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 811-21881
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Oppenheimer Rochester Minnesota Municipal Fund
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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: March 31
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Date of reporting period: 09/30/2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
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TOP TEN CATEGORIES
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General Obligation 18.1%
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Single Family Housing 12.5
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Electric Utilities 8.7
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Special Assessment 8.5
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Sales Tax Revenue 7.7
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Multifamily Housing 7.2
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Tax Increment Financing (TIF) 7.1
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Education 6.6
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Special Tax 4.9
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Tobacco Master Settlement Agreement 4.5
Portfolio holdings are subject to change. Percentages are as of September 30,
2007, and are based on the total market value of investments.
CREDIT ALLOCATION
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AAA 23.4%
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AA 0.7
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A 8.0
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BBB 53.3
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BB or lower 14.6
Allocations are subject to change. Percentages are as of September 30, 2007, and
are dollar-weighted based on the total market value of investments. Securities
rated by any rating organization are included in the equivalent Standard &
Poor's rating category in the allocation above. The allocation above also
includes unrated securities whose ratings have been assigned by the Manager;
these unrated securities, currently 54% of the Fund's market value, are deemed
comparable in the Manager's judgment to the rated securities in each category.
Market value, the total value of the Fund's securities, does not include cash.
Credit ratings of AAA, AA, A and BBB and their equivalents denote
investment-grade securities.
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20 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES
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OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. THIS ANNUAL REPORT MUST BE
PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUS OF OPPENHEIMER ROCHESTER
ARIZONA MUNICIPAL FUND.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 10/10/06. The
cumulative total returns are shown net of the applicable 4.75% maximum initial
sales charge.
CLASS B shares of the Fund were first publicly offered on 10/10/06. The
cumulative total returns are shown net of the applicable contingent deferred
sales charge of 5%. Class B shares are subject to an annual 0.75% asset-based
sales charge.
CLASS C shares of the Fund were first publicly offered on 10/10/06. The
cumulative total returns are shown net of the applicable 1% contingent deferred
sales charge. Class C shares are subject to an annual 0.75% asset-based sales
charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
21 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
TOP HOLDINGS AND ALLOCATIONS
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OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
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TOP TEN CATEGORIES
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Hospital/Health Care 19.7%
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Single Family Housing 19.2
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Tax Increment Financing (TIF) 18.9
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Marine/Aviation Facilities 7.5
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Multifamily Housing 6.7
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Adult Living Facilities 6.4
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Electric Utilities 4.6
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General Obligation 2.7
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Municipal Leases 2.1
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Specialty Retail 1.8
Portfolio holdings are subject to change. Percentages are as of September 30,
2007, and are based on the total market value of investments.
CREDIT ALLOCATION
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AAA 19.9%
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AA 10.2
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A 11.7
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BBB 39.2
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BB or lower 19.0
Allocations are subject to change. Percentages are as of September 30, 2007, and
are dollar-weighted based on the total market value of investments. Securities
rated by any rating organization are included in the equivalent Standard &
Poor's rating category in the allocation above. The allocation above also
includes unrated securities whose ratings have been assigned by the Manager;
these unrated securities, currently 53.2% of the Fund's market value, are deemed
comparable in the Manager's judgment to the rated securities in each category.
Market value, the total value of the Fund's securities, does not include cash.
Credit ratings of AAA, AA, A and BBB and their equivalents denote
investment-grade securities.
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25 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES
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OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. THIS ANNUAL REPORT MUST BE
PRECEDED OR ACCOMPANIED BY THE CURRENT PROSPECTUS OF OPPENHEIMER ROCHESTER
MINNESOTA MUNICIPAL FUND.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 11/7/06. The
cumulative total returns are shown net of the applicable 4.75% maximum initial
sales charge.
CLASS B shares of the Fund were first publicly offered on 11/7/06. The
cumulative total returns are shown net of the applicable contingent deferred
sales charge of 5%. Class B shares are subject to an annual 0.75% asset-based
sales charge.
CLASS C shares of the Fund were first publicly offered on 11/7/06. The
cumulative total returns are shown net of the applicable 1% contingent deferred
sales charge. Class C shares are subject to an annual 0.75% asset-based sales
charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
26 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund 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 September 30, 2007.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts
27 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
FUND EXPENSES Continued
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valued at less than $500.00 (subject to exceptions described in the Statement of
Additional Information). Therefore, the "hypothetical" lines of the table are
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/07) (9/30/07) SEPTEMBER 30, 2007
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Class A Actual $ 1,000.00 $ 981.60 $ 6.73
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Class A Hypothetical 1,000.00 1,018.30 6.85
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Class B Actual 1,000.00 977.90 10.47
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Class B Hypothetical 1,000.00 1,014.54 10.66
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Class C Actual 1,000.00 977.80 10.47
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Class C Hypothetical 1,000.00 1,014.54 10.66
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended September 30, 2007 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 1.35%
- -----------------------------
Class B 2.10
- -----------------------------
Class C 2.10
The expense ratios reflect reduction to custodian expenses and voluntary waivers
or reimbursements by the Fund's Manager that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements and reduction to custodian
expenses, if applicable.
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28 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/07) (9/30/07) SEPTEMBER 30, 2007
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Class A Actual $ 1,000.00 $ 976.90 $ 3.97
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Class A Hypothetical 1,000.00 1,021.06 4.06
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Class B Actual 1,000.00 973.30 7.70
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Class B Hypothetical 1,000.00 1,017.30 7.87
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Class C Actual 1,000.00 972.90 7.70
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Class C Hypothetical 1,000.00 1,017.30 7.87
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended September 30, 2007 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 0.80%
- -----------------------------
Class B 1.55
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Class C 1.55
The expense ratios reflect reduction to custodian expenses and voluntary waivers
or reimbursements by the Fund's Manager that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements and reduction to custodian
expenses, if applicable.
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29 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS September 30, 2007 / Unaudited
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OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
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MUNICIPAL BONDS AND NOTES--155.3%
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ARIZONA--123.7%
$ 60,000 Apache County, AZ IDA
(Tucson Electric Power Company) 1 5.875% 03/01/2033 $ 60,010
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250,000 AZ Agricultural & Power District (Salt River) 1 5.000 01/01/2020 253,185
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50,000 AZ Educational Loan Marketing Corp. 1 5.700 12/01/2008 50,171
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300,000 AZ Health Facilities Authority (American Baptist Estates) 1 7.750 11/15/2033 328,656
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180,000 AZ Health Facilities Authority
(FMC/SMC Obligated Group) 1 5.250 10/01/2026 183,235
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20,000 AZ Health Facilities Authority
(Northern Arizona Healthcare) 1 5.000 10/01/2023 20,394
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20,000 AZ Health Facilities Authority
(Northern Arizona Healthcare) 1 5.250 10/01/2016 20,422
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15,000 AZ State University COP (Downtown Campus/Mercado) 1 5.750 07/01/2017 15,026
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15,000 AZ State University COP (Downtown Campus/Mercado) 1 5.625 07/01/2015 15,024
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145,000 AZ Student Loan Acquisition Authority 1 5.750 05/01/2015 152,647
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75,000 AZ Student Loan Acquisition Authority 1 5.900 05/01/2024 78,665
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50,000 Casa Grande, AZ IDA
(Casa Grande Regional Medical Center) 1 7.000 12/01/2015 53,508
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20,000 Casa Grande, AZ IDA
(Casa Grande Regional Medical Center) 1 7.000 12/01/2017 21,504
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300,000 Centerra, AZ Community Facilities District 1 5.150 07/15/2031 270,510
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9,441 Central AZ Irrigation & Drain District 1 6.000 06/01/2016 9,448
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10,000 Chandler, AZ Street & Highway 1 5.375 07/01/2014 10,064
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50,000 Chandler, AZ Water & Sewer 1 5.250 07/01/2015 50,564
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10,000 Cochise County, AZ IDA
(Sierra Vista Community Hospital) 1 6.750 12/01/2026 10,207
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10,000 Cochise County, AZ Unified School District No. 21
(St. David) 1 5.000 07/01/2017 10,136
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525,000 Estrella Mountain Ranch, AZ Community Facilities
District (Montecito Assessment District) 5.550 07/01/2022 516,390
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465,000 Estrella Mountain Ranch, AZ Community Facilities District
(Montecito Assessment District) 1 5.700 07/01/2027 457,969
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505,000 Estrella Mountain Ranch, AZ Community Facilities District
(Montecito Assessment District) 5.800 07/01/2032 501,339
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100,000 Festival Ranch, AZ Community Facilities District 1 5.000 07/01/2026 98,972
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100,000 Festival Ranch, AZ Community Facilities District 1 5.000 07/01/2032 97,361
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195,000 Festival Ranch, AZ Community Facilities District 5.300 07/15/2031 181,888
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250,000 Festival Ranch, AZ Community Facilities District 1, 2 5.800 07/15/2032 249,813
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750,000 Flagstaff, AZ IDA (Senior Living Community-Northern
Arizona) 1 5.700 07/01/2042 711,998
30 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
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ARIZONA Continued
$ 20,000 Gila County, AZ IDA (Cobre Valley Community Hospital) 1 6.100% 12/01/2025 $ 20,910
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260,000 Gladden Farms, AZ Community Facilities District 1 5.350 07/15/2027 246,454
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1,000,000 Gladden Farms, AZ Community Facilities District 5.450 07/15/2032 937,350
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35,000 Glendale, AZ IDA (Midwestern University) 1 5.375 05/15/2028 35,660
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225,000 Goodyear, AZ IDA Water & Sewer
(Litchfield Park Service Company) 1 6.750 10/01/2031 238,676
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5,000 Greater AZ Devel. Authority, Series A 1 5.625 08/01/2020 5,178
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335,000 Hassayampa, AZ Community Facilities District
(Hassayampa Village Community) 7.750 07/01/2021 344,001
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5,000 Maricopa County, AZ Hospital (Sun Health Corp.) 1 5.250 04/01/2019 5,056
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95,000 Maricopa County, AZ IDA (Catholic Healthcare) 1 5.000 07/01/2021 95,918
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60,000 Maricopa County, AZ IDA (Catholic Healthcare) 1 5.000 07/01/2021 60,072
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35,000 Maricopa County, AZ IDA
(Chaparral City Water Company) 1 5.400 12/01/2022 35,765
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285,000 Maricopa County, AZ IDA (Citizens Utilities Company) 1 6.200 05/01/2030 285,162
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50,000 Maricopa County, AZ IDA (Mayo Clinic Scottsdale) 1 5.250 11/15/2037 50,892
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10,000 Maricopa County, AZ IDA (Pennington Gardens) 1 5.100 09/20/2019 10,251
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1,500,000 Maricopa County, AZ IDA (Rosa Linda Apartments) 1 5.300 07/20/2042 1,513,020
- ---------------------------------------------------------------------------------------------------------------------------------
525,000 Maricopa County, AZ IDA (Sun King Apartments) 1 6.750 05/01/2031 533,731
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50,000 Maricopa County, AZ IDA (Whispering Palms Apartments) 1 5.900 07/01/2029 51,536
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160,000 Maricopa County, AZ Pollution Control Corp.
