<PAGE> 1
SEMIANNUAL REPORT JANUARY 31, 1998
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
Manager
11 Statement of
Investments
18 Statement of
Assets and
Liabilities
20 Statement of
Operations
21 Statements of
Changes in
Net Assets
22 Financial Highlights
25 Notes to Financial
Statements
30 Officers and
Trustees
32 Information and
Services
REPORT HIGHLIGHTS
- -------------------------------------------------------------------------------
- - THE SUPPLY OF MUNICIPAL BONDS INCREASED during the last twelve months, as many
municipalities took advantage of lower interest rates to finance new projects
and refinance existing debt.
- - TWO FACTORS WHICH SUPPORT THE POSSIBILITY OF A FURTHER RALLY IN MUNICIPAL
BONDS: First, municipal bonds are inexpensive relative to taxable bonds,
especially in states with income taxes. And second, inflation remains benign,
and the economy looks like it may slow down from year-end 1997 levels.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
For the 6-Month Period Ended
1/31/98
<S> <C>
CLASS A
Without With
Sales Chg.(1) Sales Chg.(2)
4.15% (0.80)%
CLASS B
Without With
Sales Chg.(1) Sales Chg.(2)
3.85% (1.15)%
CLASS C
Without With
Sales Chg.(1) Sales Chg.(2)
3.76% 2.76%
</TABLE>
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 is not annualized and would have been lower if sales
charges were taken into account.
2. Class A returns include the current maximum initial sales charge of 4.75%.
Class B returns include the applicable contingent deferred sales charge of
5%. Class C returns include the contingent deferred sales charge of 1%. 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 Oppenheimer California Municipal Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer California
Municipal Fund
DEAR SHAREHOLDER,
- -------------------------------------------------------------------------------
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that if
the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations to improve their bottom
lines.
At OppenheimerFunds, we do not believe we will see a period of deflation in
the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers, we
continue to keep a watchful eye on these situations and are closely monitoring
your fund's investments. In times like these, your financial advisor can be of
invaluable assistance to you in helping review your financial plan and guide
your investments accordingly.
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.
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
February 23, 1998
3 Oppenheimer California Municipal Fund
<PAGE> 4
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 12/31/97(1)
<TABLE>
<CAPTION>
CLASS A
Since
1 year 5 year Inception
<S> <C> <C>
4.45% 6.32% 7.65%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
Since
1 year 5 year Inception
<S> <C> <C>
3.83% N/A 5.45%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
Since
1 year 5 year Inception
<S> <C> <C>
7.74% N/A 7.19%
</TABLE>
CUMULATIVE TOTAL RETURN
For the Period Ended 12/31/97(1)
CLASS A
5 year
35.84% $13,585(4)
STANDARDIZED YIELDS
For the 30 Days Ended 1/31/98(5)
CLASS A
4.08%
CLASS B
3.52%
CLASS C
3.52%
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
Oppenheimer California Municipal Fund has continued to perform well,
particularly during what has turned out to be a difficult period for municipal
bonds. During the last six months, long-term interest rates have fallen, which
has caused a decline in municipal bond yields. However, Oppenheimer California
Municipal Fund's Class A shares provided a cumulative total return, without
sales charges, of 4.15% for the 6-month period ended January 31, 1998.(2) In
addition, the Fund's Class A shares placed in the top third of California
municipal funds, as ranked by Lipper, for the 1-year period which ended December
31, 1997.(3)
<TABLE>
<CAPTION>
GROWTH OF $10,000
Over five years
(without sales charges)
Oppenheimer
Lehman Brothers California
Municipal Municipal Fund
Bond Index(4) Class A shares
<S> <C>
$ 10,000 $ 10,000
10,371.1 10,435.9
10,710.4 10,755.3
11,072.2 11,178.3
11,227.6 11,299.5
10,611.3 10,612.8
10,728.8 10,613.3
10,802.2 10,644.9
10,647.1 10,334.8
11,399.9 11,227.5
11,675.2 11,517.3
12,010.1 11,783.4
12,506.3 12,383.4
12,355.5 12,186.3
12,450.2 12,261
12,736.8 12,598.5
13,061.4 12,976.8
13,030.1 12,891.8
13,479.1 13,368.5
13,885.3 13,825.5
14,262.1 14,232.1
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
4.75%. Class A shares were first publicly offered on 11/3/88. Class B returns
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. Includes changes 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.
4 Oppenheimer California Municipal Fund
<PAGE> 5
CREDIT ALLOCATION(6)
<TABLE>
<S> <C>
- - AAA 49.9%
- - AA 10.0
- - A 12.1
- - BBB 22.4
- - BB 5.6
</TABLE>
PORTFOLIO REVIEW
- -------------------------------------------------------------------------------
Oppenheimer California Municipal Fund is for investors looking for income that's
exempt from federal and California income taxes.
WHAT WE LOOK FOR
- - DIVERSIFICATION among a wide range of securities.
- - Projects and regions demonstrating IMPROVING CREDIT QUALITY.
- - Securities that provide HIGH CURRENT INCOME.
<TABLE>
<CAPTION>
TOP 5 INDUSTRIES
(Percentage of invested assets)(7)
<S> <C>
..........................................
Special Assessment 20.7%
..........................................
Lease Rental 13.9
..........................................
Single Family Housing 13.4
..........................................
Hospital/Healthcare 12.5
..........................................
Electric Utilities 11.6
..........................................
</TABLE>
3. Source: Lipper Analytical Services, Inc., 12/31/97. 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 33 of 103 (1-year) and 16 of
81 (3-year) among California municipal funds for the period ended 12/31/97.
4. Results of a hypothetical $10,000 investment in Class A shares on 12/31/92.
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.
5. Standardized yield is based on net investment income for the 30-day period
ended 1/31/98. Falling share prices will tend to artificially raise yields.
6. Portfolio data is as of 1/31/98, dollar-weighted based on investment assets
and 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 10.5% of total investments)
but to which the Manager in its judgment has assigned ratings as securities
comparable to those rated by a rating agency in the same category.
