<PAGE> 1
1997 ANNUAL REPORT
THE
NEW YORK
TAX-EXEMPT
INCOME
FUND, INC.
OCTOBER 31, 1997
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
In spite of generally positive trends, the municipal markets experienced
relatively high levels of short-term volatility in the past year. This was due
in part to investors' changing outlooks for economic growth, inflation and
federal monetary policy, making yields on both taxable and tax-exempt bonds
repeatedly rise and fall.
INVESTMENT BREAKDOWN:
THE NEW YORK TAX-EXEMPT INCOME
FUND, INC. AS OF 10/31/97(3)
[Pie Chart]
AAA 47.57%
AA 3.04%
A 3.46%
BBB 27.36%
BB 6.49%
NR 12.08%
In this rapidly changing environment, The New York Tax-Exempt Income Fund, Inc.
performed well, providing a total return at market value of 9.40% during the
one-year period ended 10/31/97. The Fund paid shareholders tax-exempt income
with a dividend return of 6.52% for the month ended 10/31/97.1 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 11.59%.(2)
Both New York State and New York City continued to experience economic
improvement over the past year, and the Fund concentrated its investments on
issuers whose prospects brightened along with the economic climate. In addition
to increasing our position in New York City, we liked issuers of state
appropriation bonds, which are bonds connected with the annual state or local
budgets. Examples include bonds issued by the city and state universities. We
also continued to favor revenue bonds that were backed by the earnings of
specific projects, such as bridge tolls and sewer charges, over general
obligation bonds backed by general tax revenues. Furthermore, to provide
liquidity and pro-
1. Total return is based on the change in market value per share from 10/31/96
to 10/31/97, 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 October 1997 dividend of $0.053 and dividing by
the closing price on the American Stock Exchange of $9.76 per share on 11/1/97
(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 12.08% 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
tection against default risk, we continued to hold an overweighted position in
prerefunded and other insured bonds.
Of course, because some areas of the New York economy were still uncertain, we
were selective in our bond purchases. For example, we were cautious about bonds
in the hospital sector, even though most of these bonds are insured in New
York, because we saw few opportunities for credit improvement in that area. The
Fund also tended to avoid the smaller municipalities in New York. Our feeling
was that as the state and federal governments shifted expenses for Medicare and
many welfare programs to local entities, the smaller municipalities might find
it more difficult to meet their fiscal obligations.
Generally speaking, during this period we stayed invested in a diversified
portfolio of quality securities that provided competitive levels of income and
attractive relative values. We attempted to boost returns and reduce risks by
actively managing the Fund's average duration, which is a measure of the
portfolio's sensitivity to interest rate fluctuations. By lengthening or
shortening the average duration, we can benefit when interest rates are falling
and help protect the Fund's assets when rates rise.
Looking forward, we are cautiously optimistic about New York's prospects for
continued and increased fiscal strength on both the state and local levels.
Part of this optimism is rooted in the U.S. economy, which is in its seventh
year of non-inflationary growth. As long as inflation remains benign, our
outlook for interest rates and the bond market is generally positive. However,
if the economy grows faster than is currently expected, inflation fears could
cause significant short-term volatility. We try to help protect shareholders
from the brunt of market declines, while enabling them to participate in the
bulk of the market's gains.
As always, we thank you for the trust you have placed in OppenheimerFunds, The
Right Way to Invest. We look forward to helping you meet your investment goals
with The New York Tax-Exempt Income Fund, Inc.
Sincerely,
James C. Swain
Chairman
The New York Tax-Exempt
Income Fund, Inc.
Bridget A. Macaskill
President
The New York Tax-Exempt
Income Fund, Inc.
