As filed with the Securities and Exchange
Commission on February 20, 1997.
Registration No. 811-5278
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
Amendment No. 11 / X /
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices)
303-768-3200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
<PAGE>
FORM N-2
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
Cross Reference Sheet
Part A of
Form N-2
Item No. Prospectus Heading
1 *
2 *
3 *
4 *
5 *
6 *
7 *
8 General Description of the Registrant
9 Management
10 Capital Stock, Long-Term Debt, and Other Securities
11 *
12 *
13 See Item 15 of the Statement of Additional Information
Part B of
Form N-2
Item No. Heading In Statement of Additional Information
14 Cover Page
15 Table of Contents
16 *
17 See Item 8 of the Prospectus
18 Management
19 Control Persons and Principal Holders of Securities
20 See Item 9 of the Prospectus
21 Brokerage Allocation and Other Practices
22 See Item 10 of the Prospectus
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover.
Inapplicable.
Item 2. Inside Front and Outside Back Cover Page.
Inapplicable.
Item 3. Fee Table and Synopsis.
Inapplicable.
Item 4. Financial Highlights.
Inapplicable.
Item 5. Plan of Distribution.
Inapplicable.
Item 6. Selling Shareholders.
Inapplicable.
Item 7. Use of Proceeds.
Inapplicable.
Item 8. General Description of the Fund.
1. The New York Tax-Exempt Income Fund, Inc. (the "Fund") is
a diversified closed-end management investment company incorporated
under the laws of Minnesota on August 10, 1987.
2., 3., and 4. The Fund's primary investment objective is to
provide to the holders of the Fund's Common Stock, through
investment in a professionally managed portfolio of tax-exempt New
York Municipal Securities (defined below), current interest income
exempt from both federal income tax (although such interest income
may be subject to the federal alternative minimum tax as discussed
below) and New York State and New York City income taxes. It is a
secondary objective of the Fund to preserve and enhance the Fund's
net asset value through investments in tax-exempt New York
Municipal Securities that, in the opinion of OppenheimerFunds,
Inc., the Fund's investment adviser (the "Adviser"), are underrated
or represent municipal market sectors that are undervalued.
Underrated Municipal Securities are those whose ratings do
not, in the Adviser's opinion, reflect their true value.
Obligations may be underrated because of the time that has elapsed
since their most recent rating, or because of positive factors that
may not have been fully taken into account by the rating agencies,
or for other similar reasons. Undervalued municipal market
sectors, on the other hand, refers to Municipal Securities of
particular types or purposes (e.g., hospital bonds, industrial
revenue bonds, or bonds issued by a particular municipal issuer)
that, in the Adviser's opinion, are worth more than the value
assigned to them in the marketplace.
Municipal Securities may be undervalued because there is a
temporary excess of supply in a particular market sector, or
because of a general decline in the market price of Municipal
Securities or a market sector for reasons that do not apply to the
particular Municipal Securities that are considered undervalued.
The Fund's investment in underrated or undervalued New York
Municipal Securities will be based on the Adviser's belief that the
prices of such Securities should ultimately reflect their true
value. Under certain market conditions, such underrated or
undervalued Municipal Securities may realize market appreciation,
while in a declining market such Municipal Securities may
experience less market depreciation than other Municipal
Securities.
Accordingly, "enhancement of net asset value" does not merely
refer to market appreciation of the Fund's portfolio securities,
and the Fund does not suggest that capital appreciation is itself
an objective of the Fund. Instead, the objective of enhancement of
net asset value is one of seeking to outperform the market by
prudent selection of Municipal Securities, regardless of which
direction the market may move. A shareholder of the Fund will
realize a taxable gain upon the sale of shares at an appreciated
net asset value or in the event of capital gain distributions by
the Fund as discussed below in "Tax Status."
Portfolio Investments. Except during temporary defensive
periods, the Fund will, as a fundamental policy, invest at least
80% of its net assets in tax-exempt New York Municipal Securities.
It is also 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")or another nationally recognized statistical
rating organization. Municipal Securities rated "Baa" or "MIG2" by
Moody's, or "BBB" or "SP-2" by S&P, although investment grade, may
be subject to greater market fluctuations and risks of loss of
income and principal than higher-rated Municipal Securities and may
be considered to have speculative characteristics. A general
description of Moody's & S&P's ratings of securities is set forth
in Appendix A to this Prospectus. The Fund intends to emphasize
investments in New York Municipal Securities with long-term
maturities, but the degree of such emphasis will depend upon market
conditions existing at the time of investment.
The Fund may invest up to 20% of its net assets in unrated New
York Municipal Securities or in New York Municipal Securities rated
lower than the four highest grades for long-term securities, but no
more than half of this amount (10% of the Fund's net assets) will
be invested in such lower rated New York Municipal Securities. To
the extent it does so, there may be somewhat greater risk because
such unrated or lower rated Municipal Securities, although
generally offering a higher current yield than higher rated
securities, are generally less liquid and involve a greater risk of
non-payment of principal and interest than higher rated securities.
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 Municipal Securities that are rated
lower than Ba by Moody's or BB by S&P at the time of purchase.
Interest on certain "private activity" bonds (as defined under
the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code")) is treated as a tax preference item under the
alternative minimum tax provisions of federal tax law. Such
"private activity" bonds currently constitute a very small
percentage of the market in Municipal Securities (as defined
herein). The Fund will not invest more than 20% of its net assets
in such "private activity" bonds. To the extent the Fund invests
in such "private activity" bonds, investors could be subject to
alternative minimum taxation on the income from such investments.
In the case of certain corporations, all tax-exempt income,
including interest on bonds held by the Fund, may be included in
computing the federal alternative minimum and environmental taxes.
Temporary Investments. 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 net assets in
taxable temporary investments, the income on which may be subject
to either or both of New York State and New York City income taxes
or to both federal and New York income taxes. The Fund will invest
only in temporary investments which are U.S. Government securities
or securities rated within the two highest grades by Moody's or S&P
(including Municipal Securities the income from which is subject to
New York State and New York City income taxes), and which mature
within one year from the date of purchase. Temporary investments
of the Fund may also include repurchase agreements as discussed
below. The foregoing restrictions and other limitations discussed
herein will apply only at the time of purchase of securities and
will not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of an
acquisition of securities.
The foregoing investment objectives and policies are
fundamental policies of the Fund and may not be changed without the
approval of the majority of the outstanding shares of the Fund. As
used in this Prospectus, a majority of the Fund's outstanding
shares means the vote of: (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50%
of the Fund's shares, whichever is less.
Municipal Securities. Municipal securities ("Municipal
Securities") include debt obligations issued by states, cities and
local authorities to obtain funds for various public purposes,
including the construction of such public facilities as airports,
bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes
for which Municipal Securities may be issued include the
refinancing of outstanding obligations, the obtaining of funds for
general operating expenses and for loans to other public
institutions and facilities. In addition, certain industrial
development bonds and pollution control bonds may be included
within the term "Municipal Securities" if the interest paid thereon
qualifies as exempt from federal income tax. New York Municipal
Securities ("New York Municipal Securities") are Municipal
Securities which bear interest that, in the opinion of bond counsel
to the issuer, is exempt from federal and New York State and New
York City income taxes. Neither the Fund nor the Adviser will make
any special review for the Fund of the proceedings relating to the
issuance of the New York Municipal Securities or of the basis for
such opinions.
The two principal classifications of Municipal Securities are
"general obligation" and "revenue" bonds. General obligation bonds
are secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue
bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source.
Industrial development and pollution control bonds are in most
cases revenue bonds and do not generally constitute the pledge of
credit or taxing power of the issuer of such bonds. There are, of
course, variations in the security of Municipal Securities, both
within a particular classification and between classifications,
depending on numerous factors.
Also included within the general category of Municipal
Securities are participations in lease obligations or installment
purchase contract obligations (hereinafter collectively called
"lease obligations") of municipal authorities or entities.
Although lease obligations do not constitute general obligations of
the municipality for which the municipality's taxing power is
pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease
obligations contain "non-appropriation" clauses which provide that
the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In addition to the "non-
appropriation" risk, these securities represent a relatively new
type of financing that has not yet developed the depth of
marketability associated with more conventional bonds. Although
"non-appropriation" lease obligations are secured by the leased
property, disposition of the property in the event of foreclosure
might prove difficult. The Fund will seek to minimize these risks
by investing not more than 5% of its investment assets in lease
obligations that contain "non-appropriation" clauses, and by
investing in only those "non-appropriation" lease obligations where
(1) the nature of the leased equipment or property is such that its
ownership or use is essential to a governmental function of the
municipality, (2) the lease payments will commence amortization of
principal at an early date resulting in an average life of seven
years or less for the lease obligation, (3) appropriate covenants
will be obtained from the municipal obligor prohibiting the
substitution or purchase of similar equipment if lease payments are
not appropriated, (4) the lease obligor has maintained good market
acceptability in the past, (5) the investment is of a size that
will be attractive to institutional investors, and (6) the
underlying leased equipment has elements of portability and/or use
that enhance its marketability in the event foreclosure on the
underlying equipment was ever required. Municipal Securities also
include obligations, such as tax-exempt notes, municipal commercial
paper and municipal lease obligations, having relatively short-term
maturities, although, as noted above, the Fund intends to emphasize
investments in Municipal Securities with long-term maturities.
The yields on Municipal Securities are dependent on a variety
of factors, including the condition of the general money market and
the Municipal Securities market, the size of a particular offering,
the maturity of the obligations and the rating of the issue. The
ratings of Moody's and S&P represent their opinions as to the
quality of the Municipal Securities which they undertake to rate.
It should be emphasized, however, that ratings are general and are
not absolute standards of quality. Consequently, Municipal
Securities with the same maturity, coupon and rating may have
different yields while obligations of the same maturity and coupon
with different ratings may have the same yield. The market value
of outstanding Municipal Securities will vary with changes in
prevailing interest rate levels and as a result of changing
evaluations of the ability of their issuers to meet interest and
principal payments. Ratings may be changed, suspended or withdrawn
as a result of changes in information obtained by Moody's or S&P,
or unavailability of such information, or for other circumstances.
Such events may adversely affect the market value of the subject
Municipal Securities.
Securities of issuers of Municipal Securities are subject to
the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors, such as the Bankruptcy Reform
Act of 1978. In addition, the obligations of such issuers may
become subject to the laws enacted in the future by Congress, state
legislatures or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon municipalities to levy
taxes. There is also the possibility that, as a result of
legislation or other conditions, the power or ability of any issuer
to pay, when due, the principal of and interest on its Municipal
Securities may be materially affected.
Credit Risk and Interest Rate Risk. The values of
Municipal Securities will vary as a result of changing evaluations
by rating services and investors of the ability of the issuers of
such securities to meet the interest and principal payments. These
credit risks relates to the ability of the issuer of a Municipal
Security to make interest or principal payments on the security as
they become due. While the Manager may rely to some extent on
credit ratings by nationally recognized rating agencies, such as
Standard & Poor's or Moody's, in evaluating the credit risk of
securities selected for the Fund's portfolio, it may also use its
own research and analysis. However, many factors affect an
issuer's ability to make timely payments, and there can be no
assurance that the credit risks of a particular security will not
change over time.
Municipal Securities are also subject to interest rate risks
whereby values will also change in response to changes in interest
rates. Should interest rates rise, the values of outstanding
Municipal Securities will probably decline and (if purchased at
principal amount) would sell at a discount. If interest rates
fall, the values of outstanding Municipal Securities will probably
increase and (if purchased at principal amount) would sell at a
premium. Changes in the values of the Fund's Municipal Securities
from these or other factors will not affect interest income derived
from these securities but will affect the Fund's net asset value
per share.
Floating Rate/Variable Rate Obligations. Some of the
Municipal Securities the Fund may purchase may have variable or
floating interest rates whereby the rate of interest is not fixed
but varies with changes in specified market rates or indexes, such
as a bank prime rate or a tax-exempt money market index. Variable
rates are adjustable at stated periodic intervals. Floating rates
are automatically adjusted according to a specified market rate for
such investments, such as the percentage of the prime rate of a
bank, or the 90-day U.S. Treasury Bill rate. Such obligations may
be secured by bank letters of credit or other credit support
arrangements.
Inverse Floaters and Other Derivative Investments. The
Fund may invest in certain municipal "derivative investments." The
Fund may use some derivative investments for hedging purposes, and
may invest in others because they offer the potential for increased
income and principal value. In general, a "derivative investment"
is a specially-designed investment whose performance is linked to
the performance of another investment or security, such as an
option, future or index. In the broadest sense, derivative
investments include exchange-traded options and futures contracts
(please refer to "Financial Futures and Options Transactions,"
below).
The Fund may invest in "inverse floater" variable rate bonds,
a type of derivative investment whose yields move in the opposite
direction as short-term interest rates change. As interest rates
rise, inverse floaters produce less current income. Their price
may be more volatile than the price of a comparable fixed-rate
security. Some inverse floaters have a "cap" whereby if interest
rates rise above the "cap," the security pays additional interest
income. If rates do not rise above the "cap," the Fund will have
paid an additional amount for a feature that proves worthless. The
Fund may also invest in municipal securities that pay interest that
depends on an external pricing mechanism, also a type of derivative
investment. Examples of external pricing mechanisms are interest
rate swaps or caps and municipal bond or swap indices. The Fund
anticipates that under normal circumstances it will invest no more
than 10% of its net assets in inverse floaters.
The risks of investing in derivative investments include not
only the ability of the issuer of the derivative investment to pay
the amount due on the maturity of the investment, but also the risk
that the underlying security on which the derivative is based, and
that derivative itself, might not perform the way the Adviser
expected it to perform. That can mean that the Fund will realize
less income than expected. Another risk of investing in derivative
investments is that their market value could be expected to vary to
a much greater extent than the market value of municipal securities
that are not derivative investments but have similar credit
quality, redemption provisions and maturities.
Special Investment Considerations - New York Municipal
Securities. As explained in the Prospectus, the Fund is highly
sensitive to the fiscal stability of New York State (the "State")
and its subdivisions, agencies, instrumentalities or authorities,
including New York City, which issue the Municipal Securities in
which the Fund concentrates its investments. The following
information on risk factors in concentrating in New York Municipal
Securities is only a summary, based on official statements relating
to offerings of New York issuers of Municipal Securities on or
prior to July 15, 1996 with respect to offerings of the State and
December 18, 1996 with respect to offerings of New York City, and
no representation is made as to the accuracy of such information.
