Registration No. 33-41511
File No. 811-6332
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 10 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 10 / X /
ROCHESTER PORTFOLIO SERIES
------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
350 LINDEN OAKS, ROCHESTER, NEW YORK 14625
------------------------------------------------------------------------
(Address of Principal Executive Offices)
800-552-1149
------------------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On May 1, 1997 pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On ___________, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On _______, pursuant to paragraph (a)(2)of Rule 485.
- -------------------------------------------------------------------
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940. A Rule 24f-2 Notice for the Registrant's fiscal year ended
December 31, 1996 was filed on February 27, 1997.
<PAGE>
FORM N-1A
ROCHESTER PORTFOLIO SERIES
Cross Reference Sheet
-------------------------
Part A of
Form N-1A
Item No. Prospectus Heading
- ---------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes; How the Fund is
Managed -- Organization and History; The Transfer Agent
7 How to Exchange Shares; Special Investor Services; Service
Plan for Class A shares; Distribution and Service Plan
for Class B Shares; Distribution and Service Plan for
Class C Shares; How to Buy Shares; How to Sell Shares;
Shareholder Account Rules and Policies
8 How to Sell Shares; How to Exchange Shares; Special
Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information or
- ---------- ----------------------------------------------------
Prospectus
----------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Other Investment Restrictions
14 How the Fund is Managed -- Trustees and Officers of the
Fund
15 How the Fund is Managed -- Major Shareholders
16 How the Fund is Managed; Additional Information about the
Fund; Distribution and Service Plans; Back Cover
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your Account -- How to Buy Shares, How to Sell
Shares, How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Additional Information about the
Fund - The Distributor; Distribution and Service Plans
22 Performance of the Fund
23 Financial Statements
- ---------------
*Not applicable or negative answer.
<PAGE>
(five LIMITED TERM
bar NEW YORK
logo) MUNICIPAL FUND
Prospectus dated May 1, 1997
Rochester Portfolio Series is mutual fund consisting of one portfolio, Limited
Term New York Municipal Fund. The Fund's investment objective 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 seeks to achieve
this objective by investing 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.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it for
future reference. You can find more detailed information about the Fund in the
May 1, 1997 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
[logo]OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-1-
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Policies and Strategies
Investment Risks
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How To Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class X Shares
Special Investor Services
AccountLink
Shareholder Transactions by Fax
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
How To Sell Shares
By Mail
By Telephone
By Checkwriting
How To Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge and Purchase
Arrangements for Class A and Class X Shareholders
Appendix B: Special Sales Charge Arrangements
-2-
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services, and those
expenses are subtracted from the Fund's assets to calculate the Fund's net asset
value per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the Fund's
business operating expenses that you will bear indirectly.
The calculations for Class A shares and Class X shares are based on the
Fund's expenses for those classes during its fiscal year ended December 31,
1996. On May 1, 1997 the Fund redesignated as "Class X shares" its Class B
shares which had been outstanding prior to that date. It also authorized the
issuances of new classes of shares ("Class B shares" and "Class C shares") and
revised the sales charge schedule for Class A shares. The information for Class
B shares and Class C shares has been estimated based upon expenses expected to
be incurred through December 31, 1997.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account," for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class X
Shares Shares Shares Shares(1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge
on Purchase (as a % of
offering price) 3.50% None None None
- -------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales None(3) 4.0% in the 1% if shares 2.5% in the
Charge (as a % of the first year are redeemed first year
lower of the original declining within 12 declining
offering price or to 1% in months of to 1% in
redemption proceeds) the fifth purchase(2) the fourth
year and year and
eliminated eliminated
thereafter(2) thereafter
- --------------------------------------------------------------------------------------------------------------------------------
-3-
<PAGE>
Maximum Sales Charge
on Reinvested Dividends None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Redemption Fee None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) See "How to Buy Shares - Buying Class X Shares" for more information on
buying Class X Shares and the contingent deferred sales charge.
(2) See "How to
Buy Shares - Buying Class B Shares," and "How to Buy Shares - Buying Class C
Shares" below for more information on the contingent deferred sales charge.
(3)
If you invest $1 million or more in Class A shares, you may have to pay a sales
charge of up to 1% if you sell your shares within 12 calendar months (18
calendar months for shares purchased prior to May 1, 1997) from the end of the
calendar month during which you purchased those shares. See "How to Buy Shares -
Buying Class A Shares" below.
</FN>
</TABLE>
o Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment adviser, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed" below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
Class A Class B Class C Class X
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Management Fees 0.43% 0.43% 0.43% 0.43%
- ----------------------------------------------------------------------------------------------------------------------------
12b-1 Plan Fees(1) 0.25% 1.00% 1.00% 0.75%
- ----------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.21% 0.20% 0.20% 0.20%
- ----------------------------------------------------------------------------------------------------------------------------
-4-
<PAGE>
Total Fund Operating Expenses 0.89%(2) 1.63% 1.63% 1.38%(2)
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The 12b-1 Plan Fees for Class A shares are the service plan fees (which can
be up to a maximum of 0.25% of average annual net assets of that class), and for
Class B and Class C shares, are the service plan fees (which can be up to a
maximum of 0.25% of average annual net assets of the class) and the asset-based
sales charge of 0.75%. The 12b-1 fees for Class X shares are the service plan
fees (which can be up to a maximum of 0.25% of average annual net assets of the
class) and the asset-based sales charge of 0.50%. Although the Fund's
Distribution and Service Plan for Class X shares permits the payment of an
asset-based sales charge of up to 0.75% of average daily net assets attributable
to Class X shares per annum, the Board of Trustees has authorized payment of an
asset-based sales charge of only 0.50%. See "How to Buy Shares" for descriptions
of these plans.
(2) During the fiscal year ended December 31, 1996, Total Fund
Operating Expenses (including interest expense) were 0.89% and 1.38% for Class A
shares and Class X shares, respectively. During that period, Total Fund
Operating Expenses (excluding interest expense) were 0.83% and 1.32% for Class A
shares and Class X shares, respectively. During fiscal 1996, the Fund's interest
expense was substantially offset by the incremental interest income generated on
bonds purchased with borrowed funds.
</FN>
</TABLE>
The numbers in the table above with respect to Class A shares and
Class X shares are shown as a percentage of the average net assets of each class
of the Fund's shares for the fiscal year ended December 31, 1996. The expenses
shown for Class B shares and Class C shares are estimates since those classes
were not outstanding during fiscal year ended December 31, 1996.
The actual expenses for each class of shares in future years may be
more or less than the numbers in the above table, depending on a number of
factors, including the actual value of the Fund's assets represented by each
class of shares.
o Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of the Fund,
and that the Fund's annual return is 5%, and that its operating expenses for
each class are the ones shown in the Annual Fund Operating Expenses table above.
If you were to redeem your shares at the end of each period shown below, your
-5-
<PAGE>
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $44 $62 $83 $141
Class B Shares $54 $64 $86 $140
Class C Shares $27 $51 $89 $193
Class X Shares $39 $59 $76 $140
</TABLE>
If you did not redeem your investment, it would incur the following expenses:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $44 $62 $83 $141
Class B Shares $14 $44 $76 $140
Class C Shares $17 $51 $89 $193
Class X Shares $14 $44 $76 $140
</TABLE>
* In the first example, expenses include the Class A initial sales charge of
3.50% and the applicable Class B, Class C or Class X contingent deferred sales
charge. In the second example, Class A expenses include the initial sales
charge, but Class B, Class C and Class X expenses do not include contingent
deferred sales charges. The Class B and Class X expenses in years 7 through 10
are based on the Class A expenses shown above, because the Fund automatically
converts your Class B and Class X shares into Class A shares after 6 years.
Because of the effect of the asset-based sales charge and the contingent
deferred sales charge on Class B, Class C and Class X shares, long-term Class B,
Class C and Class X shareholders could pay the economic equivalent of more than
the maximum front-end sales charge allowed under applicable regulations. For
Class B and Class X shareholders, the automatic conversion of Class B and Class
X shares into Class A shares is designed to minimize the likelihood that this
will occur. Please refer to "How to Buy Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment returns of
the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
-6-
<PAGE>
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus before
making a decision about investing in the Fund. Keep the Prospectus for reference
after you invest, particularly for information about your account, such as how
to sell or exchange shares.
o What Is The Fund's Investment Objective? The Fund's investment
objective 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.
There can be no assurance that the investment objective of the Fund will be
realized.
o What Does The Fund Invest In? The Fund seeks to achieve its
objective by investing primarily in a portfolio of investment grade obligations
with a dollar weighted average effective maturity of five years or less. These
obligations are 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 Manager 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.
o Who Manages The Fund? The Fund's investment adviser is
OppenheimerFunds, Inc. The Manager (including subsidiaries) advises investment
company portfolios having assets of more than $60 billion at March 31, 1997. The
Manager is paid an advisory fee by the Fund, based on its assets. The Fund's
portfolio manager, who is employed by the Manager, is primarily responsible for
the selection of the Fund's securities. The portfolio manager is Ronald H.
Fielding. The Fund's Board of Trustees, which is elected by shareholders,
oversees the investment adviser and the portfolio manager. Please refer to "How
The Fund Is Managed," starting on pay 18 for more information about the Manager
and its fees.
o How Risky Is The Fund? All investments carry risks to some
-7-
<PAGE>
degree. The Fund's bond investments are subject to change in their value from a
number of factors such as change in general bond market movements, the change in
value of particular bonds because of an event affecting the issuer, or changes
in interest rates that can affect bond prices. These changes affect the value of
the Fund's investments and its price per share. As a non-diversified fund, the
Fund may invest a greater portion of its assets in the securities of a limited
number of issuers than a diversified fund. While the Manager tries to reduce
risks by structuring the Fund's portfolio to include a broad spectrum of
Municipal Obligations and by carefully researching securities before they are
purchased by the portfolio, there is no guarantee of success in achieving the
Fund's objective and your shares may be worth more or less than their original
cost when you redeem them. The Fund may borrow money from banks in amounts up to
10% of its total assets to purchase additional securities. Borrowing for
investment purposes is a speculative investment technique known as "leveraging."
This investment technique may subject the Fund to greater risks and costs,
including the burden of interest expense, an expense the Fund would not
otherwise incur. Please refer to "Investment Objective and Policies" starting on
page 11 and "Investment Risks" starting on page 15 for a more complete
discussion.
o How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How to Buy Shares" starting on page 25
for more details.
o Will I Pay A Sales Charge To Buy Shares? The Fund has four classes
of shares. All classes have the same investment portfolio, but different
expenses. Class A shares are offered with a front-end sales charge, starting at
3.50%, and reduced for larger purchases. Class B, Class C and Class X shares are
offered without a front-end sales charge, but are subject to a contingent
deferred sales charge if redeemed within 5 years (Class B shares) 4 years (Class
X shares) or 12 months (Class C shares) of purchase. There is also an annual
asset-based sales charge on Class B, Class C and Class X shares. Please review
"How To Buy Shares" for more details, including a discussion about factors you
and your financial adviser should consider in determining which class may be
appropriate for you.
o How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
-8-
<PAGE>
through your dealer. Please refer to "How to Sell Shares." The Fund also offers
exchange privileges to other Oppenheimer funds, described in "How to Exchange
Shares" starting on page 41.
o How Has The Fund Performed? The Fund measures its performance by
quoting its yield and total returns, which measure historical performance. Those
yields and returns can be compared to the yields and returns (over similar
periods) of other funds. Of course, other funds may have different objectives,
investments, and levels of risk. The Fund's performance can also be compared to
both municipal bond market and non-securities market indices which we have done
on page 24. Please remember that past performance does not guarantee future
results. See "Performance of the Fund."
Financial Highlights
The table on the following pages presents selected financial information about
the Fund, including per share data and expense ratios and other data based on
the Fund's average net assets. This information has been audited by Price
Waterhouse LLP, the Fund's independent auditors, whose report on the Fund's
financial statements for the fiscal year ended December 31, 1996, is included in
the Statement of Additional Information. On May 1, 1997, the Fund redesignated
as "Class X shares" its Class B shares which had been outstanding prior to that
date. Class B and Class C shares were not publicly offered during any of the
periods shown. Accordingly, information on these classes of shares is not
included for any of the years in the table below or in the Fund's other
financial statements.
-9-
<PAGE>
<TABLE>
<CAPTION>
Class A
Year Ended December 31,
-----------------------------------------------------------------
1996(8) 1995 1994 1993 1992(2) 1991(1)
---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $3.28 $3.15 $3.33 $3.18 $3.07 $3.00
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 .18 .16 .17 .18 .05
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) (.02) .13 (.18) .15 .11 .07
- ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .15 .31 (.02) .32 .29 .12
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.17) (.18) (.16) (.17) (.18) (.05)
- --------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.17) (.18) (.16) (.17) (.18) (.05)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $3.26 $3.28 $3.15 $3.33 $3.18 $3.07
- --------------------------------------------------------------------------------------------------------------------------
Total Return, at
Net Asset Value(3) 4.82% 10.01% (0.60%) 10.06% 9.45% 4.05%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of
period (in thousands) $634,172 $567,537 $496,452 $457,860 $150,096 $ 18,659
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $606,742 $520,990 $491,038 $309,676 $ 72,743 $ 8,407
- ----------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net investment income 5.37% 5.44% 5.12% 4.94% 5.33% 5.22%(4)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses(5) 0.89% 0.90% 0.89% 0.89% 0.83% 0.83%(4)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses (excluding
interest)(5)(6) 0.83% 0.84% 0.84% 0.86% 0.78% 0.74%(4)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 24.35% 22.34% 34.58% 17.08% 59.87% 1.42%
- ---------------------------------------------------------------------------------------------------------------------------
-10-
<PAGE>
<FN>
(1) The Fund commenced operations on September 18, 1991. (2) Net of fees waived
or reimbursed by Fielding Management Company, Inc., (the former manager), and
Rochester Fund Services, Inc., (the former shareholder servicing, accounting and
pricing agent), which amounted to $0.01 per share. Without reimbursement, the
ratios would have been 5.02%, 1.14% and 1.09%, respectively. (3) Assumes a
hypothetical initial investment on the business day before the first day of the
fiscal period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year. (4) Annualized. (5) Beginning in fiscal
1995, the expense ratios reflect the effect of gross expenses paid indirectly by
the Fund. Prior year expense ratios have not been adjusted. (6) 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.
(7) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1996 were $256,486,227 and $153,521,279, respectively. (8) On
January 4, 1996, OppenheimerFunds, Inc. acquired substantially all of the assets
of Rochester Capital Advisors, L.P. and certain affiliates and was appointed
investment adviser to the Fund. Rochester Capital Advisors, L.P. served as
investment adviser to the Fund from December 20, 1993 through January 4, 1996.
Fielding Management Company, Inc. served as investment adviser to the Fund from
September 18, 1991 to December 19, 1993.
</FN>
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Class X
Year Ended Period Ended
December 31, December 31,
1996(8) 1995(9)
-------------- ----------------
<S> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $3.28 $3.21
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .11
- --------------------------------------------------------------------------------
Net realized and
unrealized gain (loss) (.01) .07
- --------------------------------------------------------------------------------
Total income from
investment operations .15 .18
- --------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.16) (.11)
- --------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.16) (.11)
- --------------------------------------------------------------------------------
Net asset value,
end of period $3.27 $3.28
- --------------------------------------------------------------------------------
Total return, at
Net Asset Value(3) 4.59% 5.65%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of
period (in thousands) $40,828 $16,415
- --------------------------------------------------------------------------------
Average net assets
(in thousands) $28,971 $ 8,869
- --------------------------------------------------------------------------------
Ratio to average net assets:
Net investment income 4.85% 5.21%(4)
- --------------------------------------------------------------------------------
Expenses(5) 1.38% 0.90%(4)
- --------------------------------------------------------------------------------
Expenses (excluding
interest)(5)(6) 1.32% 0.85%(4)
- --------------------------------------------------------------------------------
Portfolio turnover rate(7) 24.35% 22.34%
- --------------------------------------------------------------------------------
-12-
<PAGE>
<FN>
(3) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in total returns. Total returns
are not annualized for periods of less than one full year.
(4) Annualized.
(5) Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not be
adjusted. (6) 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. (7) The lesser of purchases or sales of portfolio
securities for a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are excluded from
the calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended December 31, 1996 were $256,486,227
and $153,521,279, respectively. (8) On January 4, 1996, OppenheimerFunds, Inc.
acquired substantially all of the assets of Rochester Capital Advisors, L.P. and
certain affiliates and was appointed investment adviser to the Fund. Rochester
Capital Advisors, L.P. served as investment adviser to the Fund from December
20, 1993 through January 4, 1996. (9) For the period May 1, 1995 (inception of
offering) to December 31, 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Information On Bank Loans
Periods Ended December 31,
------------------------------------------------------------
1996 1995 1994 1993 1992 1991*
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Amount of debt outstanding
at end of period
(in thousands) $9,000 $4,660 $7,797 $ 934 $ --- $ ---
- --------------------------------------------------------------------------------------------
Average amount of debt
outstanding throughout
each period
(in thousands) $6,352 $4,345 $3,070 $1,383 $ 661 $ 94
- -------------------------------------------------------------------------------------------
Average number of shares
outstanding throughout
-13-
<PAGE>
each period (in thousands) 195,866 163,398 151,481 93,580 23,330 2,461
- ---------------------------------------------------------------------------------------------
Average amount of debt
per share outstanding
throughout each period $ .03 $ .03 $ .02 $ .01 $ .03 $ .04
- ---------------------------------------------------------------------------------------------
* The Fund commenced operations on September 18, 1991.
</TABLE>
-14-
<PAGE>
Investment Objective and Policies
Objective. 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. 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 a
portfolio of investment grade obligations with a dollar weighted average
effective maturity of five years or less. These obligations are 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 Manager 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.
Can the Fund's Investment Objective and Policies Change? Except as otherwise
noted, the Fund's investment objective and policies described herein are not
designated fundamental policies and may be changed without the vote of
shareholders. 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
Statement of Additional Information for a more detailed discussion of the Fund's
fundamental policies.
Investment Policies and Strategies
o 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
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paper). Municipal bonds, which meet longer term capital needs, generally have
maturities of more than one year. The two principal classifications of municipal
bonds in which the Fund may invest are "general obligation" bonds and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of 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 preference item for purposes of the
Federal alternative minimum tax). See "Dividends, Capital Gains and Taxes."
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 Statement
of Additional Information describes the Municipal Obligations in which the Fund
may invest in greater detail.
o Credit Quality. The Fund invests at least 95% of its 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, although unrated, 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 Manager to be of comparable investment quality to
rated securities meeting the foregoing rating criteria.
The remaining 5% of the Fund's assets, which are invested in Municipal
Obligations, may be invested in tax-exempt obligations which are rated below
investment grade or are unrated and of
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comparable quality to such 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, corporation ("S&P" or "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 Manager, is of comparable quality
to rated securities below such ratings. For a description of such ratings, see
Appendix C to the Statement of Additional Information.
o 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 specified lending
rate, such as the prime rate, and are automatically adjusted when the specified
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. 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.
o When-Issued and Delayed Delivery Transactions. 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 identify with its
custodian, certain assets, which may consist of liquid assets of any type,
including debt securities of any grade, 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
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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.
o 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 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
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substantially similar to bonds with stated maturity dates identical to the
effective maturity date.
o 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 total 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 total 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.
o 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 "Concentration in New York Municipal Securities."
o 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.
o 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
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<PAGE>
acquisition may be invested in Illiquid Securities. The Manager monitors
holdings of illiquid securities on an ongoing basis and at times the Fund may be
required to sell some holdings to maintain adequate liquidity.
Such investments may include municipal lease obligations or installment
purchase contract obligations (herein collectively 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. The Fund may invest up to 15% of the value of its net
assets in such municipal leases. Investments in tax-exempt municipal leases
which have received an investment grade rating from an NRSRO and which have been
determined to be liquid by the Manager are excluded from the 15% limitation on
investments in municipal leases and the overall 15% limitation on investments in
Illiquid Securities.
The Board of Trustees has adopted guidelines to be utilized by the
Manager in making determinations concerning the liquidity and valuation of a
municipal lease obligation. See the Statement of Additional Information for a
description of the guidelines which will be utilized by the Manager 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 canceled.
o Borrowing for Leverage. As a fundamental policy, the Fund may borrow
money, but only from banks, in amounts up to 10% of its total assets to purchase
additional securities. Borrowing for investment purposes increases both
investment opportunity and investment risk. Leveraging, or the purchase of
securities with borrowed funds, may exaggerate any increase or decrease in the
market value of the Fund's portfolio securities. 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. The Fund can borrow only if it maintains a 300%
ratio of assets to borrowings at all times in the manner set forth in the
Investment Company Act of 1940, as amended, (the "Investment Company Act").
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<PAGE>
o Other Investment Techniques and Strategies. The Fund may also use
additional investment techniques and strategies. Descriptions of these
techniques and strategies are in the Fund's Statement of Additional Information,
including limitations on their use that are designed to reduce some of the
risks.
Unless the Prospectus states that a percentage restriction applies on
an ongoing basis, it applies only at the time the Fund makes an investment, and
the Fund need not sell securities to meet the percentage limits if the value of
the investment increases in proportion to the size of the Fund. Other investment
restrictions are listed in "Other Investment Restrictions" in the Statement of
Additional Information.
Investment Risks
All investments carry risks to some degree, whether they are risks that market
prices of the investment will fluctuate (this is known as "market risk") or that
the underlying issuer will experience financial difficulties and may default on
its obligation under a fixed-income investment to pay interest and repay
principal (this is referred to as "credit risk"). These general investment
risks, and the special risks of certain types of investments that the Fund may
hold are described below. They affect the value of the Fund's investments, its
investment performance, and the prices of its shares. These risks collectively
form the risk profile of the Fund.
While the Manager tries to reduce risks by carefully researching
securities before they are purchased, and in some cases by using hedging
techniques, changes in overall market prices can occur at any time, and because
the income earned on securities is subject to change, there is no assurance that
the Fund will achieve its investment objective. When you redeem your shares,
they may be worth more or less than what you paid for them.
o Concentration in New York Municipal Obligations. Because the Fund, as
a fundamental policy, will invest at least 95% of its net assets in obligations
of New York State, its municipalities, agencies and instrumentalities, 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. Investors should consider these matters and the
financial difficulties experienced in past years by New York State and certain
of its agencies and subdivisions
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<PAGE>
(particularly New York City), as well as economic trends in New York, summarized
in the Statement of Additional Information under "Investment Considerations/Risk
Factors: Special Investment Considerations - New York Municipal Securities." In
addition, the Fund's portfolio securities are affected by general changes in
interest rates, which result in changes in the value of portfolio securities
held by the Fund, which can be expected to vary inversely to changes in
prevailing interest rates.
o Credit Quality. In general, the assets of the Fund will be invested
so that at least 95% of the Fund's net assets will consist of tax-exempt
securities. Shareholders will not be subject to regular Federal income tax or
New York State and New York City personal income taxes on distributions of
tax-exempt income derived from 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, may 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.
At least 95% of the Fund's assets invested in Municipal Obligations
will be of 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 but comparable quality, the Fund is dependent on the Manager'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 Manager 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
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<PAGE>
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 Manager will attempt to reduce the risks inherent in
investments in such obligations through active portfolio management, structuring
the portfolio to include a broad spectrum of municipal securities, credit
analysis and attention to current developments and trends in the economy and the
financial markets.
o Interest Rate Risk. The values of Municipal Securities will vary as a
result of changes in interest rates. Should interest rates rise, the values of
outstanding Municipal Securities will probably decline and (if purchased at
principal amount) would sell at a discount. If interest rates fall, the values
of outstanding Municipal Securities will probably increase and (if purchased at
principal amount) would sell at a premium. Changes in the values of the Fund's
Municipal Securities from these or other factors will not affect interest income
derived from these securities but will affect the Fund's net asset value per
share.
o Borrowing for Leverage. Borrowing for investment purposes increases
both investment opportunity and investment risk. Leveraging, or the purchase of
municipal securities with borrowed funds, may exaggerate any increase or
decrease in the market value of the Fund's portfolio securities. 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.
o Liquidity and Valuation. Unrated securities (including those that the
Manager believes are of equivalent quality to rated investment grade
securities), lower rated securities and securities of municipal issuers in which
the Fund has a substantial ownership interest are subject to greater liquidity
and valuation risks. 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
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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 in accordance with procedures established by
the Board of Trustees and may be based upon factors other than actual sales.
o 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.
o Municipal Leases. 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
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<PAGE>
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.
How The Fund Is Managed
Organization and History. Rochester Portfolio Series was organized in 1991 as a
Massachusetts business trust consisting of one portfolio. The Fund is an
open-end, non-diversified management investment company with an unlimited number
of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees which is responsible under
Massachusetts law for protecting the interests of shareholders. The Trustees
meet periodically throughout the year to oversee the Fund's activities, review
its performance, and review the actions of the Manager. "Trustees and Officers
of the Fund" in the Statement of Additional Information lists the Trustees and
provides more information about them and the officers of the Fund. Although the
Fund will not normally hold annual meetings of its shareholders, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Trustee or to take other actions
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has done
so, and the Fund currently has four classes of shares, Class A, Class B, Class C
and Class X. All classes invest in the same investment portfolio. Each class has
its own dividends and distributions and pays certain expenses which may be
different from those other classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally. Only shares of a particular class vote as a class on
matters that affect that class alone. Shares are freely transferrable.
The Manager and its Affiliates. The Fund is managed by OppenheimerFunds, Inc.,
which is responsible for selecting the Fund's investments and handles its
day-to-day business. The Manager carries out its duties, subject to the policies
established by the Board of Trustees, under an Investment Advisory Agreement
which
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states the Manager's responsibilities. The Agreement sets forth the fees paid by
the Fund to the Manager and describes the expenses that the Fund is responsible
to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including subsidiaries) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $60 billion as of
March 31, 1997, and with more than 3 million shareholder accounts. The Manager
is owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
o Portfolio Manager. The Portfolio Manager of the Fund is
Ronald H. Fielding. He has been the person principally responsible
for the day-to-day management of the Fund's portfolio since the
Fund's inception in 1991. Mr. Fielding is Vice President of the
Fund and has also served as an officer and director of the Fund's
previous investment advisers and their affiliates.
o Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager an annual fee, payable monthly, of 0.50% of its average daily
net assets of the first $100 million, 0.45% of its average daily net assets on
the next $150 million, 0.40% of its average daily net assets on the next $1,750
million, and 0.39% of its average daily net assets over $2 billion. The Fund's
management fee for its last fiscal year was 0.43% of average daily net assets
for Class A and Class X shares.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing costs.
Those expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional Information.
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 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
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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.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. When deciding which brokers to use, the Manager
is permitted by the Investment Advisory Agreement to consider whether brokers
have sold shares of the Fund or any other funds for which the Manager serves as
investment adviser.
o The Distributor. The Fund's shares are sold through dealers, brokers
and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as the
Distributor. The Distributor also distributes the shares of other Oppenheimer
funds managed by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
o The Transfer Agent. The Fund's Transfer Agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund. Shareholders should direct inquiries about their account to
the Transfer Agent at the address and toll-free number shown below in this
Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total return,"
"average annual total return," "standardized yield," "dividend yield" "yield"
and "tax-equivalent yield" to illustrate its performance. The performance of
each class of shares is shown separately, because the performance of each class
of
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<PAGE>
shares will usually be different as a result of the different kinds of expenses
each class bears. This performance information may be useful to help you see how
well your investment has done and to compare it to other funds or market
indices.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. This performance data is described below, but more
detailed information about how total returns are calculated is contained in the
Statement of Additional Information, which also contains information about other
ways to measure and compare the Fund's performance. The Fund's investment
performance will vary over time, depending on market conditions, the composition
of the portfolio, expenses and which class of shares you purchase.
o Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally they include
the payment of the current maximum initial sales charge. Total returns may also
be quoted "at net asset value," without including the sales charge, and those
returns would be reduced if sales charges were deducted. When total returns are
shown for Class B, Class C or Class X shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which total
return is shown. They may also be shown based on the change in net asset value,
without including the effect of the contingent deferred sales charge, and those
returns would be reduced if sales charges were deducted.
o Yield. Each class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a 30-day
period by the maximum offering price on the last day of the period.
Tax-equivalent yield is the equivalent yield that would be earned in the absence
of taxes. It is
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calculated by dividing that portion of the yield that is tax-exempt by a factor
equal to one minus the applicable tax rate. The yield of each class will differ
because of the different expenses of each class of shares. The yield data
represents a hypothetical investment return on the portfolio, and does not
measure an investment return based on dividends actually paid to shareholders.
To show that return, a dividend yield may be calculated. Dividend yield is
calculated by dividing the dividends of a Class X derived from net investment
income during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the deduction
of the maximum initial sales charge, but may also be shown based on the Fund's
net asset value per share. Yields for Class B, Class C or Class X shares do not
reflect the deduction of the contingent deferred sales charge.
For additional information regarding calculation of yield,
tax-equivalent yield and total return, see "Performance of the Fund" in the
Statement of Additional Information. Further information about the Fund's
performance is set forth in the Fund's Annual Report to Shareholders, which may
be obtained upon request at no charge.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its fiscal year ended December 31, 1996, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index, an index which more closely reflects the types of securities in
which the Fund invests and the Consumer Price Index ("CPI").
o Management's Discussion of Performance. During the Fund's fiscal year
ended December 31, 1996, the Fund's performance benefited from actions taken by
the Portfolio Manager to enhance the Fund's income and also from the generally
strong performance of municipal bond prices relative to Treasury bond prices. In
1996, the level of general interest rates increased and bond prices declined.
During this period, the overall total the municipal bond market outperformed
Treasury bonds.
Municipal bond yields in general rose in the first half of the year,
then drifted lower in the second half, ending the year only slightly higher for
the year. Despite the volatility in interest rates, the net asset values of the
Fund's Class A and Class X shares remained relatively stable. The Portfolio
Manager took advantage of the swings in interest rates to continue strategies
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which enhanced the stability of the Fund's share price and return potential. The
Portfolio Manager sold lower coupon serial maturity bonds and purchased bonds
with comparable effective maturities having better income and return potential.
These purchases included premium coupon callable bonds and bonds with sinking
funds.
During the year the Portfolio Manager extended the Fund's average
effective maturity slightly from 3.6 to 4.2 years to enhance the Fund's yield.
The Fund benefited from the pre- refunding and credit upgrade of several high
coupon bonds, many of which were subsequently sold by the Fund to capture these
gains. The Portfolio Manager also selectively increased the Fund's holdings of
housing issues and electric and gas utilities, while reducing the Fund's
exposure to unenhanced hospital issues with poorer credit prospects. The Fund's
portfolio holdings, allocations and strategies are subject to change.
o Comparing the Fund's Performance to the Market. The charts below show
the performance of hypothetical $10,000 investments in Class A and Class X
shares of the Fund held until December 31, 1996. Performance is measured in each
instance since inception of each class (September 18, 1991 for Class A shares,
and May 1, 1995 for Class X shares). Since Class B and Class C shares are new as
of the date of this Prospectus, there are no comparisons shown for those
classes.
The performance of the Fund's Class A and Class X shares is compared to
the performance of the Lehman Brothers Municipal Bond Index, the Merrill Lynch
Municipal Index (3-7 years) and the CPI. The Lehman Brothers Municipal Bond
Index is an unmanaged index of a broad range of investment grade municipal bonds
which is widely regarded as a measure of the performance of the general
municipal bond market. The Merrill Lynch Municipal Index (3-7 years) is a subset
of the Merrill Lynch Municipal Master Index and consists of municipal bonds
having remaining maturities of between three and seven years. Therefore, it
includes municipal bonds having maturities that more closely resemble those of
the municipal bonds in which the Fund invests. While a comparison to the
performance of the general municipal bond market is of interest, the Fund's
investments are focused primarily on bonds having shorter maturities to reduce
the effect of interest rate volatility. The CPI provides a measure of change in
the inflation rate. The performance represented by each of these indices differs
from the performance of the Fund in several important respects. While both
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the Lehman Brothers Municipal Bond Index and the Merrill Lynch Municipal Index
(3-7 years) reflect the performance of municipal securities, each of those
indices includes municipal bonds that pay interest subject to New York State and
New York City personal income taxes. Therefore, many of the municipal securities
in each of the indices would not be purchased by the Fund, which seeks to invest
in municipal bonds that pay interest free from Federal, New York State and New
York City personal income taxes.
