-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MYK9lbuUTqRDSkx0gx7i+WjOMG6DjM2dmuMZZl6wvGKn3t/wi5V0fwRQtnJUZUTW zxIr8DJBNbOckAuIfy96bg== 0000854437-97-000008.txt : 19970912 0000854437-97-000008.hdr.sgml : 19970912 ACCESSION NUMBER: 0000854437-97-000008 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL CALIFORNIA TAX EXEMPT TRUST CENTRAL INDEX KEY: 0000854437 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 841121370 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05871 FILM NUMBER: 97676597 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 3410 S GALENA STREET STREET 2: 3410 S GALENA STREET CITY: DENVER STATE: CO ZIP: 80231 N-30D 1 CENTENNIAL CALIFORNIA TAX-EXEMPT TRUST -- A/R [COVER PAGE] 1997 ANNUAL REPORT CENTENNIAL CALIFORNIA TAX EXEMPT TRUST - ------------------------------------------ June 30, 1997 RA0180.001.0697 DEAR SHAREHOLDER: The U.S. economy is in the midst of one of its best periods in decades, with growth in 1997 reaching an annual rate of 4%, up from about 2% in 1995. Unemployment has fallen to its lowest level since the early 1970s, and inflation is dormant, despite the strengthening economy. As a result, interest rates have remained under control. Although 30-year Treasury rates have risen above 7% several times during the past 12 months, yields on short-term securities, particularly tax-exempts, remain relatively low. Still, yields on tax-exempt securities are adequate to offset the effects of inflation, which is currently running at an annual rate of 2.4%. For the year ended June 30, 1997, the Centennial California Tax Exempt Trust had a compounded annual yield of 2.82%. Without compounding, the corresponding yield was 2.79%. For investors in the 36% federal tax bracket, these yields are equivalent to taxable yields of 4.41% with compounding, and 4.36% without compounding, respectively. The seven-day annualized yields, with and without compounding, for the year ended June 30, 1997 were 3.30% and 3.24%, respectively.(1) The portfolio continues to emphasize the highest quality investments. California's economy continues to improve, and tax revenues have been buoyed by the booming entertainment and high technology industries. However, certain municipalities in California have experienced credit problems in recent years. For example, despite strong tax revenues, credit concerns continue with respect to securities issued by Los Angeles County. These securities may require credit enhancement from further backing by private insurance or a major bank. Over two-thirds of the portfolio's securities are typically enhanced by municipal bond insurance or bank letters of credit. The high quality is important so that the Centennial California Tax Exempt Trust can continue to provide liquidity, as well as safety of principal. However, it's important to remember that an investment in the Trust is neither insured nor guaranteed by the U.S. government, and there is no assurance that the Trust will maintain a stable $1.00 share price in the future. One of the special challenges of managing a tax-exempt short-term fund is the inconsistent supply of securities with the appropriate maturity. For instance, during the latter half of 1996, the Trust received an above-average inflow of funds, which we sought to put to work. At the same time, we believed that interest rates were likely to trend down. As a result, we sought to purchase securities with longer maturities. That's because in a period of falling interest rates, longer-term paper paying a relatively high yield appreciates in value. However, longer-term paper was not uniformly available during that period. But the concern diminished by December, as we began to view the interest-rate environment differently. Indeed, by January, we began to sell some of our longer dated paper because our view was that interest rates would rise during the first quarter of 1997. Having a shorter-maturity portfolio is typically more appropriate in April, as investors liquidate shares to pay income taxes on their other investments. On March 25, 1997, the Federal Reserve Board raised short-term interest rates by 0.25%. As a result of the Fed action, and the April taxpaying season, the rates for very short-term tax-free instruments surged, resulting in falling yields. By keeping the portfolio's average maturity very short, we were able to take advantage of the 1.5 percentage point yield increase that ensued in the tax-exempt marketplace from mid-April to late May. However, as the end of the fiscal year approached, we began to extend the portfolio once again. Due to a somewhat decelerating economy, we are less concerned about rising inflation and interest rates than we were a few months ago. As opportunities present themselves, we will purchase longer-term paper in order to lock in higher yields. Thank you for your confidence in Centennial California Tax Exempt Trust. We look forward to helping you reach your investment goals in the future. Sincerely, /S/James C. Swain James C. Swain Chairman Centennial California Tax Exempt Trust /S/Bridget A. Macaskill Bridget A. Macaskill President Centennial California Tax Exempt Trust July 22, 1997 1. Compounded yields assume reinvestment of dividends. A portion of the Trust's distributions may be subject to federal and state income taxes. For investors subject to the federal and/or state alternative minimum tax, a portion of the Trust's distributions may increase this tax. Past performance does not guarantee future results.
