-----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, Fdq9EQvHeeuHgEPx34q/7pOaGyCRUasFk2AOWhjOGpgIr7wk6KWnjZ20VSuVrnR5 zU5vzzxhhHcpuvRD7FsWiw== 0000935069-03-000250.txt : 20030228 0000935069-03-000250.hdr.sgml : 20030228 20030228165532 ACCESSION NUMBER: 0000935069-03-000250 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030228 EFFECTIVENESS DATE: 20030228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL CALIFORNIA TAX EXEMPT TRUST CENTRAL INDEX KEY: 0000854437 IRS NUMBER: 841121370 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05871 FILM NUMBER: 03587316 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: 14TH FLOOR CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 N-30D 1 rs0180_6472vef.txt RS0180_6472VEF Dear Shareholder: We are pleased to present you with this semiannual report for Centennial California Tax Exempt Trust. For the six-month reporting period that ended December 31, 2002, the Trust provided a 0.63% compounded annual yield. Without the effects of compounding, the equivalent yield was 0.63%. For investors in the 36% federal tax bracket, this is equivalent to a taxable yield of 0.98% with compounding and 0.98% without compounding. As of December 31, 2002, the seven-day annualized yields, with and without compounding, were 0.72% and 0.71%, respectively. 1 The U.S. economy continued to improve during the past six months. Much of the economic growth continued to be courtesy of consumers, whose spending remained surprisingly strong in the face of considerable economic uncertainty. Not all of the economic news, however, was good. Corporate earnings continued to lag analysts' expectations, manufacturing spending remained depressed, unemployment returned to levels not seen since the spring and consumer confidence generally declined. Responding to these warning signs, the Federal Reserve Board ("the Fed") further lowered the federal funds interest rate to 1.25%, its lowest level since 1961. With the cut in interest rates came a corresponding decline in yields of short-term fixed-income securities, such as those found in the Trust. Yet many investors were willing to accept these low yields rather than invest in the stock market, which was very volatile and went down more than up during the period. In this environment, fixed-income investments--especially high-quality bonds with relatively short maturities--performed well. Tax-free municipal securities enjoyed especially strong performance; during part of the period, in fact, yields for some tax-free bonds actually exceeded those of certain taxable bonds--a rare situation that resulted from an especially large supply of California municipal securities during the past six months. Our overall approach to managing the Trust remained relatively consistent throughout the period. We continued to seek to identify attractive money market debt backed by issuers with strong credit. This strategy was particularly important in California, we believed, because the state continued to struggle with significant budget problems. The state's spending continued to dramatically outpace tax revenues, due in large measure to the ongoing problems in the technology sector. In this environment, we opted to invest in the highest-quality California securities we could identify. This approach was part of our ongoing effort to maintain a stable $1 net asset value for shareholders. (While we always strive to maintain a $1 share price, there is, of course, no guarantee that this objective will be achieved.) 1. Compounded yields assume reinvestments of dividends. The Trust's investment strategy, allocations and focus can change over time. Because of our significant concerns about credit quality in California, we positioned the Trust's portfolio defensively by investing approximately half of its assets in variable-rate securities with relatively short maturities. Because of the declining-interest-rate environment, this weighting in variable debt meant that we were forgoing a small degree of yield relative to what was available. The same also was true of our focus on shorter-maturity investments. Nevertheless, we believed that such an approach was prudent because of the credit risks faced by California investors. Another approach we continued to favor for the Trust was to invest in commercial paper--short-term corporate debt that matures in 270 days or less. We especially favored enhanced commercial paper, whose income payments were guaranteed by a bank or other third party. In light of the challenging economic environment faced by issuers, we found this guarantee especially welcome to help secure the Trust's yield. In addition, we also looked actively for prerefunded securities, when available. Prerefunded securities, which generally are in high demand and thus difficult to obtain, are secured by U.S. Treasuries, which are backed by the full faith and credit of the federal government. Looking ahead, we expect few significant changes to market conditions in the near future. Accordingly, we do not currently plan to alter our Trust management approach during the coming months. To position the Trust to weather future financial challenges, we expect to continue to emphasize bond issuers with strong credit and focus on high-quality tax-free money market securities. During the early part of next year, we believe that the Trust may benefit from its relatively high weighting in fixed-rate securities. As we add new debt investments to the Trust, we will continue to scrutinize issuers' credit quality, helping to maximize yield while seeking to maintain a stable net asset value for our shareholders. Sincerely, /S/ James C. Swain /S/ John V. Murphy James C. Swain John V. Murphy Chairman of the Board President Centennial California Tax Exempt Trust January 23, 2003 In reviewing performance, please remember that past performance cannot guarantee future results. Yields will fluctuate. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 2 Financial Statements Pages 4-11 3 Statement of Investments December 31, 2002 / Unaudited Centennial California Tax Exempt Trust
