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
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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
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(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: DECEMBER 31, 2006
-----------------
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, 2006.
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
(7/1/06) (12/31/06) DECEMBER 31, 2006
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Actual $1,000.00 $1,014.40 $3.89
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Hypothetical 1,000.00 1,021.35 3.90
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, 2006 is as follows:
EXPENSE RATIO
- -------------
0.76%
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6 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS December 31, 2006 / Unaudited
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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SHORT-TERM TAX-EXEMPT OBLIGATIONS--104.6%
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CALIFORNIA--96.5%
Alameda, CA Transportation Corridor Agency RB, MSTFC
Series 2006-1513, 3.92% 1,2 $ 2,255,000 $ 2,255,000
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Alameda, CA Transportation Corridor Agency RB, MSTFC
Series 2006-1514, 3.92% 1,2 4,895,000 4,895,000
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CA Coast Community College District GOUN, PTTR, Series 1417, 3.94% 1,2 1,650,000 1,650,000
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CA Dept. of Water Resources Power Supply RB, Series B-3, 3.75% 2 2,570,000 2,570,000
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CA Dept. of Water Resources Power Supply RB, Series C-15, 1.39% 2 1,000,000 1,000,000
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CA Dept. of Water Resources Power Supply RB, Series C-9, 3.75% 2 5,500,000 5,500,000
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CA Dept. of Water Resources Power Supply RB, Series C-5, 3.84% 2 2,700,000 2,700,000
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CA Dept. of Water Resources Power Supply RRB, Subseries 2005 F-2, 3.83% 2 1,100,000 1,100,000
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CA Economic Recovery RB, Series C-8, 3.75% 2 1,150,000 1,150,000
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CA EDFAU IDV RB, Applied Aerospace Structure Corp., Series 1998, 3.85% 2 800,000 800,000
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CA GOUN, P-Floats, Series PZP-010, 3.98% 1,2 500,000 500,000
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CA GOUN, Series 2003 C-4, 3.79% 2 5,000,000 4,999,800
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CA HFA RB, Home Mtg., Series M, 3.92% 2 2,300,000 2,300,000
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CA HFFAU RB, Adventist Health System, Series B, 3.89% 2 1,100,000 1,100,000
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CA HFFAU RB, Catholic Health Facilities, Series K, 3.80% 2 1,000,000 1,000,000
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CA I&E Development Bank RB, Starter & Alternator Project, Series 199, 3.95% 2 3,900,000 3,900,000
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CA PCFAU SWD RB, Cheese & Protein International Project, Series A, 4.02% 2 10,000,000 10,000,000
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CA PCFAU SWD RB, Greenwaste Recovery Project, Series A, 3.99% 2 3,075,000 3,075,000
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CA PCFAU SWD RB, Marin San Services Project, Series A, 3.99% 2 1,500,000 1,500,000
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CA PCFAU SWD RB, Penas Disposal, Inc. Project, Series A, 3.99% 2 1,345,000 1,345,000
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CA PCFAU SWD RB, Sunset Waste Paper, Inc. Project, 3.99% 2 2,960,000 2,960,000
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CA PCFAU SWD RB, Vanderham/J&D Wilson Dairy Project, Series 2004, 4.02% 2 2,500,000 2,500,000
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CA RB P-Floats, Series PZP-005, 4.01% 1,2 2,000,000 2,000,000
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CA RB, MSTFC Series 2006-1544P, 3.94% 1,2 4,000,000 4,000,000
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CA RB, P-Floats, Series PZP-002, 3.98% 1,2 4,000,000 4,000,000
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CA Reset Option Certificates Trust II GOUN, William S. Hart USD,
Series 648WFZ, 3.96% 1,2 2,830,000 2,830,000
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CA SCDAU RB, North Peninsula Jewish, 3.92% 2 500,000 500,000
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CA SCDAU RB, P-Floats, Series PT-3708, 4% 1,2 1,000,000 1,000,000
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CA SCDAU RB, SWEEP Loan Program, Series A, 3.85%, 1/3/07 5,000,000 5,000,000
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CA Statewide FAU TS RB, P-Floats, Series PA-1287, 3.96% 1,2 3,150,000 3,150,000
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CA Turlock Irrigation District RB, Series A, 3.52%, 2/8/07 1,000,000 1,000,000
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Chabot-Las Positas, CA GOUN, Community College District,
Goldman Sachs Trust Series 2006-87Z, 3.96% 1,2 2,510,000 2,510,000
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Clovis, CA USD GOB, P-Floats, Series PZ-42, 3.97% 1,2 1,510,000 1,510,000
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Fontana, CA PFAU TXAL RB, PTTR, Series 707, 3.91% 1,2 1,990,000 1,990,000
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
Irwindale, CA Community RA REF TXAL Bonds, P-Floats,
Series PT-3542, 3.91% 1,2 $ 6,870,000 $ 6,870,000
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Los Angeles Cnty., CA MTAU Sales Tax RB, Series A, 3.45%, 2/8/07 2,000,000 2,000,000