================================================================================ STATEMENT OF INVESTMENTS JUNE 30, 1997 Centennial California Tax Exempt Trust FACE VALUE AMOUNT SEE NOTE 1 ================================================================================================================================ SHORT-TERM TAX-EXEMPT OBLIGATIONS - 97.9% - -------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA - 97.9% Alhambra, CA RA MH RB, Main Street Plaza Apts. Project, 4.45% (1) $6,400,000 $ 6,400,000 - -------------------------------------------------------------------------------------------------------------------------------- CA EDFAU IDV RB, Inland Empire Venture, LLC Project, 4.15% (1) 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- CA FAU RB, Pacific Gas & Electric, 3.75%, 7/9/97 5,500,000 5,500,000 - -------------------------------------------------------------------------------------------------------------------------------- CA GOB, 3.75%, 8/8/97 (2) 7,000,000 7,000,000 - -------------------------------------------------------------------------------------------------------------------------------- CA GOB, 3.90%, 7/9/97 (2) 3,500,000 3,500,000 - -------------------------------------------------------------------------------------------------------------------------------- CA GOB, Series A-3, MBIA Insured, 4.40% (1) 3,500,000 3,500,000 - -------------------------------------------------------------------------------------------------------------------------------- CA HFFAU RB, Catholic Healthcare Project, Series B, 4.05% (1) 1,100,000 1,100,000 - -------------------------------------------------------------------------------------------------------------------------------- CA HFFAU RB, Santa Barbara Cottage Project, Series C, 3.95% (1) 200,000 200,000 - -------------------------------------------------------------------------------------------------------------------------------- CA HFFAU RRB, Catholic West Project, Series C, MBIA Insured, 4.05% (1) 3,100,000 3,099,989 - -------------------------------------------------------------------------------------------------------------------------------- CA HFFAU RRB, Memorial Health Services Project, 3.95% (1) 700,000 700,000 - -------------------------------------------------------------------------------------------------------------------------------- CA M-S-R PPA RB, San Juan Project, Sub Lien, Series E, MBIA Insured, 3.90% (1) 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- CA PCFAU RB, Chevron USA, Inc. Project, 4%, 5/15/98 (2) 2,500,000 2,500,000 - -------------------------------------------------------------------------------------------------------------------------------- CA PCFAU RB, Southern California Edison Co. Project, Series C, 3.80%, 7/9/97 1,050,000 1,050,000 - -------------------------------------------------------------------------------------------------------------------------------- CA PCFAU RRB, Pacific Gas & Electric, Series C, 3.85% (1) 800,000 800,000 - -------------------------------------------------------------------------------------------------------------------------------- CA PCFAU SWD RB, Western Waste Industries, Series A, 3.90% (1) 4,000,000 4,000,000 - -------------------------------------------------------------------------------------------------------------------------------- CA Statewide CDC IDV RB, Propak California Corp., Series B, 4.10% (1) 800,000 800,000 - -------------------------------------------------------------------------------------------------------------------------------- CA Statewide CDC RB, Fibrebond, Inc., 4.10% (1) 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- CA University Board of Regents RB, 3.75%, 9/29/97 6,000,000 6,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Covina City, CA RA MH RRB, Shadowhills Apts., Inc., Series A, 4.40% (1) 3,000,000 3,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Fairfield, CA IDAU RB, Herman G. Rowland, 4% (1) 1,150,000 1,150,000 - -------------------------------------------------------------------------------------------------------------------------------- Irvine Ranch, CA Water District RRB, Series B, 3.80% (1) 1,000,000 1,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Irvine, CA Public Facilities & Infrastructure Authority Lease RB: Capital Improvement Projects, 4% (1) 3,000,000 2,999,915 Capital Improvement Projects, 4% (1) 1,860,000 1,860,000 - -------------------------------------------------------------------------------------------------------------------------------- Los Angeles Cnty., CA HAU MH RB, Park Sierra Project, 4.05% (1) 300,000 300,000 - -------------------------------------------------------------------------------------------------------------------------------- Los Angeles Cnty., CA MTAU Sales Tax RB, AMBAC Insured, Series SG54, 3.637% (1) 1,000,000 1,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Los Angeles Cnty., CA Pension Obligation RRB, Series A, 3.90% (1) 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA Airport RB, Series SG61, 4.35% (1) 4,500,000 4,500,000 - -------------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA Wastewater System RB: 3.70%, 7/25/97 6,000,000 6,000,000 3.75%, 8/11/97 (2) 4,000,000 4,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Metropolitan Water District of Southern CA Waterworks RRB, Series A, AMBAC Insured, 4% (1) 2,600,000 2,600,080 - -------------------------------------------------------------------------------------------------------------------------------- Modesto, CA Irrigation District FAU RB, Series SG66, 4.25% (1) 5,500,000 5,500,000 - -------------------------------------------------------------------------------------------------------------------------------- Oceanside, CA MH RRB, Lakeridge Apts. Project, 4.40% (1) 5,900,000 5,900,000
4