7. Industry weightings are as of 1/31/98, and are subject to change.
5 Oppenheimer California Municipal Fund
<PAGE> 6
"THE CATALYST FOR INCREASED BOND SALES WAS ASIA'S FINANCIAL AND ECONOMIC
CRISIS."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- -------------------------------------------------------------------------------
HOW DID THE FUND PERFORM DURING THE PERIOD?
For the six months ended January 31, 1998, Oppenheimer California Municipal
Fund's Class A shares provided a cumulative total return, without sales charges,
of 4.15%.(1)
WHAT WERE THE MAIN INFLUENCES ON THE BOND MARKETS?
Several events and trends were critical to overall bond markets, municipal
markets and, specifically, California municipal securities. First, in the U.S.
bond markets, corporate and Treasury bonds benefited from low inflation and
increased investor participation--particularly in September through December of
1997. The catalyst for increased bond sales was Asia's financial and economic
crisis, which sparked turmoil in world stock markets. Simply put, investors
feared that the bottom would fall out of the U.S. stock market, so they fled to
U.S. bonds as a "safe haven."
Second, because many investors switched out of stocks and into bonds, bond
prices rose. And, the increased bond purchases caused interest rates, which move
in the opposite direction from bond prices, to fall. On January 12, 1998, the
interest rate on 30-year Treasury bonds, the benchmark rate for long-term bonds
as a whole, dipped to 5.69%, its lowest level since 30-year Treasuries began to
be sold regularly in 1977. Although interest rates on municipal securities also
fell during the period, they did not decline to the same extent as rates on
taxable fixed-income securities. This was to be expected, as municipal bond
prices typically do not rise as much as taxable bond prices when interest rates
fall.
1. Includes changes 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.
6 Oppenheimer California Municipal Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Bob Patterson
Caryn Halbrecht
Jerry Webman
(Portfolio Manager)
And third, high-yielding municipal securities were the best performers in the
California municipal market. California municipals were helped by the dramatic
improvement in the state's economy over the last year, in concert with the U.S.
economy as a whole.
HOW DID YOUR STRATEGY AFFECT THE FUND'S PERFORMANCE?
Our strategy has been to maximize the Fund's total return by focusing on
high-yielding California municipal securities. As we noted earlier,
high-yielding California municipals performed well over the past six months. For
example, we invested in Orange County's San Joaquin toll road bond. Orange
County's economy had been weak over the past few years, but the area is now
experiencing a rebound, particularly in the housing sector. Because investors
recognized the importance of a new road to accommodate the region's growth, San
Joaquin bonds rose in value--and the Fund benefited from our position in this
security.
Another contributor to the Fund's return was our outlook for falling
interest rates. In keeping with this view, we purchased noncallable bonds, zero
coupon bonds and discount bonds, all of which tend to increase in value when
interest rates decline. Because interest rates fell as we anticipated, these
investments posted gains. On the other hand, to help protect the Fund from
interest rate surprises, we broadened our holdings by purchasing current coupon
bonds and small premium bonds, which do not tend to perform well as interest
rates fall.
7 Oppenheimer California Municipal Fund
<PAGE> 8
"WITH INTERST RATES LIKELY TO STAY LOW..."
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
WHAT IMPACT DO YOU THINK THE U.S. ECONOMY WILL HAVE
ON THE BOND MARKETS IN 1998?
Most important, we don't anticipate any increase in interest rates by the
Federal Reserve Board in the near future. In the current economic environment,
we do not believe the Federal Reserve will see a need to put the brakes on U.S.
economic growth through more restrictive monetary policy. Over the past several
years, whenever the U.S. economy has begun to expand too rapidly, something has
happened to slow it down. For example, when the U.S. economy started to overheat
in 1994, the Mexican peso crisis cooled it off by reducing our exports to Mexico
and lowering the prices of imported goods. Now, Asia's financial and economic
problems are starting to have the same effect on the U.S., making a rate hike
unlikely. In fact, if inflation remains very low or prices begin to decline,
it's possible we may even see the Fed implement a rate cut. With interest rates
likely to stay low, the economic backdrop for bond markets in 1998 appears quite
favorable.
WHAT IS YOUR OUTLOOK FOR THE CALIFORNIA MUNICIPAL BOND MARKET?
We are optimistic about California. One reason is that, as we noted earlier, the
state's economy is recovering. Another reason is that California's location, on
the Pacific coast, makes it a major point of contact for U.S. trade with Asia.
We have been monitoring the Asian financial and economic crisis very closely and
analyzing its implications for California's economy. First, we believe if
Southeast Asian currencies continue to weaken, imports from Asia to the U.S. are
likely to increase. And second, while U.S. exports to the region may suffer,
exporters represent a much smaller portion of California's trade sector than do
importers. As a result, the net effect of the Asian crisis could be a
significant increase in the state's trade activity.
8 Oppenheimer California Municipal Fund
<PAGE> 9
"...THE ECONOMIC BACKDROP FOR BOND MARKETS IN 1998 APPEARS FAVORABLE."
With that thought in mind, we have made several trade-related municipal
investments in the state--including the ports of Long Beach, Los Angeles, and
San Diego, and the airports of San Diego and San Francisco.
Looking ahead, we plan to maintain the Fund's long average maturity and thus
take advantage of low (and possibly declining) interest rates. To maximize the
Fund's total return, we will continue to research California municipal markets
for promising new issues and add them to our holdings. And, to cushion the Fund
against interest rate fluctuations, we plan to add different types of
fixed-income instruments to broaden the Fund's investment mix. In our view, this
balanced approach is The Right Way to Invest in today's California municipal
market.