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Los Angeles Cnty., CA MTAU Second Sub. Sales Tax RB, Series A, 3.39%, 2/5/07 2,000,000 2,000,000
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Los Angeles, CA MH RB, P-Floats, Series PT-3700, 4% 1,2 4,000,000 4,000,000
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Los Angeles, CA Municipal Improvement Corp. RB, 3.44%, 3/7/07 1,500,000 1,500,000
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Los Angeles, CA Municipal Improvement Corp. RB, 3.46%, 3/1/07 2,000,000 2,000,000
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Los Angeles, CA Municipal Improvement Corp. RB, 3.46%, 3/1/07 1,000,000 1,000,000
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Los Angeles, CA Municipal Improvement Corp. RB, Series A-1&2, 3.44%, 3/8/07 5,000,000 5,000,000
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Los Angeles, CA USD GOUN, AUSTIN Trust Certificates,
Series BOA-109, 3.92% 1,2 1,260,000 1,260,000
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Los Angeles, CA USD GOUN, PTTR, Series 1442, 3.91% 1,2 1,300,000 1,300,000
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Mt. Diablo, CA USD GOB, AAMC Series 2004-36, 3.94% 1,2 4,590,000 4,590,000
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Oakland, CA USD GOUN, Municipal Securities Trust Certificates,
Series 9035, Cl. A, 3.90% 1,2 4,000,000 4,000,000
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Orange Cnty., CA Apt. Development RB, Hidden Hills Project, Series C, 3.75% 2 5,700,000 5,700,000
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Orange Cnty., CA Apt. Development RRB, Riverbend Apts.
Issue B of 1999, 3.75% 2 6,250,000 6,250,000
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Pasadena, CA COP, CAB, Conference Center, PTTR, Series 1464, 3.94% 1,2 1,200,000 1,200,000
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Regents of University of CA RRB, Series 2003A, 5%, 5/15/07 2,000,000 2,011,459
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Riverside Cnty., CA HAU MH RRB, Tyler Springs Apts., Series 1999C, 3.75% 2 2,050,000 2,050,000
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Riverside Cnty., CA Transportation Commission RB, Series A, 3.42%, 3/7/07 1,000,000 1,000,000
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San Diego, CA Sewer RB, SGMSTR Series SG 14, 3.91% 1,2 3,955,000 3,955,000
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San Diego, CA USD GOUN, AUSTIN Trust Certificates Series BOA-110, 3.92% 1,2 1,000,000 1,000,000
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San Diego, CA USD GOUN, P-Floats, Series PT-3724, 3.91% 1,2 2,000,000 2,000,000
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San Francisco, CA City & Cnty. PUC Clean Water RRB, MERLOTS
Series 2003 B20, 3.93% 1,2 6,975,000 6,975,000
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San Joaquin Delta Community College District, CA GOUN
Municipal Securities Trust Certificates, Cl. A, Series 3020, 3.96% 1,2 10,925,000 10,925,000
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San Joaquin Hills, CA Transportation Corridor Agency RRB,
Goldman Sachs Trust Series 2006-90TPZ, 3.94% 1,2 2,130,000 2,130,000
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San Joaquin Hills, CA Transportation Corridor Agency RRB,
Goldman Sachs Trust Series 2006-91TPZ, 3.94% 1,2 1,150,000 1,150,000
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Santa Clara Cnty., CA FAU Lease RB, Housing Authority Office Project,
Series 2004A, 3.79% 2 3,420,000 3,420,000
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Santa Rosa, CA Wastewater RB, P-Floats, Series PZ-43, 3.96% 1,2 4,880,000 4,880,000
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Ventura Cnty., CA PFAU Lease RB, 3.41%, 3/5/07 2,300,000 2,300,000
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Ventura Cnty., CA PFAU Lease RB, 3.45%, 2/7/07 1,000,000 1,000,000
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181,756,259
8 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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U.S. POSSESSIONS--8.1%
PR CMWLTH GOUN, Trust Receipts, Series 2005-F2, 4.03% 1,2 $ 8,725,000 $ 8,725,000
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PR CMWLTH Infrastructure FAU RB, MSTFC Series 2006-1534, 3.92% 1,2 2,000,000 2,000,000
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PR CMWLTH Infrastructure FAU RB, Tender Option Trust Certificates,
Series 2005 Z-6, 3.97% 1,2 2,905,000 2,905,000
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PR Municipal Finance Agency RB, Series A, 4%, 8/1/07 500,000 501,688
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PR Public Buildings Education HFAU RRB, Series M, 5.50%, 7/1/07 1,200,000 1,212,335
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15,344,023
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TOTAL INVESTMENTS, AT VALUE (COST $197,100,282) 104.6% 197,100,282
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LIABILITIES IN EXCESS OF OTHER ASSETS (4.6) (8,709,191)
------------------------------
NET ASSETS 100.0% $188,391,091
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:
AAMC ABN AMRO Munitops Certificates
CAB Capital Appreciation Bond
CMWLTH Commonwealth
COP Certificates of Participation
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
HFAU Health Facilities Authority
HFFAU Health Facilities Finance Authority
I&E Infrastructure and Economic
IDV Industrial Development
MERLOTS Municipal Exempt Receipts Liquidity
Option Tender
MH Multifamily Housing
MSTFC Morgan Stanley & Co., Inc. Trust Floater
Certificates
MTAU Metropolitan Transportation Authority
P-Floats Puttable Floating Option Tax Exempt
Receipts
PCFAU Pollution Control Finance Authority
PFAU Public Finance Authority
PTTR Puttable Tax Exempt Receipts
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 $102,155,000 or
54.22% of the Trust's net assets as of December 31, 2006.
