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. 11 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 11 / X /
ROCHESTER PORTFOLIO SERIES
- ------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
350 LINDEN OAKS, ROCHESTER, NEW YORK 14625
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(Address of Principal Executive Offices)
800-552-1149
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(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 April 22, 1998 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.
<PAGE>
<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 April 22, 1998
Rochester Portfolio Series is a non-diversified 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 April
22, 1998 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
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
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 numbers below are based on the Fund's expenses during its fiscal year ended
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," starting on page __,
for an explanation of how and when
these charges apply.
Class A Class B Class C Class X
Shares Shares Shares Shares(1)
- ---------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------
Maximum Sales Charge
on Reinvested Dividends None None None None
- ---------------------------------------------------------------------------
Redemption Fee None (4) None(4) None(4)
None(4)
- ---------------------------------------------------------------------------
Exchange Fee None None None None
- ---------------------------------------------------------------------------
(1) See "Class X Shares" for more information on Class X shares and the
contingent deferred sales charge. Class X shares were designated as Class B
shares prior to May 1, 1997. Class X shares of the Fund are no longer offered.
(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 months for shares purchased prior to May 1, 1997) from the
end of the calendar month in which you purchased those shares. See "How to Buy
Shares - Class A Shares" below. 4. There is a $10 transaction fee for
redemptions paid by Federal Funds wire, but not for redemptions paid by check or
by ACH wire transfer through AccountLink, or for which checkwriting privileges
are used. See "How To Sell Shares".
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 advisor, OppenheimerFunds, Inc. (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.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
Class A Class B Class C Class X
Shares Shares Shares Shares
- ---------------------------------------------------------------------------
Management Fees 0.42% 0.42% 0.42% 0.42%
- ----------------------------------------------------------------------------
12b-1 Plan Fees 0.25% 1.00% 1.00% 0.75%
- ----------------------------------------------------------------------------
Other Expenses 0.16% 0.14% 0.12% 0.18%
- ----------------------------------------------------------------------------
Total Fund Operating Expenses 0.83% 1.56% 1.54% 1.35%
- ----------------------------------------------------------------------------
The numbers in the chart above are based upon the Fund's expenses in its
fiscal year ended December 31, 1997. These amounts are shown as a percentage of
the average net assets of each class of the Fund's shares for that year. 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 are 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 are 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.
During the fiscal year ended December 31, 1997, Total Fund Operating
Expenses (including interest expense) were 0.83%, 1.56%, 1.54% and 1.35% for
Class A shares, Class B shares, Class C shares and Class X shares, respectively.
During that period, Total Fund Operating Expenses (excluding interest expense)
were 0.81%, 1.55%, 1.52% and 1.33% for Class A shares, Class B shares, Class C
shares and Class X shares, respectively. During fiscal 1997, the Fund's interest
expense was substantially offset by the incremental interest income generated on
bonds purchased with borrowed funds.
The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart, depending on a number of factors,
including changes in 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 investment would
incur the following expenses by the end of 1, 3, 5 and 10 years:
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- --------
Class A Shares $43 $61 $79 $134
Class B Shares $56 $69 $95 $148
Class C Shares $26 $49 $84 $183
Class X Shares $39 $58 $74 $135
If you did not redeem your investment, it would incur the
following
expenses:
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- --------
Class A Shares $43 $61 $79 $134
Class B Shares $16 $49 $85 $148
Class C Shares $16 $49 $84 $183
Class X Shares $14 $43 $74 $135
* 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 imposed on
Class B, Class C and Class X shares, long-term holders of Class B, Class C and
Class X shares 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 below.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, 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"). The Manager (including subsidiaries)
advises investment company portfolios having assets of more than $85 billion at
March 31, 1998. 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 advisor and the portfolio manager. Please
refer to "How The Fund Is Managed," starting on page __ for more information
about the Manager and its fees.
o How Risky Is The Fund? All investments carry risks to some 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 __ and "Investment Risks" starting on page __ for a more complete
discussion.
o How Can I Buy Shares? You can buy shares through your broker or 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 __
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 through your
dealer. Please refer to "How to Sell Shares" starting on page __. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How to
Exchange Shares" starting on page __.
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 pages __ and __. 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 accountants, 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. Class A Year Ended December 31, 1997, is included in the
Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A
-------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996(2) 1995 1994 1993 1992(5) 1991(4)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of
period $ 3.26 $ 3.28 $ 3.15 $ 3.33 $ 3.18 $ 3.07 $ 3.00
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 .17 .18 .16 .17 .18 .05
Net realized and unrealized
gain (loss) .08 (.02) .13 (.18) .15 .11 .07
-------- -------- -------- ------- ------- ------- -------
Total income (loss) from
investment operations .25 .15 .31 (.02) .32 .29 .12
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.17) (.17) (.18) (.16) (.17) (.18) (.05)
-------- -------- -------- ------- -------- -------- --------
Total dividends and
distributions to shareholders (.17) (.17) (.18) (.16) (.17) (.18) (.05)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.34 $ 3.26 $ 3.28 $ 3.15 $ 3.33 $ 3.18 $ 3.07
======== ======== ======== ======= ======== ======== ========
============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(6) 8.01% 4.82% 10.01% (0.50)% 10.16% 9.52% 4.05%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $771,828 $634,172 $567,537 $496,452 $457,860 $150,096 $ 18,659
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $677,376 $606,742 $520,990 $491,038 $309,676 $ 72,743 $ 8,407
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.27% 5.37% 5.44% 5.12% 4.94% 5.33% 5.22%(7)
Expenses 0.83%(8) 0.89%(8) 0.90%(8) 0.89% 0.89% 0.83% 0.83%(7)
Expenses (excluding interest)(9) 0.81%(8) 0.83%(8) 0.84%(8) 0.84% 0.86% 0.78% 0.74%(7)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(10) 27.1% 24.4% 22.3% 34.6% 17.1% 59.9% 1.4%
</TABLE>
1. For the period from May 1, 1995 (inception of offering) to December 31,
1995.
2. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
3. For the period from May 1, 1997 (inception of offering) to December 31,
1997.
4. The Fund commenced operations on September 18, 1991.
5. Net of fees and expenses waived or reimbursed by Fielding Management
Company, Inc. (the former manager) and Rochester Fund Services, Inc. (the
former shareholder servicing agent), which amounted to $.01 per share.
Without reimbursement, the ratios would have been 5.02%, 1.14% and 1.09%,
respectively.
6. 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.
1
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS X
- ------------ ------------ ---------------------------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31,
1997(3) 1997(3) 1997 1996(2) 1995(1)
========================================================================
<S> <C> <C> <C> <C>
$ 3.25 $ 3.25 $ 3.27 $ 3.28 $ 3.21
- ------------------------------------------------------------------------
.10 .10 .16 .16 .11
.09 .08 .08 (.01) .07
- ------- ------- ------- ------- -------
.19 .18 .24 .15 .18
- ------------------------------------------------------------------------
(.10) (.10) (.16) (.16) (.11)
- ------- ------- ------- ------- -------
(.10) (.10) (.16) (.16) (.11)
- ------------------------------------------------------------------------
$ 3.34 $ 3.33 $ 3.35 $ 3.27 $ 3.28
======= ======= ======= ======= =======
========================================================================
5.89% 5.58% 7.44% 4.59% 5.65%
========================================================================
$21,500 $26,862 $52,510 $40,828 $16,415
- ------------------------------------------------------------------------
$ 9,873 $12,705 $49,563 $28,971 $ 8,869
- ------------------------------------------------------------------------
4.18%(7) 4.22%(7) 4.75% 4.85% 5.21%(7)
1.56%(7)(8) 1.54%(7)(8) 1.35%(8) 1.38%(8) 0.90%(7)(8)
1.55%(7)(8) 1.52%(7)(8) 1.33%(8) 1.32%(8) 0.85%(7)(8)
- ------------------------------------------------------------------------
27.1% 27.1% 27.1% 24.4% 22.3%
</TABLE>
7. Annualized.
8. The expense ratios reflect the effect of gross expenses paid indirectly by
the Fund.
9. 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.
10. 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, 1997 were
$436,262,952 and $207,375,622, respectively.
2
<PAGE>
<TABLE>
<CAPTION>
INFORMATION ON BANK LOANS
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993 1992 1991(1)
==========================================================================================================
<S> <C> <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) $ 2,647 $ 6,352 $ 4,345 $ 3,070 $ 1,383 $ 661 $ 94
- ----------------------------------------------------------------------------------------------------------
Average number of shares
outstanding throughout
each period (in thousands) 226,163 195,866 163,398 151,481 93,580 23,330 2,461
- ----------------------------------------------------------------------------------------------------------
Average amount of debt per
share outstanding
throughout each period $ .01 $ .03 $ .03 $ .02 $ .01 $ .03 $ .04
- ----------------------------------------------------------------------------------------------------------
</TABLE>
1. The Fund commenced operations on September 18, 1991.
3
-3-
<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 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 comparable quality to such lower-rated
securities. As a general matter, unrated bonds are backed by mortgage liens or
equipment liens on the underlying property. 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 (and such investment may 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 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 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 acquisition may be
invested in Illiquid Securities. The Manager monitors holdings of illiquid
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than
those with puts exercisable within seven days.
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").
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. The Fund may also invest in municipal obligations on which the interest
rates typically decline as market rates increase and increase as market rates
decline (commonly referred to as "inverse floaters").
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 (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 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 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 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 the Manager,
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 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 $85 billion as of March 31, 1998,
and with more than 4 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.
The management services provided to the Fund by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.
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 ended December 31, 1997 was 0.42% of
average daily net assets for Class A, Class B, Class C and Class X shares.
The Fund pays expenses related to its daily operations, such as custodian
fees, Trustees' fees, transfer agency fees, legal fees 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 the Fund's
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 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. Because the Fund purchases most of its portfolio
securities directly from the sellers and not through brokers, it therefore
incurs relatively little expense for brokerage. From time to time, however, it
may use brokers when buying portfolio securities. 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 advisor.
o The Distributor. The Fund's shares are sold through dealers, brokers and
financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes the shares of other Oppenheimer
funds 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 on an "at-cost" basis. It also acts as the shareholder
servicing agent for other Oppenheimer funds. 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 shares will usually be different as a result of the different kinds of
expenses each class bears. These returns and yields measure the performance of a
hypothetical account in the Fund over various periods, and do not show the
performance of each share- holder's account (which will vary if dividends are
received in cash, or shares are sold or purchased). The Fund's performance may
help you see how well your Fund has done over time and to compare it to other
funds or market indices.
It is important to understand that the Fund's total returns and yields
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 and yields are calculated is
contained in the Statement of Additional Information, which also contains
information about indices and 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. Different types of yields may be quoted to show performance. Each
class of shares calculates its standardized yield by dividing the annualized net
investment income per share from 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
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 paid for a stated period by the
maximum offering price on the last day of the period and annualizing the result.
Yields for Class A shares normally reflect the deduction of the maximum initial
sales charge, but may also be shown without deducting sales charge. Yields for
Class B, Class C or Class X shares do not reflect the deduction of the
contingent deferred sales 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, 1997, 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, 1997, the municipal bond market was characterized by a
general increase in interest rates through April and a general decline in rates
during the rest of the year, resulting in a decline in long-term yields and a
narrowing of credit quality yield spreads. The narrowing spreads were due to a
stronger economy which boosted the financial conditions of many lower investment
grade rated issuers, and a decrease in the supply of lower investment grade
rated issuers due to increased bond insurance and credit upgrades.
The lower yield environment enabled many issuers to reduce their borrowing cost
by selling new issues and using the proceeds to advance refund older, higher
coupon issues. The Fund benefited from Fund's this as certain of its BBB-rated
and A-rated premium coupon holdings were pre-refunded, resulting in an upgrade
in credit quality and an increase in market value. The Fund also benefited from
the overall improvement of credit quality in New York State. In addition, many
New York State appropriation-backed issuers were upgraded. The Fund's portfolio
holdings, allocation and strategies are subject to change.
o Comparing the Fund's Performance to the Market. The graphs below show
the performance of a hypothetical $10,000 investment in each class of shares of
the Fund held from inception of the class until December 31, 1997. Performance
is measured in each instance since inception of each class (September 18, 1991
for Class A shares, May 1, 1997 for Class B and Class C shares and May 1, 1995
for Class X shares).
The performance of the Fund is compared to the performance of the Lehman
Brothers Municipal Bond Index, the Merrill Lynch Municipal Index (3-7 years) and
the Consumer Price Index ("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 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 income tax and New York State and New York
City personal income taxes.
Index performance reflects the reinvestment of income but does not
consider the effect of capital gains or transaction costs and none of the data
below shows the effect of taxes. 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
12/31/97(1)
1 Year 5 Year Life of Class
- -------------------------------------------------------------------
4.23% 5.67% 6.71%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical
Investments
in:
Limited Term New York Municipal Fund (Class B), Merrill Lynch
Municipal Index (3-7 years), Lehman Brothers Municipal Bond
Index and the Consumer Price Index.
[graph]
Average Annual Total Returns of Class B shares of the Fund at
12/31/97(2)
Life of Class
- -----------------------------------------------------------------
1.89%
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical
Investments
in:
Limited Term New York Municipal Fund (Class C), Merrill Lynch
Municipal Index (3-7 years), Lehman Brothers Municipal Bond
Index and the Consumer Price Index.
[graph]
Average Annual Total Returns of Class C shares of the Fund at
12/31/97(3)
Life of Class
- -----------------------------------------------------------------
4.58%
Class X Shares (formerly Class B 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
12/31/97(4)
1 Year Life of Class
- -------------------------------------------------------------------
4.94% 6.11%
Total returns and the ending account values in the graphs show changes in
share value and include reinvestment of all 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,
on April 30, 1997 in the graphs relating to Class B and Class C 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 are shown net of the 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 B shares of the Fund were first publicly offered 5/1/97. Class
B return is shown net of the applicable 4% contingent deferred sales charges for
the life-of-the-class. The ending account value in the graph is net of the
applicable 4% sales charge. (3) Class C shares of the Fund were first publicly
offered on 5/1/97. The Class C life-of-class return is shown net of the
applicable 1.0% contingent deferred sales charge. (4) 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
1.50% 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 1.50% 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 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 bought Class X shares, you paid 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 of the Fund are no
longer offered after January 5, 1998.
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 advisor. 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 to
consider 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 arrangements, contact your investment dealer or the Transfer
Agent.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class and considered the effect of the annual
asset-based sales charge on Class B and Class C expenses (which, like all
expenses, will affect your investment return). For the sake of comparison, we
have assumed that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot be predicted
and will vary, based on the Fund's actual investment returns and the operating
expenses borne by each class of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a particular class
of shares assumes that you will purchase only one class of shares, and not a
combination of shares of different classes.
o How Long Do You Expect to Hold Your Investment? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses, your choice will also depend on
how much you plan to invest. For example, the reduced sales charges available
for larger purchases of Class A shares may, over time, offset the effect of
paying an initial sales charge on your investment (which reduces the amount of
your investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or Class C shares for
which no initial sales charge is paid.
o Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six years), you
should probably consider purchasing Class A or Class C shares rather than Class
B shares, because of the effect of the Class B contingent deferred sales charge
if you redeem within six years, as well as the effect of the Class B asset-based
sales charge on the investment return for that class in the short-term. Class C
shares might be the appropriate choice (especially for investments of less than
$100,000) because there is no initial sales charge on Class C shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases toward
six years, Class C shares might not be as advantageous as Class A shares. That
is because the annual asset-based sales charge on Class C shares will have a
greater impact on your account over the longer term than the reduced front-end
sales charge available for larger purchases of Class A shares. For example,
Class A shares might be more advantageous than Class C shares (as well as Class
B shares) for investments of more than $100,000 expected to be held for 5 or 6
years (or more). For investments over $250,000 expected to be held 4 to 6 years
(or more), Class A shares may become more advantageous than Class C shares (and
Class B shares). If investing $500,000 or more, Class A shares may be more
advantageous as your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or more of Class B shares or $1 million or more of
Class C shares from a single investor.
o Investing for the Longer Term. If you are investing for the longer term,
for example, for retirement, and do not expect to need access to your money for
seven years or more, Class B shares may be an appropriate consideration, if you
plan to invest less than $100,000. If you plan to invest more than $100,000 over
the long term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect of the
expected lower expenses for Class A shares and the reduced initial sales charges
available for larger investments in Class A shares under the Fund's Right of
Accumulation.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time, using
the assumed annual performance return stated above, and therefore you should
analyze your options carefully.
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 or Class C shares (Class X
shares are no longer offered after January 5, 1998) 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". Class X shares are no longer offered
after January 5, 1998.
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 of shares
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 or 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 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 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 or Class C . 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, it is recommended that you discuss your
investment first with a financial advisor, to be sure it is appropriate for you.
o Payment by Federal Funds Wire. 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 to
transmit funds electronically to purchase shares, to have the Transfer Agent
send redemption proceeds, or to transmit dividends and distributions .
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 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, Colorado, or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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 normally
your order must be transmitted to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00 P.M., New
York time. 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).
Buying Class A Shares. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases
described below, purchases are not subject to an initial sales charge, and the
offering price will be the net asset value. 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:
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
- -------------------------------------------------------------------
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%
The Distributor reserves the right to reallow the entire commission 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. The Distributor pays dealers of record
commissions on those non- retirement plan purchases in an amount equal to the
sum of 1.0% . That commission will be paid only on the amount of those purchases
that were 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 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 may 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 and Class B 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.
Additionally, you can add together current purchases of Class A and Class
B shares of the Fund and
other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of Class A
shares. You can also include 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 and currently own to the value of current purchases to
determine the sales charge rate that applies. The Oppenheimer funds are listed
in "Reduced Sales Charges" 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 and/or Class B shares of the Fund and 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 Class B 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
Waivers of Initial and Contingent Deferred 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; and
retirement plans established by them for their employees;
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 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, banks or registered investment advisers advisors that
have entered into an agreement with the Distributor providing specifically for
the use of shares of the Fund in particular investment products made available
to their clients (those clients may be charged a transaction fee by their
dealer, broker, bank or advisor on the purchase or sale of Fund shares);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 (that have entered into an agreement for this purpose with
the Distributor) 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 advisor (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 and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
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 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 30 days 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
agrees 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);
o if, at the time of purchase of shares (if purchased during the period
May 1, 1997 through December 31, 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).
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 compensate the Distributor for 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
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.
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 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 1.00% of the net assets per year
of the respective class.
The Distributor uses the service fees to compensate dealers for providing
personal and account maintenance services that hold Class B or Class C shares.
Those services are similar to those provided under the 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.
The Distributor may 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. 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 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 and/or service fee to the Distributor for distributing
shares before the Plan was terminated. At December 31, 1997, the end of the
Class B fiscal year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class B shares of $642,821 (equal to 2.99% of the
Fund's net assets represented by Class B shares on that date). At December 31,
1997, the end of the Class C fiscal year, the Distributor had incurred
unreimbursed expenses in connection with sales of Class C shares of $452,980
(equal to 1.69% of the Fund's net assets represented by Class C shares on that
date).
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. In order to receive a waiver of the Class B and Class C contingent
deferred sales charge, you must notify the Transfer Agent which conditions
apply.
