zero Coupon, 5.65%, 9/1/22(1) Aaa/AAA $12,650,000 $ 3,275,464
- -------------------------------------------------------------------------------------------------------------------------------
Anaheim, CA PFAU Tax Allocation RB,
MBIA Insured, 6.45%, 12/28/18 Aaa/AAA 6,000,000 6,694,080
- -------------------------------------------------------------------------------------------------------------------------------
Avalon, CA CIA Tax Allocation Bonds, Series A,
7.25%, 8/1/21 NR/A- 200,000 220,028
- -------------------------------------------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical Center,
Series A, 6.50%, 12/1/11 Baa2/BBB+ 4,500,000 4,788,225
- -------------------------------------------------------------------------------------------------------------------------------
CA Community College FAU Lease RB, West
VY Mission Community College, MBIA Insured,
5.625%, 5/1/22 Aaa/AAA 3,585,000 3,720,585
- -------------------------------------------------------------------------------------------------------------------------------
CA Department of Water Resources RB, Central
Valley Project, Prerefunded, Series H,
6.90%, 12/1/25 Aaa/AA 1,000,000 1,092,690
- -------------------------------------------------------------------------------------------------------------------------------
CA Educational FA RRB, Pooled Educational
Facilities Program, MBIA Insured, 7%, 3/1/16 Aaa/AAA 100,000 108,605
- -------------------------------------------------------------------------------------------------------------------------------
CA Franchise Tax Board Refunding COP,
Prerefunded, 6.90%, 10/1/06 A2/A- 1,000,000 1,080,400
- -------------------------------------------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB:
Series A, 7.35%, 8/1/11 Aa2/AA- 80,000 85,030
Series C, 6.75%, 2/1/25 Aa2/AA- 9,815,000 10,433,345
Series C, 6.75%, 2/1/25 Aa2/AA- 145,000 145,000
Series C, 7.60%, 8/1/30 Aa2/AA- 1,465,000 1,552,607
Series E-1, 6.45%, 2/1/12 Aa2/AA- 750,000 794,212
- -------------------------------------------------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series A-2,
6.45%, 8/1/25 Aaa/AAA 8,000,000 8,443,200
- -------------------------------------------------------------------------------------------------------------------------------
CA HFFAU RB:
Henry Mayo Newhall Project, Series A,
8%, 10/1/18 NR/A+ 3,000,000 3,199,290
La Palma Hospital Medical Center, 7.10%, 2/1/13 NR/A+ 1,875,000 1,979,756
Los Angeles Children's Hospital, Prerefunded,
Series A, 7.125%, 6/1/21 Aaa/NR 1,000,000 1,127,340
- -------------------------------------------------------------------------------------------------------------------------------
CA Intermodal Container Transfer Facility
Joint PAU RRB, Southern Pacific Transportation
Co., Series A, 7.70%, 11/1/14 NR/A 1,000,000 1,071,530
- -------------------------------------------------------------------------------------------------------------------------------
CA Maritime Infrastructure Authority
Airport RB, San Diego Union Port District
Airport, AMBAC Insured, 5%, 11/1/20 Aaa/AAA/AAA 2,500,000 2,390,575
- -------------------------------------------------------------------------------------------------------------------------------
CA PC FA RB, Pacific Gas & Electric Co.
