<PAGE>
As filed with the Securities and Exchange Commission on March 26, 1997
Registration No. 33-29070
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. [ ]
----
POST-EFFECTIVE AMENDMENT NO. 14 [X]
----
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17
----
OCC CASH RESERVES, INC.
(Previously called Quest Cash Reserves, Inc.)
(Exact Name of Registrant as Specified in Charter)
ONE WORLD FINANCIAL CENTER, NEW YORK, NY 10281
(Address of Principal Executive Offices)
(212) 374-1600
(Registrant's Telephone Number)
Thomas E. Duggan, Esq.
One World Financial Center
New York, NY 10281
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] On March 31, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] pursuant to paragraph (a) of Rule 485 or 486
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940. A Rule 24f-2 Notice for the fiscal year ended November 30,
1996 was filed on January 17, 1997.
<PAGE>
CROSS REFERENCE SHEET
Form N-1A
Item
Part A Caption Prospectus
------ ------- ----------
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights
Information
4. General Description of Cover Page; Additional Information; Fund
Registrant Organization; OCC Cash Reserves-Primary
Portfolio; OCC Cash Reserves-Government
Portfolio; OCC Cash Reserves-General
Municipal Portfolio; OCC Cash Reserves-
California Municipal Portfolio; OCC Cash
Reserves-New York Municipal Portfolio
5. Management of the Fund The Advisor; Distribution Plan;
Additional Information
6. Capital Stock and Other Additional Information; Share Price;
Securities Daily Dividends, Other Distributions,
Taxes;
7. Purchase of Securities Purchase and Redemption of Shares;
Obtaining an Application Form;
Additional Information
8. Redemption or Repurchase Purchase and Redemption of Shares;
Additional Information
9. Legal Proceedings N/A
Part B Caption Statement of Additional Information
- ------ ------- -----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and N/A
History
13. Investment Objectives and Investment of the Fund's Assets;
Policies Investment Restrictions
<PAGE>
14. Management of the Fund Investment Management and Other
Services - the Advisory Agreement
15. Control Persons and Directors and Officers
Principal Holders of
Securities
16. Investment Advisory and Investment Management and Other
Other Services Services - Distribution Assistance Plan
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Other Determination of Net Asset Value;
Securities Additional Information; Possible
Additional Series
19. Purchase, Redemption and Determination of Net Asset Value
Pricing of Securities
20. Tax Status Taxes
21. Underwriters Investment Management and Other
Services - Distribution Assistance Plan
22. Calculations of Performance Portfolio Yield
Data
23. Financial Statements Financial Statements
<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").
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. THE CALIFORNIA MUNICIPAL PORTFOLIO
AND THE NEW YORK MUNICIPAL PORTFOLIO EACH MAY INVEST A SIGNIFICANT PERCENTAGE OF
ITS ASSETS IN A SINGLE ISSUER AND THEREFORE INVESTMENT IN THOSE PORTFOLIOS MAY
BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
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 Portfolio -- high money market income; very conservative investments
General Municipal -- highest money market tax-exempt income; conservative investments
Portfolio
California Municipal -- highest money market income exempt from Federal and California
Portfolio personal income taxes; conservative investments
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>
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% .50% .49% .50% .50%
12b-1(Distribution Plan)
expenses................... .25% .25% .25% .25% .25%
Other Expenses.............. .25% .26% .25% .22% .24%
--
--- --- --- ---
Total Operating Expenses.... .91% 1.01% .99% .97% .99%
</TABLE>
During the fiscal year ended November 30, 1996, 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
.50%, .49%, .38% and .49%, respectively. Such advisory fee waivers are voluntary
and may be discontinued at any time, except that the Advisor has agreed to
assume expenses (net of any expense offsets) in excess of 1.00% in any fiscal
year. Other Expenses are shown gross of certain expense offsets afforded the
Portfolio which effectively lowered overall custody expenses. After giving
effect to such waivers and expense offsets, total operating expenses were 1.00%,
.99%, .85% and .97% respectively, for the Government Portfolio, the General
Municipal Portfolio, the California Municiapl Portfolio and the New York
Municipal Portfolio.
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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary Portfolio..................................... $ 9.29 $ 29.02 $ 50.39 $ 111.96
Government Portfolio.................................. 10.30 32.15 55.78 123.63
General Municipal Portfolio........................... 10.10 31.52 54.70 121.30
California Municipal Portfolio........................ 9.90 30.90 53.63 118.97
New York Municipal Portfolio.......................... 10.10 31.52 54.70 121.30
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
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 DISTRIBUTIONS
--------------------------------------------
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS DISTRIBUTIONS
--------------------------------------- TO TO
NET ASSET NET REALIZED SHAREHOLDERS SHAREHOLDERS TOTAL DIVIDENDS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET FROM NET AND
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED DISTRIBUTIONS
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME GAINS TO SHAREHOLDERS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.046 $(0.000) $0.046 $(0.046) $(0.000) $ (0.046)
1995.......................... 1.000 0.051 0.000 0.051 (0.051) (0.000) (0.051)
1994.......................... 1.000 0.032 0.000 0.032 (0.032) (0.000) (0.032)
1993.......................... 1.000 0.024 0.000 0.024 (0.024) (0.000) (0.024)
1992.......................... 1.000 0.033 0.000 0.033 (0.033) -- (0.033)
1991.......................... 1.000 0.057 (0.000) 0.057 (0.057) -- (0.057)
December 13, 1989 (4) to
November 30,
1990......................... 1.000 0.073 0.000 0.073 (0.073) -- (0.073)
<CAPTION>
RATIOS TO AVERAGE NET
NET ASSETS
ASSETS, -------------------------
NET ASSET END OF NET NET
VALUE, END TOTAL YEAR OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996.......................... $1.000 4.69% $1,712.6 0.91%(1,2) 4.60%(1,2)
1995.......................... 1.000 5.19% 1,671.1 0.94% 5.07%
1994.......................... 1.000 3.26% 1,453.8 0.91% 3.21%
1993.......................... 1.000 2.44% 1,413.9 0.90% 2.41%
1992.......................... 1.000 3.38% 1,168.3 0.88% 3.34%
1991.......................... 1.000 5.89% 1,249.0 0.86% 5.74%
December 13, 1989 (4) to
November 30,
1990......................... 1.000 7.80%(3) 1,244.2 0.87%(3,5) 7.47%(3,5)
</TABLE>
(1) Average net assets for the year ended November 30, 1996 were $1,695,272,657.
(2) Gross of expense offsets (see note 2a in Notes to Financial Statements).
(3) Annualized.
(4) Commencement of operations.
(5) During the period noted above, the Adviser waived a portion of its fees. Had
such waiver not occurred, the net operating expense and net investment
income ratios would have been 0.88% and 7.46%, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.044 $(0.000) $0.044 $(0.044) $(0.000) $ (0.044)
1995.......................... 1.000 0.049 0.000 0.049 (0.049) (0.000) (0.049)
1994.......................... 1.000 0.031 0.000 0.031 (0.031) -- (0.031)
1993.......................... 1.000 0.022 -- 0.022 (0.022) (0.000) (0.022)
1992.......................... 1.000 0.032 0.000 0.032 (0.032) -- (0.032)
1991.......................... 1.000 0.055 -- 0.055 (0.055) -- (0.055)
February 14, 1990 (4) to
November 30, 1990............ 1.000 0.059 0.000 0.059 (0.059) -- (0.059)
<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 4.51% $ 101.1 1.00%(1,2) 4.41%(1,2)
1995.......................... 1.000 5.02% 108.6 1.00%(1) 4.91%(1)
1994.......................... 1.000 3.12% 113.2 0.95%(1) 3.08%(1)
1993.......................... 1.000 2.26% 127.9 1.00% 2.24%
1992.......................... 1.000 3.24% 131.7 0.93%(1) 3.23%(1)
1991.......................... 1.000 5.69% 142.2 0.84%(1) 5.62%(1)
February 14, 1990 (4) to
November 30, 1990............ 1.000 7.67%(3) 150.1 0.67%(1,3) 7.34%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 1.00%, 1.02%, 0.97%, 0.94%, 0.92% and
1.19%, respectively, and the ratio of net investment income to average net
assets would have been 4.41%, 4.89%, 3.06%, 3.22%, 5.54% and 6.82%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $104,838,715.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends and distributions.
3
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS
--------------------------
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS
--------------------------------------- TO
NET ASSET NET REALIZED SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT CONTRIBUTION
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME BY ADVISER
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 $ 0.000 $0.025 $(0.025) --
1995.......................... 1.000 0.031 0.000 0.031 (0.031) --
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.026 0.000 0.026 (0.026) --
1991.......................... 1.000 0.042 0.000 0.042 (0.042) --
February 14, 1990 (4)
to November 30, 1990......... 1.000 0.042 (0.000) 0.042 (0.042) --
<CAPTION>
RATIOS TO AVERAGE NET
NET ASSETS
ASSETS, -------------------------
NET ASSET END OF NET NET
VALUE, END TOTAL YEAR OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 2.56% $ 122.3 0.99%(1,2) 2.53%(1,2)
1995.......................... 1.000 3.11% 116.0 0.93%(1) 3.07%(1)
1994.......................... 1.000 2.04% 108.7 0.90%(1) 2.01%(1)
1993.......................... 1.000 1.74% 109.7 0.98%(1) 1.73%(1)
1992.......................... 1.000 2.66% 112.9 0.90%(1) 2.62%(1)
1991.......................... 1.000 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990 (4)
to November 30, 1990......... 1.000 5.45%(3) 107.9 0.71%(1,3) 5.32%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion of its fees.
Additionally, for the year ended November 30, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. Had such waivers
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 0.99%, 1.02%, 1.01%, 1.01%, 1.00%,
0.98% and 1.00%, respectively and the ratio of net investment income to
average net assets would have been 2.53%, 2.98%, 1.90%, 1.70%, 2.52%, 4.10%
and 5.03%, respectively.
(2) Average net assets for the year ended November 30, 1996 were $130,667,601.
(3) Annualized.
(4) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.024 (0.000) $0.024 $(0.024) --
1995.......................... 1.000 0.031 $(0.008) 0.023 (0.031) 0.008
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
March 20, 1991 (5)
to November 30, 1991......... 1.000 0.026 (0.000) 0.026 (0.026) --
<CAPTION>
CALIFORNIA MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.42% $ 53.4 0.85%(1,2) 2.42%(1,2)
1995.......................... 1.000 3.10%(3) 75.9 0.82%(1) 3.05%(1)
1994.......................... 1.000 1.99% 61.3 0.85%(1) 1.99%(1)
1993.......................... 1.000 1.76% 62.3 0.85%(1) 1.75%(1)
1992.......................... 1.000 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991 (5)
to November 30, 1991......... 1.000 4.24%(4) 45.4 0.54%(1,4) 3.75%(1,4)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.97%, 0.95%, 0.97%, 0.98%, 1.02% and
1.08%, respectively, and the ratio of net investment income to average net
assets would have been 2.30%, 2.92%, 1.87%, 1.62%, 2.09% and 3.21%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $61,980,887.
(3) Had the Adviser not made the capital contribution in regard to Orange
County, (see note 2f in Notes to Financial Statements) the Portfolio's total
return would have been lower.
(4) Annualized.
(5) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW YORK MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 -- $0.025 $(0.025) --
1995.......................... 1.000 0.030 0.000 0.030 (0.030) --
1994.......................... 1.000 0.019 (0.000) 0.019 (0.019) --
1993.......................... 1.000 0.016 (0.000) 0.016 (0.016) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
April 10, 1991 (4)
to November 30, 1991......... 1.000 0.024 (0.000) 0.024 (0.024) --
<CAPTION>
NEW YORK MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.50% $ 60.0 0.97%(1,2) 2.45%(1,2)
1995.......................... 1.000 3.07% 52.3 0.79%(1) 3.02%(1)
1994.......................... 1.000 1.92% 48.0 0.82%(1) 1.90%(1)
1993.......................... 1.000 1.66% 42.2 0.79%(1) 1.64%(1)
1992.......................... 1.000 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991 (4)
to November 30, 1991......... 1.000 4.29%(4) 18.4 0.56%(1,3) 3.80%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.98%, 1.00%, 1.01%, 1.03%, 1.19% and
1.43%, respectively, and the ratio of net investment income to average net
assets would have been 2.44%, 2.81%, 1.71%, 1.40%, 1.98% and 2.93%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $62,612,204.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends.
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
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
<PAGE>
"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
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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.
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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 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
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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.
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
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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 ).
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 .
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 .
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 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.
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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 .
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 .
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 .
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.
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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.
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.
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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 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 and market
discount, if any, on securities purchased by the Portfolio), 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 at least 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 9, by checking the appropriate
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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, a registered
investment adviser with approximately $50.6 billion in assets under management
on January 31, 1997. Oppenheimer Financial Corp. ("Opfin"), a holding company,
is a 1.0% general partner of the Advisor and holds a one-third managing general
partner interest in Oppenheimer Capital, and Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on the New York Stock
Exchange and of which Opfin is the sole 1.0% general partner, owns the remaining
two-thirds interest. On February 13, 1997, PIMCO Advisors L.P., a registered
investment adviser, with $110 billion in assets under management through various
subsidiaries, signed an Agreement and Plan of Merger with Oppeneheimer Group,
Inc. ("OGI") and its subsidiary Opfin pursuant to which PIMCO Advisors L.P. and
its affiliate, Thomson Advisory Group, Inc. ("TAG") will acquire the one-third
managing general partner interest in Oppenheimer Capital, its 1.0% general
partner interest in OpCap Advisors and its 1.0% general partner interest in
Oppenheimer Capital L.P. (the "Transaction") and OGI will be merged with and
into TAG. The Transaction is subject to certain conditions being satisfied prior
to closing, including consents from certain lenders, approvals from regulatory
authorities including a favorable tax ruling from the Internal Revenue Service
and consents of certain clients, which are expected to take up to six months to
obtain. If the Transaction is consummated, it will involve a change of control
of Oppenheimer Capital and its subsidiary OpCap Advisors which will constitute
an assignment and termination of the Advisory Agreement between OpCap Advisors
and the Fund. On February 28, 1997, the Board of Directors of the Fund approved
a new Advisory Agreement (on the identical terms as the existing Advisory
Agreement) to take effect upon consummation of Trnasaction and recommended that
the new Advisory Agreement be submitted to the shareholders of the Fund for
their approval. A proxy statement will be sent to shareholders in the new few
months. The management fee rate for each Portfolio is at an annual 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, 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.
ADMINISTRATIVE SERVICES. The Fund also may pay certain broker-dealers
including Oppenheimer & Co., Inc. for performing certain administrative services
for accounts in the Fund including providing beneficial owners with statements
showing their positions in the Fund, posting dividend
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payments to beneficial owners' accounts, 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.
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% (net of any expense offsets) 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 1-800-401-6672. 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. Oppenheimer & Co., Inc. maintains an omnibus account for its customers
who are shareholders of the Fund and provides certain recordkeeping for those
shareholders. 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.
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 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 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,GENERAL MUNICIPAL, CALIFORNIA MUNICIPAL OR NEW
YORK 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. (For more information see page .)
2) BY TELEPHONE--Call Unified at 800-UMC-
FUND (800-862-3863).
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.
16
<PAGE>
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 .)
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 .)
<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>
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.
A Statement of Additional Information dated March 31, 1997 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
California Municipal Portfolio............................................... 9
New York Municipal Portfolio................................................. 11
Additional Information....................................................... 12
Purchase and Redemption of Shares............................................ 16
[LOGO]
<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").
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 a 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. THE CALIFORNIA MUNICIPAL PORTFOLIO
AND THE NEW YORK MUNICIPAL PORTFOLIO EACH MAY INVEST A SIGNIFICANT PERCENTAGE OF
ITS ASSETS IN A SINGLE ISSUER AND THEREFORE INVESTMENT IN THOSE PORTFOLIOS MAY
BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
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% .50% .49% .50% .50%
12b-1(Distribution Plan)
expenses.................... .25% .25% .25% .25% .25%
Other Expenses.............. .25% .26% .25% .22% .24%
-- --
--- --- ---
Total Operating Expenses.... .91% 1.01% .99% .97% .99%
</TABLE>
During the fiscal year ended November 30, 1996, 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
.50%, .49%, .38% and .49%, respectively. Such advisory fee waivers are voluntary
and may be discontinued at any time, except that the Advisor has agreed to
assume expenses (net of any expense offsets) in excess of 1.00% in any fiscal
year. Other Expenses are shown gross of certain expense offsets afforded the
Portfolio which effectively lowered overall custody expenses. After giving
effect to such waivers and expense offsets, total operating expenses were 1.00%,
.99%, .85% and .97%, respectively, for the Government Portfolio, the General
Municipal Portfolio, the California Municipal Portfolio and the New York
Municipal Portfolio.
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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary Portfolio..................................... $ 9.29 $ 29.02 $ 50.39 $ 111.96
Government Portfolio.................................. 10.30 32.15 55.78 123.63
General Municipal Portfolio........................... 10.10 31.52 54.70 121.30
California Municipal Portfolio........................ 9.90 30.90 53.63 118.97
New York Municipal Portfolio.......................... 10.10 31.52 54.70 121.30
</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
NET ASSET NET REALIZED SHAREHOLDERS DISTRIBUTIONS TO TOTAL DIVIDENDS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET SHAREHOLDERS AND
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT FROM NET DISTRIBUTIONS TO
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME REALIZED GAINS SHAREHOLDERS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996..................... $1.000 $0.046 $ (0.000) $0.046 $(0.046) $ (0.000) $ (0.046)
1995..................... 1.000 0.051 0.000 0.051 (0.051) (0.000) (0.051)
1994..................... 1.000 0.032 0.000 0.032 (0.032) (0.000) (0.032)
1993..................... 1.000 0.024 0.000 0.024 (0.024) (0.000) (0.024)
1992..................... 1.000 0.033 0.000 0.033 (0.033) (0.000) (0.033)
1991..................... 1.000 0.057 (0.000) 0.057 (0.057) -- (0.057)
December 13, 1989(4)
to November 30, 1990.... 1.000 0.073 0.000 0.073 (0.073) -- (0.073)
<CAPTION>
RATIOS TO AVERAGE
NET NET ASSETS
ASSETS, ---------------------
NET ASSET END OF NET NET
VALUE, END TOTAL YEAR OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996..................... $1.000 4.69% $1,712.6 0.91%(1,2) 4.60%(1,2)
1995..................... 1.000 5.19% 1,671.1 0.94% 5.07%
1994..................... 1.000 3.26% 1,453.8 0.91% 3.21%
1993..................... 1.000 2.44% 1,413.9 0.90% 2.41%
1992..................... 1.000 3.38% 1,168.3 0.88% 3.34%
1991..................... 1.000 5.89% 1,249.0 0.85% 5.74%
December 13, 1989(4)
to November 30, 1990.... 1.000 7.80%(3) 1,244.2 0.87%(3,5) 7.47%(3,5)
</TABLE>
(1) Average net assets for the year ended November 30, 1996 were $1,695,272,657.
(2) Gross of expense offsets (see note 2e in Notes to Financial Statements).
(3) Annualized.
(4) Commencement of operations.