During the mid-1970's the State, some of its agencies,
instrumentalities and public benefit corporations (the
"Authorities"), and certain of its municipalities faced serious
financial difficulties. To address many of these financial
problems, the State developed various programs, many of which were
successful in ameliorating the financial crisis. Any further
financial problems experienced by these Authorities or
municipalities could have a direct adverse effect on the New York
Municipal Securities in which the Fund invests.
New York City
General. More than any other municipality, the fiscal health
of New York City (the "City") has a significant effect on the
fiscal health of the State. The national economic downturn which
began in July 1990 adversely affected the local economy which had
been declining since late 1989. As a result, the City experienced
job losses in 1990 and 1991 and real Gross City Product ("GCP")
fell in those two years. Beginning in 1992, the improvement in the
national economy helped stabilize conditions in the City.
Employment losses moderated toward year-end and real GCP increased,
boosted by strong wage gains. After noticeable improvements in the
City's economy during 1994, economic growth slowed in 1995, and the
City's current four-year financial plan assumes that moderate
economic growth will continue.
For each of the 1981 through 1996 fiscal years, the City
achieved balanced operating results as reported in accordance with
generally accepted accounting principles ("GAAP"). The City was
required to close substantial budget gaps in recent years in order
to maintain balanced operating results. There can be no assurance
that the City will continue to maintain a balanced budget as
required by State law, or that it can maintain a balanced budget
without additional tax or other revenue increases or additional
reductions in City services of programs, which could adversely
affect the City's economic base.
The Mayor is responsible for preparing the City's four-year
financial plan, including the City's current financial plan for the
1997 through 2000 fiscal years (the "1997-2000 Financial Plan",
"Financial Plan" or "City Plan"). On November 14, 1996, the City
submitted to the Control Board the Financial Plan for the 1997-2000
fiscal years, which is a modification to a financial plan submitted
to the Control Board on June 21, 1996 (the "June Financial Plan")
and which relates to the City, the Board of Education ("BOE") and
the City University of New York.
The City's projections set forth in the City Plan are based on
various assumptions and contingencies which are uncertain and which
may not materialize. Changes in major assumptions could
significantly affect the City's ability to balance its budget as
required by State law and to meet its annual cash flow and
financing requirements. Such assumptions and contingencies include
the condition of the regional and local economies, the impact on
real estate tax revenues of the real estate market, wage increases
for City employees consistent with those assumed in the City Plan,
employment growth, the ability to implement reductions in City
personnel and other cost reduction initiatives, the ability of the
New York City Health and Hospitals Corporation ("HHC") and the BOE
to take actions to offset reduced revenues, the ability to complete
revenue generating transactions, provision of State and Federal aid
and mandate relief and the impact on City revenues of proposals for
Federal and State welfare reform and any future legislation
affecting Medicare or other entitlements.
Implementation of the City Plan is also dependent upon the
City's ability to market its securities successfully in the public
credit markets. The City's financing program for fiscal years 1997
through 2000 contemplates the issuance of $7.7 billion of general
obligation bonds and $4.5 billion of bonds to be issued by the
proposed New York City Infrastructure Finance Authority ("IFA")
primarily to reconstruct and rehabilitate the City's infrastructure
and physical assets and to make other capital investments. The
creation of the IFA is subject to the enactment of State
legislation. In addition, the City issues revenue and tax
anticipation notes to finance its seasonal working capital
requirements. The success of projected public sales of City bonds
and notes and IFA notes will be subject to prevailing market
conditions, and no assurance can be given that such sales will be
completed. If the City were unable to sell its general obligation
bonds and notes or bonds of the proposed IFA, it would be prevented
from meeting its planned operating and capital expenditures.
Future developments concerning the City and public discussion of
such developments, as well as prevailing market conditions, may
affect the market for outstanding City general obligation bonds and
notes.
The City Comptroller and other agencies and public officials
have issued reports and make public statements which, among other
things, state that projected revenues may be less and future
expenditures may be greater than forecasted in the City Plan. It
is reasonable to expect that such reports and statements will
continue to be issued and to engender public comment.
1997-2000 Financial Plan. The June Financial Plan set forth
actions to close a previously projected gap of approximately $2.6
billion in the 1997 fiscal year. The proposed actions in the June
Financial Plan for the 1997 fiscal year included (i) agency actions
totaling $1.2 billion; (ii) a revised tax reduction program which
would increase projected tax revenues by $369 million due to the
four year extension of the 12.5% personal income tax surcharge and
other actions; (iii) savings resulting from cost containment in
entitlement programs to reduce City expenditures and additional
proposed State aid of $74 million; (iv) the assumed receipt of
revenues relating to rent payments for the City's airports, which
are currently the subject of a dispute with the Port Authority of
New York and New Jersey (the "Port Authority"); (v) the sale of the
City's television station for $207 million; and (vi) pension cost
savings totaling $134 million resulting from a proposed increase in
the earnings assumption for pension assets from 8.5% to 8.75%.
The 1997-2000 Financial Plan published on November 14, 1996
reflects actual receipts and expenditures and changes in forecast
revenues and expenditures since the June Financial Plan. The 1997-
2000 Financial Plan projects revenues and expenditures for the 1997
fiscal year balanced in accordance with GAAP, and projects gaps of
$1.2 billion, $2.1 billion and $3.0 billion for the 1998, 1999 and
2000 fiscal years, respectively. Changes since the June Financial
Plan include (i) an increase in projected tax revenues of $450
million, $120 million, $50 million and $45 million in fiscal years
1997 through 2000, respectively; (ii) a delay in the assumed
receipt of $304 million relating to projected rent payments for the
City airports from the 1997 fiscal year to the 1998 and 1999 fiscal
years, and a $34 million reduction in assumed State and Federal aid
for the 1997 fiscal year ; (iii) an approximately $200 million
increase in projected overtime and other expenditures in each of
the fiscal years 1997 through 2000; (iv) a $70 million increase in
expenditures for BOE in the 1997 fiscal year for school text books;
(v) a reduction in projected pension costs of $34 million, $50
million, $49 million and $47 million in fiscal years 1997 through
2000, respectively; and (vi) additional agency actions totaling
$179 million, $386 million, $473 million and $589 million in fiscal
years 1997 through 2000, including personnel reductions through
attrition and early retirement.
The Financial Plan assumes (i) approval by the Governor and
the State Legislature of the extension of the 12.5% personal income
tax surcharge, which is scheduled to expire on December 31, 1996
and is projected to provide revenue of $170 million, $463 million,
$492 million, and $521 million, in the 1997 through 2000 fiscal
years, respectively; (ii) collection of the projected rent payments
for the City's airports, totaling $270 million and $180 million in
the 1998 and 1999 fiscal years, respectively, which may depend on
the successful completion of negotiations with the Port Authority
or the enforcement of the City's rights under the existing leases
thereto through pending legal actions; (iii) the ability of HHC and
BOE to identify actions to offset substantial City and State
revenue reductions and the receipt by BOE of additional State aid;
(iv) State approval of the cost containment initiatives and State
aid proposed by the City; and (v) a reduction in City funding for
labor settlements for certain public authorities or corporations.
Legislation extending the 12.5% personal income tax surcharge
beyond December 31, 1996., was not enacted in the special
legislative session held in December 1996. Such legislation may be
enacted in the 1997 State legislative session. The Financial Plan
does not reflect any increased costs which the City might incur as
a result of welfare legislation recently enacted by Congress or
legislation proposed by the Governor, which would, if enacted,
implement such Federal welfare legislation. In addition, the
economic and financial condition of the City may be affected by
various financial, social, economic and political factors which
could have a material effect on the City.
The City's financial plans have been the subject of extensive
public comment and criticism. On February 28, 1996, Fitch
Investors Service, L.P. ("Fitch") placed the City's general
obligation bonds on FitchAlert with negative implications. On
November 5, 1996, Fitch removed the City's general obligation bonds
from FitchAlert, although Fitch stated that the outlook remains
negative.
Ratings. Moody's has rated the City's general obligation
bonds Baa1. Standard & Poor's has rated the bonds BBB+. Fitch has
rated the bonds A-. These ratings do not reflect any bond
insurance relating to any portion of the bonds. The city expects
that ratings on the Financial Guaranty Insured Bonds and the AMBAC
Insured Bonds will be received prior to January 7, 1997. The
ratings on the Financial Guaranty Insured Bonds and the AMBAC
Insured Bonds will be based on the insurance policies to be issued
by Financial Guaranty and AMBAC Indemnity, respectively. Bonds
insured to maturity by Financial Guaranty are rated "AAA" by
Standard & Poor's, "Aaa" by Moody's and "AAA" by Fitch. Such
ratings reflect only the views of Moody's, Standard & Poor's and
Fitch, from which an explanation of the significance of such
ratings will continue for any given period of time or that they
will not be revised downward or withdrawn entirely. Any such
downward revision or withdrawal could have an adverse effect on the
market prices of the bonds.
Outstanding Net Indebtedness. As of September 30, 1996, the
City and the Municipal Assistance Corporation for the City of New
York had, respectively, $20.099 billion and $3.889 billion of
outstanding net long-term debt.
The City depends on the State for State aid both to enable the
City to balance its budget and to meet its cash requirements.
There can be no assurance that there will not be reductions in
State aid to the City from amounts currently projected or that
State budgets in future fiscal years will be adopted by the April
1 statutory deadline or that any such reductions or delays will not
have adverse effects on the City's cash flow or expenditures.
Litigation. The City is a defendant in lawsuits pertaining to
material matters, including claims asserted which are incidental to
performing routine governmental and other functions. This
litigation includes, but is not limited to, actions commenced and
claims asserted against the City arising out of alleged torts,
alleged breaches of contracts, alleged violations of law and
condemnation proceedings. As of June 30, 1996 and 1995, claims in
excess of $380 billion and $311 billion, respectively, were
outstanding against the City for which the City estimates its
potential future liability to be $2.8 billion and $2.5 billion,
respectively.
New York State
The State has historically been one of the wealthiest states
in the nation. For decades, however, the State economy has grown
more slowly than that of the nation as a whole, resulting in the
gradual erosion of its relative economic affluence. The causes of
this relative decline are varied and complex, in many cases
involving national and international developments beyond the
State's control.
Recent Developments. The national economy has resumed a more
robust rate of growth after a "soft landing" in 1995, with over 11
million jobs added nationally since early 1992. The State economy
has continued to expand, but growth remains somewhat slower than in
the nation. Although the State has added approximately 240,000
jobs since late 1992, employment growth in the State has been
hindered during recent years by significant cutbacks in the
computer and instrument manufacturing, utility, defense and banking
industries. Government downsizing has also moderated these job
gains.
The 1996-1997 New York State Financial Plan (the "State Plan")
is based on the State's economy showing modest expansion during the
first half of 1996, but that some slowdown is projected during the
second half of the year. Although industries that export goods and
services are expected to continue to do well, growth is expected to
be slowed by government cutbacks at all levels and by tight fiscal
constraints on health and social services. On an average annual
basis, employment growth in the State is expected to be up slightly
from the 1995 rate. Personal income recorded moderate gains in
1996. Bonus payments in the securities industry are expected to
increase further from last year's record level.
The State Plan is based upon forecasts of national and State
economic activity developed through both internal analysis and
review of State and national economic forecasts prepared by
commercial forecasting services and other public and private
forecasters. Economic forecasts have frequently failed to predict
accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both
the national and State economies, including consumer attitudes
toward spending, the extent of corporate and governmental
restructuring, federal fiscal and monetary policies, the level of
interest rates, and the condition of the world economy, which could
have an adverse effect on the State. There can be no assurance
that the State economy will not experience results in the current
fiscal year that are worse than predicted, with corresponding
material and adverse effects on the State's projections of receipts
and disbursements.
The 1996-97 Fiscal Year. The State's General Fund (the major
operating Fund of the State) was projected in the State Plan to be
balanced on a cash basis for the 1996-97 fiscal year. The State
Plan projected General Fund receipts and transfers from other funds
at $33.17 billion, an increase of $365 million from the prior
fiscal year, and disbursements and transfers to other funds at
$33.12 billion, an increase of $444 million from the total
disbursed in the prior fiscal year.
Projections of total State receipts in the State Financial
Plan are based on the State tax structure in effect during the
fiscal year and on assumptions relating to basic economic factors
and their historical relationships to State tax receipts. In
preparing projections of State receipts, economic forecasts
relating to personal income, wages, consumption, profits and
employment have been particularly important. The projection of
receipts from most tax or revenue sources is generally made by
estimating the change in yield of such tax or revenue source caused
by economic and other factors, rather than by estimating the total
yield of such tax or revenue source from its estimated tax base.
The forecasting methodology, however, ensures that State fiscal
year estimates for taxes that are based on a computation of annual
liability, such as the business and personal income taxes, are
consistent with estimates of total liability under such taxes.
Projections of total State disbursements are based on
assumptions relating to economic and demographic factors, levels of
disbursements for various services provided by local governments
(where cost is partially reimbursed by the State), and the results
of various administrative and statutory mechanisms in controlling
disbursements for State operations. Factors that may affect the
level of disbursements in the fiscal year include uncertainties
relating to the economy of the nation and the State, the policies
of the federal government, and changes in the demand for and use of
State services.
In recent years, State actions affecting the level of receipts
and disbursements, the relative strength of the State and regional
economy, actions of the federal government and other factors, have
created structural gaps for the State. These gaps resulted from a
significant disparity between recurring revenues and the costs of
maintaining or increasing the level of support for State programs.
To address a potential imbalance in any given fiscal year, the
State would be required to take actions to increase receipts and/or
reduce disbursements as it enacts the budget for that year, and
under the State Constitution, the Governor is required to propose
a balanced budget each year. There can be no assurance, however,
that the Legislature will enact the Governor's proposals or that
the State's actions will be sufficient to preserve budgetary
balance in a given fiscal year or to align recurring receipts and
disbursements in future fiscal years.
