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
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(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
Date of fiscal year end: JUNE 30
Date of reporting period: DECEMBER 31, 2005
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 December 31, 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 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
(7/1/05) (12/31/05) DECEMBER 31, 2005
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Actual $ 1,000.00 $ 1,009.80 $ 3.81
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Hypothetical 1,000.00 1,021.42 3.83
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 184/365 (to reflect the
one-half year period). The annualized expense ratio based on the 6-month period
ended December 31, 2005 is as follows:
EXPENSE RATIO
- -------------
0.75%
The expense ratio reflects voluntary waivers or reimbursements of expenses by
the Trust's Manager that can be terminated at any time, without advance notice.
The "Financial Highlights" tables in the Trust's financial statements, included
in this report, also show the gross expense ratio, without such waivers or
reimbursements.
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6 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS December 31, 2005 / Unaudited
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM TAX-EXEMPT OBLIGATIONS--98.1%
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CALIFORNIA--88.4%
Alameda, CA Corridor Transporation Authority RRB, Puttable Floating
Option Tax Exempt Receipts, Series PZ-61, 3.57% 1,2 $ 2,700,000 $ 2,700,000
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Alameda/Contra Costa, CA Schools FAU COP, Capital Improvements
Financing Project, Series H, 3.53% 2 3,400,000 3,400,000
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CA Department of Water Resources Power Supply RB, Series C-7, 3.53% 2 2,000,000 2,000,000
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CA Department of Water Resources Power Supply RRB, Central Valley
Project, MERLOTS Series 2003 B32, 3.53% 1,2 1,990,000 1,990,000
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CA Department of Water Resources Power Supply RRB,
Subseries 2005 F-3, 3.20% 2 5,000,000 5,000,000
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CA Economic Recovery RB, Series C-10, 3.52% 2 3,625,000 3,625,000
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CA EDFAU IDV RB, Applied Aerospace Structure Corp., Series 1998, 3.56% 2 1,200,000 1,200,000
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CA Golden State Tobacco Securitization Corp. RB, Reset Option
Certificates II-R Trust, Series 364, 3.58% 1,2 2,490,000 2,490,000
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CA GOUN Floating Rate Trust Receipts, Series B-3, 3.52% 2 3,500,000 3,500,000
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CA GOUN, Puttable Floating Option Tax Exempt Receipts,
Series MT-162, 3.15% 2 2,000,000 2,000,000
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CA GOUN, Series A-2, 3.75% 2 3,700,000 3,700,000
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CA Infrastructure & ED Bank RB, Salvation Army Western Territory,
Series 2001, 2.78%, 2/8/06 7,000,000 7,000,000
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CA Pacific HFA Lease RB, Pass-Through Obligations, Series 2001A, 4.40% 2 160,000 160,000
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CA PCFAU SWD RB, Amador Valley Industry Project, Series 2005A, 3.55% 2 950,000 950,000
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CA PCFAU SWD RB, Sunset Waste Paper, Inc. Project, 3.60% 2 3,170,000 3,170,000
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CA PCFAU SWD RB, Vanderham/J&D Wilson Dairy Project, Series 2004, 3.63% 2 2,500,000 2,500,000
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CA Puttable Floating Option Tax Exempt Receipts, Series PZP-002, 3.66% 2 5,235,000 5,235,000
- ----------------------------------------------------------------------------------------------------------
CA Puttable Floating Option Tax Exempt Receipts, Series PZP-005, 3.61% 1,2 2,000,000 2,000,000
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CA REF GOUN, Kindergarten University, Series 2004B-6, 3.51% 2 11,000,000 11,000,000
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CA SCDAU MH RB, Fountains Seacliff Apts. Project, Series 2002Y, 3.55% 2 5,975,000 5,975,000
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CA SCDAU MH RB, Housing Village at Ninth Apts. Project, Series 2005D, 3.59% 2 4,375,000 4,375,000
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CA SCDAU MH RB, Puttable Floating Option Tax Exempt Receipts,
Series PT-3099, 3.61% 1,2 2,500,000 2,500,000
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CA SCDAU RB, Trust Receipts, Series F15 D, 3.61% 2 6,000,000 6,000,000
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CA Statewide Communities DAU MH RB, Oakwood Apts.
