[COVER PAGE]
1997 SEMIANNUAL REPORT
CENTENNIAL
CALIFORNIA TAX EXEMPT TRUST
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December 31, 1997
RS0180.001.1297
<PAGE>
[BLANK PAGE]
<PAGE>
JAMES C. SWAIN
Chairman
Centennial California
Tax Exempt Trust
BRIDGET A. MACASKILL
President
Centennial California
Tax Exempt Trust
DEAR SHAREHOLDER,
A year after Federal Reserve Chairman Alan Greenspan voiced concerns about
"irrational exuberance" in the U.S. stock market, the country's financial
picture remains bright. The economy is still generating good news, and economic
growth is still strong. Moreover, higher inflation has not yet materialized,
despite healthy economic growth.
U.S. financial markets were robust during 1997, as demonstrated by the Dow Jones
Industrial Average, which rebounded from occasional setbacks last year to post
20%-plus gains. U.S. corporate and Treasury bonds benefited from low inflation
and the "flight to quality" sparked by turmoil in world stock markets at the end
of October. The flight, a switch out of stocks into long-term bonds, took place
when investors, fearing that the bottom would fall out of the U.S. stock market,
began to favor bonds as a "safe haven."
In the municipal market, short-term interest rates tended to vary over the
course of the year. Interest rates on municipals declined when they generally
tend to do so--for example, when capital flowed into the municipal market at
the beginning of each month, and at times when low supply/high demand conditions
prevailed. But rates began rising in September due to factors such as account
liquidations, high dealer inventory, and a lull in demand. The interest rate
uptrend continued into October, after the U.S. stock market experienced a steep
decline. At that time, investors sold municipals and used the proceeds to buy
stocks at "bargain basement" prices.
One benefit of investors' pullout from municipal securities in October 1997 was
that it created a boost in supply following the scarcity of municipals in 1996.
Yet another benefit for short-term municipal bonds last year was that the
proposed legislation to eliminate the 2% corporate tax exemption did not pass
Congress. This legislation would have resulted in much higher short-term
municipal rates and sharply lower municipal prices. That's because corporations
that invest primarily in municipals would not have received tax credits, and
thus would have curtailed further investments in these securities.
For the period ended December 31, 1997, Centennial California Tax Exempt Trust
had a compounded annualized yield of 2.91%. Without compounding, the
corresponding yield was 2.87%. For investors in the 36% federal tax bracket,
this is equivalent to a taxable yield for six months of 4.55% with compounding,
and 4.48% without. The seven-day annualized yields, with and without
compounding, as of December 31, 1997 were 3.14% and 3.09%, respectively. (1)
Looking ahead to 1998, the main factor likely to influence U.S. markets will
likely be global--the financial and economic crisis in Asia--rather than
domestic. Our view is that Asia's problems may have a negative impact on
economic growth and corporate earnings--not just in the United States, but
abroad as well. The Asian situation could also lead to lower U.S. inflation, as
imports increase and exports face more resistance overseas. Due to Asia's
problems and their potential effects on the U.S. economy, we expect the Federal
Reserve Board to refrain from raising interest rates. In fact, if prices remain
low or begin to decline, we may even see an interest rate cut. Therefore,
against a backdrop of steady-to-declining long-term interest rates and low
inflation, we believe investors will continue viewing U.S. fixed income markets
as a secure place to invest.
3 Centennial California Tax Exempt Trust
<PAGE>
The Trust's focus will remain on high quality investments. California's economy
continues to experience solid growth: A rebound in consumer spending, robust
manufacturing activity (with high-tech equipment makers operating at or near
capacity), and an acceleration in service industries have all bolstered the
state's tax revenues.
Approximately two-thirds of the Trust's securities are enhanced by municipal
bond insurance or bank letters of credit. This high quality is important so that
Centennial California Tax Exempt Trust can continue to provide liquidity, as
well as safety of principal. However, it is important to remember that an
investment in the Trust is neither insured nor guaranteed by the U.S.
government, and there is no assurance that the Trust will maintain a stable
$1.00 share price in the future.
Thank you for your continued confidence in Centennial California Tax Exempt
Trust. We look forward to helping you meet your financial goals in
the future.
Sincerely,
/s/James C. Swain /s/Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
January 23, 1998
1. Compounded yields assume reinvestment of dividends. Past performance is not
indicative of future results.