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, 2006. 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES Unaudited
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December 31, 2006
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ASSETS
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Investments, at value (cost $197,100,282)--see accompanying statement of investments $ 197,100,282
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Cash 135,189
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Receivables and other assets:
Interest 1,476,995
Other 15,064
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Total assets 198,727,530
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LIABILITIES
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Payables and other liabilities:
Investments purchased 10,200,000
Service plan fees 98,886
Shareholder communications 6,649
Trustees' compensation 5,032
Transfer and shareholder servicing agent fees 4,461
Shares of beneficial interest redeemed 500
Other 20,911
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Total liabilities 10,336,439
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NET ASSETS $ 188,391,091
==============
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COMPOSITION OF NET ASSETS
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Paid-in capital $ 188,385,103
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Accumulated net realized gain on investments 5,988
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NET ASSETS--applicable to 188,366,380 shares of beneficial interest outstanding $ 188,391,091
==============
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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, 2006
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INVESTMENT INCOME
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Interest $ 3,472,136
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EXPENSES
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Management fees 487,348
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Service plan fees 194,649
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Transfer and shareholder servicing agent fees 24,938
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Shareholder communications 9,832
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Trustees' compensation 3,493
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Administration service fees 750
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Custodian fees and expenses 481
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Other 23,678
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Total expenses 745,169
Less reduction to custodian expenses (267)
------------
Net expenses 744,902
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NET INVESTMENT INCOME 2,727,234
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NET REALIZED GAIN ON INVESTMENTS 35,510
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,762,744
============
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, 2006 JUNE 30,
(UNAUDITED) 2006
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OPERATIONS
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Net investment income $ 2,727,234 $ 4,159,759
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Net realized gain 35,510 42,239
--------------------------------
Net increase in net assets resulting from operations 2,762,744 4,201,998
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
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Dividends from net investment income (2,727,234) (4,159,759)
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Distributions from net realized gain (63,507) --
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BENEFICIAL INTEREST TRANSACTIONS
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Net increase in net assets resulting from beneficial interest transactions 6,354,371 16,160,365
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NET ASSETS
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Total increase 6,326,374 16,202,604
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Beginning of period 182,064,717 165,862,113
--------------------------------
End of period $ 188,391,091 $ 182,064,717
================================
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, 2006 JUNE 30,
(UNAUDITED) 2006 2005 2004 2003 2002
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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 .02 1 .01 1 -- 2 .01 .01
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Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) (.02) (.01) -- 2 (.01) (.01)
Distributions from net realized gain -- 2 -- -- -- -- -- 2
----------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (.02) (.02) (.01) -- 2 (.01) (.01)
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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 1.44% 2.27% 1.13% 0.21% 0.52% 0.89%
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RATIOS/SUPPLEMENTAL DATA
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Net assets, end of period (in thousands) $188,391 $182,065 $165,862 $139,892 $152,856 $154,653
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $193,384 $184,956 $148,312 $149,559 $156,348 $164,278
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.80% 2.25% 1.11% 0.21% 0.52% 0.89%
Total expenses 0.76% 5 0.76% 6 0.77% 5 0.78% 5,6 0.76% 5,6 0.77% 5,6
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 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 wholly owned 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. As permitted under Rule 2a-7 of the Investment Company Act of 1940,
portfolio securities are valued on the basis of amortized cost, which
approximates market value. If amortized cost is determined not to approximate
market value, the fair value of the portfolio securities will be determined
under procedures approved by the Trust's Board of Trustees.
