OCC CASH RESERVES INC, 497, 1996-04-02

OCC CASH RESERVES INC
497, 1996-04-02

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[LOGO] ................... with investment objectives of

SAFETY - LIQUIDITY - INCOME

OCC Cash Reserves (the "Fund") is a money market fund with five distinct
Portfolios-the Primary Portfolio, the Government Portfolio, the General
Municipal Portfolio, the California Municipal Portfolio and the New York
Municipal Portfolio (the "Portfolios"). This prospectus pertains to the first
three Portfolios.

Safety of principal is sought by investing in securities which are selected
for their high quality, liquidity and stability of principal. A security at the
time of purchase cannot have a maturity exceeding thirteen months, and the
average weighted maturity of all securities in the Portfolio cannot exceed 90
days. Such a short average maturity enhances the ability of each Portfolio to
provide both liquidity and stability of value to you and your fellow
shareholders. WHILE EACH PORTFOLIO SEEKS TO MAINTAIN (AND HAS MAINTAINED) ITS
SHARE PRICE AT $1.00, INVESTMENTS IN THE PORTFOLIOS ARE NOT GUARANTEED OR
INSURED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE THAT A PORTFOLIO WILL
MAINTAIN A CONSTANT PRICE OF $1.00 PER SHARE.

IS OCC CASH RESERVES FOR YOU?

The Fund is designed for individuals, institutions, advisors, custodians,
charities, fiduciaries and corporations who can benefit from a fund seeking
maximum current income and who place value on an investment having safety of
principal, liquidity, stability, simplicity, and convenience. The availability
of five separate Portfolios provides you with the advantage of selecting a
combination of investment characteristics particularly suitable to your needs.
The three Portfolios described in this Prospectus compare to one another as
follows:

<TABLE>
<S> <C> <C>
Primary Portfolio -- highest money market income; conservative investments
Government Portfolio -- high money market income; very conservative investments
General Municipal -- highest money market tax-exempt income; conservative investments
Portfolio
</TABLE>

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EXPENSE INFORMATION

The expense summary format below was developed for use by all mutual funds
to help investors understand the various direct costs and expenses related to a
fund investment.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (FOR EACH PORTFOLIO)
<S> <C>
Sales Load Imposed on Purchases.............................. None
Sales Load Imposed on Reinvested Dividends................... None
Redemption Fees.............................................. None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE NET ASSETS)
GENERAL
PRIMARY GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------
<S> <C> <C> <C>
Management fees................................ .41% .48% .47%
12b-1 (Distribution Plan) expenses............. .25% .25% .25%
Other Expenses................................. .28% .27% .28%
--
--- ---
Total Operating Expenses....................... .94% 1.00% 1.00%
</TABLE>

During the fiscal year ended November 30, 1995, OpCap Advisors (the
"Advisor") waived part of its advisory fee with respect to the Government
Portfolio and the General Municipal Portfolio. After giving effect to such
waivers, the management fees for the Government Portfolio and the General
Municipal Portfolio were .48% and .41% respectively, and the total operating
expenses were 1.00% and .93%, respectively. Such advisory fee waivers are
voluntary and may be discontinued at any time, except that the Advisor has
agreed to assume expenses of any Portfolio in excess of 1.00% in any fiscal
year. Had such waivers not occurred, the total operating expenses would have
been 1.02% and 1.02% respectively. The expenses listed for the Government and
General Municipal Portfolio have been restated to reflect the Advisor's
agreement to assume expenses in excess of 1.00%. In addition, the expense
information has been restated to reflect the reduction in the 12b-1 expenses for
each Portfolio from .30% of average net assets to .25% of average net assets,
effective March 31, 1995, and an increase in administrative expenses.

The following table illustrates the expenses that an investor would pay on a
hypothetical $1,000 investment in each of the Portfolios assuming a 5% annual
return (cumulatively through the end of each time period). Neither the 5% return
nor the estimated expenses should be considered an indication of actual or
expected performance or expenses, both of which may vary.

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FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The financial information presented below has been audited by Price
Waterhouse LLP, independent accountants, whose unqualified report thereon
appears in the Statement of Additional Information ("SAI"). Investors should
understand that all the following information should be read in conjunction with
the financial statements and related notes thereto appearing in the SAI.
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
------------------------------------- ---------------------------------------------
NET DIVIDENDS TO DISTRIBUTIONS
NET ASSET REALIZED SHAREHOLDERS TO DISTRIBUTIONS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET SHAREHOLDERS TO SHAREHOLDERS
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT FROM OTHER FROM NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME SOURCES REALIZED GAINS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995..................... $1.00 $0.051 $ 0.000(1) $0.051 $(0.051) -- $(0.000)(1)
1994..................... 1.00 0.032 0.000(1) 0.032 (0.032) $ 0.000)(1) (0.000)(1)
1993..................... 1.00 0.024 0.000(1) 0.024 (0.024) (0.000)(1) (0.000)(1)
1992..................... 1.00 0.033 0.000(1) 0.033 (0.033) -- (0.000)(1)
1991..................... 1.00 0.057 (0.000)(1) 0.057 (0.057) -- --
December 13, 1989 (3)
to November 30, 1990.... 1.00 .073(4) 0.000(1) 0.073 (0.073) -- (0.000)(1)

<CAPTION>
RATIOS TO AVERAGE NET

NET ASSETS
ASSETS, --------------------------
NET ASSET END OF NET
VALUE, END TOTAL PERIOD NET OPERATING INVESTMENT
OF PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995..................... $ 1.00 5.19% $1,671.1 0.94%(2) 5.07%(2)
1994..................... 1.00 3.26% 1,453.8 0.91% 3.21%
1993..................... 1.00 2.44% 1,413.9 0.90% 2.41%
1992..................... 1.00 3.38% 1,168.3 0.88% 3.34%
1991..................... 1.00 5.89% 1,249.0 0.86% 5.74%
December 13, 1989 (3)
to November 30, 1990.... 1.00 7.80%(5) 1,244.2 0.87%(4,5) 7.47%(4,5)
</TABLE>

(1) Less than $.0005 per share.

(2) Average net assets for the year ended November 30, 1995 were $1,594,387,722.

(3) Commencement of operations.

(4) Reflects a voluntary waiver of $.00004 per share in advisory fees. Had such
waiver not occurred, the net operating expense and net investment income
ratios would have been 0.88% and 7.46%, respectively.

(5) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended November 30,
1995..................... $1.00 $0.049(2) $0.000(1) $0.049 $(0.049) -- $(0.000)(1)
1994..................... 1.00 0.031(2) 0.000(1) 0.031 (0.031) $ 0.000)(1) --
1993..................... 1.00 0.022 -- 0.022 (0.022) (0.000)(1) --
1992..................... 1.00 0.032(2) 0.000(1) 0.032 (0.032) -- (0.000)(1)
1991..................... 1.00 0.055(2) -- 0.055 (0.055) -- --
February 14, 1990 (4)
to November 30, 1990.... 1.00 0.059(2) 0.000(1) 0.059 (0.059) -- (0.000)(1)

<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1995..................... $ 1.00 5.02% $ 108.6 1.00%(2,3) 4.91%(2,3)
1994..................... 1.00 3.12% 113.2 0.95%(2) 3.08%(2)
1993..................... 1.00 2.26% 127.9 1.00% 2.24%
1992..................... 1.00 3.24% 131.7 0.93%(2) 3.23%(2)
1991..................... 1.00 5.69% 142.2 0.84%(2) 5.62%(2)
February 14, 1990 (4)
to November 30, 1990.... 1.00 7.67%(5) 150.1 0.67%(2,5) 7.34%(2,5)
</TABLE>

(1) Less than $.0005 per share.

(2) Reflects a voluntary waiver of $.0002, $.0002, $.0002 and $.001 per share,
respectively, in advisory fees and $.004 per share in advisory fees and
reimbursement of other operating expenses, respectively, in effect during
each period. Had such waivers and reimbursements not occurred, the ratio of
net operating expenses would have been 1.02%, 0.97%, 0.94%, 0.92% and 1.19%,
respectively and the ratio of net investment income would have been 4.89%,
3.06%, 3.22%, 5.54% and 6.82%, respectively.

(3) Average net assets for the year ended November 30, 1995 were $111,066,046.

(4) Commencement of operations.

(5) Annualized.

* Assumes reinvestment of all dividends and distributions.

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<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------- DIVIDENDS TO
NET ASSET NET REALIZED SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT CONTRIBUTION
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME BY ADVISOR
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $0.031(1) $(0.000)(2) $0.031 $(0.031) --
1994.......................... 1.00 0.020(1) 0.000(2) 0.020 (0.020) --
1993.......................... 1.00 0.017(1) (0.000)(2) 0.017 (0.017) --
1992.......................... 1.00 0.026(1) (0.000)(2) 0.026 (0.026) --
1991.......................... 1.00 0.042(1) 0.000(2) 0.042 (0.042) --
February 14, 1990 (4)
to November 30, 1990......... 1.00 0.042(1) (0.000)(2) 0.042 (0.042) --

<CAPTION>
RATIOS TO AVERAGE NET
NET ASSETS
ASSETS, --------------------------
NET ASSET END OF NET
VALUE, END TOTAL PERIOD NET OPERATING INVESTMENT
OF PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 3.11% $116.0 0.93%(1,3) 3.07%(1,3)
1994.......................... 1.00 2.04% 108.7 0.90%(1) 2.01%(1)
1993.......................... 1.00 1.74% 109.7 0.98%(1) 1.73%(1)
1992.......................... 1.00 2.66% 112.9 0.90%(1) 2.62%(1)
1991.......................... 1.00 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990 (4)
to November 30, 1990......... 1.00 5.45%(5) 107.9 0.71%(1,5) 5.32%(1,5)
</TABLE>

(2) Less than $.0005 per share.

(3) Average net assets for the year ended November 30, 1995 were $126,528,413.

(4) Commencement of operations.

(5) Annualized.

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OCC CASH RESERVES PRIMARY PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The Primary Portfolio's investment objectives are in the following order of
priority--safety of principal, liquidity, and maximum current income from money
market securities to the extent consistent with the first two objectives. As a
matter of fundamental policy, the Primary Portfolio pursues its objectives by
maintaining a diversified portfolio of high quality money market securities of
the types described in the succeeding section, all of which at the time of
investment have remaining maturities of thirteen months or less. While the
Portfolio may not change this policy or the other "fundamental investment
policies" described below without shareholder approval, it may, upon notice to
shareholders but without such approval, change its other investment policies. As
is true with all investment companies, there can be no assurance that the
Primary Portfolio's objectives will be achieved.

MONEY MARKET SECURITIES

The money market securities in which the Primary Portfolio invests are (1)
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities (collectively "U.S. Government Securities"); (2)
U.S. dollar-denominated certificates of deposit and bankers' acceptances of
prime quality issued or guaranteed by, and interest-bearing time deposits
maintained at, (a) U.S. banks or savings and loan associations having total
assets of more than $1 billion and which are insured under the administration of
the Federal Deposit Insurance Corporation ("FDIC"), (b) foreign branches of such
U.S. institutions, and U.S. or foreign branches of foreign banks having total
assets of at least $1 billion; (3) domestic or foreign commercial paper of prime
quality and participation interests in loans of equivalent quality extended by
banks to such companies; and (4) repurchase agreements that are collateralized
in full each day by U.S. Government Securities. For the purposes of this
prospectus, prime quality shall mean the security (or the issuer for a
comparable security) is rated in one of the two highest rating categories for
short term debt obligations by any two of Standard & Poor's Corporation ("S&P"),
Moody's Investors Service, Inc. ("Moody's"), Fitch Investors Service, Inc
("Fitch"), Duff & Phelps, Inc. ("Duff") or Thomson BankWatch, Inc., or by one of
such rating agencies if only one rating agency has issued a rating with respect
to the security, or, if not rated, judged by the Advisor pursuant to criteria
adopted by the Fund's Board of Directors to be of comparable quality.

In further regard to items (2) and (3) above, investments by the Primary
Portfolio which do not satisfy one of the following requirements are limited in
the aggregate to 5% of the Portfolio's total assets in regard to issues and to
1% of total assets (or $1 million if greater) in regard to any one issuer of
such issues: (i) issues rated in the highest category (or the issuer is so rated
for a comparable security) by at least two of the above-listed rating agencies;
or (ii) if rated only by one agency, rated in the highest category; or (iii) if
unrated, determined by the Board of Directors to be of quality comparable to
issues which qualify under (i) or (ii).

Certificates of deposit represent the obligation of a bank to repay funds
deposited with it for a specified period of time. Bankers' acceptances are
short-term collateralized credit instruments drawn on and evidencing the
obligation of a bank to pay the value at maturity. Commercial paper consists of
unsecured promissory notes issued by corporations to finance short-term credit
needs. Participation interests are undivided beneficial interests in loans
giving the purchaser the right to receive a pro rata share of a loan's cash
flow. Repurchase agreements are contracts under which the buyer acquires a
security subject to the obligation of the seller to repurchase at a fixed price,
usually within one week. The Fund enters into such agreements only with

5
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"primary dealers" (as designated by the Federal Reserve Bank of New York) in
U.S. Government Securities and with the Fund's Custodian. The Fund could
experience a loss in the event of its failure to realize full value upon
collateral liquidation required by a dealer's default. Though investments in
obligations of foreign issuers may be higher yielding than those of domestic
issuers, they may involve certain different risks such as exchange control
regulations; limited availability of information about the issuer; differences
in accounting, auditing and financial reporting standards and government
regulation; the possibility of expropriation, nationalization or confiscatory
taxation; political or social instability or diplomatic developments; and the
differences between the economies of the United States and the applicable
foreign country, even though the Fund's investments are limited to those in
"developed countries." Each of these factors is carefully considered when
investments are made, but the Fund does not limit the amount of its assets which
can be invested in any particular type of eligible obligation or in any
developed foreign country.

OTHER FUNDAMENTAL INVESTMENT POLICIES
To maintain portfolio diversification and reduce investment risk, the
Primary Portfolio may not (1) invest more than 25% of its total assets in the
securities of issuers conducting their principal business activities in any one
industry, except that under normal circumstances at least 25% of its total
assets will be invested in bank obligations; (2) invest more than 5% of its
total assets in the securities of any issuer (loan participations are considered
obligations of both the lender and the borrower); (3) invest more than 10% of
its total assets in repurchase agreements not terminable within seven days
(whether or not illiquid) or other illiquid investments including participation
interests and other instruments described above for which no secondary markets
exist: (4) borrow money except from banks for extraordinary or emergency
purposes in aggregate amounts not exceeding 15% of its total assets (and, when
such borrowings exceed 5% of its total assets, make any further investments);
and (5) mortgage, pledge or hypothecate its assets except to secure such
borrowings. Limitations (1) and (2) do not apply to U.S. Government Securities.

OCC CASH RESERVES GOVERNMENT PORTFOLIO

INVESTMENT OBJECTIVES AND PROCEDURES

The Government Portfolio's investment objectives are in the following order
of priority-- safety of principal, liquidity, and maximum current income from
money market securities to the extent consistent with the first two objectives.
As a matter of fundamental policy, the Government Portfolio pursues its
objectives by maintaining a diversified portfolio of high quality money market
securities of types described in the succeeding paragraph, all of which at the
time of investment have remaining maturities of thirteen months or less. While
the Portfolio may not change this policy or the "other fundamental investment
policies" described below without shareholder approval, it may, upon notice to
shareholders but without such approval, change its other investment policies. As
is true with all investment companies, there can be no assurance that the
Government Portfolio's objectives will be achieved.

MONEY MARKET SECURITIES

The money market securities in which the Government Portfolio invests are
(1) marketable obligations of, or guaranteed by, the United States Government,
its agencies or instrumentalities (collectively "U.S. Government Securities"),
including direct obligations of the United States Treasury such as Bills, Notes
and Bonds, and issues of agencies and instrumentalities established under the
authority of an act of Congress such as the Federal Home Loan Banks, which have
the right to borrow from the U.S. Treasury, and the Federal National Mortgage
Association, the securities of which are

6
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solely dependent on the issuing instrumentality for repayment; and (2)
repurchase agreements that are collateralized in full each day by the types of
U.S. Government Securities listed above. These agreements are entered into with
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
U.S. Government Securities and with the Fund's Custodian.

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the
Government Portfolio may not (1) invest more than 5% of its total assets in
repurchase agreements with any one vendor, although with respect to 25% of its
total assets it may invest without regard to such limitation; (2) invest more
than 10% of its total assets in repurchase agreements not terminable within
seven days (whether or not illiquid) or other illiquid investments; (3) borrow
money except from banks for extraordinary or emergency purposes in aggregate
amounts not exceeding 15% of its total assets (and, when such borrowings exceed
5% of its total assets, make any further investments); and (4) mortgage, pledge
or hypothecate its assets except to secure such borrowings.

OCC CASH RESERVES GENERAL MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The General Municipal Portfolio's investment objectives are in the following
order of priority-- safety of principal, liquidity, and, to the extent
consistent with these objectives, maximum current income from money market
securities that is exempt from Federal income taxes. As a matter of fundamental
policy, the General Municipal Portfolio pursues its objectives by maintaining a
diversified portfolio of high-grade municipal securities of the types described
in the succeeding section, all of which at the time of investment have remaining
maturities of thirteen months or less and generate, in the opinion of bond
counsel to the issuer, interest that is exempt from Federal income taxes. At
least 80% of the Portfolio's total assets will be invested in such securities
(not including securities treated as tax preference items) unless the Advisor
has determined that it is in the best interest of the Portfolio to assume a
temporary defensive position involving a greater commitment of assets to
obligations generating taxable income. Normally, substantially all of the
Portfolio's income will be exempt from Federal taxes, although it may be subject
to state or local income taxes. While the Portfolio may not change this policy
or the "other fundamental investment policies" described below without
shareholder approval, it may, upon notice to shareholders but without such
approval, change its other investment policies. As is true with all investment
companies, there can be no assurance that the General Municipal Portfolio's
objectives will be achieved.

Under the current Internal Revenue Code (1) interest on tax-exempt municipal
securities issued after August 7, 1986 and used to finance "private activities"
(e.g., industrial development bonds) shall be treated as an item of tax
preference for purposes of alternative minimum tax ("AMT") imposed on
individuals and corporations, though for Federal income tax purposes such
interest shall remain fully tax-exempt, and (2) interest on all tax-exempt
obligations shall be included in "adjusted net book income" of corporations for
AMT purposes. The General Municipal Portfolio may purchase "private activity"
municipal securities without limitation and therefore a substantial portion (and
potentially all) of any distribution from the Portfolio may be treated as a tax
preference item (with resulting tax) for those taxpayers subject to AMT.
Investors who are already subject to AMT should consider whether an investment
in the Portfolio is suitable for them. Investors are urged to consult their own
tax advisors with respect to their own tax situations.

7
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MUNICIPAL SECURITIES

The municipal securities in which the General Municipal Portfolio invests
are municipal notes, short-term municipal bonds, short-term discount notes, and
participation interests in any of the foregoing. Municipal notes are generally
used to provide for short-term capital needs and generally have maturities of
thirteen months or less. Examples include tax anticipation and revenue
anticipation notes which are generally issued in anticipation of various
seasonal revenues, bond anticipation notes, and tax-exempt commercial paper.
Municipal notes and short-term municipal bonds may either be secured by the
issuer's pledge of its faith, credit and taxing power for payment of principal
and interest, or paid from the revenues of a particular facility or a specific
excise or other source. Included within the revenue bonds category are
participations in lease obligations or installment purchase contracts
(hereinafter collectively called "lease obligations") of municipalities. States
and local agencies or authorities issue lease obligations to acquire equipment
and facilities. Short-term discount notes are short-term obligations issued at a
discount to face value. Participation interests are undivided interests in loans
giving the purchaser the right to a pro-rata share of a loan's cash flow.

All of the General Municipal Portfolio's municipal securities at the time of
purchase must be of prime quality, as previously defined. Securities must also
meet credit standards applied by the Advisor.

The General Municipal Portfolio may invest in variable rate obligations
whose interest rates are adjusted either at predesignated periodic intervals or
whenever there is a change in the market rate to which the security's interest
rate is tied. Such adjustments minimize changes in the market value of the
obligation and, accordingly, enhance the ability of the Portfolio to maintain a
stable net asset value. Variable rate securities purchased may include
participation interests in industrial development bonds backed by letters of
credit of domestic or foreign banks having total assets of more than $1 billion;
the letters of credit of any single bank in respect of all variable rate
obligations will not cover more than 10% of the Portfolio's total assets.

The General Municipal Portfolio also may purchase tender option bonds. A
tender option bond is a municipal security (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest at
a fixed rate substantially higher than prevailing short-term tax-exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer, or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value thereof.
As consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the municipal security's fixed
coupon rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities coupled
with the tender option to trade at par on the date of such determination. Thus,
after payment of the fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt rate. The
Advisor, on behalf of the General Municipal Portfolio, will consider on an
ongoing basis the creditworthiness of the issuer of the underlying municipal
security, of any custodian, and of the third party provider of the tender
option. In certain instances and for certain tender option bonds, the option may
be terminable in the event of a default in payment of principal or interest on
the underlying municipal securities, and for other reasons. The Fund will
consider as illiquid securities tender option bonds as to which it cannot
exercise the tender feature on not more than seven days' notice if there is no
secondary market available for these obligations.

Lease obligations may have risks not normally associated with general
obligation or other revenue bonds. Lease obligations and conditional sale
contracts (which may provide for title to the leased

8
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asset to pass eventually to the issuer), have developed as a means for
government issuers to acquire property and equipment without the necessity of
complying with the constitutional and statutory requirements generally
applicable for the issuance of debt. Certain lease obligations contain
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purposes by the appropriate legislative body on an annual
or other periodic basis. Consequently, continued lease payments on those lease
obligations containing "non-appropriation" clauses are dependent on future
legislative actions. If such legislative actions do not occur, the holders of
the lease obligation may experience difficulty in exercising their rights,
including disposition of the property.

In addition, lease obligations may not have the depth of marketability
associated with other municipal obligations, and as a result, certain of such
lease obligations may be considered illiquid securities. To determine whether or
not the General Municipal Portfolio will consider such securities to be illiquid
(the Portfolio may not invest more than 10% of its net assets in illiquid
securities), the following guidelines have been established to determine the
liquidity of a lease obligation. The factors to be considered in making the
determination include: (1) the frequency of trades and quoted prices for the
obligation; (2) the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of the transfer.

The General Municipal Portfolio also may invest in forward commitments,
which obligate the Portfolio to purchase securities, and stand-by commitments or
puts, which give the Portfolio the right to resell securities, from or to a
dealer at a specified price. Such commitments, which may involve certain
expenses and risks, are not expected to comprise a significant portion of the
Portfolio's investments. The Portfolio may commit up to 15% of its net assets to
the purchase of when-issued securities. The underlying securities are subject to
market fluctuations and no interest accrues prior to delivery of such
securities.

TAXABLE INVESTMENTS

The taxable investments in which the General Municipal Portfolio may invest
include obligations of the U.S. Government and its agencies or
instrumentalities; high quality certificates of deposit and bankers'
acceptances; prime commercial paper; and repurchase agreements collateralized at
all times by such instruments.

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain Portfolio diversification and reduce investment risk, the
General Municipal Portfolio may not (1) invest more than 25% of its total assets
in municipal securities whose issuers are located in the same state or more than
25% of its total assets in municipal securities whose interest is paid from
revenues of similar-type projects; (2) invest more than 5% of its total assets
in the securities of any one issuer (except the U.S. Government) although with
respect to 25% of its total assets it may invest without regard to such
limitation; (3) invest more than 10% of its total assets in repurchase
agreements not terminable within seven days (whether or not illiquid) or other
illiquid investments; (4) borrow money except from banks for extraordinary or
emergency purposes and in aggregate amounts not exceeding 15% of its total
assets (and, when such borrowings exceed 5% of its total assets, make any
further investments); and (5) mortgage, pledge or hypothecate its assets except
to secure such borrowings.

9
<PAGE>
ADDITIONAL INFORMATION

ARRANGEMENTS FOR TELEPHONE REDEMPTIONS. If you wish to use the telephone
redemption procedure, indicate this on your New Account Application and
designate a bank and account number to receive the proceeds of your withdrawals.
You also may choose to have the proceeds mailed to you in the form of check to
the address of record on your account. If you decide later that you wish to use
this procedure, or to change instructions already given, send a written notice
to Unified with your signature guaranteed by an eligible guarantor, and
designate a bank and account number to receive redemption proceeds. Eligible
guarantors include member firms of a national securities exchange, banks,
savings associations, and credit unions, as defined by the Federal Deposit
Insurance Act. For joint accounts, all owners must sign and have their
signatures guaranteed.

INVESTMENTS MADE BY CHECK. Money transmitted by a check drawn on a member
of the Federal Reserve System is converted to Federal Funds in one business day
following receipt and is then invested in the Fund. Checks drawn on banks which
are not members of the Federal Reserve System may take longer to be converted
and invested. All payments must be in United States dollars.

FORWARDING OF PROCEEDS FROM ANY REDEMPTION OF FUND SHARES PURCHASED BY CHECK
MAY BE DELAYED ONLY UNTIL THE CHECK HAS CLEARED WHICH MAY NORMALLY TAKE UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE.

AUTOMATED CLEARING HOUSE TRANSFERS. Fund shares can be purchased and
redeemed by ACH electronic funds transfer between Unified and a bank. There are
no charges to you for ACH transactions, either by the Fund or Unified. ACH
transfers are completed approximately two business days following the placement
of transfer orders.

For your Fund account to be eligible for ACH transfers to and from your
bank, you must complete Unified's ACH Authorization Form which can be obtained
from our service representative by telephoning the number below. Direct deposits
into your Fund account by ACH transfer can be used for part or all of recurring
payments made to you by your employer (corporate, Federal, military, or other
type) or by the Social Security Administration. Instructions to the sending
parties are simple; call toll-free 800-UMC-FUND (800-862-3863) to obtain
complete information from our service representative.

TIMING OF INVESTMENTS AND REDEMPTIONS. The Fund has two transaction times
each day, at 12:00 noon and 4:00 p.m. (New York time). New investments
represented by Federal Funds or bank wire monies received by the Custodian prior
to 12:00 noon are paid the full dividend for that day; such investments received
after 12:00 noon do not begin to receive daily dividends until the next day.
Redemption orders received prior to 12:00 noon are effected at 12:00 noon; the
shares redeemed do not earn that day's dividend but the redemption proceeds are
available that day. Redemption orders received after 12:00 noon are effected at
4:00 p.m.; the shares redeemed earn the daily dividend for that day and the
redemption proceeds are remitted the next business day.

MINIMUMS. The Fund has minimums of $1,000 for initial investments, $100 for
subsequent investments, and $500 for account balances. These minimums do not
apply to shareholder accounts maintained through brokerage firms or other
financial institutions, as such financial intermediaries may maintain their own
minimums for their customer's investments in the Fund. The Fund may impose
service charges upon financial intermediaries to reflect the relatively higher
costs of small accounts and small transactions; these intermediaries may in turn
pass on such charges to affected accounts.

A shareholder subject to the minimum account balance requirement must
increase his or her

10
<PAGE>
account balance to at least $500 within sixty days after notice of a deficient
balance has been mailed by the Fund, or the Fund may close the account and mail
a check for the proceeds to the shareholder. The Fund intends at least once each
six months to review its shareholder balances in regard to the $500 minimum and
to send appropriate notices to shareholders with deficient accounts. The Fund
imposes no minimums for redemptions by mail or for redemptions made on an
account's behalf by brokerage firms or other financial institutions. However,
such firms may have internal procedures that include minimums.

SHARE PRICE. Shares are sold and redeemed on a continuing basis without
sales or redemption charges at their net asset value which is expected to be
constant at $1.00, although this share price is not guaranteed. The net asset
value is determined each business day at 12:00 noon and 4:00 p.m. (New York
time). The net asset value per share is calculated by taking the sum of the
value of investments (amortized cost value is used for this purpose) and any
cash or other assets, subtracting liabilities, and dividing by the total number
of shares outstanding. All expenses, including the fees payable to the Advisor,
are accrued daily.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of each
Portfolio is determined each business day and is declared payable pro rata to
shareholders of record as of 12:00 noon. Declared dividends are accrued and are
automatically paid into shareholders' accounts on a monthly basis. As such
additional reinvested shares earn subsequent dividends, a compounding growth of
income occurs.

Net income of the Portfolios consists of all accrued interest income on
portfolio assets less the expenses applicable to that dividend period. All
realized gains and losses are reflected in the net asset value and are not
included in net investment income.

Distributions to your account of tax-exempt interest income are not subject
to Federal income tax (other than the alternative minimum tax described above),
but may be subject to state or local income taxes. Distributions of taxable
interest income, other investment income, and net short-term capital gains are
taxed to you as ordinary income; state and local taxation of such distributions,
if any, may be reduced in proportion to the percentage of income that derives
from U.S. Government obligations. Distributions of net long-term capital gains
would be taxable as long-term capital gains irrespective of the length of time
you may have held your shares. Distributions of net short-term and long-term
capital gains, if any, would be made annually. Each January, each Portfolio will
send you tax information for the calendar year just ended stating the amounts
and types of all its distributions, including the percentage of income derived
from U.S. Government obligations, for the calendar year just ended.

PERIODIC WITHDRAWALS. Without affecting your right to use any of the
methods of redemption described on page 14, by checking the appropriate boxes on
the Application Form you may elect to participate additionally in the following
plans without any separate charges. Under the INCOME DISTRIBUTION PLAN you
receive monthly payments of all the income earned in your Fund account. Under
the SYSTEMATIC WITHDRAWAL PLAN, you may request checks in any specified amount
of $50 or more each month or in any intermittent pattern of months. If desired,
you can order, via a signature-guaranteed letter to the Fund, such periodic
payments to be sent to another person.

THE ADVISOR. The Fund retains OpCap Advisors (the "Advisor"), One World
Financial Center, New York, New York, 10281, under an Advisory Agreement to
provide investment advice and, in general, to supervise the Fund's business
affairs and investment program, subject to the general control of the Directors
of the Fund. The Advisor is a subsidiary of Oppenheimer Capital, one of the
nation's largest independent investment managers, presently having in excess of
$38 billion in assets under its supervision. The management fee rate for each
Portfolio is at an annual rate of .50% on the

11
<PAGE>
first $100 million of average daily net assets, .45% on the next $200 million of
average daily net assets, and .40% of average daily net assets in excess of $300
million, payable monthly.

DISTRIBUTION PLAN. Under a Distribution Assistance and Administrative
Services Plan (the "Plan") adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, each Portfolio pays the Advisor monthly at an
annual rate of .25 of 1% of the Portfolio's average daily net assets.
Substantially all such monies are paid by the Advisor to broker-dealers, banks
and other depository institutions, and other financial intermediaries for
distribution assistance and administrative services provided to the Portfolio,
with any remaining amounts being used to partially defray other expenses
incurred by the Advisor in distributing shares. The Plan has been approved by
the Board of Directors and by the Fund's shareholders. The Statement of
Additional Information contains additional information about the Advisory
Agreement and the Plan.

EXPENSES--EXPENSE LIMITATION. Principal operating expenses of the Fund
consist of the Advisor's fee, costs of the Plan, legal and accounting expenses,
custodian fees, and transfer agent and other shareholder servicing costs.
Shareholders pay no direct charges or fees for investment services. Each
Portfolio's expenses are paid out of its gross investment income. The Advisor
reimburses each Portfolio to the extent that the combined aggregate operating
expenses of the Portfolio exceed 1% of its average daily net assets for any
fiscal year.

FUND ORGANIZATION. The Fund, which is an open-end investment company
registered under the Investment Company Act of 1940, was organized as a Maryland
corporation in series form in April 1989. The Fund's activities are supervised
by its Board of Directors. Each share of a Portfolio is entitled to one vote;
shares vote as a single series on matters that affect all Portfolios in
substantially the same manner. The Fund does not intend to hold regular annual
shareholder meetings. Directors are required to call a special meeting of a
Portfolio's shareholders if owners of at least 10% of the Portfolio's
outstanding shares so request in writing. The Fund may establish additional
Portfolios which may have different investment objectives from those stated in
this prospectus. The Fund issues shares only for full monetary consideration,
and it does not issue share certificates.

REPORTS. You will receive semi-annual and annual reports of the Portfolio
in which you are invested. To reduce expenses, only one copy of financial
reports will be mailed to your household, even if you have more than one
account. If you wish to receive additional copies of financial reports, please
call 1-800-862-3863. You can arrange for a copy of each of your account
statements to be sent to other parties.