(Public Service Company of New Mexico) 1 5.750 11/01/2022 160,986
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105,000 Maricopa County, AZ Pollution Control Corp.
(Public Service Company of New Mexico) 1 6.300 12/01/2026 106,279
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1,500,000 Maricopa County, AZ School District No. 24 (Gila Bend) 5.500 07/01/2022 1,543,800
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455,000 Marley Park, AZ Community Facilities District 1 6.000 07/15/2026 459,818
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685,000 Marley Park, AZ Community Facilities District 1 6.100 07/15/2032 692,624
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170,000 Mesa, AZ IDA (Banner Health System) 1 5.000 01/01/2019 172,183
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60,000 Mesa, AZ IDA (Mesa Student Hsg.) 1 6.000 07/01/2025 62,366
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125,000 Mesa, AZ IDA (Mesa Student Hsg.) 1 6.000 07/01/2032 129,395
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Mesa, AZ IDA (Mesa Student Hsg.) 1 6.000 07/01/2032 20,627
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60,000 Mesa, AZ IDA (Mesa Student Hsg.) 1 6.250 07/01/2032 62,543
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160,000 Navajo County, AZ IDA (Stone Container Corp.) 1 7.400 04/01/2026 162,355
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500,000 Palm Valley, AZ Community Facility District No.3 1,2 5.800 07/15/2032 493,160
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50,000 Parkway, AZ Community Facilities District No. 1
(Prescott Valley) 1 5.350 07/15/2031 46,352
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40,000 Peoria, AZ Improvement District No. 8401 1 5.300 01/01/2011 40,105
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10,000 Peoria, AZ Street & Highway 1 5.750 07/01/2012 10,017
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5,000 Peoria, AZ Street & Highway 1 5.750 07/01/2016 5,009
31 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS Unaudited / Continued
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OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
ARIZONA Continued
$ 2,000,000 Phoenix & Pima County, AZ IDA (Single Family) 1 5.800% 12/01/2039 $ 2,166,760
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Phoenix, AZ Airport 1 6.400 07/01/2012 15,029
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45,000 Phoenix, AZ Airport, Series D 1 6.200 07/01/2008 45,083
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Phoenix, AZ Civic Improvement Corp. (Bus Acquisition) 1 5.300 07/01/2010 50,566
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Phoenix, AZ Civic Improvement Corp. (Courthouse) 1 5.250 07/01/2024 25,989
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Phoenix, AZ Civic Improvement Corp. Airport, Series A 1 5.000 07/01/2018 5,088
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Phoenix, AZ Civic Improvement Corp. Airport, Series A 1 5.000 07/01/2025 40,728
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Phoenix, AZ Civic Improvement Corp. Airport, Series B 1 5.250 07/01/2022 20,635
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Phoenix, AZ Civic Improvement Corp. Airport, Series B 1 5.250 07/01/2032 51,007
- ---------------------------------------------------------------------------------------------------------------------------------
60,000 Phoenix, AZ Civic Improvement Corp. Water System 1 5.000 07/01/2019 60,525
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Phoenix, AZ Hsg. Finance Corp. 1 6.900 01/01/2023 20,278
- ---------------------------------------------------------------------------------------------------------------------------------
165,000 Phoenix, AZ IDA (Crossroads Apartments) 1 5.200 12/15/2021 166,577
- ---------------------------------------------------------------------------------------------------------------------------------
350,000 Phoenix, AZ IDA (Espiritu Community Devel. Corp.) 1 6.250 07/01/2036 355,964
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Phoenix, AZ IDA (Gourmet Boutique West) 5.875 11/01/2037 947,960
- ---------------------------------------------------------------------------------------------------------------------------------
240,000 Phoenix, AZ IDA (Liberty Cove Apartments) 1 5.150 10/20/2042 239,218
- ---------------------------------------------------------------------------------------------------------------------------------
1,499,832 Phoenix, AZ IDA (Single Family Mtg.) 1 5.500 08/01/2038 1,594,441
- ---------------------------------------------------------------------------------------------------------------------------------
750,000 Phoenix, AZ IDA (Single Family Mtg.) 1 5.625 05/01/2039 789,960
- ---------------------------------------------------------------------------------------------------------------------------------
130,000 Phoenix, AZ IDA (Single Family Mtg.) 1 6.650 10/01/2029 133,364
- ---------------------------------------------------------------------------------------------------------------------------------
225,000 Phoenix, AZ IDA (Summit Apartments) 6.550 07/20/2037 240,998
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Phoenix, AZ IDA (Ventana Palms Apartments) 1 6.150 10/01/2029 53,476
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Phoenix, AZ Street & Highway 1 6.100 07/01/2011 40,080
- ---------------------------------------------------------------------------------------------------------------------------------
65,000 Pima County, AZ Devel. Authority
(Tucson Electric Power Company) 1 6.100 09/01/2025 65,004
- ---------------------------------------------------------------------------------------------------------------------------------
170,000 Pima County, AZ IDA (Arizona Charter School) 1 6.500 07/01/2023 178,281
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Pima County, AZ IDA (Center for Academic Success) 1 5.500 07/01/2037 997,730
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Pima County, AZ IDA (Charter Schools) 1 6.375 07/01/2031 15,601
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 Pima County, AZ IDA (Charter Schools) 1 6.375 07/01/2031 11,356
- ---------------------------------------------------------------------------------------------------------------------------------
195,000 Pima County, AZ IDA (Christian Senior Living) 1 5.050 01/01/2037 180,824
- ---------------------------------------------------------------------------------------------------------------------------------
150,000 Pima County, AZ IDA (Global Water Resources) 1 5.750 12/01/2032 140,714
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Pima County, AZ IDA
(Healthpartners of Southern Arizona) 1 5.450 04/01/2010 15,319
- ---------------------------------------------------------------------------------------------------------------------------------
150,000 Pima County, AZ IDA
(Healthpartners of Southern Arizona) 1 5.625 04/01/2014 153,210
- ---------------------------------------------------------------------------------------------------------------------------------
85,000 Pima County, AZ IDA
(Horizon Community Learning Center) 1 5.250 06/01/2035 81,815
- ---------------------------------------------------------------------------------------------------------------------------------
65,000 Pima County, AZ IDA (International Studies Academy) 1 6.750 07/01/2031 72,072
- ---------------------------------------------------------------------------------------------------------------------------------
105,000 Pima County, AZ IDA (International Studies Academy) 1 6.750 07/01/2031 109,300
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Pima County, AZ IDA (Phoenix Advantage Charter School) 1 5.500 07/01/2033 15,120
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Pima County, AZ IDA (Single Family Mtg.) 1 5.200 05/01/2031 5,021
32 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
ARIZONA Continued
$ 50,000 Pima County, AZ IDA (Single Family Mtg.) 1 5.786% 3 11/01/2034 $ 10,099
- ---------------------------------------------------------------------------------------------------------------------------------
125,000 Pima County, AZ IDA (Sonoran Science Academy) 1 5.750 12/01/2037 118,410
- ---------------------------------------------------------------------------------------------------------------------------------
625,000 Pima County, AZ IDA (Southgate Academy Charter School) 1 7.000 12/01/2036 632,706
- ---------------------------------------------------------------------------------------------------------------------------------
150,000 Pima County, AZ IDA (Tucson Country Day School) 1 5.000 06/01/2037 138,768
- ---------------------------------------------------------------------------------------------------------------------------------
65,000 Pima County, AZ IDA (Tucson Medical Center) 1 5.000 04/01/2015 65,055
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Pima County, AZ Junior College District 1 7.000 07/01/2009 15,269
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Quailwood Meadows, AZ Community Facilities District 1 6.000 07/15/2022 1,018,580
- ---------------------------------------------------------------------------------------------------------------------------------
750,000 Quailwood Meadows, AZ Community Facilities District 1 6.125 07/15/2029 760,725
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 San Luis, AZ Civic Improvement Corp. (Excise Tax) 1 5.000 07/01/2038 5,134
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 San Luis, AZ Facility Devel. Corp.
(Regional Detention Center) 7.250 05/01/2027 200,022
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Santa Cruz County, AZ Unified School District 1 6.000 07/01/2009 5,031
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Show Low Bluff, AZ Community Facilities District 5.600 07/01/2031 948,020
- ---------------------------------------------------------------------------------------------------------------------------------
480,000 Show Low Bluff, AZ Community Facilities District 1, 2 5.875 07/15/2032 480,595
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Show Low, AZ IDA (Navapache Regional Medical Center) 1 5.300 12/01/2011 25,463
- ---------------------------------------------------------------------------------------------------------------------------------
175,000 Somerton, AZ IDA (Bienestar) 1 5.750 07/01/2017 174,998
- ---------------------------------------------------------------------------------------------------------------------------------
2,000,000 Tartesso West, AZ Community Facilities District 1,2 5.900 07/15/2032 1,998,500
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Tempe, AZ Improvement Bonds
(Improvement District No. 170) 1 6.875 01/01/2011 15,114
- ---------------------------------------------------------------------------------------------------------------------------------
125,000 Tolleson, AZ IDA (Copper Cove) 1 5.450 11/20/2032 127,608
- ---------------------------------------------------------------------------------------------------------------------------------
265,000 Tucson & Pima Counties, AZ IDA (Single Family Mtg.) 1 6.000 07/01/2021 274,347
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Tucson, AZ COP 1 5.600 07/01/2011 5,022
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Tucson, AZ IDA (Joint Single Family Mtg.) 1 5.000 01/01/2039 100,759
- ---------------------------------------------------------------------------------------------------------------------------------
75,000 Tucson, AZ IDA (Joint Single Family Mtg.) 1 5.350 01/01/2038 79,618
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Tucson, AZ Improvement District
(Civano Neighborhood Phase 1) 1 5.000 01/01/2015 5,014
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Tucson, AZ Improvement District
(Civano Neighborhood Phase 1) 1 5.000 01/01/2018 15,030
- ---------------------------------------------------------------------------------------------------------------------------------
35,000 University AZ Medical Center Corp.
(University Medical Center) 1 5.000 07/01/2013 35,034
- ---------------------------------------------------------------------------------------------------------------------------------
75,000 University AZ Medical Center Corp.
(University Medical Center) 1 5.000 07/01/2021 75,064
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 University AZ Medical Center Corp.