Index performance reflects the reinvestment of interest income but does
not consider the effect of capital gains or transaction costs. Also, the Fund's
performance reflects the effect of the Fund's business and operating expenses.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in: Limited
Term New York Municipal Fund (Class A), Merrill Lynch Municipal Index (3-7
years), Lehman Brothers Municipal Bond Index and the Consumer Price Index.
[graph]
Average Annual Total Returns of Class A shares of the Fund at
12/31/96(1)
1 Year 5 Year Life of Class
- -------------------------------------------------------------------
1.15% 5.96% 6.43%
Class X Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in: Limited
Term New York Municipal Fund (Class X), Merrill Lynch Municipal Index (3-7
years), Lehman Brothers Municipal Bond Index and the Consumer Price Index.
[graph]
Average Annual Total Returns of Class X shares of the Fund at
12/31/96(2)
1 Year Life of Class
- -------------------------------------------------------------------
2.10% 5.02%
Total returns and the ending account values in the graphs reflect
changes in share value and include reinvestment of all
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dividends and capital gains distributions. The performance information for the
Merrill Lynch Municipal Index (3-7 years), the Lehman Brothers Municipal Bond
Index and the Consumer Price Index begins on September 30, 1991 in the graph
relating to Class A performance and on April 30, 1995 in the graph relating to
Class X performance.
(1) The inception date of the Fund (Class A shares) was 9/18/91. Class A returns
and the ending account value in the graph are shown net of the current
applicable 3.50% maximum initial sales charge. Prior to May 1, 1997, the maximum
initial sales charge on Class A shares was 2.00%.
(2) Class X shares (which were
designated as Class B shares prior to May 1, 1997)of the Fund were first
publicly offered on 5/1/95. Returns are shown net of the applicable 2.50% and
2.00% contingent deferred sales charge for the one-year period and for the
life-of- class, respectively. The ending account value in the graph is net of
the applicable 2.00% contingent deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How To Buy Shares
Classes of Shares. The Fund offers investors four different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
o Class A Shares. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million. If you purchase Class A shares as part
of an investment of at least $1 million in shares of one or more Oppenheimer
funds, you will not pay an initial sales charge, but if you sell any of those
shares within 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares" below.
o Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
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<PAGE>
within five years of buying them, you will normally pay a contingent deferred
sales charge. That sales charge varies depending on how long you owned your
shares as described in "Buying Class B Shares" below.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%, as
described in "Buying Class C Shares," below.
o Class X Shares. If you buy Class X shares, you pay no sales charge at
the time of purchase, but if you sell your shares within four years of buying
them, you will normally pay a contingent deferred sales charge that varies
depending on how long you own your shares. Class X shares are available for
purchase only by those shareholders who owned such shares (formerly designated
as Class B shares) prior to the effective date of this Prospectus. Exchanges are
limited as described in "Buying Class X Shares " below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is best
suited to your needs depends on a number of factors which you should discuss
with your financial adviser. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on your investment
will vary your investment results over time. The most important factors are how
much you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another 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 economies of scale available
to them through a similar investment in Class A shares. For more information
about these sales
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<PAGE>
arrangements, contact your investment dealer or the Transfer Agent.
o Are There Differences in Account Features that Matter to You? Because
some account features may not be available to Class B, Class C or Class X
shareholders, you should carefully review how you plan to use your investment
account before deciding which class of shares is better for you. For example,
share certificates are not available for Class B, Class C or Class X shares and,
if you are considering using your shares as collateral for a loan, that may be a
factor to consider. Additionally, the dividends payable to Class B, Class C or
Class X shareholders will be reduced by the additional expenses borne by those
classes, such as the asset-based sales charges described below and in the
Statement of Additional Information. The exchange privileges available to Class
X shareholders are limited. See "How to Exchange Shares".
o How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B, Class C and Class X contingent deferred sales charges
and asset-based sales charges is the same as the purpose of the front-end sales
charge on sales of Class A shares, that is, to compensate the Distributor for
commissions it pays to dealers and financial institutions for selling shares.
The Distributor may pay additional periodic compensation from its own resources
to securities dealers of financial institutions based upon the value of shares
of the Fund owned by the dealer of financial institution for its own account or
for its customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans.
o With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments for as little as $25; and subsequent purchases of at
least $25 can be made by telephone through AccountLink.
o There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of
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<PAGE>
Additional Information, or you can ask your dealer or call the Transfer Agent),
or by reinvesting distributions from unit investment trusts that have made
arrangements with the Distributor.
o How Are Shares Purchased? You can buy shares several ways--through
any dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When you buy
shares, be sure to specify Class A, Class B, Class C or Class X. If you do not
choose, your investment will be made in Class A shares.
o Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial adviser, to be sure it is appropriate for you.
Shares may be purchased by Federal Funds wire. The minimum investment
is $2,500. You must first call the Distributor's Wire Department at
1-800-525-7041 to notify the Distributor of the wire, and receive further
instructions.
o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member. You can
then transmit funds electronically to purchase shares, to have the Transfer
Agent send redemption proceeds, or to transmit dividends and distributions to
your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds
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<PAGE>
PhoneLink, also described below. You should request AccountLink privileges on
the application or dealer settlement instructions used to establish your
account. Please refer to "AccountLink" below for more details.
o Asset Builder Plans. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are in the Statement of Additional Information.
o At What Price Are Shares Sold? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver. In most cases, to enable you to receive that day's offering price, the
Distributor must receive your order by the time of day the New York Stock
Exchange closes, which is normally 4:00 P.M., New York time, but may be earlier
on some days (all references to time in this Prospectus mean "New York time").
The net asset value of each class of shares is determined as of that time on
each day the New York Stock Exchange is open (which is a "regular business
day").
If you buy shares through a dealer, the dealer must receive your order
by the close of the New York Stock Exchange, on a regular business day and
transmit it to the Distributor so that it is received before the Distributor's
close of business that day, which is normally 5:00 P.M. The Distributor may
reject any purchase order for the Fund's shares, in its sole discretion.
Special Sales Charge and Purchase Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth special sales charge rates that apply to
additional purchases of Class A shares of the Fund by a person who held Class A
shares before the effective date of this Prospectus. In addition, Appendix A to
this Prospectus also describes the circumstances under which additional
purchases of Class X shares of the Fund (formerly Class B shares) may be
purchased by a person who held shares of that class before the effective date of
this Prospectus. Appendix B to this Prospectus sets forth conditions for the
waiver of, or exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases by exchange)
by a person who was a shareholder of one of the former Quest for Value Funds (as
defined in that Appendix).
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<PAGE>
Buying Class A Shares. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. In some cases, reduced
sales charges may be available, as described below. Out of the amount you
invest, the Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A portion of the
sales charge may be retained by the Distributor and allocated to your dealer as
a commission. The current sales charge rates and commissions paid to dealers and
brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as a % of as a % of as a % of
Offering Amount Offering
Amount of Purchase Price Invested Price
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Less than $100,000 3.50% 3.63% 3.00%
- ------------------------------------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.00% 3.09% 2.50%
- ------------------------------------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------------------------------------
$500,000 or more but
less than $1,000,000 2.00% 2.04% 1.50%
</TABLE>
The Distributor reserves the right to reallow the entire sales charge to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
o Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds aggregating $1 million or more. However, the Distributor pays dealers of
record commissions on purchases aggregating $1 million or more in an amount
equal to the sum of 1.0% of those purchases. That commission will be paid only
on the amount of those purchases that was not previously subject to a front-end
sales charge and dealer commission.
If you redeem any of those shares purchased prior to May 1, 1997,
within 18 months of the end of the calendar month of their purchase, a
contingent deferred sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. A Class A contingent
deferred sales charge
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<PAGE>
may be deducted from the redemption proceeds of any of those shares purchased on
or after May 1, 1997 that are redeemed within 12 months of the end of the
calendar month of their purchase. That sales charge will be equal to 1.0% of the
lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 12 calendar months (18 months
for shares purchased prior to May 1, 1997) of the end of the calendar month of
the purchase of the exchanged shares, the sales charge will apply.
o Special Arrangements With Dealers. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:
o Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A, Class B and Class X shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for a trust,
estate or other fiduciary account (including one or more employee benefit plans
of the same employer) that has multiple accounts.
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<PAGE>
Additionally, you can add together current purchases of Class A, Class
B and Class X shares of the Fund and Class A and Class B shares of other
Oppenheimer funds to reduce the sales charge rate that applies to current
purchases of Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or contingent
deferred sales charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold your investment in one of the
Oppenheimer funds. The Distributor will add the value, at current offering
price, of the shares you previously purchased to the value of current purchases
to determine the sales charge rate that applies. The Oppenheimer funds are
listed in the Statement of Additional Information, or a list can be obtained
from the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
o Letter of Intent. Under a Letter of Intent, if you purchase Class A
shares or Class A shares, Class B shares and/or Class X shares of the Fund and
Class A shares and Class B shares other Oppenheimer funds during a 13-month
period, you can reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of Class A and
either Class B or Class X shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. This can include purchases
made up to 90 days before the date of the Letter. More information is contained
in the Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
o Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
Waivers of Initial Sales Charges for Certain Purchasers. Class A shares
purchased by the following investors are not subject to any Class A sales
charges:
o the Manager or its affiliates;
o present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o dealers or brokers that have a sales agreement with the
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<PAGE>
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
o 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);
o dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor or the Fund 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 or sale of Fund shares);
o (1) investment advisers and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients, (2) "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3) clients of such
investment advisors or financial planners who buy shares for their own accounts
may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares);
o directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts; or
o any unit investment trust that has entered into an appropriate
agreement with the Distributor.
Waivers of Initial Sales Charges in Certain Transactions. Class A
shares issued or purchased in the following transactions are not subject to
Class A sales charges:
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<PAGE>
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager of its affiliates acts as
sponsor;
o shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 12 months from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your shares of the Fund, and the Distributor may require
evidence of your qualification for this waiver; or
o shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the
dealer agreed in writing to accept the dealer's portion of the sales commission
in installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase); or
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase).
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<PAGE>
Service Plan For Class A Shares. The Fund has adopted a Service Plan for Class A
shares to reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that hold Class
A shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees to compensate dealers, brokers, banks and
other financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares and to
reimburse itself for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining accounts in
the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. Payments are made by the
Distributor quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the dealer or its
customers. The payments under the Plan increase the annual expenses of Class A
shares. For more details, please refer to "Distribution and Service Plans" in
the Statement of Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within
5 years of their purchase, a contingent deferred sales charge will be deducted
from the redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value represented by
the increase in net asset value over the initial purchase price. The Class B
contingent deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in connection
with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 5 years, and (3) shares held the longest during the 5 year period. The
contingent deferred sales charge is not imposed in the circumstances described
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<PAGE>
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Years Since Beginning of Contingent Deferred Sales Charge
Month in Which Purchase on Redemptions in that Year
Order Was Accepted (as % of Amount Subject to Charge)
- -------------------------------------------------------------------
0 - 1 4.00%
- -------------------------------------------------------------------
1 - 2 3.00%
- -------------------------------------------------------------------
2 - 3 2.00%
- ------------------------------------------------------------------
3 - 4 2.00%
- ------------------------------------------------------------------
4 - 5 1.00%
- -------------------------------------------------------------------
5 and following None
In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.
o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A Shares, Class B
Shares, Class C Shares and Class X Shares" in the Statement of Additional
Information.
o Waivers of Class B Sales Charges. The Class B contingent deferred
sales charges will not apply to those shares purchased in certain types of
transactions, nor will it apply to shares redeemed in certain circumstances, as
described below under "Buying Class
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C Shares - Waivers of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original purchase price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month period.
All purchases are considered to have been made on the first regular business day
of the month in which the purchase was made.
Distribution and Service Plans for Class B and Class C Shares. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for distributing Class B and C shares and servicing
accounts. Under the Plans, the Fund pays the Distributor an annual "asset-based
sales charge" of 0.75% per year on Class B shares that are outstanding for 6
years or less and on Class C shares. The Distributor also receives a service fee
of 0.25% per year under each plan.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge and service
fees increase Class B and Class C expenses by up to 1.00% of the net assets per
year of the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or C shares. Those
services are similar to those provided under the
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Class A Service Plan, described above. The Distributor pays the 0.25% service
fees to dealers in advance for the first year after Class B or Class C shares
have been sold by the dealer and retains the service fee paid by the Fund in
that year. After the shares have been held for a year, the Distributor pays the
service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B or C
shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell those shares. The Fund pays the asset-based sales
charges to the Distributor for its services rendered in distributing Class B and
Class C shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.
The Distributor currently pays sales commissions of 2.75% of the
purchase price of Class B shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sales of Class B shares is 3.00% of the
purchase price. The Distributor retains the Class B asset-based sales charge. If
a dealer has a special agreement with the Distributor, the Distributor will pay
the Class B service fee and the asset-based sales charge to the dealer quarterly
in lieu of paying the sales commission and service fee advance at the time of
purchase.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. If a dealer has a special agreement with the
Distributor, the Distributor shall pay the Class C service fee and asset-based
sales charge to the dealer quarterly in lieu of paying the sales commission and
service fee advance at the time of purchase. The Distributor plans to pay the
asset-based sales charge as an ongoing commission to the dealer on Class C
shares that have been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may
be more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the
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Fund under the Distribution and Service Plans for Class B and C shares. If
either Plan is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the asset-based sales charge to the Distributor for
distributing shares before the Plan was terminated.
o Waivers of Class B and Class C Sales Charges. The Class B and Class C
contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions nor will it apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases, if the Transfer Agent is notified that these conditions
apply to the redemption:
o redemptions from accounts following the death or disability of the
last surviving shareholder including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by the
Social Security Administration); or
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies" below.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C shares
sold or issued in the following cases:
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose; or
o shares issued in plans of reorganization to which the Fund
is a party.
Buying Class X Shares. On May 1, 1997, the Fund redesignated as Class X shares
its Class B shares which had been outstanding prior to that date. Additional
purchases of Class X shares of the Fund are available for purchase through
January 5, 1998, by only those shareholders whose accounts holding Class X
shares were established before May 1, 1997. Class X shares of the Fund will no
longer be offered after January 5, 1998.
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Class X shares are sold at net asset value per share without an
initial sales charge. However, if Class X shares are redeemed within 4 years of
their purchase, a contingent deferred sales charge will be deducted from the
redemption proceeds. That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge will be
assessed on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The contingent deferred sales charge
is not imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price. The Class X contingent
deferred sales charge is paid to the Distributor to reimburse its expenses of
providing distribution-related services to the Fund in connection with the sale
of Class X shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 4 years, and (3) shares held the longest during the 4-year period. The
contingent deferred sales charge is not imposed in the circumstances described
in "Waivers of Class X Sales Charges" below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred
Years Since Beginning Sales Charge on
of Month in Which Redemptions in that
Purchase Order Year (as of Amount
Was Accepted Subject to Charge)
- -------------------------------------------------------------------
0-1 2.50%
- -----------------------------------------------------------------
1-2 2.00%
- ------------------------------------------------------------------
2-3 1.50%
- ------------------------------------------------------------------
3-4 1.00%
- -------------------------------------------------------------------
4 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
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the month in which the purchase was made.
o Automatic Conversion of Class X Shares. 72 months after you purchase
Class X shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class X shareholders of the asset-based sales charge
that applies to Class X shares under the Class X Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class X shares
convert, any other Class X shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A Shares, Class B
Shares, Class C Shares and Class X Shares" in the Statement of Additional
Information.
Distribution and Service Plan for Class X Shares. The Fund has adopted a
Distribution and Service Plan for Class X shares to compensate the Distributor
for distributing Class X shares and servicing accounts. Under the Plan, the Fund
currently pays the Distributor an annual "asset-based sales charge" of 0.50% per
year on Class X shares that are outstanding for 6 years or less. The Distributor
also receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class X shares, determined as of the close of each
regular business day. Although the terms of the Distribution and Service Plan
permit the Fund to pay an "asset-based sales charge" of up to 0.75% per annum of
the average daily net assets attributable to Class X shares, the Board of
Trustees has approved payment of an "asset-based sales charge" of up to only
0.50% per annum of the average daily net assets attributable to Class X shares.
The asset-based sales charge and service fee as currently in effect increase
Class X expenses by 0.75% of average net assets per year.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class X shares. Those
payments, retained by the Distributor, are at a fixed rate which is not related
to the Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and other
costs of distributing and selling Class X shares. If the Plan is terminated by
the Fund, the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for distributing Class X shares
before the Plan was
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terminated. The asset-based sales charge allows investors to buy Class X shares
without a front-end sales charge while allowing the Distributor to compensate
dealers that sell Class X shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class X shares. Those
services are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class X shares have been sold by the dealer. After the shares
have been held for a year, the Distributor pays the fee on a quarterly basis.
The Distributor pays sales commissions of 2.00% (including a prepaid service fee
of 0.25%) of the purchase price to dealers from its own resources at the time of
sale.
The Distributor's actual expenses in selling Class X shares may be more
than the payments it receives from contingent deferred sales charges collected
on redeemed shares and from the Fund under the Distribution and Service Plans
for Class X shares. At December 31, 1996, the end of the Class X Plan year, the
Distributor had incurred unreimbursed expenses in connection with sales of Class
X shares of $367,902 (equal to 0.90% of the Fund's net assets represented by
Class X shares on that date). If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the Plan was
terminated.
o Waivers of Class X Sales Charge. The Class X contingent deferred
sales charge will not be applied to shares purchased in certain types of
transactions nor will it apply to Class X shares redeemed in certain
circumstances as described below. The reasons for this policy are in "Reduced
Sales Charges" in the Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class X
contingent deferred sales charge will be waived for redemptions of shares in the
following cases:
o Following the death or disability of the last surviving shareholder
(the death or disability must have occurred after the account was established,
and for disability you must provide evidence of a determination of disability by
the Social Security Administration);
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
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with the Manager or the Distributor for that purpose;
o shares issued in plans of reorganization to which the Fund
is a party; and
o shares redeemed in involuntary redemptions as described below.
Further details about this policy are contained in "Reduced Sales Charges" in
the Statement of Additional Information.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.
AccountLink privileges should be requested on your dealer's settlement
instructions if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
o Using AccountLink to Buy Shares. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts up
to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
o PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
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o Purchasing Shares. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below for details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below for
details.
Shareholder Transactions by Fax. Beginning May 30, 1997, requests for certain
account transactions may be sent to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions are
included. Transaction requests submitted by fax are subject to the same rules
and restrictions as written and telephone requests described in this Prospectus.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:
o Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at least
$50 on a monthly, quarterly, semi-annual or annual basis. The checks may be sent
to you or sent automatically to your bank account on AccountLink. You may even
set up certain types of withdrawals of up to $1,500 per month by telephone. You
should consult the Statement of Additional Information for more details.
o Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each
OppenheimerFunds account is $25. These exchanges are subject to the terms of the
Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A,
Class B or Class X shares of the Fund, you have up to 6 months to
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reinvest all or part of the redemption proceeds in Class A shares of the Fund or
other Oppenheimer funds without paying a sales charge. This privilege applies to
Class A shares that you purchased subject to an initial sales charge and to
Class A, Class B or Class X shares on which you paid a contingent deferred sales
charge when you redeemed them. It does not apply to Class C shares. You must be
sure to ask the Distributor for this privilege when you send your payment.
Please consult the Statement of Additional Information for more details.
How To Sell Shares
You can arrange to take money out of your account by selling (redeeming) some or
all of your shares on any regular business day. Your shares will be sold at the
next net asset value calculated after your order is received and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your shares, in
writing or by telephone. You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
o Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
o You wish to redeem more than $50,000 worth of shares and
receive a check
o The redemption check is not payable to all shareholders
listed on the account statement
o The redemption check is not sent to the address of record
on your account statement
o Shares are being transferred to a Fund account with a
different owner or name, or
o Shares are redeemed by someone other than the owners (such
as an Executor)
o Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
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in securities, municipal securities or government securities, or by a U.S.
national securities exchange, a registered securities association or a clearing
agency. If you are signing on behalf of a corporation, partnership or other
business, or as a fiduciary, you must also include your title in the signature.
Selling Shares By Mail. Write a "letter of instructions" that
includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o
The signatures of all registered owners exactly as the
account is registered, and
o Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
Use the following address Send courier or Express Mail
for requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares By Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares held under a share certificate
by telephone.
o To redeem shares through a service representative, call
1-800-852-8457
o To redeem shares automatically on PhoneLink, call
1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
o Telephone Redemptions Paid By Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
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the address on the account. This service is not available within 30
days of changing the address on an account.
o Telephone Redemptions Through AccountLink. There are no dollar limits
on telephone redemption proceeds sent to a bank account designated when you
establish AccountLink. Normally the ACH wire to your bank is initiated on the
business day after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be wired.
Checkwriting. To be able to write checks against your Fund account, you may
request that privilege on your account Application or you can contact the
Transfer Agent for signature cards, which must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner. If you
previously signed a signature card to establish checkwriting in another
Oppenheimer fund, simply call 1-800-525-7048 to request checkwriting for an
account in this Fund with the same registration as the previous checkwriting
account.
o Checks can be written to the order of whomever you wish, but may not
be cashed at the Fund's bank or custodian.
o Checkwriting privileges are not available for accounts holding Class
B shares, Class C shares, Class X or Class A shares that are subject to a
contingent deferred sales charge.
o Checks must be written for at least $100.
o Checks cannot be paid if they are written for more than your
account value. Remember: your shares fluctuate in value and you
should not write a check close to the total account value.
o You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within the
prior 10 days.
o Don't use your checks if you changed your Fund account
number.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please call your dealer for
additional information. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional Information for
more details.
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How To Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge.
o Shares of the fund selected for exchange must be available
for sale in your state of residence
o The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
o You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open 7 days,
you can exchange shares every regular business day
o You must meet the minimum purchase requirements for the fund
you purchase by exchange
o Before exchanging into a fund, you should obtain and read
its prospectus
Except with respect to the Class X shares of the Fund which may be
exchanged only for Class B shares of other Oppenheimer funds, shares of a
particular class may be exchanged only for shares of the same class in the other
Oppenheimer funds. For example, you can exchange Class A shares of this Fund
only for Class A shares of another fund. At present, Oppenheimer Money Market
Fund, Inc. offers only one class of shares, which are considered to be Class A
shares for this purpose. Please refer to "How To Exchange Shares" in the
Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send it
to the Transfer Agent at the addresses listed in "How to Sell
Shares."
o Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available
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for exchanges in the Statement of Additional Information or by
calling a service representative at 1-800-525-7048. That list can
change from time to time.
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on which
the Transfer Agent receives an exchange request that is in proper form by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M. but
may be earlier on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it determines it
would be disadvantaged by a same-day transfer of the proceeds to buy shares. For
example, the receipt of multiple exchange requests from a dealer in a
"market-timing" strategy might require the disposition of securities at a time
or price disadvantageous to the Fund.
o Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
o For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund, which
may result in a capital gain or loss. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.
o If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange will
be exchanged.
o The contingent deferred sales charges, if any, of the fund into which
you are exchanging will apply at the time you redeem the shares acquired as a
result of the exchange. The contingent deferred sales charges of this Fund will
no longer apply once this Fund's shares are exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisors permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or
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suspend those privileges. As a result, those exchanges may be subject to notice
requirements, delays and other limitations that do not apply to shareholders who
exchange their shares directly by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
o Net asset value per share is determined for each class of shares as
of the close of The New York Stock Exchange, which is normally 4:00 P.M. but may
be earlier on some days, on each day the Exchange is open by dividing the value
of the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
o The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in the
Fund's best interest to do so.
o Telephone transaction privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any time. If
an account has more than one owner, the Fund and the Transfer Agent may rely on
the instructions of any one owner. Telephone privileges apply to each owner of
the account and the dealer representative of record for the account unless and
until the Transfer Agent receives cancellation instructions from an owner of the
account.
o The Transfer Agent will record any telephone calls to verify data
concerning transaction and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may
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not be able to complete a telephone transaction and should consider placing your
order by mail.
o Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time to
time, the Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously.
o The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B, Class C and Class X. Therefore, the redemption value of your
shares may be more or less than their original cost.
o Payment for redeemed shares is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission delaying or
suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 10 days from the date the shares were purchased. That
delay may be avoided if you purchase shares by certified check or arrange to
have your bank provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
o Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $200 for reasons other than the fact that the
market value of shares has dropped, and in some cases involuntary redemptions
may be made to repay the Distributor for losses from the cancellation of share
purchase orders.
-58-
<PAGE>
o Under unusual circumstances, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the Statement
of Additional Information for more details.
o "Backup Withholding" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
Employer Identification Number when you sign your application, or if you violate
Internal Revenue
Service regulations on tax reporting of income.
o The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be avoided
by redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charge when redeeming certain Class A, Class B, Class
C and Class X shares.
o To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to ask
that copies of those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B, Class C
and Class X shares from net investment income each regular business day and pays
such dividends to shareholders monthly. Normally, dividends are paid monthly. It
is expected that distributions paid with respect to Class A shares will
generally be higher than for Class B, Class C and Class X shares because
expenses allocable to Class B, Class C and Class X shares will generally be
higher. There is no fixed dividend rate and there can be no assurance as to the
payment of any dividends. The amount of a class' dividends or distributions may
vary from time to time depending on market conditions, the composition of the
Fund's portfolio and expenses borne by that class.
Capital Gains. Although the Fund does not seek capital gains, it
may realize capital gains on the sale of portfolio securities. If
-59-
<PAGE>
it does, it may make distributions out of any net short- or long-term capital
gains in December. The Fund may make supplemental distributions of dividends and
capital gains following the end of its fiscal year (which ends December 31st).
Long-term capital gains will be separately identified in the tax information the
Fund sends you after the end of the year. Short-term capital gains are treated
as dividends for tax purposes. There can be no assurance that the Fund will pay
any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. You have
four options:
o Reinvest all distributions in the Fund. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of the
Fund.
o Reinvest long-term capital gains only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or sent
to your bank account on AccountLink.
o Receive all distributions in cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them sent to
your bank account on AccountLink.
o Reinvest your distributions in another Oppenheimer fund account. You
can reinvest all distributions in another Oppenheimer fund account you have
established.
Taxes. The Fund intends to qualify to pay dividends from net investment income
from Municipal Securities that will be excludable from your gross income for
regular Federal income tax purposes, and from New York State and local regular
income taxes as well. A portion of the dividends paid by the Fund may be subject
to regular Federal, state and local income taxes and may be an item of tax
preference if you are subject to the alternative minimum tax. Long-term capital
gains distributions are taxable as long-term capital gains when distributed to
shareholders, and distributions paid from short-term capital gains are Federally
taxable as ordinary income and may be subject to state and/or local income taxes
whether you reinvest them in additional shares or take them in cash. Every year
the Fund will send you and the IRS a statement showing the amount of any taxable
distribution you received in the previous year.
-60-
<PAGE>
o "Buying a Dividend." When a fund goes ex-dividend, its share price is
reduced by the amount of the distribution. If you buy shares on or just before
the ex-dividend date, or just before the Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
o Taxes on Transactions. Even though the Fund seeks tax-exempt income
for distribution to shareholders, you may have a capital gain or loss when you
sell or exchange your shares. A capital gain or loss is the difference between
the price you paid for the shares and the price you receive when you sell them.
Any capital gain is subject to capital gains tax.
o Returns of Capital. In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders. A non-taxable return
of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain Federal income tax and
New York State and New York City personal income tax information about your
investment. More information is contained in the Statement of Additional
Information, and in addition you should consult with your tax advisor about the
effect of an investment in the Fund on your particular tax situation.
-61-
<PAGE>
APPENDIX TO PROSPECTUS OF
LIMITED TERM NEW YORK MUNICIPAL FUND
Graphic material included in the Prospectus of Limited Term New York
Municipal Fund(the "Fund"):
(a) "Class A Shares Comparison of Change in Value of a $10,000
Hypothetical Investment in: Limited Term New York Municipal Fund
(Class A), Merrill Lynch Municipal Index (3-7 Years), Lehman
Brothers Municipal Bond Index and Consumer Price Index"
(b) "Class X Shares Comparison of Change in Value of a $10,000
Hypothetical Investment in: Limited Term New York Municipal Fund
(Class X), Merrill Lynch Municipal Index (3-7 Years), Lehman
Brothers Municipal Bond Index and Consumer Price Index"
Linear graphs will be included in the Prospectus of the Fund depicting
the initial account value and subsequent account value of a hypothetical $10,000
investment in Class A shares of the Fund from September 18, 1991 (date of
inception of the class)and in Class X shares from May 1, 1995 (date of inception
of the class) to fiscal year end December 31, 1996, comparing such values with
the same investments over the same time periods with the Merrill Lynch Municipal
Index (3-7 Years), Lehman Brothers Municipal Bond Index and Consumer Price
Index. Set forth below are the relevant data points that will appear on the
linear graphs. Additional information with respect to the foregoing, including a
description of Merrill Lynch Municipal Index (3-7 Years), Lehman Brothers
Municipal Bond Index and Consumer Price Index is set forth in the Prospectus
under "Comparing the Fund's Performance to the Market."
<TABLE>
<CAPTION>
Limited Term Consumer Lehman Bro. Merrill Lynch
New York Price Municipal Municipal Index
Municipal Fund Index Bond Index (3-7 years)
Class A
<S> <C> <C> <C> <C>
9/18/91 9,650 10,000 10,000 10,000
12/31/91 10,041 10,095 10,470 10,358
12/31/92 10,996 10,388 11,393 11,168
12/31/93 12,114 10,673 12,792 12,059
12/31/94 12,054 10,959 12,130 11,852
12/31/95 13,260 11,237 14,250 13,114
12/31/96 13,899 11,611 14,317 13,673
</TABLE>
-62-
<PAGE>
<TABLE>
<CAPTION>
Limited Term Consumer Lehman Bro. Merrill Lynch
New York Price Municipal Municipal Index
Municipal Fund Index Bond Index (3-7 years)
<S> <C> <C> <C> <C>
Class X
5/01/95 10,000 10,000 10,000 10,000
12/31/95 10,565 10,105 10,958 10,630
12/31/96 10,851 10,441 11,009 11,083
</TABLE>
-63-
<PAGE>
APPENDIX A
SPECIAL SALES CHARGE AND PURCHASE ARRANGEMENTS FOR CLASS A AND
Class X SHAREHOLDERS WHO WERE SHAREHOLDERS OF THE FUND PRIOR TO
MAY 1, 1997
CLASS A SHAREHOLDERS
Those shareholders who owned Class A shares prior to May 1, 1997 may purchase
additional Class A shares of the Fund through January 5, 1998 subject to the
following sales charges:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as a as a as a Percentage
Percentage of Percentage of of Offering
Amount of Purchase Offering Price Amount Invested Price
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Less than $100,000 2.00% 2.04% 1.75%
- ----------------------------------------------------------------------------------------------------------------------
$100,000 or more but
less than $500,000 1.60% 1.63% 1.40%
- -----------------------------------------------------------------------------------------------------------------------
$500,000 or more but
less than $1,000,000 1.30% 1.32% 1.10%
- -----------------------------------------------------------------------------------------------------------------------
$1,000,000 and over(1) 1.00% 1.01% 0.80%
<FN>
(1) As described on page 28 of this Prospectus, there is no initial sales charge
on purchases of Class A shares aggregating $1 million or more. If Class A shares
purchased on or after May 1, 1997, are redeemed within 12 months of the end of
the calendar month of their purchase, the 1% Class A contingent deferred sales
charge described in this Prospectus may be deducted from the redemption
proceeds. If Class A shares purchased prior to May 1, 1997 are redeemed within
18 months after the end of the calendar month of their purchase, the 1%
contingent deferred sales charge may be deducted from the redemption proceeds.
The Distributor pays dealers of record commissions on purchases aggregating $1
million or more in an amount equal to the sum of 1.0% of those purchases. That
commission will be paid only on the amount of those purchases in excess of $1
million that were not previously subject to a front-end sales charge and dealer
commission.
</FN>
</TABLE>
CLASS X SHAREHOLDERS
A-1
<PAGE>
Those shareholders who own Class X shares prior to May 1, 1997 may purchase
additional Class X shares of the Fund through January 5, 1998 subject to the
following contingent deferred sales charges. (No other purchases of Class X
shares are permitted.)
Years Since Contingent Deferred
Beginning of Sales Charge on
Month in Which Redemptions in that
Purchase Order Year (as of amount
Was Accepted subject to Charge)
- -------------------------------------------------------------------------
0-1 2.50%
- -------------------------------------------------------------------------
1-2 2.00%
- -------------------------------------------------------------------------
2-3 1.50%
- -------------------------------------------------------------------------
3-4 1.00%
- -------------------------------------------------------------------------
4 and following None
In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.
