PROSPECTUS
LIMITED TERM
NEW YORK
MUNICIPAL FUND
ROCHESTER PORTFOLIO SERIES
350 LINDEN OAKS
ROCHESTER, NEW YORK 14625-2807
1-800-552-1129
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Rochester Portfolio Series, a Massachusetts business trust (the "Trust"),
is a non-diversified, open-end management investment company, consisting of one
portfolio, the Limited Term New York Municipal Fund (the "Fund"), which has two
classes of shares, Class A Shares and Class B Shares. The investment objective
of the Fund is to provide shareholders with as high a level of income exempt
from federal income tax and New York State and New York City personal income
taxes as is consistent with its investment policies and prudent investment
management. The Fund intends to invest primarily in a portfolio of investment
grade obligations with a dollar weighted average effective maturity of five
years or less. There can be no assurance that the investment objective of the
Fund will be realized. The Prospectus sets forth concisely information about
Class A Shares and Class B Shares of the Fund that prospective investors ought
to know before investing. Investors should read this Prospectus carefully before
investing and should retain it for future reference.
A Statement of Additional Information (the "SAI") for the Fund dated May 1,
1995, as revised January 5, 1996, which is incorporated by reference in its
entirety in this Prospectus, has been filed with the Securities and Exchange
Commission and is available without charge upon request to Oppenheimer
Shareholder Services, the Fund's shareholder servicing agent (the "Agent") at
1-800-552-1129 or by writing to the Agent. The SAI contains information about
Class A Shares and Class B Shares of the Fund and its management not included in
this Prospectus.
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.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, NOR ARE SHARES OF THE FUND FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
The date of this Prospectus is May 1, 1995, as revised on January 5, 1996
TABLE OF CONTENTS
Page
----
Shareholder Expense Information ..................... 2
Financial Highlights ................................ 3
About the Fund ...................................... 4
Risk Factors ........................................ 8
Dividends and Other Distributions ................... 9
Alternative Sales Arrangements ...................... 10
How to Purchase Shares .............................. 11
Distribution Plans .................................. 14
Shareholder Services ................................ 15
How to Redeem Shares ................................ 16
Performance ......................................... 17
Tax Matters ......................................... 18
Management, Services and Distribution ............... 19
Account Application .................................
<PAGE>
SHAREHOLDER EXPENSE INFORMATION
The information contained in the following tables is intended to assist an
investor in understanding the various costs and expenses that a shareholder in
the Fund will bear directly or indirectly. The only class of shares of the Fund
outstanding prior to May 1, 1995 was redesignated as Class A Shares on May 1,
1995. The information for Class B Shares has been estimated based on expenses
expected to have been incurred through December 31, 1995. For a further
description of the various costs and expenses listed below, see How to Purchase
Shares, How to Redeem Shares, Shareholder Services, and Management, Services and
Distribution.
Shareholder Transaction Expenses
Class A Shares Class B Shares
-------------- --------------
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price)(1) .......... 2.00% NONE
Maximum Contingent Deferred
Sales Charge(2) ................ NONE 2.5% (declining to 0%
after four years)
Annual Fund Operating Expenses
As a Percentage of Average Net Assets
Class A Shares Class B Shares
-------------- --------------
Management Fees ........................... 0.44% 0.44%
12b-1 Fees(3) ............................. 0.25% 0.75%
Other Expenses ............................ 0.20% 0.21%
----- -----
Total Fund Operating Expenses(4) .......... 0.89% 1.40%
===== =====
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(1) The Fund's maximum sales load on Class A Shares of 2.0% declines to 1.0% on
investments of $1,000,000 and over. In addition, the Fund offers several
methods by which investors may aggregate purchases to reduce the applicable
sales load. These methods, which include rights of accumulation, letters of
intent, and group purchases, are explained more fully in the section
entitled Purchasing Class A Shares--Reduced Sales Loads.
(2) A contingent deferred sales charge of up to 3.50% may be imposed on certain
redemptions of Class B Shares acquired by an exchange of another Rochester
Fund on which no contingent deferred sales charge was paid upon redemption.
See Exchange Privilege.
(3) The 12b-1 fees for Class A Shares consist of a service fee (the "Service
Fee") of 0.25%. The 12b-1 fees for Class B Shares consist of an asset-based
sales charge of 0.50% and a Service Fee of 0.25%. Although the Fund's
Distribution Plan for Class B Shares permits the payment of an asset-based
sales charge of up to 0.75% per annum of relative net assets, the Board of
Trustees has authorized payment of an asset-based sales charge of only 0.50%
per annum of relative net assets. See Distribution Plans.
(4) Total Fund operating expenses for Class A Shares would have been 0.84%
excluding interest. For the fiscal year ended December 31, 1994, the Fund's
interest expense was substantially offset by the incremental interest income
generated on bonds purchased with borrowed funds. See Management, Service,
and Distribution.
Examples
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return, redemption at the end of each period, and conversion from Class B
Shares to Class A Shares at the beginning of the seventh year:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A ............. $29 $48 $68 $127
Class B ............. $39 $59 $77 $141
Your same investment would incur the following expenses, assuming no
redemption, and conversion from Class B Shares to Class A Shares at the
beginning of the seventh year:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A ............. $29 $48 $68 $127
Class B ............. $14 $44 $77 $141
The above examples should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown. For
Class B Shares, the examples are based on estimated data for the Fund's fiscal
year ending December 31, 1995.
Long-term shareholders of Class B Shares may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
For additional information regarding fees and expenses associated with
investing in Class A Shares and Class B Shares of the Fund, see Alternative
Sales Arrangements. Sales representatives may receive different compensation for
sales of Class A Shares than for sales of Class B Shares.
2
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table contains financial information for Class A Shares of
Limited Term New York Municipal Fund for the period from September 18, 1991 to
December 31, 1991 and for the three one year periods ended December 31, 1994.
The information set forth in this table has been derived from financial
statements which have been examined by Price Waterhouse LLP, independent
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the financial statements and notes thereto which appear
in the SAI. Financial highlights are not presented for Class B Shares since no
shares of that class were outstanding for the periods indicated.
<TABLE>
<CAPTION>
Periods Ended December 31
----------------------------------
1994 1993 1992 1991*
---- ---- ---- -----
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $3.33 $3.18 $3.07 $3.00
----- ----- ----- -----
Income from investment operations:
Net investment income ......................................... 0.16 0.17 0.18(Y) 0.05
Net realized and unrealized gain (loss) on investments ........ (0.18) 0.15 0.11 0.07
----- ----- ----- -----
Total from investment operations ............................ (0.02) 0.32 0.29 0.12
----- ----- ----- -----
Less distributions:
Dividends from net investment income .......................... (0.16) (0.17) (0.18) (0.05)
----- ----- ----- -----
Total distributions ......................................... (0.16) (0.17) (0.18) (0.05)
----- ----- ----- -----
Net asset value, end of period ................................. $3.15 $3.33 $3.18 $3.07
===== ===== ===== =====
Total return (excludes sales load) ........................... (0.60%) 10.06% 9.45% 17.47%**
Ratios/Supplemental data:
Net assets, end of period (000 omitted) ......................... $496,452 $457,860 $150,096 $18,659
Ratio of total expenses to average net assets ................... 0.89% 0.89% 0.83%(Y) 0.83%**
Ratio of total expenses (excluding interest)
to average net assets*** .................................... 0.84% 0.86% 0.78%(Y) 0.74%**
Ratio of net investment income to average net assets .......... 5.12% 4.94% 5.33%(Y) 5.22%**
Portfolio turnover rate ....................................... 34.58% 17.08% 59.87% 1.42%
<FN>
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* The Fund commenced operations on September 18, 1991.
** Annualized.
*** During the periods shown above, the Fund's interest expense was
substantially offset by the incremental interest income generated on bonds
purchased with borrowed funds.
(Y) Net of fees waived or reimbursed by Fielding Management Company, Inc., the
Fund's previous investment adviser, and Rochester Fund Services, Inc., which
amounted to $0.01 per share. Without reimbursement, the ratios would have
been 1.14%, 1.09% and 5.02%, respectively. Fielding Management Company,
Inc., served as investment adviser to the Fund from September 18, 1991 to
December 19, 1993.
</FN>
</TABLE>
INFORMATION ON BANK LOANS
Periods Ended December 31
-------------------------------
1994 1993 1992 1991*
---- ---- ---- -----
Bank loans outstanding at end of
period (000) ............................... $7,797 $ 934 $ 0 $ 0
Monthly average amount of bank loans
outstanding during the period (000) ........ $3,070 $1,383 $661 $94
Monthly average number of shares of the
Fund outstanding during the period (000) ... 151,481 93,580 23,330 2,461
Average amount of bank loans per share
outstanding during the period .............. $.02 $0.01 $.03 $.04
- -----------
* The Fund commenced operations on September 18, 1991.
3
<PAGE>
ABOUT THE FUND
The Fund is an open-end, non-diversified management investment company,
organized as a Massachusetts business trust on June 14, 1991. The Fund has
established two classes of shares, known as Class A Shares and Class B Shares
(individually and collectively referred to as "Shares," as the context may
require). Except as otherwise noted in this Prospectus, Class A Shares are sold
subject to a sales charge of up to 2.0% and are redeemed at net asset value.
Class B Shares are sold at net asset value but may be subject to a contingent
deferred sales charge ("CDSC") of up to 2.5% upon redemption. Class A Shares are
subject to a Service Fee of 0.25%. Class B Shares are subject to an asset-based
sales charge of 0.50% and a Service Fee of 0.25%. See How to Purchase Shares and
Distribution Plans.
Investment Objective
The investment objective of the Fund is to seek as high a level of income
exempt from federal income tax and New York State and New York City personal
income taxes as is consistent with its investment policies and prudent
investment management. The Fund intends to invest primarily in a portfolio of
investment grade obligations with a dollar weighted average effective maturity
of five years or less. See Credit Quality and Description of Permitted
Securities and Investment Policies. No assurances can be made, however, that the
Fund will achieve its investment objective.
The Fund seeks to achieve its objective by investing primarily in
obligations issued by or on behalf of New York State, its political
subdivisions, agencies and instrumentalities and obligations of other qualifying
issuers, such as issuers located in Puerto Rico, the Virgin Islands, and Guam,
which pay interest that is, in the opinion of the bond counsel to the issuer,
exempt from federal income tax and New York State and New York City personal
income taxes ("Municipal Obligations"). As a fundamental policy, at least 95% of
the Fund's net assets will be invested in Municipal Obligations except when the
investment adviser, OppenheimerFunds, Inc. (the "Adviser"), believes that market
conditions would cause serious erosion of portfolio value, in which case assets
may be invested temporarily in short-term taxable investments as a defensive
measure to preserve net asset value.
Credit Quality
The Fund will invest at least 95% of its net assets, which are invested in
Municipal Obligations, in investment grade Municipal Obligations defined as
follows: (1) obligations which are backed by the full faith and credit of the
U.S. government; (2) short-term tax exempt notes which are rated investment
grade by a nationally recognized statistical rating organization ("NRSRO"); (3)
municipal bonds which are rated investment grade by an NRSRO; (4) tax-exempt
commercial paper which is rated investment grade by an NRSRO; (5) Municipal
Obligations which are issued by an entity which has obligations outstanding that
meet one of the foregoing rating requirements; (6) Municipal Obligations which
are backed by a letter of credit or guarantee of a bank or other institution
which has outstanding securities that meet one of the foregoing rating
requirements; or (7) Municipal Obligations which, although unrated, are
determined by the Adviser to be of comparable investment quality to rated
securities meeting the foregoing rating criteria. The remaining 5% of the Fund's
net assets, which are invested in Municipal Obligations, may be invested in
tax-exempt obligations which are lower-rated or unrated and of comparable
quality to lower-rated securities. In no case will the Fund purchase a security
with a rating of below Ba by Moody's Investors Service, Inc. ("Moody's"), BB by
Standard & Poor's Ratings Group ("Standard & Poor's") or BB by Fitch Investors
Service, Inc. ("Fitch") at the time of purchase or an unrated security which, in
the opinion of the Adviser, is of comparable quality to rated securities below
such ratings. For a description of such ratings, see Appendix A to the SAI.
Municipal Obligations
The Fund may invest in a variety of Municipal Obligations including
municipal notes, municipal bonds and municipal leases. The prices of such fixed
income securities fluctuate inversely to the direction of interest rates.
Municipal notes are generally used to provide for short-term capital needs and
generally have a maturity of one year or less. The municipal notes in which the
Fund may invest include tax anticipation notes, revenue anticipation notes, bond
anticipation notes, construction loan notes and tax-exempt commercial paper
(also known as municipal paper). Municipal bonds, which meet longer term capital
needs, generally
4
<PAGE>
have maturities of more than one year. The two principal classifications of
municipal bonds in which the Fund may invest are "general obligation" and
"revenue" bonds. General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of the principal and
interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facility or, in some cases, from the proceeds of
a special excise or specific revenue source. Industrial development bonds
("IDBs") are a specific type of revenue bond backed by the credit and security
of a private user. The Fund will purchase IDBs only to the extent that they pay
interest which continues to be tax-exempt under the Internal Revenue Code of
1986, as amended (the "Code") (although the interest may constitute a tax
preference item for purposes of the federal alternative minimum tax). See Tax
Matters. Investments in tax-exempt lease obligations, which are commonly
referred to as "municipal leases," involve additional risk factors which are not
associated with investments in other tax-exempt obligations such as general
obligation bonds or revenue bonds. See Investments in Illiquid Securities. The
SAI describes the Municipal Obligations in which the Fund may invest in greater
detail.
Description of Permitted Securities
and Investment Policies
Variable Rate Obligations
The Fund may invest in variable rate obligations. Variable rate obligations
have a yield which is adjusted periodically based upon changes in the level of
prevailing interest rates. Variable rate obligations have an interest rate fixed
to a known lending rate, such as the prime rate, and are automatically adjusted
when such known rate changes. Variable rate obligations lessen the capital
fluctuations usually inherent in fixed income investments, which diminishes the
risk of capital depreciation of portfolio investments and the Fund's shares; but
this also means that should interest rates decline, the yield of the Fund will
decline and the Fund and its shareholders will forego the opportunity for
capital appreciation of its portfolio investments and of their shares. Variable
rate obligations with demand periods greater than seven days may be determined
to be liquid by the Fund's Board of Trustees. Variable rate instruments in which
the Fund may invest include participation interests purchased from banks in
variable rate tax-exempt Municipal Obligations (expected to be concentrated in
IDBs owned by banks). A participation interest gives the Fund an undivided
interest in the Municipal Obligation in the proportion that the Fund's
participation interest bears to the total principal amount of the Municipal
Obligation. The Fund will only invest in such participation interests to the
extent that an opinion of issuer's counsel supports the characterization of
interest on such securities as tax-exempt.
When-Issued Purchases
The Fund may also purchase and sell municipal securities on a "when issued"
and "delayed delivery" basis. These transactions are subject to market
fluctuation and the value of a security at delivery may be more or less than the
purchase price. When the Fund is the buyer in such a transaction, however, it
will maintain, in a segregated account with its custodian, cash or high grade
marketable debt securities having an aggregate value equal to the amount of such
purchase commitments until payment is made. In addition, the Fund will mark the
"when issued" security to market each day for purposes of portfolio valuation.
To the extent the Fund engages in "when issued" and "delayed delivery"
transactions, it will do so for the purpose of acquiring securities for the
Fund's portfolio consistent with its investment objective and policies and not
for the purpose of investment leverage. Securities purchased on a "when issued"
and "delayed delivery" basis may not constitute more than 10% of the Fund's net
assets.
Maturity Guidelines
The Fund intends to invest primarily in a portfolio of investment grade
Municipal Obligations with a dollar weighted average effective maturity of five
years or less. In maintaining this average, the Fund may purchase individual
bonds with effective maturities of more or less than five years.
The effective maturity of bonds in the portfolio may lengthen if market
interest rates increase or shorten if market interest rates decrease. Increasing
market interest rates can cause the average effective maturity of the portfolio
to lengthen beyond five years, absent any portfolio transactions. At any time
that the average effective maturity of the portfolio exceeds five years, the
Fund will not
5
<PAGE>
purchase bonds with effective maturities exceeding five years. The Fund may
also take prudent steps to reduce the average effective maturity of the
portfolio to five years or less, including selling bonds with effective
maturities exceeding five years and purchasing bonds with effective maturities
of less than five years.
A bond's effective maturity may be shorter than its stated maturity as a
result of differences between its coupon or accretion rate and current market
interest rates, callability and call price, scheduled sinking fund payments and
anticipated prepayments, as well as other factors. In computing the Fund's
average maturity, the Fund intends to use effective maturity dates to the extent
that a particular bond is evaluated for pricing and trading purposes in the
marketplace to a date which is shorter than the bond's stated maturity. This
date may represent a mandatory put, prerefunded call date, optional call date,
or the average life to which the bond is priced. Bonds with a variable coupon
rate or anticipated principal prepayments may be assigned an effective maturity
which is shorter than a stated call date, put date, or average life to properly
reflect the reduced price volatility of such bonds.
Bonds which are evaluated for pricing and trading purposes to a maturity
date which is shorter than the stated maturity date possess price volatility
characteristics which make them substantially similar to bonds with stated
maturity dates identical to the effective maturity date.
Temporary Investments
From time to time when, due to adverse factors, market conditions could
cause serious erosion of portfolio value, the Fund may invest up to 20% of its
assets in taxable short-term investments as a defensive measure to preserve net
asset value. Distributions by the Fund of interest earned from such taxable
investments will be taxable to investors as ordinary income unless such
investors are otherwise exempt from taxation. The Fund may invest on a temporary
basis up to 5% of its assets in other investment companies which have a similar
objective of obtaining income exempt from federal income tax and New York State
and New York City personal income taxes. Such investing involves duplication of
expenses similar to the Fund's by the other investment companies involved.
Industrial Revenue Bonds
The Fund may also invest more than 25% of its assets in industrial revenue
bonds, and may invest more than 25% of its assets in Municipal Obligations
backed by letters of credit or guarantees issued by banks or other financial
institutions. See Risk Factors--Concentration in New York Issuers.
Zero Coupon Securities
The Fund may invest without limitation as to amount in zero coupon
securities. Zero coupon securities are debt obligations that do not entitle the
holder to any periodic payment of interest prior to maturity or a specified date
when the securities begin paying current interest. They are issued and traded at
a discount from their face amount of par value, which discount varies depending
on the time remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer.
Original issue discount earned on zero coupon securities is included in the
Fund's tax-free income. The market prices of zero coupon securities generally
are more volatile than the prices of securities that pay interest periodically
and in cash and are likely to respond to changes in interest rates to a greater
degree than do other types of debt securities having similar maturities and
credit quality.
Investments in Illiquid Securities
The Fund may purchase securities in private placements or in other
transactions, the disposition of which would be subject to legal restrictions,
or securities for which there is no regular trading market (collectively,
"Illiquid Securities"). No more than an aggregate of 15% of the value of the
Fund's net assets at the time of acquisition may be invested in Illiquid
Securities.
Such investments may include municipal lease obligations or installment
purchase contract obligations (which are sometimes called "municipal leases") of
municipal authorities or entities. Municipal leases generally involve a
lease-purchase agreement which is, technically, not a lease, but rather an
installment purchase. Subject to the percentage limitation on investments in
Illiquid Securities, the Fund may invest only up to 15% of the value of its net
assets in such municipal leases. Investments in tax-exempt munici-
6
<PAGE>
pal leases which have received an investment grade rating from an NRSRO and
which have been determined to be liquid by the Adviser are excluded from the 15%
limitation on investments in municipal leases. The Fund, however, will continue
to limit investments in unrated or illiquid municipal leases to 15% of the value
of the Fund's net assets, subject to the overall 15% limitation on investments
in Illiquid Securities which may be made by the Fund.
Investment in tax-exempt lease obligations presents certain special risks
which are not associated with investments in other tax-exempt obligations such
as general obligation bonds or revenue bonds. Although municipal leases do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a municipal lease may be backed by the municipality's
covenant to budget for, appropriate and make the payments due under the
municipal lease. Most municipal leases, however, contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. Although "non-appropriation" municipal leases
are generally secured by the leased property, the Fund's ability to recover
under the lease in the event of non-appropriation or default will be limited
solely to the repossession of the leased property without recourse to the
general credit of the lessee, and disposition of the property in the event of
foreclosure might prove difficult. In addition to the risk of
"non-appropriation," municipal lease obligations may be subject to an
"abatement" risk. The leases underlying certain municipal lease obligations may
provide that lease payments are subject to partial or full abatement if, because
of material damage or destruction of the leased property, there is substantial
interference with the lessee's use or occupancy of such property. This
"abatement" risk may be reduced by the existence of insurance covering the
leased property, the maintenance by the lessee of reserve funds or the provision
of credit enhancements such as letters of credit.
Investments in municipal leases will be subject to the 15% limitation
unless the lease has received an investment grade rating from an NRSRO, and the
particular municipal lease is determined to be liquid by the Adviser. The Board
of Trustees has adopted guidelines to be utilized by the Adviser in making
determinations concerning the liquidity and valuation of a municipal lease
obligation. See the SAI for a description of the guidelines which will be
utilized by the Adviser in making such determinations. Under circumstances where
the Fund proposes to purchase unrated municipal lease obligations, the Fund's
Board of Trustees will be responsible for determining the credit quality of such
obligations and will be responsible for assessing on an ongoing basis the
likelihood as to whether the lease will be cancelled.
Borrowing for Investment Purposes
As a fundamental policy, the Fund may borrow money, but only from banks, in
amounts up to 10% of its assets to purchase additional securities. Borrowing for
investment purposes increases both investment opportunity and investment risk.
The Investment Company Act of 1940 (the "Act") requires the Fund to maintain
asset coverage of at least 300% for all such borrowings, and should such asset
coverage at any time fall below 300%, the Fund would be required to reduce its
borrowings within three days to the extent necessary to meet the requirements of
the Act. The Fund might be required to sell securities at a time when it would
be disadvantageous to do so in order to reduce borrowings. In addition, because
interest on money borrowed is an expense that the Fund would not otherwise
incur, the Fund may have less net investment income during periods when its
borrowings are substantial. The interest paid by the Fund on borrowings may be
more or less than the yield on the securities purchased with borrowed funds,
depending on prevailing market conditions.
Except as otherwise noted, the Fund's investment objective and policies
described herein are not designated fundamental policies within the meaning of
the Act and may, therefore, be changed without the vote of a majority of the
outstanding voting securities of the Fund (as defined in the Act). As a matter
of policy, however, the Fund will not change its objective without the approval
of the majority of the Board of Trustees. See the SAI for a more detailed
discussion of the Fund's fundamental policies
Portfolio Transactions
The Fund has no obligation to deal with any dealer or group of dealers in
the execution of transactions in securities of the Fund. Municipal Obligations
and other securities in
7
<PAGE>
which the Fund invests are traded primarily in the over-the-counter market.
Where possible, the Fund deals directly with the dealers who make a market in
the securities involved except in those circumstances where better prices and
execution are available elsewhere. It is the policy of the Fund to obtain the
best net results in conducting portfolio transactions for the Fund, taking into
account such factors as price (including the applicable dealer spread), and the
firm's general execution capabilities. Where more than one dealer is able to
provide the most competitive price and the execution capabilities of the dealers
are comparable, the sale of shares of the Fund may be taken into consideration
as a factor in the selection of dealers to execute portfolio transactions for
the Fund. The portfolio securities of the Fund generally are traded on a net
basis and normally do not involve the payment of brokerage commissions. The cost
of securities transactions of the Fund primarily consists of paying dealer or
underwriter spreads.
RISK FACTORS
Concentration in New York Issuers
Because the Fund, as a fundamental policy, will invest at least 95% of its
assets in Municipal Obligations of New York issuers, it is more susceptible to
factors affecting the State of New York than is a comparable bond fund whose
investments are not concentrated in the obligations of issuers located in a
single state.
During the last fifteen years, New York State, New York City and other New
York public bodies have encountered financial difficulties. Continued financial
difficulties could have an adverse effect on the performance of the Fund. In
recent years, Moody's and Standard & Poor's (both NRSROs) lowered their ratings
on a substantial portion of the State's appropriation-backed bonds from A to
Baa1 and from BBB+ to BBB, respectively, and adjusted their ratings on all of
the State's outstanding general obligation bonds. The Adviser does not believe
that these developments will have a significant adverse effect on the Fund's
ability to invest in New York Municipal Obligations. These credit standings
could be further reduced and the State's ability to provide assistance to its
public authority and political subdivisions could be further impaired. See
Appendix A to the SAI for additional information relating to the risks
associated with concentration of investments in New York Municipal Obligations.
Credit Quality
In general, the assets of the Fund will be invested so that at least 95% of
the Fund's assets will consist of tax-exempt securities. Shareholders will not
be subject to regular federal income tax on distributions of tax-exempt income
on such securities. The interest on certain private activity bonds, (including
those for housing and student loans) issued after August 15, 1986, while still
tax-exempt for regular tax purposes, constitute a preference item for taxpayers
in determining their alternative minimum tax liability under the Code, and, as
such, may be subject to the alternative minimum tax. The Code also imposes
certain limitations and restrictions on the use of tax-exempt bond financing for
non-essential private activity bonds. The Fund intends to purchase private
activity bonds only to the extent that the interest paid by such bonds is
tax-exempt for regular tax purposes pursuant to the Code.
The Fund will invest at least 95% of its assets in Municipal Obligations
which are investment grade quality as defined herein. Such Municipal Obligations
may include those rated in the lowest categories of investment grade ratings
(e.g. those rated "BBB" by Standard & Poor's or "Baa" by Moody's). Municipal
Obligations in such categories have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case for Municipal
Obligations in the higher rated categories. Because 5% of the Fund's assets
which are invested in tax-exempt securities may be invested in securities which
are rated below the lowest investment grade categories or in securities which
are unrated, the Fund is dependent on the Adviser's judgment, analysis and
experience in evaluating the quality of such obligations. In evaluating the
credit quality of a particular issue, whether rated or unrated, the Adviser will
normally take into consideration, among other things, the financial resources of
the issuer (or, as appropriate, of the underlying source of the funds for debt
service), its sensitivity to economic conditions and trends, any operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters.
8
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The Adviser will attempt to reduce the risks inherent in investments in
such obligations through active portfolio management, diversification, credit
analysis and attention to current developments and trends in the economy and the
financial markets.
Borrowing for Investment Purposes
Borrowing for investment purposes increases both investment opportunity and
investment risk. The Fund might be required to sell securities at a time when it
would be disadvantageous to do so in order to reduce its borrowings. In
addition, because interest on money borrowed is an expense that the Fund would
not otherwise incur, the Fund may have less net investment income during periods
when its borrowings are substantial. The interest paid by the Fund on borrowings
may be more or less than the yield on the securities purchased with borrowed
funds, depending on prevailing market conditions
Liquidity and Valuation
Unrated securities (including those that the Adviser believes are of
equivalent quality to rated investment grade securities), lower rated securities
(restricted to 5% of the Fund's net assets) and securities in which the Fund has
a substantial ownership interest are subject to greater liquidity and valuation
risks. In general, such securities are not as liquid as securities for which
there are active secondary trading markets. Reduced liquidity may have an
adverse impact on the market price and the Fund's ability to dispose of
particular issues, when necessary, to meet the Fund's liquidity needs or in
response to a particular economic event, such as the deterioration in the credit
worthiness of the issuer. Reduced liquidity for certain securities may also make
it more difficult for the Fund to obtain market quotations based on actual
trades for purposes of valuing the Fund's portfolio. Current values for these
securities are obtained from pricing services and pricing grids which factor in
coupons, maturities, credit quality, liquidity and other factors. When there are
no readily available market quotations, such values are determined in good faith
by the Board of Trustees and may be based upon factors other than actual sales.
Non-Diversification
The Fund expects that it normally will invest in a substantial number of
issuers; however, as a non-diversified investment company, the Fund may invest a
greater portion of its assets in the securities of a limited number of issuers
than a diversified fund. The Fund's ability to invest a greater proportion of
its assets in the securities of a smaller number of issuers may enhance the
Fund's ability to achieve capital appreciation, but may also make the Fund more
susceptible to any single economic, political or regulatory occurrence. However,
as of the last day of each fiscal quarter, the Fund generally will be required
to meet certain tax-related diversification requirements, which would restrict,
to some degree, the amount of the securities of any one issuer that the Fund
could hold.
DIVIDENDS AND OTHER DISTRIBUTIONS
There are two types of distributions which the Fund may make to its
shareholders, income dividends and capital gain distributions. Distributions
paid by the Fund with respect to Class A Shares likely will be greater than
those paid with respect to Class B Shares because expenses attributable to Class
B Shares generally will be higher.
Income Dividends. The Fund receives income in the form of interest paid by
its investments. This income, less the expenses incurred in the Fund's
operations, is referred to as net investment income. Income dividends are
declared and recorded each day based on estimated net investment income. Such
dividends are paid monthly. Investors earn such dividends beginning on the day
payment for Shares is received to the day prior to the settlement date of
redemption. For federal tax purposes, all distributions declared in the fourth
quarter of any calendar year are deemed paid in that calendar year even if they
are distributed in January of the following year. Any net gain the Fund may
realize from transactions in securities held less than the period required for
long term capital gain recognition (taking into account any carryover of capital
losses from previous years), while technically a distribution from capital gain,
is taxed as an income dividend under the Code. See Tax Matters.