Composition of State Governmental Funds Group. Substantially
all State non-pension financial operations are accounted for in the
State's governmental funds group. Governmental funds include the
General Fund, which receives all income not required by law to be
deposited in another fund; Special Revenue Funds, which receive the
preponderance of moneys received by the State from the Federal
government and other income the use of which is legally restricted
to certain purposes; Capital Projects Funds, used to finance the
acquisition and construction of major capital facilities by the
State and to aid in certain of such projects conducted by local
governments or public authorities; and Debt Service Funds, which
are used for the accumulation of moneys for the payment of
principal of and interest on long-term debt and to meet lease-
purchase and other contractual-obligation commitments.
Local Government Assistance Corporation ("LGAC"). In 1990, as
part of a State fiscal reform program, legislation was enacted
creating LGAC, a public benefit corporation empowered to issue
long-term obligations to fund certain payments to local governments
traditionally funded through the State's annual seasonal borrowing.
The legislation authorized LGAC to issue its bond and notes in an
amount not in excess of $4.7 billion (exclusive of certain
refunding bonds) plus certain other amounts. Over a period of
years, the issuance of these long-term obligations, which are to be
amortized over no more than 30 years, was expected to eliminate the
need for continued short-term seasonal borrowing. The legislation
also dedicated revenues equal to one-quarter of the four cent State
sales and use tax to pay debt service on these bonds. The
legislation also imposed a cap on the annual seasonal borrowing of
the State at $4.7 billion, less net proceeds of bonds issued by
LGAC and bonds issued to provide for capitalized interest, except
in cases where the Governor and the legislative leaders have
certified the need for additional borrowing and provided a schedule
for reducing it to the cap. If borrowing above the cap is thus
permitted in any fiscal year, it is required by law to be reduced
to the cap by the fourth fiscal year after the limit was first
exceeded. This provision capping the seasonal borrowing was
included as a covenant with LGAG's bondholders in the resolution
authorizing such bonds.
As of June 1995, LGAC had issued bonds and notes to provide
net proceeds of $4.7 billion completing the program. The impact of
LGAC's borrowing is that the State is able to meet its cash flow
needs in the first quarter of the fiscal year without relying on
short-term seasonal borrowings. The State Plan includes no
seasonal borrowing.
Authorities. The fiscal stability of the State is related to
the fiscal stability of its public authorities ("Authorities").
Authorities have various responsibilities, including these which
finance, construct and/or operate revenue-producing public
facilities. Authorities are not subject to the constitutional
restrictions on the incurrence of debt which apply to the State
itself, and may issue bonds and notes within the amounts, and
restrictions set forth in, their legislative authorization. As of
September 30, 1995, there were 17 Authorities that had outstanding
debt of $100 million or more. The aggregate outstanding debt,
including refunding bonds, of these 17 Authorities was $73.45
billion as of September 30, 1995.
Authorities are generally supported by revenues generated by
the projects financed or operated, such as fares, user fees on
bridges or tunnels, highway tolls, rentals for dormitory rooms and
housing units and charges for occupancy at medical care facilities.
In addition, State legislation authorizes several financing
techniques for Authorities. Also, there are statutory arrangements
providing for State local assistance payments otherwise payable to
localities to be made under certain circumstances to Authorities.
Although the State has no obligation to provide additional
assistance to localities whose local assistance payments have been
paid to Authorities under these arrangements, if local assistance
payments are diverted the affected localities could seek additional
State assistance. Some Authorities also receive moneys from State
appropriations to pay for the operating costs of certain of their
programs.
Ratings. On January 13, 1992, Standard & Poor's reduced its
ratings on the State's general obligation bonds from A to A- and,
in addition, reduced its ratings on the State's moral obligation,
lease purchase, guaranteed and contractual obligation debt.
Standard & Poor's also continued its negative rating outlook
assessment on State general obligation debt. On April 26, 1993,
Standard & Poor's revised the rating outlook assessment to stable.
On February 14, 1994, Standard & Poor's raised its outlook to
positive and, on October 3, 1995, confirmed its A-rating. On
January 6, 1992, Moody's reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations
from A to Baa1. On October 2, 1995, Moody's reconfirmed its A
rating on the State's general obligation long-term indebtedness.
Ratings reflect only the respective views of such organizations,
and an explanation of the significance of such ratings may be
obtained from the rating agency furnishing the same. There is no
assurance that a particular rating will continue for any given
period of time or that any such rating will not be revised downward
or withdrawn entirely, if in the judgment of the agency originally
establishing the rating, circumstances so warrant. A downward
revision or withdrawal of such ratings, or either of them, may have
an effect on the market price of the New York State Municipal
Securities in which the Fund invests.
General Obligation Debt. As of March 31, 1996, the State had
approximately $5.05 billion in general obligation bonds, including
$294 million in bond anticipation notes outstanding. Principal and
interest due on general obligation bonds and interest due on bond
anticipation notes were $735 million for the 1995-96 fiscal year
and are estimated to be $719 million for the State's 1996-97 fiscal
year.
Litigation. The State is a defendant in numerous legal
proceedings pertaining to matters incidental to the performance of
routine governmental operations. Such litigation includes, but is
not limited to, claims asserted against the State arising from
alleged torts, alleged breaches of contracts, condemnation
proceedings and other alleged violations of State and Federal laws.
These proceedings could affect adversely the financial condition of
the State in the 1996-1997 fiscal year or thereafter.
The State believes that the State Plan includes sufficient
reserves for the payment of judgments that may be required during
the 1996-97 fiscal year. There can be no assurance, however, that
an adverse decision in any of these proceedings would not exceed
the amount the State Plan reserves for the payment of judgments
and, therefore, could affect the ability of the State to maintain
a balanced 1996-1997 State Plan. In its audited financial
statements for the fiscal year ended March 31, 1996, the State
reported its estimated liability for awarded and anticipated
unfavorable judgments at $474 million.
In addition, the State is party to other claims and
litigations which its counsel has advised are not probable of
adverse court decisions. Although, the amounts of potential
losses, if any, are not presently determinable, it is the State's
opinion that its ultimate liability in these cases is not expected
to have a material adverse effect on the State's financial position
in the 1996-97 fiscal year or thereafter.
Other Localities. Certain localities in addition to the City
could have financial problems leading to requests for additional
State assistance during the State's 1996-97 fiscal year and
thereafter. The potential impact on the State of such actions by
localities is not included in the projections of the State receipts
and disbursements in the State's 1996-97 fiscal year.
Fiscal difficulties experienced by the City of Yonkers
("Yonkers") resulted in the creation of the Financial Control Board
for the City of Yonkers (the "Yonkers Board") by the State in 1984.
The Yonkers Board is charged with oversight of the fiscal affairs
of Yonkers. Future actions taken by the Governor or the State
Legislature to assist Yonkers could result in increased State
expenditures for extraordinary local assistance.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks.
When-Issued and Delayed Delivery Transactions. The Fund
may purchase and sell Municipal Securities (up to 20% of the net
assets of the Fund) on a when-issued or delayed delivery basis.
When-issued and delayed delivery transactions arise when securities
are purchased or sold with payment and delivery beyond the regular
settlement date. When-issued and delayed delivery transactions
normally settle within 120 days. In such transactions, the payment
obligation and the interest rate are fixed at the time the buyer
enters into the commitment. The Fund will maintain, in a
segregated account with the custodian of the Fund, liquid assets of
any type, including equity and debt securities of any grade, having
an aggregate value equal to the amount of such payment obligation
until payment is made. The commitment to purchase securities on a
when-issued or delayed delivery basis may involve an element of
risk because the value of the securities is subject to market
fluctuation; the value at delivery may be more or less than the
purchase price. Since the Fund relies on the buyer or seller, as
the case may be, to consummate the transaction, failure by the
other party to complete the transaction may result in the Fund
missing the opportunity of obtaining a price or yield considered to
be advantageous. No interest accrues to the purchaser prior to
settlement of the transaction, and at the time of delivery the
market value may be less than cost.
Financial Futures and Options Transactions. The Fund may
attempt to hedge all or a portion of its investment portfolio
against market risk by engaging in transactions in financial
futures contracts or options on financial futures, including
options that either are based on an index of long-term Municipal
Securities or relate to debt securities whose prices are
anticipated by the Adviser to correlate with the prices of the
Municipal Securities owned by the Fund. To accomplish such
hedging, the Fund may take a position in a futures contract or in
an option which is expected to move in the opposite direction from
the position being hedged. The use of futures and options for
hedging purposes can be expected to result in taxable income to the
shareholders of the Fund.
The sale of financial futures or the purchase of put options
on financial futures or on debt securities or indexes is a means of
hedging against the risk of rising interest rates, whereas the
purchase of financial futures or of call options on financial
futures or on debt securities or indexes is a means of hedging the
Fund's portfolio against an increase in the price of securities the
Fund intends to purchase. Writing a call option on a futures
contract or on debt securities or indexes may serve as a hedge
against a modest decline in prices of Municipal Securities held in
the Fund's portfolio, and writing a put option on a futures
contract or on debt securities or indexes may serve as a partial
hedge against an increase in the value of Municipal Securities the
Fund intends to acquire.
A futures contract is a contract between a seller and a buyer
for the sale and purchase of specified property at a specified
future date for a specified price. An option is a contract that
gives the holder of the option the right, but not the obligation,
to buy (in the case of a call option) specified property from, or
to sell (in the case of a put option) specified property to, the
writer of the option for a specified price during a specified
period prior to the option's expiration. Financial futures
contracts and options cover specified debt securities (such as U.S.
Treasury securities) or indexes designed to correlate with price
movements in certain categories of debt securities. On at least
one exchange, futures contracts trade on an index designed to
correlate with the long-term municipal bond market. Financial
futures contracts and options on financial futures contracts are
traded on exchanges regulated by the Commodity Futures Trading
Commission ("CFTC"). Options on certain financial instruments and
financial indexes are traded in securities markets regulated by the
Securities and Exchange Commission. Although futures contracts and
options on specified financial instruments call for settlement by
delivery of the financial instruments covered by the contracts, in
most cases positions in these contracts are closed out by entering
into offsetting liquidating or closing transactions. Index futures
and options are designed for cash settlement only.
There are certain risks associated with the use of financial
futures and options to hedge investment portfolios. There may be
imperfect correlation between price movements of the portfolio
securities being hedged and the hedging positions. Losses may be
incurred in hedging transactions, which could reduce the portfolio
gains that might have been realized if the hedging transaction had
not been entered into. The ability to close out positions in
futures and options depends upon the existence of a liquid market,
which may not exist for all futures and options at all times. If
the Fund engages in futures transactions or in the writing of
options on futures, it will be required to maintain initial margin
and variation margin in accordance with applicable rules of the
exchanges and the CFTC. If the Fund purchases a financial futures
contract or a call option or writes a put option in order to hedge
the anticipated purchase of Municipal Securities, and if the Fund
fails to complete the anticipated purchase transaction, the Fund
may experience a loss or a gain on the futures or options
transaction that will not be offset by price movements in the
Municipal Securities that were the subject of the anticipatory
hedge. The cost of purchasing options on debt securities or
indexes effectively increases the cost of the securities subject to
them, thereby reducing the yield otherwise available from such
securities.
Although certain risks are involved in futures and options
transactions, because these transactions will be engaged in by the
Fund only for hedging purposes, these futures and options portfolio
strategies should not subject the Fund to those risks frequently
associated with speculation in futures or options transactions.
Regulations of the CFTC applicable to the Fund require that
transactions in futures and options on futures be engaged in only
for bona-fide hedging purposes, and that no such transactions may
be entered into by the Fund if the aggregate initial margin
deposits and premiums paid by the Fund exceed 5% of the market
value of its assets. In addition, the Fund is subject to the tax
requirement that it derive less than 30% of its gross income from
the sale or other disposition of securities held for less than
three months. With respect to its engaging in transactions
involving the purchase or writing of put and call options on debt
securities or indexes, the Fund will not purchase such options if
more than 5% of its assets would be invested in the premiums for
such options, and it will only write "covered" or "secured"
options, wherein the securities or cash required to be delivered
upon exercise are held by the Fund, with such cash being maintained
in a segregated account. These requirements and limitations may
limit the Fund's ability to engage in hedging transactions.
Repurchase Agreements. As temporary investments, the Fund
may invest in repurchase agreements. A repurchase agreement is a
contractual agreement whereby the seller of securities (U.S.
Government obligations or Municipal Securities) agrees to
repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed-upon repurchase price
determines the yield during the Fund's holding period. Repurchase
agreements are considered to be loans under the 1940 Act
collateralized by the underlying security that is the subject of
the repurchase contract. Income generated from transactions in
repurchase agreements will be taxable. The Fund will only enter
into repurchase agreements with registered securities dealers or
domestic banks that, under Board approved procedures, present
minimal credit risk. The risk to the Fund is limited to the
ability of the seller to pay the agreed-upon repurchase price on
the delivery date. The value of the underlying collateral at the
time a repurchase agreement is entered into always equals or
exceeds the agreed-upon repurchase price; however, in the event of
default and the sale of the collateral, the Fund might incur a loss
if the value of the collateral declines, and might incur
disposition costs or experience delays in connection with
liquidating the collateral. The Adviser will monitor the value of
the collateral at the time the transaction is entered into and at
all times subsequent during the term of the repurchase agreement in
an effort to determine that the value always equals or exceeds the
agreed-upon repurchase price. In the event the value of the
collateral declines below the repurchase price, the Adviser will
demand additional collateral from the seller to increase the value
of the collateral to at least that of the repurchase price.
Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Directors, the
Adviser determines the liquidity of certain of the Fund's
investments. Investments may be illiquid because of the absence of
an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered under the
Securities Act of 1933. The Fund will not invest more than 10% of
its net assets in illiquid or restricted securities (The Board may
increase that limit to to 15%.) The Fund's percentage limitation
on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers. The Adviser monitors holdings of illiquid securites on
an ongoing basis and at times the Fund may be required to sell some
holdings to maintain adequate liquidity.
