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 811-05871
Centennial California Tax Exempt Trust
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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
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: June 30
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Date of reporting period: June 30, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Trust, you incur ongoing costs, including
management fees; service fees; and other Trust expenses. These examples are
intended to help you understand your ongoing costs (in dollars) of investing in
the Trust and to compare these costs with the ongoing costs of investing in
other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended June 30, 2005.
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, 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 Trust's actual expense ratio, and an assumed rate of
return of 5% per year before expenses, which is not the Trust'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 Trust 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.
5 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FUND EXPENSES
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(1/1/05) (6/30/05) JUNE 30, 2005
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Actual $ 1,000.00 $ 1,007.60 $ 3.79
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Hypothetical 1,000.00 1,021.03 3.82
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Trust's annualized expense ratio, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period). The annualized expense ratio based on the 6-month period
ended June 30, 2005 is as follows:
EXPENSE RATIO
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0.76%
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6 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS JUNE 30, 2005
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM TAX-EXEMPT OBLIGATIONS--99.6%
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CALIFORNIA--97.5%
Alameda/Contra Costa, CA Schools FAU COP, Capital Improvements
Financing Project, Series A, 2.38% 1 $ 495,000 $ 495,000
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Alameda/Contra Costa, CA Schools FAU COP, Capital Improvements
Financing Project, Series D, 2.38% 1 2,000,000 2,000,000
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Alameda/Contra Costa, CA Schools FAU COP, Capital Improvements
Financing Project, Series G, 2.45% 1 545,000 545,000
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CA Department of Water Resources Power Supply RB, Series C-7, 2.22% 1 5,300,000 5,300,000
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CA Department of Water Resources Power Supply RB, Series C5, 2.35% 1 2,500,000 2,500,000
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CA Department of Water Resources Power Supply RRB, Central Valley
Project, MERLOTS Series 2003 B32, 2.31% 1,2 1,990,000 1,990,000
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CA Economic Recovery Revenue Bonds, Series C-10, 2.35% 1 3,900,000 3,900,000
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CA EDFAU IDV RB, Applied Aerospace Structure Corp., Series 1998, 2.36% 1 1,200,000 1,200,000
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CA Golden State Tobacco Securitization Corp. Reset Option
Certificates II-R Trust RB, Series 364, 2.35% 1,2 2,500,000 2,500,000
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CA HFFAU RB, Kaiser Permanente, Series A, MSTFC Series 1998 26, 2.28% 1,2 3,000,000 3,000,000
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CA Infrastructure & ED Bank RB, Salvation Army Western Territory,
Series 2001, 2.10%, 8/9/05 5,000,000 5,000,000
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CA PCFAU SWD RB, Amador Valley Industry Project, Series 2005A, 2.36% 1 3,450,000 3,450,000
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CA PCFAU SWD RB, Vanderham/J&D Wilson Dairy Project, Series 2004, 2.38% 1 2,500,000 2,500,000
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CA Puttable Floating Option Tax Exempt Receipts, Series PZP-002, 2.43% 1 2,490,000 2,490,000
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CA Puttable Floating Option Tax Exempt Receipts, Series PZP-005, 2.38% 1,2 2,000,000 2,000,000
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CA REF GOUN, Kindergarten University, Series 2004B-6, 2.28% 1 11,000,000 11,000,000
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CA SCDAU MH RB, Crossings at Madera, Series NN, 2.68%, 7/21/05 3 4,750,000 4,750,000
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CA SCDAU MH RB, Fountains Seacliff Apts. Project, Series 2002Y, 2.24% 1 6,000,000 6,000,000
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CA SCDAU RB, Trust Receipts, Series F15 D, 2.43% 1 6,000,000 6,000,000
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CA Statewide FAU TS RB, Puttable Floating Option Tax Exempt Receipts,
Series PA-1287, 2.37% 1,2 2,500,000 2,500,000
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Clovis, CA USD GOB, Puttable Floating Option Tax Exempt Receipts,
Series PZ-42, 2.40% 1 1,330,000 1,330,000
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El Rancho, CA USD GOUN, Puttable Tax Exempt Receipts, Series 807, 2.31% 1,2 6,225,000 6,225,000
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Fontana, CA PFAU TXAL RB, Putters Series 707, 2.31% 1,2 2,000,000 2,000,000