Principal Value Amount See Note 1 - ---------------------------------------------------------------------------------------------------------------------- Short-Term Tax-Exempt Obligations--99.1% California--99.1% ABN AMRO Munitops Certificates, Trust 1998-10 (San Diego, CA Water Utility Fund Net System GOB), 1.53% 1,2 ................ $ 7,000,000 $ 7,000,000 ABN AMRO Munitops Certificates, Trust 1998-25 (Los Angeles, CA Wastewater System GOB), 1.53% 1 ............................ 2,000,000 2,000,000 ABN AMRO Munitops Certificates, Trust 1999-7 (Los Angeles, CA USD GOB), 1.53% 1,2 ........................................ 7,000,000 7,000,000 CA Department of Water Resources & Power Supply RB, Series B-1, 1.80%, 3/13/03 .................................................. 7,500,000 7,500,000 CA HFFAU RB, Kaiser Permanente, Series 26, FSA Insured, 1.52% 1 ................ 6,000,000 6,000,000 CA Infrastructure ED Bank RB, Salvation Army West Territory, Series 2001, 1.35%, 5/6/03 .................................................. 7,500,000 7,500,000 CA M-S-R PPA RRB, San Juan Project, Sub. Lien, Series E, MBIA Insured, 1.45% 1 ....................................................... 900,000 900,000 CA PCFAU SWD RB, Burrtec Waste Industries, Series A, 1.80% 1 ................... 2,500,000 2,500,000 CA PCFAU SWD RB, Greenteam of San Jose Project-A, 1.75% 1 ...................... 4,235,000 4,235,000 CA SCDAU MH RB, Greentree Sr. Apartments Project-P, 1.52% 1 .................... 7,350,000 7,350,000 CA SCDAU RB, IDV-Fibrebond, Inc., 1.65% 1 ...................................... 655,000 655,000 CA SCDAU RB, IDV-Propak California-B, 1.65% 1 .................................. 340,000 340,000 CA University Board of Regents RB, 1.35%, 1/23/03 .............................. 7,500,000 7,500,000 Duarte, CA COP, Hope National Medical Center, 6.25%, 4/1/03 .................. 4,500,000 4,641,359 Lodi, CA EU REF COP, Series A, MBIA Insured, 1.35% 1 ........................... 5,000,000 5,000,000 Long Beach, CA Harbor RRB, Series A, 5%, 5/15/03 ............................... 1,900,000 1,925,578 Los Angeles Cnty., CA MH Mortgage RB, Valencia Housing Project, Series C, 1.20% 1 ........................................................... 2,500,000 2,500,000 Los Angeles, CA TAN & RAN, 3%, 6/30/03 ......................................... 17,000,000 17,119,190 Oceanside, CA MH RRB, Lakeridge Apartments Project, 1.45% 1 .................... 3,300,000 3,300,000 Orange Cnty., CA Apartment Development RB, Niguel Summit 2, Series B, 1.20% 1 ........................................................... 3,461,000 3,461,000 Orange Cnty., CA Apartment Development RRB, Villas Aliento, Series E, 1.40% 1 ........................................................... 500,000 500,000 Orange Cnty., CA LTA Sales Tax RB, 1.30%, 1/10/03 .............................. 11,200,000 11,200,000 Rancho Mirage, CA Joint Powers FA REF COP, Eisenhower Medical Center, Series B, MBIA Insured, 1.49% 1 ............................. 7,300,000 7,300,000 Sacramento Cnty., CA HAU MH RB, Shadowood Apartments Project-Issue A, 1.60% 1 .................................................... 6,000,000 6,000,000 San Bernardino Cnty., CA MH RRB, Somerset Apartments-A, 1.50% 1 ................ 2,495,000 2,495,000 San Diego, CA Unified Port District Sub Airport RB, Lindbergh Field, Series B, 1.05%, 3/3/03 ..................................................... 9,400,000 9,400,000
4 Statement of Investments Unaudited / Continued Centennial California Tax Exempt Trust
Principal Value Amount See Note 1 - --------------------------------------------------------------------------------------------------------------------- California Continued Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1996 SG54 (Los Angeles Cnty., CA MTAU Sales Tax RB), 1.56% 1 ......... $ 1,000,000 $ 1,000,000 Southeast, CA RR FA Lease RRB, Series A, 1.50% 1 ............................... 6,000,000 6,000,000 Southern CA PPAU RRB, Palo Verde Project, Series B, AMBAC Insured, 1.35% 1 ...................................................... 1,800,000 1,800,000 Stockton, CA CFD No. 99-02 SPTX Bonds, Arch Road East, 1.70% 1 ................. 3,100,000 3,100,000 ------------ Total Investments, at Value (Cost $147,222,127) ................................ 99.1% 147,222,127 ------------ Other Assets Net of Liabilities ................................................ 0.9 1,336,945 --------------------------------- Net Assets ..................................................................... 100.0% $148,559,072 =================================
Footnotes to Statement of Investments To simplify the listings of securities, abbreviations are used per the table below: CFD--Community Development District COP--Certificates of Participation ED--Economic Development EU--Electric Utilities FA--Facilities Authority GOB--General Obligation Bonds HAU--Housing Authority HFFAU--Health Facilities Finance Authority IDV--Industrial Development LTA--Local Transportation Authority/Agency MH--Multifamily Housing MTAU--Metropolitan Transportation Authority PCFAU--Pollution Control Finance Authority PPA--Public Power Agency PPAU--Public Power Authority RAN--Revenue Anticipation Nts. RB--Revenue Bonds REF--Refunding RR--Resource Recovery RRB--Revenue Refunding Bonds SCDAU--Statewide Communities Development Authority SPTX--Special Tax SWD--Solid Waste Disposal TAN--Tax Anticipation Nts. 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, 2002. 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 $14,000,000 or 9.42% of the Trust's net assets as of December 31, 2002. See accompanying Notes to Financial Statements. 5 Statement of Assets and Liabilities December 31, 2002 / Unaudited Centennial California Tax Exempt Trust