4 Centennial California Tax Exempt Trust
<PAGE>
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STATEMENT OF INVESTMENTS December 31, 1997 (Unaudited)
Centennial California Tax Exempt Trust
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM TAX-EXEMPT OBLIGATIONS - 99.4%
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CALIFORNIA - 99.4%
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<S> <C> <C> <C>
Agoura Hills, CA MH RRB, Oakridge Apts. Project, 3.75% 1 $ 2,800,000 $ 2,800,000
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Alhambra, CA RA MH RB, Main Street Plaza Apts. Project, 4.30% 1 6,400,000 6,400,000
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CA EDFAU IDV RB, Inland Empire Venture, LLC Project, 4.10% 1 1,875,000 1,875,000
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CA GOB, Series A-3, MBIA Insured, 3.80% 1 3,500,000 3,500,000
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CA HFFAU RRB, Catholic West Project, Series C, MBIA Insured, 3.90% 1 1,000,000 999,999
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CA PCFAU RB:
Chevron USA, Inc. Project, 4%, 5/15/98 2 2,500,000 2,500,000
Southern California Edison Co. Project, Series C, 3.60%, 1/9/98 1,050,000 1,050,000
Southern California Edison Co., Series D, 3.60%, 1/9/98 4,100,000 4,100,000
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CA PCFAU SWD RB, Western Waste Industries, Series A, 4.30% 1 1,500,000 1,500,000
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CA RAN, 4.50%, 6/30/98 12,500,000 12,541,418
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CA SCDAU MH RB, 3.90% 1 6,300,000 6,300,000
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CA School Cash Reserve Program Authority Nts., Series A, AMBAC Insured,
4.75%, 7/2/98 9,815,000 9,857,068
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CA Statewide CDC IDV RB, Propak California Corp., Series B, 3.85% 1 700,000 700,000
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CA University Board of Regents RB, 3.70%, 5/4/98 6,000,000 6,000,000
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Covina City, CA RA MH RRB, Shadowhills Apts., Inc., Series A, 4% 1 3,000,000 3,000,000
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Irvine, CA Public Facilities & Infrastructure Authority Lease RB, Capital
Improvement Projects:
3.65% 1 2,030,000 2,029,960
3.65% 1 1,725,000 1,725,000
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Los Angeles Cnty., CA MTAU Sales Tax RB, AMBAC Insured, Series SG54, 4% 1 1,000,000 1,000,000
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Los Angeles Cnty., CA Tax & RAN, Series A, 4.50%, 6/30/98 7,600,000 7,625,716
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Los Angeles, CA Airport RB, Series SG61, 4% 1 6,000,000 6,000,000
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Los Angeles, CA Department of Water & Power RB, 3.70%, 2/27/98 3,000,000 3,000,000
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Los Angeles, CA Tax & RAN, 4.50%, 6/30/98 6,500,000 6,519,174
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Los Angeles, CA Wastewater System RB:
3.60%, 3/2/98 2,000,000 2,000,000
3.75%, 2/10/98 4,000,000 4,000,000
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Modesto, CA Irrigation District FAU RB, Series SG66, 4% 1 5,500,000 5,500,000
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Oakland, CA Tax & RAN, 4.50%, 6/30/98 10,000,000 10,032,511
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Oceanside, CA MH RRB, Lakeridge Apts. Project, 4.40% 1 5,900,000 5,900,000
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Pittsburg, CA Mortgage Obligation Guaranteed RB, Series A, 3.95% 1 7,500,000 7,500,000
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Riverside Cnty., CA HAU MH RB, McKinley Project, 3.75% 1 1,500,000 1,500,000
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Sacramento, CA MUD RB, 3.55%, 1/9/98 5,500,000 5,500,000
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San Bernardino Cnty., CA Tax & RAN, Series A, 4.50%, 6/30/98 5,500,000 5,516,500
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San Diego, CA MH RRB, Coral Point Apts. Project, Series A, 4.10% 1 2,500,000 2,500,000
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San Francisco, CA City & Cnty. International Airport RB, Series 88, 4% 1 1,700,000 1,700,000
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San Francisco, CA City & Cnty. Redevelopment FAU RRB, Yerba Buena Garden, 3.90% 1 3,235,000 3,235,064
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San Jose, CA MH RB, Siena at Renaissance, Series A, 3.60% 1 2,000,000 2,000,000
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San Marcos, CA RA MH Bonds, San Marcos Retirement Village Project, 4.415% 1 2,500,000 2,500,000
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
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STATEMENT OF INVESTMENTS December 31, 1997 (Unaudited)
Centennial California Tax Exempt Trust
FACE VALUE
AMOUNT SEE NOTE 1
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CALIFORNIA (continued)
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<S> <C> <C> <C>
Southern CA Metropolitan Water District Waterworks RRB, Series A,
AMBAC Insured, 3.70 1 $ 1,600,000 $ 1,599,994
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Visalia, CA IDV RB, Akers West Assn., 3.60% 1 2,350,000 2,350,000
--------------
154,357,404
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TOTAL INVESTMENTS, AT VALUE 99.4% 154,357,404
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OTHER ASSETS NET OF LIABILITIES 0.6 939,522
-------------- ----------------
NET ASSETS 100.0% $ 155,296,926
============== ================
</TABLE>
To simplify the listing of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C>
CDC - Community Development Corp. MUD - Municipal Utility District
EDFAU - Economic Development Finance PCFAU - Pollution Control Finance Authority
Authority RA - Redevelopment Agency
FAU - Finance Authority RAN - Revenue Anticipation Nts.