Other Investment Restrictions. The Fund has adopted the following
investment restrictions, which together with its investment
objectives, are fundamental policies changeable only with the
approval of the holders of a "majority" of the Fund's outstanding
voting securities, defined in the 1940 Act as the affirmative vote
of the lesser of (a) more than 50% of the outstanding Shares of the
Fund, or (b) 67% or more of the Shares present or represented by
proxy at a meeting if more than 50% of the Fund's outstanding
Shares are represented at the meeting in person or by proxy. Under
these restrictions, the Fund will not do any of the following:
1. The Fund will not issue senior securities as defined in
the Investment Company Act of 1940 (the "1940 Act"), except to the
extent such issuance might be involved with respect to borrowings
described under subparagraph (3) below or with respect to
transactions involving futures contracts or the writing of options
within the limits described herein;
2. The Fund will not make short sales of securities or
purchase any securities on margin (except for such short-term
credits as are necessary for the clearance of transactions), or
write or purchase put or call options, except to the extent that
the purchase of a stand-by commitment may be considered the
purchase of a put, and except for transactions involving options
within the limits described herein;
3. The Fund will not borrow money, except from banks for
temporary or emergency purposes or for repurchase of its shares,
and then only in an amount not exceeding one-third of the value of
the Fund's total assets including the amount borrowed. While any
such borrowings exceed 5% of the Fund's total assets, no additional
purchases of investment securities will be made;
4. The Fund will not underwrite any issue of securities,
except to the extent that the purchase of Municipal Securities in
accordance with its investment objectives, policies and limitations
may be deemed to be an underwriting;
5. The Fund will not invest more than 25% of its total
assets in securities of issuers in any one industry; provided,
however, that such limitations shall not be applicable to Municipal
Securities issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
6. The Fund will not purchase or sell real estate, but this
shall not prevent the Fund from investing in Municipal Securities
secured by real estate or interests therein;
7. The Fund will not purchase or sell commodities or
commodities contracts, except for transactions involving futures
contracts within the limits described herein;
8. The Fund will not make loans, other than by entering into
repurchase agreements and through the purchase of Municipal
Securities or temporary investments in accordance with its
investment objectives, policies and limitations;
9. The Fund will not invest in securities other than New
York Municipal Securities and temporary investments, as those terms
are defined herein;
10. The Fund will not invest more than 5% of its total assets
in securities of any one issuer, except that this limitation shall
not apply to securities of the U.S. Government, its agencies and
instrumentalities or to the investment of 25% of its total assets;
11. The Fund will not pledge, mortgage or hypothecate its
assets, except that, to secure borrowings permitted by subparagraph
(3) above, it may pledge securities having a market value at the
time of pledge not exceeding 20% of the value of the Fund's total
assets;
12. The Fund will not invest more than 10% of its total
assets in repurchase agreements maturing in more than seven days;
or
13. The Fund will not purchase or retain the securities of
any issuer other than the securities of the Fund if, to the Fund's
knowledge, those directors of the Fund, or those officers and
directors of the Adviser, who individually own beneficially more
than 1/2 of 1% of the outstanding securities of such issuer,
together own beneficially more than 5% of such outstanding
securities.
For the purpose of applying the limitation set forth in
subparagraph (10) above, an issuer shall be deemed a separate
issuer when its assets and revenues are separate from other
governmental entities and its securities are backed only by its
assets and revenues. Similarly, in the case of a non-governmental
user, such as an industrial corporation or a privately owned or
operated hospital, if the security is backed only by the assets and
revenues of the non-governmental user then such non-governmental
user would be deemed to be the sole issuer. Where a security is
also backed by the enforceable obligations of a superior
governmental entity, it shall be included in the computation of
securities owned that are issued by such superior governmental
entity. If, however, a security is guaranteed by a governmental
entity or some other entity, such as a bank guarantee or letter of
credit, such a guarantee or letter of credit would be considered a
separate security and would be treated as an issue of such
government, other entity or bank. Unless the prospectus states that
a percentage restriction applies on an ongoing basis, it applies
only at the time the Fund makes an investment, and the Fund need
not sell securities to meet the percentage limits if the value of
the investment increases in proportion to the size of the Fund.
5. The shares of the Fund's common stock (the "Shares") are
listed and traded on the American Stock Exchange (the "AMEX"). The
following table sets forth for the Shares for the periods
indicated: (a) the per Share high sales price on the AMEX, the net
asset value per share as of such day and the premium or discount
(expressed as a percentage of net asset value) represented by the
difference between such high sales price and the corresponding net
asset value, (b) the per Share low sales price on the AMEX, the net
asset value per Share as of such day and the premium or discount
(expressed as a percentage of net asset value) represented by the
difference between such low sales price and the corresponding net
asset value.
<TABLE>
<CAPTION>
Market Price High;(1) Market Price Low; (1)
NAV and Premium/ NAV and Premium/
Quarter Ended (Discount) That Day (2) (Discount) That Day (2)
<S> <C> <C>
1/31/95 Market: $9.50 Market:$8.88
NAV:$9.33 NAV:$9.04
Premium/(Discount): 1.82% Premium/(Discount):(1.77)%
4/30/95 Market: $10.00 Market:$9.25
NAV:$9.69 NAV:$9.35
Premium/(Discount): 3.20% Premium/(Discount):(1.07)%
7/31/95 Market: $10.50 Market:$9.44
NAV:$9.85 NAV:$9.64
Premium/(Discount): 6.60% Premium/(Discount):(2.07)%
10/31/95 Market: $10.25 Market:$9.50
NAV:$9.82 NAV:$9.60
Premium/(Discount): 4.38% Premium/(Discount):(1.04)%
1/31/96 Market: $10.50 Market:$9.63
NAV:$9.96 NAV:$9.78
Premium/(Discount): 5.42% Premium/(Discount):(1.53)%
4/30/96 Market: $10.50 Market:$9.38
NAV:$9.96 NAV:$9.54
Premium/(Discount): 5.42% Premium/(Discount):(1.68)%
7/31/96 Market: $10.00 Market:$9.31
NAV:$9.64 NAV:$9.51
Premium/(Discount):3.73% Premium/(Discount):(2.10)%
10/31/96 Market: $10.50 Market:$9.75
NAV:$9.74 NAV:$9.59
Premium/(Discount): 7.80% Premium/(Discount):1.67%
1/31/97 Market: $10.75 Market:$9.75
NAV:$9.76 NAV:$9.64
Premium/(Discount):10.14% %Premium/(Discount):1.14%
- -----------------
1. As reported by the AMEX.
</TABLE>
2. The Fund's computation of net asset value (NAV) is as of the
close of trading on the last day of the week immediately
preceding the day for which the high and low market price is
reported and the premium or discount (expressed as a
percentage of net asset value) is calculated based on the
difference between the high or low market price and the
corresponding net asset value for that day, divided by the net
asset value.
The Board of Directors of the Fund has determined that it may
be in the interests of Fund shareholders for the Fund to take
action to attempt to reduce or eliminate a market value discount
from net asset value. To that end, the Fund may, from time to
time, either repurchase Shares in the open market or, subject to
conditions imposed from time to time by the Board, make a tender
offer for a portion of the Fund's Shares at their net asset value
per Share. Subject to the Fund's fundamental policy with respect
to borrowings, the Fund may incur debt to finance repurchases
and/or tenders. Interest on any such borrowings will reduce the
Fund's net income. In addition, the acquisition of Shares by the
Fund will decrease the total assets of the Fund and therefore will
have the effect of increasing the Fund's expense ratio. If the
Fund must liquidate portfolio securities to purchase Shares
tendered, the Fund may be required to sell portfolio securities for
other than investment purposes and may realize gains and losses.
Gains realized on securities held for less than three months may
affect the Fund's ability to retain its status as a regulated
investment company under the Internal Revenue Code.
In addition to open-market Share purchases and tender offers,
the Board could also seek shareholder approval to convert the Fund
to an open-end investment company if the Fund's Shares trade at a
substantial discount. If the Fund's Shares have traded on the AMEX
at an average discount from net asset value of more than 10%,
determined on the basis of the discount as of the end of the last
trading day in each week during the period of 12 calendar weeks
ending October 31 in such year, the Directors will consider
recommending to shareholders a proposal to convert the Fund to an
open-end company. If during a year in which the Fund's Shares
trade at the average discount stated, and for the period described,
in the preceding sentence the Fund also receives written requests
from the holders of 10% or more of the Fund's outstanding Shares
that a proposal to convert to an open end company be submitted to
the Fund's shareholders, within six months the Directors will
submit a proposal to the Fund's shareholders, to the extent
consistent with the 1940 Act, to amend the Fund's Articles of
Incorporation to convert the Fund from a closed-end to an open-end
investment company. If the Fund converted to an open-end
investment company, it would be able continuously to issue and
offer its Shares for sale, and each Share of the Fund could be
tendered to the Fund for redemption at the option of the
shareholder, at a redemption price equal to the current net asset
value per Share. To meet such redemption request, the Fund could
be required to liquidate portfolio securities. Its Shares would no
longer be listed on the AMEX. The Fund cannot predict whether any
repurchase of Shares made while the Fund is a closed-end investment
company would decrease the discount from net asset value at which
the Shares trade. To the extent that any such repurchase decreased
the discount from net asset value to an amount below 10% during the
measurement period described above, the Fund would not be required
to submit to shareholders a proposal to convert the Fund to an
open-end investment company.
Item 9. Management.
1(a). The Fund is governed by a Board of Directors, which is
responsible under Minnesota law for protecting the interests of
shareholders. The Board of Directors is comprised of three classes
of directors which are elected for three year staggered terms. The
Directors meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions
of the Adviser. The Fund is required to hold annual shareholder
meetings for the election of directors and the ratification of its
independent auditors. The Fund may also hold shareholder meetings
from time to time for other important matters, and shareholders
have the right to call a meeting to remove a Director or to take
other action described in the Fund's Articles of Incorporation.
1(b). The Adviser, a Colorado corporation with its principal
offices at Two World Trade Center, New York, New York 10048-0203,
acts as investment manager for the Fund under an investment
advisory agreement (the "Advisory Agreement") under which it
provides ongoing investment advice and conducts the investment
operations of the Fund, including purchases and sales of its
portfolio securities, under the general supervision and control of
the Directors of the Fund. On January 5, 1996, the Adviser changed
its name from Oppenheimer Management Corporation to
OppenheimerFunds, Inc.
The Adviser has operated as an investment company adviser
since April 30, 1959. It and its affiliates currently advise U.S.
investment companies with assets aggregating over $62 billion as of
December 31, 1996, and having more than 3 million shareholder
accounts. The Adviser is owned by Oppenheimer Acquisition Corp.
("OAC"), a holding company owned in part by senior management of
the Adviser, and ultimately controlled by Massachusetts Mutual Life
Insurance Company, a mutual life insurance company that also
advises pension plans and investment companies.
The Adviser provides office space and investment advisory
services for the Fund and pays all compensation of those Directors
and officers of the Fund who are affiliated persons of the Adviser.
Under the Advisory Agreement, the Fund pays the Adviser monthly an
advisory fee at the rate of .50% per annum computed on the average
weekly net assets of the Fund. During the fiscal years ended
October 31, 1994, 1995 and 1996, the Fund paid management fees to
the Adviser in the amounts of $118,617, $115,784 and $119,243,
respectively. The Fund incurred approximately $23,212, $26,135 and
$25,635 in expenses for the fiscal years ended October 31, 1994,
1995 and 1996, respectively for services provided by Shareholder
Financial Services, Inc., the Fund's transfer agent.
Under the Advisory Agreement, the Fund pays certain of its
other costs not paid by the Adviser, including (a) brokerage and
commission expenses, (b) Federal, state, local and foreign taxes,
including issue and transfer taxes, incurred by or levied on the
Fund, (c) interest charges on borrowings, (d) the organizational
and offering expenses of the Fund, whether or not advanced by the
Adviser, (e) fees and expenses of registering the Shares of the
Fund under the appropriate Federal securities laws and of
qualifying Shares of the Fund under applicable state securities
laws, (f) fees and expenses of listing and maintaining the listings
of the Fund's Shares on any national securities exchange, (g)
expenses of printing and distributing reports to shareholders, (h)
costs of shareholder meetings and proxy solicitation, (i) charges
and expenses of the Fund's custodian and Registrar, Transfer and
Dividend Disbursing Agent, (j) compensation of the Fund's Directors
who are not affiliated persons of the Adviser, (k) legal and
auditing expenses, (l) the cost of certificates representing the
Fund's Shares, (m) costs of stationery and supplies, and (n)
insurance premiums.
Beginning February 16, 1990, the Adviser began performing
limited accounting services for the Fund at an annual fee of
$12,000, plus out-of-pocket costs and expenses reasonably incurred
for acting as such accounting agent.
1(c). The Portfolio Manager of the Fund is Robert E.
Patterson, who also serves as Vice President of the Fund and Senior
Vice President of the Adviser. Mr. Patterson has been the person
principally responsible for the day-to-day management of the Fund's
portfolio since February, 1992. During the past five years, Mr.
Patterson has served as an officer of other Oppenheimer funds.
1(d). Inapplicable.
1(e). Citibank, N.A., 399 Park Avenue, New York, New York,
acts as the custodian (the "Custodian") for the Fund's assets held
in the United States. Rules adopted under the 1940 Act permit the
Fund to maintain its securities and cash in the custody of certain
eligible banks and securities depositories. The Adviser and its
affiliates presently have banking relationships with the Custodian.
The Adviser has represented to the Fund that its banking
relationships with the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund
and the Custodian. It will be the practice of the Fund to deal
with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Adviser and its
affiliates.
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.
United Missouri Trust Company of New York acts as co-transfer agent
and co-registrar with SFSI to provide such services as SFSI may
request.
1(f). See Item 10. Part 1, below.
1(g). Inapplicable.
2. Inapplicable.
3. As of January 31, 1997, no person owned of record or was
known by the Fund to own beneficially 25% or more of the
outstanding Shares except:
Item 10. Capital Stock, Long-Term Debt, and Other Securities.
1. The Fund was incorporated in Minnesota on August 10, 1987.
Its authorized capital stock consists of a single class of
250,000,000 shares of Common Stock, par value $.01 per share. All
shares have equal noncumulative voting rights and equal rights with
respect to dividends, assets and liquidation. Shares are fully
paid and non-assessable when issued and have no pre-emptive,
conversion or exchange rights.
