-----------------------------------------------
Annual Report July 31, 1999
-----------------------------------------------
O P P E N H E I M E R
California
Municipal Fund
[Photo of Checkbook Register]
[OppenheimerFunds Logo]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
[Begin: Sidebar Text]
Contents
3 President's Letter
5 An Interview
with Your Fund's
Manager
10 Fund Performance
- ----------------------------
14 Financial
Statements
37 Independent
Auditors' Report
- ----------------------------
38 Federal
Income Tax
Information
39 Officers and
Trustees
40 Information and
Services
[End: Sidebar Text]
o In stark contrast to U.S. Treasury securities, municipal bond prices were
remarkably stable throughout the reporting period.
o Our research-intensive security selection strategy helped us find areas of
opportunity and helped avoid potential problems.
o As of July 31, long-term California municipal bonds provided more than 90% of
the yield of long-term U.S. Treasury securities, making them attractive
values by historical measures.
Avg Annual Total Returns
For the 1-Year Period
Ended 7/31/99
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
1.59% -3.24%
- -----------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
0.82% -4.02%
- -----------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
0.73% -0.24%
- -----------------------------
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. The Fund's
performance may from time to time be subject to substantial short-term changes,
particularly during periods of market or interest rate volatility. For updates
on the Fund's performance, please contact your financial advisor, call us at
1-800-525-7048 or visit our website, www.oppenheimerfunds.com.
1. Includes changes in net asset value per share without deducting any sales
charges.
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%. Class B and
C shares are subject to an annual 0.75% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer California Municipal Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[Photo of Bridget A. Macaskill]
Bridget A. Macaskill
President
Oppenheimer
California Municipal Fund
In many ways, the 1999 investment environment has, so far, unfolded as many
expected it would, producing both attractive opportunities and formidable
challenges for investors.
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflationary pressures, the
Federal Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of large-capitalization growth
stocks, which has driven the market's advance over the past few years, has begun
to moderate, and many previously out-of-favor value-oriented, mid-cap and
small-cap stocks have rallied. At the same time, a healthy percentage of
actively managed, diversified portfolios have once again begun to outperform
unmanaged stock indices such as Standard & Poor's 500.
(over, please)
3 Oppenheimer California Municipal Fund
<PAGE>
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against inflation.
In our view, history has repeatedly demonstrated that most financial assets do
best in a low-inflation environment. What's more, we believe that the move to
higher interest rates should be temporary.
One recent development is quite troublesome to us however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing, it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue,
we are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industry-wide tests. We
intend to continue re-testing our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
August 20, 1999
4 Oppenheimer California Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
[Photo of Portfolio Management Team]
Portfolio Management
Team (l to r)
Bob Patterson
Caryn Halbrecht
(Portfolio Manager)
Jerry Webman
How did Oppenheimer California Municipal Fund perform during the one-year period
that ended July 31, 1999?
We are pleased with the Fund's performance over the fiscal year. We attribute
the Fund's performance to our conservative investment strategy in a rapidly
changing investment environment. In fact, market conditions during the final six
months of 1998 and the first half of 1999 were, in many respects, direct
opposites of each other. The final six months of 1998 were generally
characterized by recessionary economic conditions throughout much of the world,
declining interest rates in the United States and less restrictive monetary
policies worldwide. In contrast, the first half of 1999 saw signs of global
economic recovery, rising domestic interest rates and, ultimately, a tighter
monetary policy in the United States.
How did these economic conditions affect California's municipal bond market?
In stark contrast to U.S. Treasury securities, municipal bond prices were
remarkably stable throughout the one-year reporting period. In the first half of
the period, global economic uncertainty triggered a "flight to quality" among
U.S. and foreign investors. This created unprecedented demand for U.S. Treasury
securities, driving their prices up and their yields down (prices and yields
move in opposite directions). However, because municipal bonds do not provide
tax advantages to foreign investors, municipals did not benefit to the same
extent. As a result, U.S. Treasury securities significantly outperformed
triple-A rated municipal bonds with comparable maturities.
5 Oppenheimer California Municpal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
[Begin: Sidebar Text]
"Municpal bonds
endured
significantly
less volatility
than other
high-quality,
fixed income
securities
over the
past year."
[End: Sidebar Text]
In the second half of the reporting period, while municipal bonds remained
stable, prices of U.S. Treasury securities declined sharply, giving back all of
their previous gains. As the economy grew stronger, investors regained their
confidence and sold their Treasury bonds in order to return to riskier financial
assets such as stocks and corporate bonds. Consequently, municipal bonds
provided higher total returns than U.S. Treasuries.
In our opinion, municipal bonds' relative stability is the result of
supply-and-demand factors. Strong economic conditions in California reduced many
municipalities' need to borrow, leading to a modestly diminished supply of
tax-exempt bonds. Yet, demand remained high from investors seeking to minimize
their income tax liabilities. This supply-and-demand relationship helped support
the stability of California's municipal bond prices and yields.
Did you find compelling values in this market environment?
Yes. Long-term, tax-exempt municipal bond yields have been high relative to
yields of long-term, taxable U.S. Treasury securities. In fact, by mid-1999,
California municipal bond yields were more than 90% of comparable Treasury
yields. As a result, we believe that California municipal bonds have provided
excellent after-tax values compared to historical norms.
6 Oppenheimer California Municpal Fund
<PAGE>
[Begin: Sidebar Text]
Avg Annual Total Returns
For the Periods Ended 6/30/991
Class A
1 year 5 year 10 year
- -------------------------
- -2.96% 5.85% 6.54%
- -------------------------
Class B
Since
1 year 5 year Inception
- -------------------------
- -3.65% 5.75% 4.85%
- -------------------------
Class C
Since
1 year 5 year Inception
- -------------------------
0.15% N/A 5.04%
- -------------------------
[End: Sidebar Text]
How did you manage the Fund in this environment?
We attempted to manage the risks of changing interest rates and emphasized those
sectors of the municipal bond market that we expected to benefit most from
prevailing economic and market conditions. This strategy led us to areas of
opportunity that we believe will benefit from California's growing population,
including residential land development and adult living facilities. Residential
land development bonds finance the basic infrastructure for new housing
construction. Adult living facilities are residential housing projects designed
to meet the unique demands of a growing population of aging Americans who want
amenities tailored to their lifestyles.
Our strategy also led us to avoid certain issuers, such as hospitals,
which have been subject to financial pressures because of an unfavorable
regulatory and legislative environment, including cutbacks in Medicaid and
Medicare. We also tended to avoid bonds issued by utilities that are in the
midst of industry-wide deregulation.
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 1%
(since inception on 5/3/93). Class C returns for the one-year result include the
contingent deferred sales charge of 1%. Class C shares have an inception date of
11/1/95. Class B and C shares are subject to an annual 0.75% asset-based sales
charge. An explanation of the different performance calculations is in the
Fund's prospectus.