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Lancaster, CA RA MH RB, Floating Rate Trust Receipts, Series F12J,
Sunset Project, 2.43% 1 5,000,000 5,000,000
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Livermore, CA COP, Capital Projects, 2.35% 1 4,000,000 4,000,000
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Long Beach, CA FAU Lease RB, Long Beach Museum of Art,
Series 1999, 2.28% 1 2,060,000 2,060,000
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Los Angeles, CA Community RA RB, Skyline at Southpark Apts.,
Series 1985, 2.18% 1 5,500,000 5,500,000
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Los Angeles, CA Convention & Exhibition Center Authority Lease RB,
Series D, 2.25% 1 1,555,000 1,555,000
7 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS CONTINUED
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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CALIFORNIA Continued
Los Angeles, CA USD GOB, AAMC Series 1999-7, 2.31% 1,2 $ 6,000,000 $ 6,000,000
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Los Angeles, CA Wastewater System GOB, AAMC Series 1998-25, 2.31% 1,2 2,000,000 2,000,000
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Los Angeles, CA Wastewater System RRB, Series B, 2.15%, 12/1/05 3 5,000,000 5,000,000
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Mt. Diablo, CA USD GOB, AAMC Series 2004-36, 2.31% 1,2 4,590,000 4,590,000
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San Bernardino Cnty., CA MH HAU RRB, Montclair Heritage-A, 2.54% 1 4,620,000 4,620,000
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San Diego Cnty., CA Water Authority REF COP, Puttable Floating
Option Tax Exempt Receipts, Series PT-2375, 2.30% 1,2 5,395,000 5,395,000
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San Diego, CA Sewer RB, SGMSTR Series SG 14, 2.30% 1,2 3,955,000 3,955,000
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San Diego, CA Water Utility Fund Net System GOB,
AAMC Series 1998-10, 2.30% 1,2 2,300,000 2,300,000
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San Francisco, CA City & Cnty. PUC Clean Water RRB,
MERLOTS Series 2003 B20, 2.31% 1,2 6,985,000 6,985,000
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Santa Clara Cnty., CA El Camino Hospital FAU RB, 2.50% 1 5,700,000 5,700,000
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Santa Clara Cnty., CA FAU Lease RB, Housing Authority Office Project,
Series 2004A, 2.24% 1 3,550,000 3,550,000
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Santa Rosa, CA Wastewater RB, Puttable Floating Option Tax Exempt
Receipts, Series PZ-43, 2.38% 1 885,000 885,000
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Stockton, CA CFD No. 99-02 SPTX Bonds, Arch Road East, 2.28% 1 2,605,000 2,605,000
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University of California Board of Regents RB, ETET Series 720050006,
Cl. A, 2.31% 1,2 2,445,000 2,445,000
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Vallejo, CA COP, Capital Improvements Project, Series 2002, 2.41% 1 2,400,000 2,400,000
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Vallejo, CA COP, Golf Course Facilities Financing Project, Series 2001, 2.41% 1 6,500,000 6,500,000
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161,720,000
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U.S. POSSESSIONS--2.1%
PR CMWLTH GOUN, Floating Rate Trust Receipts, Series 2005-F2, 2.68% 1,2 3,000,000 3,000,000
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PR CMWLTH Public Improvement GOUN, Puttable Tax Exempt
Receipts, Series 491, 2.32% 1,2 400,000 400,000
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3,400,000
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TOTAL INVESTMENTS, AT VALUE (COST $165,120,000) 99.6% 165,120,000
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OTHER ASSETS NET OF LIABILITIES 0.4 742,113
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NET ASSETS 100.0% $ 165,862,113
===========================
8 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FOOTNOTES TO STATEMENT OF INVESTMENTS
To simplify the listings of securities, abbreviations are used per the table
below:
AAMC ABN AMRO Munitops Certificates
CFD Community Facilities District
CMWLTH Commonwealth
COP Certificates of Participation
ED Economic Development
EDFAU Economic Development Finance Authority
ETET Eagle Tax-Exempt Trust
FAU Finance Authority
GOB General Obligation Bonds
GOUN General Obligation Unlimited Nts.
HAU Housing Authority
HFFAU Health Facilities Finance Authority
IDV Industrial Development
MERLOTS Municipal Exempt Receipts Liquidity Option Tender
MH Multifamily Housing
MSTFC Morgan Stanley & Co., Inc. Trust Floater Certificates
PCFAU Pollution Control Finance Authority
PFAU Public Finance Authority
PUC Public Utilities Commission
RA Redevelopment Agency/Authority
RB Revenue Bonds
REF Refunding
RRB Revenue Refunding Bonds
SCDAU Statewide Communities Development Authority
SGMSTR Societe Generale, NY Branch MunicipaL Security Trust Receipts
SPTX Special Tax
SWD Solid Waste Disposal
TS Tobacco Settlement
TXAL Tax Allocation
USD Unified School District
1. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on June 30,
2005. This instrument has a demand feature which allows, on up to 30 days'
notice, the recovery of principal at any time, or at specified intervals not
exceeding one year.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $57,285,000 or 34.54% of the Trust's net
assets as of June 30, 2005.
