SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to
Exchange
Act Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- --------------------
1 - Set forth the amount on which the filing fee is calculated
and state how it was determined. THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
6803 South Tucson Way, Englewood, Colorado 80112
Notice Of Annual Meeting Of Shareholders
To Be Held May 5, 1997
To The Shareholders of The New York Tax-Exempt Income Fund, Inc.:
Notice is hereby given that the Annual Meeting of the
Shareholders of The New York Tax-Exempt Income Fund, Inc. (the
"Fund") will be held at 6803 South Tucson Way, Englewood, Colorado
80112, at 10:00 A.M., Denver time, on Monday, May 5, 1997, or any
adjournments thereof (the "Meeting"), for the following purposes:
(1) To elect four Directors in Class I to hold office
until the term of such class shall expire in 2000,
or until their successors are elected and shall
qualify;
(2) To elect one Director in Class III to hold office
until the term of such class shall expire in 1999,
or until his successor is elected and shall
qualify;
(3) To ratify the selection of Deloitte & Touche LLP as
the independent certified public accountants and
auditors of the Fund for the fiscal year commencing
November 1, 1996 (Proposal No. 1);
(4) To approve changes to certain of the Fund's
fundamental investment policies (Proposal No. 2);
(5) To approve the current Investment Advisory
Agreement between the Fund and OppenheimerFunds,
Inc. (the "Adviser") (Proposal No. 3); and
(5) To transact such other business as may properly
come before the Meeting.
Shareholders of record at the close of business on March 7,
1997, are entitled to notice of and to vote at the Meeting. The
election of Directors and the Proposals are more fully discussed in
the Proxy Statement. Please read it carefully before telling us,
through your proxy or in person, how you wish your shares to be
voted. The Board of Directors of the Fund recommends a vote to
elect each of its nominees as Director and in favor of the
Proposals. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
March 25, 1997
Shareholders who do not expect to attend the Meeting are requested
to indicate voting instructions on the enclosed proxy and to date,
sign and return it in the accompanying postage-paid envelope. To
avoid unnecessary expense and duplicate mailings, we ask your
cooperation in promptly mailing your proxy no matter how large or
small your holdings may be. THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
6803 South Tucson Way, Englewood, Colorado 80112
PROXY STATEMENT
Annual Meeting Of Shareholders
To Be Held May 5, 1997
This Proxy Statement is furnished to the shareholders of The New
York Tax-Exempt Income Fund, Inc. (the "Fund") in connection with
the solicitation by the Fund's Board of Directors of proxies to be
used at the Annual Meeting of Shareholders to be held at 6803 South
Tucson Way, Englewood, Colorado 80112, at 10:00 A.M., Denver time,
on May 5, 1997, or any adjournments thereof (the "Meeting"). It is
expected that the mailing of this Proxy Statement will be made on
or about March 25, 1997. For a free copy of the annual report
covering the operations of the Fund for the fiscal year ending
October 31, 1996, call Shareholder Financial Services, Inc., the
Fund's transfer agent, at 1-800-647-7374.
The enclosed proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in
accordance with the choices specified thereon, and will be included
in determining whether there is a quorum to conduct the Meeting.
The proxy will be voted in favor of the nominees for Director named
in this Proxy Statement unless a choice is indicated to withhold
authority to vote for all listed nominees or any individual
nominee. The proxy will be voted in favor of the Proposals unless
a choice is indicated to vote against or to abstain from voting on
a Proposal. Shares owned of record by broker-dealers for the
benefit of their customers ("street account shares") will be voted
by the broker-dealer based on instructions received from its
customers. If no instructions are received, the broker-dealer may
(if permitted under applicable stock exchange rules), as record
holder, vote such shares in the same proportion as that broker-
dealer votes street account shares for which voting instructions
were timely received. If a shareholder executes and returns a
proxy but fails to indicate how the votes should be cast, the proxy
will be voted in favor of the election of each of the nominees
named herein for Director and in favor of the Proposals.
The proxy may be revoked at any time prior to the voting by: (1)
writing to the Secretary of the Fund at 6803 South Tucson Way,
Englewood, Colorado 80112 (if received in time to be acted upon);
(2) attending the Meeting and voting in person; or (3) signing and
returning a new proxy (if returned and received in time to be
voted).
The cost of the preparation and distribution of these proxy
materials is an expense of the Fund. In addition to the
solicitation of proxies by mail, proxies may be solicited by
officers or employees of the Fund's transfer agent, Shareholder
Financial Services, Inc. (a subsidiary of OppenheimerFunds, Inc.,
the Fund s investment adviser), or by officers or employees of the
Fund s investment adviser, personally, by telephone or Facsimile or
by other communication; any expenses so incurred will be borne by
the Fund. Proxies may also be solicited by a proxy solicitation
firm hired at the Fund's expense for such purpose. Brokers, banks
and other fiduciaries may be required to forward soliciting
material to their principals and to obtain authorization for the
execution of proxies. For those services they will be reimbursed
by the Fund for their out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of March 7, 1997, the
record date, there were Series of the Fund issued and
outstanding. All shares of the Fund have equal voting rights as to
the election of Directors and as to the Proposals described herein,
and the holders of shares are entitled to one vote for each share
(and a fractional vote for a fractional share) held of record at
the close of business on the record date. As of the record date,
no person owned of record or was known by the management of the
Fund to be the beneficial owner of 5% or more of the outstanding
shares of the Fund.
ELECTION OF DIRECTORS
The Articles of Incorporation of the Fund provide that the Board of
Directors shall consist of three classes of Directors with
overlapping three year terms. One class of Directors is to be
elected each year with terms extending to the third succeeding
annual meeting after such election, or until their successors shall
be duly elected and shall have qualified. At the Meeting, four
Class I Directors are to be elected for a three year term, as
described below, or until the respective successors of each shall
be duly elected and shall have qualified. Additionally, one Class
III Director is to be elected for an initial two year term, as
described below, or until his respective successor shall be duly
elected and shall have qualified. The persons named as attorneys-
in-fact in the enclosed proxy have advised the Fund that unless the
proxy instructs them to withhold authority to vote for all listed
nominees or any individual nominee, all validly executed proxies
will be voted by them for the election of the nominees named below
as Directors of the Fund. The proxies being solicited cannot be
voted for more than five nominees.
Each of the nominees, William A. Baker, Charles Conrad, Jr.,
Bridget A. Macaskill, Raymond Kalinowski and Sam Freedman, are
presently Directors of the Fund. All present Directors of the Fund
have been previously elected by the Fund's shareholders, except for
Ms. Bridget A. Macaskill who was appointed a Class I Director by
the Fund s Board of Directors in 1995 and Mr. Sam Freedman, who was
appointed a Class III Director by the Fund's Board of Directors in
1996. Each nominee has agreed to be nominated and to serve as a
Director. Class I Directors to be elected at the Meeting shall
serve as such for a three year term. The Class III Director to be
elected at the Meeting shall serve as such until his term expires
in 1999. The classes of the Board and the expiration dates of their
terms of office are shown below.
Each of the nominees and other Directors is also a trustee,
director or managing general partner of Oppenheimer Total Return
Fund, Inc., Oppenheimer Equity Income Fund, Oppenheimer Cash
Reserves, Centennial America Fund, L.P., Oppenheimer Variable
Account Funds, Oppenheimer Champion Income Fund, Oppenheimer High
Yield Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer
Strategic Income Fund, Oppenheimer Strategic Income & Growth Fund,
Oppenheimer International Bond Fund, Oppenheimer Integrity Funds,
Oppenheimer Limited-Term Government Fund, Oppenheimer Municipal
Fund, Panorama Series Fund, Inc., Centennial Money Market Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Daily Cash Accumulation
Fund, Inc. and Centennial Tax-Exempt Trust (which together with the
Fund, comprise the "Denver Oppenheimer funds"), except that Mr.
Fossel and Ms. Macaskill are not trustees of Oppenheimer Strategic
Income Fund, Panorama Series Fund, Inc., Oppenheimer Variable
Account Funds and Oppenheimer Integrity Funds and Mr. Fossel is not
a trustee of Centennial New York Tax-Exempt Trust or a managing
general partner of Centennial America Fund, L.P. Ms. Macaskill is
the President and Mr. Swain is the Chairman and CEO, of all the
Denver Oppenheimer funds.