November 21, 1997
<PAGE> 4
STATEMENT OF INVESTMENTS
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Moody's/
S&P/Fitch Market Value
(Unaudited) Face Amount See Note 1
--------------------- ----------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 98.7%
NEW YORK -- 84.5%
Babylon, NY IDA RR RB, Ogden Martin Systems, Inc.,
Prerefunded, Series C, 8.50%, 1/1/19 . . . . . . . . Aaa/AAA $ 985,000 $ 1,044,021
NYC GOB, Prerefunded, Series D, 7.50%, 2/1/19 . . . . . Aaa/BBB+/A- 1,195,000 1,362,192
NYC GOB, Prerefunded, Series D, 8%, 8/1/03 . . . . . . Aaa/BBB+/A- 900,000 1,031,859
NYC GOB, Unrefunded Balance, Series D, 7.50%, 2/1/19 . Baa1/BBB+/A- 105,000 117,619
NYC Health & Hospital Corp. RRB, AMBAC Insured,
Inverse Floater, 7.30%, 2/15/23(1) . . . . . . . . . Aaa/AAA/AAA 1,000,000 1,013,750
NYC IDA Civil Facility RB, Community Resources
Development, 7.50%, 8/1/26 . . . . . . . . . . . . . NR/NR 500,000 525,650
NYC IDA RB, Visy Paper, Inc. Project, 7.95%, 1/1/28 . . NR/NR 1,250,000 1,429,137
NYC MTAU RB, Transportation Facilities Service
Contracts, Series 3, 9.25%, 7/1/00 . . . . . . . . . Baa1/BBB+ 1,015,000 1,141,215
NYS DA RB, Judicial Facilities Lease, Escrowed to
Maturity, BIG Insured, 7.375%, 7/1/16 . . . . . . . . Aaa/AAA 250,000 312,428
NYS DA RB, Menorah Campus, Prerefunded, 7.30%,
8/1/16 . . . . . . . . . . . . . . . . . . . . . . . NR/AA 195,000 219,708
NYS DA RRB, CUS, Series B, FGIC Insured, 9%,
7/1/00 . . . . . . . . . . . . . . . . . . . . . . . Aaa/AAA/AAA 900,000 1,010,727
NYS DA RRB, L.I. Medical Center, Series A, 7.75%,
8/15/27 . . . . . . . . . . . . . . . . . . . . . . Aa2/AAA 1,000,000 1,028,380
NYS ERDAUEF RB, L.I. Lighting Co., Series C, 6.90%,
8/1/22 . . . . . . . . . . . . . . . . . . . . . . . Ba1/BB+ 1,000,000 1,083,930
NYS ERDAUPC RB, Rochester Gas & Electric Co.
Project, Series C, 8.375%, 12/1/28 . . . . . . . . . Baa1/BBB+ 250,000 265,055
NYS GORB, 9.875%, 11/15/05 . . . . . . . . . . . . . . A2/A/A+ 400,000 538,296
NYS HFA RB, State University Construction Project,
Prerefunded, Series A, 8.30%, 5/1/18 . . . . . . . . Aaa/AAA 750,000 765,000
NYS HFASC RB, Prerefunded, Series A, 7.375%,
9/15/21 . . . . . . . . . . . . . . . . . . . . . . Aaa/AAA 575,000 656,903
NYS LGAC RB, Prerefunded, Series B, 7.50%,
4/1/20 . . . . . . . . . . . . . . . . . . . . . . . Aaa/AAA/AAA 1,000,000 1,124,900
NYS MAG RB, Inverse Floater, 5.975%, 10/1/24(1) . . . . NR/NR 1,000,000 951,250
NYS MAG RB, Ninth Series E, 8.375%, 4/1/18 . . . . . . Aaa/NR 65,000 66,383
NYS MCFFA RB, Bronx-Lebanon Hospital, Series A,
BIG Insured, 7.10%, 2/15/27 . . . . . . . . . . . . Aaa/AAA 1,000,000 1,022,450
NYS MCFFA RB, MHESF, Prerefunded, Series B, 7.875%,
8/15/20 . . . . . . . . . . . . . . . . . . . . . . Aaa/AAA 350,000 391,150
NYS MCFFA RB, MHESF, Unrefunded Balance, Series B,
7.875%, 8/15/20 . . . . . . . . . . . . . . . . . . Baa1/BBB+ 995,000 1,105,127
NYS MCFFA RRB, MHESF, Unrefunded Balance,
Series A, 8.875%, 8/15/07 . . . . . . . . . . . . . Baa1/BBB+ 145,000 148,522
NYS PAU RB, Prerefunded, Series V, 8%, 1/1/17 . . . . . NR/AA- 500,000 513,395
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Continued)