3. Put obligation redeemable at full principal value on the date reported.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2005
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ASSETS
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Investments, at value (cost $165,120,000)--
see accompanying statement of investments $ 165,120,000
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Cash 151,244
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Receivables and other assets:
Interest 759,494
Shares of beneficial interest sold 13,899
Other 8,183
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Total assets 166,052,820
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LIABILITIES
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Payables and other liabilities:
Dividends 77,676
Service plan fees 72,947
Legal, auditing and other professional fees 11,077
Shareholder communications 7,553
Trustees' compensation 4,522
Transfer and shareholder servicing agent fees 3,575
Other 13,357
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Total liabilities 190,707
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NET ASSETS $ 165,862,113
==============
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COMPOSITION OF NET ASSETS
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Paid-in capital $ 165,870,367
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Accumulated net realized loss on investments (8,254)
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NET ASSETS--applicable to 165,851,644 shares of
beneficial interest outstanding $ 165,862,113
==============
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NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND
OFFERING PRICE PER SHARE $ 1.00
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2005
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INVESTMENT INCOME
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Interest $ 2,787,684
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EXPENSES
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Management fees 740,169
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Service plan fees 294,868
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Transfer and shareholder servicing agent fees 43,265
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Shareholder communications 12,099
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Trustees' compensation 5,352
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Custodian fees and expenses 5,129
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Other 38,686
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Total expenses 1,139,568
Less reduction to custodian expenses (3,333)
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Net expenses 1,136,235
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NET INVESTMENT INCOME 1,651,449
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NET REALIZED GAIN ON INVESTMENTS 4,790
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,656,239
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
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YEAR ENDED JUNE 30, 2005 2004
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OPERATIONS
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Net investment income $ 1,651,449 $ 309,706
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Net realized gain (loss) 4,790 (13,044)
------------------------------
Net increase in net assets resulting from operations 1,656,239 296,662
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
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Dividends from net investment income (1,651,449) (309,706)
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BENEFICIAL INTEREST TRANSACTIONS
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Net increase (decrease) in net assets resulting from
beneficial interest transactions 25,965,482 (12,950,996)
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NET ASSETS
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Total increase (decrease) 25,970,272 (12,964,040)
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Beginning of period 139,891,841 152,855,881
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End of period $ 165,862,113 $ 139,891,841
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FINANCIAL HIGHLIGHTS
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YEAR ENDED JUNE 30, 2005 2004 2003 2002 2001
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PER SHARE OPERATING DATA
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Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
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Income from investment operations--net
investment income and net realized gain .01 1 -- 2 .01 .01 .03
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Dividends and/or distributions to
shareholders:
Dividends from net investment income (.01) -- 2 (.01) (.01) (.03)
Distributions from net realized gain -- -- -- -- 2 --
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Total dividends and/or distributions
to shareholders (.01) -- 2 (.01) (.01) (.03)
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Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=================================================================
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TOTAL RETURN 3 1.13% 0.21% 0.52% 0.89% 2.74%
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RATIOS/SUPPLEMENTAL DATA
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Net assets, end of period (in thousands) $ 165,862 $ 139,892 $ 152,856 $ 154,653 $ 157,316
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Average net assets (in thousands) $ 148,312 $ 149,559 $ 156,348 $ 164,278 $ 166,654
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Ratios to average net assets: 4
Net investment income 1.11% 0.21% 0.52% 0.89% 2.72%
Total expenses 0.77% 0.78% 0.76% 0.77% 0.84%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 N/A 5,6 N/A 5,6 N/A 5,6 0.81%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. Assumes an investment 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. Total returns are not annualized for
periods less than one full year. Returns do not reflect the deduction of taxes
that a shareholder would pay on Trust distributions or the redemption of Trust
shares.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary reimbursement of expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS
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1. SIGNIFICANT ACCOUNTING POLICIES
Centennial California Tax Exempt Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust's investment objective is to seek the
maximum current interest income exempt from federal and California personal
income taxes for individual investors as is consistent with the preservation of
capital. The Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI).
The following is a summary of significant accounting policies consistently
followed by the Trust.
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SECURITIES VALUATION. The net asset value of shares of the Trust is normally
determined twice each day, at 12:00 Noon Eastern time and at 4:00 P.M. Eastern
time on each day The New York Stock Exchange (the Exchange) is open for trading.
Portfolio securities are valued on the basis of amortized cost, which
approximates market value.
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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.
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FEDERAL TAXES. The Trust 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 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 Trust must satisfy under the income tax regulations, losses the
Trust may be able to offset against income and gains realized in future years
for federal income tax purposes.