The nominees and other Directors indicated below by an asterisk are
"interested persons" (as that term is defined in the Investment
Company Act of 1940, as amended, hereinafter referred to as the
"Investment Company Act") of the Fund due to the positions
indicated with the Adviser or its affiliates or a securities dealer
or other positions described. Mr. Fossel may also be considered an
interested person of the Fund or the Adviser. Please see the
section entitled The Adviser and Transfer Agent under Proposal
No. 3 for more information. The year given below indicates when
the nominees and the other Directors first became a trustee or
director of any of the Denver Oppenheimer funds without a break in
service. If a nominee should be unable to accept election, the
Board of Directors may, in its discretion, select another person to
fill the vacant position. As of March 7, 1997, none of the
Directors and officers of the Fund beneficially owned shares of the
Fund.
<TABLE>
<CAPTION> Term
Name and Other Business Experience Currently
Information During the Past Five Years Expires
<S> <C> <C>
Class I
William A. Baker Management Consultant. 1997
first became a
Director in 1966.
Age: 82
Charles Conrad, Jr. Chairman and Chief Executive 1997
first became a Officer of Universal Space
Director in 1970. Lines, Inc.(a space services
Age: 66 management company); formerly
Vice President of McDonnell
Douglas Space Systems Co. and
associated with the National
Aeronautics and Space
Administration.
Raymond J. Kalinowski Director of Wave Technologies 1997
first became a International, Inc. (a computer
Director in 1988. products training company);
Age: 67 formerly Vice Chairman and a
director of A.G. Edwards, Inc.,
parent holding company of A.G.
Edwards & Sons, Inc. (a
broker-dealer), of which he
was a Senior Vice President.
__________________________
* A Director who is an "interested person" of the Fund or the
Adviser under the Investment Company Act.
<PAGE>
Bridget A. Macaskill* President, Chief Executive 1997
first become a Officer and a Director of the
Director in 1995. Adviser and Harbour View Asset
Age: 48 Management Corporation
("HarbourView"), an investment
adviser subsidiary of the
Adviser; Chairman and a
director of Shareholder Services,
Inc.("SSI") and Shareholder
Financial Services, Inc.( SFSI ),
transfer agent subsidiaries
of the Adviser; President and
a director of Oppenheimer
Acquisition Corporation("OAC"),
parent of the Adviser and
Oppenheimer Partnership Holdings,
Inc., a holding company
subsidiary of the Adviser; a
director of Oppenheimer
Real Asset Management,
Inc. formerly Executive Vice
President of the Adviser.
Class II
C. Howard Kast Formerly Managing Partner 1998
first became a of Deloitte, Haskins &
Director in 1988. Sells (an accounting firm).
Age: 75
Robert M. Kirchner President of The Kirchner 1998
first became a Trustee Company (management
or Director in 1963. consultants).
Age: 75
Ned M. Steel Chartered Property and 1998
first became a Casualty Underwriter; a
Director in 1963. director of Visiting Nurse
Age: 81 Corporation of Colorado;
formerly Senior Vice President
and a director of Van Gilder
Insurance Corp. (insurance
brokers).
Class III
Robert G. Avis* Vice Chairman of A.G. Edwards 1999
first became a & Sons, Inc.(a broker-dealer)
Director in 1993. and A.G. Edwards, Inc. (its parent
Age: 65 holding company); Chairman of
A.G.E. Asset Management and
A.G. Edwards Trust Company (its
affiliated investment adviser
and trust company, respectively).
Jon S. Fossel* Member of the Board of 1999
first became a Governors of the Investment
Director in 1990. Company Institute (a national
Age: 54 trade association of
investment companies), Chairman
of the Investment Company
Institute Education Foundation;
formerly Chairman and a director
of the Adviser; President
and a director of Oppenheimer
Acquisition Corp. ("OAC"), the
Adviser s parent holding company;
a director of SSI and SFSI,
transfer agent subsidiaries
of the Adviser.
Sam Freedman Formerly Chairman and Chief 1999
first become a Executive Officer of
Director in 1996. OppenheimerFunds Services,
Age 56 a division of the Adviser
which is a transfer agent,
Chairman, Chief Executive
Officer and a director of SSI
& SFSI, transfer agent and
subsidiaries of the Adviser,
Vice President and
director of OAC and a
director of the Adviser.
James C. Swain* Vice Chairman of the Adviser; 1999
first became a formerly a director of the
Director in 1969. Adviser; President and a
Age: 63 director of Centennial Asset
Management Corporation
("Centennial"), an investment
adviser subsidiary of the Adviser,
and Chairman of the Board of SSI.
________________________
* A Director who is an "interested person" of the Fund or the
Adviser under the Investment Company Act.
</TABLE>
Vote Required. The affirmative vote of a majority of the voting
power of the shares present and entitled to vote is required for
the election of a nominee as Director. The Board of Directors
recommends a vote for the election of each nominee.
Functions of the Board of Directors. The primary responsibility
for the management of the Fund rests with the Board of Directors.
The Directors meet regularly to review the activities of the Fund
and the Adviser, which is responsible for the Fund's day-to-day
operations. Six regular meetings of the Board were held in the
fiscal year ended October 31, 1996 and all of the Directors were
present for at least 75% of those meetings, except Mr. Freedman was
appointed a Director on June 27, 1996 and attended all Board
meetings during the remainder of the Fund s fiscal year ended
October 31, 1996. The Directors of the Fund have appointed an
Audit and Review Committee (the "Audit Committee"), comprised of
Messrs. Baker (Chairman), Conrad and Kirchner, none of whom is an
"interested person" (as that term is defined in the Investment
Company Act) of the Adviser or the Fund. The functions of the
Audit Committee include (i) making recommendations to the Board
concerning the selection of independent auditors for the Fund
(subject to shareholder ratification); (ii) reviewing the methods,
scope and results of audits and the fees charged; (iii) reviewing
the adequacy of the Fund's internal accounting procedures and
controls; and (iv) establishing a separate line of communication
between the Fund's independent auditors and its independent
Directors. The Audit Committee met seven times during the fiscal
year ended October 31, 1996 and all members attended at least 75%
of the meetings held during this period. The Board of Directors
does not have a standing nominating or compensation committee.
Remuneration of Directors and Officers. The officers of the Fund
and certain Directors of the Fund (Ms. Macaskill and Mr. Swain)
who are affiliated with the Adviser receive no salary or fee from
the Fund. Mr. Fossel did not receive any salary or fees from the
Fund prior to January 1, 1997. The remaining Directors of the Fund
received the compensation shown below. Mr. Freedman became a
Director June 27, 1996, and received no compensation from the Fund
before that date. The compensation from the Fund was paid during
its fiscal year ended October 31, 1996. The compensation from all
of the Denver Oppenheimer funds includes the Fund and is
compensation received as a director, trustee, managing general
partner or member of a committee of the Board during the calendar
year 1996.
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds1
Robert G. Avis $223 $58,003
Director
William A. Baker $306 $79,715
Audit and Review Committee
Chairman and Director
Charles Conrad, Jr. $287 $74,717
Audit and Review Committee
Member and Director
Sam Freedman $113 $29,502
Director
Raymond J. Kalinowski $285 $74,173
Risk Management Oversite
Committee Member and
Director
C. Howard Kast $285 $74,173
Risk Management Oversite
Committee Member and
Director
Robert M. Kirchner $287 $74,173
Audit and Review Committee
Member and Director
Ned M. Steel $223 $58,003
Director
___________________
1 For the 1996 calendar year.
Officers of the Fund. Each officer of the Fund is elected by the
Directors to serve an annual term. Information is given below
about the Fund's executive officers who are not Directors of the
Fund, including their business experience during the past five
years. Messrs. Bishop, Donohue, Bowen, Farrar and Zack serve in
a similar capacity with the other Denver Oppenheimer funds.
Robert E. Patterson, Vice President and Portfolio Manager; Age 53.