Project, Series B, 8.875%, 1/1/10 A2/A 2,275,000 2,352,009
- -------------------------------------------------------------------------------------------------------------------------------
CA PC FA SWD RRB, North Cnty. Recycling Center,
Escrowed to Maturity, Series A, 6.75%, 7/1/11 Aaa/AAA 500,000 574,500
</TABLE>
10 Oppenheimer California Municipal Fund
<PAGE> 11
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CA PWBL RB:
State Prison Department of Corrections, Series E,
FSA Insured, 5.50%, 6/1/15 Aaa/AAA $ 3,000,000 $ 3,197,430
University of California Regents, Prerefunded,
Series A, 7%, 9/1/15 Aaa/AAA/AAA 9,650,000 10,677,628
- -------------------------------------------------------------------------------------------------------------------------------
CA Saddleback Community College District
Refunding COP, BIG Insured, 7%, 8/1/19 Aaa/AAA 1,000,000 1,072,980
- -------------------------------------------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Cedars-Sinai Medical Center, 5.40%, 11/1/15 A1/NR 13,200,000 13,078,032
- -------------------------------------------------------------------------------------------------------------------------------
Campbell, CA Refunding COP, Civic Center
Project, Unrefunded Balance, 6.75%, 10/1/17 A/A- 1,130,000 1,224,072
- -------------------------------------------------------------------------------------------------------------------------------
Capistrano, CA Unified School District CFD
Special Tax Bonds:
No. 87-1, Prerefunded, 7.60%, 9/1/14 Aaa/NR 4,450,000 4,865,363
No. 92-1, 7.10%, 9/1/21 NR/NR 3,250,000 3,513,217
- -------------------------------------------------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP,
Community Hospitals of Central California
Project, 5%, 2/1/23 Baa1/NR/A- 8,500,000 7,600,445
- -------------------------------------------------------------------------------------------------------------------------------
Clovis, CA Unified School District CAP GOB,
Series D, FGIC Insured, Zero Coupon,
5.60%, 8/1/10(1) Aaa/AAA 2,500,000 1,313,925
- -------------------------------------------------------------------------------------------------------------------------------
Commerce, CA Joint Powers FAU Lease RB,
Community Center, Series A, 6.25%, 10/1/22 Baa2/NR 1,410,000 1,466,301
- -------------------------------------------------------------------------------------------------------------------------------
Contra Costa, CA Transportation Authority
Sales Tax RB, Escrowed to Maturity, Series A,
FGIC Insured, 6.50%, 3/1/09 Aaa/AAA/AAA 750,000 872,782
- -------------------------------------------------------------------------------------------------------------------------------
Corona, CA COP, Vista Hospital Project,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 13,175,000 17,006,422
- -------------------------------------------------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National
Medical Center, 6.25%, 4/1/23 Baa1/NR 4,500,000 4,660,020
- -------------------------------------------------------------------------------------------------------------------------------
East Bay, CA Regional Park District GOB,
Series B, 6.375%, 9/1/10 Aa/AA- 500,000 531,530
- -------------------------------------------------------------------------------------------------------------------------------
Escondido, CA Union High School District
CAP Bonds:
MBIA Insured, Zero Coupon, 6.20%, 11/1/19(1) Aaa/AAA 2,000,000 613,800
Zero Coupon, 6.20%, 11/1/18(1) Aaa/AAA 6,000,000 1,941,780
- -------------------------------------------------------------------------------------------------------------------------------
Foothill/Eastern Transportation Corridor
Agency CA Toll Road RB, Sr. Lien, Series A,
6.50%, 1/1/32 Baa/BBB-/BBB 4,600,000 4,982,306
- -------------------------------------------------------------------------------------------------------------------------------
Fresno, CA Unified School District COP,
7%, 5/1/12 A2/BBB+ 250,000 262,108
- -------------------------------------------------------------------------------------------------------------------------------
Fresno, CA WS RB, Prerefunded, Series A,
7.30%, 6/1/20 NR/NR 1,500,000 1,571,925
</TABLE>
11 Oppenheimer California Municipal Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Industry, CA Improvement Bond Act of 1915
Special Assessment GOB, District No. 91-1,
7.65%, 9/2/21 NR/NR $1,750,000 $1,806,123
- -------------------------------------------------------------------------------------------------------------------------------
Industry, CA UDA Tax Allocation Bonds,
Transportation Distribution Project No. 3,
6.90%, 11/1/07 NR/A- 500,000 553,300
- -------------------------------------------------------------------------------------------------------------------------------
La Quinta, CA RA Refunding Tax Allocation
Bonds, La Quinta Project, Prerefunded,
8.40%, 9/1/12 Aaa/AAA 1,000,000 1,146,010
- -------------------------------------------------------------------------------------------------------------------------------
Lake Elsinore, CA Recreation Authority RB,