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Ratings: Moody's/
S&P/Fitch Market Value
(Unaudited) Face Amount See Note 1
------------------- ----------- ------------
<S> <C> <C> <C>
NEW YORK (CONTINUED)
NYS PAU RRB, Prerefunded, Series V, MBIA Insured,
7.875%, 1/1/13 . . . . . . . . . . . . . . . . . . . Aaa/AAA $ 450,000 $ 462,006
Onondaga Cnty., NY RR Agency RB, RR Facilities
Project, 7%, 5/1/15 . . . . . . . . . . . . . . . . Baa/NR/A- 900,000 968,508
Suffolk Cnty., NY GORB, AMBAC Insured, 10%,
11/1/02 . . . . . . . . . . . . . . . . . . . . . . Aaa/AAA/AAA 250,000 312,480
-----------
20,612,041
-----------
U.S. POSSESSIONS -- 14.2%
PR CMWLTH Aqueduct & Sewer Authority RB,
Escrowed to Maturity, 10.25%, 7/1/09 . . . . . . . . Aaa/AAA 800,000 1,122,888
PR CMWLTH GORB, Prerefunded, 7.70%, 7/1/20 . . . . . . NR/AAA 1,000,000 1,112,110
PR CMWLTH Special Infrastructure FAU RRB,
Series A, 7.90%, 7/1/07 . . . . . . . . . . . . . . Baa1/BBB+ 425,000 445,081
PR Industrial, Medical & Environmental PC Facilities
FAU RB, American Airlines, Inc. Project, Series A,
6.45%, 12/1/25 . . . . . . . . . . . . . . . . . . . Baa1/BB+ 435,000 479,118
PR Public Buildings Authority RB, Series B, 5.25%,
7/1/21 . . . . . . . . . . . . . . . . . . . . . . . Baa1/A 300,000 294,792
-----------
3,453,989
-----------
Total Investments, at Value (Cost $23,166,804) . . . . . . . . . . . . . 98.7% 24,066,030
Other Assets Net of Liabilities . . . . . . . . . . . . . . . . . . . . . 1.3 326,142
----------- -----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $24,392,172
=========== ===========
</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 $1,965,000 or
8.06% of the Fund's net assets at October 31, 1997.
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
The New York Tax-Exempt Income Fund, Inc.
As of October 31, 1997, securities subject to the alternative minimum tax
amounted to $3,813,013 or 15.63% of the Fund's net assets.
Distribution of investments by industry, as a percentage of total investments
at value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
-------- ------------ -------
<S> <C> <C>
Hospital/Healthcare $ 4,780,564 19.8%
General Obligation 4,474,556 18.6
Resource Recovery 2,012,529 8.4
Lease Rental 1,896,957 7.9
Higher Education 1,775,727 7.4
Sales Tax 1,569,981 6.5
Manufacturing, Durable Goods 1,429,138 5.9
Pollution Control 1,348,985 5.6
Water Utilities 1,122,888 4.7
Single Family Housing 1,017,633 4.2
Electric Utilities 975,401 4.1
Adult Living Facilities 656,903 2.7
Not-for-Profit Organization 525,650 2.2
Corporate Backed 479,118 2.0
----------- -----
$24,066,030 100.0%
=========== =====
</TABLE>
To simplify the listing of securities, abbreviations are used per the table
below:
CMWLTH Commonwealth
CUS City University System
DA Dormitory Authority
ERDAUEF Energy Research & Development
Authority Electric Facilities
ERDAUPC Energy Research & Development
Authority Pollution Control
FAU Finance Authority
GOB General Obligation Bonds
GORB General Obligation Refunding Bonds
HFA Housing Finance Agency
HFASC Housing Finance Agency Service Contract
IDA Industrial Development Agency
LGAC Local Government Assistance Corp.