Waivers for Redemptions of Shares in Certain Cases. The Class B and Class
C contingent deferred sales charges will be waived for redemptions of shares in
the following cases :
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.
Class X Shares. Class X shares of the Fund are no longer offered, effective
January 5, 1998. Prior to May 1, 1997, Class X shares were designated as Class B
shares.
Class X shares were 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 compensate the Distributor for 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 B and Class C Sales Charges" on page 38 of this Prospectus.
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
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. Class X shares of the Fund will no longer be offered after January
5, 1998.
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 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, 1997, the end of the Class X Plan year, the
Distributor had incurred unreimbursed expenses in connection with sales of Class
X shares of $444,572 (equal to 0.85% 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 and/or service fee to the Distributor for distributing shares before the
Plan was terminated.
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
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.
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 fund 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. 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.
OppenheimerFunds Internet Web Site. Information about the Fund, including your
account balance, daily share prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. Additionally, certain account
transactions may be requested by any shareholder listed in the registration on
an account as well as by the dealer representative of record, through a special
section of that Web Site. To access that section of the Web Site, you must first
obtain a personal identification number ("PIN") by calling OppenheimerFunds
PhoneLink at 1-800-533-3310. If you do not wish to have Internet account
transactions capability for your account, please call our customer service
representatives at 1-800-525-7048. To find out more information about Internet
transactions and procedures, please visit the Web Site.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer fund
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
Oppenheimer fund 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 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 only 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, by using the Fund's checkwriting privilege or by telephone. You can
also set up an Automatic Withdrawal Plan 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
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 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 or by Wire. There are no
dollar limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH transfer 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
transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account.
The bank must be a member of the Federal Reserve wire system. There is a $10 fee
for each Federal Funds wire. To place a wire redemption request, call the
Transfer Agent at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or paid on
the proceeds of shares that have been redeemed and are awaiting transmittal by
wire. To establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
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 refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
Selling Shares by Wire. You may request that redemption proceeds of $2,500 or
more be wired to a previously designated account at a commercial bank that is a
member of the Federal Reserve wire system. The wire will normally be transmitted
on the next bank business day after the redemption of shares. To place a wire
redemption request, call the Transfer Agent at 1-800-525-7048.
There is a $10 fee for each wire.
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. To
exchange shares, you must meet
several conditions:
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. In some cases, sales charges may be imposed on exchange
transactions. 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
for exchanges in the Statement of Additional Information or
obtain
one 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 sale of portfolio 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.
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 transactions 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 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 or improperly.
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 shares. 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
business days from the date the shares were purchased. That delay may be avoided
if you purchase shares by Federal Funds wire, certified check or arrange with
your bank to 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.
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 taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a current and properly certified
Social Security or Employer Identification Number when you sign your
application, or if you underreport your income to the Internal Revenue Service .
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 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 the same class of shares of another Oppenheimer
fund account you have established.
Taxes. The Fund intends to qualify to pay dividends from net investment income
from Municipal Obligations that will be excludable from your gross income for
regular Federal income tax purposes, and from New York State and New York City
personal 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. So
that the Fund will not have to pay taxes on amounts it distributes to
shareholders as dividends and capital gains, the Fund intends to manage its
investments so that it will qualify as a "regulated investment company" under
the Internal Revenue Code, although it reserves the right not to qualify in a
particular year.
o "Buying a Dividend." 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.
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 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.
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.
-4-
<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 B Shares Comparison of Change in Value of a $10,000 Hypothetical
Investment in: Limited Term New York Municipal Fund (Class B), Merrill Lynch
Municipal Index (3-7 Years), Lehman Brothers Municipal Bond Index and Consumer
Price Index"
(c) "Class C Shares Comparison of Change in Value of a $10,000 Hypothetical
Investment in: Limited Term New York Municipal Fund (Class C), Merrill Lynch
Municipal Index (3-7 Years), Lehman Brothers Municipal Bond Index and Consumer
Price Index"
(d) "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), in Class B and Class C shares from May 1, 1997 (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, 1997, 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."
Limited Term Consumer Lehman Bro. Merrill
Lynch New York Price Municipal Municipal
Index
Municipal Fund Index Bond Index (3-7
years)
Class A
9/18/91 9,650 10,000 10,000 10,000
12/31/91
10,0610,051 10,335
10,259
12/31/92 11,019 10,343 11,246 11,061
12/31/93 12,139 10,627 12,627 11,943
12/31/94 12,079 10,911 11,974 11,738
12/31/95 13,288 11,188 14,067 12,988
12/31/96 13,924 11,560 14,690 13,542
12/31/97 15,044 11,757 16,039 14,420
Limited Term Consumer Lehman Bro. Merrill
Lynch New York Price Municipal Municipal
Index
Municipal Fund Index Bond Index (3-7
years)
Class B
5/1/97 10,000 10,000 10,000 10,000
12/31/97 10,189 10,069 10,852 10,636
Limited Term Consumer Lehman Bro. Merrill
Lynch New York Price Municipal Municipal
Index
Municipal Fund Index Bond Index (3-7
years)
Class C
5/1/97 10,000 10,000 10,000 10,000
12/31/97 10,458 10,069 10,852 10,636
Limited Term Consumer Lehman Bro. Merrill
Lynch New York Price Municipal Municipal
Index
Municipal Fund Index Bond Index (3-7
years)
Class X
5/01/95 10,000 10,000 10,000 10,000
12/31/95 10,557 10,105 10,958 10,630
12/31/96 11,10,441 11,443
11,083
12/31/97 11,714 10,619 12,494
11,802
-5-
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred 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)
Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Growth & Income Fund,
Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund
and Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment advisor 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) purchased by such shareholder by exchange of shares of other Oppenheimer
funds that were acquired 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.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price Price
- ----------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -----------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
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 28 on page __ 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 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 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, Class B or Class C shares of the Fund acquired by the
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 Class 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, Class B or Class 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 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 Class 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, Class B or Class 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.
<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
OppenheimerFunds Internet Web Site:
http://www.Oppenheimerfunds.com
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street
Suite 2500
Denver, Colorado 80202
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.
PR0355.001.0498
<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 April 22, 1998
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 April 22, 1998. 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 Accountants' Report........................
Financial Statements.............................................
Appendix A: Industry Classifications............................A-1
Appendix B: Tax-Equivalent Yield Chart..........................B-1
Appendix C: Description of Municipal Securities Ratings........C-1
-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 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.
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 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) appropriate covenants will be
obtained from the municipal obligor prohibiting the substitution or purchase of
similar equipment if lease payments are not appropriated, (3) the lease obligor
has maintained good market acceptability in the past, (4) the investment is of a
size that will be attractive to institutional investors, and (5) 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 Inverse Floaters. The Fund may also invest in municipal obligations on
which the interest rates typically decline as market rates increase and increase
as market rates decline (commonly referred to as "inverse floaters"). Changes in
the market interest rate or in the floating rate security inversely affect the
residual interest rate paid on the inverse floater, with the result that the
inverse floater's price will be considerably more volatile than that of a
fixed-rate bond.
For example, a municipal issuer may
decide to issue two variable rate instruments instead of a single long-term,
fixed-rate bond. Such securi ties have the effect of providing a degree of
investment leverage, since the interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument (the
inverse floater) reflects the approximate rate the issuer would have paid on a
fixed-rate bond, multiplied by two, minus the interest rate paid on the
short-term instrument. The two portions may be recombined to form a fixed-rate
municipal bond. To seek to limit the volatility of the securities, the Manager
may acquire both portions in an effort to reduce risk and preserve capital. The
Manager believes that inverse floating rate obligations represent a flexible
portfolio management instrument for the Fund which allows the Manager to vary
the degree of investment leverage efficiently under different market conditions.
The market for inverse floaters is relatively new. Under guidelines adopted by
the Board of Trustees, the Fund may invest up to 15% of the value of its total
assets in inverse floaters. The Manager currently intends to limit such
investments to no more than 5% of the value of the Fund's net assets. Certain
investments in such obligations may be illiquid and, as such, are subject to the
Fund's limitation on investments in Illiquid Securities. The Fund may not invest
in such illiquid obligations if such investments, together with other Illiquid
Securities, would exceed 15% of the Fund's net assets.
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 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 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 3, 1998 with
respect to offerings of the State and March 12, 1998 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 . It improved thereafter commencing in calendar year 1996,
reflecting improved security industry earnings and employment in other sectors.
The City's current financial plan assumes that, after strong growth in the 1998
fiscal year, moderate economic growth will exist through the calendar year 2002,
with moderate job growth and wage increases.
For each of the 1981 through 1997 fiscal years, the City achieved balanced
operating results as reported in accordance with generally accepted accounting
principles ("GAAP") and revenues and expenditures for the City's 1998 and 1999
fiscal years are projected to be balanced in accordance with GAAP. The City has
been required to close substantial budget gaps in recent years in order to
maintain balanced operating results. A pattern of current year surplus operating
results and projected subsequent year budget gaps has been consistent through
the entire period since 1982, during which the City has achieved surplus
operating results, before discretionary transfers for each fiscal year. 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 financial plan,
including the City's current financial plan for the 1998 through 2002 fiscal
years (the "1998-2002 Financial Plan", "Financial Plan" or "City Plan"). On
January 29, 1998, the City published the Financial Plan for the 1998-2002 fiscal
years, which is a modification to a financial plan submitted to the New York
State Financial Control Board (the "Control Board") on June 10, 1997 (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 Plan are based on various
assumptions and contingencies which are uncertain and which may not materialize.
Changes in major assumptions could significantly affect the City's ability to
balance its budget as required by State law and to meet its annual cash flow and
financing requirements. Such assumptions and contingencies include the condition
of the regional and local economies, the impact on real estate tax revenues of
the real estate market, wage increases for City employees consistent with those
assumed in the City Plan, employment growth, continuation of projected interest
earning assumptions for pension fund assets and current assumptions with respect
to wages for City employees affecting the City's required pension fund
contributions, the ability to implement cost reduction initiatives, the ability
of the New York City Health and Hospitals Corporation ("HHC") , BOE and other
such agencies to maintain balanced budgets, the ability to complete certain
revenue generating transactions, provision of State and Federal aid and the
impact on City revenues of Federal and State welfare reform and any future
legislation affecting Medicare or other entitlements and unanticipated
expenditures that may be incurred as a result of the need to maintain the City's
infrastructure.
Implementation of the City Plan is also dependent upon the City's ability
to market its securities successfully in the public credit markets. The City's
financing program for fiscal years 1998 through 2002 contemplates the issuance
of $7.0 billion of general obligation bonds and $7.5 billion of bonds to be
issued by the New York City Transitional Finance Authority (the "Finance
Authority") . The Finance Authority was created as part of the City's effort to
assist in keeping the City's indebtedness within the forecast level of the
constitutional restrictions on the amount of debt the City is authorized to
incur. In a challenge to the New York City Transitional Finance Authority Act
(the "Finance Authority Act"), the state trial court, by summary judgment on
November 25, 1997, held the Finance Authority Act to be constitutional. On March
10, 1998, plaintiffs asked the State appellate court for a preliminary
injunction pending an appeal enjoining the Finance Authority from issuing bonds.
On March 25, 1998, the State appellate court denied plaintiff's request for a
preliminary injunction. 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 of 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 1998-2002 Financial Plan. The Financial Plan sets forth actions to close
a previously projected gap for the 1999 fiscal year and to reduce projected gaps
for fiscal years 2000 through 2002. The proposed actions in the Financial Plan
for the 1998 through 2002 fiscal years include additional (i) agency actions;
(ii) Federal aid; and (iii) State aid. The gap-closing actions are partially
offset by proposed new tax reduction programs totaling $237 million, $537
million, $610 million, and $774 million in fiscal years 1999 through 2002,
respectively.
The 1998-2002 Financial Plan reflects actual receipts and expenditures and
changes in forecast revenues and expenditures since the June Financial Plan. The
1998-2002 Financial Plan projects revenues and expenditures for the 1998 and
1999 fiscal years balanced in accordance with GAAP, and projects budget gaps of
$1.8 billion, $2.0 billion and $1.9 billion for the 2000, 2001 and 2002 fiscal
years, respectively. The
Financial Plan assumes (i) approval by the Governor and the State Legislature of
the extension of the 14% personal income tax surcharge, which is scheduled to
expire on December 31, 1999, and of the extension of the 12.5% personal income
tax surcharge which is scheduled to expire on December 31, 1998; (ii) collection
of the projected rent payments for the City's airports in the 1999 through 2002
fiscal years, which may depend on the successful completion of negotiations with
the Port Authority of New York and New Jersey or the enforcement of the City's
rights under the existing leases thereto through pending legal actions; and
(iii) State approval of the repeal of the Wicks Law relating to contracting
requirements for City constuction projects and the additional State funding
assumed in the Financial Plan, and State and Federal approval of the State and
Federal gap-closing actions proposed by the City in the Financial Plan. 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.
From time to time, the Control Board staff, the staff of the Office of the State
Deputy Comptroller of New York, the City Comptroller, the City's Independent
Budget Office and others issue reports and make public statements regarding the
City's financial condition, commenting on, among other matters, the City's
financial plans, projected revenues and expenditures and actions by the City to
eliminate projected operating deficits. Some of these reports and statements
have warned that the City may have underestimated certain expenditures and
overestimated certain revenues and have suggested that the City may not have
adequately provided for future contingencies. Certain of these reports have
analyzed the City's future economic and social conditions and have questioned
whether the City has the capacity to generate sufficient revenues in the future
to meet the costs of its expenditure increases and to provide necessary
services. It is reasonable to expect that reports and statements will continue
to be issued and to engender public comment.
o Ratings. As of March 12, 1998, Moody's rated the City's general
obligation bonds A3, 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 may be obtained. There is no assurance that 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 July 10, 1995, Standard &
Poor's revised its rating of City bonds downward to BBB+. On February 3, 1998,
Standard & Poor's placed its BBB+ rating of City bonds on CreditWatch with
positive implications. Moody's rating of City bonds was revised in February 1998
to A3 from Baa1.
o Outstanding Net Indebtedness. As of December 31, 1997, the City and the
Municipal Assistance Corporation for the City of New York had, respectively,
approximately $26.6 billion and $3.6 billion of outstanding net long-term debt.
As of January 22, 1998, the New York City Municipal Water Finance Authority (
the "Water Authority") had approximately $8.1 billion of aggregate principal
amount of outstanding bonds, inclusive of subordinate second resolution bonds,
and $600 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 meet 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. On May 6,
1997, the U.S. Environmental Protection Agency granted the City a filtration
avoidance waiver through April 15, 2002 in response to the City's adoption of
certain watershed regulations, which became effective May 1, 1997. The estimated
incremental cost to the City of implementing this Watershed Memorandum of
Agreement, beyond investments in the watershed which are planned independently,
is approximately $400 million. The city has estimated that if filtration of the
upstate water supply system is ultimately required, the construction
expenditures required could be between $4 billion and $5 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.
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, 1997, the City estimated that its
potential future liability to be approximately $3.5 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 approximately 14 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 300,000 jobs since late 1992, employment growth in the State
has been hindered during recent years by significant cutbacks in the computer
and instrument manufacturing, utility, defense and banking industries.
Government downsizing has also moderated these job gains. Moderate growth is
projected to continue in 1998 and 1999 for employment, wages and personal
income, although the growth rates will lessen gradually during the course of the
two years. Personal income growth in 1997 was fueled in part by a continued
large increase in financial sector bonus payments. Increases in bonus payments
at year-end 1998 are projected to be modest, a substantial change from the rate
of increase of the last few years. Overall employment growth is expected to
continue at a modest rate, reflecting the slowing growth in the national
economy, continued spending restraint in government, and restructuring in the
health care, social service, and banking sectors.
o The 1997-98 Fiscal Year. The State's budget for the 1997-1998 fiscal
year (April 1, 1997 through March 31, 1998) was adopted by the Legislature on
August 4, 1997, more than four months after the start of the fiscal year. Prior
to adoption of the budget, the Legislature enacted necessary apropriations for
state-supported debt service. The State Financial Plan for the 1997-1998 fiscal
year (the "State Plan" or "State Financial Plan") was formulated on August 11,
1997, updated on January 30, 1998, and based on the State's budget as enacted by
the Legislature, as well as actual results through the third quarter of the
1997-1998 fiscal year.
o The 1997-1998 State Financial Plan projects a balanced General Fund (the
major operating fund of the State) , on a cash basis, with a projected cash
surplus of $1.83 billion. The State has planned to accelerate $1.18 billion in
income tax refund payments into the 1997-1998 fiscal year, or provide reserves
for such payments, in order to make the cash surplus available to help finance
requirements of the 1998-1999 fiscal year. General Fund receipts are projected
to be $35.197 billion while General Fund disbursements are projected at $35.165
billion.
The State projects it has closed
a budget gap of approximately $2.3 billion for the 1997-1998 fiscal year.
Gap-closing actions include cost containment in State Medicaid, the use of the
$1.4 billion 1996-1997 fiscal year budget surplus containment in State Medicaid,
the use of the $1.4 billion 1996-1997 fiscal year budget surplus to finance
current year spending, control on State agency spending and other actions.
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 the current 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 changes in the demand for and use of State
services.
Certain actions taken in the 1997-1998 adopted budget add further pressure
to future budget balance in New York State. For example, the fiscal effects of
tax reductions adopted in the 1997- 1998 budget are projected to grow more
substantially beyond the 1998-1999 fiscal year, with incremental costs averaging
in excess of $1.3 billion annually over the last three years of the tax
reduction program. These incremental costs reflect the phase-in of State-funded
school property tax and local income tax relief, the phase-out of the
assessments on medical providers, and reductions in estate and gift levies,
utility gross receipts taxes, and the State sales tax on clothing. The full
annual cost of the enacted tax reduction package is estimated at approximately
$4.8 billion when fully effective in State fiscal year 2001-2002. In addition,
the 1997-1998 budget included multi-year commitments for school aid and
pre-kindergarten early learning programs which could add as much as $1.4 billion
in costs when fully annualized in fiscal year 2001-2002. These spending
commitments are subject to annual appropriation.
o 1998-1999 and Future Fiscal Years. The Governor presented his proposed
1998-1999 Executive Budget (the "Executive Budget") to the Legislature on
January 20, 1998. As of April 15, 1998, the Legislature passed the State's
budget which still requires the approval of the Governor before it can take
effect. There can be no assurance that the State's adopted budget projections
will not differ materially and adversely from the projections set forth in the
Executive Budget.
The Plan") State, however, has enacted legislation making appropriations for the
legal requirements of State debt service, lease purchase payments and other
special contractual obligations for the current fiscal year. Furthermore, such
legislation also provides for the payment of the State's certificates of
participation for the current year.
The draft 1998-1999 Financial Plan, based on the Executive Budget,
projects balance on a cash basis for the 1998-1999 fiscal year. Total General
Fund receipts are projected to be $36.22 billion and total General Fund
disbursements and transfers to other funds are projected to be $36.18 billion.
The Executive Budget projects budget gaps of aproximately $1.75 billion in
1999-2000 growing to $3.75 billion in 2000-2001. These gaps are projected after
assuming savings actions totaling $600 million in 1999-2000 and $800 million in
2000-2001.
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.