A-2
<PAGE>
APPENDIX B
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class A,
Class B and Class C shares of the Fund described elsewhere in this Prospectus
are modified as described below for those shareholders of (i) Quest for Value
Fund, Inc., Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value Global
Equity Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became the
investment adviser to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for Value Funds
into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
o Purchases by Groups and Associations. The following table sets forth
the initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of securities if
that Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995.
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
B-1
<PAGE>
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described beginning on pages 28 of this Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of members of an Association
or the sales charge rate that applies under the Rights of Accumulation described
above in the Prospectus. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase shares
for their individual or custodial accounts at these reduced sales charge rates,
upon request to the Fund's Distributor.
o Special Class A Contingent Deferred Sales Charge Rates. Class A
shares of the Fund purchased by exchange of shares of other Oppenheimer funds
that were acquired as a result of the merger of Former Quest for Value Funds
into those Oppenheimer funds, and which shares were subject to a Class A
contingent deferred sales charge prior to November 24, 1995 will be subject to a
contingent deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest Fund for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
o Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares of the Fund purchased by the following investors are not subject to any
Class A initial or contingent deferred sales charges:
o Shareholders of the Fund who were shareholders of the AMA
B-2
<PAGE>
Family of Funds on February 28, 1991 and who acquired shares of any of the
Former Quest for Value Funds by merger of a portfolio of the AMA Family of
Funds.
o Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
o Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the following investors
who were shareholders of any Former Quest for Value Fund:
o Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
o Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995 in connection with (i) withdrawals
under an automatic withdrawal plan holding only either Class B or C shares if
the annual withdrawal does not exceed 10% of the initial value of the account,
and (ii) liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum value of such
accounts.
o Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, B or C shares of the
Fund acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) redemptions other than from retirement
plans following the
B-3
<PAGE>
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the U.S. Social Security Administration); (2) withdrawals
under an automatic withdrawal plan (but only for Class B or C shares) where the
annual withdrawals do not exceed 10% of the initial value of the account; and
(3) liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares of
the Fund described in this section if within 90 days after that redemption, the
proceeds are invested in the same Class of shares in this Fund or another
Oppenheimer fund.
B-4
<PAGE>
(five Limited Term
bar New York
logo) Municipal Fund
The Rochester Funds
A Division of OppenheimerFunds, Inc.
350 Linden Oaks
Rochester, New York 14625-2807
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Price Waterhouse LLP
1100 Bausch & Lomb Place
Rochester, New York 14604-2705
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
No dealer, salesperson or another person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or the Statement of Additional Information, and if given or made,
such information and representations must not be relied upon as having been
authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
in any state to any person to whom it is unlawful to make such an offer in such
state.
PR0355.001.0597
<PAGE>
ROCHESTER PORTFOLIO SERIES-LIMITED TERM NEW YORK MUNICIPAL FUND
350 Linden Oaks, Rochester, New York 14625
1-800-525-7048
Statement of Additional Information dated May 1, 1997
This Statement of Additional Information of Rochester Portfolio
Series-Limited Term New York Municipal Fund is not a Prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated May 1, 1997. It should be read together with the
Prospectus, which may be obtained by writing to OppenheimerFunds Services, the
Fund's Transfer Agent, at P.O. Box 5270, Denver, Colorado 80217 or by calling
the Transfer Agent at the toll-free number shown above.
CONTENTS
Page
About the Fund
Investment Objective and Policies.............................................
Investment Policies and Strategies.......................................
Other Investment Techniques and Strategies...............................
Investment Considerations/Risk Factors...................................
Other Investment Restrictions............................................
How the Fund is Managed.......................................................
Organization and History.................................................
Trustees and Officers of the Fund........................................
The Manager and Its Affiliates...........................................
Brokerage Policies of the Fund................................................
Performance of the Fund.......................................................
Distribution and Service Plans................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Fund.........................................
Financial Information About the Fund
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix A: Industry Classifications..........................................
Appendix B: Tax-Equivalent Yield Chart........................................
Appendix C: Description of Municipal Securities Ratings......................
-1-
<PAGE>
ABOUT THE FUND
Investment Objective 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 "Internal
Revenue Code" or "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
o 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.
o 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.
o 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.
o 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.
o 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:
o 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.
o 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.
-3-
<PAGE>
o 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.
o 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.
o 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.
o 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.
o 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
-4-
<PAGE>
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 Manager"), a particular Municipal Lease is liquid.
The Board of Trustees has adopted guidelines to be utilized by the Manager 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.
o 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.
o 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
o Stand-by Commitments. The Fund 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."
o 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. However, the Fund may, from time to time, purchase
municipal securities whose settlement extends beyond six months and possibly as
long as two years or more beyond trade date. 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.
o Options Transactions. 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 net 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
Special Investment Considerations - New York Municipal Securities. As
explained in the Prospectus, the Fund is highly sensitive to the fiscal
stability of New York State (the "State") and
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its subdivisions, agencies, instrumentalities or authorities, including New York
City, which issue the Municipal Securities in which the Fund concentrates its
investments. The following information on risk factors in concentrating in New
York Municipal Securities is only a summary, based on official statements
relating to offerings of New York issuers of Municipal Securities on or prior to
March 13, 1997 with respect to offerings of the State and April 11, 1997 with
respect to offerings of New York City, and no representation is made as to the
accuracy of such information.
During the mid-1970's, the State, some of its agencies,
instrumentalities and public benefit corporations (the "Authorities"), and
certain of its municipalities faced serious financial difficulties. To address
many of these financial problems, the State developed various programs, many of
which were successful in ameliorating the financial crisis. Any further
financial problems experienced by these Authorities or municipalities could have
a direct adverse effect on the sources of payment or market value of the New
York Municipal Securities in which the Fund invests.
o New York City. More than any other municipality, the fiscal health of
New York City (the "City") has a significant effect on the fiscal health of the
State. The national economic downturn which began in July 1990 adversely
affected the local economy which had been declining since late 1989. As a
result, the City experienced job losses in 1990 and 1991 and real Gross City
Product ("GCP") fell in those two years. Beginning in 1992, the improvement in
the national economy helped stabilize conditions in the City. Employment losses
moderated toward year-end and real GCP increased, boosted by strong wage gains.
After noticeable improvements in the City's economy during 1994, economic growth
slowed in 1995 but improved during 1996. The City's current four-year financial
plan assumes that moderate economic growth will exist through the calendar year
2000.
For each of the 1981 through 1996 fiscal years, the City achieved
balanced operating results as reported in accordance with generally accepted
accounting principles ("GAAP") and the City's 1997 fiscal year results are
projected to be balanced in accordance with GAAP. The City was required to close
substantial budget gaps in recent years in order to maintain balanced operating
results. There can be no assurance that the City will continue to maintain a
balanced budget as required by State law, or that it can maintain a balanced
budget without additional tax or other revenue increases or additional
reductions in City services or programs, which could adversely affect the City's
economic base.
The Mayor is responsible for preparing the City's four-year financial
plan, including the City's current financial plan for the 1997 through 2000
fiscal years (the "1997-2000 Financial Plan" or "City Financial Plan"). On
January 30, 1997, the City submitted to the New York State Financial Control
Board (the "Control Board") the City Financial Plan for the 1997-2000 fiscal
years, which is a modification to the financial plan submitted to the Control
Board on June 21, 1996 (the "June Financial Plan") and which relates to the
City, the New York City Board of Education ("BOE") and the City University of
New York.
The City's projections set forth in the City Financial Plan are based
on various assumptions and contingencies which are uncertain and which may not
materialize. Changes in major assumptions could significantly affect the City's
ability to balance its budget as required by State law
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and to meet its annual cash flow and financing requirements. Such assumptions
and contingencies include the condition of the regional and local economies, the
impact on real estate tax revenues of the real estate market, wage increases for
City employees consistent with those assumed in the City Financial Plan,
employment growth, the ability to implement reductions in City personnel and
other cost reduction initiatives, the ability of the New York City Health and
Hospitals Corporation ("HHC") and BOE to take actions to offset reduced
revenues, the ability to complete certain revenue generating transactions,
provision of State and Federal aid and mandate relief and the impact on City
revenues of Federal and State welfare reform and any future legislation
affecting Medicare or other entitlements.
Implementation of the City Financial Plan is also dependent upon the
City's ability to market its securities successfully in the public credit
markets. The City's financing program for fiscal years 1998 through 2000
contemplates the issuance of $4.2 billion of general obligation bonds and $4.2
billion of bonds to be issued by the New York City Transitional Finance
Authority (the "Finance Authority") primarily to reconstruct and rehabilitate
the City's infrastructure and physical assets and to make other capital
investments. The Finance Authority was created in 1997 by the State to assist
the City avoid certain State constitutional debt limitations and is authorized
to issue up to $7.5 billion in long-term debt. In addition, the City issues
revenue and tax anticipation notes to finance its seasonal working capital
requirements. The success of projected public sales of City bonds and notes and
Finance Authority bonds will be subject to prevailing market conditions, and no
assurance can be given that such sales will be completed. If the City were
unable to sell its general obligation bonds and notes or bonds the Finance
Authority, it would be prevented from meeting its planned operating and capital
expenditures. Future developments concerning the City and public discussion of
such developments, as well as prevailing market conditions, may affect the
market for outstanding City general obligation bonds and notes.
o 1997-2000 Financial Plan. The June Financial Plan set forth actions
to close a previously projected gap of approximately $2.6 billion in the 1997
fiscal year. The proposed actions in the June Financial Plan for the 1997 fiscal
year included (i) agency actions; (ii) a revised tax reduction program which
would increase projected tax revenues due to the extension of the 12.5% personal
income tax surcharge and other actions; (iii) savings resulting from cost
containment in entitlement programs to reduce City expenditures and additional
proposed State aid; (iv) the assumed receipt of revenues relating to rent
payments for the City's airports, which are currently the subject of a dispute
with the Port Authority of New York and New Jersey (the "Port Authority"); (v)
the sale of the City's television station; and (vi) pension cost savings
resulting from a proposed increase in the earnings assumption for pension
assets.
The 1997-2000 Financial Plan published on January 30, 1997 reflects
actual receipts and expenditures and changes in forecast revenues and
expenditures since the June Financial Plan. The 1997-2000 Financial Plan
projects revenues and expenditures for the 1997 and 1998 fiscal years will be
balanced in accordance with GAAP, and projects budget gaps of $1.9 billion and
$2.7 billion for the 1999 and 2000 fiscal years, respectively, after successful
implementation of the gap closing program for the 1998 fiscal year. Changes
since the June Financial Plan include (i) an increase in projected tax revenues
in fiscal years 1997 through 2000, respectively; (ii) a delay in the assumed
receipt of projected rent payments for the City airports from the 1997 fiscal
year to the 1998 and
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1999 fiscal years, and a reduction in assumed State and Federal aid for the 1997
fiscal year; (iii) an increase in projected overtime and other expenditures in
each of the fiscal years 1997 through 2000; (iv) an increase in expenditures for
BOE in the 1997 fiscal year for school text books; (v) a reduction in projected
pension costs, in fiscal years 1997 through 2000, respectively; and (vi) debt
service savings resulting from the refunding of certain City bonds.
The City Financial Plan assumes (i) approval by the Governor and the
State Legislature of extension of the 14% personal income tax surcharge, which
is scheduled to expire on December 31, 1997; (ii) collection of the projected
rent payments for the City's airports in the 1998 and 1999 fiscal years,
respectively, which may depend on the successful completion of negotiations with
the Port Authority or the enforcement of the City's rights under the existing
leases thereto through pending legal actions; (iii) the ability of HHC and BOE
to identify actions to offset substantial City and State revenue reductions and
the receipt by BOE of additional State aid; and (iv) State approval of the cost
containment initiatives and State aid proposed by the City. The City Financial
Plan does not reflect any increased costs which the City might incur as a result
of welfare legislation recently enacted by Congress or legislation proposed by
the Governor, which would, if enacted, implement such Federal welfare
legislation. The City Financial Plan also assumes successful implementation of
the gap closing programs planned for each of the 1998-2000 fiscal years which
generally include significant decreases in City expenditures on entitlement and
other City programs, the sale of certain City assets, debt service savings and
additional State aid. It can be expected that such gap closing programs will
engender substantial public debate. In addition, the economic and financial
condition of the City may be affected by various financial, social, economic and
political factors which could have a material effect on the City. Accordingly,
the City Financial Plan may be changed significantly as events develop.
The City's financial plans have been the subject of extensive public
comment and criticism. In March 1997, the City Comptroller, the New York City
Independent Budget Office, the New York State Comptroller and the Control Board
each issued reports which, among other things, state that projected revenues may
be less and future expenditures may be greater than forecasted in the City
Financial Plan. It is reasonable to expect that such reports and statements will
continue to be issued and to engender public comment.
o Ratings. As of April 24, 1997, Moody's rated the City's general
obligation bonds Baa1, Standard & Poor's rated the bonds BBB+ and Fitch rated
the bonds A-. These ratings do not reflect any credit enhancements relating to
any portion of City bonds. Such ratings reflect only the views of Moody's,
Standard & Poor's and Fitch, from which an explanation of the significance of
such ratings will continue for any given period of time or that they will not be
revised downward or withdrawn entirely. Any such downward revision or withdrawal
could have an adverse effect on the market prices of the bonds. On February 28,
1996, Fitch Investors Service, Inc.. ("Fitch") placed the City's general
obligation bonds on FitchAlert with negative implications. On November 5, 1996,
Fitch removed the City's general obligation bonds from FitchAlert, although
Fitch stated that the outlook remains the negative.
o Outstanding Net Indebtedness. As of December 31, 1996, the City
and the Municipal Assistance Corporation for the City of New York had,
respectively, approximately $25.5 billion and
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$3.8 billion of outstanding net long-term debt. As of October 24, 1996, the New
York City Municipal Water Finance Authority ( the "Water Authority") had
approximately $6.6 billion of long-term debt and $400 million of commercial
paper notes outstanding.
Debt service on Water Authority obligations is secured by fees and
charges collected from the users of the City's water and sewer system. State and
federal regulations require the City's water supply to met certain standards to
avoid filtration. The City's water supply now meets all technical standards and
the City has taken the position that increased regulatory, enforcement and other
efforts to protect its water supply will preserve the high quality of water in
the upstate water supply system and prevent the need for filtration. Pursuant to
an agreement among the City, the U.S. Environmental Protection Agency (the"
EPA") and certain communities in upstate New York , the EPA has granted the City
a waiver of filtration regulations through April 15, 1997, and has stated it
will issue a waiver through April, 2002 if the City and State implement certain
protective actions estimated to cost approximately $400 million. Preliminary
estimates of the costs of such filtration are from $4 to $8 billion. Such an
expenditure could cause significant increases in City water and sewer charges.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected or that State budgets in future fiscal years will be adopted
by the April 1 statutory deadline or that any such reductions or delays will not
have adverse effects on the City's cash flow or expenditures. As of April 25,
1997, the State had not adopted its budget for its 1997-1998 fiscal year which
commenced on April 1, 1997. However, the State has enacted legislation making
interim appropriations which maintains State spending until May 9, 1997. A
prolonged delay in the adoption of the State budget without additional interim
appropriations could delay the receipt by the City of State aid.
o Litigation. The City is a defendant in lawsuits pertaining to
material matters, including claims asserted which are incidental to performing
routine governmental and other functions. This litigation includes, but is not
limited to, actions commenced and claims asserted against the City arising out
of alleged torts, alleged breaches of contracts, alleged violations of law and
condemnation proceedings. As of June 30, 1996, the City estimates its potential
future liability to be approximately $2.8 billion.
o New York State. The State has historically been one of the wealthiest
states in the nation. For decades, however, the State economy has grown more
slowly than that of the nation as a whole, resulting in the gradual erosion of
its relative economic affluence. The causes of this relative decline are varied
and complex, in many cases involving national and international developments
beyond the State's control.
o Recent Developments. The national economy has resumed a more robust
rate of growth after a "soft landing" in 1995, with over 11 million jobs added
nationally since early 1992. The State economy has continued to expand, but
growth remains somewhat slower than in the nation. Although the State has added
approximately 240,000 jobs since late 1992, employment growth in the State has
been hindered during recent years by significant cutbacks in the computer and
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instrument manufacturing, utility, defense and banking industries. Government
downsizing has also moderated these job gains. Moderate growth is projected to
continue in 1997 for employment, wages and personal income, followed by a slight
slowing in 1998.
The New York State Financial Plan for the State's 1996-1997 fiscal year
(April 1, 1996- March 31, 1997) (the "State Plan") is based on the State's
1996-1997 fiscal year budget and updated, relying on actual results, through the
third quarter of the fiscal year. The State Plan assumes that the State's
economy will show modest expansion during the calendar year 1996. Although
industries that export goods and services are expected to continue to do well,
growth is expected to be slowed by government cutbacks at all levels and by
tight fiscal constraints on health and social services. On an average annual
basis, employment growth in the State is expected to be up slightly from the
1995 rate. Personal income is expected to record moderate gains in 1996. Bonus
payments in the securities industry are expected to increase further from last
year's record level.
o The 1996-97 Fiscal Year. The State's General Fund (the major
operating fund of the State) is projected in the State Plan to be balanced on a
cash basis for the 1996-97 fiscal year with a projected surplus resulting
primarily from an increase in projected tax receipts. The State Plan projects
General Fund receipts and transfers from other funds at $32.966 billion, an
increase of $158 million from the prior fiscal year, and disbursements and
transfers to other funds at $32.895 billion, an increase of $216 million from
the total disbursed in the prior fiscal year. The State Financial Plan includes
gap closing actions to offset a previously projected budget gap of $3.9 billion
for the 1996- 1997 fiscal year. Such gap closing actions include reductions in
the State workforce, spending reductions in health care and education programs,
projected increases in tax collections, pension and debt service savings and the
use of certain reserve funds.
The State Plan is based upon forecasts of national and State economic
activity developed through both internal analysis and review of State and
national economic forecasts prepared by commercial forecasting services and
other public and private forecasters. Economic forecasts have frequently failed
to predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward spending, the extent of
corporate and governmental restructuring, federal fiscal and monetary policies,
the level of interest rates, and the condition of the world economy, which could
have an adverse effect on the State. There can be no assurance that the State
economy will not experience results in any particular fiscal year that are worse
than predicted, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
Projections of total State receipts in the State Financial Plan are
based on the State tax structure in effect during the fiscal year and on
assumptions relating to basic economic factors and their historical
relationships to State tax receipts. Projections of total State disbursements
are based on assumptions relating to economic and demographic factors, levels of
disbursements for various services provided by local governments (where cost is
partially reimbursed by the State), and the results of various administrative
and statutory mechanisms in controlling disbursements for State operations.
Factors that may affect the level of disbursements in the fiscal year include
uncertainties relating to the economy of the nation and the State, the policies
of the federal government, and
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changes in the demand for and use of State services.
o Future Fiscal Years. The Governor presented his proposed 1997-1998
Executive Budget (the "Executive Budget") to the Legislature in January, 1997
and amended the Executive Budget as permitted under law in a revised Financial
Plan released in February, 1997. As of April 25, 1997, the State had not adopted
its budget for its 1997-1998 fiscal year which commenced on April 1, 1997.
However, the State has enacted legislation making interim appropriations which
maintains State spending until May 9, 1997. The State Senate, the State Assembly
and the Governor are engaged in continuing negotiations and it is reasonable to
expect press reports on their progress as the budget process continues. There
can be no assurance as to when the State will enact the 1997- 1998 budget, that
the Legislature will enact the Executive Budget as proposed by the Governor into
law, or that the State's adopted budget projections will not differ materially
and adversely from the projections set forth in the Executive Budget.
The draft 1997-1998 Financial Plan (the "1997-1998 Financial Plan")
based on the Executive Budget, projects balance on a cash basis and reflects a
continuing strategy of substantially reduced State spending, including
reductions in social welfare spending and efficiency and productivity
initiatives. Total General Fund receipts are projected to be $32.88 billion and
total General Fund disbursements and transfers to other funds are projected to
be $32.84 billion.
The Executive Budget proposes $2.3 billion in gap closing actions to
balance the 1997-1998 Financial Plan. As a result of the loss of non-recurring
revenues available in 1996-1997 and implementation of previously enacted tax
reduction programs, the Executive Budget proposes to close this gap primarily
through a series of spending reductions and Medicaid cost containment measures,
the use of a portion of the projected budget surplus for the 1996-1997 fiscal
year and other actions. The 1997-1998 Financial Plan also projects budget gaps
of $1.08 billion and $1.35 billion for the State's 1998-1999 and 1999-2000
fiscal years, respectively, assuming the enactment of the amended Executive
Budget and the implementation of unspecified gap closing actions and receipt of
certain federal aid in such years.
In recent years, State actions affecting the level of receipts and
disbursements, the relative strength of the State and regional economy, actions
of the federal government and other factors, have created structural gaps for
the State. These gaps resulted from a significant disparity between recurring
revenues and the costs of maintaining or increasing the level of support for
State programs. To address a potential imbalance in any given fiscal year, the
State would be required to take actions to increase receipts and/or reduce
disbursements as it enacts the budget for that year, and under the State
Constitution, the Governor is required to propose a balanced budget each year.
There can be no assurance, however, that the Legislature will enact the
Governor's proposals or that the State's actions will be sufficient to preserve
budgetary balance in a given fiscal year or to align recurring receipts and
disbursements in future fiscal years.
On August 22, 1996, the President signed into law the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996. The new law
abolishes the federal Aid to Families with Dependent Children program (AFDC),
and creates a new Temporary Assistance to Needy Families Program (TANF) funded
with a fixed federal block grant to states. The new law also imposes (with
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certain exceptions) a five-year durational limit on TANF recipients, requires
that virtually all recipients be engaged in work or community service activities
within two years of receiving benefits, and limits assistance provided to
certain immigrants and other classes of individuals. States are required to
comply with the new federal welfare reform law no later than July 1, 1997.
States who fail to meet these federally mandated job participation rates, or who
fail to conform with certain other federal standards, face potential sanctions
in the form of a reduced federal block grant.
On October 16, 1996, the Governor submitted the State's TANF
implementation plan to the federal government as required under the new federal
welfare law. Submission of this plan to the federal government requires New York
State to begin compliance with certain time limits on welfare benefits and
permits the State to become eligible for federal block grant funding. The
Governor has indicated that he plans to introduce legislation necessary to
conform with federal law for consideration by the Legislature in the 1997
legislative session. Given the size and scope of the changes required under
federal law, it is likely that these proposals will produce extensive public
discussions. There can be no assurances that the State legislature will enact
welfare reform proposals as submitted by the Governor and as required by federal
law.
It is expected that funding levels provided under the federal TANF
block grant will be higher than currently anticipated in the 1997-1998 Financial
Plan. However, the net fiscal impact of any changes to the State's welfare
programs that are necessary to conform with federal law will be dependent upon
such factors as the ability of the State to avoid any federal fiscal penalties,
the level of additional resources required to comply with any new State and/or
federal requirements, and the division of non-federal welfare costs between the
State and its localities.
o Prior Fiscal Years. The State ended its 1995-1996 fiscal year in
balance, with a reported 1995-1996 General Fund cash surplus of $445 million.
Prior to adoption of the State's 1995-1996 fiscal year budget, the State had
projected a potential budget gap of approximately $5 billion, which was closed
primarily through spending reductions, cost containment measures, State agency
actions and local assistance reforms.
In July 1995, the State Comptroller issued its audit of the State's
1994-1995 fiscal year prepared in accordance with generally accepted auditing
standards. The State completed its 1994- 1995 fiscal year with a General Fund
operating deficit of $1.426 billion, as compared with an operating surplus of
$914 million for the previous fiscal year. The 1994-1995 fiscal year deficit was
caused by several factors, including the use of $1.026 billion of the 1993-1994
fiscal year surplus in the 1994-1995 fiscal year and the adoption of changes in
accounting methodologies by the State Comptroller.
o Local Government Assistance Corporation ("LGAC"). In 1990, as part of
a State fiscal reform program, legislation was enacted creating LGAC, a public
benefit corporation empowered to issue long-term obligations to fund certain
payments to local governments traditionally funded through the State's annual
seasonal borrowing. As of June 1995, LGAC had issued bonds and notes to provide
net proceeds of $4.7 billion completing the program. The impact of LGAC's
borrowing is that the State is able to meet its cash flow needs in the first
quarter of the fiscal year without relying on short-term seasonal borrowings.
The State Plan includes no seasonal borrowing.
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o Authorities. The fiscal stability of the State is related to the
fiscal stability of its public authorities ("Authorities"). Authorities have
various responsibilities, including these which finance, construct and/or
operate revenue-producing public facilities. Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself, and may issue bonds and notes within the amounts, and restrictions set
forth in, their legislative authorization. As of September 30, 1995, the latest
data available, 17 Authorities each had outstanding debt of $100 million or more
and, collectively, had aggregate outstanding debt, including refunding bonds, of
$73.45 billion.
Authorities are generally supported by revenues generated by the
projects financed or operated, such as fares, user fees on bridges or tunnels,
highway tolls, rentals for dormitory rooms and housing units and charges for
occupancy at medical care facilities. In addition, State legislation authorizes
several financing techniques for Authorities. Also, there are statutory
arrangements providing for State local assistance payments otherwise payable to
localities to be made under certain circumstances to Authorities. Although the
State has no obligation to provide additional assistance to localities whose
local assistance payments have been paid to Authorities under these
arrangements, if local assistance payments are diverted the affected localities
could seek additional State assistance. Some Authorities also receive moneys
from State appropriations to pay for the operating costs of certain of their
programs.
o Ratings. On January 13, 1992, Standard & Poor's reduced its ratings
on the State's general obligation bonds from A to A- and, in addition, reduced
its ratings on the State's moral obligation, lease purchase, guaranteed and
contractual obligation debt. Standard & Poor's also continued its negative
rating outlook assessment on State general obligation debt. On April 26, 1993,
Standard & Poor's revised the rating outlook assessment to stable. On February
14, 1994, Standard & Poor's raised its outlook to positive and, on October 3,
1995, confirmed its A-rating. On January 6, 1992, Moody's reduced its ratings on
outstanding limited-liability State lease purchase and contractual obligations
from A to Baa1. On October 2, 1995, Moody's reconfirmed its A rating on the
State's general obligation long-term indebtedness. Ratings reflect only the
respective views of such organizations, and an explanation of the significance
of such ratings may be obtained from the rating agency furnishing the same.
There is no assurance that a particular rating will continue for any given
period of time or that any such rating will not be revised downward or withdrawn
entirely, if in the judgment of the agency originally establishing the rating,
circumstances so warrant. A downward revision or withdrawal of such ratings, or
either of them, may have an effect on the market price of the State Municipal
Securities in which the Fund invests.
o General Obligation Debt. As of March 31, 1996, the State had
approximately $5.05 billion in general obligation bonds, including $294 million
in bond anticipation notes outstanding. Principal and interest due on general
obligation bonds and interest due on bond anticipation notes were $735 million
for the 1995-96 fiscal year and are estimated to be $719 million for the State's
1996-97 fiscal year.
o Litigation. The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of
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<PAGE>
contracts, condemnation proceedings and other alleged violations of State and
Federal laws. These proceedings could affect adversely the financial condition
of the State in the 1997-1998 fiscal year or thereafter.
There can be no assurance that an adverse decision in any of these
proceedings would not exceed the amount the State reserves for the payment of
judgments and therefore, affect the ability of the State to maintain a balanced
1997-1998 Financial Plan. In its audited financial statements for the fiscal
year ended March 31, 1996, the State reported its estimated liability for
awarded and anticipated unfavorable judgments at $474 million.
o Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's 1997-98 fiscal year and thereafter. The potential impact on
the State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1997-98 fiscal year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers")
resulted in the creation of the Financial Control Board for the City of Yonkers
(the "Yonkers Board") by the State in 1984. The Yonkers Board is charged with
oversight of the fiscal affairs of Yonkers. Future actions taken by the Governor
or the State Legislature to assist Yonkers could result in increased State
expenditures for extraordinary local assistance.
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 Manager, comparable in quality
to investment grade securities, the Fund is dependent on the Manager'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 Manager 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 Manager will attempt to reduce the risks inherent in investments in
such obligations through active portfolio management, structuring the Fund's
portfolio to include a broad spectrum of municipal securities, 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 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
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<PAGE>
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
o Fundamental 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 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;
(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;
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<PAGE>
(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; or
(11) Issue senior securities.
o Non-Fundamental Investment Restrictions. The Fund operates under
certain investment restrictions which are non-fundamental investment policies of
the Fund and which can be changed by the Board without shareholder approval.
These restrictions provide that, for purposes of Fundamental Investment
Restriction No. 9 described above, the Fund's policy with respect to
concentration of investments shall be interpreted as prohibiting the Fund from
making an investment in any given industry if, upon making the proposed
investment, 25% or more of the value of its total assets would be invested in
such industry.
The percentage limitations on investments which are set forth above
(fundamental and non- fundamental) and elsewhere in this Statement of Additional
Information are applied at the time an investment is made. No violation of the
percentage limitation will occur unless the limitation is exceeded immediately
after an investment is made and as a result thereof (except for the limitations
on borrowing which are in effect at all times).
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, with four classes of shares.
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<PAGE>
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-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
entitle 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.
The Portfolio Manager of the Fund is Ronald H. Fielding. He has been
the person principally
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<PAGE>
responsible for the day-to-day management of the Fund since the Fund's
inception. Mr. Fielding is Vice President of the Fund and has also served as
an officer and director of the Fund's pervious investments advisers and their
affiliates. He is also a Senior Vice President of the Manager and Chairman of
the Rochester Division of the Manager. See "Trustees and Officers of the Fund".
Anthony A. Tanner is Assistant Portfolio Manager of the Fund. He is a Vice
President of the Rochester Division of the Manager and has also served as an
officer of the Fund's previous investment advisers.
Trustees and Officers of the Fund. The Fund's Trustees and officers 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. All of the trustees are also trustees of Rochester
Fund Municipals and Oppenheimer Bond Fund for Growth, which, together with the
Fund, are referred to herein as the "Oppenheimer Rochester Funds." With the
exception of Mr. Cannon, all of the trustees are also trustees or directors of
the Oppenheimer Quest For Value Funds (consisting of the following series:
Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest Officers Value
Fund, Oppenheimer Quest Opportunity Value Fund and Oppenheimer Quest Small Cap
Fund) Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund,
Inc., and Oppenheimer Quest Capital Value Fund, Inc., all of which are referred
to herein collectively as the "Oppenheimer Quest Funds." Ms. Macaskill (in her
capacity as President) Messrs. Donohue, Bowen, Zack, Bishop and Farrar,
respectively, hold the same offices with the New York-based Oppenheimer funds as
with the Fund. As of April 7, 1997 the Trustees and officers of the Fund as a
group owned less than 1% of the outstanding shares of any class of shares of the
Fund.
BRIDGET A. MACASKILL, Chairman of the Board of Trustees and President;* Age 48
President, Chief Executive Officer, and a Director of OppenheimerFunds, Inc.
(the "Manager") and HarbourView Asset Management Corporation ("HarbourView") a
subsidiary of the Manager; President and a director of Oppenheimer Acquisition
Corp. ("OAC") the Manager's parent holding company; and of Oppenheimer
Partnership Holdings, Inc.; Chairman and a director of Shareholder Services,
Inc. ("SSI"), a transfer agent subsidiary of the Manager and Shareholder
Financial Services, Inc. ("SFSI"); and a director of Oppenheimer Real Asset
Management, Inc.
JOHN CANNON, Trustee; Age 67
620 Sentry Parkway West Suite 220, Blue Bell, Pennsylvania 19422
Independent Consultant; Chief Investment Officer, CDC Associates, Inc.,
registered investment adviser; Director, Neuberger & Berman Income Managers
Trust, Neuberger & Berman Income Funds and Neuberger Berman Trust, 1995-present;
formerly Chairman & Treasurer, CDC Associates, 1993-February, 1996, President,
AMA Investment Advisers, Inc., a mutual fund investment adviser, 1976-1991,
Senior Vice President AMA Investment Advisers, Inc., 1991-1993.
PAUL Y. CLINTON, Trustee; Age 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture capital
consulting firm; formerly, Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation; formerly
President of Essex Management Corporation, a management
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<PAGE>
consulting company; Trustee of Capital Cash Management Trust and Prime Cash
Fund, each of which is a money-market fund and Narragansett Insured Tax Free
Fund; Director of Quest Cash Re serves, 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,
President of Geneve Corp., a venture capital fund, Chairman of Woodland Capital
Corp., a small business investment company; Vice President of W.R. Grace & Co.