Public Facilities Project, Series A, 7.10%, 2/1/17 NR/NR 2,960,000 2,983,532
- -------------------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB:
5.125%, 5/15/18 Aa/AA- 5,000,000 4,810,950
MBIA Insured, 9%, 5/15/02 Aaa/AAA 5,000,000 6,022,400
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP:
6.50%, 3/1/10 Baa1/BBB 1,500,000 1,570,155
Disney Parking Project, Zero Coupon:
6.924%, 9/1/10(1) Baa1/BBB/A- 5,960,000 2,911,996
6.95%, 9/1/11(1) Baa1/BBB/A- 2,900,000 1,332,260
7.03%, 9/1/13(1) Baa1/BBB/A- 4,500,000 1,822,410
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Transition Community
Sales Tax RB, Prerefunded, Series A, 6.90%, 7/1/21 Aaa/AA-/A+ 3,200,000 3,591,104
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Convention & Exhibition Center
Authority Refunding COP, Prerefunded, Series A,
7.375%, 8/15/18 Aaa/AAA 8,175,000 8,852,381
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Harbor Department RB,
Series B, 5.375%, 11/1/23 Aa/AA/AA 5,000,000 4,989,100
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Unified School District GOB,
Series A, FGIC Insured, 5%, 7/1/21 Aaa/AAA 7,500,000 7,295,700
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Unified School District
Refunding COP, Dr. Francisco Bravo Medical
Project, 6.60%, 6/1/06 A2/A/A 250,000 274,413
- -------------------------------------------------------------------------------------------------------------------------------
Northern CA Transmission Agency RB,
California-Oregon Transmission Project,
Prerefunded, Series A, MBIA Insured, 7%, 5/1/24 Aaa/AAA 7,300,000 7,979,557
- -------------------------------------------------------------------------------------------------------------------------------
Oakland, CA RA Refunding Bonds, MBIA Insured,
Inverse Floater, 8.067%, 9/1/19(2) Aaa/AAA 4,300,000 4,826,750
- -------------------------------------------------------------------------------------------------------------------------------
Oakland, CA RRB, Municipal Retirement System
Pension Fund, Series A, FGIC Insured, 7.60%, 8/1/21 Aaa/AAA/AAA 2,000,000 2,114,860
</TABLE>
12 Oppenheimer California Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 $ 3,185,820
No. 88-1, Aliso Viejo, Prerefunded, Series A,
7.10%, 8/15/05 NR/AAA 1,440,000 1,662,235
No. 88-1, Aliso Viejo, Prerefunded, Series A,
7.35%, 8/15/18 NR/AAA 8,000,000 9,324,960
- -------------------------------------------------------------------------------------------------------------------------------
Orange Cnty., CA Improvement Bond Act of 1915
Special Assessment GOB, Assessment No. 88-1,
6.25%, 9/2/18 NR/NR 2,300,000 2,358,512
- -------------------------------------------------------------------------------------------------------------------------------
Pittsburg, CA Improvement Bond Act of 1915
Special Assessment GOB, Assessment District
1990-01, 7.75%, 9/2/20 NR/NR 1,235,000 1,274,261
- -------------------------------------------------------------------------------------------------------------------------------
Pittsburg, CA RA Tax Allocation Refunding Bonds,
Los Medanos Community Development Project,
Sub. Lien, 6.20%, 8/1/19 NR/BBB 2,500,000 2,612,000
- -------------------------------------------------------------------------------------------------------------------------------
Placentia, CA PFAU Special Tax RB, Jr. Lien,
Series B, 6.60%, 9/1/15 NR/NR 1,600,000 1,643,312
- -------------------------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity:
Series A, 7.60%, 5/1/23 Aaa/AAA 4,500,000 5,956,110
Series B, 7.50%, 8/1/23 Aaa/AAA 500,000 655,570
- -------------------------------------------------------------------------------------------------------------------------------
Pomona, CA Unified School District GORB,
Series A, MBIA Insured, 6.15%, 8/1/15 Aaa/AAA 3,000,000 3,409,170
- -------------------------------------------------------------------------------------------------------------------------------
Port Oakland, CA Port RB, Series G,
MBIA Insured, 5.375%, 11/1/25 Aaa/AAA/AAA 10,650,000 10,564,907
- -------------------------------------------------------------------------------------------------------------------------------
Poway, CA RA Tax Allocation Refunding Bonds,
Prerefunded, 7.75%, 12/15/21 Aaa/NR 2,325,000 2,713,066
- -------------------------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP:
FGIC Insured, Inverse Floater, 7.312%, 6/1/19(2) Aaa/AAA/AAA 4,000,000 4,170,000
MBIA Insured, Inverse Floater, 8.497%, 7/8/22(2) Aaa/AAA 2,500,000 3,337,500
- -------------------------------------------------------------------------------------------------------------------------------
Richmond, CA Improvement Bond Act 1915
GORB, Reassessment District No. 855,
6.60%, 9/2/19 NR/NR 1,500,000 1,545,660
- -------------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD Special Tax Bonds,
No. 88-12, 7.55%, 9/1/17 NR/NR 3,000,000 3,185,010
- -------------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force
Village West, Inc., Series A:
8.125%, 6/15/12 NR/NR 3,000,000 3,271,440
8.125%, 6/15/20 NR/NR 3,000,000 3,258,270