Pursuant to the Fund's Dividend Reinvestment and Cash Purchase
Plan (the "Plan"), all dividends and capital gains distributions
("Distributions") declared by the Fund will be automatically
reinvested in additional full and fractional shares of the Fund
("Shares") unless (i) a shareholder elects to receive cash or (ii)
Shares are held in nominee name, in which event the nominee should
be consulted as to participation in the Plan. Shareholders that
participate in the Plan ("Participants") may, at their option, make
additional cash investments in Shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services,
Inc., the agent for the Plan (the "Agent"), and a service fee of
$.75.
Depending upon the circumstances hereinafter described, Plan
Shares will be acquired by the Agent for the Participant's account
through receipt of newly issued Shares or the purchase of
outstanding Shares on the open market. If the market price of
Shares on the relevant date (normally the payment date) equals or
exceeds their net asset value, the Agent will ask the Fund for
payment of the Distribution in additional Shares at the greater of
the Fund's net asset value determined as of the date of purchase
or 95% of the then-current market price. If the market price is
lower than net asset value, the Distribution will be paid in cash,
which the Agent will use to buy Shares on the American Stock
Exchange (the "AMEX"), or otherwise on the open market to the
extent available. If the market price exceeds the net asset value
before the Agent has completed its purchases, the average purchase
price per Share paid by the Agent may exceed the net asset value,
resulting in fewer Shares being acquired than if the Distribution
had been paid in Shares issued by the Fund.
Participants may elect to withdraw from the Plan at any time
and thereby receive cash in lieu of Shares by sending appropriate
written instructions to the Agent. Elections received by the Agent
will be effective only if received more than ten days prior to the
record date for any Distribution; otherwise, such termination will
be effective shortly after the investment of such Distribution with
respect to any subsequent Distribution. Upon withdrawal from or
termination of the Plan, all Shares acquired under the Plan will
remain in the Participant's account unless otherwise requested.
For full Shares, the Participant may either: (1) receive without
charge a share certificate for such Shares; or (2) request the
Agent (after receipt by the Agent of signature guaranteed
instructions by all registered owners) to sell the Shares acquired
under the Plan and remit the proceeds less any brokerage
commissions and a $2.50 service fee. Fractional Shares may either
remain in the Participant's account or be reduced to cash by the
Agent at the current market price with the proceeds remitted to the
Participant. Shareholders who have previously withdrawn from the
Plan may rejoin at any time by sending written instructions signed
by all registered owners to the Agent.
There is no direct charge for participation in the Plan; all
fees of the Agent are paid by the Fund. There are no brokerage
charges for Shares issued directly by the Fund. However, each
Participant will pay a pro rata share of brokerage commissions
incurred with respect to open market purchases of Shares to be
issued under the Plan. Participants will receive tax information
annually for their personal records and to assist in Federal income
tax return preparation. The automatic reinvestment of
Distributions does not relieve Participants of any income tax that
may be payable on Distributions.
The Plan may be terminated or amended at any time upon 30
days' prior written notice to Participants which, with respect to
a Plan termination, must precede the record date of any
Distribution by the Fund. Additional information concerning the
Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial
Services, Inc., P.O. Box 173673, Denver, CO, 80217-3673 or by
calling 1-800-647-7374. Shareholders holding Shares in nominee
name should contact their brokerage firm or other nominee for more
information.
The Fund presently has provisions in its Articles of
Incorporation and By-Laws (together, the "Charter Documents") which
could have the effect of limiting (i) the ability of other entities
or persons to acquire control of the Fund, (ii) the Fund's freedom
to engage in certain transactions or (iii) the ability of the
Fund's Directors or shareholders to amend the Charter Documents or
effect changes in the Fund's management. Those provisions of the
Charter Documents may be regarded as "anti-takeover" provisions.
Specifically, under the Fund's Articles of Incorporation, the
affirmative vote of the holders of not less than two thirds (66-
2/3%) of the Fund's Shares outstanding and entitled to vote is
required to authorize the consolidation of the Fund with another
entity, a merger of the Fund with or into another entity, a sale or
transfer of all or substantially all of the Fund's assets, the
dissolution of the Fund, the conversion of the Fund to an open-end
company, and any amendment of the Fund's Articles of Incorporation
that would affect any of the other provisions requiring a two-
thirds vote. Reference is made to the Charter Documents of the
Fund, on file with the Securities and Exchange Commission, for the
full text of these provisions.
2. Inapplicable.
3. Inapplicable.
4. The Fund qualified for treatment as, and elected to be, a
regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code for its taxable year ended October 31, 1996,
and intends to continue to qualify as a RIC for each subsequent
taxable year. However, the Fund reserves the right not to qualify
under Subchapter M as a RIC in any year or years. For each taxable
year that the Fund qualifies for treatment as a RIC, the Fund (but
not its shareholders) will not be required to pay Federal income
tax. In addition, the Fund intends to invest in sufficient
Municipal Securities so that it will qualify to pay "exempt-
interest dividends" (as defined in the Code) to shareholders; the
dividends payable from net tax-exempt interest earned from
Municipal Securities will qualify as exempt-interest dividends if,
at the close of each quarter of the taxable year of the Fund, at
least 50% of the value of the Fund's total assets consists of
Municipal Securities, the interest on which is excludible from
gross income under Section 103(a) of the Code, and the Fund
designates such dividends as exempt-interest dividends in a written
notice mailed to shareholders within sixty days of the end of the
Fund's taxable year.
Exempt-interest dividends distributed to shareholders are not
subject to federal income tax except to the extent such interest is
subject to the alternative minimum tax, as discussed hereinafter.
The percentage of income that is tax-exempt is applied uniformly to
all income distributions made during each fiscal year and thus is
an annual average for the Fund rather than a day-by-day
determination for each shareholder whether such distributions are
received in shares or in cash. The percentage of all distributions
other than exempt-interest dividends paid by the Fund, including
distributions from interest on taxable investments and net realized
short-term capital gains, will be taxable to the shareholders as
ordinary income. Any distribution of net realized long-term
capital gains will generally be subject to Federal taxation as
long-term capital gains, regardless of the length of time the
investor has held such shares. In the case of distributions
received in cash or reinvested in shares purchased on the open
market, the amount of the distribution for tax purposes will be the
amount of cash distributed or allocated to the shareholder, and the
tax basis of any shares purchased will be the price paid by the
Plan Agent. In the case of distributions made in shares issued by
the Fund, the amount of the distribution will be the fair market
value of the shares on the payment date, and the tax basis of the
shares received will be the same amount.
Although dividends generally will be treated as distributed
when paid, dividends declared in October, November or December,
payable to shareholders of record on a specified date in one of
those months and paid during January of the following year will be
treated as having been distributed by the Fund (and received by the
shareholders) on December 31 of the year such dividends are
declared.
For both individuals and corporations, interest paid on
certain "private activity bonds" issued on or after August 8, 1986
shall be treated as an item of tax preference and may, therefore,
be subject to the alternative minimum tax. Under regulations to be
issued by the Secretary of the Treasury, exempt-interest dividends
paid by the Fund will be treated by shareholders as interest on
"private activity bonds" to the extent of the proportionate amount
of interest on private activity bonds received by the Fund. Such
exempt-interest dividends constitute a tax preference for both
individual and corporate taxpayers in computing the alternative
minimum tax.
Exempt-interest dividends received by a shareholder which are
not with respect to "private activity bonds" are not treated as a
tax preference item. However, for certain corporate shareholders
such dividends will be included in the computation of an adjustment
item used in determining such corporation's alternative minimum tax
and the environmental tax (the "Superfund Tax"). The adjustment
item is 75% of the difference between such corporate shareholder's
"adjusted current earnings" and its other alternative minimum
taxable income with certain adjustments. Although exempt-interest
dividends received by a corporate shareholder will not be included
in the gross income of such corporation for Federal income tax
purposes, "adjusted current earnings" includes all tax-exempt
interest, including exempt-interest dividends received from the
Fund. Corporate shareholders are advised to consult their tax
advisers with respect to the tax consequences of the alternative
minimum tax and the Superfund Tax.
Sales of shares of the Fund by shareholders will generally be
a taxable transaction for Federal income tax purposes and such
shareholders will recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received.
Assuming that shareholders hold such shares as a capital asset, the
gain or loss will be a capital gain or loss and will be long-term
if shareholders have held such shares for a period of more than one
year. The loss on shares held six months or less will be a long-
term capital loss to the extent any long-term capital gain
distribution is made with respect to such shares during the period
the shareholder owns the shares. In the case of shareholders
holding shares of the Fund for six months or less and subsequently
selling those shares at a loss after receiving an exempt-interest
dividend, the loss will be disallowed to the extent of the exempt-
interest dividends received. In addition, no loss will be
recognized on the sale or other disposition of shares if the
shareholder acquires (through the reinvestment in shares of the
Fund or otherwise), or enters into a contract or option to acquire,
shares within 30 days before or after the disposition.
In the case of corporations, the tax rate generally applicable
to long-term capital gains is 34%. Federal tax legislation has
been proposed from time to time that may reinstate the preferential
treatment of capital gains. It is not known whether any such
legislation will be enacted into law. All taxpayers will be
required to disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
The Fund's hedging activities and transactions in options,
futures contracts and forward contracts will be subject to special
tax rules, the effect of which may be to accelerate income to the
Fund, defer Fund losses, cause adjustments in the holding period of
Fund securities and convert short term capital losses into long
term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Recognition of unrealized gains by the Fund under the "mark to
market" rules of the Code may increase the difficulty of compliance
with requirements which must be met in order for the Fund to
continue to qualify as a regulated investment company, thus
requiring the Fund to limit its hedging activities. In order to
qualify as a regulated investment company, the Fund must derive
less than 30% of its annual gross income in the fiscal year from
the sale or other disposition of securities held less than three
months. Accordingly, the Fund will limit its activities in
options, futures contracts, forward contracts and certain other
transactions to the extent necessary to comply with this
requirement. Moreover, the Fund's hedging activities may produce
a difference between its book income and its taxable income.
Distributions from the Fund will not be eligible for the
dividends received deduction for corporations.
The Fund is required by law to withhold 31% of taxable
dividends, distributions and redemptions paid to investors who do
not furnish to the Fund their correct taxpayer identification
number (in the case of individuals, their social security number)
and in certain other circumstances.
Currently, up to 85% of a social security recipient's benefits
may be included in taxable income for a benefit recipient if the
sum of his adjusted gross income, income from tax-exempt sources
such as tax-exempt bonds and the Fund plus 50% of his social
security benefits received exceeds certain base amounts. Income
from the Fund is still tax-exempt to the extent described above; it
is only included in the calculation of whether a recipient's income
exceeds certain established amounts.
Interest on indebtedness which is incurred to purchase or
carry shares of the Fund, regardless of whether such borrowing is
directly traceable to the purchase or carrying of shares of the
Fund, is not deductible for federal income tax purposes. Further,
the Fund may not be an appropriate investment for persons who are
"substantial users" of facilities financed by industrial
development bonds or private activity bonds held by the Fund or are
"related persons" to such users, as such terms are defined by the
Code; such persons should consult their tax advisers before
investing in the Fund.
Ownership of shares of the Fund may result in collateral
federal income tax consequences to certain taxpayers, including,
without limitation, corporations subject to the branch profits tax,
financial institutions, certain insurance companies, and certain S
corporations. Prospective purchasers of the shares should consult
their tax advisors as to applicability of any such collateral
consequences.
The foregoing is a general abbreviated summary of the
provisions of the Code and Treasury Regulations presently in effect
as they directly govern the taxation of the Fund and its
shareholders. These provisions are subject to change by
legislative or administrative action, and any such change may be
retroactive with respect to Fund transactions. Shareholders are
advised to consult with their own tax advisers for more detailed
information concerning federal income tax matters.
Individual shareholders of the Fund who are subject to New
York State (and New York City) personal income taxation will not be
required to include in adjusted gross income for New York State
(and New York City) purposes that portion of the Fund's federally
tax-exempt dividends which are identified by the Fund as directly
attributable to interest earned on the New York Municipal
Securities. Fund dividends, including the federally tax-exempt
portion thereof, which are attributable to interest on Municipal
Securities other than New York Municipal Securities, including
interest on obligations of other states or federal obligations, if
any, would be taxed as dividends to individual shareholders for
purposes of New York State (and New York City) personal income
taxation.
Individual shareholders who are subject to New York State (and
New York City) personal income taxation will also be taxed at rates
applicable to other income on distributions of long or short-term
capital gains of the Fund. In addition, for New York State (and
New York City) tax purposes, an individual shareholder will
recognize a taxable long or short-term capital gain or loss in any
year in which such shareholder's shares are sold. Generally,
capital losses are subject to the same limits on deductibility for
New York State (and New York City) purposes as they are for Federal
income tax purposes. Thus, for New York State (and New York City)
income tax purposes, as for Federal income tax purposes, no capital
loss will be allowed on the sale or exchange of shares held for six
months or less up to the amount of exempt-interest dividends
received with respect to such shares.
Generally, corporate shareholders of the Fund which are
subject to New York State franchise taxation (and New York City
general corporation taxation) are subject to a tax computed on the
basis of entire net income allocated to New York, business and
investment capital allocated to New York, minimum taxable income
allocated to New York (entire net income plus certain salaries for
New York City purposes), or a flat rate minimum, whichever produces
the greater tax, plus a tax based on subsidiary capital. The
entire net income and minimum taxable income of a corporate
shareholder will include dividends received from the Fund and
investment capital of such a shareholder will include its stock
interest in the Fund, without any exclusion for dividends
attributable to interest on New York Municipal Securities or for
the portion of the Fund's assets attributable to such New York
Municipal Securities. Corporate shareholders that are subject to
the metropolitan commuter transportation district surcharge will
also be required to pay a tax surcharge on the franchise taxes
imposed by New York State with respect to Fund dividends and
capital gain distributions and gain from the sale or exchange of
Fund shares.
Although shareholders of the Fund will not be subject to New
York City unincorporated business taxation solely by reason of
their ownership of shares in the Fund, a shareholder who is subject
to the New York City unincorporated business tax must include
income and gains derived from the Fund in income subject to such
tax, except exempt-interest that is directly attributable to
interest on New York Municipal Securities.
Shares of the Fund will be exempt from local property taxes in
New York State and New York City.