(University Medical Center) 1 5.000 07/01/2033 4,807
- ---------------------------------------------------------------------------------------------------------------------------------
225,000 Verrado, AZ Community Facilities District No. 1 1 6.500 07/15/2027 233,138
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 Via Linda, AZ Road Community Facilities District
Scottsdale 1 5.650 07/15/2018 10,121
- ---------------------------------------------------------------------------------------------------------------------------------
225,000 Vistancia, AZ Community Facilities District 1 6.750 07/15/2022 242,035
- ---------------------------------------------------------------------------------------------------------------------------------
170,000 Westpark, AZ Community Facilities District 1 5.100 07/15/2018 165,434
33 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
ARIZONA Continued
$ 975,000 Westpark, AZ Community Facilities District 1 5.250% 07/15/2031 $ 903,211
- ---------------------------------------------------------------------------------------------------------------------------------
180,000 Westpark, AZ Community Facilities District 1 5.300 07/15/2022 173,461
- ---------------------------------------------------------------------------------------------------------------------------------
1,535,000 Westpark, AZ Community Facilities District 5.450 07/15/2032 1,457,897
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Yuma County, AZ Jail District 1 5.250 07/01/2012 50,066
--------------
32,741,605
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--31.6%
20,000 Guam Power Authority, Series A 1 5.250 10/01/2023 20,079
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Puerto Rico Aqueduct & Sewer Authority 1 5.000 07/01/2015 25,216
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Puerto Rico Aqueduct & Sewer Authority 1 5.000 07/01/2019 101,946
- ---------------------------------------------------------------------------------------------------------------------------------
600,000 Puerto Rico Children's Trust Fund (TASC) 1 5.625 05/15/2043 602,502
- ---------------------------------------------------------------------------------------------------------------------------------
20,000,000 Puerto Rico Children's Trust Fund (TASC) 6.342 3 05/15/2050 1,242,600
- ---------------------------------------------------------------------------------------------------------------------------------
2,800,000 Puerto Rico Electric Power Authority, Series UU 4 4.291 5 07/01/2031 2,627,660
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Puerto Rico ITEMECF (Ana G. Mendez University) 1 5.375 02/01/2019 25,349
- ---------------------------------------------------------------------------------------------------------------------------------
75,000 Puerto Rico ITEMECF (Hospital Auxilio Mutuo) 1 5.500 07/01/2026 76,222
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Puerto Rico ITEMECF (Hospital Auxilio Mutuo) 1 5.900 07/01/2008 50,087
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Puerto Rico Port Authority (American Airlines), Series A 1 6.250 06/01/2026 100,054
- ---------------------------------------------------------------------------------------------------------------------------------
185,000 Puerto Rico Port Authority (American Airlines), Series A 6.300 06/01/2023 184,998
- ---------------------------------------------------------------------------------------------------------------------------------
3,000,000 Puerto Rico Sales Tax Financing Corp., Series A 4 4.518 5 08/01/2057 2,918,970
- ---------------------------------------------------------------------------------------------------------------------------------
140,000 V.I. Public Finance Authority (Hovensa Refinery) 1 6.125 07/01/2022 145,015
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 V.I. Public Finance Authority, Series A 1 5.500 10/01/2018 51,162
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 V.I. Public Finance Authority, Series A 1 5.625 10/01/2025 204,087
--------------
8,375,947
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $41,788,586)--155.3% 41,117,552
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(55.3) (14,647,013)
--------------
NET ASSETS--100.0% $ 26,470,539
==============
34 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. All or a portion of the security has been segregated for collateral to cover
borrowings. See Note 5 of accompanying Notes.
2. When-issued security or forward commitment to be delivered and settled after
September 30, 2007. See Note 1 of accompanying Notes.
3. Zero coupon bond reflects effective yield on the date of purchase.
4. Security represents the underlying municipal bond on an inverse floating rate
security. The bond was purchased by the Fund and subsequently segregated and
transferred to a trust. See Note 1 of accompanying Notes.
5. Represents the current interest rate for a variable or increasing rate
security.
TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:
COP Certificates of Participation
FMC Flagstaff Medical Center
IDA Industrial Devel. Agency
ITEMECF Industrial, Tourist, Educational,
Medical and Environmental
Community Facilities
ROLs Residual Option Longs
SMC Sedona Medical Center
TASC Tobacco Settlement
Asset-Backed Bonds
V.I. United States Virgin Islands
DISTRIBUTION OF INVESTMENTS BY CATEGORY OF ISSUE, AS A PERCENTAGE OF TOTAL
INVESTMENTS AT VALUE, IS AS FOLLOWS:
CATEGORY MARKET VALUE PERCENT
- --------------------------------------------------------------------------------
General Obligation $ 7,427,704 18.1%
Single Family Housing 5,154,369 12.5
Electric Utilities 3,578,365 8.7
Special Assessment 3,484,823 8.5
Sales Tax Revenue 3,179,228 7.7
Multifamily Housing 2,946,442 7.2
Tax Increment Financing (TIF) 2,922,184 7.1
Education 2,727,123 6.6
Special Tax 2,025,032 4.9
Tobacco Master Settlement Agreement 1,845,102 4.5
Hospital/Health Care 1,224,813 3.0
Adult Living Facilities 1,221,478 3.0
Food Products 947,960 2.3
Water Utilities 419,864 1.0
Airlines 285,052 0.7
Student Housing 274,931 0.7
Correctional Facilities 250,088 0.6
Sewer Utilities 238,676 0.6
Student Loans 231,312 0.6
Marine/Aviation Facilities 177,570 0.4
Paper, Containers & Packaging 162,355 0.4
Oil, Gas & Consumable Fuels 145,015 0.4
Municipal Leases 91,581 0.2
Higher Education 91,302 0.2
Highways/Commuter Facilities 60,161 0.1
Government Appropriation 5,022 0.0
-----------------------
Total $ 41,117,552 100.0%
=======================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS September 30, 2007 / Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--120.2%
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA--117.2%
$ 25,000 Albany, MN Independent School District 1 5.000% 02/01/2011 $ 25,128
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Alexandria, MN Health Care Facilities
(Board of Social Ministry) 1 6.000 07/01/2032 50,073
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Alexandria, MN Independent School District No. 206 1 5.375 02/01/2013 100,585
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Apple Valley, MN EDA (Evercare Senior Living) 1 6.000 12/01/2025 24,834
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Austin, MN GO 1 5.000 10/01/2016 40,215
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Austin, MN GO 1 5.000 10/01/2018 25,095
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 Bemidji, MN Health Care Facilities
(North Country Health Services) 1 5.000 09/01/2031 9,890
- ---------------------------------------------------------------------------------------------------------------------------------
70,000 Brainerd, MN Health Care Facilities
(Benedictine Health System) 1 6.000 02/15/2020 70,129
- ---------------------------------------------------------------------------------------------------------------------------------
30,000 Carver County, MN Hsg. & Redevel. Authority
(Jail Facilities) 1 5.300 02/01/2014 30,041
- ---------------------------------------------------------------------------------------------------------------------------------
275,000 Carver County, MN Hsg. & Redevel. Authority (Lake Grace) 1 5.300 02/01/2012 275,377
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Chippewa County, MN Gross Revenue
(Montevideo Hospital) 1 5.500 03/01/2037 957,160
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 Columbia Heights, MN EDA Tax Increment
(Huset Park Area Redevel.) 1 5.375 02/15/2032 934,340
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Columbia Heights, MN Multifamily & Health Care
Facilities (Crest View Corp.) 1 5.700 07/01/2042 191,682
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Coon Rapids, MN Hsg. (Pine Point Apartments) 1 6.125 05/01/2032 5,124
- ---------------------------------------------------------------------------------------------------------------------------------
400,000 Cottage Grove, MN Senior Hsg. 1 6.000 12/01/2046 401,116
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Cuyuna Range, MN Hospital District Health Facilities 1 5.000 06/01/2029 182,920
- ---------------------------------------------------------------------------------------------------------------------------------
250,000 Cuyuna Range, MN Hospital District Health Facilities 1 5.500 06/01/2035 235,285
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Dakota County, MN Community Devel. Agency
(Regent Burnsville) 1 6.000 07/01/2045 194,518
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Douglas County, MN Alexandria Hsg. & Redevel. Authority
(Windmill Ponds) 1 5.000 2 07/01/2015 4,870
- ---------------------------------------------------------------------------------------------------------------------------------
75,000 Duluth, MN EDA (Benedictine Health System) 1 5.250 02/15/2033 75,968
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 Duluth, MN EDA (Benedictine Health System/St. Mary's
Duluth Clinic) 1 5.250 02/15/2028 10,173
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Faribault, MN Hsg. & Redevel. Authority
(Trails Edge Apartments) 1 5.250 02/01/2028 50,396
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Glencoe, MN GO 1 5.500 12/01/2014 5,013
- ---------------------------------------------------------------------------------------------------------------------------------
80,000 Golden Valley, MN
(CRC/CAH/BCH/ECH Obligated Group) 1 5.500 12/01/2029 80,839
- ---------------------------------------------------------------------------------------------------------------------------------
35,000 Harmony, MN Multifamily (Zedakah Foundation) 5.950 09/01/2020 33,881
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Hastings, MN Health Care Facility (Regina Medical Center) 1 5.300 09/15/2028 50,031
- ---------------------------------------------------------------------------------------------------------------------------------
90,000 Hayfield, MN GO 1 5.000 02/01/2018 90,332
36 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS September 30, 2007 / Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA Continued
$ 110,000 International Falls, MN Pollution Control
(Boise Cascade Corp.) 1 5.500% 04/01/2023 $ 109,659
- ---------------------------------------------------------------------------------------------------------------------------------
180,000 International Falls, MN Pollution Control
(Boise Cascade Corp.) 1 5.650 12/01/2022 181,337
- ---------------------------------------------------------------------------------------------------------------------------------
115,000 International Falls, MN Solid Waste Disposal
(Boise Cascade Corp.) 1 6.850 12/01/2029 120,903
- ---------------------------------------------------------------------------------------------------------------------------------
175,000 Lakeville, MN Liquor Revenue 1 5.000 02/01/2022 171,915
- ---------------------------------------------------------------------------------------------------------------------------------
225,000 Lakeville, MN Liquor Revenue 1 5.000 02/01/2027 215,435
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Madelia, MN GO 1 5.000 02/01/2017 40,203
- ---------------------------------------------------------------------------------------------------------------------------------
230,000 Mahtomedi, MN Multifamily (Briarcliff) 1 7.350 06/01/2036 232,592
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Maple Grove, MN GO 1 5.000 02/01/2019 5,020
- ---------------------------------------------------------------------------------------------------------------------------------
300,000 Maple Grove, MN Health Care Systems
(Maple Grove Hospital Corp.) 1 5.250 05/01/2037 304,047
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Maplewood, MN Multifamily Hsg. (Hazel Ridge) 1 5.700 12/01/2032 20,013
- ---------------------------------------------------------------------------------------------------------------------------------
230,000 McLeod County, MN Commercial Devel.