- -------------------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to Maturity,
Series A, 7.80%, 5/1/21 Aaa/AAA 4,285,000 5,683,196
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SFM RB, Escrowed to
Maturity, 8.125%, 7/1/16 Aaa/AAA 10,000,000 13,398,900
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.50%, 7/1/14 NR/BBB-/BBB- 5,000,000 5,453,050
</TABLE>
13 Oppenheimer California Municipal Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Sacramento, CA MUD Electric RB, Prerefunded,
Series W, 7.50%, 8/15/18 Aaa/AAA/A- $5,000,000 $ 5,191,500
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, FGIC Insured,
Inverse Floater, 8.534%, 8/15/18(2) Aaa/AAA/AAA 5,500,000 6,469,375
- -------------------------------------------------------------------------------------------------------------------------------
Sacramento, CA PAU RB, Cogeneration Project,
6%, 7/1/22 NR/BBB-/BBB- 7,300,000 7,614,484
- -------------------------------------------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP, Medical Center
Financing Project, MBIA Insured, 5.50%, 8/1/17 Aaa/AAA 5,250,000 5,471,078
- -------------------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA COP, MBIA Insured, Inverse
Floater, 8.616%, 11/18/19(2) A1/A 2,000,000 2,315,000
- -------------------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority Revenue
COP, Series 91-B, MBIA Insured, Inverse Floater,
8.82%, 4/8/21(2) Aaa/AAA 3,000,000 3,600,000
- -------------------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien:
5%, 1/1/33 NR/NR/BBB 8,000,000 7,472,960
6.75%, 1/1/32 NR/NR/BBB 7,000,000 7,584,430
- -------------------------------------------------------------------------------------------------------------------------------
Santa Margarita/Dana Point, CA Authority RB,
Improvement Districts 3-3A-4 & 4A, Series B,
MBIA Insured, 7.25%, 8/1/14 Aaa/AAA 680,000 862,458
- -------------------------------------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB, Series A,
7.35%, 9/1/24 NR/AAA 1,670,000 1,774,742
- -------------------------------------------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB:
5.55%, 10/30/20 Aa/AA 3,600,000 3,639,960
Inverse Floater, 6.669%, 10/30/20(2) Aa/AA 1,500,000 1,486,875
- -------------------------------------------------------------------------------------------------------------------------------
Southern CA PPAU Transmission Project RB,
Inverse Floater, 7.407%, 7/1/12(2) Aa3/A+ 1,900,000 2,144,625
- -------------------------------------------------------------------------------------------------------------------------------
Tustin, CA Unified School District Special Tax RB,
CFD 88-1, Series B, 6.375%, 9/1/21 NR/NR 3,500,000 3,694,880
- -------------------------------------------------------------------------------------------------------------------------------
University of CA Regents RB, Multiple Purpose
Projects, Prerefunded, Series A, 6.875%, 9/1/16 NR/A 1,950,000 2,228,148
- -------------------------------------------------------------------------------------------------------------------------------
West & Central Basin FAU CA RRB, West Basin
Refunding Project, Series A, AMBAC Insured,
5%, 8/1/16 Aaa/AAA/AAA 5,000,000 4,845,000
-----------
355,522,002
</TABLE>
14 Oppenheimer California Municipal Fund
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/
S&P/FITCH FACE MARKET VALUE
(UNAUDITED) AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. POSSESSIONS--6.3%
Guam PAU RB, Series A, 6.625%, 10/1/14 NR/BBB $2,000,000 $ 2,177,360
- -------------------------------------------------------------------------------------------------------------------------------
PR Commonwealth GOB, MBIA Insured,
Inverse Floater, 8%, 7/1/08(2) Aaa/AAA 3,500,000 3,933,125
- -------------------------------------------------------------------------------------------------------------------------------
PR EPAU RB, Prerefunded, Series P, 7%, 7/1/21 Aaa/BBB+ 4,000,000 4,503,280
- -------------------------------------------------------------------------------------------------------------------------------
PR HFA & Bank SFM RB, Affordable Housing
Mtg.-Portfolio I, 6.25%, 4/1/29 Aaa/AAA 3,595,000 3,750,915
- -------------------------------------------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 770,000 814,845
- -------------------------------------------------------------------------------------------------------------------------------
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 2,557,536
- -------------------------------------------------------------------------------------------------------------------------------
PR Public Buildings Authority RB, Government
Facilities, Series B, AMBAC Insured, 5%, 7/1/27 Aaa/AAA 6,900,000 6,711,837
------------
24,448,898
------------
Total Municipal Bonds and Notes (Cost $357,805,327) 379,970,900
<CAPTION>
DATE STRIKE CONTRACTS
===============================================================================================================================
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED--0.1%