9 Oppenheimer California Municipal Fund
<PAGE> 10
FINANCIALS
- -------------------------------------------------------------------------------
10 Oppenheimer California Municipal Fund
<PAGE> 11
STATEMENT OF INVESTMENTS January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES--102.1%
- -------------------------------------------------------------------------------------------------------------------
CALIFORNIA--95.2%
Anaheim, CA PFAU TXAL RB, MBIA Insured,
6.45%, 12/28/18 Aaa/AAA $6,000,000 $ 6,797,460
- -------------------------------------------------------------------------------------------------------------------
Avalon, CA CIA TXAL, Series A, 7.25%, 8/1/21 NR/A- 200,000 219,968
- -------------------------------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical Center,
Series A, 6.50%, 12/1/11 A2/A+ 4,500,000 5,065,290
- -------------------------------------------------------------------------------------------------------------------
CA CDAU Lease RB, United Airlines, Series A,
5.70%, 10/1/33 Baa3/BB+ 9,185,000 9,368,608
- -------------------------------------------------------------------------------------------------------------------
CA Community College FAU Lease RB, West
Valley Mission Community College, MBIA
Insured, 5.625%, 5/1/22 Aaa/AAA 3,585,000 3,785,222
- -------------------------------------------------------------------------------------------------------------------
CA Educational FA RRB, L.A. College
Chiropractic, 5.60%, 11/1/17 Baa2/NR 1,000,000 1,030,320
- -------------------------------------------------------------------------------------------------------------------
CA Educational FA RRB, Pooled Educational
Facilities Program, MBIA Insured, 7%, 3/1/16 Aaa/AAA 100,000 108,299
- -------------------------------------------------------------------------------------------------------------------
CA Foothill/Eastern Transportation Corridor
Agency Toll Road RB, Sr. Lien, Series A,
6.50%, 1/1/32 Baa/BBB-/BBB 4,600,000 5,044,682
- -------------------------------------------------------------------------------------------------------------------
CA Franchise Tax Board Refunding COP,
Prerefunded, 6.90%, 10/1/06 A2/A- 1,000,000 1,069,630
- -------------------------------------------------------------------------------------------------------------------
CA HFA Home Mtg. RB:
Series A, 7.35%, 8/1/11 Aa2/AA- 80,000 85,542
Series C, 6.75%, 2/1/25 Aa2/AA- 9,815,000 10,488,211
Series C, 7.60%, 8/1/30 Aa2/AA- 1,360,000 1,437,561
Series E-1, 6.45%, 2/1/12 Aa2/AA- 750,000 803,355
Series M, MBIA Insured, 5.60%, 8/1/29 Aaa/AAA 2,500,000 2,561,500
- -------------------------------------------------------------------------------------------------------------------
CA HFA SFM Purchase RB, Series A-2,
6.45%, 8/1/25 Aaa/AAA 8,000,000 8,532,560
- -------------------------------------------------------------------------------------------------------------------
CA HFFAU RB, La Palma Hospital Medical
Center, 7.10%, 2/1/13 NR/A+ 1,875,000 1,963,444
- -------------------------------------------------------------------------------------------------------------------
CA HFFAU RB, Los Angeles Children's Hospital,
Prerefunded, Series A, 7.125%, 6/1/21 Aaa/NR 1,000,000 1,117,310
- -------------------------------------------------------------------------------------------------------------------
CA Intermodal Container Transfer Facility
Joint PAU RRB, Southern Pacific Transportation
Co., Series A, 7.70%, 11/1/14 NR/A 1,000,000 1,064,710
- -------------------------------------------------------------------------------------------------------------------
CA PC FA SWD RRB, North Cnty. Recycling
Center, Escrowed to Maturity, Series A,
6.75%, 7/1/11 Aaa/AAA 500,000 581,565
- -------------------------------------------------------------------------------------------------------------------
CA PWBL RB, State Prison Department of
Corrections, Series E, FSA Insured, 5.50%, 6/1/15 Aaa/AAA 3,000,000 3,252,420
- -------------------------------------------------------------------------------------------------------------------
CA PWBL RB, University of California Regents,
Prerefunded, Series A, 7%, 9/1/15 Aaa/AAA/AAA 6,500,000 7,133,035
- -------------------------------------------------------------------------------------------------------------------
CA Saddleback Community College District
Refunding COP, BIG Insured, 7%, 8/1/19 Aaa/AAA 1,000,000 1,061,190
</TABLE>
11 Oppenheimer California Municipal Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
CA SCDAU Revenue Refunding COP, Cedars-
Sinai Medical Center, 5.40%, 11/1/15 A1/NR $13,200,000 $13,265,076
Campbell, CA Refunding COP, Civic Center
Project, Unrefunded Balance, 6.75%, 10/1/17 A/A- 1,130,000 1,258,029
- -------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds, No. 87-1,
Prerefunded, 7.60%, 9/1/14 Aaa/NR 4,000,000 4,315,480
- -------------------------------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds, No. 92-1,
7.10%, 9/1/21 NR/NR 3,250,000 3,597,230
- -------------------------------------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP,
Community Hospitals of Central California
Project, 5%, 2/1/23 Baa1/NR/A- 8,500,000 8,019,835
- -------------------------------------------------------------------------------------------------------------------
Clovis, CA USD CAP GOB, Series D, FGIC
Insured, Zero Coupon, 5.60%, 8/1/10(1) Aaa/AAA 2,000,000 1,120,240
- -------------------------------------------------------------------------------------------------------------------
Commerce, CA Community Development
Commission TXAL Refunding Bonds,
Redevelopment Project No. 1, Sub. Lien,
Series B, 5.75%, 8/1/10 NR/NR 815,000 854,878
- -------------------------------------------------------------------------------------------------------------------
Commerce, CA Community Development
Commission TXAL Refunding Bonds,
Redevelopment Project No. 1, Sub. Lien,
Series B, 6%, 8/1/21 NR/NR 2,800,000 2,860,676
- -------------------------------------------------------------------------------------------------------------------
Commerce, CA Joint Powers FAU Lease RB,
Community Center, Series A, 6.25%, 10/1/22 Baa2/NR 1,410,000 1,503,864
- -------------------------------------------------------------------------------------------------------------------
Compton, CA Refunding COP, Civic Center &
Capital Improvements, Series A, 5.50%, 9/1/15 NR/BBB 3,000,000 3,043,500
- -------------------------------------------------------------------------------------------------------------------
