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: 12/31/2008
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ITEM 1. REPORTS TO STOCKHOLDERS.
December 31, 2008
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Centennial Semiannual
California Report and
Tax Exempt Trust Management
Commentaries
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TRUST EXPENSES
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TRUST 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, 2008.
ACTUAL EXPENSES. The first section of the table provides information
about actual account values and actual expenses. You may use the
information in this section, 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 $1,000.00 = 8.60), then multiply the result by the number
in the first section under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The second section of
the table provides information about hypothetical account values and
hypothetical expenses based on the Trust's actual expense ratio, and
an assumed rate of return of 5% per year before expenses, which is not
the actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses
you paid for the period. You may use this information to compare the
ongoing costs of investing in the Trust and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of the other funds.
3 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
TRUST EXPENSES Continued
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
ACTUAL JULY 1, 2008 DECEMBER 31, 2008 DECEMBER 31, 2008
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$ 1,000.00 $ 1,006.70 $ 3.85
HYPOTHETICAL
(5% return before expenses)
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1,000.00 1,021.37 3.88
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, 2008 is as follows:
EXPENSE RATIO
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0.76%
The expense ratio reflects reduction to custodian expenses. The "Financial
Highlights" table in the Trust's financial statements, included in this report,
also show the gross expense ratio, without such waivers or reimbursements and
reduction to custodian expenses, if applicable.
4 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS December 31, 2008
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PRINCIPAL
AMOUNT VALUE
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SHORT-TERM TAX-EXEMPT OBLIGATIONS--99.4%
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CALIFORNIA--97.5%
CA ABAG FAU for Nonprofit Corps. RB, La Jolla Cnty. Day
School, Series A, 0.93% 1 $ 715,000 $ 715,000
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CA ABAG FAU for Nonprofit Corps. RB, Santa Cruz
Montessori School, Series 2007, 1% 1 600,000 600,000
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CA ABAG FAU for Nonprofit Corps. RB, The Wright
Institute, Series 2001, 1.15% 1 2,900,000 2,900,000
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CA EDLFA Pepperdine University RRB, Eclipse Funding Trust
Solar Eclipse Certificates-Series 2006-0065, 1.15% 1,2 2,200,000 2,200,000
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CA GOUN, MSTFC Series 2006-2178, 1.17% 1,2 6,084,000 6,084,000
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CA GOUN, SPEARS Deutsche Bank/Lifers Trust-Series
DBE-637, 1.24% 1,2 13,000,000 13,000,000
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CA GOUN, SPEARS Deutsche Bank/Lifers Trust-Series
DBE-648, 1.24% 1,2 3,627,000 3,627,000
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CA HFA Home Mtg. RRB, PTTR, Series 3103, 1.30% 1,2 5,015,000 5,015,000
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CA HFFAU RB, Northern CA Presbyterian Homes, 1% 1 200,000 200,000
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CA I&E Development Bank RRB, The Colburn School, Series
2008B, 0.90% 1 500,000 500,000
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CA PCFAU SWD RB, Garden City Sanitation, Series A, 1.05% 1 2,420,000 2,420,000
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CA PCFAU SWD RB, George Borba & Son Dairy Project, 1.70% 1 3,800,000 3,800,000
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CA PCFAU SWD RB, Greenwaste Recovery, Inc. Project, Series
2007A, 1.05% 1 3,190,000 3,190,000
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CA PCFAU SWD RB, Greenwaste Recovery, Inc. Project,
Series A, 1.05% 1 1,680,000 1,680,000
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CA PCFAU SWD RB, Sunset Waste Paper, Inc. Project, 1.05% 1 2,540,000 2,540,000
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CA PCFAU SWD RB, Sunset Waste Paper, Inc. Project, Series A, 1.05% 1 1,430,000 1,430,000