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond, 30 yr. Futures, 12/97
Call Opt. (Cost $182,513) 11/97 $120 312 273,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $357,987,840) 98.4% 380,243,900
- -------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.6 6,360,732
---------- ------------
NET ASSETS 100.0% $386,604,632
========== ============
</TABLE>
To simplify the listings of securities abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
CAP --Capital Appreciation PC --Pollution Control
CFD --Community Facilities District PFAU --Public Finance Authority
CIA --Community Improvement Agency PPAU --Public Power Authority
COP --Certificates of Participation PWBL --Public Works Board Lease
EPAU --Electric Power Authority RA --Redevelopment Agency
FA --Facilities Authority RB --Revenue Bonds
FAU --Finance Authority RRB --Revenue Refunding Bonds
GOB --General Obligation Bonds SCDAU --Statewide Communities Development
GORB --General Obligation Refunding Bonds Authority
HF --Health Facilities SFM --Single Family Mortgage
HFA --Housing Finance Agency SWD --Solid Waste Disposal
HFFAU --Health Facilities Finance Authority UDA --Urban Development Agency
MUD --Municipal Utility District WS --Water System
PAU --Power Authority
</TABLE>
1. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
2. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays interest at a rate that varies inversely with
short-term interest rates. As interest rates rise, inverse floaters produce less
current income. Their price may be more volatile than the price of a comparable
fixed-rate security. Inverse floaters amount to $32,283,250 or 8.35% of the
Fund's net assets at July 31, 1997.
15 Oppenheimer California Municipal Fund
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
As of July 31, 1997, securities subject to the alternative minimum tax amount to
$74,754,049 or 19.34% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
<TABLE>
<CAPTION>
INDUSTRY MARKET VALUE PERCENT
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Lease Rental $ 58,416,108 15.3%
Hospital/Healthcare 55,997,066 14.7
Special Assessment 55,246,807 14.5
Single Family Housing 53,487,673 14.1
Electric Utilities 49,040,731 12.9
Marine/Aviation Facilities 29,849,461 7.9
Highways 23,630,800 6.2
Water Utilities 16,236,450 4.3
General Obligation 11,743,330 3.1
Higher Education 9,570,555 2.5
Education 7,295,700 1.9
Adult Living Facilities 6,529,710 1.7
Pollution Control 2,352,009 0.6
Resource Recovery 574,500 0.2
Options--Treasury 273,000 0.1
------------ -----
$380,243,900 100.0%
============ =====
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer California Municipal Fund
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES July 31, 1997
<TABLE>
<S> <C>
=================================================================================================================
ASSETS
Investments, at value (cost $357,987,840)--see accompanying statement $380,243,900
- ----------------------------------------------------------------------------------------------------------------
Cash 798,911
- ----------------------------------------------------------------------------------------------------------------
Receivables:
Interest 6,074,800
Shares of beneficial interest sold 1,468,440
- ----------------------------------------------------------------------------------------------------------------
Other 10,474
------------
Total assets 388,596,525
================================================================================================================
LIABILITIES
Payables and other liabilities:
Dividends 1,086,751
Shares of beneficial interest redeemed 598,765
Trustees' fees--Note 1 139,034
Distribution and service plan fees 79,396
Transfer and shareholder servicing agent fees 9,338
Other 78,609
------------
Total liabilities 1,991,893
================================================================================================================
NET ASSETS $386,604,632
============
================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $360,580,782
- ----------------------------------------------------------------------------------------------------------------
Undistributed net investment income 966,465
- ----------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 2,801,325
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 22,256,060
------------
Net assets $386,604,632
============
================================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$298,162,064 and 27,257,122 shares of beneficial interest outstanding) $10.94
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price) $11.49
- ----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $82,473,941 and
7,536,586 shares of beneficial interest outstanding) $10.94
- ----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $5,968,627 and
546,266 shares of beneficial interest outstanding) $10.93
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer California Municipal Fund
<PAGE> 18
STATEMENT OF OPERATIONS For the Year Ended July 31, 1997
<TABLE>
<S> <C>