According to the New York State Division of the Budget, uncertainties with
regard to the economy present the largest potential risk to budget balance in
New York State. This risk includes either a financial market or broader economic
"correction". The securities industry is more important to the New York economy
than the national economy, and a significant deterioration in stock market
performance could ultimately produce adverse changes in wage and employment
levels.
o Prior Fiscal Years. The State ended its 1996-1997 fiscal year in
balance, with a reported 1996-1997 General Fund cash surplus of $1.4 billion.
Prior to adoption of the State's 1996-1997 fiscal year budget, the State had
projected a potential budget gap of approximately $3.9 billion.
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.
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 without relying
on short-term seasonal borrowing.
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 incurring 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, 1996, 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 $75.4 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. As of March 3, 1998, Moody's rated New York State general
obligations bonds A2, and Standard & Poor's rated such bonds A. Standard &
Poor's revised its ratings upwards from A- to A on August 28, 1997 . 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 State Debt. As of March 31, 1997, the State had approximately $5.03
billion outstanding in general obligation debt, including $294 million in bond
anticipation notes outstanding. The total amount of moral obligation debt was
approximately $4.07 billion, and $22.50 billion of bonds issued primarily in
connection with lease-purchase and contractual-obligation financing of State
capital programs were outstanding.
For purposes of analyzing the financial condition of the State, debt of
the State and of certain public authorities may be classified as State-supported
debt, which includes general obligations debt of the State and lease-purchase
and contractual obligations of public authorities (and municipalities) where
debt service is paid from State appropriations (including dedicated tax sources,
and other revenues such as patient charges and dormitory facilities rentals). In
addition, a broader classification, referred to as State-related debt, includes
State-supported debt, as well as certain types of contingent obligations,
including moral-obligation financing, certain contingent contractual-obligation
financing arrangements, and State-guaranteed debt, where debt service is
expected to be paid from other sources and State appropriations are contingent
in that they may be made and used only under certain circumstances.
Total outstanding State-related debt increased from $24.45 billion at the
end of the 1987-88 fiscal year to $37.11 billion at the end of the 1996-97
fiscal year, an average annual increase of 4.7%. State-supported debt increased
from $11.61 billion at the end of the 1987-88 fiscal year to $32.77 billion at
the end of the 1996-97 fiscal year, an average annual increase of 12.2%. During
the prior ten year period, annual personal income in the State rose from $329.6
billion to $526.5 billion, an average annual increase of 5.3%. Thus,
State-supported debt grew at a faster rate than personal income while
State-related obligations grew at a slower rate.
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 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
current fiscal year or thereafter.
There can be no assurance, however, that an adverse decision in any of
these proceedings would not exceed the amount the State Plan reserves for the
payment of judgments and, therefore, could affect the ability of the State to
maintain a balanced State Plan in any particular year. In its audited financial
statements for the fiscal year ended March 31, 1997, the State reported its
estimated liability for awarded and anticipated unfavorable judgments at $364
million.
In addition, the State is party to other claims and litigations which its
counsel has advised are not probable of adverse court decisions. Although, the
amounts of potential losses, if any, are not presently determinable, it is the
State's opinion that its ultimate liability in these cases is not expected to
have a material adverse effect on the State's financial position in the current
fiscal year or thereafter.
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 current 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 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 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;
(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).
Bonds which are refunded with escrowed U.S. government
securities are considered U.S. government securities for purposes
of the Fund's policy not to concentrate. Subject to the
limitations
stated above, the Fund may from time to time invest more than 25%
of its total assets in a particular
segment of the municipal securities market, including but not limited to general
obligation bonds, pollution control bonds, hospital bonds, or any other
municipal segment listed in Appendix A to this Statement of Additional
Information. In these circumstances, economic, business, political or other
changes affecting one bond (such as proposed legislation affecting the financing
of a project or decreased demand for a type of project ) might also affect other
bonds in the same municipal market segment, thereby potentially increasing
market risk to the Fund.
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.
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
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" and Oppenheimer MidCap
Fund. 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 __, 1998 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 , 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), an
investment adviser subsidiary of the Manager; Chairman and a director of
Shareholder Services, Inc. ("SSI") (since August 1994), and Shareholder
Financial Services, Inc. ("SFSI") (September 1995), transfer agent subsidiaries
of the Manager; President (since September 1995) and a director (since October
1990) of Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding
company; President (since September 1995) and a director (since November 1989)
of Oppenheimer Partnership Holdings, Inc. ("OPHI"), a holding company subsidiary
of the Manager; a director of Oppenheimer Real Asset Management, Inc. (since
July 1996); President and a director (since October 1997) of OppenheimerFunds
International Ltd., an offshore fund manager subsidiary of the Manager ("OFIL")
and Oppenheimer Millennium Funds plc (since October 1997); President and a
director of other Oppenheimer funds; a director of the NASDAQ Stock Market, Inc.
and of Hillsdown Holdings plc (a U.K. food company); formerly an Executive Vice
President of the Manager.
- ------------------------
*Trustee who is an "interested person" of the Fund.
JOHN CANNON, Trustee; Age 68
620 Sentry Parkway West Suite 220, Blue Bell, PA 19422
Independent Consultant; Chief Investment Officer, CDC Associates,
a registered investment adviser;
Director, Neuberger & Berman Income Managers Trust, Neuberger & Berman Income
Funds and Neuberger Berman Trust, 1995- Present; formerly Chairman & and
Treasurer, CDC Associates, 1993- February, 1996; prior thereto, 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 67
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture capital
consulting firm; Trustee of Capital Cash Management Trust , a money-market fund
and Narragansett Tax-Free Fund, a tax-exempt bond fund; Director of OCC Cash
Reserves, Inc. and Trustee of OCC Accumulation Trust, all of which are open-end
investment companies. Formerly: Director, External Affairs, Kravco Corporation,
a national real estate owner and property management corporation; President of
Essex Management Corporation, a management consulting company; a general partner
of Capital Growth Fund, a venture capital partnership; 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; and Vice President of W.R. Grace & Co.
THOMAS W. COURTNEY, Trustee; Age 64
833 Wyndemere Way, Naples, Florida 34105 Principal of Courtney Associates, Inc.
(venture capital firm); former General Partner of Trivest Venture Fund (private
venture capital fund); former President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund; Director of
OCC Cash Reserves, Inc., and Trustee of OCC Accumulation Trust, all of which are
open-end investment companies; former President of Boston Company Institutional
Investors; Trustee of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona,
tax-exempt bond funds; Director of several privately owned corporations; former
Director of Financial Analysts Federation.
LACY B. HERRMANN, Trustee; Age 68 380 Madison Avenue, Suite 2300, New York, New
York 10017 Chairman and Chief Executive Officer of Aquila Management
Corporation, the sponsoring organization and Manager, 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, Aquila
Cascadia Equity Fund, 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 of OCC Cash Reserves, , and Trustee of OCC Accumulation Trust , both of
which are open-end investment companies; Trustee Emeritus of Brown University.
GEORGE LOFT, Trustee; Age 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust
, both of which are open-end investment companies.
RONALD H. FIELDING, Vice President and Portfolio Manager; Age
49
350 Linden Oaks, Rochester, NY 14625
Senior Vice President of the Manager, Chairman of Rochester Division of the
Manager; Formerly President and a director of 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
Fielding Management Company, 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 (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc.
(since September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President, General Counsel and a director of Oppenheimer Real Asset Management,
Inc. (since July 1996); General Counsel (since May 1996) and Secretary (since
April 1997) of OAC; A director of OFIL and Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
GEORGE C. BOWEN, Treasurer; Age 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor ; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991)and a director (since December 1991) of Centennial;
President, Treasurer and a director of Capital Corporation (since June 1989);
Vice President and Treasurer (since August 1978) and Secretary (since April
1981) of SSI; Vice President, Treasurer and Secretary of SFSI (since November
1989); Treasurer of OAC (since June 1990); Treasurer of OPHI (since November
1989); Vice President and Treasurer of Oppenheimer Real Asset Management, Inc.
(since July 1996); Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc., a broker-dealer (since December 1995); a director or
trustee and an officer of other Oppenheimer funds.
ROBERT BISHOP, Assistant Treasurer; Age 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager .
SCOTT T. FARRAR, Assistant Treasurer; Age 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager .
ROBERT G. ZACK, Assistant Secretary; Age 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of (since May 1985), and SFSI (since
November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds.
ADELE A. CAMPBELL, Assistant Treasurer; Age 34
350 Linden Oaks, Rochester, New York 14625
Assistant Vice President of the Manager (1996-Present);
Formerly Assistant Vice President of
Rochester Fund Services, Inc. (1994-1996), Assistant Manager of
Fund Accounting, Rochester Fund
Services (1992-1994), Audit Manager for Price Waterhouse
LLP (1991-1992).
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, 1997 and (ii) other investment companies (or series thereof) in the
Fund Complex during the calendar year ended December 31, 1997. The following
table sets forth the aggregate compensation received by the non-interested
Trustees from the Fund during the fiscal year ended December 31, 1997.
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual
Compensation
from the Part of FundBenefits UponFrom Fund
Name of Person Fund Expenses(1)
Retirement(1)Complex(2)
John Cannon $7,388 $0 $0
$23,100
Paul Y. Clinton $7,227 $0 $0
$68,379
Thomas W. Courtney $7,227 $0 $0
$68,379
Lacy B. Herrmann $6,677 $0 $0
$63,154
George Loft $7,227 $0 $0
$68,379
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(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 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, 1997, 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.
o Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation Plan for Independent Trustees that enables Trustees to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Trustee is
periodically adjusted as though an equivalent amount had been invested in shares
of one or more Oppenheimer funds selected by the Trustee. The amount paid to the
Trustee under the plan will be determined based upon the performance of the
selected funds. Deferral of Trustees' fees under the plan will not materially
affect the Fund's assets, liabilities and net income per share. The plan will
not obligate the Fund to retain the services of any Trustee or to pay any
particular amount of compensation to any Trustee. Pursuant to an Order issued by
the Securities and Exchange Commission, the Fund may invest in the funds
selected by the Trustee under the plan for the limited purpose of determining
the value of the Trustee's deferred fee account.
o Major Shareholders. As of April 1, 1998 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, Class B 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
43,925,408.595 Class A
shares (17.62%); 1,614,083.795 Class B shares (16.45%); 2,777,254.940 Class C
shares (20.32%) and 3,733,987.980 Class X shares (24.22%) then outstanding.
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.
|X| Portfolio Management. The portfolio manager of the
Fund is Ronald H. Fielding, who is principally responsible for the
day-to-day management of the Fund's portfolio. Mr. Fielding's
background is described in the Prospectus under "Portfolio
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 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 Fund's Distributor. The Advisory Agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs, and non-recurring expenses, including litigation. For
the fiscal year ended December 31, 1997, the management fees paid by the Fund to
the Manager were $3,140,951. 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 year ended December 31, 1995 , the management fees paid by
the Fund to Rochester Capital Advisors, L.P. were $2,282,690 .
Under the Advisory Agreement, the Manager had agreed 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 . During the Fund's last fiscal year, the Fund's expenses did not exceed
the most stringent state regulatory limit and the expense limitation 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 resulting from a good faith error or
omission on its part with respect to any of its duties thereunder.
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, OppenheimerFunds Distributor, Inc. 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, 1995 and 1996, the aggregate amount of sales charge on sales of the
Fund's Class A shares was $1,652,514 and $1,623,032, respectively, of which
Rochester Fund Distributors, Inc., the Fund's previous principal underwriter,
retained $217,615 in 1995, respectively. In 1996, the Distributor retained
$290,035. During the Fund's fiscal year ended December 31, 1997, the aggregate
amount of sales charge on sales of the Fund's Class A shares was $2,677,697, of
which $473,852 was retained by the Distributor. During the Fund's period ended
December 31, 1997, the contingent deferred sales charge on Class B and Class C
shares totaled $15,712 and $9,187, all of which the Distributor retained. Class
B and Class C shares were first offered to the public commencing on May 1, 1997.
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 . The contingent deferred sales charge collected by the Distributor in
1996 and 1997 was $31,172 and $82,642, 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.
o The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer
Agent, 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 . 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,
1995 and 1996 was $292,278 and $3,066, respectively. The compensation paid to
OppenheimerFunds Services for such services for fiscal year ended December 31,
1996 and December 31, 1997 was $297,354 and $349,629.
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 year ended December 31, 1995 was $161,850, respectively. The compensation
paid to OppenheimerFunds Services for the fiscal year ended December 31,1996 and
December 31, 1997 was $193,682 and $225,111.
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
other than affiliates 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 Investment 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 portfolio
managers. In certain instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the Investment Advisory
Agreement and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's executive
officers. As most purchases made by the Fund are principal transactions at net
prices, the Fund does not incur substantial brokerage costs. The Fund usually
deals directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless it is
determined that a better price or execution may be obtained by utilizing the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked price. The
Fund seeks to obtain prompt execution of orders at the most favorable net
prices. When the Fund engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any transaction
in the securities to which the option relates. 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.
Other funds advised by the Manager have investment objectives and policies
similar to those of the Fund. Such other funds may purchase or sell the same
securities at the same time as the Fund, which could affect the supply and price
of such securities. If two or more of such funds purchase the same security on
the same day from the same dealer, the Manager may average the price of the
transactions and allocate the average among such funds.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates, and
investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of market quotations
for portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid for in commission dollars.
The Board of Trustees permits the Manager to use concessions on fixed-price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board also permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research where the broker has
represented to Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
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 , and by enabling the Manager to obtain market
information for the valuation of securities held in the Fund's portfolio or
being considered for purchase. The Manager provides information as to the
commissions paid to brokers furnishing such services together with the Manager's
representation that the amount of such commissions was reasonably related to the
value or benefit of such services.
Performance of the Fund
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 value" of an investment in a class of shares of the
Fund may be advertised. An explanation of how yield and total returns are
calculated for each class and the components of those calculations is set forth
below.
The Fund currently offers three classes of shares of beneficial interest:
Class A, Class B and Class C shares (Class X shares are no longer offered after
January 5, 1998). 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.
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
yield and total returns 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. Yields and total return for any given past period are not a
prediction or representation by the Fund of future yields on rated return. The
yield and total returns of each class of shares of the Fund are affected by
portfolio quality, portfolio maturity, the type of investments the Fund holds
and its operating expenses allocated to the particular class.
o Yield
o Standardized
Yield. The "standardized yield" (referred to as "yield") is shown for a class of
shares for a stated 30-day period. It 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 for
that period. It may therefore differ from the "dividend yield" for the same
class of shares, described below. It is calculated using the following formula
set forth in rules adopted by the Securities and Exchange Commission , designed
to assure uniformity in the way that all funds calculate their yields:
Standardized ~ Yield ~ = ~ 2~ [~ (~ {a-b} over cd ~ +~ 1~ ) SUP 6~ -~ 1~ ]
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period. b = expenses
accrued for the period (net of any expense reimbursements). c = the
average daily number of shares of that class outstanding during the 30-day
period that
were entitled to receive dividends.
d = the maximum offering price per share of that class on
the last day of the period, adjusted
for undistributed net investment income.
The standardized yield for a 30-day period may differ from the yield for
other periods.
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. 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 any 30-day period. For the 30-day period ended
December 31, 1997, the standardized yields for the Fund's classes of shares were
as follows:
Without Deducting Sales Charge With Sales Charge
Deducted
Class A: 4.07% 3.93%
Class B: 3.27% N/A
Class C: 3.31% N/A
Class X: 3.55% N/A
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, Class B shares, Class C shares and
Class X shares for the 30-day period ended December 31, 1997, for an individual
New York City resident in the 46.08% combined tax bracket were 7.29%, 6.06%,
6.14% and 6.58%, respectively.
o Dividend Yield. The Fund may quote a "dividend yield" for each class of
its shares. Dividend yield is based on the dividends paid on shares of a class
during the actual dividend period. To calculate dividend yield, the dividends of
a class declared during a stated 30-day period are added together and the sum is
multiplied by 12 (to annualize the yield) and divided by the maximum offering
price on the last day of the dividend period. The formula is shown below:
Dividend Yield = dividends paid x 12/maximum offering
price (payment date)
The maximum offering price for Class A shares includes the maximum initial
sales charge. The maximum offering price for Class B and Class C shares is the
net asset value per share, without considering the effect of contingent deferred
sales charges. The Class A dividend yield may also be quoted without deducting
the maximum initial sales charge .
The dividend yields for the 30-day period ended December 31,
1997 were as follows:
Without Deducting Sales Charge With Sales Charge
Deducted
Class A: 5.39% 5.20%
Class B: 4.52% N/A
Class C: 4.58% N/A
Class X: 4.82% N/A
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:
LEFT ( {~ERV~} OVER P~ right) SUP
{1/n}~-1~=~Average~Annual~Total~ Return
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:
ALIGNC {ERV~-~ P~} over P~ =~Total~ Return
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, 1997 and for the
period from September 18, 1991 through December 31, 1997, were 4.23%, 5.67% and
6.71%, respectively. The cumulative "total return" on Class A shares for the
period from September 18, 1991 through December 31, 1997 was 50.44%. The
cumulative total return on Class B shares for the period from May 1, 1997
(inception of the class) through December 31, 1997 was 1.89%. The cumulative
total return on the Class C shares for the period from May 1, 1997 (inception of
the class) through December 31, 1997 was 4.58%. For fiscal year ended December
31, 1997 and the period from May 1, 1995 (date Class X shares were first
publicly offered) through December 31, 1997, the average annual total returns on
an investment in Class X shares were 4.94% and 6.11%, respectively. The
cumulative total return on Class X shares for the period from May 1, 1995
through December 31, 1997 was 17.14%.
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, 1997 and for
the period from September 18, 1991 to December 31, 1997 were 8.01%, 6.42% and
7.32%, respectively. The average annual total returns at net asset value on an
investment in Class X shares for the fiscal year ended December 31, 1997 and for
the period from May 1, 1995 to December 31, 1997 were 7.44% and 6.62%,
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, 1997 was
55.89%. The cumulative total return at net asset value on Class B shares for the
period from May 1, 1997 (inception of the class) through December 31, 1997 was
5.89%. The cumulative total return at net asset value on the Class C shares for
the period from May 1, 1997 (inception of the class) through December 31, 1997
was 5.58%. The cumulative total return at net asset value for Class X shares for
the period from May 1, 1995 through December 31, 1997 was 18.64%.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B, Class C or Class X shares. However,
when comparing total return of an investment in Class A, Class B, Class C or
Class X shares of the Fund, a number of factors should be considered before
using such information as a basis for comparison before using such information
with other investments.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of the performance of its Class A, Class B, Class C or Class X shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring 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 bond 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 in
broad investment categories: domestic stock funds, international stock funds,
taxable bond funds and municipal bond funds based on risk-adjusted total
investment return. The Fund is ranked among the 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 the
90-day U.S. Treasury bill returns after the Fund's considering sales charges and
expenses. Risk measures a fund's or class's performance below the 90-day U.S.
Treasury bill 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
ranking 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.
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. In order to
compare the Fund's dividends to the rate of return on taxable investments,
Federal income taxes on such investments should be considered.