GOB - General Obligation Bonds RB - Revenue Bonds
HAU - Housing Authority RRB - Revenue Refunding Bonds
HFFAU - Health Facilities Finance Authority SCDAU - Statewide Communities Development
IDV - Industrial Development Authority
MH - Multifamily Housing SWD - Solid Waste Disposal
MTAU - Metropolitan Transportation Authority
</TABLE>
1. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on December
31, 1997. This instrument may also have a demand feature which allows, on up to
30 days' notice, the recovery of principal at any time, or at specified
intervals not exceeding one year.
2. Put obligation redeemable at full face value on the date reported.
See accompanying Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
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STATEMENT OF ASSETS AND LIABILITIES December 31, 1997 (Unaudited)
Centennial California Tax Exempt Trust
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- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments, at value $154,357,404
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Cash 122,168
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Receivables:
Interest 1,465,987
Shares of beneficial interest sold 1,336,648
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Other 7,634
---------------------
Total assets 157,289,841
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LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed 1,858,569
Service plan fees 77,690
Shareholder reports 22,823
Transfer and shareholder servicing agent fees 17,001
Dividends 530
Other 16,302
---------------------
Total liabilities 1,992,915
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NET ASSETS $155,296,926
=====================
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COMPOSITION OF NET ASSETS
Paid-in capital $155,299,953
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Accumulated net realized loss on investment transactions (3,027)
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Net assets - applicable to 155,299,953 shares of beneficial interest outstanding $155,296,926
=====================
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NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $1.00
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1997 (Unaudited)
Centennial California Tax Exempt Trust
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- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME - Interest $2,789,433
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EXPENSES
Management fees - Note 3 377,217
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Service plan fees - Note 3 151,041
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Transfer and shareholder servicing agent fees - Note 3 43,379
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Registration and filing fees 12,802
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Shareholder reports 9,251
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Legal and auditing fees 4,857
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Custodian fees and expenses 4,614
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Trustees' fees and expenses 959
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Other 1,242
---------------------
Total expenses 605,362
---------------------
Less assumption of expenses by Centennial Asset Management
Corporation - Note 3 (2,612)
---------------------
Net expenses 602,750
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NET INVESTMENT INCOME 2,186,683
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NET REALIZED GAIN ON INVESTMENTS 541
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- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,187,224
======================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
DECEMBER 31, 1997 YEAR ENDED
(UNAUDITED) JUNE 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OPERATIONS
<S> <C> <C>
Net investment income $2,186,683 $3,586,720
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 541 (3,568)
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Net increase in net assets resulting from operations 2,187,224 3,583,152
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (2,186,683) (3,588,347)
- -----------------------------------------------------------------------------------------------------------------------------
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BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions - Note 2 23,357,244 13,106,174
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NET ASSETS
Total increase 23,357,784 13,100,979
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Beginning of period 131,939,141 118,838,162
------------------------------------------
End of period $155,296,926 $131,939,141
==========================================
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Centennial California Tax Exempt Trust
Six Months
Ended
December 31, Year Ended June 30,
1997 ---------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
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PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations - net
investment income and net realized gain .02 .03 .03 .03 .02 .02
Dividends and distributions to shareholders (.02) (.03) (.03) (.03) (.02) (.02)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================================
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TOTAL RETURN, AT NET ASSET VALUE(1) 1.48% 2.81% 2.97% 3.00% 1.82% 2.00%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $155,297 $131,939 $118,838 $92,318 $60,376 $58,079
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Average net assets (in thousands) $149,798 $129,087 $112,911 $71,278 $65,520 $56,082
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Ratios to average net assets:
Net investment income 2.89%(2) 2.78% 2.94% 2.99% 1.79% 1.90%
Expenses, before voluntary assumption
by the Manager(3) 0.80%(2) 0.82% 0.80% 0.83% 0.87% 0.86%
Expenses, net of voluntary assumption
by the Manager 0.80%(2) 0.80% 0.79% 0.80% 0.80% 0.80%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends 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. Total returns are not
annualized for periods of less than one full year. Total returns reflect changes
in net investment income only.