(Southwest Minnesota Foundation) 1 5.125 12/01/2031 230,897
- ---------------------------------------------------------------------------------------------------------------------------------
370,000 Minneapolis & St. Paul, MN Hsg. & Redevel. Authority
(Healthspan Health System) 1 5.000 11/15/2013 370,418
- ---------------------------------------------------------------------------------------------------------------------------------
197,546 Minneapolis & St. Paul, MN Hsg. Finance Board
(Single Family Mtg.) 1 5.000 12/01/2038 193,706
- ---------------------------------------------------------------------------------------------------------------------------------
2,375,000 Minneapolis & St. Paul, MN Hsg. Finance Board
(Single Family Mtg.) 1 5.250 12/01/2040 2,451,784
- ---------------------------------------------------------------------------------------------------------------------------------
190,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission 1 5.000 01/01/2016 192,284
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission 1 5.000 01/01/2030 5,069
- ---------------------------------------------------------------------------------------------------------------------------------
120,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission 1 5.250 01/01/2022 122,756
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission (Northwest Airlines) 1 5.200 01/01/2024 25,356
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission, Series A 1 5.000 01/01/2019 5,069
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission, Series A 1 5.000 01/01/2028 25,607
- ---------------------------------------------------------------------------------------------------------------------------------
125,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission, Series A 1 5.250 01/01/2014 126,656
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission, Series B 5.250 01/01/2013 20,265
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Minneapolis & St. Paul, MN Metropolitan Airports
Commission, Series B 1 5.250 01/01/2015 20,255
- ---------------------------------------------------------------------------------------------------------------------------------
75,000 Minneapolis, MN (Carechoice Member) 1 5.875 04/01/2024 75,035
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Minneapolis, MN Community Devel. Agency 1 5.875 06/01/2019 15,860
37 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA Continued
$ 10,000 Minneapolis, MN Community Devel. Agency (Cord-Sets) 1 5.500% 06/01/2018 $ 10,076
- ---------------------------------------------------------------------------------------------------------------------------------
90,000 Minneapolis, MN Community Devel. Agency
(Riverside Homes of Minneapolis) 1 6.200 09/01/2029 92,752
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Minneapolis, MN Multifamily Hsg. (Blaisdell Apartments) 1 5.500 04/01/2042 186,184
- ---------------------------------------------------------------------------------------------------------------------------------
35,000 Minneapolis, MN Multifamily Hsg. (Riverside Plaza) 1 5.100 12/20/2018 35,181
- ---------------------------------------------------------------------------------------------------------------------------------
190,000 Minneapolis, MN Multifamily Hsg. (Riverside Plaza) 1 5.200 12/20/2030 190,308
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 Minneapolis, MN Sports Arena 5.100 10/01/2013 15,117
- ---------------------------------------------------------------------------------------------------------------------------------
250,000 Minneapolis, MN Supported Devel. (Common Bond Fund) 1 5.000 06/01/2028 244,343
- ---------------------------------------------------------------------------------------------------------------------------------
500,000 Minneapolis, MN Tax Increment (Ivy Tower) 1 5.500 02/01/2022 494,345
- ---------------------------------------------------------------------------------------------------------------------------------
250,000 Minneapolis, MN Tax Increment (St. Anthony Falls) 1 5.750 02/01/2027 249,255
- ---------------------------------------------------------------------------------------------------------------------------------
635,000 Minneapolis, MN Tax Increment (Unocal Site) 1 5.400 02/01/2031 596,894
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Minneota, MN Hsg. Facilities (Madison Ave. Apartments) 1 5.750 04/01/2019 4,839
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Minnetonka, MN Multifamily Hsg.
(Cedar Hills East/Cedar Hills West) 1 5.900 10/20/2019 41,412
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 MN Agricultural & Economic Devel. Board 1 7.250 08/01/2020 206,734
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 MN Agricultural & Economic Devel. Board
(Benedictine Health System) 1 5.000 02/15/2023 5,127
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 MN HEFA (College of St. Benedict) 1 5.350 03/01/2020 20,161
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 MN HEFA (Gustavus Adolphus College) 1 5.250 10/01/2009 15,018
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 MN HEFA (Saint Olaf College) 1 5.250 04/01/2029 5,001
- ---------------------------------------------------------------------------------------------------------------------------------
110,000 MN HFA (Rental Hsg.) 1 5.100 08/01/2047 108,277
- ---------------------------------------------------------------------------------------------------------------------------------
60,000 MN HFA (Rental Hsg.) 1 5.200 08/01/2029 60,157
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 MN HFA (Rental Hsg.) 1 5.875 08/01/2028 25,324
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 MN HFA (Rental Hsg.) 1 6.125 08/01/2021 25,452
- ---------------------------------------------------------------------------------------------------------------------------------
250,000 MN HFA (Residential Hsg.) 1 5.100 07/01/2031 250,398
- ---------------------------------------------------------------------------------------------------------------------------------
30,000 MN HFA (Single Family Mtg.) 1 5.150 07/01/2019 31,028
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 MN HFA (Single Family Mtg.) 1 5.200 07/01/2013 10,199
- ---------------------------------------------------------------------------------------------------------------------------------
155,000 MN HFA (Single Family Mtg.) 1 5.400 01/01/2025 156,110
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 MN HFA (Single Family Mtg.) 1 5.550 07/01/2013 10,265
- ---------------------------------------------------------------------------------------------------------------------------------
530,000 MN HFA (Single Family Mtg.) 1 5.600 07/01/2013 533,572
- ---------------------------------------------------------------------------------------------------------------------------------
35,000 MN HFA (Single Family Mtg.) 1 5.600 07/01/2022 35,731
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 MN HFA (Single Family Mtg.) 1 5.650 07/01/2031 5,077
- ---------------------------------------------------------------------------------------------------------------------------------
30,000 MN HFA (Single Family Mtg.) 1 5.650 07/01/2031 30,648
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 MN HFA (Single Family Mtg.) 1 5.750 01/01/2026 5,056
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 MN HFA (Single Family Mtg.) 1 5.875 01/01/2017 20,498
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 MN HFA (Single Family Mtg.) 1 5.900 07/01/2025 25,407
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 MN HFA (Single Family Mtg.) 1 6.100 07/01/2030 15,566
- ---------------------------------------------------------------------------------------------------------------------------------
310,000 MN HFA (Single Family Mtg.) 6.250 07/01/2026 313,162
- ---------------------------------------------------------------------------------------------------------------------------------
500,000 MN Municipal Power Agency 1 5.000 10/01/2030 510,415
38 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA Continued
$ 485,000 MN Municipal Power Agency 1 5.000% 10/01/2035 $ 491,548
- ---------------------------------------------------------------------------------------------------------------------------------
10,000 MN Northern Municipal Power Agency 1 5.300 01/01/2021 10,238
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 MN Public Facilities Authority Water Pollution 1 5.000 03/01/2015 15,090
- ---------------------------------------------------------------------------------------------------------------------------------
1,200,000 MN Seaway Port Authority of Duluth (Northstar Aerospace) 5.200 04/01/2027 1,138,008
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Moorhead, MN EDA (Eventide) 1 5.150 06/01/2029 184,640
- ---------------------------------------------------------------------------------------------------------------------------------
20,000 Moorhead, MN Public Utility 1 5.100 11/01/2017 20,024
- ---------------------------------------------------------------------------------------------------------------------------------
170,000 Morris, MN GO 1 5.000 02/01/2019 170,396
- ---------------------------------------------------------------------------------------------------------------------------------
55,000 New Hope, MN Hsg. & Health Care Facilities
(Minnesota Masonic Home North Ridge) 5.875 03/01/2029 54,239
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 Northfield, MN Senior Hsg. (Northfield Manor) 1 6.000 07/01/2033 39,200
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Olivia, MN GO 1 5.200 02/01/2011 5,005
- ---------------------------------------------------------------------------------------------------------------------------------
110,000 Olmstead County, MN Health Care Facilities
(Olmsted Medical Group) 1 5.450 07/01/2013 110,485
- ---------------------------------------------------------------------------------------------------------------------------------
300,000 Otter Tail County, MN GO 1 7.500 11/01/2019 302,271
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Park Rapids, MN Health Facilities (Mankato Lutheran Homes) 1 5.600 08/01/2036 95,418
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Paynesville, MN GO 1 5.450 12/01/2009 50,147
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 Pine City, MN Health Care & Hsg. (North Branch) 1 6.125 10/20/2047 99,624
- ---------------------------------------------------------------------------------------------------------------------------------
65,000 Plymouth, MN Health Facilities (HealthSpan Health
System/North Memorial Medical Center) 1 6.250 06/01/2016 65,194
- ---------------------------------------------------------------------------------------------------------------------------------
125,000 Prior Lake, MN Senior Hsg. (Shepherds Path Senior Hsg.) 1 5.750 08/01/2041 122,255
- ---------------------------------------------------------------------------------------------------------------------------------
30,000 Ramsey County, MN Hsg. & Redevel. Authority
(Hanover Townhouses) 1 5.625 07/01/2016 30,710
- ---------------------------------------------------------------------------------------------------------------------------------
600,000 Redwood Falls, MN (Redwood Area Hospital) 1 5.125 12/01/2036 544,854
- ---------------------------------------------------------------------------------------------------------------------------------
380,000 Rochester, MN Health Care Facilities (Mayo Clinic) 1 5.500 11/15/2027 387,463
- ---------------------------------------------------------------------------------------------------------------------------------
170,000 Sartell, MN Environmental Improvement, Series A 1 5.200 06/01/2027 166,967
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Sartell, MN Health Care & Hsg. Facilities
(The Foundation for Health Care Continuums) 1 6.625 09/01/2029 205,072
- ---------------------------------------------------------------------------------------------------------------------------------
55,000 Scott, MN Hsg. & Redevel. Authority (Justice Center) 1 5.500 12/01/2015 55,179
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Slayton, MN Tax Increment, Series B 1 5.350 02/01/2013 25,123
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 South Washington County, MN Independent School
District No. 833 COP 1 5.250 12/01/2014 25,016
- ---------------------------------------------------------------------------------------------------------------------------------
1,000,000 St. Anthony, MN Hsg. & Redevel. Authority
(Silver Lake Village) 1 5.000 02/01/2031 889,540
- ---------------------------------------------------------------------------------------------------------------------------------
250,000 St. Anthony, MN Hsg. & Redevel. Authority
(Silver Lake Village) 5.625 02/01/2031 242,558
- ---------------------------------------------------------------------------------------------------------------------------------
40,000 St. Cloud, MN Hospital Facilities (St. Cloud Hospital) 1 5.000 07/01/2015 40,237
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 St. Cloud, MN Hospital Facilities (St. Cloud Hospital) 1 5.000 07/01/2015 5,030
- ---------------------------------------------------------------------------------------------------------------------------------
15,000 St. Cloud, MN Hospital Facilities (St. Cloud Hospital) 1 5.000 07/01/2020 15,087