THOMAS W. COURTNEY, Trustee; Age 63
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. and
Trustee of Quest for Value Accumulation Trust, each of which is an open-end
investment company; 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.
LACY B. HERRMANN, Trustee; Age 67
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., and Trustee of Quest for Value Accumulation Trust and The
Saratoga Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
GEORGE LOFT, Trustee; Age 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc. and Trustee of Quest
for Value Accumulation Trust and The Saratoga Advantage Trust, each of which is
an open-end investment company.
RONALD H. FIELDING, Vice President and Portfolio Manager; Age 48
350 Linden Oaks, Rochester, New York 14625
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<PAGE>
Senior Vice President of the Manager, Chairman of the Rochester Funds Division
of the Manager; formerly President and a trustee or director of the Fund,
Rochester Fund Municipals, Oppenheimer Bond Fund for Growth and Rochester Tax
Managed Fund, Inc; President and a director, Fielding Management Company, Inc.,
Chairman and a director of Rochester Fund Distributors, Inc., President and a
director of Rochester Capital Advisors, Inc., President and a director of
Rochester Fund Services, Inc.
ANDREW J. DONOHUE, Secretary; Age 47
Executive Vice President and General Counsel of the Manager and OppenheimerFunds
Distributor, Inc. (the "Distributor"); President and a director of Centennial
Asset Management Corporation, an investment advisory subsidiary of the Manager
("Centennial"); Executive Vice President, General Counsel and a director of
HarbourView, SFSI, and Oppenheimer Partnership Holdings, Inc.; President and a
director of Oppenheimer Real Asset Management, Inc.; General Counsel of OAC;
Executive Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer); formerly Senior Vice President and Associate
General Counsel of the Manager 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 60
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President, Treasurer,
Assistant Secretary and a director of Centennial, an investment advisory
subsidiary of the Manager; Senior Vice President, Treasurer and Secretary of
SSI; Vice President, Treasurer and Secretary of SFSI; Treasurer of OAC; Vice
President and Treasurer of Oppenheimer Real Asset Management, Inc.; Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc.(a
broker-dealer); an officer of other Oppenheimer funds.
ROBERT BISHOP, Assistant Treasurer; Age 38
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager, 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 T. FARRAR, Assistant Treasurer; Age 31
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager, 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.
ROBERT G. ZACK, Assistant Secretary; Age 48
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<PAGE>
Senior Vice President and Associate General Counsel of the Manager, Assistant
Secretary of SSI, SFSI; an officer of other Oppenheimer funds.
ADELE A. CAMPBELL, Assistant Treasurer; Age 33
350 Linden Oaks, Rochester, New York 14625
Assistant Vice President of the Manager; formerly Assistant Vice President of
Rochester Fund Services, Inc., Assistant Manager of Fund Accounting, Rochester
Fund Services, Inc., Audit
Manager for Price Waterhouse, LLP.
- -------------------
*A Trustee who is an "interested" person as defined in the Investment Company
Act.
o Remuneration of Trustees. All officers of the Fund and Ms. Macaskill,
a Trustee and President, are officers or directors of the Manager and receive no
salary or fee from the Fund. The remaining Trustees of the Fund received the
total amounts shown below from (i) the Fund during its fiscal year ended
December 31, 1996 and (ii) other investment companies (or series thereof) in the
Fund Complex during the calendar year ended December 31, 1996. The following
table sets forth the aggregate compensation received by the non-interested
Trustees from the Fund during the fiscal year ended December 31, 1996.
<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 Expenses(1) Retirement(1) Complex(2)
<S> <C> <C> <C> <C>
John Cannon $7,193 $0 $13,500 $20,250
Paul Y. Clinton $8,031 $0 $0 $54,450
Thomas W. Courtney $8,031 $0 $0 $54,450
Lacy B. Herrmann $8,031 $0 $0 $54,450
George Loft $7,681 $0 $0 $53,400
- ---------------------
<FN>
(1) 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
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<PAGE>
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 Rochester Fund
Municipals in 1992, will serve as an Independent Trustee of that fund for nine
years.
(2) Includes compensation received during the fiscal year ended December
31, 1996, from all funds within the Fund Complex, which for purposes of the
chart above, included the Fund, Bond Fund Series - Oppenheimer Bond Fund for
Growth, Rochester Fund Municipals, Oppenheimer Quest Global Value Fund, Inc.,
Oppenheimer Growth & Income Value Fund, Oppenheimer Quest Officers Value Fund,
Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund
and Oppenheimer Quest Value Fund, Inc.
</FN>
</TABLE>
o Major Shareholders. As of April 7, 1997 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 X shares, except for Merrill Lynch
Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive, East, Jacksonville, Florida
32246 which was the record owner of 38,909,349 Class A shares (20.03%) and
3,892,950 Class X shares (26.17%) then outstanding. (Prior to May 1, 1997, the
Fund's Class X shares were designated Class B shares).
The Manager and Its Affiliates. The Manager 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 Manager'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 Manager 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 Manager.
o The Investment Advisory Agreement. The Investment Advisory Agreement
between the Manager and the Fund which was entered into on January 4, 1996 (the
"Advisory Agreement") requires the Manager, 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 Manager 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 of the first $100 million; 0.45%
of average daily net assets on the next $150 million; 0.40% of average daily net
assets of the next $1,750 million and 0.39% of average daily net assets over $2
billion.
Expenses not expressly assumed by the Manager 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,
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<PAGE>
certain printing and registration costs, and non-recurring expenses, including
litigation. For the Fund's fiscal year ended December 31, 1996, the management
fees paid by the Fund to the Manager were $2,687,213 and to Rochester Capital
Advisors, L.P., its previous investment adviser, were $27,896. For the Fund's
fiscal years ended December 31, 1995 and December 31, 1994, the management fees
paid by the Fund to Rochester Capital Advisors, L.P. were $2,282,690 and
$2,154,234, respectively.
The Advisory Agreement contains no expense limitation. However, because
of state regulations limiting fund expenses that previously applied, the Manager
has voluntarily undertaken that the Fund's total expenses in any fiscal year
(including the investment advisory fee but exclusive of taxes, interest,
brokerage commissions, distribution plan payments and any extraordinary
non-recurring expenses, such including litigation) would not exceed the most
stringent state regulatory limitation applicable to the Fund. Due to changes in
federal securities laws, such state regulations no longer apply and the
Manager's undertaking is therefore inapplicable and has been withdrawn. During
the Fund's last fiscal year, the Fund's expenses did not exceed the most
stringent state regulatory limit and the voluntary undertaking was not invoked.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard for its obligations and duties under the advisory agreement,
the Manager is not liable for any loss sustained by reason of any investment of
Fund assets made with due care and in good faith. The Advisory Agreement permits
the Manager 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 or general
distributor. If the Manager 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.
o The Distributor. Under its General Distributor's Agreement with the
Fund, which was entered into on January 4, 1996, the Distributor acts as the
Fund's principal underwriter in the continuous public offering of the Fund's
Class A , Class B, Class C and Class X 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, 1994, 1995 and 1996, the aggregate amount of sales
charge on sales of the Fund's Class A shares was $1,699,143, $1,652,514 and
$1,623,032, respectively, of which Rochester Fund Distributors, Inc., the Fund's
previous principal underwriter, retained $211,300 and $217,615 in 1994 and 1995,
respectively. In 1996, the Distributor retained $290,035. Class X shares were
offered to the public commencing on May 1, 1995. During the period from May 1,
1995 through December 31, 1995 and during fiscal year ended December 31, 1996,
the contingent deferred sales charge collected by Rochester Fund Distributors,
Inc. on the redemption of Class X shares in 1995 totaled $6,001 and the
contingent deferred sales charge collected by the Distributor in 1996 was
$31,172, all of which was retained by the Distributor. 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, see "Distribution
and Service Plans," below.
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<PAGE>
o The Transfer Agent. OppenheimerFunds Services, a division of the
Manager, serves as the Fund's transfer agent pursuant to a Service Contract
dated March 8, 1996. The transfer agent is responsible for maintaining
shareholder accounting records, and for shareholder servicing and administrative
functions. The Transfer Agent is compensated on the basis of a fixed fee per
account and as a percentage of the Fund's average daily net assets. 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, 1994, 1995 and 1996 was
$255,622, $292,278 and $3,066, respectively. The compensation paid to
OppenheimerFunds Services for such services for fiscal year ended December 31,
1996 was $297,354.
o Accounting and Recordkeeping Services. The Manager also provides
certain accounting and recordkeeping services to the Fund pursuant to an
Accounting and Administration Agreement entered 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, 1994 and 1995 was $150,500 and
$161,850, respectively. The compensation paid to OppenheimerFunds Services for
the fiscal year ended December 31,1996 was $193,682.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager 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 Manager 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 Manager 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 Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund and/or the
other accounts over which the Manager 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
Manager that the commission is fair and reasonable in relation to the services
provided. Subject to the foregoing considerations, the Manager may also consider
sales of shares of the Fund and other investment companies managed by the
Manager or its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Subject to the
provisions of the Advisory Agreement and the procedures and rules described
above, allocations of brokerage are generally made by the Manager's portfolio
traders based upon recommendations from the Manager's
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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 Manager'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 Manager 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 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 Manager 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 Manager and its affiliates. The
research services provided by brokers broaden the scope and supplement the
research activities of the Manager, 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 Manager 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, 1994, 1995 and 1996.
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, 1995 and 1996 the Fund's portfolio turnover rates were
22.34% and 24.35 %, respectively.
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus, from time to
time the "standardized yield," "dividend yield," "tax-equivalent yield,"
"average annual total return," "cumulative total return," "average annual total
return at net asset value" and "total return at net asset
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<PAGE>
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 currently offers four classes of shares of beneficial
interest: Class A, Class B, Class C and Class X shares. The different classes of
shares represent investments in the same portfolio of securities, but are
subject to different expenses and are likely to have different share prices. On
May 1, 1997, the Fund redesignated as "Class X" shares its "Class B" shares
which had been outstanding prior to that date. Performance information set forth
below relates only to the Fund's Class A and Class X shares, which were first
publicly offered on September 18, 1991 and May 1, 1995, respectively. No
performance information is provided for either new Class B or Class C shares
because no shares of either of those classes were issued during the fiscal year
ended December 31, 1996.
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 each advertised 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.
|X| Standardized Yields
o 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:
a-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.
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<PAGE>
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, 1996, the
standardized yields for the Fund's Class A and Class X shares were 4.88%, and
4.52%, respectively.
o 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. Appendix
B includes tax-equivalent yield tables based on various effective tax brackets
for tax payers. Such tax brackets are determined by a taxpayer's Federal, New
York State and New York City taxable income (the net amount subject to Federal
and State income taxes after deductions and exemptions.) The Fund's
tax-equivalent yields for its Class A shares and Class X shares for the 30-day
period ended December 31, 1996, for an individual New York City resident in the
46.43% combined tax bracket were 9.11% and 8.44%, respectively, assuming
application of 1997 tax rates.
o 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 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 of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B, Class C and Class X 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.
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<PAGE>
The dividend yields on Class A shares for the 30-day period ended
December 31, 1996 were 4.61 % and 4.78 % when calculated at maximum offering
price and at net asset value, respectively. The dividend yield on Class X shares
for the 30-day period ended December 31, 1996, was 4.29% when calculated at net
asset value.
o Total Return Information
o 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 )
o 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 3.50% (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 (4.0% for the first year, 3.0% for the second year, 2.0% for the third
and fourth years, 1.0% in the fifth year and none thereafter), is applied, as
described in the Prospectus. For Class C shares, the 1.0% contingent deferred
sales charge is applied to the investment result for the one year period (or
less). For Class X shares, the payment of a contingent deferred sales charge
(2.5% in the first year, 2.0% for the second year, 1.5% for the third year, 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 and five year periods ended December 31, 1996 and for
the period from September 18, 1991 through December 31, 1996, were 1.15%, 5.96%
and 6.43%, respectively. The cumulative "total return" on Class A shares for the
period from September 18, 1991 through December 31, 1996 was 38.99%. For fiscal
year ended December 31, 1996 and the period from May 1, 1995 (date Class X
shares were first publicly offered) through December 31, 1996, the average
annual total returns on an investment in Class X shares were 0.60% and 4.44%,
respectively. The cumulative total return on Class X shares for the period from
May 1, 1995 through December 31, 1996 was 7.51%.
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<PAGE>
o 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, Class B, Class C or Class X 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 average annual total returns at net asset value on an investment in
Class A shares for the one and five year periods ended December 31, 1996 and for
the period from September 18, 1991 to December 31, 1996 were 4.82%, 6.72% and
7.15%, respectively. The average annual total returns at net asset value on an
investment in Class X shares for the fiscal year ended December 31, 1996 and for
the period from May 1, 1995 to December 31, 1996 were 4.59% and 6.18%,
respectively.
The cumulative total return at net asset value of the Fund's Class A shares for
the period from September 18, 1991 through December 31, 1996 was 44.03%. The
cumulative total return at net asset value for Class X shares for the period
from May 1, 1995 through December 31, 1996 was 10.51%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B, Class C or Class X 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) and (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 include in its advertisement and sales literature performance
information about the Fund cited in other newspapers and periodicals such as The
New York Times, which may include performance quotations from other sources,
including Lipper and Morningstar.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B, Class C or Class X shares by Morningstar,
Inc., an independent mutual fund monitoring service. Morningstar ranks mutual
funds monthly in broad investment categories: domestic stock funds,
international stock funds, taxable bond funds and municipal bond funds based on
risk- adjusted investment return. The Fund is ranked among municipal bond funds.
Investment return measures a fund's or class's one, three, five and ten-year
average annual total returns (depending on the inception of the fund or class)
in excess of 90-day U.S. Treasury bill returns after considering sales charges
and expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill monthly returns. Risk and investment 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%). The current
star rating is the fund's or class's 3 year ranking or its combined 3- and 5-
year ranking (weighted 60%/40%, respectively) or its combined 3-, 5- and 10-
year ranking (weighted 40%, 30% and 30%, respectively) depending on the
inception of the fund or class. Rankings are subject to change monthly.
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<PAGE>
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
The total return on an investment in the Fund's Class A, Class B, Class
C or Class X shares may be compared with performance for the same period of
comparable indices, including but not limited to the Merrill Lynch Municipal
Master Index or a subset of that index which is comprised of municipal bonds
having maturities of between three and seven years and the Lehman Brothers
Municipal Bond Index or a subset of that index which is comprised of municipal
bonds, with a specific maturity of between four and six years. Both the Merrill
Lynch Municipal Master Index and the Lehman Brothers Municipal Bond Index are
broadly based, widely recognized unmanaged indices which reflect the performance
of the general municipal bond market. The specific subsets of these indices are
comprised of municipal bonds whose maturities more closely resemble those of the
municipal bonds in which the Fund invests. 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,
Class B, Class C or Class X 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 Manager may publish rankings or ratings
of the Manager (or Transfer Agent) 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, Class B, Class C or Class X
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.
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<PAGE>
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B shares, Class C shares and Class X shares under Rule
12b-1 of the Investment Company Act, pursuant to which the Fund makes payment to
the Distributor for all or a portion of its costs 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. For the Distribution and Service Plans for
Class B and Class C shares, that vote was cast by the Manager, as the sole
initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time, may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
the Fund), to make payments to brokers, dealers or other 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 Manager 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 majority vote of the
shareholders of the class affected by the amendment. In addition, because Class
B and Class X shares of the Fund automatically convert into Class A shares after
six years, the Fund is required by a Securities and Exchange Commission rule to
obtain the approval of Class B and Class X 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,
Class B and Class X 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. Those reports, including the allocations on which they are based,
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 and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
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<PAGE>
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 the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, did not exceed a minimum amount, if any,
that may be determined from time to time by a majority of the Fund's Independent
Trustees. Initially, the Board of Trustees has set the fees at the maximum rate
and has set no minimum amount of assets to qualify for payment.
For the fiscal year ended December 31, 1996, payments under the Class A
Plan totaled $1,488,992, all of which was paid by the Distributor to Recipients,
including $7,144 paid to an affiliate of the Distributor. Any unreimbursed
expenses incurred by the Distributor with respect to Class A shares for any
fiscal year may not be recovered in subsequent years. Payments received by the
Distributor under the Plan for Class A shares will not be used to pay any
interest expense, carrying charge, or other financial costs, or allocation of
overhead by the Distributor.
The Class B, Class C and Class X Plans allow 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 described in the
Prospectus. The advance payment is based on the net asset value of Class B,
Class C or Class X shares sold. An exchange of shares does not entitle the
Recipient to an advance service fee payment. In the event Class B, Class C or
Class X shares are redeemed during the first year that the shares are
outstanding, the Recipient will be obligated to repay to the Distributor a pro
rata portion of the Distributor's advance payment for those shares.
Although the Class B, Class C and Class X Plans permit the Distributor
to retain both the asset-based sales charges and the service fees on such
shares, or to pay Recipients the service fee on a quarterly basis, without
payment in advance, the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may be
established from time to time under the Class B, Class C and Class X Plans by
the Board. Initially, the Board has set no minimum holding period. All payments
under the Class B, Class C and Class X Plans are subject to the limitations
imposed by the Conduct Rules of the National Association of Securities Dealers,
Inc., on payments of asset-based sales charges and service fees.
The Class B, Class C and Class X Plans provide for the Distributor to
be compensated at a flat rate, whether the Distributor's distribution expenses
are more or less than the amounts 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, or may
provide such financing from its own resources, or from an affiliate, (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), state "blue sky" registration fees and certain other
distribution expenses.
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<PAGE>
For the fiscal year ended December 31, 1996, payments under the Class X
Plan totaled $214,619, of which the Distributor retained $171,044 as
reimbursement for Class X sales commissions and service fee advances, as well as
financing costs. The Class X 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 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.
ABOUT YOUR ACCOUNT
How to Buy Shares
Alternative Sales Arrangements - Class A Shares, Class B Shares, Class C Shares,
Class X Shares. The availability of four 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. Investors
should understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B, Class C and Class X shares are
the same as those of the initial sales charge with respect to Class A shares.
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 the other. The Distributor normally will not accept any order for
$500,000 or $1 million or more of Class B, Class C or Class X shares ,
respectively, on behalf of a single investor (not including dealer "street name"
or omnibus accounts) because generally it will be more advantageous for that
investor to purchase Class A shares of the Fund instead.
The four 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 B shares, Class C
and Class X shares and the dividends payable on Class B, Class C and Class X
shares will be reduced by incremental expenses borne by those classes, including
the asset-based sales charges.
The conversion of Class B and Class X 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 and Class X 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 or Class X shares
would occur while such suspension remained in effect. Although Class B or Class
X 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 , Class B, Class C and Class X shares
recognizes two types of expenses. General expenses
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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 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, Class B Class C and Class X 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) long-term debt
securities having a remaining maturity in excess of 60 days are valued based on
the mean between the "bid" and "ask" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the Manager from
two active market makers in the security on the basis of reasonable inquiry;
(ii) debt instruments having a maturity of more than 397 days when issued, and
non-money market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are valued at the
mean between the "bid" and "ask" prices determined by a pricing service approved
by the Fund's Board of Trustees or obtained by the Manager from two active
market makers in the security on the basis of reasonable inquiry; (iii) money
market debt securities that had a maturity of less than 397 days when issued
that have a remaining maturity of 60 days or less are valued at cost, adjusted
for amortization of premiums and accretion of discounts; and (iv) securities
(including restricted securities) not having readily-available market quotations
are valued at fair value determined under the Board's procedures. If the Manager
is unable to locate two market makers willing to give quotes (see (i) and (ii)
above), the security may be priced at the mean between the "bid" and "ask"
prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "ask" price is available).
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In the case of Municipal Securities, U.S. Government securities and
corporate bonds, when last sale information is not generally 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 (such as the tax-exempt status of the interest paid by Municipal
Securities). The Manager may use pricing services approved by the Board of
Trustees to price any of the types of securities described above. The Manager
will monitor the accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual sales prices of selected
securities.
Puts and calls are valued at the last sales price on the principal
exchange on which they are traded or on NASDAQ, as applicable, as determined by
a pricing service approved by the Board of Trustees or by the Manager. If there
were no sales that day, value shall be the last sale price on the preceding
trading day if it is within the spread of the closing "bid" and "ask" prices on
the principal exchange or on NASDAQ on the valuation date, or, if not, value
shall be the closing "bid" price on the principal exchange or on NASDAQ on the
valuation date. If the put or call is not traded on an exchange or on NASDAQ, it
shall be valued at the mean between "bid" and "ask" prices obtained by the
Manager from two active market makers (which in certain cases may be the "bid"
price if no "ask" price is available).
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House (ACH)
transfer to buy shares. Dividends will begin to accrue on shares purchased by
the proceeds of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of The New York
Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. If Federal Funds are received on a business day after the close
of the Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular business day. The proceeds of ACH transfers are normally
received by the Fund 3 days after the transfers are initiated. The Distributor
and the Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. See "How to Purchase Shares" in the Prospectus for a
description of how Shares 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 may be purchased. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for 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, a spouse's siblings, aunts, uncles, nieces and nephews.
The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which
the Distributor acts as the distributor or the sub-distributor and include the
following:
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Oppenheimer Bond Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
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Oppenheimer U.S. Government Trust
Oppenheimer Value Stock Fund
Oppenheimer World Bond Fund
Rochester Fund Municipals
The New York Tax Exempt Income Fund, Inc.
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund shares
may be subject to a contingent deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares of the Fund or Class A, Class B or Class X shares of the Fund and
Class A or Class A and Class B shares of other Oppenheimer funds during a
13-month period (the "Letter of Intend period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the Letter.
The Letter states the investor's intention to make the aggregate amount of
purchases of shares which, when added to the investor's holdings of shares of
those funds, will equal or exceed the amount specified in the Letter. Purchases
made by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
Class A and Class B (or Class X) shares purchased under the Letter to obtain the
reduced sales charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales charge) that
applies to a single lump-sum purchase of shares in the amount intended to be
purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in Terms of Escrow, below (as
those terms may be amended from time to time). The investor agrees that shares
equal in value to 5% of the intended purchase amount will be held in escrow by
the Transfer Agent subject to the Terms of Escrow. Also,
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the investor agrees to be bound by the terms of the Prospectus, this Statement
of Additional Information and the Application used for such Letter of Intent,
and if such terms are amended, as they may be from time to time by the Fund,
that those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
purchases. If total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to qualify for the
next sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and when the
dealer returns to the Distributor the excess of the amount of commissions
allowed or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the Distributor
will be used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of Intent
period will be deducted. It is the responsibility of the dealer of record and/or
the investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
o Terms of Escrow That Apply to Letters of Intent.
(1) Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended purchase amount is $50,000, the
escrow shall be shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and capital gains
distributions on the escrowed shares will be credited to the investor's account.
(2) If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.
(3) If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid if the
total amount purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If such difference in sales charges is not paid within twenty days after
a request from the Distributor or the dealer, the Distributor will, within sixty
days of the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and fractional
shares remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such
additional sales charge, the sales charge will be withheld from the redemption
proceeds.
(4) By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.
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(5) The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a) Class A or
Class X shares of the Fund sold with a front-end sales charge or subject to a
Class A contingent deferred sales charge, (b) Class B shares of other
Oppenheimer funds acquired subject to a contingent deferred sales charge, and
(c) Class A shares or Class B shares acquired in exchange for either (i) Class A
shares of one of the other Oppenheimer funds that were acquired subject to a
Class A initial or contingent deferred sales charge or (ii) Class B shares of
one of the other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
(6) Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If you make payments from your
bank account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor,
the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares resulting from delays in ACH transmission.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to shares
purchased by Asset Builder payments. An application should be obtained from the
Distributor, completed and returned, and a prospectus of the selected fund(s)
should be obtained from the Distributor or your financial adviser before
initiating Asset Builder payments. The amount of the Asset Builder investment
may be changed or the automatic investments may be terminated at any time by
writing to the Transfer Agent. A reasonable period (approximately 15 days) is
required after the Transfer Agent's receipt of such instructions to implement
them. The Fund reserves the right to amend, suspend, or discontinue offering
such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus. The
information below supplements the terms and conditions for redemptions set forth
in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank
will ask the Fund to redeem a sufficient number of full and fractional shares
in the shareholder's account to cover the
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amount of the check. This enables the shareholder to continue receiving
dividends on those shares until the check is presented to the Fund. Checks may
not be presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills or to
obtain cash at other banks. The Fund reserves the right to amend, suspend or
discontinue offering checkwriting privileges at any time without prior notice.
By choosing the Checkwriting privilege, whether you do so by signing
the Account Application or by completing a Checkwriting card, the individuals
signing (1) represent that they are either the registered owner(s) of the shares
of the Fund, or are an officer, general partner, trustee or other fiduciary or
agent, as applicable, duly authorized to act on behalf of such registered
owner(s); (2) authorize the Fund, its Transfer Agent and any bank through which
the Fund's drafts ("checks") are payable (the "Bank"), to pay all checks drawn
on the Fund account of such person(s) and to effect a redemption of sufficient
shares in that account to cover payment of such checks; (3) specifically
acknowledge(s) that if you choose to permit a single signature on checks drawn
against joint accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will be sufficient
to authorize payment of that check and redemption from an account even if that
account is registered in the names of more than one person or even if more than
one authorized signature appears on the Checkwriting card or the Application, as
applicable; and (4) understand(s) that the Checkwriting privilege may be
terminated or amended at any time by the Fund and/or the Bank and neither shall
incur any liability for such amendment or termination or for effecting
redemptions to pay checks reasonably believed to be genuine, or for returning or
not paying checks which have not been accepted for any reason.
Involuntary Redemptions. 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 $200 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.
Payments "In Kind." The Prospectus states that payment for shares tendered for
redemption is ordinarily made in cash. However, the Board of Trustees of the
Fund may determine that it would be detrimental to the best interests of the
remaining shareholders of the Fund to make payment of a redemption order wholly
or partly in cash. In that case the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of securities from the portfolio of
the Fund, in lieu of cash, in conformity with applicable rules of the Securities
and Exchange Commission. The Fund has elected to be governed by Rule 18f-1 under
the Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets of
the Fund during any 90-day period for any one shareholder. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage or other costs
in selling the securities for cash. The method of valuing securities used to
make redemptions in kind will be the same as the method the Fund uses to value
its portfolio securities described above under the "Determination of Net Asset
Values Per Share" and that valuation will be made as of the time the redemption
price is determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares that you
purchased subject to an initial sales charge, or (ii) Class A or Class B shares
on which you paid a contingent deferred sales charge when you
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redeemed them without sales charge. This privilege does not apply to Class C
or Class X shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of
the other Oppenheimer funds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer Agent
receives the reinvestment order. The shareholder must ask the Distributor for
that privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer funds within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the redemption.
However, in that case the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds. The Fund may amend,
suspend or cease offering this reinvestment privilege at any time as to shares
redeemed after the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of any class at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute assignment,
gift or bequest, not involving, directly or indirectly, a public sale). The
transferred shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the transferred shares
in the same manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not all shares
in the account would be subject to a contingent deferred sales charge if
redeemed at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B, Class C and Class X
contingent deferred sales charge will be followed in determining the order in
which shares are transferred.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. The shareholder should contact the
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
the order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from a dealer or broker after the close of the New
York Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to and received
by the Distributor prior to its close of business that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt the required redemption documents in
proper form, with the signature(s) of the registered owners guaranteed on the
redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required
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minimum distributions from OppenheimerFunds-sponsored retirement plans may not
be arranged on this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account designated on
the OppenheimerFunds New Account Application or signature-guaranteed
instructions. Shares are normally redeemed pursuant to an Automatic Withdrawal
Plan three business days before the date you select in the Account Application.
If a contingent deferred sales charge applies to the redemption, the amount of
the check or payment will be reduced accordingly. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right to amend,
suspend or discontinue offering such plans at any time without prior notice.
Because of the sales charge assessed on Class A Share purchases, shareholders
should not make regular additional Class A Share purchases while participating
in an Automatic Withdrawal Plan. Class B, Class C and Class X shareholders
should not establish withdrawal plans because of the imposition of the
contingent deferred sales charge on such withdrawals (except where the
contingent deferred sales charge is waived as described in the Prospectus.)
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below as
well as in the Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments will
automatically apply to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed instructions)
to exchange a pre-determined amount of shares of the Fund for shares (of the
same class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and shares acquired with reinvested dividends and capital gains
distributions will be redeemed next, followed by shares acquired with a sales
charge, to the extent necessary to make withdrawal payments. Depending upon the
amount withdrawn, the investor's principal may be depleted. Payments made under
withdrawal plans should not be considered as a yield or income on your
investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased for and held
under the Plan, but the Transfer Agent will credit all such shares to the
account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may be
held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the account
may be paid in cash or reinvested.
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Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date. Checks or
AccountLink payments of the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment (receipt of payment on the date selected cannot be guaranteed),
according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time in mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice (in proper form in accordance with
the requirements of the then current Prospectus of the Fund) to redeem all, or
any part of, the shares held under the Plan. In that case, the Transfer Agent
will redeem the number of shares requested at the net asset value per share in
effect in accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to
the Transfer Agent. A Plan may also be terminated at any time by the Transfer
Agent upon receiving directions to that effect from the Fund. The Transfer Agent
will also terminate a Plan upon receipt of evidence satisfactory to it of the
death or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or the Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend- reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use Class A shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the Class A shares in
certificated form. Share certificates are not issued for Class B, Class C or
Class X shares. Upon written request from the Planholder, the Transfer Agent
will determine the number of Class A shares for which a certificate may be
issued without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, except with respect to Class X shares of the Fund
which may be exchanged only for Class B shares of other Oppenheimer funds,
shares of a particular class of Oppenheimer funds having more than one class of
shares may be exchanged only for shares of the same class of other Oppenheimer
funds. 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, Class B and Class C shares except Centennial America Fund,
L.P., Centennial California Tax Exempt Trust, Centennial Government Trust,
Centennial Money Market Trust, Centennial New York Tax Exempt Trust, Centennial
Tax Exempt Trust, Daily Cash Accumulation Fund, Inc. and Oppenheimer Money
Market Fund, Inc., which offer only Class A shares, and Oppenheimer Main Street
California Municipal Fund which offer only Class A and Class B shares. (Class B
and Class C shares of Oppenheimer Cash Reserves are generally only available by
exchange from the same class of other Oppenheimer funds or through
OppenheimerFunds sponsored
-44-
<PAGE>
401(k) plans). A current list showing which funds offer which class can be
obtained by calling the Distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 12 months prior
to that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. Shares of
this Fund acquired by reinvestment of dividends or distributions from any other
of the Oppenheimer funds (except Oppenheimer Cash Reserves) or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
Shares of this Fund acquired by reinvestment of dividends or
distribution from any other of the Oppenheimer funds (except Oppenheimer Cash
Reserves) or from any unit investment trust for which reinvestment arrangements
have been made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds. No contingent deferred sales charge is
imposed on exchanges of shares of either class purchased subject to a contingent
deferred sales charge. However, when Class A shares acquired by exchange of
Class A shares of other Oppenheimer funds purchased subject to a Class A
contingent deferred sales charge are redeemed within 12 months (18 months for
shares purchased prior to May 1, 1997) of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A contingent
deferred sales charge is imposed on the redeemed shares (see "Class A Contingent
Deferred Sales Charge" in the Prospectus). The Class B contingent deferred sales
charge is imposed on Class B shares acquired by exchange if they are redeemed
within 5 years of the initial purchase of the exchanged Class B shares. The
Class C contingent deferred sales charge is imposed on Class C shares acquired
by exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares. The contingent deferred sales charges, if any, of the
fund into which shares of the Fund are exchanged will apply at the time you
redeem the shares acquired as a result of the exchange.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the imposition
of the Class B or Class C 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, Class C or
Class X shares. Note that Class X shares may only be exchanged for Class B
shares of other Oppenheimer funds.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account. 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 exchanges may be less than
the number requested if the exchange or the number requested would include
shares subject to a restriction cited
-45-
<PAGE>
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 Asset Builder
Plans, Automatic Withdrawal Plans, Checkwriting, if available, and retirement
plan contributions will be switched to the new account unless the Transfer 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
Transfer 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. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer 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
Dividends and Distributions. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares will
not be declared or paid until such time as Federal Funds (funds credited to a
member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Shares
purchased through dealers or brokers normally are paid for by the third business
day following the placement of the purchase order. Shares redeemed through the
regular redemption procedure will be paid dividends through and including the
day on which the redemption request is received by the Transfer Agent in proper
form. Dividends will be declared on shares repurchased by a dealer or broker for
three business days following the trade date (i.e., to and including the day
prior to settlement of the repurchase). If all shares in an account are
redeemed, all dividends accrued on shares of the same class in the account will
be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in
-46-
<PAGE>
shares of Oppenheimer Money Market Fund, Inc., as promptly as possible after the
return of such checks to the Transfer Agent, to enable the investor to earn a
return on otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements -- Class A, Class B, Class C and Class X shares
," above. Dividends are calculated in the same manner, at the same time and on
the same day for shares of each class. However, dividends on Class B shares,
Class C and Class X shares are expected to be lower as a result of the
asset-based sales charge on Class B shares, Class C shares and Class X shares ,
and Class B, Class C and Class X dividends will also differ in amount as a
consequence of any difference in net asset value between Class A shares, Class B
shares, Class C shares and Class X shares.