(5) During the period noted above, the Adviser waived a portion of its fees. Had
such waiver not occurred, the net operating expense and net investment
income ratios would have been 0.88% and 7.46%, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended November 30,
1996..................... $1.000 $0.044 $ (0.000) $0.044 $(0.044) $ (0.000) $ (0.044)
1995..................... 1.000 0.049 0.000 0.049 (0.049) (0.000) (0.049)
1994..................... 1.000 0.031 0.000 0.031 (0.031) -- (0.031)
1993..................... 1.000 0.022 -- 0.022 (0.022) (0.000) (0.022)
1992..................... 1.000 0.032 0.000 0.032 (0.032) -- (0.032)
1991..................... 1.000 0.055 -- 0.055 (0.055) -- (0.055)
February 14, 1990(4)
to November 30, 1990.... 1.000 0.059 0.000 0.059 (0.059) -- (0.059)
<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996..................... $1.000 4.51% $ 101.1 1.00%(1,2) 4.41%(1,2)
1995..................... 1.000 5.02% 108.6 1.00%(1) 4.91%(1)
1994..................... 1.000 3.12% 113.2 0.95%(1) 3.08%(1)
1993..................... 1.000 2.26% 127.9 1.00% 2.24%
1992..................... 1.000 3.24% 131.7 0.93%(1) 3.23%(1)
1991..................... 1.000 5.69% 142.2 0.84%(1) 5.62%(1)
February 14, 1990(4)
to November 30, 1990.... 1.000 7.67%(3) 150.1 0.67%(1,3) 7.34%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 1.00%, 1.02%, 0.97%, 0.94%, 0.92% and
1.19%, respectively, and the ratio of net investment income to average net
assets would have been 4.14%, 4.89%, 3.06%, 3.22%, 5.54% and 6.82%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $104,838,715.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends and distributions
3
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS AND DISTRIBUTIONS
INCOME FROM ---------------------------
INVESTMENT OPERATIONS DIVIDENDS TO
NET ASSET ---------------------------------------- SHAREHOLDERS
VALUE, NET NET REALIZED TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT INVESTMENT CONTRIBUTION
OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME BY ADVISER
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 $ 0.000 $0.025 $ (0.025) --
1995.......................... 1.000 0.031 0.000 0.031 (0.031) --
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.026 0.000 0.026 (0.026) --
1991.......................... 1.000 0.042 0.000 0.042 (0.042) --
February 14, 1990(4)
to November 30, 1990......... 1.000 0.042 (0.000) 0.042 (0.042) --
<CAPTION>
RATIOS TO AVERAGE
NET NET ASSETS
NET ASSET ASSETS, -------------------------
VALUE, END OF NET NET
END OF TOTAL YEAR OPERATING INVESTMENT
YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 2.56% $ 122.3 0.99%(1,2) 2.53%(1,2)
1995.......................... 1.000 3.11% 116.0 0.93%(1) 3.07%(1)
1994.......................... 1.000 2.04% 108.7 0.90%(1) 2.01%(1)
1993.......................... 1.000 1.74% 109.7 0.98%(1) 1.73%(1)
1992.......................... 1.000 2.66% 112.9 0.90%(1) 2.62%(1)
1991.......................... 1.000 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990(4)
to November 30, 1990......... 1.000 5.45%(3) 107.9 0.71%(1,3) 5.32%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion of its fees.
Additionally, for the year ended November 30, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. Had such waivers
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 0.99%, 1.02%, 1.01%, 1.01%, 1.00%,
0.98% and 1.00%, respectively, and the ratio of net investment income to
average net assets would have been 2.53%, 2.98%, 1.90%, 1.70%, 2.52%, 4.10%
and 5.03%, respectively.
(2) Average net assets for the year ended November 30, 1996 were $130,667,601.
(3) Annualized.
(4) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.024 $ (0.000) $0.024 $ (0.024) --
1995.......................... 1.000 0.031 (0.008) 0.023 (0.031) $ 0.008
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
March 20, 1991(5)
to November 30, 1991......... 1.000 0.026 (0.000) 0.026 (0.026) --
<CAPTION>
CALIFORNIA MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.42% $ 53.4 0.85%(1,2) 2.42%(1,2)
1995.......................... 1.000 3.10%(3) 75.9 0.82%(1) 3.05%(1)
1994.......................... 1.000 1.99% 61.3 0.85%(1) 1.99%(1)
1993.......................... 1.000 1.76% 62.3 0.85%(1) 1.75%(1)
1992.......................... 1.000 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991(5)
to November 30, 1991......... 1.000 4.24%(4) 45.4 0.54%(1,4) 3.75%(1,4)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.97%, 0.95%, 0.97%, 0.98%, 1.02% and
1.08%, respectively, and the ratio of net investment income to average net
assets would have been 2.30%, 2.92%, 1.87%, 1.62%, 2.09% and 3.21%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $61,980,887.
(3) Had the Adviser not made the capital contribution in regard to Orange
County, (see note 2f in Notes to Financial Statements) the Portfolio's total
return would have been lower.
(4) Annualized.
(5) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW YORK MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 -- $0.025 $ (0.025) --
1995.......................... 1.000 0.030 $ 0.000 0.030 (0.030) --
1994.......................... 1.000 0.019 (0.000) 0.019 (0.019) --
1993.......................... 1.000 0.016 (0.000) 0.016 (0.016) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
April 10, 1991(4)
to November 30, 1991......... 1.000 0.024 (0.000) 0.024 (0.024) --
<CAPTION>
NEW YORK MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.50% $ 60.0 0.97%(1.2) 2.45%(1,2)
1995.......................... 1.000 3.07% 52.3 0.79%(1) 3.02%(1)
1994.......................... 1.000 1.92% 48.0 0.82%(1) 1.90%(1)
1993.......................... 1.000 1.66% 42.2 0.79%(1) 1.64%(1)
1992.......................... 1.000 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991(4)
to November 30, 1991......... 1.000 4.29%(4) 18.4 0.56%(1,3) 3.80%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expense. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.98%, 1.00%, 1.01%, 1.03%, 1.19% and
1.43%, respectively, and the ratio of net investment income to average net
assets would have been 2.44%, 2.81%, 1.71%, 1.40%, 1.98% and 2.93%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $62,612,204.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends.
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
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 "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
5
<PAGE>
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 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
6
<PAGE>
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.
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
7
<PAGE>
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 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
8
<PAGE>
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.
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
9
<PAGE>
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 ).
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 .
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 .
The California Municipal Portfolio is concentrated in securities issued by
the State of California or entities within the State of California and therefore
investment in the Portfolio may be riskier than an investment in other types of
money market funds. Investors also should consider 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 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.
10
<PAGE>
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 .
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 .
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 .
The New York Municipal Portfolio is concentrated in securities issued by the
State of New York or entities within the State of New York and therefore
investment in the Portfolio may be riskier than an investment in other types of
money market funds. Investors also should consider the current and past
financial condition of New York municipal issuers which is discussed in the 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
11
<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.
ADDITIONAL INFORMATION
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.
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.
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.
Distributions to your account of tax-exempt interest income are not subject
to Federal income tax (other than the alternative minimum tax and market
discount, if any, on securities purchased by the Portfolio), 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
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<PAGE>
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 at least 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.
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, a registered
investment adviser with approximately $50.6 billion in assets under management
on January 31, 1997. Oppenheimer Financial Corp. ("Opfin"), a holding company,
is a 1.0% general partner of the Advisor and holds a one-third managing general
partner interest in Oppenheimer Capital, and Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on the New York Stock
Exchange and of which Opfin is the sole 1.0% general partner, owns the remaining
two-thirds interest. On February 13, 1997, PIMCO Advisors L.P., a registered
investment adviser, with $110 billion in assets under management through various
subsidiaries, signed an Agreement and Plan of Merger with Oppenheimer Group,
Inc. ("OGI") and its subsidiary Opfin pursuant to which PIMCO Advisors L.P. and
its affiliate, Thomson Advisory Group, Inc. ("TAG") will acquire the one-third
managing general partner interest in Oppenheimer Capital, its 1.0% general
partner interest in OpCap Advisors and its 1.0% general partner interest in
Oppenheimer Capital L.P. (the "Transaction") and OGI will be merged with and
into TAG. The Transaction is subject to certain conditions being satisfied prior
to closing, including consents from certain lenders, approvals from regulatory
authorities including a favorable tax ruling from the Internal Revenue Service
and consents of certain clients, which are expected to take up to six months to
obtain. If the Transaction is consummated, it will involve a change of control
of Oppenheimer Capital and its subsidiary OpCap Advisors which will constitute
an assignment and termination of the Advisory Agreement between OpCap Advisors
and the Fund. On February 28, 1997, the Board of Directors of the Fund approved
a new Advisory Agreement (on the identical terms as the existing Advisory
Agreement) to take effect upon consummation of Transaction and recommended that
the new Advisory Agreement be submitted to the shareholders of the Fund for
their approval. A proxy statement will be sent to shareholders in the next few
months. The management fee rate for each Portfolio is at an annual 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, 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
13
<PAGE>
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 SAI
contains additional information about the Advisory Agreement and the Plan.
ADMINISTRATIVE SERVICES. The Fund also may pay certain broker-dealers
including Oppenheimer & Co., Inc. 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, 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.
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% (net of any expense offsets) 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
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.
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. Oppenheimer & Co., Inc. maintains an omnibus account for its customers
who are shareholders of the Fund and provides certain recordkeeping services for
those shareholders. 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.
14
<PAGE>
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.
15
<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.
A Statement of Additional Information dated March 31, 1997 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
California Municipal Portfolio.................................................9
New York Municipal Portfolio..................................................11
Additional Information........................................................12
Purchase and Redemption of Shares.............................................15
[LOGO]
<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").
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. THE CALIFORNIA MUNICIPAL PORTFOLIO
AND THE NEW YORK MUNICIPAL PORTFOLIO EACH MAY INVEST A SIGNIFICANT PERCENTAGE OF
ITS ASSETS IN A SINGLE ISSUER AND THEREFORE INVESTMENT IN THOSE PORTFOLIOS MAY
BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
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>
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)
<S> <C> <C> <C> <C> <C>
GENERAL CALIFORNIA NEW YORK
PRIMARY GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------ ------------ -----------
Management fees............. .41% .50% .49% .50% .50%
12b-1 (Distribution Plan)
expenses.................... .25% .25% .25% .25% .25%
Other Expenses.............. .25% .26% .25% .22% .24%
--
--- --- --- -----
Total Operating Expenses.... .91% 1.01% .99% .97% .99%
</TABLE>
During the fiscal year ended November 30, 1996, 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
.50%, .49%, .38% and .49%, respectively. Such advisory fee waivers are voluntary
and may be discontinued at any time, except that the Advisor has agreed to
assume expenses (net of any expense offsets) in excess of 1.00% in any fiscal
year. Other Expenses are shown gross of certain expense offsets afforded the
Portfolio which effectively lowered overall custody expenses. After giving
effect to such waivers and expense offsets, total operating expenses were 1.00%,
.99%, .85% and .97%, respectively, for the Government Portfolio, the General
Municipal Portfolio, the California Municipal Portfolio and the New York
Municipal Portfolio.
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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary Portfolio..................................... $ 9.29 $ 29.02 $ 50.39 $ 111.96
Government Portfolio.................................. 10.30 32.15 55.78 123.63
General Municipal Portfolio........................... 10.10 31.52 54.70 121.30
California Municipal Portfolio........................ 9.90 30.90 53.63 118.97
New York Municipal Portfolio.......................... 10.10 31.52 54.70 121.30
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
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
INCOME FROM AND DISTRIBUTIONS
INVESTMENT OPERATIONS --------------------------------------------------
-------------------------------------- DIVIDENDS TO
NET ASSET NET REALIZED SHAREHOLDERS DISTRIBUTION TO TOTAL DIVIDENDS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET SHAREHOLDERS AND
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT FROM NET DISTRIBUTIONS TO
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME REALIZED GAINS SHAREHOLDERS
<S> <C> <C> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996..................... $1.000 $0.046 ($ 0.000) $0.046 ($0.046) ($ 0.000) ($ 0.046)
1995..................... 1.000 0.051 0.000 0.051 (0.051) (0.000) (0.051)
1994..................... 1.000 0.032 0.000 0.032 (0.032) (0.000) (0.032)
1993..................... 1.000 0.024 0.000 0.024 (0.024) (0.000) (0.024)
1992..................... 1.000 0.033 0.000 0.033 (0.033) (0.000) (0.033)
1991..................... 1.000 0.057 (0.000) 0.057 (0.057) -- (0.057)
December 13, 1989 (4)
to November 30, 1990.... 1.000 0.073 0.000 0.073 (0.073) -- (0.073)
<CAPTION>
RATIOS TO
AVERAGE NET ASSETS
NET
ASSETS, ---------------------
NET ASSET END OF NET NET
VALUE, END TOTAL YEAR OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
PRIMARY PORTFOLIO
Year ended November 30,
1996..................... $1.000 4.69% $1,712.6 0.91%(1,2) 4.60%(1,2)
1995..................... 1.000 5.19% 1,671.1 0.94% 5.07%
1994..................... 1.000 3.26% 1,453.8 0.91% 3.21%
1993..................... 1.000 2.44% 1,413.9 0.90% 2.41%
1992..................... 1.000 3.38% 1,168.3 0.88% 3.34%
1991..................... 1.000 5.89% 1,249.0 0.86% 5.74%
December 13, 1989 (4)
to November 30, 1990.... 1.000 7.80%(3) 1,244.2 0.87%(3,5) 7.47%(3,5)
</TABLE>
(1) Average net assets for the year ended November 30, 1996 were
$1,695,272,657.
(2) Gross of expense offsets (see note 2e in Notes to Financial Statements).
(3) Annualized.
(4) Commencement of operations.
(5) During the period noted above, the Adviser waived a portion of its fees.
Had such waiver not occurred, the net operating expense and net investment
income ratios would have been 0.88% and 7.46%, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended November 30,
1996..................... $1.000 $0.044 ($ 0.000) $0.044 ($0.044) ($ 0.000) ($ 0.044)
1995..................... 1.000 0.049 0.000 0.049 (0.049) (0.000) (0.049)
1994..................... 1.000 0.031 0.000 0.031 (0.031) -- (0.031)
1993..................... 1.000 0.022 -- 0.022 (0.022) (0.000) (0.022)
1992..................... 1.000 0.032 0.000 0.032 (0.032) -- (0.032)
1991..................... 1.000 0.055 -- 0.055 (0.055) -- (0.055)
February 14, 1990 (4) to
November 30, 1990....... 1.000 0.059 0.000 0.059 (0.059) -- (0.059)
<CAPTION>
GOVERNMENT PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996..................... $1.000 4.51% $ 101.1 1.00%(1,2) 4.41%(1,2)
1995..................... 1.000 5.02% 108.6 1.00%(1) 4.91%(1)
1994..................... 1.000 3.12% 113.2 0.95%(1) 3.08%(1)
1993..................... 1.000 2.26% 127.9 1.00% 2.24%
1992..................... 1.000 3.24% 131.7 0.93%(1) 3.23%(1)
1991..................... 1.000 5.69% 142.2 0.84%(1) 5.62%(1)
February 14, 1990 (4) to
November 30, 1990....... 1.000 7.67%(3) 150.1 0.67%(1,3) 7.34%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense
offset arrangement with its custodian bank. Had such waivers, assumptions
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 1.00%, 1.02%, 0.97%, 0.94%, 0.92% and
1.19%, respectively, and the ratio of net investment income to average net
assets would have been 4.41%, 4.89%, 3.06%, 3.22%, 5.54% and 6.82%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $104,838,715.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends and distributions.
3
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS
INCOME FROM AND DISTRIBUTIONS
INVESTMENT OPERATIONS ---------------------------
-------------------------------------- DIVIDENDS TO
NET ASSET NET REALIZED SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT CONTRIBUTION
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME BY ADVISER
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL
PORTFOLIO
Year ended November 30,
1996..................... $ 1.000 $ 0.025 $ 0.000 $0.025 ($ 0.025) --
1995..................... 1.000 0.031 0.000 0.031 (0.031) --
1994..................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993..................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992..................... 1.000 0.026 0.000 0.026 (0.026) --
1991..................... 1.000 0.042 0.000 0.042 (0.042) --
February 14, 1990 (4) to
November 30, 1990....... 1.000 0.042 (0.000) 0.042 (0.042) --
<CAPTION>
RATIOS TO
NET AVERAGE NET ASSETS
ASSETS, --------------------------
NET ASSET END OF NET
VALUE, END TOTAL YEAR NET OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL
PORTFOLIO
Year ended November 30,
1996..................... $ 1.000 2.56% $ 122.3 0.99%(1,2) 2.53%(1,2)
1995..................... 1.000 3.11% 116.0 0.93%(1) 3.07%(1)
1994..................... 1.000 2.04% 108.7 0.90%(1) 2.01%(1)
1993..................... 1.000 1.74% 109.7 0.98%(1) 1.73%(1)
1992..................... 1.000 2.66% 112.9 0.90%(1) 2.62%(1)
1991..................... 1.000 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990 (4) to
November 30, 1990....... 1.000 5.45%(3) 107.9 0.71%(1,3) 5.32%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion of its fees.
Additionally, for the year ended November 30, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. Had such
waivers and expense offsets the ratio of net operating expenses to average
net assets would have been 0.99%, 1.02%, 1.01% , 1.01%, 1.00%, 0.98% and
1.00%, respectively, and the ratio of net investment income to average net
assets would have been 2.53%, 2.98%, 1.90%, 1.70%, 2.52
(2) Average net assets for the year ended November 30, 1996 were $130,667,601.
(3) Annualized.
(4) Commencement of operations.
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C> <C>
1996..................... $ 1.000 $ 0.024 (0.000) $0.024 ($ 0.024) --
1995..................... 1.000 0.031 ($ 0.008) 0.023 (0.031) $ 0.008
1994..................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993..................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992..................... 1.000 0.025 (0.000) 0.025 (0.025) --
March 20, 1991 (5) to
November 30, 1991....... 1.000 0.026 (0.000) 0.026 (0.026) --
<CAPTION>
CALIFORNIA MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C>
1996..................... $ 1.000 2.42% $ 53.4 0.85%(1,2) 2.42%(1,2)
1995..................... 1.000 3.10%(3) 75.9 0.82%(1) 3.05%(1)
1994..................... 1.000 1.99% 61.3 0.85%(1) 1.99%(1)
1993..................... 1.000 1.76% 62.3 0.85%(1) 1.75%(1)
1992..................... 1.000 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991 (5) to
November 30, 1991....... 1.000 4.24%(4) 45.4 0.54%(1,4) 3.75%(1,4)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense
offset arrangement with its custodian bank. Had such waivers, assumptions
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 0.97%, 0.95%, 0.97%, 0.98%, 1.02% and
1.08%, respectively, and the ratio of net investment income to average net
assets would have been 2.30%, 2.92%, 1.87%, 1.62%, 2.09% and 3.21%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $61,980,887.
(3) Had the Adviser not made the capital contribution in regard to Orange
County, (see note 2f in Notes to Financial Statements) the Portfolio's
total return would have been lower.