Contra Costa, CA Transportation Authority Sales
Tax RB, Escrowed to Maturity, Series A, FGIC
Insured, 6.50%, 3/1/09 Aaa/AAA/AAA 750,000 806,430
- -------------------------------------------------------------------------------------------------------------------
Corona, CA COP, Vista Hospital Project,
Prerefunded, Series B, 10%, 11/1/20 Aaa/AAA 10,025,000 12,762,426
- -------------------------------------------------------------------------------------------------------------------
Davis, CA Public Facilities FAU Local Agency
RRB, Mace Ranch Area, Series A, 6.60%, 9/1/25 NR/NR 5,000,000 5,304,700
- -------------------------------------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National Medical
Center, 6.25%, 4/1/23 Baa1/NR 4,500,000 4,790,970
- -------------------------------------------------------------------------------------------------------------------
East Bay, CA Regional Park District GOB, Series B,
6.375%, 9/1/10 Aa/AA- 500,000 535,600
- -------------------------------------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB, MBIA
Insured, Zero Coupon, 6.20%, 11/1/19(1) Aaa/AAA 2,000,000 663,100
- -------------------------------------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB, Zero
Coupon, 6.20%, 11/1/18(1) Aaa/AAA 6,000,000 2,105,640
- -------------------------------------------------------------------------------------------------------------------
Fontana, CA RA TXAL Refunding Bonds, Jurupa
Hills Redevelopment Project, Series A,
5.50%, 10/1/19 NR/BBB+ 1,345,000 1,364,570
</TABLE>
12 Oppenheimer California Municipal Fund
<PAGE> 13
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Fontana, CA RA TXAL Refunding Bonds, Jurupa
Hills Redevelopment Project, Series A,
5.50%, 10/1/27 NR/BBB+ $ 5,395,000 $ 5,450,137
Fresno, CA USD COP, 7%, 5/1/12 A2/BBB+ 250,000 261,797
- -------------------------------------------------------------------------------------------------------------------
Huntington Park, CA PFAU Lease RRB,
Wastewater System Project, Series A,
6.20%, 10/1/25 NR/NR 3,000,000 3,095,280
- -------------------------------------------------------------------------------------------------------------------
Industry, CA Improvement Bond Act of 1915
SPAST GOB, District No. 91-1, 7.65%, 9/2/21 NR/NR 1,750,000 1,806,822
- -------------------------------------------------------------------------------------------------------------------
Industry, CA UDA TXAL Bonds, Transportation
Distribution Project No. 3, 6.90%, 11/1/07 NR/A- 500,000 555,805
- -------------------------------------------------------------------------------------------------------------------
La Quinta, CA RA TXAL Refunding Bonds,
La Quinta Project, Prerefunded, 8.40%, 9/1/12 Aaa/AAA 1,000,000 1,131,580
- -------------------------------------------------------------------------------------------------------------------
Lake Elsinore, CA Recreation Authority RB,
Public Facilities Project, Series A, 7.10%, 2/1/17 NR/NR 2,960,000 3,034,296
- -------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RB, 5.125%, 5/15/18 Aa3/AA- 5,000,000 4,959,100
- -------------------------------------------------------------------------------------------------------------------
Long Beach, CA Harbor RRB, Series A, FGIC
Insured, 6%, 5/15/10 Aaa/AAA 3,000,000 3,419,550
- -------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP, 6.50%, 3/1/10 Baa1/BBB 1,500,000 1,607,370
- -------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA COP, Disney Parking
Project, Zero Coupon:
6.924%, 9/1/10(1) Baa1/BBB/A- 5,960,000 3,066,599
6.95%, 9/1/11(1) Baa1/BBB/A- 2,900,000 1,406,065
7.03%, 9/1/13(1) Baa1/BBB/A- 4,500,000 1,931,715
- -------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB,
First Tier-Property A, Series A, FSA Insured,
5%, 7/1/15(2) Aaa/AAA/AAA 10,000,000 9,904,100
- -------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Public Works FAU Lease
RB, Multiple Capital Facilities Project V, Series A,
AMBAC Insured, 5.125%, 6/1/17 Aaa/AAA 1,965,000 1,980,091
- -------------------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Public Works FAU RRB,
Regional Park & Open Space District, Series A,
5%, 10/1/16 Aa3/AA 7,600,000 7,572,108
- -------------------------------------------------------------------------------------------------------------------
Los Angeles, CA Harbor Department RB,
Series B, 5.375%, 11/1/23 Aa3/AA/AA 5,000,000 5,062,750
- -------------------------------------------------------------------------------------------------------------------
Los Angeles, CA USD GOB, Series A, FGIC
Insured, 5%, 7/1/21 Aaa/AAA 7,500,000 7,397,850
- -------------------------------------------------------------------------------------------------------------------
Los Angeles, CA USD Refunding COP,
Dr. Francisco Bravo Medical Project,
6.60%, 6/1/06 A2/A/A 250,000 275,512
- -------------------------------------------------------------------------------------------------------------------
Oakland, CA RA Refunding Bonds, MBIA
Insured, Inverse Floater, 8.168%, 9/1/19(3) Aaa/AAA 4,300,000 4,971,875
- -------------------------------------------------------------------------------------------------------------------
Oakland, CA RRB, Municipal Retirement System
Pension Fund, Series A, FGIC Insured,
7.60%, 8/1/21 Aaa/AAA/AAA 2,000,000 2,077,360
</TABLE>
13 Oppenheimer California Municipal Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Orange Cnty., CA CFD SPTX Bonds, No. 88-1,
Aliso Viejo, Prerefunded, Series A:
7.10%, 8/15/05 NR/AAA $ 1,440,000 $ 1,651,306
7.35%, 8/15/18 NR/AAA 8,000,000 9,256,320
- -------------------------------------------------------------------------------------------------------------------
Orange Cnty., CA Improvement Bond Act of
1915 SPAST GOB, Assessment No. 88-1,
6.25%, 9/2/18 NR/NR 2,300,000 2,359,294
- -------------------------------------------------------------------------------------------------------------------
Palm Springs, CA COP, Escrowed to Maturity,
Sub. Lien, Series B, Zero Coupon,
5.68%, 4/15/21(1) NR/AAA 9,000,000 2,676,060
- -------------------------------------------------------------------------------------------------------------------
Pittsburg, CA Improvement Bond Act of 1915
SPAST GOB, Assessment District 1990-01,
7.75%, 9/2/20 NR/NR 1,235,000 1,274,742
- -------------------------------------------------------------------------------------------------------------------
Pittsburg, CA RA TXAL Refunding Bonds,