Distributions may be made annually in December out of any net
short-term or long-term capital gains realized from the sale of securities. Any
difference between the net asset values of Class A, Class B, Class C and Class X
shares will be reflected in such distributions. Distributions from net
short-term capital gains are taxable to shareholders as ordinary income and when
paid by the Fund are considered "dividends." The Fund may make a supplemental
distribution of capital gains and ordinary income following the end of its
fiscal year. Long-term capital gains distributions, if any are taxable as
long-term capital gains whether received in cash or reinvested and regardless of
how long Fund shares have been held. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the realization of any
capital gains.
Tax Status of the Fund's Dividends and Distributions. The Fund intends to
qualify under the Internal Revenue Code during each fiscal year to pay
"exempt-interest dividends" to its shareholders. Exempt-interest dividends which
are derived from net investment income earned by the Fund on Municipal
Obligations will be excludable from gross income of shareholders for Federal
income tax purposes. Net investment income includes the allocation of amounts of
income from the Municipal Securities in the Fund's portfolio which are free from
Federal income taxes. This allocation will be made by the use of one designated
percentage applied uniformly to all income dividends made during the Fund's tax
year. Such designation will normally be made following the end of each fiscal
year as to income dividends paid in the prior year. The percentage of income
designated as tax-exempt may substantially differ from the percentage of the
Fund's income that was tax-exempt for a given period. All of the Fund's
dividends (excluding capital gains distributions) paid during 1996 were exempt
from Federal income tax and New York State and New York City personal income
taxes. A portion of the exempt-interest dividends paid by the Fund may be an
item of tax preference for shareholders subject to the alternative minimum tax.
The amount of any dividends attributable to tax preference items for purposes of
the alternative minimum tax will be identified when tax information is
distributed by the Fund. 19.23% of the Fund's dividends (excluding
distributions) paid during 1996 were a tax preference item for shareholders
subject to the alternative minimum tax.
A shareholder receiving a dividend from income earned by the Fund from
one or more of: (1) certain taxable temporary investments (such as certificates
of deposit, repurchase agreements, commercial paper and obligations of the U.S.
government, its agencies and instrumentalities); (2) income from securities
loans; (3) income or gains from options or futures; or (4) an excess of net
short-term capital gain over net long-term capital loss from the Fund, treats
the dividend as a receipt of either ordinary income or long-term capital gain in
the computation of gross income, regardless of whether the dividend is
reinvested. The Fund's dividends will not be eligible for the dividends-received
deduction for corporations. Shareholders receiving Social Security benefits
should be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject
-47-
<PAGE>
to Federal income tax. Losses realized by shareholders on the redemption of Fund
shares within six months of purchase (which period may be shortened by
regulation) will be disallowed for Federal income tax purposes to the extent of
exempt-interest dividends received on such shares.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on amounts
paid by it as dividends and distributions. The Fund qualified as a regulated
investment company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests to determine whether the Fund will qualify, and the
Fund might not meet those tests in a particular year. For example, if the Fund
derives 30% or more of its gross income from the sale of securities held less
than three months, it may fail to qualify. If it does not qualify, the Fund will
be treated for tax purposes as an ordinary corporation, will receive no tax
deduction for payments of dividends and distributions made to shareholders and
will no longer be able to pay dividends which are exempt from Federal income tax
and New York State and New York City personal income taxes to its shareholders.
Under the Internal Revenue Code, by December 31 each year the Fund must
distribute at least 98% of its taxable investment income earned and its capital
gains realized from January 1 through December 31 of that year or else the Fund
must pay an excise tax on the amounts not distributed. The Manager might
determine in a particular year that it might be in the best interest of
shareholders for the Fund not to make distributions at the required levels and
to pay the excise tax on the undistributed amounts. That would reduce the amount
of income or capital gains available for distribution to shareholders.
The Internal Revenue Code requires that a holder (such as the Fund) of
a zero coupon security accrue as income each year a portion of the discount at
which the security was purchased even though the Fund receives no interest
payment in cash on the security during the year. As an investment company, the
Fund must pay out substantially all of its net investment income each year or be
subject to excise taxes, as described above. Accordingly, when the Fund holds
zero coupon securities, it may be required to pay out as an income distribution
each year an amount which is greater than the total amount of cash interest the
Fund actually received during that year. Such distributions will be made from
the cash assets of the Fund or by liquidation of portfolio securities, if
necessary. The Fund may realize a gain or loss from such sales. In the event the
Fund realizes net capital gains from such transactions, its shareholders may
receive a larger capital gain distribution than they would have had in the
absence of such transactions.
New York State and City Taxes. To the extent that exempt-interest dividends are
derived from interest on Municipal Obligations, such distributions will be
exempt from New York State and City personal income taxes. However, an
investment in the Fund may result in liability for state and/or local taxes for
individual shareholders subject to taxation by states other than New York State
or cities other than New York City because the exemption from New York State and
New York City personal income taxes does not prevent such other jurisdictions
from taxing individual shareholders on dividends received from the Fund. In
addition, distributions derived from interest on tax exempt securities other
than Municipal Obligations will be treated as taxable ordinary income for
purposes of New York State and New York City personal income taxes. For New York
State and New York City personal income tax purposes, distributions of net
long-term capital gains will be taxable at the same rates as ordinary income.
Exempt-interest dividends are included in a corporation's net
investment income for purposes of calculating such corporation's New York State
corporate franchise tax and New York City general
-48-
<PAGE>
corporation tax and will be subject to such taxes to the extent that a corporate
shareholder's net investment income is allocated to New York State and/or New
York City.
All or a portion of interest on indebtedness incurred or continued to
purchase or carry the Fund's shares generally will not be deductible for New
York State and New York City personal income tax purposes.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges,"
above, at net asset value without sales charge. Not all of the Oppenheimer funds
offer Class B shares and Class C shares. The names of the funds that offer Class
B and Class C shares can be obtained by calling the Distributor at 1-800-
525-7048. To elect this option, the shareholder must notify the Transfer Agent
in writing and must either have an existing account in the fund selected for
reinvestment or must obtain a prospectus for that fund and an application from
the Distributor to establish an account. The investment will be made at the net
asset value per share in effect at the close of business on the payable date of
the dividend or distribution. Dividends and/or distributions from certain of the
Oppenheimer funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. Citibank, N.A., 399 Park Avenue, New York, NY 10043, is currently
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 Manager and its affiliates.
Independent Auditors. Price Waterhouse LLP, 1100 Bausch & Lomb Place, Rochester,
NY 14604-2705, 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. They also act as auditors for certain other
funds advised by the Manager and its affiliates.
-49-
<PAGE>
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 statement 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, 1996, 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 five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
financial statements) are the responsibility of the 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, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- --------------------------
Price Waterhouse LLP
Rochester, New York
January 24, 1997
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 538,600 Albany Hsg. Auth. 0.000 % 10/01/12 10/01/02 (a) $ 138,980
40 Albany IDA (152 Washington Avenue) 7.500 11/01/01 05/01/97 (b) 40,400
1,975 Albany IDA (H. Johnson Office Pk.) 5.750 03/01/18 03/01/98 (d) 1,965,382
240 Albany IDA (Port of Albany) 6.250 02/01/05 07/10/01 (c) 245,388
30 Albany IDA (Spectrapark) 7.150 12/01/98 ----- 30,319
50 Albany IDA (Spectrapark) 7.500 12/01/03 12/01/98 (b) 53,192
3,525 Albany IDA (Spectrapark) 7.600 12/01/09 12/01/98 (b) 3,741,788
40 Albany Parking Auth. 0.000 09/15/02 ----- 29,398
625 Albany Parking Auth. 0.000 09/15/04 ----- 389,269
25 Albany Parking Auth. 0.000 09/15/03 ----- 16,724
20 Albany Parking Auth. 0.000 09/15/05 ----- 11,768
1,610 Albany Parking Auth. 6.850 11/01/12(s) 11/01/04 (b) 1,732,795
5,000 Albany Parking Auth. 7.150 09/15/16(s) 09/15/01 (b) 5,455,150
645 Allegany IDA (Alfred University) 6.900 09/01/99 ----- 678,863
300 American Samoa Power Auth. 6.600 09/01/97 ----- 304,641
600 American Samoa Power Auth. 6.700 09/01/97 ----- 609,672
300 American Samoa Power Auth. 6.700 09/01/98 ----- 308,817
300 American Samoa Power Auth. 6.750 09/01/99 ----- 312,246
700 American Samoa Power Auth. 6.800 09/01/98 ----- 721,651
700 American Samoa Power Auth. 6.900 09/01/99 ----- 731,157
700 American Samoa Power Auth. 7.000 09/01/00 ----- 737,926
120 Auburn IDA (Alcoa) 7.500 12/01/97 ----- 121,800
50 Auburn IDA (Alcoa) 7.600 12/01/98 06/01/97 (b) 51,000
670 Babylon IDA (WWH Ambulance) 7.000 09/15/01 11/03/99 (c) 701,189
70 Baldwinsville Development Corp. 7.200 06/01/10 07/01/97 (b) 72,800
800 Batavia Hsg. Auth. (Trocaire Place) 7.650 04/01/08 08/14/03 (c) 842,544
185 Brookhaven IDA (Dowling College) 6.200 03/01/01 ----- 196,217
195 Brookhaven IDA (Dowling College) 6.300 03/01/02 ----- 209,307
205 Brookhaven IDA (Dowling College) 6.400 03/01/03 ----- 221,937
275 Brookhaven IDA (Farber) 6.188 (v) 12/01/98 06/01/97 (f) 275,000
30 Broome IDA (Industrial Park) 7.450 12/01/98 ----- 30,300
1,550 Carnegie Redevelopment Corp. 6.250 09/01/05 12/04/01 (c) 1,580,101
1,550 Carnegie Redevelopment Corp. 6.500 09/01/11 05/17/09 (c) 1,589,928
515 Clifton Park (Caldor) 11.250 12/01/12 12/01/98 (b) 536,785
1,570 Clifton Springs Hospital & Clinic 7.000 01/01/01 07/31/99 (c) 1,609,941
40 Clinton County COP 7.000 08/01/97 ----- 40,250
5 Colonie IDA (Capital Plaza) 9.625 11/01/98 05/01/97 (b) 5,075
35 Colonie IDA (Homeowner Association) 7.250 10/01/02 04/01/97 (b) 35,525
35 Cortland IDA (Paul Bunyon) 8.000 07/01/00 07/01/98 (b) 36,749
275 Dutchess IDA (Bard College) 6.500 11/01/03 ----- 286,855
1,175 Dutchess Res Rec (Solid Waste) 6.800 01/01/10 01/01/05 (b) 1,216,842
290 Elmira HDC 7.500 08/01/08 08/01/97 (b) 300,359
15 Elmira HDC 7.500 08/01/09 08/01/97 (b) 15,843
440 Erie IDA (FMC Corp.) 6.000 02/01/03 08/01/97 (b) 439,485
385 Erie IDA (Medaille College) 7.400 12/30/02 09/13/00 (c) 400,858
40 Erie IDA (Medishield) 7.200 08/01/04 08/01/98 (b) 40,800
880 Erie IDA (Mercy Hospital) 5.900 06/01/03 08/21/00 (c) 901,868
960 Essex IDA (International Paper) 6.500 05/01/06 05/01/97 (b) 967,296
1,980 Franklin IDA (Correctional Facilities) 6.375 11/01/02 07/17/00 (c) 2,041,380
60 Franklin IDA (Correctional Facilities) 6.750 11/01/12(s) 11/01/04 (b) 62,393
2,120 Franklin SWMA 6.000 06/01/05 11/19/03 (c) 2,130,155
1,350 Franklin SWMA 6.125 06/01/09 12/28/07 (c) 1,347,476
11,635 Guam Airport Authority 6.600 10/01/10 10/01/05 (b) 12,035,477
1,200 Guam Power Authority 6.300 10/01/12 10/01/04 (b) 1,222,284
3,030 Guam Power Authority 6.375 10/01/08 10/01/04 (b) 3,109,628
2,950 Guam Power Authority 6.625 10/01/14(s) 10/01/04 (b) 3,083,163
905 Hamilton Elderly Hsg. 11.250 01/01/15(s) 05/01/97 (b) 950,304
30 Hempstead IDA (Amer. Ref-Fuel Co.) 6.700 12/01/97 ----- 30,620
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 30 Hempstead IDA (Amer. Ref-Fuel Co.) 7.000 % 12/01/99 06/01/97 (b) $ 30,600
35,500 Hempstead IDA (Amer. Ref-Fuel Co.) 7.375 12/01/05 06/01/97 (b) 36,387,500
30,820 Hempstead IDA (Amer. Ref-Fuel Co.) 7.400 12/01/10 06/01/97 (b) 31,590,500
1,500 Hempstead IDA (Nassau Dist. Energy) 7.750 09/15/15(s) 09/15/97 (b) 1,524,840
20 Hempstead IDA (UCP) 7.500 10/01/09 10/01/99 (b) 21,098
2,700 Herkimer Hsg. Auth. 7.150 03/01/11(s) 09/01/06 (b) 2,898,315
1,970 Herkimer IDA (Burrows Paper) 7.250 01/01/01 08/08/99 (c) 1,920,986
1,000 Herkimer IDA (Burrows Paper) 8.000 01/01/09 10/28/05 (c) 984,830
50 Heuvelton CSD 8.375 06/15/97 ----- 50,726
90 Islip IDA (WJL Realty) 7.400 03/01/99 ----- 95,531
2,160 Islip Res Rec 5.850 07/01/02 ----- 2,300,033
250 Jamestown GO 7.000 03/15/00 ----- 266,980
330 Jamestown GO 7.000 03/15/99 ----- 348,031
3,345 Jamestown Hsg. Auth. 6.125 07/01/10 04/06/05 (c) 3,391,228
460 Jefferson IDA (Stature Electric) 7.500 08/01/99 02/01/97 (b) 467,930
55 Lakeside Village Hsg. Corp. 0.000 09/01/05 03/01/97 (b) 24,769
430 Lincoln Towers Hsg. Corp. 11.250 01/01/15(s) 05/01/97 (b) 451,586
104 Locke Fire District #1 (i) 7.500 07/01/02 08/10/00 (c) 110,275
220 Medina Hsg. Corp. 8.250 08/15/11(s) 02/15/97 (b) 233,200
630 Middleton IDA (Fleurchem) 7.125 12/01/08 05/05/04 (c) 637,258
915 Middleton IDA (Southwinds) 7.250 03/01/03 06/14/00 (c) 914,780
5 Monroe County Airport 0.000 01/01/04 ----- 3,346
30 Monroe County GO 6.100 05/01/03 ----- 30,000
1,325 Monroe IDA (Al Sigl Center) 6.375 12/15/05 05/11/02 (c) 1,350,718
1,135 Monroe IDA (Al Sigl Center) 6.750 12/15/10 02/01/09 (c) 1,163,012
10 Monroe IDA (Cohber) 7.500 12/01/00 12/01/98 (b) 10,429
100 Monroe IDA (Cohber) 7.550 12/01/01 12/01/98 (b) 105,066
931 Monroe IDA (Emil Muller) 6.500 10/01/04 04/05/01 (c) 932,505
1,145 Monroe IDA (GEVA) 7.750 04/01/02 12/20/99 (c) 1,148,080
360 Monroe IDA (GEVA) 7.750 04/01/03 ----- 360,968
131 Monroe IDA (Hahn) 7.250 06/01/98 10/17/97 (c) 131,679
20 Monroe IDA (Hahn) 7.250 06/01/98 10/03/97 (c) 20,155
105 Monroe IDA (Palmer) 6.500 08/01/98 12/17/97 (c) 105,030
2,170 Monroe IDA (Piano Works) 6.625 11/01/06 11/12/02 (c) 2,181,718
300 Monroe IDA (Roberts Wesleyan) 6.200 09/01/05 ----- 304,971
215 Monroe IDA (West End Business) 6.750 12/01/04 11/05/01 (c) 218,915
140 Montgomery IDA (Amsterdam) 5.750 01/15/97 ----- 140,000
145 Montgomery IDA (Amsterdam) 6.000 01/15/98 ----- 145,183
885 Montgomery IDA (Amsterdam) 6.500 01/15/03 02/17/01 (c) 894,921
65 MTA 6.250 07/01/11 07/01/04 (b) 67,009
50 MTA 7.000 07/01/09 07/01/03 (b) 53,100
530 Municipal Assistance Corp. for NYC 6.875 07/01/07 07/01/97 (b) 547,877
50 Municipal Assistance Corp. for NYC 7.000 07/01/06 07/01/97 (b) 51,597
198 Municipal Assistance Corp. for Troy, NY 0.000 01/15/22 ----- 48,153
130 Municipal Assistance Corp. for Troy, NY 0.000 07/15/21 ----- 32,710
430 Nassau IDA (ACLDD) 7.250 10/01/04 08/10/01 (c) 445,760
1,025 Nassau IDA (Farmingdale Market) 10.000 05/01/98 05/01/97 (b) 1,034,738
1,090 New Rochelle IDA (CNR) 6.000 07/01/02 08/11/00 (c) 1,133,360
260 New Rochelle IDA (CNR) 6.300 07/01/03 ----- 273,848
275 New Rochelle IDA (CNR) 6.400 07/01/04 ----- 291,255
2,450 Niagara IDA (Sevenson Hotel) 5.750 05/01/03 04/30/00 (c) 2,464,994
575 North Country Development Auth. 6.600 07/01/02 ----- 599,489
2,995 North Country Development Auth. 6.750 07/01/12(s) 07/01/99 (b) 3,112,045
80 Northern Marianas Island Port Auth. 7.050 10/01/04 04/01/97 (b) 82,000
10 Northern Marianas Island Port Auth. 7.050 10/01/05 04/01/97 (b) 10,300
1,460 NYC GO 0.000 02/01/02 ----- 1,131,923
170 NYC GO 0.000 04/01/00 ----- 153,437
2,000 NYC GO 0.000 08/15/00 ----- 1,686,660
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,500 NYC GO 0.000 % 02/01/01 ----- $ 1,230,420
1,000 NYC GO 0.000 02/01/03 ----- 730,900
50 NYC GO 0.000 08/15/01 ----- 40,048
630 NYC GO 0.000 04/01/01 ----- 512,574
50 NYC GO 0.000 02/01/12 02/01/02 (b) 38,255
10 NYC GO 0.000 08/01/03 ----- 9,848
2,500 NYC GO 6.250 08/01/08 ----- 2,610,950
4,050 NYC GO 6.250 08/01/13 08/01/08 (b) 4,123,265
10,550 NYC GO 6.250 08/01/09 08/01/08 (b) 10,954,804
2,000 NYC GO 6.250 08/01/12 08/01/08 (b) 2,041,180
1,050 NYC GO 6.300 08/15/08 08/15/07 (b) 1,097,366
1,000 NYC GO 6.375 02/15/06 ----- 1,060,560
13,500 NYC GO 6.375 08/15/09 08/15/07 (b) 14,111,550
2,105 NYC GO 6.375 08/01/07 08/01/04 (b) 2,177,623
1,890 NYC GO 6.375 08/01/10 08/01/07 (b) 1,962,822
600 NYC GO 6.375 08/01/06 08/01/04 (b) 624,432
970 NYC GO 6.375 08/15/10 08/15/07 (b) 1,007,452
20 NYC GO 6.500 08/01/06 08/01/04 (b) 20,996
110 NYC GO 6.500 08/01/05 08/01/04 (b) 115,786
115 NYC GO 6.500 08/01/08 08/01/04 (b) 120,492
5,600 NYC GO 6.500 08/01/11 08/01/04 (b) 5,832,176
1,550 NYC GO 6.750 10/01/05 10/01/04 (b) 1,660,066
3,250 NYC GO 7.000 02/01/06 02/01/02 (b) 3,498,203
600 NYC GO 7.000 02/01/00 08/01/97 (b) 610,344
1,000 NYC GO 7.000 02/01/01 08/01/97 (b) 1,017,240
10 NYC GO 7.000 02/01/02 08/01/97 (b) 10,167
40 NYC GO 7.000 08/01/09 08/01/97 (b) 41,024
1,360 NYC GO 7.000 08/15/16 08/15/04 (b) 1,465,890
1,000 NYC GO 7.000 02/01/16 02/01/04 (b) 1,074,980
40 NYC GO 7.000 02/01/09 02/01/00 (b) 40,960
40 NYC GO 7.000 02/01/13 08/01/97 (b) 40,652
9,140 NYC GO 7.000 10/01/13 10/01/02 (b) 9,862,791
5 NYC GO 7.000 12/01/10 12/01/97 (b) 5,198
5 NYC GO 7.000 12/01/08 12/01/97 (b) 5,198
730 NYC GO 7.000 10/01/09 10/01/04 (b) 787,728
200 NYC GO 7.100 02/01/10 02/01/04 (b) 215,412
100 NYC GO 7.100 08/15/07 08/15/04 (b) 108,362
2,275 NYC GO 7.100 02/01/09 02/01/02 (b) 2,450,312
1,450 NYC GO 7.200 08/15/08 08/15/04 (b) 1,589,911
25 NYC GO 7.200 02/01/05 08/01/97 (b) 25,423
20 NYC GO 7.200 02/01/15 02/01/02 (b) 21,749
100 NYC GO 7.250 02/01/08 08/15/04 (b) 101,693
115 NYC GO 7.250 02/01/07 08/01/97 (b) 117,588
20 NYC GO 7.300 08/15/98 08/15/97 (b) 20,684
285 NYC GO 7.400 02/01/02 ----- 312,782
500 NYC GO 7.400 02/01/00 ----- 535,635
2,900 NYC GO 7.500 02/01/06 02/01/02 (b) 3,224,481
2,425 NYC GO 7.500 02/01/09 02/01/02 (b) 2,697,497
10,125 NYC GO 7.500 02/01/04 02/01/02 (b) 11,212,526
55 NYC GO 7.500 02/01/05 02/01/02 (b) 59,983
5 NYC GO 7.500 10/01/12 10/01/99 (b) 5,394
50 NYC GO 7.500 08/01/04 08/01/98 (b) 53,185
25 NYC GO 7.500 08/15/02 08/15/97 (b) 25,870
220 NYC GO 7.500 02/01/07 02/01/02 (b) 243,681
5 NYC GO 7.500 08/15/05 08/15/97 (b) 5,176
25 NYC GO 7.500 08/01/01 08/01/99 (b) 26,933
100 NYC GO 7.500 03/15/09 03/15/00 (b) 106,582
150 NYC GO 7.500 08/15/03 08/15/99 (b) 161,921
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50 NYC GO 7.625 % 02/01/13 02/01/02 (b) $ 55,895
4,020 NYC GO 7.650 02/01/07 02/01/02 (b) 4,523,264
300 NYC GO 7.700 02/01/09 02/01/02 (b) 336,360
1,420 NYC GO 7.750 08/15/09 08/15/01 (a) 1,631,424
1,350 NYC GO 7.750 08/15/05 08/15/01 (a) 1,551,002
5,780 NYC GO 7.750 08/15/06 08/15/01 (a) 6,640,584
295 NYC GO 7.750 08/15/12 08/15/01 (a) 338,923
725 NYC GO 7.750 08/15/01 08/15/99 (b) 781,478
55 NYC GO 7.750 08/15/01 08/15/99 (a) 59,294
135 NYC GO 7.750 08/15/09 08/15/01 (b) 150,717
905 NYC GO 7.750 08/15/12 08/15/01 (b) 1,010,360
1,500 NYC GO 7.750 08/15/07 08/15/01 (b) 1,674,630
2,145 NYC GO 7.750 08/15/06 08/15/01 (b) 2,394,721
650 NYC GO 7.750 08/15/05 08/15/01 (b) 723,119
95 NYC GO 7.875 08/01/04 08/01/00 (b) 105,443
55 NYC GO 7.875 08/01/04 08/01/00 (a) 61,158
1,685 NYC GO 8.000 08/01/03 08/01/01 (b) 1,903,174
1,230 NYC GO 8.000 08/01/03 08/01/01 (a) 1,422,864
115 NYC GO 0.000 (+) 10/01/06 10/01/02 (b) 84,080
1,445 NYC GO 6.600 02/15/10 02/15/07 (b) 1,499,390
110 NYC GO 8.250 11/15/10 11/15/01 (b) 123,505
1,950 NYC GO LIMO 0.000 (+) 02/01/07 02/01/02 (e) 1,478,334
2,000 NYC GO LIMO 0.000 (+) 02/01/04 02/01/00 (b) 1,778,480
75 NYC HDC 0.000 04/01/01 ----- 60,112
90 NYC HDC 0.000 10/01/00 ----- 73,915
15 NYC HDC 0.000 10/01/02 ----- 10,643
40 NYC HDC 0.000 04/01/99 ----- 35,543
90 NYC HDC 0.000 10/01/03 04/01/98 (b) 59,729
30 NYC HDC 0.000 10/01/99 ----- 26,141
30 NYC HDC 0.000 04/01/03 04/01/98 (b) 20,687
60 NYC HDC 0.000 04/01/04 04/01/98 (b) 38,121
290 NYC HDC 0.000 10/01/06 04/01/98 (b) 151,943
50 NYC HDC 0.000 04/01/00 ----- 42,156
50 NYC HDC 0.000 10/01/08 04/01/98 (b) 22,721
30 NYC HDC 0.000 04/01/08 04/01/98 (b) 14,118
70 NYC HDC 0.000 10/01/07 04/01/98 (b) 34,387
80 NYC HDC 0.000 04/01/06 04/01/98 (b) 43,870
200 NYC HDC 7.375 04/01/17 04/01/98 (b) 207,570
1,705 NYC HDC 7.900 02/01/23(s) 02/01/00 (b) 1,811,358
725 NYC HDC 8.100 09/01/23(s) 09/01/00 (b) 780,071
100 NYC Housing Auth., Section 8 8.250 01/01/11 07/01/97 (b) 102,500
1,325 NYC IDA 7.625 11/01/09 05/01/97 (b) 1,328,207
65 NYC IDA 8.125 11/01/09 05/01/97 (b) 66,950
1,160 NYC IDA (ALA Realty) 7.000 12/01/05 05/12/02 (c) 1,193,106
575 NYC IDA (Amster Novelty) 7.375 12/01/05 05/30/02 (c) 582,774
835 NYC IDA (Atlantic Veal & Lamb) 7.250 12/01/08 05/25/04 (c) 837,756
425 NYC IDA (BHMS) 7.500 01/01/07 03/08/03 (c) 425,978
2,945 NYC IDA (Blood Center) 6.800 05/01/02 01/08/00 (c) 3,217,265
815 NYC IDA (CCM) 7.250 12/01/06 01/08/02 (c) 832,449
250 NYC IDA (CNR) 6.200 09/01/10 10/14/08 (c) 256,168
1,281 NYC IDA (Cummins Engine) 6.500 03/01/05 06/24/01 (c) 1,284,957
1,040 NYC IDA (EPG) 7.400 07/30/02 04/11/00 (c) 1,096,118
2,140 NYC IDA (JBFS) 6.500 12/15/02 08/12/00 (c) 2,245,138
490 NYC IDA (Koenig Manufacturing) 7.375 12/01/10 09/13/05 (c) 495,586
20 NYC IDA (Lighthouse) 6.375 07/01/10 07/01/04 (b) 20,187
570 NYC IDA (OHEL) 7.125 03/15/03 06/28/00 (c) 579,747
91 NYC IDA (Paper Enterprises) 10.000 11/01/98 12/26/97 (c) 92,739
3,285 NYC IDA (Plaza Packaging) 7.650 12/01/09 12/01/99 (b) 3,508,610
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 785 NYC IDA (Promotional Slideguide) 7.000 % 12/01/05 05/19/02 (c) $ 779,003
260 NYC IDA (Streamline Plastics) 7.125 12/01/05 05/25/02 (c) 265,572
3,565 NYC IDA (St. Bernard's School) 6.125 12/01/11 01/08/06 (c) 3,583,467
50 NYC IDA (St. Christopher Ottilie) 6.750 07/01/99 ----- 52,562
160 NYC IDA (United Nations School) 6.050 12/01/05 ----- 159,782
170 NYC IDA (United Nations School) 6.100 12/01/06 ----- 169,752
180 NYC IDA (United Nations School) 6.150 12/01/07 ----- 179,719
100 NYC IDA (Visy Paper ) 7.550 01/01/05 03/29/02 (c) 104,714
2,305 NYS COP 7.625 03/01/09 09/01/01 (b) 2,540,225
1,725 NYS COP 8.250 09/01/07 09/01/97 (b) 1,801,573
4,040 NYS COP 8.300 09/01/12(s) 09/01/97 (b) 4,222,568
1,620 NYS Dorm (Brookhaven) 8.700 07/01/06 07/01/97 (b) 1,641,254
30 NYS Dorm (City University) 0.000 07/01/03 07/01/98 (b) 20,042
1,900 NYS Dorm (City University) 6.000 07/01/10 ----- 1,917,290
975 NYS Dorm (City University) 7.200 07/01/01 07/01/00 (a) 1,082,270
8,380 NYS Dorm (City University) 8.125 07/01/07 07/01/98 (b) 8,986,042
5,000 NYS Dorm (City University) 8.125 07/01/08 07/01/98 (a) 5,411,950
100 NYS Dorm (Crouse Irving) 10.250 07/01/04 01/27/97 (b) 102,702
25 NYS Dorm (ECC) 7.100 07/01/09 07/01/97 (b) 25,250
25 NYS Dorm (Higher Education) 8.500 06/01/03 06/01/97 (b) 25,593
25 NYS Dorm (JGB) 7.000 07/01/09 07/01/97 (b) 25,250
200 NYS Dorm (Judicial-Suffolk) 9.000 10/15/01 04/15/97 (b) 216,000
4,565 NYS Dorm (Judicial-Suffolk) 9.000 10/15/01 04/15/97 (b) 4,977,356
40 NYS Dorm (Manhattan E,E&T) 9.500 07/01/12(s) 07/01/97 (b) 40,800
370 NYS Dorm (Manhattan E,E&T) 11.500 07/01/09 07/01/97 (b) 379,250
80 NYS Dorm (Montefiore) 8.625 07/01/10 07/01/97 (b) 81,760
225 NYS Dorm (NY Medical College) 6.875 07/01/03 ----- 235,334
1,000 NYS Dorm (Nyack) 6.250 07/01/13 05/10/09 (c) 1,020,550
75 NYS Dorm (PCP) 7.800 12/01/05 12/01/98 (b) 80,310
2,150 NYS Dorm (State University) 5.750 05/15/10 ----- 2,149,828
2,465 NYS Dorm (State University) 5.750 05/15/09 ----- 2,487,358
1,620 NYS Dorm (State University) 6.375 05/15/14 05/15/05 (b) 1,660,986
25 NYS Dorm (State University) 7.000 05/15/16(s) 05/01/02 (b) 27,040
120 NYS Dorm (St. Francis G&H) 7.375 08/01/10 08/01/00 (b) 129,461
255 NYS Dorm (United Health) 7.150 08/01/07 02/01/00 (b) 273,903
50 NYS Dorm (United Hospital) 6.500 09/15/10 07/01/97 (b) 50,250
175 NYS Dorm (United Hospital) 11.750 09/15/10 07/01/97 (b) 180,250
15 NYS Dorm (University of Rochester) 6.500 07/01/09 07/01/97 (b) 15,406
500 NYS Dorm (Wildwood) 7.300 07/01/15 07/01/01 (a) 565,850
200 NYS Environ. (Consolidated Water) 7.150 11/01/14(s) 11/01/06 (b) 212,658
275 NYS Environ. (Huntington Res Rec) 7.375 10/01/99 10/18/98 (c) 286,891
7,545 NYS Environ. (Huntington Res Rec) 7.500 10/01/12(s) 10/01/99 (b) 7,983,817
50 NYS Environ. (Long Island Water) 10.000 10/01/17 10/01/97 (b) 52,680
370 NYS Environ. (RSP) 7.000 04/01/99 ----- 391,948