================================================================================================================================ STATEMENT OF INVESTMENTS (CONTINUED) Centennial California Tax Exempt Trust FACE VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA (CONTINUED) Ontario, CA Multifamily Residential Mtg. RB, Park Centre Project, Series A, 3.75% (1) $2,000,000 $ 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Orange Cnty., CA Apt. Development RRB, The Lakes Project, Series A, 4.05% (1) 3,000,000 3,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Palm Springs, CA Community RA COP, Headquarters Hotel, Series 7, 3.90% (1) 300,000 300,000 - -------------------------------------------------------------------------------------------------------------------------------- Pittsburg, CA Mtg. Obligation Gtd. RB, Series A, 4.10% (1) 5,000,000 5,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Riverside Cnty., CA HAU MH RB, McKinley Project, 4% (1) 4,300,000 4,300,000 - -------------------------------------------------------------------------------------------------------------------------------- Sacramento, CA MUD RB, 3.75%, 7/9/97 5,500,000 5,500,000 - -------------------------------------------------------------------------------------------------------------------------------- San Diego, CA MH RRB, Coral Point Apts. Project, Series A, 4.35% (1) 2,500,000 2,500,000 - -------------------------------------------------------------------------------------------------------------------------------- San Francisco, CA City & Cnty. International Airport RB, Series 88, 4.25% (1) 1,700,000 1,700,000 - -------------------------------------------------------------------------------------------------------------------------------- San Francisco, CA City & Cnty. Redevelopment FAU RRB, Yerba Buena Garden, 4.05% (1) 3,500,000 3,500,074 - -------------------------------------------------------------------------------------------------------------------------------- San Jose, CA MH RB, Siena at Renaissance, Series A, 4.10% (1) 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------------- San Marcos, CA RA MH Bonds, San Marcos Retirement Village Project, 3.456% (1) 2,500,000 2,500,000 - -------------------------------------------------------------------------------------------------------------------------------- Southern CA PAU RRB, Palo Verde Project, Series B, AMBAC Insured, 3.90% (1) 600,000 600,000 - -------------------------------------------------------------------------------------------------------------------------------- Visalia, CA IDV RB, Akers West Assn., 4.15% (1) 2,350,000 2,350,000 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE 97.9% 129,210,058 - -------------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 2.1 2,729,083 ------ ------------- NET ASSETS 100.0% $131,939,141 ====== =============
To simplify the listing of securities abbreviations are used per the table below: CDC - Community Development Corp. MH - Multifamily Housing COP - Certificates of Participation MTAU - Metropolitan Transportation EDFAU - Economic Development Finance Authority Authority MUD - Municipal Utility District FAU - Finance Authority PAU - Power Authority GOB - General Obligation Bonds PCFAU - Pollution Control Finance Authority HAU - Housing Authority PPA - Public Power Agency HFFAU - Health Facilities Finance RA - Redevelopment Agency Authority RB - Revenue Bonds IDAU - Industrial Development Authority RRB - Revenue Refunding Bonds IDV - Industrial Development SWD - Solid Waste Disposal 1. Floating or variable rate obligation maturing in more than one year. The interest rate, which is based on specific, or an index of, market interest rates, is subject to change periodically and is the effective rate on June 30, 1997. This instrument may also have a demand feature which allows the recovery of principal at any time, or at specified intervals not exceeding one year, on up to 30 days' notice. 2. Put obligation redeemable at full face value on the date reported. See accompanying Notes to Financial Statements. 5
================================================================================ STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 Centennial California Tax Exempt Trust ============================================================================================================================= ASSETS Investments, at value - see accompanying statement $129,210,058 - ----------------------------------------------------------------------------------------------------------------------------- Cash 245,827 - ----------------------------------------------------------------------------------------------------------------------------- Receivables: Shares of beneficial interest sold 3,022,583 Interest 463,422 - ----------------------------------------------------------------------------------------------------------------------------- Other 5,736 ------------- Total assets 132,947,626 ============================================================================================================================= LIABILITIES Payables and other liabilities: Shares of beneficial interest redeemed 776,307 Dividends 127,629 Service plan fees 67,550 Shareholder reports 16,121 Transfer and shareholder servicing agent fees 3,829 Other 17,049 ------------- Total liabilities 1,008,485 ============================================================================================================================= NET ASSETS $131,939,141 ============= ============================================================================================================================= COMPOSITION OF NET ASSETS Paid-in capital $131,942,709 - ----------------------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investment transactions (3,568) - ----------------------------------------------------------------------------------------------------------------------------- Net assets - applicable to 131,942,709 shares of beneficial interest outstanding $131,939,141 ============= ============================================================================================================================= NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $1.00