From time to time, the Fund's Manager may publish rankings or ratings of
the Manager (or Transfer Agent) or on the investor services provided by them to
shareholders of the Oppenheimer funds, other than the performance rankings of
the Oppenheimer funds themselves. Those ratings or rankings of
shareholder/investor services by a third party may compare the Oppenheimer funds
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.
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
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, 1997, payments under the Class A
Plan totaled $1,654,936, all of which was paid by the Distributor to Recipients,
including $17,777 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. Payments
made under the Class B Plan during the fiscal year ended December 31, 1997
totaled $65,535, all of which was retained by the Distributor. Payments under
the Class C Plan during the fiscal year ended December 31, 1997 totaled $84,310,
all of which was retained by the Distributor.
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. The
Distributor retains the asset-based sales charge on Class B shares outstanding
for less than 6 years. As to Class C shares, the Distributor retains the
asset-based sales charge during the first year shares are outstanding and pays
the asset-based sales charges as an ongoing commission to the dealer on Class C
shares outstanding for more than a year or more. Such payments are made to the
Distributor under the plans 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" qualification fees and
certain other distribution expenses.
For the fiscal year ended December 31, 1997, payments under the Class X
Plan totaled $371,602, of which the Distributor retained $312,896 as
reimbursement for Class X sales commissions and service fee advances, as well as
financing costs, including $1,160 paid to an affiliate of the Distributor. 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.
The availability of three 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 and Class C shares are the same as those of the initial
sales charge with respect to Class A shares. Class X shares are no longer
offered after January 5, 1998. 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 three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and expenses. 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 solely by that class,
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 and absent such exchange, Class B shares might continue to be subject to
the asset-based sales charge for longer than six years.
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 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 (a) Distribution and/or Service Plan fees, (b) transfer and shareholder
servicing agent fees and expenses, (c) registration fees and (d) 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 (the "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 Exchange's most recent annual announcement schedule
(which is subject to change) states that it will close on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other
days. Dealers other than Exchange members may conduct trading in debt securities
and in foreign securities on certain days on which the Exchange is closed
(including weekends and holidays). Because the Fund's net asset value 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) a
non-money market fund will value (a) debt instruments that had a maturity of
more than 397 days when issued, (b) debt instruments that had a maturity of 397
days or less when issued and have a remaining maturity in excess of 60 days, and
(c) non-money market type debt instruments that had a maturity of 397 days or
less when issued and have a remaining maturity of sixty days or less , at the
mean between "bid" and "asked" prices determined by a pricing service approved
by the Fund's Board of Trustees or, if unavailable, obtained by the Manager from
two active market makers in the security on the basis of reasonable inquiry;
(iii) money market-type debt securities held by a non-money market fund that had
a maturity of less than 397 days when issued that have a remaining maturity of
60 days or less and debt instruments held by a money market fund that have a
remaining maturity of 397 days or less, shall be 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), provided that the Manager is
satisfied that the firm rendering the quotes is reliable and that the quotes
reflect the current market value.
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, or 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 the 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 the 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 after such Federal Funds are received.
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. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other 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, a sibling's spouse, a spouse's siblings, aunts,
uncles, nieces and nephews. Relations by virtue of a remarriage (step-children,
step-parents, etc.) are included.
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:
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 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 International Small Company 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 MidCap 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 Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust Rochester Fund Municipals 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
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 and Class B shares of the Fund or Class A
and Class B shares of other Oppenheimer funds during a 13-month period (the
"Letter of Intent 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 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, 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
total 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 total minimum investment 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.
(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 shares
of the Fund 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 sold with a front-end sales charge of one of the other
Oppenheimer funds that were acquired subject to a 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 advisor 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 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.
Selling Shares by Wire. The wire of redemption proceeds may be delayed if the
Fund's custodian bank is not open for business on a day when the Fund would
normally authorize the wire to be made, which is usually the Fund's next regular
business day following the redemption. In those circumstances, the wire will not
be transmitted until the next bank business day on which the Fund is open for
business. No dividends will be paid on the proceeds of redeemed shares awaiting
transfer by wire.
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 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 in "How to Exchange Shares" 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 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 under "Waivers of Class B and Class C
Sales Charge").
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 those stated 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
such plans should not be considered as a yield or income on your investment. It
may not be desirable to purchase additional shares of Class A shares while
maintaining automatic withdrawals because of the sales charges that apply to
purchases when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular purchases of Class
A shares.
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.
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 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 the
Fund acquired by reinvestment of dividends or distribution from any other of the
Oppenheimer funds 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 any 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 of the
end of the calendar month of the initial purchase of the exchanged Class A
shares (18 months if the shares were initially purchased prior to May 1, 1997),
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.
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 shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans and Automatic Withdrawal Plans 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 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. 22.39% of the Fund's dividends (excluding
distributions) paid during 1997 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 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 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 Accountants. Price Waterhouse LLP, 950 Seventeenth Street, Suite
2500, Denver, Colorado 80202, 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.
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Rochester Portfolio Series
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 Limited Term New York Municipal
Fund (the sole portfolio constituting Rochester Portfolio Series, hereafter
referred to as the Fund) at December 31, 1997, 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 periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
financial statements) are the responsibility of the 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, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where securities purchased had
not been received, provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
- ----------------------------
PRICE WATERHOUSE LLP
Denver, Colorado
January 28, 1998
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 452 Albany Hsg. Authority 0.000% 10/01/12 10/01/02(a) $ 115,716
40 Albany IDA (152 Washington Avenue) 7.500 11/01/01 05/01/98(b) 40,330
1,975 Albany IDA (H. Johnson Office Pk.) 5.750 03/01/18 03/01/98(d) 1,977,172
220 Albany IDA (Port of Albany) 6.250 02/01/05 04/24/02(c) 232,395
30 Albany IDA (Spectrapark) 7.150 12/01/98 ----- 31,027
60 Albany IDA (Spectrapark) 7.250 12/01/99 ----- 62,768
50 Albany IDA (Spectrapark) 7.500 12/01/03 12/01/98(b) 52,035
3,525 Albany IDA (Spectrapark) 7.600 12/01/09 12/01/98(b) 3,688,172
40 Albany Parking Authority 0.000 09/15/02 ----- 32,518
25 Albany Parking Authority 0.000 09/15/03 ----- 19,340
625 Albany Parking Authority 0.000 09/15/04 ----- 430,013
20 Albany Parking Authority 0.000 09/15/05 ----- 14,003
1,610 Albany Parking Authority 6.850 11/01/12(s) 11/01/01(b) 1,766,830
5,015 Albany Parking Authority 7.150 09/15/16(s) 09/15/01(b) 5,424,926
275 Albany Water Finance Authority 7.500 12/01/17 12/01/98(b) 289,077
645 Allegany IDA (Alfred University) 6.900 09/01/99 ----- 650,328
100 Allegany IDA (Atlantic Richfield) 6.625 09/01/16 09/01/02(b) 108,968
300 American Samoa Power Authority 6.700 09/01/98 ----- 304,977
300 American Samoa Power Authority 6.750 09/01/99 ----- 311,202
700 American Samoa Power Authority 6.800 09/01/98 ----- 712,068
700 American Samoa Power Authority 6.900 09/01/99 ----- 727,804
700 American Samoa Power Authority 7.000 09/01/00 ----- 742,735
3,400 Amherst IDA (Amherst Rink) 5.550 10/01/17(s) 10/01/09(b) 3,452,496
50 Auburn IDA (Alcoa) 7.600 12/01/98 ----- 51,282
555 Babylon IDA (WWH Ambulance) 7.000 09/15/01 04/12/00(c) 587,318
65 Baldwinsville Development Corp. 7.200 06/01/10 07/01/98(b) 67,117
755 Batavia Hsg. Authority (Trocaire Place) 7.650 04/01/08 12/30/03(c) 821,689
100 Battery Park City Authority 5.650 12/01/13(s) 06/01/98(b) 100,001
735 Blauvelt Volunteer Fire Co. 6.000 10/15/08 04/23/04(c) 747,297
40 Brookhaven GO 6.400 10/01/10 10/01/02(b) 44,025
185 Brookhaven IDA (Dowling College) 6.200 03/01/01 ----- 194,006
195 Brookhaven IDA (Dowling College) 6.300 03/01/02 ----- 206,743
205 Brookhaven IDA (Dowling College) 6.400 03/01/03 ----- 219,932
145 Brookhaven IDA (Farber) 6.188(v) 12/01/98 06/01/98(f) 145,000
30 Broome IDA (Industrial Park) 7.450 12/01/98 ----- 30,289
1,400 Carnegie Redevelopment Corp. 6.250 09/01/05 12/04/01(c) 1,478,148
1,550 Carnegie Redevelopment Corp. 6.500 09/01/11 05/17/09(c) 1,671,288
505 Clifton Park (Caldor) 11.250 12/01/12 12/01/98(b) 523,382
1,215 Clifton Springs Hospital & Clinic 7.000 01/01/01 01/16/00(c) 1,256,747
35 Colonie IDA (Homeowner Association) 7.250 10/01/02 04/01/98(b) 35,127
25 Cortland IDA (Paul Bunyon) 8.000 07/01/00 07/01/98(b) 25,657
275 Dutchess IDA (Bard College) 6.500 11/01/03 ----- 298,664
1,175 Dutchess Res Rec (Solid Waste) 6.800 01/01/10 01/01/03(b) 1,259,436
290 Elmira HDC 7.500 08/01/08 02/01/98(b) 300,391
15 Elmira HDC 7.500 08/01/09 02/01/98(b) 15,537
440 Erie IDA (FMC Corp.) 6.000 02/01/03 02/01/98(b) 450,811
295 Erie IDA (Medaille College) 7.400 12/30/02 02/19/01(c) 313,252
40 Erie IDA (Medishield) 7.200 08/01/04 08/01/98(b) 40,342
775 Erie IDA (Mercy Hospital) 5.900 06/01/03 07/12/01(c) 803,722
940 Essex IDA (International Paper) 6.500 05/01/06 05/01/98(b) 948,460
2,575 Franklin IDA (COP) 8.125 08/01/06 10/09/03(c) 2,997,867
1,695 Franklin IDA (Correctional Facilities) 6.375 11/01/02 12/16/00(c) 1,749,799
60 Franklin IDA (Correctional Facilities) 6.750 11/01/12(s) 11/01/02(b) 65,588
2,120 Franklin SWMA 6.000 06/01/05 11/19/03(c) 2,208,340
1,350 Franklin SWMA 6.125 06/01/09 12/28/07(c) 1,402,245
11,635 Guam Airport Authority 6.600 10/01/10 10/01/03(b) 12,753,938
2,750 Guam GO 5.750 09/01/04 03/01/99(b) 2,785,008
1,000 Guam GO 5.900 09/01/05 03/01/99(b) 1,013,620
175 Guam Government Limited Obligation, Series A 7.000 11/15/04 11/15/99(a) 187,619
1,200 Guam Power Authority 6.300 10/01/12(s) 10/01/04(b) 1,269,324
3,030 Guam Power Authority 6.375 10/01/08 10/01/02(b) 3,243,888
</TABLE>
9
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,950 Guam Power Authority 6.625% 10/01/14(s) 10/01/04(b) $ 3,233,466
890 Hamilton Elderly Hsg. 11.250 01/01/15(s) 05/01/98(b) 931,082
1,500 Hempstead IDA (Nassau Dist. Energy) 7.750 09/15/15(s) 03/15/98(b) 1,509,225
20 Hempstead IDA (UCP) 7.500 10/01/09 10/01/99(b) 21,220
2,700 Herkimer Hsg. Authority 7.150 03/01/11(s) 09/01/06(b) 2,953,908
1,560 Herkimer IDA (Burrows Paper) 7.250 01/01/01 01/20/00(c) 1,593,134