L.I. Long Island
MAG Mtg. Agency
MCFFA Medical Care Facilities Finance Agency
MHESF Mental Health Services Facilities
MTAU Metropolitan Transportation 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
See accompanying Notes to Financial Statements.
5
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES October 31, 1997
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $23,166,804) -- see accompanying statement . . . . . . . . . $24,066,030
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487,551
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,711
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,558,292
-----------
LIABILITIES:
Bank overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Payables and other liabilities:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,505
Shareholder reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,625
Management and administrative fees . . . . . . . . . . . . . . . . . . . . . . . . . 10,321
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,138
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,183
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,120
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,392,172
===========
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,001
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,129,580
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,752
Accumulated net realized gain on investment transactions . . . . . . . . . . . . . . . . 268,613
Net unrealized appreciation on investments -- Note 3 . . . . . . . . . . . . . . . . . . 899,226
-----------
NET ASSETS -- applicable to 2,500,098 shares of capital stock outstanding . . . . . . . . $24,392,172
===========
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.76
=====
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 8
STATEMENT OF OPERATIONS For the Year Ended October 31, 1997
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<S> <C>
INVESTMENT INCOME -- Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,733,281
----------
EXPENSES:
Management fees -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,378
Shareholder reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,590
Transfer agent and accounting service fees -- Note 4 . . . . . . . . . . . . . . . . . . 24,231
Legal and auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,673
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,443
Custodian fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,202
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,675
Insurance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,734
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,830
----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,756
Less expenses paid indirectly -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . (7,797)
----------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,959
----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,537,322
----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,554
Net change in unrealized appreciation or depreciation on investments . . . . . . . . . . (82,854)
----------
NET REALIZED AND UNREALIZED GAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,700
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $1,742,022
==========
</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>
Year Ended October 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,537,322 $ 1,568,849
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . 287,554 (30,729)
Net change in unrealized appreciation or depreciation . . . . . . . . . (82,854) (221,504)
----------- -----------
Net increase in net assets resulting from operations . . . . . 1,742,022 1,316,616
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM INVESTMENT INCOME . . . . . . . . . . . (1,581,763) (1,562,020)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from shares issued to shareholders in
reinvestment of dividends and distributions -- Note 2 . . . . . . . . 289,815 308,225
----------- -----------
NET ASSETS:
Total increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,074 62,821
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . 23,942,098 23,879,277
----------- -----------
End of period (including undistributed net investment
income of $69,752 and $59,636, respectively) . . . . . . . . . . . . $24,392,172 $23,942,098
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE> 10
FINANCIAL HIGHLIGHTS
The New York Tax-Exempt Income Fund, Inc.
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period . . . $ 9.69 $ 9.79 $ 9.33 $ 10.77 $ 10.37
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income . . . . . . . . . .62 .64 .63 .65 .66
Net realized and unrealized gain (loss) . .09 (.10) .47 (1.18) .55
------- ------- ------- ------- -------
Total income (loss) from
investment operations . . . . . . . . .71 .54 1.10 (.53) 1.21
------- ------- ------- ------- -------
Dividends and distributions to
shareholders:
Dividends from net investment
income . . . . . . . . . . . . . . . (.64) (.64) (.64) (.66) (.74)
Distributions from net realized gain . -- -- -- -- (.07)
Distributions in excess of net realized
gain. . . . . . . . . . . . . . . . . -- -- -- (.25) --
------- ------- ------- ------- -------
Total dividends and distributions to
shareholders . . . . . . . . . . . (.64) (.64) (.64) (.91) (.81)
------- ------- ------- ------- -------
Net asset value, end of period . . . . . . $ 9.76 $ 9.69 $ 9.79 $ 9.33 $ 10.77
======= ======= ======= ======= =======
Market value, end of period . . . . . . . . $ 10.25 $ 10.00 $ 9.63 $ 9.50 $ 12.63
TOTAL RETURN, AT MARKET VALUE(1) 9.40% 10.82% 8.32% (17.70)% 25.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) . $24,392 $23,942 $23,879 $22,468 $25,516
Average net assets (in thousands) . . . . . $24,088 $23,840 $23,143 $23,852 $24,936
Ratios to average net assets:
Net investment income . . . . . . . . . . 6.35% 6.58% 6.62% 6.53% 6.26%
Expenses(2) . . . . . . . . . . . . . . . 0.85% 0.85% 0.88% 0.87% 0.84%
Portfolio turnover rate(3) . . . . . . . . 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) 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, 1997 were
$8,150,197 and $7,866,736, respectively.