(4) Annualized.
(5) Commencement of operations.
<TABLE>
<CAPTION>
NEW YORK MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C> <C>
1996..................... $ 1.000 $ 0.025 -- $0.025 ($ 0.025) --
1995..................... 1.000 0.030 $ 0.000 0.030 (0.030) --
1994..................... 1.000 0.019 (0.000) 0.019 (0.019) --
1993..................... 1.000 0.016 (0.000) 0.016 (0.016) --
1992..................... 1.000 0.025 (0.000) 0.025 (0.025) --
April 10, 1991 (4) to
November 30, 1991....... 1.000 0.024 (0.000) 0.024 (0.024) --
<CAPTION>
NEW YORK MUNICIPAL
PORTFOLIO
Year ended November 30,
<S> <C> <C> <C> <C> <C>
1996..................... $ 1.000 2.50% $ 60.0 0.97%(1,2) 2.45%(1,2)
1995..................... 1.000 3.07% 52.3 0.79%(1) 3.02%(1)
1994..................... 1.000 1.92% 48.0 0.82%(1) 1.90%(1)
1993..................... 1.000 1.66% 42.2 0.79%(1) 1.64%(1)
1992..................... 1.000 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991 (4) to
November 30, 1991....... 1.000 4.29%(4) 18.4 0.56%(1,3) 3.80%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense
offset arrangement with its custodian bank. Had such waivers, assumptions
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 0.98%, 1.00%, 1.01%, 1.03%, 1.19% and
1.43%, respectively, and the ratio of net investment income to aver 2.44%,
2.81%, 1.71%, 1.40%, 1.98% and 2.93%,respectively.
(2) Average net assets for the year ended November 30, 1996 were $62,612,204.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends.
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
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 "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
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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 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
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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.
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
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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 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
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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.
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
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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 ).
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 .
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 .
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 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.
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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 .
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 .
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 .
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.
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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.
ADDITIONAL INFORMATION
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 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 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.
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 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
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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.
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 and market
discount, if any, on securities purchased by the Portfolio), 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 at least 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 8, 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.
13
<PAGE>
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.
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, a registered
investment adviser with approximately $50.6 billion in assets under management
on January 31, 1997. Oppenheimer Financial Corp.("Opfin"), a holding company, is
a 1.0% general partner of the Advisor and holds a one-third managing general
partner interest in Oppenheimer Capital, and Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on the New York Stock
Exchange and of which Opfin is the sole 1.0% general partner, owns the remaining
two-thirds interest. On February 13, 1997, PIMCO Advisors L.P., a registered
investment adviser, with $110 billion in assets under management through various
subsidiaries, signed an Agreement and Plan of Merger with Oppenheimer Group,
Inc. ("OGI") and its subsidiary Opfin pursuant to which PIMCO Advisors L.P. and
its affiliate, Thomson Advisory Group, Inc. ("TAG") will acquire the one-third
managing general partner interest in Oppenheimer Capital, its 1.0% general
partner interest in OpCap Advisors and its 1.0% general partner interest in
Oppenheimer Capital L.P. (the "Transaction") and OGI will be merged with and
into TAG. The Transaction is subject to certain conditions being satisfied prior
to closing, including consents from certain lenders, approvals from regulatory
authorities including a favorable tax ruling from the Internal Revenue Service
and consents of certain clients, which are expected to take up to six months to
obtain. If the Transaction is consummated, it will involve a change of control
of Oppenheimer Capital and its subsidiary OpCap Advisors which will constitute
an assignment and termination of the Advisory Agreement between OpCap Advisors
and the Fund. On February 28, 1997, the Board of Directors of the Fund approved
a new Advisory Agreement (on the identical terms as the existing Advisory
Agreement) to take effect upon consummation of Transaction and recommended that
the new Advisory Agreement be submitted to the shareholders of the Fund for
their approval. A proxy statement will be sent to shareholders in the next few
months. The management fee rate for each Portfolio is at an annual 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, 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.
ADMINISTRATIVE SERVICES. The Fund also may pay certain broker-dealers
including Oppenheimer & Co., Inc. 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, and providing shareholder information to enable the Fund
14
<PAGE>
to mail prospectuses, annual and semi-annual reports to beneficial owners. Such
payments are capped at 5 basis points of average daily net assets.
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% (net of any expense offsets) 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 1-800-401-6672 during business hours. 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. Oppenheimer & Co., Inc. maintains an omnibus account for its customers
who are shareholders of the Fund and provides certain recordkeeping services for
those shareholders. 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.
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 ith 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
)
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 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.
16
<PAGE>
WITHDRAWALS (Redemptions)
A. WITHDRAWALS BY TELEPHONE (requires pre-arrangement; see page )
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
hours. institution.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.
A Statement of Additional Information dated March 31, 1997 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
California Municipal Portfolio.................................................9
New York Municipal Portfolio..................................................11
Additional Information........................................................12
Purchase and Redemption of Shares.............................................16
[LOGO]
- -Primary Portfolio
- -Government Portfolio
- -General Municipal Portfolio
- -California Municipal Portfolio
- -New York Municipal Portfolio
PROSPECTUS
March 31, 1997
<PAGE>
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 31, 1997. Prospectuses may be obtained by contacting the
Fund.
The date of this Additional Statement is March 31, 1997
<PAGE>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . 29
INVESTMENT MANAGEMENT AND OTHER SERVICES . . . . . . . . . . . . . . . . . 29
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . 33
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
PORTFOLIO YIELD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 40
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
2
<PAGE>
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
3
<PAGE>
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,
4
<PAGE>
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
5
<PAGE>
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 has resumed a more robust rate of growth after a "soft
landing" in 1995, with over 11 million jobs added nationally since early 1992.
The State economy has continued to expand, but growth remains somewhat slower
than in the nation. Although the State has added approximately 240,000 jobs
since late 1992, employment growth in the State has been hindered during recent
years by significant cutbacks in the computer and instrument manufacturing,
utility, defense and banking industries. Government downsizing has also
moderated these job gains.
The 1996-97 New York State Financial Plan (the "State Plan" or "July
Financial Plan") is based on the State's economy showing modest expansion during
the first half of 1996, but that some slowdown is projected during the second
half of the year. Although industries that export goods and services are
expected to continue to do well, growth is expected to be slowed by government
cutbacks at all levels and by tight fiscal constraints on health and social
services. On an average annual basis, employment growth in the State is
expected to be up slightly from the 1995 rate. Personal income is expected to
record moderate gains in 1996. Bonus payments in the securities industry are
expected to increase further from last year's record level.
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The State Plan is based upon forecasts of national and State economic
activity developed through both internal analysis and review of State and
national economic forecasters prepared by commercial forecasting services and
other public and private forecasters. Economic forecasts have frequently failed
to predict accurately the timing and magnitude of changes in the national and
State economies. Many uncertainties exist in forecasts of both the national and
State economies, including consumer attitudes toward spending, the extent of
corporate and governmental restructuring, federal fiscal and monetary policies,
the level of interest rates, and the condition of the world economy, which could
have an adverse effect on the State. There can be no assurance that the State
economy will not experience results in the current fiscal year that are worse
than predicted, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
The 1996-97 Fiscal Year. The State's General Fund (the major operating
fund of the State) was projected in the State Plan to be balanced on a cash
basis for the 1996-97 fiscal year. The State Plan projected General Fund
receipts and transfers from other funds at $33.17 billion, an increase of $365
million from the prior fiscal year, and disbursements and transfers to other
funds at $33.12 billion, an increase of $444 million from the total disbursed in
the prior fiscal year.
The State issued its first update to the State Plan ("the Mid-Year Update")
on October 25, 1996. The Mid-Year Update projects a continued balanced 1996-97
State Financial Plan, with a reserve for contingencies in the General Fund of
$300 million. This reserve will be utilized to help offset a variety of
potential risks and other unexpected contingencies that the State may face
during the balance of the 1996-97 fiscal year. The Mid-Year Update reflects
revisions made to estimates of both receipts and disbursements based on: (1)
updated economic forecasts for both the nation and the State, (2) an analysis of
actual receipts and disbursements through the first six months of the fiscal
year, and (3) an assessment of changing State program requirements.
More specifically, based on the revised economic outlook and actual
receipts for the first six months of 1996-97, projected General Fund receipts
for the 1996-97 State fiscal year have been increased by $420 million. Most of
this projected increase is in the yield of the personal income tax ($241
million), with additional increases now expected in business taxes ($124
million) and other tax receipts ($49 million). Projected collections from user
taxes and fees have been revised downward slightly ($5 million). Revisions were
also made to both miscellaneous receipts and in transfers from other funds (an
$11 million combined projected increase).
Disbursements through the first six months of the fiscal year were $415
million less than projected, primarily because of delays in processing payments
following delayed enactment of the State budget. As a result, no savings are
included in the Mid-Year Update from this slower-than-expected spending.
Projections of 1996-97 General Fund disbursements are increased by $120 million,
since increased General Fund disbursements for education are required to replace
a projected decrease in lottery receipts.
Revisions to the all governmental funds receipts and disbursements
estimates primarily reflect changes to the General Fund and transfers between
fund types. The projected closing fund balance for all governmental funds is
$623 million, unchanged from the projection in the State Plan. The annual
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increase in spending for all governmental funds remains approximately 4 percent,
the same as projected in the State Plan.
Uncertainties with regard to the economy, as well as the outcome of certain
litigation now pending against the State, could produce adverse effects on the
projections of receipts and disbursements in the Mid-Year Update. For example,
changes to current levels of interest rates or deteriorating world economic
conditions could have an adverse effect on the State economy and produce results
in the current fiscal year that are worse than predicated. Similarly, an
adverse judgment in legal proceedings against the State could exceed amounts
reserved in the 1996-97 Financial Plan for payment of such judgments and produce
additional unbudgeted costs to the State.
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
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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.
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
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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 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
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pay debt service on these bonds. The legislation also imposed a cap on the
annual seasonal borrowing of the State at $4.7 billion, less net proceeds of
bonds issued by LGAC and bonds issued to provide for capitalized interest,
except in cases where the Governor and the legislative leaders have certified
the need for additional borrowing and provided a schedule for reducing it to the
cap. If borrowing above the cap is thus permitted in any fiscal year, it is
required by law to be reduced to the cap by the fourth fiscal year after the
limit was first exceeded. This provision capping the seasonal borrowing was
included as a covenant with 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.
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As of September 30, 1995, there were 17 authorities that had outstanding
debt of $100 million or more and the aggregate outstanding debt, including
refunding bonds, of these authorities was $3.45 billion.
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 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
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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.
GENERAL
The national economic downturn which began in July 1990 adversely affected
the local economy, which had been declining since late 1989. As a result, the
City experienced job losses in 1990 and 1991 and real Gross City Product (GCP)
fell in those two years. For the 1992 fiscal year, the City closed a projected
budget gap of $3.3 billion in order to achieve a balanced budget as required by
the laws of the State. Beginning in 1992, the improvement in the national
economy helped stabilize conditions in the City. Employment losses moderated
toward year-end and real GCP increased, boosted by strong wage gains. After
noticeable improvements in the City's economy during calendar year 1994,
economic growth slowed in 1995, and the City's current four-year financial plan
assumes that moderate economic growth will continue through the year 2000.
For each of the 1981 through 1996 fiscal years, the City achieved balanced
operating results as reported in accordance with then applicable generally
accepted accounting principles ("GAAP"). The City was required to close
substantial budget gaps in recent years in order to maintain balanced operating
results.
1997-2000 NEW YORK CITY FINANCIAL PLAN
The Mayor is responsible for preparing the City's four-year financial plan
(the "1997-2000 Financial Plan" or "City Plan"). On November 14, 1996, the City
submitted to the Control Board the Finanical Plan for the 1997-2000 fiscal
years, which is a modification to a financial plan submitted to the Control
Board on 1997-2000, (the "June Financial Plan") and which relates to the City,
the Board of Education ("BOE") and the City University of New York.
The June Financial Plan set forth proposed actions to close a previously
projected gap of approximately $2.6 billion for the 1996 fiscal year, including
(i) agency actions totaling $1.2 billion; (ii) a revised tax reduction program
which would increase projected tax revenues by $369 million due to the four year
extension of the 12.5% personal income tax surcharge and other actions; (iii)
savings resulting from cost containment in entitlement programs to reduce City
expenditures and additional proposed State aid of $74 million; (iv) the assumed
receipt of revenues relating to rent payments for the City's airports, which are
currently the subject of a dispute with the Port Authority of New York and New
Jersey (the "Port Authority"); (v) the sale of the City's television station for
$207 million; and
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(vi) pension cost savings totaling $134 million resulting from a proposed
increase in the earnings assumption for pension assets from 8.5% to 8.75%.
The 1997-2000 Financial Plan published on November 14, 1996 reflects actual
receipts and expenditures and changes in forecast revenues and expenditures
since the June Financial Plan. The 1997-2000 Financial Plan projects revenues
and expenditures for 1997 fiscal year balanced in accordance with GAAP, and
projects gaps of $1.2 billion, $2.1 billion and $3.0 billion for the 1998, 1999
and 2000 fiscal years, respectively. Changes since the June Financial Plan
include: (i) an increase in projected tax revenues of $450 million, $120
million, $50 million and $45 million in fiscal years in 1997 through 2000,
respectively; (ii) a delay in the assumed receipt of $304 million relating to
projected rent payments for the City airports from the 1997 fiscal year to the
1998 and 1999 fiscal years, and a $34 million reduction in assumed State and
Federal aid for the 1997 fiscal year; (iii) an approximate $200 million increase
in projected overtime and other expenditures in each of the fiscal years 1997
through 2000; (iv) a $70 million increase in expenditures for the Board of
Education ("BOE") in the 1997 fiscal year for school text books; (v) a reduction
in projected pension costs of $34 million, $50 million, $49 million and $47
million in fiscal years 1997 through 2000, respectively; and (vi) additional
agency actions totaling $179 million, $386 million, $473 million and $589
million in fiscal years 1997 through 2000, respectively, including personnel
reductions through attrition and early retirement.
The City depends on the State for aid both to enable the City to balance
its budget and to meet its cash requirements. There can be no assurance that
there will not be reductions in State aid to the City from amounts currently
projected or that the State budgets in future fiscal years will be adopted by
the April 1 statutory deadline and that such reductions or delays will not have
adverse effects on the City's cash flow or expenditures.
The City's projections set forth in the City Plan are based on various
assumptions and contingencies which are uncertain and which may not materialize.
Changes in major assumptions could significantly affect the City's ability to
balance its budget as required by State law and to meet its annual cash flow and
financing requirements. Such assumptions and contingencies include: the
condition of the regional and local economies, the impact on real estate tax
revenues of the real estate market, wage increases for City employees consistent
with those assumed in the Financial Plan, employment growth, the ability to
implement proposed reductions in City personnel and other cost reduction
initiatives, which may require in certain cases the cooperation of the City's
municipal unions, the ability of the New York City Health and Hospitals
Corporations and BOE to take actions to offset reduced revenues, the ability to
complete revenue generating transactions, provision of State and Federal aid and
mandate relief and the impact on City revenues of proposals for Federal and
State welfare reform and any future legislation affecting Medicare or other
entitlements.
Implementation of the City Plan is also dependent upon the City's ability
to market its securities successfully in the public credit markets. The City's
financing program for fiscal years 1997 through 2000 contemplates the issuance
of $7.7 billion of general obligation bonds and $4.5 billion of bonds to be
issued by the proposed New York City Infrastructure Finance Authority ("IFA")
primarily to reconstruct and rehabilitate the City's infrastructure and physical
assets and to make other capital
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requirements. The creation of the IFA is subject to the enactment of State
legislation. In addition, the City issues revenue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City bonds and notes and IFA Bonds will be subject to prevailing
market conditions, and no assurance can be given that such sales will be
completed. If the City were unable to sell its general obligation bonds and
notes or bonds of the proposed IFA, it would be prevented from meeting its
planned operating and capital expenditures.
The City Comptroller and other agencies and public officials have issued
reports and made public statements which, among other things, state that
projected revenues may be less and future expenditures may be greater than
forecast in the City Plan. It is reasonable to expect that such reports and
statements will continue to be issued and engender public comment.
OUTSTANDING INDEBTEDNESS
As of September 30, 1996, the City and the Municipal Assistance Corporation
for the City of New York had, respectively, $25.099 billion and $3.889 billion
of outstanding net long-term debt.
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
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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 1996-97
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 1996-97 fiscal year.
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
increased State expenditures for extraordinary local assistance.
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.
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 August 5, 1996, 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
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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 Investors
Service, Inc. ("Fitch") continues to rate the City general obligation bonds A-.
On February 28, 1996, Fitch placed the City's general obligation bonds on
FitchAlert with negative implications. On November 5, 1996, Fitch removed the
City's general obligation bonds from FitchAlert, although Fitch stated that the
outlook remains negative. 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
("California") 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. Although California is still experiencing some
of the effects of the recession and its unemployment is above the national
average, the gap is narrowing and is projected to close to within 1% of the
national average in 1997. California's economic recovery from the recession is
continuing at a strong pace. Recent economic reports indicate that, while the
rate of economic growth in California is expected to moderate over the next
three years, the increases in employment and income will likely exceed those of
the nation as a whole by a significant margin.
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.
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In July 1996, the Governor signed into law a new $62.8 billion budget
which, among other things, significantly increases education spending from the
previous fiscal year, reduces taxes for corporations and banks and provides for
a balanced budget at the close of the fiscal year. At the same time, the budget
continues several funding reductions made in the past years, mostly to health
and welfare programs. Although the state's budget provides for a reserve of
$305 million, revenue and expenditure developments have occurred which may have
the effect of reducing the reserve. The Governor's proposed budget for fiscal
year 1997-1998 indicates total spending of $66.6 billion and anticipates a $553
million reserve for economic uncertainties. As in past years, California's
budget assumes savings which depend on future federal actions, both to fund
programs relating to MediCal and incarceration costs associated with
undocumented immigrants and to relieve the state from federally mandated
spending, which may not occur. Accordingly, the anticipated reserves may be
reduced unless the economy outperforms expectations or spending falls below
planned levels.
Because of California's continuing budget problems, California'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. However, in 1996, citing California's improving
economy and budget situation, both Fitch and Standard & Poor's raised their
ratings from A to A+.
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
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voters]." In addition, Article XIIIB requires the California 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 California 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.
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 November 1996, California voters approved Proposition 218. The
initiative applied the provisions of Proposition 62 to all entities, including
charter cities. It requires that all taxes for general purposes obtain a simple
majority popular vote and that taxes for special purposes obtain a two-thirds
majority vote. Prior to the effectiveness of Proposition 218, charter cities
could levy certain taxes such as transient occupancy taxes and utility user's
taxes without a popular vote. Proposition 218 will also limit the authority of
local governments to impose property-related assessments, fees and charges,
requiring that such assessments be limited to the special benefit conferred and
prohibiting their use for general governmental services. Proposition 218 also
allows voters to use their initiative power to reduce or repeal
previously-authorized taxes, assessments, fees and charges.
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In 1988, California 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.
California is a party to numerous legal proceedings, many of which normally
occur in governmental operations and if decided against California, might
require California to make significant future expenditures or impair future
revenue sources.