1,000 Herkimer IDA (Burrows Paper) 8.000 01/01/09 10/28/05(c) 1,044,310
475 Hudson IDA (Have, Inc.) 7.125 12/01/07 01/01/04(c) 497,909
90 Islip IDA (WJL Realty) 7.400 03/01/99 ----- 91,049
1,160 Islip Res Rec 5.850 07/01/02 ----- 1,242,163
330 Jamestown GO 7.000 03/15/99 ----- 341,883
250 Jamestown GO 7.000 03/15/00 ----- 265,305
3,200 Jamestown Hsg. Authority 6.125 07/01/10 08/17/05(c) 3,327,392
460 Jefferson IDA (Stature Electric) 7.500 08/01/99 02/01/98(b) 465,906
420 Lincoln Towers Hsg. Corp. 11.250 01/01/15(s) 05/01/98(b) 439,110
86 Locke Fire District #1 (i) 7.500 07/01/02 01/03/02(c) 91,933
1,705 Madison IDA (Morrisville College) 6.750 07/01/07 04/12/03(c) 1,787,863
210 Medina Hsg. Corp. 8.250 08/15/11(s) 02/15/98(b) 217,942
595 Middleton IDA (Fleurchem) 7.125 12/01/08 09/19/04(c) 625,607
810 Middleton IDA (Southwinds) 7.250 03/01/03 04/21/01(c) 848,872
5 Monroe County Airport 0.000 01/01/04 ----- 3,874
30 Monroe County GO 6.100 05/01/03 ----- 30,527
2,815 Monroe IDA (Al Sigl Center) 6.125 12/15/08 07/13/04(c) 3,046,140
1,210 Monroe IDA (Al Sigl Center) 6.375 12/15/05 11/01/02(c) 1,273,198
1,135 Monroe IDA (Al Sigl Center) 6.750 12/15/10 01/31/09(c) 1,204,383
10 Monroe IDA (Cohber) 7.500 12/01/00 12/01/98(b) 10,349
100 Monroe IDA (Cohber) 7.550 12/01/01 12/01/98(b) 102,751
838 Monroe IDA (Emil Muller) 6.500 10/01/04 09/04/01(c) 838,967
360 Monroe IDA (Geva Theatre) 7.750 04/01/03 ----- 361,159
990 Monroe IDA (Geva Theatre) 7.750 04/01/02 11/02/00(c) 993,188
6 Monroe IDA (Hahn) 7.250 06/01/98 03/31/98(c) 6,035
45 Monroe IDA (Hahn) 7.250 06/01/98 03/31/98(c) 44,730
43 Monroe IDA (Palmer) 6.500 08/01/98 06/08/98(c) 42,978
2,010 Monroe IDA (Piano Works) 6.625 11/01/06 04/08/03(c) 2,127,706
300 Monroe IDA (Roberts Wesleyan College) 6.200 09/01/05 ----- 310,524
195 Monroe IDA (West End Business) 6.750 12/01/04 09/01/02(c) 204,920
145 Montgomery IDA (Amsterdam) 6.000 01/15/98 ----- 145,000
885 Montgomery IDA (Amsterdam) 6.500 01/15/03 02/17/01(c) 916,630
50 MTA Service Contract 7.000 07/01/09 07/01/01(b) 55,508
30 MTA Service Contract, Series L 6.000 07/01/15(s) 07/01/98(b) 30,028
100 MTA Service Contract, Series L 7.500 07/01/17 07/01/98(b) 103,748
45 MTA Service Contract, Series L 7.500 07/01/17 07/01/98(b) 46,687
5,000 MTA Service Contract, Series P 5.750 07/01/15 07/01/05(b) 5,153,350
2,785 MTA Service Contract, Series R 5.200(w) 07/01/08 ----- 2,825,912
5,160 MTA Service Contract, Series R 5.200(w) 07/01/08 ----- 5,235,800
1,420 MTA Service Contract, Series R 5.300(w) 07/01/09 ----- 1,442,223
2,915 MTA Service Contract, Series R 5.300(w) 07/01/09 ----- 2,960,620
30 MTA Transportation Facility Revenue 7.400 07/01/02 07/01/98(b) 31,128
65 MTA Transportation Facility Revenue, Series K 6.250 07/01/11 07/01/02(b) 69,208
345 MTA (Special Obligation) 6.875 01/01/08 01/01/00(b) 369,912
430 Nassau IDA (ACLDD) 7.250 10/01/04 01/02/02(c) 455,314
1,090 New Rochelle IDA (CNR) 6.000 07/01/02 08/11/00(c) 1,160,959
260 New Rochelle IDA (CNR) 6.300 07/01/03 ----- 282,711
275 New Rochelle IDA (CNR) 6.400 07/01/04 ----- 299,514
255 Newark Sr. Citizens Hsg. 9.000 03/01/11 03/01/98(b) 272,544
115 Niagara Frontier Transit Authority 7.000 02/15/00 02/15/98(b) 117,735
2,100 Niagara IDA (Sevenson Hotel) 5.750 05/01/03 10/30/00(c) 2,132,550
665 North Babylon Volunteer Fire Co. 5.000 08/01/07 11/21/03(c) 686,706
575 North Country Development Authority 6.600 07/01/02 ----- 607,959
2,995 North Country Development Authority 6.750 07/01/12(s) 07/01/99(b) 3,173,143
10 Northern Marianas Island Port Authority 7.050 10/01/05 04/01/98(b) 10,172
</TABLE>
10
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 130 Northern Marianas Island Port Authority 7.050% 10/01/04 04/01/98(b) $ 132,304
1,460 NYC GO 0.000 02/01/02 ----- 1,231,846
630 NYC GO 0.000 04/01/01 ----- 552,938
50 NYC GO 0.000(+) 02/01/12 02/01/02(b) 41,110
1,000 NYC GO 0.000 02/01/03 ----- 803,520
1,340 NYC GO 0.000(+) 05/15/14 05/15/08(b) 1,050,721
10 NYC GO 0.000 08/01/07 08/01/02(b) 8,066
30 NYC GO 0.000 08/01/06 08/01/98(b) 29,593
50 NYC GO 0.000 08/15/01 ----- 43,234
1,500 NYC GO 0.000 02/01/01 ----- 1,325,370
170 NYC GO 0.000 04/01/00 ----- 155,832
2,000 NYC GO 0.000 08/15/00 ----- 1,807,120
17,750 NYC GO 5.125 08/01/10 ----- (b) 17,772,898
15 NYC GO 5.625 08/01/14 08/01/06(b) 15,342
10 NYC GO 5.625 10/01/13 10/01/05(b) 10,210
100 NYC GO 5.750 08/15/11 08/15/05(b) 103,864
5 NYC GO 5.750 08/15/14 08/15/05(b) 5,133
10 NYC GO 5.750 05/15/13 05/15/05(b) 10,314
50 NYC GO 5.750 08/15/16 08/15/05(b) 51,361
1,000 NYC GO 5.750 08/15/14 08/15/05(b) 1,027,220
20 NYC GO 5.750 08/15/12 08/15/05(b) 20,722
25 NYC GO 5.750 08/01/15 08/01/05(b) 25,678
400 NYC GO 5.875 03/15/13 03/15/08(b) 420,812
11,870 NYC GO 5.920(r) 08/15/10 08/15/05(b) 11,885,431
1,750 NYC GO 6.000 04/15/09 ----- 1,896,458
90 NYC GO 6.000 02/15/12 02/15/07(b) 95,243
75 NYC GO 6.000 02/15/11 02/15/07(b) 79,554
500 NYC GO 6.000 08/01/17(s) 08/01/07(b) 528,650
15 NYC GO 6.000 08/01/06 08/01/99(a) 15,469
30 NYC GO 6.000 08/01/10 08/01/05(b) 31,786
25 NYC GO 6.000 02/15/14 02/15/07(b) 26,228
50 NYC GO 6.000 08/01/16(s) 08/01/08(b) 54,192
1,075 NYC GO 6.000 08/01/17 08/01/09(b) 1,136,598
35 NYC GO 6.000 05/15/15 05/15/05(b) 36,585
55 NYC GO 6.000 08/01/14 02/01/98(b) 55,030
40 NYC GO 6.000 02/15/15 02/15/07(b) 41,916
5 NYC GO 6.000 08/01/06 08/01/99(b) 5,093
30 NYC GO 6.000 08/01/12 02/01/98(b) 30,029
20 NYC GO 6.000 08/01/06 08/01/99(b) 20,517
20 NYC GO 6.125 08/01/11 08/01/06(b) 21,360
2,000 NYC GO 6.250 08/01/12 08/01/08(b) 2,173,260
2,500 NYC GO 6.250 08/01/08 ----- 2,773,125
10,550 NYC GO 6.250 08/01/09 08/01/08(b) 11,642,136
205 NYC GO 6.250 08/01/10 08/01/08(b) 224,709
4,265 NYC GO 6.250 08/01/13 08/01/08(b) 4,615,924
45 NYC GO 6.250 10/01/08 10/01/02(b) 49,322
1,050 NYC GO 6.300 08/15/08 08/15/05(b) 1,152,564
2,105 NYC GO 6.375 08/01/07 08/01/02(b) 2,267,064
970 NYC GO 6.375 08/15/10 08/15/05(b) 1,060,259
135 NYC GO 6.375 08/15/11 08/15/05(b) 146,757
10,000 NYC GO 6.375 08/15/12 08/15/05(b) 10,844,500
1,890 NYC GO 6.375 08/01/10 08/01/05(b) 2,065,241
1,000 NYC GO 6.375 02/15/06 ----- 1,103,040
620 NYC GO 6.375 08/01/06 08/01/04(b) 667,734
13,500 NYC GO 6.375 08/15/09 08/15/05(b) 14,801,265
15 NYC GO 6.500 12/01/13 06/01/98(b) 15,331
13,000 NYC GO 6.500 08/01/11 08/01/02(b) 14,039,090
80 NYC GO 6.500 08/01/13 08/01/02(b) 86,394
100 NYC GO 6.500 08/01/14 08/15/05(b) 111,190
110 NYC GO 6.500 08/01/05 08/01/02(b) 119,739
600 NYC GO 6.500 02/15/08 02/15/05(b) 662,862
</TABLE>
11
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5 NYC GO 6.500% 12/01/15 06/01/98(b) $ 5,123
100 NYC GO 6.500 08/01/12 08/01/02(b) 107,993
50 NYC GO 6.500 08/01/16 08/01/05(b) 55,595
115 NYC GO 6.500 08/01/08 08/01/02(b) 124,439
20 NYC GO 6.500 08/01/06 08/01/02(b) 21,642
90 NYC GO 6.500 08/15/18 02/15/98(b) 90,288
20 NYC GO 6.500 12/01/15 06/01/98(a) 20,520
10,000 NYC GO 6.625 02/15/14 02/15/05(b) 11,160,600
360 NYC GO 6.750 10/01/06 10/01/02(a) 403,560
1,300 NYC GO 6.750 10/01/05 10/01/02(a) 1,455,519
5 NYC GO 6.750 01/15/12 01/15/98(b) 5,067
50 NYC GO 6.750 10/01/17 10/01/04(b) 54,960
365 NYC GO 6.750 10/01/06 10/01/02(b) 399,737
250 NYC GO 6.750 10/01/05 10/01/02(b) 274,800
5 NYC GO 7.000 12/01/08 06/01/98(b) 5,131
455 NYC GO 7.000 02/01/01 02/01/98(b) 460,524
15 NYC GO 7.000 08/15/99 02/15/98(b) 15,284
1,180 NYC GO 7.000 08/15/16 08/15/04(b) 1,344,398
5 NYC GO 7.000 02/01/09 02/01/98(b) 5,057
490 NYC GO 7.000 02/01/00 02/01/98(b) 496,003
180 NYC GO 7.000 08/15/16 08/15/04(a) 209,650
5 NYC GO 7.000 02/01/11 02/01/98(a) 5,063
390 NYC GO 7.000 02/01/06 02/01/02(b) 434,105
5 NYC GO 7.000 08/01/09 02/01/98(b) 5,085
730 NYC GO 7.000 10/01/09 10/01/04(b) 810,767
30 NYC GO 7.000 02/01/12 02/01/98(b) 30,362
15 NYC GO 7.000 08/01/16 08/01/02(b) 16,615
2,860 NYC GO 7.000 02/01/06 02/01/02(a) 3,196,908
55 NYC GO 7.000 02/01/17 02/01/02(a) 51,900
10 NYC GO 7.000 08/01/00 02/01/98(b) 10,173
365 NYC GO 7.000 08/01/07 ----- 423,732
15 NYC GO 7.000 02/01/17 02/01/02(b) 16,477
25 NYC GO 7.000 10/01/15 10/01/99(b) 26,228
65 NYC GO 7.000 10/01/16 10/01/99(b) 68,192
9,145 NYC GO 7.000 10/01/13 10/01/02(b) 10,156,803
35 NYC GO 7.000 12/01/06 06/01/98(b) 35,685
15 NYC GO 7.000 10/01/18 10/01/99(b) 15,737
5 NYC GO 7.000 08/15/07 02/01/98(b) 5,085
5 NYC GO 7.000 12/01/10 06/01/98(b) 5,131
2,000 NYC GO 7.000 02/01/16 02/01/02(b) 2,201,660
20 NYC GO 7.000 08/15/02 02/15/98(b) 20,376
145 NYC GO 7.100 02/01/10 02/01/02(b) 159,812
55 NYC GO 7.100 02/01/10 02/01/02(a) 61,683
1,970 NYC GO 7.100 02/01/09 02/01/02(a) 2,209,375
100 NYC GO 7.100 08/15/07 08/15/04(b) 112,971
250 NYC GO 7.100 02/01/09 02/01/02(b) 275,538
10 NYC GO 7.100 02/01/04 02/01/98(b) 10,119
20 NYC GO 7.200 02/01/15 02/01/02(a) 22,505
1,450 NYC GO 7.200 08/15/08 08/15/04(b) 1,668,370
25 NYC GO 7.200 02/01/05 02/01/98(b) 25,319
25 NYC GO 7.200 08/01/01 02/01/98(b) 27,187
1,010 NYC GO 7.250 08/15/19 08/15/04(b) 1,158,117
3,990 NYC GO 7.250 08/15/19 08/15/04(a) 4,704,290
100 NYC GO 7.250 02/01/07 02/01/98(b) 100,329
5 NYC GO 7.250 02/01/07 02/01/98(b) 5,059
15 NYC GO 7.250 08/15/17 08/15/99(b) 15,899
5 NYC GO 7.300 08/15/98 02/15/98(b) 5,094
285 NYC GO 7.400 02/01/02 ----- 316,330
500 NYC GO 7.400 02/01/00 ----- 532,130
10 NYC GO 7.500 08/01/01 08/01/99(a) 10,682
50 NYC GO 7.500 08/01/04 08/01/98(b) 51,835
</TABLE>
12
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 8,900 NYC GO 7.500% 02/01/06 02/01/02(b) $ 10,028,698
5 NYC GO 7.500 08/01/01 08/01/99(b) 5,313
220 NYC GO 7.500 02/01/07 02/01/02(b) 247,196
20 NYC GO 7.500 12/01/03 06/01/98(b) 20,079
10,125 NYC GO 7.500 02/01/04 02/01/02(b) 11,343,240
115 NYC GO 7.500 08/15/03 08/15/99(b) 122,319
55 NYC GO 7.500 02/01/05 02/01/02(b) 61,580
5 NYC GO 7.500 08/15/05 02/15/98(b) 5,094
105 NYC GO 7.500 03/15/09 03/15/00(b) 113,169
2,425 NYC GO 7.500 02/01/09 02/01/02(b) 2,734,479
5 NYC GO 7.500 08/15/01 02/15/98(b) 5,095
45 NYC GO 7.625 02/01/13 02/01/02(a) 51,475
5 NYC GO 7.625 02/01/13 02/01/02(b) 5,641
3,705 NYC GO 7.650 02/01/07 02/01/02(a) 4,241,521
315 NYC GO 7.650 02/01/07 02/01/02(b) 353,928
25 NYC GO 7.700 02/01/09 02/01/02(b) 28,366
275 NYC GO 7.700 02/01/09 02/01/02(a) 315,334
180 NYC GO 7.750 08/15/12 08/15/01(a) 204,520
125 NYC GO 7.750 08/15/05 08/15/01(b) 139,448
485 NYC GO 7.750 08/15/06 08/15/01(b) 541,745
525 NYC GO 7.750 08/15/05 08/15/01(a) 596,516
5 NYC GO 7.750 08/15/11 08/15/01(b) 5,594
30 NYC GO 7.750 08/15/06 08/15/01(a) 34,087
90 NYC GO 7.750 08/15/07 08/15/01(b) 100,402
1,460 NYC GO 7.750 08/15/09 08/15/01(a) 1,658,881
320 NYC GO 7.750 08/15/01 08/15/99(a) 343,882
95 NYC GO 7.750 08/15/09 08/15/01(b) 106,623
1,410 NYC GO 7.750 08/15/07 08/15/01(a) 1,602,070
40 NYC GO 7.750 08/15/11 08/15/01(a) 45,449
405 NYC GO 7.750 08/15/01 08/15/99(b) 432,342
75 NYC GO 7.875 08/01/04 08/01/00(b) 82,242
200 NYC GO 8.000 08/01/01 08/01/98(b) 207,420
1,685 NYC GO 8.000 08/01/03 08/01/01(b) 1,900,697
5 NYC GO 8.250 08/01/11 08/01/01(b) 5,721
1,445 NYC GO 6.600 02/15/10 02/15/05(b) 1,612,403
14,000 NYC GO 6.600 10/01/16 10/01/02(b) 15,225,280
110 NYC GO 8.250 11/15/10 11/15/01(b) 126,185
2,000 NYC GO LIMO 0.000(+) 02/01/04 02/01/00(b) 1,938,040
1,950 NYC GO LIMO 0.000(+) 02/01/07 02/01/02(e) 1,622,537
115 NYC GO PRAMS 0.000(+) 10/01/06 10/01/02(b) 92,845
50 NYC HDC 0.000 10/01/08 04/01/98(b) 23,876
60 NYC HDC 0.000 04/01/00 ----- 53,006
80 NYC HDC 0.000 04/01/06 04/01/98(b) 46,110
655 NYC HDC 0.000 10/01/06 04/01/98(b) 363,964
70 NYC HDC 0.000 10/01/07 04/01/98(b) 35,984
40 NYC HDC 0.000 04/01/99 ----- 37,361
60 NYC HDC 0.000 04/01/04 04/01/98(b) 40,273
30 NYC HDC 0.000 04/01/08 04/01/98(b) 14,863
30 NYC HDC 0.000 10/01/99 ----- 27,266
55 NYC HDC 0.000 10/01/04 04/01/98(b) 35,609
90 NYC HDC 0.000 10/01/03 04/01/98(b) 62,804
15 NYC HDC 0.000 10/01/02 ----- 11,296
30 NYC HDC 0.000 04/01/03 04/01/98(b) 21,699
20 NYC HDC 0.000 10/01/01 ----- 16,221
90 NYC HDC 0.000 10/01/00 ----- 77,349
65 NYC HDC 0.000 04/01/05 04/01/98(b) 40,449
75 NYC HDC 0.000 04/01/01 ----- 62,608
9,810 NYC HDC 5.500 11/01/09 05/01/08(b) 10,169,242
5,000 NYC HDC 5.625 05/01/12(s) 05/01/08(b) 5,184,000
5,045 NYC HDC 5.700 11/01/13(s) 05/01/05(b) 5,181,316
520 NYC HDC 5.750 04/01/07 05/22/03(c) 538,424
</TABLE>
13
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,665 NYC HDC 6.550% 10/01/15(s) 04/01/03(b) $ 1,778,886
110 NYC HDC 7.300 06/01/10 06/01/01(b) 117,806
275 NYC HDC 7.375 04/01/17 04/01/98(b) 280,572
1,690 NYC HDC 7.900 02/01/23(s) 02/01/00(b) 1,786,567
715 NYC HDC 8.100 09/01/23(s) 09/01/00(b) 763,985
1,970 NYC HDC (Pass Through Certificate) (i) 6.500 09/20/03 11/20/02(c) 2,062,511
60 NYC IDA 8.125 11/01/09 05/01/98(b) 60,872
1,265 NYC IDA Composite Offering XIV, Series C 7.625 11/01/09 05/01/98(b) 1,294,664
1,065 NYC IDA (ALA Realty) 7.000 12/01/05 10/13/02(c) 1,133,778
2,505 NYC IDA (American Airlines) 8.000 07/01/20 01/01/99(b) 2,636,337
530 NYC IDA (Amster Novelty) 7.375 12/01/05 07/27/02(c) 533,689
790 NYC IDA (Atlantic Veal & Lamb) 7.250 12/01/08 08/11/04(c) 830,077
405 NYC IDA (BHMS) 7.500 01/01/07 03/15/03(c) 422,111
2,560 NYC IDA (Blood Center) 6.800 05/01/02 06/17/00(c) 2,812,723
760 NYC IDA (CCM) 7.250 12/01/06 06/13/03(c) 802,811
360 NYC IDA (CNR) 6.200 09/01/10(s) 09/01/07(b) 392,134
1,158 NYC IDA (Cummins Engine) 6.500 03/01/05 11/24/01(c) 1,171,506
895 NYC IDA (EPG) 7.400 07/30/02 09/18/00(c) 957,972
1,965 NYC IDA (Friends Seminary School) 6.125 12/01/07 11/30/03(c) 1,988,875
1,550 NYC IDA (Gabrielli Truck Sales) 7.250 12/01/07 01/02/04(c) 1,617,425
1,835 NYC IDA (JBFS) 6.500 12/15/02 01/30/01(c) 1,965,065
470 NYC IDA (Koenig Manufacturing) 7.375 12/01/10 01/12/06(c) 495,906
25 NYC IDA (Lighthouse) 6.375 07/01/10 07/01/04(b) 26,692
505 NYC IDA (OHEL) 7.125 03/15/03 05/08/01(c) 512,242
41 NYC IDA (Paper Enterprises) 10.000 11/01/98 06/18/98(c) 42,544
3,130 NYC IDA (Plaza Packaging) 7.650 12/01/09 12/01/99(b) 3,346,565
720 NYC IDA (Promotional Slideguide) 7.000 12/01/05 10/13/02(c) 753,134
55 NYC IDA (Sharif Designs) 7.375 11/01/09 05/01/98(b) 55,119
240 NYC IDA (Streamline Plastics) 7.125 12/01/05 10/08/02(c) 253,829
3,415 NYC IDA (St. Bernard's School) 6.125 12/01/11 01/09/06(c) 3,442,354
50 NYC IDA (St. Christopher Ottilie Project) 6.750 07/01/99 ----- 51,890