Los Medanos Community Development Project,
Sub. Lien, 6.20%, 8/1/19 NR/BBB 2,500,000 2,694,175
- -------------------------------------------------------------------------------------------------------------------
Placentia, CA PFAU SPTX RB, Jr. Lien, Series B,
6.60%, 9/1/15 NR/NR 1,600,000 1,674,112
- -------------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 4,500,000 5,892,300
- -------------------------------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series B, 7.50%, 8/1/23 Aaa/AAA 500,000 652,535
- -------------------------------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A, MBIA
Insured, 6.15%, 8/1/15 Aaa/AAA 2,000,000 2,326,160
- -------------------------------------------------------------------------------------------------------------------
Port Oakland, CA Port RB, Series G, MBIA
Insured, 5.375%, 11/1/25 Aaa/AAA/AAA 10,650,000 10,802,082
- -------------------------------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP:
FGIC Insured, Inverse Floater, 7.393%, 6/1/19(3) Aaa/AAA/AAA 4,000,000 4,355,000
MBIA Insured, Inverse Floater, 8.558%, 7/8/22(3) Aaa/AAA 2,500,000 3,296,875
- -------------------------------------------------------------------------------------------------------------------
Richmond, CA Improvement Bond Act 1915
GORB, Reassessment District No. 855,
6.60%, 9/2/19 NR/NR 1,500,000 1,546,170
- -------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD SPTX Bonds, No. 88-12,
7.55%, 9/1/17 NR/NR 3,000,000 3,192,330
- -------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA PFAU TXAL RRB,
Redevelopment Projects, Series A,
5.625%, 10/1/33 Baa2/BBB- 6,600,000 6,761,766
- -------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force
Village West, Inc., Series A:
8.125%, 6/15/12 NR/NR 3,000,000 3,283,410
8.125%, 6/15/20 NR/NR 3,000,000 3,299,700
- -------------------------------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to
Maturity, Series A, 7.80%, 5/1/21 Aaa/AAA 4,285,000 5,849,668
- -------------------------------------------------------------------------------------------------------------------
Sacramento Cnty., CA SFM RB, Escrowed to
Maturity, 8.125%, 7/1/16(4) Aaa/AAA 10,000,000 13,661,400
</TABLE>
14 Oppenheimer California Municipal Fund
<PAGE> 15
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Sacramento Cnty., CA SPTX Refunding Bonds,
CFD No. 1, 5.70%, 12/1/20 NR/NR $ 2,000,000 $ 1,997,540
- -------------------------------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.50%, 7/1/14 NR/BBB- 5,000,000 5,499,750
- -------------------------------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, FGIC Insured,
Inverse Floater, 9.02%, 8/15/18(3) Aaa/AAA/AAA 5,500,000 6,558,750
- -------------------------------------------------------------------------------------------------------------------
Sacramento, CA MWFAU Electric RRB, Series L,
AMBAC Insured, 5.10%, 7/1/14 Aaa/AAA/AAA 11,795,000 12,116,414
- -------------------------------------------------------------------------------------------------------------------
Sacramento, CA PAU RB, Cogeneration Project,
6%, 7/1/22 NR/BBB- 7,300,000 7,783,041
- -------------------------------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP, Medical Center
Financing Project, MBIA Insured, 5.50%, 8/1/17 Aaa/AAA 5,250,000 5,629,050
- -------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA COP, MBIA Insured, Inverse
Floater, 8.821%, 11/18/19(3) A1/A 2,000,000 2,317,500
- -------------------------------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority Revenue
COP, Series 91-B, MBIA Insured, Inverse Floater,
8.63%, 4/8/21(3) Aaa/AAA 3,000,000 3,930,000
- -------------------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty., Community
International Airport RRB, Second Series-Issue
15A, FSA Insured, 5%, 5/1/21 Aaa/AAA/AAA 2,500,000 2,441,025
- -------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien:
5%, 1/1/33 Baa3/NR/BBB 8,000,000 7,705,840
6.75%, 1/1/32 Aaa/NR/BBB 7,000,000 7,961,800
- -------------------------------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RRB, CAP, Series A, Zero
Coupon, 2.27%, 1/15/21(1) Baa3/BBB-/BBB 11,800,000 7,905,056
- -------------------------------------------------------------------------------------------------------------------
Santa Margarita/Dana Point, CA Authority RB,
Improvement Districts 3-3A-4 & 4A, Series B,
MBIA Insured, 7.25%, 8/1/14 Aaa/AAA 680,000 873,875
- -------------------------------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB, Series A,
7.35%, 9/1/24 NR/AAA 1,670,000 1,770,551
- -------------------------------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB, 5.55%, 10/30/20 Aa2/AA 3,600,000 3,716,172
- -------------------------------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB, Inverse Floater,
6.811%, 10/30/20(3) Aa2/AA 1,500,000 1,550,625
- -------------------------------------------------------------------------------------------------------------------
Southern CA PPAU Transmission Project RB,
Inverse Floater, 7.508%, 7/1/12(3) Aa3/A+ 1,900,000 2,199,250
- -------------------------------------------------------------------------------------------------------------------
Stockton, CA CFD SPTX RRB, Brookside Estates,
No. 90-2, 6.20%, 8/1/15 NR/NR 1,750,000 1,833,125
- -------------------------------------------------------------------------------------------------------------------
Tustin, CA USD SPTX RB, CFD No. 88-1, Series B,
6.375%, 9/1/21 NR/NR 3,500,000 3,789,835
- -------------------------------------------------------------------------------------------------------------------
University of CA Regents RB, Multiple Purpose
Projects, Prerefunded, Series A, 6.875%, 9/1/16 NR/A 1,950,000 2,214,771
</TABLE>
15 Oppenheimer California Municipal Fund
<PAGE> 16
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
<TABLE>
<CAPTION>
RATINGS:
MOODY'S/ FACE MARKET VALUE
S&P/FITCH AMOUNT SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (CONTINUED)
Yuba City, CA USD Refunding COP, Series A,
5%, 2/1/17 Aaa/AAA $3,010,000 $ 3,012,167
------------
391,023,430
- -------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--6.9%
Guam PAU RB, Series A, 6.625%, 10/1/14 NR/BBB 2,000,000 2,229,120
- -------------------------------------------------------------------------------------------------------------------
PR CMWLTH GOB, 5.375%, 7/1/25 Baa1/A 6,600,000 6,748,962
- -------------------------------------------------------------------------------------------------------------------