YIELD DEFINITIONS. From time to time we may advertise yield, effective
yield, and tax equivalent yield. Yield refers to income generated by an
investment in a Portfolio over a seven day or other stated period, expressed as
an annual percentage rate. Effective yield of a Portfolio results from the
compounding of periodically reinvested dividends. Tax-equivalent yield
represents the amount of income subject to a particular tax rate which would
have to be earned to give an investor an amount of income equal to tax-exempt
income. In addition, reference in advertisements may be made to ratings and
ratings among similar funds by independent evaluators, such as Lipper's
Analytical Services, Inc. The performance of the Portfolios may be compared to
recognized indices of market performance.

CUSTODIAN AND TRANSFER AGENT. The custodian of the assets, transfer agent
and shareholder servicing agent for the Fund is State Street Bank and Trust
Company. Cash balances of the Fund with the Custodian in excess of $100,000 are
unprotected by Federal deposit insurance. Such uninsured balances may at times
be substantial.

12
<PAGE>
Investment Advisers, Inc. and for former shareholders of the Unified Funds and
Liquid Green Trusts, accounts which participated or participate in a retirement
plan for which Unified Investment Advisers, Inc. or an affiliate acts as
custodian or trustee, accounts which have a brokerage account, and other
accounts for which Unified Management Corporation is the dealer of record.

PURCHASE AND REDEMPTION OF SHARES

OPENING ACCOUNTS--NEW INVESTMENTS

A. WHEN FUNDS ARE SENT BY WIRE (the wire method permits immediate credit)

1) Telephone Unified toll-free at 800-UMC-
FUND (800-862-3863). A service representative will ask you for (a) the
name of the account as you wish it to be registered, (b) the address of
the account, (c) your taxpayer identification number (social security
number for an individual) and (d) the name of the Portfolio in which you
wish to invest. You will then be provided with a control number.

2) Instruct your bank to wire Federal Funds
(see minimums below) exactly as follows and precisely in the order
presented:

RECEIVING BANK INFORMATION:
Fifth Third Bank (Cincinnati, OH)
ABA#042000314

BENEFICIARY INFORMATION:

BNF=OCC Cash Reserves

(SPECIFY PRIMARY, GOVERNMENT OR GENERAL MUNICIPAL PORTFOLIO)

AC-71575485

OTHER BENEFICIARY INFORMATION:

OBI=OCC Cash Reserves

<TABLE>
<S> <C> <C>
Your account name as registered

Your account number with the Fund
</TABLE>

There is a $1,000 minimum to open a new account, except that there is no
minimum for opening Individual Retirement Accounts or other retirement plans.

3)Mail a completed Application Form to:

Unified Management Corp.
P.O. Box 6110
Indianapolis, IN 46206-6110

FOR OTHER THAN U.S. POSTAL SERVICE MAIL:

Unified Management Corp.
429 North Pennsylvania Street
Indianapolis, IN 46204

B. WHEN FUNDS ARE SENT BY CHECK

1) Complete the New Account Application

2) Mail the completed Application along with
your check, money order or Federal Reserve bank draft (see minimums under
A(2) above) payable to the OCC Cash Reserves Portfolio you have selected,
to the address in A(3) above.

C. BY EXCHANGE

1) BY MAIL--Send a written request to the
address in A(3) above. Sign the request exactly as your name appears on the
account registration. (For joint accounts, all owners must sign.) Be
certain your request meets the minimum for a new account and that the
amount remaining in the Fund from which you are exchanging also exceeds
its minimum.

2) BY TELEPHONE--Call Unified at 800-UMC-
FUND (800-862-3863).

13
<PAGE>
SUBSEQUENT INVESTMENTS (PURCHASES)

A. INVESTMENTS BY WIRE (to obtain immediate credit)

Instruct your bank to wire Federal Funds (minimum $1000) as in A(2) above.
B. INVESTMENTS BY CHECK
Mail your check, money order or Federal Reserve bank draft (minimum $100),
payable to the appropriate OCC Portfolio, to the address in A(3) above, along
with the remittance portion of your last account statement or letter of
instruction. Include your account name, account number and Portfolio name on the
front of your check, money order or draft.
C. BY EXCHANGE
Follow instructions under C, above. There is no minimum for systematic
exchanges established for dollar cost averaging purposes.
WITHDRAWALS (Redemptions)

A. WITHDRAWALS BY TELEPHONE (requires pre-arrangement; call 800-UMC-FUND
(800-862-3863) for information)

Telephone Unified toll-free at 800-UMC-FUND (800-862-3863) or at
317-634-3300 (not toll-free) and place your redemption request with the service
representative. You may request that your redemption proceeds be sent via wire
or ACH to your previously-designated bank account or that a check be mailed to
you. Wires will be sent to your bank and checks will be mailed to you on the
next Indiana business day following receipt of your request. Unified may charge
a fee for wire redemptions. Monies sent via ACH take approximately two business
days to reach your bank. You may be required to have your signature guaranteed.
(See page 10.)

B. WITHDRAWALS BY CHECKWRITING
Under the Fund's Regular Checkwriting Service, you may write checks made
payable to any payee in any amount of $250 or more. The checkwriting service
enables you to receive the daily dividends declared on the shares to be redeemed
until the day that your check is presented for payment.

Please do not use the checkwriting service to close out your OCC account, as
the balance of your account will continue to increase via daily dividends until
the check is presented for payment. Unified reserves the right to impose a
charge for certain check services such as checks returned unpaid for
insufficient funds or for checks on which you have placed a stop order.

C. WITHDRAWALS BY MAIL

Submit a written request for any amount to Unified at the address in A(3)
above. Include your account name as registered and your account number. Sign the
request exactly as your name appears on the registration. (For joint accounts,
all owners must sign.) You may be required to have your signature guaranteed.
(See page 10.)

<TABLE>
<S> <C>
OBTAINING AN APPLICATION FORM--ASSISTANCE If your account with the Fund is to be
If you wish to obtain an Application Form, maintained through a brokerage firm or
or if you have any questions about the other institution, do not fill out the
Form, purchasing shares, or other Fund Application Form or the Signature Card.
procedures, please telephone the Fund Instead, contact your account
toll-free at 800-UMC-FUND (800-862-3863). representative at such institution.
Institutions may charge a fee for providing
such assistance.
</TABLE>

14
<PAGE>
OCC Cash Reserves (the "Fund") is an open-end money market fund investment
company with five separate Portfolios. Though the Portfolios have the same
investment objectives of safety of principal, liquidity and maximum current
income, they may in the pursuit of these objectives invest in different types of
money market securities or in different proportions of the same types of
securities. This prospectus sets forth information about the Fund and its
Primary, Government and General Municipal Portfolios that a prospective investor
should know before investing. Please retain this prospectus for future
reference.

A Statement of Additional Information dated March 29, 1996 provides further
discussion of certain areas in this prospectus and other matters which may be of
interest to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. A free copy may be obtained
by writing the Fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTENTS PAGE
Introduction.................................................................. 1
Expense Information.......................................................... 2
Financial Highlights......................................................... 3
Primary Portfolio............................................................ 5
Government Portfolio......................................................... 6
General Municipal Portfolio.................................................. 7
Additional Information....................................................... 10
Purchase and Redemption of Shares............................................ 13

[PASTE-UP]

- - Primary Portfolio
- - Government Portfolio
- - General Municipal Portfolio

Offered through
Unified Management Corporation
429 N. Pennsylvania St.
Indianapolis, IN 46204

Prospectus
March 29, 1996
<PAGE>

[LOGO] ................... with investment objectives of

SAFETY - LIQUIDITY - INCOME

IS OCC CASH RESERVES FOR YOU?

The Fund is designed for individuals, institutions, advisors, custodians,
charities, fiduciaries and corporations who can benefit from a fund seeking
maximum current income and who place value on an investment having safety of
principal, liquidity, stability, simplicity, and convenience. The availability
of five separate Portfolios provides you with the advantage of selecting a
combination of investment characteristics particularly suitable to your needs.
The five Portfolios described in this Prospectus compare to one another as
follows:

<TABLE>
<S> <C> <C>
Primary Portfolio -- highest money market income; conservative investments
Government -- high money market income; very conservative investments
Portfolio
General Municipal -- highest money market tax-exempt income; conservative investments
Portfolio
California -- highest money market income exempt from Federal and California
Municipal personal income taxes; conservative investments
Portfolio
New York Municipal -- highest money market income exempt from Federal, New York State
Portfolio and New York City income taxes; conservative investments
</TABLE>

<PAGE>
EXPENSE INFORMATION

The expense summary format below was developed for use by all mutual funds
to help investors understand the various direct costs and expenses related to a
fund investment.

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE NET ASSETS)
GENERAL CALIFORNIA NEW YORK
PRIMARY GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Management fees............. .41% .48% .47% .50% .50%
12b-1 (Distribution Plan)
expenses.................... .25% .25% .25% .25% .25%
Other Expenses.............. .28% .27% .28% .20% .25%
--
--- --- --- -----
Total Operating Expenses.... .94% 1.00% 1.00% .95% 1.00%
</TABLE>

During the fiscal year ended November 30, 1995, OpCap Advisors (the
"Advisor") waived part of its advisory fee with respect to the Government
Portfolio, the General Municipal Portfolio, the California Municipal Portfolio
and the New York Municipal Portfolio. After giving effect to such waivers, the
management fees for the Government Portfolio, the General Municipal Portfolio,
the California Municipal Portfolio and the New York Municipal Portfolio were
.48%, .41%, .37% and .29%, respectively, and the total operating expenses were
1.00%, .93%, .82% and .79%, respectively. Such advisory fee waivers are
voluntary and may be discontinued at any time, except that the Advisor has
agreed to assume expenses of any Portfolio in excess of 1.00% in any fiscal
year. Had such waivers not occurred, the total operating expenses would have
been 1.02%, 1.02%, .95%, and 1.00%, respectively. The expenses listed for the
Government and General Municipal Portfolio have been restated to reflect the
Advisor's agreement to assume expenses in excess of 1.00% and the expenses for
the California Municipal Portfolio and the New York Municipal Portfolio have
been restated to reflect what the expenses would have been without the voluntary
waivers. In addition, the expense information has been restated to reflect the
reduction in the 12b-1 expenses for each Portfolio from .30% of average net
assets to .25% of average net assets, effective March 31, 1995, and an increase
in administrative expenses.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary Portfolio..................................... $ 9.59 $ 29.96 $ 52.02 $ 115.48
Government Portfolio.................................. 10.20 31.84 55.24 122.46
General Municipal Portfolio........................... 10.20 31.84 55.24 122.46
California Municipal Portfolio........................ 9.69 30.26 52.54 116.63
New York Municipal Portfolio.......................... 10.20 31.84 55.24 122.46
</TABLE>

2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The financial information presented below has been audited by Price
Waterhouse LLP, independent accountants, whose unqualified report thereon
appears in the Statement of Additional Information ("SAI"). Investors should
understand that all the following information should be read in conjunction with
the financial statements and related notes thereto appearing in the SAI.
<TABLE>
<CAPTION>
DIVIDENDS AND
INCOME FROM DISTRIBUTIONS
INVESTMENT OPERATIONS ----------------------------------------------
-------------------------------------- DIVIDENDS TO DISTRIBUTIONS
NET ASSET NET REALIZED SHAREHOLDERS TO DISTRIBUTIONS TO
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET SHAREHOLDERS SHAREHOLDERS
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT FROM OTHER FROM NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME SOURCES REALIZED GAINS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995..................... $1.00 $0.051 $ 0.000(1) $0.051 $(0.051) -- $(0.000)(1)
1994..................... 1.00 0.032 0.000(1) 0.032 (0.032) $(0.000)(1) (0.000)(1)
1993..................... 1.00 0.024 0.000(1) 0.024 (0.024) (0.000)(1) (0.000)(1)
1992..................... 1.00 0.033 0.000(1) 0.033 (0.033) -- (0.000)(1)
1991..................... 1.00 0.057 (0.000)(1) 0.057 (0.057) -- --
December 13, 1989(3)
to November 30, 1990.... 1.00 0.073(4) 0.000(1) 0.073 (0.073) -- (0.000)(1)

RATIOS TO AVERAGE
NET NET ASSETS
ASSETS, --------------------------
NET ASSET END OF NET
VALUE, END TOTAL PERIOD NET OPERATING INVESTMENT
OF PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995..................... $ 1.00 5.19% $1,671.1 0.94%(2) 5.07%(2)
1994..................... 1.00 3.26% 1,453.8 0.91% 3.21%
1993..................... 1.00 2.44% 1,413.9 0.90% 2.41%
1992..................... 1.00 3.38% 1,168.3 0.88% 3.34%
1991..................... 1.00 5.89% 1,249.0 0.86% 5.74%
December 13, 1989(3)
to November 30, 1990.... 1.00 7.80%(5) 1,244.2 0.87%(4,5) 7.47%(4,5)
</TABLE>

(1) Less than $.0005 per share.

(2) Average net assets for the year ended November 30, 1995 were
$1,594,387,722.

(3) Commencement of operations.

(5) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year end November 30,
1995..................... $1.00 $0.049(2) $ 0.000(1) $0.049 $(0.049) -- $(0.000)(1)
1994..................... 1.00 0.031(2) 0.000(1) 0.031 (0.031) $(0.000)(1) --
1993..................... 1.00 0.022 -- 0.022 (0.022) (0.000)(1) --
1992..................... 1.00 0.032(2) 0.000(1) 0.032 (0.032) -- $(0.000)(1)
1991..................... 1.00 0.055(2) -- 0.055 (0.055) -- --
February 14, 1990(4)
to November 30, 1990.... 1.00 0.059(2) 0.000(1) 0.059 (0.059) -- (0.000)(1)

<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year end November 30,
1995..................... $ 1.00 5.02% $ 108.6 1.00%(2,3) 4.91%(2,3)
1994..................... 1.00 3.12% 113.2 0.95%(2) 3.08%(2)
1993..................... 1.00 2.26% 127.9 1.00% 2.24%
1992..................... 1.00 3.24% 131.7 0.93%(2) 3.23%(2)
1991..................... 1.00 5.69% 142.2 0.84%(2) 5.62%(2)
February 14, 1990(4)
to November 30, 1990.... 1.00 7.67%(5) 150.1 0.67%(2,5) 7.34%(2,5)
</TABLE>

(1) Less than $.0005 per share.

(2) Reflects a voluntary waiver of $.0002, $.0002, $.0002 and $.001 per share,
respectively, in advisory fees and $.004 per share in advisory fees and
reimbursement of other operating expenses, respectively, in effect during
each period. Had such waivers and reimbursements not occurred, the ratio of
net operating expenses would have been 1.02%, 0.97%, 0.94%, 0.92% and
1.19%, respectively and the ratio of net investment income would have been
4.89%, 3.06%, 3.22%, 5.54% and 6.82%, respectively.

(3) Average net assets for the year ended November 30, 1995 were $111,066,046.

(4) Commencement of operations.

(5) Annualized.

* Assumes reinvestment of all dividends and distributions.

3
<PAGE>
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS
-------------------------------------- DIVIDENDS TO
NET ASSET NET REALIZED SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT CONTRIBUTION
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME BY ADVISER
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL
PORTFOLIO
Year ended November 30,
1995..................... $1.00 $0.031(1) $(0.000)(2) $0.031 $(0.031) --
1994..................... 1.00 0.020(1) 0.000(2) 0.020 (0.020) --
1993..................... 1.00 0.017(1) (0.000)(2) 0.017 (0.017) --
1992..................... 1.00 0.026(1) (0.000)(2) 0.026 (0.026) --
1991..................... 1.00 0.042(1) 0.000(2) 0.042 (0.042) --
February 14, 1990(4)
to November 30, 1990.... 1.00 0.042(1) (0.000)(2) 0.042 (0.042) --

RATIOS TO AVERAGE
NET NET ASSETS
ASSETS, --------------------------
NET ASSET END OF NET
VALUE, END TOTAL PERIOD NET OPERATING INVESTMENT
OF PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL
PORTFOLIO
Year ended November 30,
1995..................... $ 1.00 3.11% $116.0 0.93%(1,3) 3.07%(1,3)
1994..................... 1.00 2.04% 108.7 0.90%(1) 2.01%(1)
1993..................... 1.00 1.74% 109.7 0.98%(1) 1.73%(1)
1992..................... 1.00 2.66% 112.9 0.90%(1) 2.62%(1)
1991..................... 1.00 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990(4)
to November 30, 1990.... 1.00 5.45%(5) 107.9 0.71%(1,5) 5.32%(1,5)
</TABLE>

(2) Less than $.0005 per share.

(3) Average net assets for the year ended November 30, 1995 were $126,528,413.

(4) Commencement of operations.

(5) Annualized.
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C> <C>
1995..................... $1.00 $0.031(1) $(0.008) $0.023 $(0.031) $ 0.008
1994..................... 1.00 0.020(1) 0.000(2) 0.020 (0.020) --
1993..................... 1.00 0.017(1) (0.000)(2) 0.017 (0.017) --
1992..................... 1.00 0.025(1) (0.000)(2) 0.025 (0.025) --
March 20, 1991(4) to
November 30, 1991....... 1.00 0.026(1) (0.000)(2) 0.026 (0.026) --

<CAPTION>
CALIFORNIA MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C>
1995..................... $ 1.00 3.10% $ 75.9 0.82%(1,3) 3.05%(1,3)
1994..................... 1.00 1.99% 61.3 0.85%(1) 1.99%(1)
1993..................... 1.00 1.76% 62.3 0.85%(1) 1.75%(1)
1992..................... 1.00 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991(4) to
November 30, 1991....... 1.00 4.24%(5) 45.4 0.54%(1,5) 3.75%(1,5)
</TABLE>

(2) Less than $.0005 per share.

(3) Average net assets for the year ended November 30, 1995 were $63,810,311.

(4) Commencement of operations.

(5) Annualized.
<TABLE>
<CAPTION>
NEW YORK MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C> <C>
1995..................... $1.00 $0.030(1) $(0.000)(2) $0.030 $(0.030) --
1994..................... 1.00 0.019(1) 0.000(2) 0.019 (0.019) --
1993..................... 1.00 0.016(1) (0.000)(2) 0.016 (0.016) --
1992..................... 1.00 0.025(1) (0.000)(2) 0.025 (0.025) --
April 10, 1991(4)
to November 30, 1991.... 1.00 0.024(1) (0.000)(2) 0.024 (0.024) --

<CAPTION>
NEW YORK MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C>
1995..................... $ 1.00 3.07% $ 52.3 0.79%(1,3) 3.02%(1,3)
1994..................... 1.00 1.92% 48.0 0.82%(1) 1.90(1)
1993..................... 1.00 1.66% 42.2 0.79%(1) 1.64%(1)
1992..................... 1.00 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991(4)
to November 30, 1991.... 1.00 4.29%(5) 18.4 0.56%(1,5) 3.80%(1,5)
</TABLE>

(1) Reflects a voluntary waiver of $.002, $.002, $.002 and $.005 per share in
advisory fees and $.006 per share in advisory fees and reimbursement of
other operating expenses, respectively, in effect during each period. Had
such waivers and reimbursements not occurred, the ratio of net operating
expenses would have been 1.00%, 1.01%, 1.03%, 1.19% and 1.43%,
respectively, and the ratio of net investment income would have been 2.81%,
1.71%, 1.40%, 1.98% and 2.93%, respectively.

(2)
Less than $.0005 per share.

(3) Average net assets for the year ended November 30, 1995 were $52,398,588.

(4) Commencement of operations.

(5) Annualized.

* Assumes reinvestment of all dividends and distributions.

4
<PAGE>
OCC CASH RESERVES PRIMARY PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

MONEY MARKET SECURITIES

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the
Primary Portfolio may not (1) invest more than 25% of its total assets in the
securities of issuers conducting their principal business activities in any one
industry, except that under normal circumstances at least 25% of its total
assets will be invested in bank obligations; (2) invest more than 5% of its
total assets in the securities of any issuer (loan participations are considered
obligations of both the lender and the borrower); (3) invest more than 10% of
its total assets in repurchase agreements not terminable within seven days
(whether or not illiquid) or other illiquid investments including participation
interests and other instruments described above for which no secondary markets
exist: (4) borrow money except from banks for extraordinary or emergency
purposes in aggregate amounts not exceeding 15% of its total assets (and, when
such borrowings exceed 5% of its total assets, make any further investments);
and (5) mortgage, pledge or hypothecate its assets except to secure such
borrowings. Limitations (1) and (2) do not apply to U.S. Government Securities.

OCC CASH RESERVES GOVERNMENT PORTFOLIO

INVESTMENT OBJECTIVES AND PROCEDURES

MONEY MARKET SECURITIES

6
<PAGE>
Mortgage Association, the securities of which are solely dependent on the
issuing instrumentality for repayment; and (2) repurchase agreements that are
collateralized in full each day by the types of U.S. Government Securities
listed above. These agreements are entered into with "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S. Government
Securities and with the Fund's Custodian.

OTHER FUNDAMENTAL INVESTMENT POLICIES

OCC CASH RESERVES GENERAL MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

7
<PAGE>
MUNICIPAL SECURITIES

Lease obligations may have risks not normally associated with general
obligation or other revenue bonds. Lease obligations and conditional sale
contracts (which may provide for title to the leased

TAXABLE INVESTMENTS

OTHER FUNDAMENTAL INVESTMENT POLICIES

9
<PAGE>
OCC CASH RESERVES CALIFORNIA MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the California Municipal Portfolio (the
"Portfolio") are in the following order of priority--safety of principal,
liquidity and, to the extent consistent with these objectives, maximum current
income available from money market securities that is exempt from Federal and
California personal income taxes. The Portfolio pursues its objectives by
maintaining a portfolio of high-grade securities of the types described in the
succeeding section, which at the time of investment have remaining maturities of
thirteen months or less and generate, in the opinion of bond counsel to the
issuer, interest that is exempt from Federal and California personal income
taxes ("California Municipal Securities"). As a matter of fundamental policy, at
least 80% of the Portfolio's total assets will be invested in California
Municipal Securities unless the Advisor determines that it is in the best
interest of the Portfolio to assume a temporary defensive position involving a
greater commitment of assets to obligations generating taxable income. Normally,
substantially all of the Portfolio's income will be exempt from Federal and
California personal income taxes. While the Portfolio may not change the
foregoing policies or the "other fundamental investment policies" described
below without shareholder approval, it may, upon notice to shareholders but
without such approval, change its other investment policies. As is true with all
investment companies, there can be no assurance that the Portfolio's objectives
will be achieved.

The Portfolio may purchase "private activity" municipal securities without
limitation and therefore a substantial portion (and potentially all) of any
distribution from the Portfolio may be treated as a tax preference item (with
resulting tax) for those taxpayers subject to AMT (as defined on page 7).
Investors already subject to AMT should consider whether an investment in the
Portfolio is suitable for them. Investors are urged to consult their own tax
advisors with respect to their own tax situations.

CALIFORNIA MUNICIPAL SECURITIES

The California Municipal Securities in which the Portfolio invests are
municipal notes, short-term municipal bonds, short-term discount notes and
participation interests in any of the foregoing as described under "Municipal
Securities" on page 8.

All of the Portfolio's securities at the time of purchase are of prime
quality as defined previously. Securities must also meet credit standards
applied by the Advisor.

The Portfolio may invest in variable rate obligations, forward commitments
and stand-by commitments, tender option bonds and lease obligations, as
described and according to the limitations set forth under "Municipal
Securities" on page 8.

Investors in the California Municipal Portfolio should consider the possible
greater risk arising from the geographic concentration and non-diversified
structure of the Portfolio's investments, as well as the current and past
financial condition of California municipal issuers which is discussed in the
Statement of Additional Information ("SAI").

TAXABLE INVESTMENTS

While it is anticipated that substantially all of the Portfolio's assets
will be invested in California Municipal Securities, the Portfolio is
authorized, under normal circumstances, to invest up to 20% of its total assets
in taxable investments. The taxable investments are limited to obligations of
the U.S. Government and its agencies or instrumentalities; prime quality
certificates of deposit and bankers

10
<PAGE>
acceptances of domestic banks; prime quality commercial paper; and repurchase
agreements collateralized at all times by such instruments.

OTHER FUNDAMENTAL INVESTMENT POLICIES

To reduce investment risk, the Portfolio may not (1) invest more than 25% of
its total assets in securities whose interest is paid from revenues of
similar-type projects; (2) with respect to 50% of its assets invest more than 5%
of its total assets in the securities of any one issuer (except the U.S.
Government); (3) invest any more than 25% of its assets in any one issuer; (4)
invest more than 10% of its total assets in repurchase agreements not terminable
within seven days (whether or not illiquid) or other illiquid investments; (5)
borrow money except from banks for extraordinary or emergency purposes and in
aggregate amounts not exceeding 15% of its total assets, and when such
borrowings exceed 5% of its total assets, make any further investments; and (6)
mortgage, pledge or hypothecate its assets except to secure such borrowings.

OCC CASH RESERVES NEW YORK MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the New York Municipal Portfolio (the
"Portfolio") are in the following order of priority--safety of principal,
liquidity and, to the extent consistent with these objectives, maximum current
income available from money market securities that is exempt from Federal, New
York State and New York City income taxes. The Portfolio pursues its objectives
by maintaining a portfolio of high-grade securities of the types described in
the succeeding section, which at the time of investment have remaining
maturities of thirteen months or less and generate, in the opinion of bond
counsel to the issuer, interest that is exempt from Federal, New York State and
New York City income taxes ("New York Municipal Securities"). As a matter of
fundamental policy, at least 80% of the Portfolio's total assets will be
invested in New York Municipal Securities unless the Advisor determines that it
is in the best interest of the Portfolio to assume a temporary defensive
position involving a greater commitment of assets to obligations generating
taxable income. Normally, substantially all of the Portfolio's income will be
exempt from Federal, New York State and New York City income taxes. While the
Portfolio may not change the foregoing policies or the "other fundamental
investment policies" described below without shareholder approval, it may, upon
notice to shareholders but without such approval, change its other investment
policies. As is true with all investment companies, there can be no assurance
that the Portfolio's objectives will be achieved.

The Portfolio may purchase "private activity" municipal securities without
limitation, and therefore a substantial portion (and potentially all) of any
distribution from the Portfolio may be treated as a tax preference item (with
resulting tax) for those taxpayers subject to AMT as defined on page 7.
Investors who are already subject to AMT should consider whether an investment
in the Portfolio is suitable for them. Investors are urged to consult their own
tax advisors with respect to their own tax situations.

NEW YORK MUNICIPAL SECURITIES

The New York Municipal Securities in which the Portfolio invests are
municipal notes, short-term municipal bonds, short-term discount notes and
participation interests in any of the foregoing as described under Municipal
Securities on page 8.

All of the Portfolio's securities at the time of purchase are of prime
quality as defined previously. Securities must also meet credit standards
applied by the Advisor.

The Portfolio may invest in variable rate obligations, forward commitments
and stand-by commitments or puts, tender option bonds and lease

11
<PAGE>
obligations as described and according to the limitations set forth under
"Municipal Securities" on page 8.

Investors in the New York Municipal Portfolio should consider the possible
greater risk arising from the geographic concentration and non-diversified
structure of the Portfolio's investments, as well as the current and past
financial condition of New York municipal issuers which is discussed in the
Statement of Additional Information ("SAI").

TAXABLE INVESTMENTS

While it is anticipated that substantially all of the Portfolio's assets
will be invested in New York Municipal Securities, the Portfolio is authorized,
under normal circumstances, to invest up to 20% of its total assets in taxable
investments. The taxable investments are limited to obligations of the U.S.
Government and its agencies or instrumentalities; prime quality certificates of
deposit and bankers
acceptances of domestic banks; prime quality commercial paper; and repurchase
agreements collateralized at all times by such instruments.

OTHER FUNDAMENTAL INVESTMENT POLICIES

ADDITIONAL INFORMATION

ARRANGEMENTS FOR TELEPHONE REDEMPTIONS. If you wish to use the telephone
redemption procedure, indicate this on your Application Form and designate a
bank and account number to receive the proceeds of your withdrawals. If you
decide later that you wish to use this procedure, or to change instructions
already given, send a written notice to the Fund with your signature guaranteed
by an eligible guarantor, and designate a bank and account number to receive
redemption proceeds. Eligible guarantors include member firms of a national
securities exchange, banks, savings associations, and credit unions, as defined
by the Federal Deposit Insurance Act. For joint accounts, all owners must sign
and have their signatures guaranteed.

FORWARDING OF PROCEEDS FROM ANY REDEMPTION OF FUND SHARES PURCHASED BY CHECK
MAY BE DELAYED ONLY UNTIL THE CHECK HAS CLEARED WHICH MAY NORMALLY TAKE UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE.

AUTOMATED CLEARING HOUSE TRANSFERS. Fund shares can be purchased and
redeemed by ACH electronic funds transfer between the Fund and a bank. There are
no charges to you for ACH transactions, either by the Fund or by the bank. ACH
transfers are completed approximately two business days following the placement
of transfer orders.

For your Fund account to be eligible for ACH transfers to and from your
bank, you must complete the Fund's ACH Authorization Form which can be obtained
from our service representative by

12
<PAGE>
telephoning the number below. Direct deposits into your Fund account by ACH
transfer can be used for part or all of recurring payments made to you by your
employer (corporate, Federal, military, or other type) or by the Social Security
Administration. Instructions to the sending parties are simple; call toll-free
800-401-6672 during business hours to obtain complete information from our
service representative.

A shareholder subject to the minimum account balance requirement must
increase his or her account balance to at least $500 within sixty days after
notice of a deficient balance has been mailed by the Fund, or the Fund may close
the account and mail a check for the proceeds to the shareholder. The Fund
intends at least once each six months to review its shareholder balances in
regard to the $500 minimum and to send appropriate notices to shareholders with
deficient accounts. The Fund imposes no minimums for redemptions by mail or for
redemptions made on an account's behalf by brokerage firms or other financial
institutions. However, such firms may have internal procedures that include
minimums.

GUARANTEED PAYMENT. A broker-dealer or other financial intermediary may
arrange for investments in shares of the Fund at the 4:00 p.m. transaction time
and guarantee that payments in Federal Funds for the shares purchased will be
made prior to 12:00 noon the next day.

Distributions to your account of tax-exempt interest income are not subject
to Federal income

13
<PAGE>
tax (other than the alternative minimum tax described above), but may be subject
to state or local income taxes. Distributions of income earned by the California
General Municipal Portfolio from California tax-exempt securities are not
subject to Federal income tax (other than the alternative minimum tax described
above) or to California personal income taxes. Distributions of income earned by
the New York Municipal Portfolio from New York Municipal Securities are not
subject to Federal income tax (other than the alternative minimum tax described
above) or to New York State and New York City income taxes. Distributions of
taxable interest income, other investment income, and net short-term capital
gains are taxed to you as ordinary income; state and local taxation of such
distributions, if any, may be reduced in proportion to the percentage of income
that derives from U.S. Government obligations. Distributions of net long-term
capital gains would be taxable as long-term capital gains irrespective of the
length of time you may have held your shares. Distributions of net short-term
and long-term capital gains, if any, would be made annually. Each January, each
Portfolio will send you tax information for the calendar year just ended stating
the amounts and types of all its distributions, including the percentage of
income derived from U.S. Government obligations, for the calendar year just
ended.

PERIODIC WITHDRAWALS. Without affecting your right to use any of the
methods of redemption described on page 17, by checking the appropriate boxes on
the Application Form you may elect to participate additionally in the following
plans without any separate charges. Under the INCOME DISTRIBUTION PLAN you
receive monthly payments of all the income earned in your Fund account. Under
the SYSTEMATIC WITHDRAWAL PLAN, you may request checks in any specified amount
of $50 or more each month or in any intermittent pattern of months. If desired,
you can order, via a signature-guaranteed letter to the Fund, such periodic
payments to be sent to another person.

VALUED INVESTMENT PLAN. The Valued Investment Plan ("VIP") is a central
asset program that includes checkwriting with no minimum dollar amount and a VIP
cash card. The program is available only to individuals whose Fund shares are
held as part of a brokerage account. The fees for this program, which are being
waived currently, are $45 a year with fees for additional checks and a $1.00 fee
per transaction for use at automated teller machines. Shareholders should
contact their broker or the Fund for information about this program.

14
<PAGE>
EXPENSES--EXPENSE LIMITATION. Principal operating expenses of the Fund
consist of the Advisor's fee, costs of the Plan, legal and accounting expenses,
custodian fees, and transfer agent and other shareholder servicing costs.
Shareholders pay no direct charges or fees for investment services. Each
Portfolio's expenses are paid out of its gross investment income. The Advisor
reimburses each Portfolio to the extent that the combined aggregate operating
expenses of the Portfolio exceed 1% of its average daily net assets for any
fiscal year.