- -------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $147,222,127)--see accompanying statement ........................ $ 147,222,127 Cash ......................................................................................... 311,274 Receivables and other assets: Shares of beneficial interest sold ........................................................... 1,282,369 Interest ..................................................................................... 653,296 Other ........................................................................................ 12,549 -------------- Total assets ............................................................................... 149,481,615 -------------- LIABILITIES Payables and other liabilities: Shares of beneficial interest redeemed ....................................................... 811,910 Service plan fees ............................................................................ 77,307 Shareholder reports .......................................................................... 5,880 Transfer and shareholder servicing agent fees ................................................ 2,809 Trustees' compensation ....................................................................... 296 Other ........................................................................................ 24,341 -------------- Total liabilities .......................................................................... 922,543 -------------- NET ASSETS ................................................................................... $148,559,072 ============== COMPOSITION OF NET ASSETS Paid-in capital .............................................................................. $ 148,562,595 Accumulated net realized loss on investment transactions ..................................... (3,523) -------------- NET ASSETS--Applicable to 148,546,199 shares of beneficial interest outstanding .............. $ 148,559,072 ============== NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE ................................................................. $1.00
See accompanying Notes to Financial Statements. 6 Statement of Operations For the Six Months Ended December 31, 2002 / Unaudited Centennial California Tax Exempt Trust - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest .......................................................... $1,102,090 EXPENSES Management fees ................................................... 397,861 Service plan fees ................................................. 158,638 Transfer and shareholder servicing agent fees ..................... 24,155 Custodian fees and expenses ....................................... 12,930 Trustees' compensation ............................................ 2,722 Shareholder reports ............................................... 2,525 Other ............................................................. 6,090 ---------- Total expenses .................................................... 604,921 ---------- Less reduction to custodian expenses .............................. (4,282) Less voluntary reimbursement of expenses .......................... (520) ---------- Net expenses ...................................................... 600,119 ---------- NET INVESTMENT INCOME ............................................. 501,971 ---------- NET REALIZED LOSS ON INVESTMENTS .................................. (3,523) ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............. $ 498,448 ========== See accompanying Notes to Financial Statements. 7 Statements of Changes in Net Assets Centennial California Tax Exempt Trust
Six Months Ended December 31, 2002 Year Ended (Unaudited) June 30, 2002 - ----------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income ................................................... $ 501,971 $ 1,464,326 Net realized gain (loss) ................................................ (3,523) 20,304 ------------------------------------- Net increase in net assets resulting from operations .................... 498,448 1,484,630 ------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income .................................... (501,971) (1,447,930) Distributions from net realized gain .................................... -- (16,396) ------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net decrease in net assets resulting from beneficial interest transactions ...................................... (6,090,470) (2,683,600) ------------------------------------- NET ASSETS Total decrease .......................................................... (6,093,993) (2,663,296) Beginning of period ..................................................... 154,653,065 157,316,361 ------------------------------------- End of period ........................................................... $148,559,072 $154,653,065 =====================================
See accompanying Notes to Financial Statements. 8 Financial Highlights Centennial California Tax Exempt Trust
Six Months Year Ended Ended December 31, 2002 June 30, (Unaudited) 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA 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 ............. -- 1 .01 .03 .03 .02 .03 ------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income ................ -- 1 (.01) (.03) (.03) (.02) (.03) Distributions from net realized gain ................ -- -- 1 N/A N/A N/A N/A ------------------------------------------------------------------- Total dividends and/or distributions to shareholders ....................... -- (.01) (.03) (.03) (.02) (.03) ------------------------------------------------------------------- Net asset value, end of period ........................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 =================================================================== TOTAL RETURN 2 ........................................ 0.32% 0.89% 2.74% 2.63% 2.41% 2.86% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) .............. $148,559 $154,653 $157,316 $162,261 $155,839 $155,832 Average net assets (in thousands) ..................... $157,811 $164,278 $166,654 $160,351 $168,272 $160,317 Ratios to average net assets: 3 Net investment income ................................. 0.63% 0.89% 2.72% 2.57% 2.38% 2.81% Expenses .............................................. 0.76% 0.77% 0.84% 0.83% 0.80% 0.80% 4 Expenses, net of reduction to custodian expenses and/or voluntary reimbursement of expenses ......................................... 0.76% 5 0.77% 0.81% 0.81% 0.78% 0.79%