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. On June 12, 1996, it emerged from bankruptcy after the
successful sale of $880 million in municipal bonds allowed the county to pay off
the last of its creditors. On January 7, 1997, Orange County returned to the
municipal bond market with a $136 million bond issue maturing in 13 years at an
insured yield of 7.23%.
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. Also, the county has not yet recovered from the ongoing loss of revenue
caused by state property tax shift initiatives in 1993 through 1995. Entering
the 1996-1997 fiscal year, the county faced a budgetary shortfall of
approximately $516 million. The county's budgetary difficulties have continued
with their effect on the 1997-1998 budget still uncertain.
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
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measures affecting the taxing or spending authority of California or its
political subdivisions may be approved or enacted in the future.
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.
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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 7, 1997, 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 3,961,112 shares (5.79%) of the New York Municipal Portfolio on
March 7, 1997.
JOSEPH M. LA MOTTA, CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT*
Chairman of Oppenheimer Capital and of OpCap Advisors, registered investment
advisers; Chairman of OCC Distributors; Chairman of the Board and President
of OCC Accumulation Trust, and Chairman of The Saratoga Advantage Trust,
open-end investment companies.
PAUL Y. CLINTON, DIRECTOR
39 Blossom Avenue
Osterville, MA 02655
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, a money market fund and Director of
Narragansett Tax-Free Fund, a tax-exempt bond fund; Director of Oppenheimer
Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc., Oppenheimer
Quest Capital 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 OCC 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
Capital 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 and OCC Accumulation
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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
President and Chairman of the Board of Aquila Management Corporation (since
1984), the sponsoring organization and Administrator and/or Advisor or
Sub-Advisor to the following open-end investment companies, and Chairman of the
Board of Trustees and President of each: Churchill Cash Reserves Trust (since
1985), Short Term Asset Reserves (from 1984 to 1985), Pacific Capital Assets
Trust (1984), Pacific Capital U.S. Treasuries Cash Assets Trust (since 1988),
Pacific Capital Tax-Free Cash Assets Trust (since 1988), Prime Cash Fund (from
1982 to 1996), Oxford Cash Management Fund (1982-1988) and Trinity Liquid Assets
Trust (1982-1985), each of which is a money market fund, and of Churchill
Tax-Free Fund of Kentucky (since 1986), Tax-Free Fund of Colorado (since 1986),
Tax-Free Trust of Oregon (since 1985), Tax-Free Trust of Arizona (since 1985),
Tax-Free Fund for Utah (since 1992), Narragansett Insured Tax Free Income Fund
(since 1992), and Hawaiian Tax-Free Trust (since 1984), each of which is a
tax-free municipal bond fund; Vice President, Director, Secretary, and formerly
Treasurer of Aquila Distributors, Inc. (since 1981), distributor of each 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-Advisor to CCMT; Director of
Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Capital 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,
OCC Accumulation Trust and The Saratoga Advantage Trust, each of which is an
open-end investment company.
GEORGE LOFT, DIRECTOR
51 Herrick Road
Sharon, Connecticut 06069
Private Investor; Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Capital 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 OCC
Accumulation Trust, Oppenheimer Quest for Value Funds and The Saratoga Advantage
Trust, all of which are open-end investment companies.
EVERETT ALCENAT, VICE PRESIDENT
Senior Vice President of OCC Cash Management Services, a Division of Oppenheimer
Capital, since 1996 and Vice President from 1993 to 1996; Assistant Vice
President-Mutual Fund Operations at
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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 OCC Accumulation
Trust, an open-end investment company.
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; Director of Oppenheimer
Capital Trust Company.
JOHN GIUSIO, VICE PRESIDENT
Vice President, Oppenheimer Capital; Vice President of OCC 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.
BENJAMIN GUTSTEIN, VICE PRESIDENT & PORTFOLIO MANAGER
Assistant Vice President, Oppenheimer Capital since 1996; joined the firm in
1993; prior thereto, associate at Lehman Brothers.
SUSAN A. MURPHY, VICE PRESIDENT
President of OCC Cash Management Services, a Division of Oppenheimer Capital,
since 1994; Senior Vice President of that division from 1989-1994.
DEBORAH KABACK, SECRETARY
Senior Vice President of Oppenheimer Capital; Secretary of OCC Accumulation
Trust and The Saratoga Advantage Trust, open-end investment companies.
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<PAGE>
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.
SHELDON M. SIEGEL, TREASURER
Managing Director of Oppenheimer Capital; Treasurer of OpCap Advisors; Treasurer
of OCC Accumulation Trust and The Saratoga Advantage Trust, open-end investment
companies.
RICHARD L. PETEKA, ASSISTANT TREASURER
Vice President of Oppenheimer Capital; Assistant Treasurer of OCC Accumulation
Trust and The Saratoga Advantage Trust, open-end investment companies.
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, 1996 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 1996 fiscal year.
<TABLE>
<CAPTION>
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 OCC Fund Complex
<S> <C> <C> <C> <C>
Paul Clinton 31,875 0 0 38,925
Thomas Courtney 29,625 0 0 36,225
Lacy Herrmann 31,875 0 0 41,187.50
Joseph La Motta 0 0 0 0
George Loft 31,875 0 0 48,287.50
</TABLE>
Mr. Clinton and Mr. Courtney earned directors fees with respect to 7 investment
companies in the Advisor's Fund Complex, Mr. Herrmann earned directors fees with
respect to 8 investment companies in the Advisor's Fund Complex and the fees
earned by Mr. Loft were with respect to 9 investment companies in the Advisor's
Fund Complex (one of which is 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 5 investment companies in the Advisor's Fund Complex
for which they received no fees; Mr. Loft and Mr. Herrmann each served as
director with respect to 11 investment companies in the Advisor's Fund Complex
for which they received no fees. 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, 1997, 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.
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<PAGE>
Holder Portfolio Percentage
Oppenheimer & Co., Inc. Primary Portfolio 94.25%
Omnibus Account
for the benefit of clients
Oppenheimer Tower
World Financial Center
New York, NY 10281
Oppenheimer & Co., Inc. Government Portfolio 90.40%
Omnibus Account
for the benefit of clients
World Financial Center
New York, NY 10281
Oppenheimer & Co., Inc. General Municipal Portfolio 95.56%
Omnibus Account
for the benefit of clients
World Financial Center
New York, NY 10281
Oppenheimer & Co., Inc. New York Municipal Portfolio 86.19%
Omnibus Account
for the benefit of clients
(Joseph La Motta and
members of his family held
3,916,112 shares of the
Portfolio, constituting
5.79% of the outstanding
shares on March 7, 1997.)
World Financial Center
New York, NY 10281
Oppenheimer & Co., Inc. California Municipal Portfolio 99.73%
Omnibus Account
for the benefit of clients
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
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<PAGE>
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 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 of Opco's customers. The
following amounts were paid to Opco as reimbursement for shareholder services:
for the fiscal year ended November 30, 1996 -- $323,317, $18,497, $24,536,
$12,352 and $9,212, respectively; for the fiscal year ended November 30,
1995--$281,524; $18,693; $22,314; $12,642 and $9,181, respectively; and for the
fiscal year ended November 30, 1994 -- $259,449; $21,158; $19,615; $12,051 and
$8,842, respectively; with respect to the Primary, Government, General
Municipal, California Municipal and New York Municipal Portfolios.
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<PAGE>
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, and
providing shareholder information to enable the Fund to mail prospectuses,
annual and semi-annual reports to beneficial owners. Such payments are limited
to 5 basis points of average daily net assets of each broker-dealer's customers.
Opco also is paid a fee of $9.25 per shareholder account for performing
recordkeeping.
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% (net of any expense offsets) of that
Portfolio's average annual net assets. For the fiscal year ended November 30,
1996, the total advisory fee paid by the Primary Portfolio was $6,981,092 and
the total advisory fees accrued or paid by the Government, General Municipal,
California Municipal and New York Municipal Portfolios were $520,106, $638,004,
$309,904 and $313,061 of which $258, $1,744, $71,394 and $7,866, respectively,
was waived by the Advisor. 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.
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.
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<PAGE>
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, 1996, the total distribution fees accrued or
paid by the Primary, Government, General Municipal, California Municipal and New
York Municipal Portfolios were $4,238,182, $262,097, $326,669, $154,952 and
$156,531, 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.
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, 1996:
<TABLE>
<CAPTION>
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
Prospectuses to Other than
Current Shareholders -0- -0- -0- -0- -0-
Compensation to Dealers $7,258,951 $459,688 $576,820 $279,459 $286,847
---------- --------- --------- --------- ---------
Compensation to Sales Personnel -0- -0- -0- -0- -0-
Other (1) -0- -0- -0- -0- -0-
</TABLE>
(1) Includes cost of telephone and overhead.
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
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<PAGE>
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 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
amortizating to maturity 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.
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<PAGE>
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
deviation of the current net asset value per share based on available market
quotations from a Portfolio's amortized cost price per share reaches 1/2 of 1%,
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 deviation of the current net asset
value per share based on available market quotations from a Portfolio's
amortized cost price per share reaches .003. 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 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 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 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 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
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<PAGE>
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, 1996,
accumulated net realized capital loss carry forwards available as a reduction
against future net realized capital gains were: Primary -- $88 which will expire
in 2004. Government -- $138 which will expire in 2004. General -- $90,738 of
which $12,327 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 Municipal Portfolio--$30,854 of which
$730 will expire in 1999, $5,856 will expire in 2000, $1,137 will expire in
2001, $13,827 will expire in 2003 and $9,304 will expire in 2004; 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.
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<PAGE>
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
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 calendar 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.
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<PAGE>
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.
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.
37
<PAGE>
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 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:
38
<PAGE>
EFFECTIVE YIELD = [(Base Period Return + 1) 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.
YIELD FOR SEVEN DAY PERIOD
Portfolio Yield for seven-day period ended 11/30/96
- --------- -----------------------------------------
CURRENT EFFECTIVE
Primary 4.82% 4.94%
Government* 4.38% 4.47%
General Municipal* 2.68% 2.71%
California Municipal* 2.99% 3.04%
New York Municipal 2.66% 2.70%
* During the seven day period ended November 30, 1996, the Advisor waived a
portion of its advisory fees with respect to the Government, General
Municipal and California 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, General
Municipal and California Municipal Portfolios would have been 4.35% and
4.44%; 2.51% and 2.54% and; 2.36% and 2.39% respectively.
TAX EQUIVALENT YIELD -- 30 DAY PERIOD
for the 30-day period ended November 30, 1996
Portfolio At Federal Income Tax Rate of 39.6%
- --------- -----------------------------------
General Municipal 4.34%*
California Municipal 5.43%*
New York Municipal 4.59%
* During the fiscal year ended November 30, 1996, the Advisor 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 General and California Portfolios would have
been 4.04% and 4.26%, 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, 1996, approximately 31.5%, 16.7%, and 25.8%, respectively, of
39
<PAGE>
distributions of the General, California and New York Municipal Portfolios
were tax preference items; for the calendar year ended December 31, 1996,
approximately 35.8%, 17.3% and 28.0%, 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 Portfolios 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 7.35%; if a shareholder was a New York
City resident, the tax-equivalent yield would have been 4.82%, based on an
assumed New York City tax rate of 4.46%.
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
40
<PAGE>
affiliates shall be liable for any loss, cost or expense caused by unauthorized
telephone redemption and exchange instructions.
41
<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.
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.
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, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Schedules of Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Primary Portfolio
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
U.S. Government Agencies--4.4%
Federal National Mortgage Association,
$ 45,000 5.24%-5.67%,
4/11/97-9/29/97. . . . . . . . . . . . . . $ 44,992,033
15,000 5.37%, 12/3/96, VRDN*. . . . . . . . . . . 14,996,179
15,000 Student Loan Marketing Association,
5.18%-5.40%, 3/13/97 . . . . . . . . . . . 15,000,000
--------------
Total U.S. Government Agencies
(amortized cost--$74,988,212) . . . . . . . . . . . . . . $ 74,988,212
--------------
Bank Notes--.2%
$ 4,000 NationsBank NA,
5.37%, 2/10/97
(amortized cost--$3,957,637) . . . . . . . $ 3,957,637
--------------
Certificates of Deposit--17.8%
$ 35,000 BankAmerica NTSA,
5.50%-5.66%,
12/9/96-10/7/97. . . . . . . . . . . . . . $ 35,000,000
45,000 Bank of Nova Scotia,
5.56%-5.83%,
1/21/97-3/10/97. . . . . . . . . . . . . . 45,000,000
20,000 Beneficial Corp., VRDN*,
5.35%, 1/10/97 . . . . . . . . . . . . . . 20,000,000
55,000 Canadian Imperial Bank of Commerce,
5.33%-5.415%,
12/30/96-1/8/97. . . . . . . . . . . . . . 55,000,651
20,000 Deutsche Bank,
5.51%, 11/24/97. . . . . . . . . . . . . . 19,990,589
10,000 Dresdner U.S. Finance Inc.,
5.60%, 7/7/97. . . . . . . . . . . . . . . 10,000,000
25,000 National Westminster Bank PLC,
5.53%, 12/10/96. . . . . . . . . . . . . . 25,000,000
25,000 NationsBank NA,
5.35%, 2/10/97 . . . . . . . . . . . . . . 25,000,000
15,000 Royal Bank of Canada,
5.46%, 12/31/96. . . . . . . . . . . . . . 15,000,122
55,000 Societe Generale Bank,
5.48%-5.70%,
12/9/96-5/19/97. . . . . . . . . . . . . . 55,000,000
--------------
Total Certificates of Deposit
(amortized cost--$304,991,362). . . . . . . . . . . . . . $ 304,991,362
--------------
- -
Commercial Paper--74.5%
$ 35,000 Abbey National North America,
5.42%-5.49%,
12/4/96-12/26/96 . . . . . . . . . . . . . $ 34,933,779
$ 25,000 ABN-Amro North America Finance Inc.,
5.43%-5.57%,
12/3/96-4/1/97 . . . . . . . . . . . . . . $ 24,723,143
46,730 American Express Credit Corp.,
5.25%-5.30%,
12/30/96-12/31/96. . . . . . . . . . . . . 46,527,359
30,000 American Home Products Corp.,
5.28%, 12/23/96. . . . . . . . . . . . . . 29,903,200
25,000 Associates Corporation of North America,
5.255%, 12/20/96 . . . . . . . . . . . . . 24,930,663
62,000 Bayerische Vereinsbank AG,
5.33%-5.52%,
2/3/97-4/10/97 . . . . . . . . . . . . . . 61,115,543
30,961 British Columbia (Province of),
5.28%-5.50%,
12/9/96-1/30/97. . . . . . . . . . . . . . 30,714,448
20,000 Canadian Wheat Board,
5.33%-5.45%,
3/13/97-4/7/97 . . . . . . . . . . . . . . 19,657,553
48,000 Cheltenham & Gloucester Building Society,
5.26%-5.34%,
12/11/96-5/12/97 . . . . . . . . . . . . . 47,500,290
76,955 Daimler Benz North America Corp.,
5.26%-5.33%,
12/4/96-1/21/97. . . . . . . . . . . . . . 76,648,328
15,000 Deere (John) Capital Corp.,
5.41%, 3/24/97 . . . . . . . . . . . . . . 14,745,279
50,000 Dresdner U.S. Finance Inc.,
5.32%-5.41%,
12/2/96-1/27/97. . . . . . . . . . . . . . 49,824,925
22,500 Eksportfinans A/S,
5.30%-5.60%,
12/18/96-3/18/97 . . . . . . . . . . . . . 22,276,646
25,000 Ford Credit Europe PLC,
5.31%, 2/3/97. . . . . . . . . . . . . . . 24,764,000
42,000 General Electric Capital Corp.,
5.35%-5.38%,
1/13/97-1/27/97. . . . . . . . . . . . . . 41,667,767
22,000 General Electric Capital Services Inc.,
5.27%, 4/14/97 . . . . . . . . . . . . . . 21,568,446
65,945 General Motors Acceptance Corp.,
5.32%-5.325%,
5/23/97-8/21/97. . . . . . . . . . . . . . 63,586,143
15,000 Glaxo Holdings PLC,
5.41%, 1/2/97. . . . . . . . . . . . . . . 14,927,867
50,000 Household Finance Corp.