PR CMWLTH GORB, MBIA Insured, Inverse
Floater, 7.784%, 7/1/08(3) Aaa/AAA 3,500,000 4,011,875
- -------------------------------------------------------------------------------------------------------------------
PR EPAU RB, Prerefunded, Series P, 7%, 7/1/21 Aaa/BBB+ 4,000,000 4,458,520
- -------------------------------------------------------------------------------------------------------------------
PR HFA & Bank SFM RB, Affordable Housing
Mtg.-Portfolio I, 6.25%, 4/1/29 Aaa/AAA 3,565,000 3,773,624
- -------------------------------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 675,000 721,184
- -------------------------------------------------------------------------------------------------------------------
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 2,620,920
- -------------------------------------------------------------------------------------------------------------------
PR Public Buildings Authority RB, Government
Facilities, Series B, AMBAC Insured, 5%, 7/1/27 Aaa/AAA 3,900,000 3,870,126
------------
28,434,331
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $386,824,276) 102.1% 419,457,761
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (2.1) (8,471,127)
---------- ------------
NET ASSETS 100.0% $410,986,634
========== ============
</TABLE>
To simplify the listing of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
CAP --Capital Appreciation PAU --Power Authority
CDAU --Communities Development Authority PC --Pollution Control
CFD --Community Facilities District PFAU --Public Finance Authority
CIA --Community Improvement Agency PPAU --Public Power Authority
CMWLTH --Commonwealth PWBL --Public Works Board Lease
COP --Certificates of Participation RA --Redevelopment Agency
EPAU --Electric Power Authority RB --Revenue Bonds
FA --Facilities Authority RRB --Revenue Refunding Bonds
FAU --Finance Authority SCDAU --Statewide Communities Development Authority
GOB --General Obligation Bonds SDI --School District
GORB --General Obligation Refunding Bonds SFM --Single Family Mortgage
HF --Health Facilities SPAST --Special Assessment
HFA --Housing Finance Agency SPTX --Special Tax
HFFAU --Health Facilities Finance Authority SWD --Solid Waste Disposal
MTAU --Metropolitan Transportation Authority TXAL --Tax Allocation
MUD --Municipal Utility District UDA --Urban Development Agency
MWFAU --Municipal Water Finance Authority USD --Unified School District
</TABLE>
16 Oppenheimer California Municipal Fund
<PAGE> 17
- --------------------------------------------------------------------------------
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, 1998.
3. 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 $33,191,750 or 8.08% of the
Fund's net assets at January 31, 1998.
4. Securities with an aggregate market value of $1,379,801 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
As of January 31, 1998, securities subject to the alternative minimum tax amount
to $84,931,544 or 20.67% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
<TABLE>
<CAPTION>
INDUSTRY MARKET VALUE PERCENT
- --------------------------------------------------------------
<S> <C> <C>
Special Assessment $ 84,935,944 20.2%
Lease Rental 57,850,645 13.8
Single Family Housing 56,229,990 13.4
Hospital/Healthcare 52,281,331 12.5
Electric Utilities 48,496,720 11.6
Highways 28,617,378 6.8
Marine/Aviation Facilities 27,749,217 6.6
General Obligation 17,511,577 4.2
Sales Tax 9,904,100 2.4
Corporate Backed 9,368,608 2.2
Water Utilities 9,196,797 2.2
Higher Education 7,138,612 1.7
Adult Living Facilities 6,583,110 1.6
Education 3,012,167 0.7
Resource Recovery 581,565 0.1
------------ -----
$419,457,761 100.0%
============ =====
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer California Municipal Fund
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES January 31, 1998 (Unaudited)
<TABLE>
<S> <C>
============================================================================================
ASSETS
Investments, at value (cost $386,824,276)--see accompanying statement $419,457,761
- --------------------------------------------------------------------------------------------
Cash 170,629
- --------------------------------------------------------------------------------------------
Receivables:
Interest 5,749,814
Investments sold 2,479,583
Shares of beneficial interest sold 587,710
- --------------------------------------------------------------------------------------------
Other 15,542
------------
Total assets 428,461,039
============================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 15,642,137
Dividends 1,049,395
Shares of beneficial interest redeemed 294,654
Trustees' fees--Note 1 162,249
Daily variation on futures contracts--Note 5 93,684
Distribution and service plan fees 88,727
Transfer and shareholder servicing agent fees 25,101
Other 118,458
------------
Total liabilities 17,474,405
============================================================================================
NET ASSETS $410,986,634
============
============================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $379,644,445
- --------------------------------------------------------------------------------------------
Overdistributed net investment income (221,295)
- --------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (827,189)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 32,390,673
------------
Net assets $410,986,634
============
</TABLE>
18 Oppenheimer California Municipal Fund
<PAGE> 19
<TABLE>
<S> <C>
============================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$300,913,142 and 27,274,502 shares of beneficial interest outstanding) $11.03
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $11.58
- --------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $101,347,029
and 9,182,706 shares of beneficial interest outstanding) $11.04
- --------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $8,726,463
and 792,027 shares of beneficial interest outstanding) $11.02
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer California Municipal Fund
<PAGE> 20
STATEMENT OF OPERATIONS For the Six Months Ended January 31, 1998 (Unaudited)
<TABLE>
<S> <C>
=========================================================================
INVESTMENT INCOME
Interest $11,906,990
=========================================================================
EXPENSES
Management fees--Note 4 1,119,03