160 NYC IDA (United Nations School) 6.050 12/01/05 ----- 171,080
170 NYC IDA (United Nations School) 6.100 12/01/06 ----- 182,427
180 NYC IDA (United Nations School) 6.150 12/01/07 ----- 194,267
100 NYC IDA (Visy Paper) 7.550 01/01/05 03/29/02(c) 112,099
2,240 NYS COP 7.625 03/01/09 09/01/01(b) 2,485,482
25 NYS Dorm 7.125 05/15/09 05/15/99(a) 26,573
30 NYS Dorm (Adelphi University) 8.000 07/01/02 07/01/98(b) 30,702
25 NYS Dorm (Adelphi University) 8.200 07/01/05 07/01/98(b) 25,589
200 NYS Dorm (Adelphi University) 8.250 07/01/06 07/01/98(b) 204,720
700 NYS Dorm (Albany Airport) 5.250 04/01/11 ----- 706,874
425 NYS Dorm (CDD) 4.750 07/01/06 ----- 433,942
150 NYS Dorm (CDD) 4.750 07/01/07 ----- 152,816
30 NYS Dorm (City University) 0.000 07/01/03 07/01/98(b) 21,103
2,020 NYS Dorm (City University) 5.500(w) 07/01/06 ----- 2,102,012
2,000 NYS Dorm (City University) 5.500(w) 07/01/04 ----- 2,080,200
1,500 NYS Dorm (City University) 5.500(w) 07/01/05 ----- 1,559,115
1,050 NYS Dorm (City University) 5.600 07/01/10 07/01/05(b) 1,088,073
1,900 NYS Dorm (City University) 6.000 07/01/10 07/01/08(b) 2,063,457
6,200 NYS Dorm (City University) 8.125 07/01/07 07/01/98(a) 6,455,192
15 NYS Dorm (ECC) 7.100 07/01/09 07/01/98(b) 15,045
25 NYS Dorm (Higher Education) 8.500 06/01/03 06/01/98(b) 25,340
40 NYS Dorm (Jewish Geriatric) 7.150 08/01/14 08/01/04(b) 46,007
25 NYS Dorm (JGB Health Facilities) 7.000 07/01/09 07/01/98(b) 25,056
10 NYS Dorm (L.I. Medical Center) 7.000 08/15/99 ----- 10,238
385 NYS Dorm (L.I. Medical Center) 7.625 08/15/08 02/15/98(b) 394,213
5,060 NYS Dorm (L.I. Medical Center) 7.750 08/15/27 02/15/98(b) 5,180,074
25 NYS Dorm (Manhattan College) 6.500 07/01/19(s) 07/01/04(b) 27,201
750 NYS Dorm (MEET) 5.375 07/01/12 11/22/10(c) 750,638
5,000 NYS Dorm (Mental Health) 5.500 08/15/17(s) 02/15/09(b) 5,112,450
75 NYS Dorm (Montefiore) 8.625 07/01/10 07/01/98(b) 75,248
</TABLE>
14
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 35 NYS Dorm (Mount Sinai) 6.750% 07/01/15 07/01/01(b) $ 38,350
225 NYS Dorm (NY Medical College) 6.875 07/01/03 ----- 251,849
1,150 NYS Dorm (Nyack Hospital) 6.250 07/01/13(s) 07/01/08(b) 1,225,670
75 NYS Dorm (Park Ridge Hsg.) 7.850 02/01/29 02/01/99(b) 79,077
815 NYS Dorm (PCP) 7.800 12/01/05 12/01/98(b) 855,065
10 NYS Dorm (Rochester General Hospital) 8.750 07/01/02 07/01/98(b) 11,047
1,150 NYS Dorm (State University) 5.750 05/15/10 05/15/08(b) 1,246,692
3,600 NYS Dorm (State University) 5.750 05/15/16(s) 05/15/08(b) 3,733,560
590 NYS Dorm (State University) 6.000 05/15/17 05/15/00(b) 602,343
8,730 NYS Dorm (State University) 6.375 05/15/14 05/15/03(a) 9,753,680
85 NYS Dorm (State University) 7.000 05/15/16(s) 05/15/00(b) 91,634
75 NYS Dorm (State University) 7.000 05/15/16 05/15/00(b) 81,031
100 NYS Dorm (St. Francis G&H) 7.375 08/01/10 08/01/00(b) 109,954
175 NYS Dorm (Suffolk-Judicial) 9.000 10/15/01 04/15/98(b) 193,557
4,085 NYS Dorm (Suffolk-Judicial) 9.000 10/15/01 04/15/98(b) 4,453,753
310 NYS Dorm (United Health) 7.150 08/01/07 02/01/00(a) 332,422
65 NYS Dorm (United Hospital) 6.500 09/15/10 07/01/98(b) 65,118
170 NYS Dorm (United Hospital) 11.750 09/15/10 03/15/98(b) 171,039
540 NYS Dorm (University of Rochester) 6.500 07/01/09 07/01/98(b) 551,972
4,990 NYS Dorm (University of Rochester) 6.500 07/01/09 07/01/98(b) 5,098,533
1,250 NYS Dorm (Upstate Community Colleges) 6.200 07/01/15(s) 07/01/07(b) 1,350,313
200 NYS Environ. (Consolidated Water) 7.150 11/01/14(s) 11/01/06(b) 219,978
190 NYS Environ. (Huntington Res Rec) 7.375 10/01/99 04/08/99(c) 199,164
7,550 NYS Environ. (Huntington Res Rec) 7.500 10/01/12(s) 10/01/99(b) 8,049,508
1,400 NYS Environ. (PCR Water) 5.625 03/15/04 03/14/01(c) 1,455,538
330 NYS Environ. (RSP) 7.100 04/01/01 04/01/01(a) 360,598
50 NYS Environ. (State Park) 5.750 03/15/13(s) 03/15/04(b) 51,989
5 NYS ERDA (Central Hudson G&E) 6.250 06/01/07 06/01/98(b) 5,007
5,000 NYS ERDA (Con Ed) 6.750 01/15/27 01/15/01(b) 5,350,950
20 NYS ERDA (Con Ed) 7.250 11/01/24 11/01/98(b) 20,693
4,250 NYS ERDA (Con Ed) 7.500 01/01/26 01/01/00(b) 4,533,518
25 NYS ERDA (LILCO) 6.900 08/01/22 02/01/02(b) 27,270
175 NYS ERDA (LILCO) 7.500 12/01/06 06/01/98(b) 175,313
425 NYS ERDA (LILCO) 7.800 12/01/09 06/01/98(b) 427,720
340 NYS ERDA (LILCO) 8.250 10/01/12 04/01/98(b) 342,176
2,125 NYS ERDA (Niagara Mohawk) 8.875 11/01/25 05/01/98(b) 2,174,513
100 NYS ERDA (RG&E) 8.125 12/01/28 12/01/98(b) 105,442
15 NYS GO 6.000 11/15/07 11/15/02(b) 16,142
40 NYS GO 6.600 12/01/14 06/01/98(b) 41,177
35 NYS HFA 5.875 11/01/11 11/01/01(b) 35,804
10 NYS HFA 5.875 11/01/12 11/01/01(b) 10,226
5 NYS HFA 5.875 11/01/10 11/01/01(b) 5,117
15 NYS HFA 6.400 11/01/02 11/01/00(b) 15,330
80 NYS HFA (Children's Rescue) 7.400 11/01/00 ----- 82,402
140 NYS HFA (Children's Rescue) 7.500 11/01/01 ----- 144,928
65 NYS HFA (Children's Rescue) 7.500 05/01/01 ----- 67,020
114 NYS HFA (General Housing) 6.500 11/01/03 ----- 116,511
30 NYS HFA (General Housing) 6.600 11/01/06 11/01/00(b) 30,645
10 NYS HFA (General Housing) 6.600 11/01/05 11/01/00(b) 10,215
6 NYS HFA (General Housing) 6.750 11/01/98 ----- 6,133
1,435 NYS HFA (Health Facility) 6.000 05/01/07 ----- 1,563,217
2,165 NYS HFA (Health Facility) 6.000 05/01/08 ----- 2,357,187
14,360 NYS HFA (Health Facility) 7.900 11/01/99 02/08/99(c) 15,043,680
1,560 NYS HFA (HELP/Bronx) 8.050 11/01/05 11/01/99(b) 1,653,226
55 NYS HFA (H&N) 5.900 11/01/05 ----- 55,598
15 NYS HFA (H&N) 5.900 11/01/03 05/01/98(b) 15,166
10 NYS HFA (H&N) 6.375 11/01/01 ----- (a) 10,815
640 NYS HFA (H&N) 6.800 11/01/02 05/01/98(b) 654,272
480 NYS HFA (H&N) 6.800 11/01/01 05/01/98(b) 490,704
2,145 NYS HFA (H&N) 6.875 11/01/07 05/01/98(b) 2,170,955
45 NYS HFA (H&N) 6.875 11/01/09 05/01/98(b) 45,945
</TABLE>
15
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 300 NYS HFA (H&N) 6.875% 11/01/11 05/01/98(b) $ 306,345
15 NYS HFA (H&N) 6.875 11/01/10 05/01/98(b) 15,331
25 NYS HFA (H&N) 6.875 11/01/05 05/01/98(b) 25,532
55 NYS HFA (H&N) 6.875 11/01/04 05/01/98(b) 56,230
5 NYS HFA (H&N) 6.875 11/01/08 05/01/98(b) 5,110
40 NYS HFA (H&N) 6.875 11/01/99 ----- (a) 41,044
1,660 NYS HFA (H&N) 7.000 11/01/17(s) 05/01/98(b) 1,680,252
10 NYS HFA (Insured Mtg.) 6.250 08/15/14(s) 08/15/06(b) 10,693
135 NYS HFA (Meadow Manor) 7.750 11/01/19 05/01/98(b) 136,889
125 NYS HFA (Monroe) 7.625 05/01/05 05/01/00(b) 135,315
200 NYS HFA (Multi-Family) 0.000 11/01/09 11/01/06(b) 111,708
50 NYS HFA (Multi-Family) 0.000 11/01/12 11/01/06(b) 22,613
65 NYS HFA (Multi-Family) 5.625 09/15/13(s) 09/15/05(b) 66,606
1,000 NYS HFA (Multi-Family) 6.450 08/15/14(s) 08/15/04(b) 1,049,230
1,900 NYS HFA (Multi-Family) 6.950 08/15/24 08/15/02(b) 2,017,287
100 NYS HFA (Multi-Family) 6.950 08/15/12 08/15/02(b) 108,248
15 NYS HFA (Multi-Family) 7.300 11/01/04 11/01/99(b) 15,640
309 NYS HFA (Multi-Family) 7.450 11/01/28(s) 11/01/99(b) 325,223
570 NYS HFA (Multi-Family) 8.000 11/01/08 11/01/00(b) 631,560
675 NYS HFA (Multi-Family) 10.000 11/15/99 05/15/98(b) 678,456
5 NYS HFA (NonProfit) 6.000 11/01/12 11/01/00(b) 5,104
10 NYS HFA (NonProfit) 6.100 11/01/98 ----- 10,211
45 NYS HFA (NonProfit) 6.100 11/01/99 ----- 46,441
5 NYS HFA (NonProfit) 6.200 11/01/11 11/01/98(b) 5,159
5 NYS HFA (NonProfit) 6.200 11/01/06 11/01/98(b) 5,161
40 NYS HFA (NonProfit) 6.200 11/01/08 11/01/98(b) 41,272
10 NYS HFA (NonProfit) 6.400 11/01/04 11/01/00(b) 10,218
80 NYS HFA (NonProfit) 6.400 11/01/09 11/01/01(b) 81,730
25 NYS HFA (NonProfit) 6.400 11/01/05 11/01/00(b) 25,544
40 NYS HFA (NonProfit) 6.400 11/01/00 ----- 40,881
5 NYS HFA (NonProfit) 6.400 11/01/06 11/01/00(b) 5,108
5 NYS HFA (NonProfit) 6.400 11/01/11 11/01/00(b) 5,108
10 NYS HFA (NonProfit) 6.500 11/01/01 ----- 10,223
60 NYS HFA (NonProfit) 6.500 11/01/02 ----- 61,296
5 NYS HFA (NonProfit) 6.500 11/01/03 ----- 5,110
10 NYS HFA (NonProfit) 6.600 11/01/09 11/01/98(b) 10,214
25 NYS HFA (NonProfit) 6.600 11/01/13 05/01/98(b) 25,779
25 NYS HFA (NonProfit) 6.600 11/01/00 11/01/98(b) 25,796
30 NYS HFA (NonProfit) 6.600 11/01/01 ----- 30,952
75 NYS HFA (NonProfit) 6.600 11/01/05 11/01/98(b) 77,360
225 NYS HFA (NonProfit) 6.600 11/01/03 ----- 232,229
5 NYS HFA (NonProfit) 6.600 11/01/10 11/01/98(b) 5,157
15 NYS HFA (NonProfit) 6.600 11/01/11 11/01/03(b) 15,470
15 NYS HFA (NonProfit) 6.600 11/01/06 11/01/00(b) 15,323
15 NYS HFA (NonProfit) 6.600 11/01/09 11/01/98(b) 15,471
5 NYS HFA (NonProfit) 6.600 11/01/11 05/01/98(b) 5,107
50 NYS HFA (NonProfit) 6.600 11/01/05 11/01/00(b) 51,075
10 NYS HFA (NonProfit) 6.600 11/01/02 ----- 10,316
20 NYS HFA (NonProfit) 6.750 11/01/01 11/01/98(b) 20,645
5 NYS HFA (NonProfit) 6.750 11/01/08 11/01/98(b) 5,157
15 NYS HFA (NonProfit) 6.750 11/01/09 11/01/98(b) 15,472
5 NYS HFA (NonProfit) 6.750 11/01/05 11/01/98(b) 5,158
1,420 NYS HFA (NonProfit) 6.750 11/01/11 05/01/98(b) 1,475,451
61 NYS HFA (NonProfit) 6.875 11/01/10 05/01/98(b) 62,404
250 NYS HFA (Phillips Village) 6.700 08/15/02 ----- 264,153
195 NYS HFA (Phillips Village) 6.700 02/15/02 ----- 204,968
175 NYS HFA (Phillips Village) 6.900 02/15/04 ----- 185,645
85 NYS HFA (Phillips Village) 6.900 08/15/04 ----- 90,520
415 NYS HFA (Simeon Dewitt) 8.000 11/01/18(s) 05/01/98(b) 418,225
240 NYS HFA (Westchester/HELP) 7.500 11/01/00 11/01/98(b) 246,698
50 NYS HFA (Westchester/HELP) 7.550 11/01/02 05/01/00(b) 51,978
</TABLE>
16
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 755 NYS LGSC (SCSB) 6.375% 12/15/09 02/25/05(c) $ 794,909
1,000 NYS Medcare 5.750 02/15/05 ----- 1,031,720
325 NYS Medcare (Beth Israel Medical Center) 7.125 11/01/06 05/01/98(b) 328,868
95 NYS Medcare (Beth Israel Medical Center) 7.200 11/01/14 05/01/98(b) 96,174
14,590 NYS Medcare (BLH) 7.100 02/15/27 02/15/98(b) 14,917,983
100 NYS Medcare (Brookdale Hospital) 6.250 08/15/15(s) 02/15/05(b) 108,813
260 NYS Medcare (Brookdale Hospital) 6.600 02/15/03 ----- 282,363
615 NYS Medcare (Brookdale Hospital) 6.600 08/15/03 ----- 672,423
2,000 NYS Medcare (Brookdale Hospital) 6.800 08/15/12(s) 02/15/05(b) 2,204,700
3,050 NYS Medcare (Brookdale Hospital) 6.850 02/15/17(s) 02/15/05(b) 3,371,135
20 NYS Medcare (Buffalo General Hospital) 6.000 08/15/14 08/15/06(b) 21,142
10 NYS Medcare (Central Suffolk Hospital) 5.875 11/01/05 12/12/03(c) 9,903
365 NYS Medcare (Downtown Hospital) 6.550 02/15/06 ----- 405,446
945 NYS Medcare (Downtown Hospital) 6.550 08/15/06 ----- 1,052,324
1,915 NYS Medcare (Huntington Hospital) 6.500 11/01/14(s) 11/01/06(b) 2,077,660
80 NYS Medcare (H&N) 5.650 08/15/02 ----- 83,170
80 NYS Medcare (H&N) 5.950 08/15/09 08/15/04(b) 83,872
15 NYS Medcare (H&N) 6.100 08/15/13(s) 08/15/02(b) 16,053
285 NYS Medcare (H&N) 6.125 02/15/14(s) 02/15/06(b) 303,819
45 NYS Medcare (H&N) 6.150 02/15/02 02/15/98(b) 47,262
1,660 NYS Medcare (H&N) 6.400 08/15/14 08/15/06(b) 1,813,467
75 NYS Medcare (H&N) 6.400 11/01/14 05/01/02(b) 81,754
10 NYS Medcare (H&N) 6.550 08/15/12 08/15/04(b) 10,869
5 NYS Medcare (H&N) 7.000 02/15/99 ----- 5,171
25 NYS Medcare (H&N) 7.100 08/15/01 02/15/98(b) 25,597
820 NYS Medcare (H&N) 7.100 11/01/99 ----- 838,475
10 NYS Medcare (H&N) 7.100 11/01/98 ----- 10,225
125 NYS Medcare (H&N) 7.100 11/01/00 ----- 127,821
10 NYS Medcare (H&N) 7.200 08/15/02 02/15/98(b) 10,240
100 NYS Medcare (H&N) 7.200 02/15/02 02/15/98(b) 102,399
715 NYS Medcare (H&N) 7.200 11/01/01 05/01/98(b) 731,180
425 NYS Medcare (H&N) 7.250 11/01/03 05/01/98(b) 434,588
310 NYS Medcare (H&N) 7.250 02/15/09 02/15/99(a) 327,583
85 NYS Medcare (H&N) 7.250 11/01/02 05/01/98(b) 86,927
50 NYS Medcare (H&N) 7.300 08/15/11 08/15/01(b) 55,373
5 NYS Medcare (H&N) 7.300 08/15/10 08/15/99(b) 5,340
45 NYS Medcare (H&N) 7.350 02/15/29 02/15/99(b) 47,403
715 NYS Medcare (H&N) 7.400 11/01/16(s) 05/01/98(b) 731,080
685 NYS Medcare (H&N) 7.500 02/15/08 02/15/98(b) 701,289
20 NYS Medcare (H&N) 7.500 02/15/09 02/15/99(b) 21,099
3,670 NYS Medcare (H&N) 7.625 02/15/23 02/15/98(b) 3,757,823
75 NYS Medcare (H&N) 7.900 02/15/08 08/15/98(b) 78,148
340 NYS Medcare (H&N) 8.000 02/15/28 08/15/98(b) 354,477
4,335 NYS Medcare (H&N) 8.000 02/15/27 02/15/98(b) 4,434,618
40 NYS Medcare (H&N) 8.625 02/15/06 02/15/98(b) 40,142
325 NYS Medcare (H&N) 8.875 08/15/27 02/15/98(b) 333,262
660 NYS Medcare (H&N) 9.000 02/15/26 02/15/98(b) 661,967
2,765 NYS Medcare (H&N) 10.000 11/01/06 05/01/98(b) 2,934,495
3,400 NYS Medcare (Insured Hospital) 7.250 02/15/12 02/15/98(b) 3,476,058
120 NYS Medcare (Insured Hospital) 7.625 02/15/02 02/15/98(b) 122,768
2,260 NYS Medcare (Insured Hospital) 7.875 02/15/07 02/15/98(b) 2,311,709
1,245 NYS Medcare (Insured Mtg.) 6.600 02/15/11 02/15/05(b) 1,402,156
5 NYS Medcare (Insured Mtg.) 7.100 02/15/00 ----- 5,305
660 NYS Medcare (Insured Mtg.) 9.375 11/01/16(s) 05/01/98(b) 689,060
660 NYS Medcare (Insured Nursing) 10.250 01/01/24 01/15/98(b) 668,197
1,345 NYS Medcare (Long Beach Hospital) 7.625 02/15/06 08/15/98(b) 1,403,252
5 NYS Medcare (Mental Health) 0.000 02/15/03 08/15/98(a) 3,682
5 NYS Medcare (Mental Health) 0.000 02/15/03 08/15/98(b) 3,630
5 NYS Medcare (Mental Health) 0.000 08/15/03 08/15/98(b) 3,499
20 NYS Medcare (Mental Health) 0.000 08/15/01 ----- 16,493
190 NYS Medcare (Mental Health) 5.550 08/15/01 02/15/98(b) 190,190
</TABLE>
17
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 25 NYS Medcare (Mental Health) 5.700% 02/15/03 02/15/98(b) $ 25,028
40 NYS Medcare (Mental Health) 6.000 02/15/11 08/15/98(b) 40,335
125 NYS Medcare (Mental Health) 6.375 08/15/14(s) 08/15/04(b) 139,156
4,075 NYS Medcare (Mental Health) 6.375 08/15/14(s) 08/15/06(b) 4,448,474
3,780 NYS Medcare (Mental Health) 6.500 08/15/12(s) 08/15/02(b) 4,105,647
85 NYS Medcare (Mental Health) 6.850 08/15/00 ----- 90,641
45 NYS Medcare (Mental Health) 7.000 02/15/01 ----- 48,648
15 NYS Medcare (Mental Health) 7.100 02/15/02 08/15/99(b) 15,992
10 NYS Medcare (Mental Health) 7.200 02/15/04 08/15/99(b) 10,677
50 NYS Medcare (Mental Health) 7.200 08/15/00 ----- 53,582
50 NYS Medcare (Mental Health) 7.300 02/15/21 08/15/01(b) 55,586
40 NYS Medcare (Mental Health) 7.375 02/15/14 08/15/99(b) 42,528
25 NYS Medcare (Mental Health) 7.400 02/15/02 02/15/00(b) 27,011
45 NYS Medcare (Mental Health) 7.400 08/15/00 ----- 48,577
10 NYS Medcare (Mental Health) 7.500 08/15/07 02/15/01(b) 11,128
145 NYS Medcare (Mental Health) 7.625 02/15/07 08/15/01(b) 162,603