5.25%-5.35%,
12/12/96-12/23/96. . . . . . . . . . . . . 49,871,056
B-1
<PAGE>
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Commercial Paper--74.5% (cont'd)
$ 26,890 IBM Credit Corp.,
5.25%-5.31%,
12/17/96-1/14/97 . . . . . . . . . . . . . $ 26,798,617
70,000 Merrill Lynch & Co. Inc.,
5.34%-5.40%,
1/6/97-1/28/97 . . . . . . . . . . . . . . 69,539,100
55,000 Morgan (J.P.) & Co. Inc.,
5.37%-5.62%,
2/18/97-3/10/97. . . . . . . . . . . . . . 54,296,808
49,000 Morgan Stanley Group Inc.,
5.32%-5.48%,
12/5/96-2/4/97 . . . . . . . . . . . . . . 48,673,014
20,150 Oesterreichische Kontrollbank AG,
5.28%, 2/18/97 . . . . . . . . . . . . . . 19,916,529
10,000 Queensland Treasury Corp.,
5.42%, 12/12/96. . . . . . . . . . . . . . 9,983,439
26,803 Sherwood Medical Co.,
5.28%, 12/18/96. . . . . . . . . . . . . . 26,736,171
12,000 Societe Generale N.A. Inc.,
5.41%, 3/5/97. . . . . . . . . . . . . . . 11,830,487
15,000 Student Loan Corp.,
5.34%, 12/2/96 . . . . . . . . . . . . . . 14,997,775
62,275 Svenska Handelsbanken Inc.,
5.35%-5.52%,
12/6/96-4/16/97. . . . . . . . . . . . . . 61,742,408
64,000 Sweden (Kingdom of),
5.25%-5.42%,
12/16/96-6/27/97 . . . . . . . . . . . . . 63,407,312
34,000 Swedish Export Credit Corp.,
5.31%-5.32%,
1/9/97-1/13/97 . . . . . . . . . . . . . . 33,798,997
20,000 The Queen in Right of Alberta,
5.50%, 12/5/96 . . . . . . . . . . . . . . 19,987,778
30,000 Toronto-Dominion Holdings USA Inc.,
5.30%, 12/23/96. . . . . . . . . . . . . . 29,902,833
42,150 UBS Finance Inc.,
5.32%-5.90%,
12/2/96-12/3/96. . . . . . . . . . . . . . 42,141,492
42,600 U.S. Borax & Chemical Corp.,
5.30%-5.46%,
12/19/96-5/19/97 . . . . . . . . . . . . . 42,182,454
Total Commercial Paper
(amortized cost--$1,275,821,649). . . . . . . . . . . . . $1,275,821,649
--------------
Corporate Note--.9%
$ 15,000 CIT Group Holdings Inc., VRDN*,
5.33%, 11/20/97
(amortized cost--$14,990,107). . . . . . . $ 14,990,107
--------------
Repurchase Agreement--2.1%
$ 36,034 J.P. Morgan Securities Inc.,
dtd. 11/29/96, 5.62%, 12/2/96
(proceeds at maturity $36,050,876,
collateralized by $36,805,000 par,
$36,758,994 value, Federal Home
Loan Mortgage Corp., 12/5/96
(amortized cost--$36,034,000). . . . . . . $ 36,034,000
--------------
Total Investments
(amortized cost--$1,710,782,967+) . . . . . . . . . . 99.9% $1,710,782,967
Other Assets in Excess
of Other Liabilities. . . . . . . . . . . . . . . . . 0.1 1,797,794
------ --------------
Total Net Assets . . . . . . . . . . . . . . . . . . . .100.0% $1,712,580,761
------ --------------
------ --------------
- --------------------------------------------------------------------------------
Government Portfolio
- --------------------------------------------------------------------------------
U.S. Government Agencies--91.0%
$ 600 Federal Farm Credit Bank,
5.23%, 1/17/97 . . . . . . . . . . . . . . $ 595,903
44,040 Federal Home Loan Bank,
5.20%-5.70%,
12/2/96-7/24/97. . . . . . . . . . . . . . 43,652,141
28,712 Federal Home Loan Mortgage Corporation,
5.16%-5.70%,
12/2/96-5/6/97 . . . . . . . . . . . . . . 28,534,962
Federal National Mortgage Association,
14,455 5.23%-5.37%,
12/9/96-6/11/97. . . . . . . . . . . . . . 14,278,507
5,000 5.37%, 12/3/96, VRDN*. . . . . . . . . . . 4,998,726
--------------
Total U.S. Government Agencies
(amortized cost--$92,060,239) . . . . . . . . . . . . . . $ 92,060,239
Repurchase Agreement--8.9%
$ 8,966 J.P. Morgan Securities Inc.,
dtd. 11/29/96, 5.62%, 12/2/96
(proceeds at maturity $8,970,199,
collateralized by $9,230,000 par,
$9,149,238 value, Federal Home
Loan Mortgage Corp., 1/27/97)
(amortized cost--$8,966,000) . . . . . . . $ 8,966,000
--------------
Total Investments
(amortized cost--$101,026,239+) . . . . . . . . . . . 99.9% $ 101,026,239
Other Assets in Excess
of Other Liabilities. . . . . . . . . . . . . . . . . 0.1 $ 109,265
------ --------------
Total Net Assets . . . . . . . . . . . . . . . . . . . .100.0% $ 101,135,504
------ --------------
------ --------------
B-2
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Schedules of Investments (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
General Municipal Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Alabama--1.6%
$ 2,000 Phenix Cnty. IDB, EIR,
Mead Coated Brd. Proj.,
(LC; ABN Amro Bank, PA)
3.50%, 1/22/97 . . . . . . . . . . . . . . $ 2,000,000
--------------
Alaska--9.5%
915 Alaska Indl. Dev. Auth.,
8.75%, 4/1/97 (A). . . . . . . . . . . . . 948,333
3,600 Alaska St. HF Corp.,
Ser. A, VRDN*,
3.55%, 12/4/96 . . . . . . . . . . . . . . 3,600,000
250 Anchorage Elec. Util. Rev.,
(Insd.; MBIA),
4.50%, 12/1/96 . . . . . . . . . . . . . . 250,000
Valdez Marine Term. Rev.,
Arco Transn. Proj.,
4,800 Ser. A, 3.70%, 1/6/97 . . . . . . . . . . . . 4,800,000
2,000 Ser. B, VRDN*,
3.70%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
--------------
11,598,333
--------------
Arizona--5.6%
1,000 Arizona Edl. Ln. Mktg. Corp.,
ELR, Ser. A, VRDN*
(LC; Dresdner Bank AG),
3.60%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
2,500 Cochise Cnty. PCR, SWDR,
Arizona Elec. Pwr. Coop. Inc. Proj.,
3.70%, 3/1/97. . . . . . . . . . . . . . . 2,500,000
2,100 Maricopa Cnty. PCC, PCR,
So. California Edison,
Palo Verdi Proj.,
3.55%, 12/12/96. . . . . . . . . . . . . . 2,100,000
1,200 Mesa Muni. Dev. Corp.,
Ser. A,
3.50%, 12/2/96 . . . . . . . . . . . . . . 1,200,000
--------------
6,800,000
--------------
California--4.9%
1,500 California Sch. Cash Reserve,
Prog. Auth., Ser. A,
4.75%, 7/2/97. . . . . . . . . . . . . . . 1,507,838
1,000 California St. RAN's,
dtd. 8/6/96,
4.50%, 6/30/97 . . . . . . . . . . . . . . 1,002,946
1,000 Contra Costa Cnty. TRAN's,
dtd. 7/1/96,
4.50%, 7/3/97. . . . . . . . . . . . . . . 1,004,233
1,000 Fresno TRAN's,
dtd. 7/2/96,
4.50%, 6/30/97 . . . . . . . . . . . . . . $ 1,003,053
1,000 Los Angeles Cnty. TRAN's,
dtd. 7/1/96,
Ser. A,
(LC; Credit Suisse, NY and
Morgan Guaranty, N.Y.),
4.50%, 6/30/97 . . . . . . . . . . . . . . 1,004,063
500 Sonoma Valley Sch. Dist. TRAN's
dtd. 7/3/96,
4.50%, 7/3/97. . . . . . . . . . . . . . . 501,692
--------------
6,023,825
--------------
Delaware--2.5%
3,100 Delaware St. EDAR, Gas Facs.,
Delmarva Pwr. & Lt., VRDN*,
4.00%, 12/2/96 . . . . . . . . . . . . . . 3,100,000
--------------
Florida--1.1%
1,350 Putnam Cnty. Dev. Auth., PCR,
Seminole Elec. Co. Proj.,
Ser. H-1, VRDN*,
3.55%, 12/4/96 . . . . . . . . . . . . . . 1,350,000
--------------
Hawaii--3.9%
500 Hawaii St. Arpts. Sys. Rev.
6.00%, 7/1/97. . . . . . . . . . . . . . . 505,364
2,210 Hawaii St. Dept. 1988, Ser. C,
3.45%, 1/29/97 . . . . . . . . . . . . . . 2,210,000
1,000 Hawaii St. GO,
Ser. BW (LC; FGIC),
5.15%, 3/1/97. . . . . . . . . . . . . . . 1,003,399
1,000 Secondary Mkt. Svcs. Corp., SLR,
Ser. II, VRDN*
(LC; Nat'l. Westminster Bank PLC),
3.60%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
--------------
4,718,763
--------------
Illinois--9.7%
5,300 Chicago O'Hare Int'l. Arpt.,
Ser. B, VRDN*
(LC; Societe Generale Bank),
3.60%, 12/4/96 . . . . . . . . . . . . . . 5,300,000
Illinois Hlth. FAR,
Hosp. Sisters Svc. Proj., Ser. E,
VRDN* (Insd.; MBIA),
1,700 3.55%, 12/4/96 . . . . . . . . . . . . . . 1,700,000
1,510 3.55%, 1/30/97 . . . . . . . . . . . . . . 1,510,000
2,800 Parkside Dev. Corp. Proj.,
VRDN* (LC; First Nat'l. Bank of
Chicago),
3.55%, 12/4/96 . . . . . . . . . . . . . . 2,800,000
B-3
<PAGE>
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Illinois--9.7% (cont'd)
$ 500 Illinois St., GO,
5.25%, 10/1/97 . . . . . . . . . . . . . . $ 504,968
--------------
11,814,968
--------------
Indiana--2.7%
500 Indianapolis Ind. Loc. Pub. Impt.,
Bond Bank, Ser.D,
4.25%, 1/9/97. . . . . . . . . . . . . . . 500,235
2,745 Sullivan PCR,
Rural Util./Hoosier Elec. Co.,
Ser. 85L-4,
3.50%, 1/24/97 . . . . . . . . . . . . . . 2,745,000
--------------
3,245,235
--------------
Kentucky--1.8%
200 Boone Cnty. PCR,
Cincinnati Gas & Elec. Co.
Proj., Ser. A, VRDN*
(LC; Union Bank of Switzerland),
3.65%, 12/2/96 . . . . . . . . . . . . . . 200,000
2,000 Kentucky HEL, Student Loan
Corp., SLR, Ser. E, VRDN*
3.60%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
--------------
2,200,000
--------------
Maryland--2.0%
1,000 Anne Arundel Cnty. EDR,
Baltimore Gas & Elec. Co. Proj.,
3.60%, 12/11/96. . . . . . . . . . . . . . 1,000,000
1,000 Maryland St., Dept. of Trans.,
3.625%, 6/15/97. . . . . . . . . . . . . . 999,492
500 Washington Subn. San. Dist.,
Gen. Constr.,
4.50%, 6/1/97. . . . . . . . . . . . . . . 501,205
--------------
2,500,697
--------------
Mississippi--1.1%
1,300 Jackson Cnty., Port. Fac. Rev.
Chevron USA Inc. Proj., VRDN*
4.15%, 12/2/96 . . . . . . . . . . . . . . 1,300,000
--------------
Missouri--.5%
600 Missouri EIERA, PCR,
Union Elec. Co. Proj.,
Ser. A (LC; Swiss Bank Corp.),
3.65%, 6/1/97. . . . . . . . . . . . . . . 600,000
--------------
Nebraska--3.0%
Nebraska HEL Prog.,
Student Ln. Prog.
2,100 Ser. A, VRDN*
(LC; SLMA),
3.60%, 12/4/96 . . . . . . . . . . . . . . 2,100,000
1,600 Ser. C, VRDN*
(LC; SLMA),
3.60%, 12/4/96 . . . . . . . . . . . . . . $ 1,600,000
--------------
3,700,000
--------------
Nevada--.4%
500 Clark Cnty. AIR,
Sub. Lien, Ser. A-2, VRDN*
(LC; Toronto-Dominion Bank),
3.60%, 12/4/96 . . . . . . . . . . . . . . 500,000
--------------
New Hampshire--.9%
1,100 New Hampshire St. BFA, PCR,
Pub. Svc. Co. of New Hampshire
Proj., Ser. D, VRDN*
(LC; Barclays Bank PLC),
3.75%, 12/4/96 . . . . . . . . . . . . . . 1,100,000
--------------
New Jersey--1.6%
1,000 Essex Cnty. BAN's,
Ser. A, dtd. 9/18/96,
4.50%, 9/17/97 . . . . . . . . . . . . . . 1,003,773
1,000 Ocean Cnty. BAN's
dtd. 6/20/96
4.25%, 6/20/97 . . . . . . . . . . . . . . 1,002,115
--------------
2,005,888
--------------
New York--13.6%
328 East Hampton Town BAN's,
Ser. C, dtd. 8/22/96,
4.50%, 8/22/97 . . . . . . . . . . . . . . 329,020
400 Gloversville Sch. Dist. GO,
(CS; FSA)
4.90%, 6/15/97 . . . . . . . . . . . . . . 402,516
1,000 New York City Mun. Asst. Corp.,
Ser. E
4.00%, 7/1/97. . . . . . . . . . . . . . . 1,001,566
New York St. DAR,
500 City Univ. Sys. Cons., Ser. A,
8.125%, 7/1/97 (A) . . . . . . . . . . . . 521,843
200 St. Francis Ctr. at the Knolls,
VRDN* (LC; Banque Nationale de Paribas),
4.00%, 12/2/96 . . . . . . . . . . . . . . 200,000
1,000 New York St. ERDA, PCR,
Rochester Gas & Elec. Corp. Proj.,
(LC; Credit Suisse),
3.60%, 11/15/97. . . . . . . . . . . . . . 1,000,000
New York St. JDA, St. Gtd.,
200 Ser. A1-A13, VRDN*,
4.05%, 12/2/96 . . . . . . . . . . . . . . 200,000
4,300 Ser. A1-A42, VRDN*,
4.05%, 12/2/96 . . . . . . . . . . . . . . 4,300,000
B-4
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Schedules of Investments (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
General Municipal Portfolio (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
New York--13.6% (cont'd)
$ 2,500 Ser. B1-B21, VRDN*,
4.05%, 12/2/96 . . . . . . . . . . . . . . $ 2,500,000
2,000 New York St. PAR,
3.70%, 3/1/97*** . . . . . . . . . . . . . 2,000,000
Niagara Cnty. NY Solid Waste.,
Ser. C,
1,600 3.85%, 12/3/96 . . . . . . . . . . . . . . 1,600,000
2,100 3.70%, 1/9/97. . . . . . . . . . . . . . . 2,100,000
500 Oceanside Sch. Dist. TAN's,
dtd. 7/10/96,
4.375%, 6/27/97. . . . . . . . . . . . . . 501,303
--------------
16,656,248
--------------
North Carolina--1.4%
1,700 Wake Cnty. Indl. Facs. & PCFA
Carolina Power & Lt. Co. Proj.,
VRDN* (LC; Sumitomo Bank),
4.00%, 12/2/96 . . . . . . . . . . . . . . 1,700,000
--------------
Ohio--2.0%
1,500 Ohio HFAMR,
Ser. A (LC; American Intl. Group),
3.40%, 3/3/97**. . . . . . . . . . . . . . 1,500,000
1,000 Ohio St. Air Quality DAR,
JMG Fdg. Ltd. Proj., Ser. B, VRDN*
(LC; Societe Generale Bank),
3.65%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
--------------
2,500,000
--------------
Pennsylvania--5.5%
1,700 Emmaus GAR,
Ser. C-8, VRDN*
(LC; Midland Bank PLC),
3.70%, 12/4/96 . . . . . . . . . . . . . . 1,700,000
200 Pennsylvania St. GO, Ser. A,
6.50%, 6/1/97. . . . . . . . . . . . . . . 202,419
2,000 Pennsylvania St. HEA, SLR,
Ser. A, VRDN*
(LC; SLMA),
3.60%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
350 Philadelphia, GO,
4.00%, 5/15/97 . . . . . . . . . . . . . . 350,071
500 Philadelphia Sch. Dist. TRAN's,
dtd. 7/17/96,
4.50%, 6/30/97 . . . . . . . . . . . . . . 501,392
2,000 Venango IDA, RRR, Ser. '90B,
3.55%, 1/23/97 . . . . . . . . . . . . . . 2,000,000
--------------
6,753,882
--------------
Rhode Island--.2%
$ 225 North Providence, GO,
5.75%, 7/1/97. . . . . . . . . . . . . . . $ 227,218
--------------
South Carolina--.8%
970 York Cnty. PCR,
Saluda River Proj., Ser. '84E,
3.65%, 2/15/97 . . . . . . . . . . . . . . 970,000
--------------
Tennessee--2.7%
2,300 Hamilton Cnty. IDR,
Seaboard Feeds Inc. Proj.,
VRDN*
3.75%, 12/5/96 . . . . . . . . . . . . . . 2,300,000
1,000 Metropolitan Nashville Arpt.,
VRDN* (Insd.; FGIC),
3.50%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
--------------
3,300,000
--------------
Texas--12.1%
1,000 Brazos HEA,
Ser. B-1, VRDN*
(CS; SLMA),
3.55%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
2,300 Brazos River Auth., PCR,
Texas Utils. Elec. Co. Proj., Ser. A,
(LC; Canadian Imperial Bank),
3.55%, 12/10/96. . . . . . . . . . . . . . 2,300,000
2,200 Brazos River Harbor Navigation,
Dist. of Brazoria Cnty.,
3.55%, 1/28/97 . . . . . . . . . . . . . . 2,200,000
3,000 Dallas Area TRAN's,
dtd. 8/8/95, Ser. A,
3.35%, 12/5/96 . . . . . . . . . . . . . . 3,000,000
1,000 Gulf Coast IDA, Marine Term. Rev.,
Amoco Oil Co. Proj.,
3.60%, 12/1/96 . . . . . . . . . . . . . . 1,000,000
2,000 Gulf Coast WDA, PCR,
Exxon Proj.,
3.55%, 12/9/96 . . . . . . . . . . . . . . 2,000,000
1,400 Lower CO. River Auth. Tex. Rev.,
Jr. Lien, Ser. 3rd Suppl.,
3.50%, 12/4/96 . . . . . . . . . . . . . . 1,400,000
240 North Cent., HFDCR,
Presbyterian Healthcare, Ser. A,
4.00%, 6/1/97. . . . . . . . . . . . . . . 240,000
620 Texas HEA, EEIR,
Ser. B, VRDN*
(Insd.; FGIC),
3.50%, 12/4/96 . . . . . . . . . . . . . . 620,000
1,000 Texas St. TRAN's,
dtd. 8/30/96,
4.75%, 8/29/97 . . . . . . . . . . . . . . 1,006,068
--------------
14,766,068
--------------
B-5
<PAGE>
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Utah--2.5%
$ 1,000 Emery Cnty. PCR,
Pacificorp Projs., VRDN*
4.15%, 12/2/96 . . . . . . . . . . . . . . $ 1,000,000
2,000 Utah St. Brd. Regents SLR,
Ser. L, VRDN*
(Insd.; AMBAC),
3.60%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
--------------
3,000,000
--------------
Washington--.2%
250 Washington St. GO,
Ser. R-'92C,
4.90%, 9/1/97. . . . . . . . . . . . . . . 251,816
--------------
West Virginia--.8%
1,000 West Virginia Pub. Auth. Rev.,
Morgantown Assoc. Proj.,
(LC; Swiss Bank),
3.55%, 2/3/97. . . . . . . . . . . . . . . 1,000,000
--------------
Wisconsin--3.6%
1,000 Racine Sch. Dist. TRAN's
dtd. 8/26/96,
4.15%, 8/22/97 . . . . . . . . . . . . . . 1,001,909
3,400 Wisconsin HFFAR,
Hosp. Sisters Oblig.,
Ser. G, VRDN* (Insd.; MBIA),
3.55%, 12/4/96 . . . . . . . . . . . . . . 3,400,000
--------------
4,401,909
--------------
Total Investments
(amortized cost--$120,084,850+) . . . . . . . . . 98.2% $ 120,084,850
Other Assets in Excess
of Other Liabilities. . . . . . . . . . . . . . . 1.8 2,196,942
------ --------------
Total Net Assets . . . . . . . . . . . . . . . . . . 100.0% $ 122,281,792
------ --------------
------ --------------
- --------------------------------------------------------------------------------
California Municipal Portfolio
- --------------------------------------------------------------------------------
California--92.1%
$ 2,000 Anaheim Ctfs. Partn.,
1993 Ref. Projs.,
VRDN* (LC; ABN-Amro Bank),
3.40%, 12/4/96 . . . . . . . . . . . . . . $ 2,000,000
1,000 California Cmnty. College FA
TRAN's, Ser. A,
dtd. 7/3/96,
4.75%, 7/2/97. . . . . . . . . . . . . . . 1,005,056
500 California HF Agy. Rev.,
Home Mtg. Prog., Ser. D,
3.55%, 4/1/97. . . . . . . . . . . . . . 500,000
2,000 California HFF,
Kaiser Permanente Proj.,
Ser. A, VRDN*,
3.45%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
2,000 California HFFAR, Memorial
Hlth. Svcs. Proj., VRDN*,
3.45%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
1,000 California PCFA,
Pacific Gas & Elec. Co. Proj.,
Ser. D, (LC; Union Bank of Switzerland),
3.25%, 12/3/96 . . . . . . . . . . . . . . 1,000,000
2,000 California PCFA, PCR,
Homestake Mining Proj., Ser. '84A,
VRDN* (LC; Bank of Nova Scotia),
3.45%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
2,000 California PCFA, PCR, RRR,
Wadham Energy Proj., Ser. C,
VRDN* (LC; Banque Nationale
de Paribas),
3.60%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
California PCFA, RRR,
1,300 Burney Forest Prods., Ser. A,
VRDN* (LC; Fleet Bank),
4.00%, 12/2/96 . . . . . . . . . . . . . . 1,300,000
1,000 Delano Proj.,
VRDN* (LC; Algemene Bank, Netherlands),
4.05%, 12/2/96 . . . . . . . . . . . . . . 1,000,000
900 Ultrapower Malaga Corp. Proj.,
VRDN* (LC; Bank of America),
Ser. B, 4.10%, 12/2/96 . . . . . . . . . . 900,000
Ultrapower Rocklin Proj.,
VRDN* (LC; Security Pacific National Bank),
1,000 Ser. A, 4.10%, 12/2/96 . . . . . . . . . . 1,000,000
400 Ser. B, 4.10%, 12/2/96 . . . . . . . . . . 400,000
300 California PCFA, SWDR,
Shell Oil Co. Martinez Proj.,
Ser. B, VRDN*,
4.20%, 12/2/96 . . . . . . . . . . . . . . 300,000
California SCD Corp. Rev.,
Ind'l. Dev.,
395 Florestone Prod. Proj.,
VRDN* (LC; California St. Tchrs. Ret. Fd.),
3.55%, 12/4/96 . . . . . . . . . . . . . . 395,000
1,700 South Bay Circuits Proj.,
VRDN* (LC; California St. Tchrs. Ret. Fd.),
3.55%, 12/4/96 . . . . . . . . . . . . . . 1,700,000
B-6
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Schedules of Investments (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
California Municipal Portfolio (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