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CA RB, SPEARS Deutsche Bank/Lifers Trust-Series DB-477, 1.24% 1,2 3,625,000 3,625,000
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CA SCDAU MH RB, PTTR, IAC Project, Series 2681, 1.50% 1,2 500,000 500,000
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CA SCDAU MH RB, Tyrella Gardens Apts., Series 2003 B, 1.10% 1 3,285,000 3,285,000
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CA SCDAU MH RRB, PTTR, IAC Project, Series 2680, 1.35% 1,2 10,000,000 10,000,000
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CA SCDAU RB, House Ear Institute Project, Series 2007, 1.75% 1 7,910,000 7,910,000
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CA SCDAU RB, MSTFC Series 2008-2742, 1.27% 1,2 3,500,000 3,500,000
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CA SCDAU RRB, Prospect Sierra School, Series 2006, 1% 1 2,245,000 2,245,000
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Foothill-De Anza, CA Community College District GOUN,
MSTFC Series 2006-1844, 1.27% 1,2 4,950,000 4,950,000
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Foothill/Eastern Corridor Agency, CA Toll Road RB, Sr. Lien,
Series A, 7.05%, 1/1/09 5,000,000 5,000,000
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Irvine, CA USD SPTX Bonds, Austin Trust Certificates-Series
BOA 315, 1.03% 1,2 6,000,000 6,000,000
F1 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS Unaudited / Continued
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PRINCIPAL
AMOUNT VALUE
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CALIFORNIA Continued
Los Angeles Cnty., CA MTAU Proposition C Sales Tax RB,
Series A, 0.60%, 2/5/09 $ 2,500,000 $ 2,500,000
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Los Angeles, CA COP, Loyola High School, Series 2005A, 0.93% 1 450,000 450,000
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Los Angeles, CA COP, Windward School, Series 2007A, 0.93% 1 500,000 500,000
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Los Angeles, CA Municipal Improvement Corp. RB, 0.95%, 2/13/09 2,000,000 2,000,000
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Los Angeles, CA Municipal Improvement Corp. RB, 1.10%, 2/2/09 1,500,000 1,500,000
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Los Angeles, CA Municipal Improvement Corp. RB, Series
A-1&2, 1.64%, 1/8/09 1,000,000 1,000,000
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Modesto, CA MH RRB, Shadowbrook Apts., Series 2001 A, 1% 1 700,000 700,000
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Northstar Community Housing Corp. CA RB, MH Project,
Series 2006A, 1.25% 1 2,908,000 2,908,000
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Orange Cnty., CA Apt. Development RRB, Villas Aliento,
Series E, 1% 1 840,000 840,000
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Petaluma, CA Community Development Commision MH RB,
Oakmont at Petaluma Project, Series 1996A, 1.45% 1 500,000 500,000
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Riverside Cnty., CA Teeter RB, Series B, 0.55%, 2/9/09 4,522,000 4,522,000
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Riverside Cnty., CA Transportation Commission RB, Series A,
1.43%, 1/2/09 1,000,000 1,000,000
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Riverside, CA Transportation Commission RB, Series A, 1.50%, 1/8/09 1,000,000 1,000,000
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Sacramento Cnty., CA HAU MH RB, Reset Option Certificates II-R
Trust-Series 10010CE, 1.46% 1,2 3,000,000 3,000,000
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Sacramento Cnty., CA HAU MH RB, Reset Option Certificates II-R
Trust-Series 823CE, 1.46% 1,2 1,070,000 1,070,000
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Sacramento, CA MUD RB Series J, 0.80%, 2/12/09 4,000,000 4,000,000
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San Diego, CA Public Facilities Water RB, PTTR, Series 2595, 1.15% 1,2 8,300,000 8,300,000
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San Francisco City & Cnty., CA PUC RB, 0.75%, 2/12/09 2,000,000 2,000,000
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San Francisco City & Cnty., CA PUC RB, Wastewater, 1.05%, 2/3/09 2,500,000 2,500,000
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San Joaquin, CA Transportation Authority Sales Tax RB, 0.50%, 1/5/09 2,500,000 2,500,000
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Turlock, CA Irrigation District RB, Series A, 0.60%, 1/5/09 4,000,000 4,000,000
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Vacaville, CA MH Mtg. RB, Quail Run Project Series 1988A, 0.64% 1 3,500,000 3,500,000
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Vacaville, CA USD GOUN, Eclipse Funding Trust Solar Eclipse