See accompanying Notes to Financial Statements. 6
================================================================================ STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997 Centennial California Tax Exempt Trust ============================================================================================================================= INVESTMENT INCOME - Interest $4,618,950 ============================================================================================================================= EXPENSES Management fees - Note 3 644,397 - ----------------------------------------------------------------------------------------------------------------------------- Service plan fees - Note 3 261,035 - ----------------------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees - Note 3 75,459 - ----------------------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 32,452 - ----------------------------------------------------------------------------------------------------------------------------- Shareholder reports 14,565 - ----------------------------------------------------------------------------------------------------------------------------- Legal and auditing fees 12,650 - ----------------------------------------------------------------------------------------------------------------------------- Registration and filing fees 12,089 - ----------------------------------------------------------------------------------------------------------------------------- Insurance expenses 3,653 - ----------------------------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 3,264 - ----------------------------------------------------------------------------------------------------------------------------- Other 2,501 ----------- Total expenses 1,062,065 ----------- Less assumption of expenses by Centennial Asset Management Corporation - Note 3 (7,679) Less expenses paid indirectly - Note 3 (22,156) ----------- Net expenses 1,032,230 ============================================================================================================================= NET INVESTMENT INCOME 3,586,720 ============================================================================================================================= NET REALIZED LOSS ON INVESTMENTS (3,568) ============================================================================================================================= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,583,152 ===========
================================================================================ STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED JUNE 30, 1997 1996 ============================================================================================================================= OPERATIONS Net investment income $ 3,586,720 $ 3,314,158 - ----------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (3,568) 13,191 - ----------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 3,583,152 3,327,349 ============================================================================================================================= DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (3,588,347) (3,314,158) ============================================================================================================================= BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions - Note 2 13,106,174 26,507,136 ============================================================================================================================= NET ASSETS Total increase 13,100,979 26,520,327 - ----------------------------------------------------------------------------------------------------------------------------- Beginning of period 118,838,162 92,317,835 ---------------------------------- End of period $131,939,141 $118,838,162 ==================================
See accompanying Notes to Financial Statements. 7
================================================================================ FINANCIAL HIGHLIGHTS Centennial California Tax Exempt Trust Year Ended June 30, --------------------------------------------------------------------- 1997 1996 1995 1994 1993 ============================================================================================================================ PER SHARE OPERATING DATA: Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations - net investment income and net realized gain .03 .03 .03 .02 .02 Dividends and distributions to shareholders (.03) (.03) (.03) (.02) (.02) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 =================================================================== ============================================================================================================================ TOTAL RETURN, AT NET ASSET VALUE(1) 2.81% 2.97% 3.00% 1.82% 2.00% ============================================================================================================================ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $131,939 $118,838 $92,318 $60,376 $58,079 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $129,087 $112,911 $71,278 $65,520 $56,082 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 2.78% 2.94% 2.99% 1.79% 1.90% Expenses, before voluntary assumption by the Manager(2) 0.82% 0.80% 0.83% 0.87% 0.86% Expenses, net of voluntary assumption by the Manager 0.80% 0.79% 0.80% 0.80% 0.80%