$ 1,500 California Sch. Cash Reserve,
Prog. Auth., Ser. A,
4.75%, 7/2/97. . . . . . . . . . . . . . . $ 1,507,838
1,306 California St. DWR's,
3.35%, 12/19/96. . . . . . . . . . . . . . 1,306,000
1,000 California St. RAN's, Ser. A,
dtd. 8/6/96,
4.50%, 6/30/97 . . . . . . . . . . . . . . 1,003,278
1,000 Contra Costa Cnty. TRAN's,
dtd. 7/1/96,
4.50%, 7/3/97. . . . . . . . . . . . . . . 1,004,233
2,000 Contra Costa TA, STR,
Ser. A (Insd.; FGIC),
5.00%, 3/1/97. . . . . . . . . . . . . . . 2,007,096
1,500 Irvine Ranch WD, Ser. B,
VRDN* (LC; Landesbank Hessen),
3.95%, 12/2/96 . . . . . . . . . . . . . . 1,500,000
1,600 Los Angeles Cnty. MTA, STR, Ser. A,
(LC; Morgan Guaranty Trust Co. Inc.,
Union Bank of Switzerland and
Credit Suisse),
3.30%, 12/13/96. . . . . . . . . . . . . . 1,600,000
1,000 Los Angeles Dept. of Wtr. & Power,
Electric Plant Short Term Rev.,
3.35%, 12/12/96. . . . . . . . . . . . . . 1,000,000
1,000 Metropolitan WD, Ser. A,
3.40%, 12/12/96. . . . . . . . . . . . . . 1,000,000
1,000 Monterey Cnty. FAR,
Reclamation & Dist. Proj., VRDN*,
(LC; Dai-Ichi Kangyo Bank),
3.55%, 12/5/96 . . . . . . . . . . . . . . 1,000,000
1,000 Sacramento MUD, Ser. I,
(LC; Bayerische Landensbank
Girozentrale),
3.25%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
500 San Luis Obispo Cnty. Cmnty.
College Dist. TRAN's,
dtd. 7/2/96,
4.50%, 6/30/97 . . . . . . . . . . . . . . 501,668
1,000 San Luis Obispo Cnty. Office of
Education TRAN's,
dtd. 10/10/96,
4.50%, 10/9/97 . . . . . . . . . . . . . . 1,005,674
1,200 Santa Clara Cnty. FA, Lease Rev.,
VMC Fac. Replacement Proj., Ser.B,
VRDN* (LC; Union Bank of Switzerland),
3.50%, 12/4/96 . . . . . . . . . . . . . . 1,200,000
500 Southern California Edison Co.,
3.45%, 2/12/97 . . . . . . . . . . . . . . 500,000
State of California GO,
1,500 3.30%, 12/2/96 . . . . . . . . . . . . . . 1,500,000
2,000 3.30%, 12/9/96 . . . . . . . . . . . . . . 2,000,000
1,000 3.40%, 1/30/97 . . . . . . . . . . . . . . 1,000,000
2,000 3.45%, 1/23/97 . . . . . . . . . . . . . . 2,000,000
1,000 Sutter Cnty. Office of Education
TRAN's, dtd. 10/22/96,
4.50%, 10/22/97. . . . . . . . . . . . . . 1,006,002
4,000 University of California,
Regents, Ser. A,
3.35%, 12/5/96 . . . . . . . . . . . . . . 4,000,000
1,000 Ventura Cnty. TRAN's,
dtd. 7/2/96,
4.75%, 7/2/97. . . . . . . . . . . . . . . 1,005,054
--------------
49,146,899
--------------
Puerto Rico--5.6%
Puerto Rico Gov't. Dev. Bank,
1,000 3.45%, 2/3/97. . . . . . . . . . . . . . . 1,000,000
2,000 3.55%, 2/4/97. . . . . . . . . . . . . . . 2,000,000
--------------
3,000,000
--------------
Total Investments
(amortized cost--$52,146,899+). . . . . . . . . . 97.7% $ 52,146,899
Other Assets in Excess
of Other Liabilities. . . . . . . . . . . . . . . 2.3 1,213,758
------ --------------
Total Net Assets . . . . . . . . . . . . . . . . . . 100.0% $ 53,360,657
------ --------------
------ --------------
- --------------------------------------------------------------------------------
New York Portfolio
- --------------------------------------------------------------------------------
New York--96.2%
$ 1,000 Babylon, IDA, RRR,
VRDN*, dtd. 11/27/96
3.95%, 12/2/96 . . . . . . . . . . . . . . $ 1,000,000
1,000 Broome Cnty. BAN's,
dtd. 4/18/96,
4.10%, 4/18/97 . . . . . . . . . . . . . . 1,001,531
300 Broome Cnty. Ctfs., Partn.,
Pub. Safety Fac.,
(Insd.; MBIA),
3.75%, 4/1/97. . . . . . . . . . . . . . . 299,947
500 Elmira City, BAN'S
dtd. 7/11/96
4.375%, 7/10/97. . . . . . . . . . . . . . 501,530
1,000 Gloversville Sch. Dist. GO,
(CS.; FSA)
4.90%, 6/15/97 . . . . . . . . . . . . . . 1,006,289
Manhasset Sch. Dist. GO,
1,000 4.25%, 6/26/97 . . . . . . . . . . . . . . 1,002,733
500 7.25%, 1/1/97. . . . . . . . . . . . . . . 501,482
B-7
<PAGE>
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
$ 415 Montgomery Cnty. GO,
(Insd.; AMBAC)
4.50%, 5/1/97. . . . . . . . . . . . . . . $ 415,827
325 New York City GO,
Ser. A,
8.75%, 11/1/97 (A) . . . . . . . . . . . . 344,362
300 New York City GO, VRDN*
Ser. B-5,
4.05%, 11/1/97 . . . . . . . . . . . . . . 300,000
New York City, GO,
1,000 Sub. Ser. H-6
3.40%, 2/6/97. . . . . . . . . . . . . . . 1,000,000
2,000 Sub. Ser. J-2
3.60%, 1/16/97 . . . . . . . . . . . . . . 2,000,000
900 New York City Housing Dev. Corp.
Residential East 17th St., Ser. A,
VRDN*
4.15%, 1/2/97. . . . . . . . . . . . . . . 900,000
500 New York City IDA, CFR,
Childrens Oncology Soc. Proj.,
VRDN*
(LC; Barclays Bank PLC)
3.40%, 12/4/96 . . . . . . . . . . . . . . 500,000
New York City IDA, IDR,
1,000 JFK Field Hotel Assoc. Proj.,
VRDN* (LC; Banque Indosuez),
3.50%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
1,000 La Guardia Arpt. Assoc. Proj.,
VRDN* (LC; Banque Indosuez),
3.50%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
New York City Mun. Asst. Corp.,
1,000 Ser. E, 4.00%, 7/1/97. . . . . . . . . . . 1,001,566
1,000 Ser. 68, 6.90%, 7/1/97 . . . . . . . . . . 1,017,529
New York City MWFA
1,000 Series 3, 3.40%, 12/5/96 . . . . . . . . . 1,000,000
2,000 Series 4, 3.45%, 12/12/96. . . . . . . . . 2,000,000
New York City Trust CRR,
2,000 Carnegie Hall Proj.,VRDN*
(LC; Dai-Ichi Kangyo Bank),
3.40%, 12/4/96 . . . . . . . . . . . . . . 2,000,000
1,500 Museum of Broadcasting Proj.,
VRDN* (LC; Sumitomo Bank),
3.70%, 12/4/96 . . . . . . . . . . . . . . 1,500,000
1,000 New York City, TAN'S
Ser. A, dtd. 8/1/96
4.50%, 2/12/97 . . . . . . . . . . . . . . 1,001,516
New York DAR,
500 City Univ. Sys. Cons., Ser. A,
8.125%, 7/1/97 (A) . . . . . . . . . . . . 521,843
2,115 Metropolitan Museum of Art Proj.,
Ser. B, VRDN* (Insd.; MBIA),
3.35%, 12/4/96 . . . . . . . . . . . . . . 2,115,000
505 Miriam Osborn Mem. Home Proj.,
Ser. A, VRDN* (LC; Banque
Nationale de Paribas),
3.55%, 12/4/96 . . . . . . . . . . . . . . 505,000
1,000 Ser. 1996
3.50%, 1/23/97 . . . . . . . . . . . . . . 1,000,000
500 Sloan Kettering Mem. Hosp. Proj.,
Ser. C, (LC; Chemical Bank),
3.65%, 1/6/97. . . . . . . . . . . . . . . 500,000
New York St. EFC, SWDR,
Gen. Elec. Co. Proj., Ser. A,
2,000 3.35%, 12/3/96 . . . . . . . . . . . . . . 2,000,000
1,600 3.40%, 12/4/96 . . . . . . . . . . . . . . 1,600,000
1,000 3.35%, 12/5/96 . . . . . . . . . . . . . . 1,000,000
1,400 New York St. General Electric
3.50%, 1/28/97 . . . . . . . . . . . . . . 1,400,000
New York St. ERDA, PCR,
2,000 New York St. Elec. & Gas Co. Proj.,
Ser. B,
3.85%, 10/15/97*** . . . . . . . . . . . . 2,000,000
1,000 Niagara Mohawk Pwr. Co. Proj.
Ser. A,
4.25%, 6/30/97 . . . . . . . . . . . . . . 1,000,000
Rochester Gas & Elec. Co. Proj.,
VRDN* (LC; Bank of New York)
1,500 3.40%, 12/2/96 . . . . . . . . . . . . . . 1,500,000
1,000 3.60%, 11/15/97*** . . . . . . . . . . . . 1,000,000
New York St. JDA, St. Gtd.,
VRDN*
750 Ser. A, 4.05%, 12/2/96 . . . . . . . . . . 750,000
845 Ser. B, 4.05%, 12/2/96 . . . . . . . . . . 845,000
385 Special Purpose,
Ser. A, 4.05%, 12/2/96 . . . . . . . . . . 385,000
3,000 New York St. LGAC,
Ser. E, VRDN* (LC; Canadian
Imperial Bank),
3.70%, 12/4/96 . . . . . . . . . . . . . . 3,000,000
2,000 New York St. PAR,
3.70%, 3/1/97*** . . . . . . . . . . . . . 2,000,000
1,000 New York St., BAN'S
Ser. S, dtd. 11/27/96
3.55%, 2/5/97. . . . . . . . . . . . . . . 1,000,000
558 Niagara Cnty. IDA, IDR,
Pyron Corp. Proj., VRDN*
(LC; Chemical Bank),
3.55%, 12/4/96 . . . . . . . . . . . . . . 558,000
1,500 Niagara Cnty. IDA, SWDR
Ser. C,
3.70%, 1/9/97. . . . . . . . . . . . . . . 1,500,000
500 Oceanside Sch. Dist. TAN'S,
dtd. 7/10/96,
4.375%, 6/27/97. . . . . . . . . . . . . . 501,303
B-8
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Schedules of Investments (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New York Municipal Portfolio (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Port Auth. of New York & New
Jersey, Ser. A,
$ 1,000 3.50%, 1/29/97 . . . . . . . . . . . . . . $ 1,000,000
2,500 3.55%, 12/2/96 . . . . . . . . . . . . . . 2,500,000
260 St. Lawrence Cnty. IDA, CFR,
INSD-St. Lawrence Univ. Proj.,
Ser. A,
4.25%, 7/1/97. . . . . . . . . . . . . . . 260,733
1,000 St. Lawrence Cnty. IDA, EIR,
Reynolds Metals Co. Proj., VRDN*
(LC; Royal Bank Of Canada),
3.40%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
500 Scarsdale Sch. Dist., TAN'S
dtd. 7/16/96,
4.25%, 6/26/97 . . . . . . . . . . . . . . 500,927
1,000 Student Loan Corp.,
Ser. '89A, 3.40%, 12/4/96. . . . . . . . . 1,000,000
1,000 Suffolk Cnty. IDA, IDR,
Nissequogue Cogen Ptnrs. Proj.,
VRDN* (LC; Toronto-Dominion
Bank), 3.50%, 12/4/96. . . . . . . . . . . 1,000,000
1,000 Suffolk Cnty. Wtr. Auth., BAN's,
VRDN*, dtd. 12/21/94,
3.45%, 12/4/96 . . . . . . . . . . . . . . 1,000,000
450 Wallkill IDA, PCR,
Reynolds Metals Co. Proj., VRDN*
(LC; Dresdner Bank A.G.),
3.35%, 12/4/96 . . . . . . . . . . . . . . 450,000
--------------
Total Investments
(amortized cost--$57,687,118+). . . . . . . . . . . 96.2% $ 57,687,118
Other Assets in Excess
of Other Liabilities. . . . . . . . . . . . . . . . 3.8 2,309,004
------ --------------
Total Net Assets . . . . . . . . . . . . . . . . . . . 100.0% $ 59,996,122
------ --------------
------ --------------
- --------------------
+ 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 date
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.
(A) Date shown is the pre-refunding date. Collateralized by U.S.
Government securities and cash which are held in escrow and are used
to pay principal and interest on the municipal issue and to retire the
bonds in full at the earliest refunding date.
See accompanying notes to financial statements.
B-9
<PAGE>
General Abbreviations:
AD Apartment Development
AIR Airport Improvement Revenue
AMBAC American Mortgage Bond Assurance Corporation
BAN Bond Anticipation Note
BFA Business Finance Authority
CDR Community Development Revenue
CFR Civic Facility Revenue
CRR Cultural Resources Revenue
CS Credit Support
DA Development Authority
DAR Dormitory Authority Revenue
DWR Department of Water Resources
EDA Economic Development Authority
EDAR Economic Development Authority Revenue
EDR Economic Development Revenue
EEIR Education Equipment & Improvement Revenue
EFC Environmental Facilities Corporation
EFR Electric Facilities Revenue
EIERA Environmental Improvement & Energy Resource Authority
EIR Environment Improvement Revenue
ELR Educational Loan Revenue
ERDA Energy Research & Development Authority
FA Finance Authority
FAGR Finance Agency Revenue
FAR Finance Authority Revenue
FGIC Financial Guaranty Insurance Corporation
FSA Financial Security Assurance
GAR General Authority Revenue
GFR General Fund Revenue
GO General Obligation
HAR Hospital Authority Revenue
HDA Housing Development Authority
HEA Higher Education Authority
HEAA Higher Education Assistance Revenue
HEL Higher Education Loan
HF Housing Finance
HFA Housing Finance Authority
HFAMR Housing Finance Agency Mortgage Revenue
HFASFR Housing Finance Authority Single Family Revenue
HFC Housing Finance Committee
HFDCR Health Facilities Development Corporation Revenue
HFF Health Facilities Financing
HFFAR Health Facilities Financing Authority Revenue
HFR Health Facilities Revenue
HHEFAR Health &Higher Educational Facilities Authority Revenue
HR Hospital Revenue
HMFA Housing Mortgage Finance Authority
HMFC Housing Mortgage Finance Corporation
ID Industrial Development
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
IFA Industrial Finance Agency
JDA Job Development Authority
LC Letter of Credit
LGAC Local Government Assistance Corporation
MBIA Municipal Bond Investors Assurance
MFA Municipal Finance Authority
MFHR Multiple Family Housing Revenue
MMR Multiple Family Mortgage Revenue
MTA Metropolitan Transportation Authority
MUD Municipal Utility District
MUDER Municipal Utility District Electric Revenue
MWFA Municipal Water Finance Authority
MWFSSR Municipal Water Finance Sewer System Revenue
PAR Power Authority Revenue
PCC Pollution Control Corporation
PCFA Pollution Control Financing Authority
PCFR Pollution Control Facilities Revenue
PCR Pollution Control Revenue
PFA Public Facility Authority
PPA Public Power Authority
PPR Public Power Revenue
PSA Public School Authority
PSR Power Supply Revenue
RAN Revenue Anticipation Note
RRR Resource Recovery Revenue
SCD Statewide Communities Development
SLMA Student Loan Marketing Association
SLR Student Loan Revenue
STR Sales Tax Revenue
SWDR Solid Waste Disposal Revenue
TA Transportation Authority
TAN Tax Anticipation Note
TRAN Tax Revenue Anticipation Note
WD Water District
WDA Waste Disposal Authority
B-10
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------- ------------- ------------- ------------- -------------
Primary Government General California New York
Portfolio Portfolio Municipal Municipal Municipal
Portfolio Portfolio Portfolio
-------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Investments, at value
(amortized cost --
$1,710,782,967, $101,026,239,
$120,084,850, $52,146,899 and
$57,687,118, respectively) . . . . . . $1,710,782,967 $ 101,026,239 $ 120,084,850 $ 52,146,899 $ 57,687,118
Cash. . . . . . . . . . . . . . . . . . . 240,211 95,127 5,459 11,522 98,707
Receivable for investments sold . . . . . -- -- 1,500,000 1,000,000 1,000,000
Receivable for fund shares sold . . . . . 345,427 922 -- -- 931,262
Receivable from Adviser . . . . . . . . . -- -- -- 819 --
Interest receivable . . . . . . . . . . . 4,197,991 170,380 838,178 273,372 373,686
Prepaid expenses and other assets . . . . 102,843 12,840 10,011 4,022 3,050
-------------- ------------- ------------- ------------- -------------
Total Assets. . . . . . . . . . . . . . . 1,715,669,439 101,305,508 122,438,498 53,436,634 60,093,823
-------------- ------------- ------------- ------------- -------------
Liabilities
Payable for fund shares redeemed. . . . . 9,709 -- 6,461 -- 14,246
Investment advisory fee payable . . . . . 76,737 -- -- -- 2,423
Distribution fee payable. . . . . . . . . 46,598 2,770 3,337 1,463 1,622
Shareholder services fee payable. . . . . 82,184 4,192 5,849 2,536 2,638
Administrative services fee payable . . . 9,320 554 668 293 324
Dividends payable . . . . . . . . . . . . 2,092,702 112,620 81,170 39,614 39,957
Other payables and accrued expenses . . . 771,428 49,868 59,221 32,071 36,491
-------------- ------------- ------------- ------------- -------------
Total Liabilities . . . . . . . . . . . . 3,088,678 170,004 156,706 75,977 97,701
-------------- ------------- ------------- ------------- -------------
Total Net Assets. . . . . . . . . . . . . $1,712,580,761 $ 101,135,504 $ 122,281,792 $ 53,360,657 $ 59,996,122
-------------- ------------- ------------- ------------- -------------
-------------- ------------- ------------- ------------- -------------
Composition of Net Assets
Par value ($.0001 per share,
10 billion shares authorized
for each portfolio). . . . . . . . . . $ 171,262 $ 10,116 $ 12,237 $ 5,339 $ 6,002
Paid-in-capital in excess of par. . . . . 1,712,409,587 101,125,526 122,360,293 53,386,172 60,013,921
Accumulated net realized
loss on investments. . . . . . . . . . (88) (138) (90,738) (30,854) (23,801)
-------------- ------------- ------------- ------------- -------------
Total Net Assets. . . . . . . . . . . . . $1,712,580,761 $ 101,135,504 $ 122,281,792 $ 53,360,657 $ 59,996,122
-------------- ------------- ------------- ------------- -------------
-------------- ------------- ------------- ------------- -------------
Fund shares outstanding . . . . . . . . . 1,712,620,019 101,157,835 122,373,195 53,391,512 60,019,923
-------------- ------------- ------------- ------------- -------------
Net asset value per share . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
-------------- ------------- ------------- ------------- -------------
-------------- ------------- ------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements.