7 Oppenheimer California Municipal Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
[Begin: Sidebar Text]
Standardized Yields(2)
For the 30 Days Ended 7/31/99
- ------------------------------
Class A 4.44%
- ------------------------------
Class B 3.90
- ------------------------------
Class C 3.90
- ------------------------------
[End: Sidebar Text]
Throughout the reporting period, we mostly targeted a neutral average
duration--which is a measure of sensitivity to changes in interest rates. When
interest rates declined in 1998, our neutral position constrained performance
slightly compared to portfolios with longer durations. However, when interest
rates rose in 1999, our neutral position helped shelter the portfolio from some
of the impact affecting investors who had previously adopted a longer, more
aggressive duration strategy.
What is your outlook for the municipal bond market and the Fund?
We remain cautiously optimistic. First, we believe that municipal bonds are
attractively valued relative to comparable taxable securities, and should
benefit as that relationship returns to more normal levels. Second, California
has benefited greatly from the recent strength of the U.S. economy, which has
enabled many of its municipalities to put their fiscal houses in good order.
This should help reduce the risk of credit downgrades.
2. Standardized yield is based on net investment income for the 30-day period
ended July 31, 1999. Falling share prices will tend to artificially raise
yields.
8 Oppenheimer California Municipal Fund
<PAGE>
[Begin: Sidebar Text]
[Begin: Tabular Representation of Pie Chart]
Credit Allocation(3)
AAA 44.9%
AA 8.7
A 11.1
BBB 28.2
BB 6.3
B 0.8
[End: Tabular Representation of Pie Chart]
[End: Sidebar Text]
On the other hand, we remain concerned about rising interest rates. Accordingly,
we intend to continue to monitor the economic environment carefully. If the
economy continues to grow at an unsustainable rate, we may position the
portfolio to reduce the adverse effects of potentially higher interest rates. We
believe that these credit-conscious, risk management strategies make Oppenheimer
California Municipal Fund an important part of The Right Way to Invest.
Top 5 Industries
(Percentage of invested assets)(4)
- ---------------------------------------------------------
Special Assessment 26.2%
- ---------------------------------------------------------
Single-Family Housing 12.0
- ---------------------------------------------------------
Municipal Leases 9.3
- ---------------------------------------------------------
Highways 9.2
- ---------------------------------------------------------
Hospital/Healthcare 7.9
- ---------------------------------------------------------
3. Portfolio data are as of July 31, 1999, are dollar-weighted based on invested
assets and are subject to change. The Fund may invest up to 25% of its assets in
below-investment-grade securities which carry greater risk of default. Average
credit quality and ratings allocations include securities rated by national
ratings organizations as well as unrated securities (currently 14.2% of total
investments) which have ratings assigned by the Manager in categories equivalent
to those of ratings organizations.
4. Industry weightings are as of July 31, 1999, and are subject to change.
9 Oppenheimer California Municipal Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
How Has the Fund Performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended July 31, 1999, followed by a graphical
comparison of the Fund's performance to an appropriate broad-based market index.
[square bullet] Management's Discussion of Performance.
During the Fund's fiscal year that ended July 31, 1999, Oppenheimer California
Municipal Fund performed relatively well, despite the fact that the overall bond
market weakened considerably in 1999. The weakness in the bond market stemmed
from signs of continuing strong economic growth, which could cause inflation to
reemerge. However, the Fund benefited from a reduced supply of new tax-exempt
bond issues relative to robust demand from investors seeking to manage their
income tax liabilities. This reduction in issuance was primarily a result of
strong economic conditions throughout the United States, which helped curtail
California's need to borrow. In this environment, the Fund continued to adhere
to its long-standing strategy of holding a diversified portfolio of municipal
bonds selected after extensive research into their issuers' credit quality. The
Fund's portfolio holdings, allocations and strategies are subject to change.
10 Oppenheimer California Municipal Fund
<PAGE>
[square bullet] Comparing the Fund's Performance to the Market. The graphs
that follow show the performance of a hypothetical $10,000 investment in each
class of shares of the Fund held from the inception of the class until July 31,
1999. In the case of Class A shares, performance is measured over a ten-year
period. In the case of Class B shares, performance is measured from the
inception of the class on May 3, 1993, and in the case of Class C shares, from
the inception of the class on November 1, 1995. The Fund's performance reflects
the deduction of the maximum initial sales charge on Class A shares and the
applicable contingent deferred sales charge for Class B and Class C shares. The
graphs assume that all dividends and capital gains distributions were reinvested
in additional shares.
Because the Fund invests in a variety of Municipal Securities, the Fund's
performance is compared to that of the Lehman Brothers Municipal Bond Index, an
unmanaged index of a broad range of investment grade municipal bonds that is
widely regarded as a measure of the performance of the general municipal bond
market. Index performance reflects the reinvestment of income but does not
consider the effect of capital gains or transaction costs, and none of the data
below shows the effect of taxes. Also, the Fund's performance reflects the
effect of Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in any one index.
11 Oppenheimer California Municipal Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer California Municipal Fund (Class A) and Lehman Brothers Municipal
Bond Index
[Begin: Tablular Representation of Line Chart]
Oppenheimer California Lehman Brothers Municipal
Municipal Fund Class A Bond Index
11.3.88 9525 10000
12.31.88 9661 10010
12.31.89 10783 11090
12.31.90 11470 11898
12.31.91 12724 13343
12.31.92 13777 14519
12.31.93 15604 16302
12.31.94 14279 15460
12.31.95 17100 18158
7.31.96(1) 17158 18241
7.31.97 19063 20111
7.31.98 20142 21316
7.31.99 20463 21929
[End: Tablular Representation of Line Chart]
Average Annual Total Return of Class AShares of the Fund at 7/31/99(2)
1 Year -3.24% 5 Year 5.42% 10 Year 6.40%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer California Municipal Fund (Class B) and Lehman Brothers Municipal
Bond Index
[Begin: Tablular Representation of Line Chart]
Oppenheimer California Lehman Brothers Municipal
Municipal Fund Class B Bond Index
5.3.93 10000 10000
12.31.93 10656 10718
12.31.94 9656 10164
12.31.95 11486 11938
7.31.96(1) 11474 11993
7.31.97 12651 13222
7.31.98 13267 14015
7.31.99 13375 14418
[End: Tablular Representation of Line Chart]
Average Annual Total Return of Class BShares of the Fund at 7/31/99(3)
1 Year -4.02% 5 Year 5.32% Life 4.77%
12 Oppenheimer California Municipal Fund
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer California Municipal Fund (Class C) and Lehman Brothers Municipal
Bond Index
[Begin: Tablular Representation of Line Chart]
Oppenheimer California Lehman Brothers Municipal
Municipal Fund Class C Bond Index
11.1.95 10000 10000
12.31.95 10290 10264
7.31.96(1) 10271 10310
7.31.97 11324 11367
7.31.98 11876 12049
7.31.99 11963 12395
[End: Tablular Representation of Line Chart]
Average Annual Total Return of Class CShares of the Fund at 7/31/99(4)
1 Year -0.24% Life 4.90%
Total returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information for the Lehman Brothers Municipal Bond Index in the
graphs begins on 10/31/88 for Class A, 4/30/93 for Class B and 10/31/95 for
Class C.
1. The Fund changed its fiscal year-end from December 31 to July 31.
2. The average annual total returns are shown net of the applicable 4.75%
maximum initial sales charge.
