UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21474
OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
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(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: JULY 31
Date of reporting period: FEBRUARY 25, 2004 - JULY 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMER FUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL PERIOD ENDED JULY 31, 2004.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Limited Term California Municipal
Fund was created to provide a specific balance between risk and return for
California investors. Since volatility is significantly related to maturity, the
Fund seeks to maintain lower volatility than the average long-term municipal
fund by managing to an average effective maturity of five years or less.
Furthermore, by investing in a broad spectrum of issues, callable bonds, premium
coupon bonds, and select unrated bonds (to a prospectus limit not to exceed 5%),
we seek to provide investors with a yield that is competitive with longer-term
California municipal bond funds.
Since the Fund's inception on February 25, 2004, we have focused on
creating a portfolio that emphasizes the pursuit of current income. With this
goal of high current yields in mind, we rarely invest in general obligation
bonds and, instead, use our extensive credit research capabilities to select
undervalued, lesser-known, overlooked and/or misunderstood tax-exempt bonds. Our
5% allotment to below investment grade issues has typically garnered us more
yield than comparable issues without an appreciable increase to portfolio risk.
We relied heavily on our many years of experience in the California market
to purchase more than 170 different securities. We invested in such varied
sectors as master settlement agreement (MSA) bonds, hospitals and healthcare
issues, and special assessment/special tax issues. Of these, the Fund's largest
allocation at July 31 was MSA bonds (21.6% of total investments).
MSA bonds are BBB-rated bonds backed by a state's (or territory's) share
of the national settlement agreement with major tobacco manufacturers. Referred
to as tobacco bonds, MSA bonds provided greater yields than other BBB bonds and
so play an important role in generating strong current income. Their prices in
the past year have been volatile as investors repeatedly responded to news of
ongoing litigation in the tobacco industry, and this volatility detracted
slightly from the Fund's total return. That volatility notwithstanding, we
intend to maintain approximately one-quarter of the Fund's assets in this
high-yielding sector. We believe the price volatility of MSA securities will
abate as investors come to understand them better and the supply dissipates
(there has been no new issuance in California since mid-2003).
In many cases, we moved to acquire premium-coupon callable issues. These
bonds, which can be found in many sectors across the entire credit spectrum,
help to maximize yield, limit risk and maintain our average effective maturity
of less than five years (4.3
9 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
FUND PERFORMANCE DISCUSSION
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years as of July 31, 2004). Premium callable bonds are issues that have passed
their call dates but have not yet been retired. Because they could be retired at
any time, the market treats these bonds like very short-term investments, and
their prices fluctuate less than longer-term bonds when interest rates move.
This effect, in essence, a reduced sensitivity to interest rates, was a definite
advantage between March and June. During that span, in anticipation of
interest-rate increases by the Federal Reserve, municipal yields increased and
prices declined, particularly at the longer-maturity end of the spectrum.
The Fund attempts to pay dividends on Class A shares at a constant level.
However there is no assurance it will be able to do so, and the dividend may be
changed at any time without prior notice to shareholders. This practice did not
affect the Fund's investment strategies or per share net asset values, or cause
it to pay any distributions of capital.
10 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
NOTES
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TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS DISTRIBUTIONS IN A HYPOTHETICAL INVESTMENT FOR THE PERIODS SHOWN.
THE FUND'S TOTAL RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF INCOME TAXES ON
AN INDIVIDUAL'S INVESTMENT. TAXES MAY REDUCE YOUR ACTUAL INVESTMENT RETURNS ON
ANY GAINS YOU MAY REALIZE IF YOU SELL YOUR SHARES.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
THE FUND'S INVESTMENT STRATEGY AND FOCUS CAN CHANGE OVER TIME. THE MENTION OF
SPECIFIC FUND HOLDINGS DOES NOT CONSTITUTE A RECOMMENDATION BY OPPENHEIMERFUNDS,
INC.
CLASS A shares of the Fund were first publicly offered on 2/25/04. The average
annual total returns are shown net of the applicable 3.50% maximum initial sales
charge.
CLASS B shares of the Fund were first publicly offered on 2/25/04. The average
annual total returns are shown net of the applicable contingent deferred sales
charge of 4% (1-year) and 1% (5-year). Class B shares are subject to an annual
0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 2/25/04. The average
annual total returns are shown net of the applicable 1% contingent deferred
sales charge for the one-year period. Class C shares are subject to an annual
0.75% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
11 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and service
fees; and other Fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The examples for Actual Expenses are based on an investment of $1,000.00
invested at the beginning of the period, February 25, 2004 (commencement of
operations) and held for the period ended July 31, 2004.
The Hypothetical Examples for Comparison Purposes are based on an investment of
$1,000.00 invested on February 1, 2004 and held for the six months ended July
31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
12 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT ACCOUNT EXPENSES PAID
VALUE VALUE DURING THE PERIOD
(2/25/04) (7/31/04) ENDED 7/31/04 1,2
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,002.10 $3.28
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Class A Hypothetical 1,000.00 1,021.08 3.82
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Class B Actual 1,000.00 1,016.00 6.74
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Class B Hypothetical 1,000.00 1,017.16 7.77
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Class C Actual 1,000.00 998.40 6.69
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,017.16 7.77
Hypothetical assumes 5% annual return before expenses.
1. Actual expenses paid are equal to the Fund's annualized expense ratio for
that class, multiplied by the average account value over the period, multiplied
by 158/366 [to reflect the period from February 25, 2004 (commencement of
operations) to July 31, 2004].
2. Hypothetical expenses paid are equal to the Fund's annualized expense ratio
for that class, multiplied by the average account value over the period,
multiplied by 182/366 [to reflect the one-half year period). Those expense
ratios for the period from February 25, 2004 (commencement of operations) to
July 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- -----------------------
Class A 0.76%
- -----------------------
Class B 1.55
- -----------------------
Class C 1.55
The expense ratios reflect voluntary reimbursements of expenses by the Fund's
Manager that can be terminated at any time, without advance notice. The
"Financial Highlights" tables in the Fund's financial statements, included in
this report, also show the gross expense ratios, without such reimbursements.