REPORTS. You will receive semi-annual and annual reports of the Portfolio
in which you are invested. To reduce expenses, only one copy of financial
reports will be mailed to your household, even if you have more than one
account. If you wish to receive additional copies of financial reports, please
call 1-800-401-6672 during business hours. You can arrange for a copy of each of
your account statements to be sent to other parties.

SHAREHOLDER SERVICING AGENT FOR CERTAIN SHAREHOLDERS. Unified Management
Corporation (800-UMC-FUND(862-3863)) is the shareholder servicing agent for
former shareholders of the AMA Family of Funds and clients of AMA Investment
Advisers, Inc., and for former shareholders of the Unified Funds and Liquid
Green Trusts, accounts which participated or participate in a retirement plan
for which Unified Investment Advisers, Inc. or an affiliate acts as custodian or
trustee, accounts which have a Money Manager brokerage account, and other
accounts for which Unified Management Corporation is the dealer of record.

15
<PAGE>
PURCHASE AND REDEMPTION OF SHARES

OPENING ACCOUNTS--NEW INVESTMENTS

A. WHEN FUNDS ARE SENT BY WIRE (the wire method permits immediate credit)

1) Telephone the Fund toll-free at
800-401-6672 during business hours. Our service representative will ask
you for (a) the name of the account as you wish it to be registered, (b)
the address of the account, (c) your taxpayer identification number
(social security number for an individual) and (d) the name of the
Portfolio in which you wish to invest. You will then be provided with an
account number.

2) Instruct your bank to wire Federal Funds
(minimum $1,000) to the Fund's custodian and transfer agent (P.O. Box
8505, Boston, MA 02266) exactly as follows and precisely in the order
presented:

RECEIVING BANK INFORMATION:

State Street Bank and Trust Company
Attn: Custody
ABA#011000028

BENEFICIARY INFORMATION:

BNF=OCC Cash Reserves

SPECIFY PRIMARY, GOVERNMENT, GENERAL
MUNICIPAL, CALIFORNIA OR NEW YORK MUNICIPAL PORTFOLIO

AC-99043838

OTHER BENEFICIARY INFORMATION

OBI=OCC Cash Reserves

<TABLE>
<S> <C> <C>
Shareholder account name as registered
Shareholder account number with the Fund
</TABLE>

3)Mail a completed Application Form to:

OCC Cash Reserves
P.O. Box 8505
Boston, MA 02266

FOR OTHER THAN U.S. POSTAL SERVICE MAIL:

OCC Cash Reserves
2 Heritage Drive
North Quincy, MA 02171

B. WHEN FUNDS ARE SENT BY CHECK

1) Fill out an Application Form

2) Mail the completed Application Form
along with your check or negotiable bank draft (minimum $1,000) payable
to OCC Cash Reserves--Primary, Government, General Municipal, California
Municipal or New York Municipal Portfolio, to the address in A(3) above.

SUBSEQUENT INVESTMENTS (Purchases)

A. INVESTMENTS BY WIRE (to obtain immediate credit)

Instruct your bank to wire Federal Funds (minimum $100) as in A(2)
above.

B. INVESTMENTS BY CHECK

Mail your check or negotiable bank draft (minimum $100), payable to OCC Cash
Reserves--Primary, Government, General Municipal, California Municipal or New
York Municipal Portfolio, to the address in A(3) above. Include with the check
or draft the "next investment" stub from one of your previous monthly or interim
account statements. For added identification, place your Fund account number on
the check or draft.

C. INVESTMENTS BY AUTOMATED CLEARING HOUSE (requires pre-arrangement; see page
12)

You may transfer amounts of $100 and more by ACH from your bank account to
your Fund account by telephoning the Fund toll-free at 800-401-6672 and talking
with our service representative during business hours. When placing an order, be
prepared to provide your Portfolio number (Primary-55, Government-56, General
Municipal-57, California Municipal-23 and New York

16
<PAGE>
Municipal-24) and your account and personal identification numbers. Allow
approximately two business days after your order for the money to be received by
the Fund.

WITHDRAWALS (Redemptions)

A. WITHDRAWALS BY TELEPHONE (requires pre-arrangement; see page 12)

You may transfer any amount from your Fund account to your designated bank
account by telephoning the Fund toll-free at 800-401-6672 and talking with our
service representative during business hours. You may order such withdrawals of
$1,000 or more to be sent by wire, withdrawals of $100 or more to be sent by the
Automated Clearing House (ACH) system, or withdrawals of any amount to be sent
by check. When placing an order, be prepared to provide your Portfolio number
and your account and personal identification numbers.

For withdrawals being sent by wire: if your telephone order is received by
the Fund prior to 12:00 Noon (New York time), your bank will receive the
requested amount the same day; if your telephone order is received after 12:00
Noon, your bank will receive the requested amount the next business day; for ACH
transfers, allow approximately two business days for the amount to be received
by your bank. For transfers you order to be sent by check, the Fund will mail
the check the next business day. Withdrawals by any method are made without any
charge to you.

B. WITHDRAWALS BY CHECKWRITING

Under the Fund's Regular Checkwriting Service, you may write checks made
payable to any payee in any amount of $250 or more. Different checkwriting
services may be offered by participating broker-dealers and through Unified
Management Corporation. There are no separate charges for regular checkwriting.
The Fund's agent for all checkwriting services, State Street Bank, will impose
its normal charges for checks which are returned unpaid because of insufficient
funds or for checks upon which you have placed a stop order. To establish
check-writing, you must fill out the Signature Card which is with the
Application Form. If you wish to establish this checkwriting service subsequent
to the opening of your Fund Account, contact the Fund by telephone or mail. The
checkwriting service enables you to receive the daily dividends declared on the
shares to be redeemed until the day that your check is presented to State Street
Bank for payment.

You cannot close out your account by checkwriting, however, because your
shares continue to earn dividends and fluctuate in value until the check is
presented for payment.

C. WITHDRAWALS BY MAIL

You may withdraw any amount from your account at any time by mail. Written
orders for withdrawals should be mailed to OCC Cash Reserves, P.O. Box 8505
Boston, MA 02266. Such orders must include the account name as registered with
the Fund and the account number. All written orders for redemption must be
signed by all owners of the account with the signatures guaranteed by an
eligible guarantor.

<TABLE>
<S> <C>
OBTAINING AN APPLICATION FORM--ASSISTANCE If your account with the Fund is to be
If you wish to obtain an Application Form, maintained through a brokerage firm or
or if you have any questions about the other institution, do not fill out the
Form, purchasing shares, or other Fund Application Form or the Signature Card.
procedures, please telephone the Fund Instead, contact your account
toll-free at 800-401-6672 during business representative at such institution.
hours. Institutions may charge a fee for providing
such assistance.
</TABLE>

17
<PAGE>
OCC Cash Reserves (the "Fund") is an open-end money market fund investment
company with five separate Portfolios. Though the Portfolios have the same
investment objectives of safety of principal, liquidity and maximum current
income, they may in the pursuit of these objectives invest in different types of
money market securities or in different proportions of the same types of
securities. This prospectus sets forth information about the Fund and its
Primary, Government, General Municipal, California Municipal and New York
Municipal Portfolios that a prospective investor should know before investing.
Please retain this prospectus for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTENTS PAGE
Introduction................................................................ 1
Expense Information......................................................... 2
Financial Highlights........................................................ 3
Primary Portfolio........................................................... 5
Government Portfolio........................................................ 6
General Municipal Portfolio................................................. 7
California Municipal Portfolio.............................................. 10
New York Municipal Portfolio................................................ 11
Additional Information...................................................... 12
Purchase and Redemption of Shares........................................... 16

[PASTE-UP]

- - Primary Portfolio
- - Government Portfolio
- - General Municipal Portfolio
- - California Municipal Portfolio
- - New York Municipal Portfolio

Prospectus
March 29, 1996
<PAGE>

[LOGO] ................... with investment objectives of

SAFETY - LIQUIDITY - INCOME

OCC Cash Reserves (the "Fund") is a money market fund with five distinct
Portfolios--the Primary Portfolio, the Government Portfolio, the General
Municipal Portfolio, the California Municipal Portfolio and the New York
Municipal Portfolio (the "Portfolios").

There are no minimums for investments in, or withdrawals from, a Portfolio
maintained through an Oppenheimer securities account, and withdrawals can be
made in any amount at any time without fee or penalty. The Portfolio's dividends
are declared daily and compounded monthly.

IS OCC CASH RESERVES FOR YOU?

The Fund is designed for individuals, institutions, advisors, custodians,
charities, fiduciaries and corporations who can benefit from a fund seeking
maximum current income and who place value on an investment having safety of
principal, liquidity, stability, simplicity, and convenience. The availability
of five separate Portfolios provides you with the advantage of selecting a
combination of investment characteristics particularly suitable to your needs.
The five Portfolios described in this Prospectus compare to one another as
follows:

Primary Portfolio -- highest money market income;
conservative investments
Government Portfolio -- high money market income; very
conservative investments
General Municipal -- highest money market tax-exempt income;
Portfolio conservative investments
California Municipal -- highest money market income exempt from
Portfolio Federal and California personal income
taxes; conservative investments
New York Municipal -- highest money market income exempt from
Portfolio Federal, New York State and New York
City income taxes; conservative
investments

<PAGE>
EXPENSE INFORMATION

The expense summary format below was developed for use by all mutual funds
to help investors understand the various direct costs and expenses related to a
fund investment.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (FOR EACH PORTFOLIO)
<S> <C>
Sales Load Imposed on Purchases............................... None
Sales Load Imposed on Reinvested Dividends.................... None
Redemption Fees............................................... None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE NET ASSETS)
GENERAL CALIFORNIA NEW YORK
PRIMARY GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Management fees............. .41% .48% .47% .50% .50%
12b-1 (Distribution Plan)
expenses.................... .25% .25% .25% .25% .25%
Other Expenses.............. .28% .27% .28% .20% .25%
-- --
--- --- ---
Total Operating Expenses.... .94% 1.00% 1.00% .95% 1.00%
</TABLE>

2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The financial information presented below has been audited by Price
Waterhouse LLP, independent accountants, whose unqualified report thereon
appears in the Statement of Additional Information ("SAI"). Investors should
understand that all the following information should be read in conjunction with
the financial statements and related notes thereto appearing in the SAI.
<TABLE>
<CAPTION>
DIVIDENDS AND
INCOME FROM DISTRIBUTIONS
INVESTMENT OPERATIONS ------------------------------------
----------------------------------- DIVIDENDS DISTRIBUTIONS
NET TO DISTRIBUTIONS TO
NET ASSET REALIZED TOTAL SHAREHOLDERS TO SHAREHOLDERS
VALUE, NET GAIN/(LOSS) FROM FROM NET SHAREHOLDERS FROM NET
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT FROM OTHER REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME SOURCES GAINS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $ 0.051 $ 0.000(1) $0.051 $(0.051) -- $(0.000)(1)
1994.......................... 1.00 0.032 0.000(1) 0.032 (0.032) $(0.000)(1) (0.000)(1)
1993.......................... 1.00 0.024 0.000(1) 0.024 (0.024) (0.000)(1) (0.000)(1)
1992.......................... 1.00 0.033 0.000(1) 0.033 (0.033) -- (0.000)(1)
1991.......................... 1.00 0.057 (0.000)(1) 0.057 (0.057) -- --
December 13, 1989(3)
to November 30, 1990......... 1.00 .073(4) 0.000(1) 0.073 (0.073) -- (0.000)(1)

RATIOS TO AVERAGE
NET NET ASSETS
NET ASSET ASSETS, ---------------------
VALUE, END OF NET NET
END OF TOTAL PERIOD OPERATING INVESTMENT
PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1995.......................... $1.00 5.19% $1,671.1 0.94%(2) 5.07%(2)
1994.......................... 1.00 3.26% 1,453.8 0.91% 3.21%
1993.......................... 1.00 2.44% 1,413.9 0.90% 2.41%
1992.......................... 1.00 3.38% 1,168.3 0.88% 3.34%
1991.......................... 1.00 5.89% 1,249.0 0.86% 5.74%
December 13, 1989(3)
to November 30, 1990......... 1.00 7.80%(5) 1,244.2 0.87%(4,5) 7.47%(4,5)
</TABLE>

(1) Less than $.0005 per share.
(2) Average net assets for the year ended November 30, 1995 were $1,594,387,722.
(3) Commencement of operations.
(4) Reflects a voluntary waiver of $.00004 per share in advisory fees. Had such
waiver not occurred, the net operating expense and net investment income
ratios would have been 0.88% and 7.46%, respectively.
(5) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $ 0.049(2) $ 0.000(1) $0.049 $(0.049) -- $(0.000)(1)
1994.......................... 1.00 0.031(2) 0.000(1) 0.031 (0.031) $(0.000)(1) --
1993.......................... 1.00 0.022 -- 0.022 (0.022) (0.000)(1) --
1992.......................... 1.00 0.032(2) 0.000(1) 0.032 (0.032) -- (0.000)(1)
1991.......................... 1.00 0.055(2) -- 0.055 (0.055) -- --
February 14, 1990(4)
to November 30, 1990......... 1.00 0.059(2) 0.000(1) 0.059 (0.059) -- (0.000)(1)

<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1995.......................... $1.00 5.02% $ 108.6 1.00%(2,3) 4.91%(2,3)
1994.......................... 1.00 3.12% 113.2 0.95%(2) 3.08%(2)
1993.......................... 1.00 2.26% 127.9 1.00% 2.24%
1992.......................... 1.00 3.24% 131.7 0.93%(2) 3.23%(2)
1991.......................... 1.00 5.69% 142.2 0.84%(2) 5.62%(2)
February 14, 1990(4)
to November 30, 1990......... 1.00 7.67%(5) 150.1 0.67%(2,5) 7.34%(2,5)
</TABLE>

(1) Less than $.0005 per share.
(2) Reflects a voluntary waiver of $.0002, $.0002, $.0002 and $.001 per share,
respectively, in advisory fees and $.004 per share in advisory fees and
reimbursement of other operating expenses, respectively, in effect during
each period. Had such waivers and reimbursements not occurred, the ratio of
net operating expenses would have been 1.02%, 0.97%, 0.94%, 0.92% and 1.19%,
respectively and the ratio of net investment income would have been 4.89%,
3.06%, 3.22%, 5.54% and 6.82%, respectively.
(3) Average net assets for the year ended November 30, 1995 were $111,066,046.
(4) Commencement of operations.
(5) Annualized.

* Assumes reinvestment of all dividends and distributions.

3
<PAGE>
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS
----------------------------------- DIVIDENDS
NET TO
NET ASSET REALIZED TOTAL SHAREHOLDERS
VALUE, NET GAIN/(LOSS) FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON SECURITY INVESTMENT INVESTMENT CONTRIBUTION BY
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME ADVISOR
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $ 0.031(1) $(0.000)(2) $0.031 $(0.031) --
1994.......................... 1.00 0.020(1) 0.000(2) 0.020 (0.020) --
1993.......................... 1.00 0.017(1) (0.000)(2) 0.017 (0.017) --
1992.......................... 1.00 0.026(1) (0.000)(2) 0.026 (0.026) --
1991.......................... 1.00 0.042(1) 0.000(2) 0.042 (0.042) --
February 14, 1990(4)
to November 30, 1990......... 1.00 0.042(1) (0.000)(2) 0.042 (0.042) --

RATIOS TO AVERAGE
NET NET ASSETS
NET ASSET ASSETS, ---------------------
VALUE, END OF NET NET
END OF TOTAL PERIOD OPERATING INVESTMENT
PERIOD RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 3.11% $ 116.0 0.93%(1,3) 3.07%(1,3)
1994.......................... 1.00 2.04% 108.7 0.90%(1) 2.01%(1)
1993.......................... 1.00 1.74% 109.7 0.98%(1) 1.73%(1)
1992.......................... 1.00 2.66% 112.9 0.90%(1) 2.62%(1)
1991.......................... 1.00 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990(4)
to November 30, 1990......... 1.00 5.45%(5) 107.9 0.71%(1,5) 5.32%(1,5)
</TABLE>

(1) Reflects a voluntary waiver of $.001, $.001, $.0003, $.001, $.001 and $.002
per share, respectively, in advisory fees in effect during each period. Had
such waivers not occurred, the ratio of net operating expenses would have
been 1.02%, 1.01%, 1.01%, 1.00%, 0.98% and 1.00%, respectively, and the
ratio of net investment income would have been 2.98%, 1.90%, 1.70%, 2.52%,
4.10% and 5.03%, respectively.
(2) Less than $.0005 per share.
(3) Average net assets for the year ended November 30, 1995 were $126,528,413.
(4) Commencement of operations.
(5) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $ 0.031(1) ($0.008) $0.023 ($0.031) $ 0.008
1994.......................... 1.00 0.020(1) 0.000(2) 0.020 (0.020) --
1993.......................... 1.00 0.017(1) (0.000)(2) 0.017 (0.017) --
1992.......................... 1.00 0.025(1) (0.000)(2) 0.025 (0.025) --
March 20, 1991(4)
to November 30, 1991......... 1.00 0.026(1) (0.000)(2) 0.026 (0.026) --

<CAPTION>
CALIFORNIA MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1995.......................... $1.00 3.10% $ 75.9 0.82%(1,3) 3.05%(1,3)
1994.......................... 1.00 1.99% 61.3 0.85%(1) 1.99%(1)
1993.......................... 1.00 1.76% 62.3 0.85%(1) 1.75%(1)
1992.......................... 1.00 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991(4)
to November 30, 1991......... 1.00 4.24%(5) 45.4 0.54%(1,5) 3.75%(1,5)
</TABLE>

(1) Reflects a voluntary waiver of $.001, $.001, $.001 and $.004 per share in
advisory fees and $.004 per share in advisory fees and reimbursement of
other operating expenses, respectively, in effect during each period. Had
such waivers and reimbursements not occurred, the ratio of net operating
expenses would have been 0.95%, 0.97%, 0.98%, 1.02% and 1.08%, respectively,
and the ratio of net investment income would have been 2.92%, 1.87%, 1.62%,
2.09% and 3.21%, respectively.
(2) Less than $.0005 per share.
(3) Average net assets for the year ended November 30, 1995 were $63,810,311.
(4) Commencement of operations.
(5) Annualized.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW YORK MUNICIPAL PORTFOLIO
Year ended November 30,
1995.......................... $1.00 $ 0.030(1) $(0.000)(2) $0.030 $(0.030) --
1994.......................... 1.00 0.019(1) 0.000(2) 0.019 (0.019) --
1993.......................... 1.00 0.016(1) (0.000)(2) 0.016 (0.016) --
1992.......................... 1.00 0.025(1) (0.000)(2) 0.025 (0.025) --
April 10, 1991(4)
to November 30, 1991......... 1.00 0.024(1) (0.000)(2) 0.024 (0.024) --

<CAPTION>
NEW YORK MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1995.......................... $1.00 3.07% $ 52.3 0.79%(1,3) 3.02%(1,3)
1994.......................... 1.00 1.92% 48.0 0.82%(1) 1.90%(1)
1993.......................... 1.00 1.66% 42.2 0.79%(1) 1.64%(1)
1992.......................... 1.00 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991(4)
to November 30, 1991......... 1.00 4.29%(5) 18.4 0.56%(1,5) 3.80%(1,5)
</TABLE>

(1) Reflects a voluntary waiver of $.002, $.002, $.002 and $.005 per share in
advisory fees and $.006 per share in advisory fees and reimbursement of
other operating expenses, respectively, in effect during each period. Had
such waivers and reimbursements not occurred, the ratio of net operating
expenses would have been 1.00%, 1.01%, 1.03%, 1.19% and 1.43%, respectively,
and the ratio of net investment income would have been 2.81%, 1.71%, 1.40%,
1.98% and 2.93%, respectively.
(2) Less than $.0005 per share.
(3) Average net assets for the year ended November 30, 1995 were $52,398,588.
(4) Commencement of operations.
(5) Annualized.

* Assumes reinvestment of all dividends and distributions.

4
<PAGE>
OCC CASH RESERVES PRIMARY PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The Primary Portfolio's investment objectives are in the following order of
priority-safety of principal, liquidity, and maximum current income from money
market securities to the extent consistent with the first two objectives. As a
matter of fundamental policy, the Primary Portfolio pursues its objectives by
maintaining a diversified portfolio of high quality money market securities of
the types described in the succeeding section, all of which at the time of
investment have remaining maturities of thirteen months or less. While the
Portfolio may not change this policy or the other "fundamental investment
policies" described below without shareholder approval, it may, upon notice to
shareholders but without such approval, change its other investment policies. As
is true with all investment companies, there can be no assurance that the
Primary Portfolio's objectives will be achieved.

MONEY MARKET SECURITIES

OTHER FUNDAMENTAL INVESTMENT POLICIES

OCC CASH RESERVES GOVERNMENT PORTFOLIO

INVESTMENT OBJECTIVES AND PROCEDURES

The Government Portfolio's investment objectives are in the following order
of priority-safety of principal, liquidity, and maximum current income from
money market securities to the extent consistent with the first two objectives.
As a matter of fundamental policy, the Government Portfolio pursues its
objectives by maintaining a diversified portfolio of high quality money market
securities of types described in the succeeding paragraph, all of which at the
time of investment have remaining maturities of thirteen months or less. While
the Portfolio may not change this policy or the "other fundamental investment
policies" described below without shareholder approval, it may, upon notice to
shareholders but without such approval, change its other investment policies. As
is true with all investment companies, there can be no assurance that the
Government Portfolio's objectives will be achieved.

MONEY MARKET SECURITIES

6
<PAGE>
from the U.S. Treasury, and the Federal National Mortgage Association, the
securities of which are solely dependent on the issuing instrumentality for
repayment; and (2) repurchase agreements that are collateralized in full each
day by the types of U.S. Government Securities listed above. These agreements
are entered into with "primary dealers" (as designated by the Federal Reserve
Bank of New York) in U.S. Government Securities and with the Fund's Custodian.

OTHER FUNDAMENTAL INVESTMENT POLICIES

OCC CASH RESERVES GENERAL MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The General Municipal Portfolio's investment objectives are in the following
order of priority-safety of principal, liquidity, and, to the extent consistent
with these objectives, maximum current income from money market securities that
is exempt from Federal income taxes. As a matter of fundamental policy, the
General Municipal Portfolio pursues its objectives by maintaining a diversified
portfolio of high-grade municipal securities of the types described in the
succeeding section, all of which at the time of investment have remaining
maturities of thirteen months or less and generate, in the opinion of bond
counsel to the issuer, interest that is exempt from Federal income taxes. At
least 80% of the Portfolio's total assets will be invested in such securities
(not including securities treated as tax preference items) unless the Advisor
has determined that it is in the best interest of the Portfolio to assume a
temporary defensive position involving a greater commitment of assets to
obligations generating taxable income. Normally, substantially all of the
Portfolio's income will be exempt from Federal taxes, although it may be subject
to state or local income taxes. While the Portfolio may not change this policy
or the "other fundamental investment policies" described below without
shareholder approval, it may, upon notice to shareholders but without such
approval, change its other investment policies. As is true with all investment
companies, there can be no assurance that the General Municipal Portfolio's
objectives will be achieved.

7
<PAGE>
should consider whether an investment in the Portfolio is suitable for them.
Investors are urged to consult their own tax advisors with respect to their own
tax situations.

MUNICIPAL SECURITIES

8
<PAGE>
Lease obligations may have risks not normally associated with general
obligation or other revenue bonds. Lease obligations and conditional sale
contracts (which may provide for title to the leased asset to pass eventually to
the issuer), have developed as a means for government issuers to acquire
property and equipment without the necessity of complying with the
constitutional and statutory requirements generally applicable for the issuance
of debt. Certain lease obligations contain "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purposes by
the appropriate legislative body on an annual or other periodic basis.
Consequently, continued lease payments on those lease obligations containing
"non-appropriation" clauses are dependent on future legislative actions. If such
legislative actions do not occur, the holders of the lease obligation may
experience difficulty in exercising their rights, including disposition of the
property.

TAXABLE INVESTMENTS

OTHER FUNDAMENTAL INVESTMENT POLICIES

9
<PAGE>
OCC CASH RESERVES CALIFORNIA MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the California Municipal Portfolio (the
"Portfolio") are in the following order of priority-safety of principal,
liquidity and, to the extent consistent with these objectives, maximum current
income available from money market securities that is exempt from Federal and
California personal income taxes. The Portfolio pursues its objectives by
maintaining a portfolio of high-grade securities of the types described in the
succeeding section, which at the time of investment have remaining maturities of
thirteen months or less and generate, in the opinion of bond counsel to the
issuer, interest that is exempt from Federal and California personal income
taxes ("California Municipal Securities"). As a matter of fundamental policy, at
least 80% of the Portfolio's total assets will be invested in California
Municipal Securities unless the Advisor determines that it is in the best
interest of the Portfolio to assume a temporary defensive position involving a
greater commitment of assets to obligations generating taxable income. Normally,
substantially all of the Portfolio's income will be exempt from Federal and
California personal income taxes. While the Portfolio may not change the
foregoing policies or the "other fundamental investment policies" described
below without shareholder approval, it may, upon notice to shareholders but
without such approval, change its other investment policies. As is true with all
investment companies, there can be no assurance that the Portfolio's objectives
will be achieved.

CALIFORNIA MUNICIPAL SECURITIES

All of the Portfolio's securities at the time of purchase are of prime
quality as defined previously. Securities must also meet credit standards
applied by the Advisor.

TAXABLE INVESTMENTS

10
<PAGE>
OTHER FUNDAMENTAL INVESTMENT POLICIES

mortgage, pledge or hypothecate its assets except to secure such borrowings.

OCC CASH RESERVES NEW YORK MUNICIPAL PORTFOLIO

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the New York Municipal Portfolio (the
"Portfolio") are in the following order of priority-safety of principal,
liquidity and, to the extent consistent with these objectives, maximum current
income available from money market securities that is exempt from Federal, New
York State and New York City income taxes. The Portfolio pursues its objectives
by maintaining a portfolio of high-grade securities of the types described in
the succeeding section, which at the time of investment have remaining
maturities of thirteen months or less and generate, in the opinion of bond
counsel to the issuer, interest that is exempt from Federal, New York State and
New York City income taxes ("New York Municipal Securities"). As a matter of
fundamental policy, at least 80% of the Portfolio's total assets will be
invested in New York Municipal Securities unless the Advisor determines that it
is in the best interest of the Portfolio to assume a temporary defensive
position involving a greater commitment of assets to obligations generating
taxable income. Normally, substantially all of the Portfolio's income will be
exempt from Federal, New York State and New York City income taxes. While the
Portfolio may not change the foregoing policies or the "other fundamental
investment policies" described below without shareholder approval, it may, upon
notice to shareholders but without such approval, change its other investment
policies. As is true with all investment companies, there can be no assurance
that the Portfolio's objectives will be achieved.

NEW YORK MUNICIPAL SECURITIES

All of the Portfolio's securities at the time of purchase are of prime
quality as defined previously. Securities must also meet credit standards
applied by the Advisor.

The Portfolio may invest in variable rate obligations, forward commitments
and stand-by commitments or puts, tender option bonds and lease obligations as
described and according to the limitations set forth under "Municipal
Securities" on page 8.

Investors in the New York Municipal Portfolio should consider the possible
greater risk arising from the geographic concentration and non-diversified
structure of the Portfolio's investments, as

11
<PAGE>
well as the current and past financial condition of New York municipal issuers
which is discussed in the Statement of Additional Information ("SAI").

TAXABLE INVESTMENTS

While it is anticipated that substantially all of the Portfolio's assets
will be invested in New York Municipal Securities, the Portfolio is authorized,
under normal circumstances, to invest up to 20% of its total assets in taxable
investments. The taxable investments are limited to obligations of the U.S.
Government and its agencies or instrumentalities; prime quality certificates of
deposit and bankers acceptances of domestic banks; prime quality commercial
paper; and repurchase agreements collateralized at all times by such
instruments.

OTHER FUNDAMENTAL INVESTMENT POLICIES

ADDITIONAL INFORMATION

12
<PAGE>
Net income of the Portfolios consists of all accrued interest income on
portfolio assets less the expenses applicable to that dividend period. All
realized gains and losses are reflected in the net asset value and are not
included in net investment income.

Distributions to your account of tax-exempt interest income are not subject
to Federal income tax (other than the alternative minimum tax described above),
but may be subject to state or local income taxes. Distributions of income
earned by the California General Municipal Portfolio from California tax-exempt
securities are not subject to Federal income tax (other than the alternative
minimum tax described above) or to California personal income taxes.
Distributions of income earned by the New York Municipal Portfolio from New York
Municipal Securities are not subject to Federal income tax (other than the
alternative minimum tax described above) or to New York State and New York City
income taxes. Distributions of taxable interest income, other investment income,
and net short-term capital gains are taxed to you as ordinary income; state and
local taxation of such distributions, if any, may be reduced in proportion to
the percentage of income that derives from U.S. Government obligations.
Distributions of net long-term capital gains would be taxable as long-term
capital gains irrespective of the length of time you may have held your shares.
Distributions of net short-term and long-term capital gains, if any, would be
made annually. Each January, each Portfolio will send you tax information for
the calendar year just ended stating the amounts and types of all its
distributions, including the percentage of income derived from U.S. Government
obligations, for the calendar year just ended.

13
<PAGE>
the same manner. The Fund does not intend to hold regular annual shareholder
meetings. Directors are required to call a special meeting of a Portfolio's
shareholders if owners of at least 10% of the Portfolio's outstanding shares so
request in writing. The Fund may establish additional Portfolios which may have
different investment objectives from those stated in this prospectus. The Fund
issues shares only for full monetary consideration, and it does not issue share
certificates.

REPORTS. You will receive semi-annual and annual reports of the Portfolio
in which you are invested. To reduce expenses, only one copy of financial
reports will be mailed to your household, even if you have more than one
account. If you wish to receive additional copies of financial reports, please
call 1-800-401-6672. Your Portfolio transactions and balances will be reported
each month on your Oppenheimer securities account statements.

PURCHASE AND REDEMPTION OF SHARES

THERE ARE NO MINIMUM AMOUNTS REQUIRED FOR EITHER INVESTMENTS OR WITHDRAWALS

INITIAL INVESTMENTS (Purchases)

Contact your Oppenheimer Account Executive to arrange for an initial
investment in a Portfolio of the Fund. You may use the Portfolio either as the
money market fund tied to your Oppenheimer securities account through
Oppenheimer's sweep service or as an additional investment position held in your
securities account.

The "sweep" means that cash is automatically invested in the Portfolio of
your choice when the cash becomes available in your Oppenheimer securities
account from any source such as proceeds from securities sales, receipt of
dividends or interest income, or a check deposit from you. Amounts of $10,000 or
more are invested on the next business day; amounts less than $10,000 are
invested once a week on the first business day of the following week. The sweep
automatically withdraws cash from your Portfolio when appropriate to cover
purchases or other activities in your securities account.
SUBSEQUENT INVESTMENTS (Purchases)
Mail or deliver your check, payable to Oppenheimer & Co., Inc., to your
Oppenheimer Account Executive. Please write your securities account number and
the Portfolio name on the check. If you wish to make an investment by sending a
wire from your bank, contact your Oppenheimer Account Executive to obtain wiring
instructions.

WITHDRAWALS (Redemptions)
For withdrawals other than those automatically activated by the sweep (see
"Initial Investments" above), please instruct your Oppenheimer Account Executive

as to the withdrawal amount and the delivery of the proceeds.

14
<PAGE>
OCC Cash Reserves (the "Fund") is an open-end money market fund investment
company with five separate Portfolios. Though the Portfolios have the same
investment objectives of safety of principal, liquidity and maximum current
income, they may in the pursuit of these objectives invest in different types of
money market securities or in different proportions of the same types of
securities. This prospectus sets forth information about the Fund and its
Primary, Government, General Municipal, California Municipal and New York
Municipal Portfolios that a prospective investor should know before investing.
Please retain this prospectus for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTENTS PAGE
Introduction................................................................ 1
Expense Information......................................................... 2
Financial Highlights........................................................ 3
Primary Portfolio........................................................... 5
Government Portfolio........................................................ 6
General Municipal Portfolio................................................. 7
California Municipal Portfolio.............................................. 10
New York Municipal Portfolio................................................ 11
Additional Information...................................................... 12
Purchase and Redemption of Shares........................................... 14

MARCH 29, 1996

OCC CASH RESERVES

- PRIMARY PORTFOLIO
- GOVERNMENT PORTFOLIO
- GENERAL MUNICIPAL PORTFOLIO
- CALIFORNIA MUNICIPAL PORTFOLIO
- NEW YORK MUNICIPAL PORTFOLIO

PROSPECTUS
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STATEMENT OF ADDITIONAL INFORMATION

OCC CASH RESERVES, INC.