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends 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 reflect changes in net investment income only. 2. Beginning in fiscal 1995, the expense ratio reflects the effect of expenses paid indirectly by the Trust. Prior year expense ratios have not been adjusted. See accompanying Notes to Financial Statements. 8 NOTES TO FINANCIAL STATEMENTS Centennial California Tax Exempt Trust 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 preservation of capital. The Trust's investment adviser 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. INVESTMENT VALUATION. Portfolio securities are valued on the basis of amortized cost, which approximates market value. FEDERAL TAXES. The Trust intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income or excise tax provision is required. DISTRIBUTIONS TO SHAREHOLDERS. The Trust intends to declare dividends from net investment income each day the New York Stock Exchange is open for business and pay such dividends monthly. To effect its policy of maintaining a net asset value of $1.00 per share, the Trust may withhold dividends or make distributions of net realized gains. OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Realized gains and losses on investments are determined on an identified cost basis, which is the same basis used for federal income tax purposes. The Trust concentrates its investments in California and, therefore, may have more credit risks related to the economic conditions of California than a portfolio with a broader geographical diversification. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 2. SHARES OF BENEFICIAL INTEREST The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
YEAR ENDED JUNE 30, 1997 YEAR ENDED JUNE 30, 1996 ------------------------- ------------------------ SHARES AMOUNT SHARES AMOUNT Sold 400,712,797 $ 400,712,797 397,706,144 $ 397,706,144 Dividends and distributions reinvested 3,470,265 3,470,265 3,281,812 3,281,812 Redeemed (391,076,888) (391,076,888) (374,480,820) (374,480,820) ------------- -------------- ------------- -------------- Net increase 13,106,174 $ 13,106,174 26,507,136 $ 26,507,136 ============= ============== ============= ==============
9 NOTES TO FINANCIAL STATEMENTS (CONTINUED) CENTENNIAL CALIFORNIA TAX EXEMPT TRUST 3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for a fee of 0.50% of the first $250 million of net assets; 0.475% of the next $250 million of net assets; 0.45% of the next $250 million of net assets; 0.425% of the next $250 million of net assets and 0.40% of net assets in excess of $1 billion. The Manager has voluntarily undertaken to assume Trust expenses in excess of 0.80% of average annual net assets. Shareholder Services, Inc. (SSI), a subsidiary of OFI, is the transfer and shareholder servicing agent for the Trust, and for other registered investment companies. SSI's total costs of providing such services are allocated ratably to these companies. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Trust. Under an approved plan of distribution, the Trust may expend up to 0.20% of its net assets annually to reimburse the Manager, as distributor, for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Trust, including amounts paid to brokers, dealers, banks and other institutions. 10 INDEPENDENT AUDITORS' REPORT Centennial California Tax Exempt Trust The Board of Trustees and Shareholders of Centennial California Tax Exempt Trust: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Centennial California Tax Exempt Trust as of June 30, 1997, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended June 30, 1997 and 1996, and the financial highlights for the period July 1, 1992 to June 30, 1997. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at June 30, 1997 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Centennial California Tax Exempt Trust at June 30, 1997, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Denver, Colorado July 22, 1997 11 FEDERAL INCOME TAX INFORMATION (Unaudited) Centennial California Tax Exempt Trust In early 1998, shareholders will receive information regarding all dividends and distributions paid to them by the Trust during calendar year 1997. Regulations of the U.S. Treasury Department require the Trust to report this information to the Internal Revenue Service. None of the dividends paid by the Trust during the fiscal year ended June 30, 1997 are eligible for the corporate dividend-received deduction. The dividends were derived from interest on municipal bonds and are not subject to federal income tax. To the extent a shareholder is subject to any state or local tax laws, some or all of the dividends received may be taxable. The foregoing information is presented to assist shareholders in reporting distributions received from the Trust to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax adviser for specific guidance. 12 CENTENNIAL CALIFORNIA TAX EXEMPT TRUST OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer Bridget A. Macaskill, Trustee and President Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee George C. Bowen, Vice President, Treasurer and Assistant Secretary Andrew J. Donohue, Vice President and Secretary Michael A. Carbuto, Vice President Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary INVESTMENT ADVISER AND DISTRIBUTOR Centennial Asset Management Corporation TRANSFER AND SHAREHOLDER SERVICING AGENT Shareholder Services, Inc. CUSTODIAN OF PORTFOLIO SECURITIES Citibank, N.A. INDEPENDENT AUDITORS Deloitte & Touche LLP LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. This is a copy of a report to shareholders of Centennial California Tax Exempt Trust. This report must be preceded or accompanied by a Prospectus of Centennial California Tax Exempt Trust. For material information concerning the Trust, see the Prospectus. For shareholder servicing, call: 1-800-525-9310 (in U.S.) 303-768-3200 (outside U.S.) Or write: Shareholder Services, Inc. P.O. Box 5143 Denver, CO 80217-5143 13 -----END PRIVACY-ENHANCED MESSAGE-----