<PAGE> 1
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
Officers and Directors
James C. Swain, Chairman and
Chief Executive Officer
Bridget A. Macaskill, Director and
President
Robert G. Avis, Director
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
George C. Bowen, Director, Vice President,
Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Robert E. Patterson, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor
OppenheimerFunds, Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
Citibank, N.A.
Independent Auditors
Deloitte & Touche LLP
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of The New York Tax-Exempt Income
Fund, Inc. It does not offer for sale or solicit orders to buy any
securities.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that periodically the Fund may purchase its shares of
capital stock in the open market at prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
RS0875.001.0498 [RECYCLE LOGO] Printed on recycled paper
1998 SEMIANNUAL REPORT
THE
NEW YORK
TAX-EXEMPT
INCOME
FUND, INC.
APRIL 30, 1998
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
Although overall trends remained generally positive, municipal bond markets
experienced a high level of volatility within a relatively narrow trading range
during the past six months. Yields frequently rose and fell in response to
conflicting evidence regarding economic strength and inflation. On one hand,
reports of strong economic growth and rising labor costs fueled inflation
concerns, which caused bond prices to fall, and yields to rise. On the other
hand, news about the impact of the Asian crisis on U.S. corporate earnings
helped reduce those concerns, leading bond prices higher, and yields lower.
Investment Breakdown:
The New York Tax-Exempt Income Fund, Inc.
as of 4/30/98(3)
<TABLE>
<S> <C>
AAA 45.74%
AA 9.32%
A 20.08%
BBB 15.68%
BB 9.17%
</TABLE>
In this volatile environment, The New York Tax-Exempt Income Fund, Inc.
performed well, providing a cumulative total return at market value of 2.34%
during the six-month period ended 4/30/98. The Fund paid shareholders tax-exempt
income with a dividend return of 5.38% for the month of April, 1998.(1) For New
York State residents in the 43.74% combined effective tax bracket, this tax-free
dividend would have been equivalent to a taxable dividend of 9.55%.(2)
As New York's economic recovery continued throughout the period, we focused on
what we believe were undervalued credits in sectors of vital interest to the
city and state. These included state appropriation bonds--bonds connected with
the annual state budget--such as bonds issued by the city and state universities
and transportation authorities. In addition, although we remained cautious with
respect to the hospital sector, we found new opportunities to invest in the
state's hospital system through
1. Total return is based on the change in market value per share from 10/31/97
to 4/30/98, without deducting any sales charges or brokerage costs. Returns
would have been lower if brokerage costs were deducted. Dividend return is
determined by annualizing the April 1998 dividend of $0.043 and dividing by the
closing price on the American Stock Exchange of $9.60 per share on 5/1/98
(payment date). Past performance does not guarantee future results.
2. Assumes a combined effective tax bracket of 43.74% for New York residents,
using the 36% federal and the maximum New York State income tax rates. A portion
of the Fund's distributions may be subject to federal, state and local income
taxes. For investors subject to alternative minimum income tax, a portion of the
Fund's distributions may increase that tax. Tax rates may be lower depending on
individual circumstances.
3. The chart is based on total investments at market value and is subject to
change. The Fund may invest up to 10% of net assets in below-investment-grade
securities, which carry a greater risk that the issuer may default on repayment
of interest or principal. Securities rated by any rating organization are
included in the equivalent Standard & Poor's rating category. Average credit
quality and allocation include rated securities and those not rated by a
national rating organization (currently 16.95% of total investments) but to
which the ratings given above have been assigned by the Manager for internal
purposes as being comparable, in the Manager's judgment, to securities rated by
a rating agency in the same category.
<PAGE> 3
state-backed bonds. We also added to our position in New York City bonds because
of the city's strengthening financial position.
Outside of New York State, we identified attractive opportunities in Puerto Rico
bonds. These bonds broadened the Fund's diversification, while providing
shareholders with the benefits of income exempt from New York state and local
taxes.