UNDISTRIBUTED NET UNDISTRIBUTED ACCUMULATED LOSS
INVESTMENT INCOME LONG-TERM GAINS CARRYFORWARD 1,2
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$ 97,512 $ -- $ 8,254
1. As of June 30, 2005, the Trust had $8,254 of net capital loss carryforwards
available to offset future realized capital gains, if any, and thereby reduce
future taxable gain distributions. As of June 30, 2005 details of the capital
loss carryfor-ward was as follows:
EXPIRING
--------------------
2012 $8,254
2. During the fiscal year June 30, 2005, the Trust utilized $4,790 of capital
loss carryforward to offset capital gains realized in that fiscal year. During
the fiscal year June 30, 2004, the Trust did not utilize any capital loss
carryforwards.
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 year from net investment income or net
realized gains may differ from their
14 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends 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 Trust.
The tax character of distributions paid during the years ended June 30, 2005 and
June 30, 2004 were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2005 JUNE 30, 2004
--------------------------------------------------------
Distributions paid from:
Exempt-interest dividends $ 1,651,449 $ 309,706
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TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Trust. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Trust or in other Oppenheimer funds
selected by the Trustee. The Trust purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Trust asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Trust, and will not materially affect the
Trust's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
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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 but may be paid at other times to maintain the net asset value per
share at $1.00.
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CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Trust on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Trust pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Trust during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
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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.
15 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Continued
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1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
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2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
YEAR ENDED JUNE 30, 2005 YEAR ENDED JUNE 30, 2004
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
Sold 435,633,846 $ 435,633,846 416,638,639 $ 416,638,639
Dividends and/or
distributions reinvested 1,571,006 1,571,006 300,412 300,412
Redeemed (411,239,370) (411,239,370) (429,890,047) (429,890,047)
------------------------------------------------------------
Net increase (decrease) 25,965,482 $ 25,965,482 (12,950,996) $ (12,950,996)
============================================================
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3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for a fee at an
annual rate of 0.50% of the first $250 million of the net assets, 0.475% of the
next $250 million of net assets, 0.45% of the next $250 million of net assets,
0.425% of the next $250 million of net assets and 0.40% of the net assets in
excess of $1 billion.
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ADMINISTRATION SERVICES. The Trust pays the Manager a fee of $1,500 per year for
preparing and filing the Trust's tax returns.
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TRANSFER AGENT FEES. Shareholder Services, Inc. (SSI) acts as the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. The Trust pays SSI a per account fee. For the year ended June 30,
2005, the Trust paid $43,302 to SSI for services to the Trust.
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SERVICE PLAN (12b-1) FEES. The Trust has adopted a service plan. It reimburses
Centennial Asset Management Corporation, the Distributor, for a portion of its
costs incurred for services provided to accounts that hold shares of the Trust.
Reimbursement is made quarterly, or monthly depending on asset size, at an
annual rate of up to 0.20% of the average annual net assets of the Trust. 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 shares of the Trust. Fees
incurred by the Trust under the Plan are detailed in the Statement of
Operations.
16 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily undertaken
to assume certain expenses of the Trust in any fiscal year that exceed 0.80% of
the Trust's average annual net assets. Effective July 7, 2003, the Manager has
voluntarily undertaken to waive receipt of its management fees to the extent
necessary so that the Trust may seek to maintain a positive yield. The Manager
reserves the right to amend or terminate either voluntary expense assumption at
any time.
SSI has voluntarily agreed to limit transfer and shareholder servicing
agent fees to 0.35% of average annual net assets of the Trust. This undertaking
may be amended or withdrawn at any time.
17 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF CENTENNIAL CALIFORNIA TAX EXEMPT
TRUST: We have audited the accompanying statement of assets and liabilities of
Centennial California Tax Exempt Trust, including the statement of investments,
as of June 30, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with 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.
The Trust is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Centennial California Tax Exempt Trust as of June 30, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
August 15, 2005
18 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FEDERAL INCOME TAX INFORMATION UNAUDITED
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In early 2006, if applicable, shareholders of record will receive information
regarding all taxable dividends and distributions paid to them by the Trust
during calendar year 2005. Regulations of the U.S. Treasury Department require
the Trust to report this information to the Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust 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.