Senior Vice President of the Adviser; an officer of other
Oppenheimer funds.
Andrew J. Donohue, Vice President and Secretary; Age 46.
Executive Vice President and General Counsel of the Adviser
and OppenheimerFunds Distributor, Inc.; President and a
director of Centennial; Executive Vice President, General
Counsel and a director of HarbourView, SFSI, SSI and
Oppenheimer Partnership Holdings Inc.; President and a
director of Real Asset Management, Inc.; General Counsel of
OAC; Executive Vice President, General Counsel and a director
of MultiSource Services, Inc. (a broker-dealer); an officer
of other Oppenheimer funds; formerly Senior Vice President
and Associate General Counsel of the Adviser and
OppenheimerFunds Distributor, Inc.; Partner in Kraft &
McManimon (a law firm); an officer of First Investors
Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds
and First Investors Life Insurance Company.
George C. Bowen, Vice President, Assistant Secretary and Treasurer;
Age 60.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Adviser; Vice
President and Treasurer of OppenheimerFunds Distributor, Inc.
and HarbourView; Senior Vice President, Treasurer and
Assistant Secretary and a director of Centennial; Senior Vice
President, Treasurer and Secretary of SSI; Vice President,
Treasurer and Secretary of SFSI; Treasurer of OAC; Vice
President and Treasurer of Oppenheimer Real Asset Management,
Inc.; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc. and an officer of other
Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age 48.
Senior Vice President and Associate General Counsel of the
Adviser; Assistant Secretary of SSI and SFSI; an officer of
other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 38.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund
Controller for the Adviser, prior to which he was an
Accountant for Yale & Seffinger, P.C., an accounting firm and
previously an Accountant and Commissions Supervisor for
Stuart James Company Inc., a broker-dealer.
Scott T. Farrar, Assistant Treasurer; Age 31.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund
Controller for the Adviser.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 1)
The Investment Company Act requires that independent certified
public accountants and auditors ("auditors") be selected annually
by the Board of Directors and that such selection be ratified by
the shareholders at the next-convened annual meeting of the Fund,
if one is held. The Board of Directors of the Fund, including a
majority of the Directors who are not "interested persons" (as
defined in the Investment Company Act) of the Fund or the Adviser,
at a meeting held October 22, 1996, selected Deloitte & Touche LLP
("Deloitte") as auditors of the Fund for the fiscal year beginning
November 1, 1996. Deloitte also serves as auditors for the Adviser
and certain other funds for which the Adviser acts as investment
adviser. At the Meeting, a resolution will be presented for the
shareholders' vote to ratify the selection of Deloitte as auditors.
Representatives of Deloitte are not expected to be present at the
Meeting but they will have the opportunity to make a statement if
they desire to do so and they will be available should any matter
arise requiring their presence. The Board of Directors recommends
approval of the selection of Deloitte as auditors of the Fund.
APPROVAL OF CHANGES TO CERTAIN OF THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
(Proposal No. 2)
The Adviser proposed to the Board of Directors that certain
fundamental investment policies of the Fund be changed, as
described below. An investment policy that has been designated as
"fundamental" is one that cannot be changed without the requisite
shareholder approval described below under "Vote Required." If
shareholders do not approve this Proposal, the investment policy
changes described in this Proposal will not be implemented at this
time.
It is a fundamental policy of the Fund to invest, except during
temporary defensive periods, at least 80% of its net assets in tax-
exempt New York Municipal Securities. It is proposed to change the
following fundamental policies. It is a fundamental policy that
80% of the Fund's net assets will be securities rated at the time
of purchase within the four highest grades for long-term securities
or within the two highest grades for short-term loans, notes and
commercial paper by Moody's Investors Services, Inc. ("Moody's"),
or Standard & Poor's Corporation ("S&P"). The Fund will invest in
only unrated New York Municipal Securities which, in the opinion of
the Adviser, have credit characteristics equivalent to New York
Municipal Securities which have S&P or Moody's ratings qualifying
them for investment by the Fund. The Fund will not invest in any
rated New York Municipal Securities that are rated lower than Ba by
Moody's or BB by S&P at the time of purchase.
Additionally, it is currently a fundamental policy of the Fund that
during temporary defensive periods (e.g. times when temporary
imbalances of supply and demand or other temporary dislocations in
the tax-exempt bond market adversely affect the price at which New
York Municipal Securities are available), the Fund may invest any
percentage of its assets in taxable temporary investment. Under
the Fund's current fundamental policy, temporary investments are
limited to U.S. Government securities or securities rated within
the two highest grades by Moody's or S&P.
The Fund's fundamental investment policies may be changed by the
Fund only with appropriate shareholder approval. Non-fundamental
policies may be changed by the Board of Directors without
shareholder approval in response to, for example, changing market
or economic conditions.
The Board of Directors proposes that the above-listed fundamental
investment policies be changed to non-fundamental policies as
stated below:
(1) that the fundamental restriction on ratings of municipal
securities be replaced with a non-fundamental policy that 80%
of the Fund's net assets will be securities rated at the time
of purchase within the four highest grades for long-term
securities or within the two highest grades for short-term
loans, notes and commercial paper by Moody's Investors
Services, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), Fitch Investors Service, Inc. ("Fitch") Duff &
Phelps, Inc. ("Duff & Phelps") or another nationally
recognized statistical rating organization or, if unrated,
judged by the Adviser to be of comparable quality to
Municipal Securities rated within such grades.
(2) that the fundamental policy on investing in unrated New York
municipal securities be replaced with a non-fundamental
policy that the Fund will invest in only unrated New York
Municipal Securities which, in the opinion of the Adviser,
have credit characteristics equivalent to New York Municipal
Securities which have ratings qualifying them for investment
by the Fund. The Fund will not invest in any rated New York
(a) municipal bonds rated lower than "Ba" by Moody's or, "BB"
by S&P, Fitch or Duff & Phelps, (b) municipal notes rated
"SP-2" by Standard & Poor's, "MIG2" by Moody's or "F-2" by
Fitch, or (c) if unrated Municipal Securities, judged by the
Adviser to be of comparable quality to Municipal Securities
rated within the grades described in (a) or (b) above or by
another nationally recognized statistical rating
organization; and
(3) that the fundamental policy that restricts the Fund from
investing in New York municipal securities rated lower than
"Ba"by Moody's and "BB" by S&P be replaced by a non-
fundamental policy that , that the time of purchase, the Fund
will only invest in municipal securities rated within the
four highest grades for long-term securities or within the
two highest grades for short-term loans, notes and commercial
paper by Moody's Investors Services, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P"), Fitch Investors
Service, Inc. ("Fitch"), Duff & Phelps, Inc. ("Duff &
Phelps") or another nationally recognized statistical rating
organization or, if unrated, judged by the Adviser to be of
comparable quality to Municipal Securities rated within such
grades
(4) that the fundamental limit on investing in temporary
investments be replaced with a non-fundamental policy that
during temporary defensive periods (e.g. times when temporary
imbalances of supply and demand or other temporary
dislocations in the tax-exempt bond market adversely affect
the price at which New York Municipal Securities are
available), the Fund will invest only in temporary
investments which are U.S. Government securities or
securities rated at the time of purchase within the two
highest grades by Moody's, S&P, Fitch or Duff & Phelps or
another nationally recognized statistical rating organization
or, if unrated, judged by the Adviser to be of comparable
quality to Municipal Securities rated within such grades."
If this Proposal is approved, it would permit the Fund to invest in
municipal securities that are rated by nationally recognized
statistical rating organizations other than Moody and S&P. This
would give the Fund more flexibility and allow it to take advantage
of other investment opportunities without materially increasing the
risks of the Fund. A description of the rating categories for
Moody, S&P, Fitch and Duff & Phelps is enclosed as Exhibit A for
your review.
At a meeting of the Board of Directors held on February 25, 1997,
the Adviser presented to the Board of Directors this Proposal to
change the fundamental investment restrictions outlined above. The
Adviser explained to the Directors the advantages and risks of
allowing ratings by the other rating organizations. If shareholders
approve this Proposal, the Adviser and the Board of Directors will
have greater flexibility to respond to market, economic and other
conditions, and the Board will be able to further adjust the Fund's
investment policies and strategies as it may deem appropriate. The
Directors approved and recommended, subject to shareholder
approval, the change in fundamental investment policies described
in this Proposal.