5. The following information is provided as of January 31,
1997:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Amount Held Amount Outstanding
by Registrant Exclusive of
Amount or for its Amount Shown
Title of Class Authorized Account Under (3)
<S> <C> <C> <C>
Shares of Beneficial 250,000,000 None 2,480,900
Interest, $.01 par value
</TABLE>
Item 11. Defaults and Arrears on Senior Securities.
Inapplicable.
Item 12. Legal Proceedings.
Inapplicable.
Item 13. Table of Contents of the Statement of Additional
Information.
Reference is made to Item 15 of the Statement of Additional
Information.
<PAGE>
APPENDIX A
Descriptions 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.
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.
Corporate Debt
The "other debt securities" included in the definition of
temporary investments are corporate (as opposed to municipal) debt
obligations. The Moody's and S&P 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.
<PAGE>
The New York Tax-Exempt Income Fund, Inc.
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
Statement of Additional Information dated February 20, 1997
This Statement of Additional Information is not a Prospectus.
This document contains additional information about the Fund and
supplements information in the Prospectus dated February 20, 1997.
It should be read together with the Prospectus, and the
Registration Statement on Form N-2, of which the Prospectus and
this Statement of Additional Information are a part. These
materials can be inspected and copied at public reference
facilities maintained by the Securities and Exchange Commission
(the "SEC") in Washington, D.C. and certain of its regional
offices, and copies of such materials can be obtained at prescribed
rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C., 20549.
TABLE OF CONTENTS
Page
Investment Objective and Policies*
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Control Persons and Principal Holders of Securities. . . . . . . . . . . .6
Investment Advisory and Other Services*
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . .6
Tax Status*
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .7
______________________
*See Prospectus
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page.
Reference is made to the preceding page.
Item 15. Table of Contents.
Reference is made to the preceding page and to Items 16
through 23 of the Statement of Additional Information set forth
below.
Item 16. General Information and History.
Inapplicable.
Item 17. Investment Objective and Policies.
Reference is made to Item 8 of the Prospectus.
Item 18. Management.
Directors and Officers of the Fund. The Fund's Directors and
officers and their principal occupations and business affiliations
and occupations during the past five years are listed below. All
of the Directors are also trustees, directors or managing general
partners of Oppenheimer Total Return Fund, Inc., Oppenheimer Equity
Income Fund, Oppenheimer High Yield Fund, Oppenheimer Cash
Reserves, Oppenheimer Municipal Fund, Oppenheimer Limited-Term
Government Fund, Oppenheimer Champion Income Fund, Oppenheimer Main
Street Funds, Inc., Panorama Series Fund, Inc., Oppenheimer
Strategic Income Fund, Oppenheimer Strategic Income & Growth Fund,
Oppenheimer International Bond Fund, Oppenheimer Variable Account
Funds, and Oppenheimer Integrity Funds; as well as the following
"Centennial Funds": Centennial America Fund, L.P., Daily Cash
Accumulation Fund, Inc., Centennial Money Market Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial
Tax Exempt Trust and Centennial California Tax Exempt Trust, (all
of the foregoing funds are collectively referred to as the "Denver-
based Oppenheimer funds") except for Mr. Fossel and Ms. Macaskill,
who are Trustees, Directors or Managing General Partners of all
the Denver-based Oppenheimer funds except Oppenheimer Integrity
Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund,
Inc. and Oppenheimer Variable Account Funds (in addition, Mr.
Fossel is not a trustee of Centennial New York Tax-Exempt Trust or
a Managing General Partner of Centennial America Fund, L.P.). All
of the Fund's officers except Mr. Patterson are officers of the
Denver-based Oppenheimer funds. Ms. Macaskill is President and Mr.
Swain is Chairman and Chief Executive Officer of the Denver-based
Oppenheimer funds. As of January 31, 1997, the Directors and
officers of the Fund as a group owned less than 1% of each class of
shares of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for
employees of the Adviser (for which plan two officers of the Fund,
Bridget A. Macaskill and Andrew J. Donohue, are trustees), other
than the shares beneficially owned under that plan by officers of
the Fund listed above.
Robert G. Avis, Director;* Age 65
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and
A.G. Edwards, Inc. (its parent holding company); Chairman of A.G.E.
Asset Management and A.G. Edwards Trust Company (its affiliated
investment adviser and trust company, respectively).
William A. Baker, Director; Age 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Director; Age 66
1501 Quail Street, Newport Beach, California 92660
Chairman and Chief Executive Officer of Universal Space Lines, Inc.
(a space services management company); formerly Vice President of
McDonnell Douglas Space Systems Co. and associated with the
National Aeronautics and Space Administration.
Sam Freedman, Director; Age 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds
Services, Chairman, Chief Executive Officer and a director of
Shareholder Services, Inc.("SSI") and Chairman, Chief Executive
and Officer and director of Shareholder Financial Services,
Inc.("SFSI"), transfer agent subsidiaries of the Adviser, Vice
President and director of Oppenheimer Acquisition Corporation
("OAC"), the Adviser's parent holding company and a director of
OppenheimerFunds, Inc.
Jon S. Fossel, Director;* Age 54
Box 44-Mead Street, Waccabuc, New York 10597
Member of the Board of Governors of the Investment Company
Institute (a national 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 OAC, and SSI and SFSI, transfer agent subsidiaries of
the Adviser.
Raymond J. Kalinowski, Director; Age 67
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer
products training company); 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.
C. Howard Kast, Director; Age 75
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Director; Age 75
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
- -----------------------
* A Director who is an "interested person" of the Fund as defined
in the Investment Company Act.
Ned M. Steel, Director; Age 81
3416 S. Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting
Nurse Corporation of Colorado; formerly Senior Vice President and
a Director of Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman, Chief Executive Officer and Director;*
Age 63
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Adviser; formerly President and a Director of
Centennial Asset Management Corporation, an investment adviser
subsidiary of the Adviser ("Centennial"); a director of the Adviser
and Chairman of the Board of SSI.
Bridget A. Macaskill, President and Director;* Age 48
President, Chief Executive Officer and a Director of the Adviser
and HarbourView Asset Management Corporation ("HarbourView") (a
subsidiary of the Adviser); Chairman and a Director of SSI and
SFSI, President and a Director of OAC 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.
Andrew J. Donohue, Vice President and Secretary; Age 46
Executive Vice President and General Counsel of OppenheimerFunds,
Inc. (the "Adviser") and OppenheimerFunds Distributor, Inc. (the
"Distributor"); President and a director of Centennial; Executive
Vice President, General Counsel and a director of HarbourView, SSI,
SFSI, and Oppenheimer Partnership Holdings, Inc.; President and
director of Oppenheimer Real Asset Management, Inc.; General
Counsel of OAC; Executive Vice President, Chief Legal Officer 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 the Distributor;
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 the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and
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.; an officer of other
Oppenheimer funds.
Robert E. Patterson, Vice President and Portfolio Manager; Age 53
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Adviser; an officer of other
Oppenheimer funds.
- -------------------------
* A Director who is an "interested person" of the Fund as defined
in the Investment Company Act.
Robert G. Zack, Assistant Secretary; Age 48
Two World Trade Center, New York, New York 10048-0203
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; formerly a Fund Controller of the Adviser,
prior to which he was an Accountant for Yale & Seffinger, P.C., and
previously an Accountant and Commissions Supervisor for Stuart
James Company Inc., a broker-dealer.
Scott 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; formerly a Fund Controller for the
Adviser.
Remuneration of Directors. 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 fees 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 from the Fund. 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-based Oppenheimer funds includes the Fund
and is compensation received as a director, trustee, managing
general partner or member of a committee of the Board of those
funds during the calendar year 1996.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds1
<S> <C> <C>
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
Raymond J. Kalinowski, $285 $74,173
Risk Management Oversight
Committee Member and Director
C. Howard Kast, $285 $74,173
Risk Management Oversight
Committee Member and Director
Robert M. Kirchner, $287 $74,717
Audit and Review
Committee Member
and Director
Ned M. Steel, $223 $58,003
Director
Sam Freedman, $113 $29,502
Director
- --------------------------
1For the 1996 calendar year.
</TABLE>
Item 19. Control Persons and Principal Holders of Securities.
1. Inapplicable.
2. As of January 31, 1997, no person owned of record or
known by the Fund to own beneficially 5% or more of the outstanding
Shares.
3. As of January 31, 1997, the directors and officers of the
Fund as a group owned less than 1% of the outstanding Shares.
Item 20. Investment Advisory and Other Services.
Reference is made to Item 9 of the Prospectus.
Item 21. Brokerage Allocation and Other Practices.
1. and 2. The Fund paid no brokerage commissions during the
fiscal years ended October 31, 1994, 1995 and 1996.
The Adviser supplies portfolio management, selects brokers and
supplies investment research in accordance with the Fund's
policies. The Fund does not intend to effect portfolio
transactions through any broker which is an affiliated person of
the Fund or its Adviser although the Fund reserves the right to do
so.
As most purchases of portfolio securities made by the Fund are
principal transactions at net prices, the Fund incurs little or no
brokerage costs. The Fund deals directly with the selling or
purchasing principal or market maker without incurring charges for
the services of a broker on its behalf unless it is determined that
a better price or execution may be obtained by using the services
of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between
the bid and asked price. The Fund seeks to obtain prompt execution
of orders at the most favorable net price.
3. The Advisory Agreement between the Fund and the Adviser
(the "Advisory Agreement") contains provisions relating to the
selection of brokers, dealers and futures commission merchants
(collectively referred to as "brokers") for the Fund's portfolio
transactions. The Adviser may employ brokers 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 has no duty or obligation to seek
advance competitive bidding for the most favorable commission rate
or to select any broker-dealer on the basis of its purported or
"posted" commission rates but will, to the best of its ability
endeavor to be aware of the current level of charges of eligible
broker-dealers and to minimize the expense incurred by the Fund to
the extent consistent with the interests and policies of the Fund
as established by the Board of Directors and the provisions of the
Agreement.
Certain other investment companies advised by the Adviser and
its affiliates have investment objectives and policies similar to
those of the Fund. If transactions on behalf of more than one fund
during the same period increase the demand for securities being
purchased or the supply of securities being sold, there may be an
adverse effect on price or quantity. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transactions in the security
to which the option relates.
If brokers are used for portfolio transactions, brokers may be
selected for their execution and/or research services, on which no
dollar value can be placed. Information received by the Adviser
for those other accounts may or may not be useful to the Fund. The
commissions paid to such dealers may be higher than another
qualified dealer would have charged if a good faith determination
is made by the Adviser that the commission is reasonable in
relation to the services provided. Subject to applicable
regulations, sales of shares of the Fund and/or investment
companies advised by the Adviser or its affiliates may also be
considered as a factor in directing transactions to brokers, but
only in conformity with the price, execution and other
considerations and practices discussed above.
Such research, which may be provided by a broker through a
third party, includes information on particular companies and
industries as well as market, economic or institutional activity
areas. It serves to broaden the scope and supplement the research
activities of the Adviser, to make available additional views for
consideration and comparisons, and to enable the Adviser to obtain
market information for the valuation of securities held in the
Fund's portfolio or being considered for purchase.
4. Inapplicable.
5. Inapplicable.
Item 22. Tax Status.
Reference is made to Item 10 of the Prospectus.
Item 23. Financial Statements.
1. Statement of Investments
2. Statement of Assets and Liabilities
3. Statement of Operations
4. Statements of Changes in Net Assets
5. Financial Highlights
6. Notes to Financial Statements
7. Independent Auditors' Report
8. Independent Auditors' Consent
<PAGE>
Statement of Investments October 31, 1996
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Market
Moody's/S&P's/Fitch's Value
(Unaudited) Face Amount See Note 1
--------------- ----------- ----------
<S> <C> <C> <C>
Municipal Bonds and Notes -- 98.5%
New York -- 88.3%
Babylon, NY IDA RR RB, Ogden Martin Systems,
Inc., Series C, 8.50%, 1/1/19................. Aaa/AAA $ 985,000 $1,084,357
MTA NY RB, Transportation Facilities Service
Contracts, Prerefunded, Series 1, 8.50%,
7/1/17........................................ Aaa/AAA 500,000 525,560
NYC GOB:
Inverse Floater, 7.129%, 8/1/08(1)............ Baa1/BBB+ 700,000 646,625
Prerefunded, Series A, 8.75%, 11/1/15......... Aaa/AAA 1,000,000 1,063,380
Series D, 7.50%, 2/1/19....................... Baa1/BBB+ 1,300,000 1,438,255
NYC Health & Hospital Corp. RRB, AMBAC Insured,
Inverse Floater, 7.504%, 2/15/23(1)........... Aaa/AAA/AAA 1,000,000 932,750
NYC IDA RB, VISY Paper, Inc. Project, 7.95%,
1/1/28........................................ NR/NR 1,250,000 1,327,725
NYC Municipal Assistance Corp. RB:
Series 61, MBIA Insured, 6.875%, 7/1/07....... Aaa/AAA 500,000 519,015
Series 62, 6.90%, 7/1/07...................... Aa/AA-/AA 500,000 518,220
NYC MWFA WSS RB, Prerefunded, Series A, 9%,
6/15/17....................................... Aaa/AAA 500,000 526,050
NYS DA:
RB, Judicial Facilities Lease, Escrowed to
Maturity, BIG Insured, 7.375%, 7/1/16....... Aaa/AAA 250,000 296,135
RRB, Long Island Jewish Medical Center, Series
A, FHA Insured, 7.75%, 8/15/27.............. Aa/AAA 1,000,000 1,057,160
NYS ERDAEF RB, Long Island Lighting Co., Series
C, 6.90%, 8/1/22.............................. Ba1/BB+ 1,000,000 1,009,210
NYS ERDAPC RB, Rochester Gas & Electric Co.