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13 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF INVESTMENTS July 31, 2004
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EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--125.7%
- ------------------------------------------------------------------------------------------------------------
CALIFORNIA--118.1%
$ 5,000 ABAG Finance Authority for NonProfit
Corporations (Civic Center Drive
Apartments) 5.875% 03/01/2032 09/01/2009 1 $ 5,157
- ------------------------------------------------------------------------------------------------------------
5,000 ABAG Finance Authority for NonProfit
Corporations COP 5.600 11/01/2023 11/01/2005 1 5,039
- ------------------------------------------------------------------------------------------------------------
250,000 ABAG Finance Authority for NonProfit
Corporations COP (Lytton Gardens) 6.000 02/15/2019 02/15/2008 1 267,005
- ------------------------------------------------------------------------------------------------------------
150,000 ABAG Finance Authority for NonProfit
Corporations, Series A 0.000 4 04/20/2019 04/20/2012 1 63,788
- ------------------------------------------------------------------------------------------------------------
25,000 Adelanto Improvement Agency, Series B 5.500 12/01/2023 12/01/2004 1 25,500
- ------------------------------------------------------------------------------------------------------------
75,000 Adelanto Public Financing Authority, 7.250 09/15/2015 09/15/2004 1 75,074
Series B
- ------------------------------------------------------------------------------------------------------------
35,000 Berkeley Unified School District GO 6.150 08/01/2012 08/01/2004 1 35,832
- ------------------------------------------------------------------------------------------------------------
400,000 CA CDA (East Valley Tourist) 11.000 10/01/2020 03/01/2007 2 400,208
- ------------------------------------------------------------------------------------------------------------
10,000 CA County Tobacco Securitization Agency
(TASC) 5.750 06/01/2030 06/04/2012 3 8,468
- ------------------------------------------------------------------------------------------------------------
100,000 CA County Tobacco Securitization Agency
(TASC) 5.875 06/01/2043 09/01/2019 3 78,695
- ------------------------------------------------------------------------------------------------------------
25,000 CA Department of Veterans Affairs
Home Purchase 5.100 12/01/2019 06/01/2005 1 25,100
- ------------------------------------------------------------------------------------------------------------
60,000 CA Department of Veterans Affairs
Home Purchase 5.500 12/01/2019 01/09/2012 1 62,505
- ------------------------------------------------------------------------------------------------------------
100,000 CA Department of Water Resources
(Center Valley) 5.250 07/01/2022 01/01/2005 1 100,165
- ------------------------------------------------------------------------------------------------------------
25,000 CA Department of Water Resources
(Center Valley) 5.400 07/01/2012 01/01/2005 1 25,079
- ------------------------------------------------------------------------------------------------------------
10,000 CA Educational Facilities Authority
(Cedars-Sinai Medical Center) 6.125 12/01/2019 12/01/2009 1 10,804
- ------------------------------------------------------------------------------------------------------------
30,000 CA Educational Facilities Authority
(College of Osteopathic Medicine) 5.750 06/01/2018 06/01/2005 1 31,486
- ------------------------------------------------------------------------------------------------------------
90,000 CA Educational Facilities Authority
(University of Redlands) 6.000 10/01/2025 10/01/2005 1 95,438
- ------------------------------------------------------------------------------------------------------------
60,000 CA GO 5.100 03/01/2010 09/02/2004 1 60,167
- ------------------------------------------------------------------------------------------------------------
90,000 CA GO 5.125 10/01/2017 10/01/2004 1 91,294
- ------------------------------------------------------------------------------------------------------------
50,000 CA GO 5.150 10/01/2019 10/01/2005 1 50,722
- ------------------------------------------------------------------------------------------------------------
25,000 CA GO 5.250 04/01/2018 10/01/2004 1 25,053
- ------------------------------------------------------------------------------------------------------------
10,000 CA GO 5.250 04/01/2019 10/01/2004 1 10,021
- ------------------------------------------------------------------------------------------------------------
55,000 CA GO 5.500 04/01/2019 10/01/2004 1 55,849
- ------------------------------------------------------------------------------------------------------------
5,000 CA GO 5.500 03/01/2020 09/01/2004 1 5,119
- ------------------------------------------------------------------------------------------------------------
40,000 CA GO 5.500 03/01/2020 09/01/2004 1 40,899
- ------------------------------------------------------------------------------------------------------------
130,000 CA GO 5.500 10/01/2022 10/01/2004 1 130,659
- ------------------------------------------------------------------------------------------------------------
35,000 CA GO 5.750 11/01/2017 11/01/2004 1 35,313
- ------------------------------------------------------------------------------------------------------------
10,000 CA GO 6.000 10/01/2021 10/01/2004 1 10,065
- ------------------------------------------------------------------------------------------------------------
10,000 CA GO 6.800 11/01/2008 11/01/2004 1 10,328
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14 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 125,000 CA Golden State Tobacco Securitization
Corp. 5.500% 06/01/2019 06/01/2007 1 $ 127,701
- ------------------------------------------------------------------------------------------------------------
200,000 CA Golden State Tobacco Securitization
Corp. 5.750 06/01/2021 06/01/2008 1 206,748
- ------------------------------------------------------------------------------------------------------------
3,000,000 CA Golden State Tobacco Securitization
Corp. 6.250 06/01/2033 09/11/2012 3 2,720,700
- ------------------------------------------------------------------------------------------------------------
150,000 CA Golden State Tobacco Securitization
Corp. 7.800 06/01/2042 06/01/2013 1 152,411
- ------------------------------------------------------------------------------------------------------------
710,000 CA Golden State Tobacco Securitization
Corp. 7.900 06/01/2042 06/01/2013 1 725,932
- ------------------------------------------------------------------------------------------------------------
535,000 CA Golden State Tobacco Securitization
Corp. (TASC) 7.875 06/01/2042 06/01/2013 1 546,149
- ------------------------------------------------------------------------------------------------------------
135,000 CA Golden State Tobacco Securitization
Corp. (TASC) 7.875 06/01/2042 06/01/2013 1 137,813
- ------------------------------------------------------------------------------------------------------------
20,000 CA Health Facilities Financing Authority
(Catholic Healthcare West), Series A 6.000 07/01/2025 07/01/2008 1 21,512
- ------------------------------------------------------------------------------------------------------------
25,000 CA Health Facilities Financing Authority
(Community Program) 7.200 01/01/2012 08/01/2004 1 25,380
- ------------------------------------------------------------------------------------------------------------
500,000 CA Health Facilities Financing Authority
(Scripps Research Institute), Series A 6.300 07/01/2009 01/01/2005 1 511,840
- ------------------------------------------------------------------------------------------------------------
30,000 CA Health Facilities Financing Authority
(Small Facilities Loan), Series A 6.700 03/01/2011 09/01/2004 1 30,068
- ------------------------------------------------------------------------------------------------------------
50,000 CA HFA (Home Mtg.), Series B 5.150 02/01/2018 02/01/2010 1 51,527
- ------------------------------------------------------------------------------------------------------------
30,000 CA HFA (Multifamily Hsg.) 5.450 08/01/2028 08/01/2010 1 30,539
- ------------------------------------------------------------------------------------------------------------
10,000 CA HFA (Multifamily Hsg.) 5.950 08/01/2028 02/01/2009 1 10,257
- ------------------------------------------------------------------------------------------------------------
55,000 CA HFA (Multifamily Hsg.) 6.050 08/01/2038 02/01/2009 1 56,445
- ------------------------------------------------------------------------------------------------------------
25,000 CA HFA (Multifamily Hsg.) 6.300 08/01/2026 02/01/2008 1 25,758
- ------------------------------------------------------------------------------------------------------------
15,000 CA HFA (Single Family Mtg.), Series A 5.300 08/01/2018 02/01/2010 1 15,519
- ------------------------------------------------------------------------------------------------------------
10,000 CA HFA (Single Family Mtg.), Series B 6.200 08/01/2014 10/01/2007 1 10,080
- ------------------------------------------------------------------------------------------------------------
5,000 CA HFA (Single Family Mtg.), Series D-2 5.550 02/01/2022 02/01/2009 1 5,133
- ------------------------------------------------------------------------------------------------------------
5,000 CA HFA, Series B-1 5.200 08/01/2011 08/01/2009 1 5,135
- ------------------------------------------------------------------------------------------------------------
55,000 CA HFA, Series F 6.100 08/01/2015 08/01/2007 1 56,358
- ------------------------------------------------------------------------------------------------------------
15,000 CA Loan Purchasing Finance Authority 5.600 10/01/2014 10/01/2004 1 15,193
- ------------------------------------------------------------------------------------------------------------
30,000 CA Pollution Control Financing Authority
(Sacramento Biosolids Facility) 5.300 12/01/2017 06/24/2016 3 30,564