Certificates-Series 2007-0079, 1.19% 1,2 10,285,000 10,285,000
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Vallejo, CA HAU MH RRB, Fountain Plaza Hills Apts., 1.04% 1 885,000 885,000
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Ventura Cnty., CA PFAU Lease RB, 0.55%, 1/6/09 2,500,000 2,500,000
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Ventura Cnty., CA PFAU RB, 1.50%, 1/8/09 500,000 500,000
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Victorville, CA Joint Powers FAU Lease RRB, CoGeneration Facilities,
Series 2007A, 1.27% 1 11,000,000 11,000,000
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172,376,000
F2 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
PRINCIPAL
AMOUNT VALUE
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U.S. POSSESSIONS--1.9%
Puerto Rico EPAU RRB, BB&T Municipal Trust Securities,
Series 2006, 1.12% 1,2 $ 2,000,000 $ 2,000,000
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Puerto Rico Sales Tax Finance Corp. RRB, SPEARS Deutsche Bank/Lifers
Trust-Series DBE-627, 1.20% 1,2 1,295,000 1,295,000
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3,295,000
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TOTAL INVESTMENTS, AT VALUE (COST $175,671,000) 99.4% 175,671,000
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OTHER ASSETS NET OF LIABILITIES 0.6 1,132,827
------------------------------
NET ASSETS 100.0% $ 176,803,827
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:
ABAG Association of Bay Area Governments MUD Municipal Utility District
COP Certificates of Participation PCFAU Pollution Control Finance Authority
EDLFA Educational Facilities Authority PFAU Public Finance Authority
EPAU Electric Power Authority PTTR Puttable Tax Exempt Receipts
FAU Finance Authority PUC Public Utilities Commission
GOUN General Obligation Unlimited Nts. RB Revenue Bonds
HAU Housing Authority RRB Revenue Refunding Bonds
HFA Housing Finance Agency SCDAU Statewide Communities Development
HFFAU Health Facilities Finance Authority Authority
I&E Infrastructure and Economic SPEARS Short Puttable Exempt Adjustable
MH Multifamily Housing Receipts
MSTFC Morgan Stanley & Co., Inc. Trust SPTX Special Tax
Floater Certificates SWD Solid Waste Disposal
MTAU Metropolitan Transportation Authority USD Unified School District
1. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on December
31, 2008. This instrument has a demand feature which allows, on up to 30 days'
notice, the recovery of principal at any time, or at specified intervals not
exceeding one year.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $84,451,000 or 47.77% of the Trust's net
assets as of December 31, 2008.
F3 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF INVESTMENTS Unaudited / Continued
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FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
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VALUATION INPUTS
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Various data inputs are used in determining the value of each of the Trust's
investments as of the reporting period end. These data inputs are categorized in
the following hierarchy under applicable financial accounting standards:
1) Level 1--quoted prices in active markets for identical assets or
liabilities (including securities actively traded on a securities exchange)
2) Level 2--inputs other than quoted prices that are observable for the
asset (such as quoted prices for similar assets and market corroborated
inputs such as interest rates, prepayment speeds, credit risks, etc.)
3) Level 3--unobervable inputs (including the Manager's own judgments about
assumptions that market participants would use in pricing the asset).
The market value of the Trust's investments was determined based on the
following inputs as of December 31, 2008:
INVESTMENTS IN OTHER FINANCIAL
VALUATION DESCRIPTION SECURITIES INSTRUMENTS*
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Level 1--Quoted Prices $ -- $ --
Level 2--Other Significant Observable Inputs 175,671,000 --
Level 3--Significant Unobservable Inputs -- --
-----------------------------------
Total $ 175,671,000 $ --
===================================
*Other financial instruments include options written, currency contracts,
futures, forwards and swap contracts. Currency contracts and forwards are
reported at their unrealized appreciation/depreciation at measurement date,
which represents the change in the contract's value from trade date. Futures are
reported at their variation margin at measurement date, which represents the
amount due to/from the Trust at that date. Options written and swaps are
reported at their market value at measurement date.