- -------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 365,398
Class B 459,626
Class C 34,956
- -------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 111,82
- -------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 53,82
- -------------------------------------------------------------------------
Shareholder reports 46,093
- -------------------------------------------------------------------------
Legal and auditing fees 14,586
- -------------------------------------------------------------------------
Custodian fees and expenses 9,506
- -------------------------------------------------------------------------
Insurance expenses 5,985
- -------------------------------------------------------------------------
Registration and filing fees 5,611
- -------------------------------------------------------------------------
Other 1,911
-----------
Total expenses 2,228,357
=========================================================================
NET INVESTMENT INCOME 9,678,633
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 134,157
Closing of futures contracts (941,863)
-----------
Net realized loss (807,706)
- -------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 7,136,958
-----------
Net realized and unrealized gain 6,329,252
=========================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $16,007,885
===========
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer California Municipal Fund
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1998 YEAR ENDED
(UNAUDITED) JULY 31, 1997
=============================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 9,678,633 $ 19,125,130
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) (807,706) 3,408,420
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 7,136,958 15,361,034
------------ ------------
Net increase in net assets resulting from operations 16,007,885 37,894,584
=============================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (7,481,987) (15,608,071)
Class B (1,951,062) (3,005,232)
Class C (148,220) (177,543)
- ---------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (2,091,964) --
Class B (677,601) --
Class C (51,243) --
=============================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 200,857 (2,968,658)
Class B 17,897,277 26,671,234
Class C 2,678,060 3,556,642
=============================================================================================
NET ASSETS
Total increase 24,382,002 46,362,956
- ---------------------------------------------------------------------------------------------
Beginning of period 386,604,632 340,241,676
------------ ------------
End of period [including undistributed
(overdistributed) net investment income
of $(221,295) and $966,465, respectively] $410,986,634 $386,604,632
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer California Municipal Fund
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
SIX MONTHS
ENDED
JANUARY 31,
1998 YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
(UNAUDITED) 1997 1996(2) 1995 1994
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.94 $10.39 $10.69 $ 9.45 $10.97
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 .58 .33 .58 .60
Net realized and unrealized gain (loss) .21 .54 (.30) 1.25 (1.51)
------ ------ ------ ------ ------
Total income (loss) from investment
operations .45 1.12 .03 1.83 (.91)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.28) (.57) (.33) (.58) (.61)
Dividends in excess of net investment income -- -- -- (.01) --
Distributions from net realized gain (.08) -- -- -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.36) (.57) (.33) (.59) (.61)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.03 $10.94 $10.39 $10.69 $ 9.45
====== ====== ====== ====== ======
=============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 4.15% 11.11% 0.34% 19.76% (8.49)%
=============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $300,913 $298,162 $286,033 $285,307 $219,682
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $295,869 $289,439 $279,796 $250,188 $248,850
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.07%(5) 5.49% 5.53%(5) 5.64% 5.99%
Expenses 0.93%(5) 0.94% 0.97%(5) 0.95% 0.96%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 17.8% 31.1% 14.0% 23.0% 21.9%
</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.
22 Oppenheimer California Municipal Fund
<PAGE> 23
<TABLE>
<CAPTION>
CLASS B
------------------ --------------------------------------------------------------
SIX MONTHS
ENDED
JANUARY 31,
1998 YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
1993 1992 (UNAUDITED) 1997 1996(2) 1995 1994 1993(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
================================================================================================================================
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.35 $10.22 $10.94 $10.39 $10.69 $ 9.44 $10.98 $10.72
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .62 .61 .21 .49 .28 .51 .54 .35
Net realized and unrealized gain (loss) .72 .20 .20 .55 (.30) 1.25 (1.55) .34
------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations 1.34 .81 .41 1.04 (.02) 1.76 (1.01) .69
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.65) (.60) (.23) (.49) (.28) (.50) (.53) (.36)
Dividends in excess of net investment
income -- -- -- -- -- (.01) -- --
Distributions from net realized gain (.07) (.08) (.08) -- -- -- -- (.07)
------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.72) (.68) (.31) (.49) (.28) (.51) (.53) (.43)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.97 $10.35 $11.04 $10.94 $10.39 $10.69 $ 9.44 $10.98
====== ====== ====== ====== ====== ====== ====== ======
================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 13.26% 8.28% 3.85% 10.27% (0.12)% 18.97% (9.39)% 6.66%
================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $266,490 $204,349 $101,347 $82,474 $52,038 $41,224 $20,224 $9,921
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $245,193 $174,055 $ 91,279 $65,192 $46,422 $29,918 $16,552 $5,218
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.74% 6.07% 4.28%(5) 4.70% 4.74%(5) 4.82% 5.17% 4.57%(5)
Expenses 0.97% 1.07% 1.68%(5) 1.70% 1.74%(5) 1.72% 1.73% 1.79%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 13.7% 26.8% 17.8% 31.1% 14.0% 23.0% 21.9% 13.7%
</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, 1998 were $101,660,396 and $70,416,659, respectively.