- ------------------------------------------------------------------------------------------------------------
130,000 CA Pollution Control Financing Authority
(San Diego Gas & Electric Company) 5.850 06/01/2021 06/01/2005 1 131,639
- ------------------------------------------------------------------------------------------------------------
20,000 CA Pollution Control Financing Authority
(Southern California Edison Company) 5.550 09/01/2031 09/01/2011 1 20,488
- ------------------------------------------------------------------------------------------------------------
100,000 CA Pollution Control Financing Authority
(Southern California Edison Company) 6.000 07/01/2027 07/01/2005 1 100,282
- ------------------------------------------------------------------------------------------------------------
375,000 CA Pollution Control Financing Authority
(Southern California Edison Company) 6.400 12/01/2024 12/01/2004 1 377,873
15 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 200,000 CA Pollution Control Financing Authority
(Southern California Edison Company) 6.400% 12/01/2024 12/01/2004 1 $ 203,820
- ------------------------------------------------------------------------------------------------------------
20,000 CA Pollution Control Financing Authority
(Southern California Water Company) 5.500 12/01/2026 12/01/2005 1 20,439
- ------------------------------------------------------------------------------------------------------------
25,000 CA Public Works
(Department of Corrections) 5.250 01/01/2021 01/01/2006 1 25,790
- ------------------------------------------------------------------------------------------------------------
10,000 CA Public Works
(Department of Corrections) 5.500 06/01/2019 06/01/2006 1 10,227
- ------------------------------------------------------------------------------------------------------------
200,000 CA Public Works
(Department of Corrections) 5.500 06/01/2019 12/01/2004 1 204,542
- ------------------------------------------------------------------------------------------------------------
25,000 CA Public Works
(Department of Food & Agriculture) 5.400 06/01/2013 06/01/2005 1 25,317
- ------------------------------------------------------------------------------------------------------------
20,000 CA Public Works
(Department of Justice Building) 5.625 05/01/2020 12/01/2004 1 20,672
- ------------------------------------------------------------------------------------------------------------
15,000 CA Public Works
(Dept. of Corrections-State Prison) 5.500 06/01/2019 06/01/2006 1 15,331
- ------------------------------------------------------------------------------------------------------------
110,000 CA Public Works (State Universities) 5.500 12/01/2018 12/01/2005 1 112,426
- ------------------------------------------------------------------------------------------------------------
30,000 CA Public Works (State Universities) 5.500 06/01/2021 12/01/2004 1 30,374
- ------------------------------------------------------------------------------------------------------------
100,000 CA Statewide CDA (Bouquet Canyon) 5.300 07/01/2018 07/01/2010 1 102,592
- ------------------------------------------------------------------------------------------------------------
95,000 CA Statewide CDA (CA Odd Fellow Hsg.) 5.375 10/01/2013 10/01/2005 1 96,249
- ------------------------------------------------------------------------------------------------------------
25,000 CA Statewide CDA (CA Odd Fellow Hsg.) 5.500 10/01/2023 10/01/2005 1 25,146
- ------------------------------------------------------------------------------------------------------------
400,000 CA Statewide CDA (Fairfield Apartments) 6.500 01/01/2016 01/01/2016 401,732
- ------------------------------------------------------------------------------------------------------------
40,000 CA Statewide CDA COP
(Motion Picture & TV Fund) 5.375 01/01/2020 01/01/2005 1 40,886
- ------------------------------------------------------------------------------------------------------------
25,000 CA Statewide CDA COP
(Salk Institute for Biological Studies) 6.200 07/01/2024 01/01/2005 1 25,587
- ------------------------------------------------------------------------------------------------------------
500,000 CA Statewide CDA COP INFLOS 10.003 5 10/01/2011 03/15/2010 3 615,620
- ------------------------------------------------------------------------------------------------------------
35,000 CA Statewide Financing Authority
Tobacco Settlement (TASC) 5.625 05/01/2029 07/30/2010 3 29,753
- ------------------------------------------------------------------------------------------------------------
25,000 CA Valley Health System COP 6.875 05/15/2023 01/06/2016 3 21,044
- ------------------------------------------------------------------------------------------------------------
295,000 CA Valley Health System, Series A 6.500 05/15/2025 05/15/2008 1 305,700
- ------------------------------------------------------------------------------------------------------------
55,000 CA Veterans GO, Series BH 5.500 12/01/2024 12/01/2005 1 55,287
- ------------------------------------------------------------------------------------------------------------
135,000 CA Veterans GO, Series BH 5.600 12/01/2032 12/01/2005 1 135,323
- ------------------------------------------------------------------------------------------------------------
50,000 CA Veterans GO, Series BP 5.500 12/01/2026 12/01/2004 1 50,020
- ------------------------------------------------------------------------------------------------------------
10,000 CA Veterans GO, Series BT 5.100 12/01/2013 12/01/2006 1 10,129
- ------------------------------------------------------------------------------------------------------------
140,000 CA Veterans GO, Series BX 5.500 12/01/2031 06/01/2007 1 142,411
- ------------------------------------------------------------------------------------------------------------
15,000 CA Veterans GO, Series BZ 5.350 12/01/2021 06/01/2008 1 15,218
- ------------------------------------------------------------------------------------------------------------
50,000 CA Water Resource Devel., Series N 5.500 06/01/2011 06/02/2005 1 50,157
- ------------------------------------------------------------------------------------------------------------
5,000 Central CA Joint Powers Health Financing
Authority COP (FCH/CCH/SCH/Fresno
CH/CALC/SMCH Obligated Group) 5.500 02/01/2015 02/01/2005 1 5,014
- ------------------------------------------------------------------------------------------------------------
15,000 Clayton Redevel. Agency 5.500 08/01/2024 08/01/2004 1 15,374
- ------------------------------------------------------------------------------------------------------------
310,000 Coalinga, CA Regional Medical Center COP 5.000 09/01/2014 09/01/2008 3 300,979
16 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 95,000 Contra Costa County Multifamily Hsg.
(Crescent Park Apartments) 7.800% 12/20/2014 06/20/2005 1 $ 99,939
- ---------------------------------------------------------------------------------------------------------------
85,000 Corona Redevel. Agency Tax Allocation 6.250 09/01/2016 09/01/2004 1 87,075
- ---------------------------------------------------------------------------------------------------------------
20,000 Culver City Unified School District GO 5.700 08/01/2025 08/01/2007 1 21,455
- ---------------------------------------------------------------------------------------------------------------
15,000 El Centro Redevel. Agency 5.500 11/01/2026 11/01/2008 1 15,696
- ---------------------------------------------------------------------------------------------------------------
145,000 Emeryville Public Financing Authority 6.200 09/01/2025 09/01/2006 1 148,992
- ---------------------------------------------------------------------------------------------------------------
15,000 Grossmont Union High School District COP 5.750 09/01/2026 09/01/2008 1 17,133
- ---------------------------------------------------------------------------------------------------------------
10,000 Indian Wells Redevel. Agency Tax Allocation 5.375 12/01/2022 12/01/2005 1 10,535
- ---------------------------------------------------------------------------------------------------------------
75,000 Lancaster Redevel. Agency Tax Allocation
(Fire Protection) 5.750 08/01/2023 08/01/2004 1 77,018
- ---------------------------------------------------------------------------------------------------------------
120,000 Loma Linda Hospital
(Loma Linda University Medical Center) 5.375 12/01/2022 12/01/2004 1 122,266
- ---------------------------------------------------------------------------------------------------------------
150,000 Long Beach Harbor Department 5.375 05/15/2020 05/15/2007 1 155,925
- ---------------------------------------------------------------------------------------------------------------
25,000 Los Alamitos Unified School District Special
Tax (Community Facilities District No. 90-1) 6.400 08/15/2018 08/15/2004 1 25,555
- ---------------------------------------------------------------------------------------------------------------
10,000 Los Angeles County Public Works
Financing Authority 5.250 12/01/2016 12/01/2004 1 10,223
- ---------------------------------------------------------------------------------------------------------------
10,000 Los Angeles Department of Airports
(Ontario International Airport) 6.000 05/15/2026 05/15/2006 1 10,618
- ---------------------------------------------------------------------------------------------------------------
5,000 Los Angeles Hsg. (Multifamily) 5.750 01/01/2024 01/01/2006 1 5,064
- ---------------------------------------------------------------------------------------------------------------
30,000 Los Angeles Mtg. (Section 8) 5.350 07/01/2022 01/01/2005 1 30,012
- ---------------------------------------------------------------------------------------------------------------
100,000 Los Angeles Regional Airports
Improvement Corp. (Laxfuel Corp.) 5.250 01/01/2023 01/01/2012 1 100,575
- ---------------------------------------------------------------------------------------------------------------
20,000 Los Angeles Regional Airports
Improvement Corp. (Laxfuel Corp.) 6.375 01/01/2024 01/01/2005 1 20,468
- ---------------------------------------------------------------------------------------------------------------
210,000 Los Angeles Single Family Mtg.