Of course, we remained selective in our bond purchases. For example, although we
believe utilities hold promise for the future, we avoided these types of bonds
during the period because the sector continues to be roiled by deregulation. We
also tended to focus away from smaller municipalities in New York because of the
risk implicit in their dependence on federal- and state-level financial
decisions and appropriations to meet local obligations.
In addition to the careful selection of investment sectors and individual
credits, we sought to boost returns and help reduce risks by actively managing
the portfolio's average duration. Duration is a measure of a bond's sensitivity
to changes in interest rates. Generally, the longer a portfolio's average
duration, the higher the returns investors are likely to receive in an
environment of falling interest rates. Conversely, the shorter the duration,
generally, the higher the returns when interest rates rise. At the beginning of
the period, we expected interest rates to decline, so we took a mildly long
position relative to our benchmarks. However, after the first of the year,
prospects dimmed for immediately lower interest rates, so we shifted to a more
neutral position--neither long nor short--with respect to duration.
As a result of our duration shifts, shareholders benefited from the Fund's below
average risk profile and strong relative performance, particularly during the
second half of the period.
Looking forward, we are cautiously optimistic about New York's prospects for
continued and increased fiscal strength on both the state and local levels. New
York City's credit rating was recently upgraded by Moody's Investors Service,
one of the principal rating agencies--an indication of the city's steady
recovery. As long as the U.S. economy continues its long run of non-inflationary
growth, our outlook for interest rates, and the bond market, is generally
positive.
We remain committed to our strategy of conservative risk management, and to our
relentless search for undervalued issues in the New York municipal bond market.
We believe these qualities continue to make The New York Tax-Exempt Income Fund,
Inc. part of The Right Way to Invest.
Sincerely,
/s/ JAMES C. SWAIN
James C. Swain
Chairman
The New York Tax-Exempt
Income Fund, Inc.
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
The New York Tax-Exempt
Income Fund, Inc.
May 21, 1998
<PAGE> 4
STATEMENT OF INVESTMENTS APRIL 30, 1998 (Unaudited)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
----------------- -------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 94.6%
NEW YORK -- 84.0%
Babylon, NY IDA RR RB, Ogden Martin Systems, Inc.,
Prerefunded, Series C, 8.50%, 1/1/19.......................................... Aaa/AAA $ 985,000 $ 1,021,731
Buffalo, NY MWFAU System RRB, Series B, FGIC
Insured, 5%, 7/1/18........................................................... Aaa/AAA 1,200,000 1,159,968
Monroe Cnty., NY IDA RB, DePaul Community
Facilities, Series A, 5.875%, 2/1/28.......................................... NR/NR 250,000 246,995
NY TBTAU GP RRB, Series A, 5.125%, 1/1/22....................................... Aa3/A+ 975,000 948,226
NYC GOB, Prerefunded, Series D, 7.50%, 2/1/19................................... Aaa/BBB+/A- 1,195,000 1,342,630
NYC GOB, Unrefunded Balance, Series D, 7.50%, 2/1/19............................ A3/BBB+/A- 105,000 115,823
NYC GORB, Series D, 5.25%, 8/1/21............................................... Baa1/BBB+/A- 1,000,000 971,160
NYC Health & Hospital Corp. RRB, AMBAC Insured,
Inverse Floater, 7.36%, 2/15/23(1)............................................ Aaa/AAA/AAA 1,000,000 1,030,000
NYC IDA Civic Facility RB, Community Resources
Development, 7.50%, 8/1/26.................................................... NR/NR 500,000 529,440
NYC IDA RB, Visy Paper, Inc. Project, 7.95%, 1/1/28............................. NR/NR 1,250,000 1,451,175
NYC IDA RRB, Brooklyn Navy Yard Cogen Partners,
5.75%, 10/1/36................................................................ Baa3/BBB- 500,000 500,015
NYC MWFAU WSS RRB, Series C, FGIC Insured,
5%, 6/15/21................................................................... Aaa/AAA/AAA 1,000,000 956,370
NYS DA RB, Judicial Facilities Lease, Escrowed to
Maturity, BIG Insured, 7.375%, 7/1/16......................................... Aaa/AAA 250,000 312,772
NYS DA RB, New York University, Series A, MBIA
Insured, 5.75%, 7/1/27........................................................ Aaa/AAA 1,000,000 1,082,030
NYS DA RRB, L.I. Medical Center, Series A, 7.75%,
8/15/27....................................................................... Aa2/AAA 1,000,000 1,022,490
NYS ERDAUEF RB, L.I. Lighting Co., Series C, 6.90%,
8/1/22........................................................................ Ba1/BB+ 1,000,000 1,094,370
NYS ERDAUPC RB, Rochester Gas & Electric Co.