Capital Gain Distributions. If, during any fiscal year, the Fund realizes a
net gain on transactions in securities held for more than one year, it has a net
long term capital gain.
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After deduction of the amount of any net short term loss, the balance may
be used to offset any carryover of capital losses from previous years, or, if
there is no loss carryover, will be paid out to shareholders as a capital gain
distribution. Capital gain distributions, if any, will be paid to shareholders
of record prior to the end of each calendar year.
Because the value of Fund Shares is based directly on the amount of its net
assets, rather than on the principle of supply and demand, any distribution of
income or capital gain will result in a decrease in the value of Fund Shares
equal to the amount of the distribution.
All dividends and capital gain distributions are paid in additional full
and fractional Shares at net asset value for each shareholder's account unless
otherwise requested on the Account Application or by notifying the Fund in
writing or by telephone. Notice will be effective for the current dividend or
distribution only if it is received by the Fund at least five business days
before the record date. Notice received thereafter will be effective commencing
with the next dividend or distribution. Income dividends and capital gain
distributions will be credited to a shareholder's account in additional shares
valued at the closing net asset value (without a sales load).
If the U.S. Postal Service cannot deliver a shareholder's check, or if a
shareholder check remains uncashed for six months, the Fund reserves the right
to credit the shareholder's account with additional shares of the Fund at the
then current net asset value in lieu of the cash payment and to thereafter issue
such shareholder's dividends in additional Shares of the Fund.
Stock certificates will not be issued in connection with distributions
which are paid in additional Shares unless a written request is received and
certain other procedures are followed. Call the Agent at 1-800-552-1129 for more
information. Shareholders will be advised of the nature of a distribution, the
number of Shares purchased and the price following each such distribution.
In certain circumstances, dividends received from the Fund may cause a
portion of Social Security benefits to be subject to federal income tax. See Tax
Matters in the SAI.
ALTERNATIVE SALES ARRANGEMENTS
The two classes of Shares which the Fund offers incur sales charges in
different forms and amounts and incur different levels of expenses.
Class A Shares
Shareholders who purchase Class A Shares pay a sales charge at the time of
purchase. As a result, Class A Shares are not subject to any charges when they
are redeemed. Certain purchases of Class A Shares qualify for reduced sales
charges. Class A Shares currently incur a Service Fee at the annual rate of
0.25% of the Fund's average net assets attributable to Class A Shares. See
Purchasing Class A Shares.
Class B Shares
Class B Shares of the Fund are sold without an initial sales charge, but
are subject to a CDSC of 2.5% if redeemed within the first year, declining to 0%
after the fourth year. Class B Shares also incur an asset-based sales charge,
currently at the annual rate of 0.50% of the Fund's average daily net assets
attributable to Class B Shares, as well as a Service Fee at an annual rate of
0.25%. Class B Shares provide shareholders the benefit of putting all of the
investor's dollars to work from the time the investment is made, but likely will
have a higher expense ratio and pay lower dividends than Class A Shares due to
the asset-based sales charge. Class B Shares will convert into Class A Shares
after approximately six years and thereafter will pay the lower ongoing expenses
associated with Class A Shares. See Purchasing Class B Shares.
Factors to Consider in Choosing a Class of Shares
The decision as to which class of Shares provides a more suitable
investment for an investor depends on a number of factors, including the amount
invested and the intended length of investment. Investors making large
investments, thus qualifying for a reduced sales charge, might consider Class A
Shares. Investors who prefer that 100% of their purchase be invested
immediately, or who want to spread the sales charge payment over time, might
consider Class B Shares. Orders for Class B Shares for $500,000 or more will be
declined because the investor would not realize the
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economies of scale available to them through a similar investment in Class
A Shares. For more information about these sales arrangements, contact your
investment dealer or the Agent at 1-800-552-1129.
HOW TO PURCHASE SHARES
Shares of the Fund are being continuously offered through securities
dealers who have a sales agreement with OppenheimerFunds Distributor, Inc.
(the "Distributor"), Two World Trade Center, New York, New York 10048-0203, the
principal underwriter of the Fund. The minimum initial investment in Class A
Shares or Class B Shares is $5,000 and subsequent investments must be $100 or
more. Such minimum investment requirements may be modified at the discretion of
the Distributor.
There Are Several Ways You Can Invest
Through the Distributor. Complete an Account Application and return it with
a check payable to the Distributor, who will act as your agent in purchasing
Shares.
Through Your Investment Dealer. Many investment dealers and financial
institutions have a sales agreement with the Distributor and will be glad to
accept your order. If you do not have an account with a dealer, the Distributor
can refer you to one.
Through the Automatic Bank Draft Plan. The Automatic Bank Draft Plan is
available as a convenience to all shareholders of the Fund. Under this plan, you
may elect to make investments ($100 minimum) automatically by arranging to have
pre-authorized checks drawn on your bank account by the Agent. This plan is only
available if your bank agrees to participate. There is no charge for this
service and it may be terminated at any time upon written notice to the Agent.
See Shareholder Services.
Automatic Investment Plan. Investments of $100 or more may be made through
a shareholder's checking account by Automated Clearing House ("ACH") funds. For
information on how to establish a plan, contact the Agent 1-800-552-1129.
Certificates
To facilitate redemptions and transfers, most shareholders elect not to
receive share certificates; however, the Fund will issue them if requested to do
so in writing or by telephone if you have owned the Shares for at least 30 days.
If you lose a stock certificate, you may incur an expense to replace it. Call
the Agent for more information.
Purchase Price of Shares
Shares of the Fund are offered at the public offering price (which is the
net asset value plus a sales charge for Class A Shares and net asset value for
Class B Shares) next computed after receipt by the Distributor of an order from
a qualified securities dealer, by mail, or from the investor directly, in good
order. The net asset value of Shares is determined once daily as of the close of
the New York Stock Exchange (the "Exchange") on each day that the Exchange is
open.
For the purpose of the computation of the applicable public offering price,
orders for Shares placed by the mailing of an Account Application with a check
payable to the Fund are considered processed upon receipt by the Distributor.
Purchase of Shares through authorized dealers must be received by such dealers
prior to 4:00 p.m. New York time (the "Closing") in order to receive such
trading day's public offering price. Orders received by the Distributor
subsequent to the Closing are confirmed at the public offering price determined
as of the Closing on the next trading day. If a dealer who has a sales agreement
with the Distributor receives an order prior to the Closing and fails to
transmit such order to the Distributor prior to its close of business on that
day (5:00 p.m. New York time), any resulting loss will be borne by the dealer.
The net asset value per Share of each class of the Fund, the price at which
Shares of each class are redeemed, is computed by dividing the value of the
Fund's total assets, less its liabilities attributable to a class, by the total
number of Shares of that class outstanding. The net asset value of the Shares of
each class of the Fund fluctuate based on the market value of the Fund's
investments. Procedures describing the method of valuation of individual
securities are discussed in the SAI. The net asset value for Class A Shares, and
Class B Shares may differ primarily due to the
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<PAGE>
variance in daily net income and accrual of expenses realized by each class.
The Distributor may provide promotional incentives or compensation to
dealers that sell Shares of the Fund in addition to sales loads. In some
instances, these incentives may be made available only to certain dealers who
have sold specified amounts of Shares. Dealers may not use sales of the Fund's
Shares to qualify for such incentives to the extent that such sales may be
prohibited by the laws of any state or self-regulatory agency such as the
National Association of Securities Dealers, Inc.
PURCHASING CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a
sales load. The following table shows the sales load at various investment
levels for the purchase of Class A Shares of the Fund:
Sales Load Reallow-
as % of ance to
-------------------- Dealers
Public Net as % of
Offering Amount Offering
Amount of Purchase Price Invested Price
------------------ ----- -------- -----
Less than $100,000 ...................... 2.00% 2.04% 1.75%
$100,000 to less than $500,000 .......... 1.60% 1.63% 1.40%
$500,000 to less than $1,000,000 ........ 1.30% 1.32% 1.10%
$1,000,000 and over ..................... 1.00% 1.01% 0.80%
The Distributor also may make a payment, out of its own resources, to
dealers in an amount not to exceed 0.25% of purchases of $1,000,000 or more.
Information with regard to any of the following special purchase plans or
methods may be obtained from the Distributor.
Reduced Sales Loads
Class A Shares of the Fund may be purchased under a variety of plans which
provide for reduced sales loads. To obtain the reduction of a sales load you or
your dealer must notify the Distributor at the time of the sale which qualifies
for the reduction.
Right of Accumulation. The total value (at the public offering price) of
Class A Shares of the Fund and shares of Eligible Funds (as described in
Exchange Privilege) registered to you, your spouse or your children under 21,
may be combined with the amount of your current purchase in determining the
sales load to be paid.
Letter of Intent. Reduced sales loads will apply to purchases of Class A
Shares made within a period of thirteen months by any person pursuant to a
non-binding Letter of Intent. A shareholder may include the combined value (at
the applicable public offering price) of Class A Shares of the Fund, and of
Shares of Eligible Funds (as described in Exchange Privilege) held by the
shareholder of record as of the date of the Letter of Intent as an "accumulation
credit" toward the completion of the intention expressed in the Letter of
Intent. A shareholder's holdings in the Class A Shares of the Fund and Shares of
any Eligible Funds acquired more than 90 days before the Letter of Intent is
filed, will be counted towards completion of the Letter of Intent, but will not
be entitled to a retroactive downward adjustment of sales load.
Group Purchases. An individual who is a member of a qualified group may
also purchase Class A Shares of the Fund at the reduced sales load applicable to
the group taken as a whole. The sales load is based upon the aggregate amount of
Class A Shares previously purchased and still owned by the group, plus the
securities currently being purchased. A "qualified group" is one with more than
10 members and which (1) has been in existence for more than six months, (2) has
a purpose other than acquiring Class A Shares of the Fund at a discount and (3)
satisfies uniform criteria which enables the Distributor to realize economies of
scale in its costs of distributing Class A Shares.
Other Discounts
Class A Shares of the Fund may be purchased at net asset value, without
sales load, by investment managers such as trust companies or bank trust
departments for funds over which they exercise exclusive discretionary
investment authority and which are held in a fiduciary, agency, custodial or
similar capacity. Such purchases are subject to minimum requirements with
respect to amount of investment, which may be established by the Distributor.
Currently, those criteria require that the amount invested or to be invested
during the subsequent 13 month period in the Fund or any other fund in the
Eligible Funds group must total at least $100,000. If an investment by an
investment manager at net
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<PAGE>
asset value is made through a dealer who has executed a dealer agreement
with respect to the Fund, the Distributor may make payment out of its own
resources to such dealer in an amount not to exceed 0.25% of the amount
invested.
The Fund may also sell Class A Shares at net asset value to the following
investors: (a) the Adviser or its affiliates,(b) present or former officers,
directors, trustees and employees (and their "immediate families" as defined in
the SAI) of the Fund, the Adviser and its affiliates, and retirement plans
established by them for their employees, (c) registered management investment
companies, or separate accounts of insurance companies having an agreement with
the Adviser or the Distributor for that purpose,(d) dealers or brokers that have
a sales agreement with the Distributor, if they purchase shares for their own
accounts or for retirement plans for their employees, (e) employees and
registered representatives (and their spouses) of dealers or brokers described
above or financial institutions that have entered into sales arrangements with
such dealers or brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the time of
purchase that the purchase is for the purchaser's own account (or for the
benefit of such employee's spouse or minor children), (f) dealers, brokers or
registered investment advisers that have entered into an agreement with the
Distributor providing specifically for the use of shares of the Fund in
particular investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser on the
purchase of Fund shares), and (g) dealers, brokers or registered investment
advisers that have entered into an agreement with the Distributor to sell shares
to defined contribution employee retirement plans for which the dealer, broker
or investment adviser provides administrative services.
PURCHASING CLASS B SHARES
Class B Shares of the Fund are sold without an initial sales charge,
although a CDSC will be imposed if you redeem Class B Shares of the Fund within
four years of purchase. The following types of Class B Shares may be redeemed
without charge at any time: (1) Class B Shares acquired by reinvestment of
distributions and (2) Class B Shares held for more than four full years from the
date of purchase. Subject to the foregoing exclusions, the amount of the charge
is determined as a percentage of the lesser of the current market value or the
cost of the Class B Shares at the time of purchase. Therefore, when a Class B
Share is redeemed, any increase in value above the initial purchase price is not
subject to any CDSC. The amount of the CDSC, which depends on the number of
years since you invested and the dollar amount redeemed, will be calculated
according to the following tables:
CDSC As a
Percentage of
Years Since Purchase Dollar Amount
Payment Made Subject to Charge
-------------------- -----------------
0-1 ................................ 2.50%
1-2 ................................ 2.00%
2-3 ................................ 1.50%
3-4 ................................ 1.00%
4 and thereafter ................... NONE
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in a manner that results in the lowest possible
charge to the shareholder. In computing the CDSC it will be assumed that
redemptions occur in the following order: (1) any Class A Shares in the
shareholder account; (2) Class B Shares acquired pursuant to the reinvestment of
dividends or distributions; (3) Class B Shares held for more than four years
from the date of purchase; and (4) Class B Shares held longest, if redeemed
before four years from the purchase date. The charge will not be applied to
amounts representing increases in net asset value above the original purchase
price. Upon exchange of shares the CDSC schedule of the fund into which you
exchanged your shares will apply. See the prospectus of that fund for the
applicable CDSC schedule. For information on how sales charges are calculated on
exchanges of Class B Shares, see Exchange Privilege. The Distributor receives
the entire amount of any CDSC you pay.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B Shares until the time of
redemption of such Shares. For example, assume you purchased 100 Class B Shares
at a price of $10 per Class B Share for a total cost of $1,000. You then
received an additional five Class B Shares through dividend reinvestment and net
asset value has increased to $12 per share. During the second year after your
original purchase you elect to redeem 50 Class B Shares ($600 in proceeds). In
calculating your proceeds, the five
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<PAGE>
Class B Shares received through dividend reinvestment ($60) would not be
subject to any charge. With respect to the remaining 45 Class B Shares, the
charge would be applied to the original price per Class B Share ($10) of these
Class B Shares or $450. The charge would not apply to the increase in net asset
value of $2. Therefore, you would expect to pay a charge of 2.00% of $450 or
$9.00.
Waiver of the CDSC
The CDSC will be waived with respect to the following redemptions: (1)
redemptions following the death or disability, as defined in Section 72(m)(7) of
the Code, of a shareholder; and (2) involuntary redemptions by the Fund of
Shares in shareholder accounts that do not comply with the minimum balance
requirements. Shareholders must notify the Distributor in writing that they are
entitled to the waiver. The Trustees may discontinue the waiver of the CDSC at
any time, although shareholders will be notified of such termination. Any Shares
purchased prior to the discontinuation of the waiver would continue to have the
CDSC waived as provided in the prospectus at the time those Shares were
purchased.
Conversion of Class B Shares
Class B Shares of the Fund will convert automatically into Class A Shares
approximately six years after the purchase date, except as noted below. Class B
Shares acquired by exchange from Class B Shares of another of the Eligible Funds
will convert into Class A Shares based on the time of the initial purchase. Each
time any Class B Shares in the Shareholder's account convert to Class A Shares,
the same percentage of Class B Shares acquired through payment of dividends and
distributions will also convert to Class A Shares. The conversion of Class B
Shares to Class A Shares is subject to the continuing availability of a ruling
from the Internal Revenue Service or an opinion of counsel that such conversions
will not constitute taxable events for Federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and no conversions of
Class B Shares to Class A Shares will occur if such ruling or opinion is not
available. In such event, Class B Shares would continue to be subject to higher
expenses than Class A Shares for an indefinite period. Shareholders holding
Class B Shares may be affected by changes to the Class A Shares Distribution
Plan. The Board will monitor for conflicts of interest among classes and will
take any action necessary to eliminate conflicts.
DISTRIBUTION PLANS
Pursuant to Rule 12b-1 under the Act, the Fund has adopted a Distribution
and/or Service Plan and Agreement with respect to each class of Shares
(collectively, the "Plans") which permits the Fund to pay to the Distributor a
Service Fee in connection with the distribution of Shares an amount of up to
0.25% per annum of the Fund's relative net assets attributable to each class of
Shares. In the case of the Plan for the Class A Shares, the Service Fee is paid
to the Distributor primarily as reimbursement for payments by the Distributor to
compensate brokers, dealers and banks who have a service agreement with the
Distributor for personal service and/or maintenance of shareholder accounts
pursuant to the provisions of the Service Agreement. In the case of the Plan for
the Class B Shares, the Service Fee is paid to the Distributor as compensation.
The Distributor also makes payments to brokers, dealers and banks to compensate
them for providing services to Class B Shareholders and for maintaining accounts
of the Class B Shareholders. Pursuant to the Plan for Class B Shares, the Fund
may also pay the Distributor an asset-based sales charge of 0.50% per annum,
which is computed based on the relative net assets attributable to Class B
Shares. This asset-based sales charge payment is designed to permit an investor
to purchase Class B Shares of the Fund without the assessment of a front-end
sales load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sales of Class B Shares. Although the Fund's
Distribution Plan for Class B Shares permits the payment of an asset based sales
charge of up to 0.75% per annum of relative net assets, the Board of Trustees
has authorized payment of an asset based sales charge of only 0.50% per annum of
relative net assets. See the SAI for further information about the Plans. The
asset based sales charges for an investor who exchanges Class B shares of an
Eligible Fund for Class B shares of the Fund may be higher than those associated
with the Eligible Fund Class B shares.
Although Class B Shares are sold without an initial sales charge, the
Distributor pays a sales commission equal to 2.00% (including a prepaid service
fee of 0.25%) to dealers
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<PAGE>
who sell Class B Shares. These commissions are not paid on exchanges from
other Eligible Funds or on sales to investors exempt from the CDSC.
Banks and other financial institutions may be subject to various state laws
regarding the services described above and may be required to register as
dealers pursuant to state law.
SHAREHOLDER SERVICES
Account Information
Shareholders with inquiries on accounts not held by their dealer may call
the Fund or the Agent at 1-800-552-1129 (9:00 a.m.-5:00 p.m. New York time) or
write to the Agent.
Exchange Privilege
The Rochester Funds group currently consists of two investment companies in
addition to the Fund, Rochester Fund Municipals and The Bond Fund For Growth,
each of which has distinct investment objectives and policies. As described
below, a shareholder may exchange Shares of the Fund for shares of the same
class of another of The Rochester Funds or shares of certain other funds which
are managed by the Adviser (the "Oppenheimer" funds) which are eligible for sale
in the Shareholder's state of residence (collectively the "Eligible Funds"). A
list indicating which funds are Eligible Funds can be obtained by calling the
Agent at 1-800-552-1129. Not all of the Eligible Funds offer more than one class
of shares. If the other Eligible Fund offers only one class of shares, only
Class A Shares may be exchanged for such class. Shareholders wishing to make an
exchange into an Eligible Fund should obtain and review a prospectus of the
appropriate Eligible Fund before making the exchange. No exchange of shares of
an Oppenheimer fund for shares of any fund in The Rochester Funds group is
allowed.
If you exchange Shares subject to a CDSC, the transaction will not be
subject to the CDSC. However, when you redeem the Shares acquired through the
exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the Shares. You will pay the CDSC of the Fund from which
you are redeeming without regard to any exchange unless the exchange was from
the Fund to The Bond Fund For Growth. In that case, you will pay the CDSC of the
Fund. For purposes of computing the CDSC, the length of time you have owned your
Shares will be measured from the date of original purchase, as determined by the
Fund (see Purchasing Class B Shares) and will not be affected by any exchange.
Shares of an Eligible Fund may be exchanged for shares of the same class of
another Eligible Fund on the basis of the relative net asset values of each
Fund's shares, at the time of the exchange (without sales charge), except that
exchanges of Class A Shares held in the Fund for less than six months for shares
of Rochester Fund Municipals will be charged an incremental sales load.
Shareholders may effect exchanges of noncertificated shares by telephone.
The privilege is available to all shareholders unless requested otherwise by the
shareholder on the account application. Telephone Exchange Authorization Forms
are available from the Distributor upon request. In order to effect an exchange
by telephone shareholders may call the Agent weekdays (except holidays) between
9:00 a.m. and 5:00 p.m. (New York time). All exchanges will be made on the basis
of the relative net asset value of the two funds next determined after the
request is received in good order. Exchange requests received after the close of
regular trading on the Exchange, generally 4:00 p.m. (New York time) will be
processed at the net asset value determined as of the close of business on the
following business day. Telephone exchanges are available only in nonretirement
accounts registered in the same name. Shareholders are limited to one telephone
exchange within any 30-day period for each account authorized to make such
exchanges.
The Fund, the Agent and their affiliates will not be liable for any loss,
damage, cost or expense arising out of any instruction (or any interpretation of
such instruction) received by telephone which they reasonably believe to be
authentic. In acting upon telephone instructions, the Agent utilizes procedures
which are reasonably designed to ensure that such instructions are genuine. Your
telephone call will be recorded and a written confirmation of the exchange will
be mailed to you. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone exchanges. The
Fund reserves the right, in its sole discretion, upon 60 days' notice, to
15
<PAGE>
materially modify or discontinue the telephone exchange privilege. During times
of drastic economic or market conditions, telephone exchanges may be difficult
to implement. If you experience difficulty in making a telephone exchange, you
may transmit your request in writing to the Agent and it will be implemented at
the next determined net asset value (subject to any applicable sales charge)
following receipt in good order by the Agent.
See Tax Matters for an explanation of the tax consequences of exercising
the exchange privilege.
Reinvestment Privilege
If you redeem Class A Shares or Class B Shares of the Fund and you decide
to reinvest in the Shares of the Fund, you may, within 90 calendar days of the
date of redemption, use all or any part of the proceeds of the redemption to
reinvest, free of sales load, in Class A Shares of the Fund. The Fund will not,
however, refund any CDSC paid as a result of a redemption of Class B Shares.
Your investment will be reinvested at the net asset value per Class A Share next
determined after your request is accepted. You must inform the Agent that this
purchase represents a reinvestment. If you redeem Class A Shares or Class B
Shares of the Fund and immediately invest the proceeds of the redemption in a
money market fund, you may, upon notification to the Fund within one year of
such transaction, reinvest, free of sales load, the exact amount of the proceeds
of the redemption in Class A Shares of the Fund. Your investment will be
reinvested at the net asset value per Class A Share established at the close of
business of the Exchange on the day your request is accepted. There may be
certain limits on facilitating such a transaction with respect to wire orders.
Shareholders should consult with their dealers with respect to facilitating such
transactions. The Fund reserves the right to require proof of the validity of
any request for reinvestment pursuant to this service. You may use these
respective reinvestment privileges only once a calendar year.
See Tax Matters for an explanation of the tax consequences of exercising
the reinvestment privilege.
HOW TO REDEEM SHARES
By Mail. A shareholder may redeem Shares at any time and receive the value
of such Fund's Shares by forwarding a written request signed by all registered
owners to the Agent. The shareholder will then receive from the Fund the value
of the Shares based upon the net asset value per Share, less any applicable CDSC
on Class B Shares, next computed after a written request in good order is
received by the Agent. Redemption requests received after the time at which the
net asset value is calculated each day (at the close of the Exchange) will
receive the price calculated on the following business day. Any certificates
representing Fund Shares being redeemed must be submitted with the written
redemption request.
For the shareholder's protection, and to be considered in good order,
signature(s) must be guaranteed if the redemption request involves any of the
following:
(1) the proceeds of the redemption are over $100,000;
(2) the proceeds (in any amount) are to be paid to someone other than the
registered owner(s) of the account; or
(3) the proceeds (in any amount) are to be sent to any address other than
the shareholder's address of record, pre-authorized bank account or brokerage
firm account.
Eligible signature guarantors are determined in accordance with standards
and procedures adopted by the Agent from time to time. A notarized signature is
not acceptable.
Payment for the redeemed Shares will be sent to the shareholder within
seven days after receipt of the request in good order, except that the Fund may
delay the mailing of the redemption check or a portion thereof until the Fund's
depository bank has made fully available for withdrawal the check used to
purchase Fund Shares, which may take up to 15 days.
Through your Investment Dealer. For the convenience of its shareholders,
the Fund has authorized the Distributor to act as its agent to accept orders
from dealers' authorized order rooms for the redemption of Fund Shares. The Fund
may revoke or suspend this authorization at any time. The redemption price is
the net asset value, less any applicable CDSC on Class B Shares, next determined
16
<PAGE>
following the time at which the Shares are offered for redemption to the dealer.
Payment of the redemption proceeds is made to the dealer who placed the order
within five days after receipt of the order provided that within this time,
delivery of certificates for Shares in good order is received, or for open
accounts, upon the receipt of a written request for redemption as described
above, and, if required, any supporting documents. Neither the Fund nor the
Distributor may make a charge upon such a redemption, other than any applicable
CDSC on Class B Shares. However, a dealer may make a charge as agent for the
shareholder in the redemption of Fund Shares. If a shareholder is unable to
execute a transaction by telephone to his dealer, or a dealer is unable to
execute a transaction by telephone to the Distributor (for example, during times
of unusual market activity), the shareholder or dealer should consider placing
the order by mail.
Systematic Withdrawal Plan. A Systematic Withdrawal Plan ("SWP") is
available to shareholders which provides for monthly payments by ACH funds or
check. Withdrawals of Class B Shares through the SWP may be subject to a CDSC.
For information on how to establish an SWP, contact the Agent at 1-800-552-1129.
Required Redemption. The Fund may, in order to reduce its expenses, require
any shareholder with Shares having a net asset value in the aggregate of less
than $3,500 to redeem such Shares. Such required redemption would relate only to
a shareholder whose holdings had fallen to below $3,500 by reason of redemption.
Notice of any required redemption (which would be made only in cash at net asset
value without payment of any CDSC) would be given to any such shareholder at
least 30 days prior to any such required redemption, during which time the
shareholder would have the opportunity to bring the account up to a value of
$3,500. The provisions relating to the reinvestment privilege would not be
applicable to any such redeemed shares. Required redemptions are not applicable
where a shareholder is making continuous regular investments in the Fund through
an Automatic Bank Draft Plan.
PERFORMANCE
Advertisements and other sales literature for each class of Shares of the
Fund may refer to the "yield," "tax equivalent yield" and "average annual total
return." When the Fund advertises the yield or tax equivalent yield of a class
of Shares it will also advertise the average annual total return for the most
recent one-year period, the most recent five-year period and for the life of
that class of Shares. Such calculations are determined in accordance with the
rules and regulations established by the Securities and Exchange Commission and
are applicable to all investment companies and are not indicative of the
dividends or other distributions which were or will be paid to the Fund's
shareholders. Dividends or other distributions paid to shareholders are
reflected in the current distribution rate or tax equivalent distribution rate
which may be quoted to shareholders.
The advertised yield of a class of Shares of the Fund will be based upon a
30-day period stated in the advertisement. Yield is calculated by dividing the
net investment income per Share of a class earned during the period by the
maximum offering price per Share of that class on the last day of the period.
The result is then "annualized" using a formula that provides for semiannual
compounding of income. The Fund's yield for a class reflects the deduction of
the maximum initial sales charge, but does not reflect the deduction of any
CDSC.
Tax-equivalent yield for a class of Shares is calculated by applying the
stated federal and state income tax rate only to that portion of the yield which
is exempt from taxation. The tax-exempt portion of the yield is divided by the
number one minus the stated income tax rate (e.g., 100%-38% = 62%). The result
is then added to that portion of the yield, if any, that is not tax-exempt.
The average annual total return of Shares of the Fund is computed by
finding the average annual compounded rate of return of a class over a period
that would equate the initial amount invested in that class to the ending
redeemable value. The calculation assumes that the maximum sales load charge is
deducted from an initial $1,000 investment in Class A Shares, and that the CDSC
is deducted in the case of Class B Shares. The calculation also assumes that
dividends and capital gains distributions are reinvested at net asset value. The
calculation includes all recurring fees that are charged to all shareholder
accounts.
For additional information regarding the calculation of yield and total
return, see Calculation of Performance Data
17
<PAGE>
in the SAI. Further information about the Fund's performance is set forth
in the Fund's Annual Report to shareholders, which may be obtained upon request
without charge.
TAX MATTERS
Taxation of the Fund
During the taxable year ended December 31, 1995, the Fund qualified for
treatment as a regulated investment company under Subchapter M of the Code. The
Fund intends to continue to so qualify for future taxable years. The Fund
intends to avoid incurring liability for federal income tax on its investment
company taxable income (consisting generally of taxable net investment income
and net short-term capital gains) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss), and a 4% federal
excise tax on certain undistributed income and gains, by distributing all of
that income and gains and by meeting other applicable requirements of the Code.