595 NYS Environ. (RSP) 7.000 04/01/00 ----- 641,321
330 NYS Environ. (RSP) 7.100 04/01/01 ----- 362,489
2,985 NYS Environ. (RSP) 7.250 04/01/07 04/01/02 (b) 3,412,034
4,080 NYS ERDA (Con Ed) 7.750 01/01/24 01/01/98 (b) 4,259,846
15 NYS ERDA (Con Ed) 9.250 09/15/22 09/15/97 (b) 15,698
175 NYS ERDA (LILCO) 7.500 12/01/06 06/01/97 (b) 176,750
425 NYS ERDA (LILCO) 7.800 12/01/09 06/01/97 (b) 425,608
315 NYS ERDA (LILCO) 8.250 10/01/12 04/01/97 (b) 315,945
2,125 NYS ERDA (Niagara Mohawk) 8.875 11/01/25 05/01/97 (b) 2,183,438
40 NYS GO 6.600 12/01/14 06/01/97 (b) 41,000
1,500 NYS HDC 6.550 10/01/15(s) 04/01/05 (b) 1,567,770
600 NYS HDC 9.625 01/01/19(s) 07/01/97 (b) 622,902
520 NYS HDC 5.750 04/01/07 05/22/03 (c) 528,809
1,970 NYS HDC (Pass Through Certificate) (i) 6.500 09/20/03 11/20/02 (c) 2,043,225
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 80 NYS HFA (Children's Rescue) 7.400 % 11/01/00 ----- $ 84,615
65 NYS HFA (Children's Rescue) 7.500 05/01/01 ----- 69,352
140 NYS HFA (Children's Rescue) 7.500 11/01/01 ----- 150,195
94 NYS HFA (General Housing) 6.500 11/01/03 ----- 94,940
10 NYS HFA (General Housing) 6.600 11/01/05 11/01/00 (b) 10,425
6 NYS HFA (General Housing) 6.750 11/01/98 ----- 6,060
1,435 NYS HFA (Health Facility) 6.000 05/01/07 ----- 1,464,762
2,165 NYS HFA (Health Facility) 6.000 05/01/08 ----- 2,195,007
20,730 NYS HFA (Health Facility) 7.900 11/01/99 08/21/98 (c) 22,003,651
1,535 NYS HFA (HELP/Bronx) 8.050 11/01/05 11/01/99 (b) 1,645,796
2,000 NYS HFA (H&N) 5.625 09/15/13 06/21/12 (c) 1,960,580
55 NYS HFA (H&N) 5.900 11/01/05 ----- 53,900
650 NYS HFA (H&N) 6.800 11/01/02 05/01/97 (b) 663,637
480 NYS HFA (H&N) 6.800 11/01/01 05/01/97 (b) 490,738
55 NYS HFA (H&N) 6.875 11/01/04 05/01/97 (b) 55,550
1,710 NYS HFA (H&N) 6.875 11/01/07 05/01/97 (b) 1,747,842
300 NYS HFA (H&N) 6.875 11/01/11 05/01/97 (b) 306,180
25 NYS HFA (H&N) 6.875 11/01/05 05/01/97 (b) 25,250
45 NYS HFA (H&N) 6.875 11/01/09 05/01/97 (b) 45,743
15 NYS HFA (H&N) 6.875 11/01/10 05/01/97 (b) 15,375
1,550 NYS HFA (H&N) 7.000 11/01/17(s) 05/01/97 (b) 1,596,500
570 NYS HFA (H&N) 8.000 11/01/08 11/01/00 (b) 638,674
5 NYS HFA (H&N) 8.625 11/01/05 05/01/97 (b) 5,050
140 NYS HFA (H&N) 9.000 11/01/17(s) 05/01/97 (b) 142,800
10 NYS HFA (Insured Mtg.) 6.250 08/15/14(s) 08/15/06 (b) 10,298
145 NYS HFA (Meadow Manor) 7.750 11/01/19 05/01/97 (b) 148,045
135 NYS HFA (Monroe) 7.625 05/01/05 05/01/00 (b) 147,454
1,000 NYS HFA (Multi-Family) 6.450 08/15/14(s) 08/15/04 (b) 1,037,630
15 NYS HFA (Multi-Family) 7.300 11/01/04 11/01/99 (b) 16,424
800 NYS HFA (Multi-Family) 7.450 11/01/28(s) 11/01/99 (b) 842,392
875 NYS HFA (Multi-Family) 10.000 11/15/99 05/15/97 (b) 879,253
10 NYS HFA (NonProfit) 6.100 11/01/98 ----- 10,000
50 NYS HFA (NonProfit) 6.100 11/01/99 ----- 50,250
25 NYS HFA (NonProfit) 6.400 11/01/05 ----- 25,250
40 NYS HFA (NonProfit) 6.400 11/01/00 ----- 40,400
35 NYS HFA (NonProfit) 6.400 11/01/09 11/01/01 (b) 35,140
10 NYS HFA (NonProfit) 6.400 11/01/04 ----- 10,100
35 NYS HFA (NonProfit) 6.500 11/01/02 ----- 36,373
10 NYS HFA (NonProfit) 6.500 11/01/01 ----- 10,100
20 NYS HFA (NonProfit) 6.600 11/01/01 ----- 21,164
15 NYS HFA (NonProfit) 6.600 11/01/11 11/01/03 (b) 15,000
75 NYS HFA (NonProfit) 6.600 11/01/05 11/01/98 (b) 78,351
5 NYS HFA (NonProfit) 6.600 11/01/10 ----- 5,050
5 NYS HFA (NonProfit) 6.600 11/01/02 ----- 5,186
225 NYS HFA (NonProfit) 6.600 11/01/03 11/01/98 (b) 228,375
25 NYS HFA (NonProfit) 6.600 11/01/05 11/01/00 (b) 25,438
10 NYS HFA (NonProfit) 6.600 11/01/13 05/01/97 (b) 9,980
1,420 NYS HFA (NonProfit) 6.750 11/01/11 05/01/97 (b) 1,470,637
20 NYS HFA (NonProfit) 6.750 11/01/01 11/01/98 (b) 20,400
61 NYS HFA (NonProfit) 6.875 11/01/10 05/01/97 (b) 62,525
250 NYS HFA (Phillips Village) 6.700 08/15/02 ----- 262,988
195 NYS HFA (Phillips Village) 6.700 02/15/02 ----- 204,705
175 NYS HFA (Phillips Village) 6.900 02/15/04 ----- 186,212
85 NYS HFA (Phillips Village) 6.900 08/15/04 ----- 90,644
415 NYS HFA (Simeon Dewitt) 8.000 11/01/18(s) 05/01/98 (b) 421,350
360 NYS HFA (Westchester/HELP) 7.500 11/01/00 03/05/99 (c) 381,247
60 NYS HFA (Westchester/HELP) 7.550 11/01/02 05/01/00 (b) 64,988
795 NYS LGSC (SCSB) 6.375 12/15/09 10/15/04 (c) 806,035
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 35 NYS Medcare (Beth Israel Medical Center) 7.200 % 11/01/14 05/01/97 (b) $ 35,788
615 NYS Medcare (Brookdale Hospital) 6.600 08/15/03 ----- 643,917
260 NYS Medcare (Brookdale Hospital) 6.600 02/15/03 ----- 271,588
1,000 NYS Medcare (Central Suffolk) 6.125 11/01/16 06/03/12 (c) 880,310
365 NYS Medcare (Downtown Hospital) 6.550 02/15/06 ----- 383,754
945 NYS Medcare (Downtown Hospital) 6.550 08/15/06 ----- 995,558
95 NYS Medcare (Good Samaritan) 7.650 11/01/01 11/01/97 (b) 98,886
1,750 NYS Medcare (Huntington Hospital) 6.500 11/01/14(s) 11/01/06 (b) 1,820,963
1,470 NYS Medcare (H&N) 6.400 08/15/14 08/15/06 (b) 1,555,892
20 NYS Medcare (H&N) 7.000 02/15/99 ----- 20,991
25 NYS Medcare (H&N) 7.100 08/15/01 02/15/98 (b) 26,172
550 NYS Medcare (H&N) 7.100 11/01/99 ----- 562,007
10 NYS Medcare (H&N) 7.100 11/01/98 ----- 10,100
60 NYS Medcare (H&N) 7.100 11/01/00 ----- 61,200
755 NYS Medcare (H&N) 7.200 11/01/01 05/01/97 (b) 771,663
5 NYS Medcare (H&N) 7.250 02/15/98 ----- 5,153
185 NYS Medcare (H&N) 7.250 11/01/03 05/01/97 (b) 190,550
310 NYS Medcare (H&N) 7.250 02/15/09 02/15/99 (b) 335,349
90 NYS Medcare (H&N) 7.250 11/01/02 05/01/97 (b) 92,700
20 NYS Medcare (H&N) 7.300 08/15/10 08/15/99 (b) 21,067
470 NYS Medcare (H&N) 7.400 11/01/16(s) 05/01/97 (b) 480,589
10 NYS Medcare (H&N) 7.500 02/15/09 02/15/99 (b) 10,482
120 NYS Medcare (H&N) 7.500 02/15/08 02/15/98 (b) 128,747
5 NYS Medcare (H&N) 7.750 08/15/08 08/15/98 (b) 5,355
10 NYS Medcare (H&N) 8.000 02/15/28 08/15/98 (b) 10,513
350 NYS Medcare (H&N) 8.000 02/15/27 08/15/97 (b) 364,536
245 NYS Medcare (H&N) 8.625 02/15/06 02/15/97 (b) 246,313
335 NYS Medcare (H&N) 8.875 08/15/27 02/15/98 (b) 350,705
960 NYS Medcare (H&N) 9.000 02/15/26 02/15/97 (b) 965,578
3,090 NYS Medcare (H&N) 10.000 11/01/06 05/01/97 (b) 3,267,675
1,660 NYS Medcare (Insured Hospital) 7.250 02/15/12 08/15/97 (b) 1,721,603
310 NYS Medcare (Insured Hospital) 7.625 02/15/02 08/15/97 (b) 321,941
1,610 NYS Medcare (Insured Hospital) 7.875 02/15/07 08/15/97 (b) 1,675,543
5 NYS Medcare (Insured Mtg.) 7.100 02/15/00 ----- 5,212
690 NYS Medcare (Insured Mtg.) 9.375 11/01/16(s) 05/01/97 (b) 720,429
665 NYS Medcare (Insured Nursing) 10.250 01/01/24 07/01/97 (b) 687,610
1,345 NYS Medcare (Long Beach) 7.625 02/15/06 08/15/98 (b) 1,447,637
20 NYS Medcare (Mental Health) 0.000 08/15/01 ----- 15,528
10 NYS Medcare (Mental Health) 0.000 02/15/03 08/15/98 (b) 6,912
30 NYS Medcare (Mental Health) 0.000 08/15/03 08/15/98 (b) 19,987
85 NYS Medcare (Mental Health) 6.850 08/15/00 ----- 91,098
45 NYS Medcare (Mental Health) 7.000 02/15/01 ----- 47,622
50 NYS Medcare (Mental Health) 7.200 08/15/00 ----- 53,044
40 NYS Medcare (Mental Health) 7.200 02/15/04 08/15/99 (b) 42,869
90 NYS Medcare (Mental Health) 7.375 02/15/14 08/15/99 (b) 94,566
45 NYS Medcare (Mental Health) 7.400 08/15/00 ----- 49,044
25 NYS Medcare (Mental Health) 7.400 02/15/02 02/15/00 (b) 27,353
15 NYS Medcare (Mental Health) 7.500 08/15/07 02/15/01 (b) 16,838
400 NYS Medcare (Mental Health) 7.625 02/15/07 08/15/01 (b) 440,380
20 NYS Medcare (Mental Health) 7.625 08/15/07 08/15/01 (b) 21,888
105 NYS Medcare (Mental Health) 7.750 08/15/10 02/15/00 (b) 111,600
3,000 NYS Medcare (Mental Health) 8.250 02/15/99 08/15/97 (b) 3,126,450
35 NYS Medcare (Mental Health) 8.875 08/15/07 08/15/97 (b) 36,260
50 NYS Medcare (North Shore) 7.125 11/01/08 11/01/00 (b) 52,447
10 NYS Medcare (N. General) 7.000 02/15/98 ----- 10,254
275 NYS Medcare (N. General) 7.100 02/15/99 ----- 289,174
25 NYS Medcare (N. General) 7.150 08/15/01 08/15/99 (b) 26,825
10 NYS Medcare (N. General) 7.200 08/15/02 08/15/99 (b) 10,452
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 965 NYS Medcare (N. General) 7.350 % 08/15/09 08/15/99 (b) $ 1,017,641
135 NYS Medcare (Secured Hospital) 7.000 02/15/07 02/15/97 (b) 138,375
105 NYS Medcare (Secured Hospital) 7.000 02/15/07 02/15/97 (b) 108,150
15 NYS Medcare (St. Luke's Hospital) 7.400 02/15/09 02/15/00 (b) 16,655
10 NYS Medcare (Vassar Brothers Hospital) 7.700 11/01/99 11/01/97 (b) 10,417
715 NYS Medcare (WHMC) 6.850 02/15/00 ----- 744,780
80 NYS Medcare (WHMC) 6.850 08/15/00 ----- 83,764
80 NYS Medcare (WHMC) 6.950 08/15/01 ----- 84,671
250 NYS Medcare (WHMC) 6.950 02/15/01 ----- 263,188
50 NYS Medcare (WHMC) 7.150 08/15/03 08/15/01 (b) 53,806
25 NYS Medcare (WHMC) 7.150 02/15/03 08/15/01 (b) 26,849
1,600 NYS Medcare (WHMC) 7.350 08/15/11(s) 08/15/01 (b) 1,727,360
100 NYS Power Authority 7.500 01/01/02 01/01/98 (b) 105,408
385 NYS Thruway 0.000 01/01/06 ----- 232,767
530 NYS Thruway 0.000 01/01/01 ----- 429,602
250 NYS Thruway 0.000 01/01/05 ----- 159,220
400 NYS Thruway 0.000 01/01/98 ----- 380,652
10 NYS UDC 0.000 01/01/00 ----- 8,518
15 NYS UDC 0.000 01/01/11 04/08/08 (c) 6,419
20 NYS UDC 0.000 01/01/99 ----- 17,888
30 NYS UDC 0.000 01/01/07 ----- 16,437
25 NYS UDC (Correctional Facilities) 0.000 01/01/03 ----- 18,032
250 NYS UDC (Correctional Facilities) 6.700 01/01/99 ----- 260,128
50 NYS UDC (South Mall) 0.000 01/01/05 06/24/04 (c) 32,851
35 NYS UDC (South Mall) 0.000 01/01/03 ----- 24,929
130 NYS UDC (South Mall) 0.000 01/01/05 ----- 84,033
175 NYS UDC (South Mall) 0.000 01/01/11 04/08/08 (c) 76,801
10 NYS (SONYMA) Mortgage, 1 0.000 10/01/14(s) 04/01/97 (b) 1,924
125 NYS (SONYMA) Mortgage, 1 0.000 10/01/98 04/01/97 (b) 107,111
120 NYS (SONYMA) Mortgage, 10-A 7.800 10/01/03 04/01/98 (b) 126,145
25 NYS (SONYMA) Mortgage, 10-A 8.000 10/01/08 04/01/98 (b) 25,877
15 NYS (SONYMA) Mortgage, 11 6.875 04/01/16(s) 10/01/98 (b) 15,300
30 NYS (SONYMA) Mortgage, 12 0.000 04/01/03 10/01/97 (b) 19,655
30 NYS (SONYMA) Mortgage, 12 0.000 04/01/99 10/01/97 (b) 27,204
100 NYS (SONYMA) Mortgage, 12 0.000 10/01/00 10/01/97 (b) 79,785
60 NYS (SONYMA) Mortgage, 12 0.000 10/01/99 10/01/97 (b) 51,717
15 NYS (SONYMA) Mortgage, 12 6.800 10/01/97 ----- 15,236
25 NYS (SONYMA) Mortgage, 12 6.800 04/01/97 ----- 25,129
830 NYS (SONYMA) Mortgage, 2 0.000 10/01/14(s) 04/01/97 (b) 156,903
50 NYS (SONYMA) Mortgage, 44 7.000 10/01/07 11/01/06 (b) 52,419
215 NYS (SONYMA) Mortgage, 6 9.375 04/01/10 04/01/01 (c) 224,221
65 NYS (SONYMA) Mortgage, 7 GAINS 0.000 (+) 10/01/14(s) 04/01/98 (b) 60,022
25 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/02 10/01/98 (b) 18,283
250 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/00 10/01/98 (b) 204,068
60 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/01 10/01/98 (b) 45,310
85 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/01 10/01/98 (b) 66,116
30 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/00 10/01/98 (b) 24,079
70 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/02 10/01/98 (b) 49,689
20 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/98 ----- 18,275
75 NYS (SONYMA) Mortgage, 8-A 6.875 04/01/17(s) 04/01/97 (b) 76,875
50 NYS (SONYMA) Mortgage, 8-B 7.200 04/01/99 ----- 51,281
25 NYS (SONYMA) Mortgage, 8-C 7.500 04/01/99 10/01/97 (b) 25,947
40 NYS (SONYMA) Mortgage, 8-C 7.900 10/01/01 10/01/97 (b) 41,646
85 NYS (SONYMA) Mortgage, 8-C 8.300 10/01/06 10/01/97 (b) 87,570
3,535 NYS (SONYMA) Mortgage, 8-C 8.400 10/01/17(s) 10/01/97 (b) 3,611,886
25 NYS (SONYMA) Mortgage, 8-D 7.700 10/01/99 01/04/98 (b) 26,297
100 NYS (SONYMA) Mortgage, 8-D 8.200 10/01/06 01/04/98 (b) 103,231
80 NYS (SONYMA) Mortgage, 8-E 8.100 10/01/17(s) 04/01/98 (b) 82,655
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 40 NYS (SONYMA) Mortgage, 8-F 7.200 % 10/01/00 07/01/98 (b) $ 42,270
30 NYS (SONYMA) Mortgage, 8-F 7.800 10/01/06 07/01/98 (b) 31,347
110 NYS (SONYMA) Mortgage, 8-F 8.000 10/01/17(s) 10/01/97 (c) 112,768
100 NYS (SONYMA) Mortgage, 9-A 6.700 10/01/98 04/01/97 (b) 101,600
25 NYS (SONYMA) Mortgage, 9-A 6.900 04/01/00 04/01/97 (b) 25,558
20 NYS (SONYMA) Mortgage, 9-A 7.000 04/01/01 04/01/97 (b) 20,400
100 NYS (SONYMA) Mortgage, 9-A 7.250 10/01/06 04/01/97 (b) 102,300
15 NYS (SONYMA) Mortgage, 9-A 7.300 04/01/17 04/01/97 (b) 15,360
10 NYS (SONYMA) Mortgage, 9-A 8.250 10/01/08 04/01/98 (b) 10,423
190 NYS (SONYMA) Mortgage, 9-B 8.000 10/01/02 07/01/97 (b) 196,555
230 NYS (SONYMA) Mortgage, 9-B 8.125 10/01/07 07/01/97 (b) 237,539
6,120 NYS (SONYMA) Mortgage, 9-B 8.300 10/01/17(s) 07/01/97 (b) 6,285,240
90 NYS (SONYMA) Mortgage, 9-C 8.400 10/01/02 10/01/97 (b) 92,786
25 NYS (SONYMA) Mortgage, 9-E 7.375 10/01/98 ----- 26,263
440 NYS (SONYMA) Mortgage, 9-E 8.000 10/01/03 04/01/98 (b) 458,665
70 NYS (SONYMA) Mortgage, AA 7.700 04/01/99 ----- 73,179
65 NYS (SONYMA) Mortgage, BB-2 7.125 10/01/98 10/01/97 (b) 67,432
210 NYS (SONYMA) Mortgage, BB-2 7.850 10/01/08 10/01/97 (b) 217,946
12,570 NYS (SONYMA) Mortgage, BB-2 7.950 10/01/15(s) 10/01/97 (b) 13,043,135
35 NYS (SONYMA) Mortgage, EE-1 8.000 10/01/10 04/14/99 (b) 36,478
35 NYS (SONYMA) Mortgage, EE-2 7.050 10/01/00 02/04/99 (c) 37,336
65 NYS (SONYMA) Mortgage, EE-2 7.450 10/01/10 09/14/99 (b) 68,586
230 NYS (SONYMA) Mortgage, EE-3 7.125 10/01/00 02/04/99 (c) 239,796
115 NYS (SONYMA) Mortgage, EE-4 7.800 10/01/13(s) 10/01/00 (b) 123,686
25 NYS (SONYMA) Mortgage, FF 7.000 04/01/97 ----- 25,142
50 NYS (SONYMA) Mortgage, FF 7.100 10/01/98 ----- 51,862
10 NYS (SONYMA) Mortgage, FF 7.850 10/01/08 10/01/97 (b) 10,369
4,875 NYS (SONYMA) Mortgage, FF 7.950 10/01/14(s) 10/01/97 (b) 5,058,495
55 NYS (SONYMA) Mortgage, HH-2 7.700 10/01/09 10/01/99 (b) 57,294
125 NYS (SONYMA) Mortgage, HH-3 7.875 10/01/09 06/07/00 (b) 132,886
3,600 NYS (SONYMA) Mortgage, HH-3 7.950 04/01/22(s) 06/07/00 (b) 3,817,044
75 NYS (SONYMA) Mortgage, II 0.000 04/01/05 04/01/99 (b) 41,654
300 NYS (SONYMA) Mortgage, II 0.000 10/01/09 04/01/99 (b) 116,850
45 NYS (SONYMA) Mortgage, II 0.000 10/01/05 04/01/99 (b) 24,017
40 NYS (SONYMA) Mortgage, II 0.000 10/01/06 04/01/99 (b) 19,756
175 NYS (SONYMA) Mortgage, II 0.000 04/01/09 04/01/99 (b) 70,872
6,910 NYS (SONYMA) Mortgage, II 0.000 04/01/20 04/01/99 (b) 1,133,102
90 NYS (SONYMA) Mortgage, II 0.000 04/01/07 04/01/99 (b) 42,599
520 NYS (SONYMA) Mortgage, II 0.000 10/01/08 04/01/99 (b) 218,962
120 NYS (SONYMA) Mortgage, II 0.000 10/01/07 04/01/99 (b) 54,626
100 NYS (SONYMA) Mortgage, JJ 0.000 04/01/02 ----- 73,883
75 NYS (SONYMA) Mortgage, JJ 0.000 10/01/01 ----- 55,773
215 NYS (SONYMA) Mortgage, JJ 0.000 04/01/03 10/01/99 (b) 142,801
145 NYS (SONYMA) Mortgage, JJ 0.000 04/01/01 ----- 108,432
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/00 ----- 7,738
200 NYS (SONYMA) Mortgage, JJ 0.000 04/01/07 10/01/99 (b) 98,164
75 NYS (SONYMA) Mortgage, JJ 0.000 04/01/00 ----- 60,055
50 NYS (SONYMA) Mortgage, JJ 0.000 10/01/08 10/01/99 (b) 21,989
30 NYS (SONYMA) Mortgage, JJ 0.000 04/01/04 10/01/99 (b) 18,431
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/04 10/01/99 (b) 5,922
170 NYS (SONYMA) Mortgage, JJ 0.000 04/01/05 10/01/99 (b) 97,158
185 NYS (SONYMA) Mortgage, JJ 0.000 10/01/05 10/01/99 (b) 101,774
35 NYS (SONYMA) Mortgage, JJ 0.000 10/01/03 10/01/99 (b) 22,352
60 NYS (SONYMA) Mortgage, JJ 0.000 04/01/06 10/01/99 (b) 31,715
270 NYS (SONYMA) Mortgage, JJ 0.000 10/01/06 10/01/99 (b) 137,711
15 NYS (SONYMA) Mortgage, KK 7.050 10/01/99 07/22/98 (c) 15,731
100 NYS (SONYMA) Mortgage, MM-1 7.100 10/01/97 ----- 101,790
30 NYS (SONYMA) Mortgage, MM-1 7.200 10/01/98 ----- 31,258
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 35 NYS (SONYMA) Mortgage, MM-1 7.500 % 04/01/13(s) 02/04/01 (b) $ 37,025
25 NYS (SONYMA) Mortgage, MM-1 7.650 10/01/03 02/04/01 (b) 26,652
100 NYS (SONYMA) Mortgage, MM-1 7.700 10/01/04 02/04/01 (b) 106,226
50 NYS (SONYMA) Mortgage, MM-1 7.750 04/01/05 02/04/01 (b) 53,202
10 NYS (SONYMA) Mortgage, MM-2 7.550 04/01/02 10/01/00 (b) 10,514
25 NYS (SONYMA) Mortgage, NN 7.100 04/01/02 01/01/00 (b) 26,789
20 NYS (SONYMA) Mortgage, NN 7.150 10/01/03 01/01/00 (b) 21,014
25 NYS (SONYMA) Mortgage, QQ 7.700 10/01/12 04/01/00 (b) 26,284
25 NYS (SONYMA) Mortgage, RR 7.700 10/01/10 10/01/00 (b) 26,849
115 NYS (SONYMA) Mortgage, SS 7.500 10/01/19(s) 10/01/00 (b) 118,711
25 NYS (SONYMA) Mortgage, TT 6.850 10/01/01 ----- 26,744
20 NYS (SONYMA) Mortgage, TT 6.950 04/01/02 ----- 20,499
25 NYS (SONYMA) Mortgage, TT 7.200 10/01/05 04/01/03 (b) 26,563
25 NYS (SONYMA) Mortgage, UU 6.850 10/01/99 ----- 26,158
75 NYS (SONYMA) Mortgage, UU 6.950 04/01/00 ----- 79,509
525 NYS (SONYMA) Mortgage, UU 7.150 10/01/22(s) 10/01/01 (b) 547,418
135 NYS (SONYMA) Mortgage, UU 7.750 10/01/23(s) 04/01/01 (b) 142,649
50 NYS (SONYMA) Mortgage, VV 6.300 04/01/97 ----- 50,210
5 NYS (SONYMA) Mortgage, VV 6.400 04/01/98 ----- 5,106
40 NYS (SONYMA) Mortgage, VV 6.600 04/01/00 ----- 42,051
25 NYS (SONYMA) Mortgage, VV 6.800 10/01/02 ----- 27,064
60 NYS (SONYMA) Mortgage, VV 6.900 04/01/03 ----- 65,974
50 NYS (SONYMA) Mortgage, VV 7.000 04/01/04 10/01/03 (b) 52,566
580 NYS (SONYMA) Mortgage, VV 7.250 10/01/07 10/01/01 (b) 618,268
13,260 NYS (SONYMA) Mortgage, VV 7.375 10/01/11(s) 10/01/01 (b) 14,179,714
20 Oneida Healthcare Corp. 7.100 08/01/11 08/01/01 (b) 21,465
1,150 Oneida Herkimer SWMA 6.600 04/01/04 ----- 1,228,775
2,200 Oneida Herkimer SWMA 6.750 04/01/14(s) 04/01/05 (b) 2,251,590
15 Oneida IDA (MetLife Insurance) 7.250 12/01/97 ----- 15,225
15,300 Onondaga County Res Rec 6.625 05/01/00 11/30/98 (c) 15,756,246
8,260 Onondaga County Res Rec 6.875 05/01/06 01/12/04 (c) 8,637,978
60 Onondaga IDA (Sysco Foods) 7.750 04/01/03 04/01/97 (b) 60,600
1,805 Oswego County Res Rec 6.500 06/01/04 05/23/03 (c) 1,942,036
50 Philadelphia, NY GO 7.500 12/15/09 ----- 57,105
75 Port Authority NY/NJ (Delta Airlines) 6.950 06/01/08 06/01/04 (b) 82,586
1,000 Port Authority NY/NJ (KIAC) 6.750 10/01/11 05/03/10 (c) 1,023,410
10,000 Port Authority NY/NJ (KIAC) 7.000 10/01/07 05/02/05 (c) 10,732,600
15 Portchester Community Devel. 8.100 08/01/10 02/08/05 (c) 17,416
2,499 Puerto Rico Aqueduct & Sewer (i) 7.250 03/21/00 10/16/98 (c) 2,560,018
95 Puerto Rico Commonwealth GO 7.125 07/01/02 07/01/97 (b) 98,091
50 Puerto Rico Commonwealth Infrastructure 7.500 07/01/09 07/01/98 (b) 52,447
5 Puerto Rico Commonwealth Infrastructure 7.700 07/01/01 07/01/98 (b) 5,266
10 Puerto Rico Commonwealth Infrastructure 7.750 07/01/08 07/01/98 (b) 10,524
10 Puerto Rico Electric 7.000 07/01/07 07/01/99 (b) 10,314
45 Puerto Rico HFC 0.000 04/15/08 09/15/98 (b) 20,936
25 Puerto Rico HFC 0.000 10/15/04 09/15/98 (b) 15,292
5 Puerto Rico HFC 6.700 04/01/97 ----- 5,029
45 Puerto Rico HFC 6.800 10/01/99 ----- 47,395
15 Puerto Rico HFC 6.900 04/15/98 ----- 15,424
20 Puerto Rico HFC 7.000 04/15/99 ----- 20,959
40 Puerto Rico HFC 7.000 04/01/00 ----- 42,836
15 Puerto Rico HFC 7.100 10/15/00 10/01/98 (b) 15,845
10 Puerto Rico HFC 7.100 04/01/02 04/01/00 (b) 10,758
65 Puerto Rico HFC 7.300 04/01/06 04/01/00 (b) 68,447
30 Puerto Rico HFC 7.400 04/01/07 04/01/00 (b) 31,633
20 Puerto Rico HFC 7.450 10/15/09 09/27/00 (b) 21,294
6,585 Puerto Rico HFC 7.500 04/01/22(s) 04/01/00 (b) 6,962,518
1,060 Puerto Rico HFC 7.500 10/01/15(s) 04/01/00 (b) 1,125,603
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 245 Puerto Rico HFC 8.250 % 06/01/11(s) 06/01/97 (b) $ 248,295
10 Puerto Rico IME (Baxter Travenol) 8.000 09/01/12 09/01/98 (b) 10,823
15 Puerto Rico IME (Dr. Pila Hospital) 7.700 08/01/08 08/01/98 (a) 16,039
710 Puerto Rico IME (Squibb) 6.500 07/01/04 07/01/97 (b) 717,988
55 Puerto Rico PCR 8.000 01/01/03 07/01/97 (b) 56,100
130 Puerto Rico Port Auth. 7.300 07/01/07 07/01/97 (b) 132,600
586 Puerto Rico Port Auth. (Computer Lease) (i) 9.000 05/15/99 05/31/98 (c) 614,961
2,000 Puerto Rico TEMEC (MGH) 6.500 07/01/12(s) 07/01/08 (b) 2,056,600
20 Puerto Rico Urban Renewal 0.000 10/01/97 ----- 19,242
105 Puerto Rico Urban Renewal 7.875 10/01/04 10/01/99 (b) 113,359
1,440 Putnam IDA (Brewster Plastics) 7.375 12/01/08 03/28/04 (c) 1,477,814
35 Radisson Senior Citizens Hsg. 12.000 11/01/11(s) 11/01/97 (b) 38,114
125 Rensselaer Hsg. Auth. (Renwyck) 7.650 01/01/11(s) 01/01/03 (b) 143,754
1,440 Rensselaer Municipal Leasing Corp. 6.250 06/01/04 12/28/02 (c) 1,475,914
25 Riverhead Hsg. Devel. 8.250 08/01/10 02/01/97 (b) 26,250
3,025 Rochester Hsg. Auth. (Crossroads) 7.300 07/01/05 12/05/01 (c) 3,285,967
770 Rochester Hsg. Auth. (Stonewood) 5.900 09/01/09 06/24/04 (c) 774,435
775 Rockland IDA (DC) 7.000 03/01/03 06/12/00 (c) 808,255
225 Roxbury CSD 6.400 06/15/10 06/15/07 (b) 228,346
235 Roxbury CSD 6.400 06/15/11 06/15/07 (b) 238,494
295 Saratoga IDA (ARC) 7.250 03/01/01 04/20/99 (c) 301,151
250 Saratoga IDA (City Center) 10.000 10/01/08 10/01/99 (b) 279,868
2,495 Saratoga IDA (Saratoga Sheraton) 6.750 12/31/07 08/13/02 (c) 2,579,556
50 Schodack IDA (Hamilton Printing) 7.600 07/01/00 ----- 53,945
50 Steuben IDA (Corning Glass) 7.625 07/01/99 07/01/97 (b) 51,000
240 Steuben IDA (Corning Glass) 9.000 11/01/04 05/01/97 (b) 244,800
25 St. Casimer's Elderly Hsg. 7.000 09/01/98 ----- 25,625
950 St. Casimer's Elderly Hsg. 7.375 09/01/10 03/01/97 (b) 988,618
30 St. Lawrence County (SWDA) 8.250 01/01/02 01/01/99 (a) 32,645
10 St. Lawrence County (SWDA) 8.300 01/01/99 01/01/98 (a) 10,574
5 Suffolk County GO 6.000 09/15/97 ----- 5,063
10 Suffolk County GO 6.400 02/01/00 ----- 10,100
210 Suffolk IDA (ADP) 7.750 04/01/18 04/01/97 (b) 215,775
240 Suffolk IDA (Dowling College) 6.500 12/01/06 ----- 249,218
20 Suffolk IDA (Marbar) 8.150 03/01/04 03/01/97 (b) 20,656
25 Suffolk IDA (Marbar) 8.200 03/01/05 03/01/97 (b) 25,491
85 Suffolk IDA (OPWC) 7.000 11/01/02 08/14/00 (c) 90,876
480 Suffolk IDA (Printing Assoc.) 7.013 (v) 01/01/01 07/01/97 (f) 480,000
1,420 Suffolk IDA (Rimland Facilities) 6.188 (v) 12/01/04 06/01/97 (f) 1,420,000
2,410 Sunnybrook Elderly Hsg. Corp. 11.250 12/01/14(s) 04/01/97 (b) 2,553,082
133 Syracuse IDA (Genesee St.) 6.023 (v) 12/01/98 06/01/97 (f) 135,334
1,010 Syracuse IDA (Rockwest Center) 7.000 12/01/05 06/12/02 (c) 1,029,503
460 Syracuse IDA (Rockwest Center) 7.250 06/01/03 09/15/00 (c) 491,832
1,240 Syracuse IDA (St. Joseph's Hospital) 7.250 06/01/01 07/22/99 (c) 1,313,495
1,030 Syracuse Senior Citizens Hsg. 8.000 12/01/10 06/01/97 (b) 1,079,183
195 Tomkins IDA (Kendall at Ithaca) 7.875 06/01/15(s) 06/01/05 (b) 199,801
300 Tompkins Healthcare 10.800 02/01/28 08/01/05 (b) 394,119
310 Tonawanda Housing Devel. 10.000 05/01/08 05/01/97 (b) 317,263
130 Tonawanda Housing Devel. 10.000 05/01/07 05/01/97 (b) 132,600
105 Tonawanda Housing Devel. 10.000 05/01/06 05/01/97 (b) 107,100
85 Tupper Lake Housing Devel. 8.125 10/01/10 03/15/02 (b) 89,250
510 Ulster County Res Rec 5.500 03/01/02 ----- 513,279
1,080 Ulster County Res Rec 5.500 03/01/03 ----- 1,080,248
1,600 Union Elderly Hsg. 10.000 04/01/13(s) 04/01/97 (b) 1,664,000
5 Union Elderly Hsg. 11.000 04/01/00 04/01/97 (b) 5,200
910 Union Hsg. (Methodist Homes) 6.800 11/01/04 09/07/01 (c) 949,267
90 Union Hsg. (Methodist Homes) 7.800 04/01/97 ----- 90,607
95 Union Hsg. (Methodist Homes) 7.900 04/01/98 ----- 98,112
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Statement of Investments
December 31, 1996
<TABLE>
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 555 University of V. I. 6.500 % 10/01/99 10/14/98 (c) $ 570,634
500 University of V. I. 7.500 10/01/09 10/01/04 (b) 547,790
500 University of V. I. 7.650 10/01/14 10/01/04 (b) 549,755
100 Utica GO 5.900 12/01/02 ----- 105,235
580 Utica GO 6.000 01/15/06 ----- 505,998
560 Utica GO 6.250 01/15/07 ----- 492,862
100 Utica Hsg. Corp. (Brookhaven) 0.000 01/01/99 ----- 89,117
10 Utica Hsg. Corp. (Brookhaven) 0.000 07/01/99 ----- 8,659
35 Utica Senior Citizen Hsg. 0.000 01/01/98 ----- 33,073
40 Utica Senior Citizen Hsg. 0.000 01/01/02 ----- 29,989
1,963 Utica Senior Citizen Hsg. 10.230 07/01/22 07/01/97 (b) 2,097,703
10 Valley Health & Devel. 7.850 02/01/02 12/15/98 (c) 11,531
20 Valley Health & Devel. 11.300 02/01/07 08/01/00 (b) 24,289
820 V. I. Airport 7.875 10/01/97 ----- 840,959
17,785 V. I. Airport 8.100 10/01/05 10/01/98 (b) 18,826,134
15 V. I. HFA 7.550 06/01/03 12/01/98 (b) 16,253
260 V. I. Highway 7.650 10/01/99 ----- 281,432
1,535 V. I. Port Auth. (Marine Division) 7.400 11/01/99 05/01/97 (b) 1,539,083
1,220 V. I. Port Auth. (Marine Division) 7.550 11/01/99 05/01/97 (b) 1,223,501
765 V. I. Public Finance Auth. 6.500 10/01/99 10/15/98 (c) 791,882
515 V. I. Public Finance Auth. 6.625 10/01/99 10/15/98 (c) 534,663
1,500 V. I. Public Finance Auth. 6.800 10/01/00 ----- 1,583,265
2,000 V. I. Public Finance Auth. 7.250 10/01/18(s) 10/01/02 (b) 2,141,720
250 V. I. Public Finance Auth. 7.700 10/01/04 10/01/99 (b) 270,605
2,185 V. I. Water & Power 7.200 01/01/02 09/22/99 (c) 2,280,572
13,700 V. I. Water & Power 7.400 07/01/11(s) 01/01/00 (b)(c) 14,620,366
16,700 V. I. Water & Power 8.500 01/01/10 01/01/98 (b) 17,819,735
777 V. I. (GO/HUGO) 7.750 10/01/06(s) 10/01/99 (b)(c) 847,311
95 Watervliet Elderly Hsg. 8.000 11/15/00 05/15/97 (b) 98,107
95 Watervliet Elderly Hsg. 8.000 11/15/01 05/15/97 (b) 98,107
100 Watervliet Elderly Hsg. 8.000 11/15/02 05/15/97 (b) 103,270
45 Wayne IDA (Hauser Machine) 7.700 12/01/09 12/01/01 (d) 48,993
455 Westchester IDA (BAH) 7.250 12/01/09 08/22/04 (c) 466,632
1,000 Westchester IDA (JBFS) 6.500 12/15/02 07/14/01 (c) 1,037,850
570 Westchester IDA (JDAM) 6.250 04/01/05 01/23/02 (c) 580,773
1,000 Westchester IDA (JDAM) 6.750 04/01/16(s) 04/01/08 (b) 1,023,200
50 Yonkers IDA (Waldbaum) 9.250 03/01/98 03/01/97 (b) 51,200
---------------
Total municipal bond investments, at value (cost $655,947,818) - 99.4% 670,678,326
Other assets and liabilities (net) - 0.6% 4,321,424
---------------
Net assets - 100.0% 674,999,750
===============
</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.