(Government National Mortgage Assn.
& FNMA Mtg. Backed), Series A 6.875 06/01/2025 12/01/2004 1 210,067
- ---------------------------------------------------------------------------------------------------------------
35,000 M-S-R Public Power Agency (San Juan) 6.000 07/01/2022 01/01/2005 1 35,957
- ---------------------------------------------------------------------------------------------------------------
15,000 Montclair Redevel. Agency Tax Allocation
(Redevel. Project Area III) 5.500 12/01/2027 12/01/2006 1 15,651
- ---------------------------------------------------------------------------------------------------------------
10,000 Monterey County COP (Sheriffs Facility) 5.000 12/01/2014 12/01/2005 1 10,129
- ---------------------------------------------------------------------------------------------------------------
20,000 Monterey Joint Powers Financing Authority
(Materials Recovery Facilities) 5.600 03/01/2012 03/01/2005 1 20,424
- ---------------------------------------------------------------------------------------------------------------
50,000 Monterey Joint Powers Financing Authority
(Materials Recovery Facilities) 5.600 03/01/2013 03/01/2005 1 51,180
- ---------------------------------------------------------------------------------------------------------------
20,000 Monterey Joint Powers Financing Authority
(Materials Recovery Facilities) 5.700 03/01/2015 03/01/2005 1 20,569
- ---------------------------------------------------------------------------------------------------------------
20,000 Monterey Joint Powers Financing Authority
(Materials Recovery Facilities) 5.700 03/01/2016 03/01/2005 1 20,618
- ---------------------------------------------------------------------------------------------------------------
55,000 Moreno Valley Special Tax
(Towngate Community Facilities) 6.125 12/01/2021 12/01/2004 1 55,771
- ---------------------------------------------------------------------------------------------------------------
25,000 Morgan Hill Redevel. Agency
(LaCrosse Village) 6.450 12/01/2027 12/01/2005 1 26,124
17 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 25,000 Norwalk Community Facilities Financing
Authority, Series B 7.400% 09/15/2025 09/15/2005 1 $ 26,393
- ----------------------------------------------------------------------------------------------------------------
50,000 Novato, CA Special Tax Community
Facilities District No. 1 7.250 08/01/2021 08/01/2004 1 51,183
- ----------------------------------------------------------------------------------------------------------------
50,000 Olivenhain Municipal Water District
Bond Act 1915 5.450 09/02/2027 09/02/2009 1 51,607
- ----------------------------------------------------------------------------------------------------------------
90,000 Otay Water District COP 5.700 09/01/2023 09/01/2004 1 92,049
- ----------------------------------------------------------------------------------------------------------------
40,000 Palm Desert Financing Authority Various
Assessment & Community Facilities Districts 6.000 10/01/2020 10/01/2009 1 40,679
- ----------------------------------------------------------------------------------------------------------------
60,000 Palm Springs Financing Authority, Series A 6.400 09/01/2017 09/01/2004 1 61,470
- ----------------------------------------------------------------------------------------------------------------
10,000 Palm Springs Financing Authority, Series B 6.700 09/01/2022 09/01/2004 1 10,214
- ----------------------------------------------------------------------------------------------------------------
40,000 Palm Springs Unified School District GO 5.300 02/01/2017 02/01/2005 1 41,392
- ----------------------------------------------------------------------------------------------------------------
15,000 Paramount Multifamily Hsg.
(Prince Twin Towers Property) 5.700 02/20/2033 08/20/2009 1 15,235
- ----------------------------------------------------------------------------------------------------------------
125,000 Pittsburg Infrastructure Financing Authority,
Series B 6.000 09/02/2024 09/02/2010 1 126,821
- ----------------------------------------------------------------------------------------------------------------
25,000 R.E. Badger Water Facilities Financing
Authority 5.750 10/01/2024 10/01/2007 1 27,100
- ----------------------------------------------------------------------------------------------------------------
610,000 Riverside County Public Financing Authority
Improvement Bond Act of 1915
(Rancho Village) 6.250 09/02/2013 08/12/2010 2 643,288
- ----------------------------------------------------------------------------------------------------------------
110,000 Rosemead Redevel. Agency 5.600 10/01/2033 10/01/2005 1 110,285
- ----------------------------------------------------------------------------------------------------------------
750,000 Roseville Woodcreek West Community
Facility 6.700 09/01/2025 09/01/2011 1 784,155
- ----------------------------------------------------------------------------------------------------------------
10,000 Sacramento City Financing Authority 6.500 11/01/2004 11/01/2004 10,043
- ----------------------------------------------------------------------------------------------------------------
25,000 Sacramento County Airport System, Series A 5.900 07/01/2024 07/01/2006 1 26,816
- ----------------------------------------------------------------------------------------------------------------
60,000 Sacramento Improvement Bond Act
(Willowcreek II) 6.700 09/02/2022 09/02/2004 1 61,865
- ----------------------------------------------------------------------------------------------------------------
205,000 Sacramento Special Tax
(Community Facilities District No. 97-1) 6.750 09/01/2027 09/01/2005 1 215,449
- ----------------------------------------------------------------------------------------------------------------
85,000 Salinas Redevel. Agency Tax Allocation
(Central City Revitalization) 5.500 11/01/2023 11/01/2008 1 90,139
- ----------------------------------------------------------------------------------------------------------------
70,000 San Bernardino County COP
(Medical Center) 5.500 08/01/2024 08/01/2006 1 70,679
- ----------------------------------------------------------------------------------------------------------------
75,000 San Bernardino Joint Powers Financing
Authority (California Department of
Transportation Lease) 5.500 12/01/2020 12/01/2007 1 75,790
- ----------------------------------------------------------------------------------------------------------------
20,000 San Diego County Hsg.
(Orange Glen Apartments) 6.150 08/01/2020 08/01/2005 1 20,649
- ----------------------------------------------------------------------------------------------------------------
50,000 San Diego Industrial Devel.
(San Diego Gas & Electric Company) 5.900 06/01/2018 12/01/2004 1 50,641
- ----------------------------------------------------------------------------------------------------------------
15,000 San Diego Industrial Devel.
(San Diego Gas & Electric Company) 5.900 09/01/2018 09/01/2005 1 15,289
18 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 100,000 San Diego Public Facilities Financing
Authority 5.000% 05/15/2025 05/15/2007 1 $ 100,367
- --------------------------------------------------------------------------------------------------------------
25,000 San Diego Public Facilities Financing
Authority 5.250 05/15/2020 05/15/2005 1 25,163
- --------------------------------------------------------------------------------------------------------------
45,000 San Diego Redevel. Agency
(Tax Allocation-Centre City Redev.) 5.400 09/01/2016 09/01/2004 1 45,392
- --------------------------------------------------------------------------------------------------------------
40,000 San Diego Sewer 5.000 05/15/2023 05/15/2005 1 40,393
- --------------------------------------------------------------------------------------------------------------
50,000 San Francisco City & County Airports
Commission 5.500 05/01/2015 05/01/2008 1 53,418
- --------------------------------------------------------------------------------------------------------------
20,000 San Francisco City & County Airports
Commission 5.500 05/01/2026 05/01/2007 1 20,498
- --------------------------------------------------------------------------------------------------------------
50,000 San Francisco City & County Airports
Commission 5.500 05/01/2026 05/01/2007 1 51,245
- --------------------------------------------------------------------------------------------------------------
230,000 San Francisco City & County Airports
Commission 5.625 05/01/2021 05/01/2008 1 244,283
- --------------------------------------------------------------------------------------------------------------
50,000 San Francisco City & County Airports
Commission 5.750 05/01/2020 05/01/2005 1 51,649
- --------------------------------------------------------------------------------------------------------------
20,000 San Francisco City & County Airports
Commission 5.900 05/01/2025 05/01/2005 1 20,685
- --------------------------------------------------------------------------------------------------------------
90,000 San Francisco City & County Redevel.