- Primary Portfolio

- Government Portfolio

- General Municipal Portfolio

- California Municipal Portfolio

- New York Municipal Portfolio

One World Financial Center
New York, New York 10281
(800) 401-6672/(212) 374-6187

This Statement of Additional Information (the "Additional Statement") is not a
Prospectus. Investors should understand that this Additional Statement should
be read in conjunction with the Prospectus for OCC Cash Reserves, Inc. (the
"Fund") dated March 29, 1996. Prospectuses may be obtained by contacting the
Fund.

The date of this Additional Statement is March 29, 1996

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TABLE OF CONTENTS

Page

INVESTMENT OF THE FUND'S ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 3

SPECIAL CONSIDERATIONS REGARDING NEW YORK MUNICIPAL
OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SPECIAL CONSIDERATIONS REGARDING CALIFORNIA MUNICIPAL
OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .22

DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . .27

INVESTMENT MANAGEMENT AND OTHER SERVICES . . . . . . . . . . . . . . . . . . .28

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .32

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

PORTFOLIO YIELD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

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INVESTMENT OF THE FUND'S ASSETS

The investment objective and policies of each portfolio of the Fund (the
"Portfolio(s)") are described in the applicable prospectus for the Portfolio. A
further description of the Portfolios' investments and investment methods
appears below.

U.S. GOVERNMENT SECURITIES. U.S. Government Securities (i.e., obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities) include securities issued by the U.S. Government, which in
turn include Treasury Bills (which mature within one year of the date they are
issued), Treasury Notes (which mature more than one year after the date they are
issued and less than ten years after the date they are issued) and Treasury
Bonds (which mature more than ten years after the date they are issued). All
Treasury securities are backed by the full faith and credit of the United States
Government. U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Services Administration, Bank for Cooperatives, Federal Home Loan Banks, Federal
Home Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Student Loan Marketing Association, Maritime Administration, the
Tennessee Valley Authority and the District of Columbia Advisory Board.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal National Mortgage
Association ("Fannie Mae"), are supported only by the credit of the
instrumentality and not by the Treasury. If the securities are not backed by
the full faith and credit of the United States, the owner of the securities must
look principally to the agency issuing the obligation for repayment and may not
be able to assert a claim against the United States Government in the event that
the agency or instrumentality does not meet its commitment.

TIME DEPOSITS AND COMMERCIAL PAPER. The Portfolios may invest in fixed time
deposits, whether or not subject to withdrawal penalties; however, investment in
such deposits which are subject to withdrawal penalties, other than overnight
deposits, are subject to the 10% limit on illiquid investments set forth in the
Prospectus for each Portfolio.

Commercial paper consists of short-term, unsecured promissory notes issued
to finance short-term credit needs. The commercial paper purchased by the
Portfolios will consist only of direct obligations issued by domestic and
foreign entities which, at the time of their purchase are (a) rated high quality
(in one of the two highest categories) by two of the following nationally
recognized statistical rating organizations ("NRSROs")(or if only one NRSRO has
issued a rating at the time the Fund purchases or rolls over the security, that
NRSRO): Moody's Investors Service, Inc. ("Moodys"), Standard & Poor's
Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps,
Inc. ("Duff & Phelps"), Thomson BankWatch, Inc. and with respect to debt issued
by banks, bank holding companies, United Kingdom building societies, broker-
dealers and broker-dealers' parent companies, and bank-supported debt, IBCA
Limited and its affiliate, IBCA Inc. or (b) if unrated, determined by

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OpCap Advisors (the "Advisor") under guidelines established by the Board of
Directors ("Board") to be of comparable quality to those rated obligations which
may be purchased by the Portfolios. The other corporate obligations in which
the Portfolios may invest consist of high quality, U.S. dollar denominated
short-term bonds and notes (including variable amount demand notes) issued by
domestic and foreign corporations.

The commercial paper obligations which the Portfolios buy are unsecured and
include variable rate notes. The nature and terms of a variable rate note
(i.e., a "Master Note") permit a fund to invest fluctuating amounts at varying
rates of interest pursuant to a direct arrangement between a fund, as lender,
and the issuer, as borrower. It permits daily changes in the amounts borrowed.
The Fund has the right at any time to increase, up to the full amount stated in
the note agreement, or to decrease the amount outstanding under the Master Note.
The issuer may prepay at any time and without penalty any part of, or the full
amount of, the principal balance outstanding under the Master Note. The Master
Note may or may not be backed by one or more bank letters of credit. Because
these notes are direct lending arrangements between the Fund and the issuer, it
is not generally contemplated that they will be traded; moreover, there is
currently no secondary market for them. Except as specifically provided in the
Prospectus for each Portfolio, there is no limitation on the type of issuer from
whom these notes will be purchased; however, in connection with such purchase
and on an ongoing basis, the Advisor will, subject to policies established by
the Board of Directors of the Fund, consider and monitor on a continuous basis
the ratings, earning power, cash flow and other liquidity ratios of the issuer,
and its ability to pay principal and interest on demand, including a situation
in which all holders of such notes make demand simultaneously. A Portfolio will
not invest more than 5% of its total assets in such variable rate notes.

BANK OBLIGATIONS. The Federal Deposit Insurance Corporation ("FDIC") insures
the deposits of federally insured banks and savings and loan associations
(collectively referred to as "banks") up to $100,000. A Portfolio may, within
the limits set forth in the Prospectus, purchase bank obligations which are
fully insured as to principal by the FDIC. Currently, to remain fully insured
as to principal, these investments must be limited to $100,000 per bank; if the
principal amount and accrued interest together exceed $100,000, the excess will
not be insured. Insured bank obligations have limited marketability and the
Portfolios will not limit investment in banks to the insured amount. Unless the
Board of Directors determines that a readily available market exists for such
obligations, a Portfolio will treat such obligations as subject to the 10% limit
for illiquid investments unless such obligations are payable at principal amount
plus accrued interest on demand or within seven days after demand.

MUNICIPAL SECURITIES. The General Municipal Portfolio, California Municipal
Portfolio and New York Municipal Portfolio (collectively the "Municipal
Portfolios") invest primarily in tax-exempt securities. "Municipal Securities"
refers to debt obligations issued by a state and its political subdivisions (for
example, counties, cities, towns, villages, districts and authorities) and by
territories and possessions of the U.S. the interest from which is, in the
opinion of bond counsel, exempt from federal income tax and (i) California
personal income taxes in the case of the California Municipal Portfolio, or (ii)
New York State and New York City income taxes in the case of the New York
Municipal Portfolio. Such obligations are issued to obtain funds for various
public purposes, including the construction of a wide range of public
facilities, such as airports, bridges, highways, housing,

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hospitals, mass transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Securities may be issued include the
refunding of outstanding obligations or obtaining funds for general operating
expenses. Short-term Municipal Securities are generally issued by state and
local governments and public authorities as interim financing in anticipation of
collections, revenue receipts, or bond sales to finance such public purposes.
In addition, certain types of "private activity" bonds may be issued by public
authorities to finance privately operated housing facilities, and certain local
facilities for water supply, gas, electricity, sewage or solid waste disposal,
student loans, or the obtaining of funds to lend to public or private
institutions for the construction of facilities such as educational, hospital
and housing facilities. Such obligations are considered as Municipal Securities
if the interest paid thereon is, in the opinion of bond counsel, exempt from
federal income tax and (i) California personal income taxes in the case of the
California Municipal Portfolio or (ii) New York State and New York City income
taxes in the case of the New York Municipal Portfolio. Other types of private
activity bonds, the proceeds of which are used for the construction, equipment,
repair or improvement of privately operated industrial or commercial facilities,
constitute Municipal Securities, although the current federal laws place
substantial limitations on the size of such issues. Municipal Securities also
include short-term discount notes (tax-exempt commercial paper), which are
promissory notes issued by municipalities to enhance their cash flows.

PARTICIPATION INTERESTS. The Municipal Portfolios may invest in Municipal
Securities either by purchasing them directly or by purchasing certificates of
actual or similar instruments evidencing direct ownership of interest payments
or principal payments, or both, on Municipal Securities, provided that, in the
opinion of counsel to the initial seller of each such certificate or instrument,
any discount accruing on the certificate or instrument that is purchased at a
yield not greater than the coupon rate of interest on the related Municipal
Securities will be exempt from federal income tax (and in the case of the
California and New York Municipal Portfolios applicable State and local tax) to
the same extent as interest on the Municipal Securities. The Portfolio may also
invest in Municipal Securities by purchasing from banks participation interests
in all or part of specific holdings of Municipal Securities. These
participations may be backed in whole or in part by an irrevocable letter of
credit or guarantees of the selling bank and have "put" provisions allowing the
Portfolio to compel the seller of the interest to purchase it on pre-determined
terms. The selling bank may receive a fee from the Fund in connection with the
arrangement. A Municipal Portfolio will not purchase such participation
interests unless it receives an opinion of counsel or a ruling of the Internal
Revenue Service that interest earned by it on Municipal Securities in which it
holds such participation interests is exempt from federal income tax and (i)
California personal income tax in the case of the California Municipal Portfolio
or (ii) New York State and New York City income tax in the case of the New York
Municipal Portfolio. The Municipal Portfolios do not expect to invest more than
5% of their respective total assets in participation interests.

LOAN PARTICIPATIONS. The Primary Portfolio may invest in short-term loan
participations pursuant to agreements between the Fund and commercial banks
which have been approved by the Board of Directors. Generally, these short-term
loans have maturities ranging between fourteen days and six months (the Fund
will not purchase any participation having maturities of longer than one year)
and bear interest at a fixed rate payable at maturity. Loan participations do
not provide recourse to the selling banks but are solely the obligation of the
borrower, although the bank will have continuing

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responsibility for administering the loan, collecting payment at maturity and
passing funds on to the Fund as they are received for which it receives a fee.
The Fund will only participate in loans to companies whose outstanding
securities and commercial paper are of a quality permissible for investment by
the Fund. Loan participations are evidenced by non-negotiable Participation
Certificates.

STAND-BY COMMITMENTS. The Municipal Portfolios have the authority to acquire
stand-by commitments from banks and broker-dealers in connection with the
purchase of Municipal Securities. A stand-by commitment may be considered a
security independent of the Municipal Security to which it relates. The amount
payable by a bank or dealer during the time a stand-by commitment is
exercisable, absent unusual circumstances, would be substantially the same as
the market value of the underlying Municipal Security to a third party at any
time. Each Portfolio anticipates that stand-by commitments generally will be
available without the payment of direct or indirect consideration. The
Portfolios do not expect to assign any value to stand-by commitments.

TENDER OPTION BONDS. The Municipal Portfolios may invest in long-term tax-
exempt fixed rate instruments that have been converted into short-term tax-
exempt variable rate demand instruments ("tender option bonds") by virtue of
certain third party demand features. Tender option bonds are tax-exempt bonds
with maturities of 5 to 25 years that bear interest at a fixed rate
substantially higher than prevailing short-term tax-exempt rates, that have been
coupled with the agreement of a third party such as a bank pursuant to which
such institution grants bondholders the option at periodic intervals (usually
every six months but in no event less than every twelve months) to tender (put)
their bonds to the institution and receive the face value thereof. Holders of
tender option bonds are assessed periodic variable tender fees by the
institution. Such fees are established for each tender period at a rate equal
to the difference between the bonds' fixed coupon rate and the rate as
determined by a remarketing or similar agent at or near the commencement of such
period, that would cause the tender option bonds to trade at par on the date of
such determination. The purchase by the Municipal Portfolios of tender option
bonds must comply with certain conditions established by the Securities and
Exchange Commission.

FORWARD COMMITMENTS. The Municipal Portfolios may purchase money market
securities on a forward commitment basis, which means that delivery and payment
for such securities normally take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate that will
be received on the securities are fixed at the time the buyer enters into the
commitment. The Portfolios will make commitments to purchase such securities
only with the intention of actually acquiring the securities, but the Portfolio
may sell these securities before the settlement date if it is deemed advisable.
The Portfolios will not accrue income in respect of a security purchased on a
forward commitment basis prior to its stated delivery date.

WHEN-ISSUED SECURITIES. The Government and Municipal Portfolios may take
advantage of offerings of eligible portfolio securities on a "when-issued"
basis, I.E., delivery of and payment for such securities take place sometime
after the transaction date on terms established on such date. Normally,
settlement on municipal securities occurs within one month of the transaction
date and settlement in U.S. Government Securities takes place within ten days.
A Portfolio will only make when-issued commitments on eligible securities with
the intention of actually acquiring the securities. If a Portfolio

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chooses to dispose of the right to acquire a when-issued security prior to its
acquisition, it could, as with the disposition of any other portfolio
obligation, incur a gain or a loss due to market fluctuation. No when-issued
commitments will be made if, as a result, more than 15% of a Portfolio's net
assets would be so committed.

REPURCHASE AGREEMENTS. Each Portfolio may acquire securities subject to
repurchase agreements. Under a typical repurchase agreement, a Portfolio would
acquire a debt security for a relatively short period (usually from day to day
and seldom for more than one week) subject to an obligation of the seller to
repurchase and of the Portfolio to resell the debt security at an agreed-upon
higher price and time, thereby establishing a fixed investment return during the
Portfolio's holding period which is not subject to market fluctuations. The
Portfolios will enter into repurchase agreements with primary dealers in U.S.
Government securities as designated by the Federal Reserve Bank of New York or
their subsidiaries or with the Fund's custodian. Under each repurchase
agreement, the selling institution will be required to provide, as collateral,
securities subject to such repurchase agreement whose market value is not less
than the repurchase price. Repurchase agreements could involve certain risks in
the event of default or insolvency of the selling institution, including costs
of disposing of such securities and any loss resulting from delays or
restrictions upon a Portfolio's ability to dispose of the underlying securities.
The Advisor considers the creditworthiness of those dealers with which the Fund
enters into repurchase agreements and monitors on an ongoing basis the value of
securities subject to repurchase agreements to ensure that such value is
maintained at the required level.

The Portfolios may also enter into reverse repurchase agreements which
involve the sale of securities held by a Portfolio with an agreement to
repurchase the securities at an agreed-upon price, date and interest payment.
Under normal circumstances there should be no need to enter into reverse
repurchase agreements.

ILLIQUID INVESTMENTS. The Advisor will not make investments as to which there
exists the possibility of limited liquidity if thereafter more than 10% of the
total assets of any Portfolio would consist of such investments. Such
investments include (i) repurchase agreements maturing in more than seven days;
(ii) fixed time deposits subject to withdrawal penalties, other than overnight
deposits; (iii) restricted securities, I.E., securities which cannot be sold
freely due to legal or contractual restrictions on resale (the Fund does not
expect to own such securities); (iv) securities and other assets for which a
bona fide market does not exist at the time of purchase or subsequent valuation;
(v) insured bank obligations, unless the Board of Directors determines that a
readily available market exists for such obligations; (vi) participation
interest in loans extended by banks; (vii) variable rate obligations for which
there is no readily available market; and (viii) securities of foreign issuers
which are not listed on a recognized domestic or foreign securities exchange,
but not including certain certificates of deposits of major foreign banks,
banker's acceptances of major foreign banks and high quality commercial paper of
major foreign issuers for which the Board of Directors determines that a readily
available market exists. Notwithstanding the foregoing, obligations payable at
principal amount plus accrued interest on or within seven days after demand are
not included with the 10% limitation.

OBLIGATIONS OF FOREIGN BANKS AND FOREIGN BRANCHES OF U.S. BANKS. Each Portfolio
may invest in U.S. dollar-denominated securities of foreign banks, their
branches and foreign branches of U.S. banks

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which are rated in one of the two highest rating categories or which are deemed
to be of comparable quality, as determined by the Board of Directors. To the
extent a Portfolio makes such investments, it will be subject to additional
investment risks which differ from those incurred by an investment company that
invests only in debt obligations of domestic U.S. banks. Such risks include
political and economic developments of the country in which the bank or branch
is located, possible imposition of withholding taxes on interest payable on the
securities, possible seizure or nationalization of foreign deposits and the
possible establishment of exchange control regulations or the adoption of other
governmental restrictions that might affect the payment of principal and
interest on such securities. Additionally, not all of the U.S. Federal and
state banking laws and regulations applicable to domestic banks relating to
maintenance of reserves (which are often lower), loan limits and promotion of
financial soundness apply to foreign branches of domestic banks, and none of the
laws and regulations apply to foreign banks. There may be greater difficulty in
commencing legal action against foreign issuers than against U.S. issuers of
securities.

RISKS. No Portfolio will make investments with the objective of capital growth.
However, the market value of the securities held by the Portfolios, including
U.S. Government Securities, may be affected by changes in general interest
rates. Because the current market value of debt securities varies inversely
with changes in prevailing interest rates, if interest rates increase after a
security is purchased, the market value of that security would normally decline.
Conversely, should interest rates decrease after a security is purchased, its
market value would rise. However, those fluctuations in market value will not
generally result in realized gains or losses to the Portfolios since the
Portfolios do not usually intend to dispose of securities prior to their
maturity. A debt security held to maturity is redeemable by its issuer at full
principal value plus accrued interest. To a limited degree, the Portfolios may
engage in short-term trading to attempt to take advantage of short-term
variations, or may dispose of a portfolio security prior to its maturity if, on
the basis of a revised credit evaluation of the issuer or other considerations,
the Portfolio believes such disposition advisable or if it needs to generate
cash to satisfy redemptions. In such cases, the Portfolios may realize a
capital gain or loss. The securities in which the Portfolios will invest may
not earn as high a level of current income as longer-term or lower-quality
securities, which generally have less liquidity, greater market risk and more
fluctuation in market value. Securities in which the Portfolios may invest are
subject to the provisions of bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the Federal Bankruptcy Code, and laws,
if any, which may be enacted by Congress or the state legislatures extending the
time for payment of principal or interest or both or imposing other constraints
upon enforcement of such obligations. There is also the possibility that as a
result of litigation or other conditions the power or ability of issuers to meet
their obligations for the payment of interest and principal on their securities
may be materially affected.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Securities. Federal legislation limits the types and
amounts of tax-exempt bonds issuable for certain purposes, especially for
industrial development bonds and other types of so-called "private activity
bonds." Such limits may affect the future supply and yields of these types of
Municipal Securities. Further proposals limiting the issuance of Municipal
Securities may well be introduced in the future. If it appeared that the
availability of Municipal Securities and the value of that Portfolio could be
materially affected by

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such changes in law, the Board of Directors would reevaluate its investment
objective and policies and consider changes in the structure of that Portfolio
or its dissolution. Any changes in basic investment objective or fundamental
investment policies of any of the Portfolios must be approved by that
Portfolio's shareholders before being effected.

SPECIAL CONSIDERATIONS REGARDING
NEW YORK MUNICIPAL OBLIGATIONS

The economic and financial condition of the State of New York (the "State")
may be affected by various financial, social, economic and political factors.
Those factors can be very complex, may vary from fiscal year to fiscal year, and
are frequently the result of actions taken not only by the State and its
agencies and instrumentalities but also by entities such as the Federal
government, that are not under the control of the State.

The financial condition of the State, its authorities and public benefit
corporations (the "Authorities") and its municipalities, particularly The City
of New York (the "City"), could affect the market values and marketability of,
and therefore the net asset value per share and the interest income of, the New
York Municipal Portfolio, or result in the default of existing obligations,
including obligations which may be held by the New York Municipal Portfolio.

The following section provides only a brief summary of the complex factors
affecting the financial situation in New York and is based on information drawn
from certain official statements relating to securities offerings of the State,
its Authorities and the City and certain other localities, as available on the
date of this Statement of Additional Information. THE INFORMATION CONTAINED IN
SUCH OFFICIAL STATEMENTS AND OTHER PUBLICLY AVAILABLE DOCUMENTS HAS NOT BEEN
INDEPENDENTLY VERIFIED.

The national economy began the current expansion in 1991 and has added over
7 million jobs since early 1992. However, the recession lasted longer in the
State and the State's economic recovery has lagged behind the nation's.
Although the State has added approximately 185,000 jobs since November 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.

In recent years, State actions affecting the level of receipts and
disbursements, as well as the relative strength of the State and regional
economy, actions of the Federal government and other factors, have created
structural budget 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. The 1995-96 enacted budget combines
significant tax and program reductions which will, in the current and future
years, lower both the recurring receipts base (before the effect of any economic
stimulus from such tax reductions) and the historical annual growth in State
program spending. Notwithstanding these changes, the State can expect to
continue to confront structural deficits in future years.

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The 1995-96 State Financial Plan includes actions that will have an effect
on the budget outlook for State fiscal year 1996-97 and beyond. The Division of
the Budget estimates that the 1995-96 State Financial Plan contains actions that
provide nonrecurring resources or savings totaling approximately $900 million.
These include the use of balances set aside originally for mass transportation
aid ($220 million), the use of a reserve established to fund pension
supplementation costs ($110 million) and the use of lottery balances ($62
million). The Comptroller believes that the amount of nonrecurring resources or
savings exceeds $1.0 billion. The Division of the Budget also estimates that
the 1995-96 State Financial Plan contains nonrecurring expenditures totalling
nearly $250 million. These include the payment of social services litigation
($65 million), the deposit to the Contingency Reserve Fund ($40 million), the
payment of 1993-94 pension charges ($56 million) and aid for maintenance costs
of local schools ($45 million). The net amount of nonrecurring resources used
in the 1995-96 State Financial Plan, accordingly, is estimated by the Division
of the Budget at over $600 million.

In addition to this use of nonrecurring resources, the 1995-96 State
Financial Plan reflects actions that will directly affect the State's 1996-97
fiscal year baseline receipts and disbursements. The three-year plan to reduce
State personal income taxes will decrease State tax receipts by an estimated
$1.7 billion in State fiscal year 1996-97, in addition to the amount of
reduction in State fiscal year 1995-96. Further significant reductions in the
personal income tax are scheduled for the 1997-98 State fiscal year. Other tax
reductions enacted in 1994 and 1995 are estimated to cause an additional
reduction in receipts of over $500 million in 1996-97, as compared to the level
of receipts in 1995-96. Similarly, many actions taken to reduce disbursements
in the State's 1995-96 fiscal year are expected to provide greater reductions in
State fiscal year 1996-97. These include actions to reduce the State workforce,
reduce Medicaid and welfare expenditures and slow community mental hygiene
program development.

The net impact of these and other factors is expected to produce a
potential imbalance in receipts and disbursements in State fiscal year 1996-97.
The Governor has indicated that in the 1996-97 Executive Budget he will propose
to close this potential imbalance primarily through General Fund expenditure
reductions and without increases in taxes or deferrals of scheduled tax
reductions.

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. To correct
recurring budgetary imbalances, the State would need to take significant actions
to align recurring receipts and disbursement in future fiscal years. 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.

New York State's financial operations have improved during recent fiscal
years. During the period 1989-90 through 1991-92, the State incurred General
Fund operating deficits that were closed with receipts from the issuance of tax
and revenue anticipation notes ("TRANs"). First, the national recession, and
then the lingering economic slowdown in the New York and regional economy,
resulted

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in repeated shortfalls in receipts and three budget deficits. For its 1992-93,
1993-94 and 1994-95 fiscal years, the State recorded balanced budgets on a cash
basis, with substantial fund balances in 1992-93 and 1993-94, and a smaller fund
balance in 1994-95.

The State historically has been one of the wealthiest states in the nation.
For decades, however, the State has grown more slowly than the nation as a
whole, gradually eroding its relative economic position. Statewide, urban
centers have experienced significant changes involving migration of the more
affluent to the suburbs and an influx of generally less affluent residents.
Regionally, the older Northeast cities have suffered because of the relative
success that the South and the West have had in attracting people and business.
New York City (the "City") has also had to face greater competition as other
major cities have developed financial and business capabilities which make them
less dependent on the specialized services traditionally available almost
exclusively in the City.

State financing activities include general obligation debt of the State and
State-guaranteed debt, to which the full faith and credit of the State has been
pledged, as well as lease-purchase and contractual-obligation financings, moral
obligation financings and other financings, through public authorities and
municipalities, where the State's legal obligation to make payments to those
public authorities and municipalities for their debt service is subject to
annual appropriation by the Legislature.

GENERAL OBLIGATION AND STATE-GUARANTEED FINANCING

There are a number of methods by which the State itself may incur debt.
The State may issue general obligation bonds. Under the State Constitution, the
State may not, with limited exceptions for emergencies, undertake long-term
general obligation borrowing (i.e., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no limitation on the amount of
long-term general obligation debt that may be so authorized and subsequently
incurred by the State. With the exception of general obligation housing bonds
(which must be paid in equal annual installments or installments that result in
substantially level or declining debt service payments, within 50 years after
issuance, commencing no more than three years after issuance), general
obligation bonds must be paid in equal annual installments or installments that
result in substantially level or declining debt service payments, within 40
years after issuance, beginning not more than one year after issuance of such
bonds.

The State may undertake short-term borrowings without voter approval (i) in
anticipation of the receipt of taxes and revenues, by issuing tax and revenue
anticipation notes ("TRANs"), and (ii) in anticipation of the receipt of
proceeds from the sale of duly authorized but unissued general obligation bonds,
by issuing bond anticipation notes ("BANs"). TRANs must mature within one year
from their dates of issuance and may not be refunded or refinanced beyond such
period. BANs may only be issued for the purposes and within the amounts for
which bonds may be issued pursuant to voter authorizations. Such BANs must be
paid from the proceeds of the sale of bonds in anticipation of which they were
issued or from other sources within two years of the date of issuance or, in the
case of BANs for housing purposes, within five years of the date of issuance.

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The State may also, pursuant to specific constitutional authorization,
directly guarantee certain public authority obligations. The State Constitution
provides for the State guarantee of the repayment of certain borrowings for
designated projects of the New York State Thruway Authority, the Job Development
Authority and the Port Authority of New York and New Jersey. The State has
never been called upon to make any direct payments pursuant to such guarantees.
The constitutional provisions allowing a State-guarantee of certain Port
Authority of New York and New Jersey debt stipulates that no such guaranteed
debt may be outstanding after December 31, 1996. Payments of debt service on
State general obligation and State-guaranteed bonds and notes are legally
enforceable obligations of the State.

LEASE-PURCHASE AND CONTRACTUAL-OBLIGATION FINANCING

The State employs additional long-term financing mechanisms, lease-purchase
and contractual-obligation financings, which involve obligations of public
authorities or municipalities that are State-supported but not general
obligations of the State. Under these financing arrangements, certain public
authorities and municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition and
rehabilitation of equipment, and expect to meet their debt service requirements
through the receipt of rental or other contractual payments made by the State.
Although these financing arrangements involve a contractual agreement by the
State to make payments to a public authority, municipality or other entity, the
State's obligation to make such payments is generally expressly made subject to
appropriation by the Legislature and the actual availability of money to the
State for making the payments.

The State also participates in the issuance of certificates of
participation ("COPs") in a pool of leases entered by the State's Office of
General Services on behalf of several State departments and agencies interested
in acquiring operational equipment, or in certain cases, real property.
Legislation enacted in 1986 established restrictions upon and centralized State
control, through the State Comptroller and the Director of the Budget, over the
issuance of COPs representing the State's contractual obligation, subject to
appropriation by the Legislature and availability of money, to make installment
or lease-purchase payments for the State's acquisition of such equipment or real
property.

The State has never defaulted on any of its general obligation indebtedness
or its obligations under lease-purchase or contractual-obligation financing
arrangements and has never been called upon to make any direct payments pursuant
to its guarantees.

MORAL OBLIGATION AND OTHER FINANCING

Moral obligation financing generally involves the issuance of debt by a
public authority to finance a revenue-producing project or other activity. The
debt is secured by project revenues and includes statutory provisions requiring
the State, subject to appropriation by the Legislature, to make up any
deficiencies which may occur in the issuer's debt service reserve fund. There
has never been a default on any moral obligation debt of any public authority.
The State does not intend to increase

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statutory authorizations for moral obligation bond programs. From 1976 through
1987, the State was called upon to appropriate and make payments totaling $162.8
million to make up deficiencies in the debt service reserve funds of the Housing
Finance Agency pursuant to moral obligation provisions. In the same period, the
State also expended additional funds to assist the Project Finance Agency, Urban
Development Corporation and other public authorities which had moral obligation
debt outstanding. The State has not been called upon to make any payments
pursuant to any moral obligations since the 1986-87 fiscal year and no such
requirements are anticipated during the 1995-96 fiscal year.

In addition to the moral obligation financing arrangements described above,
State law provides for State municipal assistance corporations, which are public
authorities established to aid financially troubled localities. The Municipal
Assistance Corporation For The City of New York ("MAC"), created in 1975 to
provide financing assistance to New York City, is the only municipal assistance
corporation created to date. To enable MAC to pay debt service on its
obligations, MAC receives, subject to annual appropriation by the Legislature,
receipts from the 4 percent New York State sales tax for the benefit of New York
City, the State-imposed stock transfer tax and , subject to certain prior liens,
certain local assistance payments otherwise payable to New York City. The
legislation creating MAC also includes a moral obligation provision. Under its
enabling legislation, MAC's authority to issue moral obligation bonds and notes
(other than refunding bonds and notes) expired on December 31, 1984.

The State also provides for contingent contractual-obligation financing for
the Secured Hospital Program pursuant to legislation enacted in 1985. Under
this financing method, the State contracts to pay debt service, subject to
annual appropriations, on bonds issued by the New York State Medical Care
Facilities Finance Agency ("MCFFA") in the event there are shortfalls of
revenues from other sources. The State has never been required to make any
payments pursuant to this financing arrangement, nor does it anticipate being
required to do so during the 1995-96 fiscal year.

STATE FISCAL REFORM

LOCAL GOVERNMENT ASSISTANCE CORPORATION

In 1990, as part of a State fiscal reform program, legislation was enacted
creating the Local Government Assistance Corporation ("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 bonds 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

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fiscal year after the limit was first exceeded. This provision capping the
seasonal borrowing was included as a covenant with LGAC'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 1995-96 State
Financial Plan includes no spring borrowing nor did the 1994-95 State Financial
Plan, which was the first time in 35 years there was no short-term seasonal
borrowing. This reflects the success of the LGAC program in permitting the
State to accelerate local aid payments from the first quarter of the current
fiscal year to the fourth quarter of the previous fiscal year.

PUBLIC AUTHORITIES

The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities. Public authorities refer to public benefit
corporations, created pursuant to State law, other than local authorities.
Public 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 as otherwise restricted by, their legislative
authorization. The State's access to the public credit markets could be
impaired, and the market price of its outstanding debt may be materially
adversely affected, if any of its public authorities were to default on their
respective obligations, particularly those using the financing techniques
referred to as State-supported or State-related debt.

There are numerous public authorities, with various responsibilities,
including those which finance, construct and/or operate revenue producing public
facilities. Public authority operating expenses and debt service costs are
generally paid by revenues generated by the projects financed or operated, such
as tolls charged for the use of highways, bridges or tunnels, rental charges for
housing units, and charges for occupancy at medical care facilities.

In addition, State legislation authorizes several financing techniques for
public authorities. Also, there are statutory arrangements providing for State
local assistance payments, otherwise payable to localities, to be made under
certain circumstances to public authorities. Although the State has no
obligation to provide additional assistance to localities whose local assistance
payments have been paid to public authorities under these arrangements if local
assistance payments are so diverted, the affected localities could seek
additional State assistance.

Some authorities also receive monies from State appropriations to pay for
the operating costs of certain of their programs. As described below, the MTA
receives the bulk of this money in order to carry out mass transit and commuter
services.

METROPOLITAN TRANSPORTATION AUTHORITY

The Metropolitan Transportation Authority (the"MTA") oversees the operation
of subway and bus lines in New York City by is affiliates, the New York City
Transit Authority and the Manhattan and Bronx Surface Transit Operating
Authority (collectively, the "TA"). The MTA operates certain

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commuter rail and bus lines in the New York Metropolitan areas through MTA's
subsidiaries, the Long Island Rail Road Company, the Metro-North Commuter
Railroad Company, and the Metropolitan Suburban Bus Authority. In addition, the
Staten Island Rapid Transit Operating Authority, an MTA subsidiary, operates a
rapid transit line on Staten Island. Through its affiliated agency, the
Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates certain
intrastate toll bridges and tunnels. Because fare revenues are not sufficient
to finance the mass transit portion of these operations, the MTA has depended
and will continue to depend, for operating support upon a system of State, Local
government and TBTA support, and to the extent available, Federal operating
assistance, including loans, grants and subsidies. If current revenue
projections are not realized and/or operating expenses exceed current
projections, the TA or commuter railroads may be required to seek additional
State assistance, raise fares or take other actions.