Series 00, 3.47%, 6/15/06 3 5,500,000 5,500,000
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CA Statewide FAU TS RB, Puttable Floating Option Tax Exempt Receipts,
Series PA-1287, 3.59% 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, 3.59% 2 1,330,000 1,330,000
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El Rancho, CA USD GOUN, Puttable Tax Exempt Receipts, Series 807, 3.54% 1,2 6,215,000 6,215,000
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Fontana, CA PFAU TXAL RB, Putters Series 707, 3.54% 1,2 1,995,000 1,995,000
7 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS Unaudited / Continued
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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CALIFORNIA Continued
Lancaster, CA RA MH RB, Floating Rate Trust Receipts, Series F12J, Sunset
Project, 3.58% 2 $ 8,600,000 $ 8,600,000
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Los Angeles, CA USD GOB, AAMC Series 1999-7, 3.51% 1,2 6,000,000 6,000,000
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Los Angeles, CA Wastewater System GOB, AAMC Series 1998-25, 3.53% 1,2 2,000,000 2,000,000
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Mt. Diablo, CA USD GOB, AAMC Series 2004-36, 3.53% 1,2 4,590,000 4,590,000
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San Diego, CA Sewer RB, SGMSTR Series SG 14, 3.53% 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, 3.52% 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,
3.53% 1,2 6,980,000 6,980,000
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San Mateo Cnty., CA HAU MH RB, Pacific Oaks Apts. Project, Series A, 3.54% 2 3,000,000 3,000,000
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Santa Clara Cnty., CA FAU Lease RB, Housing Authority Office Project, Series
2004A, 3.53% 2 3,485,000 3,485,000
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Santa Rosa, CA Wastewater RB, Puttable Floating Option Tax Exempt
Receipts, Series PZ-43, 3.61% 2 2,085,000 2,085,000
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Vallejo, CA COP, Capital Improvements Project, Series 2002, 3.58% 2 2,700,000 2,700,000
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Vallejo, CA COP, Golf Course Facilities Financing Project, Series 2001,
3.58% 2 6,500,000 6,500,000
-------------
152,205,000
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U.S. POSSESSIONS--9.7%
PR CMWLTH GOUN, Floating Rate Trust Receipts, Series 2005-F2, 3.63% 1,2 3,500,000 3,500,000
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PR CMWLTH Infrastructure FAU RB, Tender Option Trust Certificates, Series 2005
Z-6, 3.59% 1,2 2,905,000 2,905,000
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PR CMWLTH Public Finance Corp. RRB, Reset Option Certificates II-R
Trust, Series 415CE, 3.57% 2 2,700,000 2,700,000
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PR CMWLTH Public Improvement GOUN, Puttable Tax Exempt Receipts, Series 491,
3.55% 1,2 1,000,000 1,000,000
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PR CMWLTH RB, Credit Enhanced Custodial Receipts, 2.85%, 1/30/06 4 6,500,000 6,500,000
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16,605,000
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TOTAL INVESTMENTS, AT VALUE (COST $168,810,000) 98.1% 168,810,000
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OTHER ASSETS NET OF LIABILITIES 1.9 3,318,659
----------------------------
NET ASSETS 100.0% $ 172,128,659
============================
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
CMWLTH Commonwealth
COP Certificates of Participation
DAU Development Authority
ED Economic Development
EDFAU Economic Development Finance Authority
FAU Finance Authority
GOB General Obligation Bonds
GOUN General Obligation Unlimited Nts.
HAU Housing Authority
HFA Housing Finance Agency/Authority
IDV Industrial Development
MERLOTS Municipal Exempt Receipts Liquidity Option Tender
MH Multifamily Housing
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
SWD Solid Waste Disposal
TS Tobacco Settlement
TXAL Tax Allocation
USD Unified School District
1. 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 $55,620,000 or 32.31% of the Trust's net
assets as of December 31, 2005.
2. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on December
31, 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.