Vote Required. An affirmative vote of the holders of a "majority"
(as defined in the Investment Company Act) of all outstanding
shares of the Fund is required to approve this Proposal; the
classes do not vote separately. Such "majority" vote is defined in
the Investment Company Act as the vote of the holders of the lesser
of: (i) 67% or more of the voting securities present or represented
by proxy at the shareholders meeting, if the holders of more than
50% of the outstanding voting securities are present or represented
by proxy, or (ii) more than 50% of the outstanding voting
securities. If this Proposal is not approved, the above-described
investment policies will not change. The Board of Directors
recommends a vote in favor of approving this Proposal.
APPROVAL OF CURRENT INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has an Investment Advisory Agreement dated October 22,
1990 with the Adviser (the "Agreement") which was most recently
approved by the Fund's Board of Directors, including a majority of
the Directors who are not "interested persons" (as defined in the
Investment Company Act) of the Fund or of the Adviser, on December
17, 1996. Prior to January 5, 1996, the Adviser was known as
Oppenheimer Management Corporation. The Agreement was approved by
shareholders of the Fund at a meeting held on October 1, 1990
because of the acquisition of the Adviser by MassMutual through a
wholly owned subsidiary, Oppenheimer Acquisition Corporation. The
Board of Directors has determined to submit for shareholder
approval the Fund s current Investment Advisory Agreement. The
Agreement, attached as Exhibit B, has not been modified or amended
since it was last approved by shareholders, and the Board
recommends approval of the Agreement without any amendments. If
approved by the shareholders at this meeting, the Agreement will
continue in effect until December 31, 1997, and thereafter from
year to year unless terminated, but only so long as such
continuance is approved in accordance with the Investment Company
Act.
Under the Agreement, the Adviser supervises the investment
operations of the Fund and the composition of its portfolio and
furnishes the Fund advice and recommendations with respect to
investments, investment policies and the purchase and sale of
securities. The management fee payable monthly under the Agreement
to the Adviser is computed on the average weekly net assets of the
Fund at the rate of 0.50% per annum. During the fiscal year ended
October 31, 1996, the Fund paid the Adviser a fee of $119,243 under
the Agreement. The fund also paid the Adviser a fee of $12,000 to
calculate the daily net asset value of the Fund s shares and to
perform related accounting services. The Fund also pays the
Adviser a fee of $2,500 per year to prepare the Fund s Federal and
State income tax returns. The Adviser also acts as investment
adviser to other funds that have similar or comparable investment
objectives. A list of those funds and the net assets and advisory
fee rates paid by those funds is contained in Exhibit C to this
Proxy Statement.
The Agreement requires the Adviser, at its expense, to provide the
Fund with adequate office space, facilities and equipment as well
as to provide, and supervise the activities of all administrative
and clerical personnel required to provide effective administration
for the Fund, including the compilation and maintenance of records
with respect to its operations, the preparation and filing of
specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the
Fund. Expenses not expressly assumed by the Adviser under the
Agreement are paid by the Fund. The Agreement lists examples of
expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Directors,
legal and audit expenses, custodian and transfer agent expenses,
share certificate issuance costs, certain printing and registration
costs, and non-recurring expenses, including litigation.
Under the Investment Advisory Agreement, the Adviser is authorized
at its option to appoint a subadviser to perform certain of the
Adviser s responsibilities under the Agreement with the prior
approval of the Board of Directors and, if necessary, the approval
of the shareholders. The Adviser has not appointed a subadviser
and the Adviser has no current intention of appointing a
subadviser.
The Agreement contains no expense limitation. However,
independently of the Agreement, the Adviser has undertaken that the
total expenses of the Fund in any fiscal year (including the
management fee but excluding taxes, interest, brokerage fees and
any extraordinary non-recurring expenses, such as litigation)
shall not exceed the most stringent applicable state regulatory
limitation. The payment of the management fee at the end of any
month will be reduced so that there will not be any accrued but
unpaid liability under this expense limitation. The Adviser has
reserved the right to change or eliminate this expense limitation
at any time. Due to changes in federal securities laws, such state
regulatory limitations no longer apply, and the Adviser may
withdraw its undertaking in the future. During the Fund's most
recent fiscal period ended October 31, 1996, the Fund's expenses
did not exceed the most stringent state regulatory limit and the
voluntary undertaking was not invoked.
The Agreement provides that the Adviser shall not be liable for any
loss sustained by reason of good faith errors or omissions in
connection with any investment, or the purchase, sale or retention
of any security, or for any act or omission in performing the
services required by the Agreement.
Brokerage Provisions of the Agreement. Most transactions in the
securities in which the Fund invests are transactions directly with
the selling or purchasing underwriter, dealer or market maker. The
Fund uses a broker only if it is determined that a better price or
execution may be obtained from a broker. Transactions with an
underwriter, dealer or market maker are principal transactions at
net prices, and the Fund incurs little or no brokerage costs.
Purchases of securities from underwriters include a commission or
concession paid by the issuers to the underwriter, and purchases
from dealers include a spread between the bid and asked price. On
rare occasions, the Fund may use a broker for portfolio
transactions. The Board of Directors permits the Fund to pay
brokerage commissions for certain fixed income agency transactions
and to allocate concessions from fixed price offerings, in each
case to obtain research services. The commissions and concessions
from such transactions are allocated subject to the provisions of
the Agreement and in accordance with the Adviser s policies under
the supervision of the Adviser s executive officers.
One of the duties of the Adviser under the Agreement is to arrange
the portfolio transactions for the Fund. The Agreement contains
provisions relating to the employment of broker-dealers ("brokers")
to effect the Fund's portfolio transactions. In doing so, the
Adviser is authorized by the Agreement to employ such broker-
dealers, including "affiliated" brokers, as that term is defined in
the Investment Company Act, as may, in its best judgment based on
all relevant factors, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable price obtainable) of such
transactions. The Adviser need not seek competitive commission
bidding but is expected to be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent
consistent with the interest and policies of the Fund as
established by its Board of Directors.
Under the Agreement, the Adviser is authorized to select brokers
that provide brokerage and/or research services for the Fund and/or
the other accounts over which the Adviser or its affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good
faith determination is made by the Adviser that the commission is
fair and reasonable in relation to the value of the services
provided. Subject to the foregoing considerations, the Adviser may
also consider sales of shares of the Fund and other investment
companies managed by the Adviser or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Adviser and its
affiliates, and investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more
of such other accounts. If a research service also assists the
Adviser in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component
that provides assistance to the Adviser in the investment decision-
making process may be paid in commission dollars.
The Adviser and the Transfer Agent. Subject to the authority of
the Board of Directors, the Adviser is responsible for the day-to-
day management of the Fund's business, pursuant to its Investment
Advisory Agreement with the Fund. Shareholder Financial Services,
Inc. ("SFSI"), a subsidiary of the Adviser, acts as primary
transfer agent, shareholder servicing agent and dividend paying
agent for the Fund. Fees paid to SFSI are based on the number of
shareholder accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses. The Fund incurred
approximately $25,635 in expenses for the fiscal year ended October
31, 1996 for services provided by SFSI. United Missouri Trust
Company of New York acts as co-transfer agent and co-registrar with
SFSI and provides such additional services as SFSI may request.
The Adviser (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Adviser is a wholly-owned
subsidiary of Oppenheimer Acquisition Corp. ("OAC"), a holding
company controlled by Massachusetts Mutual Life Insurance Company
("MassMutual"). The Adviser and OAC are located at Two World Trade
Center, New York, New York 10048. MassMutual is located at 1295
State Street, Springfield, Massachusetts 01111. OAC acquired the
Adviser on October 22, 1990. As indicated below, the common stock
of OAC is owned by (i) certain officers and/or directors of the
Adviser, (ii) MassMutual and (iii) another investor. No
institution or person holds 5% or more of OAC's outstanding common
stock except MassMutual. MassMutual has engaged in the life
insurance business since 1851.