Taxation of Shareholders
By meeting certain requirements of the Code, including the requirement that
at the close of each quarter of its taxable year at least 50% of the value of
its total assets consists of obligations the interest on which is excludable
from gross income under section 103(a) of the Code, the Fund intends to continue
to qualify to pay "exempt-interest" dividends to its shareholders.
Exempt-interest dividends designated as such by the Fund may be excluded from a
shareholder's gross income for federal income tax purposes. To the extent
dividends are derived from earnings on interest attributable to obligations of
New York State and its political subdivisions, Puerto Rico, or other U.S.
possessions, they also will be excluded from a New York shareholder's gross
income for New York State and New York City personal income tax purposes.
Although exempt-interest dividends will not be subject to federal income
tax for Fund shareholders, a portion of such dividends which is derived from
interest on certain "private activity" bonds will give rise to a tax preference
item which could subject a shareholder to, or increase a shareholder's liability
under, the federal alternative minimum tax, depending on the shareholder's
individual tax situation.
To the extent dividends are derived from options trading, temporary taxable
investments, an excess of net short-term capital gain over net long-term capital
loss or accretion of market discount, those dividends are taxable as ordinary
income for federal income tax purposes whether a shareholder has elected to
receive dividends in cash or additional Fund Shares. Such dividends will not
qualify for the dividends-received deduction for corporations. Interest on
indebtedness incurred or continued to purchase or carry Shares of the Fund is
not deductible to the extent the Fund's distributions consist of exempt-interest
dividends. Distributions, if any, of net capital gain, when designated as such,
will be treated as long-term capital gains by each shareholder regardless of the
length of time the shareholder has owned Fund Shares and whether the shareholder
received them in cash or additional Fund Shares.
Information as to the tax status of Fund distributions will be provided
annually including information as to which portions are taxable or tax-exempt.
In addition, information will be provided annually identifying the portion of
exempt-interest dividends that constitutes a preference item for shareholders in
determining their liability for the alternative minimum tax. Shareholders who
have not been in the Fund for a full taxable year may get distributions of
income and/or capital gains which are not equivalent to the actual amount
applicable to the period for which they have held shares.
The Fund is required to withhold 31% of all taxable dividends, capital gain
distributions and redemption proceeds (including any applicable CDSC) payable to
individuals and certain other noncorporate shareholders who do not furnish the
Fund with a correct taxpayer identification number. Withholding at that rate
from taxable dividends and capital gain distributions also is required for such
shareholders who otherwise are subject to backup withholding.
Up to 85% of a Social Security recipient's benefits may be included in
federal gross income for recipients whose adjusted gross income (including
income from tax-exempt sources such as the Fund) plus 50% of their benefits
exceeds certain base amounts. Income from the Fund is still
18
<PAGE>
tax-exempt to the extent described above; it is only included in the
calculation of whether a recipient's Social Security benefits are to be included
in gross income.
A redemption of Fund Shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed Shares (which
normally includes any sales load paid). An exchange of Fund Shares for shares of
any Eligible Fund generally will have similar tax consequences. However, special
rules apply when a shareholder (1) disposes of Fund Shares through an exchange
or redemption within 90 days after purchase thereof and (2) subsequently
acquires shares of an Eligible Fund or reacquires Fund Shares without paying a
sales load due to the exchange privilege or 90-day reinvestment privilege. (See
Shareholder Services, Exchange Privilege, and Reinvestment Privilege.) In these
cases, any gain on the disposition of the original Fund Shares will be
increased, or loss decreased, by the amount of the sales load paid when those
Shares were acquired, and that amount will increase the basis of the
subsequently acquired Shares. In addition, if a shareholder purchases Fund
Shares (whether pursuant to the reinvestment privilege or otherwise) within 30
days before or after redeeming other Fund Shares at a loss, all or a portion of
that loss will not be deductible and will increase the basis of the newly
purchased Shares.
The foregoing is only a summary of some of the important tax considerations
generally affecting the Fund and its shareholders--see the SAI for a further
discussion--and is not intended to be a substitute for careful tax planning.
There may be tax considerations involved with the automatic conversion of Class
B Shares to Class A Shares--see Conversion of Class B Shares for further
information. There may also be other federal, state or local tax considerations
applicable to a particular investor; for example, the Fund's distributions may
be wholly or partly taxable under state and/or local laws other than New York
State and New York City. Prospective investors therefore are urged to consult
their own tax advisers.
MANAGEMENT, SERVICES AND DISTRIBUTION
Limited Term New York Municipal Fund. The Fund offers an unlimited number
of Shares of beneficial interest, divided into two classes, each Share of which
is entitled to one vote. Fractional Shares have the same rights as full Shares
to the extent of their proportionate interest. All Shares of each class in the
Fund have equal voting rights, except that, in matters affecting only a
particular portfolio or class, only Shares of that portfolio or class are
entitled to vote.
The Fund has a Board of Trustees which has the primary responsibility for
the overall management of the Fund. The Trustees elect the officers of the Fund
who are responsible for administering its day-to-day operations. Under the
Fund's Declaration of Trust, no annual or regular meeting of shareholders is
required, but special meetings will be called for certain purposes such as
electing trustees, changing fundamental policies or approving a management
contract. The Declaration of Trust of the Fund provides that the Trustees shall
call and give notice of a meeting of shareholders for the purpose of voting upon
removal of any trustee when requested in writing by shareholders holding not
less than 10% of the shares of the Fund.
The Adviser. The Fund is managed by the Adviser, OppenheimerFunds, Inc.,
which is responsible for selecting the Fund's investments and handles its
day-to-day business. The Adviser carries out its duties, subject to the policies
established by the Board of Trustees, under the Investment Advisory Agreement
with the Fund which states the Adviser's responsibilities. The Adviser provides
the Fund with investment supervision and management, administrative services and
office space. The Adviser is entitled to receive, pursuant to the Investment
Advisory Agreement, an annual fee, payable monthly, of 0.50% of its average
daily net assets up to $100 million, 0.45% of its average daily net assets on
the next $150 million, 0.40% of its average daily net assets in excess of $250
million but less than $2 billion and 0.39% of its average daily net assets in
excess of $2 billion.
The Adviser, an investment adviser registered under the Investment Advisers
Act of 1940, has operated as an investment adviser since 1959. The Adviser
(including a subsidiary) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $40 billion as of November 30, 1995
and with more than 2.8 million shareholders. The Adviser is owned by Oppenheimer
Acquisition Corp., a holding company that is
19
<PAGE>
owned in part by senior officers of the Adviser and controlled by
Massachusetts Mutual Life Insurance Company. On or about the date of this
Prospectus, the Adviser acquired the business relationships and certain assets
and liabilities of the previous adviser and distributor to the Fund. Pursuant to
this acquisition and Fund shareholder approval received on December 20, 1995,
the Fund entered into the following agreements, effective January 4, 1996: the
Investment Advisory Agreement between the Fund and the Adviser and the
Distribution and Service Plans and Agreements between the Fund and the
Distributor.
Ronald H. Fielding, the Portfolio Manager of the Fund, has been primarily
responsible for management of the Fund's portfolio since its inception. Mr.
Fielding was President and a trustee of the Fund from 1991-January, 1996 and is
currently Vice President of the Fund. He also has been an officer and a director
of the Fund's previous advisers (President and a director of Fielding Management
Company, Inc. since 1982 and President and a director of Rochester Capital
Advisors, Inc., the general partner of Rochester Capital Advisors L.P., since
1993). Messrs. Michael Rosen and Anthony Tanner also have responsibility for the
day-to-day management of the Fund's portfolio. Prior to their employment by the
Adviser, Messrs. Fielding, Rosen and Tanner were employed by the Fund's previous
investment advisers, Fielding Management Company, Inc. and Rochester Capital
Advisors, L.P.
The Agent. The Fund acts as its own transfer agent and dividend paying
agent. The Fund's shareholder servicing agent is Oppenheimer Shareholder
Services, a division of the Adviser, which acts as servicing agent for the Fund
and as transfer agent for various other Oppenheimer funds. Shareholders should
direct inquiries about their accounts to the Agent at the toll-free number shown
on the back cover of this Prospectus.
The Distributor. The Fund's shares are sold through dealers and brokers
that have a sales agreement with OppenheimerFunds Distributor, Inc., a
subsidiary of the Adviser that acts as the Distributor. The Distributor also
distributes the shares of other Oppenheimer funds and is sub-distributor for
funds managed by a subsidiary of the Adviser.
20
<PAGE>
Account Application
The Rochester Funds
- --------------------------------------------------------------------------------
Mail completed The person or persons (the "Investor") who are executing this
application to: Account Application authorize Oppenheimer Shareholder
Oppenheimer Services to open or revise an account to purchase common
Shareholder shares of the Fund indicated below (collectively "The
Services Rochester Funds") in accordance with these instructions and
350 Linden Oaks all other applicable provisions in this Account Application,
Rochester, NY and all provisions in the current Prospectus of the indicated
14625 Fund, which Prospectus the investor acknowledges having
received from its Dealer prior to, or simultaneously with,
the execution of this Account Application.
- --------------------------------------------------------------------------------
Account Type/NAME (Please Print or Type)
[ ] Individual__________________________________________________________________
First Name Middle Initial Last Name
Joint [ ] JTTEN:
[ ] Owner [ ] Ten Com:__________________________________________________________
) First Name Middle Initial Last Name
Uniform Gift/
[ ] Transfer to Minor___________________________________________________________
[ ] UTMA [ ] UGMA Custodian First Name Middle Initial Last Name
as Custodian for___________________________ ______________________________
Name of Minor(s) State in which gift is made
[ ] Trust,______________________________________________________________________
Corporation, Name of Trust or Organization as it Appears on Trust Agreement
Partnership or
Other Entity ________________________________________________________________
Name of Trustee(s) or Officer
_______________________________________________ ___________________________
For the Benefit of Date of Trust
______________________________ ___________________ ______________ ________
Address City State Zip
( ) __________________ ( )__________________ Telephone numbers will be used
Day Phone Evening Phone for non-soliciting purposes only
(include area code) (include area code)
YOU MUST COMPLETE THIS SECTION FOR ALL ACCOUNT TYPES
- --------------------------------------------------------------------------------
Fund and Privilege Selections
Please indicate your Mutual Fund Investment Choice(s) and circle the appropriate
Share Class (if applicable). (Please notice the minimum required investment for
the fund you choose. Subsequent purchases must be in amount of $100 or more for
each fund.)
Fund Name Share Class Amount
[ ] Rochester Fund Municipals
(minimum $2,000)
RMUNX Class A only available $_________
[ ] Limited Term NY Municipal
Fund (minimum $5,000)
LTNYX Class A $_________
LTNBX Class B $_________
[ ] The Bond Fund for Growth
(minimum $2,000)
RCVGX Class A $_________
RCVBX Class B $_________
RCVYX (Institutional
Investors only) Class Y (minimum $50,000) $_________
TOTAL: $_________
Please enclose a check for this amount
payable to Oppenheimer Funds Distributor, Inc.
21
<PAGE>
Dividend and Capital Gain
(Distributions will be reinvested in additional shares, unless specified
otherwise.)
[ ] Reinvest dividends in shares and pay capital gains in cash
[ ] Pay dividends in cash and reinvest capital gains in shares
[ ] Pay all dividends and capital gains in cash
[ ] I do not want Telephone Exchange Privileges. Telephone Exchange is
automatic (where applicable) unless otherwise specified here.
Please complete the following if dividend distributions are to be mailed to
another address or will be payable to another payee:
_____________________ __________________________ _______________________
Name Address City/State/Zip
________________________________________________________________________________
Signature Guarantee required for above transaction
A signature guarantee may be obtained at any commercial bank or from your
broker dealer.
- --------------------------------------------------------------------------------
Signature and Taxpayer Certification
I (we) am of legal age to make this purchase. Under the penalties of perjury,
I certify that the tax identifying or social security number contained herein is
true, correct and complete and I am not subject to backup withholding under
section 3406(a)(1)(C) of the Internal Revenue Code. I (we) hereby agree that,
upon acceptance by Oppenheimer Funds Distributor, Inc. ("OFDI"), this Account
Application will be a contract governed by the laws of the State of New York.
In addition, I (we) hereby agree that any controversy arising out of or in
relation to my (our) account or this contract shall be settled by arbitration
before the National Association of Securities Dealers, Inc. or any other self-
regulatory organization of which OFDI is a member.
_____________________________________ ________________________________________
Owner's Signature Date Owner's Social Security/Tax ID State in
which signed (Minor's SS# if UGMA/UTMA)
_____________________________________________
Joint Owner's Signature (if any) Date
For Tax Purposes: (check appropriate box:)
[ ] I am a citizen of US [ ] Other_________
[ ] I am a resident of US [ ] Other_________
(Non-resident Aliens must provide the W-8 form)
- --------------------------------------------------------------------------------
Registered Representative Identification (Broker/Dealer Use Only)
__________________ ______________ __________________ _______________________
First Name Middle Initial Last Name Representative Number
_______________________________________________________ _______________________
Registered Representative Signature (required) Office Phone Number
_______________________________________________________ _______________________
Firm Name Branch Number
_________________________________ __________________ ____________ _________
Address City State Zip
Please make your check payable to Oppenheimer Funds Distributor, Inc.
and mail to: 350 Linden Oaks, Rochester, NY 14625. A shareholder package
containing fund privileges will be forwarded upon processing of your
application.
The broker-dealer ("Dealer") signing the Application hereby agrees to all
applicable provisions of this Application. The Dealer will act as principal in
all purchases by the Investor of Fund shares indicated herein and authorizes and
appoints OFDI to execute such purchases and to confirm such purchases to the
Investor. OFDI will remit monthly to the Dealer the amount of any commissions
due, except that no commissions will be paid to the Dealer on any transactions
for which the Dealer's net sales commissions are less than $5.00. The Dealer
also represents that it may lawfully sell shares of the indicated Fund in the
state designated as the Investor's record address, and that it has a currently
effective Dealer Agreement with OFDI authorizing the Dealer to sell common
shares of The Rochester Funds.
The Dealer signature guarantees the signature and legal capacity of the
Investor. If the Investor does not sign this Application, the Dealer warrants
that this application is completed in accordance with the Investor's
instructions and information and agrees to indemnify OFDI and the Oppenheimer
Funds from any loss or liability from acting or relying upon such instructions
and information.
22
<PAGE>
LOGO
The Rochester Funds
A Division of OppenheimerFunds, Inc.
350 Linden Oaks
Rochester, NY 14625
Investment Adviser
OppenheimerFunds, Inc.
Distributor
OppenheimerFunds Distributor, Inc.
Shareholder Servicing Agent
Oppenheimer Shareholder Services
(800) 552-1129
- ---------------------------------------------------
Custodian
Investors Bank & Trust Company
Boston, MA
Independent Accountants
Price Waterhouse LLP
Rochester, NY
Legal Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
- ----------------------------------------------------
For further information with respect to the Fund and
the shares offered hereby, reference is made to the
Registration Statement filed with the Securities and
Exchange Commission.
- -----------------------------------------------------
LOGO OPPENHEIMERFUNDS.
PRO355.001.0196 Item #ROC512450
LIMITED TERM
NEW YORK
MUNICIPAL FUND
PROSPECTUS AND
NEW ACCOUNT APPLICATION
AS REVISED JANUARY 5, 1996
ROCHESTER PORTFOLIO SERIES
350 LINDEN OAKS
ROCHESTER, NY 14625
LOGO OPPENHEIMER FUNDS.
<PAGE>
ROCHESTER PORTFOLIO SERIES-LIMITED TERM NEW YORK MUNICIPAL FUND
350 Linden Oaks, Rochester, New York 14625
1-800-552-1129
Statement of Additional Information dated May 1, 1995, as revised on
January 5, 1996
This Statement of Additional Information of Rochester Portfolio
Series-Limited Term New York Municipal Fund (the "Fund") is not a Prospectus.
This document contains additional information about the Fund and supplements
information in the Prospectus dated May 1, 1995, as revised on January 5, 1996.
It should be read together with the Prospectus, which may be obtained by writing
to the Fund's shareholder servicing agent, Oppenheimer Shareholder Services (the
"Agent"), at P.O. Box 5270, Denver, Colorado 80217 or by calling the Agent at
the toll-free number shown above.
TABLE OF CONTENTS
PAGE
ABOUT THE FUND
Investment Objectives and Policies .................................... 2
Investment Policies and Strategies ............................... 2
Other Investment Techniques and Strategies ....................... 6
Investment Considerations/Risk Factors ........................... 6
Other Investment Restrictions ................................... 10
How the Fund is Managed ............................................... 11
Organization and History ......................................... 11
Trustees and Officers of the Fund ................................ 12
The Adviser and Its Affiliates ................................... 17
Brokerage Policies of the Fund ........................................ 19
Performance of the Fund ............................................... 20
Distribution and Service Plans ........................................ 24
ABOUT YOUR ACCOUNT
How To Buy Shares ..................................................... 26
How To Sell Shares .................................................... 28
How To Exchange Shares ................................................ 28
Dividends, Capital Gains and Taxes .................................... 29
Additional Information About the Fund ................................. 32
FINANCIAL INFORMATION ABOUT THE FUND
Financial Statements .................................................. 34
Independent Auditors' Report .......................................... 34
Appendix A: Description of Municipal Securities Ratings .............. A-1
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES AND STRATEGIES. The investment objective of the Fund is to
provide shareholders with as high a level of income exempt from federal income
tax and New York State and New York City personal income taxes as is consistent
with its investment policies and prudent investment management. The Fund intends
to invest primarily in a portfolio of investment grade Municipal Obligations as
defined below and in the Prospectus with a dollar weighted average effective
maturity of five years or less. There can be no assurance that the investment
objective of the Fund will be realized.
The Fund seeks to achieve its objective by investing primarily in a portfolio of
obligations issued by or on behalf of New York State, its political
subdivisions, agencies and instrumentalities and obligations of other qualifying
issuers, such as issuers located in Puerto Rico, the Virgin Islands, and Guam,
which pay interest which, in the opinion of the bond counsel to the issuer, is
exempt from federal income tax and New York State, and New York City personal
income taxes ("Municipal Obligations").
The Fund is classified as non-diversified within the meaning of the Investment
Company Act of 1940, as amended, (the "Investment Company Act"), which means
that the Fund is not limited by the Investment Company Act in the proportion of
its assets that it may invest in obligations of a single issuer. The Fund
intends to continue to qualify as a "regulated investment company," however,
under the Internal Revenue Code of 1986, as amended (the "Code"). See Dividends,
Capital Gains and Taxes. In addition to satisfying other requirements to so
qualify, the Fund will limit its investments so that, at the close of each
quarter of its taxable year, (i) not more than 25% of the market value of its
total assets will be invested in the securities of a single issuer and (ii) with
respect to 50% of its total assets, not more than 5% will be invested in the
securities of a single issuer. In contrast, a fund which elects to be classified
as "diversified" under the Investment Company Act must satisfy the foregoing 5%
requirement with respect to 75% of its assets at all times. To the extent that
the Fund assumes large positions in the obligations of a small number of
issuers, the Fund's total return may fluctuate to a greater extent than that of
a diversified company as a result of changes in the financial condition or in
the market's assessment of the issuers.
MUNICIPAL OBLIGATIONS
-- MUNICIPAL BONDS. Municipal bonds include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which municipal securities or bonds may be issued include the
refunding of outstanding obligations, the obtaining of funds for general
operating expenses and the obtaining of funds to loan to other public
institutions and facilities. In addition, certain types of private activity
bonds are issued by or on behalf of public authorities to obtain funds to
provide housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, port or
-2-
<PAGE>
parking facilities, manufacturing facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal.
-- GENERAL OBLIGATION BONDS. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest. The
taxes that can be levied for the payment of debt service may be limited or
unlimited as to the rate or amount of special assessments.
-- REVENUE BONDS. Revenue Bonds are not secured by the full faith, credit
and taxing power of an issuer. Rather, the principal security for revenue bonds
is generally the net revenue derived from a particular facility, group of
facilities or, in some cases, the proceeds of a special excise tax or other
specific revenue source. Revenue bonds are issued to finance a wide variety of
capital projects including: electric, gas, water, and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and universities,
and hospitals. Although the principal security behind these bonds may vary, many
provide additional security in the form of a debt service reserve fund, from
which money may be used to make principal and interest payments on the issuer's
obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other public
projects. Some authorities are provided with further security in the form of
state assurance (although without obligation) to make up deficiencies in the
debt service reserve fund.
-- INDUSTRIAL DEVELOPMENT BONDS. Industrial development bonds are, in most
cases, revenue bonds and are issued by or on behalf of public authorities to
raise money for the financing of various privately-operated facilities such as
manufacturing, housing, and pollution control. These bonds are also used to
finance public facilities such as airports, mass transit systems, ports and
parking. The payment of the principal and interest on such bonds is solely
dependent on the ability of the facilities user to meet its financial
obligations and the pledge, if any, of the real and personal property so
financed as security for such payment. The Fund will purchase industrial
development bonds only to the extent that the interest paid by a particular bond
is tax-exempt pursuant to the Code, which limits the types of facilities that
may be financed with tax-exempt industrial development and private activity
bonds and the amounts of such bonds each state may issue.
-- MUNICIPAL NOTES. Municipal notes generally fund short-term capital needs
and have maturities of one year or less. The Fund may invest in municipal notes
which include:
-- TAX ANTICIPATION NOTES. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
-- REVENUE ANTICIPATION NOTES. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as federal revenues
available under the Federal Revenue Sharing Programs.
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-- BOND ANTICIPATION NOTES. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the notes.
-- MISCELLANEOUS, TEMPORARY AND ANTICIPATORY INSTRUMENTS. These instruments
may include notes issued to obtain interim financing pending entering into
alternate financial arrangements such as receipt of anticipated federal, state
or other grants or aid, passage of increased legislative authority to issue
longer term instruments or obtaining other refinancing.
-- CONSTRUCTION LOAN NOTES. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of the Construction Loan Notes, is sometimes provided by a
commitment of the Government National Mortgage Association ("GNMA") to purchase
the loan, accompanied by a commitment by the Federal Housing Administration to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. The Fund will only
purchase Construction Loan Notes that are subject to permanent GNMA or bank
purchase commitments.
-- TAX-EXEMPT COMMERCIAL PAPER. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by agencies
of state and local governments to finance seasonal working capital needs or as
short-term financing in anticipation of longer term financing.
-- MUNICIPAL LEASES. Municipal lease obligations or installment purchase
contract obligations (collectively, "Municipal Leases") have special risks not
normally associated with Municipal Obligations. Although Municipal Leases do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a Municipal Lease may be backed by the municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligations. However, most lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. Although "non-appropriation" Municipal Leases
are generally secured by the leased property, the Fund's ability to recover
under the lease in the event of non-appropriation or default will be limited
solely to repossession of the leased property without recourse to the general
credit of the lessee, and disposition of the property in the event of
foreclosure might prove difficult. In addition, Municipal Leases may be subject
to an " abatement" risk. The leases underlying certain municipal lease
obligations may provide that lease payments are subject to partial or full
abatement if, because of material damage or destruction of the leased property,
there is substantial interference with the lessee's use or occupancy of such
property. The "abatement" risk may be reduced by the existence of insurance
covering the leased property, the maintenance by the lessee of reserve funds or
the provision of credit enhancements such as letters of credit.
In addition to the "non-appropriation" and "abatement" risks, investments
in Municipal Leases represent a relatively new type of financing. As such,
Municipal Leases have not yet
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developed the depth of marketability associated with more conventional
Municipal Obligations. The Fund will seek to minimize these risks by investing
not more than 10% of its total assets in Municipal Leases that contain
"non-appropriation" clauses, and by investing only in those "non-appropriation"
lease obligations where (1) the nature of the leased equipment or property is
such that its ownership or use is essential to a governmental function of the
municipality, (2) the lease payments will commence amortization of principal at
an early date resulting in an average life of seven years or less for the lease
obligation, (3) appropriate covenants will be obtained from the municipal
obligor prohibiting the substitution or purchase of similar equipment if lease
payments are not appropriated, (4) the lease obligor has maintained good market
acceptability in the past, (5) the investment is of a size that will be
attractive to institutional investors, and (6) the underlying leased equipment
has elements of portability and/or use that enhance its marketability in the
event foreclosure on the underlying equipment is ever required.
Investments in Municipal Leases will be subject to the Fund's 15% limit on
investments in Illiquid Securities unless, in the judgment of OppenheimerFunds,
Inc. ("the Adviser"), a particular Municipal Lease is liquid. The Board of
Trustees has adopted guidelines to be utilized by the Adviser in making
determinations concerning the liquidity and valuation of a municipal lease
obligation. Such determinations will be based on all relevant factors including
among others: (1) the frequency of trades and quotes for the obligation; (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (3) the willingness of dealers to undertake to make a
market in the security ; (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 transfer; (5) the likelihood that the marketability of the
obligation will be maintained throughout the time the Fund holds the obligation;
and (6) the likelihood that the municipality will continue to appropriate
funding for the leased property.
-- NEW FORMS OF MUNICIPAL OBLIGATIONS. New forms of Municipal Obligations
in which the Fund may desire to invest are continuing to evolve. Accordingly,
the descriptions herein as to certain types of existing Municipal Obligations
should be viewed as illustrative and not exclusive. The Fund may invest in new
forms of instruments or variations of existing instruments, subject only to the
Fund's criteria of investment quality and tax exemption and to the restrictions
specified in this Statement of Additional Information. As new forms of
instruments or variations of existing instruments evolve, the Fund will revise
its prospectus to reflect such evolution prior to investing.
-- DEFINITION OF ISSUER. For purposes of diversification under the
Investment Company Act, identification of the "issuer" of a Municipal Obligation
depends on the terms and conditions of the obligation. If the assets and
revenues of an agency, authority, instrumentality or other political subdivision
are separate from those of the government creating the subdivision and the
obligation is backed only by the assets and revenues of the subdivision, such
subdivision would be regarded as the sole issuer. Similarly, in the case of an
industrial development revenue bond, if the bond is backed only by the assets
and revenues of the non-governmental user, the non-governmental user would be
deemed to be the sole issuer.
If, however, in either case, the creating government or some other entity
guarantees the security, such a guarantee would not be a separate security which
must be included in the Fund's
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limitation on investments in a single issuer, provided the value of all
securities guaranteed by a guarantor is not greater than 10% of the Fund's total
assets.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES
-- STAND-BY COMMITMENTS. The Fund cannot issue but may purchase municipal
securities together with the right to resell the securities to the seller at an
agreed upon price or yield within a specified period prior to the maturity date
of the securities. Although it is not a put option in the technical sense, such
a right to resell is commonly known as a "put" and is also referred to as a
"stand-by commitment."
-- WHEN-ISSUED SECURITIES. Municipal bonds are frequently offered on a
"when-issued" basis. When so offered, the price, which is generally expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within six months of the purchase of
municipal bonds and notes; during the period between purchase and settlement, no
payment is made by the Fund to the issuer and no interest accrues to the Fund.
To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, the Fund would earn no income; however, it is the
Fund's intention to be fully invested to the extent practicable and subject to
the policies stated above. While when-issued securities may be sold prior to the
settlement date, the Fund intends to purchase such securities with the purpose
of actually acquiring them unless a sale appears desirable for investment
reasons. At the time the Fund makes the commitment to purchase a municipal bond
on a when-issued basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The Fund does not believe that
its net asset value or income will be adversely affected by its purchase of
municipal bonds on a when-issued basis. The Fund will establish a segregated
account in which it will maintain cash and marketable securities equal in value
to commitment for when-issued securities.
-- OPTIONS TRANSACTION. The Fund may engage in options transactions in
order to provide additional income (the writing of covered call options) or in
order to afford protection against adverse market conditions (the buying of put
options). Such transactions may, however, limit the amount of possible capital
appreciation which might otherwise be realized. The Fund may only write covered
call options or purchase put options which are listed for trading on a national
securities exchange and purchase call options and sell put options to the extent
necessary to cancel options previously written. As an operational policy, no
more than 5% of the Fund's total assets will be invested in options
transactions.
Unless otherwise noted, the foregoing investment objectives and policies
are not designated as fundamental policies within the meaning of the Investment
Company Act.
INVESTMENT CONSIDERATIONS/RISK FACTORS
-- CONCENTRATION OF INVESTMENTS IN NEW YORK STATE ISSUERS
In view of the Fund's policy of concentrating its investments in the
obligations of New York State (the "State"), its municipalities, agencies and
instrumentalities (collectively "New York
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Issuers"), the following information is provided to investors. This
represents only a brief summary of the corresponding risks inherent in the Fund
and does not purport to be a complete description. It is based on information
obtained from official statements relating to securities offerings of the State,
from independent municipal credit reports and from other sources. This
information is believed to be accurate but has not been independently verified
by the Fund. Additional information may be obtained from official statements and
prospectuses issued by, and other information reported by the State and its
various public bodies and other entities located within the State in connection
with the issuance of their respective securities.