2. Annualized.
3. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Trust. Prior year expense ratios have not been
adjusted.
See accompanying Notes to Financial Statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Centennial California Tax Exempt Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial California Tax Exempt Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust's investment objective is to seek the
maximum current interest income exempt from Federal and California personal
income taxes for individual investors as is consistent with preservation of
capital. The Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI). The
following is a summary of significant accounting policies consistently followed
by the Trust.
INVESTMENT VALUATION. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
FEDERAL TAXES. The Trust 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 to shareholders. Therefore, no federal
income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. The Trust intends to declare dividends from net
investment income each day the New York Stock Exchange is open for business and
pay such dividends monthly. To effect its policy of maintaining a net asset
value of $1.00 per share, the Trust may withhold dividends or make distributions
of net realized gains.
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Realized gains and losses on investments are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes. The Trust concentrates its investments in California and,
therefore, may have more credit risks related to the economic conditions of
California than a portfolio with a broader geographical diversification.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1997 YEAR ENDED JUNE 30, 1997
----------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Sold 232,979,239 $ 232,979,239 400,712,797 $ 400,712,797
Dividends and distributions reinvested 2,269,660 2,269,660 3,470,265 3,470,265
Redeemed (211,891,655) (211,891,655) (391,076,888) (391,076,888)
------------ ------------- ------------ -------------
Net increase 23,357,244 $ 23,357,244 13,106,174 $ 13,106,174
============ ============= ============ =============
</TABLE>
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
Centennial California Tax Exempt Trust
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of 0.50% of the first
$250 million of net assets; 0.475% of the next $250 million of net assets; 0.45%
of the next $250 million of net assets; 0.425% of the next $250 million of net
assets and 0.40% of net assets in excess of $1 billion. The Manager has
voluntarily undertaken to assume Trust expenses in excess of 0.80% of average
annual net assets.
Shareholder Services, Inc. (SSI), a subsidiary of OFI, is the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Expenses paid indirectly represent a reduction of custodian fees for earnings on
cash balances maintained by the Trust.
Under an approved plan of distribution, the Trust may expend up to 0.20% of its
net assets annually to reimburse the Manager, as distributor, for costs incurred
in connection with the personal service and maintenance of accounts that hold
shares of the Trust, including amounts paid to brokers, dealers, banks and other
institutions.
11
<PAGE>
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
OFFICERS AND TRUSTEES
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Trustee, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Michael A. Carbuto, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR AND DISTRIBUTOR
Centennial Asset Management Corporation
TRANSFER AND SHAREHOLDER SERVICING AGENT
Shareholder Services, Inc.
CUSTODIAN OF PORTFOLIO SECURITIES
Citibank, N.A.
INDEPENDENT AUDITORS
Deloitte & Touche LLP
LEGAL COUNSEL
Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records of the
Trust without examination by the independent auditors.
This is a copy of a report to shareholders of Centennial California Tax Exempt
Trust. This report must be preceded or accompanied by a Prospectus of Centennial
California Tax Exempt Trust. For material information concerning the Trust, see
the Prospectus.
For shareholder servicing, call:
1-800-525-9310 (in U.S.)
303-768-3200 (outside U.S.)
Or write:
Shareholder Services, Inc.
P.O. Box 5143
Denver, CO 80217-5143