10 NYS Medcare (Mental Health) 7.625 08/15/07 08/15/01(b) 11,214
100 NYS Medcare (Mental Health) 7.625 02/15/08 02/15/98(b) 102,393
205 NYS Medcare (Mental Health) 7.700 02/15/18 02/15/98(b) 209,924
25 NYS Medcare (Mental Health) 7.750 08/15/10 02/15/00(b) 27,246
145 NYS Medcare (Mental Health) 7.800 02/15/19 02/15/99(b) 153,652
945 NYS Medcare (Mental Health) 7.875 08/15/20 08/15/00(b) 1,049,016
1,230 NYS Medcare (Mental Health) 8.250 02/15/99 02/15/98(b) 1,258,893
1,700 NYS Medcare (Mental Health) 8.875 08/15/07 02/15/98(b) 1,740,273
50 NYS Medcare (North Shore University Hospital) 7.125 11/01/08 11/01/00(b) 54,852
10 NYS Medcare (N. General Hospital) 7.000 02/15/98 ----- 10,039
275 NYS Medcare (N. General Hospital) 7.100 02/15/99 ----- 284,625
25 NYS Medcare (N. General Hospital) 7.150 08/15/01 08/15/99(b) 26,672
10 NYS Medcare (N. General Hospital) 7.200 08/15/02 08/15/99(b) 10,677
1,030 NYS Medcare (N. General Hospital) 7.350 08/15/09 08/15/99(b) 1,090,183
235 NYS Medcare (Secured Hospital) 7.000 02/15/07 02/15/98(b) 240,304
865 NYS Medcare (Secured Hospital) 7.000 02/15/07 02/15/98(b) 891,383
100 NYS Medcare (St. Luke's Hospital) 7.375 02/15/19(s) 02/15/00(b) 106,644
65 NYS Medcare (St. Luke's Hospital) 7.400 02/15/09 02/15/00(b) 69,870
40 NYS Medcare (St. Luke's Hospital) 7.500 11/01/11 11/01/99(b) 43,000
80 NYS Medcare (WHMC) 6.850 08/15/00 ----- 84,840
715 NYS Medcare (WHMC) 6.850 02/15/00 ----- 751,558
250 NYS Medcare (WHMC) 6.950 02/15/01 ----- 268,165
80 NYS Medcare (WHMC) 6.950 08/15/01 ----- 86,534
25 NYS Medcare (WHMC) 7.150 02/15/03 08/15/01(b) 27,642
50 NYS Medcare (WHMC) 7.150 08/15/03 08/15/01(b) 55,498
1,600 NYS Medcare (WHMC) 7.350 08/15/11(s) 08/15/01(b) 1,769,456
785 NYS Power Authority 7.000 01/01/09 07/01/98(b) 800,975
100 NYS Power Authority 7.500 01/01/02 07/01/98(b) 102,040
1,000 NYS Power Authority 7.600 01/01/03 07/01/98(b) 1,020,410
225 NYS Power Authority 7.800 01/01/06 07/01/98(b) 229,599
530 NYS Thruway 0.000 01/01/01 ----- 464,444
385 NYS Thruway 0.000 01/01/06 ----- 262,813
250 NYS Thruway 0.000 01/01/05 ----- 179,613
3,000 NYS Thruway 6.000 04/01/12 04/01/09(b) 3,260,880
500 NYS Thruway 6.000 04/01/11 04/01/09(b) 544,380
30 NYS UDC 0.000 01/01/07 ----- 19,439
15 NYS UDC 0.000 01/01/11 04/08/08(c) 7,284
20 NYS UDC 0.000 01/01/99 ----- 19,167
10 NYS UDC 0.000 01/01/00 ----- 9,166
4,000 NYS UDC 5.500 01/01/15(s) 01/01/05(b) 4,046,280
10,000 NYS UDC 5.500 01/01/15(s) 01/01/05(b) 10,115,700
25 NYS UDC (Correctional Facilities) 0.000 01/01/03 ----- 20,259
175 NYS UDC (South Mall) 0.000 01/01/11 04/08/08(c) 84,441
35 NYS UDC (South Mall) 0.000 01/01/03 ----- 27,482
130 NYS UDC (South Mall) 0.000 01/01/05 ----- 91,410
</TABLE>
18
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50 NYS UDC (South Mall) 0.000% 01/01/05 06/24/04(c) $ 35,158
10 NYS (SONYMA) Mortgage, 1 0.000 10/01/14(s) 04/01/98(b) 2,112
400 NYS (SONYMA) Mortgage, 1 0.000 10/01/98 04/01/98(b) 376,372
195 NYS (SONYMA) Mortgage, 10-A 7.800 10/01/03 04/01/98(b) 199,760
150 NYS (SONYMA) Mortgage, 10-A 8.000 10/01/08 04/01/98(b) 153,719
15 NYS (SONYMA) Mortgage, 11 6.875 04/01/16(s) 10/01/98(b) 15,191
60 NYS (SONYMA) Mortgage, 12 0.000 10/01/99 10/01/98(b) 53,885
30 NYS (SONYMA) Mortgage, 12 0.000 04/01/03 10/01/98(b) 20,508
30 NYS (SONYMA) Mortgage, 12 0.000 04/01/99 10/01/98(b) 27,955
30 NYS (SONYMA) Mortgage, 12 0.000 10/01/01 10/01/98(b) 23,086
100 NYS (SONYMA) Mortgage, 12 0.000 10/01/00 10/01/98(b) 83,212
315 NYS (SONYMA) Mortgage, 12 7.300 10/01/12 04/01/98(b) 321,933
200 NYS (SONYMA) Mortgage, 12 8.250 04/01/17 04/01/98(b) 205,030
715 NYS (SONYMA) Mortgage, 2 0.000 10/01/14(s) 04/01/98(b) 148,212
165 NYS (SONYMA) Mortgage, 2 0.000 10/01/14 04/01/01(b) 34,384
55 NYS (SONYMA) Mortgage, 36-A 6.000 10/01/17(s) 04/01/06(b) 57,954
30 NYS (SONYMA) Mortgage, 41-A 6.450 10/01/14 06/01/04(b) 32,626
50 NYS (SONYMA) Mortgage, 43 6.450 10/01/17(s) 09/01/04(b) 54,485
50 NYS (SONYMA) Mortgage, 44 7.000 10/01/07 11/01/06(b) 53,615
20 NYS (SONYMA) Mortgage, 47 6.125 10/01/20(s) 06/06/06(b) 20,732
90 NYS (SONYMA) Mortgage, 6 9.375 04/01/10 10/01/98(c) 93,346
1,000 NYS (SONYMA) Mortgage, 67 5.600 10/01/14(s) 09/01/09(b) 1,023,150
500 NYS (SONYMA) Mortgage, 67 5.700 10/01/17 09/01/09(b) 513,690
40 NYS (SONYMA) Mortgage, 67 6.375 10/01/17(s) 03/28/07(b) 43,354
75 NYS (SONYMA) Mortgage, 7 GAINS 0.000(+) 10/01/14(s) 04/01/98(b) 75,253
250 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/00 10/01/98(b) 217,563
70 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/02 10/01/98(b) 51,299
30 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/00 10/01/98(b) 25,249
85 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/01 10/01/98(b) 68,970
60 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/01 10/01/98(b) 47,061
85 NYS (SONYMA) Mortgage, 8-A 0.000 04/01/02 10/01/98(b) 64,441
20 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/98 ----- 19,295
45 NYS (SONYMA) Mortgage, 8-A 0.000 10/01/99 ----- 40,562
90 NYS (SONYMA) Mortgage, 8-A 6.875 04/01/17 04/01/98(b) 91,076
75 NYS (SONYMA) Mortgage, 8-A 6.875 04/01/17(s) 04/01/98(b) 75,911
295 NYS (SONYMA) Mortgage, 8-A 6.875 04/01/17 04/01/98(b) 298,561
50 NYS (SONYMA) Mortgage, 8-B 7.200 04/01/99 ----- 51,079
25 NYS (SONYMA) Mortgage, 8-D 7.700 10/01/99 01/04/98(b) 25,539
100 NYS (SONYMA) Mortgage, 8-D 8.200 10/01/06 01/04/98(b) 102,062
350 NYS (SONYMA) Mortgage, 8-E 8.100 10/01/17(s) 04/01/98(b) 358,596
40 NYS (SONYMA) Mortgage, 8-F 7.200 10/01/00 07/01/98(b) 41,108
30 NYS (SONYMA) Mortgage, 8-F 7.800 10/01/06 07/01/98(b) 30,742
110 NYS (SONYMA) Mortgage, 8-F 8.000 10/01/17(s) 07/01/98(b) 111,322
100 NYS (SONYMA) Mortgage, 9-A 6.700 10/01/98 ----- 101,155
25 NYS (SONYMA) Mortgage, 9-A 6.900 04/01/00 04/01/98(b) 25,281
20 NYS (SONYMA) Mortgage, 9-A 7.000 04/01/01 04/01/98(b) 20,243
150 NYS (SONYMA) Mortgage, 9-A 7.250 10/01/06 04/01/98(b) 151,794
150 NYS (SONYMA) Mortgage, 9-A 7.300 04/01/17 04/01/98(b) 151,770
10 NYS (SONYMA) Mortgage, 9-A 8.250 10/01/08 04/01/98(b) 10,222
90 NYS (SONYMA) Mortgage, 9-C 8.400 10/01/02 04/01/98(b) 91,392
15 NYS (SONYMA) Mortgage, 9-E 7.375 10/01/98 ----- 15,244
540 NYS (SONYMA) Mortgage, 9-E 8.000 10/01/03 04/01/98(b) 553,565
70 NYS (SONYMA) Mortgage, AA 7.700 04/01/99 ----- 71,497
35 NYS (SONYMA) Mortgage, BB-2 7.125 10/01/98 07/03/98(c) 35,717
210 NYS (SONYMA) Mortgage, BB-2 7.850 10/01/08 04/01/98(b) 214,805
12,620 NYS (SONYMA) Mortgage, BB-2 7.950 10/01/15(s) 04/01/98(b) 13,093,250
65 NYS (SONYMA) Mortgage, EE-1 8.000 10/01/10 04/14/99(b) 65,889
25 NYS (SONYMA) Mortgage, EE-2 7.050 10/01/00 07/21/99(c) 26,234
85 NYS (SONYMA) Mortgage, EE-2 7.450 10/01/10 09/14/99(b) 89,341
180 NYS (SONYMA) Mortgage, EE-3 7.125 10/01/00 07/20/99(c) 187,070
50 NYS (SONYMA) Mortgage, EE-3 7.650 04/01/16 10/01/00(b) 53,056
</TABLE>
19
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50 NYS (SONYMA) Mortgage, EE-3 7.750% 04/01/16 04/01/00(b) $ 53,168
110 NYS (SONYMA) Mortgage, EE-4 7.050 10/01/00 07/21/99(c) 113,915
115 NYS (SONYMA) Mortgage, EE-4 7.800 10/01/13(s) 10/01/00(b) 122,416
50 NYS (SONYMA) Mortgage, FF 7.100 10/01/98 ----- 50,785
20 NYS (SONYMA) Mortgage, FF 7.850 10/01/08 04/01/98(b) 20,453
4,875 NYS (SONYMA) Mortgage, FF 7.950 10/01/14(s) 04/01/98(b) 4,980,788
50 NYS (SONYMA) Mortgage, HH-2 7.700 10/01/09 10/01/99(b) 52,130
120 NYS (SONYMA) Mortgage, HH-3 7.875 10/01/09 06/07/00(b) 126,955
3,600 NYS (SONYMA) Mortgage, HH-3 7.950 04/01/22(s) 06/07/00(b) 3,801,024
1,685 NYS (SONYMA) Mortgage, HH-4 7.700 10/01/09(s) 04/01/99(g) 1,762,139
120 NYS (SONYMA) Mortgage, II 0.000 10/01/07 04/01/99(b) 58,613
580 NYS (SONYMA) Mortgage, II 0.000 10/01/08 04/01/99(b) 261,893
90 NYS (SONYMA) Mortgage, II 0.000 04/01/07 04/01/99(b) 45,707
175 NYS (SONYMA) Mortgage, II 0.000 04/01/09 04/01/99(b) 75,954
300 NYS (SONYMA) Mortgage, II 0.000 10/01/09 04/01/99(b) 124,104
20 NYS (SONYMA) Mortgage, II 0.000 04/01/06 04/01/02(b) 11,025
40 NYS (SONYMA) Mortgage, II 0.000 10/01/06 04/01/99(b) 21,211
45 NYS (SONYMA) Mortgage, II 0.000 10/01/05 04/01/99(b) 25,801
75 NYS (SONYMA) Mortgage, II 0.000 04/01/05 04/01/99(b) 44,699
90 NYS (SONYMA) Mortgage, JJ 0.000 04/01/00 ----- 82,481
30 NYS (SONYMA) Mortgage, JJ 0.000 04/01/04 10/01/99(b) 20,624
170 NYS (SONYMA) Mortgage, JJ 0.000 04/01/05 10/01/99(b) 108,384
110 NYS (SONYMA) Mortgage, JJ 0.000 04/01/02 ----- 87,979
145 NYS (SONYMA) Mortgage, JJ 0.000 04/01/01 ----- 125,018
185 NYS (SONYMA) Mortgage, JJ 0.000 10/01/05 10/01/99(b) 113,684
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/04 10/01/99(b) 6,626
15 NYS (SONYMA) Mortgage, JJ 0.000 10/01/02 ----- 11,569
75 NYS (SONYMA) Mortgage, JJ 0.000 10/01/03 10/01/99(b) 53,642
100 NYS (SONYMA) Mortgage, JJ 0.000 10/01/07 10/01/99(b) 52,742
200 NYS (SONYMA) Mortgage, JJ 0.000 04/01/07 10/01/99(b) 109,466
95 NYS (SONYMA) Mortgage, JJ 0.000 10/01/01 ----- 79,005
215 NYS (SONYMA) Mortgage, JJ 0.000 04/01/03 10/01/99(b) 159,500
60 NYS (SONYMA) Mortgage, JJ 0.000 04/01/06 10/01/99(b) 35,396
10 NYS (SONYMA) Mortgage, JJ 0.000 10/01/00 ----- 8,958
335 NYS (SONYMA) Mortgage, JJ 0.000 10/01/06 10/01/99(b) 181,657
150 NYS (SONYMA) Mortgage, JJ 0.000 10/01/08 10/01/99(b) 73,337
200 NYS (SONYMA) Mortgage, JJ 7.500 10/01/17 10/01/99(b) 211,406
15 NYS (SONYMA) Mortgage, KK 7.050 10/01/99 01/09/99(c) 15,506
35 NYS (SONYMA) Mortgage, KK 7.800 10/01/20 10/01/99(b) 36,807
30 NYS (SONYMA) Mortgage, MM-1 7.200 10/01/98 ----- 30,463
140 NYS (SONYMA) Mortgage, MM-1 7.500 04/01/13(s) 02/04/01(b) 146,993
5 NYS (SONYMA) Mortgage, MM-1 7.600 10/01/02 02/04/01(b) 5,282
25 NYS (SONYMA) Mortgage, MM-1 7.650 10/01/03 02/04/01(b) 26,340
100 NYS (SONYMA) Mortgage, MM-1 7.700 10/01/04 02/04/01(b) 104,953
50 NYS (SONYMA) Mortgage, MM-1 7.750 04/01/05 02/04/01(b) 52,373
10 NYS (SONYMA) Mortgage, MM-2 7.550 04/01/02 10/01/00(b) 10,526
25 NYS (SONYMA) Mortgage, NN 7.100 04/01/02 01/01/00(b) 26,146
20 NYS (SONYMA) Mortgage, NN 7.150 10/01/03 01/01/00(b) 20,874
25 NYS (SONYMA) Mortgage, QQ 7.600 10/01/12 04/01/00(b) 26,265
2,715 NYS (SONYMA) Mortgage, QQ 7.700 10/01/12 04/01/00(b) 2,857,972
6,000 NYS (SONYMA) Mortgage, QQ 7.850 10/01/21 02/04/01(b) 6,544,020
50 NYS (SONYMA) Mortgage, RR 7.600 10/01/10 10/01/00(b) 53,106
25 NYS (SONYMA) Mortgage, RR 7.700 10/01/10 10/01/00(b) 26,615
30 NYS (SONYMA) Mortgage, SS 7.500 10/01/19(s) 10/01/00(b) 30,924
25 NYS (SONYMA) Mortgage, TT 6.850 10/01/01 ----- 26,236
20 NYS (SONYMA) Mortgage, TT 6.950 04/01/02 ----- 21,060
125 NYS (SONYMA) Mortgage, TT 7.150 04/01/04 04/01/01(b) 131,351
25 NYS (SONYMA) Mortgage, TT 7.200 10/01/05 04/01/01(b) 26,212
25 NYS (SONYMA) Mortgage, UU 6.850 10/01/99 ----- 25,700
75 NYS (SONYMA) Mortgage, UU 6.950 04/01/00 ----- 77,398
530 NYS (SONYMA) Mortgage, UU 7.150 10/01/22(s) 10/01/01(b) 555,954
</TABLE>
20
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 135 NYS (SONYMA) Mortgage, UU 7.750% 10/01/23(s) 04/01/01(b) $ 143,679
5 NYS (SONYMA) Mortgage, VV 6.400 04/01/98 ----- 5,025
40 NYS (SONYMA) Mortgage, VV 6.600 04/01/00 ----- 41,426
25 NYS (SONYMA) Mortgage, VV 6.800 10/01/02 ----- 26,544
60 NYS (SONYMA) Mortgage, VV 6.900 04/01/03 ----- 63,841
100 NYS (SONYMA) Mortgage, VV 7.000 10/01/04 10/01/01(b) 106,046
50 NYS (SONYMA) Mortgage, VV 7.000 04/01/04 10/01/01(b) 52,928
590 NYS (SONYMA) Mortgage, VV 7.250 10/01/07 10/01/01(b) 629,560
13,300 NYS (SONYMA) Mortgage, VV 7.375 10/01/11(s) 10/01/01(b) 14,303,219
45 Oneida Healthcare Corp. 7.100 08/01/11 08/01/01(b) 49,026
1,150 Oneida Herkimer SWMA 6.600 04/01/04 ----- 1,274,258
3,200 Oneida Herkimer SWMA 6.750 04/01/14(s) 04/01/03(b) 3,456,672
9,700 Onondaga County Res Rec 6.625 05/01/00 05/17/99(c) 10,046,581
8,260 Onondaga County Res Rec 6.875 05/01/06 01/12/04(c) 8,841,587
6,830 Onondaga County Res Rec 7.000 05/01/15 05/01/02(b) 7,382,001
4,400 Onondaga IDA (Crouse Irving Hospital) 7.900 01/01/17 01/01/03(b) 4,955,720
110 Onondaga IDA (Sysco Foods) 7.750 04/01/03 04/01/98(b) 111,067
1,485 Orange IDA (Kingston Manufacturing) 7.250 11/01/03 07/19/01(c) 1,532,238
40 Orange IDA (Mental Health) 6.000 05/01/08 ----- 43,469
1,805 Oswego County Res Rec 6.500 06/01/04 05/23/03(c) 1,941,007
50 Philadelphia, NY GO 7.500 12/15/09 ----- 62,172
75 Port Authority NY/NJ (Delta Airlines) 6.950 06/01/08 06/01/02(b) 82,546
1,000 Port Authority NY/NJ (KIAC) 6.750 10/01/11 05/03/10(c) 1,111,530
10,000 Port Authority NY/NJ (KIAC) 7.000 10/01/07 05/02/05(c) 11,371,800
30 Port Authority NY/NJ, 39th Series 5.800 02/01/07 02/01/98(b) 30,038
15 Port Authority NY/NJ, 46th Series 5.500 10/01/08 04/01/98(b) 15,308
20 Port Authority NY/NJ, 51st Series 9.000 11/01/14 11/01/99(b) 21,702
45 Port Authority NY/NJ, 52nd Series 6.000 03/01/03 03/01/98(b) 45,548
45 Port Authority NY/NJ, 67th Series 7.000 12/01/14 06/01/98(b) 46,398
30 Port Authority NY/NJ, 83rd Series 6.375 10/15/17 10/15/02(b) 32,612
75 Port Authority NY/NJ, 83rd Series 6.875 01/01/25 01/01/00(b) 79,486
15 Portchester Community Devel. Corp. 8.100 08/01/10 04/04/05(c) 16,119
1,847 Puerto Rico Aqueduct & Sewer (i) 7.250 03/21/00 04/03/99(c) 1,885,931
30 Puerto Rico Commonwealth Infrastructure 0.000(+) 07/01/01 07/01/98(b) 29,956
8,580 Puerto Rico Commonwealth Infrastructure 7.500 07/01/09 07/01/98(b) 8,919,082
265 Puerto Rico Commonwealth Infrastructure 7.600 07/01/00 07/01/98(b) 275,062
5 Puerto Rico Commonwealth Infrastructure 7.700 07/01/01 07/01/98(b) 5,190
8,380 Puerto Rico Commonwealth Infrastructure 7.750 07/01/08 07/01/98(b) 8,721,485
10,000 Puerto Rico Commonwealth Infrastructure 7.900 07/01/07 07/01/98(b) 10,414,800
170 Puerto Rico Electric 6.000 07/01/10 07/01/99(b) 173,585
25 Puerto Rico Electric 6.000 07/01/16(s) 07/01/06(b) 26,786
30 Puerto Rico Electric 6.000 07/01/16(s) 07/01/06(b) 32,483
120 Puerto Rico Electric 7.000 07/01/07 07/01/99(b) 126,509
115 Puerto Rico Electric 7.125 07/01/14 07/01/99(b) 122,363
10 Puerto Rico Electric 7.125 07/01/14 07/01/99(b) 10,580
5 Puerto Rico GO 6.000 07/01/14 07/01/04(b) 5,323
1,105 Puerto Rico GO 8.000 07/01/06 07/01/98(b) 1,147,266
1,800 Puerto Rico GO YCN 7.634(r) 07/01/08 07/01/02(b) 2,031,750
500 Puerto Rico HBFA 6.100 10/01/15(s) 04/01/07(b) 527,405
25 Puerto Rico HFC 0.000 10/15/04 09/15/98(b) 15,444