B-11
<PAGE>
Year ended November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------- ------------- ------------- ------------- -------------
Primary Government General California New York
Portfolio Portfolio Municipal Municipal Municipal
Portfolio Portfolio Portfolio
-------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment Income
Interest. . . . . . . . . . . . . . . . . $ 93,426,661 $ 5,675,674 $ 4,588,062 $ 2,024,273 $ 2,146,269
-------------- ------------- ------------- ------------- -------------
Operating Expenses
Investment advisory fee (note 2a) . . . . 6,981,092 520,106 638,004 309,904 313,061
Distribution fee (note 2b). . . . . . . . 4,238,182 262,097 326,669 154,952 156,531
Transfer and dividend
disbursement agent fees. . . . . . . . 2,330,976 78,649 79,161 22,501 32,601
Administrative services fee (note 2c) . . 847,636 52,419 65,334 30,990 31,306
Shareholder services fee (note 2d). . . . 335,977 21,519 26,281 12,379 13,544
Registration fees . . . . . . . . . . . . 284,343 20,514 44,154 150 65
Custodian fees (note 2e). . . . . . . . . 146,502 42,626 48,881 19,951 18,962
Reports and notices to shareholders . . . 133,766 6,733 8,329 2,811 3,293
Auditing, consulting and tax
return preparation fees. . . . . . . . 43,406 18,106 18,606 17,106 18,106
Directors' fees and expenses. . . . . . . 29,470 24,900 24,950 24,900 24,900
Legal fees. . . . . . . . . . . . . . . . 10,225 2,320 2,880 2,200 2,200
Miscellaneous . . . . . . . . . . . . . . 134,213 6,135 9,815 4,039 6,554
-------------- ------------- ------------- ------------- -------------
Total operating expenses . . . . . . . . . . 15,515,788 1,056,124 1,293,064 601,883 621,123
Less: Investment advisory fee
waived (note 2a). . . . . . . . . . . . . -- (258) (1,744) (71,394) (7,866)
Less: Expense offset
arrangement (note 2e) . . . . . . . . . . (7,532) (7,483) (3,283) (4,683) (4,081)
-------------- ------------- ------------- ------------- -------------
Net operating expenses . . . . . . . . . . . 15,508,256 1,048,383 1,288,037 525,806 609,176
-------------- ------------- ------------- ------------- -------------
Net investment income . . . . . . . . . .. 77,918,405 4,627,291 3,300,025 1,498,467 1,537,093
Net realized gain (loss)
on investments. . . . . . . . . . . (88) (138) 1,357 (9,304) --
-------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations . . . . . . . . $ 77,918,317 $ 4,627,153 $ 3,301,382 $ 1,489,163 $ 1,537,093
-------------- ------------- ------------- ------------- -------------
-------------- ------------- ------------- ------------- -------------
</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,
----------------------------------- -----------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations
Net investment income . . . . . . . . $ 77,918,405 $ 80,795,389 $ 4,627,291 $ 5,452,937
Net realized gain (loss)
on investments . . . . . . . . . . (88) 68 (138) 700
--------------- --------------- --------------- ---------------
Net increase in net assets
resulting from operations . . . 77,918,317 80,795,457 4,627,153 5,453,637
--------------- --------------- --------------- ---------------
Dividends and Distributions
to Shareholders
Net investment income . . . . . . . . (77,918,405) (80,795,389) (4,627,291) (5,452,937)
Net realized gains. . . . . . . . . . (68) (482) (700) (494)
--------------- --------------- --------------- ---------------
Total dividends and
distributions to shareholders. . . (77,918,473) (80,795,871) (4,627,991) (5,453,431)
--------------- --------------- --------------- ---------------
Fund Share Transactions
Net proceeds from sales . . . . . . . 9,931,873,061 8,545,299,477 547,203,168 561,063,508
Reinvestment of dividends
and distributions. . . . . . . . . 75,659,105 77,748,816 4,601,454 5,335,254
Cost of shares redeemed . . . . . . . (9,966,080,610) (8,405,687,289) (559,243,310) (571,041,692)
--------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets from fund
share transactions. . . . . . . 41,451,556 217,361,004 (7,438,688) (4,642,930)
--------------- --------------- --------------- ---------------
Increase due to voluntary
capital contribution
by adviser (note 2f) . . . . . . . -- -- -- --
--------------- --------------- --------------- ---------------
Total increase (decrease) in
net assets . . . . . . . . . . . . 41,451,400 217,360,590 (7,439,526) (4,642,724)
Net Assets
Beginning of year . . . . . . . . . . 1,671,129,361 1,453,768,771 108,575,030 113,217,754
--------------- --------------- --------------- ---------------
End of year . . . . . . . . . . . . . $ 1,712,580,761 $ 1,671,129,361 $ 101,135,504 $ 108,575,030
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</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,
---------------------------- ------------------------------ ----------------------------
1996 1995 1996 1995 1996 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income . . . . . . . . $ 3,300,025 $ 3,880,838 $ 1,498,467 $ 1,946,409 $ 1,537,093 $ 1,582,050
Net realized gain (loss)
on investments . . . . . . . . . . 1,357 (33,497) (9,304) (618,234) -- (19,669)
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations . . . 3,301,382 3,847,341 1,489,163 1,328,175 1,537,093 1,562,381
------------- ------------- ------------- ------------- ------------- -------------
Dividends and Distributions
to Shareholders
Net investment income . . . . . . . . (3,300,025) (3,880,838) (1,498,467) (1,946,409) (1,537,093) (1,582,050)
Net realized gains. . . . . . . . . . -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total dividends and
distributions to shareholders. . . (3,300,025) (3,880,838) (1,498,467) (1,946,409) (1,537,093) (1,582,050)
------------- ------------- ------------- ------------- ------------- -------------
Fund Share Transactions
Net proceeds from sales . . . . . . . 718,878,788 667,188,766 276,344,120 296,613,031 317,110,184 303,848,325
Reinvestment of dividends
and distributions. . . . . . . . . 3,249,617 3,738,051 1,512,475 1,848,545 1,470,312 1,487,169
Cost of shares redeemed . . . . . . . (715,812,543) (663,670,132) (300,398,721) (283,854,056) (310,927,499) (300,949,618)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets from fund
share transactions. . . . . . . 6,315,862 7,256,685 (22,542,126) 14,607,520 7,652,997 4,385,876
------------- ------------- ------------- ------------- ------------- -------------
Increase due to voluntary
capital contribution
by adviser (note 2f) . . . . . . . -- -- -- 604,407 -- --
------------- ------------- ------------- ------------- ------------- -------------
Total increase (decrease) in
net assets . . . . . . . . . . . . 6,317,219 7,223,188 (22,551,430) 14,593,693 7,652,997 4,366,207
Net Assets
Beginning of year . . . . . . . . . . 115,964,573 108,741,385 75,912,087 61,318,394 52,343,125 47,976,918
------------- ------------- ------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . $ 122,281,792 $ 115,964,573 $ 53,360,657 $ 75,912,087 $ 59,996,122 $ 52,343,125
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
B-14
<PAGE>
November 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
OCC Cash Reserves (the "Fund") is registered under the Investment Company
Act of 1940 as an open-end management investment company. The Fund has five
portfolios: 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 preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. 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. The amortized cost method involves valuing a security
at cost on the date of purchase and thereafter assuming a constant dollar
amortization to maturity of the difference between the principal amount due at
maturity and the initial cost of the security.
(b) Federal Income Taxes
Each Portfolio intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distributes
substantially all of its taxable and non-taxable income to its shareholders;
accordingly, no Federal income tax provision is required.
(c) Investment Transactions and Other Income
Investment transactions are accounted for on the trade date. Cost of
investments sold is determined on the basis of identified cost. Interest income
is accrued as earned. Premiums are amortized and original issue discounts are
accreted to interest income over the lives of the respective securities.
(d) 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, if any,
are declared and paid annually by each Portfolio.
(e) Repurchase Agreements
Each Portfolio may enter into repurchase agreements as part of its
investment program. The Portfolios' 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 counterparty to the agreement, realization and/or retention of
the collateral or proceeds may be subject to legal proceedings.
B-15
<PAGE>
(f) 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 applicable Portfolios or on
another reasonable basis.
2. Investment Advisory Fee, Distribution Fee, Shareholder Services Fee
and Other Transactions with Affiliates
(a) Under the Investment Advisory Agreement, each Portfolio pays the
Adviser a monthly investment advisory fee 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 voluntarily agreed to reimburse each Portfolio to the
extent that the combined operating expenses of the Portfolio do not exceed 1.00%
of its average daily net assets (net of expense offsets) for any fiscal year.
For the year ended November 30, 1996, the Adviser waived $258, $1,744, $71,394
and $7,866 in investment advisory fees for Government, General, California and
New York, respectively.
(b) The Fund has adopted a Distribution Plan (the "Plan") pursuant to
which each Portfolio pays the Adviser a monthly fee 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, 1996, substantially all fees under the Plan were paid to
Oppenheimer & Co., Inc., an affiliated broker-dealer of the Adviser.
(c) Each Portfolio pays Oppenheimer & Co., Inc. and certain other broker-
dealers for administrative services performed for shareholder accounts at an
annual rate of .05% of each Portfolio's average daily net assets. For the year
ended November 30, 1996, payments to Oppenheimer & Co., Inc. were: Primary
$847,636; Government $52,419; General $65,334; California $30,990; and New York
$31,306.
(d) Each Portfolio reimburses Oppenheimer & Co., Inc. for a portion of its
costs in providing it with shareholder servicing. The Fund has been informed
that for the year ended November 30, 1996, amounts paid to Oppenheimer & Co.,
Inc. for such services were: Primary $323,317; Government $18,497; General
$24,536; California $12,352; and New York $9,212.
(e) The Fund benefits from an expense offset arrangement with the
custodian bank where uninvested cash balances earn credits that reduce monthly
fees. Had these cash balances been invested in income producing securities, they
would have generated income for the Fund.
(f) On December 7, 1994 the Adviser voluntarily purchased from the
California Municipal Portfolio $2,000,000 par, Orange County, CA Tax and Revenue
Anticipation Notes for an amount which exceeded their fair market value by
$604,407. 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.
3. Purchases and Sales of Investments
For the year ended November 30, 1996, purchases and sales/maturities of
investment securities were: Primary $10,316,457,954 and $10,361,803,246,
respectively; Government $4,350,947,604 and $4,368,805,841, respectively;
General $577,868,868 and $571,989,155, respectively; California $280,033,105 and
$302,643,187, respectively; and New York $273,168,629 and $268,186,600,
respectively.
B-16
<PAGE>
4. Financial Instruments and Associated Risks
Each Portfolio invests in issues with a remaining maturity of thirteen
months or less and are rated high quality by a nationally recognized statistical
rating organization or, if not rated, are judged by the Adviser to be of
comparable quality. Primary maintains portfolio diversification to reduce
investment risk by not investing more than 25% of its total assets in 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. At November 30, 1996, major industry
concentrations were as follows: Banking--37.2%, Finance--15.3%, Sovereign--
11.7%, Automotive--9.6%, Brokerage--6.9%. 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, 1996, accumulated net realized capital loss carryforwards
available as a reduction against future net realized capital gains for Federal
income tax purposes were: Primary--$88 which will expire in 2004; Government--
$138 which will expire in 2004; General--$90,738 of which $12,327 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--$30,854 of which $730 will expire in 1999, $5,856 will expire in
2000, $1,137 will expire in 2001, $13,827 will expire in 2003 and $9,304 will
expire in 2004; 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. To the extent that these
capital loss carryforwards are used to offset future net capital gains, it is
possible that gains so offset will not be distributed to shareholders.
6. Subsequent Events
OpCap Advisors is a majority-owned subsidiary of Oppenheimer Capital.
Oppenheimer Financial Corp. (""Opfin''), a holding company, is a 1.0% general
partner of OpCap Advisors. Opfin also holds a one-third managing general
partner interest in Oppenheimer Capital, and Oppenheimer Capital, L.P., a
Delaware limited partnership whose units are traded on the New York Stock
Exchange and of which Opfin is the sole 1.0% general partner, owns the
remaining two-thirds interest. On February 13, 1997, PIMCO Advisors L.P.
(""PIMCO Advisors''), a registered investment adviser, signed an Agreement
and Plan of Merger with Oppenheimer Group, Inc. (""OGI'') and its subsidiary
Opfin pursuant to which PIMCO Advisors and its affiliate, Thomson Advisory
Group Inc. (""TAG''), will acquire the one-third managing general partner
interest in Oppenheimer Capital, its 1.0% general partnership interest in
OpCap Advisors, and its 1.0% general partner interest in Oppenheimer Capital
L.P. (the ""Transaction'') and OGI will be merged with and into TAG. The
Transaction is subject to certain conditions being satisfied prior to
closing, including consents from certain lenders, approvals from regulatory
authorities, including a favorable tax ruling from the Internal Revenue
Service, and consents of certain clients, which are expected to take up to
six months to obtain.
B-17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Highlights (For a share outstanding throughout each year)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM DIVIDENDS
INVESTMENT OPERATIONS AND DISTRIBUTIONS
----------------------------------------------------- -------------------------------------------------
Dividends to
Net Asset Net Shareholders Distributions Total Dividends
Value, Net Realized Total from from Net to Shareholders and Distributions
Beginning Investment Gain/(Loss) Investment Investment from Net to
of Year Income on Investments Operations Income Realized Gains Shareholders
<S> <C> <C> <C> <C> <C> <C> <C>
Primary Portfolio
Year ended Nov. 30, 1996 $1.000 $0.046 ($0.000) $0.046 ($0.046) ($0.000) ($0.046)
Year ended Nov. 30, 1995 1.000 0.051 0.000 0.051 (0.051) (0.000) (0.051)
Year ended Nov. 30, 1994 1.000 0.032 0.000 0.032 (0.032) (0.000) (0.032)
Year ended Nov. 30, 1993 1.000 0.024 0.000 0.024 (0.024) (0.000) (0.024)
Year ended Nov. 30, 1992 1.000 0.033 0.000 0.033 (0.033) (0.000) (0.033)
</TABLE>
<TABLE>
<CAPTION>
RATIOS TO
AVERAGE
NET ASSETS
------------------------
Net Asset Net Assets,
Value, End of Net Net
End of Total Year Operating Investment
Year Return* (millions) Expenses Income
<S> <C> <C> <C> <C> <C>
Primary Portfolio
Year ended Nov. 30, 1996 $1.000 4.69% $1,712.6 0.91%(1,2) 4.60%(1,2)
Year ended Nov. 30, 1995 1.000 5.19% 1,671.1 0.94% 5.07%
Year ended Nov. 30, 1994 1.000 3.26% 1,453.8 0.91% 3.21%
Year ended Nov. 30, 1993 1.000 2.44% 1,413.9 0.90% 2.41%
Year ended Nov. 30, 1992 1.000 3.38% 1,168.3 0.88% 3.34%
</TABLE>
(1) Average net assets for the year ended November 30, 1996 were $1,695,272,657.
(2) Gross of expense offsets (see note 2e in Notes to Financial Statements).
<TABLE>
<CAPTION>
INCOME FROM DIVIDENDS
INVESTMENT OPERATIONS AND DISTRIBUTIONS
----------------------------------------------------- -------------------------------------------------
Dividends to
Net Asset Net Shareholders Distributions Total Dividends
Value, Net Realized Total from from Net to Shareholders and Distributions
Beginning Investment Gain/(Loss) Investment Investment from Net to
of Year Income on Investments Operations Income Realized Gains Shareholders
<S> <C> <C> <C> <C> <C> <C> <C>
Government Portfolio
Year ended Nov. 30, 1996 $1.000 $0.044 ($0.000) $0.044 ($0.044) ($0.000) ($0.044)
Year ended Nov. 30, 1995 1.000 0.049 0.000 0.049 (0.049) (0.000) (0.049)
Year ended Nov. 30, 1994 1.000 0.031 0.000 0.031 (0.031) - (0.031)
Year ended Nov. 30, 1993 1.000 0.022 -- 0.022 (0.022) (0.000) (0.022)
Year ended Nov. 30, 1992 1.000 0.032 0.000 0.032 (0.032) - (0.032)
</TABLE>
<TABLE>
<CAPTION>
RATIOS TO
AVERAGE
NET ASSETS
------------------------
Net Asset Net Assets,
Value, End of Net Net
End of Total Year Operating Investment
Year Return* (millions) Expenses Income
<S> <C> <C> <C> <C> <C>
Government Portfolio
Year ended Nov. 30, 1996 $1.000 4.51% $101.1 1.00%(1,2) 4.41%(1,2)
Year ended Nov. 30, 1995 1.000 5.02% 108.6 1.00%(1) 4.91%(1)
Year ended Nov. 30, 1994 1.000 3.12% 113.2 0.95%(1) 3.08%(1)
Year ended Nov. 30, 1993 1.000 2.26% 127.9 1.00% 2.24%
Year ended Nov. 30, 1992 1.000 3.24% 131.7 0.93%(1) 3.23%(1)
</TABLE>
(1) During the years noted above, the Adviser waived a portion of its fees.