3. Class B shares of the Fund were first publicly offered on 5/3/93. The average
annual total returns are shown net of the applicable 5% (1-year) and 1% (since
inception) contingent deferred sales charges. The ending account value in the
graph is net of the applicable 1% contingent deferred sales charge.
4. Class C shares of the Fund were first publicly offered on 11/1/95. The 1-year
period is shown net of the applicable 1% contingent deferred sales charge.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
13 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
==============================================================================================
Municipal Bonds and Notes--99.6%
- ----------------------------------------------------------------------------------------------
California--94.8%
Anaheim, CA PFAU Lease RB, Public
Improvements Project, Sub. Lien, Series C,
FSA Insured, Zero Coupon, 5.27%, 9/1/20(1) Aaa/AAA/AAA $17,630,000 $ 5,450,843
- ----------------------------------------------------------------------------------------------
Anaheim, CA PFAU TXAL RB, MBIA Insured,
Inverse Floater, 12.30%, 12/28/18(2) Aaa/AAA 3,000,000 3,615,000
- ----------------------------------------------------------------------------------------------
Berkeley, CA HF RRB, Alta Bates Medical Center,
Prerefunded, Series A, 6.50%, 12/1/11 A2/NR 4,500,000 4,849,785
- ----------------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, American
Baptist Homes, Series A, 6.20%, 10/1/27 NR/BBB 6,000,000 6,223,860
- ----------------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, Episcopal
Homes Foundation, 5.125%, 7/1/18 NR/A- 5,900,000 5,539,274
- ----------------------------------------------------------------------------------------------
CA Assn. of Bay Area Governments FAU for
Non-profit Corps. Refunding COP, Rhonda Haas
Goldman Plaza, 5.125%, 5/15/23 NR/A+ 2,300,000 2,147,119
- ----------------------------------------------------------------------------------------------
CA CDAU Lease RB, United Airlines,
Series A, 5.70%, 10/1/33 Baa3/BB+ 9,185,000 9,143,025
- ----------------------------------------------------------------------------------------------
CA Community College FAU Lease RB,
West Valley Mission Community College,
MBIA Insured, 5.625%, 5/1/22 Aaa/AAA 3,585,000 3,630,279
- ----------------------------------------------------------------------------------------------
CA Educational FA RRB, Los Angeles
College Chiropractic, 5.60%, 11/1/17 Baa2/NR 1,000,000 994,820
- ----------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency Toll Road
RB, Sr. Lien, Prerefunded, Series A, 6.50%, 1/1/32 Baa3/BBB-/BBB 4,600,000 5,144,410
- ----------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency Toll Road
RRB, Zero Coupon, 5.98%, 1/15/21(1)(3) Baa3/BBB-/BBB 7,500,000 2,080,875
- ----------------------------------------------------------------------------------------------
CA Foothill/Eastern Corridor Agency Toll Road
RRB, Zero Coupon, 6%, 1/15/22(1)(3) Baa3/BBB-/BBB 7,500,000 1,957,650
- ----------------------------------------------------------------------------------------------
CA GOB, 5%, 10/1/27 Aa3/A+/AA- 2,000,000 1,861,520
- ----------------------------------------------------------------------------------------------
CA GOB, MBIA Insured, 5%, 8/1/24 Aaa/AAA/AAA 6,000,000 5,622,060
- ----------------------------------------------------------------------------------------------
CA HFA RB, Series A, 7.35%, 8/1/11 Aa2/AA- 75,000 78,302
- ----------------------------------------------------------------------------------------------
CA HFA RB, Series C, 7.60%, 8/1/30 Aa2/AA- 940,000 957,913
- ----------------------------------------------------------------------------------------------
CA HFA RB, Series E-1, 6.45%, 2/1/12 Aa2/AA- 750,000 790,492
- ----------------------------------------------------------------------------------------------
CA HFA RB, Series M, MBIA Insured,
5.60%, 8/1/29 Aaa/AAA 2,500,000 2,496,375
- ----------------------------------------------------------------------------------------------
CA HFA SFM RB, Series 83, Inverse
Floater, 9.045%, 8/1/25(2) NR/AAA 4,000,000 4,401,600
- ----------------------------------------------------------------------------------------------
CA HFA SFM RB, Series C, 6.75%, 2/1/25 Aa2/AA- 9,730,000 10,232,944
</TABLE>
14 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
California (continued)
CA HFFAU RB, Los Angeles Children's Hospital,
Prerefunded, Series A, 7.125%, 6/1/21 Aaa/NR $1,000,000 $1,076,060
- ----------------------------------------------------------------------------------------------
CA HFFAU RRB, Kaiser Permanente,
Series B, 5%, 10/1/18 A3/A 3,500,000 3,241,245
- ----------------------------------------------------------------------------------------------
CA Infrastructure & ED Bank RB, American
Center for Wine, Food & Arts, 5.75%, 12/1/24 NR/A /A 5,000,000 4,969,850
- ----------------------------------------------------------------------------------------------
CA Intermodal Container Transfer Facility Joint
PAU RRB, Southern Pacific Transportation Co.,
Series A, 7.70%, 11/1/14 A3/A- 1,000,000 1,027,910
- ----------------------------------------------------------------------------------------------
CA PCFAU SWD RRB, North Cnty. Recycling
Center, Escrowed to Maturity, Series A,
6.75%, 7/1/11 Aaa/NR 500,000 544,340
- ----------------------------------------------------------------------------------------------
CA PWBL RB, State Prison Department of
Corrections, Series E, FSA Insured, 5.50%, 6/1/15 Aaa/AAA/AAA 3,000,000 3,127,410
- ----------------------------------------------------------------------------------------------
CA Rural Home Mtg. FAU SFM RB, Mtg.-Backed
Securities Program, Series B-5, 6.35%, 12/1/29 NR/AAA 3,080,000 3,290,826
- ----------------------------------------------------------------------------------------------
CA Saddleback Community College District
Refunding COP, BIG Insured, 7%, 8/1/19 Aaa/AAA 1,000,000 1,020,100
- ----------------------------------------------------------------------------------------------
CA SCDAU COP, Children's Hospital-Los Angeles,
5.25%, 8/15/29 A1/A+ 5,000,000 4,701,950
- ----------------------------------------------------------------------------------------------
CA SCDAU COP, The Internext Group,
5.375%, 4/1/17 NR/BBB 5,500,000 5,231,600
- ----------------------------------------------------------------------------------------------
CA SCDAU COP, The Internext Group,
5.375%, 4/1/30 NR/BBB 8,500,000 7,847,455
- ----------------------------------------------------------------------------------------------
CA SCDAU Revenue Refunding COP,
Inverse Floater, 7.575%, 11/1/15(2) A1/NR 6,600,000 6,327,750
- ----------------------------------------------------------------------------------------------
Campbell, CA Refunding COP, Civic Center
Project, Prerefunded Balance, 6.75%, 10/1/17 A /A 1,130,000 1,218,061
- ----------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds,
Ladera No. 98-2, 5.70%, 9/1/20 NR/NR 5,000,000 4,844,800
- ----------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Bonds,
Prerefunded, No. 92-1, 7.10%, 9/1/21 NR/NR 3,250,000 3,838,575
- ----------------------------------------------------------------------------------------------