THE CITY OF NEW YORK

The fiscal health of the State may also be affected by the fiscal health of
the City, which has required and continues to require significant financial
assistance from the State. The City depends on State aid both to enable the
City to balance its budget and to meet its cash requirements. The City has
achieved balanced operating results for each of its fiscal years since 1981 as
reported in accordance with the then-applicable GAAP standards.

FISCAL OVERSIGHT

In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the
State established the Municipal Assistance Corporation For The City of New York
("MAC") to provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the City's financial
affairs; the Office of the State Deputy Comptroller for the City of New York
("OSDC") to assist the Control Board in exercising its powers and
responsibilities; and a "Control Period" which existed from 1975 to 1986 during
which the City was subject to certain statutorily-prescribed fiscal controls.
Although the Control Board terminated the Control Period in 1986 when certain
statutory conditions were met, thus suspending certain Control Board powers, the
Control Board, MAC and OSDC continue to exercise various fiscal monitoring
functions over the City, and upon the occurrence or "substantial likelihood and
imminence" of the occurrence of certain events, including, but not limited to, a
City operating budget deficit of more than $100 million, the Control Board is
required by law to reimpose a Control period. Currently, the City and its
Covered Organizations (i.e., those which receive or may receive moneys from the
City directly, indirectly or contingently) operate under a four-year financial
plan (the "Financial Plan") which the City prepares annually and periodically
updates. The City's Financial Plan includes its capital, revenue and expense
projections and outlines proposed gap-closing programs for years with projected
budget gaps.

The City's projections set forth in the Financial Plan are based on various
assumptions and contingencies, some of which are uncertain and may not
materialize. Unforeseen developments and 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.

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The State could be affected by the ability of the City and certain Covered
Organizations to market their securities successfully in the public credit
markets. Future developments concerning the City or certain of the Covered
Organizations, and public discussion of such developments, as well as prevailing
market conditions and securities credit ratings, may affect the ability or cost
to sell securities issued by the City or such Covered Organizations and may also
affect the market for their outstanding securities.

MONITORING AGENCIES

The staffs of OSDC, the Control Board and the City Comptroller issue
periodic reports on the City's Financial Plans, as modified, analyzing forecasts
of revenues and expenditures, cash flow, and debt service requirements, as well
as compliance with the Financial Plan, as modified, by the City and its Covered
Organizations. OSDC staff reports issued during the mid-1980's noted that the
City's budgets benefited from a rapid rise in the City's economy, which boosted
the City's collection of property, business and income taxes. These resources
were used to increase the City's workforce and the scope of discretionary and
mandated City services. Subsequent OSDC staff reports, including its periodic
economic reports, examined the 1987 stock market crash and the 1989-92
recession, which affected the New York City region more severely than the
nation, and these reports attributed an erosion of City revenues and increasing
strain on City expenditures to that recession. According to a recent OSDC
economic report, the City's economy was slow to recover from the recession and
is expected to experience a weak employment situation, and moderate wage and
income growth, during the 1995-96 period. Also, Financial Plan reports of OSDC,
the Control Board, and the City Comptroller have variously indicated that many
of the City's balanced budgets have been accomplished, in part, through the use
of non-recurring resources, tax and fee increases, personnel reductions and
additional State assistance; that the City has not yet brought its long-term
expenditures in line with recurring revenues; that the City's proposed gap-
closing programs, if implemented, should narrow future budget gaps; that these
programs tend to rely heavily on actions outside the direct control of the City;
and that the City is therefore likely to continue to face future projected
budget gaps requiring the City to reduce expenditures and/or increase revenues.
According to the most recent staff reports of OSDC, the Control Board and the
City Comptroller during the four-year period covered by the current Financial
Plan, the City is relying on obtaining substantial resources from initiatives
needing approval and cooperation of its municipal labor unions, Covered
Organizations, and City Council, as well as the State and Federal governments,
among others, and there can be no assurance that such approval can be obtained.

OTHER LOCALITIES

Certain localities in addition to the City could have financial problems
leading to requests for additional State assistance during the State's 1995-96
fiscal years and thereafter. The potential impact on the State of such requests
by localities is not included in the projections of the State's receipts and
disbursements for the State's 1995-96 fiscal year.

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Fiscal difficulties experienced by the City of Yonkers resulted in the re-
establishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
allocation of State resources in amounts that cannot yet be determined.

Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1993, the total indebtedness of all localities in
the State other than New York City was approximately $17.7 billion. A small
portion (approximately $105 million) of that indebtedness represented borrowing
to finance budgetary deficits and was issued pursuant to State enabling
legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than New York City authorized by State law to issue debt to finance deficits
during the period that such deficit financing is outstanding. Fifteen
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1993.

From time to time, Federal expenditure reductions could reduce, or in some
cases eliminate, Federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities.
If the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining
urban population, increasing expenditures and other economic trends could
adversely affect localities and require increasing State assistance in the
future.

Ratings. On January 13, 1992, Standard and Poor's Corporation ("S&P")
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. S&P also continued its negative
rating outlook assessment on State general obligation debt. On April 26, 1993,
S&P revised its rating outlook assessment to stable. On February 14, 1994, S&P
raised its outlook to positive and , on October 3, 1995, confirmed its A-
rating. On January 6, 1992, Moody's Investors Service, Inc. ("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 long-term indebtedness.

On July 10, 1995, S&P revised downward its rating on City general
obligation bonds from A - to BBB+ and removed City bonds from CreditWatch. S&P
stated that "structural budgetary balance remains elusive because of persistent
softness in the City's economy, highlighted by weak job growth and a growing
dependence on the historically volatile financial services sector". Other
factors identified by S&P in lowering its rating on City bonds included a trend
of using one-time measures, including debt refinancing, to close projected
budget gaps, dependence on unratified labor savings to help balance the
Financial Plan, optimistic projections of additional federal and State aid or
mandate relief, a history of cash flow difficulties caused by State budget
delays and continued high debt levels. Fitch

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Investors Service, Inc. ("Fitch") continues to rate the City general obligation
bonds A-. Moody's rating for City general obligation bonds is Baa1.

SPECIAL CONSIDERATIONS REGARDING
CALIFORNIA MUNICIPAL OBLIGATIONS

Since the California Municipal Portfolio concentrates its investments in
California tax-exempt securities, the Portfolio will be affected by any
political, economic or regulatory developments affecting the ability of
California issuers to pay interest or repay principal. Various subsequent
developments regarding the California Constitution and State of California
("State") statutes which limit the taxing and spending authority of California
governmental entities may impair the ability of California issuers to maintain
debt service on their obligations. Of particular impact are constitutional
voter initiatives, which have become common in recent years. The following
information constitutes only a brief summary and is not intended as a complete
description.

California is the most populous state in the nation with a total population
at the 1990 census of 29,976,000. Growth has been incessant since World War II,
with population gains in each decade since 1950 of between 18% and 49%. During
the last decade, the population rose 20%. The State now comprises 12.3% of the
nation's population and 12.9% of its total personal income. Its economy is
broad and diversified with major concentrations in high technology research and
manufacturing, aerospace and defense-related manufacturing, trade, real estate,
and financial services. After experiencing strong growth throughout much of the
1980s, the State was adversely affected by both the national recession and the
cutbacks in aerospace and defense spending which had a severe impact on the
economy in Southern California. California is still experiencing some effects
of the recession. Unemployment has remained above the national average since
1990. Substantial contraction in California's defense related industries,
overbuilding in commercial real estate and consolidation and decline in the
State's financial services industry will likely produce slower overall growth
for several years. Economists predict that the State's economy will experience
modest growth in 1996.

These economic difficulties have exacerbated the structural budget
imbalance which has been evident since fiscal year 1985-1986. Since that time,
budget shortfalls have become increasingly more difficult to solve and the State
has recorded in its general fund (the "General Fund") operating deficits in
several fiscal years. Many of these problems have been attributable to the fact
that the great population influx has produced increased demand for education and
social services at a far greater pace than the growth in the State's tax
revenues. Despite substantial tax increases, expenditure reductions and the
shift of some expenditure responsibilities to local government, the budget
condition remains problematic.

On August 3, 1995, the Governor signed into law a new $57.5 billion budget
which, among other things, reduces welfare payments and increases education
spending from the previous fiscal year. The fiscal 1995-96 budget calls for
$44.1 billion in revenues and $43.4 billion in spending, an increase of over
3.5% and 4.0%, respectively, from the fiscal 1994-95 budget. Although the
State's budget projects an operating surplus of approximately $600 million, it
continues to rely on federal actions, both to fund programs relating to MediCal
and incarceration costs associated with illegal immigrants

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and to relieve the State from federally mandated spending, which are not certain
of occurring. Accordingly, the surplus may not be realized unless the economy
outperforms expectations or spending falls below planned levels.

Because of California's continuing budget problems, the State's General
Obligation bonds were downgraded in July 1994 from A1 to Aa by Moody's and from
A+ to A by Standard & Poor's and from AA to A by Fitch Investment Service, Inc.
All three ratings companies expressed uncertainty in the State's ability to
balance its budget by 1996.

In 1978, Proposition 13, an amendment to the California Constitution, was
approved, limiting real property valuation for property tax purposes and the
power of local governments to increase real property tax revenues and revenues
from other sources. Legislation adopted after Proposition 13 provided for
assistance to local governments, including the redistribution of the then-
existing surplus in the General Fund, reallocation of revenues to local
governments, and assumption by the State of certain local government
obligations. However, more recent legislation reduced such state assistance.
There can be no assurance that any particular level of State aid to local
governments will be maintained in future years. In NORDLINGER V. HAHN, the
United States Supreme Court upheld certain provisions of Proposition 13 against
claims that it violated the equal protection clause of the Constitution.

In 1979, an amendment was passed adding Article XIIIB to the State
Constitution. As amended in 1990, Article XIIIB imposes an "appropriations
limit" on the spending authority of the State and local government entities. In
general, the appropriations limit is based on certain 1978-1979 expenditures,
adjusted annually to reflect changes in the cost of living, population and
certain services provided by State and local government entities.
"Appropriations limit" does not include appropriations for qualified capital
outlay projects, certain increases in transportation-related taxes, and certain
emergency appropriations.

If a government entity raises revenues beyond its "appropriations limit" in
any year, a portion of the excess which cannot be appropriated within the
following year's limit must be returned to the entity's taxpayers within two
subsequent fiscal years, generally by a tax credit, refund or temporary
suspension of tax rates or fee schedules. "Debt service" is excluded from these
limitations, and is defined as "appropriations required to pay the cost of
interest and redemption charges, including the funding of any reserve or sinking
fund required in connection therewith, on indebtedness existing or legally
authorized as of January 1, 1979 or on bonded indebtedness thereafter approved
[by the voters]." In addition, Article XIIIB requires the State Legislature to
establish a prudent State reserve, and to require the transfer of 50% of excess
revenue to the State School Fund; any amounts allocated to the State School Fund
will increase the appropriations limit.

In June 1982, the voters of California passed two initiative measures to
repeal the California gift and inheritance tax laws and to enact, in lieu
thereof, California death taxes. California voters also passed an initiative
measure to increase, for taxable years commencing on or after January 1, 1982,
the amount to account for the effects of inflation. Decreases in State and
local revenues in future fiscal years as a consequence of these initiatives may
result in reductions in allocations of State revenues to California issuers or
in the ability of California issuers to pay their obligations.

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In 1986, California voters approved an initiative statute known as
Proposition 62. This initiative (i) requires that any tax for general
governmental purposes imposed by local governments be approved by resolution or
ordinance adopted by a two-thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the governmental entity, (ii)
requires that any special tax (defined as tax levied for other than general
governmental purposes) imposed by a local governmental entity be approved by a
two-thirds vote of the voters within that jurisdiction, (iii) restricts the use
of revenues from a special tax to the purposes or for the service for which the
special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by the
Proposition 13 amendment, (v) prohibits the imposition of transaction taxes and
sales taxes on the sale of real property by local governments, (vi) requires
that any tax imposed by a local government on or after August 1, 1985, be
ratified by a majority vote of the electorate within two years of the adoption
of the initiative or be terminated by November 15, 1989, (vii) requires that, in
the event a local government fails to comply with the provisions of this
measure, a reduction of the amount of property tax revenue allocated to such
local government occurs in an amount equal to the revenues received by such
entity attributable to the tax levied in violation of the initiative, and (viii)
permits these provisions to be amended exclusively by the voters of the State of
California.

In September 1995, the California Supreme Court upheld the
constitutionality of Proposition 62, creating uncertainty as to the legality of
certain local taxes enacted by non-charter cities in California without voter
approval. It is not possible to predict the impact of the decision.

In 1988, State voters approved Proposition 87, which amended Article XVI of
the State Constitution to authorize the State Legislature to prohibit
redevelopment agencies from receiving any property tax revenues raised by
increased property taxes to repay bonded indebtedness of local government which
is not approved by voters on or before January 1, 1989. It is not possible to
predict whether the State Legislature will enact such a prohibition, nor is it
possible to predict the impact of Proposition 87 on redevelopment agencies and
their ability to make payments on outstanding debt obligations.

In November 1988, California voters approved Proposition 98. This
initiative requires that revenues in excess of amounts permitted to be spent and
which would otherwise be returned by revision of tax rates or fee schedules, be
transferred and allocated (up to a maximum of 40%) to the State School Fund and
be expended solely for purposes of instructional improvement and accountability.
No such transfer or allocation of funds will be required if certain designated
state officials determine that annual student expenditures and class size meet
certain criteria as set forth in Proposition 98. Any funds allocated to the
State School Fund shall cause the appropriation limits to be annually increased
for any such allocation made in the prior year. Proposition 98 also requires
the State of California to provide a minimum level of funding for public schools
and community colleges. The initiative permits the enactment of legislation, by
a two-thirds vote, to suspend the minimum funding requirement for one year.

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The State is a party to numerous legal proceedings, many of which normally
occur in governmental operations and if decided against the State, might require
the State to make significant future expenditures or impair future revenue
sources.

Since 1990, California has faced the worst economic, fiscal and budget
conditions since the 1930s. After experiencing strong growth throughout mush of
the 1980s, the State was adversely affected by the national recession and
cutbacks in aerospace and defense spending, both of which had a severe impact on
the economy in Southern California. California is still experiencing some
effects of the recession. However, economic data indicate that the State's
economy grew at a modest rate in 1995, and continued growth is expected in 1996.

On December 6, 1994, Orange County (California) became the largest
municipality in the United States to file for protection under the Federal
bankruptcy laws. The filing stemmed from approximately $1.7 billion in losses
suffered by the County's investment pool due to investments in high risk
"derivative" securities. In September 1995 the state legislature approved
legislation permitting Orange County to use for bankruptcy recovery $820 million
over 20 years in sales taxes previously earmarked for highways, transit and
development. Such legislation also permits the Governor to appoint a trustee to
take over Orange County's financial affairs if the county does not have a full
recovery plan filed with the Bankruptcy Court by May 1996.

Los Angeles County, the nation's largest county, is also experiencing
financial difficulty. In August 1995 the credit rating of the county's long-
term bonds was downgraded for the third time since 1992 as a result of, among
other things, severe operating deficits for the county's health care system. In
September 1995, federal and state aid to Los Angeles County totaling $514
million was pledged, providing a short-term solution to the County's budget
problems. Despite such efforts, the County is facing a potential budget gap of
$1.0 billion in the 1996-97 fiscal year.

The effect of these various constitutional and statutory amendments and
budget developments upon the ability of California issuers to pay interest and
principal on their obligations remains unclear and in any event may depend upon
whether a particular California tax-exempt security is a general or limited
obligation bond and on the type of security provided for the bond. It is
possible that other measures affecting the taxing or spending authority of
California or its political subdivisions may be approved or enacted in the
future.

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INVESTMENT RESTRICTIONS

The significant investment restrictions applicable to each Portfolio are
described in the applicable Prospectus for the Portfolio. The following are
also fundamental policies and, together with the restrictions and other
fundamental policies described for each Portfolio, cannot be changed without the
vote of a majority of the outstanding voting securities of that Portfolio, as
defined in the Investment Company Act of 1940 (the "Act"). Such a majority is
defined as the lesser of (a) 67% or more of the shares of a Portfolio present at
a meeting of shareholders of the Fund, if the holders of more than 50% of the
outstanding shares of a Portfolio are present or represented by proxy or (b)
more than 50% of the outstanding shares of a Portfolio. For purposes of the
following restrictions and those contained in the Prospectus: (i) all
percentage limitations apply immediately after a purchase or initial investment;
and (ii) any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from a Portfolio.

Under these additional restrictions, each Portfolio cannot: (a) invest in
commodities or commodity contracts; (b) purchase or sell real property
(including limited partnership interests); however, each Portfolio may purchase
securities of issuers which engage in real estate operations and securities
which are secured by real estate or interests therein; (c) purchase securities
on margin (except for such short-term loans as are necessary for the clearance
of purchases of portfolio securities) or make short sales of securities except
"against the box"; (d) underwrite securities of other companies except in so far
as the Fund may be deemed to be an underwriter under the Securities Act of 1933
in disposing of a security; (e) invest in securities of other investment
companies except in connection with merger, consolidation, reorganization or
acquisition of assets; (f) invest in interests, including leases, in oil, gas or
other mineral exploration or development; (g) invest in securities of any issuer
if, to the knowledge of the Advisor, any officer or director of the Fund or any
officer or director of the Advisor owns more than 1/2 of 1% of the outstanding
securities of such issuer, and such officers, directors who own more than 1/2 of
1% own in the aggregate more than 5% of the outstanding securities of such
issuer; (h) pledge its assets or assign or otherwise encumber its assets in
excess of 15% of its total assets (taken at market value at the time of
pledging) and then only to secure borrowings effected within the limitations set
forth in the Prospectus. While such borrowings exceed 5% of any Portfolio's net
assets no further portfolio investments may be made. The Fund is required under
the Act to maintain continuous asset coverage of 300% with respect to such
borrowing; (i) invest for the purpose of exercising control or management of
another company; and (j) issue senior securities as defined in the Act except
insofar as the Portfolio may be deemed to have issued a senior security by
reason of: (1) entering into any repurchase agreement; or (2) borrowing money
in accordance with restrictions described above; (k) invest in warrants. In
addition, in order to comply with a state's securities laws, the Fund has agreed
not to make loans to any person or individual except that portfolio securities
may be loaned within the limitations set forth in the Prospectus.

22
<PAGE>

DIRECTORS AND OFFICERS

The directors and officers of the Fund, and their principal occupations
during the past five years, are set forth below. Directors who are "interested
persons," as defined in the Act, are denoted by an asterisk. The address of
each is One World Financial Center, New York, New York 10281, except as noted.
As of March 8, 1996, all of the directors and officers of the Fund as a group
owned less than 1% of the outstanding shares of each Portfolio of the Fund
except for the New York Municipal Portfolio. The officers and directors as a
group owned 1,772,737 shares (2.7%) of the New York Municipal Portfolio on March
8, 1996.

JOSEPH M. LA MOTTA, CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT*

President of Oppenheimer Capital and Chairman of OpCap Advisors, registered
investment advisers; Chairman of OCC Distributors; Chairman of the Board and
President of Quest for Value Accumulation Trust, and Chairman of The Saratoga
Advantage Trust, open-end investment companies, and Quest for Value Dual Purpose
Fund, Inc., a closed-end investment company.

PAUL Y. CLINTON, DIRECTOR
946 Morris Avenue
Bryn Mawr, Pennsylvania 19010

Principal of Clinton Management Associates, a financial and venture capital
consulting firm; formerly Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation; formerly
President of Essex Management Corporation, a management consulting company;
Trustee of Capital Cash Management Trust, Prime Cash Fund and Short-Term Asset
Reserves, each of which is a money-market fund; Director of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc., Rochester Fund
Municipals, Rochester Portfolio Series Limited Term New York Municipals and Bond
Fund Series, Oppenheimer Bond Fund for Growth, Trustee of Quest for Value
Accumulation Trust and Oppenheimer Quest for Value Funds, each of which is an
open-end investment company; formerly a general partner of Capital Growth Fund,
a venture capital partnership; formerly a general partner of Essex Limited
Partnership, an investment partnership; formerly President of Geneve Corp., a
venture capital fund; formerly Chairman of Woodland Capital Corp., a small
business investment company; formerly Vice President of W.R. Grace & Co.

THOMAS W. COURTNEY, C.F.A., DIRECTOR
P.O. Box 8186
Naples, Florida 33941

Principal of Courtney Associates, Inc., a venture capital business, former
General Partner of Trivest Venture Fund, a private venture capital fund; former
President of Federated Investment Counseling, Inc.; former President of Boston
Company Institutional Investors, Inc.; Trustee of Cash Assets Trust, a money
market fund; Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest
Global Value Fund, Inc., Rochester Fund Municipals, Rochester Portfolio Series
Limited Term New York

23
<PAGE>

Municipals and Bond Fund Series, Oppenheimer Bond Fund for Growth, Trustee of
Oppenheimer Quest for Value Funds and Quest for Value Accumulation Trust, each
of which is an open-end investment company; Trustee of Hawaiian Tax-Free Trust
and Tax-Free Trust of Arizona, tax-exempt bond funds; Director of several
privately owned corporations; and former Director of Financial Analysts
Federation.

LACY B. HERRMANN, DIRECTOR
Suite 2300
380 Madison Avenue
New York, New York 10017

Founder, President, and Chairman of the Board of Aquila Management Corporation
since 1984, the sponsoring organization and Administrator and/or Sub-Adviser to
the following open-end investment companies, and Founder, Chairman of the Board
of Trustees, and President of each: Prime Cash Fund, 1982-1996; Pacific Capital
Cash Assets Trust since 1984; Short Term Asset Reserves since 1984; Churchill
Cash Reserves Trust since 1985; Pacific Capital U.S. Treasuries Cash Assets
Trust since 1988; Pacific Capital Tax-Free Cash Assets Trust since 1988; each of
which is a money market fund; and of Hawaiian Tax-Free Trust since 1984; Tax-
Free Trust of Arizona since 1986; Tax-Free of Oregon since 1986; Tax-Free Fund
of Colorado since 1987; Churchill Tax-Free Fund of Kentucky since 1987; Tax-Free
Fund for Utah since 1992; and Narragansett Insured Tax-Free Fund since 1992;
each of which is a tax-free municipal bond fund, and an equity fund, Aquila
Rocky Mountain Equity Fund since 1993; Vice President, Director, Secretary, and
formerly Treasurer of Aquila Distributors, Inc. since 1981, distributor of the
above funds; President and Chairman of the Board of Trustees of Capital Cash
Management Trust ("CCMT"), a money-market fund since 1981, and an Officer and
Trustee/Director of its predecessors since 1974; President and Director of STCM
Management Company, Inc., sponsor and sub-adviser to CCMT; Chairman, President,
and a Director since 1984, of InCap Management Corporation, formerly sub-adviser
and administrator of Prime Cash Fund and Short Term Asset Reserves and Founder
and Chairman of several other money-market funds; Director of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc., Rochester Fund
Municipals, Rochester Portfolio Series Limited Term New York Municipals and Bond
Fund Series, Oppenheimer Bond Fund for Growth, Trustee of Oppenheimer Quest for
Value Funds, Quest for Value Accumulation Trust and The Saratoga Advantage
Trust, each of which is an open-end investment company; Trustee of Brown
University since 1990; actively involved for many years in leadership roles with
university, school, and charitable organizations.

GEORGE LOFT, DIRECTOR
51 Herrick Road
Sharon, Connecticut 06069

Private Investor; Director of Oppenheimer Quest Value Fund, Inc., Rochester Fund
Municipals, Rochester Portfolio Series Limited Term New York Municipals and Bond
Fund Series, Oppenheimer Bond Fund for Growth, Oppenheimer Quest Global Value
Fund, Inc., Trustee of Quest for Value Accumulation Trust, Oppenheimer Quest for
Value Funds and The Saratoga Advantage Trust, all of

24
<PAGE>

which are open-end investment companies; and Director of Quest for Value Dual
Purpose Fund, Inc., a closed-end investment company.

EVERETT ALCENAT, VICE PRESIDENT

Vice President of OCC Cash Management Services, a Division of the Advisor since
October 1993; Assistant Vice President-Mutual Fund Operations at Pershing from
2/93 to 10/93 and prior thereto, Assistant Vice President-Syndicate Operations
at Prudential Securities Inc.

ROBERT J. BLUESTONE, VICE PRESIDENT

Managing Director, Oppenheimer Capital; Vice President of Quest for Value
Accumulation Trust, an open-end investment company; formerly Vice President,
Bankers Trust Co.

MARIA CAMACHO, ASSISTANT SECRETARY

Assistant Vice President of Oppenheimer Capital since 1994 and Registrations
Department Administrator with Oppenheimer Capital since 1989; Assistant
Secretary of The Saratoga Advantage Trust, an open-end investment company.

BERNARD H. GARIL, VICE PRESIDENT

President and Chief Operating Officer of OpCap Advisors; Senior Vice President
of Oppenheimer Capital; Vice President of Quest for Value Dual Purpose Fund,
Inc., a closed-end investment company; formerly Senior Vice President of
Oppenheimer & Co., Inc., 1981-1990.

JOHN GIUSIO, VICE PRESIDENT

Vice President, Oppenheimer Capital; Vice President of Quest for Value
Accumulation Trust, an open-end investment company; previously Vice President,
Salomon Brothers.

MATTHEW GREENWALD, VICE PRESIDENT & PORTFOLIO MANAGER

Vice President, Oppenheimer Capital; Assistant Vice President, Oppenheimer
Capital, 1989-1992.

VIKKI HANGES, VICE PRESIDENT & PORTFOLIO MANAGER

Vice President, Oppenheimer Capital; Vice President and Portfolio Manager, Quest
for Value Accumulation Trust; Assistant Vice President, Oppenheimer Capital,
1987-1992.

25
<PAGE>

SUSAN A. MURPHY, VICE PRESIDENT

President of OCC Cash Management Services, a Division of the Fund's Advisor,
since 1994; Senior Vice President of that division from 1989-1994.

DEBORAH KABACK, SECRETARY

Senior Vice President of Oppenheimer Capital; Secretary of Quest for Value
Accumulation Trust and The Saratoga Advantage Trust, open-end investment
companies, and Assistant Secretary of Quest for Value Dual Purpose Fund, Inc., a
closed-end investment company.

THOMAS E. DUGGAN, ASSISTANT SECRETARY

General Counsel and Secretary of Oppenheimer Capital and OpCap Advisors;
Assistant Secretary of The Saratoga Advantage Trust, an open-end investment
company, and Secretary of Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company.

SHELDON M. SIEGEL, TREASURER

Managing Director of Oppenheimer Capital; Treasurer of OpCap Advisors; Treasurer
of Quest for Value Accumulation Trust and The Saratoga Advantage Trust, open-end
investment companies, and Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company.

LESLIE KLEIN, ASSISTANT TREASURER

Vice President of Oppenheimer Capital; Assistant Treasurer of Quest for Value
Accumulation Trust and The Saratoga Advantage Trust, open-end investment
companies, and Quest for Value Dual Purpose Fund, Inc., a closed-end investment
company.

REMUNERATION OF OFFICERS AND DIRECTORS. All officers of the Fund are officers
or employees of Oppenheimer Capital and receive no salary or fee from the Fund.
The following table sets forth the aggregate compensation paid by the Fund to
each of the Directors during its fiscal year ended November 30, 1995 and the
aggregate compensation paid to each of the Directors by all of the funds in the
Advisor's Fund Complex during each such fund's 1995 fiscal year.

Name of Director of the Aggregate Pension or Retirement Estimated Annual Total Compensation
Fund Compensation from the Benefits Accrued as Part Benefits upon from the Fund and the
Fund of Fund Expenses Retirement Quest Fund Complex
<S> <C> <C> <C> <C>
Paul Clinton 21,750 0 0 74,650
Thomas Courtney 21,000 0 0 73,900
Lacy Herrmann 21,750 0 0 74,650
Joseph LaMotta 0 0 0 0
George Loft 21,750 0 0 81,350

</TABLE>

26
<PAGE>

Mr. Clinton, Mr. Courtney and Mr. Herrmann earned directors fees with respect
to 16 investment companies in the Advisor's Fund Complex and the fees earned
by Mr. Loft were with respect to 17 investment companies in the Advisor's
Fund Complex. During such periods the independent Directors received fees
from ten investment companies which are no longer part of the Advisor's Fund
Complex. In addition during such periods, Mr. Clinton and Mr. Courtney each
served as director with respect to eight investment companies in the
Advisor's Fund Complex for which they received no fees (two of which are no
longer in the Advisor's Fund Complex); Mr. Loft and Mr. Herrmann each served
as director with respect to 15 investment companies in the Advisor's Fund
Complex for which they received no fees (two of which are no longer in the
Advisor's Fund Complex). For the purpose of this paragraph, a portfolio of
an investment company organized in series form is considered to be an
investment company.

PRINCIPAL HOLDERS OF SECURITIES

As of March 7, 1996, the following persons owned of record or were known by the
Fund to own beneficially 5% of the outstanding shares of any Portfolio of the
Fund.

Holder Portfolio Percentage

Oppenheimer & Co., Inc. Government Portfolio 9.97%
for the benefit of a client
Oppenheimer Tower
World Financial Center
New York, NY 10281

Unified Management Corp. Government Portfolio 5.63%
Omnibus Account
for the benefit of clients, no one
of which held 5% or more of the
shares of the Government
Portfolio
429 N. Pennsylvannia St.
Indianapolis, IN 46204-1873

Unified Management Corp. Government Portfolio 5.36%
Omnibus Account
for the benefit of clients, no one
of which held 5% or more of the
shares of the Govenment
Portfolio
429 N. Pennsylvannia St.
Indianapolis, IN 46204-1873

27
<PAGE>

Oppenheimer & Co., Inc. California Municipal Portfolio 6.38%
for the benefit of a client
Oppenheimer Tower
World Financial Center
New York, NY 10281

INVESTMENT MANAGEMENT AND OTHER SERVICES

THE ADVISORY AGREEMENT. The Advisory Agreement pursuant to which the
investments of each Portfolio of the Fund are managed by the Advisor was first
approved by the Board of Directors and by Oppenheimer Capital as then sole
shareholder of the Fund on August 11, 1989 (the "Initial Advisory Agreement").
An amendment to the initial Advisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) on January 20, 1992 and by the
shareholders of each Portfolio of the Fund on April 29, 1992. The amendment
eliminated the provision in the initial Advisory Agreement that provided for
quarterly payments to be made to the Advisor or its parent Oppenheimer Capital
as reimbursement for the costs of providing administrative services and
increased the advisory fee by approximately the same amount.

Under the Advisory Agreement, the Advisor is required to: (i) regularly
provide investment advice and recommendations to each Portfolio with respect to
its investments, investment policies and the purchase and sale of securities;
(ii) supervise continuously and determine the securities to be purchased or sold
by each Portfolio and the portion, if any, of each Portfolio's assets to be held
uninvested; and (iii) arrange for the purchase of securities and other
investments by each Portfolio and the sale of securities and other investments
held in each Portfolio's assets.

The Advisory Agreement also requires the Advisor to provide for the
business management for the Fund and its Portfolios, including (1) making
arrangements for accountants, counsel and other parties to perform services for
the Portfolios, (2) preparation and filing of reports required by federal
securities and "blue sky" laws, shareholder reports and proxy materials and
(3) arranging for and supervising the continuous distribution of each Portfolio
and the provision of continuous administrative services to Portfolio
shareholders.

Expenses not expressly assumed by the Advisor under the Advisory Agreement
are paid by the Portfolios. These include fees to the Advisor, custodian,
transfer agent and shareholder servicing expenses, directors' fees and expenses,
legal and audit expenses, stock issuance costs, certain printing, postage,
federal and state registration costs, annual meeting costs, and organizational
and non-recurring expenses, including litigation.