SEE THE ACCOMPANYING NOTES FOR FURTHER DISCUSSION OF THE METHODS USED IN
DETERMINING VALUE OF THE TRUST'S INVESTMENTS, AND A SUMMARY OF CHANGES TO THE
VALUATION TECHNIQUES, IF ANY, DURING THE REPORTING PERIOD.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F4 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF ASSETS AND LIABILITIES Unaudited
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December 31, 2008
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ASSETS
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Investments, at value (cost $175,671,000)--see accompanying statement of investments $ 175,671,000
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Cash 343,960
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Receivables and other assets:
Interest 819,344
Other 10,306
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Total assets 176,844,610
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LIABILITIES
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Payables and other liabilities:
Shareholder communications 10,000
Legal, auditing and other professional fees 7,361
Transfer and shareholder servicing agent fees 4,335
Trustees' compensation 2,330
Custodian fees 334
Other 16,423
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Total liabilities 40,783
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NET ASSETS $ 176,803,827
================
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COMPOSITION OF NET ASSETS
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Paid-in capital $ 176,803,828
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Accumulated net investment loss (11,983)
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Accumulated net realized gain on investments 11,982
----------------
NET ASSETS--applicable to 176,785,105 shares of beneficial interest outstanding $ 176,803,827
================
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NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE $ 1.00
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F5 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENT OF OPERATIONS Unaudited
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For the Six Months Ended December 31, 2008
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INVESTMENT INCOME
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Interest $ 2,111,258
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EXPENSES
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Management fees 509,948
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Service plan fees 177,692
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Transfer and shareholder servicing agent fees 25,583
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Registration and filing fees 13,872
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Legal, auditing and other professional fees 9,122
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Trustees' compensation 3,809
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Custodian fees and expenses 683
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Other 30,888
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Total expenses 771,597
Less reduction to custodian expenses (44)
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Net expenses 771,553
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NET INVESTMENT INCOME 1,339,705
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NET REALIZED GAIN ON INVESTMENTS 120
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,339,825
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F6 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
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SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 2008 JUNE 30,
(UNAUDITED) 2008
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- ---------------------------------------------------------------------------------------------------
OPERATIONS
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Net investment income $ 1,339,705 $ 4,437,314
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Net realized gain 120 30,772
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Net increase in net assets resulting from operations 1,339,825 4,468,086
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
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Dividends from net investment income (1,351,688) (4,437,314)
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Distributions from net realized gain -- (64,816)
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BENEFICIAL INTEREST TRANSACTIONS
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Net increase (decrease) in net assets resulting from
beneficial interest transactions (66,478,217) 63,943,206
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NET ASSETS
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Total increase (decrease) (66,490,080) 63,909,162
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Beginning of period 243,293,907 179,384,745
----------------------------------
End of period (including accumulated net investment
loss of $11,983 for the period ended December 31, 2008) $ 176,803,827 $ 243,293,907
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F7 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FINANCIAL HIGHLIGHTS
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SIX MONTHS
ENDED
DECEMBER 31, 2008 YEAR ENDED JUNE 30,
(UNAUDITED) 2008 2007 2006 2005 2004
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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 .01 1 .02 1 .03 1 .02 1 .01 1 -- 2
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Dividends and/or distributions
to shareholders:
Dividends from net investment income (.01) (.02) (.03) (.02) (.01) -- 2
Distributions from net realized gain -- -- 2 -- 2 -- -- --
----------------------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (.01) (.02) (.03) (.02) (.01) -- 2
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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 0.67% 2.22% 2.91% 2.27% 1.13% 0.21%
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RATIOS/SUPPLEMENTAL DATA
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Net assets, end of period (in thousands) $ 176,804 $ 243,294 $ 179,385 $ 182,065 $ 165,862 $ 139,892
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Average net assets (in thousands) $ 202,510 $ 211,565 $ 190,423 $ 184,956 $ 148,312 $ 149,559
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 1.31% 2.10% 2.84% 2.25% 1.11% 0.21%
Total expenses 0.76% 5 0.78% 5,6 0.77% 5 0.76% 6 0.77% 5 0.78% 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 less than one full year.