Capistrano, CA USD CFD SPTX Refunding
Bonds, Las Flores No. 92-1, MBIA Insured,
5%, 9/1/23 Aaa/AAA/AAA 1,000,000 938,090
- ----------------------------------------------------------------------------------------------
Central CA Joint Powers Health FAU COP,
Community Hospitals of Central California
Project, 5%, 2/1/23 Baa1/NR 5,090,000 4,601,258
- ----------------------------------------------------------------------------------------------
Clovis, CA USD CAP GOB, Series D, FGIC Insured,
Zero Coupon, 5.60%, 8/1/10(1) Aaa/AAA 2,000,000 1,154,120
- ----------------------------------------------------------------------------------------------
Colton, CA PFAU TXAL RRB, Redevelopment
Projects, Series B, 5.875%, 8/1/27 NR/NR 3,700,000 3,575,421
</TABLE>
15 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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)
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 $ 820,542
- ----------------------------------------------------------------------------------------------
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 2,789,836
- ----------------------------------------------------------------------------------------------
Commerce, CA Joint Powers FAU Lease RB,
Community Center, Series A, 6.25%, 10/1/22 Baa2/NR 1,410,000 1,462,198
- ----------------------------------------------------------------------------------------------
Compton, CA Refunding COP, Civic Center &
Capital Improvements, Series A, 5.50%, 9/1/15 NR/BBB 3,000,000 2,938,740
- ----------------------------------------------------------------------------------------------
Davis, CA Public Facilities FAU Local Agency
RRB, Mace Ranch Area, Series A, 6.60%, 9/1/25 NR/NR 5,000,000 5,182,100
- ----------------------------------------------------------------------------------------------
Delta Cnty., CA Home Mtg. FAU SFM RB,
Series A, 5.35%, 6/1/24 Aaa/AAA/AAA 4,605,000 4,475,231
- ----------------------------------------------------------------------------------------------
Duarte, CA COP, City of Hope National
Medical Center, 6.25%, 4/1/23 Baa1/AAA 4,500,000 4,902,930
- ----------------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB, MBIA
Insured, Zero Coupon, 6.20%, 11/1/18(1) Aaa/AAA 6,000,000 2,089,320
- ----------------------------------------------------------------------------------------------
Escondido, CA Union High SDI CAP GOB, MBIA
Insured, Zero Coupon, 6.20%, 11/1/19(1) Aaa/AAA 2,000,000 654,140
- ----------------------------------------------------------------------------------------------
Fontana, CA RA TXAL Refunding Bonds,
Jurupa Hills Redevelopment Project,
Series A, 5.50%, 10/1/19 NR/BBB+ 1,345,000 1,310,528
- ----------------------------------------------------------------------------------------------
Fontana, CA RA TXAL Refunding Bonds,
Jurupa Hills Redevelopment Project,
Series A, 5.50%, 10/1/27 NR/BBB+ 6,040,000 5,842,311
- ----------------------------------------------------------------------------------------------
Huntington Park, CA PFAU Lease RRB,
Wastewater System Project, Series A,
6.20%, 10/1/25 NR/NR 3,000,000 3,014,490
- ----------------------------------------------------------------------------------------------
Industry, CA Improvement Bond Act of 1915
SPAST GOB, Prerefunded, District No. 91-1,
7.65%, 9/2/21 NR/NR 1,750,000 1,952,352
- ----------------------------------------------------------------------------------------------
Irvine, CA Improvement Bond Act of 1915
SPAST GOB, District 94-13-Group One,
5.50%, 9/22/22 NR/NR 2,500,000 2,365,600
- ----------------------------------------------------------------------------------------------
Laguna Salada, CA USD CAP GOB, Series B,
FGIC Insured, Zero Coupon, 5.30%, 8/1/22(1) Aaa/AAA/AAA 3,035,000 845,490
- ----------------------------------------------------------------------------------------------
Lake Elsinore, CA PFAU TXAL Bonds,
Series A, 5.50%, 9/1/30 NR/BBB 5,000,000 4,699,450
</TABLE>
16 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
California (continued)
Lake Elsinore, CA School FAU SPTX RRB,
Horsethief Canyon, 5.625%, 9/1/16 NR/NR $4,760,000 $4,580,405
- ----------------------------------------------------------------------------------------------
Long Beach, CA Water RRB, Series A,
MBIA Insured, 5%, 5/1/24 Aaa/AAA 7,090,000 6,644,961
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney Parking
Project, Zero Coupon, 5.58%, 3/1/12(1) Baa1/BBB/A- 1,700,000 842,622
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney Parking
Project, Zero Coupon, 6.92%, 9/1/10(1) Baa1/BBB/A- 5,960,000 3,278,358
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney Parking
Project, Zero Coupon, 6.95%, 9/1/11(1) Baa1/BBB/A- 2,900,000 1,492,021
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney Parking
Project, Zero Coupon, 7.03%, 9/1/13(1) Baa1/BBB/A- 4,500,000 2,034,675
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA CAP COP, Disney Parking
Project, Zero Coupon, 5.16%, 9/1/14(1) Baa1/BBB/A- 7,260,000 3,080,128
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB, First
Tier-Property A, Series A, FSA Insured, 5%, 7/1/15 Aaa/AAA/AAA 5,000,000 4,879,200
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU Sales Tax RRB,
Series A, FSA Insured, 5%, 7/1/14 Aaa/AAA/AAA 5,000,000 4,919,800
- ----------------------------------------------------------------------------------------------
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 1,922,163
- ----------------------------------------------------------------------------------------------
Los Angeles Cnty., CA Public Works FAU RRB,
Regional Park & Open Space District,
Series A, 5%, 10/1/16(4) Aa3/AA 7,600,000 7,356,952
- ----------------------------------------------------------------------------------------------
Los Angeles, CA Harbor Department RB,
Series B, 5.375%, 11/1/23 Aa3/AA/AA 5,000,000 4,841,600
- ----------------------------------------------------------------------------------------------
Los Angeles, CA USD GOB, Series B,
FGIC Insured, 5%, 7/1/23 Aaa/AAA/AAA 5,000,000 4,691,500
- ----------------------------------------------------------------------------------------------
Oakland, CA RA TXAL Refunding Bonds,
MBIA Insured, 5.95%, 9/1/19(5) Aaa/AAA 8,600,000 9,040,578
- ----------------------------------------------------------------------------------------------
Orange Cnty., CA CFD No. 86-2 SPTX
Refunding Bonds, Rancho Santa Margarita,
Series A, 5.55%, 8/15/17 NR/NR 1,000,000 974,410
- ----------------------------------------------------------------------------------------------
Orange Cnty., CA CFD No. 88-1 SPTX Bonds,
Aliso Viejo, Prerefunded, Series A, 7.10%, 8/15/05 NR/AAA 1,440,000 1,594,915
- ----------------------------------------------------------------------------------------------
Orange Cnty., CA CFD No. 88-1 SPTX Bonds,
Aliso Viejo, Prerefunded, Series A, 7.35%, 8/15/18 NR/AAA 7,000,000 7,802,760
- ----------------------------------------------------------------------------------------------
Orange Cnty., CA Improvement Bond Act of
1915 RRB, Irvine Coast Assessment District,
No. 88-1-A, 5.50%, 9/2/16 NR/NR 3,000,000 2,973,630
</TABLE>
17 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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)
Orange Cnty., CA Improvement Bond Act of
1915 SPAST GOB, Assessment No. 88-1,
