<PAGE> 1
1999 SEMIANNUAL REPORT
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
DECEMBER 31, 1999
<PAGE> 2
DEAR SHAREHOLDER:
We are pleased to report that the second half of calendar and fiscal 1999 was a
relatively calm period for both the bond market and Centennial California Tax
Exempt Trust. For the six months that ended December 31, 1999, the Trust
produced a compounded annual yield of 2.48%. Without compounding, the
corresponding yield was 2.45%. For investors in the 36% tax bracket, this is
equivalent to a taxable yield of 3.88% with compounding, and 3.83% without. As
of December 31, 1999, the seven-day annualized yields, with and without
compounding, were 3.42% and 3.36%, respectively.(1)
Like all California tax-exempt funds, the Trust was impacted by two major
factors during the period: interest rate hikes at the national level and a
dwindling supply of notes issued by state, county and municipal entities in
California.
The pivotal event for all fixed income securities during the six-month period
was a series of 0.25% interest-rate increases implemented by the Federal Reserve
Board, (the Fed) beginning on June 30th. By early summer, it was clear that the
U.S. economy was no longer suffering the effects of the worldwide economic
crisis that occurred in the fall of 1998. In fact, there were signs that rapid
economic growth might lead to higher rates of inflation. To preempt this
possibility and to curb borrowing by business and consumers, the Fed gradually
raised its key interest rates. These moves did not cause a great deal of turmoil
in the marketplace. Widely anticipated, they were viewed largely as "taking
back" the three rate declines the Fed had imposed during the fall-1998 crisis.
In California, a demand-supply imbalance continued to impact investors. After
nearly a decade of economic expansion, many municipalities were posting budget
surpluses and had less need to issue new notes. The result: Demand for
California issues has outstripped the supply, especially during the most recent
six months. Investors have bid up the prices for California notes and bonds and
thereby forced down yields.
To compensate for the lower yields on California securities, we purchased
long-term securities, which provide higher yields. To offset the greater
volatility associated with longer maturities, we focused on buying high-quality
issues.
Early in the period, we responded to the Fed's interest-rate hikes by reducing
the average maturity of the Trust slightly. When rates rise, bond prices fall,
and the effect is more pronounced for longer-term issues. Since the Trust seeks
to maintain a stable $1.00 share price, we wanted to minimize this effect and
invested a portion of the portfolio in shorter-term issues. There can be no
assurance that the Trust will maintain a stable share price, but we are ever
mindful of the need to balance yield against protecting your principal.
By November, interest rates had stabilized, and we gradually reinvested proceeds
from maturing seven-day securities into 35- to 45-day issues. This shift back to
longer
1. Compounded yields assume reinvestment of dividends. Past performance is not
indicative of future results.
<PAGE> 3
maturities boosted the Trust's yield, but we do not believe it will have a
significant impact on volatility, for two reasons. First, in our view, interest
rates will remain relatively stable while the Federal Reserve prepares for its
next interest rate move, widely expected in February or March. Second, the
portfolio is heavily skewed toward the highest quality issues.
For instance, almost all of the notes in the portfolio are insured or are backed
by a letter of credit or some other bank facility. Also, there is a high
concentration in notes issued by the State of California or Los Angeles County.
The former notes are backed by the full faith and credit of a rapidly growing
state with a vibrant business environment. The latter are guaranteed by an
economic region with an improving tax base and strong ties to the rapidly
recovering Asian economies. Please keep in mind that, while the individual
issues held in the portfolio may be insured or guaranteed, the Trust itself is
neither insured nor guaranteed by the U.S. government or any other entity.
At this juncture, we do not believe that Y2K presents many challenges, but it is
difficult to predict whether the rate hikes of the last six months will slow the
California and/or national economy materially. While the Fed assumes a low-key
month-to-month approach, taking its time to see whether its 1999 efforts will
have the desired effect-- or whether additional rate changes are needed--we are
doing the same. By investing primarily in securities that mature monthly or
thereabouts, we have positioned the Trust to respond quickly once the Fed gives
some indication of its next move. This conservative approach will help us to
maintain a competitive yield while pursuing the Trust's objectives of safety and
liquidity.