3. Put obligation redeemable at full principal value on the date reported.
4. Illiquid security. The aggregate value of illiquid securities as of December
31, 2005 was $6,500,000, which represents 3.78% of the Trust's net assets. See
Note 4 of Notes to Financial Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES Unaudited
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December 31, 2005
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ASSETS
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Investments, at value (cost $168,810,000)--see accompanying statement of investments $ 168,810,000
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Cash 82,951
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Receivables and other assets:
Investments sold on a when-issued basis or forward commitment 2,350,000
Interest 1,052,894
Shares of beneficial interest sold 11,200
Other 12,323
--------------
Total assets 172,319,368
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LIABILITIES
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Payables and other liabilities:
Distribution and service plan fees 90,985
Dividends 67,768
Shareholder communications 7,041
Trustees' compensation 5,401
Legal, auditing and other professional fees 4,570
Transfer and shareholder servicing agent fees 3,783
Shares of beneficial interest redeemed 785
Other 10,376
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Total liabilities 190,709
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NET ASSETS $ 172,128,659
==============
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COMPOSITION OF NET ASSETS
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Paid-in capital $ 172,136,190
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Accumulated net investment income 465
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Accumulated net realized loss on investments (7,996)
--------------
NET ASSETS--applicable to 172,117,467 shares of beneficial interest outstanding $ 172,128,659
==============
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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 Unaudited
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For the Six Months Ended December 31, 2005
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INVESTMENT INCOME
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Interest $ 2,367,253
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EXPENSES
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Management fees 443,212
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Service plan fees 177,187
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Transfer and shareholder servicing agent fees 22,006
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Shareholder communications 7,809
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Trustees' compensation 3,052
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Custodian fees and expenses 2,195
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Administration service fees 750
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Other 15,348
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Total expenses 671,559
Less reduction to custodian expenses (2,020)
Less waivers and reimbursements of expenses (486)
------------
Net expenses 669,053
==============================================================================
NET INVESTMENT INCOME 1,698,200
==============================================================================
NET REALIZED GAIN ON INVESTMENTS 258
==============================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,698,458
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
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SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2005 JUNE 30,
(UNAUDITED) 2005
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OPERATIONS
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Net investment income $ 1,698,200 $ 1,651,449
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Net realized gain 258 4,790
----------------------------------
Net increase in net assets resulting from operations 1,698,458 1,656,239
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
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Dividends from net investment income (1,697,735) (1,651,449)
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BENEFICIAL INTEREST TRANSACTIONS
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Net increase in net assets resulting from beneficial 6,265,823 25,965,482
interest transactions
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NET ASSETS
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Total increase 6,266,546 25,970,272
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Beginning of period 165,862,113 139,891,841
----------------------------------
End of period (including accumulated net investment
income of $465 for the period ended
December 31, 2005) $ 172,128,659 $ 165,862,113
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FINANCIAL HIGHLIGHTS
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SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2005 JUNE 30,
(UNAUDITED) 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 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations--net
investment income and net realized gain .02 1 .01 1 -- 2 .01 .01 .03
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.02) (.01) -- 2 (.01) (.01) (.03)
Distributions from net realized gain -- -- -- -- -- 2 --
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.02) (.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 $ 1.00
========================================================================
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TOTAL RETURN(3) 0.98% 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) $ 172,129 $165,862 $ 139,892 $ 152,856 $ 154,653 $ 157,316
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Average net assets (in thousands) $ 175,874 $148,312 $ 149,559 $ 156,348 $ 164,278 $ 166,654
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Ratios to average net assets: 4
Net investment income 1.92% 1.11% 0.21% 0.52% 0.89% 2.72%
Total expenses 0.76% 0.77% 0.78% 0.76% 0.77% 0.84%
Expenses after payments and waivers and
reduction to custodian expenses 0.75% 0.77% 0.78% 0.76% 0.77% 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Unaudited
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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 Oppenheimer Funds, 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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SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Trust on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Trust may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Trust maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Trust's net asset
value to the extent the Trust executes such transactions while remaining
substantially fully invested. The Trust may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of December 31, 2005, the Trust had sold $2,350,000 of
securities issued on a when-issued basis or forward commitment.
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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, 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.
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 ultimate characterization for federal
income tax purposes. Also, due to timing of dividends
14 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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.
As of December 31, 2005, the Trust had available for federal income tax
purposes an estimated capital loss carryforward of $7,996 expiring by 2014. This
estimated capital loss carryforward represents carryforward as of the end of the
last fiscal year, increased for losses deferred under tax accounting rules to
the current fiscal year and is increased or decreased by capital losses or gains
realized in the first six months of the current fiscal year. During the six
months ended December 31, 2005, it is estimated that the Trust will utilize $258
of capital loss carryforward to offset realized capital gains. During the year
ended June 30, 2005, the Trust did utilize $4,790 of capital loss carryforward
to offset capital gains realized in that fiscal year.
As of June 30, 2005, the Trust had available for federal income tax purposes
unused capital loss carryforward as follows:
EXPIRING
----------------------
2012 $8,254
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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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 to the extent they are not
offset by positive cash balances maintained by the Trust. 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.
15 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
SIX MONTHS ENDED DECEMBER 31, 2005 YEAR ENDED JUNE 30, 2005
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
Sold 261,997,844 $ 261,997,844 435,633,846 $ 435,633,846
Dividends and/or
distributions reinvested 1,615,055 1,615,055 1,571,006 1,571,006
Redeemed (257,347,076) (257,347,076) (411,239,370) (411,239,370)
----------------------------------------------------------------
Net increase 6,265,823 $ 6,265,823 25,965,482 $ 25,965,482
================================================================
- --------------------------------------------------------------------------------
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 the 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.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Trust pays the Manager a fee of $1,500 per year
for preparing and filing the Trust's tax returns.
- --------------------------------------------------------------------------------
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 six months ended
December 31, 2005, the Trust paid $21,798 to SSI for services to the Trust.