Agency 6.750 07/01/2025 01/01/2005 1 92,147
- --------------------------------------------------------------------------------------------------------------
10,000 San Francisco City & County Redevel.
Agency (FHA Insured-Section 8) 6.850 07/01/2024 01/01/2005 1 10,023
- --------------------------------------------------------------------------------------------------------------
40,000 San Francisco City & County Redevel.
Agency (South Beach) 5.700 03/01/2029 03/01/2006 1 40,422
- --------------------------------------------------------------------------------------------------------------
100,000 San Gabriel Valley Schools Financing
Authority (Pomona Unified School District) 5.875 02/01/2021 02/01/2006 1 102,499
- --------------------------------------------------------------------------------------------------------------
50,000 San Jacinto Redevel. Agency 6.250 12/01/2023 12/01/2005 1 50,694
- --------------------------------------------------------------------------------------------------------------
45,000 San Jose Finance Authority, Series B 5.625 11/15/2018 11/15/2004 1 45,439
- --------------------------------------------------------------------------------------------------------------
10,000 San Jose Redevel. Agency Tax Allocation 5.000 08/01/2020 02/01/2006 1 10,078
- --------------------------------------------------------------------------------------------------------------
5,000 San Jose-Santa Clara Water Financing
Authority 5.375 11/15/2020 11/15/2005 1 5,217
- --------------------------------------------------------------------------------------------------------------
25,000 San Pablo Redevel. Agency
(Tax Allocation-Merged Project Area) 5.250 12/01/2023 12/01/2006 1 25,706
- --------------------------------------------------------------------------------------------------------------
1,000,000 Santaluz Special Tax Community
Facilities District No. 2 6.375 09/01/2030 09/01/2007 1 1,011,340
- --------------------------------------------------------------------------------------------------------------
200,000 South Tahoe Joint Powers Financing
Authority 6.000 10/01/2028 10/01/2005 1 206,828
- --------------------------------------------------------------------------------------------------------------
5,000 Southern CA Home Financing Authority 7.625 10/01/2022 04/01/2005 1 5,003
- --------------------------------------------------------------------------------------------------------------
200,000 Southern CA Public Power Authority 5.500 07/01/2020 01/01/2005 1 200,648
- --------------------------------------------------------------------------------------------------------------
70,000 Southern CA Public Power Authority 5.500 07/01/2020 01/01/2005 1 70,172
- --------------------------------------------------------------------------------------------------------------
5,000 Southern CA Public Power Authority 5.500 07/01/2020 01/01/2005 1 5,004
- --------------------------------------------------------------------------------------------------------------
85,000 Southern CA Public Power Authority 6.000 07/01/2018 01/01/2005 1 86,782
- --------------------------------------------------------------------------------------------------------------
250,000 Southern CA Public Power Authority 7.000 07/01/2009 01/01/2005 1 255,075
19 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
EFFECTIVE
PRINCIPAL MATURITY* VALUE
AMOUNT COUPON MATURITY (UNAUDITED) SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 750,000 Tejon Ranch Public Facilities Finance
Authority Special Tax (Community Facilities
District No. 1) 7.200% 09/01/2030 09/01/2004 1 $ 772,860
- ---------------------------------------------------------------------------------------------------------------
50,000 Tracy Community Facilities District Special
Tax (Plan C Properties) 5.700 08/01/2023 08/02/2010 1 50,560
- ---------------------------------------------------------------------------------------------------------------
30,000 Tracy COP
(Community Park & Civic Center) 6.625 03/01/2018 09/01/2004 1 30,045
- ---------------------------------------------------------------------------------------------------------------
20,000 Tri-City Hospital District 6.000 02/01/2022 02/01/2005 1 20,245
- ---------------------------------------------------------------------------------------------------------------
25,000 Turlock Health Facilities COP
(Emanuel Medical Center) 5.625 10/15/2013 10/15/2005 1 25,274
- ---------------------------------------------------------------------------------------------------------------
125,000 Washington Township Hospital District 5.500 07/01/2018 07/01/2005 1 125,991
------------
19,148,450
- ---------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--7.6%
80,000 Puerto Rico Electric Power Authority,
Series X 5.500 07/01/2025 07/01/2005 1 81,894
- ---------------------------------------------------------------------------------------------------------------
130,000 Puerto Rico HBFA 6.250 04/01/2029 04/01/2006 1 133,528
- ---------------------------------------------------------------------------------------------------------------
5,000 Puerto Rico HFC 7.300 10/01/2006 10/01/2004 1 5,016
- ---------------------------------------------------------------------------------------------------------------
5,000 Puerto Rico HFC 7.500 10/01/2015 10/01/2004 1 5,008
- ---------------------------------------------------------------------------------------------------------------
200,000 Puerto Rico Highway &
Transportation Authority 5.000 07/01/2022 07/01/2005 1 200,366
- ---------------------------------------------------------------------------------------------------------------
40,000 Puerto Rico Port Authority, Series D 6.000 07/01/2021 01/01/2005 1 40,468
- ---------------------------------------------------------------------------------------------------------------
570,000 Puerto Rico Port Authority, Series D 7.000 07/01/2014 01/01/2005 1 582,369
- ---------------------------------------------------------------------------------------------------------------
125,000 University of Puerto Rico, Series O 5.375 06/01/2030 06/01/2006 1 128,620
- ---------------------------------------------------------------------------------------------------------------
50,000 V.I. Public Finance Authority, Series A 5.500 10/01/2022 10/01/2010 1 50,835
------------
1,228,104
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $20,534,667)--125.7% 20,376,554
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(25.7) (4,161,168)
------------
NET ASSETS--100.0% $16,215,386
============
FOOTNOTES TO STATEMENT OF INVESTMENTS
*Call Date, Put Date or Average Life of Sinking Fund, if applicable, as
detailed.
1. Optional call date; corresponds to the most conservative yield
calculation.
2. Average life due to mandatory, or expected, sinking fund principal
payments prior to the applicable optional call date.
3. Average life due to mandatory, or expected, sinking fund principal
payments prior to maturity.
4. Represents a zero coupon bond.
5. Represents the current interest rate for a variable rate bond known as
an "inverse floater." See Note 1 of Notes to Financial Statements.
20 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:
ABAG Association of Bay Area Governments GO General Obligation
CALC Community Alzheimer's Living Center HBFA Housing Bank and Finance Agency
CCH Clovis Community Hospital HFA Housing Finance Agency/Authority
CDA Communities Development Authority HFC Housing Finance Corp.