Sincerely,
/s/ JAMES C. SWAIN
James C. Swain
Chairman
Centennial California Tax Exempt Trust
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
Centennial California Tax Exempt Trust
January 24, 2000
2
<PAGE> 4
STATEMENT OF INVESTMENTS December 31, 1999 (Unaudited)
Centennial California Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--99.7%
CALIFORNIA--99.7%
CA EDFAU RB, Independent System, Series D, 5.10%(1) .......................... $ 1,000,000 $ 1,000,000
CA GOB, Tendered Option Certificates, Series 1998A, MBIA Insured, 5%(1)(2) 6,803,000 6,802,949
CA HFA RB, Series PT 220, 3.10%, 3/9/00(3) ................................... 6,580,000 6,580,000
CA PCFAU SWD RB, Santa Clara Valley Disposal Co., Series A, 4.50%(1) ......... 2,900,000 2,900,000
CA PCFAU RB, Chevron USA, Inc. Project, 3.10%, 5/15/00(3) .................... 2,500,000 2,500,000
CA RAN, Series A, 4%, 6/30/00 ................................................ 7,500,000 7,524,200
CA SCDAU COP, Series 24, FSA Insured, 5.26%(1)(2) ............................ 7,000,000 7,000,000
CA School Cash Reserve Program Authority RB, Series A, 4%, 7/3/00 ............ 16,000,000 16,042,460
CA Statewide CDC IDV RB, Propak California Corp., Series B, 5.50%(1) ......... 635,000 635,000
CA University Board of Regents RB:
3.40%(3) ................................................................. 4,945,000 4,945,000
3.55%, 1/3/00(3) ......................................................... 2,500,000 2,500,000
Freemont, CA MH RB, Treetops Apts., Series A, 5%(1) .......................... 4,000,000 4,000,000
Los Angeles Cnty., CA MTAU Sales Tax RB, AMBAC Insured, Series SG54, 5.15%(1) 1,000,000 1,000,000
Los Angeles Cnty., CA Pension Obligation RB, Series B, AMBAC Insured, 4.85%(1) 600,000 600,000
Los Angeles Water Department RB:
3.25%, 1/21/00(3) ........................................................ 1,100,000 1,100,000
3.25%, 1/21/00(3) ........................................................ 1,700,000 1,700,000
Los Angeles, CA Airport RB, Series SG61, 5.20%(1) ............................ 6,000,000 6,000,000
Los Angeles, CA TAN & RAN, 4%, 6/30/00 ....................................... 7,000,000 7,022,590
Los Angeles, CA USD RB, 5.44%(1)(2) .......................................... 7,000,000 7,000,000
Los Angeles, CA Wastewater System ABN AMRO Munitops Certificates,
Series 1998-25, 3.20%, 3/1/00(3) ......................................... 7,750,000 7,750,000
Modesto, CA Irrigation District FAU RB, Series SG66, 5.15%(1) ................ 5,500,000 5,500,000
Oceanside, CA MH RRB, Lakeridge Apts. Project, 5.55%(1) ...................... 7,000,000 7,000,147
Orange Cnty., CA Special FAU Teeter Plan RB, Series B, AMBAC Insured, 5%(1) .. 2,000,000 2,000,000
Paramount City, CA HAU MH RRB, Century Place Apts. Project, Series A, 5.15%(1) 7,000,000 7,000,000
Pittsburg, CA Mtg. Obligation RRB, Series A, 5.35%(1) ........................ 7,000,000 7,000,029
Sacramento, CA MUD RB, MBIA Insured, 7%, 7/1/00(3) ........................... 4,000,000 4,149,726
San Bernardino Cnty., CA MH RB, Somerset Apts., Series A, 4.90%(1) ........... 2,495,000 2,495,000
San Diego Cnty., CA Airport RB, 3.50%, 1/26/00(3) ............................ 2,500,000 2,500,000
San Diego Cnty., CA GOB, 3.60%, 1/20/00(3) ................................... 2,500,000 2,500,000
San Diego, CA ABN AMRO Munitops Certificates, Series 1998-10, 5.39%(1)(2) .... 7,000,000 7,000,000
San Francisco, CA City & Cnty. International Airport RB, Series 88, 5.15%(1) . 1,700,000 1,700,000
San Fransico Bay Area Transit RB, 3.40%, 1/19/00(3) .......................... 6,500,000 6,500,000
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS December 31, 1999 (Unaudited) (Continued)
Centennial California Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
CALIFORNIA (CONTINUED)
San Mateo Cnty., CA Transit District RB, Series A, MBIA Insured, 4%, 6/1/00 $ 5,085,000 $ 5,103,968
Southern CA PAU RRB, Palo Verde Project, Series B, AMBAC Insured, 4.85%(1) 1,100,000 1,100,000
------------
Total Investments, at Value ............................................... 99.7% 156,151,069
Other Assets Net of Liabilities ........................................... 0.3 419,265
------------ ------------
Net Assets ................................................................ 100.0% $156,570,334
============ ============
</TABLE>
To simplify the listings of securities, abbreviations are used per the table