The common stock of OAC is divided into three classes. At December
31, 1996, MassMutual held (i) all of the 2,160,000 shares of Class
A voting stock, (ii) 716,943 shares of Class B voting stock, and
(iii) 1,353,873 shares of Class C non-voting stock. This
collectively represented 86.2% of the outstanding common stock and
94.2% of the voting power of OAC as of that date. Certain officers
and/or directors of the Adviser held (i) 407,866 shares of the
Class B voting stock, representing 8.3% of the outstanding common
stock and 4.1% of the voting power, and (ii) options acquired
without cash payment which, when they become exercisable, allow the
holders to purchase up to 684,407 shares of Class C non-voting
stock. That group includes persons who serve as officers of the
Fund, and Ms. Macaskill and Mr. Swain, who serve as Directors of
the Fund. Holders of OAC Class B and Class C common stock may put
(sell) their shares and vested options to OAC or MassMutual at a
formula price (based on earnings of the Adviser). MassMutual may
exercise call (purchase) options on all outstanding shares of both
such classes of common stock and vested options at the same formula
price. From the period November 1, 1995 to December 31, 1996, the
only transactions by persons who serve as Directors of the Fund
were by Ms. Macaskill, who surrendered to OAC 20,000 stock
appreciation rights issued in tandem with the Class C OAC options,
for cash payments aggregating $1,421,800, Mr. Fossel who sold
117,838 shares of Class B OAC common stock to MassMutual for an
aggregate of $15,133,735, Mr. Swain who surrendered to OAC 20,000
stock appreciation rights issued in tandem with Class C OAC
options, for a cash payment aggregating $2,267,780, and Mr.
Freedman who surrendered to OAC 45,474 stock appreciation rights
issued in tandem with Class C OAC options, for a cash payment of
$4,808,876. Mr. Freedman and Mr. Fossel no longer hold any OAC
stock, stock appreciation rights or other financial interests in
the Adviser or any of its affiliates. Mr. Fossel, however, may be
entitled to an additional payment to be made in 1997.
The names and principal occupations of the executive officers and
directors of the Adviser are as follows: Bridget A. Macaskill,
President, Chief Executive Officer and a director; Donald W. Spiro,
Chairman Emeritus; Robert G. Galli and James C. Swain, Vice
Chairmen; O. Leonard Darling, Paula Gabriele, Barbara Hennigar,
James Ruff, Loretta McCarthy, Tilghman G. Pitts III and Nancy
Sperte, Executive Vice Presidents; Andrew J. Donohue, Executive
Vice President, General Counsel and a director; Robert C. Doll,
Jr., Executive Vice President and a director; George C. Bowen,
Senior Vice President and Treasurer; Peter M. Antos, Victor Babin,
Robert A. Densen, Ronald H. Fielding, Robert E. Patterson, Richard
Rubinstein, Arthur Steinmetz, Ralph Stellmacher, John Stoma, Jerry
A. Webman, William L. Wilby and Robert G. Zack, Senior Vice
Presidents. These officers are located at one of the four offices
of the Adviser: Two World Trade Center, New York, NY 10048; 6803
South Tucson Way, Englewood, CO 80112; 350 Linden Oaks, Rochester,
NY 14625 and One Financial Plaza, 755 Main Street, Hartford, CT
06103.
Considerations by the Board of Directors. In connection with the
annual review by the Board of Directors in December 1996 to
determine if the Investment Advisory Agreement should be approved
and renewed, the Board and the Independent Directors considered and
reviewed materials prepared for this purpose by a consultant. The
Board also considered materials provided by the Adviser. As a
result of its deliberations, the Board of Directors including the
Independent directors concluded to approve and renew the Agreement
without amendment for an additional one year period.
The materials reviewed and considered by the Board included
information on: the nature, quality and extent of services rendered
by the Adviser to the Fund; an analysis of the Fund s investment
advisory fee, investment performance, expense ratios and expenses
of the Fund as compared in each case to comparable mutual funds;
the investment performance of other mutual funds for which the
Adviser acts as investment adviser; information on the portfolio
manager for the Fund and his experience and qualifications; the
profitability of the Adviser from its investment advisory
operations for the Fund and other mutual funds for which it or its
affiliates are the investment adviser; the financial condition and
resources of the Adviser and its parent, OAC; the benefits which
the Adviser obtains from its relationship with the Fund; and
economies of scale made available to the Fund by the Adviser. The
Board also considered the terms and conditions of the current
Agreement, and considered alternatives to the use of the Adviser.
The Board of Directors including the Independent Directors
considered all of the above matters in reaching its decision to
approve the Agreement and to renew it for an additional year. The
Board did not single out any one factor or group of factors as
being more important than other factors, but considered such
matters together in arriving at its decision. The Board of
Directors also considered that the Adviser has been the investment
adviser for the Fund for a number of years and the Board has found
the performance of the Adviser pursuant to the Investment Advisory
Agreement to be satisfactory.
Determination by the Independent Directors and the Board of
Directors. After completion of its review, the Independent
Directors recommended that the Board of Directors approve, and the
Board unanimously approved, the Agreement.
Vote Required. An affirmative vote of the holders of a "majority"
(as defined above in Proposal No.2) of all outstanding voting
securities of the Fund is required for approval of the Agreement;
the classes do not vote separately. The Board of Directors
recommends a vote in favor of approving the Investment Advisory
Agreement.
RECEIPT OF SHAREHOLDER PROPOSALS
Any shareholder who wishes to present a proposal for action at the
next annual meeting of shareholders and who wishes to have it set
forth in a proxy statement and identified in the form of proxy
prepared by the Fund must notify the Fund in such a manner so that
such notice is received by the Fund by December 1, 1997 and in such
form as is required under, and otherwise meets the requirements of,
the rules and regulations promulgated by the Securities and
Exchange Commission.<PAGE>
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above that will be presented at the Meeting. Since
matters not known at the time of the solicitation may come before
the Meeting, the proxy as solicited confers discretionary authority
with respect to such matters as may properly come before the
Meeting, including any adjournment or adjournments thereof, and it
is the intention of the persons named as attorneys-in-fact in the
proxy to vote the proxy in accordance with their judgment on such
matters.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
March 25, 1997
PROXY/875#6
<PAGE>
Exhibit A
Description of Ratings Categories
Municipal Bonds
Moody's Investor Services, Inc. The ratings of Moody's Investors
Service, Inc. ("Moody's") for Municipal Bonds are Aaa, Aa, A, Baa,
Ba, B, Caa, Ca and C. Municipal Bonds rated "Aaa" are judged to be
of the "best quality." The rating of Aa is assigned to bonds which
are of "high quality by all standards," but as to which margins of
protection or other elements make long-term risks appear somewhat
larger than "Aaa" rated Municipal Bonds. The "Aaa" and "Aa" rated
bonds comprise what are generally known as "high grade bonds."
Municipal Bonds which are rated "A" by Moody's possess many
favorable investment attributes and are considered "upper medium
grade obligations." Factors giving security to principal and
interest of A rated bonds are considered adequate, but elements may
be present which suggest a susceptibility to impairment at some
time in the future. Municipal Bonds rated "Baa" are considered
"medium grade" obligations. They are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well. Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds
in this class. Bonds which are rated "B" generally lack
characteristics of the desirable investment. Assurance of interest
and principal payments or of maintenance of other terms of the
contract over any long period of time may be small. Bonds which
are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest. Bonds which are rated "Ca" represent
obligations which are speculative in a high degree. Such issues
are often in default or have other marked shortcomings. Bonds
which are rated "C" are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing. Those bonds in the Aa, A,
Baa, Ba and B groups which Moody's believes possess the strongest
investment attributes are designated Aa1, A1, Baa1, Ba1 and B1
respectively.
In addition to the alphabetic rating system described above,
Municipal Bonds rated by Moody's which have a demand feature that
provides the holder with the ability to periodically tender ("put")
the portion of the debt covered by the demand feature, may also
have a short-term rating assigned to such demand feature. The
short-term rating uses the symbol VMIG to distinguish
characteristics which include payment upon periodic demand rather
than fund or scheduled maturity dates and potential reliance upon
external liquidity, as well as other factors. The highest
investment quality is designated by the VMIG 1 rating and the
lowest by VMIG 4.