19 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS UNAUDITED
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The Trust has adopted Portfolio Proxy Voting Policies and Procedures under which
the Trust votes proxies relating to securities ("portfolio proxies") held by the
Trust. A description of the Trust's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Trust
toll-free at 1.800.525.7048, (ii) on the Trust's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Trust is required to file 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 Trust's voting record is available (i) without charge, upon
request, by calling the Trust toll-free at 1.800.525.7048, and (ii) in Form N-PX
filing on the SEC's website at www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the SEC for
the first quarter and the third quarter of each fiscal year on Form N-Q. The
Trust's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
20 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BOARD APPROVAL OF THE TRUST'S INVESTMENT
ADVISORY AGREEMENT UNAUDITED
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Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Trust's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Trust services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Trust's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Trust with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio manager and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Trust's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Trust. The Board noted that the Manager has had over twenty years of experience
as an investment adviser. The Board evaluated the Manager's administrative,
accounting, legal and compliance services and information the Board received
regarding the experience and professional qualifications of the Manager's
personnel and the size and functions of its staff. The Board members also
considered their experiences as directors or trustees of the Trust and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Trust's service agreements. The Board was aware that there are alternatives
to retaining the Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of John C. Bonnell and the Manager's money market investment team and
analysts. Mr. Bonnell has had over twelve years of experience managing money
market investments and has been the person principally responsible for the
day-to-day management of the Trust's portfolio since May 2004. Mr. Bonnell is a
Vice President of the Trust and the Manager, and an officer and portfolio
manager of other funds for which the Manager or an affiliate serves as
investment advisor. Prior to joining the Manager, he was a portfolio manager at
Strong Financial Corporation.
21 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BOARD APPROVAL OF THE TRUST'S INVESTMENT
ADVISORY AGREEMENT UNAUDITED / CONTINUED
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The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Trust's historical performance to relevant
market indices and to the performance of other California tax-exempt money
market funds advised by other investment advisers. The Board also receives and
reviews comparative performance information regarding the Trust and other funds
at each Board meeting. The Board noted that the Trust's one-year, three-year,
five-year and ten-year performance was below its peer group average. The Board
recognized that in the recent environment of low interest rates, the difference
between rankings for money market funds was very small. The Manager last year
engaged a new portfolio manager for the tax exempt money market Funds, and the
Board noted that the performance of these Funds has begun to improve. The Board
also noted that it had recently changed certain Board-approved investment
restrictions that were adopted in the past to protect the credit quality of the
Trust's investments at a particularly difficult time in the credit markets.
These restrictions were no longer deemed necessary as market conditions
improved. The Board determined to permit the Manager more time to improve
performance.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Trust. The independent
consultant provided comparative data in regard to the fees and expenses of the
Trust, other California tax-exempt money market funds and other funds with
comparable asset levels and distribution features. The Manager has voluntarily
undertaken to assume certain expenses of the Trust in any fiscal year that
exceed 0.80% of the Trust's average annual net assets and to waive fees to the
extent necessary so that the Trust may seek to maintain a positive yield. The
Board noted that the Trust's management fees are higher than its peer group
average and that its total expenses are slightly higher than its peer group
average. The Board determined to allow the Manager to make recommendations to
reduce expenses for the Trust. In addition, the Board evaluated the
comparability of the fees charged and the services provided to the Trust to the
fees charged and services provided to other types of entities advised by the
Manager.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Trust and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Trust and its shareholders. In
addition the Board considered information that was provided regarding the direct
and
22 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
indirect benefits the Manager receives as a result of its relationship with the
Trust, including compensation paid to the Manager's affiliates.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Trust and the current
level of Trust assets in relation to the Trust's breakpoint schedule for its
management fees. The Board considered that the Trust has not experienced any
recent asset growth and that, based on current asset levels, the Trust is not
yet approaching its last management fee breakpoint.
CONCLUSIONS. These factors were also considered by the independent Trustees
meeting separately from the full Board, assisted by experienced counsel to the
Trust and to the independent Trustees. Trust counsel and the independent
Trustees' counsel are both independent of the Manager within the meaning and
intent of the Securities and Exchange Commission Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Trust by the Manager are a benefit to the Trust and in the best interest of the
Trust's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the advisory
agreement for another year. In arriving at this decision, the Board did not
single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
23 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
TRUSTEES AND OFFICERS UNAUDITED
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NAME, POSITION(s) HELD WITH PRINCIPAL OCCUPATION(s) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
TRUST, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW, EXCEPT MR. ARMSTRONG, IS
TRUSTEES 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. MR. ARMSTRONG'S ADDRESS IS
1625 BROADWAY, SUITE 780, DENVER, CO 80202. EACH TRUSTEE SERVES FOR AN
INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Chairman (since 2003) Mortgage Company (since 1991), Centennial State Mortgage Company (since
and Trustee (since 2000) 1994), and The El Paso Mortgage Company (since 1993); Chairman of the
Age: 68 following private companies: Ambassador Media Corporation (since 1984) and
Broadway Ventures (since 1984); Director of the following: Helmerich &
Payne, Inc. (oil and gas drilling/production company) (since 1992), Campus
Crusade for Christ (since 1991) and the Bradley Foundation (since 2002);
former Chairman of the following: Transland Financial Services, Inc.