As noted in the Fund's Prospectus, as a fundamental policy, at least 95% of
the Fund's net assets will ordinarily be invested in New York State, municipal
and public authority debt obligations, the interest from which is exempt from
Federal income tax, New York State income tax and New York City personal income
tax ("New York State Tax Exempt Securities"). Therefore, the Fund is more
susceptible to political, economic or regulatory factors and/or events affecting
the State and its political subdivisions than would a more diverse portfolio of
securities relating to a number of different states. In addition, the value of
the Fund's shares may fluctuate more widely than the value of shares of a
diversified portfolio of securities relating to a number of different states.
A national recession commenced in mid-1990. The nation then experienced a
period of weak economic growth during 1991 and 1992. In 1993, the nation's
economy grew faster than in 1992, but still at a very moderate rate, as compared
to other recoveries. The rate of economic expansion accelerated considerably in
1994. National employment and income growth in 1994 were substantial. In
response, the Federal Reserve Board shifted to a policy of monetary tightening
by raising interest rates throughout most of the year. As a result, expansion of
the economy slowed sharply during the first half of 1995 as higher interest
rates reduced the growth of consumer spending and business investment.
The economic recession was more severe in State and its recovery started
later than in the nation as a whole due in part to the significant downsizing in
the banking and financial services industries, defense related industries and
other major corporations as well as an overbuilt commercial real estate market.
The State recovery, as measured by employment, began near the start of calendar
year 1993. During the calendar year 1993, employment began to increase, though
sporadically, and the unemployment rate declined. Moderate employment growth
continued into the first half of 1994 but then came to a virtual halt in the
middle of the year. Employment growth once again picked up in 1995, though as of
September, 1995, unemployment in New York State was 6.8%.
New York State's fiscal year begins April 1 of each year. The 1995-1996
budget, adopted over two months later than the April 1, 1995 deadline, attempted
to make important changes to the State's fiscal policies. For the first time in
50 years, the State's budget called for a reduction in year to year
expenditures. At the same time, the budget attempted to close a $4.8 billion gap
identified at the beginning of the budget process by, in part, significantly
reducing expenditures on certain services. Through the first six months of the
1995-1996 fiscal year, the State has made no significant revisions to the budget
and still projects a balanced budget for the year. However, with the projected
slow down of the national and State economies along with the sizes of the
additional tax reductions expected to be phased in over the next two years, the
State's fiscal outlook remains stressed.
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On October 2, 1995, the State Comptroller released a report entitled
"Comptroller's Report on the Financial Condition of New York State 1995" in
which he identified several risks to the State Financial Plan and reaffirmed his
estimate that the State faces a potential imbalance in receipts and
disbursements of at least $2.7 billion for the State's 1996-1997 fiscal year and
at least $3.9 billion for the State's 1997-1998 fiscal year.
Uncertainties with regard to both the economy and potential decisions at
the federal level add further pressure on future budget balance in New York
State. Specific budget proposals being discussed at the federal level but not
included in the State's current economic forecast would, if enacted, have a
disproportionately negative impact on the longer-term outlook for the State's
economy as compared to other states.
To the extent that the State's municipalities, agencies and authorities
require State assistance to meet their financial obligations, the ability of the
State of New York to meet its own obligations as they become due or to obtain
additional financing could be adversely affected and any reduction in such
assistance and subsidies by the State could adversely affect the ability of such
issuers to meet their debt obligations. Any reduction in the actual or perceived
ability of any issuer of New York State Tax Exempt Securities to meet its
obligations (including a reduction in the rating of its outstanding securities)
would be likely to adversely affect the market value and marketability of its
obligations and could adversely affect the values of New York Tax Exempt
Securities as well.
A substantial principal amount of bonds issued by various municipalities,
agencies and authorities are either guaranteed by the State through
lease-purchase arrangements, other contractual obligations or moral obligation
provisions, which impose no immediate financial obligation on the State and
require appropriations by the legislature before any payments can be made.
Failure of the State to appropriate necessary amounts or to take other action to
permit such municipalities, agencies or authorities to meet their obligations
could result in their default. If a default were to occur, it would likely have
a significant adverse impact on the market price of obligations of the State and
its municipalities, agencies and authorities. While debt service is normally
paid out of revenues generated by projects of such issuers, the State has had to
appropriate large amounts of funds in recent years to enable such
municipalities, agencies and authorities to meet their financial obligations and
in some cases, prevent default. Additional financial assistance is expected to
be required in the current and in the future fiscal years since certain
municipalities, agencies and authorities continue to experience financial
difficulties.
The combination of state and local taxes in the State has been among the
highest in the nation for many years. The burden of state and local taxation, in
combination with the many other causes of regional economic dislocation, has
contributed to the decisions of some businesses and individuals to relocate
outside, or not relocate within, the State. The current high level of taxes
limits the ability of New York State, New York City (the "City") and other
municipalities to impose higher taxes in the event of future difficulties. In
addition, constitutional challenges to State laws have limited the amount of
taxes which political subdivisions can impose on real property, which may have
an adverse effect on the ability of issuers to meet obligations supported by
such taxes. A variety of additional court actions have been brought against the
State and certain agencies and municipalities relating to financing, amount of
real estate tax, use of tax revenues and other matters, which could adversely
affect the ability of the State or such agencies or municipalities to pay their
obligations.
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The fiscal health of the State is closely related to the fiscal health of
it localities, particularly the City, which has required and continues to
require significant financial assistance from the State. Both the State and the
City face potential economic problems which could seriously affect the ability
of both the State and the City to meet their respective financial obligations.
On July 10, 1995, S&P lowered its rating on the City's general obligation bonds
to BBB+ from A-. The City faces continuing and recurring problems of economic
sluggishness compounded by reductions in State aid. Moreover, large budget gaps
projected over the next three years further indicate the City's lack of
financial flexibility. Despite Mayor Guiliani's efforts at reform, many industry
analysts expect further downgrades by the credit agencies rating in the future.
Beginning in early 1975, the State, the City and other State entities faced
serious financial difficulties which jeopardized the credit standing and
impaired the borrowing abilities of such entities and contributed to higher
interest rates on, and lower market prices for, debt obligations issued by them.
A recurrence of such financial difficulties or failure of certain financial
recovery programs could result in defaults or declines in the market values of
numerous New York obligations in which the Fund may invest.
Since 1990, S&P and Moody's Investor Service, Inc. ("Moody's") each lowered
its credit rating on New York State's general obligation bonds and certain other
obligations issued by New York State. Ratings of New York State's general
obligation bonds are among the lowest of all states. As a result, there are
special risks inherent in the Fund's concentration of investments in New York
Tax Exempt Securities.
The foregoing information as to certain New York risk factors is given to
investors in view of the Fund's policy of concentrating its investments in New
York issuers. Such information constitutes only a brief summary and does not
purport to be a complete description. See Appendix A to this Statement.
-- MANAGEMENT OF CREDIT RISK. Because 5% of the Fund's assets may be
invested in securities which are rated below the lowest investment grade
categories, as rated by a nationally recognized statistical rating organization
("NRSRO"), and because a substantial portion of its assets may be invested in
securities which are unrated, but which are, in the opinion of the Adviser,
comparable in quality to investment grade securities, the Fund is dependent on
the Adviser's judgment, analysis and experience in evaluating the quality of
such obligations. In evaluating the credit quality of a particular issue,
whether rated or unrated, the Adviser will normally take into consideration,
among other things, the financial resources of the issuer (or, as appropriate,
of the underlying source of the funds for debt service), its sensitivity to
economic conditions and trends, any operating history of and the community
support for the facility financed by the issue, the ability of the issuer's
management and regulatory matters. The Adviser will attempt to reduce the risks
inherent in investments in such obligations through active portfolio management,
diversification, credit analysis and attention to current developments and
trends in the economy and the financial markets.
Changes in the value of municipal bonds held in the Fund's portfolio
arising from these or
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other factors will cause changes in the net asset value per share of the
Fund. As an operational policy, however, the Fund will not invest more than 5%
of its assets in securities where the principal and interest are the
responsibility of an industrial user with less than three years' operational
history.
-- DEFAULT. The Fund will also take such action as it considers appropriate
in the event of anticipated financial difficulties, default or bankruptcy of
either the issuer of any such obligation or of the underlying source of funds
for debt service. Such action may include retaining the services of various
persons and firms to evaluate or protect any real estate, facilities or other
assets securing any such obligation or acquired by the Fund as a result of any
such event. The Fund will incur additional expenditures in taking protective
action with respect to portfolio obligations in default and assets securing such
obligations, and, as a result, the Fund's net asset value could be adversely
affected. Any income derived from the Fund's ownership or operation of assets
acquired as a result of such actions may not be tax-exempt.
-- LIQUIDITY AND VALUATIONS. The Fund may from time to time, purchase
securities which have a rating which is less than investment grade or securities
for which there is no regular trading market. The market values of such
securities tend to reflect individual developments affecting the issuer to a
greater extent than do higher rated or more liquid securities, which react
primarily to fluctuation in the general level of interest rates. Such securities
also tend to be more sensitive to economic conditions than higher rated
securities or securities for which there is a regular trading market. A portion
of these fixed income securities are considered by S&P and Moody's, on balance,
to be speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligation and will generally involve more
credit risk than securities in the higher rating categories. Securities rated
BBB or Baa by S&P or Moody's are considered to be speculative with respect to
their ability to timely make principal and interest payments. It is possible
that the Fund may be required to liquidate such securities at an inopportune
time, thus having a possible adverse affect on the Fund's performance.
OTHER INVESTMENT RESTRICTIONS
The following investment restrictions and policies are designated fundamental
policies within the meaning of the Investment Company Act and may not be changed
without the consent of the shareholders of a majority of the Fund's outstanding
Shares, including a majority of the Shares of the Fund. A majority of the shares
means the lesser of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented or (ii) more than 50% of the
outstanding shares. The Fund may not:
(1) Purchase common stocks, preferred stocks, warrants, or other equity
securities;
(2) Borrow money or mortgage or pledge any of its assets, except that the
Fund may borrow from a bank for temporary or emergency purposes or for
investment purposes in amounts not exceeding 10% of its total net
assets. Where borrowings are made for a purpose other than temporary or
emergency purposes, the Investment Company Act requires that the Fund
maintain asset coverage of at least 300% for all such borrowings.
Should such asset coverage at any time fall below 300%, the Fund will
be required to reduce its borrowings within three (3) days to the
extent necessary to meet such asset coverage.
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(3) Sell securities short, purchase securities on margin, or write put
options. The Fund reserves the right to purchase securities with puts
attached;
(4) Underwrite the securities of other issuers, except to the extent that
the purchase of municipal obligations in accordance with the Fund's
investment objective and policies, either directly from the issuer, or
from an underwriter for an issuer, may be deemed an underwriting;
(5) Purchase or sell real estate, real estate investment trust securities,
commodities, or commodity contracts, or oil and gas interests, but this
shall not preclude the Fund from investing in municipal obligations
secured by real estate or interests therein;
(6) Purchase the securities of any issuer which would result in the Fund
owning more than 10% of the voting securities of such issuer.
(7) Purchase or retain securities of any issuer if trustees of the Fund,
each of whom owns more than 1/2 of 1% of the outstanding securities of
such issuer, together own more than 5% of such outstanding securities;
(8) Make loans to others, except in accordance with the Fund's investment
objective and policies or pursuant to contracts providing for the
compensation of service providers by compensating balances;
(9) Invest more than 25% of its assets in any particular industry or
industries, except that the Fund may invest more than 25% of its assets
in obligations issued or guaranteed by the U. S. Government, its
agencies or instrumentalities. Industrial development bonds, where the
payment of principal and interest is the responsibility of companies
within the same industry, are grouped together as an "industry";
(10) Invest in companies for the purpose of exercising control or
management;
(11) Issue senior securities.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. Rochester Portfolio Series (the "Trust"), a
Massachusetts business trust established on June 14, 1991, is an open-end,
non-diversified, management investment company consisting of one portfolio, the
Limited Term New York Municipal Fund which currently has two classes of Shares.
As a Massachusetts business trust, the Fund is not required to hold, and does
not plan to hold, regular annual meetings of shareholders. The Fund will hold
meetings when required to do so by the Investment Company Act or other
applicable law, or when a shareholder meeting is called by the Trustees.
Shareholders have the right, upon the declaration in writing or vote of two-
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thirds of the outstanding shares of the Fund, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of its outstanding shares.
In addition, if the Trustees receive a request from at least 10 shareholders
(who have been shareholders for at least six months) holding shares of the Fund
valued at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with other
shareholders to request a meeting to remove a Trustee, the Trustees will then
either make the Fund's shareholder list available to the applicants or mail
their communication to all other shareholders at the applicants' expense, or the
Trustees may take such other action as set forth under Section 16(c) of the
Investment Company Act.
Each share of the Fund represents an interest in the Fund proportionately
equal to the interest of each other share of the same class and entitles the
holder to one vote per share (and a fractional vote for a fractional share) on
matters submitted to their vote at shareholders' meetings. Shareholders of the
Fund vote together in the aggregate on certain matters at shareholders'
meetings, such as the election of Trustees and ratification of appointment of
auditors for the Fund. Shareholders of a particular series or class vote
separately on proposals which affect that series or class, and shareholders of a
series or class which is not affected by that matter are not entitled to vote on
the proposal.
The Trustees are authorized to create new series and classes of series. The
Trustees may reclassify unissued shares of the Fund or its series or classes
into additional series or classes of shares. The Trustees may also divide or
combine the shares of a class into a greater or lesser number of shares without
thereby changing the proportionate beneficial interest of a shareholder in the
Fund. Shares do not have cumulative voting rights or preemptive or subscription
rights. Shares may be voted in person or by proxy.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides for
indemnification and reimbursement of expenses out of its property for any
shareholder held personally liable for its obligations. The Declaration of Trust
also provides that the Fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a shareholder of a
business trust (such as the Fund) to be held personally liable as a "partner"
under certain circumstances, the risk of a Fund shareholder incurring financial
loss on account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any shareholder
of the Trust, agrees under the Trust's Declaration of Trust to look solely to
the assets of the Trust for satisfaction of any claim or demand which may arise
out of any dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
TRUSTEES AND OFFICERS OF THE FUND. The Fund's Trustees and officers, one of
which is the Fund's portfolio manager, are listed below, together with principal
occupations and business affiliations during the past five years. The address of
each is Two World Trade Center, New York, New York 10048, except as noted. As of
January 5, 1996 the Trustees and officers of the Fund as a group owned less than
1% of the outstanding shares of class of the Fund.
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BRIDGET A. MACASKILL, CHAIRMAN OF THE BOARD OF TRUSTEES AND PRESIDENT*; AGE: 47.
Chairman of the Board, President and a Trustee of the Fund, Rochester Fund
Municipals and Rochester Fund Series-The Bond Fund For Growth; Chief Executive
Officer of the Adviser; President and Chief Operating Officer of the Adviser;
prior thereto, Chief Operating Officer of the Adviser and Executive Vice
President of the Adviser from 1987-1989. Vice President and a Director of
Oppenheimer Acquisition Corp., Director of Oppenheimer Partnership Holdings,
Inc., Chairman and a Director of Oppenheimer Shareholder Services, Director of
Main Street Advisers, Inc., and Director of HarbourView Asset Management
Corporation, all of which are subsidiaries of the Adviser; a Trustee of the New
York-based Oppenheimer funds.
JOHN CANNON, TRUSTEE; AGE 65
620 Sentry Parkway West, Suite 220, Blue Bell, Pennsylvania 19422
Chairman and Treasurer, CDC Associates, Inc., registered investment adviser,
1993-present; prior thereto, President, AMA Investment Advisers, Inc., a mutual
fund investment adviser, 1976-1991; Senior Vice President AMA Investment
Advisers, Inc., 1991-1993; Director, Neuberger & Berman Income Managers Trust,
Neuberger & Berman Income Funds and Neuberger & Berman Income Trust,
1995-present; Trustee of Rochester Fund Municipals and Rochester Fund Series-The
Bond Fund For Growth.
PAUL Y. CLINTON, DIRECTOR; AGE: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation, a national real estate owner and
property management corporation; formerly President of Essex Management
Corporation, a management consulting company; Trustee of Capital Cash Management
Trust, Prime Cash Fund and Short Term Asset Reserves, each of which is a
money-market fund; Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc., and Quest Cash Reserves, Inc. and Trustee of
Quest For Value Accumulation Trust, all of which are open-end investment
companies. 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.; Trustee of Rochester Fund
Municipals and Rochester Fund Series-The Bond Fund For Growth.
THOMAS W, COURTNEY, DIRECTOR; AGE: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm; former General
Partner of Trivest Venture Fund, a private venture capital fund; former
President of Investment Counseling Federated Investors, Inc.; Trustee of Cash
Assets Trust, a money market fund; Director of Quest Cash Reserves, Inc.,
Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc.
and Trustee of Quest for Value Accumulation Trust, all of which are open-end
investment companies; former President of Boston Company Institutional
Investors; Trustee of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona,
tax-exempt bond funds; Director of several privately owned corporations; former
Director of Financial Analysts Federation; Trustee of Rochester Fund Municipals
and Rochester Fund Series-The Bond Fund For Growth.
__________
* A Trustee who is an "intrested person" as defined in the Investment Company
Act.
-13-
<PAGE>
LACY B. HERRMANN, DIRECTOR; AGE: 66
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management Corporation, the
sponsoring organization and Administrator and/or Sub-Adviser to the following
open-end investment companies, and Chairman of the Board of Trustees and
President of each: Churchill Cash Reserves Trust, Short Term Asset Reserves,
Pacific Capital Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund, Narragansett
Insured Tax-Free Income Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of
Kentucky, Tax-Free Fund of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of
Arizona, Hawaiian Tax-Free Trust, and Aquila Rocky Mountain Equity Fund; Vice
President, Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the Board of
Trustees of Capital Cash Management Trust ("CCMT"), and an Officer and
Trustee/Director of its predecessors; President and Director of STCM Management
Company, Inc., sponsor and adviser to CCMT; Chairman, President and a Director
of InCap Management Corporation, formerly sub-adviser and administrator of Prime
Cash Fund and Short Term Asset Reserves; Director or Trustee of Quest Cash
Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc. and Oppenheimer Quest
Value Fund, Inc. and Trustee of Quest for Value Accumulation Trust and The
Saratoga Advantage Trust, each of which is an open-end investment company;
Trustee of Rochester Fund Municipals and Rochester Fund Series-The Bond Fund For
Growth: Trustee of Brown University.
GEORGE LOFT, DIRECTOR; AGE: 80
51 Herrick Road
Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., Oppenheimer Quest for
Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc. and Trustee of
Quest for Value Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies, and Director of the Quest for Value
Dual Purpose Fund, Inc., a closed-end investment company; Trustee of Rochester
Fund Municipals and Rochester Fund Series-The Bond Fund For Growth
RONALD H. FIELDING, VICE PRESIDENT; AGE 46
350 Linden Oaks, Rochester, New York 14625
Vice President of the Fund and Rochester Fund Municipals, January 5,
1996-present; Senior Vice President and Portfolio Manager of the Adviser,
January 5, 1996-present; Chairman of the Rochester Division of the Adviser,
January 5, 1996-present; President and Trustee of the Fund, 1986-January 4,
1996; Portfolio Manager of the Fund, 1986-present; President and Trustee of
Rochester Fund Municipals and Rochester Fund Series - The Bond Fund For Growth,
1986-January 4, 1996; President and Director of Rochester Tax Managed Fund,
Inc., 1982-1995; President and a director, Fielding Management Company, Inc.
(1982-present); President and a director, Rochester Fund Distributors, Inc.
(1982-present); President and a director, Rochester Capital Advisors, Inc.
(1993-present); President and a director, Rochester Fund Services, Inc.
(1986-present).
-14-
<PAGE>
ANDREW J. DONOHUE, SECRETARY; AGE: 45
Secretary of the Fund, Rochester Fund Municipals and Rochester Fund Series-The
Bond Fund For Growth; Executive Vice President and General Counsel of the
Adviser and the Distributor; an officer of other Oppenheimer funds; formerly
Senior Vice President and Associate General Counsel of the Adviser and the
Distributor, partner in Kraft & McManimon (a law firm), an officer of First
Investors Corporation (a broker-dealer) and First Investors Management Company,
Inc. (broker-dealer and investment adviser), and a director and an officer of
First Investors Family of Funds and First Investors Life Insurance Company.
GEORGE C. BOWEN, TREASURER; AGE: 59
3410 South Galena Street Denver, Colorado 80231
Treasurer of the Fund, Rochester Fund Municipals and Rochester Fund Series-The
Bond Fund For Growth; Senior Vice President and Treasurer of the Adviser; Vice
President and Treasurer of the Distributor and HarbourView Asset Management
Corporation; Senior Vice President, Treasurer, Assistant Secretary and a
director of Centennial Asset Management Corporation, an investment advisory
subsidiary of the Adviser; Vice President, Treasurer and Secretary of the Agent
and Shareholder Financial Services, Inc., a transfer agent subsidiary of the
Adviser; an officer of other Oppenheimer funds.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE: 47
Assistant Secretary of the Fund, Rochester Fund Municipals and Rochester Fund
Series-The Bond Fund For Growth; Senior Vice President and Associate General
Counsel of the Adviser; Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
ROBERT BISHOP, ASSISTANT TREASURER; AGE: 36
Assistant Treasurer of the Fund, Rochester Fund Municipals and Rochester Fund
Series-The Bond Fund For Growth; 3410 South Galena Street, Denver, Colorado
80231 Assistant Vice President of the Adviser/Mutual Fund Accounting; an officer
of other Oppenheimer funds; previously a Fund Controller for the Adviser, prior
to which he was an Accountant for Yale & Seffinger, P.C., an accounting firm,
and previously an Accountant and Commissions Supervisor for Stuart James Company
Inc., a broker-dealer.
SCOTT FARRAR, ASSISTANT TREASURER; AGE: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Treasurer of the Fund, Rochester Fund Municipals and Rochester Fund
Series-The Bond Fund For Growth; Assistant Vice President of the Adviser/Mutual
Fund Accounting; an officer of other Oppenheimer funds; previously a Fund
Controller for the Adviser, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and previously a Senior
Fund Accountant for State Street Bank & Trust Company.
-15-
<PAGE>
-- REMUNERATION OF TRUSTEES. All officers of the Fund and Ms. Macaskill, a
Trustee and President, are officers or directors of the Adviser and receive no
salary or fee from the Fund. The following table sets forth the aggregate
compensation received by the non-interested Trustees from the Fund during the
fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund(1) Expenses(2) Retirement(2) Complex(3)
<S> <C> <C> <C> <C>
John Cannon ................................. $XXX $XXX $XXX $XXX
Paul Y. Clinton ............................. $ $
Thomas W. Courtney .......................... $ $
Lacy B. Herrmann ............................ $ $
George Loft ................................. $ $
</TABLE>
__________
(1) During the fiscal year ended December 31, 1995, only one of the Fund's
current trustees, John Cannon, served as a Trustee of the Fund.
(2) The Board of Rochester Fund Municipals has adopted a Retirement Plan for
Independent Trustees of that Fund. Under the terms of the Retirement Plan, as
amended and restated on October 16, 1995, an eligible Trustee (an Independent
Trustee who has served as such for at least three years prior to retirement) may
receive an annual benefit equal to the product of $1500 multiplied by the number
of years of service as an Independent Trustee up to a maximum of nine years. The
maximum annual benefit which may be paid to an eligible Trustee under the
Retirement Plan is $13,500. The Retirement Plan will be effective for all
eligible Trustees who have dates of retirement occurring on or after December
31, 1995. Subject to certain exceptions, retirement is mandatory at age 72 in
order to qualify for the Retirement Plan. Although the Retirement Plan permits
Eligible Trustees to elect early retirement at age 63, retirement benefits are
not payable to Eligible Trustees who elect early retirement until age 65. The
Retirement Plan provides that no Independent Trustee who is elected as a Trustee
of Rochester Fund Municipals after September 30, 1995, will be eligible to
receive benefits thereunder. Mr. Cannon is the only current Independent Trustee
who may be eligible to receive benefits under the Retirement Plan. The estimate
of annual benefits payable to Mr. Cannon under the Retirement Plan is based upon
the assumption that Mr. Cannon, who was first elected as a Trustee of the Fund
in 1992, will serve as an Independent Trustee for nine years.
(3) Includes compensation received during the fiscal year ended December 31,
1995, from all registered investment companies within the Fund Complex during
that year which consisted of the Fund, Rochester Fund Municipals, Rochester Fund
Series - The Bond Fund For Growth, and Rochester Tax Managed Fund, Inc. On June
28, 1995, Rochester Fund Series - The Bond Fund For Growth acquired all of the
assets and assumed all of the liabilities of Rochester Tax Managed Fund, Inc.
-16-
<PAGE>
-- MAJOR SHAREHOLDERS. As of December 15, 1995, no person owned of record
or was known by the Fund to own beneficially 5% or more of the Fund as a whole
or of the Fund's outstanding Class A or Class B Shares, except for Merrill Lynch
Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive, EFL 3, Jacksonville, Florida
32246 which was the record owner of 22% and 43% of the Class A Shares and the
Class B Shares then outstanding, respectively.
THE ADVISER AND ITS AFFILIATES. The Adviser is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts Mutual
Life Insurance Company. OAC is also owned in part by certain of the Adviser's
directors and officers, some of whom serve as officers of the Fund and one of
whom (Ms. Macaskill) serves as a Trustee of the Fund.
The Adviser and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees, including
portfolio managers, that would compete with or take advantage of the Fund's
portfolio transactions. Compliance with the Code of Ethics is carefully
monitored and strictly enforced by the Adviser.
- -- THE INVESTMENT ADVISORY AGREEMENT. The Investment Advisory Agreement between
the Adviser and the Fund which was entered into on January 4, 1996 (the
"Advisory Agreement") requires the Adviser, at its expense, to provide the Fund
with adequate office space, facilities and equipment, and to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective corporate administration for the Fund, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and the composition of proxy
materials and registration statements for continuous public sale of shares of
the Fund. For these services, the Adviser will receive from the Fund an annual
fee, computed and payable monthly as a percentage of average daily net assets,
as follows: 0.50% of average daily net assets up to $100 million; 0.45% of
average daily net assets on the next $150 million; 0.40% of average daily net
assets in excess of $250 million but less than $2 billion, and 0.39% of average
daily net assets in excess of $2 billion.
Expenses not expressly assumed by the Adviser under the Advisory Agreement
or by the Distributor are paid by the Fund. The Advisory Agreement lists
examples of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal and
audit expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs, and non-recurring expenses, including
litigation. For the Fund's fiscal years ended December 31, 1994 and 1995, the
management fees paid by the Fund to its previous investment adviser, Rochester
Capital Advisors, L.P. were $2,154,234 and $2,282,690, respectively. Rochester
Capital Advisors, Inc. is the general partner of Rochester Capital Advisors,
L.P. During the fiscal year ended December 31, 1993, the Fund paid investment
advisory fees as follows: $1,344,075 to Fielding Management Company, Inc. for
investment advisory services provided during the period from January 1, 1993
through December 19, 1993, and $55,857 to Rochester Capital Advisors L.P.
Fielding Management Company, Inc. served as investment adviser to the Fund from
the commencement of its operations on September 18, 1991 through December 19,
1993.
-17-
<PAGE>
The Advisory Agreement contains no expense limitation. However,
independently of the Agreement, the Adviser has voluntarily undertaken that the
total expenses of the Fund in any fiscal year (exclusive of taxes, interest,
brokerage commissions, and any extraordinary non-recurring expenses, such as
litigation costs) shall not exceed the most stringent state regulatory
limitation on Fund expenses applicable to the Fund. The payment of the
management fee will be reduced so that at no time will there be any accrued but
unpaid liability under the above expense limitation. The Adviser reserves the
right to amend or terminate this expense limitation at any time.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties thereunder, the Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions on its part with respect
to any matters to which the Advisory Agreement relates. The Agreement permits
the Adviser to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with other
investment companies for which it may act as investment adviser. If the Adviser
shall no longer act as investment adviser to the Fund, the right of the Fund to
use the name "Oppenheimer" as part of its name may be withdrawn.
- -- THE DISTRIBUTOR. Under its General Distributor's Agreement with the Fund,
which was entered into on January 4, 1996, Oppenheimer Funds Distributor, Inc.
(the "Distributor") acts as the Fund's principal underwriter in the continuous
public offering of the Fund's Class A Shares and Class B Shares, but is not
obligated to sell a specific number of shares. Expenses normally attributable to
sales (other than those paid under the Distribution and Service Plans, but
including advertising and the cost of printing and mailing prospectuses, other
than those furnished to existing shareholders) are borne by the Distributor.
During the Fund's fiscal years ended December 31, 1993, 1994 and 1995, the
aggregate amount of sales charge on sales of the Fund's Class A Shares was
$4,437,005, $1,699,143, and $1,439,854 respectively, of which Rochester Fund
Distributors, Inc., the Fund's previous principal underwriter, retained
$527,405, $211,300 and $214,315 in those respective years. Class B Shares were
offered to the public commencing on May 2, 1995. During the period from May 2,
1995 through December 31, 1995, the contingent deferred sales charge collected
by Rochester Fund Distributors, Inc. on the redemption of Class B Shares
totalled $6,001. For additional information about distribution of the Fund's
shares and the payments made by the Fund to the Distributor in connection with
such activities, please refer to "Distribution and Service Plans," below.