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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 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.
During the fiscal year ended June 30, 2006, the Trust utilized $8,254 of
capital loss carryfoward to offset capital gains realized in that fiscal year.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a compensation
deferral 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
14 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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, 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Trust's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Trust. In the
normal course of business, the Trust may also enter into contracts that provide
general indemnifications. The Trust's maximum exposure under these arrangements
is unknown as this would be dependent on future claims that may be made against
the Trust. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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.
15 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006 YEAR ENDED JUNE 30, 2006
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
Sold 286,502,443 $ 286,502,443 567,108,511 $ 567,108,511
Dividends and/or
distributions reinvested 2,685,429 2,685,429 4,048,435 4,048,435
Redeemed (282,833,501) (282,833,501) (554,996,581) (554,996,581)
-----------------------------------------------------------------
Net increase 6,354,371 $ 6,354,371 16,160,365 $ 16,160,365
=================================================================
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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 average net assets as shown in the following table:
FEE SCHEDULE
-----------------------------------------
Up to $250 million 0.500%
Next $250 million 0.475
Next $250 million 0.450
Next $250 million 0.425
Over $1 billion 0.400
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ADMINISTRATION SERVICE FEES. 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 six months ended
December 31, 2006, the Trust paid $24,044 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 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.
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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.
16 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Trust's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Trust's tax return
will be ultimately sustained. A tax liability and expense must be recorded in
respect of any tax position that, in OFI's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
December 31, 2006, OFI has evaluated the implications of FIN 48 and does not
currently anticipate a material impact to the Trust's financial statements. OFI
will continue to monitor the Trust's tax positions prospectively for potential
future impacts.
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of December 31, 2006, OFI does not believe the adoption
of SFAS No. 157 will materially impact the financial statement amounts; however,
additional disclosures may be required about the inputs used to develop the
measurements and the effect of certain of the measurements on changes in net
assets for the period.
17 | 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 the 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 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 and its affiliates, 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.
The Board was aware that there are alternatives to retaining the Manager.
NATURE, QUALITY AND EXTENT OF SERVICES. The Board considered information
about the nature and extent of the services provided to the Trust and
information regarding the Manager's key personnel who 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 who 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 had over twenty-five years of
experience as an investment adviser and that its assets under management rank it
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. In its evaluation
of the quality of the portfolio management services provided, the Board
considered the experience of Cameron Ullyatt and the Manager's Money Market
investment team and analysts. Mr. Ullyatt has been the portfolio manager of the
Trust since July 2006. 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 MANAGER AND THE TRUST. During the year, the
Manager provided information on the investment performance of the Trust and the
Manager 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 all other retail front-end load and
no-load 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. The Board noted, however, that on an expense adjusted basis
the Trust outperformed its peer group median for the one-year, three-year and
ten-year 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, other
New York tax-exempt money market funds and other funds with comparable asset
levels and distribution features. The Board
20 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
noted that the Manager has agreed to voluntarily assume certain expenses of the
Trust in any fiscal year that exceeds 0.80% of the Trust's average annual net
assets. Additionally, 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. The Board noted that the
Trust's contractual and actual management fees are higher than its peer group
median. The Board also noted, the Manager's assertion that there is significant
compression in the expense rankings and that the Trust's total expenses are only
four basis points above the peer group median.
ECONOMIES OF SCALE. The Board reviewed 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 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 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 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, 2006, 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 8, 2007
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 8, 2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: February 8, 2007