(private mortgage banking company) (1997-2003), Great Frontier Insurance
(insurance agency) (1995-2000), Frontier Real Estate, Inc. (residential
real estate brokerage) (1994-2000) and Frontier Title (title insurance
agency) (1995-2000); former Director of the following: UNUMProvident
(insurance company) (1991-2004), Storage Technology Corporation (computer
equipment company) (1991-2003) and International Family Entertainment
(television channel) (1992-1997); U.S. Senator (January 1979-January 1991).
Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner of
Trustee (since 1990) private equity funds) (until February 2001); Chairman, President and Chief
Age: 74 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000);
Director of A.G. Edwards & Sons, Inc. (brokerage company) (until 2000) and
A.G. Edwards Trust Company (investment adviser) (until 2000); Vice Chairman
and Director of A.G. Edwards, Inc. (until March 1999); Vice Chairman of
A.G. Edwards & Sons, Inc. (until March 1999); Chairman of A.G. Edwards
Trust Company (until March 1999) and A.G.E. Asset Management (investment
adviser) (until March 1999). Oversees 38 portfolios in the
OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of the Manager (December 1991-April 1999);
Trustee (since 1998) President, Treasurer and Director of Centennial Capital Corporation (June
Age: 68 1989-April 1999); Chief Executive Officer and Director of MultiSource
Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions
with OppenheimerFunds, Inc. and with subsidiary or affiliated companies of
OppenheimerFunds, Inc. (September 1987-April 1999). Oversees 38 portfolios
in the OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical
Trustee (since 2000) site) (since June 2000); Director of Genetic ID, Inc. (biotech company)
Age: 66 (March 2001-May 2002); Partner at PricewaterhouseCoopers LLP (accounting
firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global
Investment Management Industry Services Group (July 1994-June 1998).
Oversees 38 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director
Trustee (since 1990) of Northwestern Energy Corp. (public utility corporation) (since November
Age: 63 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003);
Director of Rocky Mountain Elk Foundation (February 1998-February 2003);
Chairman and Director (until 1996) and President and Chief Executive
Officer (until October 1995) of OppenheimerFunds, Inc.; President, Chief
Executive Officer and Director of the following: Oppenheimer Acquisition
Corp. ("OAC") (parent holding
24 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
JON S. FOSSEL, company of OppenheimerFunds, Inc.), Shareholder Services, Inc. and
Continued Shareholder Financial Services, Inc. (until October 1995). Oversees 38
portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (charitable organization) (since September
Trustee (since 1996) 1984). Mr. Freedman held several positions with OppenheimerFunds, Inc. and
Age: 64 with subsidiary or affiliated companies of OppenheimerFunds, Inc. (until
October 1994). Oversees 38 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational
Trustee (since 2002) organization) (since February 2000); Director of The California Endowment
Age: 58 (philanthropic organization) (since April 2002); Director of Community
Hospital of Monterey Peninsula (since February 2002); Director of Emerging
Markets Growth Fund Inc. (mutual fund) (since October 1991); President of
ARCO Investment Management Company (February 1991-April 2000); Member of the
investment committees of The Rockefeller Foundation and The University of
Michigan; Advisor at Credit Suisse First Boston's Sprout venture capital
unit (venture capital fund) (1994- January 2005); Trustee of MassMutual
Institutional Funds (investment company) (1996-June 2004); Trustee of MML
Series Investment Fund (investment company) (April 1989-June 2004); Member
of the investment committee of Hartford Hospital (2000-2003); and Advisor to
Unilever (Holland) pension fund (2000-2003). Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank
Trustee (since 2002) (commercial banking) (since August 2003); Director of Colorado UpLIFT
Age: 60 (charitable organization) (since 1986); Trustee of the Gallagher Family
Foundation (non-profit organization) (since 2000); Former Chairman of U.S.
Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National
Bank) (July 1996- April 1999); Director of Commercial Assets, Inc. (REIT)
(1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and
Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-February
2004). Oversees 38 portfolios in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds)
Trustee (since 2000) (investment company) (since 1996) and MML Series Investment Fund (invest-
Age: 63 ment company) (since 1996), the Springfield Library and Museum Association
(museums) (since 1995) and the Community Music School of Springfield (music
school) (since 1996); Chairman and Trustee (since 2003) and Chairman of the
Investment Committee (since 1994) of the Worcester Polytech Institute
(private university); President and Treasurer of the SIS Funds (private
charitable fund) (since January 1999); Chairman of SIS & Family Bank, F.S.B.