Project, Series C, 8.375%, 12/1/28............................................ Baa1/BBB+ 250,000 260,655
NYS GORB, 9.875%, 11/15/05...................................................... A2/A/A+ 400,000 530,308
NYS MAG RB, Inverse Floater, 6.733%, 10/1/24(1)................................. NR/NR 1,000,000 976,250
NYS MCFFA RB, MHESF, Unrefunded Balance,
Series B, 7.875%, 8/15/20..................................................... A3/A- 365,000 400,788
NYS MCFFA RRB, MHESF, Unrefunded Balance,
Series A, 8.875%, 8/15/07..................................................... Baa1/BBB+ 145,000 148,428
NYS UDC RRB, Correctional Capital Facilities,
Series A, 5.25%, 1/1/21....................................................... Baa1/BBB+/A 1,000,000 963,990
Onondaga Cnty., NY RR Agency RB, RR Facilities
Project, 7%, 5/1/15........................................................... Baa1/NR/A- 900,000 970,587
PAUNYNJ RB, 111th Series, 5%, 10/1/32........................................... A1/AA-/AA- 1,000,000 952,700
Suffolk Cnty., NY GORB, AMBAC Insured, 10%, 11/1/02............................. Aaa/AAA/AAA 250,000 305,630
Syracuse, NY IDA Civic Facilities RB, Crouse Health
Hospital, Inc. Project, Series A, 5.375%, 1/1/23.............................. NR/BBB 1,000,000 976,560
----------
20,271,091
----------
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS APRIL 30, 1998 (Unaudited) (Continued)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Moody's/ Face Market Value
S&P/Fitch Amount See Note 1
----------------- -------- ------------
<S> <C> <C> <C>
U.S. POSSESSIONS -- 10.6%
PR CMWLTH Aqueduct & Sewer Authority RB,
Escrowed to Maturity, 10.25%, 7/1/09.......................................... Aaa/AAA $800,000 $ 1,095,224
PR CMWLTH GOB, 5.375%, 7/1/25................................................... Baa1/A 250,000 248,743
PR CMWLTH Infrastructure FAU Special RRB,
Prerefunded, Series A, 7.90%, 7/1/07.......................................... Baa1/BBB+ 330,000 338,686
PR CMWLTH Infrastructure FAU Special RRB,
Unrefunded Balance, Series A, 7.90%, 7/1/07................................... Baa1/BBB+ 95,000 97,424
PR Industrial, Medical & Environmental PC Facilities
FAU RB, American Airlines, Inc. Project,
Series A, 6.45%, 12/1/25...................................................... Baa1/BB+ 435,000 475,947
PR Public Buildings Authority RB, Series B, 5.25%,
7/1/21........................................................................ Baa1/A 300,000 294,846
-------------
2,550,870
-------------
Total Municipal Bonds and Notes (Cost $21,903,113).............................. 22,821,961
-------------
SHORT-TERM TAX-EXEMPT OBLIGATIONS -- 3.3%
NYS ERDAUPC RB, Niagara Mohawk Corp. Project,
Series A, 4.10%, 5/1/98(2) (Cost $800,000).................................... 800,000 800,000
-----------
Total Investments, at Value (Cost $22,703,113).................................. 97.9% 23,621,961
Other Assets Net of Liabilities................................................. 2.1 506,888
-------- -----------
Net Assets...................................................................... 100.0% $24,128,849
======== ===========
</TABLE>
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
CMWLTH Commonwealth MCFFA Medical Care Facilites Finance Agency
DA Dormitory Authority MHESF Mental Health Services Facilities
ERDAUEF Energy Research & Development MWFAU Municipal Water Finance Authority
Authority Electric Facilities NYC New York City
ERDAUPC Energy Research & Development NYS New York State
Authority Pollution Control PAUNYNJ Port Authority of New York & New Jersey
FAU Finance Authority PC Pollution Control
GOB General Obligation Bonds RB Revenue Bonds
GORB General Obligation Refunding Bonds RR Resource Recovery
GP General Purpose RRB Revenue Refunding Bonds
IDA Industrial Development Agency TBTAU Triborough Bridge & Tunnel Authority
L.I. Long Island UDC Urban Development Corp.