6.25%, 9/2/18 NR/NR $ 2,300,000 $ 2,326,404
- ----------------------------------------------------------------------------------------------
Palm Springs, CA COP, Escrowed to Maturity,
Sub. Lien, Series B, Zero Coupon,
5.54%, 4/15/21(1) NR/AAA 15,000,000 4,520,700
- ----------------------------------------------------------------------------------------------
Pittsburg, CA RA TXAL Refunding Bonds,
Los Medanos Community Development
Project, Sub. Lien, 6.20%, 8/1/19 NR/BBB 2,500,000 2,630,325
- ----------------------------------------------------------------------------------------------
Placentia, CA PFAU SPTX RB, Jr. Lien,
Series B, 6.60%, 9/1/15 NR/NR 1,600,000 1,641,776
- ----------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series A, 7.60%, 5/1/23 Aaa/AAA 4,500,000 5,644,350
- ----------------------------------------------------------------------------------------------
Pomona, CA SFM RRB, Escrowed to Maturity,
Series B, 7.50%, 8/1/23 Aaa/AAA 500,000 625,050
- ----------------------------------------------------------------------------------------------
Pomona, CA USD GORB, Series A, MBIA
Insured, 6.15%, 8/1/15 Aaa/AAA 2,000,000 2,190,760
- ----------------------------------------------------------------------------------------------
Port Oakland, CA Port RB, Series G, MBIA
Insured, 5.375%, 11/1/25 Aaa/AAA/AAA 10,650,000 10,371,502
- ----------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
FGIC Insured, Inverse Floater, 7.97%, 6/1/19(2) Aaa/AAA/AAA 4,000,000 4,135,000
- ----------------------------------------------------------------------------------------------
Redding, CA Electric System Revenue COP,
MBIA Insured, Inverse Floater, 9.339%, 7/8/22(2) Aaa/AAA 2,500,000 3,040,625
- ----------------------------------------------------------------------------------------------
Richmond, CA Improvement Bond Act of 1915
GORB, Reassessment District No. 855,
6.60%, 9/2/19 NR/NR 1,500,000 1,545,450
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA CFD No. 88-12 SPTX Bonds,
Prerefunded, 7.55%, 9/1/17 NR/NR 3,000,000 3,186,150
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA PFAU Refunding COP,
5.75%, 5/15/19 NR/BBB- 2,100,000 2,079,735
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA PFAU TXAL RRB,
Redevelopment Projects, Series A,
5.625%, 10/1/33 Baa2/BBB- 6,600,000 6,491,166
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force
Village West, Inc., Series A, 8.125%, 6/15/12 NR/NR 3,000,000 3,367,320
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA Refunding COP, Air Force
Village West, Inc., Series A, 8.125%, 6/15/20 NR/NR 3,000,000 3,367,320
- ----------------------------------------------------------------------------------------------
Riverside Cnty., CA SFM RB, Escrowed to
Maturity, Series A, 7.80%, 5/1/21 Aaa/AAA 4,285,000 5,546,675
- ----------------------------------------------------------------------------------------------
Sacramento Cnty., CA SFM RB, Escrowed to
Maturity, 8%, 7/1/16(4) Aaa/AAA 10,000,000 12,944,900
</TABLE>
18 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) 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 $1,938,420
- ----------------------------------------------------------------------------------------------
Sacramento, CA Cogeneration Authority RB,
Procter & Gamble Project, 6.50%, 7/1/14 NR/BBB-/NR 5,000,000 5,631,600
- ----------------------------------------------------------------------------------------------
Sacramento, CA MUD Electric RRB, FGIC
Insured, Inverse Floater, 9.325%, 8/15/18(2) Aaa/AAA/AAA 5,500,000 6,235,625
- ----------------------------------------------------------------------------------------------
Sacramento, CA PAU RB, Cogeneration
Project, 6%, 7/1/22 NR/BBB- 7,300,000 7,453,592
- ----------------------------------------------------------------------------------------------
San Bernardino Cnty., CA COP, Medical
Center Financing Project, MBIA Insured,
5.50%, 8/1/17 Aaa/AAA 5,250,000 5,404,717
- ----------------------------------------------------------------------------------------------
San Diego Cnty., CA COP, MBIA Insured,
Inverse Floater, 8.896%, 11/18/19(2) A1/A 2,000,000 2,202,500
- ----------------------------------------------------------------------------------------------
San Diego Cnty., CA Water Authority Revenue
COP, Prerefunded, Series 91-B, MBIA Insured,
Inverse Floater, 9.12%, 4/8/21(2) Aaa/AAA 3,000,000 3,630,000
- ----------------------------------------------------------------------------------------------
San Diego, CA Convention Center Expansion
FAU Lease RB, Series A, 5.25%, 4/1/16 Aaa/AAA/AAA 3,000,000 2,984,940
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. International
Airport Commission RB, Issue 22, AMBAC
Insured, 5%, 5/1/19 Aaa/AAA/AAA 235,000 220,797
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. International
Airport Commission RB, Series 84, AMBAC
Insured, Inverse Floater, 6.145%, 5/1/19(2) NR/AAA 4,750,000 4,175,820
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL Refunding Bonds, CAP
Redevelopment Projects, Series C,
Zero Coupon, 5.10%, 8/1/11(1) A2/A 2,350,000 1,218,875
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL Refunding Bonds, CAP
Redevelopment Projects, Series C, Zero
Coupon, 5.15%, 8/1/12(1) A2/A 2,350,000 1,142,382
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL Refunding Bonds, CAP
Redevelopment Projects, Series C, Zero
Coupon, 5.25%, 8/1/14(1) A2/A 2,350,000 1,006,129
- ----------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. Redevelopment
FAU TXAL Refunding Bonds, Series C, Zero
Coupon, 5%, 8/1/10(1) A2/A 2,350,000 1,302,652
- ----------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road CAP RRB, Series A,
0%/5.75%, 1/15/21(6) Baa3/BBB-/BBB 11,800,000 7,620,558
</TABLE>
19 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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)
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road CAP RRB, Series A, MBIA
Insured, Zero Coupon, 5.73%, 1/15/25(1) Aaa/AAA/AAA $18,250,000 $ 4,386,570
- ----------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, 5%, 1/1/33 Baa3/BBB-/BBB 8,000,000 7,161,920
- ----------------------------------------------------------------------------------------------
San Joaquin Hills, CA Transportation Corridor
Agency Toll Road RB, Sr. Lien, Prerefunded,
6.75%, 1/1/32 Aaa/AAA/AAA 7,000,000 7,718,480
- ----------------------------------------------------------------------------------------------
Santa Ana, CA FAU RRB, Inner-City Commuter,
Series C, 5.60%, 9/1/19 NR/BBB 3,060,000 2,959,601
- ----------------------------------------------------------------------------------------------
Santa Ana, CA FAU RRB, Mainplace Project,
Series D, 5.50%, 9/1/15 NR/NR 1,000,000 953,760
- ----------------------------------------------------------------------------------------------
Santa Ana, CA FAU RRB, Mainplace Project,
Series D, 5.60%, 9/1/19 NR/NR 1,000,000 950,250
- ----------------------------------------------------------------------------------------------
Santa Margarita/Dana Point, CA Authority RB,
Improvement Districts 3-3A-4-4A, Series B,
MBIA Insured, 7.25%, 8/1/14 Aaa/AAA 680,000 833,864
- ----------------------------------------------------------------------------------------------
Southern CA Home FAU SFM RB,