- -- THE TRANSFER AGENT; THE SHAREHOLDER SERVICES AGENT. The Fund currently acts
as its own transfer agent. Oppenheimer Shareholder Services, the Fund's
shareholder services agent, a division of the Adviser, is responsible for
maintaining shareholder accounting records, and for shareholder servicing and
administrative functions. The Agent is compensated on the basis of a fixed fee
per account. The compensation paid by the Fund for such services under a
comparable arrangement with Rochester Fund Services, Inc., the Fund's previous
shareholder services agent, for the fiscal years ending December 31, 1993, 1994
and 1995 was $189,702, $255,622 and $292,278, respectively.
- -- ACCOUNTING AND RECORDKEEPING SERVICES. The Adviser also provides certain
accounting and recordkeeping services to the Fund pursuant to an Accounting and
Administration Agreement entered
-18-
<PAGE>
into on January 4, 1996. The services provided pursuant to the Fund
thereunder include the maintenance of general ledger accounts and records
relating to the business of the Fund in the form required to comply with the
Investment Company Act and the calculation of the daily net asset value of the
Fund. The compensation paid by the Fund for such services to Rochester Fund
Services, Inc. its previous shareholder services agent, for the fiscal years
ended December 31, 1993, 1994 and 1995 was $120,896, $150,500 and $161,850.
BROKERAGE POLICIES OF THE FUND
BROKERAGE PROVISIONS OF THE INVESTMENT ADVISORY AGREEMENT. One of the duties of
the Adviser under the Advisory Agreement is to arrange the portfolio
transactions for the Fund. The Advisory Agreement contains provisions relating
to the employment of broker-dealers ("brokers") to effect the Fund's portfolio
transactions. In doing so, the Adviser is authorized by the Advisory Agreement
to employ broker-dealers, including "affiliated" brokers, as that term is
defined in the Investment Company Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the most
favorable price obtainable) of such transactions. The Adviser need not seek
competitive commission bidding but is expected to minimize the commissions paid
to the extent consistent with the interest and policies of the Fund as
established by its Board of Trustees.
Under the Advisory Agreement, the Adviser is authorized to select
brokers that provide brokerage and/or research services for the Fund and/or the
other accounts over which the Adviser or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination is made by the
Adviser that the commission is fair and reasonable in relation to the services
provided. Subject to the foregoing considerations, the Adviser may also consider
sales of shares of the Fund and other investment companies managed by the
Adviser or its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
DESCRIPTION OF BROKERAGE PRACTICES FOLLOWED BY THE ADVISER. Subject to the
provisions of the Advisory Agreement and the procedures and rules described
above, allocations of brokerage are generally made by the Adviser's portfolio
traders based upon recommendations from the Adviser's portfolio managers. In
certain instances, portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of the Advisory Agreement and the
procedures and rules described above. In either case, brokerage is allocated
under the supervision of the Adviser's executive officers. Transactions in
securities other than those for which an exchange is the primary market are
generally done with principals or market makers. As stated in the prospectus,
the portfolio securities of the Fund are generally traded on a net basis and, as
such, do not involve the payment of brokerage commissions. It is the policy of
the Adviser to obtain the best net results in conducting portfolio transactions
for the Fund, taking into account such factors as price (including the
applicable dealer spread) and the firm's general execution capabilities. Where
more than one dealer is able to provide the most competitive price, both the
sale of Fund shares and the receipt of research may be taken into consideration
as factors in the selection of dealers to execute portfolio transactions for the
Fund. The transaction costs associated with such transactions consist primarily
of the payment of dealer and underwriter spreads. Brokerage commissions are paid
primarily for effecting transactions in listed securities and or for certain
fixed-income agency transactions, in the
-19-
<PAGE>
secondary market, otherwise only if it appears likely that a better price
or execution can be obtained. When possible, concurrent orders to purchase or
sell the same security by more than one of the accounts managed by the Adviser
or its affiliates are combined. The transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be useful in one
or more of the advisory accounts of the Adviser and its affiliates. The research
services provided by brokers broaden the scope and supplement the research
activities of the Adviser, by making available additional views for
consideration and comparisons. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and who have no
direct or indirect financial interest in the operation of the Advisory Agreement
or the Distribution Plans described below) annually reviews information
furnished by the Adviser as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such commissions
was reasonably related to the value or benefit of such services. The Fund did
not incur costs for brokerage commissions in connection with its portfolio
transactions during the fiscal years ended December 31, 1993, 1994 and 1995.
A change in securities held by the Fund is known as "portfolio turnover".
As portfolio turnover increases, the Fund can be expected to incur brokerage
commission expenses and transaction costs which will be borne by the Fund. In
any particular year, however, market conditions could result in portfolio
activity at a greater or lesser rate than anticipated. For the fiscal years
ended December 31, 1993, 1994, and 1995 the Fund's portfolio turnover rates were
and 17.08%, 34.58%, and 22.34% respectively.
PERFORMANCE OF THE FUND
YIELD AND TOTAL RETURN INFORMATION. As described in the Prospectus, from time to
time the "standardized yield," "dividend yield," "average annual total return,"
"cumulative total return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in a class of shares of the
Fund may be advertised. An explanation of how these total returns are calculated
for each class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data with respect to any class
must, under applicable rules of the Securities and Exchange Commission, include
the average annual total returns for that class of shares of the Fund for the 1,
5, and 10-year periods (or the life of the class, if less) ending as of the most
recently-ended calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors should be
considered before using such information as a basis for comparison with other
investments. An investment in the Fund is not insured; its returns and share
prices are not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or representation
by the Fund of future returns. The returns of each class of shares of the Fund
are affected by portfolio quality, the type of investments the Fund holds and
its operating expenses allocated to the particular class.
-20-
<PAGE>
- -- STANDARDIZED YIELDS
-- YIELD. The Fund's "yield" (referred to as "standardized yield") for a
given 30-day period for a class of shares is calculated using the following
formula set forth in rules adopted by the Securities and Exchange Commission
that apply to all funds that quote yields:
2-b 6
Standardized Yield = 2[( --- + 1) - 1]
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of that class on the last day
of the period, adjusted for undistributed net investment income.
The standardized yield of a class of shares for a 30-day period may differ
from its yield for any other period. The SEC formula assumes that the
standardized yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. This standardized
yield is not based on actual distributions paid by the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net investment
income from the Fund's portfolio investments calculated for that period. The
standardized yield may differ from the "dividend yield" of that class, described
below. Additionally, because each class of shares is subject to different
expenses, it is likely that the standardized yields of the Fund's classes of
shares will differ. For the 30-day period ended December 31, 1995, the
standardized yields for the Fund's Class A and Class B Shares were 4.90%
and 4.30%, respectively.
-- TAX-EQUIVALENT YIELD. The Fund's "tax-equivalent yield" adjusts the
Fund's current yield, as calculated above, by a stated combined Federal, state
and city tax rate. The tax-equivalent yield is based on a 30-day period, and is
computed by dividing the tax-exempt portion of the Fund's current yield (as
calculated above) by one minus a stated income tax rate and adding the result to
the portion (if any) of the Fund's current yield that is not tax exempt. The tax
equivalent yield may be used to compare the tax effects of income derived from
the Fund with income from taxable investments at the tax rates stated. The
Fund's tax-equivalent yields (after expense assumptions by the Adviser) for its
Class A Shares and Class B Shares for the 30-day period ended December 31, 1995,
for an individual New York City resident in the 38.3% combined tax bracket were
7.94% and 6.97%, respectively.
-- DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the dividends paid on shares of a class from dividends derived
from net investment income during a stated period. Distribution return includes
dividends derived from net investment income and from realized capital
-21-
<PAGE>
gains declared during a stated period. Under those calculations, the
dividends and/or distributions for that class declared during a stated period of
one year or less (for example, 30 days) are added together, and the sum is
divided by the maximum offering price per share of that class on the last day of
the period. When the result is annualized for a period of less than one year,
the "dividend yield" is calculated as follows:
Dividend Yield Dividends of the Class
of the Class = ______________________ / Number of Days (accrual period) X 365
Max. Offering Price of
the Class (last day of
period)
The maximum offering price for Class A Shares includes the maximum
front-end sales charge. For Class B Shares, the maximum offering price is the
net asset value per share without considering the effect of contingent deferred
sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its maximum offering
price) at the end of the period. The dividend yields on Class A Shares for the
30-day period ended December 31, 1995 were 5.43% and 5.31% when calculated at
maximum offering price and at net asset value, respectively. The dividend yield
on Class B Shares for the 30-day period ended December 31, 1995, were 4.98% when
calculated at net asset value.
- -- TOTAL RETURN INFORMATION
-- AVERAGE ANNUAL TOTAL RETURNS. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of
that investment, according to the following formula:
( ERV )1/n
(_____) -1 = Average Annual Total Return
( P )
-- CUMULATIVE TOTAL RETURNS. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
_______ = Total Return
P
In calculating total returns for Class A shares, the current maximum sales
charge of 2.0% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown at net asset value, as
described below). For Class B shares, payment of a contingent deferred sales
charge of 2.5% for the first year, 2.0% for the second year, 1.5% for the third
year,
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<PAGE>
1.0% for the fourth year, and none thereafter, is applied, as described in the
Prospectus. Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares at net
asset value per share, and that the investment is redeemed at the end of the
period. The "average annual total returns" on an investment in Class A shares of
the Fund for the one year period ended December 31, 1995 and for the period from
September 18, 1991 through December 31, 1995, were 7.95%, and 7.20%,
respectively. The cumulative "total return" on Class A shares for the period
from September 18, 1991 through December 31, 1995 was 34.65%. The cumulative
total return on Class B Shares for the period from May 1, 1995 (commencement of
Class B Shares) through December 31, 1995 was 1.84%.
-- TOTAL RETURNS AT NET ASSET VALUE. From time to time the Fund may also
quote an average annual total return at net asset value or a cumulative total
return at net asset value for Class A or Class B Shares. Each is based on the
difference in net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions. The
cumulative total return at net asset value of the Fund's Class A shares for the
one year period ended December 31, 1995 and the period from September 18, 1991
through December 31, 1995 was 10.01% and 37.34%, respectively. The cumulative
total return at net asset value for Class B Shares for the period from May 1,
1995 through December 31, 1995 was 4.34%.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish the
ranking of its Class A or Class B Shares by Lipper Analytical Services, Inc.
("Lipper"), a widely-recognized independent service. Lipper monitors the
performance of regulated investment companies, including the Fund, and ranks
their performance for various periods based on categories relating to investment
objectives. The performance of the Fund's classes are ranked against (i) all
other funds (excluding money market funds), (ii) all other New York municipal
bond funds. The Lipper performance rankings are based on total returns that
include the reinvestment of capital gain distributions and income dividends but
do not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance of
its Class A or Class B Shares by Morningstar, Inc., an independent mutual fund
monitoring service that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and hybrid) based on
risk-adjusted investment return. Investment return measures a fund's three, five
and ten-year average annual total returns (when available) in excess of 90-day
U.S. Treasury bill returns after considering sales charges and expenses. Risk
reflects fund performance below 90-day U.S. Treasury bill monthly returns. Risk
and return are combined to produce star rankings reflecting performance relative
to the average fund in a fund's category. Five stars is the "highest" ranking
(top 10%), four stars is "above average" (next 22.5%), three stars is "average"
(next 35%), two stars is "below average" (next 22.5%) and one star is "lowest"
(bottom 10%). Morningstar ranks the Class A and Class B Shares of the Fund in
relation to other New York State municipal bond funds. Rankings are subject to
change.
The total return on an investment in the Fund's Class A or Class B shares
may be compared with performance for the same period of comparable indices,
including but not limited to The Merrill
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Lynch Municipal Index (3-7 year maturities) and the Lehman Brothers 5-year
Municipal Bond Index. The Merrill Lynch Municipal Index is a broadly based,
widely recognized unmanaged index of municipal bonds with a specific maturity of
between 3 and 7 years. The Lehman Brothers Municipal Bond Index is also a
broadly based, widely recognized unmanaged index of municipal bonds, but with a
specific maturity of between 4 and 6 years. Whereas the Fund's portfolio
comprises bonds principally from New York State, the Indices are comprised of
bonds from all 50 states and many jurisdictions. Index performance reflects the
reinvestment of income but does not consider the effect of capital gains or
transaction costs. Any other index selected for comparison would be similar in
composition to one of these two indices.
Investors may also wish to compare the return on the Fund's Class A or
Class B Shares to the returns on fixed income investments available from banks
and thrift institutions, such as certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed by the FDIC or
any other agency and will fluctuate daily, while bank depository obligations may
be insured by the FDIC and may provide fixed rates of return, and Treasury bills
are guaranteed as to principal and interest by the U.S. government.
From time to time, the Fund's Adviser may publish rankings or ratings of
the Adviser (or other service providers) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance rankings
of the Oppenheimer funds themselves. Those ratings or rankings of
shareholder/investor services by third parties may compare the OppenheimerFunds'
services to those of other mutual fund families selected by the rating or
ranking services and may be based upon the opinions of the rating or ranking
service itself, based on its research or judgment, or based upon surveys of
investors, brokers, shareholders or others.
The performance of the Fund's Class A or Class B Shares may also be
compared in publications to (i) the performance of various market indices or to
other investments for which reliable performance data is available, and (ii) to
averages, performance rankings or other benchmarks prepared by recognized mutual
fund statistical services.
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted a Service Plan for Class A Shares and a Distribution
and Service Plan for Class B Shares under Rule 12b-1 of the Investment Company
Act, pursuant to which the Fund makes payment to the Distributor in connection
with the distribution and/or servicing of shares of that class as described in
the Prospectus (collectively, the "Plans"). Each Plan has been approved by a
vote of (i) the Board of Trustees of the Fund, including a majority of the
"Independent Trustees", cast in person at a meeting called for the purpose of
voting on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class. The fee structure of each
of the Plans, which became effective on January 4, 1996, is identical to the fee
structure of the Distribution Plan for each class of shares as in effect prior
to that time.
In addition, under the Plans, the Adviser and the Distributor, in their
sole discretion, from time to time, may use their own resources (which, in the
case of the Adviser, may include profits from the advisory fee it receives from
the Fund), to make payments to brokers, dealers or other
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financial institutions (each is referred to as a "Recipient" under the
Plans) for distribution and administrative services they perform, at no cost to
the Fund. The Distributor and the Adviser may, in their sole discretion,
increase or decrease the amount of payments they make from their own resources
to Recipients.
Unless terminated as described below, each Plan continues in effect from
year to year but only as long as such continuance is specifically approved at
least annually by the Fund's Board of Trustees, including the Independent
Trustees, by a vote cast in person at a meeting called for the purpose of voting
on such continuance. Each Plan may be terminated at any time by the vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class. No Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by the class affected by
the amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required to obtain the
approval of Class B as well as Class A shareholders for a proposed amendment to
the Class A Plan that would materially increase the amount to be paid by Class A
shareholders under the Class A Plan. Such approval must be by a "majority" (as
defined in the Investment Company Act), of the Class A and Class B shares voting
separately by class. All material amendments must be approved by the Board and
the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports to the Fund's Board of Trustees at least quarterly for
its review, detailing the amount of all payments made pursuant to each Plan, the
identity of each Recipient that received any such payment, and the purpose of
the payments.E Those reports will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan further
provides that while it is in effect, the selection or replacement and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in such selection and nomination if the final decision
as to any such selection or nomination is approved by a majority of such
Independent Trustees.
For the fiscal year ended December 31, 1995, payments under the Class A
Plan totaled $1,410,995. Of that amount, $1,177,599 was paid by Rochester Fund
Distributors, Inc. to Recipients as reimbursement for services and $125,485 was
retained by Rochester Fund Distributors, Inc. for its services in maintaining
shareholder accounts.
For the fiscal year ended December 31, 1995, payments under the Class B
Plan totaled $41,927. Of that amount, $41,927 was paid to Rochester Fund
Distributors, Inc., the Fund's previous distributor as reimbursement for
expenses incurred by it under the Class B Plan. In addition, $0 was paid by
Rochester Fund Distributors, Inc. to Recipients as reimbursement for services
and $0 was retained by Rochester Fund Distributors, Inc. for its services in
maintaining shareholder accounts. Any unreimbursed expenses incurred with
respect to Class B shares for any fiscal quarter by the Distributor may not be
recovered under the Class B Plan in subsequent fiscal quarters.
The Class B Plan allows the service fee payment to be paid by the
Distributor to Recipients in advance for the first year such shares are
outstanding, and thereafter on a quarterly basis, as
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<PAGE>
described in the Prospectus. The advance payment is based on the net assets
of the shares sold. An exchange of shares does not entitle the Recipient to an
advance service fee payment. In the event shares are redeemed during the first
year such shares are outstanding, the Recipient will be obligated to repay a pro
rata portion of such advance payment to the Distributor.
The Class B Plan provides for the Distributor to be compensated at a flat
rate, whether the Distributor's distribution expenses are more or less than the
amount paid by the Fund during that period. Such payments are made in
recognition that the Distributor (i) pays sales commissions to authorized
brokers and dealers at the time of sale and pays service fees as described in
the Prospectus, (ii) may finance such commissions and/or the advance of the
service fee payment to Recipients under those Plans, (iii) employs personnel to
support distribution of shares, and (iv) may bear the costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders) and state "blue sky" registration fees.
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
ALTERNATIVE SALES ARRANGEMENTS - CLASS A SHARES AND CLASS B SHARES. The
availability of two classes of shares permits an investor to choose the method
of purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Any salesperson or other person entitled to
receive compensation for selling Fund shares may receive different compensation
with respect to one class of shares than another.
The two classes of shares each represent an interest in the same portfolio
investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class A and Class B
Shares and the dividends payable on Class A and Class B Shares will be reduced
by incremental expenses borne by those classes, including the asset-based sales
charge to which Class A and Class B shares are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such a revenue ruling or opinion is
no longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A Shares and Class B Shares recognizes two
types of expenses. General expenses that do not pertain specifically to any
class are allocated pro rata to the shares of each class, based on the
percentage of the net assets of such class to the Fund's total assets, and then
equally to each
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outstanding share within a given class. Such general expenses include
(i) management fees, (ii) legal, bookkeeping and audit fees, (iii) printing and
mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, (iv) fees to
unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses include (i) Distribution
and/or Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific class rather
than to the Fund as a whole.
DETERMINATION OF NET ASSET VALUE PER SHARE. The net asset values per share of
Class A and Class B shares of the Fund are determined as of the close of
business of The New York Stock Exchange on each day that the Exchange is open,
by dividing the value of the Fund's net assets attributable to that class by the
number of shares of that class outstanding. The Exchange normally closes at 4:00
P.M., New York time, but may close earlier on some days (for example, in case of
weather emergencies or on days falling before a holiday). The Exchanges most
recent annual holiday schedule (which is subject to change) states that it will
close on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may also
close on other days. Trading may occur in debt securities and in foreign
securities when the Exchange is closed (including weekends and holidays).
Because the Fund's net asset values will not be calculated on those days, the
Fund's net asset value per share may be significantly affected on such days when
shareholders may not purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the valuation
of the Fund's securities, generally as follows: (i) equity securities traded on
a securities exchange or on the Nasdaq National Market System ("Nasdaq") are
valued at the last reported sale prices on their primary exchange or Nasdaq that
day (or, in the absence of sales that day, at values based on the last sale
prices of the preceding trading day, or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are valued at the
last sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Adviser as reported by the principal exchange on which the
security is traded; (iii) unlisted foreign securities or listed foreign
securities not actively traded are valued as in (i) above, if available, or at
the mean between "bid" and "asked" prices obtained from active market makers in
the security on the basis of reasonable inquiry; (iv) long-term debt securities
having a remaining maturity in excess of 60 days are valued at the mean between
the "bid" and "asked" prices determined by a portfolio pricing service approved
by the Fund's Board of Trustees or obtained from active market makers in the
security on the basis of reasonable inquiry; (v) debt instruments having a
maturity of more than one year when issued, and non-money market type
instruments having a maturity of one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the basis of
reasonable inquiry; (vi) money market-type debt securities having a maturity of
less than one year when issued that having a remaining maturity of 60 days or
less are valued at cost, adjusted for amortization of premiums and accretion of
discounts; and (vii) securities (including restricted securities) not having
readily-available market quotations are valued at fair value under the Board's
procedures. In the case of certain securities where last sale information is not
generally
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<PAGE>
available, such pricing procedures may include "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield, maturity
and other special factors involved. The Trustees will monitor the accuracy of
pricing services by comparing prices used for portfolio valuation to actual
sales prices of selected securities.
See How to Buy Shares in the Prospectus for a description of how shares of
each class are offered to the public and how the excess of public offering price
over the net amount invested, if any, is allocated to authorized dealers. The
Prospectus describes several special purchase plans and methods by which Shares
of each class may be purchased. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation and
Letters of Intent because of the economies of sales efforts and expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain circumstances described in the Prospectus because
the Distributor or dealer or broker incurs little or no selling expenses. The
term "immediate family" refers to one's spouse, children, grandchildren,
parents, grandparents, parents-in-law, brothers and sisters, sons-and
daughters-in-law, siblings, a sibling's spouse and a spouse's siblings.
HOW TO SELL SHARES
Information on how to sell shares of the Fund is stated in the Prospectus.
-- INVOLUNTARY REDEMPTIONS. As described in the Prospectus, the Fund's
Board of Trustees has the right to cause the involuntary redemption of the
shares held in any account if the aggregate net asset value of those shares is
less than $1,500 or such lesser amount as the Board may fix. The Board of
Trustees will not cause the involuntary redemption of shares in an account if
the aggregate net asset value of the shares has fallen below the stated minimum
solely as a result of market fluctuations. Should the Board elect to exercise
this right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question (not
less than 30 days), or the Board may set requirements for granting permission to
the Shareholder to increase the investment, and set other terms and conditions
so that the shares would not be involuntarily redeemed.
HOW TO EXCHANGE SHARES
As stated in the Prospectus, shares of a particular class of the Fund or of
certain other funds which are managed by the Adviser ( the "Oppenheimer funds")
having more than one class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds which are eligible for sale in the
shareholder's state of residence. Shares of the Oppenheimer funds that have a
single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A shares, but certain other
Oppenheimer funds do not presently offer either or both of Class B or Class Y
shares. Shareholders may obtain a list showing which funds offer which class by
calling the Agent at 1-800-552-1129. For purposes of the Exchange Privilege as
defined in the Prospectus, the following funds in addition to the Fund are
referred to as "The Rochester Funds": Rochester Fund Municipals and Rochester
Portfolio Series - Limited Term New York Municipal Fund. At the present time,
shareholders of Oppenheimer funds other than The Rochester Funds may not
exchange their shares for shares of The Rochester Funds.
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<PAGE>
When Class B Shares are redeemed to effect an exchange, the priorities
described in "Purchasing Class B Shares" in the Prospectus for the imposition of
the Class B contingent deferred sales charge will be followed in determining the
order in which the shares are exchanged. Shareholders should take into account
the effect of any exchange on the applicability and rate of any contingent
deferred sales charge that might be imposed in the subsequent redemption of
remaining shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class Y shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The Fund
may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as dividend
reinvestment will be switched to the new account unless the Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for example,
during periods of substantial market fluctuations), shareholders might not be
able to request exchanges by telephone and would have to submit written exchange
requests.
Shares to be exchanged are redeemed on the regular business day the Agent
receives an exchange request in proper form (the "Redemption Date"). Normally,
shares of the fund to be acquired are purchased on the Redemption Date, but such
purchases may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer of the
redemption proceeds. The Fund reserves the right, in its discretion, to refuse
any exchange request that may disadvantage it (for example, if the receipt of
multiple exchange requests from a dealer might require the disposition of
portfolio securities at a time or at a price that might be disadvantageous to
the Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the Fund selected is appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. The Fund, the Distributor, and the Agent are
unable to provide investment, tax or legal advice to a shareholder in connection
with an exchange request or any other investment transaction.
DIVIDENDS, CAPITAL GAINS AND TAXES
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Code, the Fund must distribute to its shareholders for
each taxable year at least 90% of
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the sum of its investment company taxable income (consisting generally of
taxable net investment income and net short-term capital gain) plus its interest
income excludable from gross income under Section 103(a) of the Code
("tax-exempt income") and must meet several additional requirements. These
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities,
or other income (including gains from options) derived with respect to its
business of investing in securities ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities or options that were held for less than three
months ("Short-Short Limitation"); and (3) at the close of each quarter of the
Fund's taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities that are limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets,
and (ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.
Dividends paid by the Fund will qualify as exempt-interest dividends, and
thus will be excludable from gross income by its shareholders, if the Fund
satisfies the additional requirement that, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of
securities the interest on which is tax-exempt income; the Fund intends to
continue to satisfy this requirement. The aggregate exempt-interest dividends
may not be greater than the excess of the Fund's tax-exempt income over certain
amounts disallowed as deductions. The shareholders' treatment of dividends from
the Fund under local and state income tax laws may differ from the treatment
thereof under the Code.
As noted in the Prospectus, the Fund annually reports to its shareholders
regarding the amounts and status of distributions paid during the year. Such
report allocates dividends among tax-exempt, taxable and alternative minimum
taxable income in approximately the same proportions as they bear to the Fund's
total income for the year. Accordingly, income derived from each of these
sources by the Fund in any particular distribution period may vary substantially
from the allocation reported to shareholders annually. The proportion of
dividends that constitutes taxable income will depend on the relative amounts of
assets invested in taxable securities, the yield relationships between taxable
and tax-exempt securities, and the period of time for which such securities are
held.
Because the taxable portion of the Fund's investment income consists
primarily of interest and income from options transactions, its dividends will
not qualify for the dividends-received deduction available to corporations.
Dividends and other distributions declared by the Fund, and payable to
shareholders of record on a date, in the last quarter of any calendar year are
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be treated as received
by the shareholders for the year in which that December 31 falls.
As noted in the Prospectus, interest on indebtedness incurred or
continued by shareholders
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to purchase or carry Shares of the Fund is not deductible for federal
income tax purposes. Under rules applied by the Internal Revenue Service to
determine whether borrowed funds are used for the purpose of purchasing or
carrying particular assets, the purchase of Fund Shares may, depending upon the
circumstances, be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to the purchase of those Shares.
If you redeem at a loss Shares of the Fund held for six months or less,
that loss will not be recognized for federal income tax purposes to the extent
of exempt-interest dividends you have received with respect to those shares. If
any such loss exceeds the amount of such exempt-interest dividends you received,
that excess loss will be treated as a long-term capital loss to the extent you
receive any capital gain distribution with respect to those Shares.
Persons who are "substantial users" (or persons related thereto) of
facilities financed by industrial development bonds should consult their own tax
advisers before purchasing Shares. Such persons may find investment in the Fund
unsuitable for tax reasons. Generally, an individual will not be a "related
person" under the Code unless he or his immediate family (spouse, brothers,
sisters, ancestors and lineal descendants) owns, directly or indirectly, in the
aggregate more than 50% of the equity of a corporation or partnership that is a
"substantial user" of a facility financed from the proceeds of such bonds. A
"substantial user" of such a facility is defined generally as a non-exempt
person who regularly uses a part of such facility in his trade or business.
The Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on December 31 of that year, plus certain other amounts.
The use of hedging strategies, such as writing (selling) and purchasing
options, involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from transactions in options derived by the Fund
with respect to its business of investing in securities will qualify as
permissible income under the Income Requirement. However, income from the
disposition of options will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
will consider whether it should seek to qualify for this treatment for its
hedging transactions. To the extent the Fund does not so qualify, it may be
forced to defer the closing out of certain options beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as RIC.
Corporate investors may wish to consult their own tax advisers before
purchasing Fund shares. Corporations may find investment in the Fund unsuitable
for tax reasons, because the interest on all Municipal Obligations held by the
Fund distributed to corporate shareholders will be includible in calculating
adjusted current earnings for purposes of both the alternative minimum tax and
the environmental tax. In addition, certain property and casualty insurance
companies, financial
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<PAGE>
institutions, and U.S. branches of foreign corporations may be adversely
affected by the tax treatment of the interest on Municipal Obligations.
ADDITIONAL INFORMATION ABOUT THE FUND
THE CUSTODIAN. Investors Bank & Trust Company ("Custodian"), whose principal
business address is 89 South Street Boston, MA 02111 is the Custodian of the
Fund's assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of such
securities to and from the Fund. It will be the practice of the Fund to deal
with the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Adviser and its affiliates.
INDEPENDENT AUDITORS. Price Waterhouse LLP, 1900 Chase Square, Rochester, NY
14604, serves as the Fund's independent accountants. The services provided by
Price Waterhouse LLP include auditing services and review and consultations on
various filings by the Fund with the Securities and Exchange Commission and tax
authorities. and the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds advised by the
Adviser and its affiliates.