CH Convalescent Hospital INFLOS Inverse Floating Rate Securities
COP Certificates of Participation SCH Sierra Community Hospital
FCH Fresno Community Hospital SMCH Sierra Meadows Convalescent Hospital
FHA Federal Housing Agency TASC Tobacco Settlement Asset-Backed Bonds
FNMA Federal National Mortgage Association V.I. United States Virgin Islands
- --------------------------------------------------------------------------------
SUMMARY OF RATINGS July 31, 2004 / Unaudited
- --------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS BY RATING CATEGORY, AS A PERCENTAGE OF TOTAL
INVESTMENTS AT VALUE, IS AS FOLLOWS:
RATING PERCENT
- --------------------------------------------------------------------------------
AAA 29.4%
AA 3.9
A 11.2
BBB 53.4
B 0.1
Not Rated 2.0
-------
Total 100.0%
=======
Bonds rated by any nationally recognized statistical rating organization are
included in the equivalent Standard & Poor's rating category. As a general
matter, unrated bonds may be backed by mortgage liens or equipment liens on the
underlying property, and also may be guaranteed. Bonds which are backed by a
letter of credit or by other financial institutions or agencies may be assigned
an investment-grade rating by the Manager, which reflects the quality of the
guarantor, institution or agency. Unrated bonds may also be assigned a rating
when the issuer has rated bonds outstanding with comparable credit
characteristics, or when, in the opinion of the Manager, the bond itself
possesses credit characteristics which allow for rating. The unrated bonds in
the portfolio are predominantly smaller issuers which have not applied for a
bond rating. Only those unrated bonds which subsequent to purchase have not been
designated investment grade by the Manager are included in the "Not Rated"
category.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES July 31, 2004
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------
Investments, at value (cost $20,534,667)--see accompanying statement of investments $ 20,376,554
- ---------------------------------------------------------------------------------------------------
Cash 388,560
- ---------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 312,775
Investments sold 101,585
Shares of beneficial interest sold 72,389
Other 1,890
-------------
Total assets 21,253,753
- ---------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------
Payables and other liabilities:
Notes payable to bank (interest rate 2.1200% at July 31, 2004) 4,600,000
Investments purchased 402,239
Shareholder communications 10,188
Dividends 7,111
Distribution and service plan fees 1,424
Transfer and shareholder servicing agent fees 315
Trustees' compensation 99
Shares of beneficial interest redeemed 16
Other 16,975
-------------
Total liabilities 5,038,367
- ---------------------------------------------------------------------------------------------------
NET ASSETS $ 16,215,386
=============
- ---------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 4,909
- ---------------------------------------------------------------------------------------------------
Additional paid-in capital 16,344,100
- ---------------------------------------------------------------------------------------------------
Accumulated net investment income 43,823
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (19,333)
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (158,113)
-------------
NET ASSETS $ 16,215,386
=============
22 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $11,626,564 and
3,521,082 shares of beneficial interest outstanding) $3.30
Maximum offering price per share (net asset value plus sales charge of 3.50% of offering price) $3.42
- -------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $509,509 and 151,606 shares of
beneficial interest outstanding) $3.36
- -------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $4,079,313 and 1,236,382 shares of
beneficial interest outstanding) $3.30
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF OPERATIONS For the Period Ended July 31, 2004 1
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
INVESTMENT INCOME
- ------------------------------------------------------------------------------
Interest $ 263,745
- ------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------
Management fees 22,923
- ------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,467
Class B 1,006
Class C 8,617
- ------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 607
Class B 119
Class C 78
- ------------------------------------------------------------------------------
Shareholder communications:
Class A 7,901
Class B 380
Class C 1,946
- ------------------------------------------------------------------------------
Legal, auditing and other professional fees 23,400
- ------------------------------------------------------------------------------
Interest expense 23,561
- ------------------------------------------------------------------------------
Trustees' compensation 3,999
- ------------------------------------------------------------------------------
Custodian fees and expenses 1,562
- ------------------------------------------------------------------------------
Other 2,043
----------
Total expenses 99,609
Less reduction to custodian expenses (562)
Less payments and waivers of expenses (55,576)
----------
Net expenses 43,471
- ------------------------------------------------------------------------------
NET INVESTMENT INCOME 220,274
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
- ------------------------------------------------------------------------------
Net realized loss on investments (19,333)
- ------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (158,113)
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 42,828
==========
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
PERIOD ENDED JULY 31, 2004 1
- --------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------
Net investment income $ 220,274
- --------------------------------------------------------------------------------------------
Net realized loss (19,333)
- --------------------------------------------------------------------------------------------
Net change in unrealized depreciation (158,113)
--------------
Net increase in net assets resulting from operations 42,828
- --------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (147,367)
Class B (4,128)
Class C (27,988)
- --------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 11,680,834
Class B 509,182
Class C 4,060,025
- --------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------
Total increase 16,113,386
- --------------------------------------------------------------------------------------------
Beginning of period 102,000 2
--------------
End of period (including accumulated net investment income of $43,823) $ 16,215,386
==============
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
2. Reflects the value of the Manager's initial seed money investment on February
9, 2004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
STATEMENT OF CASH FLOWS For the Period Ended July 31, 2004 1
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------------------------------------------------------
Net increase in net assets from operations $ 42,828
- ------------------------------------------------------------------------------------
Adjustments to reconcile net increase in net assets from operations
to net cash used in operating activities:
Purchase of investment securities (22,273,677)
Proceeds from disposition of investment securities 1,626,145
Premium amortization 95,185
Discount accretion (1,653)
Net realized loss on investments 19,333
Net change in unrealized depreciation on investments 158,113
Increase in interest receivable (312,775)
Increase in receivable for securities sold (101,585)
Increase in other assets (1,890)
Increase in payable for securities purchased 402,239
Increase in accrued expenses 29,001
--------------
Net cash used in operating activities (20,318,736)
- ------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------
Proceeds from bank borrowing 16,300,000
Payments on bank borrowing (11,700,000)
Proceeds from shares sold 16,974,563
Payment on shares redeemed (829,524)
Cash distributions paid (139,743)
--------------
Net cash provided by financing activities 20,605,296
- ------------------------------------------------------------------------------------
Net increase in cash 286,560
- ------------------------------------------------------------------------------------
Cash, beginning balance 102,000 2
--------------
Cash, ending balance $ 388,560
==============
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
2. Reflects the value of the Manager's initial seed money investment on February
9, 2004.
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $32,629.
Cash paid for interest on bank borrowings--$23,000.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PERIOD ENDED JULY 31, 2004 1 CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------
Net asset value, beginning of period $ 3.35 $ 3.35 $ 3.35
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .05 .05
Net realized and unrealized gain (loss) (.06) -- 2 (.06)
--------------------------------
Total from investment operations .01 .05 (.01)
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06) (.04) (.04)
- ------------------------------------------------------------------------------------
Net asset value, end of period $ 3.30 $ 3.36 $ 3.30
================================
- ------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.21% 1.60% -0.16%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $11,627 $ 510 $ 4,079
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $ 8,381 $ 297 $ 2,044
- ------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.99% 3.96% 3.92%
Total expenses 1.92% 2.86% 2.93%
Expenses after payments and waivers and reduction
to custodian expenses 0.76% 1.55% 1.55%
- ------------------------------------------------------------------------------------
Portfolio turnover rate 2% 2% 2%
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
2. Less than $0.005 per share.
3. Assumes an investment at net asset value on the business day before the first
day of the fiscal period, 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 return. Total returns are not annualized for
periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Limited Term California Municipal Fund (the Fund) is a
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek as high a level of income exempt from federal income tax and California
individual income taxes as is consistent with its investment policies and
prudent investment management. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B and Class C shares. As of July 31, 2004,
2,165,214 shares of Class A, 299 shares of Class B and 299 shares of Class C
were owned by the Manager and its affiliates, which represents 61.5%, 0.20% and
0.02%, respectively, of the Fund's total shares outstanding of each class. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B and Class C shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). All classes of shares have identical rights and voting privileges with
respect to the Fund in general and exclusive voting rights on matters that
affect that class alone. Earnings, net assets and net asset value per share may
differ due to each class having its own expenses, such as transfer and
shareholder servicing agent fees and shareholder communications, directly
attributable to that class. Class 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. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic or foreign exchanges are
valued based on the last sale price of the security traded on that exchange
prior to the time when the Fund's assets are valued. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ prior to the time when
the Fund's assets are valued. In the absence of a sale, the security is valued
at the last sale price on the prior trading day, if it is within the spread of
the closing bid and asked prices, and if not, at the closing bid price.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities may be valued primarily
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Trustees. Short-term "money
market type" debt securities with
28 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
remaining maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Fund invests in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Fund intends to invest no more than 20% of its total assets in inverse floaters.