- --------------------------------------------------------------------------------
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 periodically 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 periodically 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. During the
six months ended December 31, 2005, the Manager waived $486 of its management
fees. 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.
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4. ILLIQUID SECURITIES
As of December 31, 2005, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Trust will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
17 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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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 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 voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing 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 quarter 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 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.
18 | 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
investment advisory agreement (the "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 Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Trust services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Trust and the
Manager, (iii) the fees and expenses of the Trust, including comparative expense
information, (iv) the profitability of the Manager, including an analysis of the
cost of providing services, (v) whether economies of scale are realized as the
Trust grows and whether fee levels reflect these economies of scale for Trust
investors and (vi) other benefits to the Manager from its relationship with the
Trust. Outlined below is a summary of the principal information considered by
the Board as well as the Board's conclusions.
NATURE, QUALITY, AND EXTENT OF SERVICES. The Board considered
information on the nature and extent of the services provided to the Trust by
the Manager and by OppenheimerFunds, Inc., the Manager's parent company, and
information regarding the key personnel that provide such services. The
Manager's duties include providing the Trust with 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; securities trading
services; oversight of third party service providers; monitoring compliance with
applicable Trust policies and procedures and adherence to the Trust's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Trust as well. Those services include providing and supervising
all administrative and clerical personnel that are necessary in order to provide
effective corporate administration for the Trust; compiling and maintaining
records with respect to the Trust's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Trust for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Trust's
shares. The Manager also provides the Trust with office space, facilities and
equipment.
19 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BOARD APPROVAL OF THE TRUST'S INVESTMENT ADVISORY AGREEMENT UNAUDITED/CONTINUED
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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
took account of the fact that the Manager has been an investment advisor since
1978 and that the Manager's and its parent's assets under management rank among
the top mutual fund managers in the United States. The Board evaluated the
Manager's administrative, accounting, legal and compliance services, and
information the Board has received regarding the experience and professional
qualifications of the Manager's key personnel and the size and functions of its
staff providing investment management services to the Trust. The Board also
considered compliance reports from the Trust's Chief Compliance Officer. In its
evaluation of the quality of the portfolio management services provided, the
Board considered the experience of John Bonnell and the Manager's money market
investment team and analysts. Mr. Bonnell has had over 17 years of experience
managing money market, equity, fixed income and municipal/tax-exempt
investments. The Board members also considered the totality of their experiences
with the Manager, as directors or trustees of the Trust and other funds advised
by the Manager. In light of the foregoing, the Board concluded that the Trust
benefits from the services provided under the Agreement as a result of the
Manager's experience, reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE TRUST. During the year, the Manager
provided information on the performance of the Trust at each Board meeting,
including comparative performance information. 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. The Board
noted that the Trust's one-year, three-year, five-year and ten-year performance
were below its peer group median, although its one-year performance had improved
over prior periods.
COSTS OF SERVICES AND PROFITS REALIZED BY THE MANAGER. The Board
considered information regarding the Manager's costs in serving as the Trust's
investment adviser, including the costs associated with the personnel and
systems necessary to manage the Trust, and information regarding the Manager's
profitability from its relationship with the Trust. The Board reviewed the fees
paid to the Manager and the other expenses borne by the Trust. The Board also
evaluated the comparability of the fees charged and the services provided to the
Trust to the fees and services for other clients or accounts advised by the
Manager. 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 agreed to assume certain expenses that exceed 0.80% of
the Trust's average
20 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
annual net assets in any fiscal year and 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. The Board noted that the Trust's contractual management
fees are at its peer group median and that its actual management fees and total
expenses are higher than its peer group median. The Board concluded that the
Trust's fees are reasonable in light of the Trust's recent performance
improvement.
ECONOMIES OF SCALE. The Board considered whether the Manager may
realize economies of scale in managing and supporting the Trust, whether those
economies of scale benefit the Trust's shareholders and the current level of
Trust assets in relation to the Trust's management fee breakpoints, which are
intended to share with shareholders economies of scale that may exist as the
Trust grows.
OTHER BENEFITS TO THE MANAGER. In addition to considering the profits
realized by the Manager, the Board considered information that was provided
regarding the direct and indirect benefits the Manager receives as a result of
its relationship with the Trust, including compensation paid to the Manager's
affiliates. The Board also considered the nature and quality of services
provided by affiliates of the Manager, which it reviews at other times during
the year in connection with the renewal of the Trust's service agreements. 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.
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,
decided 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.
21 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
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 FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's 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 December 31, 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 have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Not applicable to semiannual reports.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
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: February 14, 2006
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: February 14, 2006
By: /s/ Brian W. Wixted
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Brian W. Wixted
Principal Financial Officer
Date: February 14, 2006