MAG Mtg. Agency WSS Water & Sewer System
</TABLE>
1. Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays 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 $2,006,250 or 8.31% of the
Fund's net assets as of April 30, 1998.
2. Floating or variable rate obligation. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on April 30, 1998. This instrument may
also have a demand feature which allows, on up to 30 days' notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
4
<PAGE> 6
STATEMENT OF INVESTMENTS APRIL 30, 1998 (Unaudited) (Continued)
The New York Tax-Exempt Income Fund, Inc.
As of April 30, 1998, securities subject to the alternative minimum tax
amount to $4,276,802 or 17.72% of the Fund's net assets.
Distribution of investments by industry of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
-------- ------------ -------
<S> <C> <C>
General Obligation $ 3,514,293 14.9%
Water Utilities 3,211,561 13.7
Hospital/Healthcare 3,029,050 12.9
Lease Rental 2,120,825 9.0
Resource Recovery 1,992,318 8.4
Electric Utilities 1,855,040 7.9
Manufacturing, Non-Durable Goods 1,451,175 6.1
Higher Education 1,082,030 4.6
Single Family Housing 976,250 4.1
Marine/Aviation Facilities 952,700 4.0
Highways 948,227 4.0
Pollution Control 800,000 3.4
Not-for-Profit Organization 529,440 2.2
Corporate Backed 475,947 2.0
Sales Tax 436,110 1.8
Adult Living Facilities 246,995 1.0
----------- -----
Total $23,621,961 100.0%
=========== =====
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES April 30, 1998 (Unaudited)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $22,703,113) -- see accompanying statement.......... $23,621,961
Cash............................................................................ 117,040
Receivables:
Interest...................................................................... 422,856
Other........................................................................... 9,377
-----------
Total assets.................................................................. 24,171,234
-----------
LIABILITIES:
Payables and other liabilities:
Dividends..................................................................... 17,803
Management and administrative fees............................................ 9,991
Shareholder reports........................................................... 9,069
Directors' fees............................................................... 3,632
Other......................................................................... 1,890
-----------
Total liabilities............................................................ 42,385
-----------
NET ASSETS...................................................................... $24,128,849
===========
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock............................................ $ 25,179
Additional paid-in capital...................................................... 23,099,969
Overdistributed net investment income........................................... (88,505)
Accumulated net realized gain on investment transactions........................ 173,358
Net unrealized appreciation on investments -- Note 3............................ 918,848
-----------
NET ASSETS -- applicable to 2,517,893 shares of capital stock outstanding....... $24,128,849
===========
NET ASSET VALUE PER SHARE....................................................... $9.58
=====
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 8
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 1998 (Unaudited)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<S> <C>
INVESTMENT INCOME -- Interest................................................... $ 737,156
---------
EXPENSES:
Management fees -- Note 4....................................................... 60,481
Shareholder reports............................................................. 17,657
Transfer agent and accounting services fees -- Note 4........................... 12,293
Legal and auditing fees......................................................... 5,046
Custodian fees and expenses..................................................... 4,765
Registration and filing fees.................................................... 3,568
Directors' fees and expenses.................................................... 1,015
Other........................................................................... 3,705
---------
Total expenses.............................................................. 108,530