(f) Effective maturity corresponding to variable coupon payment date.
(i) Illiquid security.
(s) Security also has mandatory sinking fund principal payments prior to
maturity and an average life which is shorter than the stated final
maturity.
(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.
<PAGE>
Limited Term New York Municipal Fund - December 31, 1996
================================================================================
Portfolio Abbreviations
To simplify the listings of the Limited Term New York Municipal Fund's holdings
in the Statement 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
BAH Beth Abraham Hospital
BHMS Brooklyn Heights Montessori School
CCM Comprehensive Care Management
CNR College of New Rochelle
Con Ed Consolidated Edison Co.
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
GAINS Growth and Income Securities
GO General Obligation
G&H Geriatric and Healthcare
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 of Family Services
JDAM Julia Dyckman Angus Memorial
LGSC Local Government Services Corporation
LILCO Long Island Lighting Corporation
LIMO Limited Interest Muncipal Obligation
MGH Mennonite General Hospital
MTA Metropolitan Transit Authority
OPWC Ocean Park Water Corporation
PCP Pooled Capital Program
PCR Pollution Control Revenue
Res Rec Resource Recovery Facility
RSP Riverbank State Park
SCSB Schuyler Community Services Board
SONYMA State of New York Mortgage Agency
SWDA Solid Waste Development Authority
SWMA Solid Waste Management Authority
TEMEC Tourist, Educational, Medical and Environmental Control
UCP United Cerebral Palsy
UDC Urban Development Corporation
V.I. United States Virgin Islands
WHMC Wyckoff Heights Medical Center
WWH Wyandach/Wheatley Heights
The Fund had the following concentrations at December 31, 1996 (as a percentage
of total net assets):
# of % of Total
Issuers Net Assets
------- ----------
General Obligation 19 20.4%
Resource Recovery 7 15.7%
Hospital/Healthcare 44 11.3%
Housing, Single Family 27 8.3%
Housing, Multi-Family 40 7.4%
Electric Utilities 11 6.9%
Marine/Aviation Facilities 10 5.3%
Higher Education 20 4.7%
Corporate Backed 25 3.9%
Lease Rental 12 3.9%
Water Utilities 4 3.0%
NonProfit Organization 12 2.0%
Manufacturing, Non-Durable Goods 12 1.8%
Pollution Control 4 1.6%
Education 6 1.0%
Other 28 2.2%
-------
Total 99.4%
=======
================================================================================
Asset Composition Table
December 31, 1996 (Unaudited)
Percentage
Rating of Investments
- -----------------------------
AAA 2.7%
AA 12.6%
A 45.0%
BBB 35.7%
BB 0.6%
B 0.2%
CCC 0.0%
CC 0.0%
C 0.0%
Not Rated 3.2%
------------
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 Manager, 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 Manager, 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.
<PAGE>
Limited Term New York Municipal Fund
================================================================================
Statement of Assets and Liabilities - December 31, 1996
Assets
Investments,satovaluencial Statements
(Cost $655,947,818) $670,678,326
Cash 79,389
Receivables:
Interest 12,593,061
Investments sold 2,100,539
Shares of beneficial
interest sold 933,731
Other 37,181
------------
Total assets 686,422,227
------------
Liabilities
Payables and other liabilities:
Demand note payable to bank
(interest rate 7.60% at 12/31/96) 9,000,000
Shares of beneficial interest
redeemed 2,133,730
Dividends 183,485
Trustees' fees 9,000
Other 96,262
------------
Total liabilities 11,422,477
------------
Net Assets $674,999,750
============
Composition of Net Assets
Paid-in capital $670,144,226
Undistributed net investment income 480,101
Accumulated net realized loss on
investment transactions (10,355,085)
Net unrealized appreciation
on investments 14,730,508
-------------
Net assets $674,999,750
=============
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$634,172,056 and 194,315,367 shares of beneficial interest
outstanding) $3.26
=============
Maximum offering price per share (net asset
value plus sales charge of 2.00% of offering price) $3.33
=============
Class B Shares:
Net asset value, redemption price and offering price
per share (based on net assets of $40,827,694 and
12,491,844 shares of beneficial interest outstanding) $3.27
=============
================================================================================
Statement of Operations
For the Year Ended December 31, 1996
Investment Income:
Interest $39,801,585
------------
Expenses:
Management fees 2,715,109 Distribution and service plan fees:
Class A 1,488,992
Class B 214,619
Transfer and shareholder servicing agent fees:
Class A 285,165
Class B 15,255
Accounting service fees 193,682
Shareholder reports 142,340
Registration and filing fees 96,603
Custodian fees and expenses 89,685
Legal and auditing fees 46,425
Trustees' fees and expenses 45,534
Organizational expenses 7,083
Other 76,093
Interest 396,316
------------
Total expenses 5,812,901
Less expenses paid indirectly (12,009)
------------
Total net expenses 5,800,892
------------
Net Investment Income 34,000,693
------------
Realized and Unrealized Loss:
Net realized loss on investments (242,301)
Net change in unrealized appreciation
or depreciation on investments (2,445,222)
------------
Net realized and unrealized loss (2,687,523)
------------
Net Increase in Net Assets
Resulting From Operations $31,313,170
============
Statements of Changes in Net Assets
Year Ended December 31, 1996 1995
---- ----
Increase in Net Assets -
Operations:
Net investment income $34,000,693 $28,678,554
Net realized loss (242,301) (2,258,016)
Net change in unrealized appreciation
or depreciation (2,445,222) 22,706,855
------------- -------------
Net increase in net assets
resulting from operations 31,313,170 49,127,393
------------- -------------
Dividends and Distributions to
Shareholders:
Dividends from net investment income:
Class A (32,233,558) (28,615,850)
------------- -------------
Class B (1,354,963) (276,083)
------------- -------------
Beneficial Interest Transactions:
Net increase in net assets resulting
from beneficial interest
transactions (Note 2):
Class A 68,975,038 51,133,814
------------- -------------
Class B 24,348,503 16,130,704
------------- -------------
Net Assets:
Total increase 91,048,190 87,499,978
Beginning of period 583,951,560 496,451,582
------------- -------------
End of period (including undistributed
net investment income of $480,101
and $23,004, respectively) $674,999,750 $583,951,560
============= =============
See accompanying Notes to Financial Statements.
<PAGE>
Limited Term New York Municipal Fund
Financial Highlights
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Year ended December 31,
1996 1995 1994 1993 1992 (a)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $3.28 $3.15 $3.33 $3.18 $3.07
----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.17 0.18 0.16 0.17 0.18
Net realized and unrealized gain (loss) (0.02) 0.13 (0.18) 0.15 0.11
----------- ----------- ----------- ----------- -----------
Total income (loss) from investment operations 0.15 0.31 (0.02) 0.32 0.29
----------- ----------- ----------- ----------- -----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.17) (0.18) (0.16) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions to shareholders (0.17) (0.18) (0.16) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $3.26 $3.28 $3.15 $3.33 $3.18
=========== =========== =========== =========== ===========
Total Return, at Net Asset Value (b) 4.82% 10.01% (0.60% 10.06% 9.45%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $634,172 $567,537 $496,452 $457,860 $150,096
Average net assets (in thousands) $606,742 $520,990 $491,038 $309,676 $72,743
Ratios to average net assets:
Net investment income 5.37% 5.44% 5.12% 4.94% 5.33%
Expenses (c) 0.89% 0.90% 0.89% 0.89% 0.83%
Expenses (excluding interest) (c) (d) 0.83% 0.84% 0.84% 0.86% 0.78%
Portfolio turnover rate (e) 24.35% 22.34% 34.58% 17.08% 59.87%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Net of fees waived or reimbursed by Fielding Management Company, Inc. (the
former manager), and Rochester Fund Services, Inc. (the former shareholder
servicing, accounting and pricing agent), which amounted to $0.01 per
share. Without reimbursement, the ratios would have been 5.02%, 1.14% and
1.09%, respectively.
(b) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in
the total returns. Total returns are not annualized for periods of less
than one full year.
(c) Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not
been adjusted.
(d) 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.
(e) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended December 31, 1996 were
$256,486,227 and $153,521,279, respectively.
See accompanying Notes to Financial Statements.
<PAGE>
Limited Term New York Municipal Fund
Financial Highlights
Class B
-------------------------
Year Ended Year Ended
December 31, December 31,
1996 1995(a)
------------ ------------
Per Share Operating Data:
Net asset value, beginning of period $ 3.28 $ 3.21
--------- ---------
Income (loss) from investment operations:
Net investment income 0.16 0.11
Net realized and unrealized gain (loss) (0.01) 0.07
--------- ---------
Total income from investment operations 0.15 0.18
--------- ---------
Dividends and distributions to shareholders:
Dividends from net investment income (0.16) (0.11)
--------- ---------
Total dividends and distributions to shareholders (0.10) (0.11)
--------- ---------
Net asset value, end of period $ 3.27 $ 3.28
========= =========
Total Return, at Net Asset Value (b) 4.59% 5.65%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $40,828 $16,415
Average net assets (in thousands) $28,971 $8,869
Ratios to average net assets:
Net investment income 4.85% 5.21%
Expenses (d) 1.38% 0.90%
Expenses (excluding interest) (d) (c) 1.32% 0.85%
Portfolio turnover rate (f) 24.35% 22.34%
- --------------------------------------------------------------------------------
(a) For the period from May 1, 1995 (inception of offering) to December 31,
1995.
(b) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period Sales charges are not reflected in
the total returns. Total returns are not annualized for period of less than
one full year.
(c) Annualized.
(d) Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not
been adjusted.
(e) 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.
(f) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the period ended December 31, 1996 were
$256,486,227 and $153,521,279 respectively.
See accompanying Notes to Financial Statements.
<PAGE>
Limited Term New York Municipal Fund
Notes to Financial Statements
December 31, 1996
Note 1. Significant Accounting Policies:
The Limited Term New York Municipal Fund (the Fund) is a series of Rochester
Portfolio Series which is registered under the Investment Company Act of 1940,
as amended, as a non-diversified, open-end management investment company. The
investment objective of the Fund is to provide shareholders with as high a level
of income exempt from federal, 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.
On January 4, 1996, Rochester Capital Advisors, L.P. (RCA, L.P.), the Fund's
investment adviser, Rochester Fund Distributors, Inc. (RFD), the Fund's
principal underwriter, and Rochester Fund Services, Inc. (RFS), the Fund's
shareholder servicing, accounting and pricing agent, consummated a transaction
with OppenheimerFunds, Inc. (the Manager), which resulted in the sale to the
Manager of certain assets of RCA, L.P., RFD and RFS, including the transfer of
the investment advisory agreement and other contracts with the Fund and the use
of the name "The Rochester Funds."
The Fund offers both Class A and Class B shares. Class A shares are sold with a
front-end sales charge. Class B shares may be subject to a contingent deferred
sales charge. Both classes of shares have identical rights to earnings, assets
and voting privileges, except that each class has its own distribution and/or
service plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
Investment Valuation and Transactions. Portfolio securities are valued at the
close of the New York Stock Exchange on each trading day. Long-term debt
securities are valued at the mean between the bid and asked price using
information available from a portfolio pricing service approved by the Board of
Trustees, dealer-supplied valuations, provided the Manager is satisfied that the
firm rendering the quotes is reliable and that the quotes reflect current value,
or analysis of various relationships between comparable securities. Securities
for which market quotations are not readily available are valued at fair value
under consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Investment transactions are accounted for on
the date the investments are purchased or sold (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. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. At December 31, 1996,
the Fund had no outstanding when-issued or forward commitments.
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At December 31, 1996, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $10,313,000 which expires between 1999 and 2004.
<PAGE>
Distributions to Shareholders. Income dividends are declared and recorded each
day the New York Stock Exchange is open for business based on the projected net
investment income for a period, usually one month, calculated as if earned pro
rata throughout the period on a daily basis. Such dividends are paid monthly.
Distributions from net realized gains on investments, if any, are recorded on
the ex-dividend date and paid annually.
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purpose. Also, due to timing of dividend
distributions, the fiscal year in which amounts are distributed may differ from
the year that the income or realized gain (loss) was recorded by the Fund.
During the year ended December 31, 1996, the Fund adjusted the classification of
net investment income and net realized gain (loss) to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. During the year ended December 31, 1996, amounts
have been reclassified to reflect a decrease in paid-in capital of $44,925 and
an increase in undistributed net investment income of $44,925.
Deferred Organizational Expenses. The Fund was organized under the laws of
Massachusetts in September, 1991. Deferred organizational expenses in the amount
of $50,000 were amortized on a straight-line basis over a five year period
ending September, 1996.
Concentration in New York Issuers. 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.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
Other. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Note 2. Shares of Beneficial Interest:
The Agreement and Declaration of Trust permits the Fund to issue an unlimited
number of shares of beneficial interest of each class, par value $.01 per share.
Transactions in shares of beneficial interest were as follows:
Class A:
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995
---- ----
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold 46,954,523 $152,448,902 41,287,431 $133,924,167
Dividends and distributions
reinvested 6,569,019 21,305,028 5,901,142 19,071,036
Redeemed (32,312,396) (104,778,892) (31,589,856) (101,861,389)
----------- ------------- ----------- -------------
Net increase 21,211,144 $68,975,038 15,598,717 $51,133,814
=========== ============= =========== =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended Period May 1-
December 31, 1996 December 31, 1995
----------------- -----------------
Class B:
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold 7,835,459 $25,456,582 5,028,893 $16,226,929
Dividends and distributions
reinvested 287,435 933,386 50,215 163,547
Redeemed (630,627) (2,041,465) (79,531) (259,772)
---------- ------------ ---------- ------------
Net increase 7,492,267 $24,348,503 4,999,577 $16,130,704
========== ============ ========== ============
</TABLE>
Note 3. Portfolio Information:
During 1996, 15.36% of interest income was derived from investments in U.S.
territories which are exempt from federal, all states and New York City income
taxes.
At December 31, 1996, net unrealized appreciation on investments of $14,730,508
was composed of gross appreciation of $15,281,182, and gross depreciation of
$550,674.
Unrealized appreciation (depreciation) at December 31, 1996 based on cost of
investments for federal income tax purposes of $655,989,982 was:
Gross unrealized appreciation $15,249,800
Gross unrealized depreciation (561,456)
------------
Net unrealized appreciation $14,688,344
============
Note 4. Management Fees and Other Transactions With Affiliates:
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee based on an annual
rate of 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. During 1996, the Fund paid $27,896 to RCA, L.P.
(the former manager) and $2,687,213 to the Manager for management and investment
advisory services.
Accounting fees paid to the Manager were in accordance with the accounting
services agreement with the Fund which provides for an annual fee of $12,000 for
the first $30 million of net assets and $9,000 for each additional $30 million
of net assets. During 1996, the Fund paid $1,980 to RFS (the former accounting
and pricing agent) and $191,702 to the Manager for accounting and pricing
services.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund. The transfer and shareholder servicing
agent fee paid by the Fund is based on an annual maintenance fee of $24.12 for
each Class A shareholder account and $26.02 for each Class B shareholder
account. During 1996, the Fund paid a total of $3,066 to RFS (the former
shareholder servicing agent), with the remainder being paid to OFS.
For the year ended December 31, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $1,623,032, of which $290,035 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by affiliated broker/dealers. Sales charges
advanced to broker/dealers by OFDI on sales of the Fund's Class B shares totaled
$498,857, of which $7,432 was paid to an affiliated broker/dealer. During the
year ended December 31, 1996, OFDI received contingent deferred sales charges of
$31,172 upon redemption of Class B shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
<PAGE>
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a
portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made monthly
at an annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. OFDI uses the service fee to reimburse brokers,
dealers, banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class A shares.
During the year ended December 31, 1996, OFDI paid $7,144 to an affiliated
broker/dealer as reimbursement for Class A personal service and maintenance
expenses.
The Fund has adopted a compensation type Distribution and Service Plan for Class
B shares to compensate OFDI for its services and costs in distributing Class B
shares and servicing accounts. Under the Plan, the Fund may pay OFDI an annual
asset-based sales charge of up to 0.75% per year on Class B shares, as
compensation for sales commissions paid from its own resources at the time of
sale and associated financing costs. Currently, the Board of Trustees has
limited the asset-based sales charge to 0.50% per year on Class B shares. OFDI
also receives a service fee of 0.25% per year as compensation for costs incurred
in connection with the personal service and maintenance of accounts that hold
shares of the Fund, including amounts paid to brokers, dealers, banks and other
financial institutions. The fee is computed on the average annual net assets of
Class B shares, determined as of the close of each regular business day. During
the year ended December 31, 1996, OFDI retained $171,044 as compensation for
Class B sales commissions and service fee advances, as well as financing costs.
If the Plan is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plan was terminated. At December 31, 1996, OFDI
had incurred unreimbursed expenses of $367,902 for Class B.
Note 5. Bank Borrowings:
The Fund may borrow up to 10% of its total assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The Fund has
entered into an agreement which enables it to participate with two other
Rochester Division funds managed by the Manager in an unsecured line of credit
with a bank, which permits borrowings up to $70 million, collectively. Interest
is charged to each fund, based on its borrowings, at a rate equal to the New
York Interbank Offer Rate (NIBOR) plus 0.75%. Borrowings are payable on demand.
The Fund had borrowings of $9,000,000 outstanding at December 31, 1996. For the
year ended December 31, 1996, the average monthly loan balance was $6,351,876 at
an average interest rate of 6.163%. The maximum amount of borrowings outstanding
at any month-end was $22,440,000.
<PAGE>
<PAGE>
APPENDIX A
INDUSTRY CLASSIFICATIONS
Electric Resource Recovery
Gas
Water Higher Education
Sewer Education
Telephone
Lease Rental
Adult Living Facilities
Hospital Non Profit Organization
General Obligation Highways
Special Assessment Marine/Aviation Facilities
Sales Tax
Multi Family Housing
Manufacturing, Non Durables Single Family Housing
Manufacturing, Durables
Pollution Control
A-1
<PAGE>
APPENDIX B
TAX EQUIVALENT YIELD TABLES
The equivalent yield tables below compare tax-free income with taxable income
under Federal, New York State and New York City income tax rates effective April
22, 1997. Combined taxable income refers to the net amount subject to Federal,
New York State and New York City income tax after deductions and exemptions. The
tables assume that an investor's highest tax bracket applies to the change in
taxable income resulting from a switch between taxable and non-taxable
investments, that the investor is not subject to the Alternative Minimum Tax and
that New York State and local income tax payments are fully deductible for
Federal income tax purposes. They do not reflect the phaseout of itemized
deductions and personal exemptions at higher income levels, resulting in higher
effective tax rates and tax equivalent yields.
<TABLE>
<CAPTION>
New York State Residents
Combined Taxable Income
Limited Term New York Municipal Fund Yield
Single Return Joint Return of:
Combined 3.5% 4.0% 4.5%
Effective Is Approximately
Not Not Tax Equivalent to a Taxable
Over Over Over Over Bracket Yield of:
<S> <C> <C> <C> <C> <C> <C> <C>
$ 22,000 $ 26,000 19.46% 4.35% 4.97% 5.59%
$ 26,000 $ 40,000 20.01% 4.38% 5.00% 5.63%
$ 20,000 $ 24,650 $ 40,000 $ 41,200 20.82% 4.42% 5.05% 5.68%
$ 24,650 $ 59,750 $ 41,200 $ 99,600 32.93% 5.22% 5.96% 6.71%
$ 59,750 $124,650 $ 99,600 $151,750 35.73% 5.45% 6.22% 7.00%
$124,650 $271,050 $151,750 $271,050 40.38% 5.87% 6.71% 7.55%
$271,050 $271,050 43.74% 6.22% 7.11% 8.00%
New York State Residents
Combined Taxable Income
Limited Term New York Municipal Fund Yield
Single Return Joint Return of:
Combined 5.0% 5.5% 6.0%
Effective Is Approximately
Not Not Tax Equivalent to a Taxable
Over Over Over Over Bracket Yield of:
$ 22,000 $ 26,000 19.46% 6.21% 6.83% 7.45%
$ 26,000 $ 40,000 20.01% 6.25% 6.88% 7.50%
$ 20,000 $ 24,650 $ 40,000 $ 41,200 20.82% 6.31% 6.95% 7.58%
$ 24,650 $ 59,750 $ 41,200 $ 99,600 32.93% 7.46% 8.20% 8.95%
$ 59,750 $124,650 $ 99,600 $151,750 35.73% 7.78% 8.56% 9.34%
$124,650 $271,050 $151,750 $271,050 40.38% 8.39% 9.23% 10.06%
$271,050 $271,050 43.74% 8.89% 9.78% 10.66%
B-1
<PAGE>
New York City Residents
Combined Taxable Income
Limited Term New York Municipal Fund Yield
Single Return Joint Return of:
Combined 3.5% 4.0% 4.5%
Effective Is Approximately
Not Not Tax Equivalent to a Taxable
Over Over Over Over Bracket Yield of:
$ 26,000 $ 27,000 23.70% 4.59% 5.24% 5.90%
$ 27,000 $ 40,000 23.75% 4.59% 5.25% 5.90%
$ 20,000 $ 24,650 $ 40,000 $ 41,200 24.55% 4.64% 5.30% 5.96%
$ 24,650 $ 25,000 $ 41,200 $ 45,000 36.09% 5.48% 6.26% 7.04%
$ 25,000 $ 50,000 $ 45,000 $ 90,000 36.10% 5.48% 6.26% 7.04%
$ 50,000 $ 59,750 $ 90,000 $ 99,600 36.14% 5.48% 6.26% 7.05%
$ 59,750 $124,650 $ 99,600 $151,750 38.80% 5.72% 6.54% 7.35%
$124,650 $271,050 $151,750 $271,050 43.24% 6.17% 7.05% 7.93%
$271,050 $271,050 46.43% 6.53% 7.47% 8.40%
New York City Residents
Combined Taxable Income
Limited Term New York Municipal Fund Yield
Single Return Joint Return of:
Combined 5.0% 5.5% 6.0%
Effective Is Approximately
Not Not Tax Equivalent to a Taxable
Over Over Over Over Bracket Yield of:
$ 26,000 $ 27,000 23.70% 6.55% 7.21% 7.86%
$ 27,000 $ 40,000 23.75% 6.56% 7.21% 7.87%
$ 20,000 $ 24,650 $ 40,000 $ 41,200 24.55% 6.63% 7.29% 7.95%
$ 24,650 $ 25,000 $ 41,200 $ 45,000 36.09% 7.82% 8.61% 9.39%
$ 25,000 $ 50,000 $ 45,000 $ 90,000 36.10% 7.82% 8.61% 9.39%
$ 50,000 $ 59,750 $ 90,000 $ 99,600 36.14% 7.83% 8.61% 9.40%
$ 59,750 $124,650 $ 99,600 $151,750 38.80% 8.17% 8.99% 9.80%
$124,650 $271,050 $151,750 $271,050 43.24% 8.81% 9.69% 10.57%
$271,050 $271,050 46.43% 9.33% 10.27% 11.20%
</TABLE>
B-2
<PAGE>
APPENDIX C
DESCRIPTION OF MUNICIPAL SECURITIES RATINGS
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Trust. The ratings descriptions are based on information supplied by the
ratings organizations to subscribers.
Short Term Debt Ratings.
Moody's Investors Service, Inc. ("Moody's"): The following rating designations
for commercial paper (defined by Moody's as promissory obligations not having
original maturity in excess of nine months), are judged by Moody's to be
investment grade, and indicate the relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be evidenced by
the following characteristics: (a) leveling market positions in well-established
industries; (b) high rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (d) broad margins in earning coverage of fixed financial charges and
high internal cash generation; and (e) well established access to a range of
financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are designated
"Moody's Investment Grade" ("MIG"). Short-term notes which have demand features
may also be designated as "VMIG".
These rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broadbased access to the
market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not so
large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P for
commercial paper (defined by S&P as debt having an original maturity of no more
than 365 days) assess the likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2: Satisfactory capacity for timely payment. However, the relative
degree of safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
C-3
<PAGE>
SP-1: Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand
or double feature as part of their provisions. The first rating addresses the
likelihood of repayment of principal and interest as due, and the second rating
addresses only the demand feature. With short-term demand debt, S&P's note
rating symbols are used with the commercial paper symbols (for example, "SP-
1+/A-1+").
Fitch Investors Service, Inc. ("Fitch"): Fitch assigns the following short-
term ratings to debt obligations that are payable on demand or have original
maturities of generally up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and
investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of assurance for
timely payment.
F-1: Very strong credit quality; assurance of timely payment is only slightly
less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for timely payment,
but the margin of safety is not as great as for issues assigned "F-1+" or "F-1"
ratings.
Duff & Phelps, Inc. ("Duff & Phelps"): The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities, when issued, of
under one year), asset-backed commercial paper, and certificates of deposit (the
ratings cover all obligations of the institution with maturities, when issued,
of under one year, including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors
are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as follows:
A1: Obligations supported by the highest capacity for timely repayment.
A1: Obligations supported by a very strong capacity for timely repayment.
C-4
<PAGE>
A2: Obligations supported by a strong capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic, or
financial conditions.
Thomson BankWatch, Inc. ("TBW"): The following short-term ratings apply to
commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety regarding timely
repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings. These ratings are relevant for securities purchased by
the Trust with a remaining maturity of 397 days or less, or for rating issuers
of short-term obligations.
Moody's: Bonds (including municipal bonds) are rated as follows:
Aaa: 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 most unlikely to impair the fundamentally strong
positions of such issues.