5. Reduction to custodian expenses less than 0.005%.
6. Reimbursement of expenses less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F8 | 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 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 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.
Securities are valued at cost adjusted by the amortization of discount or
premium to maturity (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.
Effective for fiscal periods beginning after November 15, 2007, FASB
Statement of Financial Accounting Standards No. 157, FAIR VALUE MEASUREMENTS,
establishes a hierarchy for measuring fair value of assets and liabilities. As
required by the standard, each investment asset or liability of the Trust is
assigned a level at measurement date based on the significance and source of the
inputs to its valuation. Quoted prices in active markets for identical
securities are classified as "Level 1", inputs other than quoted prices for an
asset that are observable are classified as "Level 2" and unobservable inputs,
including the Manager's judgment about the assumptions that a market participant
would use in pricing an asset or liability are classified as "Level 3". The
inputs used for valuing securities are not necessarily an indication of the
risks associated with investing in those securities. A table summarizing the
Trust's investments under these levels of classification is included following
the Statement of Investments.
"Money market-type" instruments are typically designated as Level 2.
In the absence of a readily available quoted market price, including for
securities whose values have been materially affected by what the Manager
identifies as a significant event occurring before the Trust's assets are valued
but after the close of the securities' respective exchanges, the Manager, acting
through its internal valuation committee, in good faith determines the fair
valuation of that asset using consistently applied procedures under the
supervision of the Board of Trustees (which reviews those fair valuations by the
Manager). Those procedures include certain standardized methodologies to fair
value securities. Such methodologies include, but are not limited to, pricing
securities initially at cost and subsequently adjusting the value based on:
changes in company specific fundamentals, changes in an appropriate securities
index, or changes in the value of similar securities which may be adjusted for
any discounts related to resale restrictions. When possible, such methodologies
use observable market inputs such as quoted prices of similar securities,
observable interest
F9 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
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- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
rates, currency rates and yield curves. The methodologies used for valuing
securities are not necessarily an indication of the risks associated with
investing in those securities.
Fair valued securities may be classified as "Level 3" if the valuation
primarily reflects the Manager's own assumptions about the inputs that market
participants would use in valuing such securities.
There have been no significant changes to the fair valuation methodologies
during the period.
- --------------------------------------------------------------------------------
CONCENTRATION RISK. There are certain risks arising from geographic
concentration in any state. Certain economic, regulatory or political
developments occurring in the state may impair the ability of certain issuers of
municipal securities to pay principal and interest on their obligations.
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FEDERAL TAXES. The Trust intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income to shareholders.
Therefore, no federal income or excise tax provision is required. The Trust
files income tax returns in U.S. federal and applicable state jurisdictions. The
statute of limitations on the Trust's tax return filings generally remain open
for the three preceding fiscal reporting period ends.
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.
- --------------------------------------------------------------------------------
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 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 compensation deferral plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations and
may differ from U.S. generally accepted accounting principles, are recorded on
the ex-dividend date. Income distributions, if any, are declared daily and paid
monthly. Capital gain distributions,
F10 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
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.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Interest income is recognized on an accrual basis. Discount
and premium, which are included in interest income on the Statement of
Operations, are amortized or accreted daily.
- --------------------------------------------------------------------------------
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.
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SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
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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 accounting
principles generally accepted in the United States of America 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 increases and
decreases in net assets from operations 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, 2008 YEAR ENDED JUNE 30, 2008
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
Sold 326,105,356 $ 326,105,356 777,683,703 $ 777,683,703
Dividends and/or
distributions reinvested 1,327,207 1,327,207 4,369,292 4,369,292
Redeemed (393,910,780) (393,910,780) (718,109,789) (718,109,789)
--------------------------------------------------------------------------
Net increase (decrease) (66,478,217) $ (66,478,217) 63,943,206 $ 63,943,206
==========================================================================
F11 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
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3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Under the investment advisory agreement, the Trust pays the
Manager a management fee based on the daily net assets of the Trust at an annual
rate 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
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. Shareholder Services, Inc. ("SSI") acts as the transfer and
shareholder servicing agent for the Trust. The Trust pays SSI a per account fee.