- ---------------------------------------------------------------------------------------------------------------------------------
400,000 St. Paul, MN Hsg. & Redevel. Authority
(Bridgecreek Senior Place) 7.000 09/15/2037 399,952
39 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF INVESTMENTS Unaudited / Continued
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
PRINCIPAL VALUE
AMOUNT COUPON MATURITY SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA Continued
$ 342,000 St. Paul, MN Hsg. & Redevel. Authority
(Great Northern Lofts) 6.250% 03/01/2029 $ 352,465
- ---------------------------------------------------------------------------------------------------------------------------------
150,000 St. Paul, MN Hsg. & Redevel. Authority
(Hmong Academy) 1 6.000 09/01/2036 151,176
- ---------------------------------------------------------------------------------------------------------------------------------
180,000 St. Paul, MN Hsg. & Redevel. Authority
(St. Paul Academy & Summit School) 1 5.500 10/01/2024 186,905
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 St. Paul, MN Hsg. & Redevel. Authority Health Care
Facility (GHP/RH/MAC Obligated Group) 5.250 05/15/2036 198,086
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 St. Paul, MN Hsg. & Redevel. Authority Health Care
Facility (Regions Hospital) 1 5.200 05/15/2013 5,058
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 St. Paul, MN Hsg. & Redevel. Authority Health Care
Facility (Regions Hospital) 1 5.250 05/15/2018 25,183
- ---------------------------------------------------------------------------------------------------------------------------------
35,000 St. Paul, MN Hsg. & Redevel. Authority Health Care
Facility (Regions Hospital) 1 5.300 05/15/2028 35,045
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 St. Paul, MN Independent School District No. 625 COP 1 6.375 02/01/2013 100,221
- ---------------------------------------------------------------------------------------------------------------------------------
100,000 St. Paul, MN Port Authority (Great Northern) 1 6.000 03/01/2030 101,080
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Stillwater, MN Multifamily (Orleans Homes) 1 5.500 02/01/2042 188,964
- ---------------------------------------------------------------------------------------------------------------------------------
25,000 Virginia, MN Hsg. & Redevel. Authority Health Care
Facilities 5.375 10/01/2030 25,218
- ---------------------------------------------------------------------------------------------------------------------------------
130,000 Washington County, MN Hsg. & Redevel. Authority
(HealthEast) 1 5.500 11/15/2027 131,197
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Washington County, MN Hsg. & Redevel. Authority
(HealthEast/HealthEast Bethesda Hospital Obligated Group) 1 5.375 11/15/2018 5,053
- ---------------------------------------------------------------------------------------------------------------------------------
215,000 Washington County, MN Hsg. & Redevel. Authority
(Seasons Villas) 1 6.950 12/01/2023 217,507
- ---------------------------------------------------------------------------------------------------------------------------------
200,000 Winona, MN Health Care Facilities
(Winona Health Obligated Group) 1 5.150 07/01/2031 196,460
--------------
21,948,433
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--3.0%
40,000 Puerto Rico Children's Trust Fund (TASC) 5.375 05/15/2033 39,823
- ---------------------------------------------------------------------------------------------------------------------------------
300,000 Puerto Rico Children's Trust Fund (TASC) 1 5.500 05/15/2039 300,354
- ---------------------------------------------------------------------------------------------------------------------------------
60,000 Puerto Rico IMEPCF (American Airlines) 1 6.450 12/01/2025 60,454
- ---------------------------------------------------------------------------------------------------------------------------------
5,000 Puerto Rico ITEMECF (Ana G. Mendez University) 1 5.375 02/01/2019 5,070
- ---------------------------------------------------------------------------------------------------------------------------------
110,000 Puerto Rico Port Authority (American Airlines), Series A 1 6.250 06/01/2026 110,059
- ---------------------------------------------------------------------------------------------------------------------------------
50,000 Puerto Rico Port Authority (American Airlines), Series A 6.300 06/01/2023 50,000
--------------
565,760
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $23,107,791)--120.2% 22,514,193
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(20.2) (3,783,066)
--------------
NET ASSETS--100.0% $ 18,731,127
==============
40 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. All or a portion of the security has been segregated for collateral to cover
borrowings. See Note 5 of accompanying Notes.
2. Represents the current interest rate for a variable or increasing rate
security.
TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:
BCH Bethany Covenant Home
CAH Colonial Acres Home
COP Certificates of Participation
CRC Covenant Retirement Communities
ECH Ebenezer Covenant Home
EDA Economic Devel. Authority
GHP Group Health Plan
GO General Obligation
HEFA Higher Education Facilities Authority
HFA Housing Finance Agency
IMEPCF Industrial, Medical and Environmental Pollution Control Facilities
ITEMECF Industrial, Tourist, Educational, Medical and Environmental Community
Facilities
MAC Midwest Assurance Company
RH Regions Hospital
TASC Tobacco Settlement Asset-Backed Bonds
DISTRIBUTION OF INVESTMENTS BY CATEGORY OF ISSUE, AS A PERCENTAGE OF TOTAL
INVESTMENTS AT VALUE, IS AS FOLLOWS:
CATEGORY MARKET VALUE PERCENT
- -------------------------------------------------------------------------------
Hospital/Health Care $ 4,445,217 19.7%
Single Family Housing 4,330,378 19.2
Tax Increment Financing (TIF) 4,260,429 18.9
Marine/Aviation Facilities 1,681,325 7.5
Multifamily Housing 1,498,677 6.7
Adult Living Facilities 1,434,126 6.4
Electric Utilities 1,032,225 4.6
General Obligation 607,455 2.7
Municipal Leases 460,818 2.1
Specialty Retail 411,899 1.8
Beverages 387,350 1.7
Tobacco Master Settlement Agreement 340,177 1.5
Energy Equipment & Services 302,271 1.3
Government Appropriation 244,343 1.1
Not-for-Profit Organization 230,897 1.0
Airlines 220,513 1.0
Construction Materials 206,734 0.9
Education 176,192 0.8
Resource Recovery 166,967 0.7
Higher Education 45,250 0.2
Food Products 15,860 0.1
Water Utilities 15,090 0.1
-----------------------
Total $ 22,514,193 100.0%
=======================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER
ROCHESTER ROCHESTER
ARIZONA MINNESOTA
MUNICIPAL MUNICIPAL
September 30, 2007 FUND FUND
- ---------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------
Investments, at cost $ 41,788,586 $ 23,107,791
===================================================================================================
Investments, at value $ 41,117,552 $ 22,514,193
- ---------------------------------------------------------------------------------------------------
Cash 180,708 149,955
- ---------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,466,034 1,206
Interest 414,259 314,472
Shares of beneficial interest sold 121,486 90,909
Due from Manager 90 147
Other 1,138 1,121
----------------------------
Total assets 43,301,267 23,072,003
- ---------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------
Payables and other liabilities:
Payable on borrowings (See Note 5) 8,300,000 4,300,000
Payable for short-term floating rate notes issued (See Note 1) 5,220,000 --
Investments purchased* 3,240,069 --
Interest expense on borrowings 36,705 18,797
Dividends 18,534 12,742
Distribution and service plan fees 7,953 1,128
Shareholder communications 4,139 3,888
Transfer and shareholder servicing agent fees 463 452
Trustees' compensation 471 406
Shares of beneficial interest redeemed -- 13
Other 2,394 3,450
----------------------------
Total liabilities 16,830,728 4,340,876
- ---------------------------------------------------------------------------------------------------
NET ASSETS $ 26,470,539 $ 18,731,127
============================
- ---------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 1,931 $ 1,422
- ---------------------------------------------------------------------------------------------------
Additional paid-in capital 27,151,504 19,230,665
- --------------------------------------------------------------------------------------------------
Accumulated net investment income 172,968 128,397
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (184,830) (35,759)
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (671,034) (593,598)
----------------------------
NET ASSETS $ 26,470,539 $ 18,731,127
============================
* Investments purchased on a when-issued basis or forward commitment $ 3,230,000 $ --
42 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER OPPENHEIMER
ROCHESTER ROCHESTER
ARIZONA MINNESOTA
MUNICIPAL MUNICIPAL
FUND FUND
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ---------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
and shares of beneficial interest outstanding)
Net assets $ 23,169,636 $ 17,328,566
Shares of benefical interest outstanding 1,690,140 1,315,433
Per share $ 13.71 $ 13.17
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 14.39 $ 13.83
- ---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of beneficial interest outstanding)
Net assets $ 131,807 $ 398,487
Shares of benefical interest outstanding 9,620 30,272
Per share $ 13.70 $ 13.16
- ---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of beneficial interest outstanding)
Net assets $ 3,169,096 $ 1,004,074
Shares of benefical interest outstanding 231,276 76,286
Per share $ 13.70 $ 13.16
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENTS OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER OPPENHEIMER
ROCHESTER ROCHESTER
ARIZONA MINNESOTA
MUNICIPAL MUNICIPAL
For the Six Months Ended September 30, 2007 FUND FUND
- ---------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------
Interest $ 681,975 $ 419,897
- ---------------------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------------------
Management fees 50,837 34,627
- ---------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 9,127 159
Class B 616 1,304
Class C 10,853 3,384
- ---------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,641 1,474
Class B 78 141
Class C 454 304
- ---------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 1,862 2,186
Class B 913 431
Class C 624 603
- ---------------------------------------------------------------------------------------------------
Interest expense on borrowings 154,320 106,149
- ---------------------------------------------------------------------------------------------------
Interest expense and fees on short-term floating rate notes issued
(See Note 1) 51,004 --
- ---------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 14,376 13,476
- ---------------------------------------------------------------------------------------------------
Custodian fees and expenses 373 840
- ---------------------------------------------------------------------------------------------------
Trustees' compensation 315 262
- ---------------------------------------------------------------------------------------------------
Other 10,085 7,475
----------------------------
Total expenses 307,478 172,815
Less reduction to custodian expenses (54) (581)
Less waivers and reimbursements of expenses (173,822) (118,341)
----------------------------
Net expenses 133,602 53,893
- ---------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 548,373 366,004
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (183,975) (35,166)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (801,409) (632,151)
- ---------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (437,011) $ (301,313)
============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Oppenheimer Rochester Arizona Municipal Fund
SIX MONTHS PERIOD
ENDED ENDED
SEPTEMBER 30, 2007 MARCH 31,
(UNAUDITED) 2007 1
- ----------------------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------------------
Net investment income $ 548,373 $ 184,119
- ----------------------------------------------------------------------------------------------------------
Net realized loss (183,975) (855)
- ----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (801,409) 130,375
-----------------------------
Net increase (decrease) in net assets resulting from operations (437,011) 313,639
- ----------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (381,199) (127,692)
Class B (2,434) (791)
Class C (42,691) (6,491)
-----------------------------
(426,324) (134,974)
- ----------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions:
Class A 13,619,171 10,029,836
Class B 57,924 78,749
Class C 1,984,689 1,282,840
-----------------------------
15,661,784 11,391,425
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Total increase 14,798,449 11,570,090
- ----------------------------------------------------------------------------------------------------------
Beginning of period 11,672,090 102,000 2
-----------------------------
End of period (including accumulated net investment income of
$172,968 and $50,919, respectively) $ 26,470,539 $ 11,672,090
=============================
1. For the period from October 10, 2006 (commencement of operations) to
March 31, 2007.