Standard & Poor's Corporation. The ratings of Standard & Poor's
Corporation ("S&P") for Municipal Bonds are AAA (Prime), AA (High
Grade), A (Good Grade), BBB (Medium Grade), BB, B, CCC, CC, and C
(speculative grade). Bonds rated in the top four categories (AAA,
AA, A, BBB) are commonly referred to as "investment grade."
Municipal Bonds rated AAA are "obligations of the highest quality."
The rating of AA is accorded issues with investment
characteristics "only slightly less marked than those of the prime
quality issues." The rating of A describes "the third strongest
capacity for payment of debt service." Principal and interest
payments on bonds in this category are regarded as safe. It
differs from the two higher ratings because, with respect to
general obligations bonds, there is some weakness, either in the
local economic base, in debt burden, in the balance between
revenues and expenditures, or in quality of management. Under
certain adverse circumstances, any one such weakness might impair
the ability of the issuer to meet debt obligations at some future
date. With respect to revenue bonds, debt service coverage is
good, but not exceptional. Stability of the pledged revenues could
show some variations because of increased competition or economic
influences on revenues. Basic security provisions, while
satisfactory, are less stringent. Management performance appears
adequate. The BBB rating is the lowest "investment grade" security
rating. The difference between A and BBB ratings is that the
latter shows more than one fundamental weakness, or one very
substantial fundamental weakness, whereas the former shows only one
deficiency among the factors considered. With respect to revenue
bonds, debt coverage is only fair. Stability of the pledged
revenues could show variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are
no more than adequate. Management performance could be stronger.
Bonds rated "BB" have less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which would lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated "B" have a
greater vulnerability to default, but currently has the capacity to
meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. Bonds rated "CCC"
have a current identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal. Bonds noted "CC" typically are debt
subordinated to senior debt which is assigned on actual or implied
"CCC" debt rating. Bonds rated "C" typically are debt subordinated
to senior debt which is assigned an actual or implied "CCC-" debt
rating. The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are
continued. Bonds rated "D" are in payment default. The "D" rating
category is used when interest payments or principal payments are
not made on the date due even if the applicable grace period has
not expired, unless S&P believes that such payments will be made
during the grace period. The "D" rating also will be used upon the
filing of a bankruptcy petition if debt service payments are
jeopardized.
The ratings from AA to CCC may be modified by the addition of
a plus or minus sign to show relative standing within the major
rating categories.
Fitch. The ratings of Fitch Investors Service, Inc. for
Municipal Bonds are AAA, AA, A, BBB, BB, B, CCC, CC, C, DDD, DD,
and D. Municipal Bonds rated AAA are judged to be of the "highest
credit quality." The rating of AA is assigned to bonds of "very
high credit quality." Municipal Bonds which are rated A by Fitch
are considered to be of "high credit quality." The rating of BBB
is assigned to bonds of "satisfactory credit quality." The A and
BBB rated bonds are more vulnerable to adverse changes in economic
conditions than bonds with higher ratings. Bonds rated AAA, AA, A
and BBB are considered to be of investment grade quality. Bonds
rated below BBB are considered to be of speculative quality. The
ratings of "BB" is assigned to bonds considered by Fitch to be
"speculative." The rating of "B" is assigned to bonds considered
by Fitch to be "highly speculative." Bonds rated "CCC" have
certain identifiable characteristics which, if not remedied, may
lead to default. Bonds rated "CC" are minimally protected.
Default in payment of interest and/or principal seems probable over
time. Bonds rated "C" are in imminent default in payment of
interest
or principal. Bonds rated "DDD", "DD" and "D" are in default on
interest and/or principal payments. DDD represents the highest
potential for recovery on these bonds, and D represents the lowest
potential for recovery.
Duff & Phelps' The ratings of Duff & Phelps are as follows: AAA
which are judged to be the "highest credit quality". The risk
factors are negligible, being only slightly more than for risk-free
US Treasury debt. AA+, AA & AA- High credit quality protection
factors are strong. Risk is modest but may vary slightly from time
to time because of economic conditions. A+, A & A- Protection
factors are average but adequate. However, risk factors are more
variable and greater in periods of economic stress. BBB+, BBB &
BBB- Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in
risk during economic cycles. BB+, BB & BB- Below investment grade
but deemed to meet obligations when due. Present or prospective
financial protection factors fluctuate according to industry
conditions or company fortunes. Overall quality may move up or
down frequently within the category. B+, B & B- Below investment
grade and possessing risk that obligations will not be met when
due. Financial protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this
category or into a higher of lower rating grade. CCC Well below
investment grade securities. Considerable uncertainty exists as to
timely payment of principal interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic industry conditions, and/or with unfavorable
company developments. DD Defaulted debt obligations issuer failed
to meet scheduled principal and/or interest payments. DP Preferred
stock with dividend arreages.
Municipal Notes
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG").
Notes bearing the designation MIG-1 are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the
market for financing. Notes bearing the designation "MIG-2" are of
high quality with ample margins of protection, although not as
large as notes rated "MIG." Such short-term notes which have
demand features may also carry a rating using the symbol VMIG as
described above, with the designation MIG-1/VMIG 1 denoting best
quality, with superior liquidity support in addition to those
characteristics attributable to the designation MIG-1.
S&P's rating for Municipal Notes due in three years or less
are SP-1, SP-2, and SP-3. SP-1 describes issues with a very strong
capacity to pay principal and interest and compares with bonds
rated A by S&P; if modified by a plus sign, it compares with bonds
rated AA or AAA by S&P. SP-2 describes issues with a satisfactory
capacity to pay principal and interest, and compares with bonds
rated BBB by S&P. SP-3 describes issues that have a speculative
capacity to pay principal and interest.
Fitch's rating for Municipal Notes due in three years or
less are F-1+, F-1, F-2, F-3, F-S and D. F-1+ describes notes with
an exceptionally strong credit quality and the strongest degree of
assurance for timely payment. F-1 describes notes with a very
strong credit quality and assurance of timely payment is only
slightly less in degree than issues rated F-1+. F-2 describes
notes with a good credit quality and a satisfactory assurance of
timely payment, but the margin of safety is not as great for issues
assigned F-1+ or F-1 ratings. F-3 describes notes with a fair
credit quality and an adequate
assurance of timely payment, but near-term adverse changes could
cause such securities to be rated below investment grade. F-S
describes notes with weak credit quality. Issues rated D are in
actual or imminent payment default.
Corporate Debt
The "other debt securities" included in the definition of
temporary investments are corporate (as opposed to municipal) debt
obligations. The Moody's, S&P and Fitch corporate debt ratings
shown do not differ materially from those set forth above for
Municipal Bonds.
Commercial Paper
Moody's The ratings of commercial paper by Moody's are
Prime-1, Prime-2, Prime-3 and Not Prime. Issuers rated Prime-1
have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations. Issuers rated
Prime-3 have an acceptable capacity for repayment of short-term
promissory obligations. Issuers rated Not Prime do not fall within
any of the Prime rating categories.
S&P The ratings of commercial paper by S&P are A-1, A-2, A-
3, B, C, and D. A-1 indicates that the degree of safety regarding
timely payment is strong. A-2 indicates capacity for timely
payment is satisfactory. However, the relative degree of safety is
not as high as for issues designated A-1. A-3 indicates an
adequate capacity for timely payments. They are, however, more
vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B indicates only
speculative capacity for timely payment. C indicates a doubtful
capacity for payment. D is assigned to issues in default.
Fitch The ratings of commercial paper by Fitch are similar
to its ratings of Municipal Notes, above.
<PAGE>
Exhibit B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 22nd day of October, 1990, by and between
The New York Tax-Exempt Fund, Inc. (hereinafter called the
"Trust"), and OPPENHEIMER MANAGEMENT CORPORATION (hereinafter
called the "Adviser").