Project, Series C, 8.375%, 12/1/28............ Baa1/BBB+ 250,000 270,915
NYS GORB, 9.875%, 11/15/05...................... A/A-/A+ 400,000 540,408
NYS HFA RB, State University Construction
Project, Prerefunded, Series A, 8.30%,
5/1/18........................................ Aaa/AAA 750,000 797,700
NYS HFASC RB, Prerefunded, Series A, 7.375%,
9/15/21....................................... Aaa/AAA 575,000 660,491
NYS MCFFA RB:
Bronx-Lebanon Hospital, Series A, BIG Insured,
7.10%, 2/15/27.............................. Aaa/AAA 1,000,000 1,027,370
Mental Health Services Facilities,
Prerefunded, Series A, 8.875%, 8/15/07...... Aaa/AAA 155,000 164,167
Mental Health Services Facilities,
Prerefunded, Series B, 7.875%, 8/15/20...... Aaa/AAA 350,000 398,055
Mental Health Services Facilities, Unrefunded
Balance, Series A, 8.875%, 8/15/07.......... Baa1/BBB+ 345,000 364,320
Mental Health Services Facilities, Unrefunded
Balance, Series B, 7.875%, 8/15/20.......... Baa1/BBB+ 1,000,000 1,118,460
</TABLE>
Statement of Investments (Continued)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Market
Moody's/S&P's/Fitch's Value
(Unaudited) Face Amount See Note 1
--------------- ----------- ----------
<S> <C> <C> <C>
NYS Mtg. Agency RB:
Inverse Floater, 6.816%, 10/1/24(1)........... NR/NR $1,000,000 $ 840,250
Ninth Series E, 8.375%, 4/1/18................ Aa/NR 655,000 680,669
NYS PAU:
RB, Prerefunded, Series V, 8%, 1/1/17......... NR/AA 500,000 532,975
RRB, Series V, MBIA Insured, 7.875%, 1/1/13... Aaa/AAA 450,000 479,443
Onondaga Cnty., NY RR Agency RB, Resource
Recovery Facilities Project, 7%, 5/1/15....... Baa/NR/A- 900,000 924,768
Suffolk Cnty., NY GORB, AMBAC Insured, 10%,
11/1/02....................................... Aaa/AAA/AAA 250,000 318,955
TBTA of NY General Purpose RB, Prerefunded,
Series K, 8.25%, 1/1/17....................... Aaa/AAA 1,040,000 1,068,610
----------
21,131,998
U.S. Possessions -- 10.2%
PR Commonwealth Aqueduct & Sewer Authority RB,
Escrowed to Maturity, 10.25%, 7/1/09.......... Aaa/AAA 675,000 937,562
PR EPA RRB, Prerefunded, Series K, 9.375%,
7/1/17........................................ Aaa/AAA 1,000,000 1,057,320
PR Industrial, Medical & Environmental PC
Facilities Financing Authority RB, American
Airlines, Inc. Project, Series A, 6.45%,
12/1/25....................................... Baa1/BB+ 435,000 450,060
----------
2,444,942
----------
Total Investments, at Value (Cost $22,594,860)................... 98.5% 23,576,940
Other Assets Net of Liabilities.................................. 1.5 365,158
----------- ----------
Net Assets....................................................... 100.0% $23,942,098
----------- ----------
----------- ----------
</TABLE>
(1) Represents the current interest rate for a variable rate bond. These bonds
known as 'inverse floaters' pay interest at a rate that varies inversely
with short-term interest rates. As interest rates rise, inverse floaters
produce less current income. Their price may be more volatile than the
price of a comparable fixed-rate security. Inverse floaters amount to
$2,419,625 or 10.11% of the Fund's net assets at October 31, 1996.
As of October 31, 1996, securities subject to the alternative minimum tax
amounted to $4,213,287 or 17.60% of the Fund's net assets.
Statement of Investments (Continued)
The New York Tax-Exempt Income Fund, Inc.
Distribution of investments by industry, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Market
Industry Value Percent
<S> <C> <C>
General Obligation..................................... $4,007,623 17.0%
Lease Rental........................................... 3,527,188 15.0
Hospital/Healthcare.................................... 3,017,280 12.8
Electric Utilities..................................... 2,069,739 8.8
Resource Recovery...................................... 2,009,125 8.5
Single Family Housing.................................. 1,520,919 6.5
Water Utilities........................................ 1,463,612 6.2
Manufacturing, Non-Durable Goods....................... 1,327,725 5.6
Pollution Control...................................... 1,280,125 5.4
Highways............................................... 1,068,610 4.5
Sales Tax.............................................. 1,037,235 4.4
Higher Education....................................... 797,700 3.4
Corporate Backed....................................... 450,059 1.9
---------- -----
$23,576,940 100.0%
---------- -----
---------- -----
</TABLE>
To simplify the listings of The New York Tax-Exempt Income Fund, Inc.
holdings in the Statement of Investments, we have abbreviated the descriptions
of many of the securities per the table below:
DA Dormitory Authority
EPA Electric Power Authority
ERDAEF Energy Research & Development
Authority Electric Facilities
ERDAPC Energy Research & Development
Authority Pollution Control
GOB General Obligation Bonds
GORB General Obligation Refunding Bonds
HFA Housing Finance Agency
HFASC Housing Finance Agency Service
Contract
IDA Industrial Development Authority
MCFFA Medical Care Facilities Finance
Agency
MTA Metropolitan Transportation
Authority
MWFA Municipal Water Finance Authority
NYC New York City
NYS New York State
PAU Power Authority
PC Pollution Control
RB Revenue Bonds
RR Resource Recovery
RRB Revenue Refunding Bonds
TBTA Triborough Bridge & Tunnel
Authority
WSS Water & Sewer System
See accompanying Notes to Financial Statements.
Statement of Assets and Liabilities October 31, 1996
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $22,594,860) -- see accompanying
statement.............................................................. $23,576,940
Cash..................................................................... 168,469
Receivables:
Investments sold....................................................... 887,656
Interest............................................................... 512,662
Other.................................................................... 3,674
----------
Total assets......................................................... 25,149,401
----------
LIABILITIES:
Payables and other liabilities:
Investments purchased.................................................. 1,049,601
Dividends.............................................................. 130,932
Transfer agent and accounting service fees............................. 1,604
Other.................................................................. 25,166
----------
Total liabilities.................................................... 1,207,303
----------
NET ASSETS............................................................... $23,942,098
----------
----------
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock..................................... $ 24,704
Additional paid-in capital............................................... 22,912,752
Undistributed net investment income...................................... 59,636
Accumulated net realized loss on investment transactions................. (37,074)
Net unrealized appreciation on investments -- Note 3................... 982,080
----------
NET ASSETS -- applicable to 2,470,421 shares of capital stock
outstanding............................................................ $23,942,098
----------
----------
NET ASSET VALUE PER SHARE................................................ $9.69
</TABLE>
See accompanying Notes to Financial Statements.
<TABLE>
<S> <C>
Statement of Operations For the Year Ended October 31, 1996
The New York Tax-Exempt Income Fund, Inc.
INVESTMENT INCOME -- Interest........................................... $1,767,852
---------
EXPENSES:
Management fees -- Note 4............................................... 119,243
Shareholder reports....................................................... 31,248
Transfer agent and accounting service fees -- Note 4.................... 25,635
Legal and auditing fees................................................... 10,470
Custodian fees and expenses............................................... 6,153
Directors' fees and expenses.............................................. 2,009
Registration and filing fees.............................................. 7,500
Other..................................................................... 309
---------
Total expenses........................................................ 202,567
Less expenses paid indirectly -- Note 4............................. (3,564)
---------
Net expenses.......................................................... 199,003
---------
NET INVESTMENT INCOME..................................................... 1,568,849
---------
REALIZED AND UNREALIZED LOSS:
Net realized loss on investments.......................................... (30,729)
Net change in unrealized appreciation or depreciation on investments...... (221,504)
---------
NET REALIZED AND UNREALIZED LOSS.......................................... (252,233)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $1,316,616
---------
---------
</TABLE>
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................. $1,568,849 $1,531,652
Net realized loss.................................................. (30,729) (2,641)
Net change in unrealized appreciation or depreciation.............. (221,504) 1,126,994
---------- ----------
Net increase in net assets resulting from operations............... 1,316,616 2,656,005
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME............... (1,562,020) (1,541,374)
CAPITAL STOCK TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of
dividends and distributions -- Note 2.......................... 308,225 296,884
---------- ----------
NET ASSETS:
Total increase..................................................... 62,821 1,411,515
Beginning of period................................................ 23,879,277 22,467,762
---------- ----------
End of period (including undistributed net investment income of
$59,636 and $53,705, respectively)............................... $23,942,098 $23,879,277
---------- ----------
---------- ----------
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period............ $ 9.79 $ 9.33 $ 10.77 $ 10.37 $ 10.22
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income....................... .64 .63 .65 .66 .65
Net realized and unrealized gain (loss)..... (.10) .47 (1.18) .55 .18
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations.............................. .54 1.10 (.53) 1.21 .83
--------- --------- --------- --------- ---------
Dividends and distributions to shareholders:
Dividends from net investment income........ (.64) (.64) (.66) (.74) (.64)
Distributions from net realized gain........ -- -- -- (.07) (.04)
Distributions in excess of net realized
gain...................................... -- -- (.25) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions to
shareholders............................ (.64) (.64) (.91) (.81) (.68)
--------- --------- --------- --------- ---------
Net asset value, end of period.................. $ 9.69 $ 9.79 $ 9.33 $ 10.77 $ 10.37
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Market value, end of period..................... $ 10.00 $ 9.63 $ 9.50 $ 12.63 $ 10.88
TOTAL RETURN, AT MARKET VALUE(1)................ 10.82% 8.32% (17.70)% 25.11% 16.09%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)........ $ 23,942 $ 23,879 $ 22,468 $ 25,516 $ 24,266
Average net assets (in thousands)............... $ 23,840 $ 23,143 $ 23,852 $ 24,936 $ 24,042
Ratios to average net assets:
Net investment income....................... 6.58% 6.62% 6.53% 6.26% 6.32%
Expenses(2)................................. 0.85% 0.88% 0.87% 0.84% 0.97%
Portfolio turnover rate(3)...................... 13% 12% 6% 28% 9%
</TABLE>
(1) Assumes a hypothetical purchase at the current market price 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 a sale at the current market price on the last business day of
the period.
(2) Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not
been adjusted.
(3) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended October 31, 1996 were
$4,388,945 and $3,142,587, respectively.
See accompanying Notes to Financial Statements.
Notes to Financial Statements
The New York Tax-Exempt Income Fund, Inc.
1. Significant Accounting Policies
The New York Tax-Exempt Income Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Fund seeks to provide high current income
which is free from federal, New York State and New York City income taxes. The
Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The
following is a summary of significant accounting policies consistently
followed by the Fund.
Investment Valuation -- Portfolio securities are valued at the close of the
American Stock Exchange on the last day of each week on which day the American
Stock Exchange is open. Listed and unlisted securities for which such
information is regularly reported are valued at the last sale price of the day
or, in the absence of sales, at values based on the closing bid or the last
sale price on the prior trading day. Long-term and short-term 'non-money
market' debt securities are valued by a portfolio pricing service approved
by the Board of Directors. Such securities which cannot be valued by the
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Directors to
determine fair value in good faith. Short-term 'money market type' debt
securities having a remaining maturity of 60 days or less are valued at cost
(or last determined market value) adjusted for amortization to maturity of any
premium or discount.
Federal Taxes -- The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
Distributions to Shareholders -- The Fund intends to declare and pay
dividends from net investment income monthly. Distributions from net realized
gains on investments, if any, will be declared at least once each year.
Classification of Distributions to Shareholders --
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes primarily because of premium amortization
for tax purposes. The character of the distributions made during the 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
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain (loss) was recorded by
the Fund.
During the year ended October 31, 1996, the Fund adjusted the classification
of net investment income and capital gain (loss) to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Accordingly, during the year ended October 31,
1996, amounts have been reclassified to reflect a decrease in undistributed
net investment income of $898. Accumulated net realized loss on investments
was decreased by the same amount.
Other -- Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Original issue discount on
securities purchased is amortized over the life of the respective securities,
in
Notes to Financial Statements (Continued)
The New York Tax-Exempt Income Fund, Inc.
accordance with federal income tax requirements. For bonds acquired after
April 30, 1993, on disposition or maturity, taxable ordinary income is
recognized to the extent of the lesser of gain or market discount that would
have accrued over the holding period. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes. The
Fund concentrates its investments in New York and, therefore, may have more
credit risks related to the economic conditions of New York than a portfolio
with a broader geographical diversification.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
2. Capital Stock
The Fund has authorized 250,000,000 shares
of $.01 par value capital stock. Of these shares, 204,579 shares were reserved
for issuance under a Dividend Reinvestment and Cash Purchase Plan.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------
1996 1995
---------------------- ----------------------
Shares Amount Shares Amount
----- --------- ----- ---------
<S> <C> <C> <C> <C>
Net increase
from
dividends and
distributions
reinvested..... 31,639 $ 308,225 30,958 $ 296,884
----- --------- ----- ---------
----- --------- ----- ---------
</TABLE>
3. Unrealized Gains and Losses on Investments
At October 31, 1996, net unrealized appreciation on investments of $982,080
was composed of gross appreciation of $1,234,089, and gross depreciation of
$252,009.
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were
in accordance with the investment advisory agreement with the Fund which
provides for a fee of 0.50% on the Fund's average annual net assets.
The Manager acts as the accounting agent for the Fund at an annual fee of
$12,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly owned subsidiary of the
Manager, is the transfer agent and registrar for the Fund. Fees paid to SFSI
are based on the number of accounts and the number of shareholder
transactions, plus out-of-pocket costs and expenses.
Expenses paid indirectly represent a reduction of custodian fees for earnings
on cash balances maintained by the Fund.
<PAGE>
Independent Auditors' Report
The New York Tax-Exempt Income Fund, Inc.
The Board of Directors and Shareholders of
The New York Tax-Exempt Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of The New York Tax-Exempt Income
Fund, Inc. as of October 31, 1996, the related statement of operations for the
year then ended, the statements of changes in net assets for the years ended
October 31, 1996 and 1995 and the financial highlights for the period November
1, 1991 to October 31, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at October 31, 1996 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The New York
Tax-Exempt Income Fund, Inc. at October 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
Denver, Colorado
November 21, 1996
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial Statements.
(a) Statement of Investments - (See Part B,
Statement of Additional Information): filed herewith.
(b) Statement of Assets and Liabilities - (See Part
B, Statement of Additional Information): filed herewith.
(c) Statement of Operations - (See Part B, Statement
of Additional Information): filed herewith.
(d) Statements of Changes in Net Assets - (See Part
B, Statement of Additional Information): filed herewith.
(e) Financial Highlights - (See Part B, Statement
of Additional Information): filed herewith.