The Fund may pay certain broker-dealers, including its affiliate
Oppenheimer & Co., Inc. ("Opco") or other financial intermediaries whose
customers are Fund shareholders for performing shareholder servicing functions,
such as opening new shareholder accounts, processing purchase and redemption
transactions and responding to inquiries regarding the Portfolios' current yield
and the status of shareholder accounts. The Fund may pay for the electronic
communications equipment

28
<PAGE>

maintained at the broker-dealers' offices that permits access to the Fund's
computer files and, in addition, reimburses the broker-dealers at cost for
personnel expenses involved in providing these services. All such payments and
reimbursements must be approved in advance by the Fund's Board of Directors.
Currently, any such payments to Opco are capped at 2 basis points of average
daily net assets. The following amounts were paid to Opco as reimbursement for
shareholder services: for the fiscal year ended November 30, 1995--$281,524;
$18,693; $22,314; $12,642 and $9,181, respectively; for the fiscal year ended
November 30, 1994 -- $259,449; $21,158; $19,615; $12,051 and $8,842,
respectively; for the fiscal year ended November 30, 1993 -- $242,478, $22,809,
$21,240, $11,382 and $7,349, respectively, with respect to the Primary,
Government, General Municipal, California Municipal and New York Municipal
Portfolios.

The Fund also may pay certain broker-dealers including its affiliate Opco,
for performing certain administrative services for accounts in the Fund
including providing beneficial owners with statements showing their positions in
the Fund, posting dividend payments to beneficial owners' accounts, forwarding
shareholder communications such as dividend and tax notices and providing
shareholder information to enable the Fund to mail prospectuses, annual and
semi-annual reports to beneficial owners. Such payments are capped at 5 basis
points of average daily net assets.

The Advisory Agreement provides that in absence of willful misfeasance, bad
faith, gross negligence or reckless disregard for its obligations thereunder,
the Advisor is not liable for any act or omission in the course of, or in
connection with, the rendition of services thereunder. The Agreement permits
the Advisor to act as investment adviser for any other person, firm or
corporation.

Under the initial Advisory Agreement, the Fund's advisory fee was at the
annual rate of .40 of 1% of the average daily value of the Fund's net assets.
Effective April 29, 1992, the advisory fee was changed to the rate of .50% on
the first $100 million of average daily net assets, .45% on the next $200
million of average daily net assets, and .40% of average daily net assets in
excess of $300 million. The fee is accrued daily and paid monthly. Under the
Advisory Agreement, the Advisor guarantees that the total expenses of each
Portfolio in any fiscal year, exclusive of taxes, interest, and brokerage fees,
shall not exceed, and undertakes to pay or refund to the Portfolio any amount by
which such expenses do exceed, 1% of that Portfolio's average annual net assets.
For the fiscal year ended November 30, 1995, the total advisory fee paid by the
Primary Portfolio was $6,577,551 and the total advisory fees accrued or paid by
the Government, General Municipal, California Municipal and New York Municipal
Portfolios were $549,734, $619,378, $319,052 and $261,993, of which $20,074,
$112,617, $83,794 and $110,219, respectively was waived by the Advisor. For the
fiscal year ended November 30, 1994, the total advisory fee paid by the Primary
Portfolio was $6,143,853 and the total advisory fees accrued or paid by the
Government, General Municipal, California Municipal and New York Municipal
Portfolios were $626,670, $573,408, $305,560 and $250,541, of which $26,922,
$132,333, $70,831 and $94,564, respectively, was waived by the Advisor. For the
fiscal year ended November 30, 1993, the total advisory fees paid by the Primary
and Government Portfolios were $5,655,644 and $656,218, respectively, and the
total advisory fees accrued or paid by the General Municipal, California
Municipal and New York Municipal Portfolios were $614,481, $287,200 and
$214,761, respectively, of which $37,700, $76,788 and $102,497, respectively,
was waived by the Advisor.

29
<PAGE>

THE DISTRIBUTION ASSISTANCE PLAN. The Fund has a Distribution Assistance and
Administrative Services Plan (the "Plan") with the Advisor which was adopted in
accordance with the requirements of Rule 12b-1 under the 1940 Act and has been
approved by the Fund's Board of Directors, including a majority of the Directors
who are not "interested persons" of a Portfolio as defined in the 1940 Act and
who have no direct or indirect financial interest in the operation of the Plan
or in any agreement related to the Plan ("Disinterested Directors") and by
Oppenheimer Capital as then sole shareholder of the Fund. Shareholders of each
Portfolio approved the Plan at the Annual Meeting of Shareholders held on April
29, 1992.

Under the Plan, the Fund may be provided with distribution assistance
and/or administrative services through broker-dealers, banks and other
depository institutions and other financial intermediaries and administrative
services. The fee payable by the Fund's portfolios under the Plan was reduced
from .30% to .25% of the average daily value of each Portfolio's net assets,
effective March 31, 1995. The services to be obtained are believed to be
permissible activities under present banking laws and regulations, and the
Directors of the Fund will take appropriate actions (which should not adversely
affect the Fund or its shareholders) in the future to maintain such legal
conformity should any changes in, or interpretations of, such laws or
regulations occur. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. For
the fiscal year ended November 30, 1995 the total distribution fees accrued or
paid by the Primary, Government, General Municipal, California Municipal and New
York Municipal Portfolios were $4,231,722, $296,807, $336,589, $169,188 and
$139,776, respectively.

The Plan provides that, as long as the Plan remains in effect, the
selection and nomination of directors of the Fund who are not "interested
persons" shall be committed to the discretion of the directors who are not
"interested persons" of the Fund. The Plan can be terminated at any time with
regard to each Portfolio, without penalty, by the vote of a majority of the
Disinterested Directors or by the vote of the holders of a majority of the
outstanding voting securities of that Portfolio. Finally, the Plan cannot be
amended materially without shareholder approval, and all material amendments are
required to be approved by the vote of the Board of Directors of the Fund,
including a majority of the Disinterested Directors, cast in person at a meeting
called for that purpose.

30
<PAGE>

It is estimated that the Advisor spent approximately the following amounts
with respect to the Primary, Government, General Municipal, California Municipal
and New York Municipal Portfolios for the fiscal year ended November 30, 1995:

Primary Government General California New York
Portfolio Portfolio Municipal Municipal Municipal
Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Sales Material and Advertising -0- -0- -0- -0- -0-

Printing and Mailing of -0- -0- -0- -0- -0-
Prospectuses to Other than
Current Shareholders

Compensation to Dealers $6,787,349 $485,822 $558,024 $285,233 $235,185

Compensation to Sales -0- -0- -0- -0- -0-
Personnel

Other (1) -0- -0- -0- -0- -0-

(1) Includes cost of telephone and overhead.

</TABLE>

THE DISTRIBUTION AGREEMENT. The Fund has entered into a Distribution Agreement
with OCC Distributors (the "Distributor"), an affiliated broker-dealer of the
Advisor. Under the Distribution Agreement, the Distributor acts as the Fund's
agent (underwriter) in the continuous public offering of its shares. Also under
the Agreement, the Fund makes no payment to the Distributor or any other party
and expenses normally attributable to sales, other than those paid by the
Advisor, are borne by the Distributor.

PORTFOLIO TRANSACTIONS. Portfolio decisions are based on the judgment and
actions of the Advisor. As most, if not all, purchases made by the Fund are
principal transactions at net prices, the Fund pays little brokerage commission.
Prices of portfolio securities purchased from underwriters of new issues include
a commission or concession paid by the issuer to the underwriter, and prices of
debt securities from dealers include a spread between the bid and asked prices.
The Advisor seeks to obtain prompt execution of orders at the most favorable net
price. Transactions may be directed to dealers during the course of an
underwriting in return for their execution and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Portfolios and/or other accounts of the Advisor; information
received in connection with directed orders of other accounts managed by the
Advisor or its affiliates may or may not be useful to one or more of the
Portfolios. Such information may be in written or oral form and 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 activities of the Advisor, to make available additional views for
consideration and comparison, to enable the Advisor to obtain market information
for the valuation of securities held in a Portfolio's assets.

A Portfolio will not purchase any securities from or sell any securities to
Opco acting as principal for its account. The Advisor currently serves as
investment manager to a number of clients, including other investment companies,
and in the future may act as investment manager or adviser to

31
<PAGE>

others. It is the practice of the Advisor to cause purchase or sale
transactions to be allocated among the Portfolios and others whose assets it
manages in such manner as it deems equitable. In making such allocations among
the Portfolios and other client accounts, the main factors considered are the
respective investment objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment, the size
of investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of each Portfolio and other client
accounts.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each Portfolio is determined each day the
New York Stock Exchange (the "Exchange") is open, as of 12:00 noon and 4:00
p.m., New York time that day by dividing the value of a Portfolio's net assets
by the number of its shares outstanding.

The Portfolios operate under a rule (the "Rule") of the Securities and
Exchange Commission under the Act which permits them to value their portfolios
on the basis of amortized cost. The amortized cost method of valuation is
accomplished by valuing a security at its cost adjusted by straight-line
amortization to maturity of any discount with respect to the Primary and
Government Portfolios or premium with respect to all Portfolios, regardless of
the impact of fluctuating interest rates on the market value of the security.
The method does not take into account unrealized gains or losses.

There may be periods during which the value, as determined by amortized
cost, may be higher or lower than the price a Portfolio would receive if it sold
its securities on a particular day. During periods of declining interest rates,
the daily yield on a Portfolio's shares may tend to be higher (and net
investment income and daily dividends lower) than under a like computation made
by a fund with identical investments which utilizes a method of valuation based
upon market prices. The converse would apply in a period of rising interest
rates.

The Fund's Board of Directors has established procedures designed to
stabilize the Portfolios' price per share as computed for purpose of sales and
redemptions at $1.00. Under the Rule, such procedures must include review of
portfolio holdings by the Board of Directors at such intervals as it deems
appropriate, and at such intervals as are reasonable in light of current market
conditions, to determine whether the Portfolios' net asset value calculated by
using available market quotations deviates from the per share value based on
amortized cost. "Available market quotations" may include actual quotations,
estimates of market value reflecting current market conditions based on
quotations or estimates of market value for individual portfolio instruments or
values obtained from yield data relating to a directly comparable class of
securities published by reputable sources. Under the Rule, whenever the net
asset value based on available market quotations reaches $.995 per share or
$1.005 per share, the Board must promptly consider what action, if any, will be
initiated. However, the Board has adopted a policy under which it will be
required to consider what action to take whenever the net asset value per share,
based on available market quotations, reaches $.997 per share or $1.003 per
share. When the Board believes that the extent of any deviation may result in
material dilution or other unfair results to potential investors or existing
shareholders, it is to take such action as it deems

32
<PAGE>

appropriate to eliminate or reduce to the extent reasonably practicable such
dilution or unfair results. Such actions could include the sale of portfolio
securities prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or payment of distributions
from capital or capital gains, redemptions of shares in kind, or establishing a
net asset value per share using available market quotations.

A "business day," during which purchases and redemptions of Fund shares can
become effective and the transmittal of redemption proceeds can occur, is
considered for Fund purposes as any day the New York Stock Exchange is open for
trading; however, on any such day that is an official bank holiday in
Massachusetts, neither purchases nor wired redemptions can become effective
because Federal Funds cannot be received or sent by State Street Bank & Trust
Company. On such days, therefore, the Fund can only accept redemption orders
for which shareholders desire remittance by check. The right of redemption may
be suspended or the date of a redemption payment postponed for any period during
which the New York Stock Exchange is closed (other than customary weekend and
holiday closings), when trading in the markets which the Fund normally utilizes
is restricted, or an emergency (as determined by the Securities and Exchange
Commission) exists, or the Commission has ordered such a suspension for the
protection of shareholders. The New York Stock Exchange's most recent annual
announcement (which is subject to change) states that it will close on New
Year's Day, President's Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving and Christmas Day. It may also close on other days. The value of
a shareholder's investment at the time of redemption may be more or less than
his cost, depending on the market value of the securities held by the Fund at
such time and the income earned.

TAXES

Each Portfolio intends to continue to qualify each year as a regulated
investment company under the Internal Revenue Code ("Code"). Provided that a
Portfolio (a) is a regulated investment company and (b) distributes at least 90%
of its taxable net investment income (including, for this purpose, net realized
short-term capital gains) and 90% of its tax-exempt interest income (reduced by
certain expenses), the Portfolio will not be liable for Federal income taxes to
the extent that its taxable net investment income and its net realized long-term
and short-term capital gains are distributed to its shareholders. Any net short-
term and long-term capital gains realized by a Portfolio will be distributed
annually as described in the Prospectus. Distributions of short-term capital
gains are taxable as ordinary income, however, distributions of long-term
capital gains will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held shares of the Portfolio, and will
be designated as long-term capital gain dividends in a written notice mailed by
the Portfolio to shareholders after the close of the Portfolio's taxable year.
If a shareholder receives a long-term capital gain dividend with respect to any
share and if the share has been held by the shareholder for six months or less,
then any loss (to the extent not disallowed pursuant to the other six-month rule
described below relating to exempt-interest dividends) on the sale or exchange
of such share will be treated as a long-term capital loss to the extent of the
long-term capital gain dividend. At November 30, 1995, accumulated net realized
capital loss carry forwards available as a reduction against future net realized
capital gains were: General Municipal Portfolio - $92,095, of which $13,684 will
expire in 1997, $29,512 will expire in 1998, $1,302 will expire in 1999, $13,801
will expire in 2000, $299 will expire

33
<PAGE>

in 2001 and $33,497 will expire in 2003; California Municipal Portfolio--
$21,550, of which $730 will expire in 1999, $5,856 will expire in 2000, $1,137
will expire in 2001 and $13,827 will expire in 2003; and New York Municipal
Portfolio--$23,801, of which $3,198 will expire in 2000, $934 will expire in
2001 and $19,669 will expire in 2003.

The Municipal Portfolios are designed to provide investors with current
income which is excluded from gross income for Federal income tax purposes and
with respect to the New York Municipal and California Municipal Portfolios,
exempt from New York State and New York City personal income taxes and from
California personal income tax, respectively. Investment in the Portfolios would
not be suitable for tax-exempt institutions, qualified retirement plans, H.R. 10
plans and individual retirement accounts since such investors would not gain any
additional tax benefit from the receipt of tax-exempt income. Although each of
the Municipal Portfolios expects to be relieved of all or substantially all
Federal and state income or franchise taxes, depending upon the extent of its
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, that portion of a Portfolio's income
which is treated as earned in any such state or locality could be subject to
state and local tax. Any such taxes paid by a Portfolio would reduce the amount
of income and gains available for distribution to shareholders.

Because the Municipal Portfolios will distribute exempt-interest dividends,
interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Portfolio is not deductible for Federal income and New York State and New
York City personal income tax purposes and California personal income tax
purposes. If a shareholder receives exempt-interest dividends with respect to
any share and if such share is held by the shareholder for six months or less,
then any loss on the sale or exchange of such share may, to the extent of such
exempt-interest dividends, be disallowed. In addition, the Code may require a
shareholder, if he or she receives exempt-interest dividends, to treat as
taxable income a portion of certain otherwise non-taxable social security and
railroad retirement benefit payments. Furthermore, that portion of any exempt-
interest dividend paid by a Portfolio which represents income derived from
private activity bonds held by the Portfolio may not retain its tax-exempt
status in the hands of a shareholder who is a "substantial user" of a facility
financed by such bonds, or a "related person" thereof. Moreover, as noted in
the applicable Prospectus for the Municipal Portfolios, some (and potentially
all) of a Portfolio's dividends may be a specific preference item or a component
of an adjustment item, for purposes of the Federal individual and corporate
alternative minimum taxes with resulting tax for individuals and corporations
subject to such alternative minimum tax ("AMT"). In addition, the receipt of
dividends and distributions from a Portfolio also may affect a foreign corporate
shareholder's Federal "branch profits" tax liability and a Subchapter S
corporate shareholder's Federal "excess net passive income" tax liability.
Shareholders should consult their own tax advisors as to whether they are (a)
substantial users with respect to a facility or related to such users within the
meaning of the Code or (b) subject to a Federal alternative minimum tax, the
Federal environmental tax, the Federal branch profits tax or the Federal excess
net passive income tax. At the Annual Meeting of Shareholders held on April 29,
1992, the shareholders of the Municipal Portfolios approved a change in each
Portfolio's fundamental investment policies to permit the purchase of securities
treated as tax preference items without limitation. Consequently, investors

34
<PAGE>

already subject to the AMT should consider whether an investment in the
Municipal Portfolios is suitable for them.

Each shareholder will receive after the close of the calendar year an
annual statement as to the Federal income tax status of his or her dividends and
distributions from the Portfolio for the prior calendar year. These statements
also will designate the amount of exempt-interest dividends that is a specified
preference item for purposes of the Federal individual and corporate alternative
minimum taxes. Each shareholder of the General Municipal Portfolio will also
receive a report of the percentage and source on a state-by-state basis of
interest income on municipal obligations received by the Portfolio during the
preceding year. Each shareholder of the New York Municipal Portfolio will
receive an annual statement as to the New York State and New York City personal
income tax status of his or her dividends and distributions from such Portfolio
for the prior calendar year and each shareholder of the California Municipal
Portfolio will receive an annual statement as to the California State personal
income tax status of his or her dividends and distributions from such Portfolio
for the prior calendar year. Shareholders should consult their tax advisors as
to any other state and local taxes that may apply to these dividends and
distributions. In the event that a Municipal Portfolio derives taxable net
investment income, it intends to designate as taxable dividends the same
percentage of each day's dividend as its actual taxable net investment income
bears to its total taxable net investment income earned on that day. Therefore,
the percentage of each day's dividend designated as taxable, if any, may vary
from day to day.

If a shareholder fails to furnish a correct taxpayer identification number,
fails to fully report dividend or interest income or fails to certify that he or
she has provided a correct taxpayer identification number and that he or she is
not subject to backup withholding, then the shareholder may be subject to a 31%
"backup withholding tax" with respect to (a) taxable dividends and
distributions, and (b) the proceeds of any redemptions of shares of a Portfolio.
An individual's taxpayer identification number is his or her social security
number. The 31% backup withholding tax is not an additional tax and may be
credited against a taxpayer's regular Federal income tax liability.

The foregoing is only a summary of certain tax considerations generally
affecting each Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Individuals are often exempt from state
and local personal income taxes on distributions of tax-exempt interest income
derived from obligations of issuers located in the state in which they reside
when these distributions are received directly from these issuers, but are
usually subject to such taxes on income derived from obligations of issuers
located in other jurisdictions. Shareholders are urged to consult their tax
advisors with specific reference to their own tax situations.

35
<PAGE>

PORTFOLIO YIELD

YIELDS. Yields on portfolio securities depend on a variety of factors,
including general money market conditions, effective marginal tax rates, the
financial condition of the issuer, general conditions of the fixed-income or
tax-exempt securities market, the size of particular offerings, the maturity of
obligations and the rating of an issue. The ratings of the rating organizations
represent their opinions as to the quality of the securities which they
undertake to rate. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, securities with the
same maturity and interest rate with different ratings may have the same yield.
Yield disparities may occur for reasons not directly related to the investment
quality of particular issues or the general movement of interest rates, due to
such factors as changes in the overall demand or supply of various types of
securities or changes in the investment objectives of investors. Subsequent to
purchase, an issue of Municipal Securities or other investments may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by a Portfolio. Neither event will require the elimination of an
investment by a Portfolio, but the Advisor will consider such an event in its
determination of whether a Portfolio should continue to hold an investment.

Yield information may be useful to investors in reviewing a Portfolio's
performance. However, a number of factors should be considered before using
yield information as a basis for comparison with other investments. An
investment in any of the Portfolios of the Fund is not insured as is typically
the case with deposits in a bank or savings and loan; yield is not guaranteed
and normally will fluctuate on a daily basis. The yield for any given past
period is not an indication or representation of future yields or rates of
return. Yield is affected by portfolio quality, portfolio maturity, type of
instruments held and operating expenses. When comparing a Portfolio's yield
with that of other investments, investors should understand that certain other
investment alternatives such as money market instruments or bank accounts
provide fixed yields and also that bank accounts may be insured.

From time to time the Fund may advertise yield figures. Reference in
advertisements may be made to ratings and rankings among similar funds by
independent evaluators such as Lipper Analytical Services Inc. and Donoghue's
Money Fund Report, and the performance of the Portfolios may be compared to
recognized indices of market performance.

There are two methods by which the Portfolios' yield for a specified period
of time is calculated.

The first method, which results in an amount referred to as the "current
yield," assumes an account containing exactly one share at the beginning of the
period. The net asset value of this share will be $1.00. The net change in the
value of the account during the period is then determined by subtracting this
beginning value from the value of the account at the end of the period; however,
capital changes (i.e., realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) are excluded from the calculation.
Thus, the dividends used in the yield computation may not be the same as the
dividends actually declared, as the capital changes in question may be included
in the dividends declared; see "Daily Dividends, Other Distributions, and Taxes"
in the Prospectus. Instead, the dividends used in the yield calculation will be
those which would have been declared if the

36
<PAGE>

capital changes had not affected the dividends. This net change in the account
value is then divided by the value of the account at the beginning of the period
and the resulting figure (referred to as the "period base return") is then
annualized by multiplying it by 365 and dividing it by the number of days in the
period; the result is the "current yield." Normally a seven day period will be
used in determining yields (both the current and the effective yield discussed
below) in published or mailed advertisements.

The second method results in an amount referred to as the "effective
yield." This represents an annualization of the current yield with dividends
reinvested daily. This effective yield for a seven day period would be computed
by compounding the unannualized base period return by adding one to the base
period return, raising the sum to a power equal to 365 divided by 7 and
subtracting 1 from the result.

"Tax equivalent yield" is calculated by dividing the percentage of the
current yield or the effective yield which is not subject to federal income tax
by the reciprocal of the applicable federal tax rate and adding the percentage
of the current or effective yield to the quotient.

TAX EQUIVALENT CURRENT YIELD = T/r + R

r = reciprocal of applicable tax rate (1.00 - tax rate = r)
T = % of yield which is tax-exempt
R = % of yield taxable

The "current yield" is calculated for the indicated period according to the
following formula:

CURRENT YIELD = (Base Period Return) x 365/7

The "effective yield" is calculated for the indicated period according to the
following formula:

EFFECTIVE YIELD = [(Base Period Return + 1) to the power of 365/7 ]-1

Where: Base Period Return is the net change, exclusive of capital changes, in
the value of a hypothetical preexisting account having a balance of
one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts and dividing
the difference by the value of the account at the beginning of the
base period.

37
<PAGE>

YIELD FOR SEVEN DAY PERIOD

Portfolio Yield for seven-day period ended 11/30/95
- --------- -----------------------------------------
CURRENT EFFECTIVE

Primary 4.90% 5.01%

Government* 4.77% 4.88%

General Municipal 3.03% 3.08%

California Municipal 3.09% 3.14%

New York Municipal* 3.13% 3.18%

* During the seven day period ended November 30, 1995, the Advisor
voluntarily waived a portion of its advisory fees with respect to the
Government and New York Municipal Portfolios in order to maintain the
Portfolios' yields at a competitive level. Had the fee waivers not been in
effect, the current yield and effective yield for the Government and New
York Municipal Portfolios would have been 4.78% and 4.89% and 3.07% and
3.12% respectively.

TAX EQUIVALENT YIELD -- 30 DAY PERIOD

for the 30-day period ended November 30, 1995

Portfolio At Federal Income Tax Rate of 39.6%
- --------- -----------------------------------

General Municipal 4.85%*

California Municipal 5.77%*

New York Municipal 5.57%*

* During the fiscal year ended November 30, 1995, the Advisor voluntarily
waived a portion of its advisory fees with respect to the Portfolios.
These waivers have been made in order to maintain the Portfolios' yields at
a competitive level but have not been made at a constant rate from week to
week. Had the fee waivers not been in effect during the above 30-day
period, the tax-equivalent yield for the California and New York Municipal
Portfolios would have been 5.77% and 5.41%, respectively. A portion of the
tax-exempt dividends paid by the Portfolios is treated as a tax preference
item for individuals subject to the alternative minimum tax. For the
fiscal year ended November 30, 1995, approximately 40.9%, 19.8%, and 25.1%,
respectively, of distributions of the General, California and New York
Municipal Portfolios were tax preference items; for the calendar year ended
December 31, 1995, approximately 37.0%, 18.3% and 24.0%, respectively, of
distributions were tax preference items. In addition, certain corporate
shareholders which are subject to the alternative minimum tax may also have
to take remaining distributions by the Portfolio into account in computing
the alternative minimum tax. The tax equivalent yield for the California
Municipal Portfolio is based on an assumed California State tax rate of
11%. The tax equivalent yield for the New York Municipal Portfolio is
based on an assumed New York state tax rate of 7.59375%; if a shareholder
was a New York City resident, the tax-equivalent yield would have been
5.85% accounting for advisory fee waivers and 5.68% without such fee
waivers, based on an assumed New York City tax rate of 4.46%.

38
<PAGE>

2. ADDITIONAL INFORMATION

DESCRIPTION OF THE FUND. The Fund was formed under the laws of Maryland on
April 27, 1989. It is not contemplated that share certificates will be issued
or regular annual meetings of the shareholders will be held. The Fund will
provide without charge to any stockholder, upon request to the Secretary at the
Corporation's principal office, (a) a full statement of the designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the shares of each class of stock which the Corporation is
authorized to issue, (b) the differences in the relative rights and preferences
between the shares of each series to the extent they have been set, and (c) the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series.

POSSIBLE ADDITIONAL PORTFOLIO SERIES. If additional Portfolios are created by
the Board of Directors, shares of each such Portfolio will be entitled to vote
as a class only to the extent permitted by the 1940 Act (see below) or as
permitted by the Board of Directors. Expenses not otherwise identified with a
particular Portfolio will be allocated fairly among two or more Portfolios by
the Board of Directors.

Under Rule 18f-2 of the 1940 Act, any matter to be submitted to a vote of
shareholders of any investment company which has two or more series outstanding
is not deemed to have been effectively acted upon unless approved by the holders
of a "majority" (as defined in that Rule) of the voting securities of each
series affected by the matter. Such separate voting requirements do not apply
to the election of directors or the ratification of the selection of
accountants. The Rule contains special provisions for cases in which an
advisory contract is approved by one or more, but not all, series. A change in
investment policy may go into effect as to one or more series whose holders so
approve the change even though the required vote is not obtained as to the
holders of other affected series.

INDEPENDENT ACCOUNTANTS. Price Waterhouse LLP serves as the independent
accountants of the Fund and of each Portfolio; their services include examining
the annual financial statements of each Portfolio as well as other related
services. Price Waterhouse LLP also serves as independent accountants for the
Advisor and its affiliates.

TELEPHONE REDEMPTIONS AND EXCHANGES. In the absence of negligence on the part
of the Transfer Agent or gross negligence on the part of the Fund, neither the
Fund, the Transfer Agent nor their affiliates shall be liable for any loss, cost
or expense caused by unauthorized telephone redemption and exchange
instructions.

g/fund/qcr/sai-396.blk

39
<PAGE>

Appendix

DESCRIPTION OF COMMERCIAL PAPER AND MUNICIPAL BOND AND NOTE RATINGS

COMMERCIAL PAPER RATINGS

Moody's commercial paper ratings are opinions of the ability of issuers to
repay promissory obligations when due. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1 - Superior Ability for Repayment;
Prime 2 - Strong Ability for Repayment; Prime 3 - Acceptable Ability for
Repayment.

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment. Ratings are graded into four categories, ranging
from "A" for the highest quality obligations to "D" for the lowest. Issues
assigned the highest rating, "A", are regarded as having the greatest capacity
for timely payment. Issues in this category are delineated with the numbers
"1", "2" and "3" to indicate the relative degree of safety. The designation
"A-1" indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. The "A+" designation is applied to those issues
rated "A-1" which possess overwhelming safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated "A-1."

Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assessment
places emphasis on the existence of liquidity. Ratings range from F-1+ which
represents exceptionally strong credit quality to F-4 which represents weak
credit quality.

Duff & Phelps' short-term ratings apply to all obligations with maturities
of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit and current maturities of long-term
debt. Emphasis is placed on liquidity. Ratings range from Duff 1+ for the
highest quality to Duff 5 for the lowest, issuers in default. Issues rated Duff
1+ are regarded as having the highest certainty of timely payment. Issues rated
Duff 1 are regarded as having very high certainty of timely payment.

Thomson's BankWatch, Inc. assigns only one Issuer Rating to each company,
based upon a qualitative and quantitative analysis of the consolidated
financials of an issuer and its subsidiaries. The rating incorporates TBW's
opinion of the vulnerability of the company to adverse developments which may
impact the marketability of its securities, as well as the issuer's ability to
repay principal and interest. Ratings range from A for highest quality to E for
the lowest, companies with very serious problems.

A-1
<PAGE>

BOND RATINGS

A bond rated "Aaa" by Moody's is judged to be the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is deemed secure.
While the various protective elements may change, such foreseeable changes are
unlikely to impair the fundamentally strong position of such issues. Bonds
which are rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. Margins of protection on "Aa" bonds may not be as large as on
"Aaa" securities or fluctuations of protective elements may be of greater
magnitude or there may be other elements present which make the long-term risks
appear somewhat larger than "Aaa" securities. Bonds which are rated "A" possess
many favorable investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment some time in the future. Bonds rated "Baa" are considered medium
grade obligations whose interest payments and principal security appear adequate
for the present but lack certain protective elements or may be
characteristically unreliable over any great length of time. Moody's applies
numerical figures "1", "2" and "3" in each generic rating classification from
"Aa" through "B" in its corporate bond rating system. The modifier "1"
indicates that the security ranks in the higher end of its generic rating
category; the modifier "2" indicates a mid-range ranking and the modifier "3"
indicates that the issue ranks in the lower end of its generic rating category.

Debt rated "AAA" by Standard & Poor's has the highest rating assigned by
it. Capacity to pay interest and repay principal is extremely strong. Debt
rated "AA" has a strong capacity to pay interest and repay principal and differs
from "AAA" issues only in small degree. Debt rated "A" has a strong capacity to
pay interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.

Debt rated "AAA", the highest rating by Fitch, is considered to be of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Debt rated "AA" is regarded as very high credit quality.
The obligor's ability to pay interest and repay principal is very strong. Debt
rated "A" is of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than debt with higher
ratings. Debt rated "BBB" is of satisfactory credit quality. The obligor's
ability to pay interest and repay principal is adequate, however a change in
economic conditions may adversely affect timely payment. Plus (+) and minus (-)
signs are used with a rating symbol (except AAA) to indicate the relative
position within the category.

A-2
<PAGE>

Debt rated AAA, the highest rating by Duff & Phelps, is considered to be of
the highest credit quality. The risk factors are negligible being only slightly
more than for risk-free U.S. Treasury debt. Debt rated AA is regarded as high
credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.

NOTE RATINGS

Moody's

MIG 1/VMIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG 2/VMIG 2 -- This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.

Standard & Poor's

SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

DESCRIPTION OF MOODY'S FOUR HIGHEST MUNICIPAL BOND RATINGS

Aaa. Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. They are rated lower than the Aaa bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which made the long-term risks appear somewhat larger than in Aaa
securities.

A. Bonds which are rated A are judged to be upper medium grade
obligations. Security for principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment sometime in
the future.

Baa. Bonds which are rated Baa are considered as medium grade obligations,
i.e.; they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate

A-3
<PAGE>

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.

DESCRIPTION OF S&P'S FOUR HIGHEST MUNICIPAL BOND RATINGS

AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree. The
AA rating may be modified by the addition of a plus or minus sign to show
relative standing within the AA rating category.

A. Debt rated A is regarded as safe. This rating differs from the two
higher ratings
because, with respect to general obligation bonds, there is some weakness which,
under certain adverse circumstances, 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 and stability of pledged revenues
could show some variations because of increased competition or economic
influences in revenues.

BBB. Bonds rated BBB are regarded as having adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in the A category.

DESCRIPTION OF FITCH'S FOUR HIGHEST MUNICIPAL BOND RATINGS.

DESCRIPTION OF MOODY'S HIGHEST RATINGS OF STATE AND MUNICIPAL NOTES AND OTHER
SHORT-TERM LOANS

Moody's ratings for state and municipal notes and other short-term loans
are designated "Moody's Investment Grade" ("MIG"). Such ratings recognize the
differences between short-term

A-4
<PAGE>

credit risk and long-term risk. A short-term rating designated VMIG may also be
assigned on an issue having a demand feature. Factors affecting the liquidity of
the borrower and short-term cyclical elements are critical in short-term
borrowing. Symbols used will be as follows:

MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

DESCRIPTION OF S&P'S RATINGS OF STATE AND MUNICIPAL NOTES AND OTHER SHORT-TERM
LOANS

Standard & Poor's tax exempt note ratings are generally given to such notes
that mature in three years or less. The two higher rating categories are as
follows:

SP-1. Very strong or strong capacity to pay principal and interest. These
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.