2. Reflects the value of the Manager's initial seed money on May 31, 2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS Continued
- --------------------------------------------------------------------------------
Oppenheimer Rochester Minnesota Municipal Fund
SIX MONTHS PERIOD
ENDED ENDED
SEPTEMBER 30, 2007 MARCH 31,
(UNAUDITED) 2007 1
- ----------------------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------------------
Net investment income $ 366,004 $ 142,286
- ----------------------------------------------------------------------------------------------------------
Net realized loss (35,166) (593)
- ----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (632,151) 38,553
-----------------------------
Net increase (decrease) in net assets resulting from operations (301,313) 180,246
- ----------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (265,634) (96,679)
Class B (5,238) (1,277)
Class C (12,482) (1,099)
-----------------------------
(283,354) (99,055)
- ----------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions:
Class A 10,032,822 7,651,497
Class B 196,298 213,782
Class C 875,422 162,782
-----------------------------
11,104,542 8,028,061
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Total increase 10,519,875 8,109,252
- ----------------------------------------------------------------------------------------------------------
Beginning of period 8,211,252 102,000 2
-----------------------------
End of period (including accumulated net investment income of
$128,397 and $45,747, respectively) $ 18,731,127 $ 8,211,252
=============================
1. For the period from November 7, 2006 (commencement of operations) to March
31, 2007.
2. Reflects the value of the Manager's initial seed money on May 31, 2006.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF CASH FLOWS Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER
ROCHESTER
ARIZONA
MUNICIPAL
For the Six Months Ended September 30, 2007 FUND
- -------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
- -------------------------------------------------------------------------------------
Net decrease in net assets from operations $ (437,011)
- -------------------------------------------------------------------------------------
Adjustments to reconcile net decrease in net assets from operations
to net cash used in operating activities:
Purchase of investment securities (28,708,874)
Proceeds from disposition of investment securities 6,897,713
Short-term investment securities, net (4,140,318)
Premium amortization 49,143
Discount accretion (41,062)
Net realized loss on investments 183,975
Net change in unrealized depreciation on investments 801,409
Increase in interest receivable (218,285)
Increase in receivable for securities sold (1,431,034)
Increase in other assets (282)
Increase in payable for securities purchased 2,779,174
Increase in payable for accrued expenses 5,826
--------------
Net cash used in operating activities (24,259,626)
- -------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------
Proceeds from bank borrowings 25,100,000
Payments on bank borrowings (19,900,000)
Proceeds from short-term floating rate notes issued 3,470,000
Proceeds from shares sold 18,969,952
Payment on shares redeemed (3,268,123)
Cash distributions paid (295,501)
--------------
Net cash provided by financing activities 24,076,328
- -------------------------------------------------------------------------------------
Net decrease in cash (183,298)
- -------------------------------------------------------------------------------------
Cash, beginning balance 364,006
--------------
Cash, ending balance $ 180,708
==============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $118,312.
Cash paid for interest on bank borrowings--$128,262.
Cash paid for interest on short-term floating rate notes issued--$51,004.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
STATEMENT OF CASH FLOWS Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER
ROCHESTER
MINNESOTA
MUNICIPAL
For the Six Months Ended September 30, 2007 FUND
- -------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
- -------------------------------------------------------------------------------------
Net decrease in net assets from operations $ (301,313)
- -------------------------------------------------------------------------------------
Adjustments to reconcile net decrease in net assets from operations
to net cash used in operating activities:
Purchase of investment securities (11,341,622)
Proceeds from disposition of investment securities 609,934
Short-term investment securities, net (2,326,443)
Premium amortization 34,632
Discount accretion (47)
Net realized loss on investments 35,166
Net change in unrealized depreciation on investments 632,151
Increase in interest receivable (179,005)
Decrease in receivable for securities sold 14,229
Increase in other assets (416)
Decrease in payable for securities purchased (10,322)
Decrease in payable for accrued expenses (18,822)
--------------
Net cash used in operating activities (12,851,878)
- -------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------
Proceeds from bank borrowings 10,900,000
Payments on bank borrowings (9,300,000)
Proceeds from shares sold 11,515,058
Payment on shares redeemed (324,415)
Cash distributions paid (196,199)
--------------
Net cash provided by financing activities 12,594,444
- -------------------------------------------------------------------------------------
Net decrease in cash (257,434)
- -------------------------------------------------------------------------------------
Cash, beginning balance 407,389
--------------
Cash, ending balance $ 149,955
==============
Supplemental disclosure of cash flow information:
Noncash financing activities not included herein consist of reinvestment of
dividends and distributions of $78,521.
Cash paid for interest on bank borrowings--$98,686.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Oppenheimer Rochester Arizona Municipal Fund
CLASS A CLASS B CLASS C
Six Months Period Six Months Period Six Months Period
Ended Ended Ended Ended Ended Ended
Sept. 30, 2007 March 31, Sept. 30, 2007 March 31, Sept. 30, 2007 March 31,
(Unaudited) 2007 1 (Unaudited) 2007 1 (Unaudited) 2007 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.30 $ 13.80 $ 14.29 $ 13.80 $ 14.29 $ 13.80
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 2 .42 .37 .36 .31 .36 .29
Net realized and unrealized gain (loss) (.68) .39 (.67) .39 (.67) .41
-------------------------------------------------------------------------------------------
Total from investment operations (.26) .76 (.31) .70 (.31) .70
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.33) (.26) (.28) (.21) (.28) (.21)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.71 $ 14.30 $ 13.70 $ 14.29 $ 13.70 $ 14.29
===========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (1.84)% 5.61% (2.21)% 5.16% (2.22)% 5.18%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 23,170 $ 10,308 $ 132 $ 80 $ 3,169 $ 1,284
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 16,220 $ 6,676 $ 123 $ 44 $ 2,175 $ 411
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 6.00% 5.52% 5.21% 4.56% 5.21% 4.39%
Expenses excluding interest and fees on
short-term floating rate notes issued 2.64% 2.88% 5.07% 11.63% 3.58% 4.48%
Interest and fees on short-term
floating rate notes issued 5 0.55% 0.14% 0.55% 0.14% 0.55% 0.14%
-------------------------------------------------------------------------------------------
Total expenses 3.19% 6 3.02% 6 5.62% 6 11.77% 6 4.13% 6 4.62% 6
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 7 1.35% 0.94% 2.10% 1.69% 2.10% 1.69%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 32% 0% 32% 0% 32% 0%
1. For the period from October 10, 2006 (commencement of operations) to March
31, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an initial 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. Sales charges are not
reflected in the total returns. 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 fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Interest and fee expense relates to the Fund's liability for short-term
floating rate notes issued in conjunction with inverse floating rate security
transactions. See Note 1 of accompanying Notes.
6. Total expenses ratio is higher than the anticipated total expense ratio of
the class for future fiscal years due to the Fund's limited operating history.
7. Expenses after payments, waivers and/or reimbursements and reduction to
custodian expenses, excluding interest and related expenses from inverse
floating rate securities, as a percent of average daily net assets will not
exceed the following annual rates: 0.80%, 1.55% and 1.55% for Class A shares,
Class B shares and Class C shares, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Oppenheimer Rochester Minnesota Municipal Fund
CLASS A CLASS B CLASS C
Six Months Period Six Months Period Six Months Period
Ended Ended Ended Ended Ended Ended
Sept. 30, 2007 March 31, Sept. 30, 2007 March 31, Sept. 30, 2007 March 31,
(Unaudited) 2007 1 (Unaudited) 2007 1 (Unaudited) 2007 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.79 $ 13.60 $ 13.78 $ 13.60 $ 13.78 $ 13.60
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income 2 .39 .30 .34 .26 .33 .26
Net realized and unrealized gain (loss) (.70) .09 (.71) .08 (.70) .08
-------------------------------------------------------------------------------------------
Total from investment operations (.31) .39 (.37) .34 (.37) .34
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.31) (.20) (.25) (.16) (.25) (.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.17 $ 13.79 $ 13.16 $ 13.78 $ 13.16 $ 13.78
===========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 (2.31)% 2.85% (2.67)% 2.48% (2.71)% 2.47%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 17,329 $ 7,832 $ 398 $ 215 $ 1,004 $ 164
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 11,661 $ 6,330 $ 275 $ 95 $ 680 $ 77
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 5.85% 5.53% 5.10% 4.75% 4.99% 4.75%
Total expenses 2.64% 5 3.44% 5 3.92% 5 8.87% 5 3.84% 5 9.87% 5
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 0.80% 0.80% 1.55% 1.55% 1.55% 1.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4% 0% 4% 0% 4% 0%
1. For the period from November 7, 2006 (commencement of operations) to March
31, 2007.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an initial 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. Sales charges are not
reflected in the total returns. 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 fund distributions or the redemption of fund shares.
4. Annualized for periods less than one full year.
5. Total expenses ratio is higher than the anticipated total expense ratio of
the class for future fiscal years due to the Fund's limited operating history.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Rochester Arizona Municipal Fund ("Arizona Fund") and Oppenheimer
Rochester Minnesota Municipal Fund ("Minnesota Fund"), collectively (the
"Funds"), are each non-diversified, open-end management investment companies
registered under the Investment Company Act of 1940, as amended. The investment
objective of each of the Funds is to seek a high level of current interest
income exempt from federal and its state income taxes for individual investors
as is consistent with preservation of capital. The Funds' investment advisor is
OppenheimerFunds, Inc. (the "Manager").