WHEREAS, the Trust is a closed-end, diversified management
investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "Investment Company Act"), and the Adviser
is a registered investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and
agreements hereinafter set forth, it is agreed by and between the
parties as follows:
1. In General The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Trust with respect to
the investment of its assets; to supervise and arrange the
purchases of securities for and the sale of securities held in the
portfolio of the Trust; and to furnish facilities and furnish and
supervise personnel as shall be required to provide the services
described herein.
2. Duties and Obligations of the Adviser with respect to
investment of assets of the Trust
(a) Subject to the succeeding provisions of this
section and subject to the direction and control of the Board of
Trustees, the Adviser shall:
(i) Regularly provide investment advice and
recommendations to the Trust with respect to its
investments, investment policies and the purchase
and sale of securities and other investments
(collectively, "securities");
(ii) Supervise continuously the investment program of
the Trust and the composition of its portfolio;
(iii) Arrange, subject to the provisions of paragraph
"4" hereof, for the purchase of securities and
other investments and for the sale of securities
and other investments held in the portfolio of the
Trust; and
(iv) Prepare proxy materials for meetings of the
Trust's shareholders and such registrations and
reports as may be required by federal securities
laws.
(b) Any investment advice furnished by the Adviser
under this section shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the provisions of
the Investment Company Act of 1940, and of any rules or regulations
in force thereunder; (2) any other applicable provision of law; (3)
the provisions of the Declaration of Trust and By-Laws of the Trust
as amended from time to time; (4) any policies and determinations
of the Board of Trustees of the Trust; and (5) the terms of the
registration statement of the Trust, as amended from time to time
under the Securities Act of 1933 and the Investment Company Act of
1940.
(c) Nothing in this Agreement shall prevent the
Adviser or any officer thereof from acting as investment adviser
for any other person, firm or corporation and shall not in any way
limit or restrict the Adviser or any of its directors, officers,
stockholders or employees from buying, selling or trading any
securities for its or their own accounts or for the accounts of
other for whom it or they may be acting, provided, however, that
the Adviser expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(d) The Adviser may obtain investment information,
research or assistance from any other person, firm or corporation
to supplement, update or otherwise improve its investment
management services, provided that the Trust shall not be required
to pay any compensation other than as provided by the terms of this
Agreement and subject to the provisions of Paragraph 4 hereof.
3. Trust Administration and Allocation of Expenses. The Adviser
shall at its expense provide all executive, administrative and
clerical personnel as shall be required to provide effective
administration for the Trust, except such services, facilities and
personnel as the Trust has contracted to obtain pursuant to the
Administration Agreement annexed hereto as Exhibit A. Services to
be provided by the Adviser hereunder shall include the compilation
and maintenance of such records with respect to the Trust's
operations as may reasonably be required; the preparation and
filing of such reports with respect thereto as shall be required by
the Securities and Exchange Commission and periodic reports with
respect to its operations for the shareholders of the Trust except
required reports to shareholders and Form N-SAR (or such other form
as the SEC may substitute therefor); preparation of proxy materials
for meetings of the Trust's shareholders; and the preparation of
such registrations and reports as may be required by Federal
securities laws. The Adviser shall, at its own cost and expense,
also provide the Trust with adequate office space, facilities and
equipment. The Adviser shall, at its own expense, provide such
officers for the Trust as the Trust's Board may request.
All other costs and expenses not expressly assumed by the
Adviser under this Agreement shall be paid by the Trust, including,
but not limited to: (i) interest and taxes, including issue and
transfer taxes, incurred by or levied on the Fund; (ii) insurance
premiums for fidelity and other coverage requisite to its
operations; (iii) compensation and expenses of its Trustees other
than those associated or affiliated with the Adviser; (iv) legal
and audit expenses; (v) custodian, dividend paying agent, registrar
and transfer agent fees and expenses (including charges and
expenses of the Trust's Dividend Reinvestment Plan Agent) and
brokerage commissions, if any; (viii) fees and expenses, other than
as hereinabove provided, incident to the registration, under
Federal law, of shares of the Trust for public sale; (ix) except as
noted above, all other expenses incidental to holding meetings of
the Trust's shareholders; (x) payments under the Trust's
Administration Agreement; (xi) fees and expenses of listing and
maintaining the listing of the Trust's shares of any national
securities exchange; (xii) cost of certificates representing the
Trust's shares; and (xiii) such non-recurring expenses as may
arise, including litigation affecting the Trust and the legal
obligation which the Trust may have to indemnify its officers and
Trustees with respect thereto.
4. Portfolio Transactions and Brokerage.
(a) The Adviser is authorized, in arranging the
purchase and sale of the Trust's portfolio securities, to employ or
deal with such members of securities or commodities exchanges,
brokers or dealers (hereinafter "broker-dealers"), including
"affiliated" broker-dealers (as that term is defined in the
Investment Company Act), as may, in its best judgment, implement
the policy of the Trust to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Trust's portfolio transactions as
well as to obtain, consistent with the provisions of subparagraph
(c) of this paragraph 4, the benefit of such investment information
or research as will be of significant assistance to the performance
by the Adviser of its investment management functions.
(b) The Adviser shall select broker-dealers to effect
the Trust's portfolio transactions on the basis of its estimate of
their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain
best execution of particular portfolio transaction(s) will be
judged by the Adviser on the basis of all relevant factors and
considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the
Trust's portfolio transactions by participating therein for its own
account; the importance to the Trust of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Trust.
(c) The Adviser shall have discretion, in the
interests of the Trust, to allocate brokerage on the Trust's
portfolio transactions to broker-dealers, other than an affiliated
broker-dealer, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) for the Trust and/or other accounts for which
the Adviser or its affiliates exercise "investment discretion" (as
that term is defined in Section 3(a)(35) of the Securities Exchange
Act of 1934) and to cause the Trust to pay such broker-dealers a
commission for effecting a portfolio transaction for the Trust that
is in excess of the amount of commission another broker-dealer
adequately qualified to effect such transaction would have charged
for effecting that transaction, if the Adviser determines, in good
faith, that such commission is reasonable in relation to the value
of the brokerage and/or research services provided by such broker-
dealer, viewed in terms of either that particular transaction or
the overall responsibilities of the Adviser or its affiliates with
respect to the accounts as to which they exercise investment
discretion. In reaching such determination, the Adviser will not
be required to place or attempt to place a specific dollar value on
the brokerage and/or research services provided or being provided
by such broker-dealer. In demonstrating that such determinations
were made in good faith, the Adviser shall be prepared to show that
all commissions were allocated for purposes contemplated by this
Agreement and that the total commissions paid by the Trust over a
representative period selected by the Trust's trustees were
reasonable in relation to the benefits to the Trust.
(d) The Adviser shall have no duty or obligation to
seek advance competitive bidding for the most favorable commission
rate applicable to any particular portfolio transactions or to
select any broker-dealer on the basis of its purported or "posted"
commission rate but will, to the best of its ability, endeavor to
be aware of the current level of the charges of eligible broker-
dealers and to minimize the expense incurred by the Trust for
effecting its portfolio transactions to the extent consistent with
the interests and policies of the Trust as established by the
determinations of the Board of Trustees of the Trust and the
provisions of this paragraph 4.
(e) The Trust recognizes that an affiliated broker-
dealer: (i) may act as one of the Trust's regular brokers so long
as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Trust; and (iii) may effect
portfolio transactions for the Trust only if the commissions, fees
or other remuneration received or to be received by it are
determined in accordance with procedures contemplated by any rule,
regulation or order adopted under the Investment Company Act for
determining the permissible level of such commissions.
(f) Subject to the foregoing provisions of this
paragraph 4, the Adviser may also consider sales of shares of the
Trust and the other funds advised by the Adviser and its affiliates
as a factor in the selection of broker-dealers for its portfolio
transactions.
5. Compensation of the Adviser. The Trust agrees to pay the
Adviser and the Adviser agrees to accept as full compensation for
all services rendered by the Adviser as such, a fee payable weekly
in an amount computed by applying the annual rate of .65 of 1% to
the end of week net assets of the Trust, determined as of the close
of business of the New York Stock Exchange each Friday. When the
New York Stock Exchange is not open on a Friday, then the net
assets shall be determined as of the close of business of the New
York Stock Exchange on the day on which the New York Stock Exchange
was open next preceding such Friday.