See accompanying Notes to Financial Statements.
9
<PAGE> 11
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 exempt from federal, New York
State and New York City income taxes for individual investors as is
available from municipal securities. 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
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 fiscal year in which the
income or realized gain was recorded by the Fund.
The Fund adjusted the classification of distributions to shareholders
to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, during the period ended October 31, 1997, amounts have
been reclassified to reflect an increase in undistributed net
investment income of $54,557, an increase in accumulated net realized
gain on investments of $18,133, and a decrease in paid-in capital of
$72,690.
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. 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 dis-
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (Continued)
The New York Tax-Exempt Income Fund, Inc.
count 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 million shares of $.01 par value capital
stock. Of these shares, 174,902 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,
--------------------------------------
1997 1996
----------------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net increase from dividends
reinvested 29,677 $289,815 31,639 $308,225
====== ======== ====== ========
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997, net unrealized appreciation on investments of
$899,226 was composed of gross appreciation of $1,057,621, and gross
depreciation of $158,395.
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.
11
<PAGE> 13
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, 1997, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended October 31,
1997 and 1996 and the financial highlights for the period November 1, 1993 to
October 31, 1997. 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, 1997 by correspondence with the custodian. 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, 1997, 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
Denver, Colorado
November 21, 1997
12
<PAGE> 14
FEDERAL INCOME TAX INFORMATION (Unaudited)
The New York Tax-Exempt Income Fund, Inc.
In early 1998, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1997.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended October 31,
1997 are eligible for the corporate dividend-received deduction. The dividends
were derived from interest on municipal bonds and are not subject to federal
income tax. To the extent a shareholder is subject to any state or local tax
laws, or to alternative minimum tax, some or all of the dividends received may
be taxable.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
SHAREHOLDER MEETING (Unaudited)
On May 5, 1997, a special shareholder meeting was held at which the five
Directors identified below were elected, the selection of Deloitte & Touche LLP
as the independent certified public accountants and auditors of the Fund for
the fiscal year beginning November 1, 1996 was ratified (Proposal No. 1), the
proposal to change certain of the Fund's fundamental investment policies was
approved (Proposal No. 2) and the current Investment Advisory Agreement between
the Fund and OppenheimerFunds, Inc. was approved (Proposal No. 3) 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 Non-Votes Total
- ---------------- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Directors
William A. Baker 1,453,537 12,981 317,212 1,466,518
Charles Conrad, Jr. 1,453,537 12,981 317,212 1,466,518
Raymond J. Kalinowski 1,453,537 12,981 317,212 1,466,518
Bridget A. Macaskill 1,453,537 12,981 317,212 1,466,518
Sam Freedman 1,453,407 13,111 317,212 1,466,518
Proposal No. 1 1,440,184 3,300 23,034 317,212 1,466,518
Proposal No. 2 1,232,371 26,842 49,406 634,424 1,308,619
Proposal No. 3 1,402,485 14,796 48,737 317,212 1,466,018
</TABLE>
13
<PAGE> 15
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.
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.
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 $0.75.
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.
14
<PAGE> 16
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."
<PAGE> 17
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, 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.
RA0875.001.1097 [RECYCLED LOGO] Printed on recycled paper