For the six months ended December 31, 2008, the Trust paid $25,106 to SSI for
services to the Trust.
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SERVICE PLAN (12b-1) FEES. The Trust has adopted a Service Plan (the "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 (together with significant amounts
from the Manager's own resources) to pay dealers, brokers, banks and other
financial institutions periodically for providing personal service 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.
Effective as of the close of the New York Stock Exchange on December 5,
2008, the Board of Trustees of the Trust has set the rate for the Service Plan
(12b-1) Fees at zero.
- --------------------------------------------------------------------------------
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. The Manager has voluntarily undertaken to
waive fees to the extent necessary to assist the Trust in attempting to maintain
a positive yield. There is no guarantee that the Trust will maintain a positive
yield. That undertaking may be amended or withdrawn 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.
- --------------------------------------------------------------------------------
4. RECENT ACCOUNTING PRONOUNCEMENT
In March 2008, the Financial Accounting Standards Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 161, DISCLOSURES ABOUT
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This standard requires enhanced
disclosures about derivative and hedging activities, including qualitative
disclosures about how and why the Fund uses derivative instruments, how these
activities are accounted for, and their effect on the Fund's financial position,
financial performance and cash flows. SFAS No. 161 is effective
F12 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008. At this time, management is evaluating the implications
of SFAS No. 161 and its impact on the Fund's financial statements and related
disclosures.
- --------------------------------------------------------------------------------
5. TEMPORARY GUARANTEE PROGRAM FOR MONEY MARKET FUNDS
The Fund's Board of Trustees has elected for the Fund to participate in the
Temporary Guarantee Program for Money Market Funds (the "Program") established
by the U.S. Treasury Department. The Treasury Department has accepted the Fund's
application to participate in the Program and entered into a Guarantee Agreement
with the Fund dated as of September 19, 2008. The Fund has also notified the
Treasury Department of its intent to continue its participation in the Program
through April 30, 2009.
Under the Program, shareholders of the Fund as of the close of business on
September 19, 2008 may be guaranteed against loss in the event that the Fund's
net asset value falls below $0.995. The Program applies only to shareholders of
record as of the close of business on September 19, 2008. The number of shares
covered by the Program will be the lesser of (a) the number of shares of the
Fund owned by the shareholder on September 19, 2008 or (b) the number of shares
owned by the shareholder on the date the Fund's net asset value falls below
$0.995. If the number of shares of the Fund a shareholder holds after September
19, 2008 fluctuates during the Program period due to purchases or redemptions of
shares, any shares in excess of the amount held as of the close of business on
September 19, 2008 will not be covered.
The Fund has paid a fee to participate in the Program's initial term in the
amount equal to 0.01% of the Fund's net assets as of the close of business on
September 19, 2008. The Fund has paid an additional fee to continue its
participation in the Program through April 30, 2009 in the amount of 0.015% of
the Fund's net assets as of the close of business on September 19, 2008. Fees
paid by the Fund to participate in the Program are included in other expenses on
the Statement of Operations. Participation in any further extension of the
Program would require payment of an additional fee.
- --------------------------------------------------------------------------------
6. CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At a meeting held on August 20, 2008, the Board of Trustees of the Fund
appointed KPMG LLP as the independent registered public accounting firm to the
Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP,
effective at the conclusion of the fiscal 2008 audit. During the two most recent
fiscal years the audit reports of Deloitte & Touche LLP contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. Further, there were no
disagreements between the Fund and Deloitte & Touche LLP on accounting
principles, financial statement disclosure or audit scope, which if not resolved
to the satisfaction of Deloitte & Touche LLP would have caused it to make
reference to the disagreements in connection with its reports.
- --------------------------------------------------------------------------------
7. SUBSEQUENT EVENT
The remaining shareholders of the Trust redeemed their shares on February 13,
2009. Following that redemption, the Trust commenced winding down its
operations.
F13 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
THIS PAGE INTENTIONALLY LEFT BLANK.