Additionally, for the year ended November 30, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. Had such
waivers and expense offsets not been in effect, the ratios of net operating
expenses to average net assets would have been 1.00%, 1.02%, 0.97% and
0.94%, respectively, and the ratios of net investment income to average net
assets would have been 4.41%, 4.89%, 3.06% and 3.22%, respectively.
(2) Average net assets for the year ended November 30, 1996 were $104,838,715.
- --------------------
* Assumes reinvestment of all dividends and distributions.
B-18
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS AND
DISTRIBUTIONS
--------------------------
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS
--------------------------------------- TO
NET ASSET NET REALIZED SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET CAPITAL
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT CONTRIBUTION
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME BY ADVISER
<S> <C> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 $ 0.000 $0.025 $(0.025) --
1995.......................... 1.000 0.031 0.000 0.031 (0.031) --
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.026 0.000 0.026 (0.026) --
1991.......................... 1.000 0.042 0.000 0.042 (0.042) --
February 14, 1990 (4)
to November 30, 1990......... 1.000 0.042 (0.000) 0.042 (0.042) --
<CAPTION>
RATIOS TO AVERAGE NET
NET ASSETS
ASSETS, -------------------------
NET ASSET END OF NET NET
VALUE, END TOTAL YEAR OPERATING INVESTMENT
OF YEAR RETURN* (MILLIONS) EXPENSES INCOME
<S> <C> <C> <C> <C> <C>
GENERAL MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 2.56% $ 122.3 0.99%(1,2) 2.53%(1,2)
1995.......................... 1.000 3.11% 116.0 0.93%(1) 3.07%(1)
1994.......................... 1.000 2.04% 108.7 0.90%(1) 2.01%(1)
1993.......................... 1.000 1.74% 109.7 0.98%(1) 1.73%(1)
1992.......................... 1.000 2.66% 112.9 0.90%(1) 2.62%(1)
1991.......................... 1.000 4.24% 100.1 0.88%(1) 4.20%(1)
February 14, 1990 (4)
to November 30, 1990......... 1.000 5.45%(3) 107.9 0.71%(1,3) 5.32%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion of its fees.
Additionally, for the year ended November 30, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. Had such waivers
and expense offsets not been in effect, the ratio of net operating expenses
to average net assets would have been 0.99%, 1.02%, 1.01%, 1.01%, 1.00%,
0.98% and 1.00%, respectively and the ratio of net investment income to
average net assets would have been 2.53%, 2.98%, 1.90%, 1.70%, 2.52%, 4.10%
and 5.03%, respectively.
(2) Average net assets for the year ended November 30, 1996 were $130,667,601.
(3) Annualized.
(4) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.024 (0.000) $0.024 $(0.024) --
1995.......................... 1.000 0.031 $(0.008) 0.023 (0.031) 0.008
1994.......................... 1.000 0.020 (0.000) 0.020 (0.020) --
1993.......................... 1.000 0.017 (0.000) 0.017 (0.017) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
March 20, 1991 (5)
to November 30, 1991......... 1.000 0.026 (0.000) 0.026 (0.026) --
<CAPTION>
CALIFORNIA MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.42% $ 53.4 0.85%(1,2) 2.42%(1,2)
1995.......................... 1.000 3.10%(3) 75.9 0.82%(1) 3.05%(1)
1994.......................... 1.000 1.99% 61.3 0.85%(1) 1.99%(1)
1993.......................... 1.000 1.76% 62.3 0.85%(1) 1.75%(1)
1992.......................... 1.000 2.57% 61.2 0.60%(1) 2.51%(1)
March 20, 1991 (5)
to November 30, 1991......... 1.000 4.24%(4) 45.4 0.54%(1,4) 3.75%(1,4)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.97%, 0.95%, 0.97%, 0.98%, 1.02% and
1.08%, respectively, and the ratio of net investment income to average net
assets would have been 2.30%, 2.92%, 1.87%, 1.62%, 2.09% and 3.21%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $61,980,887.
(3) Had the Adviser not made the capital contribution in regard to Orange
County, (see note 2f in Notes to Financial Statements) the Portfolio's total
return would have been lower.
(4) Annualized.
(5) Commencement of operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW YORK MUNICIPAL PORTFOLIO
Year ended November 30,
1996.......................... $1.000 $0.025 -- $0.025 $(0.025) --
1995.......................... 1.000 0.030 0.000 0.030 (0.030) --
1994.......................... 1.000 0.019 (0.000) 0.019 (0.019) --
1993.......................... 1.000 0.016 (0.000) 0.016 (0.016) --
1992.......................... 1.000 0.025 (0.000) 0.025 (0.025) --
April 10, 1991 (4)
to November 30, 1991......... 1.000 0.024 (0.000) 0.024 (0.024) --
<CAPTION>
NEW YORK MUNICIPAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Year ended November 30,
1996.......................... $1.000 2.50% $ 60.0 0.97%(1,2) 2.45%(1,2)
1995.......................... 1.000 3.07% 52.3 0.79%(1) 3.02%(1)
1994.......................... 1.000 1.92% 48.0 0.82%(1) 1.90%(1)
1993.......................... 1.000 1.66% 42.2 0.79%(1) 1.64%(1)
1992.......................... 1.000 2.56% 32.9 0.74%(1) 2.43%(1)
April 10, 1991 (4)
to November 30, 1991......... 1.000 4.29%(4) 18.4 0.56%(1,3) 3.80%(1,3)
</TABLE>
(1) During the periods noted above, the Adviser waived a portion or all of its
fees and assumed a portion of the operating expenses. Additionally, for the
year ended November 30, 1996, the Portfolio benefited from an expense offset
arrangement with its custodian bank. Had such waivers, assumptions and
expense offsets not been in effect, the ratio of net operating expenses to
average net assets would have been 0.98%, 1.00%, 1.01%, 1.03%, 1.19% and
1.43%, respectively, and the ratio of net investment income to average net
assets would have been 2.44%, 2.81%, 1.71%, 1.40%, 1.98% and 2.93%,
respectively.
(2) Average net assets for the year ended November 30, 1996 were $62,612,204.
(3) Annualized.
(4) Commencement of operations.
* Assumes reinvestment of all dividends.
B-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Independent Accountants Report
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of OCC Cash Reserves
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 OCC Cash Reserves,
hereafter referred to as the "Portfolio") at November 30, 1996, 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 five years in the period then ended, 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, 1996 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 20, 1997
except as to Note 6, which is as of March 25, 1997
B-20
<PAGE>
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS:
Included in the Prospectus:
Financial Highlights
Included in Part B:
AUDITED FINANCIALS: Schedules of Investments, Statements of
Assets and Liabilities, Statement of Operations, Statement of
Changes in Net Assets, Notes to the Financial Statements,
Financial Highlights, Report of Independent Accountants for the
fiscal year ended November 30, 1996.
Included in Part C:
None
EXHIBITS:
(1) Articles of Incorporation.*
(2) Bylaws of Registrant.*
(3) Not Applicable.
(4) Not Applicable.
(5) Advisory Agreement.*
(6) (a) Distribution Agreement.*
(b) Dealer Agreement.*
(7) Not Applicable.
(8) Custody Agreement.*
(9) Not Applicable.
C-1
<PAGE>
(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will when
sold be legally issued, fully paid and non-assessable.*
(11) Consent of Independent Accountants.
(12) Not Applicable.
(13) Agreement relating to initial capital.*
(14) Not Applicable.
(15) Distribution Assistance and Administrative Services Plan Pursuant
to Rule 12b-1.*
(16) Performance Computations.*
(17) Financial Data Schedules.
* Incorporated by reference to exhibits filed with Post-Effective
Amendment No. 12.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is presently controlled by or under common control with
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record
Holders as of
Title of Class March 7, 1997
-------------- -------------
Common Stock Primary Portfolio . . . . . . . . . . . 132,487
Common Stock Government Portfolio. . . . . . . . . . . 2,645
Common Stock General Municipal Portfolio . . . . . . . 3,374
Common Stock California Municipal Portfolio. . . . . . 1,368
Common Stock New York Municipal Portfolio. . . . . . . 1,792
ITEM 27. INDEMNIFICATION
See Article Eighth, Sections (6) and (7) of Registrant's Articles of
Incorporation, Exhibit 1.
C-2
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Investment
Management and Other Services" in the Additional Statement regarding
the business of the investment adviser. Set forth below is
information as to the business, profession, vocation or employment of
a substantial nature of each of the officers and directors of the
investment adviser.
<TABLE>
<CAPTION>
Name & Current Position with OpCap Advisors Other Business and Connections During the Past Two Years
- ------------------------------------------- --------------------------------------------------------
<S> <C>
Thomas E. Duggan, General Counsel & Secretary Managing Director and General Counsel of Oppenheimer Capital; Assistant
Secretary of Oppenheimer Financial Corp.: General Counsel and Secretary of
Oppenheimer Capital Limited and OCC Distributors.
Bernard H. Garil, President Director of Oppenheimer Capital Trust Company.
Joseph M. LaMotta, Chairman Chairman and Chief Executive Officer of Oppenheimer Capital; Director &
Executive Vice President of Oppenheimer Financial Corp. and Oppenheimer
Group, Inc.; General Partner of Oppenheimer & Co., L.P.; Director of
Oppenheimer Capital Trust Company; Director and President of Oppenheimer
Capital Limited: Chairman of OCC Distributors.
Sheldon M. Siegel, Treasurer and Chief Financial Managing Director/Treasurer/Chief Financial Officer of Oppenheimer Capital;
Officer Director of Oppenheimer Capital Trust Company; Treasurer and Chief Financial
Officer of Oppenheimer Capital Limited and OCC Distributors.
</TABLE>
The address of OpCap Advisors is 200 Liberty Street, New York, New
York 10281.
ITEM 29. PRINCIPAL UNDERWRITER
(a) OCC Distributors acts as principal underwriter for the
Registrant, The Saratoga Advantage Trust and OCC Accumulation
Trust.
(b) Set forth below is certain information pertaining to the partners
and officers of OCC Distributors, Registrant's Principal
Underwriter; THE PRINCIPAL BUSINESS ADDRESS OF EACH IS ONE WORLD
FINANCIAL CENTER, NEW YORK, NY, 10281:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- --------------------- ---------------------
Oppenheimer Capital General Partner None
Oppenheimer Financial Corp. General Partner None
Peter Muratore President None
C-3
<PAGE>
Sheldon M. Siegel Treasurer Treasurer
Thomas E. Duggan Secretary Assistant Secretary
(c) Not applicable.
ITEM 30. LOCATION OF REQUIRED RECORDS -- RULE 31a-1
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 01271
Will maintain records required by Rule 31a-1(b)(1), (b)(2), (b)(3),
(b)(6), (b)(7) and (b)(8).
OpCap Advisors
One World Financial Center
New York, NY 10281
Will maintain records required by Rule 31a-1(b)(4), (b)(9), (b)(10)
and (b)(11).
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 31. UNDERTAKINGS
(a) Registrant hereby undertakes to assist shareholder communication
in accordance with the provisions of Section 16 of the Investment
Company Act of 1940 and to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Director or
Directors when requested in writing to do so by the holders of at
least 10% of the Registrant's outstanding shares of common stock.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485 (b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned thereto
duly authorized in the City of New York, and State of New York on the 25th day
of March, 1997.
OCC CASH RESERVES, INC.
/s/ Joseph M. La Motta
-----------------------------
Joseph M. La Motta, President
Attest:
/s/ Deborah Kaback
- -------------------------
Deborah Kaback, Secretary
Pursuant to the requirements of the Securities Act of 1933 this
registration statement has been signed below by the following persons in the
capacities and on the date indicated:
OCC CASH RESERVES, INC.
Date
/s/ Joseph M. La Motta 3/25/97
- ---------------------------------------
Joseph M. La Motta, President, Director
Paul Y. Clinton 3/25/97
- ---------------------------------------
Paul Y. Clinton, Director
Thomas W. Courtney 3/25/97
- ---------------------------------------
Thomas W. Courtney, Director
Lacy B. Herrmann 3/25/97
- ---------------------------------------
Lacy B. Herrmann, Director
George Loft 3/25/97
- ---------------------------------------
George Loft, Director
Deborah Kaback 3/25/97
- ---------------------------------------
Deborah Kaback, Secretary
Sheldon Siegel 3/25/97
- ---------------------------------------
Sheldon Siegel, Treasurer
C-5
<PAGE>
OCC CASH RESERVES, INC.
INDEX TO EXHIBITS
Exhibit No.
(11) Consent of Independent Accountants
(17) Financial Data Schedules
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 14 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 20, 1997, relating to the financial statements and financial highlights
of the Primary Portfolio, the Government Portfolio, the General Municipal
Portfolio, the California Municipal Portfolio, and the New York Municipal
Portfolio (constituting OCC Cash Reserves), which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the heading "Independent Accountants" in
such Statement of Additional Information and to the reference to us under the
heading "Financial Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
March 25, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
OCC CASH RESERVES -PRIMARY PORTFOLIO ANNUAL REPORT FOR THE YEAR
ENDED NOVEMBER 30, 1996.
</LEGEND>
<CIK> 0000851173
<NAME> OCC CASH RESERVES
<SERIES>
<NUMBER> 1
<NAME> PRIMARY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 1710782967
<INVESTMENTS-AT-VALUE> 1710782967
<RECEIVABLES> 4543418
<ASSETS-OTHER> 343054
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1715669439
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3088678
<TOTAL-LIABILITIES> 3088678
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1712580849
<SHARES-COMMON-STOCK> 1712620019
<SHARES-COMMON-PRIOR> 1671168463
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (88)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1712580761
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 93426661
<OTHER-INCOME> 0
<EXPENSES-NET> (15508256)
<NET-INVESTMENT-INCOME> 77918405
<REALIZED-GAINS-CURRENT> (88)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 77918317
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (77918405)
<DISTRIBUTIONS-OF-GAINS> (68)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9931873061
<NUMBER-OF-SHARES-REDEEMED> (9966080610)
<SHARES-REINVESTED> 75659105
<NET-CHANGE-IN-ASSETS> 41451556
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 68
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6981092
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15515788<F1>
<AVERAGE-NET-ASSETS> 1695272657
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .046
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.046)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>(55) GROSS OF EXPENSE OFFSETS - $7,532
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
OCC CASH RESERVES -GENERAL MUNICIPAL PORTFOLIO ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30, 1996.
</LEGEND>
<CIK> 0000851173
<NAME> OCC CASH RESERVES
<SERIES>
<NUMBER> 2
<NAME> GENERAL MUNICIPAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 120084850
<INVESTMENTS-AT-VALUE> 120084850
<RECEIVABLES> 2338178
<ASSETS-OTHER> 15470
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 122438498
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 156706
<TOTAL-LIABILITIES> 156706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122372530
<SHARES-COMMON-STOCK> 122373195
<SHARES-COMMON-PRIOR> 116057333
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (90738)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 122281792
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4588062
<OTHER-INCOME> 0
<EXPENSES-NET> (1288037)
<NET-INVESTMENT-INCOME> 3300025
<REALIZED-GAINS-CURRENT> 1357
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3301382
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3300025)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 718878788
<NUMBER-OF-SHARES-REDEEMED> (715812543)
<SHARES-REINVESTED> 3249617
<NET-CHANGE-IN-ASSETS> 6315862
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (92095)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 638004
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1289781<F1>
<AVERAGE-NET-ASSETS> 130667601
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .025
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.025)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>(55)GROSS OF EXPENSE OFFSETS-$3,283
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
OCC CASH RESERVES - GOVERNMENT PORTFOLIO ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30, 1996.
</LEGEND>
<CIK> 0000851173
<NAME> OCC CASH RESERVES
<SERIES>
<NUMBER> 3
<NAME> GOVERNMENT PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 101026239
<INVESTMENTS-AT-VALUE> 101026239
<RECEIVABLES> 171302
<ASSETS-OTHER> 107967
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101305508
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 170004
<TOTAL-LIABILITIES> 170004
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 101135642
<SHARES-COMMON-STOCK> 101157835
<SHARES-COMMON-PRIOR> 108596523
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (138)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 101135504
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5675674
<OTHER-INCOME> 0
<EXPENSES-NET> (1048383)
<NET-INVESTMENT-INCOME> 4627291
<REALIZED-GAINS-CURRENT> (138)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4627153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4627291)
<DISTRIBUTIONS-OF-GAINS> (700)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 547203168
<NUMBER-OF-SHARES-REDEEMED> (559243310)
<SHARES-REINVESTED> 4601454
<NET-CHANGE-IN-ASSETS> (7438688)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 700
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 520106
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1056124<F1>
<AVERAGE-NET-ASSETS> 104838715
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .044
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.044)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>(55) GROSS OF EXPENSE OFFSETS- $7,483
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
OCC CASH RESERVES - NEW YORK MUNICIPAL PORTFOLIO ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30, 1996.
</LEGEND>
<CIK> 0000851173
<NAME> OCC CASH RESERVES
<SERIES>
<NUMBER> 4
<NAME> NEW YORK MUNICIPAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 57687118
<INVESTMENTS-AT-VALUE> 57687118
<RECEIVABLES> 2304948
<ASSETS-OTHER> 101757
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60093823
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 97701
<TOTAL-LIABILITIES> 97701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60019923
<SHARES-COMMON-STOCK> 60019923
<SHARES-COMMON-PRIOR> 52366926
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (23801)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 59996122
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2146269
<OTHER-INCOME> 0
<EXPENSES-NET> (609176)
<NET-INVESTMENT-INCOME> 1537093
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1537093
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1537093)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 317110184
<NUMBER-OF-SHARES-REDEEMED> (310927499)
<SHARES-REINVESTED> 1470312
<NET-CHANGE-IN-ASSETS> 7652997
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (23801)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 313061
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 621123<F1>
<AVERAGE-NET-ASSETS> 62612204
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .025
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.025)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>(55) GROSS OF EXPENSE OFFSETS- $4,081
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
OCC CASH RESERVES- CALIFORNIA MUNICIPAL PORTFOLIO ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30, 1996.
</LEGEND>
<CIK> 0000851173
<NAME> OCC CASH RESERVES
<SERIES>
<NUMBER> 5
<NAME> CALIFORNIA MUNICIPAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 52146899
<INVESTMENTS-AT-VALUE> 52146899
<RECEIVABLES> 1274191
<ASSETS-OTHER> 15544
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53436634
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 75977
<TOTAL-LIABILITIES> 75977
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53391511
<SHARES-COMMON-STOCK> 53391512
<SHARES-COMMON-PRIOR> 75933638
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (30854)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 53360657
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2024273
<OTHER-INCOME> 0
<EXPENSES-NET> (525806)
<NET-INVESTMENT-INCOME> 1498467
<REALIZED-GAINS-CURRENT> (9304)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1489163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1498467)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 276344120
<NUMBER-OF-SHARES-REDEEMED> (300398721)
<SHARES-REINVESTED> 1512475
<NET-CHANGE-IN-ASSETS> (22542126)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (21550)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 309904
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 601883<F1>
<AVERAGE-NET-ASSETS> 61980887
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.024)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>GROSS OF EXPENSE OFFSET- $4,683
</FN>
</TABLE>