(formerly SIS Bank) (commercial bank) (January 1999-July 1999); Member of
the Investment Committee of the Community Foundation of Western
Massachusetts (1998-2003); and Executive Vice President of Peoples Heritage
Financial Group, Inc. (commercial bank) (January 1999-July 1999). Oversees
38 portfolios in the OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. GRABISH IS 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924.
MR. GRABISH SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL. MR. GRABISH IS AN INTERESTED TRUSTEE DUE TO
HIS POSITIONS WITH A.G. EDWARDS & SONS, INC. WHICH IS A PARTIAL OWNER OF THE
MANAGER'S PARENT COMPANY.
RICHARD F. GRABISH, Senior Vice President and Assistant Director of Sales and Marketing (since
Trustee (since 2001) March 1997), Director (since March 1987) and Manager of Private Client
Age: 56 Services (since June 1985) of A.G. Edwards & Sons, Inc. (broker/dealer and
investment firm);
25 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
TRUSTEES AND OFFICERS UNAUDITED/CONTINUED
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RICHARD F. GRABISH, Chairman and Chief Executive Officer of A.G. Edwards Trust Company (since
Continued March 2001); President and Vice Chairman of A.G. Edwards Trust Company
(investment adviser) (April 1987-March 2001). Oversees 5 portfolios in the
OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER,
AND OFFICER 225 LIBERTY STREET, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN
INDEFINITE TERM, UNTIL HIS RESIGNATION, DEATH OR REMOVAL. MR. MURPHY IS AN
INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS
AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
President (since 2001) and President (since September 2000) of OppenheimerFunds, Inc.; President and
Trustee (since 2003) Director or Trustee of other Oppenheimer funds; President and Director of
Age: 55 OAC and of Oppenheimer Partnership Holdings, Inc. (holding company
subsidiary of OppenheimerFunds, Inc.) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of OppenheimerFunds, Inc.)
(since November 2001); Chairman and Director of Shareholder Services, Inc.
and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of
OppenheimerFunds, Inc.) (since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust program established by
OppenheimerFunds, Inc.) (since July 2001); Director of the following
investment advisory subsidiaries of OppenheimerFunds, Inc.: the Manager, OFI
Institutional Asset Management, Inc., 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 2001) and Director (since July
2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President
of Massachusetts Mutual Life Insurance Company (OAC's parent company)
(since February 1997); Director of DLB Acquisition Corporation
(holding company parent of Babson Capital Management LLC) (since June 1995);
Member of the Investment Company Institute's Board of Governors (since
October 3, 2003); Chief Operating Officer of OppenheimerFunds, Inc.
(September 2000- June 2001); President and Trustee of MML Series Investment
Fund and MassMutual Select Funds (open-end investment companies) (November
1999-November 2001); Director of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive Officer and Director of MML
Bay State Life Insurance Company (September 1999-August 2000); Director of
Emerald Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of
Emerald Isle Bancorp) (June 1989-June 1998). Oversees 66 portfolios as
trustee or director and 20 additional portfolios as Officer in the
OppenheimerFunds complex.
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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 MS. WOLF, MR. WEISS, MR. WIXTED, AND MR. VANDEHEY, 6803 S.
TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL
TERM OR UNTIL HIS OR HER EARLIER RESIGNATION, DEATH OR REMOVAL.
JOHN BONNELL, Vice President of OppenheimerFunds, Inc. (since May 2004); Chartered
Vice President (since 2004) Financial Analyst; Portfolio Manager at Financial Corporation (May 1999 -
Age: 40 May 2004). Mr. Bonnell is an officer of 3 portfolios in the OppenheimerFunds
complex.
26 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BRIAN W. WIXTED, Senior Vice President and Treasurer of OppenheimerFunds, Inc. (since March
Treasurer (since 1999) 1999); Treasurer of the following: Shareholder Services Inc., HarbourView
Age: 45 Asset Management Corporation, Shareholder Financial Services, Inc.,
Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership
Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since
March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (since June 2003); Treasurer and
Chief Financial Officer of OFI Trust Company (trust company subsidiary of
OppenheimerFunds, Inc.) (since May 2000); Assistant Treasurer of OAC (since
March 1999); and Assistant Treasurer of the Manager and Distributor (March
1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer of Bankers Trust Company-Mutual
Fund Services Division (March 1995-March 1999). An officer of 86 portfolios
in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Vice President and Secretary March 2002) of OppenheimerFunds, Inc.; General Counsel of the Manager and
(since 2001) Distributor (since December 2001); General Counsel and Director of
Age: 56 OppenheimerFunds Distributor, Inc. (since December 2001); Senior Vice Presi-
dent, General Counsel and Director of the Transfer Agent, Shareholder
Financial Services, Inc., OFI Private Investments, Inc. and OFI Trust
Company (since November 2001); Senior Vice President and General Counsel of
HarbourView Asset Management Corporation (since December 2001); Secretary
and General Counsel of OAC (since November 2001); Assistant Secretary (since
September 1997) and Director (since November 2001) of OppenheimerFunds
International Ltd. and OppenheimerFunds plc; Vice President and Director of
Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
(since November 2001); Director of OppenheimerFunds (Asia) Limited (since
December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General Counsel
(May 1981- October 2001) of OppenheimerFunds, Inc.; Assistant Secretary of
the following: the Transfer Agent (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November 2001), and OppenheimerFunds
International Ltd. (September 1997-November 2001). An officer of 86
portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of OppenheimerFunds, Inc.