below:
CDC--Community Development Corporation MUD--Municipal Utility District
COP--Certificates of Participation PAU--Power Authority
EDFAU--Economic Development Finance PCFAU--Pollution Control Finance
Authority Authority
FAU--Finance Authority RAN--Revenue Anticipation Nts.
GOB--General Obligation Bonds RB--Revenue Bonds
HAU--Housing Authority RRB--Revenue Refunding Bonds
HFA--Housing Finance Agency SCDAU--Statewide Communities
Development Authority
IDV--Industrial Development SWD--Solid Waste Disposal
MH--Multifamily Housing TAN--Tax Anticipation Nts.
MTAU--Metropolitan Transportation USD--Unified School District
Authority
1. Represents the current interest rate for a variable rate security, maturing
in more than one year. 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. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $27,802,949 or 17.76% of the Trust's net
assets as of December 31, 1999.
3. Put obligation redeemable at full face value on the date reported.
See accompanying Notes to Financial Statements.
4
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES December 31, 1999 (Unaudited)
Centennial California Tax Exempt Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement ............................. $ 156,151,069
Cash .......................................................................... 524,909
Receivables and other assets:
Interest ................................................................... 1,342,876
Shares of beneficial interest sold ......................................... 1,229,163
Other ...................................................................... 6,866
-------------
Total assets ............................................................. 159,254,883
-------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed ..................................... 2,525,134
Service plan fees .......................................................... 86,947
Dividends .................................................................. 14,854
Transfer and shareholder servicing agent fees .............................. 4,555
Trustees' compensation ..................................................... 981
Other ...................................................................... 52,078
-------------
Total liabilities ........................................................ 2,684,549
-------------
NET ASSETS .................................................................... $ 156,570,334
=============
COMPOSITION OF NET ASSETS
Paid-in capital ............................................................... $ 156,604,327
Accumulated net realized loss on investment transactions ...................... (33,993)
-------------
NET ASSETS--applicable to 156,604,327 shares of beneficial interest outstanding $ 156,570,334
=============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ................ $1.00
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE> 7
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1999 (Unaudited)
Centennial California Tax Exempt Trust
<TABLE>
<S> <C>
INVESTMENT INCOME--Interest ........................ $ 2,661,867
-----------
EXPENSES
Management fees .................................... 409,933
Service plan fees .................................. 163,975
Transfer and shareholder servicing agent fees ...... 35,202
Custodian fees and expenses ........................ 25,486
Trustees' compensation ............................. 1,522
Other .............................................. 24,699
-----------
Total expenses ................................... 660,817
Less expenses paid indirectly .................. (9,025)
-----------
Net expenses ..................................... 651,792
-----------
NET INVESTMENT INCOME .............................. 2,010,075
-----------
NET REALIZED LOSS ON INVESTMENTS ................... (1,481)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,008,594
===========
</TABLE>
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
----------- -------------
<S> <C> <C>
OPERATIONS
Net investment income .............................. $ 2,010,075 $ 4,010,707
Net realized loss .................................. (1,481) (9,637)
------------- -------------
Net increase in net assets resulting from operations 2,008,594 4,001,070
------------- -------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS ..... (2,010,075) (4,010,707)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions ................. 732,338 17,181