Inverse floaters amounted to $615,620 as of July 31, 2004. Including the effect
of leverage, inverse floaters represent 2.63% of the Fund's total assets as of
July 31, 2004.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. 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.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis 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 comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
DEPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1 TAX PURPOSES
- ------------------------------------------------------------------------------
$50,934 $-- $19,333 $158,113
1. As of July 31, 2004, the Fund had $19,333 of post-October losses available to
offset future realized capital gains, if any. Such losses, if unutilized, will
expire in 2013.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal period from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends
29 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or net realized gain was
recorded by the Fund. Accordingly, the following amounts have been reclassified
for July 31, 2004. Net assets of the Fund were unaffected by the
reclassications.
INCREASE TO
REDUCTION TO ACCUMULATED NET
PAID-IN CAPITAL INVESTMENT INCOME
- -----------------------------------------
$3,032 $3,032
The tax character of distributions paid during the period ended July 31, 2004
was as follows:
PERIOD ENDED
JULY 31, 2004 1
----------------------------------------------------
Distributions paid from:
Exempt-interest dividends $179,483
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of July 31, 2004 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $20,534,667
===========
Gross unrealized appreciation $ 79,333
Gross unrealized depreciation (237,446)
-----------
Net unrealized depreciation $ (158,113)
===========
- --------------------------------------------------------------------------------
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. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. 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
30 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
income and expenses during the reporting period. Actual results could differ
from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
PERIOD ENDED JULY 31, 2004 1,2
SHARES AMOUNT
- --------------------------------------------------------------------------------
CLASS A
Sold 3,598,439 $ 12,034,579
Dividends and/or
distributions reinvested 3,629 11,929
Redeemed (110,836) (365,674)
-------------------------------
Net increase 3,491,232 $ 11,680,834
===============================
- --------------------------------------------------------------------------------
CLASS B
Sold 288,947 $ 970,279
Dividends and/or
distributions reinvested 829 2,769
Redeemed (138,468) (463,866)
-------------------------------
Net increase 151,308 $ 509,182
===============================
- --------------------------------------------------------------------------------
CLASS C
Sold 1,230,617 $ 4,042,094
Dividends and/or
distributions reinvested 5,467 17,931
Redeemed -- --
-------------------------------
Net increase 1,236,084 $ 4,060,025
===============================
1. For the period from February 25, 2004 (commencement of operations) to July
31, 2004.
2. The Fund sold 29,850 shares of Class A and 298 shares each of Class B and
Class C to the Manager upon seeding of the Fund on February 9, 2004.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and securities subject to call within 365 days from
date of purchase, for the period ended July 31, 2004, were $12,498,820 and
$164,342, respectively.
- --------------------------------------------------------------------------------
4. 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 at an
annual rate of 0.50% of the first $100 million of average daily net assets,
0.45% of the next $150 million of average daily net assets, 0.40% of the next
$1,750 million of average daily net assets, and 0.39% of average daily net
assets in excess of $2 billion.
31 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the period ended July 31, 2004, the Fund paid $489 to
OFS for services to the Fund.
- --------------------------------------------------------------------------------
OFFERING AND ORGANIZATIONAL COSTS. The Manager paid all offering and
organizational costs associated with the registration, seeding and initial
offering of the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% per year on Class B and
Class C shares. The Distributor also receives a service fee of up to 0.25% per
year under each plan. If either the Class B or Class C plan is terminated by the
Fund or by the shareholders of a class, the Board of Trustees and its
independent trustees must determine whether the Distributor shall be entitled to
payment from the Fund of all or a portion of the service fee and/or asset-based
sales charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at July 31, 2004 for Class B and Class C shares were $9,038 and $39,073,
respectively. Fees incurred by the Fund under the plans are detailed in the
Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
32 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
CLASS A CLASS B CLASS C
CLASS A CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY
PERIOD ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------
July 31, 2004 $7,368 $1,503 $-- $--
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. The Manager has voluntarily agreed to waive
management fees and/or reimburse the Fund for certain expenses so that "Total
Annual Fund Operating Expenses" will not exceed 0.80% for Class A shares and
1.55% for Class B, and Class C shares, respectively. During the period ended
July 31, 2004, the Manager waived management fees and/or reimbursed fees of the
Fund in the amounts of $41,740, $1,676 and $12,160 for Class A, Class B and
Class C shares, respectively. The voluntary waivers described above may be
amended or withdrawn at any time.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. BANK BORROWINGS
The Fund may borrow up to one third of its total assets from a bank to purchase
portfolio securities, to meet redemption obligations or for temporary and
emergency purposes. The purchase of securities with borrowed funds creates
leverage in the Fund. The Fund has entered into an agreement which enables it to
participate with certain other Oppenheimer funds in a committed, unsecured line
of credit with a bank, which permits borrowings up to $540 million,
collectively. Interest is charged to each fund, based on its borrowings, at a
rate equal to the Federal Funds Rate plus 0.75%. 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 0.09% per annum.
The Fund had borrowings outstanding of $4,600,000 at July 31, 2004 at an
interest rate of 2.12%. For the period ended July 31, 2004, the average monthly
loan balance was $2,484,032 at an average daily interest rate of 1.842%. The
Fund had gross borrowings and gross loan repayments of $16,300,000 and
$11,700,000, respectively, during the period ended July 31, 2004. The maximum
amount of borrowings outstanding at any month-end was $4,600,000. The Fund paid
commitment fees of $20 and interest of $23,000 during the period ended July 31,
2004.
33 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
- --------------------------------------------------------------------------------
6. SUBSEQUENT EVENTS - LITIGATION
Three complaints have been filed as putative derivative and class actions
against the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"),
as well as 51 of the Oppenheimer funds (collectively, the "Funds") excluding
this Fund, and nine directors/trustees of certain of the Funds (collectively,
the "Directors/Trustees"). The complaints allege that the Manager charged
excessive fees for distribution and other costs, improperly used assets of the
Funds in the form of directed brokerage commissions and 12b-1 fees to pay
brokers to promote sales of the Funds, and failed to properly disclose the use
of Fund assets to make those payments in violation of the Investment Company Act
of 1940 and the Investment Advisers Act of 1940. The complaints further allege
that by permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the Investment
Company Act of 1940 and at common law.
OppenheimerFunds believes that it is premature to render any opinion as to the
likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
34 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Limited Term California Municipal Fund (the "Fund"), including the
statement of investments, as of July 31, 2004, and the related statements of
operations, cash flows and changes in net assets and the financial highlights
for the period from February 25, 2004 (commencement of operations) to July 31,
2004. 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 audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. 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
audit provides 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 Limited Term California Municipal Fund at July 31, 2004, the results
of its operations, its cash flows, the changes in its net assets and the
financial highlights for the period from February 25, 2004 to July 31, 2004 in
conformity with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
August 30, 2004
35 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. 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 period ended July 31,
2004 are eligible for the corporate dividend-received deduction. The dividends
were derived from interest on municipal bonds and are not subject to federal
income taxes. 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.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file new Form N-PX, with its complete proxy voting record for the 12 months
ended June 30th, no later than August 31st of each year. The Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarters of each fiscal year on Form N-Q.
The Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied and the SEC's Public
Reference Room in Washington D.C. and information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
36 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD
FUND, LENGTH OF SERVICE, AGE BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE AND INTERESTED TRUSTEE IN THE CHARTS BELOW IS 6803 S.
TRUSTEES TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM,
UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
RONALD J. ABDOW, Chairman (since 1959) of Abdow Corporation (operator of restaurants); Trustee
Trustee (since 2004) of the following real estate businesses (owners and operators of restaurants):
Age: 72 G&R Realty Co. (since 1978), G&R Trust Co. (since 1973), Abdow Partnership
(since 1975), Auburn Associates (since 1983) and Hazard Associates (since 1985);
Trustee of MML Series Investment Fund (since 1993) and of MassMutual
Institutional Funds (MMIF) (since 1994) (open-end investment companies);
Trustee (since 1987) of Bay State Health System (health services); Chairman
(since 1996) of Western Mass Development Corp. (non-profit land development);
Chairman (since 1991) of American International College (non-profit
college). Oversees 10 portfolios in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Self-employed as an investment consultant; a director (since 1996) of Lakes
Trustee (since 2004) Environmental Association, and Medintec (since 1992) and Cathco (since 1995)
Age: 63 (medical device companies); a member of the investment committee of the
Associated Jewish Charities of Baltimore (since 1994); formerly a director of
Fortis/Hartford mutual funds (1994 - December 2001). Oversees 10 portfolios
in the OppenheimerFunds complex.