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<PAGE>
INVESTMENT ADVISER
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
SHAREHOLDER SERVICES AGENT
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-552-1129
CUSTODIAN OF PORTFOLIO SECURITIES
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
INDEPENDENT AUDITORS
Price Waterhouse LLP
1900 Chase Square
Rochester, NY 14604
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, D.C. 20036
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<PAGE>
FINANCIAL STATEMENT
LIMITED TERM
[LOGO] NEW YORK
MUNICIPAL FUND
PORTFOLIO OVERVIEW
Based on the market value as of December 31, 1994
Total Net Assets $496,451,582
Shares Outstanding 157,505,504
Number of Issues 694
Largest Sectors:
Resource Recovery, Pollution Control Revenue 20.0%
Health Care 18.3%
Municipal Tax Obligations (GO) 12.9%
Transportation 9.2%
Non-Profit -- Higher Education 7.5%
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of the Limited Term New York Municipal Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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 Limited Term New York Municipal
Fund (the "Fund") at December 31, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended and for the period September 18, 1991 through December 31,
1991, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund'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
December 31, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Price Waterhouse LLP
Rochester, New York
January 20, 1995
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<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5 Albany Hsg. Auth. 10.250% 10/01/95 -- $ 5,187
20 Albany Hsg. Auth. 10.400 10/01/96 -- 21,357
50 Albany IDA (126 State Street) 8.000 12/01/95 -- 50,750
65 Albany IDA (Dept of Health) 6.750 10/01/95 -- 65,000
1,975 Albany IDA (H. Johnson Office Pk) 5.750 03/01/18 03/01/98 (d) 1,979,286
280 Albany IDA (Port of Albany) 6.250 02/01/05 09/03/00 (c) 267,896
50 Albany IDA (Spectrapark) 7.500 12/01/03 12/01/98 (b) 55,245
40 Albany IDA (Warren Avenue) 7.500 11/01/01 05/01/95 (b) 40,400
25 Albany IDA (West Plaza 6) 7.100 12/01/95 06/01/95 (b) 25,250
20 Albany Parking Auth. 6.500 09/15/96 -- 20,310
40 Albany Parking Auth. 0.000 09/15/02 -- 23,982
625 Albany Parking Auth. 0.000 09/15/04 -- 323,550
645 Allegany IDA (Alfred U) 6.900 09/01/99 -- 667,207
500 American Samoa Power Auth. 6.400 09/01/95 -- 501,925
600 American Samoa Power Auth. 6.600 09/01/96 -- 607,188
600 American Samoa Power Auth. 6.700 09/01/97 -- 609,708
700 American Samoa Power Auth. 6.800 09/01/98 -- 722,274
700 American Samoa Power Auth. 6.900 09/01/99 -- 727,524
700 American Samoa Power Auth. 7.000 09/01/00 -- 723,3 10
300 American Samoa Power Auth. 6.250 09/01/95 -- 300,864
300 American Samoa Power Auth. 6.400 09/01/96 -- 302,652
300 American Samoa Power Auth. 6.600 09/01/97 -- 304,125
300 American Samoa Power Auth. 6.700 09/01/98 -- 306,585
300 American Samoa Power Auth. 6.750 09/01/99 -- 307,908
50 Amherst IDA (Inducon) 7.250 11/01/96 11/01/95 (b) 51,095
50 Amsterdam HDC 9.000 02/01/25 05/01/95 (b) 51,667
50 Auburn IDA (Alcoa) 7.600 12/01/98 06/01/95 (b) 51,713
120 Auburn IDA (Alcoa) 7.500 12/01/97 06/01/95 (b) 123,600
30 Babylon IDA (BCW) 7.600 07/01/96 -- 31,123
25 Babylon IDA (BCW) 7.650 07/01/97 -- 26,491
75 Babylon IDA (BCW) 7.700 07/01/98 -- 80,728
100 Babylon IDA (Ogden Martin) 7.600 01/01/96 -- 102,578
90 Babylon IDA (Ogden Martin) 7.600 01/01/96 -- 92,320
375 Babylon IDA (Ogden Martin) 7.800 01/01/97 -- 394,538
45 Babylon IDA (Ogden Martin) 7.900 01/01/98 -- 48,360
35 Babylon IDA (Ogden Martin) 8.100 01/01/00 07/01/98 (b) 39,230
880 Babylon IDA (WWH Ambulance) 7.000 09/15/01 06/02/98 (c) 926,068
20 Battery Park City 7.600 05/01/06 05/01/99 (a) 21,931
35 BOCES (Greenport) 7.500 10/01/96 12/28/95 (c) 36,279
165 Brookhaven IDA (Dowling College) 6.000 03/01/99 -- 162,099
170 Brookhaven IDA (Dowling College) 6.100 03/01/00 -- 166,780
185 Brookhaven IDA (Dowling College) 6.200 03/01/01 -- 179,333
195 Brookhaven IDA (Dowling College) 6.300 03/01/02 -- 189,045
205 Brookhaven IDA (Dowling College) 6.400 03/01/03 -- 198,729
500 Brookhaven IDA (Farber) 6.375 (v) 12/01/98 -- 497,500
165 Broome IDA (Industrial Park) 7.350 12/01/96 -- 171,290
30 Broome IDA (Industrial Park) 7.450 12/01/98 -- 30,300
50 Broome IDA (Lander) 7.400 07/01/96 07/01/95 (b) 50,720
25 Cattaraugus COP (Olean) 8.100 08/01/99 08/01/98 (a) 26,472
35 Cattaraugus COP (Olean) 8.200 08/01/00 08/01/98 (a) 36,827
460 Clifton Park (Caldor) 11.250 12/01/12 12/01/98 (b) 483,000
2,210 Clifton Springs Hospital & Clinic 7.000 01/01/01 09/10/98 (c) 2,191,922
35 Colonie NY IDA 7.250 10/01/02 04/01/95 (b) 36,652
5 Colony IDA (Capital Plaza) 9.625 11/01/98 05/01/95 (b) 5,075
1,100 Cortland IDA (Memorial Hospital) 6.150 07/01/02 08/12/00 (c) 1,074,623
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 660 Devel. Auth. of North Country 6.500% 07/01/01 -- $ 652,826
1,285 Devel. Auth. of North Country 6.600 07/01/02 -- 1,291,823
1,000 Devel. Auth. of North Country 6.750 07/01/12 07/13/08 (c) 1,013,460
275 Dutchess IDA (Bard College) 6.500 11/01/03 -- 273,895
15 Elmira HDC 7.500 08/01/09 08/01/95 (b) 15,843
440 Erie IDA (FMC Corp) 6.000 02/01/03 08/02/01 (c) 418,000
425 Erie IDA (Medaille College) 7.400 12/30/02 11/15/99 (c) 435,782
1,075 Erie IDA (Mercy Hospital) 5.900 06/01/03 10/18/99 (c) 1,018,283
1,635 Erie IDA (Prudential Associates) 0.000 12/01/15 12/01/95 (d) 1,537,995
640 Franklin SWMA 5.250 06/01/98 -- 624,922
475 Franklin SWMA 5.500 06/01/99 -- 467,296
600 Franklin SWMA 5.625 06/01/00 -- 598,698
50 Fulton IDA (J.R. Kearney) 7.000 12/01/96 06/01/95 (b) 50,500
55 Glen Cove GO 5.700 03/15/98 -- 56,090
20 Glen Cove GO 5.900 03/15/99 -- 20,392
200 Green Island Power Auth. 5.300 01/01/01 -- 191,854
130 Green Island Power Auth. 5.400 01/01/02 -- 122,580
125 Green Island Power Auth. 5.600 01/01/04 -- 116,415
15 Groton Community Health 11.500 07/15/99 01/15/95 (b) 15,978
10 Groton Community Health 0.000 07/15/01 01/15/95 (b) 5,752
5,690 Guam Airport 6.400 10/01/05 11/15/03 (c) 5,654,381
930 Hamilton Elderly Hsg. 11.250 01/01/15 05/01/95 (b) 995,100
10 Hempstead IDA (Amer. Ref-Fuel Co.) 6.500 12/01/96 -- 9,851
30 Hempstead IDA (Amer. Ref-Fuel Co.) 6.700 12/01/97 -- 30,497
325 Hempstead IDA (Amer. Ref-Fuel Co.) 7.000 12/01/99 12/01/96 (b) 333,158
30,760 Hempstead IDA (Amer. Ref-Fuel Co.) 7.375 12/01/05 12/01/00 (b) 31,542,534
30,240 Hempstead IDA (Amer. Ref-Fuel Co.) 7.400 12/01/10 12/01/00 (b) 31,046,198
3,060 Herkimer IDA (Burrows Paper) 7.250 01/01/01 09/26/98 (c) 3,140,723
1,000 Herkimer IDA (Burrows Paper) 8.000 01/01/09 10/28/05 (c) 972,210
50 Heuvelton NY CSD 8.375 06/15/97 -- 52,408
15 Housing NY Corp 9.000 11/01/17 11/01/97 (a) 16,688
90 Islip IDA (WJL Realty) 7.400 03/01/99 -- 96,707
50 Islip Res Rec 8.500 09/01/07 09/01/95 (b) 52,741
405 Jamestown GO 7.000 03/15/98 -- 416,968
330 Jamestown GO 7.000 03/15/99 -- 341,204
250 Jamestown GO 7.000 03/15/00 -- 259,093
1,600 Jamestown Hsg. Auth. 6.125 07/01/10 07/29/04 (c) 1,523,120
260 Jefferson IDA (Stature Electric) 7.500 08/01/99 02/01/95 (b) 268,164
1,050 Lackawana BANS 8.800 10/01/95 -- 1,070,454
55 Lakeside Village Hsg. Corp 0.000 09/01/05 03/01/95 (b) 21,734
440 Lincoln Towers Hsg. Corp 11.250 01/01/15 05/01/95 (b) 470,800
132 Locke Fire District #1 7.500 07/01/02 03/22/99 (e) 137,024
25 Lockport GO 7.200 03/01/15 03/01/00 (a) 26,419
50 Mechanicsville HDC 10.450 10/01/22 04/01/95 (b) 52,250
195 Medina Hsg. Corp 8.250 08/15/11 08/15/95 (b) 206,700
1,005 Middleton IDA (Southwinds) 7.250 03/01/03 01/09/00 (c) 1,009,151
5 Monroe County Airport 0.000 01/01/04 -- 2,519
30 Monroe County GO 6.100 05/01/03 -- 29,250
49 Monroe IDA (BBDO Int'l) 7.750 09/01/95 05/17/95 (c) 49,392
50 Monroe IDA (Brazill Mezk) 7.000 12/15/95 -- 50,555
10 Monroe IDA (Cohber) 7.100 12/01/95 -- 10,106
10 Monroe IDA (Cohber) 7.500 12/01/00 12/01/98 (b) 10,142
100 Monroe IDA (Cohber) 7.550 12/01/01 12/01/98 (b) 107,208
342 Monroe IDA (Consler) 7.000 08/01/99 07/04/97 (c) 344,967
1,101 Monroe IDA (Emil Muller) 6.500 10/01/04 06/17/00 (c) 1,121,865
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLLO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 250 Monroe IDA (Flower City Printing) 8.000% 12/01/95 -- $ 257,500
1,425 Monroe IDA (GEVA) 7.750 04/01/02 02/21/99 (c) 1,468,135
360 Monroe IDA (GEVA) 7.750 04/01/03 -- 363,640
285 Monroe IDA (Hahn) 7.250 06/01/98 11/10/96 (c) 287,846
45 Monroe IDA (Hahn) 7.250 06/01/98 10/25/96 (e) 45,513
217 Monroe IDA (Palmer) 6.500 08/01/98 01/12/97 (c) 216,520
10 Monroe IDA (Piano Works) 7.125 11/01/96 11/01/95 (b) 10,100
50 Montgomery IDA (Alpin Haus) 7.000 12/01/96 06/01/95 (b) 50,360
270 Montgomery IDA (Amsterdam) 5.750 01/01/97 01/15/96 (c) 270,397
145 Montgomery IDA (Amsterdam) 6.000 01/01/98 -- 145,508
885 Montgomery IDA (Amsterdam) 6.500 01/01/03 02/17/01 (c) 853,308
40 MTA 7.800 07/01/97 -- 41,905
120 MTA 7.600 07/01/97 -- 125,480
505 Nassau IDA (ACLDD) 7.250 10/01/04 10/25/00 (c) 521,079
1,200 Nassau IDA (Farmingdale Market) 10.000 05/01/98 05/01/95 (b) 1,236,000
1,135 Nassau IDA (NPD Realty) 10.375 12/01/97 12/01/95 (b) 1,169,050
320 Nassau IDA (Tishcon Corp) 10.000 02/01/03 09/27/99 (b) 369,728
1,090 New Rochelle IDA (CNR) 6.000 07/01/02 08/11/00 (c) 1,039,773
260 New Rochelle IDA (CNR) 6.300 07/01/03 -- 255,663
275 New Rochelle IDA (CNR) 6.400 07/01/04 -- 269,099
3,150 Niagara IDA (Sevenson Hotel) 5.750 05/01/03 05/01/99 (c) 2,965,662
635 North Tonawanda HDC 6.350 12/15/02 09/22/99 (c) 614,985
10 Northern Marianas Island Port Auth. 7.050 10/01/05 10/01/95 (b) 10,325
80 Northern Marianas Island 7.050 10/01/04 10/01/95 (b) 82,000
1,500 NYC GO 7.000 08/15/06 08/15/00 (b) 1,540,665
175 NYC GO 7.000 12/01/10 12/01/99 (b) 181,475
1,000 NYC GO 7.000 02/01/01 02/01/97 (b) 1,029,230
100 NYC GO 8.000 12/01/08 06/01/98 (b) 107,938
200 NYC GO 7.000 12/01/08 12/01/99 (b) 203,166
25 NYC GO 7.500 08/15/05 08/15/97 (b) 26,176
50 NYC GO 7.500 O8/15/02 08/15/97 (b) 52,414
1,200 NYC GO 7.750 08/15/12 08/15/03 (b) 1,247,400
300 NYC GO 7.875 08/01/00 08/01/98 (b) 323,406
630 NYC GO 7.000 08/01/02 08/01/01 (b) 654,595
50 NYC GO 7.500 08/01/04 08/01/00 (b) 52,269
1,355 NYC GO 7.750 08/15/09 08/15/01 (b) 1,445,189
150 NYC GO 7.875 08/01/04 08/01/02 (b) 163,181
165 NYC GO 7.500 08/15/03 08/15/01 (b) 175,936
300 NYC GO 7.700 02/01/09 02/01/04 (b) 319,116
2,915 NYC GO 8.000 08/01/03 08/01/01 (b) 3,162,950
2,000 NYC GO 7.750 08/15/05 08/15/03 (b) 2,133,080
600 NYC GO 7.750 08/15/03 08/15/01 (b) 653,592
10,280 NYC GO 7.500 02/01/04 -- 10,770,973
1,000 NYC GO 7.650 02/01/07 02/01/04 (b) 1,034,450
2,000 NYC GO 0.000 02/01/03 -- 1,216,200
50 NYC GO 0.000 08/15/01 -- 33,372
2,000 NYC GO 6.375 08/01/07 -- 1,902,800
3,250 NYC GO 7.000 02/01/06 02/01/04 (b) 3,284,645
640 NYC GO 6.375 08/01/08 -- 607,392
1,550 NYC GO 6.750 10/01/05 -- 1,541,367
1,000 NYC GO 6.750 10/01/06 -- 991,080
1,450 NYC GO 6.500 08/01/06 -- 1,403,006
115 NYC GO 0.000 (+) 10/01/06 10/01/02 (b) 64,148
935 NYC GO 0.000 05/15/06 -- 449,333
710 NYC GO 0.000 08/01/06 -- 317,185
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,000 NYC GO 0.000 (+) 02/01/04 02/01/00 (b) $ 1,530,040
1,555 NYC GO 5.375 10/01/05 -- 1,378,383
1,950 NYC GO 0.000 (+) 02/01/07 02/01/02 (e) 1,284,348
25 NYC GO 7.500 08/01/01 08/01/99 (b) 26,597
1,500 NYC GO 0.000 02/01/01 -- 1,040,745
1,460 NYC GO 0.000 02/01/02 -- 950,664
285 NYC GO 7.400 02/01/02 -- 302,408
100 NYC GO 6.875 02/01/02 -- 101,405
2,000 NYC GO 0.000 08/15/00 -- 1,430,520
630 NYC GO 0.000 04/01/01 -- 453,575
850 NYC GO 0.000 08/01/03 -- 497,080
100 NYC GO 5.250 10/01/04 -- 90,620
165 NYC GO 0.000 09/15/99 -- 125,788
105 NYC GO 5.600 08/01/01 -- 101,267
220 NYC GO 7.750 02/15101 08/15/99 (a) 243,184
780 NYC GO 7.750 02/15/01 08/15/99 (b) 839,444
2,275 NYC GO 5.250 08/01/06 -- 2,077,940
1,005 NYC GO 7.400 02/01/00 -- 1,056,124
100 NYC GO 7.625 08/01/03 02/01/00 (b) 104,278
50 NYC GO 7.000 02/01/00 02/01/96 (b) 50,928
605 NYC GO 0.000 03/15/98 -- 504,437
170 NYC GO 0.000 04/01/00 -- 130,871
25 NYC GO 7.300 08/15/98 08/15/97 (b) 26,070
40 NYC HDC 8.600 02/15/97 02/15/95 (a) 40,924
60 NYC HDC 9.000 02/15/99 02/15/95 (a) 61,492
25 NYC HDC 9.000 08/15/99 02/15/95 (a) 25,622
50 NYC HDC 9.200 02/15/00 02/15/95 (a) 51,255
5 NYC HDC 5.750 05/01/96 -- 5,055
130 NYC HDC 0.000 04/01/17 04/01/00 (a) 18,495
85 NYC HDC 8.500 04/15/15 04/15/95 (d) 85,636
45 NYC HDC 8.000 02/01/97 08/01/95 (b) 45,977
15 NYC HDC 8.200 02/01/99 08/01/95 (b) 15,486
30 NYC HDC 8.200 08/01/00 08/01/95 (b) 31,210
130 NYC HDC 8.500 05/01/07 11/01/95 (b) 135,200
40 NYC HDC 0.000 04/01/99 -- 29,774
30 NYC HDC 0.000 10/01/99 -- 22,129
45 NYC HDC 0.000 10/01/00 -- 29,794
75 NYC HDC 0.000 04/01/01 -- 51,449
30 NYC HDC 0.000 04/01/03 04/01/98 (b) 17,783
60 NYC HDC 0.000 10/01/03 04/01/98 (b) 33,673
60 NYC HDC 0.000 04/01/04 04/01/98 (b) 32,768
80 NYC HDC 0.000 04/01/06 04/01/98 (b) 36,521
60 NYC HDC 0.000 10/01/06 04/01/98 (b) 26,908
70 NYC HDC 0.000 10/01/07 04/01/98 (b) 28,665
20 NYC HDC 0.000 04/01/08 04/01/98 (b) 8,130
50 NYC HDC 0.000 10/01/08 04/01/98 (b) 19,214
730 NYC HDC 8.100 09/01/23 09/01/00 (b) 782,137
2,000 NYC Health & Hospital 6.000 02/15/07 -- 1,855,100
85 NYC IDA a.125 11/01/09 11/01/95 (b) 93,303
1,520 NYC IDA 7.625 11/01/09 11/01/95 (b) 1,545,080
3,700 NYC IDA (Amer. Airlines) 8.000 07/01/20 01/01/01 (b) 3,775,628
3,650 NYC IDA (Blood Center) 6.800 05/01/02 03/04/99 (c) 3,664,126
1,504 NYC IDA (Cummins Engine) 6.500 03/01/05 09/04/00 (c) 1,481,037
44 NYC IDA (Design Tex Fabrics) 8.000 04/01/95 03/02/95 (c) 44,002
1,300 NYC IDA (EPG) 7.400 07/30/02 06/11/99 (c) 1,400,191
</TABLE>
-38-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,425 NYC IDA (JBFS) 6.500% 12/15/02 03/15/00 (c) $ 2,404,169
20 NYC IDA (Lighthouse) 6.375 07/01/10 -- 18,579
695 NYC IDA (OHEL) 7.125 03/15/03 08/19/99 (c) 725,156
165 NYC IDA (Paper Enterprises) 10.000 11/01/98 01/29/97 (c) 172,858
50 NYC IDA (St. Christopher Ottilie) 6.750 07/01/99 -- 50,929
20 NYC IDA (Weeks Office Park) 8.000 02/01/95 02/01/95 (c) 19,788
152 NYC IDA (World Refrigerator) 8,000 08/01/97 05/17/96 (c) 153,444
50 NYC Water Auth. 0.000 06/15/01 06/15/98 (a) 33,026
50 NYC Water Auth. 0.000 06/15/08 06/15/98 (a) 20,491
10 NYS COP 7.100 08/15/00 08/15/96 (b) 9,887
395 NYS COP 7.250 08/15/07 08/15/00 (b) 403,552
1,325 NYS COP 8.250 09/01/07 09/01/97 (b) 1,418,638
40 NYS COP 8.300 09/01/12 09/01/97 (b) 43,256
50 NYS COP 7.000 09/15/96 -- 50,500
2,305 NYS COP 7.625 03/01/09 09/01/01 (b) 2,409,924
1,695 NYS COP 6.900 09/01/98 -- 1,788,750
500 NYS COP 7.000 03/01/99 -- 512,230
15 NYS Dorm (Hylan Education) 7.700 12/01/95 -- 15,367
50 NYS Dorm (NYU) 7.750 07/01/05 07/01/95 (b) 50,796
85 NYS Dorm (PCP) 7.800 12/01/05 12/01/98 (b) 92,143
15 NYS Dorm (Pharmacy) 9.750 07/01/99 07/01/95 (b) 15,563
10 NYS Dorm (United Health) 7.150 08/01/07 02/01/00 (b) 10,281
185 NYS Dorm (United Hospital) 11.750 09/15/10 07/01/95 (b) 190,550
2,500 NYS Dorm Highland Comm. Dev. 5.500 07/01/01 07/01/01 (d) 2,377,375
710 NYS Dorm (Brookhaven) 8.700 07/01/06 07/01/96 (b) 732,720
975 NYS Dorm (City U) 7.200 07/01/01 -- 1,082,630
1,865 NYS Dorm (City U) 7.500 07/01/00 -- 1,983,801
12,000 NYS Dorm (City U) 8.125 07/01/08 07/01/98 (b) 12,938,640
25 NYS Dorm (City U) 7.250 07/01/99 07/01/96 (b) 26,073
75 NYS Dorm (City U) 7.300 07/01/00 07/01/96 (b) 76,408
35 NYS Dorm (City U) 7.500 07/01/06 07/01/00 (b) 35,931
30 NYS Dorm (City U) 0.000 07/01/03 07/01/98 (b) 17,160
8,380 NYS Dorm (City U) 8.125 07/01/07 07/01/98 (b) 8,904,420
50 NYS Dorm (Crouse Irving) 10.250 07/0l/04 07/01/95 (b) 51,351
365 NYS Dorm (Crouse Irving) 10.500 07/01/17 07/01/95 (b) 375,366
90 NYS Dorm (ECC) 7.100 07/01/09 12/30/04 (c) 90,900
25 NYS Dorm (Higher Education) 8.500 06/01/03 06/01/95 (b) 25,879
25 NYS Dorm (JGB) 7.000 07/01/09 07/01/95 (b) 25,250
5,365 NYS Dorm (Judicial-Suffolk) 9.000 l0/l5/01 04/15/95 (b) 5,941,738
230 NYS Dorm (Judicial-Suffolk) 9.000 10/15/01 04/15/95 (b) 255,300
385 NYS Dorm (Manhattan E,E&T) 11.500 07/01/09 07/01/95 (b) 398,860
30 NYS Dorm (Manhattan E,E&T) 9.500 07/01/12 07/01/95 (b) 30,600
75 NYS Dorm (Montefiore) 8.625 07/01/10 07/01/95 (b) 76,500
225 NYS Dorm (NY Medical College) 6.875 07/01/03 -- 227,086
85 NYS Dorm (RGH) 8.500 08/01/05 08/01/95 (a) 88,328
75 NYS Dorm (Society Hospital) 8.900 07/01/95 -- 75,750
10 NYS Dorm (Society Hospital) 9.400 07/01/98 07/01/95 (b) 10,267
310 NYS Dorm (Society Hospital) 9.625 07/01/03 07/01/95 (b) 316,820
2,765 NYS Dorm (Society Hospital) 9.750 07/01/15 07/01/95 (b) 2,825,830
5 NYS Dorm (Society Hospital) 9.500 07/01/99 07/01/95 (b) 5,110
100 NYS Dorm (State U) 0.000 11/15/99 -- 70,290
1,500 NYS Dorm (State U) 0.000 11/15/00 -- 1,041,720
1,365 NYS Dorm (State U) 6.700 07/01/03 10/03/00 (c) 1,365,000
135 NYS Dorm (State U) 7.100 07/01/01 07/01/98 (b) 144,351
670 NYS Dorm (State U) 7.000 05/15/03 05/15/01 (b) 702,328
</TABLE>
-39-
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
<CAPTION>
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 425 NYS Dorm (State U) 7.000% 05/15/05 05/15/01 (b) $ 445,506
145 NYS Dorm (State U) 6.900 07/01/98 07/01/96 (b) 146,450
55 NYS Dorm (State U) 6.900 07/01/99 07/01/96 (b) 56,100
10 NYS Dorm (St. Vincent) 7.000 07/01/98 07/01/95 (b) 10,080
20 NYS Dorm (St. Vincent) 7.750 07/01/05 07/01/95 (b) 20,250
85 NYS Dorm (St. Vincent) 8.125 07/01/13 07/01/95 (b) 86,530
505 NYS Dorm (St. Vincent) 7.750 07/15/15 07/01/95 (b) 512,070
45 NYS Dorm (UCC) 7.650 07/01/01 07/01/99 (a) 49,746
25 NYS Envir (Huntington Res Rec) 7.000 10/01/95 -- 25,125
235 NYS Envir (Huntington Res Rec) 7.375 10/01/99 05/04/98 (c) 251,582
10,000 NYS Envir (Huntington Res Rec) 7.500 10/01/12 10/0l/03 (b) 10,055,500
370 NYS Environ (RSP) 7.000 04/01/99 -- 396,725
595 NYS Environ (RSP) 7.000 04/01/00 -- 643,980
330 NYS Environ (RSP) 7.100 04/01/01 -- 361,466
730 NYS Environ (State Park) 5.200 03/15/01 -- 703,355
320 NYS Environ (State Park) 5.350 03/15/02 -- 297,661
75 NYS Environ (Env Elements) 8.000 12/01/98 12/01/95 (b) 78,593
5 NYS Environ (Env Elements) 8.100 12/01/00 12/01/95 (b) 5,230
250 NYS Environ (Jamaica Water) 10.875 12/01/14 12/01/95 (b) 262,500
15 NYS Environ (Long Island Water) 10.000 10/01/17 10/01/97 (b) 16,746
50 NYS ERDA (ConEd) 9.000 08/15/20 08/15/95 (b) 52,263
75 NYS ERDA (LILCO) 7.500 12/01/06 06/01/95 (b) 75,000
170 NYS ERDA (LILCO) 7.800 12/01/09 12/01/95 (b) 175,950
15 NYS ERDA (LILCO) 8.250 10/0l/12 04/01/95 (b) 15,225
30 NYS ERDA (Orange & Rockland) 9.000 08/01/15 08/01/95 (b) 30,900
5 NYS Gov't Svcs Corp 7.550 04/01/95 -- 5,000
95 NYS HFA (Children's Rescue) 7.000 11/01/96 -- 97,231
80 NYS HFA (Children's Rescue) 7.400 11/01/00 -- 83,823
65 NYS HFA (Children's Rescue) 7.500 05/01/01 -- 68,313
140 NYS HFA (Children's Rescue) 7.500 11/01/01 -- 146,411
26,615 NYS HFA (Health Facilities) 7.900 11/01/99 03/08/98 (c) 28,610,060
1,535 NYS HFA (HELP/Bronx) 8.050 11/01/05 11/01/99 (b) 1,627,729
1,460 NYS HFA (Henry Phipps) 8.000 05/01/18 05/01/98 (b) 1,506,720
10 NYS HFA (Urban Rental) 8.000 11/01/99 11/01/98 (b) 11,044
10 NYS HFA (Non-Profit) 6.400 11/01/04 -- 9,850
30 NYS HFA (Non-Profit) 6.400 11/01/05 -- 29,100
1,000 NYS HFA (H&N) 9.000 11/01/17 11/01/95 (b) 1,053,630
30 NYS HFA (H&N) 5.800 11/01/00 -- 28,950
75 NYS HFA (H&N) 5.800 11/01/01 -- 70,500
115 NYS HFA (H&N) 6.875 11/01/07 11/01/02 (b) 116,150
10 NYS HFA (Non-Profit) 6.100 11/01/98 -- 9,900
50 NYS HFA (Non-Profit) 6.100 11/01/99 -- 49,750
50 NYS HFA (Urban Rental) 5.800 11/01/99 -- 49,000
20 NYS HFA (Urban Rental) 5.800 11/01/02 -- 19,000
6 NYS HFA (General Housing) 6.750 11/01/98 -- 6,060
65 NYS HFA (H&N) 5.900 l1/01/05 -- 60,450
140 NYS HFA (H&N) 5.900 11/01/06 -- 128,800
94 NYS HFA (General Housing) 6.500 11/01/03 -- 92,778
5 NYS HFA (Non-Profit) 6.750 11/01/96 -- 5,050
20 NYS HFA (Non-Profit) 6.600 11/01/01 11/01/98 (b) 20,709
5 NYS HFA (Non-Profit) 6.600 11/01/02 11/01/98 (b) 5,076
150 NYS HFA (Non-Profit) 6.600 11/01/03 -- 148,500
75 NYS HFA (Non-Profit) 6.600 11/01/05 -- 71,429
5 NYS HFA (Non-Profit) 6.600 11/01/10 -- 4,850
5 NYS HFA (Non-Profit) 6.600 11/01/11 -- 4,900
</TABLE>
-40-
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
<CAPTION>
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 25 NYS HFA (H&N) 6.700% 11/01/95 -- $ 25,000
100 NYS HFA (H&N) 6.700 11/01/96 -- 102,000
35 NYS HFA (H&N) 6.750 11/01/98 -- 35,525
65 NYS HFA (H&N) 6.875 11/01/04 -- 65,650
10 NYS HFA (H&N) 6.875 11/01/05 -- 10,000
10 NYS HFA (Non-Profit) 6.500 11/01/01 11/01/95 (b) 9,900
30 NYS HFA (Non-Profit) 8.400 11/01/95 -- 30,450
40 NYS HFA (Non-Profit) 6.400 11/01/00 11/01/95 (b) 39,600
155 NTS HFA (Monroe) 7.625 05/01/05 05/01/02 (b) 163,289
1,070 NYS HFA (Multi-Family) 10.000 11/15/99 11/l5/95 (b) 1,102,100
20 NYS HFA (Multi-Family) 7.300 11/01/04 11/01/99 (b) 21,315
195 NYS HFA (Phillips Village) 6.700 02/15/02 -- 196,074
250 NYS HFA (Phillips Village) 6.700 08/15/02 -- 250,860
175 NYS HFA (Phillips Village) 6.900 02/15/04 -- 175,921
85 NYS HFA (Phillips Village) 6.900 08/15/04 -- 85,228
430 NYS HFA (Simeon Dewitt) 8.000 11/01/18 05/01/98 (b) 434300
595 NYS HFA (Westchester/HELP) 7.500 11/01/00 04/19/98 (c) 644,986
70 NYS HFA (West-HeIp) 7.550 11/01/02 05/01/00 (b) 73,364
390 NYS Medcare (Insured Hospital) 10.125 01/15/24 01/15/96 (b) 398,970
20 NYS Medcare (Insured Hospital) 9.125 01/15/05 01/15/95 (a) 20,400
50 NYS Medcare (Insured Hospital) 9.250 01/15/25 01/15/95 (a) 51,000