The Funds offer Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge ("CDSC"). All
classes of shares have identical rights and voting privileges with respect to
the Funds in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B and C shares have separate distribution and/or service
plans. Class B shares will automatically convert to Class A shares six years
after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Funds.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Funds calculate the net asset value of their shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Funds'
assets are valued. Securities traded on NASDAQ(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Funds' assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. Securities traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, identified by the portfolio pricing
service, prior to the time when the Funds' assets are valued. In the absence of
a sale, the security is valued at the official closing price on the principal
exchange. Corporate, government and municipal debt instruments having a
remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Funds' assets are valued. Securities
(including restricted securities) for which market quotations are not
51 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
readily available are valued at their fair value. Foreign and domestic
securities whose values have been materially affected by what the Manager
identifies as a significant event occurring before the Funds' assets are valued
but after the close of their respective exchanges will be fair valued. Fair
value is determined in good faith using consistently applied procedures under
the supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Funds on a when-issued basis or
forward commitment take place generally at least ten days or more after the
trade date. Normally the settlement date occurs within six months after the
trade date; however, the Funds may, from time to time, purchase securities whose
settlement date extends six months or more beyond trade date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Funds
maintain internally designated assets with a market value equal to or greater
than the amount of their purchase commitments. The purchase of securities on a
when-issued basis or forward commitment may increase the volatility of the
Funds' net asset value to the extent the Funds execute such transactions while
remaining substantially fully invested. The Funds may also sell securities that
they purchased on a when-issued basis or forward commitment prior to settlement
of the original purchase. As of September 30, 2007, the following Fund had
purchased securities issued on a when-issued basis or forward commitment.
PURCHASED ON A WHEN-ISSUED BASIS
OR FORWARD COMMITMENT
---------------------------------
Arizona Fund $ 3,230,000
- --------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Funds invest in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Funds will not invest more than 20% of their total assets in inverse floaters.
As of September 30, 2007, the following Fund held inverse floaters.
INVERSE FLOATER % OF TOTAL ASSETS
----------------------------------------------------
Arizona Fund $ 326,630 0.75%
Certain inverse floating rate securities are created when the Funds purchase and
subsequently transfer a municipal bond security (the "municipal bond") to a
broker dealer. The municipal bond is typically a fixed rate security. The broker
dealer (the "sponsor") creates a trust (the "Trust") and deposits the municipal
bond. The Trust issues short-term floating rate notes available to third parties
and a residual interest in the municipal bond (referred to as an "inverse
floating rate security") to the Funds. The terms of these inverse floating rate
securities grant the Funds the right to require that the Trust issuing the
inverse floating
52 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
rate security compel a tender of the short-term floating rate notes to
facilitate the Funds' repurchase of the underlying municipal bond. Following
such a request, the Funds pay the sponsor the principal amount due to the
holders of the short-term floating rate notes issued by the Trust and exchanges
the inverse floating rate security for the underlying municipal bond. These
transactions are considered secured borrowings for financial reporting purposes.
As a result of such accounting treatments, the Funds include the municipal bond
position on its Statement of Investments (but does not separately include the
inverse floating rate securities received). The Funds also include the value of
the municipal bond and a payable amount equal to the short-term floating rate
notes issued by the Trust on their Statements of Assets and Liabilities. The
interest rates on these short-term floating rate notes reset periodically,
usually weekly. The holders of these short-term floating rate notes have the
option to tender their investment, to the sponsor or the Trust's liquidity
provider, for redemption at par at each reset date. Income from the municipal
bond position and the interest expense on the payable for the short-term
floating rate notes issued by the Trust are recorded on the Funds' Statements of
Operations. At September 30, 2007 municipal bond holdings shown on the Fund's
Statement of Investments are held by such Trusts and serve as collateral for the
short-term floating rate notes issued and outstanding at that date. The value of
the municipal bond holdings and the short-term floating rate notes issued are
shown in the following table.
VALUE OF MUNICIPAL SHORT-TERM FLOATING
BOND HOLDINGS RATE NOTES ISSUED
------------------------------------------------------
Arizona Fund $ 5,546,630 $ 5,220,000
At September 30, 2007, the Arizona Fund's residual exposure to these types of
inverse floating rate securities was as follows:
PRINCIPAL INVERSE COUPON MATURITY VALUE AS OF
AMOUNT FLOATER 1 RATES 2 DATES SEPTEMBER 30, 2007
- ----------------------------------------------------------------------------------------------------
ARIZONA FUND
$ 280,000 Puerto Rico Electric Power Authority ROLs 5.880% 7/1/31 $ 107,660
300,000 Puerto Rico Sales Tax Financing Corp. ROLs 3 7.990 8/1/57 218,970
------------------
$ 326,630
==================
1. For a list of abbreviations used in the Inverse Floater table, see the
Portfolio Abbreviation table on page 35 of the Statement of Investments.
2. Represents the current interest rate for a variable rate bond known as an
"inverse floater"
3. Security is subject to a shortfall and forbearance agreement.
The Funds enter into shortfall and forbearance agreements with the sponsors of
certain inverse floaters held by the Funds. These agreements commit the Funds to
reimburse the sponsor of the inverse floater, in certain circumstances, for the
amount of the difference between the liquidation value of the underlying
security (which is the basis of the inverse floater) and the principal amount
due to the holders of the floating rate notes issued by the Trust in conjunction
with the inverse floating rate security. Under the standard terms of an inverse
floating rate security, absent such a shortfall and forbearance agreement, the
Funds would not be required to make such a reimbursement. The Manager monitors
the
53 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Funds' potential exposure with respect to these agreements on a daily basis and
intends to take action to terminate the Funds' investment in such inverse
floating rate securities, if it deems it appropriate to do so. As of September
30, 2007, in addition to the exposure detailed in the preceding tables, the
Funds' maximum exposure under such agreements is estimated at as shown in the
following table.
APPROXIMATE MAXIMUM EXPOSURE
--------------------------------------
Arizona Fund $ 2,700,000
Minnesota Fund $ --
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Funds intend to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Funds.
As of September 30, 2007, the Funds had available for federal income tax
purposes an estimated capital loss carryforwards expiring by 2015 as shown in
the following table.
CAPITAL LOSS CARRYFORWARDS
--------------------------------------
Arizona Fund $ 184,830
Minnesota Fund 35,759
This estimated capital loss carryforward represents carryforward as of the end
of the last fiscal year, increased for losses deferred under tax accounting
rules to the current fiscal year and is increased or decreased by capital losses
or gains realized in the first six months of the current fiscal year. As of
September 30, 2007, it is estimated that the Funds
54 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
will not utilize any capital loss carryforwards to offset realized capital
gains. During the fiscal year ended March 31, 2007, the Funds did not utilize
any capital loss carryforward.
As of March 31, 2007, the Funds had available for federal income tax purposes
post-October losses as follows:
POST-OCTOBER LOSSES
------------------------------------
Arizona Fund $ 855
Minnesota Fund 593
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Funds have adopted an unfunded retirement plan (the
"Plan") for the Funds' independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the six months ended September 30, 2007,
the Funds' projected benefit obligations were increased and payments were made
to retired trustees, resulting in an accumulated liability as shown in the
following table:
PROJECTED BENEFIT PAYMENTS MADE
OBLIGATIONS TO RETIRED ACCUMULATED
INCREASED TRUSTEES LIABILITY
- --------------------------------------------------------------------------------
Arizona Fund $ 221 $ 70 $ 397
Minnesota Fund 183 60 339
The Funds' Board of Trustees have 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 Funds.
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 Funds or in other Oppenheimer funds selected by the Trustee. The
Funds purchase shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Funds' assets
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 Funds, and will not materially affect the Funds' 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,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
55 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
CUSTODIAN FEES. "Custodian fees and expenses" in the Statements of Operations
may include interest expense incurred by the Funds on any cash overdrafts of
their custodian accounts 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 Funds pay
interest to their custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Funds, 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 Funds
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Funds' 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 Funds. In the normal
course of business, the Funds may also enter into contracts that provide general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Funds. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Funds have authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
for the Funds were as follows:
ARIZONA FUND
SIX MONTHS ENDED SEPTEMBER 30, 2007 PERIOD ENDED MARCH 31, 2007 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
CLASS A
Sold 1,195,582 $ 16,754,404 713,364 $ 10,027,355
Dividends and/or
distributions reinvested 7,283 101,427 899 12,860
Redeemed (233,513) (3,236,660) (721) (10,379)
-----------------------------------------------------------------
Net increase 969,352 $ 13,619,171 713,542 $ 10,029,836
=================================================================
56 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
SIX MONTHS ENDED SEPTEMBER 30, 2007 PERIOD ENDED MARCH 31, 2007 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
CLASS B
Sold 4,768 $ 68,291 5,491 $ 78,562
Dividends and/or
distributions reinvested 73 1,014 18 251
Redeemed (797) (11,381) (5) (64)
-----------------------------------------------------------------
Net increase 4,044 $ 57,924 5,504 $ 78,749
=================================================================
- -------------------------------------------------------------------------------------------------------
CLASS C
Sold 141,781 $ 1,988,900 89,709 $ 1,281,692
Dividends and/or
distributions reinvested 1,145 15,871 82 1,176
Redeemed (1,511) (20,082) (2) (28)
-----------------------------------------------------------------
Net increase 141,415 $ 1,984,689 89,789 $ 1,282,840
=================================================================
1. For the period from October 10, 2006 (commencement of operations) to March
31, 2007.
2. The Fund sold 7,246.377 shares of Class A at a value of $100,000 and 72.464
shares each of Class B and Class C at a value of $1,000, respectively, to the
Manager upon seeding of the Fund on May 31, 2006.
MINNESOTA FUND
SIX MONTHS ENDED SEPTEMBER 30, 2007 PERIOD ENDED MARCH 31, 2007 1,2
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------
CLASS A
Sold 751,102 $ 10,080,569 560,338 $ 7,650,736
Dividends and/or
distributions reinvested 5,045 67,329 378 5,211
Redeemed (8,461) (115,076) (322) (4,450)
-----------------------------------------------------------------
Net increase 747,686 $ 10,032,822 560,394 $ 7,651,497
=================================================================
- -------------------------------------------------------------------------------------------------------
CLASS B
Sold 14,476 $ 194,148 15,525 $ 213,286
Dividends and/or
distributions reinvested 204 2,720 38 523
Redeemed (43) (570) (2) (27)
-----------------------------------------------------------------
Net increase 14,637 $ 196,298 15,561 $ 213,782
=================================================================
- -------------------------------------------------------------------------------------------------------
CLASS C
Sold 78,984 $ 1,075,732 11,766 $ 161,762
Dividends and/or
distributions reinvested 635 8,472 74 1,020
Redeemed (15,247) (208,782) -- --
-----------------------------------------------------------------
Net increase 64,372 $ 875,422 11,840 $ 162,782
=================================================================
1. For the period from November 7, 2006 (commencement of operations) to March
31, 2007.
2. The Fund sold 7,352.941 shares of Class A at a value of $100,000 and 73.529
shares each of Class B and Class C at a value of $1,000, respectively, to the
Manager upon seeding of the Fund on May 31, 2006.