23 Oppenheimer California Municipal Fund
<PAGE> 24
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
SIX MONTHS
ENDED PERIOD
JANUARY 31, ENDED
1998 YEAR ENDED JULY 31, DEC. 31,
(UNAUDITED) 1997 1996(2) 1995(1)
==========================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.93 $10.38 $10.68 $10.46
- ------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .49 .27 .08
Net realized and unrealized gain (loss) .17 .55 (.30) .22
------ ------ ------ ------
Total income (loss) from investment
operations .40 1.04 (.03) .30
- ------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.23) (.49) (.27) (.07)
Dividends in excess of net investment
income -- -- -- (.01)
Distributions from net realized gain (.08) -- -- --
------ ------ ------ ------
Total dividends and distributions
to shareholders (.31) (.49) (.27) (.08)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $11.02 $10.93 $10.38 $10.68
====== ====== ====== ======
==========================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 3.76% 10.26% (0.19)% 2.90%
==========================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $8,726 $5,969 $2,171 $125
- ------------------------------------------------------------------------------------------
Average net assets (in thousands) $6,948 $3,869 $1,156 $ 91
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.24%(5) 4.66% 4.54%(5) 4.56%(5)
Expenses 1.68%(5) 1.70% 1.80%(5) 1.68%(5)
- ------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 17.8% 31.1% 14.0% 23.0%
</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.
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, 1998 were $101,660,396 and $70,416,659, respectively.
See accompanying Notes to Financial Statements.
24 Oppenheimer California Municipal Fund
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
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 advisor
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.
- --------------------------------------------------------------------------------
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.
25 Oppenheimer California Municipal Fund
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, 1998, a provision of $17,214 was made for the Fund's projected
benefit obligations resulting in an accumulated liability of $156,248 at January
31, 1998.
- --------------------------------------------------------------------------------
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. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Original issue discount or premiums on
securities purchased are amortized over the life of the respective securities,
in accordance with federal income tax requirements. As of November 4, 1997, in
order to conform book and tax bases, the Fund began amortization of premiums on
securities for book purposes. Accordingly, during the six months ended January
31, 1998, amounts have been reclassified to reflect a decrease in
overdistributed net investment income of $1,712,531. Paid-in capital was
decreased by the same amount. 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.
26 Oppenheimer California Municipal Fund
<PAGE> 27
================================================================================
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, 1998 YEAR ENDED JULY 31, 1997
--------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Class A:
Sold 1,891,839 $ 20,595,566 3,743,446 $ 39,457,645
Dividends and
distributions reinvested 532,472 5,776,227 847,947 8,930,517
Redeemed (2,406,931) (26,170,936) (4,874,267) (51,356,820)
---------- ------------ ---------- ------------
Net increase (decrease) 17,380 $ 200,857 (282,874) $ (2,968,658)
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------
Class B:
Sold 1,904,354 $ 20,721,245 3,027,347 $ 31,931,406
Dividends and
distributions reinvested 155,996 1,693,256 167,555 1,766,598
Redeemed (414,230) (4,517,224) (667,227) (7,026,770)
---------- ------------ ---------- ------------
Net increase 1,646,120 $ 17,897,277 2,527,675 $ 26,671,234
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------
Class C:
Sold 324,307 $ 3,534,730 477,845 $ 5,040,612
Dividends and
distributions reinvested 14,794 160,392 11,183 117,848
Redeemed (93,340) (1,017,062) (151,952) (1,601,818)
---------- ------------ ---------- ------------
Net increase 245,761 $ 2,678,060 337,076 $ 3,556,642
========== ============ ========== ============
</TABLE>
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At January 31, 1998, net unrealized appreciation on investments of $32,633,485
was composed of gross appreciation of $32,665,710, and gross depreciation of
$32,225.
================================================================================
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% of the first
$200 million of average annual net assets, 0.55% of the next $100 million, 0.50%
of the next $200 million, 0.45% of the next $250 million, 0.40% of the next $250
million and 0.35% of average annual net assets over $1 billion.
For the six months ended January 31, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $435,725, of which
$66,821 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 $803,015 and $33,382, respectively, of which $13,155
was paid to an affiliated broker/dealer for Class B.
27 Oppenheimer California Municipal Fund
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
During the six months ended January 31, 1998, OFDI received contingent deferred
sales charges of $99,016 and $2,846, 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 maintenance of
accounts of their customers that hold Class A shares. During the six months
ended January 31, 1998, OFDI paid $10,464 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 cost 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,
for its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
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, 1998, OFDI paid $1,024 to an affiliated broker/dealer as
compensation for Class B personal service and maintenance expenses and retained
$386,460 and $22,160, 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 January 31, 1998, OFDI had incurred
unreimbursed expenses of $3,287,755 for Class B and $105,340 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.
28 Oppenheimer California Municipal Fund
<PAGE> 29
================================================================================
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities (initial margin) in an amount equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
At January 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE CONTRACTS JANUARY 31, 1998 DEPRECIATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bond Future 3/98 20 $ 2,486,250 $ 13,125
U.S. Treasury Bonds, 30 yr. 3/98 300 36,684,375 229,687
--------
$242,812
========
</TABLE>
================================================================================
6. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months
ended January 31, 1998.
29 Oppenheimer California Municipal Fund
<PAGE> 30
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 ADVISOR 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
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.
30 Oppenheimer California Municipal Fund
<PAGE> 31
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
==========================================================================================
REAL ASSET FUNDS
- ------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==========================================================================================
STOCK FUNDS
- ------------------------------------------------------------------------------------------
Developing Markets Fund Discovery Fund Growth Fund
International Small Quest Small Cap Value Fund Global Fund
Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
==========================================================================================
STOCK & BOND FUNDS
- ------------------------------------------------------------------------------------------
Main Street Income & Quest Growth &Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund
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(1) Pennsylvania Municipal Fund(1) Rochester Division:
Florida Municipal Fund(1) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(1) Insured Municipal Fund Limited Term New York
New York Municipal Fund(1) Intermediate Municipal Fund Municipal Fund
==========================================================================================
MONEY MARKET FUNDS(2)
- ------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==========================================================================================
LIFESPAN
- ------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. Available only to investors in certain states.
2. 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 1998 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer California Municipal Fund
<PAGE> 32
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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]
RS0790.001.0198 April 1, 1998