------------- -------------
NET ASSETS
Total increase ..................................... 730,857 7,544
Beginning of period ................................ 155,839,477 155,831,933
------------- -------------
End of period ...................................... $ 156,570,334 $ 155,839,477
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 8
FINANCIAL HIGHLIGHTS
Centennial California Tax Exempt Trust
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
(Unaudited) Year Ended June 30,
---------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
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............................ .01 .02 .03 .03 .03 .03
Dividends and/or distributions
to shareholders.............................. (.01) (.02) (.03) (.03) (.03) (.03)
-------- -------- -------- -------- -------- -------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =======
TOTAL RETURN(1).................................. 1.26% 2.41% 2.86% 2.81% 2.97% 3.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)......... $156,570 $155,839 $155,832 $131,939 $118,838 $92,318
Average net assets (in thousands)................ $162,671 $168,272 $160,317 $129,087 $112,911 $71,278
Ratios to average net assets:(2)
Net investment income ........................... 2.45% 2.38% 2.81% 2.78% 2.94% 2.99%
Expenses......................................... 0.81% 0.80% 0.80%(3) 0.82%(3) 0.80%(3) 0.83%(3)
Expenses, net of indirect expenses and/or
voluntary assumption of expenses ............ 0.79% 0.78% 0.79% 0.80% 0.79% 0.80%
</TABLE>
1. Assumes a $1,000 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 reflect
changes in net investment income only. Total returns are not annualized for
periods of less than one full year.
2. Annualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
7
<PAGE> 9
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.
Securities 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. As of June 30, 1999, the Trust had
available for federal income tax purposes, an unused capital loss carryover of
approximately $24,000, which expires between 2006 and 2007.
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.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of 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.
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.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
Centennial California Tax Exempt Trust
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, 1999 Year Ended June 30, 1999
------------------------------------ -----------------------------------
Shares Amount Shares Amount
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold ......................... 253,391,933 $ 253,391,933 545,122,539 $ 545,122,539
Dividends and/or distributions
reinvested .................. 2,075,501 2,075,501 3,938,512 3,938,512
Redeemed ..................... (254,735,096) (254,735,096) (549,043,870) (549,043,870)
------------- ------------- ------------- -------------
Net increase ................. 732,338 $ 732,338 17,181 $ 17,181
============= ============= ============= =============
</TABLE>
3. 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 Trust which provides for a fee of 0.50%
of the first $250 million of the Trust's net assets; 0.475% of the next $250
million; 0.45% of the next $250 million; 0.425% of the next $250 million 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. The Trust's management fee for the six months ended December 31, 1999,
was 0.50% of average annual net assets, annualized for periods of less than one
full year.
Transfer Agent Fees. Shareholder Services, Inc. (SSI), a subsidiary of the
Manager, 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.
Service Plan Fees. 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.
9
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<PAGE> 12
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<PAGE> 13
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
Officers and Trustees
James C. Swain, Trustee and
Chairman of the Board
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Michael J. Carbuto, Vice President
Andrew J. Donohue, Vice President and
Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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 of 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
RS0180.001.1299 [ICON] Printed on recycled paper