Series A, 7.35%, 9/1/24 NR/AAA 1,340,000 1,393,761
- ----------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RB, Inverse Floater,
7.419%, 10/30/20(2) Aa2/AA 3,300,000 3,291,750
- ----------------------------------------------------------------------------------------------
Southern CA Metropolitan Water District
Waterworks RRB, Series A, 4.75%, 7/1/22 Aa2/AA 10,000,000 9,011,100
- ----------------------------------------------------------------------------------------------
Southern CA PPAU Transmission Project RB,
Inverse Floater, 7.615%, 7/1/12(2) Aa3/A+ 1,900,000 2,101,875
- ----------------------------------------------------------------------------------------------
Stockton, CA CFD No. 90-2 SPTX RRB,
Brookside Estates, 6.20%, 8/1/15 NR/NR 1,750,000 1,780,870
- ----------------------------------------------------------------------------------------------
Temecula, CA CFD No. 88-12-A SPTX
Refunding Bonds, 5.625%, 9/1/17 NR/NR 2,175,000 2,125,454
- ----------------------------------------------------------------------------------------------
Tustin, CA USD CFD No. 88-1 SPTX RB,
Prerefunded, Series B, 6.375%, 9/1/21 NR/NR 3,500,000 3,978,520
- ----------------------------------------------------------------------------------------------
University of CA Regents RB, Multiple Purpose
Projects, Prerefunded, Series A, 6.875%, 9/1/16 NR/AAA 1,950,000 2,149,388
- ----------------------------------------------------------------------------------------------
West Sacramento, CA Improvement Bond Act of
1915 SPAST Refunding Bonds, 5.60%, 9/2/17 NR/NR 2,000,000 1,938,020
- ----------------------------------------------------------------------------------------------
Yuba City, CA USD Refunding COP,
Series A, 5%, 2/1/17 Aaa/AAA 3,010,000 2,909,496
------------
441,559,397
</TABLE>
20 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings:
Moody's/
S&P/Fitch Face Market Value
(Unaudited) Amount See Note 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
U.S. Possessions--4.8%
Guam PAU RB, Series A, 6.625%, 10/1/14 NR/BBB $2,000,000 $ 2,241,980
- ----------------------------------------------------------------------------------------------
PR CMWLTH GORB, MBIA Insured,
Inverse Floater, 7.794%, 7/1/08(2) Aaa/AAA 3,500,000 3,815,000
- ----------------------------------------------------------------------------------------------
PR CMWLTH HTAU RRB, Series A,
AMBAC Insured, 5.50%, 7/1/13 Aaa/AAA/AAA 3,000,000 3,144,390
- ----------------------------------------------------------------------------------------------
PR CMWLTH HTAU RRB, Series A,
AMBAC Insured, 5.50%, 7/1/14 Aaa/AAA/AAA 3,500,000 3,657,920
- ----------------------------------------------------------------------------------------------
PR EPAU RB, Prerefunded, Series P, 7%, 7/1/21 Baa1/BBB+ 4,000,000 4,305,560
- ----------------------------------------------------------------------------------------------
PR HFA SFM RB, Affordable Housing Mtg
Portfolio I, 6.25%, 4/1/29 Aaa/AAA 2,440,000 2,531,256
- ----------------------------------------------------------------------------------------------
PR Housing Finance Corp. SFM RB, Portfolio 1,
Series B, 7.65%, 10/15/22 Aaa/AAA 275,000 286,209
- ----------------------------------------------------------------------------------------------
PR Industrial, Medical & Environmental
PC Facilities Tourist RB, Mennonite General
Hospital Project, Series A, 6.50%, 7/1/12 NR/BBB-/BBB 2,350,000 2,468,157
------------
22,450,472
- ----------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $451,843,264) 99.6% 464,009,869
- ----------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.4 1,979,775
--------- ------------
Net Assets 100.0% $465,989,644
========= ============
</TABLE>
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C>
CAP -- Capital Appreciation PAU -- Power Authority
CDAU -- Communities Development Authority PC -- Pollution Control
CFD -- Community Facilities District PCFAU -- Pollution Control Finance Authority
CMWLTH -- Commonwealth PFAU -- Public Finance Authority
COP -- Certificates of Participation PPAU -- Public Power Authority
ED -- Economic Development 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 Authority
GORB -- General Obligation Refunding Bonds SDI -- School District
HF -- Health Facilities SFM -- Single Family Mortgage
HFA -- Housing Finance Agency SPAST -- Special Assessment
HFFAU -- Health Facilities Finance Authority SPTX -- Special Tax
HTAU -- Highway & Transportation Authority SWD -- Solid Waste Disposal
MTAU -- Metropolitan Transportation Authority TXAL -- Tax Allocation
MUD -- Municipal Utility District USD -- Unified School District
</TABLE>
21 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 floaters" 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 $46,972,545 or 10.08% of the
Fund's net assets as of July 31, 1999.
3. When-issued security to be delivered and settled after July 31, 1999.
4. Securities with an aggregate market value of $1,808,680 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
5. Represents the current interest rate for a variable rate security.
6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
As of July 31, 1999, securities subject to the alternative minimum tax amount to
$77,814,717 or 16.70% of the Fund's net assets.
Distribution of investments by industry of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
- -----------------------------------------------------------------------------
<S> <C> <C>
Special Assessment $121,100,182 26.2%*
- -----------------------------------------------------------------------------
Single-Family Housing 55,695,885 12.0
- -----------------------------------------------------------------------------
Municipal Leases 43,363,362 9.3
- -----------------------------------------------------------------------------
Highways 42,872,773 9.2
- -----------------------------------------------------------------------------
Hospital/Healthcare 36,689,836 7.9
- -----------------------------------------------------------------------------
Adult Living Facilities 35,803,683 7.7
- -----------------------------------------------------------------------------
Electric Utilities 35,145,857 7.6
- -----------------------------------------------------------------------------
General Obligation 22,923,910 4.9
- -----------------------------------------------------------------------------
Water Utilities 22,577,811 4.9
- -----------------------------------------------------------------------------
Marine/Aviation Facilities 20,637,629 4.4
- -----------------------------------------------------------------------------
Sales Tax 9,799,000 2.1
- -----------------------------------------------------------------------------
Corporate Backed 9,143,025 2.0
- -----------------------------------------------------------------------------
Higher Education 6,774,486 1.5
- -----------------------------------------------------------------------------
Education 938,090 0.2
- -----------------------------------------------------------------------------
Resource Recovery 544,340 0.1
------------ -----
Total $464,009,869 100.0%
============ =====
</TABLE>
*Securities with a market value of $22,353,273 or 18.46% of total investments at
value are represented by pre-refunded securities, collateralized by U.S.
government securities.