10 NYS Medcare (Insured Mtg) 7.100 02/15/00 -- 10,299
2,045 NYS Medcare (Central Suffolk) 5.875 11/01/05 12/12/03 (c) 1,935,817
95 NYS Medcare (Good Samaritan) 7.650 11/01/01 11/01/97 (b) 101,346
50 NTS Medcare (H&N) 8.750 02/15/15 02/15/95 (b) 51,240
95 NYS Medcare (H&N) 8.625 02/15/06 02/15/95 (b) 97,329
5 NYS Medcare (Huntington) 6.800 11/01/96 -- 5,153
50 NYS Medcare (H&N) 7.000 02/15/99 -- 52,022
10 NYS Medcare (H&N) 7.500 02/15/09 02/15/99 (b) 10,330
80 NYS Medcare (H&N) 7.250 02/15/09 02/15/99 (b) 81,930
50 NYs Medcare (H&N) 7.250 02/15/98 -- 52,071
365 NYS Medcare (H&N) 7.000 02/15/98 -- 372,563
2,150 NYS Medcare (H&N) 10.000 11/01/06 11/01/96 (b) 2,289,750
10 NYS Medcare (H&N) 7.100 11/01/98 11/01/95 (b) 10,100
565 NYS Medcare (H&N) 7.100 11/01/99 11/01/95 (b) 584,380
200 NYS Medcare (H&N) 7.300 08/15/02 08/15/98 (a) 216,872
490 NYS Medcare (H&N) 10.500 01/15/24 01/15/96 (b) 502,544
25 NYS Medcare (H&N) 7.100 08/15/01 02/15/98 (b) 27,127
100 NYS Medcare (H&N) 7.500 02/15/08 02/15/00 (b) 104,383
140 NYS Medcare (Insured Mtg Hosp) 7.625 02/15/02 08/15/99 (b) 152,517
25 NYS Medcare (Insured Mtg Hosp) 7.875 02/15/07 08/l5/97 (b) 26,788
75 NYS Medcare (Insured Mtg Hosp) 7.250 02/15/12 08/15/99 (b) 76,971
680 NYS Medcare (Insured Mtg Nursing) 10.250 01/01/24 01/01/98 (b) 707,880
10 NYS Medcare (Insured Mtg Nursing) 10.250 0l/15/04 01/15/96 (b) 10,257
465 NYS Medcare (Insured Mtg) 9.375 11/01/16 11/01/96 (b) 495,225
1,345 NYS Medcare (Long Beach) 7.625 02/15/06 08/15/00 (b) 1,394,926
2,390 NYS Medcare (Mental Health) 7.375 02/15/14 08/15/01 (b) 2,384,718
25 NYS Medcare (Mental Health) 7.400 02/15/02 02/15/00 (b) 26,801
105 NYS Medcare (Mental Health) 7.300 08/15/99 -- 110,956
280 NYS Medcare (Mental Health) 7.500 02/15/01 -- 300,068
20 NYS Medcare (Mental Health) 0.000 08/15/01 -- 12,796
15 NYS Medcare (Mental Health) 0.000 02/15/03 08/15/98 (a) 9,378
10 NYS Medcare (Mental Health) 0.000 02/15/03 08/15/98 (b) 5,821
70 NYS Medcare (Mental Health) 0.000 08/15/03 08/15/98 (a) 42,034
30 NYS Medcare (Mental Health) 0.000 08/15/03 08/15/98 (b) 16,831
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 10 NYS Medcare (Mental Health) 7.200% 02/15/04 08/15/99 (a) $ 10,844
40 NYS Medcare (Mental Health) 7.200 02/15/04 08/15/99 (b) 42,310
400 NYS Medcare (Mental Health) 7.625 02/15/07 08/15/03 (b) 416,872
180 NYS Medcare (Mental Health) 7.400 08/15/03 -- 187,193
70 NYS Medcare (Mental Health) 7.750 08/15/10 02/15/00 (a) 77,739
105 NYS Medcare (Mental Health) 7.750 08/15/10 02/15/02 (b) 107,471
85 NYS Medcare (Mental Health) 6.850 08/15/00 -- 88,279
25 NYS Medcare (Mental Health) 8.000 02/15/97 -- 25,916
530 NYS Medcare (Mental Health) 8.000 08/15/97 -- 560,199
25 NYS Medcare (Mental Health) 8.150 08/15/98 -- 26,789
5,000 NYS Medcare (Mental Health) 8.250 02/15/99 02/15/97 (b) 5,401,450
95 NYS Medcare (Mental Health) 5.700 02/15/99 -- 94,207
50 NYS Medcare (Mercy Hospital) 9.500 11/01/03 11/01/95 (b) 51,000
5,660 NYS Medcare (Mercy Hospital) 9.800 11/01/16 11/01/95 (b) 5,829,800
890 NYS Medcare (Nassau/Maimonides) 9.375 01/15/03 07/15/95 (b) 915,365
1,760 NYS Medcare (Nassau/Maimonides) 9.600 01/15/23 07/15/95 (b) 1,804,000
50 NYS Medcare (North Shore) 7.125 11/01/08 11/01/02 (b) 51,712
1,945 NYS Medcare (Nyack) 8.200 11/01/04 11/01/98 (b) 2,059,152
5,465 NYS Medcare (Nyack) 8.300 11/01/13 11/01/00 (b) 5,797,709
10 NYS Medcare (N. General) 7.000 02/15/98 -- 10,300
275 NYS Medcare (N. General) 7.100 02/15/99 -- 287,111
25 NYS Medcare (N. General) 7.150 08/15/01 -- 26,232
100 NYS Medcare (N. General) 7.200 02/15/03 08/15/01 (b) 104,427
915 NYS Medcare (N. General) 7.350 08/15/09 08/15/01 (b) 927,288
5 NYS Medcare 7.200 11/01/01 11/01/99 (b) 5,150
105 NYS Medcare 7.250 11/01/02 11/01/99 (b) 108,150
200 NYS Medcare 7.250 11/01/03 11/01/99 (b) 206,000
40 NYS Medcare (Secured Hosp) 7.000 02/15/07 02/15/99 (b) 40,772
30 NYS Medcare (St. John's Riverside) 9.750 01/15/04 01/15/96 (b) 30,720
50 NYs Medcare (Vassar) 7.200 11/01/96 -- 51,346
250 NYS Medcare (Wychoff) 6.625 02/15/98 -- 258,165
715 NYS Medcare (Wychoff) 6.850 02/15/00 -- 714,006
80 NYS Medcare (Wychoff) 6.850 08/15/00 -- 79,881
250 NYS Medcare (Wychoff) 6.950 02/15/01 -- 250,835
80 NYS Medcare (Wychoff) 6.950 08/15/01 -- 80,285
1,000 NYS Power Auth. 7.875 01/01/13 01/01/98 (b) 1,047,500
350 NYS Thruway 6.700 01/01/99 -- 356,489
100 NYS Thruway 6.250 04/01/04 -- 101,524
5,440 NYS Thruway 0.000 01/01/98 -- 4,467,981
330 NYS Thruway 0.000 01/01/99 -- 253,348
6,310 NYS Thruway 0.000 01/01/00 -- 4,525,469
530 NYS Thruway 0.000 01/01/01 -- 354,236
2,000 NYS Thruway 0.000 01/01/02 -- 1,243,220
250 NYS Thruway 0.000 01/01/05 -- 126,250
385 NYS Thruway 0.000 01/01/06 -- 181,589
720 NYS UDC 9.375 09/01/99 09/01/95 (b) 747,360
30 NYS UDC 0.000 01/01/05 01/01/98 (a) 15,104
240 NYS UDC 7.250 04/01/99 -- 252,192
250 NYS UDC 6.700 01/01/99 -- 255,523
1,250 NYS UDC 0.000 01/01/08 -- 509,088
35 NYS UDC (S MALL) 0.000 01/01/03 -- 20,260
120 NYS UDC (S MALL) 0.000 01/01/05 06/24/04 (c) 60,308
50 NYS UDC (S MALL) 0.000 01/01/05 06/24/04 (c) 26,120
50 NYS UDC (Syracuse U) 7.400 01/01/99 01/01/98 (b) 52,835
75 NYS (SONYMA) Mortgage, 1 0.000 10/01/98 04/01/95 (b) 55,146
</TABLE>
-42-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 20 NYS (SONYMA) Mortgage, 1 0.000% 10/01/14 04/01/95 (b) $ 3,283
120 NYS (SONYMA) Mortgage, 10-A 7.800 10/01/03 04/01/98 (b) 130,115
25 NYS (SONYMA) Mortgage, 10-A 8.000 10/0l/08 04/01/98 (b) 25.946
15 NYS (SONYMA) Mortgage, 11 6.875 04/01/16 -- 15,297
25 NYS (SONYMA) Mortgage, 12 6.800 04/01/97 -- 25.918
15 NYS (SONYMA) Mortgage, 12 6.800 10/01/97 -- 15,685
30 NYS (SONYMA) Mortgage, 12 0.000 04/01/99 10/01/97 (b) 23,570
60 NYS (SONYMA) Mortgage, 12 0.000 10/01/99 10/01/97 (b) 43,056
100 NYS (SONYMA) Mortgage, 12 0.000 10/01/00 10/01/97 (b) 67,541
855 NYS (SONYMA) Mortgage, 2 0.000 10/01/14 04/01/95 (b) 136,757
50 NYS (SONYMA) Mortgage, 27 6.250 10/01/02 -- 49,782
100 NYS (S0NYMA) Mortgage, 27 6.450 10/01/04 -- 98.822
95 NYS (SONYMA) Mortgage, 5 8.700 10/01/96 04/01/95 (b) 99,196
5 NYS (S0NYMA) Mortgage, 5 8.900 04/01/97 04/01/95 (b) 5,154
30 NYS (SONYMA) Mortgage, 5 9.100 04/01/98 04/01/95 (b) 30,969
165 NYS (SONYMA) Mortgage, 5 9.100 10/01/98 04/01/95 (b) 170,372
30 NYS (SONYMA) Mortgage, 5 0.000 04/01/99 -- 20,220
25 NYS (SONYMA) Mortgage, 5 0.000 10/01/99 -- 16,123
10 NYS (SONYMA) Mortgage, 5 0.000 04/01/00 -- 6,143
5 NYS (SONYMA) Mortgage, 6 8.000 04/01/95 -- 5,032
15 NYS (SONYMA) Mortgage, 6 8.200 04/01/96 04/01/95 (b) 15,593
40 NYS (SONYMA) Mortgage, 6 8.200 10/01/96 04/01/95 (b) 41,214
25 NYS (SONYMA) Mortgage, 6 8.400 04/01/97 04/01/95 (b) 25,771
5 NYS (SONYMA) Mortgage, 6 8.400 10/01/97 04/01/95 (b) 5,392
5 NYS (SONYMA) Mortgage, 6 0.000 04/01/98 -- 3,805
10 NYS (SONYMA) Mortgage, 6 0.000 10/01/98 -- 7,297
170 NYS (SONYMA) Mortgage, 6 0.000 (+) 04/01/10 10/01/99 (b) 149,107
10 NYS (SONYMA) Mortgage, 6 0.000 04/01/99 -- 6,969
10 NYS (SONYMA) Mortgage, 6 0.000 10/01/99 -- 6,583
20 NYS (S0NYMA) Mortgage, 6 0.000 10/01/00 04/01/00 (b) 12,193
15 NYS (SONYMA) Mortgage, 6 0.000 04/01/01 04/01/00 (b) 8,536
50 Nvs (SONYMA) Mortgage, 7 7.600 04/01/95 -- 50,212
50 NYS (SONYMA) Mortgage, 7 7.700 04/01/96 -- 50,260
35 NYS (SONYMA) Mortgage, 7 0.000 10/01/98 -- 25,863
55 NYS (SONYMA) Mortgage, 7 0.000 10/01/99 -- 37,154
360 NYS (SONYMA) Mortgage, 7 8.625 04/01/11 10/01/95 (b) 372,035
50 NYS (SONYMA) Mortgage, 7 0.000 (+) 10/01/14 04/01/98 (b) 37,955
1 NYS (SONYMA) Mortgage, 7 8.500 10/01/04 10/01/95 (b) 1,036
50 NYS (SONYMA) Mortgage. 8-B 7.200 04/01/99 -- 53,018
40 NYS (SONYMA) Mortgage, 8-C 7.900 10/01/01 10/01/97 (b) 43,319
20 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/98 10/01/96 (b) 15,302
30 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/00 10/01/96 (b) 20,335
85 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/01 10/01/96 (b) 55,822
60 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/01 10/01/98 (b) 40,724
25 NYS (S0NYMA) Mortgage, 8-A 0.000 04/01/02 10/01/96 (b) 15,417
70 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/02 10/01/96 (b) 42,271
50 NYS (S0NYMA) Mortgage, 8-C 6.900 04/01/96 -- 51,165
25 NYS (SONYMA) Mortgage, 8-C 7.500 04/01/99 10/01/97 (b) 26,788
100 NYS (SONYMA) Mortgage, 8-D 8.200 10/01/06 01/04/98 (b) 103,763
25 NYS (SONYMA) Mortgage, 8-D 7.700 10/01/99 01/04/98 (b) 27,151
80 NYS (SONYMA) Mortgage, 8-E 8.100 10/01/17 04/01/98 (b) 82,491
25 NYS (SONYMA) Mortgage, 8-E 6.750 04/01/96 -- 25,538
40 NTS (SONYMA) Mortgage, 8-F 7.200 10/01/00 07/01/98 (b) 43,209
20 NYS (SONYMA) Mortgage, 9-A 7.000 04/01/01 10/01/96 (b) 21,028
100 NYS (SONYMA) Mortgage, 9-A 6.700 10/01/98 10/01/96 (b) 104,643
</TABLE>
-43-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 25 NYS (SONYMA) Mortgage, 9-A 6.900% 04/01/00 10/01/96 (b) $ 26,069
100 NYS (S0NYMA) Mortgage, 9-A 7.250 10/01/06 10/01/98 (b) 101,388
45 NYS (SONYMA) Mortgage, 9-B 8.000 10/01/02 07/01/97 (b) 48,328
160 NYS (SONYMA) Mortgage, 9-B 8.125 10/01/07 07/01/97 (b) 167,774
6,045 NYS (SONYMA) Mortgage, 9-B 8.300 10/01/17 07/01/97 (b) 6,280,453
65 NYS (SONYMA) Mortgage, 9-C 8.400 10/01/02 10/01/97 (b) 68,108
150 NYS (SONYMA) Mortgage, 9-C 8.700 10/01/07 10/01/97 (b) 159,788
35 NYS (SONYMA) Mortgage, 9-C 8.800 10/01/17 10/01/97 (b) 37,370
30 NYS (SONYMA) Mortgage, 9-E 7.375 10/01/98 -- 32,481
240 NYS (SONYMA) Mortgage, 9-E 8.000 10/01/03 04/01/98 (b) 246,970
95 NYS (SONYMA) Mortgage, BB-2 7.125 10/01/98 07/25/97 (c) 101,652
200 NYS (SONYMA) Mortgage, BB-2 7.850 10/01/08 10/01/97 (b) 207,392
12,570 NYS (SONYMA) Mortgage, BB-2 7.950 10/01/15 10/01/99 (b) 12,880,856
40 NYS (SONYMA) Mortgage, EE-I 8.000 10/01/10 04/14/99 (b) 41,622
1,425 NYS (SONYMA) Mortgage, EE-I 8.050 04/01/16 04/14/01 (b) 1,472,823
60 NYS (SONYMA) Mortgage, EE-2 7.050 10/01/00 11/21/97 (c) 61,536
365 NYS (SONYMA) Mortgage, EE-3 7.125 10/0l/00 11/21/97 (c) 370,168
115 NYS (SONYMA) Mortgage, EE-4 7.050 10/01/00 11/18/97 (c) 116,225
100 NYS (SONYMA) Mortgage, EE-4 7.800 10/01/13 10/01/00 (b) 103,052
25 NYS (SONYMA) Mortgage, FF 6.800 10/01/95 -- 25,144
25 NYS (SONYMA) Mortgage, FF 7.000 04/01/97 -- 26,023
50 NYS (SONYMA) Mortgage, FF 7.100 10/01/98 -- 53,470
4,875 NYS (SONYMA) Mortgage, FF 7.950 10/01/14 10/01/99 (b) 5,102,663
25 NYS (SONYMA) Mortgage, GG 7.600 10/0l/18 04/01/95 (c) 25,500
1,640 NYS (SONYMA) Mortgage, GG 8.125 04/01/20 10/01/99 (b) 1,695,219
55 NYS (SONYMA) Mortgage, HH-2 7.700 10/01/09 10/01/99 (b) 56,933
45 NYS (S0NYMA) Mortgage, HH-3 7.875 10/01/09 06/07/00 (b) 47,225
75 NYS (S0NYMA) Mortgage, II 0.000 04/01/05 04/01/99 (b) 35,925
50 NYS (S0NYMA) Mortgage, II 0.000 04/01/07 04/01/99 (b) 20,433
120 NYS (S0NYMA) Mortgage, II 0.000 10/01/07 04/01/99 (b) 46,970
520 NYS (SONYMA) Mortgage, II 0.000 10/01/08 04/01/02 (b) 189,826
175 NYS (SONYMA) Mortgage, II 0.000 04/01/09 04/01/02 (b) 61,191
75 NYS (SONYMA) Mortgage, JJ 0.000 04/0l/00 -- 50,141
125 NYS (SONYMA) Mortgage, JJ 0.000 04/01/01 -- 81,799
75 NYS (SONYMA) Motlgage, JJ 0.000 10/01/01 -- 47,754
100 NYS (SONYMA) Mortgage, JJ 0.000 04/01/02 10/01/99 (b) 63,975
180 NYS (SONYMA) Mortgage, JJ 0.000 04/01/03 10/01/99 (b) 103,502
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/03 10/01/99 (b) 5,506
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/04 10/01/99 (b) 5,242
145 NYS (SONYMA) Mortgage, JJ 0.000 04/01/05 10/01/99 (b) 72,335
170 NYS (SONYMA) Mortgage, JJ 0.000 10/01/05 10/01/99 (b) 80,993
60 NYS (SONYMA) Mortgage, JJ 0.000 04/01/06 10/01/99 (b) 27,821
205 NYS (SONYMA) Mortgage, JJ 0.000 10/01/06 10/01/99 (b) 91,057
200 NYS (SONYMA) Mortgage, JJ 0.000 04/01/07 10/01/99 (b) 85,014
50 NYS (SONYMA) Mortgage, JJ 0.000 10/01/08 10/01/99 (b) 19,062
20 NYS (SONYMA) Mortgage, KK 7.050 10/01/99 07/22/97 (b) 20,221
50 NYS (SONYMA) Mortgage, MM-I 7.100 04/01/97 -- 52,152
100 NYS (SONYMA) Mortgage, MM-I 7.100 10/01/97 -- 105,196
30 NYS (SONYMA) Mortgage, MM-I 7.200 10/01/98 -- 32,135
100 NYS (SONYMA) Mortgage, MM-I 7.700 10/01/04 02/04/03 (b) 106,680
50 NYS (SONYMA) Mortgage, MM-I 7.750 04/01/05 02/04/03 (b) 52,691
45 NTS (SONYMA) Mortgage, MM-2 7.050 04/01/97 -- 46,938
55 NYS (SONYMA) Mortgage, MM-2 7.150 04/01/98 -- 58,419
10 NYS (SONYMA) Mortgage, MM-2 7.550 04/01/02 10/01/00 (b) 10,239
25 NYS (SONYMA) Mortgage, NN 7.100 04/01/02 01/01/00 (b) 25,650
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 40 NYS (SONYMA) Mortgage, QQ 7.700% 10/01/12 04/01/00 (b) $ 41,519
25 NYS (SONYMA) Mortgage, TT 6.850 10/01/01 -- 25,306
25 NYS (SONYMA) Mortgage, TT 7.200 10/01/06 04/01/03 (b) 25,645
50 NYS (SONYMA) Mortgage, UU 6.750 10/01/98 -- 52,868
25 NYS (SONYMA) Mortgage, UU 6.850 10/01/99 -- 25,107
75 NYS (SONYMA) Mortgage, UU 6.950 04/01/00 -- 76,325
50 NYS (SONYMA) Mortgage, VV 6.300 04/01/97 -- 51,418
5 NYS (SONYMA) Mortgage, VV 6.400 04/01/98 -- 5,230
100 NYS (SONYMA) Mortgage, VV 6.500 10/01/99 -- 99,504
40 NYS (SONYMA) Mortgage, VV 6.600 04/01/00 -- 40,040
25 NYS (SONYMA) Mortgage, VV 6.800 10/01/02 -- 25,402
60 NYS (SONYMA) Mortgage, VV 6.900 04/01/03 -- 61,146
545 NYS (SONYMA) Mortgage, VV 7.250 10/01/07 10/01/03 (b) 561,475
250 NYS (SONYMA) Mortgage, VV 6.900 04/01/03 -- 251,993
275 NYS (SONYMA) Mortgage, VV 6.600 10/01/00 -- 275,693
250 Oneida County GO 5.300 12/01/03 -- 228,810
200 Oneida County GO 5.400 12/01/04 -- 179,756
285 Oneida County IDA (DB Smith) 5.000 12/01/96 -- 283,595
285 Oneida County IDA (DB Smith) 5.200 12/01/98 -- 283,284
285 Oneida County IDA (DB Smith) 5.300 12/01/99 -- 282,908
290 Oneida County IDA (DB Smith) 5.400 12/01/00 -- 288,956
200 Oneida Herkimer SWMA 5.900 04/01/98 -- 201,028
50 Onondaga County GO 5.700 07/01/95 -- 50,000
18,500 Onondaga Res Rec 6.625 05/01/00 06/19/98 (c) 18,448,570
750 Orleans IDA (Anchor Bank) 7.500 12/01/96 06/01/95 (b) 761,250
125 Port Authority NY/NJ, Series 53 8.700 07/15/20 07/15/95 (b) 130,796
20 Portchester Community Devel. 8.100 08/01/10 06/27/04 (c) 21,368
10 Puerto Rico Commonwealth 8.750 07/01/95 -- 10,150
5 Puerto Rico Commonwealth 9.375 07/01/05 07/01/95 (a) 5,291
25 Puerto Rico Electric 5.000 01/01/97 -- 24,500
20 Puerto Rico Electric 7.000 07/01/07 07/01/02 (b) 20,671
275 Puerto Rico Electric 6.750 0l/01/00 07/01/95 (b) 279,400
245 Puerto Rico Electric 6.750 0l/0l/01 07/01/95 (b) 248,675
25 Puerto Rico Electric 5.900 01/01/06 -- 24,250
255 Puerto Rico HFC 8.250 06/01/l1 06/01/95 (b) 262,650
15 Puerto Rico HFC 6.900 04/15/98 -- 15,513
25 Puerto Rico HFC 7.000 04/15/99 -- 25,893
15 Puerto Rico HFC 7.100 10/15/00 10/01/98 (b) 15,713
45 Puerto Rico HFC 0.000 04/l5/08 09/15/98 (b) 17,256
25 Puerto Rico HFC 0.000 10/15/04 09/15/98 (b) 13,204
20 Puerto Rico HFC 7.450 10/15/09 09/27/00 (b) 20,470
5 Puerto Rico HFC 6.700 04/01/97 -- 5,132
125 Puerto Rico HFC 6.800 04/01/99 -- 128,501
45 Puerto Rico HFC 6.800 10/01/99 -- 46,389
40 Puerto Rico HFC 7.000 04/0l/00 -- 41,813
10 Puerto Rico HFC 7.100 04/01/02 -- 10,387
65 Puerto Rico HFC 7.300 04/01/06 04/01/00 (b) 65,485
30 Puerto Rico HFC 7.400 04/01/07 04/01/00 (b) 31,202
20 Puerto Rico HFC 7.500 10/01/15 04/01/02 (b) 20,748
1,635 Puerto Rico IME (Amer. Airlines) 8.750 12/01/25 12/01/95 (d) 1,706,368
760 Puerto Rico IME (Amer. Cyanamid) 8.750 05/01/13 05/01/95 (b) 790,400
10 Puerto Rico IME (Baxter Travenol) 8.000 09/01/12 09/01/98 (b) 10,496
1,770 Puerto Rico IME (C.R. Bard) 11.750 07/01/01 07/01/96 (b) 1,919,742
1,000 Puerto Rico IME (Dr. Pila Hosp) 7,850 08/01/28 08/01/00 (b) 1,062,570
665 Puerto Rico IME (Squibb) 6.500 07/01/04 06/30/00 (c) 671,650
</TABLE>
-45-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUNd DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 70 Puerto Rico PCR 8.000% 01/01/03 07/01/95 (b) $ 71,400
70 Puerto Rico Port Auth. 7.300 07/01/07 07/01/96 (b) 71,400
45 Puerto Rico University 8.000 06/01/05 06/01/99 (b) 45,675
1,980 Puerto Rico University 8.000 06/01/13 06/01/99 (b) 2,039,400
20 Puerto Rico Urban Renewal 0.000 10/01/97 -- 16,521
105 Puerto Rico Urban Renewal 7.875 10/01/04 10/01/99 (b) 112,343
10 Radisson Senior Citizens Hsg. 12.000 11/01/11 11/01/97 (b) 11,529
25 Riverhead Hsg. Devel. 8.250 08/01/10 08/01/95 (b) 26,468
6,760 Rochester Hsg. Auth. (Stonewood) 5.900 09/01/09 09/18/03 (c) 6,286,530
935 Rockland IDA (DC) 7.000 03/01/03 08/12/99 (c) 931,961
70 Saltaire GO 5.700 07/15/01 -- 65,897
70 Saltaire GO 5.750 07/15/05 -- 64,308
70 Saltaire GO 5.750 07/15/06 -- 63,793
50 San Juan Puerto Rico GO 8.200 07/01/96 07/01/95 (b) 51,000
90 San Juan Puerto Rico GO 8.200 07/01/96 07/01/95 (b) 91,800
390 Saratoga IDA (ARC) 7.250 03/01/01 06/02/98 (c) 391,287
250 Saratoga IDA (City Center) 10.000 10/01/08 10/01/99 (b) 288,215
2,455 Saratoga IDA (Saratoga Sheraton) 6.750 12/31/07 08/12/01 (c) 2,364,730
50 Schodack IDA (Hamilton Printing) 7.600 07/01/00 -- 54,080
5 Scotia HDC 8.000 10/01/03 10/01/95 (b) 5,289
25 Scotia HDC 8.250 10/01/10 10/01/95 (b) 26,250
55 Steuben IDA (Corning Glass) 7.625 07/01/99 07/01/95 (b) 56,100
240 Steuben IDA (Corning Glass) 9.000 11/01/04 11/01/95 (b) 250,320
15 St. Casimer's Elderly Hsg. 7.000 09/01/98 -- 15,600
835 St. Casimer's Elderly Hsg. 7.375 09/01/10 09/01/04 (b) 860,050
30 St Lawrence IDA (Res Rec) 8.250 01/01/02 01/01/99 (b) 32,312
10 St Lawrence IDA (Solid Waste) 7.600 01/01/97 -- 10,483
10 Suffolk County GO 6.400 02/01/00 -- 10,100
25 Suffolk County GO 6.375 02/15/97 08/15/95 (b) 25,475
5 Suffolk County GO 6.000 09/15/97 -- 5,016
190 Suffolk IDA (ADP) 7.750 04/01/18 04/01/95 (b) 196,650
20 Suffolk IDA (Marbar) 8.150 03/01/04 03/01/96 (b) 20,841
85 Suffolk IDA (OPWC) 7.000 11/01/02 11/22/99 (c) 88,771
650 Suffolk IDA (Printing Assoc) 7.225 (v) 01/01/01 08/04/98 (c) 643,500
1,630 Suffolk IDA (Rimland Facilities) 6.375 (v) 12/01/04 12/28/00 (c) 1,564,800
21 Suffolk IDA (RSC Associates) 7.000 03/01/95 02/15/95 (c) 20,584
700 Sullivan County GO 7.000 05/01/01 -- 724,458
725 Sullivan County GO 7.000 05/01/02 -- 755,660
2,485 Sunnybrook Elderly Hsg. Corp 11.250 12/01/14 04/01/95 (b) 2,658,950
267 Syracuse IDA (Genesee St.) 6.205 (v) 12/01/98 01/15/97 (c) 269,480
550 Syracuse IDA (Rockwest Center) 7.250 06/01/03 11/30/99 (c) 574,431
1,240 Syracuse IDA (St. Joseph's Hosp) 7.250 06/01/01 07/22/99 (c) 1,286,785
1,500 Troy GO TANS 7.250 02/01/95 -- 1,500,390
800 Troy IDA (City of Troy) 7.000 03/15/96 09/20/95 (c) 802,504
915 Troy IDA (City of Troy) 7.250 03/15/98 09/20/97 (c) 934,352
1,055 Troy IDA (City of Troy) 7.500 03/15/00 09/20/99 (c) 1,099,943
1,225 Troy IDA (City of Troy) 7.600 03/15/02 09/20/01 (c) 1,298,206
95 Tupper Lake Housing Devel. 8.125 10/01/10 03/15/02 (b) 100,102
460 Ulster County Res Rec 5.400 03/01/01 -- 435,128
1,010 Ulster County Res Rec 5.500 03/01/02 -- 948,612
1,080 Ulster County Res Rec 5.500 03/01/03 -- 1,004,173
20 Union Elderly Hsg. 10.750 04/01/96 04/01/95 (b) 20,700
5 Union Elderly Hsg. 11.000 04/01/00 04/01/95 (b) 5,200
1,190 Union Elderly Hsg. 10.000 04/01/13 04/01/95 (b) 1,237,600
75 Union Hsg. (Methodist Homes) 7.550 04/01/95 -- 75,000
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND DECEMBER 31, 1994
PORTFOLIO OF INVESTMENTS
Effective
Face Amount Maturity
(000) omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 80 Union Hag. (Methodist Homes) 7.700% 04/01/96 -- $ 81,530
90 Union Hag. (Methodist Homes) 7.800 04/01/97 -- 93,011
95 Union Hag. (Methodist Homes) 7.900 04/01/98 99,311
295 Union Hag. (Methodist Homes) 6.800 11/01/04 -- 294,929
875 University of Virgin Islands 6.500 10/01/99 11/11/97 (c) 873,346
420 Utica GO 5.500 12/01/99 408,190
450 Utica GO 5.700 12/01/00 -- 438,534
475 Utica GO 5.800 12/01/01 -- 457,444
200 Utica GO 5.900 12/01/02 -- 193,008
15 Utica GO 7.900 01/15/02 07/15/95 (b) 15,375
15 Utica GO 7.900 01/15/05 07/15/95 (b) 15,375
10 Utica Hag. Corp (Brookhaven) 0.000 07/01/99 -- 6,643
10 Utica Senior Citizen Hag. 0.000 01/01/97 -- 8,369
35 Utica Senior Citizen Hag. 0.000 01/01/98 -- 26,722
100 Utica Senior Citizen Hag. 0.000 01/01/99 -- 69,520
1,992 Utica Senior Citizen Hag. 10.230 07/01/22 07/01/97 (b) 2,230,307
15 Valley Health & Devel. 7.850 02/01/02 16,414
1,890 V.I. Port Auth. (Marine Division) 7.550 11/01/99 11/01/96 (b) 1,936,135
2,380 V.I. Port Auth. (Marine Division) 7.400 11/01/99 11/01/96 (b) 2,433,264
2,280 V.I. Airport 7.875 10/01/97 10/19/96 (c) 2,371,451
9,610 V.I. Airport 8.100 10/01/05 10/01/98 (b) 10,208,319
15 V.I. HFA 7.550 06/01/03 12/01/98 (b) 16,436
1,600 V.I. Highway 7.550 10/01/97 -- 1,680,864
260 V.I. Highway 7.650 10/01/99 -- 275,935
3,100 V.I. Port Auth. 10.125 11/01/05 11/01/95 (b) 3,266,780
200 V.I. Public Finance Auth. 7.700 10/01/04 10/01/99 (b) 216,526
1,330 V.I. Public Finance Auth. 6.600 10/01/98 -- 1,358,981
1,500 V.I. Public Finance Auth. 6.800 10/01/00 -- 1,539,885
1,200 V.l. Public Finance Auth. 6.500 10/01/99 11/15/97 (c) 1,197,912
805 V.l. Public Finance Auth. 6.625 10/01/99 11/19/97 (c) 802,786
18,100 V.1. Water & Power 8.500 01/01/10 01/01/98 (b) 19,566,824
2,765 V.I. Water & Power 7.200 01/01/02 04/21/99 (e) 2,835,119
1,000 Westchester IDA-JBFS 6.500 12/15/02 07/14/01 (c) 993,120
35 Yonkers IDA (Waldbaum) 9.250 03/01/98 03/01/95 (b) 35,840
---------------
Total municipal bond investments (cost $504,230,380) (100.5%) $ 498,699,255
---------------
Other assets and liabilities (net) ( -0.5%) (2,247,673)
---------------
Net assets at market (100.0%) $ 496,451,582
---------------
Net asset value per share (157,505,504 shares outstanding) $3.15
================
</TABLE>
* Call Date, Put Date or Average Life of Sinking Fund if applicable as detailed:
(a) Date of prerefunded call.