1. Less than $0.005 per year. 2. 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 reflect changes in net investment income only. Total returns are not annualized for periods less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Less than 0.01%. See accompanying Notes to Financial Statements. 9 Notes to Financial Statements Unaudited 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 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. - -------------------------------------------------------------------------------- Securities Valuation. Portfolio securities are valued on the basis of amortized cost, which approximates market value. - -------------------------------------------------------------------------------- Security Credit Risk. There are certain risks arising from geographic concentration in any state. Certain revenue or tax related events in a state may impair the ability of certain issuers of municipal securities to pay principal and interest on their obligations. - -------------------------------------------------------------------------------- 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. As of December 31, 2002, the Trust had available for federal income tax purposes an estimated unused capital loss carryforward of $3,523. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. - -------------------------------------------------------------------------------- Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with 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 income and expenses during the reporting period. Actual results could differ from those estimates. 10 Notes to Financial Statements Unaudited / Continued Centennial California Tax Exempt Trust - -------------------------------------------------------------------------------- 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, 2002 Year Ended June 30, 2002 Shares Amount Shares Amount - ----------------------------------------------------------------------------------------------------------------- Sold ............................. 229,751,684 $ 229,751,684 444,501,691 $ 444,501,691 Dividends and/or distributions reinvested ....... 518,055 518,055 1,492,748 1,492,748 Redeemed ......................... (236,360,209) (236,360,209) (448,678,039) (448,678,039) ----------------------------------------------------------------------------- Net decrease ..................... (6,090,470) $ (6,090,470) (2,683,600) $ (2,683,600) =============================================================================
- -------------------------------------------------------------------------------- 3. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for a fee of 0.50% of the first $250 million of the net assets; 0.475% of the next $250 million of net assets; 0.45% of the next $250 million of net assets; 0.425% of the next $250 million of net assets; and 0.40% of net assets in excess of $1 billion. The Manager has voluntarily undertaken to assume certain expenses of the Trust in any fiscal year they exceed 0.80% of the Trust's average annual net assets. The Manager reserves the right to amend or terminate that expense assumption at any time. - -------------------------------------------------------------------------------- Transfer Agent Fees. Shareholder Services, Inc. (SSI) acts as the transfer and shareholder servicing agent for the Trust and for other registered investment companies. The Trust pays SSI a $14.75 per account fee. - -------------------------------------------------------------------------------- Service Plan (12b-1) Fees. The Trust has adopted a service plan. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold shares of the Trust. Reimbursement is made quarterly at an annual rate up to 20% of the average annual net assets of the Trust. During the six months ended December 31, 2002, the Trust paid $9 to a broker/dealer affiliated with the Manager as reimbursement for distribution-related expenses. 11 Centennial California Tax Exempt Trust Officers and Trustees James C. Swain, Trustee and Chairman of the Board John V. Murphy, President William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Richard F. Grabish, Trustee Beverly Hamilton, Trustee Robert J. Malone, Trustee F. William Marshall, Jr., Trustee Michael J. Carbuto, Vice President Robert G. Zack, Vice President and Secretary Brian W. Wixted, Treasurer Investment Advisor and Distributor Centennial Asset Management Corporation Transfer and Shareholder Servicing Agent Shareholder Services, Inc. Independent Auditors Deloitte & Touche LLP Legal Counsel to the Fund Myer, Swanson, Adams & Wolf, P.C. Legal Counsel to the Independent Trustees Mayer Brown Rowe & Maw For more complete information about Centennial California Tax Exempt Trust, please refer to the Prospectus. To obtain a copy, call your financial advisor, or contact Centennial Asset Management Corp. at 1.800.525.9310. Please read the prospectus carefully before you invest any money. The financial statements included herein have been taken from the records of the Trust without examination of those records by the independent auditors. RS0180.001.1202 [LOGO] Printed on recycled paper 2002 Semiannual Report and Management Commentaries Centennial California Tax Exempt Trust December 31, 2002 -----END PRIVACY-ENHANCED MESSAGE-----