See accompanying Notes to Financial Statements.
22 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=======================================================================================
Assets
Investments, at value (cost $451,843,264)--see accompanying statement $464,009,869
- ---------------------------------------------------------------------------------------
Cash 187,500
- ---------------------------------------------------------------------------------------
Receivables and other assets:
Interest 6,445,459
Investments sold 1,881,411
Shares of beneficial interest sold 323,018
Daily variation on futures contracts--Note 5 70,469
Other 4,546
------------
Total assets 472,922,272
=======================================================================================
Liabilities
Payables and other liabilities:
Investments purchased (including $4,107,525 purchased on a
when-issued basis)--Note 1 4,107,525
Dividends 1,238,112
Shares of beneficial interest redeemed 1,191,917
Trustees' compensation--Note 1 162,339
Distribution and service plan fees 96,106
Shareholder reports 55,955
Transfer and shareholder servicing agent fees 26,547
Custodian fees 2,937
Other 51,190
------------
Total liabilities 6,932,628
=======================================================================================
Net Assets $465,989,644
============
=======================================================================================
Composition of Net Assets
Paid-in capital $455,561,717
- ---------------------------------------------------------------------------------------
Overdistributed net investment income (1,088,872)
- ---------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (648,400)
- ---------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 12,165,199
------------
Net assets $465,989,644
============
</TABLE>
23 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=======================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$316,362,542 and 29,941,203 shares of beneficial interest outstanding) $10.57
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.10
- ---------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $132,762,787
and 12,560,331 shares of beneficial interest outstanding) $10.57
- ---------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $16,864,315
and 1,598,190 shares of beneficial interest outstanding) $10.55
</TABLE>
See accompanying Notes to Financial Statements.
24 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
=======================================================================================
Investment Income
Interest $ 26,109,577
=======================================================================================
Expenses
Management fees--Note 4 2,540,982
- ---------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 757,647
Class B 1,294,892
Class C 146,564
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 259,539
- ---------------------------------------------------------------------------------------
Shareholder reports 98,260
- ---------------------------------------------------------------------------------------
Trustees' compensation--Note 1 47,096
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 45,007
- ---------------------------------------------------------------------------------------
Legal, auditing and other professional fees 42,049
- ---------------------------------------------------------------------------------------
Registration and filing fees 15,486
- ---------------------------------------------------------------------------------------
Insurance expenses 8,257
- ---------------------------------------------------------------------------------------
Other 10,495
------------
Total expenses 5,266,274
Less expenses paid indirectly--Note 1 (25,729)
------------
Net expenses 5,240,545
=======================================================================================
Net Investment Income 20,869,032
=======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments 199,201
Closing of futures contracts 167,513
------------
Net realized gain 366,714
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (16,235,114)
------------
Net realized and unrealized loss (15,868,400)
=======================================================================================
Net Increase in Net Assets Resulting from Operations $ 5,000,632
============
</TABLE>
See accompanying Notes to Financial Statements.
25 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended July 31,
1999 1998
<S> <C> <C>
=============================================================================================================
Operations
Net investment income $ 20,869,032 $ 19,136,459
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 366,714 (1,120,364)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (16,235,114) 3,444,127
------------ ------------
Net increase in net assets resulting from operations 5,000,632 21,460,222
=============================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (15,214,034) (14,732,831)
Class B (5,284,436) (4,147,106)
Class C (600,129) (359,910)
- -------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (2,092,323)
Class B -- (677,374)
Class C -- (51,258)
=============================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 26,403,170 3,072,554
Class B 22,044,556 33,042,362
Class C 6,138,090 5,382,827
=============================================================================================================
Net Assets
Total increase 38,487,849 40,897,163
- -------------------------------------------------------------------------------------------------------------
Beginning of period 427,501,795 386,604,632
------------ ------------
End of period (including overdistributed net investment
income of $1,088,872 and $859,305, respectively) $465,989,644 $427,501,795
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Year Ended Year Ended
July 31, December 31,
1999 1998 1997 1996(1) 1995 1994
<S> <C> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $10.92 $10.94 $10.39 $10.69 $ 9.45 $10.97
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 .54 .58 .33 .58 .60
Net realized and unrealized gain (loss) (.35) .06 .54 (.30) 1.25 (1.51)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .18 .60 1.12 .03 1.83 (.91)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.53) (.54) (.57) (.33) (.58) (.61)
Dividends in excess of net
investment income -- -- -- -- (.01) --
Distributions from net realized gain -- (.08) -- -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.53) (.62) (.57) (.33) (.59) (.61)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.57 $10.92 $10.94 $10.39 $10.69 $ 9.45
====== ====== ====== ====== ====== ======
==========================================================================================================================
Total Return, at Net Asset Value(2) 1.59% 5.66% 11.11% 0.34% 19.76% (8.49)%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $316,363 $300,717 $298,162 $286,033 $285,307 $219,682
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $314,094 $297,372 $289,439 $279,796 $250,188 $248,850
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.79% 4.91% 5.49% 5.53% 5.64% 5.99%
Expenses 0.91% 0.92%(4) 0.94%(4) 0.97%(4) 0.95%(4) 0.96%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 35% 31% 31% 14% 23% 22%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended July 31, 1999, were $206,390,312 and $160,398,205, respectively.
27 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------
Year Ended Year Ended
July 31, December 31,
1999 1998 1997 1996(1) 1995 1994
<S> <C> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data
Net asset value, beginning of period $10.92 $10.94 $10.39 $10.69 $ 9.44 $10.98
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .46 .49 .28 .51 .54
Net realized and unrealized gain (loss) (.35) .06 .55 (.30) 1.25 (1.55)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .10 .52 1.04 (.02) 1.76 (1.01)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.45) (.46) (.49) (.28) (.50) (.53)
Dividends in excess of net
investment income -- -- -- -- (.01) --
Distributions from net realized gain -- (.08) -- -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.45) (.54) (.49) (.28) (.51) (.53)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.57 $10.92 $10.94 $10.39 $10.69 $ 9.44
====== ====== ====== ====== ====== ======
==========================================================================================================================
Total Return, at Net Asset Value(2) 0.82% 4.86% 10.27% (0.12)% 18.97% (9.39)%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period
(in thousands) $132,763 $115,444 $82,474 $52,038 $41,224 $20,224
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $129,538 $ 99,266 $65,192 $46,422 $29,918 $16,552
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.03% 4.21% 4.70% 4.74% 4.82% 5.17%
Expenses 1.67% 1.67%(4) 1.70%(4) 1.74%(4) 1.72%(4) 1.73%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 35% 31% 31% 14% 23% 22%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended July 31, 1999, were $206,390,312 and $160,398,205, respectively.