Less expenses paid indirectly -- Note 4......................................... (3,784)
---------
Net expenses................................................................ 104,746
---------
NET INVESTMENT INCOME........................................................... 632,410
---------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments................................................ 177,255
Net change in unrealized appreciation or depreciation on investments............ (225,125)
---------
NET REALIZED AND UNREALIZED LOSS................................................ (47,870)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 584,540
=========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 9
STATEMENTS OF CHANGES IN NET ASSETS
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Six Months
Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 632,410 $ 1,537,322
Net realized gain............................................................... 177,255 287,554
Net change in unrealized appreciation or depreciation........................... (225,125) (82,854)
----------- ------------
Net increase in net assets resulting from operations.......................... 584,540 1,742,022
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income............................................ (748,178) (1,581,763)
Distributions from net realized gain............................................ (272,510) --
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from shares issued to shareholders in
reinvestment of dividends and distributions -- Note 2......................... 172,825 289,815
----------- ------------
NET ASSETS:
Total increase (decrease)....................................................... (263,323) 450,074
Beginning of period............................................................. 24,392,172 23,942,098
----------- ------------
End of period [including undistributed (overdistributed) net investment
income of $(88,505) and $69,752, respectively]................................ $24,128,849 $24,392,172
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE> 10
FINANCIAL HIGHLIGHTS
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Six Months
Ended Year Ended October 31,
April 30, 1998 -----------------------------------------------------------
Unaudited) 1997 1996 1995 1994 1993
-------------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period................ $ 9.76 $ 9.69 $ 9.79 $ 9.33 $ 10.77 $ 10.37
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income............................. .18 .62 .64 .63 .65 .66
Net realized and unrealized gain (loss) .......... .05 .09 (.10) .47 (1.18) .55
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations.......................... .23 .71 .54 1.10 (.53) 1.21
------- ------- ------- ------- ------- -------
Dividends and distributions to
shareholders:
Dividends from net investment
income......................................... (.30) (.64) (.64) (.64) (.66) (.74)
Distributions from net realized gain ............ (.11) -- -- -- -- (.07)
Distributions in excess of net
realized gain.................................. -- -- -- -- (.25) --
------- ------- ------- ------- ------- -------
Total dividends and distributions to
shareholders................................. (.41) (.64) (.64) (.64) (.91) (.81)
------- ------- ------- ------- ------- -------
Net asset value, end of period...................... $ 9.58 $ 9.76 $ 9.69 $ 9.79 $ 9.33 $ 10.77
======= ======= ======= ======= ======= =======
Market value, end of period......................... $ 9.44 $ 10.25 $ 10.00 $ 9.63 $ 9.50 $ 12.63
TOTAL RETURN, AT MARKET VALUE(1).................... 2.34% 9.40% 10.82% 8.32% (17.70)% 25.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............ $24,129 $24,392 $23,942 $23,879 $22,468 $25,516
Average net assets (in thousands)................... $24,391 $24,088 $23,840 $23,143 $23,852 $24,936
Ratios to average net assets:
Net investment income............................. 2.59%(2) 6.35% 6.58% 6.62% 6.53% 6.26%
Expenses(3)....................................... 0.43%(2) 0.85% 0.85% 0.88% 0.87% 0.84%
Portfolio turnover rate(4).......................... 37.6% 33.2% 13% 12% 6% 28%
</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) Annualized
(3) 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.
(4) 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 April 30, 1998 were $9,065,426 and $10,137,964, respectively.
See accompanying Notes to Financial Statements.