PETER I. WOLD, President of Wold Properties, Inc. (an oil and gas exploration and production
Trustee (since 2004) company); Vice President, Secretary and Treasurer of Wold Trona Company, Inc.
Age: 56 (soda ash processing and production); Vice President of Wold Talc Company,
Inc. (talc mining); Managing Member, Hole-in-the-Wall Ranch (cattle ranching);
formerly Director and Chairman of the Board, Denver Branch of the Federal
Reserve Bank of Kansas City (1993 - 1999) and Director of PacifiCorp. (1995 -
1999), an electric utility. Oversees 10 portfolios in the OppenheimerFunds
complex.
- ----------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
EUSTIS WALCOTT, Principal with Ardsley Associates (since 2000) (consulting firm); Director (since
Trustee (since 2004) October 2000) of Cornerstone Real Estate Advisors (real estate equity investment
Age: 66 management services) and MML Investors Services (individual retirement,
insurance, investment, and life event planning products and services company)
(both affiliates of the Manager; Trustee of OFI Trust Company (since 2001) (also
an affiliate of the Manager). Formerly Trustee of the American International
College (1995 - December 2003); Senior Vice President, MassMutual Financial
Group (May 1990 - July 2000). Oversees 10 portfolios in the OppenheimerFunds
complex.
37 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225
AND OFFICER LIBERTY STREET, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE TERM,
UNTIL HIS RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President
President, Trustee and (since September 2000) of the Manager; President and a director or trustee
Chairman of the Board, of other Oppenheimer funds; President and a director (since July 2001) of
Trustee (since 2004) Oppenheimer Acquisition Corp. (the Manager's parent holding company) and
Age: 55 of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor,
Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001)
of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established
by the Manager); a director of the following investment advisory subsidiaries
of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset
Management Corporation, Trinity Investment Management Corporation and
Tremont Capital Management, Inc. (since November 2001), HarbourView Asset
Management Corporation and OFI Private Investments, Inc. (since July 2001);
President (since November 1, 2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President (since
February 1997) of Massachusetts Mutual Life Insurance Company (the
Manager's parent company); a director (since June 1995) of DLB Acquisition
Corporation (a holding company that owns the shares of Babson Capital
Management LLC); a member of the Investment Company Institute's Board of
Governors (elected to serve from October 3, 2003 through September 30, 2006).
Formerly, Chief Operating Officer (September 2000-June 2001) of the Manager;
President and trustee (November 1999-November 2001) of MML Series
Investment Fund and MassMutual Institutional Funds (open-end investment
companies); a director (September 1999-August 2000) of C.M. Life Insurance
Company; President, Chief Executive Officer and director (September 1999-
August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-
owned subsidiary of Emerald Isle Bancorp). Oversees 73 portfolios as Trustee/
Director and 10 portfolios as Officer in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MR. ZACK, TWO WORLD
FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008, FOR MR.
WIXTED AND MARK VANDEHEY, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924, AND
FOR MR. FIELDING, 350 LINDEN OAKS, ROCHESTER, NY 14625. EACH OFFICER SERVES FOR AN
ANNUAL TERM OR UNTIL HIS OR HER EARLIER RESIGNATION, DEATH OR REMOVAL.
RONALD H. FIELDING, Senior Vice President of the Manager since January 1996; Chairman of the
Vice President (since 2004) Rochester Division of the Manager since January 1996; an officer of 10 portfolios
Age: 55 in the OppenheimerFunds complex.
38 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager;
Treasurer, Principal Financial Treasurer of HarbourView Asset Management Corporation, Shareholder Financial
and Accounting Officer Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
(since 2003) Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999),
Age: 44 of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional
Asset Management, Inc. (since November 2000), and of OppenheimerFunds
Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer
and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust
company subsidiary of the Manager); Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset
Management Corporation (March 1999-October 2003) and OppenheimerFunds
Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer
(March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services
Division. An officer of 83 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2003) February 2002) of the Manager; General Counsel and a director (since November
Age: 56 2001) of the Distributor; General Counsel (since November 2001) of Centennial
Asset Management Corporation; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation;
Secretary and General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director (since October 1997) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President
and a director (since November 2001) of Oppenheimer Partnership Holdings,
Inc.; a director (since November 2001) of Oppenheimer Real Asset Management,
Inc.; Senior Vice President, General Counsel and a director (since November 2001)
of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private
Investments, Inc. and OFI Trust Company; Vice President (since November 2001)
of OppenheimerFunds Legacy Program; Senior Vice President and General
Counsel (since November 2001) of OFI Institutional Asset Management, Inc.; a
director (since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior
Vice President (May 1985-December 2003), Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001)
of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-
November 2001), Shareholder Financial Services, Inc. (November 1989-November
2001); and OppenheimerFunds International Ltd. (October 1997-November
2001). An officer of 83 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST.
39 | OPPENHEIMER LIMITED TERM CALIFORNIA MUNICIPAL FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that Joseph M.
Wikler, the Chairman of the Board's Audit Committee, possesses the technical
attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as
an "audit committee financial expert," and has designated Mr. Wikler as the
Audit Committee's financial expert. Mr. Wikler is an "independent" Trustee
pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements was engaged to provide $22,250 in fiscal
2004. This section is not applicable to fiscal 2003 as the
registrant commenced operations in February 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year. This section is not applicable to fiscal
2003 as the registrant commenced operations in February 2004.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant. This
section is not applicable to fiscal 2003 as the registrant
commenced operations in February 2004.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year. This section is not applicable to fiscal
2003 as the registrant commenced operations in February 2004.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last fiscal
year to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant. This
section is not applicable to fiscal 2003 as the registrant
commenced operations in February 2004.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year. This section is not applicable to fiscal
2003 as the registrant commenced operations in February 2004.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant. This
section is not applicable to fiscal 2003 as the registrant
commenced operations in February 2004.
Such fees would include services provided to the registrant's
Board of Trustees with respect to analysis of the registrant's
expenses and consultations with management with respect to its due
diligence review process surrounding investments.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last fiscal year to the registrant and the registrant's
investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing
services to the registrant related to non-audit fees. Those
billings did not include any prohibited non-audit services as
defined by the Securities Exchange Act of 1934. This section is
not applicable to fiscal 2003 as the registrant commenced
operations in February 2004.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board is responsible for approving nominees for election as
trustees. To assist in this task, the Board has designated the Audit Committee
as the nominating committee for the Board. It reviews and recommends nominees to
the Board. The Committee is comprised entirely of disinterested trustees as
defined in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the
Committee in nominating candidates for election as independent Trustees of the
Registrant. The Registrant's Board has adopted a written charter for the
Committee. A current copy of the Audit Committee charter is available to
shareholders on the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM.
Under the current policy, if the Board determines that a vacancy exists
or is likely to exist on the Board, the Audit Committee of the Board will
consider candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission
to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO
80112, to the attention of the Board of Trustees of the named Registrant, c/o
the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for
trustees includes a number of factors. In screening candidates for board
membership, whether the candidate is suggested by Board members, shareholders or
others, the Committee considers the candidate's professional experience,
soundness of judgment, integrity, ability to make independent, analytical
inquiries, collegiality, willingness and ability to devote the time required to
perform Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(c)) as of July 31, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and
communicated to registrant's management, including its principal
executive officer and principal financial officer, to allow timely
decisions regarding required disclosure, and (b) is recorded,
processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities
and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(a) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(b) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)