================================================================================================================
INVESTMENT INCOME
Interest $23,014,569
================================================================================================================
EXPENSES
Management fees--Note 4 2,039,568
- ----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 708,943
Class B 650,431
Class C 38,548
- ----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 179,346
- ----------------------------------------------------------------------------------------------------------------
Shareholder reports 106,750
- ----------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 70,936
- ----------------------------------------------------------------------------------------------------------------
Legal and auditing fees 41,439
- ----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 21,451
- ----------------------------------------------------------------------------------------------------------------
Insurance expenses 14,057
- ----------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 549
Class B 6,994
Class C 799
- ----------------------------------------------------------------------------------------------------------------
Other 9,628
-----------
Total expenses 3,889,439
================================================================================================================
NET INVESTMENT INCOME 19,125,130
================================================================================================================
REALIZED AND UNREALIZED GAIN
Net realized gain on:
Investments 2,905,310
Closing of futures contracts 503,110
-----------
Net realized gain 3,408,420
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 15,361,034
-----------
Net realized and unrealized gain 18,769,454
================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $37,894,584
===========
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer California Municipal Fund
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED JULY 31, DECEMBER 31,
1997 1996(1) 1995
=================================================================================================================
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 19,125,130 $ 10,332,070 $ 15,558,791
- -----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 3,408,420 350,347 (187,865)
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation 15,361,034 (9,638,403) 33,596,236
------------ ------------ ------------
Net increase in net assets resulting from
operations 37,894,584 1,044,014 48,967,162
=================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (15,608,071) (8,865,165) (13,975,299)
Class B (3,005,232) (1,260,228) (1,412,825)
Class C (177,543) (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 (2,968,658) 8,617,533 35,765,117
Class B 26,671,234 12,021,290 17,684,830
Class C 3,556,642 2,058,790 122,526
=================================================================================================================
NET ASSETS
Total increase 46,362,956 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 $966,465, $868,145 and
$756,370, respectively) $386,604,632 $340,241,676 $326,655,603
============ ============ ============
</TABLE>
1. For the period ended July 31, 1996. The Fund changed its fiscal year end
from December 31 to July 31. See accompanying Notes to Financial Statements.
19 Oppenheimer California Municipal Fund
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
1997 1996(2) 1995 1994 1993
====================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.39 $10.69 $ 9.45 $10.97 $10.35
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .58 .33 .58 .60 .62
Net realized and unrealized gain (loss) .54 (.30) 1.25 (1.51) .72
------ ------ ------ ------ ------
Total income (loss) from investment operations 1.12 .03 1.83 (.91) 1.34
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.57) (.33) (.58) (.61) (.65)
Dividends in excess of net investment income -- -- (.01) -- --
Distributions from net realized gain -- -- -- -- (.07)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.57) (.33) (.59) (.61) (.72)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.94 $10.39 $10.69 $ 9.45 $10.97
====== ====== ====== ====== ======
====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 11.11% 0.34% 19.76% (8.49)% 13.26%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $298,162 $286,033 $285,307 $219,682 $266,490
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $289,439 $279,796 $250,188 $248,850 $245,193
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.53%(5) 5.64% 5.99% 5.74%
Expenses 0.94% 0.97%(5) 0.95% 0.96% 0.97%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 31.1% 14.0% 23.0% 21.9% 13.7%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
2. For the seven months ended July 31, 1996. 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 of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns.Total
returns are not annualized for periods of less than one full year.