SP-2. Satisfactory capacity to pay principal and interest.

A-5

<PAGE>
November 30, 1995

SCHEDULES OF INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIMARY PORTFOLIO

Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
U.S. Government Securities--4.2%
Federal Farm Credit Bank,
$ 15,000 5.63%, 1/4/96.................................. $ 14,920,242
20,000 VRDN*, 5.87%-5.95%,
3/21/96-5/9/96................................. 19,997,576
36,200 Federal National
Mortgage Association,
5.585%-5.63%,
12/7/95-1/10/96................................ 36,035,887
------------
Total U.S. Government Securities
(amortized cost--$70,953,705).................................. $ 70,953,705
------------
Bankers' Acceptances--2.1%
$ 9,900 First Union National Bank,
5.60%, 12/21/95................................ $ 9,869,200
7,000 National Bank of Detroit,
5.64%, 1/23/96-1/24/96......................... 6,941,250
6,000 National Westminster Bank PLC,
5.63%, 12/12/95................................ 5,989,678
12,000 Republic National Bank of New York,
5.60%, 1/8/96.................................. 11,929,067
------------
Total Bankers' Acceptances
(amortized cost--$34,729,195).................................. $ 34,729,195
------------
Certificates of Deposit--5.2%
$ 36,000 National Westminster Bank PLC,
5.78%-5.81%,
1/12/96-2/1/96................................. $ 36,000,636
50,000 Societe Generale Bank,
5.76%-5.80%,
12/18/95-1/4/96................................ 50,000,000
------------
Total Certificates of Deposit
(amortized cost--$86,000,636).................................. $ 86,000,636
------------
Commercial Paper--85.2%
$ 39,600 Abbey National North America,
5.64%-5.71%,
1/5/96-3/6/96.................................. $ 39,289,074
37,450 ABN-Amro North America Finance Inc.,
5.57%-5.70%,
12/5/95-2/16/96................................ 37,229,441
18,875 A. H. Robbins Co. Inc.,
5.70%-5.71%,
1/16/96-2/8/96................................. 18,703,847
17,400 Alberta (Province of),
5.65%-5.71%,
12/28/95-1/12/96............................... 17,302,026

Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 54,000 American Express Credit Corp.,
5.60%-5.75%,
12/4/95-2/5/96................................. $ 53,738,806
30,000 American Home Products Corp.,
5.70%-5.72%,
12/18/95-2/2/96................................ 29,790,731
35,000 American Telephone & Telegraph Co.,
5.62%-5.64%, 12/18/95.......................... 34,906,925
20,000 AVCO Financial Services Inc.,
5.70%-5.72%,
1/9/96-1/10/96................................. 19,874,700
60,250 Bayerische Landesbank Girozentrale,
5.61%-5.76%,
1/2/96-2/26/96................................. 59,771,439
15,000 Cheltenham & Gloucester Building
Society, 5.74%, 1/3/96......................... 14,921,075
41,100 Commerzbank U.S. Finance Inc.,
5.62%-5.71%,
1/5/96-2/5/96.................................. 40,801,871
8,800 Compagnie Bancaire USA Funding
Corp., 5.65%-5.76%,
1/4/96-2/5/96.................................. 8,727,536
25,570 Daimler Benz North America Corp.,
5.65%-5.72%,
1/3/96-2/14/96................................. 25,357,128
47,748 Deere (John) Capital Corp.,
5.60%-5.68%,
12/4/95-2/5/96................................. 47,486,806
25,400 Dresdner U.S. Finance Inc.,
5.71%-5.72%,
1/22/96-1/23/96................................ 25,187,919
31,465 Eksportfinans A/S,
5.62%-5.66%,
12/1/95-12/20/95............................... 31,410,132
25,915 Finnish Export Credit LTD,
5.70%-5.72%,
1/23/96-1/24/96................................ 25,694,189
6,000 Ford Credit Europe PLC,
5.74%, 12/19/95................................ 5,982,780
36,000 Ford Motor Credit Co.,
5.68%-5.69%,
12/6/95-1/12/96................................ 35,854,611
10,000 General Electric Capital Services Inc.,
5.62%, 1/22/96................................. 9,918,967
60,000 General Motors Acceptance Corp.,
5.62%-5.65%,
12/8/95-12/28/95............................... 59,825,010
30,000 Generale Bank Inc.,
5.59%-5.61%,
1/16/96-2/2/96................................. 29,758,969

B-1

<PAGE>

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------

<C> <S> <C>
Commercial Paper--85.2% (cont'd)
$ 63,000 Glaxo Holdings PLC,
5.64%-5.66%,
2/12/96-2/22/96................................ $ 62,202,545
33,285 Halifax Building Society,
5.63%-5.73%,
12/11/95-1/3/96................................ 33,180,815
35,000 Hanson Finance (U.K.) PLC,
5.63%-5.65%,
12/4/95-3/1/96................................. 34,639,507
6,000 Hewlett-Packard Co.,
5.60%, 2/29/96................................ 5,916,000
20,000 IBM Credit Corp.,
5.65%, 1/29/96................................. 19,814,806
62,400 Merrill Lynch & Co. Inc.,
5.65%-5.70%,
12/4/95-2/29/96................................ 61,927,528
55,000 Morgan (J.P.) & Co. Inc.,
5.61%-5.62%,
1/5/96-1/31/96................................. 54,537,808
54,300 Morgan Stanley Group Inc.,
5.70%, 2/5/96-2/12/96.......................... 53,688,232
5,000 Oesterreichische Kontrollbank AG,
5.72%, 1/8/96.................................. 4,969,811
8,000 Pitney Bowes Credit Corp.,
5.64%, 12/1/95................................. 8,000,000
4,000 Prudential Funding Corp.,
5.65%, 12/14/95................................ 3,991,839
25,000 Queensland Treasury Corp.,
5.64%, 1/8/96.................................. 24,851,167
15,000 Rabobank USA Financial Corp.,
5.60%, 2/26/96................................. 14,797,000
51,650 Republic New York Corp.,
5.60%-5.66%,
12/11/95-1/18/96............................... 51,380,037
63,000 Royal Bank of Canada,
5.61%-5.70%,
1/29/96-2/2/96................................. 62,393,393
10,000 Societe Generale N.A. Inc.,
5.61%, 12/22/95................................ 9,967,275
8,500 Student Loan Corp.,
5.705%, 1/22/96................................ 8,429,955
64,150 Svenska Handelsbanken Inc.,
5.62%-5.73%,
12/27/95-3/29/96............................... 63,532,516
41,000 Sweden (Kingdom of),
5.65%-5.70%,
1/16/96-2/28/96................................ 40,508,444

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 52,000 Swedish Export Credit Corp.,
5.62%-5.64%,
12/11/95-12/22/95..............................$ 51,863,308
15,400 Toronto-Dominion Holdings
USA Inc., 5.71%, 1/8/96........................ 15,307,181
52,965 Transamerica Finance Corp.,
5.62%-5.76%,
12/5/95-1/30/96................................ 52,688,478
14,100 U.S. Borax & Chemical Corp.,
5.63%, 3/4/96.................................. 13,892,722
--------------
Total Commercial Paper
(amortized cost--$1,424,014,349)...............................$1,424,014,349
--------------
Corporate Notes--2.9%
$ 15,000 CIT Group Holdings Inc., VRDN*,
5.89%, 9/26/96.................................$ 14,989,835
33,500 General Electric Capital Corp.,
VRDN*, 5.84%-6.05%,
1/10/96-8/16/96................................ 33,499,946
--------------
Total Corporate Notes
(amortized cost--$48,489,781)..................................$ 48,489,781
--------------
Repurchase Agreement--.8%
$ 14,000 J.P. Morgan Securities Inc.,
dtd. 11/30/95, 5.90%, 12/1/95
(proceeds at maturity $14,002,294,
collateralized by $14,035,000 par,
$14,280,613 value U.S. Treasury
Notes, 6.875%, 10/31/96)
(amortized cost-$14,000,000)...................$ 14,000,000
--------------
Total Investments
(amortized cost $1,678,187,666+).......................100.4% $1,678,187,666
Other Liabilities in Excess
of Other Assets........................................ (0.4) (7,058,305)
----- --------------
Total Net Assets
(applicable to 1,671,168,463 shares
outstanding at $1.00 per share)........................100.0% $1,671,129,361
===== ==============

GOVERNMENT PORTFOLIO

U.S. Government Securities--96.6%
$ 15,000 Federal Farm Credit Bank, VRDN*,
5.87%-5.95%,
3/21/96-5/9/96.................................$ 14,997,946

B-2
<PAGE>

November 30, 1995

SCHEDULES OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------

GOVERNMENT PORTFOLIO (cont'd)

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>

U.S. Government Securities (cont'd)
$ 47,300 Federal Home Loan Bank,
5.56%-5.80%,
12/1/95-2/6/96................................. $ 47,173,400
43,000 Federal National
Mortgage Association,
5.53%-5.61%,
12/7/95-1/30/96................................ 42,740,515
------------
Total U.S. Government Securities
(amortized cost--$104,911,861)................................. $104,911,861
------------
Repurchase Agreement--9.2%
$ 10,000 J.P. Morgan Securities Inc.,
dtd. 11/30/95, 5.90%, 12/1/95
(proceeds at maturity $10,001,639,
collateralized by $10,165,000 par,
$10,203,119 value Federal Home
Loan Mortgage Corp., 5/13/96)
(amortized cost-$10,000,000)................... $ 10,000,000
------------
Total Investments
(amortized cost--$114,911,861+)......................... 105.8% $114,911,861
Other Liabilities in Excess of
Other Assets............................................ (5.8) (6,336,831)
----- ------------
Total Net Assets (applicable to 108,596,523
shares outstanding at $1.00 per share).................. 100.0% $108,575,030
===== ============
GENERAL MUNICIPAL PORTFOLIO

Alabama--1.9%
$ 1,600 Alabama Pvt. Clges. & Univs., FAR,
Ser. A, VRDN* (Insd.; FGIC),
3.60%, 12/6/95................................. $ 1,600,000
575 Fairfield IDB, EIR,
USX Corp. Proj. (LC;
Wachovia Bank), 3.70%,
5/1/96** 575,000
------------
2,175,000
------------

Alaska--4.8%
3,600 Alaska St. HF Corp.,
Ser. A, VRDN*,
3.625%, 12/6/95................................ 3,600,000

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Alaska (cont'd)
$ 2,000 Valdez Marine Term. Rev.,
Arco Transn. Proj.,
Ser. B, VRDN*,
3.75%, 12/6/95................................. $ 2,000,000
------------
5,600,000
------------
Arizona--6.0%
1,000 Arizona Edl. Ln. Mktg. Corp.,
ELR, Ser. A, VRDN*
(LC; Dresdner Bank AG),
3.80%, 12/6/95................................. 1,000,000
4,000 Cochise Cnty. PCR, SWDR,
Arizona Elec. Pwr. Coop. Inc.
Proj., 3.90%, 3/1/96***........................ 4,000,000
2,000 Maricopa Cnty. PCC, PCR,
So. California Edison Palo Verdi
Proj., 3.70%, 2/1/96........................... 2,000,000
------------
7,000,000
------------
California--6.1%
California HEL Auth.,
1,000 Ser. A (LC; Nat'l. Westminster
Bank PLC), 4.35%, 5/1/96**..................... 1,000,000
1,000 Ser. E-5 (CS; SLMA),
4.25%, 6/1/96**................................ 1,000,000
1,000 California Hsg. FAGR,
Home Mtg. Prog., Ser. E,
4.60%, 2/1/96**................................ 1,000,000
2,000 California St. RAW's,
Ser. C, dtd. 7/26/94,
5.75%, 4/25/96................................. 2,008,508
2,000 Ukiah Elec. Rev.,
Ser. A,
8.00%, 6/1/96.................................. 2,121,806
------------
7,130,314
------------
Colorado--1.7%
2,000 Colorado St. GFR, TRAN's,
Ser A, dtd. 7/6/95,
4.50%, 6/27/96................................. 2,008,805
------------
Florida--1.2%
1,350 Putnam Cnty. Dev. Auth., PCR,
Seminole Elec. Co. Proj.,
Ser. H-1, VRDN*,
3.65%, 12/6/95................................. 1,350,000
------------
Hawaii--.9%
1,000 Secondary Mkt. Svcs. Corp., SLR,
Ser. II, VRDN* (LC; Nat'l.
Westminster Bank PLC),
3.70%, 12/6/95................................. 1,000,000
------------

B-3
<PAGE>

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Illinois--10.3%
$ 6,300 Chicago O'Hare Int'l. Arpt.,
Ser. B, VRDN*
(LC; Societe Generale Bank),
3.80%, 12/6/95................................. $ 6,300,000
1,000 Chicago Tender Notes,
Ser. A (LC; Morgan Guaranty
Trust Co., Inc.), 3.75%, 5/1/96**.............. 1,000,000
1,800 Illinois Hlth. FAR,
Hosp. Sisters Svc. Proj., Ser. E,
VRDN* (Insd.; MBIA),
3.60%, 12/6/95................................. 1,800,000
2,800 Parkside Dev. Corp. Proj.,
VRDN* (LC: First Nat'l. Bank
of Chicago), 3.70%, 12/6/95.................... 2,800,000
------------
11,900,000
------------
Indiana--3.9%
3,830 Indiana Bond Bank,
Com. Sch. Fd., Adv. Pur. Fdg.,
(Insd.; AMBAC),
3.90%, 2/1/96**................................ 3,832,494
650 Mt. Vernon PCR, SWDR,
General Elec. Co. Proj.,
3.95%, 1/29/96................................. 650,000
------------
4,482,494
------------
Kansas--.7%
800 Butler Cnty. SWDR,
Texaco Inc. Refng. & Marketing
Proj., Ser. A, VRDN*,
3.85%, 12/1/95................................. 800,000
------------
Kentucky--6.7%
200 Boone Cnty. PCR,
Cincinnati Gas & Elec. Co.
Proj., Ser. A, VRDN*
(LC; Union Bank of Switzerland),
3.85%, 12/1/95................................. 200,000
4,000 Graves Cnty. IDA,
Seaboard Farms of Kentucky Inc.
Proj., VRDN* (LC; Bank of New
York), 3.85%, 12/7/95.......................... 4,000,000
3,600 Mayfield Cnty. IDR,
Seaboard Farms of Kentucky Inc.
Proj., VRDN* (LC; Bank of New
York), 3.85%, 12/7/95.......................... 3,600,000
------------
7,800,000
------------

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Louisiana--4.5%
$ 200 Calcasieu Parish Inc. IDB, Env.
Rev., Citgo Petroleum Corp.
Proj., VRDN* (LC; Banque
Nationale de Paris),
3.90%, 12/1/95................................. $ 200,000
2,950 Louisiana Public FAR,
Clge. & Univ. Equip.
& Cap. Proj., Ser. A,
VRDN* (Insd.; FGIC),
3.60%, 12/6/95................................. 2,950,000
1,000 Orleans Parish Sch. Brd.,
Ser. A (Insd.; MBIA),
7.00%, 6/1/96.................................. 1,035,881
1,000 St. Charles Parish PCR,
Shell Oil Co. NorCo. Proj.,
VRDN*,
3.80%, 12/1/95................................. 1,000,000
------------
5,185,881
------------
Maryland--2.8%
3,300 Anne Arundel Cnty. EDR,
Baltimore Gas & Elec. Co.
Proj.,
3.80%-3.95%,
12/13/95-1/29/96............................... 3,300,000
------------
Massachusetts--1.0%
1,165 Massachusetts Hsg. FAGR,
Single Fam. Mtg. Prog.,
4.15%, 6/1/96**................................ 1,165,000
------------
Minnesota--3.4%
3,000 Hubbard Cnty. SWDR,
Potlatch Corp. Proj.,
VRDN* (LC; Credit Suisse),
3.80%, 12/6/95................................. 3,000,000
250 Minnesota St. HFA,
Ser. D (Insd.; MBIA),
3.80%, 8/1/96.................................. 250,000
750 University of Minn., Univ. Revs.,
Ser. G, 3.65%, 2/1/96***....................... 750,000
------------
4,000,000
------------
Missouri--1.4%
Missouri EIERA, PCR,
Union Elec. Co. Proj.,
600 Ser. A (LC; Swiss Bank Corp.),
4.00%, 6/1/96***............................... 600,000
1,000 Ser. B (LC; Union Bank of
Switzerland), 4.00%, 6/1/96***................. 1,000,000
------------
1,600,000
------------

B-4
<PAGE>

November 30, 1995

SCHEDULES OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------

GENERAL MUNICIPAL PORTFOLIO (cont'd)

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Nebraska--2.2%
$ 1,600 Nebraska HEL Prog.,
Ser. C, VRDN*
(CS; SLMA),
3.75%, 12/6/95................................. $ 1,600,000
1,000 Omaha Pub. Pwr. Dist., Elec.
Rev., Ser. A,
3.90%, 2/1/96.................................. 1,000,651
------------
2,600,651
------------
Nevada--.6%
700 Clark Cnty. AIR,
Sub Lien, Ser. A-2,
VRDN* (LC; Toronto Dominion
Bank), 3.75%, 12/6/95.......................... 700,000
------------
New Hampshire--1.8%
1,100 New Hampshire St. BFA, PCR,
Pub. Svc. Co. of New Hampshire
Proj., Ser. D, VRDN* (LC; Barclays
Bank PLC), 3.85%, 12/6/95...................... 1,100,000
1,000 New Hampshire St. HFA,
Single Fam. Mtg. Rev., Ser. F,
4.55%, 4/1/96**................................ 1,000,000
------------
2,100,000
------------
New Mexico--2.2%
2,600 Farmington PCR,
Arizona Pub. Svc. Co. Proj.,
Ser C,VRDN* (LC; Union Bank
of Switzerland), 3.80%, 12/1/95................ 2,600,000
------------
New York--4.5%
1,200 Nassau Cnty. TAN's,
Ser. B, dtd. 9/26/95,
4.50%, 4/15/96................................. 1,202,618
1,000 New York St. ERDA, PCR,
Rochester Gas & Elec. Corp.
Proj., (LC; Credit Suisse),
3.75%, 11/15/96***............................. 1,000,000
1,000 New York St. JDA, St. Gtd.,
Ser. B, VRDN*,
4.05%, 12/1/95................................. 1,000,000
2,000 New York St. PAR,
3.85%, 3/1/96***............................... 2,000,000
------------
5,202,618
------------

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Ohio--.9%
$ 1,000 Ohio St. Air Quality DAR,
JMG Fdg. Ltd. Proj., Ser. B,
VRDN* (LC; Societe Generale
Bank), 3.70%, 12/6/95.......................... $ 1,000,000
------------
Oregon--1.7%
Oregon St. GO, Ser. C,
1,000 Higher Ed.,
3.95%, 3/1/96.................................. 1,000,000
905 Pollution Ctl.,
8.75%, 6/1/96.................................. 927,454
------------
1,927,454
------------
Pennsylvania--6.3%
1,700 Emmaus GAR,
Ser. C-8, VRDN*
(LC; Midland Bank PLC),
3.80%, 12/6/95................................. 1,700,000
2,000 Pennsylvania St. HEA, SLR,
Ser. A, VRDN*
(CS; SLMA),
3.80%, 12/7/95................................. 2,000,000
1,000 Philadelphia TRAN's,
Ser. A, dtd. 7/6/95,
4.50%, 6/27/96................................. 1,003,027
2,000 Upper Allegheny JSA,
4.50%, 1/15/96**............................... 2,001,667
600 York Cnty. IDA, IDR,
Preston Trucking Co. Proj.,
VRDN* (LC; Mellon Bank),
3.65%, 12/1/95................................. 600,000
------------
7,304,694
------------
Rhode Island--.9%
1,000 Rhode Island HMFC,
Home Ownership Oppty. Prog.,
Ser. B, 3.90%, 6/27/96**....................... 1,000,000
------------
South Carolina--.8%
985 York Cnty. PCR,
Saluda River Proj., Ser. '84E,
3.80%, 2/15/96***.............................. 985,000
------------
Tennessee--3.7%
2,300 Hamilton Cnty. IDR,
Seaboard Feed of Chattanooga
Proj., VRDN* (LC; Bank of
New York), 3.85%, 12/7/95...................... 2,300,000

B-5
<PAGE>

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Tennessee (cont'd)
$ 2,000 Metropolitan Nashville Arpt.,
VRDN* (Insd.; FGIC),
3.65%, 12/6/95................................. $ 2,000,000
------------
4,300,000
------------
Texas--8.2%
1,000 Brazos HEA,
Ser. B-1, VRDN*
(CS; SLMA),
3.75%, 12/6/95................................. 1,000,000
2,300 Brazos River Auth., PCR,
Texas Utils. Elec. Co. Proj., Ser. A,
(LC; Canadian Imperial Bank),
3.95%, 2/8/96.................................. 2,300,000
300 Grapevine IDR,
American Airlines Inc. Proj.,
Ser. B-3, VRDN* (LC; Morgan
Guaranty Trust Co., Inc.),
3.85%, 12/1/95................................. 300,000
1,000 Harris Cnty. Hosp. Dist., Mtg. Rev.,
8.50%, 4/1/96.................................. 1,057,811
2,000 Texas A&M Univ., Perm.
Univ. Fd., Ser. B,
3.80%, 12/8/95................................. 2,000,000
790 Texas HEA, EEIR,
Ser. B, VRDN*
(Insd.; FGIC),
3.60%, 12/6/95................................. 790,000
2,000 Texas St. TRAN's,
Ser. A, dtd. 9/1/95,
4.75%, 8/30/96................................. 2,010,885
------------
9,458,696
------------
Utah--2.6%
1,000 Intermountain Pwr. Agy.,
PSR, Ser. E
(LC; Swiss Bank Corp.),
3.80%, 3/15/96***.............................. 1,000,000
2,000 Utah St. Brd. Regents SLR,
Ser. L, VRDN*
(Insd.; AMBAC),
3.85%, 12/6/95................................. 2,000,000
------------
3,000,000
------------
Washington--.5%
615 Washington St. HF Cmnty.,
Single Fam. Mtg. Prog., Ser. 1A,
4.10%, 6/1/96**................................ 615,000
------------

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Wisconsin--3.6%
$ 4,200 Wisconsin HFFAR,
Hosp. Sisters Svc. Proj.,
Ser. G, VRDN* (Insd.; MBIA),
3.60%, 12/6/95................................. $ 4,200,000
------------

Wyoming--.9%
1,000 Sweetwater Cnty. EIR,
Pacificorp Proj., Ser. A
(LC; Westdeutsche Landesbank),
3.90%, 1/26/96................................. 1,000,000
------------
Total Investments
(amortized cost--$114,491,607+)......................... 98.7% 114,491,607
Other Assets in Excess
of Other Liabilities.................................... 1.3 1,472,966
----- ------------
Total Net Assets
(applicable to 116,057,333 shares
outstanding at $1.00 per share)......................... 100.0% $115,964,573
===== ============

CALIFORNIA MUNICIPAL PORTFOLIO

California--98.8%
$ 1,000 Alameda Cnty. TA, STR,
(Insd.; FGIC),
4.50%, 5/1/96.................................. $ 1,003,236
500 California EFAR,
Stanford Univ. Proj., Ser. G.,
8.10%, 12/1/95................................. 518,777
1,000 California HFF,
Scripps Mem. Hosp. Proj., Ser. A,
VRDN* (LC; Morgan Guaranty
Trust Co., Inc.), 3.40%, 12/7/95............... 1,000,000
California HFFAR, Kaiser
Permanente Proj., VRDN*,
3,000 Ser. A, 3.45%, 12/6/95......................... 3,000,000
500 Ser. B, 3.45%, 12/6/95......................... 500,000
4,300 Mem. Hlth. Svcs. Proj.,
VRDN*,
3.45%, 12/6/95................................. 4,300,000
1,000 California Hsg. FAGR,
Home Mtg. Prog., Ser. E,
4.60%, 2/1/96**................................ 1,000,000

B-6
<PAGE>

November 30, 1995

SCHEDULES OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------

CALIFORNIA MUNICIPAL PORTFOLIO (cont'd)

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
California PCFA, PCR,
Homestake Mining Proj.,
VRDN* (LC; Bank of Nova Scotia),
$ 2,200 Ser. 84A, 3.50%, 12/6/95....................... $ 2,200,000
800 Ser. 84B, 3.50%, 12/6/95....................... 800,000
Pacific Gas & Elec. Co. Proj.,
2,000 Ser. A (LC; Swiss Bank Corp.),
3.80%, 12/7/95................................. 2,000,000
1,500 Ser. C (LC; Credit Suisse),
3.55%, 12/11/95................................ 1,500,000
So. Cal. Edison Proj.,
2,000 Ser. B,
3.55%, 2/2/96.................................. 2,000,000
VRDN*,
100 Ser. B, 3.85%, 12/1/95......................... 100,000
500 Ser. C, 3.85%, 12/1/95......................... 500,000
200 Ser. D, 3.85%, 12/1/95......................... 200,000
4,400 California PCFA, PCR, RRR,
Wadham Energy Proj., Ser. C,
VRDN* (LC; Banque Nationale de
Paribas), 3.90%, 12/6/95....................... 4,400,000
California PCFA, RRR,
200 Burney Forest Prod. Proj., Ser. A,
VRDN* (LC; Nat'l. Westminster
Bank PLC), 3.85%, 12/1/95...................... 200,100
1,300 Delano Proj.,
VRDN* (LC; ABN-Amro Bank),
3.75%, 12/1/95................................. 1,300,000
600 Ultrapower Malaga Corp. Proj.,
VRDN* (LC; Bank of America),
Ser. B, 3.80%, 12/1/95......................... 600,000
1,100 California St. DWR,
Cent. Vy. Proj.,
VRDN* (LC; Canadian Imperial
Bank), 3.50%, 12/6/95.......................... 1,100,000
4,507 California St. DWR, Rev.,
3.50%-3.65%, 12/5/95-12/21/95.................. 4,507,000
5,700 California St. RAW's,
Ser. C, dtd. 7/26/94,
5.75%, 4/25/96................................. 5,749,840
California SCD Corp. Rev., Ind'l. Dev.,
445 Florestone Prod. Proj.,
VRDN* (LC; Bank of Tokyo),
3.95%, 12/6/95................................. 445,000
1,800 South Bay Circuits Proj.,
VRDN* (CS; California St. Tchrs.
Ret. Fd.), 3.95%, 12/6/95...................... 1,800,000

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 200 California SCD Auth., SWFR,
Chevron USA Inc. Proj.,
VRDN*, 3.70%, 12/1/95.......................... $ 200,000
3,000 Contra Costa TA, STR,
Ser. A, VRDN* (Insd.; FGIC),
3.45%, 12/6/95................................. 3,000,000
1,000 East Bay MUD,
3.50%, 1/22/96................................. 1,000,000
2,000 Loma Linda HR,
Loma Linda Univ. Med. Ctr.
Proj., Ser. C, VRDN*
(LC; Ind'l. Bank of Japan),
4.35%, 12/7/95................................. 2,000,000
900 Long Beach HFR,
Mem. Hlth. Svcs. Proj.,
VRDN*, 3.45%, 12/6/95.......................... 900,000
2,300 Los Angeles Cnty. DWP,
3.55%, 1/31/96................................. 2,300,000
680 Los Angeles Cnty. IDA, IDR,
Hon Industries Inc. Proj.,
VRDN*, 3.40%, 12/6/95.......................... 680,000
3,000 Los Angeles Cnty. Met. TA, Ser. A,
(LC; ABN-Amro Bank, Banque
Nationale de Paribas and Nat'l.
Westminster Bank PLC),
3.55%-3.70%, 12/6/95-12/18/95.................. 3,000,000
1,000 Metropolitan WD of So. California,
3.70%, 12/7/95................................. 1,000,000
1,000 Monterey Cnty. FAR,
Reclamation & Dist. Proj., VRDN*
(LC; Dai-Ichi Kangyo Bank),
4.15%, 12/7/95................................. 1,000,000
890 Morgan Hill Redev. Agy., Tax Alloc.,
Ojo De Agua Cmnty. Dev. Proj.,
7.875%, 3/1/96................................. 931,556
1,100 Northern California Pwr. Agy.,
PPR, (Insd.; AMBAC),
7.50%, 7/1/96.................................. 1,160,997
2,000 Sacramento Cnty. TRAN's,
dtd. 7/5/95, 4.75%, 10/4/96.................... 2,013,901
2,000 Sacramento MUD, Ser. I
(LC; Bayerische Landesbank
Girozentrale), 3.60%, 12/13/95................. 2,000,000
2,300 San Joaquin Cnty. TA, STR,
VRDN* (LC; Sumitomo Bank),
3.95%, 12/6/95................................. 2,300,000
500 Santa Ana HFR,
Multi Modal-Town & Ctry. Proj.,
VRDN* (LC; Banque Nationale de
Paribas), 3.70%, 12/1/95....................... 500,000

B-7
<PAGE>

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 5,700 Santa Clara Cnty. Fing. Auth., Lease
Rev., VMC Fac. Replacement Proj.,
Ser. B, VRDN* (LC; Union Bank
of Switzerland), 3.45%, 12/6/95................ $ 5,700,000
500 Santa Clara Vy. WD,
5.75%, 6/1/96.................................. 506,374
2,000 Ukiah Elec. Rev.,
Ser. A, 8.00%, 6/1/96.......................... 2,121,806
2,000 West Basin WD,
3.50%-3.70%, 1/24/96-2/26/96................... 2,000,000
------------
Total Investments
(amortized cost-$75,038,587+)......................... 98.8% $ 75,038,587
Other Assets in Excess
of Other Liabilities.................................. 1.2 873,500
----- ------------
Total Net Assets
(applicable to 75,933,638 shares
outstanding at $1.00 per share)....................... 100.0% $ 75,912,087
===== ============
NEW YORK MUNICIPAL PORTFOLIO

New York--101.1%
$ 2,000 Albany GO,
(Insd.; AMBAC),
3.65%, 1/15/96................................. $ 2,000,000
1,000 Albany Cnty. GO,
South Mall Constr. Proj.,
Ser. A (Insd.; FGIC),
4.30%, 4/1/96.................................. 1,001,378
1,000 Monroe Cnty. BAN's,
Ser. A, dtd. 6/8/95,
4.50%, 6/7/96.................................. 1,002,977
Nassau Cnty. BAN's,
1,000 Ser. E, dtd. 6/30/95,
4.25%, 3/15/96................................. 1,001,671
1,000 Ser. F, dtd. 8/30/95,
4.50%, 3/15/96................................. 1,001,824
1,000 Nassau Cnty. GO,
Ser. H (Insd.; MBIA),
3.80%, 6/15/96................................. 1,001,564
New York City GO,
200 Ser. A-7, VRDN*
(LC; Morgan Guaranty Trust
Co., Inc.), 3.70%, 12/1/95..................... 200,000
500 Ser. B-4, VRDN*
(LC; Union Bank of Switzerland),
4.00%, 12/1/95................................. 500,000
100 Ser. E-2, VRDN*
(LC; Ind'l. Bank of Japan),
3.85%, 12/1/95................................. 100,000

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 500 New York City IDA, CFR,
Childrens Oncology Soc. Proj.,
VRDN* (LC; Barclays Bank PLC),
3.45%, 12/6/95................................. $ 500,000
New York City IDA, IDR,
1,000 JFK Field Hotel Assoc. Proj.,
VRDN* (LC; Banque Indosuez),
3.60%, 12/6/95................................. 1,000,000
1,000 La Guardia Arpt. Assoc. Proj.,
VRDN* (LC; Banque Indosuez),
3.60%, 12/6/95................................. 1,000,000
700 New York City IDA, SFR,
Compagnie Nationale Air Proj.,
VRDN* (LC; Societe Generale Bank),
3.50%, 12/6/95................................. 700,000
2,000 New York City MFA,
3.80%-3.90%, 12/4/95-12/8/95................... 2,000,000
New York City MWFASSR, Ser. A,
1,500 7.00%, 6/15/96................................. 1,555,290
200 VRDN*, 4.00%, 12/1/95.......................... 200,000
1,000 New York City TAN's,
Ser. A, dtd. 8/2/95,
4.50%, 2/15/96................................. 1,001,368
New York City Trust CRR,
2,000 Carnegie Hall Proj., VRDN*
(LC; Dai-Ichi Kangyo Bank),
4.05%, 12/6/95................................. 2,000,000
1,500 Museum of Broadcasting Proj.,
VRDN* (LC; Sumitomo Bank),
4.00%, 12/6/95................................. 1,500,000
New York St. DAR,
1,100 Cornell Univ. Proj., Ser. B, VRDN*,
3.70%, 12/1/95................................. 1,100,000
2,615 Metropolitan Museum of Art Proj.,
Ser. B, VRDN* (Insd.; MBIA),
3.25%, 12/6/95................................. 2,615,000
1,400 Miriam Osborn Mem. Home Proj.,
Ser. A, VRDN* (LC; Banque
Nationale de Paribas),
3.60%, 12/6/95................................. 1,400,000
1,980 New York Univ. Proj.,
(Insd.; MBIA),
6.625%, 7/1/96................................. 2,059,890
Sloan Kettering Mem. Hosp. Proj.,
VRDN* (LC; Chemical Bank),
1,000 Ser. C, 3.65%, 12/8/95......................... 1,000,000
800 Ser. D, 3.65%, 12/13/95........................ 800,000
750 Spl. Oblig. Bonds, St. Univ. Edl.
Fac. Proj., Ser. A, 6.40%, 5/1/96.............. 758,094