(f) Notes to Financial Statements - (See Part B,
Statement of Additional Information): filed herewith.
(g) Independent Auditors' Report - (See Part B,
Statement of Additional Information): filed herewith.
(h) Independent Auditors' Consent - (See Part B,
Statement of Additional Information): filed herewith.
2. Exhibits:
(a) Articles of Incorporation of the Registrant:
Previously filed as Exhibit 1 to Fund's
Registration Statement on Form N-2 (Investment
Company Act File No. 811-5278), filed with the
Securities and Exchange Commission on August
11, 1987, and refiled pursuant to Item 102 of
Regulation S-T with Registrant's Amendment No.
11, 2/28/95, and incorporated herein by
reference.
(b) By-Laws of the Registrant: Previously filed as
Exhibit 2 to Amendment No. 1 to the Fund's
Registration Statement on Form N-2 (Investment
Company Act File No. 811-5278), filed with the
Securities and Exchange Commission on September
14, 1987, and refiled purusatn to Item 102 of
Regulation S-T with Registrant's Amendment No.
11, 2/28/95, and incorporated herein by
reference.
(c) Not applicable.
(d) Specimen certificate for Shares of Capital
Stock of the Registrant: Previously filed with
Registrant's Amendment No. 7, 2/28/91, and
refiled with Registrant's Amendment No. 11,
2/28/95, and refiled pursuant to Item 102 of
Regulation S-T with Registrant's Amendment No.
11, 2/28/95, and incorporated herein by
reference.
(e) See (j)(2) and (j)(3) below.
(f) Not applicable.
(g) Investment Advisory Agreement with
OppenheimerFunds, Inc. dated 10/22/90 -
Previously filed with Registrant's Amendment
No. 7, 2/28/91, and incorporated herein by
reference.
(h) Not applicable.
(i) Not applicable.
(j) (1) Custodian Agreement between Registrant and
Citibank, N.A.: previously filed with
Registrant's Amendment No. 11, 2/28/95,
and incorporated herein by reference.
(2) Registrar, Transfer Agency and Service
Agreement between Registrant and
Shareholder Financial Services, Inc.:
previously filed with Registrant's
Amendment No. 11, 2/28/95, and
incorporated herein by reference.
(3) Co-Transfer Agency Agreement between
Registrant and United Missouri Trust
Company of New York: previously filed with
Registrant's Amendment No. 11, 2/28/95,
and incorporated herein by reference.
(k) Not applicable.
(l) Not applicable.
(m) Not applicable.
(n) Not applicable.
(o) Not applicable.
(p) Not applicable.
(q) Not applicable.
(r) Financial data schedule: Filed herewith.
Item 25. Marketing Arrangements.
Inapplicable.
Item 26. Other Expenses of Issuance and Distribution.
Inapplicable.
Item 27. Persons Controlled by or under Common Control with
Registrant.
None.
Item 28. Number of Holders of Securities.
(2)
Number of
(1) Record Holders at
Title of Class January 31, 1997
Shares of Common Stock 912
Item 29. Indemnification.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the
Registrant in connection with the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act, and will be governed
by the final adjudication of such issue.
Registrant, in conjunction with the Registrant's Directors,
and other registered management investment companies managed by the
Adviser, generally maintains insurance on behalf of any person who
is or was a Director, officer, employee, or agent of Registrant.
Item 30. Business and Other Connections of Investment Adviser.
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly Vice
President of Equity Derivatives at
Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice President
of HarbourView; prior to March, 1996 he
was the senior equity portfolio manager
for the Panorama Series Fund, Inc. (the
"Company") and other mutual funds and
pension funds managed by G.R. Phelps &
Co. Inc. ("G.R. Phelps"), the Company's
former investment adviser, which was a
subsidiary of Connecticut Mutual Life
Insurance Company; was also responsible
for managing the common stock department
and common stock investments of
Connecticut Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a
Vice President and Senior Portfolio
Manager at First of America Investment
Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales Director for
Retirement Plan Services at Charles
Schwab & Co., Inc.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President of Asian Equities
for Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the Oppenheimer
Funds (listed below); previously a Fund
Controller for OppenheimerFunds, Inc.
(the "Adviser").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer of the
Denver-based Oppenheimer Funds. Vice
President and Treasurer of
OppenheimerFunds Distributor, Inc. (the
"Distributor") and HarbourView Asset
Management Corporation ("HarbourView"),
an investment adviser subsidiary of the
Adviser; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Adviser; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
the Adviser; Director, Treasurer and
Chief Executive Officer of MultiSource
Services, Inc.; Vice President and
Treasurer of Oppenheimer Real Asset
Management, Inc.; President, Treasurer
and Director of Centennial Capital
Corporation; Vice President and Treasurer
of Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational
Services for H.D. Vest Investment
Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income for
State Street Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio manager of
certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President and
Secretary of the Denver-based Oppenheimer
Funds; Secretary of the Oppenheimer Quest
and Oppenheimer Rochester Funds;
Executive Vice President, Director and
General Counsel of the Distributor;
President and a Director of Centennial;
Chief Legal Officer and a Director of
MultiSource Services, Inc.; President and
a Director of Oppenheimer Real Asset
Management, Inc.; Executive Vice
President, General Counsel and Director
of SFSI and SSI; formerly Senior Vice
President and Associate General Counsel
of the Adviser and the Distributor.
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New York-based
and Denver-based Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset Management
Corporation, MultiSource Services, Inc.
and Centennial Asset Management
Corporation; Secretary, Vice President
and Director of Centennial Capital
Corporation; Vice President and Secretary
of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds.
Formerly Chairman of the Board and
Director of Rochester Fund Distributors,
Inc. ("RFD"), President and Director of
Fielding Management Company, Inc.
("FMC"), President and Director of
Rochester Capital Advisors, Inc.
("RCAI"), Managing Partner of Rochester
Capital Advisors, L.P., President and
Director of Rochester Fund Services, Inc.
("RFS"), President and Director of
Rochester Tax Managed Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and General
Counsel of Rochester Capital Advisors,
L.P. and Secretary of Rochester Tax
Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based Oppenheimer
Funds; Vice President and Counsel of OAC;
formerly he held the following positions:
Vice President and a director of
HarbourView and Centennial, a director of
SFSI and SSI, an officer of other
Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President / Director of
Graphic and Print Communications for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy Consultant
for the Private Client Division of
Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President of Fixed Income Portfolio
Management at Bankers Trust.
Glenna Hale,
Director of Investor Marketing Formerly Vice President (1994-1997) of
Retirement Plans Services for
OppenheimerFunds Services.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Adviser President and Director of SFSI; President
and Chief Executive Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and Associate
General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Managing Director of Global Equities at
Paine Webber's Mitchell Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director of Van
Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with Bankers
Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96), Chinese
Finance Society; formerly Chairman
(11/94-2/96)), Chinese Finance Society;
and Director (6/94-6/95), Greater China
Business Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was
the senior bond portfolio manager for
Panorama Series Fund, Inc., other mutual
funds and pension accounts managed by
G.R. Phelps; was also responsible for
managing the public fixed-income
securities department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of the
New York-based and the Denver-based
Oppenheimer funds; President and a
Director of OAC, HarbourView and
Oppenheimer Partnership Holdings, Inc.;
Director of ORAMI; Chairman and Director
of SSI; a Director of Oppenheimer Real
Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co., Salomon
Brothers, and Kidder Peabody.
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly Vice President, Quest for Value
Distributors, Oppenheimer Capital
Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Portfolio Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly Marketing Manager (July, 1995 -
November, 1996) for Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly
Senior Investment Officer and Portfolio
Manager with Chemical Bank.
Russell Read,
Vice President Consultant for Prudential Insurance on
behalf of the General Motors Pension
Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for the Adviser.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly Vice
President of RFS, President and Director
of RFD, Vice President and Director of
FMC, Vice President and director of RCAI,
General Partner of RCA, an officer and/or
portfolio manager of certain Oppenheimer
funds.
David Rosenberg,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President and Portfolio Manager/Security
Analyst for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar Dry
Dock Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a
Vice President and Senior Portfolio
Manager for Dean Witter InterCapital,
Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President
None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New
York-based Oppenheimer Funds; formerly
Chairman of the Adviser and the
Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and Marketing for
Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was
an equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds
and pension accounts managed by G.R.
Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; President and a
Director
of Centennial; formerly President and
Director of OAMC, and Chairman of the
Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Adviser; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund, Oppenheimer
Global Emerging Growth Fund and
Oppenheimer Enterprise Fund. Formerly
Managing Director of Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the Distributor
and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer Funds; Formerly
Managing Director and Chief Fixed Income
Strategist at Prudential Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView; prior to March, 1996 he was
an equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds
and pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial; Vice President, Finance
and Accounting and member of the Board of
Directors of the Junior League of Denver,
Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the Adviser;
Assistant Secretary of the Oppenheimer
Funds; Assistant Secretary of SSI, SFSI;
an officer of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Quest/Rochester Funds,
set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited-Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Oppenheimer Real Asset Management,
Inc. is 6803 South Tucson Way, Englewood, Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund is 350
Linden Oaks, Rochester, New York 14625-2807.
Item 31. Not Applicable
Item 32.Location of Accounts and Records.
All accounts, books and other documents, required to be maintained
by the Registrant under Section 31(a) of the Investment Company Act
of 1940 and the Rule thereunder are maintained by OppenheimerFunds,
Inc. at its offices at 6803 South Tucson Way, Englewood, Colorado
80112.
Item 33. Management Services.
The Registrant is not a party to any management-related
service contract not discussed in Part A of this Registration
Statement.
Item 34. Undertakings.
1. The Registrant undertakes to suspend the offering
of the shares covered hereby until it amends its prospectus if (1)
subsequent to the effective date of this Registration Statement,
its net asset value per share declines more than 10 percent from
its net asset value per share as of the effective date of this
Registration Statement, or (2) its net asset value increases to an
amount greater than its net proceeds as stated in the prospectus.
2. Inapplicable
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. Inapplicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver and
State of Colorado on the 20th day of February, 1997.
THE NEW YORK TAX-EXEMPT INCOME FUND
By: /s/ James C. Swain
----------------------------
James C. Swain
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities on the dates indicated:
<TABLE>
<S> <C> <C>
Signatures Title Date
/s/ James C. Swain* Chairman of the February 20, 1997
- ---------------------- Board of Directors
James C. Swain
/s/ Jon S. Fossel* Director February 20, 1997
- ----------------------
Jon S. Fossel
/s/ George C. Bowen* Chief Financial February 20, 1997
- ---------------------- and Accounting
George C. Bowen Officer
/s/ Robert G. Avis* Director February 20, 1997
- ----------------------
Robert G. Avis
/s/ William A. Baker* Director February 20, 1997
- ----------------------
William A. Baker
/s/ Charles Conrad Jr.* Director February 20, 1997
- ----------------------
Charles Conrad, Jr.
/s/ Sam Freedman Director February 20, 1997
- ----------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Director February 20, 1997
- -------------------------
Raymond J. Kalinowski
/s/ Howard Kast* Director February 20, 1997
- ------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Director February 20, 1997
- ------------------------
Robert M. Kirchner
/s/ Bridget A. Macaskill President & Director February 20, 1997
- ------------------------
Bridget A. Macaskill
/s/ Ned M. Steel* Director February 20, 1997
- ------------------------
Ned M. Steel
</TABLE>
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
Registration No. 811-5278
Post-Effective Amendment No. 11
Index to Exhibits
Exhibit No. Description
24(1)(h) Independent Auditor's Consent
24(2)(r) Financial Data Schedule
-- Powers of Attorney - For Bridget A. Macaskill
and Sam Freedman
Independent Auditors' Consent
The Board of Trustees
The New York Tax-Exempt Income Fund
We consent to the use in this Post-Effective Amendment No. 11 to
Registration Statement No. 811-5278 of the New York Tax Exempt
Income Fund, Inc. of our report dated November 21, 1996 appearing
in the Statement of Additional Information, which is a part of such
Registration Statement, and to the reference to us under the
heading "Financial Highlights" appearing in the Prospectus, which
is a also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Denver, Colorado
February 17, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 820090
<NAME> NEW YORK TAX-EXEMPT INCOME FUND, INC. (THE)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 22,594,860
<INVESTMENTS-AT-VALUE> 23,576,940
<RECEIVABLES> 1,400,318
<ASSETS-OTHER> 3,674
<OTHER-ITEMS-ASSETS> 168,469
<TOTAL-ASSETS> 25,149,401
<PAYABLE-FOR-SECURITIES> 1,049,601
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 157,702
<TOTAL-LIABILITIES> 1,207,303
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,937,456
<SHARES-COMMON-STOCK> 2,470,421
<SHARES-COMMON-PRIOR> 2,438,782
<ACCUMULATED-NII-CURRENT> 59,636
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (37,074)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 982,080
<NET-ASSETS> 23,942,098
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,767,852
<OTHER-INCOME> 0
<EXPENSES-NET> 199,003
<NET-INVESTMENT-INCOME> 1,568,849
<REALIZED-GAINS-CURRENT> (30,729)
<APPREC-INCREASE-CURRENT> (221,504)
<NET-CHANGE-FROM-OPS> 1,316,616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,562,020
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 31,639
<NET-CHANGE-IN-ASSETS> 62,821
<ACCUMULATED-NII-PRIOR> 53,705
<ACCUMULATED-GAINS-PRIOR> (7,243)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 119,243
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 202,567
<AVERAGE-NET-ASSETS> 23,840,000
<PER-SHARE-NAV-BEGIN> 9.79
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> (0.10)
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.69
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Andrew J. Donohue or Robert G. Zack, and
each of them, her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for her and in
her capacity as a director of THE NEW YORK TAX-EXEMPT INCOME FUND,
INC., a Minnesota corporation (the "Fund"), to sign on her behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of
1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully as to all intents and purposes as she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 19th day of February, 1997.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Andrew J. Donohue or Robert G. Zack, and
each of them, her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for her and in
her capacity as a director of THE NEW YORK TAX-EXEMPT INCOME FUND,
INC., a Minnesota corporation (the "Fund"), to sign on her behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of
1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully as to all intents and purposes as she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 19th day of February, 1997.
/s/ Sam Freedman
- --------------------------------
Sam Freedman