20 Oppenheimer California Municipal Fund
<PAGE> 21
<TABLE>
<CAPTION>
CLASS B CLASS C
- ------- ---------------------------------------------------------- ---------------------------------
PERIOD
ENDED
YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31, YEAR ENDED JULY 31, DEC. 31,
1992 1997 1996(2) 1995 1994 1993(3) 1997 1996(2) 1995(1)
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.22 $10.39 $10.69 $ 9.44 $10.98 $10.72 $10.38 $10.68 $10.46
- ---------------------------------------------------------------------------------------------------------------
.61 .49 .28 .51 .54 .35 .49 .27 .08
.20 .55 (.30) 1.25 (1.55) .34 .55 (.30) .22
------ ------ ------ ------ ------ ------ ------ ------ ------
.81 1.04 (.02) 1.76 (1.01) .69 1.04 (.03) .30
- --------------------------------------------------------------------------------------------------------------
(.60) (.49) (.28) (.50) (.53) (.36) (.49) (.27) (.07)
-- -- -- (.01) -- -- -- -- (.01)
(.08) -- -- -- -- (.07) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
(.68) (.49) (.28) (.51) (.53) (.43) (.49) (.27) (.08)
- --------------------------------------------------------------------------------------------------------------
$10.35 $10.94 $10.39 $10.69 $ 9.44 $10.98 $10.93 $10.38 $10.68
====== ====== ====== ====== ====== ====== ====== ====== ======
==============================================================================================================
8.28% 10.27% (0.12)% 18.97% (9.39)% 6.66% 10.26% (0.19)% 2.90%
==============================================================================================================
$204,349 $82,474 $52,038 $41,224 $20,224 $9,921 $5,969 $2,171 $125
- --------------------------------------------------------------------------------------------------------------
$174,055 $65,192 $46,422 $29,918 $16,552 $5,218 $3,869 $1,156 $ 91
- --------------------------------------------------------------------------------------------------------------
6.07% 4.70% 4.74%(5) 4.82% 5.17% 4.57%(5) 4.66% 4.54%(5) 4.56%(5)
1.07% 1.70% 1.74%(5) 1.72% 1.73% 1.79%(5) 1.70% 1.80%(5) 1.68%(5)
- --------------------------------------------------------------------------------------------------------------
26.8% 31.1% 14.0% 23.0% 21.9% 13.7% 31.1% 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 July 31, 1997 were $140,865,190 and $110,604,518, respectively.
See accompanying Notes to Financial Statements.
21 Oppenheimer California Municipal Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer California Municipal Fund (the 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
that is 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 that class and exclusive voting rights with
respect to matters affecting that class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following is
a summary of significant accounting policies consistently followed by the Fund.
- -------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
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
22 Oppenheimer California Municipal Fund
<PAGE> 23
================================================================================
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 year ended
July 31, 1997, a provision of $40,302 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 $139,034 at July 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.
- --------------------------------------------------------------------------------
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 on long-term bonds for tax purposes.
The character of the distributions made during the year from net investment
income or net realized gains may differ from its ultimate characterization for
federal income tax purposes. Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or realized gain was recorded by the Fund.
During the year ended July 31, 1997, the Fund adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Accordingly, during the period ended July 31, 1997,
amounts have been reclassified to reflect a decrease in undistributed net
investment income of $235,964, an increase in accumulated net realized gain on
investments of $169,415, and an increase in paid-in capital of $66,549.
- --------------------------------------------------------------------------------
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 using the effective
yield method, in accordance with federal income tax requirements. For bonds
acquired after April 30, 1993, on disposition or maturity, taxable ordinary
income is recognized to the extent of the lesser of gain or market discount that
would have accrued over the holding period. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. The Fund concentrates its investments in California and, therefore,
may have more credit risks related to the economic conditions of California than
a portfolio with a broader geographical diversification.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
23 Oppenheimer California Municipal Fund
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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>
YEAR ENDED
YEAR ENDED JULY 31, 1997 PERIOD ENDED JULY 31, 1996(1) DECEMBER 31, 1995(2)
------------------------ ----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 3,743,446 $ 39,457,645 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 847,947 8,930,517 487,581 5,059,245 805,760 8,234,996
Redeemed (4,874,267) (51,356,820) (2,856,210) (29,767,541) (4,166,682) (42,740,131)
---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease) (282,874) $ (2,968,658) 840,430 $ 8,617,533 3,443,837 $ 35,765,117
========== ============ ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------
Class B:
Sold 3,027,347 $ 31,931,406 1,589,523 $ 16,574,775 1,996,884 $ 20,575,685
Dividends and
distributions
reinvested 167,555 1,766,598 69,259 717,798 80,329 824,085
Redeemed (667,227) (7,026,770) (506,438) (5,271,283) (362,263) (3,714,940)
---------- ------------ ---------- ------------ ---------- ------------
Net increase 2,527,675 $ 26,671,234 1,152,344 $ 12,021,290 1,714,950 $ 17,684,830
========== ============ ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------
Class C:
Sold 477,845 $ 5,040,612 213,392 $ 2,220,863 11,729 $ 123,162
Dividends and
distributions
reinvested 11,183 117,848 1,712 17,557 36 383
Redeemed (151,952) (1,601,818) (17,583) (179,630) (96) (1,019)
---------- ------------ ---------- ------------ ---------- ------------
Net increase 337,076 $ 3,556,642 197,521 $ 2,058,790 11,669 $ 122,526
========== ============ ========== ============ ========== ============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to July 31.