B-8
<PAGE>

November 30, 1995

SCHEDULES OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------

NEW YORK MUNICIPAL PORTFOLIO (cont'd)

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 500 New York St. EFC, PCR,
Revolving Fd. Pooled Ln. Prog.,
Ser. A, 3.70%, 9/15/96......................... $ 500,170
2,000 New York St. EFC, SWDR,
General Elec. Co. Proj., Ser. A,
3.65%, 12/13/95................................ 2,000,000
New York St. ERDA, PCR,
1,300 Cent. Hudson Gas & Elec. Co.
Proj., Ser. A, VRDN*
(LC; Union Bank of Switzerland),
3.80%, 12/7/95................................. 1,300,000
1,000 New York St. Elec. & Gas Co. Proj.,
Ser. B, 3.85%, 10/15/96***..................... 1,000,000
Rochester Gas & Elec. Co. Proj.,
VRDN*,
1,500 (LC; Bank of New York),
3.65%, 12/1/95................................. 1,500,000
1,000 (LC; Credit Suisse),
3.75%, 11/15/96***............................. 1,000,000
1,000 New York St. GO,
6.50%, 3/1/96.................................. 1,007,033
New York St. JDA, St. Gtd.,
VRDN*,
785 Ser. B, 4.05%, 12/1/95......................... 785,000
Spl. Purp.,
1,020 Ser. A, 4.05%, 12/1/95......................... 1,020,000
810 Ser. B, 4.05%, 12/1/95......................... 810,000
3,000 New York St. LGAC,
Ser. E, VRDN* (LC; Canadian
Imperial Bank), 3.55%, 12/6/95................. 3,000,000
New York St. MCF, FAGR,
1,200 Mt. Sinai Hosp. Proj., Ser. C,
VRDN*, 8.875%, 1/15/96......................... 1,258,976
1,000 Insd. Mtg. Hosp. Prog., Ser. A.,
8.50%, 1/15/96................................. 1,025,916

<CAPTION>
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
<C> <S> <C>
$ 1,000 New York St. PAR,
3.85%, 3/1/96***............................... $ 1,000,000
635 Niagra Cnty. IDA, IDR,
Pyron Corp. Proj., VRDN*
(LC; Chemical Bank),
3.65%, 12/6/95................................. 635,000
1,000 Port Auth. of New York & New Jersey,
Spl. Oblig. Bonds, Ser. 1, VRDN*,
3.65%, 12/1/95................................. 1,000,000
851 Rensselaer Cnty. GO,
Ser. A (Insd.; FGIC), 5.50%, 5/1/96............ 856,133
1,000 St. Lawrence Cnty. IDA, EIR,
Reynolds Metals Co. Proj., VRDN*
(LC; Royal Bank of Canada),
3.60%, 12/6/95................................. 1,000,000
1,000 Suffolk Cnty. IDA, IDR,
Nissequogue Cogen Ptnrs. Proj.,
VRDN* (LC; Toronto Dominion
Bank), 3.75%, 12/6/95.......................... 1,000,000
1,000 Suffolk Cnty. Wtr. Auth., BAN's,
VRDN*, dtd. 12/21/94,
3.65%, 12/6/95................................. 1,000,000
450 Walkill IDA, PCR,
Reynolds Metals Co. Proj., VRDN*
(LC; Nat'l. Westminster Bank PLC),
3.80%, 12/6/95................................. 450,000
750 Westchester Cnty. GO,
5.50%, 12/15/95................................ 750,466
------------
Total Investments
(amortized cost-$52,897,750+)........................... 101.1% $ 52,897,750
Other Liabilities in Excess
of Other Assets......................................... (1.1) (554,625)
----- ------------
Total Net Assets
(applicable to 52,366,926 shares
outstanding at $1.00 per share)......................... 100.0% $ 52,343,125
===== ============
</TABLE>

- --------------------------------------------------------------------------------
+ Federal income tax basis of portfolio securities is the same as for
financial reporting purposes.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date)
and/or whose interest rates vary with changes in a designated base rate
(such as the prime interest rate). Maturity shown is date of next rate
change.
** These issues carry a mandatory put feature. Date shown is the exercise date
of the put.
*** These issues carry an optional put feature. Date shown is the exercise date
of the put.

See accompanying notes to financial statements.

B-9
<PAGE>

General Abbreviations:

AIR Airport Improvement Revenue
AMBAC American Mortgage Bond Assurance Corporation
BAN Bond Anticipation Note
BFA Business Finance Authority
CFR Civic Facility Revenue
CRR Cultural Resources Revenue
CS Credit Support
DAR Dormitory Authority Revenue
DWP Department of Water & Power
DWR Department of Water Resources
EDR Economic Development Revenue
EEIR Educational Equipment & Improvement Revenue
EFAR Educational Facilities Authority Revenue
EFC Environmental Facilities Corporation
EIERA Environmental Improvement & Energy
Resource Authority
EIR Environment Improvement Revenue
ELR Educational Loan Revenue
ERDA Energy Research & Development Authority
FAR Finance Authority Revenue
FAGR Finance Agency Revenue
FGIC Financial Guaranty Insurance Corporation
GAR General Authority Revenue
GFR General Fund Revenue
GO General Obligation
HEA Higher Education Authority
HEL Higher Education Loan
HF Housing Finance
HFA Housing Finance Authority
HFF Health Facilities Financing
HFFAR Health Facilities Financing Authority Revenue
HFR Health Facilities Revenue
HMFC Housing & Mortgage Finance Corporation
HR Hospital Revenue
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
JDA Job Development Authority
JSA Joint Sanitation Authority
LC Letter of Credit
LGAC Local Government Assistance Corporation
MBIA Municipal Bond Investors Assurance Corporation
MCF Medical Care Facilities
MFA Municipal Finance Authority
MUD Municipal Utility District
MWFASSR Municipal Water Finance Authority Sewer System
Revenue
PAR Power Authority Revenue
PCFA Pollution Control Financing Authority
PCC Pollution Control Corporation
PCR Pollution Control Revenue
PPR Public Power Revenue
PSR Power Supply Revenue
RAW Revenue Anticipation Warrant
RRR Resource Recovery Revenue
SCD Statewide Communities Development
SFR Special Facilities Revenue
SLMA Student Loan Marketing Association
SLR Student Loan Revenue
SWDR Solid Waste Disposal Revenue
SWFR Solid Waste Facilities Revenue
STR Sales Tax Revenue
TA Transportation Authority
TAN Tax Anticipation Note
TRAN Tax Revenue Anticipation Note
WD Water District

B-10
<PAGE>

November 30, 1995

STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
General California New York
Primary Government Municipal Municipal Municipal
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Assets
Investments, at value
(amortized cost-$1,678,187,666,
$114,911,861, $114,491,607,
$75,038,587 and $52,897,750,
respectively)........................ $1,678,187,666 $114,911,861 $114,491,607 $ 75,038,587 $52,897,750
Cash................................. 505,758 123,350 173,667 237,882 97,605
Receivable for investments sold...... -- -- 1,100,090 100,292 --
Receivable for capital stock sold.... 31,031,767 396,891 2,448,150 523,397 376,568
Interest receivable.................. 1,045,635 95,405 1,004,640 541,166 484,815
Deferred organization and
prepaid expenses..................... 62,165 5,564 2,988 2,274 2,577
-------------- ------------ ------------ ------------ -----------
Total Assets......................... 1,710,832,991 115,533,071 119,221,142 76,443,598 53,859,315
-------------- ------------ ------------ ------------ -----------

Liabilities
Payable for investments purchased.... -- -- 250,739 -- 504,230
Payable for capital stock redeemed... 35,848,885 6,700,816 2,812,594 401,356 913,553
Investment advisory fee payable...... 37,708 5,185 3,203 2,347 1,772
Distribution assistance fee payable.. 22,882 1,564 1,605 1,040 726
Shareholder services fee payable..... 75,554 4,468 5,645 3,771 2,316
Administrative services fee payable.. 4,576 313 321 208 145
Dividends payable.................... 3,131,422 206,292 140,284 92,337 65,064
Other payables and accrued
expenses............................. 582,603 39,403 42,178 30,452 28,384
-------------- ------------ ------------ ------------ -----------
Total Liabilities.................... 39,703,630 6,958,041 3,256,569 531,511 1,516,190
-------------- ------------ ------------ ------------ -----------

Net Assets
Par value ($.0001 per share,
10 billion shares authorized
for each portfolio).................. 167,117 10,860 11,606 7,593 5,237
Paid-in-surplus...................... 1,670,962,176 108,563,470 116,045,062 75,926,044 52,361,689
Accumulated undistributed net
realized gain (loss)
on investments....................... 68 700 (92,095) (21,550) (23,801)
-------------- ------------ ------------ ------------ -----------
Total Net Assets..................... $1,671,129,361 $108,575,030 $115,964,573 $75,912,087 $52,343,125
============== ============ ============ ============ ============

Fund shares outstanding.............. 1,671,168,463 108,596,523 116,057,333 75,933,638 52,366,926
-------------- ------------ ------------- ------------ ------------
Net asset value, offering and
redemption price per share $1.00..... $1.00 $1.00 $1.00 $1.00 $1.00
============== ============ ============ ============ ============
</TABLE>

See accompanying notes to financial statements.

B-11
<PAGE>

Year ended November 30, 1995

STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
General California New York
Primary Government Municipal Municipal Municipal
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Investment Income
Interest................................... $95,791,581 $6,569,203 $5,063,373 $2,471,976 $1,997,808
----------- ---------- ---------- ---------- ----------

Operating Expenses
Investment advisory fee (note 2a).......... 6,577,551 549,734 619,378 319,052 261,993
Distribution assistance fee (note 2b)...... 4,231,722 296,807 336,589 169,188 139,776
Transfer agent and dividend
disbursement agent fees................... 2,405,213 100,539 97,057 24,360 30,189
Administrative services fee................ 551,441 36,391 42,996 22,243 17,419
Registration fees.......................... 464,679 33,314 78,474 5,192 1,675
Shareholder services fee................... 295,993 21,429 24,182 12,678 12,895
Reports and notices to shareholders........ 145,964 5,998 7,762 4,609 4,084
Custodian fees............................. 109,932 40,946 39,797 3,657 8,310
Auditing, consulting and tax return
preparation fees.......................... 40,884 17,533 17,233 17,555 17,534
Legal fees................................. 21,563 5,661 3,255 2,547 2,403
Directors' fees and expenses............... 18,090 18,090 18,090 17,277 17,277
Miscellaneous.............................. 133,160 9,898 10,339 11,003 12,422
----------- ---------- ---------- ---------- ----------
Total operating expenses................. 14,996,192 1,136,340 1,295,152 609,361 525,977
Less: Investment advisory fee
waived (note 2a)........................ --- (20,074) (112,617) (83,794) (110,219)
----------- ---------- ---------- ---------- ----------
Net operating expenses................... 14,996,192 1,116,266 1,182,535 525,567 415,758
----------- ---------- ---------- ---------- ----------
Net investment income.................... 80,795,389 5,452,937 3,880,838 1,946,409 1,582,050
----------- ---------- ---------- ---------- ----------
Net realized gain (loss)
on security transactions
(note 2e)............................... 68 700 (33,497) (618,234) (19,669)
----------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations................. $80,795,457 $5,453,637 $3,847,341 $1,328,175 $1,562,381
=========== ========== ========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

B-12
<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Primary Portfolio Government Portfolio

Year ended November 30, Year ended November 30,
------------------------------------ -------------------------------
1995 1994 1995 1994
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations
Net investment income.................... $ 80,795,389 $ 47,757,069 $ 5,452,937 $ 3,944,731
Net realized gain (loss)
on security transactions................ 68 482 700 494
--------------- --------------- ------------- -------------
Net increase in net assets
resulting from operations............... 80,795,457 47,757,551 5,453,637 3,945,225
--------------- --------------- ------------- -------------
Dividends and Distributions
to Shareholders
Net investment income.................... (80,795,389) (47,757,069) (5,452,937) (3,944,731)
From other sources....................... -- (22,925) -- (19,562)
Net realized gains....................... (482) (519) (494) --
--------------- --------------- ------------- -------------
Total dividends and
distributions to
shareholders.......................... (80,795,871) (47,780,513) (5,453,431) (3,964,293)
--------------- --------------- ------------- -------------

Fund Share Transactions
Net increase (decrease) in
net assets derived from
fund share transactions................. 217,361,004 39,885,122 (4,642,930) (14,644,277)
--------------- --------------- ------------- -------------
Increase due to voluntary capital
contribution by adviser (note 2e)..... -- -- -- --
--------------- --------------- ------------- -------------

Total increase (decrease) in
net assets............................ 217,360,590 39,862,160 (4,642,724) (14,663,345)

Net Assets
Beginning of year........................ 1,453,768,771 1,413,906,611 113,217,754 127,881,099
--------------- --------------- ------------- -------------

End of year.............................. $ 1,671,129,361 $ 1,453,768,771 $ 108,575,030 $ 113,217,754
=============== =============== ============= =============

Shares Issued and Redeemed
(all at $1.00 per share)
Issued.................................. 8,545,299,477 7,161,861,617 561,063,508 532,176,675
Issued in reinvestment of
dividends and distributions............ 77,748,816 44,984,290 5,335,254 3,749,627
Redeemed................................ (8,405,687,289) (7,166,960,785) (571,041,692) (550,570,579)
--------------- --------------- ------------- -------------

Net increase (decrease)............... 217,361,004 39,885,122 (4,642,930) (14,644,277)
=============== =============== ============= =============
</TABLE>

See accompanying notes to financial statements.

B-13
<PAGE>

<TABLE>
<CAPTION>
General Municipal Portfolio California Municipal Portfolio New York Municipal Portfolio

Year ended November 30, Year ended November 30, Year Ended November 30,
--------------------------- --------------------------- ----------------------------
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income................ $ 3,880,838 $ 2,339,750 $ 1,946,409 $ 1,213,588 $ 1,582,050 $ 950,379
Net realized gain (loss)
on security transactions............ (33,497) 541 (618,234) 1,178 (19,669) 1,510
------------ ------------ ------------ ------------ ------------- -----------
Net increase in net assets
resulting from operations........... 3,847,341 2,340,291 1,328,175 1,214,766 1,562,381 951,889
------------ ------------ ------------ ------------ ------------- -----------
Dividends and Distributions
to Shareholders
Net investment income................ (3,880,838) (2,339,750) (1,946,409) (1,213,588) (1,582,050) (950,379)
From other sources................... -- -- -- -- -- --
Net realized gains................... -- -- -- -- -- --
------------ ------------ ------------ ------------- ------------- ------------
Total dividends and
distributions to
shareholders...................... (3,880,838) (2,339,750) (1,946,409) (1,213,588) (1,582,050) 950,379
------------ ------------ ------------ ------------- ------------- ------------
Fund Share Transactions
Net increase (decrease) in
net assets derived from
fund share transactions............. 7,256,685 (931,784) 14,607,520 (1,019,116) 4,385,876 5,739,456
----------- ------------ ------------ ------------- ------------- ------------
Increase due to voluntary capital
contribution by adviser (note 2e). -- -- 604,407 -- -- --
------------ ------------ ------------ ------------- ------------- ------------

Total increase (decrease) in
net assets....................... 7,223,188 (931,243) 14,593,693 (1,017,938) 4,366,207 5,740,966

Net Assets
Beginning of year................... 108,741,385 109,672,628 61,318,394 62,336,332 47,976,918 42,235,952
------------ ------------ ------------ ------------ ------------- ------------

End of year......................... $115,964,573 $108,741,385 $ 75,912,087 $ 61,318,394 $ 52,343,125 $ 47,976,918
============ ============ ============ ============ ============= ============

Shares Issued and Redeemed
(all at $1.00 per share)
Issued............................. 667,188,766 492,775,657 296,613,031 248,723,997 303,848,325 258,534,314
Issued in reinvestment of
dividends and distributions....... 3,738,051 2,232,370 1,848,545 1,143,418 1,487,169 888,182
Redeemed........................... (663,670,132) (495,939,811) (283,854,056) (250,886,531) (300,949,618) (253,683,040)
------------ ------------ ------------ ------------ ------------- ------------

Net increase (decrease).......... 7,256,685 (931,784) 14,607,520 (1,019,116) 4,385,876 5,739,456
============ ============ ============ ============ ============= ============
</TABLE>

B-14
<PAGE>

November 30, 1995

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

1. Organization and Significant Accounting Policies

Quest Cash Reserves, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as an open-end management investment company. The Fund has
five portfolios (the "Portfolio"): the Primary Portfolio ("Primary"), the
Government Portfolio ("Government"), the General Municipal Portfolio
("General"), the California Municipal Portfolio ("California") and the New York
Municipal Portfolio ("New York"). Each Portfolio is considered to be a
separate entity for financial reporting and tax purposes. OpCap Advisors (the
"Adviser") and OCC Distributors (the "Distributor"), both majority-owned (99%)
subsidiaries of Oppenheimer Capital, serve as each Portfolio's adviser and
distributor, respectively. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements:

(a) Valuation of Investments

Each Portfolio values its investments on the basis of amortized cost which
approximates market value.

(b) Federal Income Taxes

Each Portfolio intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distributes all
of its taxable income to its shareholders; accordingly, no Federal income tax
provision is required.

The following costs were incurred by each Portfolio, respectively, in
connection with its organization: Primary--$124,000, Government--$800,
General--$9,000, California--$19,000 and New York--$21,000. These costs have
been deferred and are being amortized to expense on a straight line basis over
sixty months from commencement of each Portfolio's operations.

(d) Security Transactions and Other Income

Security transactions are accounted for on the trade date. Cost of
securities sold is determined on the basis of identified cost. Interest income
is accrued as earned. Premiums are amortized by each Portfolio and discounts
are accreted by Primary and Government to interest income over the lives of the
respective securities.

(e) Dividends and Distributions

Dividends from net investment income are declared daily and paid monthly by
each Portfolio. Distributions of net realized short-term capital gains are
declared and paid annually by each Portfolio.

(f) Repurchase Agreements

Each Portfolio may enter into repurchase agreements as part of its
investment program. The Portfolio's custodian takes possession of the
collateral pledged by the counterparty. The collateral is marked-to-market
daily to ensure that the value, plus accrued interest, is at least equal to the
repurchase price. In the event of default of the obligor to repurchase, the
Portfolio has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal proceedings.

B-15
<PAGE>

(g) Allocation of Expenses

Expenses specifically identifiable to a particular Portfolio are borne by
that Portfolio. Other expenses are allocated to each Portfolio based on its
net assets in relation to the total net assets of all the applicable Portfolios
or another reasonable basis.

2. Investment Advisory Fee, Distribution Plan and Other Transactions with
Affiliates

(a) Under the Investment Advisory Agreement, each Portfolio pays the Adviser
an investment advisory fee monthly at the annual rate of .50% of the first $100
million of average daily net assets, .45% on the next $200 million of average
daily net assets, and .40% on average daily net assets in excess of $300
million. The Adviser has agreed to reimburse each Portfolio to the extent that
the combined operating expenses of the Portfolio exceed 1.00% of its average
daily net assets for any fiscal year. For the year ended November 30, 1995,
the Adviser waived $20,074, $112,617, $83,794 and $110,219 in investment
advisory fees for Government, General, California and New York, respectively.

(b) The Fund has adopted a Distribution Assistance Plan (the "Plan")
pursuant to which each Portfolio pays the Adviser a fee monthly at an annual
rate of .25% of each Portfolio's average daily net assets and the Adviser uses
such amounts in their entirety for (i) payments to broker-dealers, banks and
other financial intermediaries for their distribution assistance provided to
the Portfolio and (ii) otherwise promoting the sale of shares of the Fund. For
the year ended November 30,1995, the vast majority of all fees under the Plan
were paid by the Adviser to Oppenheimer & Co., Inc., an affiliated
broker-dealer of the Adviser.

(c) A portion of the shareholder services fee for each Portfolio is payable
to Oppenheimer & Co., Inc. Each Portfolio reimburses Oppenheimer & Co., Inc.
for a portion of its costs in providing it with shareholder services; for the
year ended November 30, 1995, such reimbursements were: Primary $281,524;
Government $18,693; General $22,314; California $12,642; and New York $9,181.

(d) Each Portfolio pays Oppenheimer & Co., Inc. and certain other
broker-dealers for administrative services performed for shareholder accounts;
for the year ended November 30, 1995, payments to Oppenheimer & Co., Inc. were:
Primary $486,997; Government $30,484; General $37,882; California $22,006; and
New York $15,049.

(e) On December 7, 1994 the Adviser voluntarily purchased from the
California Municipal Portfolio $1,000,000 par, Orange County Tax and Revenue
Anticipation Fixed Rate Notes, 4.50% coupon maturing July 19, 1995 and
$1,000,000 par, Orange County Tax and Revenue Anticipation Floating Rate Notes
at an amount $604,407 in excess of the securities' fair market value. The
Portfolio recognized a realized loss on the sale and received a capital
contribution of an equal amount from the Adviser. For tax purposes, the capital
contribution was applied against the realized losses for the year ended
November 30, 1995. Accordingly, such amount has been reclassified from
paid-in-surplus to accumulated undistributed net realized loss on investments
in the Statement of Assets and Liabilities.

3. Purchases and Sales of Securities

For the year ended November 30, 1995, purchases and sales/maturities of
investment securities were: Primary $9,736,213,188 and $9,600,638,852,
respectively; Government $4,638,483,933 and $4,640,660,354, respectively;
General $559,109,333 and $554,830,890, respectively; California $302,827,251
and $286,833,293, respectively; and New York $253,352,155 and $246,642,194,
respectively.

4. Financial Instruments and Associated Risks

Each Portfolio invests in issues which mature in thirteen months or less and
are rated high quality by a nationally-recognized rating organization or, if
not rated, are judged by the Adviser to be of comparable quality. Primary, in
pursuing its policy of portfolio diversification, may have industry
concentrations in excess of 5%; at November 30, 1995, such concentrations were
Banking--34.4%, Finance--14.9%, Sovereign--11.5%, Brokerage--10.2%,
Automotive--7.6% and

B-16
<PAGE>

November 30, 1995

NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------

Health/Hospital--6.6%. Government's portfolio is concentrated in issues of, or
guaranteed by, the U.S. Government and/or its agencies and is diversified with
respect to its investments in repurchase agreements. General maintains a
diversified portfolio of short-term obligations issued by states, territories
and possessions of the United States and by the District of Columbia and by
their political subdivisions and duly constituted authorities. California and
New York maintain non-diversified portfolios of short-term obligations issued by
the States of California and New York, respectively, and their political
subdivisions. Issuers' abilities to meet their obligations may be affected by
economic and political developments in a specific state, region or industry.
Certain short-term debt obligations held by the Portfolios may be entitled to
the benefit of standby letters of credit or other guarantees of banks or other
financial institutions.

5. Capital Loss Carryforward

At November 30, 1995, accumulated net realized capital loss carryforwards
available as a reduction against future net realized capital gains for Federal
income tax puposes were: General--$92,095 of which $13,684 will expire in 1997,
$29,512 will expire in 1998, $1,302 will expire in 1999, $13,801 will expire in
2000, $299 will expire in 2001 and $33,497 will expire in 2003; California--
$21,550 of which $730 will expire in 1999, $5,856 will expire in 2000, $1,137
will expire in 2001 and $13,827 will expire in 2003; and New York--$23,801 of
which $3,198 will expire in 2000, $934 will expire in 2001 and $19,669 will
expire in 2003.

B-17
<PAGE>

Financial Highlights (For a share outstanding throughout each year)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO
INCOME FROM DIVIDENDS AVERAGE
INVESTMENT OPERATIONS AND DISTRIBUTIONS NET ASSETS
---------------------------------- -------------------------------- --------------------
Divi- Distri-
dends to butions to
to Share- Distri- Share- Net
Net Asset Net Realized holders butions to holders Asset Net Assets,
Value, Net Gain/(Loss) Total from from Net holders from Net Value, End of Net Net
Beginning Investment on Security Investment Investment from Other Realized End of Total Year Operating Investment
of Year Income Transactions Operations Income Sources Gains Year Return* (millions) Expenses Income
--------- ---------- ------------ ---------- ---------- ---------- ---------- -------- ------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Primary Portfolio
Year
ended
November
30,
1995 $1.00 $0.051 $0.000 (1) $0.051 ($0.051) -- ($0.000)(1) $1.00 5.19% $1,671.1 0.94%(2) 5.07%(2)
1994 1.00 0.032 0.000 (1) 0.032 (0.032) ($0.000)(1) (0.000)(1) 1.00 3.26% 1,453.8 0.91% 3.21%
1993 1.00 0.024 0.000 (1) 0.024 (0.024) (0.000)(1) (0.000)(1) 1.00 2.44% 1,413.9 0.90% 2.41%
1992 1.00 0.033 0.000 (1) 0.033 (0.033) -- (0.000)(1) 1.00 3.38% 1,168.3 0.88% 3.34%
1991 1.00 0.057 (0.000)(1) 0.057 (0.057) -- -- 1.00 5.89% 1,249.0 0.86% 5.74%
</TABLE>
(1) Less than $.0005 per share.
(2) Average net assets for the year ended November 30, 1995 were
$1,594,387,722.

<TABLE>
<CAPTION>
Government Portfolio
Year
ended
November
30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $1.00 $0.049(2) $0.000(1) $0.049 ($0.049) -- ($0.000)(1) $1.00 5.02% $108.6 1.00%(2,3)4.91%(2,3)
1994 1.00 0.031(2) 0.000(1) 0.031 (0.031) ($0.000)(1) -- 1.00 3.12% 113.2 0.95%(2) 3.08%(2
1993 1.00 0.022 -- 0.022 (0.022) (0.000)(1) -- 1.00 2.26% 127.9 1.00% 2.24%
1992 1.00 0.032(2) 0.000(1) 0.032 (0.032) -- (0.000)(1) 1.00 3.24% 131.7 0.93%(2) 3.23%(2)
1991 1.00 0.055(2) -- 0.055 (0.055) -- -- 1.00 5.69% 142.2 0.84%(2) 5.62%(2)
</TABLE>

(1) Less than $.0005 per share.
(2) Reflects a waiver of $.0002, $.0002, $.0002 and $.001 per share,
respectively, in advisory fees in effect during each year. Had such waivers
not occurred, the ratio of net operating expenses would have been 1.02%,
0.97%, 0.94% and 0.92%, respectively, and the ratio of net investment income
would have been 4.89%, 3.06%, 3.22% and 5.54%, respectively.
(3) Average net assets for the year ended November 30, 1995 were $111,066,046.

- ---------------
* Assumes reinvestment of all dividends and distributions.

B-18
<PAGE>

Financial Highlights (For a share outstanding throughout each period (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO
General Municipal Portfolio

Year ended November 30,
INCOME FROM AVERAGE
INVESTMENT OPERATIONS NET ASSETS
------------------------------------ --------------------
Dividends to
Net Asset Net Realized Shareholders Net Asset Net Assets,
Value, Net Gain/(Loss) Total from from Net Capital Value, End of Net Net
Beginning Investment on Security Investment Investment Contribution End of Total Year Operating Investment
of Year Income Transactions Operations Income by Advisor Period Return* (millions) Expenses Income
--------- ---------- ------------- ---------- ------------ ------------ --------- ------- ----------- --------- ----------

(1) Reflects a waiver of $.001, $.001, $.0003, $.001 and $.001 per share,
respectively, in advisory fees in effect during each year. Had such waivers not
occurred, the ratio of net operating expenses would have been 1.02%, 1.01%,
1.01%, 1.00% and 0.98%, respectively and the ratio of net investment income
would have been 2.98%, 1.90%, 1.70%, 2.52% and 4.10%, respectively.
(2) Less than $.0005 per share.
(3) Average net assets for the year ended November 30, 1995 were
$126,528,413.

<TABLE>
<CAPTION>
California Municipal Portfolio

Year ended November 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $1.00 $0.031(1) ($0.008) $0.023 ($0.031) $0.008 $1.00 3.10% $75.9 0.82%(1,2) 3.05%(1,2)
1994 1.00 0.020(1) 0.000(3) 0.020 (0.020) -- 1.00 1.99% 61.3 0.85%(1) 1.99%(1)
1993 1.00 0.017(1) (0.000)(3) 0.017 (0.017) -- 1.00 1.76% 62.3 0.85%(1) 1.75%(1)
1992 1.00 0.025(1) (0.000)(3) 0.025 (0.025) -- 1.00 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991 (4)
to November
30, 1991 1.00 0.026(1) (0.000)(3) 0.026 (0.026) -- 1.00 4.24%(5) 45.4 0.54%(1,5) 3.75%(1,5)
</TABLE>

(1) Reflects a waiver of $.001, $.001, $.001 and $.004 per share in advisory
fees and $.004 per share in advisory fees and reimbursement of other operating
expenses, respectively, in effect during each period. Had such waivers and
reimbursements not occurred, the ratio of net operating expenses would have
been 0.95%, 0.97%, 0.98%, 1.02% and 1.08%, respectively and the ratio of net
investment income would have been 2.92%, 1.87%, 1.62%, 2.09% and 3.21%,
respectively.
(2) Average net assets for the year ended November 30, 1995 were $63,810,311.
(3) Less than $.0005 per share.
(4) Commencement of operations.
(5) Annualized.

New York Municipal Portfolio
Year ended November 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $1.00 $0.030(1) ($0.000)(2) $0.030 ($0.030) -- $1.00 3.07% $52.3 0.79%(1,3) 3.02%(1,3)
1994 1.00 0.019(1) 0.000 (2) 0.019 (0.019) -- 1.00 1.92% 48.0 0.82%(1) 1.90%(1)
1993 1.00 0.016(1) (0.000)(2) 0.016 (0.016) -- 1.00 1.66% 42.2 0.79%(1) 1.64%(1)
1992 1.00 0.025(1) (0.000)(2) 0.025 (0.025) -- 1.00 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991 (4) to
November 30, 1991 1.00 0.024(1) (0.000)(2) 0.024 (0.024) -- 1.00 4.29%(5) 18.4 0.56%(1,5) 3.80%(1,5)
</TABLE>

(1) Reflects a waiver of $.002, $.002, $.002 and $.005 per share in advisory
fees and $.006 per share in advisory fees and reimbursement of other operating
expenses, respectively, in effect during each period. Had such waivers and
reimbursements not occurred, the ratio of net operating expenses would have
been 1.00%, 1.01%, 1.03%, 1.19% and 1.43%, respectively and the ratio of net
investment income would have been 2.81%, 1.71%, 1.40%, 1.98% and 2.93%,
respectively.
(2) Less than $.0005 per share.
(3) Average net assets for the year ended November 30, 1995 were $52,398,588.
(4) Commencement of operations.
(5) Annualized.
* Assumes reinvestment of all dividends and distributions.

B-19
<PAGE>

Report of Independent Accountants

To the Shareholders and Board of Directors
of Quest Cash Reserves, Inc.

In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Primary
Portfolio, the Government Portfolio, the General Municipal Portfolio, the
California Municipal Portfolio and the New York Municipal Portfolio
(constituting Quest Cash Reserves, Inc., hereafter referred to as the
"Portfolio") at November 30, 1995, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 19, 1996

B-20
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Quest Cash Reserves, Inc.

In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Primary
Portfolio, the Government Portfolio, the General Municipal Portfolio, the
California Municipal Portfolio and the New York Municipal Portfolio
(constituting Quest Cash Reserves, Inc., hereafter referred to as the
"Portfolio") at November 30, 1995, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at November 30, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 19, 1996