28 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------------
Period
Ended
Year Ended July 31, Dec. 31,
1999 1998 1997 1996(1) 1995(6)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $10.91 $10.93 $10.38 $10.68 $10.46
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .46 .49 .27 .08
Net realized and unrealized gain (loss) (.36) .06 .55 (.30) .22
------ ------ ------ ------ ------
Total income (loss) from
investment operations .09 .52 1.04 (.03) .30
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.45) (.46) (.49) (.27) (.07)
Dividends in excess of net
investment income -- -- -- -- (.01)
Distributions from net realized gain -- (.08) -- -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.45) (.54) (.49) (.27) (.08)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.55 $10.91 $10.93 $10.38 $10.68
====== ====== ====== ====== ======
====================================================================================================================
Total Return, at Net Asset Value(2) 0.73% 4.87% 10.26% (0.19)% 2.90%
====================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $16,864 $11,340 $5,969 $2,171 $125
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $14,672 $ 8,614 $3,869 $1,156 $ 91
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 4.03% 4.24% 4.66% 4.54% 4.56%
Expenses 1.67% 1.66%(4) 1.70%(4) 1.80%(4) 1.68%(4)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 35% 31% 31% 14% 23%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended July 31, 1999, were $206,390,312 and $160,398,205, respectively.
6. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
See accompanying Notes to Financial Statements.
29 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
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 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, on investments up to $1 million. Class B and
Class C shares may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. Class
B shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. 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.
30 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond the
trade date. During this period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Fund maintains segregated assets with a market value equal
to or greater than the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of July 31, 1999, the
Fund had entered into outstanding when-issued or forward commitments of
$4,107,525.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of July 31, 1999, the
Fund had available for federal tax purposes an unused capital loss carryover of
approximately $650,000, which expires in 2006.
- -------------------------------------------------------------------------------
Trustees' Compensation. 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,
1999, a provision of $2,209 was made for the Fund's projected benefit
obligations and payments of $6,365 were made to retired trustees, resulting in
an accumulated liability of $159,162 as of July 31, 1999.
The Board of Trustees has adopted a deferred compensation plan
for independent Trustees that enables Trustees to elect to defer receipt of all
or a portion of annual compensation they are entitled to receive from the Fund.
Under the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Trustees in shares of one or more
Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under
the plan will be determined based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
income per share.
31 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date. Original
issue discount is accreted and premium is amortized in accordance with federal
income tax requirements. For municipal bonds acquired after April 30, 1993, on
disposition or maturity, taxable ordinary income is recognized to the extent of
the lesser of gain or market discount that would have accrued over the holding
period. Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes.
There are certain risks arising from geographic concentration in
any state. Certain revenue or tax related events in a state may impair the
ability of certain issuers of municipal securities to pay principal and interest
on their obligations.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and 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.
32 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 July 31, 1999 Year Ended July 31, 1998
----------------------------- ----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Class A:
Sold 6,301,987 $ 69,153,860 4,625,371 $ 50,462,764
Dividends and/or
distributions reinvested 818,090 8,975,978 921,790 10,031,986
Redeemed (4,716,845) (51,726,668) (5,266,312) (57,422,196)
---------- ------------ ---------- ------------
Net increase 2,403,232 $ 26,403,170 280,849 $ 3,072,554
========== ============ ========== ============
- --------------------------------------------------------------------------------------------
Class B:
Sold 3,406,294 $ 37,480,696 3,871,772 $ 42,232,554
Dividends and/or
distributions reinvested 301,331 3,307,444 279,759 3,046,210
Redeemed (1,715,264) (18,743,584) (1,120,147) (12,236,402)
---------- ------------ ---------- ------------
Net increase 1,992,361 $ 22,044,556 3,031,384 $ 33,042,362
========== ============ ========== ============
- --------------------------------------------------------------------------------------------
Class C:
Sold 856,519 $ 9,406,000 697,841 $ 7,611,935
Dividends and/or
distributions reinvested 37,673 412,830 29,500 320,853
Redeemed (335,760) (3,680,740) (233,849) (2,549,961)
---------- ------------ ---------- ------------
Net increase 558,432 $ 6,138,090 493,492 $ 5,382,827
========== ============ ========== ============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of July 31, 1999, net unrealized appreciation on securities of $12,166,605
was composed of gross appreciation of $18,048,861, and gross depreciation of
$5,882,256.
33 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.60% 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 in excess of $1
billion. The Fund's management fees for the year ended July 31, 1999, was 0.55%
of the average annual net assets for each class of shares.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and for other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End On Class A On Class B On Class C
Sales Charges Sales Charges Shares Shares Shares
On Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 31, 1999 $924,929 $154,753 $188,991 $1,254,294 $84,556
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
July 31, 1999 $-- $291,981 $8,385
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
34 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares of the Fund. For the fiscal year ended July 31, 1999, payments under the
Class A Plan totaled $757,647, all of which was paid by the Distributor to
recipients. That included $25,906 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate,whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B
shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding. The asset-based sales charges
on Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the plan was terminated. The
plans allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended July 31, 1999, were
as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses
Total Payments Amount Retained Expenses As % of Net
Class Under Plan By Distributor Under Plan Assets of Class
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $1,294,892 $1,062,283 $4,059,718 3.06%
- -------------------------------------------------------------------------------------------------------------------------
Class C Plan $ 146,564 $ 93,541 $ 207,394 1.23%
</TABLE>
35 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund may recognize a realized gain or loss when the
contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
As of July 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Contract Description Date Contracts July 31, 1999 Depreciation
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Sell
- -----------------
U.S. Long Bond 9/21/99 205 $23,568,594 $1,406
</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 year ended July
31, 1999.
36 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer California Municipal Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer California Municipal Fund as of
July 31, 1999, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in the
three-year period then ended, the seven-month period ended July 31, 1996, and
each of the years in the two-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, 1999, by correspondence with the custodian and brokers; and
where confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Oppenheimer California Municipal Fund as of July 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the three-year period then ended, the
seven-month period ended July 31, 1996, and each of the years in the two-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
KPMG LLP
Denver, Colorado
August 20, 1999
37 Oppenheimer California Municipal Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. 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, 1999, are eligible for the corporate dividend-received deduction.
The dividends were derived from interest on municipal bonds and are not subject
to federal income tax. To the extent a shareholder is subject to any state or
local tax laws, some or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
38 Oppenheimer California Municipal Fund
<PAGE>
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Oppenheimer California Municipal Fund
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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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
Phillip A. Griffiths, 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
Caryn Halbrecht, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
=========================================================================================
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 LLP
=========================================================================================
Legal Counsel Mayer, Brown & Platt
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, are not insured
by the FDIC or any other agency, and involve investment
risks, including the possible loss of the principal amount
invested.
</TABLE>
39 Oppenheimer California Municipal Fund
<PAGE>
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Information and Services
-------------------------------------------------
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
Internet
24-hr access to account information and transactions
------------------------------------------------------
www.oppenheimerfunds.com
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General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
------------------------------------------------------
1-800-525-7048
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Telephone Transactions
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
------------------------------------------------------
1-800-852-8457
------------------------------------------------------
PhoneLink
24-hr automated information
and automated transactions
------------------------------------------------------
1-800-533-3310
------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-6pm ET
------------------------------------------------------
1-800-843-4461
------------------------------------------------------
OppenheimerFunds Information Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
------------------------------------------------------
1-800-835-3104
------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services,
P.O. Box 5270, Denver, CO 80217-5270
[OppenheimerFunds Logo]
OppenheimerFunds(R)
Distributor, Inc.
RA0790.001.0799 September 29, 1999