Vice President and (since March 2004); Vice President of the Manager, OppenheimerFunds
Chief Compliance Officer Distributor, Inc., and Shareholder Services, Inc. (since June 1983); Vice
(since 2004) President and Director of Internal Audit of OppenheimerFunds, Inc.
Age: 54 (1997-February 2004). An officer of 86 portfolios in the Oppenheimer funds
complex.
THE TRUST'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE TRUST'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST.
27 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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 Edward L. Cameron,
the Chairman of the Board's Audit Committee, and George C. Bowen, a member of
the Board's Audit Committee, possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts," and has designated Messrs. Cameron and
Bowen as the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees 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 billed $10,250 in fiscal 2005 and $10,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2005 and $5,525 in fiscal 2004 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.
Such services include: internal control reviews.
(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 two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years 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.
(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 two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years 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.
(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.
Under applicable laws, pre-approval of non-audit services maybe 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 in fiscal 2005 and $5,525 in
fiscal 2004 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.
(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 accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUNDS' GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Funds' Governance Committee (the "Committee") will evaluate
potential Board candidates to assess their qualifications. The
Committee shall have the authority, upon approval of the Board, to
retain an executive search firm to assist in this effort. The
Committee may consider recommendations by business and personal
contacts of current Board members and by executive search firms
which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider
the advice and recommendation of the Funds' investment manager and
its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The
Committee has not established specific qualifications that it
believes must be met by a trustee nominee. In evaluating trustee
nominees, the Committee considers, among other things, an
individual's background, skills, and experience; whether the
individual is an "interested person" as defined in the Investment
Company Act of 1940; and whether the individual would be deemed an
"audit committee financial expert" within the meaning of applicable
SEC rules. The Committee also considers whether the individual's
background, skills, and experience will complement the background,
skills, and experience of other nominees and will contribute to the
Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the
nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the
Board at such times as the Committee meets to consider new nominees
for the Board. The Committee shall have the sole discretion to
determine the
candidates to present to the Board and, in such cases where
required, to shareholders. Recommendations for trustee nominees
should, at a minimum, be accompanied by the following:
o the name, address, and business, educational, and/or
other pertinent background of the person being
recommended;
o a statement concerning whether the person is an
"interested person" as defined in the Investment
Company Act of 1940;
o any other information that the Funds would be required
to include in a proxy statement concerning the person
if he or she was nominated; and
o the name and address of the person submitting the
recommendation and, if that person is a shareholder,
the period for which that person held Fund shares.
The recommendation also can include any additional information
which the person submitting it believes would assist the Committee
in evaluating the recommendation.
4. Shareholders should note that a person who owns securities issued
by Massachusetts Mutual Life Insurance Company (the parent company
of the Funds' investment adviser) would be deemed an "interested
person" under the Investment Company Act of 1940. In addition,
certain other relationships with Massachusetts Mutual Life
Insurance Company or its subsidiaries, with registered
broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a
trustee, Committee members and other directors customarily
interview the individual in person. In addition, the individual
customarily is asked to complete a detailed questionnaire which is
designed to elicit information which must be disclosed under SEC
and stock exchange rules and to determine whether the individual is
subject to any statutory disqualification from serving as a trustee
of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company Act of
1940 (17 CFR 270.30a-3(c)) as of June 30, 2005, the registrant's principal
executive officer and principal financial officer found the registrant's
disclosure controls and procedures to provide reasonable assurances that
information
required to be disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Centennial California Tax Exempt Trust
By: /s/John V. Murphy
-----------------
John V. Murphy
Principal Executive Officer
Date: August 10, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/John V. Murphy
-----------------
John V. Murphy
Principal Executive Officer
Date: August 10, 2005
By: /s/Brian W. Wixted
-----------------
Brian W. Wixted
Principal Financial Officer
Date: August 10, 2005