6. Use of Name. The Adviser hereby grants to the Trust a
royalty-free, non-exclusive license to use the name "Oppenheimer"
in the name of the Trust for the duration of this Agreement and any
extensions or renewals thereof. To the extent necessary to protect
the Adviser's rights to the name "Oppenheimer" under applicable
law, such license shall allow the Adviser to inspect and, subject
to control by the Trust's Board, control the nature and quality of
services offered by the Trust under such name. Such license may,
upon termination of this Agreement, be terminated by the Adviser,
in which event the Trust shall promptly take whatever action may be
necessary to change its name and discontinue any further use of the
name "Oppenheimer" in the name of the Trust or otherwise. The name
"Oppenheimer" may be used or licensed by the Adviser in connection
with any of its activities, or licensed by the Adviser to any other
party.
7. Duration and Termination.
(a) This Agreement will take effect on the date first
set forth above. This Agreement shall continue in effect until
December 31, 1991, and thereafter from year to year, so long as
such continuance shall be approved at least annually (a) by the
Board of Trustees, including the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act of 1940) of any
such party cast in person at a meeting called for the purpose of
voting on such approval, or (b) by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding voting securities of the Trust and by such
aforementioned vote of the Board of Trustees.
(b) This Agreement may be terminated by the Adviser at
any time without penalty upon sixty days' written notice to the
Trust (which notice may be waived by the Trust) and may be
terminated by the Trust at any time without penalty upon sixty
days' notice to the Adviser (which notice may be waived by the
Adviser), provided that such termination by the Trust shall be
directed or approved by the vote of a majority of all the Trustees
of the Trust then in office or by the vote of the holders of a
"majority" (as defined in the Investment Company Act of 1940) of
the outstanding voting securities of the Trust. This Agreement
shall automatically terminate in the event of its assignment (as
"assignment" is defined in the Investment Company Act of 1940).
8. Liability.
(a) Provided that nothing herein shall be deemed to
protect the Adviser from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or reckless disregard
of its obligations and duties under this Agreement, the Adviser
shall not be liable for any loss sustained by reason of good faith
errors or omissions in connection with any matters to which this
Agreement relates.
(b) The Adviser understands and agrees that the
obligations of the Trust under this Agreement are not binding upon
any Trustee or shareholder of the Trust personally, but bind only
the Trust and the Trust's property; the Adviser represents that it
has notice of the provisions of the Declaration of Trust of the
Trust disclaiming Trustee or shareholder liability for acts or
obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers as of
the day and year first above written.
The New York Tax-Exempt Fund, Inc.
Attest:
By: /s/ James C. Swain
------------------------
James C. Swain, President
OPPENHEIMER MANAGEMENT CORPORATION
Attest:
By: /s/ Katherine P. Feld
----------------------
Katherine P. Feld
Vice President & Secretary
<PAGE>
<PAGE>
EXHIBIT C
<TABLE>
<CAPTION>
Approximate Net Advisory Fee Rate as
Assets as of % of Average Annual
12/31/96
Name of Fund ($ Millions) Net Assets
<S> <C> <C>
Oppenheimer New York Municipal $775.4 .60% on the first $200
Fund million,
Oppenheimer New Jersey Municipal $25.8 .55% on the next $100
Fund million,
Oppenheimer Municipal Bond Fund $663.8 .50% on the next $200
million,
Oppenheimer Florida Municipal $41.3 .45% on the next $250
Trust(1) million,
Oppenheimer Pennsylvania Municipal $84.1 .40% on the next $250
and Trust(1) million,
Oppenheimer California Municipal $355.3 .35% of net assets in
Fund excess of $1
billion
Oppenheimer Insured Municipal $104.8 .45% on the first $100
Fund million,
.40% on the next $150
million,
.375% on the next $250
million, and
.35% of net assets in
excess of $500 million
Oppenheimer Intermediate $100.4 .50% on the first $100
Municipal Fund million,
.45% on the next $150
million,
.425% on the next $250
million, and
.40% of net assets in
excess of $500 million
Oppenheimer Main Street California 150.5 .55% of net assets
Municipal Fund (2)
___________________________________
(1) Effective January 1, 1997, and ending no later than December 31,
1997, OppenheimerFunds, Inc., will waive a portion of its management
fee so the effective management fee will, on an annualized basis
equal 57 basis points for Oppenheimer Pennsylvania Municipal Fund
and 54.5 basis points for Oppenheimer Florida Municipal Fund.
While, OppenheimerFunds, Inc. has no present intention of doing so,
these fee waivers may be modified or withdrawn by OppenheimerFunds,
Inc. at any time.
(2) The Manager has agreed to waive a portion of the fee when the Fund s
net assets are less than $100 million. The fee rate reflecting this
waiver is 0.40% when net assets are $75 million or more but less
than $100 million, 0.25% when net assets are $50 million or more but
less than $75 million, 0.15% when net assets are $25 million or more
but less than $50 million, and 0% when net assets are less than $25
million.
/TABLE
<PAGE>
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
PROXY FOR ANNUAL SHAREHOLDERS MEETING TO BE HELD MAY 5, 1997
Your shareholder vote is important!
Your prompt response can save your Fund the expense of another
mailing.
Please mark your proxy on the reverse side, date and sign it, and
return it promptly in the accompanying envelope, which requires no
postage if mailed in the United States.
Please detach at perforation before mailing.
- -------------------------------------------------------------------
The New York Tax-Exempt Income Fund, Inc.
Proxy for Annual Shareholders Meeting to be held May 5, 1997.
The undersigned shareholder of The New York Tax-Exempt Income Fund,
Inc. (the "Fund") does hereby appoint George C. Bowen, Rendle Myer,
Robert Bishop, Scott Farrar, and each of them, as attorneys-in-fact
and proxies of the undersigned, with full power of substitution, to
attend the Annual Meeting of Shareholders of the Fund to be held
May 5, 1997, at 6803 South Tucson Way, Englewood, Colorado, 80112
at 10:00 A.M., Denver time, and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record
date for said meeting for the election of Directors and on each
Proposal specified on the reverse side. Said attorneys-in-fact
shall vote in accordance with their best judgment as to any other
matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHICH
RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND
FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
<PAGE>
The New York Tax-Exempt Income Fund, Inc./Proxy for Annual
Shareholders Meeting to be held May 5, 1997
Your shareholder vote is important!
Your prompt response can save your Fund money.
Please vote, sign and mail your proxy ballot (this card) in the
enclosed postage-paid envelope today, no matter how many shares you
own. A majority of the Fund's shares must be represented in person
or by proxy. Please vote your proxy so your Fund can avoid the
expense of another mailing.
Please detach at perforation before mailing.
- -------------------------------------------------------------------
1. Election of Directors
A) William A. Baker
B) Charles Conrad, Jr.
C) Raymond Kalinowski
D) Bridget A. Macaskill
E) Sam Freedman
____ FOR all nominees listed ____ WITHHOLD AUTHORITY
except as marked to the contrary. to vote for all nominees
listed at left.
Instruction: To withhold authority to vote for any individual
nominee, line out that nominee's name at left.
2. Ratification of selection of Deloitte & Touche LLP as
independent auditors (Proposal No. 1)
FOR____ AGAINST____ ABSTAIN____
3. Approval of changes to certain of the Fund s fundamental
investment policies (Proposal No.2)
FOR____ AGAINST____ ABSTAIN____
4. Approval of the current Advisory Agreement between the Fund and
OppenheimerFunds, Inc. (Proposal No. 3)
FOR____ AGAINST____ ABSTAIN____
Dated: ___________________________, 1997
(Month) (Day)
___________________________________
Signature(s)
___________________________________
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When
signing as custodian, attorney, executor, administrator, trustee,
etc., please give your full title as such. All joint owners should
sign this proxy. If the account is registered in the name of a
corporation, partnership or other entity, a duly authorized
individual must sign on behalf of such entity and give his or her
title.
Please read both sides of this ballot.