Aa: 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 long-term risks
appear somewhat larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
Standard & Poor's: Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ
from "AAA" rated issues only in small degree.
Fitch:
AAA: 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.
C-5
<PAGE>
AA: Considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Plus (+) and minus (-) signs are used
in the "AA" category to indicate the relative position of a credit within that
category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+".
Duff & Phelps:
AAA: The highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions. Plus
(+) and minus (-) signs are used in the "AA" category to indicate the relative
position of a credit within that category.
IBCA: Long-term obligations (with maturities of more than 12 months) are rated
as follows:
AAA: The lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse changes
in business, economic, or financial conditions are unlikely to increase
investment risk significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in
business, economic, or financial conditions may increase investment risk
albeit not very significantly.
A plus (+) or minus (-) sign may be appended to a long term rating to denote
relative status within a rating category.
TBW: TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.
A/B: The company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is not quite as
favorable as for companies in the highest rating category.
C-6
<PAGE>
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Price Waterhouse LLP
1100 Bausch & Lomb Place
Rochester, NY 14604-2705
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
A-7
<PAGE>
ROCHESTER PORTFOLIO SERIES
LIMITED TERM NEW YORK MUNICIPAL FUND
PART C
Other Information
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements:
(1) Financial Highlights (see Part A): Filed
herewith
(2) Report of Independent Accountants (see Part B):
Filed herewith
(3) Portfolio of Investments (see Part B): Filed
herewith
(4) Statement of Assets and Liabilities (see Part B):
Filed herewith
(5) Statement of Operations (see Part B): Filed
herewith
(6) Statement of Changes in Net Assets (see Part B):
Filed herewith
(7) Notes to Financial Statements (see Part B): Filed
herewith
(b) Exhibits:
(1) Amended and Restated Declaration of Trust as filed
with the Common of Massachusetts on February 8, 1995,
as amended on November 7, 1995 - filed with
Registrant's Post Effective Amendment No. 7 filed
January 11, 1996 - incorporated by reference
(2) Bylaws - filed with Registrant's initial
Registration Statement filed July 1, 1991 -
C-1
<PAGE>
incorporated by reference
(3) Not applicable
(4) (i) Specimen Share Certificate representing Class A
Shares of Limited Term New York Municipal Fund, a
portfolio of the Registrant - Filed with Registrant's
Post Effective Amendment No. 9, filed February 28,
1997 - incorporated herein by reference
(ii) Specimen Share Certificate representing Class B
Shares of Limited Term New York Municipal Fund, a
portfolio of the Registrant - Filed with Registrant's
Post Effective Amendment No. 9, filed February 28,
1997 - incorporated herein by reference
(iii) Specimen Share Certificate representing Class C
Shares of Limited Term New York Municipal Fund, a
portfolio of the Registrant - Filed with Registrant's
Post Effective Amendment No. 9, filed February 28,
1997 - incorporated herein by reference
(iv) Specimen Share Certificate representing Class X
Shares of Limited Term New York Municipal Fund, a
portfolio of the Registrant - Filed with Registrant's
Post Effective Amendment No. 9, filed February 28,
1997 - incorporated herein by reference
(5) Investment Advisory Agreement dated January 4, 1996
with Oppenheimer Management Corporation - Filed
with Registrant's Post Effective Amendment No. 7
filed January 11, 1996 - incorporated by reference
(6) (a) General Distributor's Agreement dated January
4, 1996 with Oppenheimer Funds Distributor, Inc. -
filed with Registrant's Post Effective Amendment
No. 7 filed January 11, 1996 - incorporated by
reference
(b) Form of Oppenheimer Funds Distributor Inc.
Dealer Agreement - Filed with Post-Effective
C-2
<PAGE>
Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850) filed September 30, 1994
- incorporated by reference
(c) Form of Oppenheimer Funds Distributor Inc.
Broker Agreement - Filed with Post-Effective
Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850) filed September 30, 1994
- incorporated by reference
(d) Form of Oppenheimer Funds Distributor Inc.
Agency Agreement - Filed with Post-Effective
Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850) filed September 30, 1994
- incorporated by reference
(7) Not Applicable
(8) Custodian Agreement dated July 5, 1996 with
Citibank, N.A. - Filed with Registrant's Post
Effective Amendment No. 9, filed February 28, 1997
- incorporated herein by reference
(9) Service Contract dated March 8, 1996 with
OppenheimerFunds Services - Filed with Registrant's
Post Effective Amendment No. 9, filed February 28,
1997 - incorporated herein by reference
(10) Consent of Counsel - incorporated by reference to
the Registrant's Rule 24f-2 Notice filed on
February 27, 1997
(11) Independent Auditor's Consent - Filed herewith
(12) Not applicable
(13) (i)Form of Investment Letter regarding Class B
shares from OppenheimerFunds, Inc. - Filed with
Registrant's Post Effective Amendment No. 9, filed
February 28, 1997 - incorporated herein by
reference
(ii)Form of Investment Letter regarding Class C
shares from OppenheimerFunds, Inc. - Filed with
Registrant's Post Effective Amendment No. 9, filed
C-3
<PAGE>
February 28, 1997 - incorporated herein by
reference
(14) Not applicable
(15) (i) Form of Service Plan and Agreement for Class A
Shares with Oppenheimer Funds Distributor, Inc.
Dated January 4, 1996 for Class A shares - Filed
with Registrant's Post Effective Amendment No. 7
filed January 11, 1996 - Incorporated by reference
(ii) Form of Distribution and Service Plan and
Agreement for Class B Shares dated as of May 1, 1997
under Rule 12b-1 of the Investment Company Act of
1940 - Filed with Registrant's Post Effective
Amendment No. 9, filed February 28, 1997 incorporated
herein by reference
(iii) Form of Distribution and Service Plan and
Agreement for Class C Shares dated as of May 1, 1997
under Rule 12b-1 of the Investment Company Act of
1940 - Filed with Registrant's Post Effective
Amendment No. 9, filed February 28, 1997 incorporated
herein by reference
(iv) Form of Distribution and Service Plan and
Agreement for Class X Shares dated as of May 1, 1997
under Rule 12b-1 of the Investment Company Act of
1940 - Filed with Registrant's Post Effective
Amendment No. 9, filed February 28, 1997 incorporated
herein by reference
(16) Performance Data Computation Schedule - Filed
herewith
(17) (a) Financial Data Schedule for Class A Shares -
Filed herewith
(b) Financial Data Schedule for Class X Shares -
Filed herewith
(18) Oppenheimer Fund Multiple Class Plan under Rule
18f-3 dated January 5, 1996 - filed with
Registrant's Post Effective Amendment No. 7 filed
January 11, 1996 - incorporated by reference
C-4
<PAGE>
--- Powers of Attorney - filed with Registrant's Post
Effective Amendment No. 7 filed January 11, 1996 -
incorporated by reference
Item 25. Persons Controlled by or under Common Control with
- -------- ---------------------------------------------------
Registrant
- ----------
The Board of Trustees of the Registrant is identical to the
Boards of Trustees of Rochester Fund Municipals and Bond Fund
Series - Oppenheimer Bond Fund for Growth (collectively "The
Rochester Funds").
Item 26. Number of Holders of Securities
- -------- -------------------------------
Number of Record
Holders as of
Title of Class April 7, 1997
-------------- -----------------
Shares of beneficial 11,909
interest, Class A
Shares of beneficial
interest, Class B -0-
Shares of beneficial
interest, Class C -0-
Shares of beneficial
interest, Class X 1,103
Item 27. Indemnification
- -------- ---------------
Registrant's Amended and Restated Agreement and Declaration of Trust
(the "Declaration of Trust"), which is referenced herein, (see Exhibit 1),
contains certain provisions relating to the indemnification of Registrant's
officers and trustees. Section 6.4 of Registrant's Declaration of Trust provides
that Registrant shall indemnify (from the assets of the Fund or Funds in
question) each of its trustees and officers (including persons who served at
Registrant's request as directors, officers or trustees of another
C-5
<PAGE>
organization in which Registrant has any interest as a shareholder, creditor or
otherwise hereinafter referred to as a "Covered Person") against all
liabilities, including but not limited to, amounts paid for satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined in one of the manners described below,
that such Covered Person (i) did not act in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interest of
Registrant or (ii) had acted with willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct
described in (i) and (ii) being referred to hereafter as "Disabling Conduct".
Section 6.4 provides that a determination that the Covered Conduct may
be made by (i) a final decision on the merits by a court or other body before
whom the proceeding was brought that the person to be indemnified was not liable
by reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnity was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of trustees who are neither "interested
persons" of Registrant as defined in Section 2(a)(19) of the 1940 Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion.
In addition, Section 6.4 provides that expenses, including accountants'
and counsel fees so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines or penalties), may
be paid from time to time in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken to repay the amounts so paid to the Sub-trust in question if it is
ultimately determined that indemnification of such expenses is not authorized
under Article 6 and (i) the Covered Person shall have provided security for such
undertaking, (ii) Registrant shall be
C-6
<PAGE>
insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of disinterested trustees who are not a party to the
proceeding, by an independent legal counsel in a written opinion, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 6.1 of Registrant's Agreement and Declaration of Trust
provides, among other things, that nothing in the Agreement and Declaration of
Trust shall protect any trustee or officer against any liability to Registrant
or the shareholders to which such trustee or officer would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of trustee or such
officer.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant;
it and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and listed
in Item 28(b) below.
(b) There is set forth below information as to any other
C-7
<PAGE>
business, profession, vocation or employment of a substantial nature in which
each officer and director of OppenheimerFunds, Inc. is, or at any time during
the past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice
President of HarbourView; prior to
March, 1996 he was the senior equity
portfolio manager for the Panorama
Series Fund, Inc. (the "Company") and
other mutual funds and pension funds
managed by G.R. Phelps & Co. Inc.
("G.R. Phelps"), the Company's former
investment adviser, which was a
subsidiary of Connecticut Mutual Life
Insurance Company; was also responsible
for managing the common stock
department and common stock investments
of Connecticut Mutual Life Insurance
Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly a
Vice President
and Senior
Portfolio
C-8
<PAGE>
Manager at First of America Investment
Corp.
Ellen Batt,
Assistant Vice President None.
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales Director
for Retirement Plan Services at Charles
Schwab & Co., Inc.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President of Asian
Equities for Barclays de Zoete Wedd,
Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the Oppenheimer
Funds (listed below); previously a Fund
Controller for OppenheimerFunds, Inc.
(the "Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer of
the Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc. (the
"Distributor") and HarbourView Asset
Management Corporation ("HarbourView"),
an investment adviser subsidiary of the
Manager; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer and
Secretary of Shareholder Services, Inc.
("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager; Director,
Treasurer and Chief Executive Officer
C-9
<PAGE>
of MultiSource
Services,
Inc.; Vice
President and
Treasurer of
Oppenheimer
Real Asset
Management,
Inc.;
President,
Treasurer and
Director of
Centennial
Capital
Corporation;
Vice President
and Treasurer
of Main Street
Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational
Services for H.D. Vest Investment
Securities, Inc.
Michael A. Carbuto,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income
for State Street Research & Management
Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Doney,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
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<PAGE>
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President and
Secretary of the Denver-based
Oppenheimer Funds; Secretary of the
Oppenheimer Quest and Oppenheimer
Rochester Funds; Executive Vice
President, Director and General Counsel
of the Distributor; President and a
Director of Centennial; Chief Legal
Officer and a Director of MultiSource
Services, Inc.; President and a
Director of Oppenheimer Real Asset
Management, Inc.; Executive Vice
President, General Counsel and Director
of SFSI and SSI; formerly Senior Vice
President and Associate General Counsel
of the Manager and the Distributor.
George Evans,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Scott Farrar,
Vice President Assistant Treasurer of the New York-
based and Denver-based Oppenheimer
funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset
Management Corporation, MultiSource
Services, Inc. and Centennial Asset
Management Corporation; Secretary, Vice
President and Director of Centennial
Capital Corporation; Vice President and
Secretary of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An
officer,
Director
and/or
portfolio
manager of
certain
Oppenheimer
funds.
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<PAGE>
Formerly Chairman of the Board and
Director of Rochester Fund
Distributors, Inc. ("RFD"), President
and Director of Fielding Management
Company, Inc. ("FMC"), President and
Director of Rochester Capital Advisors,
Inc. ("RCAI"), Managing Partner of
Rochester Capital Advisors, L.P.,
President and Director of Rochester
Fund Services, Inc. ("RFS"), President
and Director of Rochester Tax Managed
Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and
General Counsel of Rochester Capital
Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President and
Counsel of OAC; formerly he held the
following positions: Vice President and
a director of HarbourView and
Centennial, a director of SFSI and SSI,
an officer of other Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman,
Assistant Vice President None.
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President / Director
C-12
<PAGE>
of Graphic and Print Communications for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Robert Grill,
Vice President
Formerly
Marketing Vice
President for
Bankers Trust
Company
(1993-1996);
Steering
Committee
Member,
Subcommittee
Chairman for
American
Savings
Education
Council
(1995-1996).
Caryn Halbrecht,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly Vice
President of
Fixed Income
Portfolio
Management at
Bankers Trust.
Glenna Hale,
Director of Investor Marketing Formerly Vice President (1994-1997) of
Retirement Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Assistant Vice President None.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of
OppenheimerFunds
Services, a
division of
the Manager
President and
Director of
SFSI;
President and
Chief
Executive
Officer of
SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
C-13
<PAGE>
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and Associate
General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Formerly a
Managing
Director of
Global
Equities at
Paine Webber's
Mitchell
Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director of
Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with Bankers
Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for Columbus Circle
Investors.
C-14
<PAGE>
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President
Director of
Board (since
2/96), Chinese
Finance
Society;
formerly
Chairman
(11/94-2/96)),
Chinese
Finance
Society; and
Director
(6/94-6/95),
Greater China
Business
Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he
was the senior bond portfolio manager
for Panorama Series Fund, Inc., other
mutual funds and pension accounts
managed by G.R. Phelps; was also
responsible for managing the public
fixed-income securities department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of the
New York-based and the Denver-based
Oppenheimer funds; President and a
Director of OAC, HarbourView and
Oppenheimer Partnership Holdings, Inc.;
Director of ORAMI; Chairman and
Director of SSI; a Director of
Oppenheimer Real Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
C-15
<PAGE>
Trading, at S.N. Phelps & Co.,Salomon
Brothers, and Kidder Peabody.
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly Vice President, Quest for
Value Distributors, Oppenheimer Capital
Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Portfolio Manager with Phoenix
Securities Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly Marketing Manager (July, 1995
- November, 1996) for Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
C-16
<PAGE>
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Pirie,
Assistant Vice President Formerly a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Formerly
Senior
Investment
Officer and
Portfolio
Manager with
Chemical Bank.
Russell Read,
Vice President Consultant for Prudential Insurance on
behalf of the General Motors Pension
Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly
Vice President of RFS, President and
Director of RFD, Vice President and
Director of FMC, Vice President and
director of RCAI, General Partner of
RCA, an officer and/or portfolio
manager of certain Oppenheimer funds.
C-17
<PAGE>
David Rosenberg,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly
Vice President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar Dry
Dock Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly a
Vice President
and Senior
Portfolio
Manager for
Dean Witter
InterCapital,
Inc.
Richard A. Soper,
Assistant Vice President None.
Nancy Sperte,
Executive Vice President None.
C-18
<PAGE>
Donald W. Spiro,
Chairman Emeritus and
Director Vice
Chairman and
Trustee of the
New York-based
Oppenheimer
Funds;
formerly
Chairman of
the Manager
and the
Distributor.
Arthur Steinmetz,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and Marketing for
Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he
was an equity portfolio manager for
Panorama Series Fund, Inc. and other
mutual funds and pension accounts
managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; President and a
Director
of Centennial; formerly President and
Director of OAMC, and Chairman of the
Board of SSI.
James Tobin,
Vice President None.
C-19
<PAGE>
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund, Oppenheimer
Global Emerging Growth Fund and
Oppenheimer Enterprise Fund. Formerly
Managing Director of Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the Distributor
and SFSI.
Ashwin Vasan,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Dorothy Warmack,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Jerry A. Webman,
Senior Vice President
Director of
New York-based
tax-exempt
fixed income
Oppenheimer
Funds;
Formerly
Managing
Director and
Chief Fixed
Income
Strategist at
Prudential
Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView; prior to March, 1996 he
was an equity portfolio manager for
Panorama Series Fund, Inc. and other
mutual funds and pension funds managed
by G.R. Phelps.
C-20
<PAGE>
William L. Wilby,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting and
member of the Board of Directors of the
Junior League of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary
Associate
General
Counsel of the
Manager;
Assistant
Secretary of
the
Oppenheimer
Funds;
Assistant
Secretary of
SSI, SFSI; an
officer of
other
Oppenheimer
Funds.
Arthur J. Zimmer,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Quest/Rochester Funds,
set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
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<PAGE>
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Limited Term New York Municipal Fund
Oppenheimer Bond Fund For Growth
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
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<PAGE>
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund is 350
Linden Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds
/Vice President,
Secretary and
Treasurer of the
Denver-based
C-23
<PAGE>
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppenheimer
funds/Vice
President of the
Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
C-24
<PAGE>
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
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<PAGE>
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
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<PAGE>
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
C-27
<PAGE>
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
C-28
<PAGE>
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tuscon Way, Englewood, CO 80112
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act and the General Rules and
Regulations promulgated thereunder, are in possession of OppenheimerFunds, Inc.
at its offices at 6803 South Tucson Way, Englewood, Colorado 80112, except that
records with regard to items covered by Registrant's Custodian Agreement, are
maintained by, or under agreement with, its custodian, Citibank, N.A., 399 Park
Avenue, New York, New York 10043.
Item 31. Management Services
- -------- -------------------
There are no management-related service contracts not discussed in
Parts A and B of this Form under which services are provided to the Registrant
and, therefore, this Item 31 is not applicable.
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
C-29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for the effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and State of New York on the 29th day
of April, 1997.
ROCHESTER PORTFOLIO SERIES
LIMITED TERM NEW YORK MUNICIPAL FUND
/s/ Bridget A. Macaskill
------------------------------*
By: Bridget A. Macaskill
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Bridget A. Macaskill Chairman of the Board,
- ------------------------* President (Principal April 29, 1997
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen
- ------------------------* Treasurer (Principal April 29, 1997
George C. Bowen Financial and Accounting
Officer)
/s/ John Cannon
- -------------------------* Trustee April 29, 1997
John Cannon
/s/ Paul Y. Clinton
- -------------------------* Trustee April 29, 1997
Paul Y. Clinton
C-30
<PAGE>
/s/ Thomas W. Courtney
- --------------------------* Trustee April 29, 1997
Thomas W. Courtney
/s/ Lacy B. Herrmann
- --------------------------* Trustee April 29, 1997
Lacy B. Herrmann
/s/ George Loft
- -------------------------* Trustee April 29, 1997
George Loft
</TABLE>
*By: /s/ Robert G. Zack
----------------------------------
Robert G. Zack, Attorney-in-Fact
C-31
<PAGE>
FORM N-1A
ROCHESTER PORTFOLIO SERIES
LIMITED TERM NEW YORK MUNICIPAL FUND
EXHIBIT INDEX
Item No. Description
- -------- -----------
24(b)(11) Independent Auditor's Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A Shares
24(b)(17)(ii) Financial Data Schedule for Class X Shares
C-32
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 10 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 24, 1997, relating to the financial statements and financial highlights
of Rochester Portfolio Series - Limited Term New York Municipal Fund which
appears in such Statement of Additional Information, and to the incorporation by
reference of our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the reference to us under the heading
"Financial Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Rochester, New York
April 28, 1997
Limited Term New York Municipal Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10 years
which are as follows:
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares
11/13/91 0.0206820 0.0000000 3.040
12/13/91 0.0146270 0.0000000 3.070
12/31/91 0.0157500 0.0000000 3.070
02/13/92 0.0149873 0.0000000 3.060
03/12/92 0.0146626 0.0000000 3.070
04/13/92 0.0146625 0.0000000 3.080
05/13/92 0.0146625 0.0000000 3.110
06/11/92 0.0146625 0.0000000 3.110
07/13/92 0.0146625 0.0000000 3.160
08/13/92 0.0146625 0.0000000 3.190
09/10/92 0.0145313 0.0000000 3.190
10/13/92 0.0144000 0.0000000 3.170
11/12/92 0.0144000 0.0000000 3.150
12/11/92 0.0144000 0.0000000 3.180
12/31/92 0.0144000 0.0000000 3.180
02/12/93 0.0150000 0.0000000 3.210
03/12/93 0.0140000 0.0000000 3.250
04/12/93 0.0150000 0.0000000 3.250
05/12/93 0.0140000 0.0000000 3.260
06/11/93 0.0150000 0.0000000 3.260
07/12/93 0.0140000 0.0000000 3.290
08/12/93 0.0140000 0.0000000 3.310
09/03/93 0.0140000 0.0000000 3.330
10/13/93 0.0130000 0.0000000 3.350
11/12/93 0.0130000 0.0000000 3.320
12/13/93 0.0130000 0.0000000 3.340
12/31/93 0.0130000 0.0000000 3.330
02/11/94 0.0130000 0.0000000 3.330
03/11/94 0.0130000 0.0000000 3.270
04/04/94 0.0130000 0.0000000 3.180
05/02/94 0.0130000 0.0000000 3.220
06/01/94 0.0130000 0.0000000 3.230
07/01/94 0.0130000 0.0000000 3.220
08/01/94 0.0140000 0.0000000 3.240
09/01/94 0.0140000 0.0000000 3.250
10/03/94 0.0140000 0.0000000 3.210
11/01/94 0.0140000 0.0000000 3.170
12/01/94 0.0150000 0.0000000 3.140
12/30/94 0.0140000 0.0000000 3.150
01/24/95 0.0140000 0.0000000 3.160
02/21/95 0.0140000 0.0000000 3.190
03/28/95 0.0150000 0.0000000 3.210
04/25/95 0.0150000 0.0000000 3.220
05/23/95 0.0150000 0.0000000 3.240
06/27/95 0.0150000 0.0000000 3.240
07/25/95 0.0150000 0.0000000 3.230
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Page 2
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares (Continued)
08/22/95 0.0150000 0.0000000 3.220
09/26/95 0.0150000 0.0000000 3.250
10/24/95 0.0150000 0.0000000 3.270
11/21/95 0.0150000 0.0000000 3.270
12/27/95 0.0150000 0.0000000 3.270
01/23/96 0.0150000 0.0000000 3.270
02/20/96 0.0150000 0.0000000 3.260
03/26/96 0.0150000 0.0000000 3.240
04/23/96 0.0150000 0.0000000 3.230
05/28/96 0.0140000 0.0000000 3.230
06/25/96 0.0140000 0.0000000 3.210
07/23/96 0.0140000 0.0000000 3.230
08/27/96 0.0140000 0.0000000 3.240
09/24/96 0.0140000 0.0000000 3.240
10/22/96 0.0140000 0.0000000 3.240
11/26/96 0.0140000 0.0000000 3.270
12/27/96 0.0140000 0.0000000 3.260
Class B (X) Shares
05/23/95 0.0136000 0.0000000 3.240
06/27/95 0.0136000 0.0000000 3.240
07/25/95 0.0136000 0.0000000 3.230
08/22/95 0.0136000 0.0000000 3.220
09/26/95 0.0136000 0.0000000 3.250
10/24/95 0.0136000 0.0000000 3.270
11/21/95 0.0136000 0.0000000 3.270
12/27/95 0.0136000 0.0000000 3.270
01/23/96 0.0136000 0.0000000 3.270
02/20/96 0.0136000 0.0000000 3.270
03/26/96 0.0136000 0.0000000 3.240
04/23/96 0.0136000 0.0000000 3.230
05/28/96 0.0126000 0.0000000 3.240
06/25/96 0.0126000 0.0000000 3.220
07/23/96 0.0126000 0.0000000 3.230
08/27/96 0.0126000 0.0000000 3.240
09/24/96 0.0126000 0.0000000 3.240
10/22/96 0.0126000 0.0000000 3.250
11/26/96 0.0126000 0.0000000 3.270
12/27/96 0.0126000 0.0000000 3.270
</TABLE>
<PAGE>
Limited Term New York Municipal Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 12/31/96:
The formula for calculating average annual total return is as follows:
1 / number of years = n ERV n
(---) - 1 = average annual total return
P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 2.00%:
One Year Five Year
$1,027.25 1 $1,356.57 .2
(---------) - 1 = 2.73% (---------) - 1 = 6.29%
$1,000 $1,000
Inception
$1,411.54 .1892
(---------) - 1 = 6.74%
$1,000
Class B (X) Shares
Examples, assuming a maximum contingent deferred sales charge of 2.50% for the
first year, and 2.00% for the inception year:
One Year Inception
$1,021.00 1 $1,085.06 .6000
(---------) - 1 = 2.10% (---------) - 1 = 5.02%
$1,000 $1,000
<PAGE>
Limited Term New York Municipal Fund
Page 4
1. Average Annual Total Returns for the Periods Ended 12/31/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,048.20 1 $1,384.24 .2
(---------) - 1 = 4.82% (---------) - 1 = 6.72%
$1,000 $1,000
Inception
$1,440.36 .1892
(---------) - 1 = 7.15%
$1,000
Class B (X) Shares
One Year Inception
$1,045.92 1 $1,105.06 .6000
(---------) - 1 = 4.59% (---------) - 1 = 6.18%
$1,000 $1,000
<PAGE>
Limited Term New York Municipal Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 12/31/96:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 2.00%:
One Year Five Year
$1,027.25 - $1,000 $1,356.57 - $1,000
------------------ = 2.73% ------------------ = 35.66%
$1,000 $1,000
Inception
$1,411.54 - $1,000
------------------ = 41.15%
$1,000
Class B (X)Shares
Examples, assuming a maximum contingent deferred sales charge of 2.50% for the
first year, and 2.00% for the inception year:
One Year Inception
$1,021.00 - $1,000 $1,085.06 - $1,000
------------------ = 2.10% ------------------ = 8.51%
$1,000 $1,000
<PAGE>
Limited Term New York Municipal Fund
Page 6
2. Cumulative Total Returns for the Periods Ended 12/31/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,048.20 - $1,000 $1,384.24 - $1,000
------------------ = 4.82% ------------------ = 38.42%
$1,000 $1,000
Inception
$1,440.36 - $1,000
------------------ = 44.04%
$1,000
Class B (X) Shares
One Year Inception
$1,045.92 - $1,000 $1,105.06 - $1,000
------------------ = 4.59% ------------------ = 10.51%
$1,000 $1,000
<PAGE>
Limited Term NY Municipal Fund
Page 7
3. Standardized Yield for the 30-Day Period Ended 12/31/96:
The Fund's standardized yields are calculated using the following formula
set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
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 Fund shares outstanding during the
30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge) per share
on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred sales
charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 2.00%:
$3,051,055.43 - $407,294.03 6
2{(--------------------------- + 1) - 1} = 4.95%
194,312,336 x $3.33
Class B (X) Shares
Example at NAV:
$ 191,574.52 - $ 42,857.83 6
2{(--------------------------- + 1) - 1} = 4.52%
12,184,274 x $3.27
<PAGE>
Limited Term New York Municipal Fund
Page 8
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/96:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = { (a / 30) x 365 } / b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share on the
last day of the period.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering $0.0128122/30 x 365 / $3.33 = 4.68%
Dividend Yield
at Net Asset Value $0.0128122/30 x 365 / $3.26 = 4.78%
Class B (X) Shares
Dividend Yield
at Net Asset Value $0.0115310/30 x 365 / $3.27 = 4.29%
<PAGE>
Limited Term New York Municipal Fund
Page 9
4. TAX-EQUIVALENT YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/96:
The Fund's tax-equivalent yields are calculated using the following formula:
{ a / (1 - c )} + b = Tax-Equivalent Yield
The symbols above represent the following factors:
a = 30-day SEC yield of tax-exempt security positions in the portfolio.
b = 30-day SEC yield of taxable security positions in the portfolio.
c = Combined stated tax rate (e.g., federal, state and New York City
income tax rates for an individual in the 39.6% federal tax bracket
filing singly).
Examples:
Class A Shares
[ 0.0464 / ( 1 - 0.4596 )] + 0 = 8.59%
Class B (X) Shares
[ 0.0412 / ( 1 - 0.4596 ) ] + 0 = 7.62%
Combined Stated Tax Rate Formula
1 - {(1-d)(1-(e+f))} = Combined Stated Tax Rate
The symbols above represent the following factors:
d = Stated federal tax rate (e.g., federal income tax rate for an
individual in the 39.6% federal tax bracket filing singly).
e = Stated New York State tax rate (e.g., for an individual in the 39.6%
federal and 7.594% state tax bracket filing singly).
f = Stated New York City tax rate (e.g., for an individual in the 39.6%
federal and 3.40% City tax bracket filing singly).
Example: 1 - {(1 - .3960)(1 - (.07125+.03400))} = 45.96%
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000876409
<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
<SERIES>
<NUMBER> 1
<NAME> CLASS A
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 655,947,818
<INVESTMENTS-AT-VALUE> 670,678,326
<RECEIVABLES> 15,627,331
<ASSETS-OTHER> 37,181
<OTHER-ITEMS-ASSETS> 79,389
<TOTAL-ASSETS> 686,422,227
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,422,477
<TOTAL-LIABILITIES> 11,422,477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 670,144,226
<SHARES-COMMON-STOCK> 194,315,367
<SHARES-COMMON-PRIOR> 173,104,221
<ACCUMULATED-NII-CURRENT> 480,101
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,355,085)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,730,508
<NET-ASSETS> 674,999,750
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39,801,585
<OTHER-INCOME> 0
<EXPENSES-NET> 5,800,892
<NET-INVESTMENT-INCOME> 34,000,693
<REALIZED-GAINS-CURRENT> (242,301)
<APPREC-INCREASE-CURRENT> (2,445,222)
<NET-CHANGE-FROM-OPS> 31,313,170
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (32,233,558)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 49,954,523
<NUMBER-OF-SHARES-REDEEMED> (32,312,396)
<SHARES-REINVESTED> 6,569,019
<NET-CHANGE-IN-ASSETS> 91,048,190
<ACCUMULATED-NII-PRIOR> 23,004
<ACCUMULATED-GAINS-PRIOR> (10,112,784)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,715,109
<INTEREST-EXPENSE> 396,316
<GROSS-EXPENSE> 5,812,901
<AVERAGE-NET-ASSETS> 635,712,997
<PER-SHARE-NAV-BEGIN> 3.28
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> (.02)
<PER-SHARE-DIVIDEND> (.17)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.26
<EXPENSE-RATIO> .89
<AVG-DEBT-OUTSTANDING> 6,351,876
<AVG-DEBT-PER-SHARE> .03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000876409
<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
<SERIES>
<NUMBER> 2
<NAME> CLASS B WILL BECOME CLASS X MAY 1, 1997
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 655,947,818
<INVESTMENTS-AT-VALUE> 670,678,326
<RECEIVABLES> 15,627,331
<ASSETS-OTHER> 37,181
<OTHER-ITEMS-ASSETS> 79,389
<TOTAL-ASSETS> 686,422,227
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,422,477
<TOTAL-LIABILITIES> 11,422,477
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 670,144,226
<SHARES-COMMON-STOCK> 12,491,844
<SHARES-COMMON-PRIOR> 4,999,577
<ACCUMULATED-NII-CURRENT> 480,101
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,355,085)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,730,508
<NET-ASSETS> 674,999,750
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39,801,585
<OTHER-INCOME> 0
<EXPENSES-NET> 5,800,892
<NET-INVESTMENT-INCOME> 34,000,693
<REALIZED-GAINS-CURRENT> (242,301)
<APPREC-INCREASE-CURRENT> (2,445,222)
<NET-CHANGE-FROM-OPS> 31,313,170
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,354,963)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,835,459
<NUMBER-OF-SHARES-REDEEMED> (630,627)
<SHARES-REINVESTED> 287,435
<NET-CHANGE-IN-ASSETS> 91,048,190
<ACCUMULATED-NII-PRIOR> 23,004
<ACCUMULATED-GAINS-PRIOR> (10,112,784)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,715,109
<INTEREST-EXPENSE> 396,316
<GROSS-EXPENSE> 5,812,901
<AVERAGE-NET-ASSETS> 635,712,997
<PER-SHARE-NAV-BEGIN> 3.28
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> (.01)
<PER-SHARE-DIVIDEND> (.16)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 3.27
<EXPENSE-RATIO> 1.38
<AVG-DEBT-OUTSTANDING> 6,351,876
<AVG-DEBT-PER-SHARE> .03
</TABLE>