F14 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew Centennial
California Tax Exempt Trust's (the "Funds") 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, the Board requests for that purpose. In
addition, the Board receives information throughout the year regarding Fund
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 Fund and the Manager,
(iii) the fees and expenses of the Fund, 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 Fund grows and whether fee levels reflect these economies of
scale for Fund investors and (vi) other benefits to the Manager from its
relationship with the Fund. The Board was aware that there are alternatives to
retaining the Manager.
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
about the nature, quality and extent of the services provided to the Fund and
information regarding the Manager's key personnel who provide such services. The
Manager's duties include providing the Fund 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 Fund's investments; securities trading
services; oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund 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 Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund 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 Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
5 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
The Board also considered the quality of the services provided and the
quality of the Manager's resources that are available to the Fund. The Board
took account of the fact that the Manager has had over forty 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
advisory, 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. In its evaluation of the quality of the portfolio management services
provided, the Board considered the experience of Carol Wolf, the portfolio
manager for the Fund, and the Manager's investment team and analysts. The Board
members also considered the totality of their experiences with the Manager as
Directors or Trustees of the Fund and other funds advised by the Manager. The
Board considered information regarding the quality of services provided by
affiliates of the Manager, which its members have become knowledgeable about in
connection with the renewal of the Fund's service agreements. The Board
concluded in light of the Manager's experience, reputation, personnel,
operations and resources, the Fund benefits from the services provided under the
Agreement.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. Throughout the year,
the Manager provided information on the investment performance of the Fund and
the Manager, including comparative performance information. The Board also
reviewed information, prepared by the Manager and by the independent consultant,
comparing the Fund's historical performance to relevant market indices and to
the performance of other retail front-end load and no-load California tax-exempt
money market funds advised by other investment advisers. The Board considered
that the Fund underperformed its performance universe median during the one-,
three-, five-, and ten-year periods. The Board considered the Manager's
assertion that, in the Fund's category, small performance differences can result
in significantly different quintile rankings and that the difference between the
best performer and the worst performer in every time period was less than 0.85%.
The Board also considered that the gross performance of the Fund compared
favorably to its peers.
COSTS OF SERVICES BY THE MANAGER. The Board reviewed the fees paid to the
Manager and the other expenses borne by the Fund. The Board also considered the
comparability of the fees charged and the services provided to the Fund 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 Fund and California tax-exempt money market funds with
comparable asset levels and distribution features. The
6 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
Board considered that the Fund's actual management fees and total expenses were
higher than its expense group median. The Board considered the Manager's
explanation that there was significant compression between the quintiles in
terms of expenses and that the difference between the fund with the lowest
actual total expense and the fund with the highest actual total expense was only
0.394%. The Board also considered that the Manager has voluntarily agreed to
assume certain expenses of the Fund that exceed 0.80% of the Trust's average
annual net assets.
ECONOMIES OF SCALE AND PROFITS REALIZED BY THE MANAGER. The Board
considered information regarding the Manager's costs in serving as the Fund's
investment adviser, including the costs associated with the personnel and
systems necessary to manage the Fund, and information regarding the Manager's
profitability from its relationship with the Fund. The Board reviewed whether
the Manager may realize economies of scale in managing and supporting the Fund.
The Board noted that the Fund currently has management fee breakpoints, which
are intended to share with Fund shareholders economies of scale that may exist
as the Fund's assets grow.
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 Fund, 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
quality services to the Fund and that maintaining the financial viability of the
Manager is important in order for the Manager to continue to provide significant
services to the Fund 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
Fund and to the independent Trustees. Fund counsel and the independent Trustees'
counsel are 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 above information, and
considered the terms and conditions of the Agreement, including the management
fee, in light of all of the surrounding circumstances.
7 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
8 | 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.
a) Not applicable.
b) 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:
- the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
- a statement concerning whether the person is an "interested person" as
defined in the Investment Company Act of 1940;
- 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
- 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 12/31/2008, 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: 02/11/2009
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: 02/11/2009
By: /s/ Brian W. Wixted
---------------------------------
Brian W. Wixted
Principal Financial Officer
Date: 02/11/2009