57 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended September 30, 2007, were
as follows:
INVESTMENT SECURITIES
PURCHASES SALES
-------------------------------------------------
Arizona Fund $ 28,708,874 $ 6,897,713
Minnesota Fund 11,341,622 609,934
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with each of the Funds which provides for a fee at
an average annual rate as shown in the following table:
FEE SCHEDULE FOR THE FUNDS
-----------------------------------------
Up to $500 million of net assets 0.55%
Next $500 million of net assets 0.50
Next $500 million of net assets 0.45
Over $1.5 billion of net assets 0.40
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Funds. The Funds
each pay OFS a per account fee. For the six months ended September 30, 2007, the
Funds paid OFS for services as shown in the following table:
-----------------------------------------
Arizona Fund $ 1,779
Minnesota Fund 1,534
- --------------------------------------------------------------------------------
INITIAL OFFERING AND ORGANIZATIONAL COSTS. The Manager assumed all initial
offering and organizational costs associated with the registration and seeding
of the Funds.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with each of the Funds, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Funds' principal underwriter in the continuous public
offering of the Funds' classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Funds have each adopted a Service Plan (the
Plan) for Class A shares. The Funds reimburse the Distributor for a portion of
their costs incurred for services provided to accounts that hold Class A shares.
Reimbursement is made periodically at an annual rate of up to 0.25% of the
average annual net assets of Class A shares of the Funds. The Distributor
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions periodically for providing personal services and
maintenance of accounts of their customers that hold Class A shares. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent years. Fees incurred by the
Funds under the Plan are detailed in the Statements of Operations.
58 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Funds have
each adopted Distribution and Service Plans (the Plans) for Class B and Class C
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the Plans, the Funds
pay the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares. The Distributor also receives a service fee of up to 0.25% under
each plan. If either the Class B or Class C plan is terminated by the Funds or
by the shareholders of a class, the Board of Trustees and its independent
trustees must determine whether the Distributor shall be entitled to payment
from the Funds of all or a portion of the service fee and/or asset-based sales
charge in respect to shares sold prior to the effective date of such
termination. Fees incurred by the Funds under the Plans are detailed in the
Statements of Operations. The Distributor's aggregate uncompensated expenses
under the plan at September 30, 2007 for Class B and Class C shares were as
follows:
CLASS B CLASS C
--------------------------------------------
Arizona Fund $ 3,507 $ 30,006
Minnesota Fund 9,762 15,220
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Funds. They are deducted from the
proceeds of sales of fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares are shown in the table below for the six months ended
September 30, 2007.
CLASS A CLASS B CLASS C
CLASS A CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY
DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------
Arizona Fund $ 12,946 $ -- $ 3 $ 1
Minnesota Fund 13,701 -- 29 11
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to
waive management fees and/or reimburse the Funds for certain expenses so that
"Total expenses," excluding expenses attributable to the Funds' investments in
inverse floaters, will not exceed 0.80% for Class A shares and 1.55% for Class B
shares and Class C shares, respectively, of average annual net assets for each
class of shares. This voluntary undertaking is expected to remain in effect
indefinitely. However, it may be amended or withdrawn by the Manager at any time
without shareholder notice. During the six months ended September 30, 2007, the
Manager reimbursed the Funds as detailed in the following table.
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Arizona Fund $ 149,604 $ 2,182 $ 22,036
Minnesota Fund 107,299 3,256 7,786
59 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. BORROWINGS
The Funds can each borrow money from banks in amounts up to one-third of their
total assets (including the amount borrowed) less all liabilities and
indebtedness other than borrowings to purchase portfolio securities, to meet
redemption obligations or for temporary and emergency purposes. The purchase of
securities with borrowed funds creates leverage in the Funds. The Funds have
entered into a Revolving Credit and Security Agreement (the "Agreement") with a
conduit lender and a bank which enables them to participate with certain other
Oppenheimer funds in a committed, secured borrowing facility that permits
borrowings of up to $900 million, collectively. To secure the loan, the Funds
pledge investment securities in accordance with the terms of the Agreement.
Interest is charged to the Funds, based on their borrowings, at current
commercial paper issuance rates (5.5866% as of September 30, 2007). The Funds
pay additional fees of 0.30% per annum on their outstanding borrowings to manage
and administer the facility and are allocated their pro-rata share of a 0.13%
per annum commitment fee for a liquidity backstop facility with respect to the
$900 million facility size.
For the six months ended September 30, 2007, the Funds had borrowings
outstanding at an interest rate of 5.5866%. Details of the borrowings for the
six months ended September 30, 2007 are listed in the following table.
MAXIMUM
AMOUNT OF
BORROWINGS
AVERAGE OUSTANDING
AVERAGE DAILY GROSS GROSS LOAN AT ANY FEES INTEREST
DAILY LOAN INTEREST BORROWINGS REPAYMENTS MONTH-END PAID PAID
BALANCE RATE FOR DURING DURING DURING DURING DURING
FOR THE SIX THE SIX THE SIX THE SIX THE SIX THE SIX THE SIX
MONTHS MONTHS BORROWINGS MONTHS MONTHS MONTHS MONTHS MONTHS
ENDED ENDED OUTSTANDING ENDED ENDED ENDED ENDED ENDED
SEPTEMBER SEPTEMBER AT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 2007 30, 2007 30, 2007 30, 2007 30, 2007 30, 2007 30, 2007 30, 2007
- ----------------------------------------------------------------------------------------------------------------------------
Arizona Fund $ 5,648,634 5.344% $ 8,300,000 $ 25,100,000 $ 19,900,000 $ 8,300,000 $ 7,432 $ 128,262
Minnesota Fund 3,902,186 5.344 4,300,000 10,900,000 9,300,000 5,300,000 5,704 98,686
- --------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and expands disclosures about fair value
measurements. SFAS No. 157 applies to fair value measurements already required
or permitted by existing standards.
60 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. As of September 30, 2007, the Manager does not believe the adoption of
SFAS No. 157 will materially impact the financial statement amounts; however,
additional disclosures may be required about the inputs used to develop the
measurements and the effect of certain of the measurements on changes in net
assets for the period.
61 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
62 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding 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 by the Manager and its affiliates,
(v) the extent to which 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.
NATURE AND EXTENT OF SERVICES. The Board considered information about the
nature 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 managers 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.
63 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
QUALITY OF SERVICES. 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 administrative, accounting, legal and compliance
services, and information the Board has received regarding the experience and
professional qualifications of the Manager's 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 Ronald H.
Fielding, Daniel G. Loughran, Scott S. Cottier, Troy E. Willis, Mark R. DeMitry
and Marcus V. Franz, the portfolio managers for the Fund, and the Manager's
Rochester investment team. The Board members also considered their experiences
with the Manager and its officers and other personnel through their service on
the Boards 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. In light of the foregoing,
the Board concluded that the Fund benefits from the services provided under the
Agreement and from the Manager's experience, reputation, personnel, operations,
and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each regular quarterly Board meeting, 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 Arizona municipal debt funds advised by the Manager
and by other investment advisers. The Board noted that the Fund's performance
since inception had been better than its peer group median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates 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, other Arizona municipal debt funds and other
funds with comparable asset levels and distribution features. The Board noted
that the Manager has agreed to voluntarily waive management fees and/or
reimburse the Fund for certain expenses so that total expenses
64 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER ARIZONA MUNICIPAL FUND
will not exceed 0.80% of annual net assets for Class A shares and 1.55% of
annual net assets for Class B shares and Class C shares, which may be modified
or terminated at any time without notice to shareholders. The Board noted that
the Fund's actual management fees are lower than its peer group median although
its contractual management fees and total expenses were higher than its peer
group median.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share with its shareholders economies of scale that may exist as the Fund
grows.
BENEFITS TO 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 considered that the Manager must be able to pay and retain
experienced professional personnel at competitive rates to provide 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. In addition to considering the profits
realized by the Manager, the Board considered information 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 for services
provided.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is 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,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the Agreement for
another year. In arriving at this decision, the Board did not single out any
factor or factors as being more important than others, but considered all of the
factors together. The Board judged the terms and conditions of the Agreement,
including the management fee, in light of all of the surrounding circumstances.
65 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding 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 by the Manager and its affiliates,
(v) the extent to which 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.
NATURE AND EXTENT OF SERVICES. The Board considered information about the
nature 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 managers 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.
QUALITY OF SERVICES. 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
66 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
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
administrative, accounting, legal and compliance services, and information the
Board has received regarding the experience and professional qualifications of
the Manager's 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 Ronald H. Fielding, Daniel G. Loughran, Scott
S. Cottier, Troy E. Willis, Mark R. DeMitry and Marcus V. Franz, the portfolio
managers for the Fund, and the Manager's Rochester investment team. The Board
members also considered their experiences with the Manager and its officers and
other personnel through their service on the Boards 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. In light of the foregoing, the Board concluded that the Fund
benefits from the services provided under the Agreement and from the Manager's
experience, reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each regular quarterly Board meeting, 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 Minnesota municipal debt funds advised by the Manager
and by other investment advisers. The Board noted that the Fund's performance
since inception had been better than its peer group median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates 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, other Minnesota municipal debt funds and
other funds with comparable asset levels and distribution features. The Board
noted that the Manager has agreed to voluntarily waive management fees and/or
reimburse the Fund for certain expenses so that total expenses will not exceed
0.80% of annual net assets for Class A shares and 1.55% of annual net assets for
Class B shares and Class C shares, which may be modified or terminated at any
time without notice to shareholders. The Board noted that the Fund's contractual
and
67 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
OPPENHEIMER ROCHESTER MINNESOTA MUNICIPAL FUND
actual management fees are lower than its peer group median although its total
expenses were higher than its peer group median.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share with its shareholders economies of scale that may exist as the Fund
grows.
BENEFITS TO 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 considered that the Manager must be able to pay and retain
experienced professional personnel at competitive rates to provide 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. In addition to considering the profits
realized by the Manager, the Board considered information 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 for services
provided.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is 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,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the Agreement for
another year. In arriving at this decision, the Board did not single out any
factor or factors as being more important than others, but considered all of the
factors together. The Board judged the terms and conditions of the Agreement,
including the management fee, in light of all of the surrounding circumstances.
68 | OPPENHEIMER ROCHESTER STATE SPECIFIC MUNICIPAL FUNDS
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to semiannual reports.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to semiannual reports.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is
an "interested person" as defined in the Investment Company Act of 1940;
and whether the individual would be deemed an "audit committee financial
expert" within the meaning of applicable SEC rules. The Committee also
considers whether the individual's background, skills, and experience will
complement the background, skills, and experience of other nominees and
will contribute to the Board. There are no differences in the manner in
which the Committee evaluates nominees for trustees based on whether the
nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of 09/30/2007, 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.
Oppenheimer Rochester Minnesota Municipal Fund
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 11/14/2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 11/14/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 11/14/2007