2. 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.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At July 31, 1997, net unrealized appreciation on investments of $22,256,060 was
composed of gross appreciation of $24,221,008, and gross depreciation of
$1,964,948.
24 Oppenheimer California Municipal Fund
<PAGE> 25
================================================================================
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.
For the year ended July 31, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $951,080, of which
$160,054 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 $1,195,489 and $45,765, respectively, of which $3,635
and $2,844 was paid to an affiliated broker/dealer for Class B and Class C,
respectively. During the year ended July 31, 1997, OFDI received contingent
deferred sales charges of $156,180 and $2,811, 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 shareholder 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 maintaining accounts
of their customers that hold Class A shares. During the year ended July 31,
1997, OFDI paid $21,858 to an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.
The Fund has adopted 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. 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.
25 Oppenheimer California Municipal Fund
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
During the year ended July 31, 1997, OFDI paid $1,810 to an affiliated
broker/dealer as compensation for Class B personal service and maintenance
expenses and retained $552,871 and $30,704, respectively, as compensation for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. If either Plan is terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to OFDI
for distributing shares before the Plan was terminated. At July 31, 1997, OFDI
had incurred unreimbursed expenses of $2,729,459 for Class B and $68,718 for
Class C.
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required
to deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the contract
is closed or expires.
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.
================================================================================
6. ACQUISITION OF QUEST CALIFORNIA TAX-EXEMPT FUND
On November 24, 1995, the 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.
26 Oppenheimer California Municipal Fund
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer California Municipal Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer California Municipal Fund (formerly Oppenheimer
California Tax-Exempt Fund) as of July 31, 1997, the related statement of
operations for the year then ended, the statements of changes in net assets for
the year then ended, the seven-month period ended July 31, 1996 and the year
ended December 31, 1995, and the financial highlights for the year ended July
31, 1997, the seven-month period ended July 31, 1996 and for each of the years
in the four-year period ended December 31, 1995. 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 July 31, 1997, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material respects, the
financial position of Oppenheimer California Municipal Fund as of July 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for the year then ended, the seven-month period ended July 31, 1996 and
the year ended December 31, 1995, and the financial highlights for the year
ended July 31, 1997, the seven-month period ended July 31, 1996 and for each of
the years in the four-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
August 21, 1997
27 Oppenheimer California Municipal Fund
<PAGE> 28
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal
year ended July 31, 1997 are eligible for the corporate dividend-received
deduction. The dividends were derived from interest on municipal bonds and are
not subject to federal income tax. To the extent a shareholder is subject to any
state or local tax laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist
shareholders in reporting distributions received from the Fund to the Internal
Revenue Service. Because of the complexity of the federal regulations which may
affect your individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax adviser for specific
guidance.
28 Oppenheimer California Municipal Fund
<PAGE> 29
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 OppenheimerFunds Services
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 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.
29 Oppenheimer California Municipal Fund
<PAGE> 30
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
===========================================================================================================
REAL ASSET FUNDS
- ----------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
===========================================================================================================
STOCK FUNDS
- ----------------------------------------------------------------------------------------------------------
Developing Markets Fund Quest Small Cap Value Fund Global Fund
Enterprise Fund Capital Appreciation Fund(1) Quest Global Value Fund
International Growth Fund Quest Capital Value Fund Disciplined Value Fund
Discovery Fund Growth Fund Quest Value Fund
===========================================================================================================
STOCK & BOND FUNDS
- ----------------------------------------------------------------------------------------------------------
Main Street Income & Quest Growth &Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth &Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
===========================================================================================================
BOND FUNDS
- ----------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
===========================================================================================================
MUNICIPAL FUNDS
- ----------------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
===========================================================================================================
MONEY MARKET FUNDS(4)
- ----------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
===========================================================================================================
LIFESPAN
- ----------------------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds
are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center,
New York, NY 10048-0203.
(C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer California Municipal Fund
<PAGE> 31
INTERNET
24-hr access to account
information
WWW.OPPENHEIMERFUNDS.COM
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
ACCOUNT TRANSACTIONS
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-852-8457
PHONELINK
24-hr automated information
and automated transactions
1-800-533-3310
TELECOMMUNICATION DEVICE
FOR THE DEAF (TDD)
Mon-Fri 8:30am-2pm ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
1-800-835-3104
INFORMATION AND SERVICES
- --------------------------------------------------------------------------------
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at www.oppenheimerfunds.com--
we're here to help.
[OPPENHEIMERFUNDS LOGO]
RA0790.001.0797 September 30, 1997