(b) Optional call date; corresponds to the most conservative yield
calculation.
(c) Average life because of mandatory (sinking fund) principal payments
prior to maturity.
(d) Date of mandatory put.
(e) Date of conversion.
(v) Variable rate security that fluctuates as a percentage of prime rate.
(+) Security will convert to a fixed coupon at a date prior to maturity.
See accompanying notes to financial statements.
-47-
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
DECEMBER 31, 1994
PORTFOLIO ABBREVIATIONS
To simplify the listings of the Limited Term New York
Municipal Fund's holdings in the Portfolio of investments,
we have abbreviated the descriptions of many of the
securities per the table below:
ACLDD Adults and Children with Learning
and Developmental Disabilities
ARC Association of Retarded Citizens
BANS Bond Anticipation Notes
BCW Babylon Community Waste
BOCES Board of Cooperative Educational
Services
CNR College of New Rochelle
COP Certificate of Participation
CSD Central School District
DC Dominican College
ECC Erie Community College
E,E&T Ear, Eye and Throat
EPG Elmhurst Parking Garage
ERDA Energy Research and
Development Authority
GO General Obligation
HDC Housing Development Corporation
HELP Homeless Economic Loan Program
HFA Housing Finance Agency
HFC Housing Finance Corporation
H&N Hospital and Nursing
IDA Industrial Development Authority
IME Industrial Medical and Environmental
JBFS Jewish Board Family Services
LILCO Long Island Lighting Corporation
MTA Metropolitan Transit Authority
OPWC Ocean Park Water Corporation
PCP Pooled Capital Program
PCR Pollution Control Revenue
Res Rec Resource Recovery Facility
RGH Rochester General Hospital
RSP Riverbank State Park
SONYMA State of New York Mortgage Agency
SWMA Solid Waste Management Authority
TANS Tax Anticipation Notes
UCC Upstate Community College
UDC Urban Development Corporation
V.I. United States Virgin Islands
WWH Wyandach/Wheatley Heights
- --------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS
The Fund had the following concentrations at December 31,1994 as a percentage of
total investments):
# of % of
1ssuers Portfolio
------- ---------
Resource Recovery, Pollution Control Revenue 12 20.0%
Health Care 57 18.3%
Municipal Tax Obligations (GO) 17 12.9%
Transportation 13 9.2%
NonProfit - Higher Education 18 7.5%
Housing - Single-Family 40 7.1%
Housing - Multi-Family 46 5.6%
Water and Telephone Utilities 8 4.9%
Government and Public Facilities 20 4.2%
Manufacturing - Durable Goods 24 2.8%
NonProfit - Other 12 2.7%
Service Companies 13 1.9%
Electric and Gas Utilities 8 1.6%
Private Lease Revenue 15 1.3%
Manufacturing - Non-Durable Goods 2 *
-----
Total 100.0%
=====
* Below 1%
- --------------------------------------------------------------------------------
ASSET COMPOSITION TABLE
DECEMBER 31, 1994 (UNAUDITED)
(As a percentage of total investments)
Percentage
Rating of Investments
-------- --------------
AAA 2.0%
AA 10.0%
A 45.0%
BBB 39.1%
BB 0.0%
B 0.0%
CCC 0.0%
CC 0.0%
C 0.0%
Not rated 3.9%
------
Total 100.0%
======
ALL bonds are current with their debt service requirements. All unrated bonds
are backed by mortgage liens and guarantees by the issuer. Bonds which are
backed by a letter of credit or by other financial institutions or agencies may
be assigned an investment grade rating by the Investment Policy Committee of the
Board of Trustees, which reflects the quality of the guarantor, institution or
agency. Unrated bonds may also be assigned a rating when the issuer has rated
bonds outstanding with comparable credit characteristics, or when, in the
opinion of the Investment Policy Committee, the bond itself possesses credit
characteristics which allow for rating. The unrated bonds in the portfolio are
predominantly smaller issuers which have not applied for a bond rating. Only
those unrated bonds which subsequent to purchase have not been designated
investment grade are included in the "Not Rated" category. For further
information see "Credit Quality" in the Prospectus.
-48-
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities - December 31, 1994
ASSETS
Investments at market (Cost $504,230,380) $498,699,255
Interest receivable 9,473,655
Receivable for capital shares sold 3,899,046
Receivable for investments sold 1,636,592
Organizational costs 17,083
Other assets 30,226
------------
Total assets 513,755,857
============
LIABILITIES
Payable for investments purchased 5,208,834
Payable for capital shares repurchased 3,693,216
Distribution payable to shareholders 560,565
Demand note payable to Bank
Interest at prime (8.50% at 12/31/94) 7,797,300
Payable to affiliated party 17,083
Other liabilities 27,277
-----------
Total liabilities 17,304,275
----------
NET ASSETS $496,451,582
============
Represented by
--------------
Paid in capital $509,601,093
Undistributed net investment income 236,382
Accumulated net realized loss on
investment transactions (7,854,768)
Inlet unrealized depreciation
of investments (5,531,125)
-----------
Total - Representing net assets
applicable to capital shares outstanding $496,451,582
============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
Net asset value and redemption
price per share ($496,451.582
divided by 157,505,504 shares) $ 3.15
============
Offering price per share (100/98 of $3.15(* $ 3.21
============
* On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
INVESTMENT INCOME:
Interest $29,388,084
-----------
EXPENSES:
Management fees 2,154,234
Distribution fees 1,237,020
Shareholder servicing agent fees 255,622
Accounting and auditing 170,191
Registration fees 125,893
Shareholder communications 73,483
Custodian fees 26,852
Legal fees 14,667
Trustees' fees 13,900
Organizational expense 10,000
Miscellaneous 39,731
Interest 216,018
-----------
Total expenses 4,337,611
-----------
Net investment income 25,050,473
-----------
REALIZED AND UNREALIZED
LOSS ON INVESTMENT:
Net realized loss on
investments (7,321,925)
Net decrease in unrealized
appreciation of investments (20,760,177)
------------
Net loss on investments (28,082,102)
------------
Net decrease in net assets
resulting from operations ($3.031,629)
============
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December31, 1994 1993
---- ----
Increase in net assets--
Operations:
Net investment income $25,050,473 $15,210,592
Net realized from security
transaction (7,321,925) (361,152)
(Decrease) increase in unrealized
appreciation (20,760,177} 12,652,444
----------- -----------
(Decrease) increase in net assets
resulting from operations (3,031,629) 27,501,884
----------- -----------
Distributions to shareholders from:
Net investment income (24,794,117) (15,220,591)
----------- -----------
Fund share transactions:
Net proceeds from shares sold 166,022,617 315,515,173
Value of shams issued in
reinvestment of distributions 16,164,567 9,702,027
Cost of shares repurchased (115,770,198) (29,734,640)
------------ -----------
Increase in net assets derived
from Fund share transactions 66,416,986 295,482,560
------------ -----------
Increase in net assets 38,591,240 307,763,853
Net assets:
Beginning of year 457,860,342 150,096,489
------------ ------------
End of year (including undistributed
net investment income $236,382 --
1994 and ($19,974) - 1993) $496,451,582 $457,860,342
------------ ------------
See accompanying notes to financial statements.
-49-
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
The Limited Term New York Municipal Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements:
SECURITY VALUATION AND TRANSACTIONS. Investments are valued at market value
using information available from an approved pricing service, quotations from
bond dealers, market transactions in comparable securities, and various
relationships between securities. Security transactions are accounted for on the
trade date. Cost is determined and realized gains and losses are based upon the
specific identification method for both financial statement and federal income
tax purposes. Interest income is recorded on the accrual basis. In computing net
investment income, the Fund amortizes premiums and accretes original issue
discount. For municipal bonds purchased after April 30, 1993 and subsequently
sold at a gain, market discount is accreted at the time of sale (to the extent
of the lesser of the accrued market discount or the disposition gain) and is
treated as taxable income, rather than capital gain.
SECURITIES PURCHASED ON A WHEN ISSUED BASIS. The Fund may purchase portfolio
securities on a when issued or delayed delivery basis. These securities have
been registered by a municipality or government agency, but have not been issued
to the public. The Fund may contract to purchase these securities in advance of
issuance. Delivery of the security and payment therefor may take place a month
or more after the date of the transaction. At the time of purchase, the Fund
sets aside sufficient investment securities as collateral to meet such purchase
commitments. Such securities are subject to market fluctuations during this
period. The current value of these securities is determined in the same manner
as for other portfolio securities.
DISTRIBUTIONS TO SHAREHOLDERS. Income dividends are declared and recorded daily
by the Fund and are distributed to shareholders monthly. Capital gain
distributions, if any, are recorded on the ex-dividend date and paid annually.
FEDERAL INCOME TAXES. During any particular year, the Fund is required to
distribute certain minimum mounts of net realized capital gains and net
investment income in order to avoid a federal income or excise tax. It is the
Fund's Intention to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable and tax-exempt income to shareholders. Therefore, the Fund was not
required to record a liability for either federal income or excise tax.
DEFERRED ORGANIZATIONAL EXPENSES. The Fund was organized under the laws of
Massachusetts in September, 1991. Deferred organizational expenses in the amount
of $50,000 are being amortized on a straight-line basis over a five year period
ending September, 1996.
RECLASSIFICATION OF CAPITAL ACCOUNTS. In 1993, the Fund adopted the provisions
of Statement of Position 93-2 "Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies" (SOP). The SOP requires the Fund to report the
undistributed net investment income (accumulated loss) and accumulated net
realized gain (loss) accounts in such a manner as to approximate amounts
available for future tax distributions (or to offset future realized capital
gains). The implementation of the SOP did not have a significant impact on the
Fund.
OTHER. There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
NOTE 2. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATED PARTIES:
Ronald H. Fielding, President and a trustee of the Fund, is also an officer,
director and controlling shareholder of Rochester Fund Distributors, Inc.
(RFD), the Fund's principal underwriter and an officer, director and controlling
shareholder of Rochester Fund Services, Inc. (RFS), the Fund's shareholder
servicing, accounting and pricing agent. The Fund's investment adviser is
Rochester Capital Advisors, L.P. (RCA, L.P.). RCA, L.P. is managed by Rochester
Capital Advisors, Inc. (RCA), which serves as the general partner of RCA, L.P.
Mr. Fielding is President, director and controlling shareholder of RCA.
-50-
<PAGE>
The management fee payable to RCA, L.P. is based on an annual rate of .50% of
average daily net assets up to $100 million, .45% of average daily net assets on
the next $150 million, .40% of average daily net assets in excess of $250
million but less than $2 billion, and .39% of average daily net assets in excess
of $2 billion. For the year ended December 31, 1994, RCA, L.P. received fees of
$2,154,234 for management and investment advisory services.
The affiliated payable of $17,083 is due to Fielding Management Company, Inc.
(FMC), the Fund's previous investment adviser, and relates to organizational
expenses paid by FMC on behalf of the Fund. These expenses will be reimbursed
to FMC over a five year period ending September, 1996.
For the year ended December 31, 1994, RFD purchased shares from the Fund at net
asset value to fill orders received from dealers and retained net underwriting
discounts of $211,300. The Fund has adopted a distribution plan pursuant to Rule
12b-1 of the Investment Company Act of 1940, as amended, which permits the Fund
to pay up to .25% per annum of its average daily net assets as a service fee in
connection with the maintenance of shareholder accounts. For the year ended
December 31, 1994, the Fund paid distribution fees of $1,237,020 to RFD. From
this amount, RFD made service fee payments of $1,221,579 to broker dealers and
financial institutions.
For the year ended December 31, 1994, RFS received $406,122 in shareholder
servicing agent, pricing and accounting fees from the Fund. The shareholder
servicing agent fee charged by RFS to the Fund is based on a monthly maintenance
fee of $2.01 for each shareholder account. During 1994, the Fund was charged
$150,500 for pricing and accounting services.
During 1994, the Fund directly sold to and purchased from Rochester Fund
Municipals, an affiliated investment company, investments at market value in the
amount of $28,188,218 and $9,573,313, respectively. There were no commissions or
other charges associated with these transactions.
NOTE 3. PORTFOLIO INFORMATION:
Purchases at cost and proceeds from sales of investment securities for the year
ended December 31, 1994 were $249,590,913 and $168,132,088, respectively.
During 1994, 12.12% of interest income was derived from investments in U.S.
territories which are exempt from federal, all states and New York City income
taxes.
The aggregate gross unrealized appreciation and depreciation, and net unrealized
depreciation of investment securities based on cost of securities for federal
income tax purposes, were $3,633,883, $9,202,151 and $5,568,268, respectively.
The aggregate tax cost of investments owned as of December 31, 1994 was
$504,267,522.
At December 31, 1994, capital loss carryovers available (to the extent provided
in regulations) to offset future realized gains were approximately as follows:
Year of Expiration Capital Loss Carryover
------------------ ----------------------
1999 $ 3,000
2000 167,000
2001 353,600
2002 7,294,000
----------
$7,817,600
==========
The availability of these loss carryovers may be limited in a given year but
will be used to the extent possible to offset any future realized gains.
-51-
<PAGE>
In March, 1994, the Fund entered into a conditional contract to purchase a total
of $11,995,000 of Islip Resource Recovery Series D Refunding Bonds as detailed
below:
Face
Amount Coupon Maturity
------ ------ --------
$ 635,000 5.45% 1996
1,650,000 5.45% 1997
1,740,000 5.45% 1998
1,835,000 5.45% 1999
1,935,000 5.60% 2000
2,040,000 5.75% 2001
2,160,000 5.85% 2002
-----------
$11,995,000
===========
The bonds will be issued and delivered on August 15, 1995 if the following terms
and conditions are met: 1) Counsel must render opinions that the interest on the
Series D bonds is exempt for federal income tax purposes and is not a tax
preference item for the purposes of computing alternative minimum tax and
2) AMBAC Indemnity Corporation must still have an AAA rating from at least one
Nationally Recognized Securities Rating Organization (NRSRO) at the time they
issue their insurance policy on the bonds. The Fund has not recorded this
commitment as of December 31, 1994, due to the uncertainties relating to the
aforementioned terms and conditions with respect to this bond issuance; however,
the Fund has segregated sufficient investment securities to cover the potential
commitment.
NOTE 4. BANK BORROWINGS:
The Fund has available a $12,000,000 unsecured line of credit with a bank.
Borrowings are payable on demand and bear interest at the bank's prime rate.
The Fund had borrowings of $7,797,300 outstanding at December 31, 1994. For the
year ended December 31, 1994, the average monthly loan balance was $3,069,882 at
a weighted average interest rate of 7.15%. The maximum mount of borrowing
outstanding at any month-end was $10,105,200.
NOTE 5. SHARES OF BENEFICIAL INTEREST:
The Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest, par value $.01 per share. Transactions
in capital stock were as follows:
Year ended December 31, 1994 1993
----------------------- ---- ----
Shares sold 51,295,766 96,223,147
Shares issued on reinvestment of
distributions 5,032,266 2,939,939
Shares repurchased (36,116,865) (9,042,065)
------------ -----------
Net increase in shares outstanding 20,211,167 90,121,021
Shares outstanding, beginning of
year 137,294,337 47,173,316
------------ -----------
Shares outstanding; end of year 157,505,504 137,294,337
============ ===========
52
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Period September 18
Year ended December 31, through December 31,
------------------------ ------------------------
1994 1993 1992 1991 **
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 3.33 $ 3.18 $ 3.07 $ 3.00
-------- -------- -------- ---------
Income from investment operations:
Net investment income O.16 O.17 O.18 + 0.05
Net realized and unrealized gain
(loss) on investments (0.18) 0.15 0.11 0.07
-------- -------- -------- -------
Total from investment operations (0.02) 0.32 0.29 O.12
-------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.16) (0.17) (0.18) (0.05)
Distributions from capital gains -- -- -- --
Returns of capital -- -- -- --
Total distributions (0.16) (0.17) (0.I8) (0.05)
-------- -------- -------- -------
Net asset value, end of period $ 3.15 $ 3.33 $ 3.18 $ 3.07
======== ======== ======== =======
Total return (excludes sales load) (0.60%) 10.06% 9.45% 17.47% *
Ratios/supplemental data:
Net assets, end of period (000 omitted) $496,452 $457,860 $150,096 $18,659
Ratio of total expenses to
average net assets 0.89% 0.89% 0.83% + 0.83% *
Ratio of total expenses (excluding
interest) to average net assets*** 0.84% 0.86% 0.78% + 0.74% *
Ratio of net investment income to
average net assets 5.12% 4.94% 533% + 5.22% *
Portfolio turnover rate 34.58% 17.08% 59.87% 1.42%
</TABLE>
- ------------------------
+ Net of fees waived or reimbursed by Fielding Management Company, Inc., the
Fund's previous investment adviser, and Rochester Fund Services, Inc.,
which amounted to $0.01 per share. Without reimbursement, the ratios would
have been 1.14%, 1.09%, and 5.02%, respectively.
* Annualized.
** The Fund commenced operations on September 18, 1991.
*** During the periods shown above, the Fund's interest expense was offset by
the incremental interest income generated by bonds purchased with borrowed
funds.
-53-
<PAGE>
APPENDIX A
DESCRIPTION OF MUNICIPAL SECURITIES RATINGS
STANDARD & POOR'S RATING GROUP
A brief description of the applicable Standard & Poor's Corporation rating
symbols and their meanings (as published by Standard & Poor's Corporation)
follows:
A Standard & Poor's corporate or municipal debt rating is a current assessment
of the creditworthiness of an obligator with respect to a specific debt
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer and
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
Long-Term Municipal Bonds
AAA Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small
degree.
A Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
-A1-
<PAGE>
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
BB-D Debt rated "BB", "B", "CCC" and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. "BB"
indicates the lowest degree of speculation and "CC" the highest degree
of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions. The "C" is reserved for
income bonds on which no interest is being paid. Debt rated "D" is in
default, and payment of interest and/or repayment of principal is in
arrears.
Plus (+) or minus (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "P" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investors should
exercise his own judgement with respect to such likelihood and risk.
Short-Term Tax-Exempt Notes
Standard & Poor's tax exempt note ratings are generally given to such notes that
mature in three years or less. The three rating categories are as follows:
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 interest.
SP-3 Speculative capacity to pay principal and interest.
Tax-Exempt Commercial Paper
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
165 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. The four categories are as
follows:
A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further
refined with the designation 1,
-A2-
<PAGE>
2, and 3 to indicate the relative degree of safety. These issues
determined to posses overwhelming safety characteristics are denoted
with a plus (+) sign designation.
A-1 This designation indicates that the degree of safety regarding timely
payment is very strong.
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3 Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying
the higher designation.
B Issues rated "B" are regarded as having only an adequate capacity for
timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.
C & D These ratings indicate that the issue is either in default or
expected to be in default upon maturity.
MOODY'S INVESTORS SERVICE, INC.
A brief description of the applicable Moody's Investors Service, Inc. rating
symbols and their meanings follow:
Long-Term Municipal Bonds
Aaa Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge". 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 more unlikely to impair the fundamentally strong
position of such issues. With the occasional exception of oversupply in
a few specific instances, the safety of obligations of this class is so
absolute that their market value is affected solely by money market
fluctuations.
Aa 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. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuations of protective elements may be of greater amplitude or
there may be other elements present which make the one-term risks
appear somewhat larger than the Aaa securities. These Aa bonds are high
grade, their market value virtually immune to all but money market
fluctuations.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as higher medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a
-A3-
<PAGE>
susceptibility to A-rated bonds may be influenced to some degree by
credit circumstances during a sustained period of depressed business
conditions. During periods of normalcy, bonds of this quality
frequently move in parallel with Aaa and Aa obligations, with the
occasional exception of oversupply in a few specific instances.
Baa Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments but certain protective elements may be
lacking or may be characteristically unreliable or over any great
length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well. The market value
of Baa-rated bonds is more sensitive to change in economic
circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic normalcy,
except in instances of oversupply.
Ba-C Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often, the protection of
interest and principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. Bonds which
are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small. Bonds
which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings. Bonds which are rated C are the lowest rated
of bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Moody's bond rating symbols may contain numerical modifiers of a generic rating
classification. The modifier 1 indicates that the bond ranks at the high end of
its 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.
Con. Bonds for which the security depends upon the completion of some act or
the fulfillment of some conditions are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operating experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit status upon completion of construction or elimination
of basis of condition.
Short-Term Tax-Exempt Notes
The four ratings of Moody's for short-term notes are MIG 1, MIG 2, MIG 3, and
MIG 4; MIG 1 denotes "best quality, enjoying strong protection from established
cash flows"; MIG 2 denotes "high quality" with "ample margins of protection";
MIG 3 notes are of "favorable quality... but lacking the undeniable strength of
the preceding grades"; MIG 4 notes are of "adequate quality, carrying specific
risk but having protection...and not distinctly or predominantly speculative".
-A4-
<PAGE>
Tax-Exempt Commercial Paper
Moody's commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:
Issuers rated Prime 1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime 2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations.
Issuers rated Prime 3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
FITCH INVESTORS SERVICE, INC.
A brief description of the applicable Fitch Investors Service rating symbols and
their meanings follow:
Long Term Municipal Bonds
AAA Bonds considered to be investment grade and 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.
AA Bonds considered to be investment grade and of very high quality. "The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bond rating "AAA".
A Bonds considered to be investment grade and of high 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 bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have an adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB-C BB bonds are considered speculative. The obligor's ability to pay interest
and repay principal
-A5-
<PAGE>
may be affected over time by adverse economic changes, however, business and
financial alternatives can be identified which could assist the obligor in
satisfying debt service requirements. B bonds are considered highly speculative.
While debt service payments are currently being met, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety. CCC bonds have certain identifiable characteristics
which, if not remedied, may lead to default; CC bonds are minimally protected
and default in payment of interest and/or principal seems probable over time;
C bonds are in imminent default in payment of interest or principal.
DDD Bonds rated DDD, DD, D are in default on interest and/or principal
payments. Such bonds are extremely speculative. "DDD" represents the highest
probability for recovery on these bonds, "D" represents the lowest probability
for recovery
Plus (+) Minus(-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs are not used in the "AAA", "DDD", "DD", or "D" categories.
Conditional: A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
-A6-