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 current income which is
exempt from federal, New York State and New York City income taxes. The Fund's
investment advisor 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 an 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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
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 accordance
with federal income tax requirements. As of November 4, 1997, in order to
conform book and tax bases, the Fund began amortization of premiums on
securities for book purposes. Accordingly, during the six months ended April 30,
1998, amounts have been reclassified to reflect a decrease in distributed net
investment income of $42,489, an increase in unrealized appreciation on
investments of $244,747 and a decrease in paid-in capital of $202,258. 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
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
The New York Tax-Exempt Income Fund, Inc.
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 million shares of $.01 par value capital stock. Of
these shares, 157,107 shares were reserved for issuance under a Dividend
Reinvestment and Cash Purchase Plan. Transactions in shares of capital stock
were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1998 October 31, 1997
---------------- ----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net increase from dividends
and distributions reinvested 17,795 $172,825 29,677 $289,815
====== ======== ====== ========
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At April 30, 1998, net unrealized appreciation on investments of $918,848 was
composed of gross appreciation of $1,054,321, and gross depreciation of
$135,473.
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.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
The New York Tax-Exempt Income Fund, Inc.
5. SHAREHOLDER MEETING
On April 16, 1998, a special shareholder meeting was held at which the four
Directors identified below were elected and the selection of Deloitte & Touche
LLP as the independent certified public accountants and auditors of the Fund for
the fiscal year beginning November 1, 1997 was ratified (Proposal No. 1) as
described in the Fund's proxy statement for that meeting. The following is a
report of the votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Nominee/Proposal For Against Abstain Total Non-Votes
- ---------------- ------------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Directors
C. Howard Kast 2,042,243.123 32,129.029 0 2,074,372.152 160,705
Robert M. Kirchner 2,042,243.123 32,129.029 0 2,074,372.152 160,705
Ned M. Steel 2,042,243.123 32,129.029 0 2,074,372.152 160,705
George C. Bowen 2,042,243.123 32,129.029 0 2,074,372.152 160,705
Proposal No. 1 2,030,209.892 12,330.611 31,831.649 2,074,372.152 160,705
</TABLE>
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<PAGE> 14
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
GENERAL INFORMATION CONCERNING THE FUND
The New York Tax-Exempt Income Fund, Inc. is a closed-end investment company
whose shares trade on the American Stock Exchange (the ASE). The Fund seeks to
provide high current income which is exempt from federal, New York State and New
York City income taxes. A portion of the Fund's distributions may be subject to
income tax. For investors subject to the alternative minimum income tax, a
portion of the Fund's distributions may increase that tax. The Fund seeks to
achieve its objective by investing in municipal obligations, the income from
which is generally tax-exempt as described above. The Fund may invest in
municipal lease obligations, municipal obligations with variable or floating
interest rates and certain derivative investments, such as inverse floaters. The
Fund may also use certain hedging instruments. At the April 28, 1998 Board of
Directors meeting, the Board approved a non-fundamental investment policy
permitting the Fund to invest in municipal lease obligations with
"non-appropriation" clauses, subject to the Fund's liquidity and credit quality
guidelines for municipal lease obligations. The investment advisor (the Manager)
of the Fund is OppenheimerFunds, Inc.
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 Manager. Mr.
Patterson has been the person principally responsible for the day-to-day
management of the Fund's portfolio since February 1992. Mr. Patterson also
serves as an officer and portfolio manager for certain mutual funds managed by
the Manager.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Fund's Dividend Reinvestment and Cash Purchase Plan (the Plan),
as to shares of the Fund (Shares) not registered in nominee name, all dividends
and capital gains distributions (Distributions) declared by the Fund will be
automatically reinvested in additional full and fractional Shares unless a
shareholder elects to receive cash. If Shares are registered in nominee name,
the shareholder should consult the nominee if the shareholder desires to
participate 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), accompanied by 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 ASE, 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.
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<PAGE> 15
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
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.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the ASE section of
newspapers. The Fund's ASE trading symbol is XTX. Weekly comparative net asset
value (NAV) and market price information about The New York Tax-Exempt Income
Fund, Inc. is published each Monday in The Wall Street Journal and The New York
Times and each Saturday in Barron's in a table under the heading "Closed-End
Bond Funds."
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