45 Puerto Rico HFC 0.000 04/15/08 09/15/98(b) 21,366
100 Puerto Rico HFC 6.650 10/15/10 10/01/01(b) 105,772
45 Puerto Rico HFC 6.800 10/01/99 ----- 46,490
10 Puerto Rico HFC 6.900 04/15/98 ----- 10,066
40 Puerto Rico HFC 7.000 04/01/00 ----- 41,592
15 Puerto Rico HFC 7.000 04/15/99 ----- 15,386
10 Puerto Rico HFC 7.100 04/01/02 04/01/00(b) 10,589
15 Puerto Rico HFC 7.100 10/15/00 10/01/98(b) 15,504
65 Puerto Rico HFC 7.300 04/01/06 04/01/00(b) 68,816
30 Puerto Rico HFC 7.400 04/01/07 04/01/00(b) 31,823
20 Puerto Rico HFC 7.450 10/15/09 09/27/00(b) 21,311
</TABLE>
21
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,075 Puerto Rico HFC 7.500% 10/01/15(s) 04/01/00(b) $ 1,140,984
10 Puerto Rico HFC 7.500 10/15/12 09/27/00(b) 10,655
8,610 Puerto Rico HFC 7.500 04/01/22(s) 04/01/00(b) 9,151,655
275 Puerto Rico HFC 7.650 10/15/22 09/27/00(b) 293,464
270 Puerto Rico HFC 8.250 06/01/11(s) 06/01/98(b) 271,010
275 Puerto Rico IME (Abbott Labs) 6.500 07/01/09 07/01/98(b) 279,532
10 Puerto Rico IME (Baxter Travenol) 8.000 09/01/12 09/01/98(b) 10,529
500 Puerto Rico IME (Motorola) (q) 6.750 01/01/14 01/01/02(b) 554,195
3,500 Puerto Rico IME (PepsiCo) 6.250 11/15/13 11/15/02(b) 3,797,255
640 Puerto Rico IME (Squibb) 6.500 07/01/04 07/01/98(b) 649,216
1,020 Puerto Rico IME (Upjohn) 7.500 12/01/23 12/01/98(b) 1,086,218
40 Puerto Rico Port Authority 5.750 07/01/02 07/01/98(b) 40,029
125 Puerto Rico Port Authority 7.300 07/01/07 07/01/98(b) 125,198
367 Puerto Rico Port Authority (Computer Lease) (i) 9.000 05/15/99 11/19/98(c) 387,301
30 Puerto Rico Public Buildings Authority 6.000 07/01/12 07/01/99(b) 30,537
2,015 Puerto Rico TEMEC (MGH) 6.500 07/01/12(s) 07/01/08(b) 2,190,124
1,045 Puerto Rico TEMEC (RMH) 6.400 05/01/09 05/01/06(b) 1,122,539
105 Puerto Rico Urban Renewal 7.875 10/01/04 10/01/99(b) 112,407
1,360 Putnam IDA (Brewster Plastics) 7.375 12/01/08 08/11/04(c) 1,459,878
35 Radisson Senior Citizens Hsg. 12.000 11/01/11(s) 05/01/98(b) 36,904
125 Rensselaer Hsg. Authority (Renwyck) 7.650 01/01/11(s) 01/01/03(b) 136,588
1,440 Rensselaer Municipal Leasing Corp. 6.250 06/01/04 12/28/02(c) 1,554,898
20 Riverhead Hsg. Devel. Corp. 8.250 08/01/10 02/01/98(b) 20,733
3,250 Rochester Hsg. Authority (Crossroads) 7.300 07/01/05 05/02/02(c) 3,561,708
795 Rochester Hsg. Authority (Stonewood) 5.900 09/01/09 11/16/04(c) 817,173
365 Rockland Gardens Hsg. 10.500 05/01/11 05/01/98(b) 389,528
690 Rockland IDA (DC) 7.000 03/01/03 04/21/01(c) 734,436
225 Roxbury CSD 6.400 06/15/10 06/15/07(b) 252,531
235 Roxbury CSD 6.400 06/15/11 06/15/07(b) 262,963
245 Saratoga IDA (ARC) 7.250 03/01/01 03/10/00(c) 252,754
360 Saratoga IDA (City Center) 10.000 10/01/08 10/01/99(b) 392,141
2,150 Saratoga IDA (Saratoga Sheraton) 6.750 12/31/07 02/12/03(c) 2,306,112
50 Schodack IDA (Hamilton Printing) 7.600 07/01/00 ----- 50,760
60 Schodack IDA (Hamilton Printing) 7.625 07/01/01 ----- 62,808
120 Schuyler IDA (Cargill) 7.900 04/01/07 10/01/98(b) 127,463
135 Springville HDC (Springbrook) 5.950 01/01/10 01/13/05(c) 140,647
25 St. Casimer's Elderly Hsg. 7.000 09/01/98 ----- 25,257
960 St. Casimer's Elderly Hsg. 7.375 09/01/10 03/01/98(b) 994,810
10 Suffolk County GO 6.400 02/01/00 ----- 10,068
5 Suffolk County GO 6.700 08/01/02 ----- 5,073
240 Suffolk IDA (Dowling College) 6.500 12/01/06 ----- 253,262
1,035 Suffolk IDA (Huntington Res Rec) 5.150(w) 10/01/99 ----- 1,035,673
6,395 Suffolk IDA (Huntington Res Rec) 5.150(w) 10/01/00 ----- 6,447,951
6,875 Suffolk IDA (Huntington Res Rec) 5.350(w) 10/01/01 ----- 6,991,806
7,390 Suffolk IDA (Huntington Res Rec) 5.450(w) 10/01/02 ----- 7,584,209
7,945 Suffolk IDA (Huntington Res Rec) 5.500(w) 10/01/03 ----- 8,195,347
1,785 Suffolk IDA (L.I. ACLD) 7.350 08/01/09(s) 08/01/99(g) 1,886,567
20 Suffolk IDA (Marbar) 8.150 03/01/04 03/01/98(b) 20,186
25 Suffolk IDA (Marbar) 8.200 03/01/05 03/01/98(b) 25,102
60 Suffolk IDA (OPWC) 7.000 11/01/02 01/30/01(c) 61,004
380 Suffolk IDA (Printing Assoc.) 7.013(v) 12/01/01 07/01/98(f) 380,000
1,300 Suffolk IDA (Rimland Facilities) 6.188(v) 12/01/04 06/01/98(f) 1,300,000
5 Suffolk Water Authority 7.375 06/01/12(s) 06/01/98(b) 5,219
2,365 Sunnybrook Elderly Hsg. Corp. 11.250 12/01/14(s) 04/01/98(b) 2,509,738
67 Syracuse IDA (543 E. Genesee St.) 6.205(v) 12/01/98 07/12/98(c) 67,547
930 Syracuse IDA (Rockwest Center) 7.000 12/01/05 11/01/02(c) 972,799
400 Syracuse IDA (Rockwest Center) 7.250 06/01/03 02/23/01(c) 435,856
1,025 Syracuse IDA (St. Joseph's Hospital) 7.250 06/01/01 01/02/00(c) 1,102,316
300 Tompkins Healthcare 10.800 02/01/28 08/01/05(b) 400,047
195 Tompkins IDA (Kendall at Ithaca) 7.875 06/01/15(s) 06/01/05(b) 211,495
3,755 Tonawanda HDC (Tonawanda Towers) 6.150 10/01/11 09/05/06(c) 3,930,659
</TABLE>
22
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND STATEMENT OF INVESTMENTS -- DECEMBER 31, 1997
<CAPTION>
Effective
Face Amount Maturity
(000) Omitted Description Coupon Maturity Date* Market Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 60 Triborough Bridge & Tunnel Authority 6.000% 01/01/13(s) 01/01/00(b) $ 61,865
10 Triborough Bridge & Tunnel Authority 6.625 01/01/17 01/01/05(b) 10,821
80 Tupper Lake Housing Devel. 8.125 10/01/10 03/15/02(b) 80,664
1,600 Union Elderly Hsg. 10.000 04/01/13(s) 04/01/98(b) 1,659,520
5 Union Elderly Hsg. 11.000 04/01/00 04/01/98(b) 5,077
855 Union Hsg. (Methodist Homes) 6.800 11/01/04 02/28/02(c) 906,197
95 Union Hsg. (Methodist Homes) 7.900 04/01/98 ----- 95,728
475 United Nations Devel. Corp. 5.400 07/01/14(s) 07/01/99(b) 476,287
1,275 United Nations Devel. Corp. 5.500 07/01/17(s) 07/01/99(b) 1,278,812
380 University of V. I. 6.500 10/01/99 04/06/99(c) 387,296
500 University of V. I. 7.500 10/01/09 10/01/04(b) 569,930
500 University of V. I. 7.650 10/01/14 10/01/04(b) 571,075
10 Utica Hsg. Corp. (Brookhaven) 0.000 07/01/99 ----- 8,707
100 Utica Hsg. Corp. (Brookhaven) 0.000 01/01/99 ----- 91,184
40 Utica Senior Citizen Hsg. 0.000 01/01/02 ----- 27,506
35 Utica Senior Citizen Hsg. 0.000 01/01/98 ----- 35,000
100 Utica Senior Citizen Hsg. 6.500 04/15/08 04/15/06(b) 111,179
10 Valley Health & Devel. Corp. 7.850 02/01/02 06/02/99(c) 10,644
25 Valley Health & Devel. Corp. 11.300 02/01/23 12/15/00(b) 30,443
100 Valley Health & Devel. Corp. 11.300 02/01/07 08/01/00(b) 121,859
17,890 V. I. Airport 8.100 10/01/05 10/01/98(b) 18,625,100
722 V. I. GO (Hugo Insurance Claims Program) 7.750 10/01/06(s) 10/01/99(g) 803,933
15 V. I. HFA 7.550 06/01/03 12/01/98(a) 15,799
260 V. I. Highway 7.650 10/01/99 ----- 275,644
1,060 V. I. Port Authority (Marine Division) 7.400 11/01/99 05/01/98(b) 1,062,777
845 V. I. Port Authority (Marine Division) 7.550 11/01/99 05/01/98(b) 850,915
525 V. I. Public Finance Authority 6.500 10/01/99 04/06/99(c) 543,239
355 V. I. Public Finance Authority 6.625 10/01/99 04/09/99(c) 368,071
1,500 V. I. Public Finance Authority 6.800 10/01/00 ----- 1,594,560
2,000 V. I. Public Finance Authority 7.250 10/01/18(s) 10/01/02(b) 2,245,820
250 V. I. Public Finance Authority 7.700 10/01/04 10/01/99(b) 265,733
1,870 V. I. Water & Power 7.200 01/01/02 08/05/00(c) 1,960,714
13,170 V. I. Water & Power 7.400 07/01/11(s) 01/01/00(g) 14,444,014
16,100 V. I. Water & Power 8.500 01/01/10 07/01/98(b) 17,042,172
100 Watervliet Elderly Hsg. Corp. 8.000 11/15/02 04/15/98(b) 101,859
95 Watervliet Elderly Hsg. Corp. 8.000 11/15/00 04/15/98(b) 96,766
95 Watervliet Elderly Hsg. Corp. 8.000 11/15/01 04/15/98(b) 96,766
45 Wayne IDA (Hauser Machine) 7.700 12/01/09 12/01/01(d) 47,453
435 Westchester IDA (BAH) 7.250 12/01/09 09/09/04(c) 465,054
1,000 Westchester IDA (JBFS) 6.500 12/15/02 07/14/01(c) 1,060,950
570 Westchester IDA (JDAM) 6.250 04/01/05 01/23/02(c) 604,901
1,000 Westchester IDA (JDAM) 6.750 04/01/16(s) 04/01/08(b) 1,073,240
45 Yonkers IDA (Waldbaum) 9.250 03/01/98 03/01/98(b) 45,335
- --------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BOND INVESTMENTS, AT VALUE (COST $882,212,998) -- 104.7% $913,669,993
LIABILITIES IN EXCESS OF OTHER ASSETS -- (4.7%) (40,970,686)
------------
NET ASSETS -- 100.0% $872,699,307
============
* 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 due to 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.
(g) Average life due to mandatory (sinking fund) principal payments
prior to the stated optional call date.
(i) Illiquid security--See Note 6 of Notes to Financial Statements.
(q) Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $554,195, or 0.06% of the Fund's
net assets, at December 31, 1997.
(r) Interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
December 31, 1997.
(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.
(w) When-issued security--See Note 3 of Notes to Financial Statements.
(+) Security will convert to a fixed coupon at a date prior to maturity.
See accompanying Notes to Financial Statements.
</TABLE>
23
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND - DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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:
ACLD Association for Children with Learning
Disabilities
ACLDD Adults and Children with Learning
and Developmental Disabilities
ARC Association of Retarded Citizens
BAH Beth Abraham Hospital
BHMS Brooklyn Heights Montessori School
BLH Bronx Lebanon Hospital
CCM Comprehensive Care Management
CDD Center for Developmental Disabilities
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
EPG Elmhurst Parking Garage
ERDA Energy Research and
Development Authority
GAINS Growth and Income Securities
GO General Obligation
G&E Gas and Electric
G&H Geriatric and Healthcare
HBFA Housing Bank and Finance Agency
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
L.I. Long Island
LILCO Long Island Lighting Corporation
LIMO Limited Interest Municipal Obligation
MEET Manhattan Eye, Ear and Throat
MGH Mennonite General Hospital
MTA Metropolitan Transit Authority
OPWC Ocean Park Water Corporation
PRAMS Prudential Receipts of Accrual
Municipal Securities
PCP Pooled Capital Program
PCR Pollution Control Revenue
Res Rec Resource Recovery Facility
RG&E Rochester Gas and Electric
RMH Ryder Memorial Hospital
RSP Riverbank State Park
SCSB Schuyler Community Services Board
SONYMA State of New York Mortgage Agency
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
YCN Yield Curve Note
- --------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS
The Fund had the following concentrations at December 31, 1997 (as a percentage
of total net assets):
# of % of Total
Issuers Net Assets
------- ----------
General Obligation 12 26.8%
Hospital/Healthcare 48 15.2%
Multi-Family Housing 41 8.5%
Resource Recovery 4 7.7%
Single-Family Housing 39 7.0%
Electric Utilities 13 6.3%
Higher Education 20 5.3%
Lease Rental 17 4.3%
Marine/Aviation Facilities 11 4.3%
Sales Tax Revenue 1 3.3%
Corporate Backed 21 3.2%
Highways/Railways 4 2.7%
Water Utilities 6 2.4%
NonProfit Organization 14 2.0%
Pollution Control 4 1.5%
Manufacturing, Non-Durable Goods 15 1.4%
Education 6 1.2%
Manufacturing, Durable Goods 11 1.0%
Other 5 0.6%
------
Total 104.7%
======
- --------------------------------------------------------------------------------
ASSET COMPOSITION TABLE
DECEMBER 31, 1997 (UNAUDITED)
Percentage
Rating of Investments
- ----------------------------------
AAA 14.2%
AA 11.3%
A 39.5%
BBB 31.6%
BB 0.4%
B 0.0%
CCC 0.0%
CC 0.0%
C 0.0%
Not Rated 3.0%
------
Total 100.0%
======
ALL bonds are current with their debt service requirements. Bonds rated by any
nationally recognized statistical rating organization are included in the
equivalent Standard & Poor's rating category. As a general matter, unrated bonds
may be backed by mortgage liens or equipment liens on the underlying property,
and also may be guaranteed. 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 by the Manager
and the Fund's Board of Trustees are included in the "Not Rated" category. For
further information see "Credit Quality" in the Prospectus.
24
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM NEW YORK MUNICIPAL FUND
- ----------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
ASSETS
<S> <C>
Investments, at value(cost $882,212,998)--see accompanying statement $ 913,669,993
Receivables:
Interest 17,566,929
Investments sold 17,503,468
Shares of beneficial interest sold 3,604,093
Other 502,352
-------------
Total assets 952,846,835
-------------
LIABILITIES
Bank overdraft 1,088,580
Payables and other liabilities:
Investments purchased 76,495,885
Shares of beneficial interest redeemed 1,673,135
Dividends 266,131
Trustees' fees 9,044
Other 614,753
-------------
Total liabilities 80,147,528
-------------
NET ASSETS $ 872,699,307
=============
- ----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 850,109,599
Undistributed net investment income 411,938
Accumulated net realized loss on investment transactions (9,279,225)
Net unrealized appreciation on investments--Note 3 31,456,995
-------------
Net assets $ 872,699,307
=============
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
CLASS A SHARES:
Net asset value and redemption price per share (based on net assets of
$771,827,797 and 231,056,256 shares of beneficial interest outstanding)
$3.34
Maximum offering price per share (net asset value plus sales charge of
3.50% of offering price) $3.46
- ----------------------------------------------------------------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$21,499,963 and 6,443,045 shares of beneficial
interest outstanding) $3.34
- ----------------------------------------------------------------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$26,861,858 and 8,056,501 shares of beneficial
interest outstanding) $3.33
- ----------------------------------------------------------------------------------------------
CLASS X SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$52,509,689 and 15,691,606 shares of beneficial
interest outstanding) $3.35
- ----------------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
</TABLE>
25
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
- -----------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
INVESTMENT INCOME:
Interest $45,174,691
--------------
EXPENSES:
Management fees--Note 4 3,140,951
Distribution and service plan
fees--Note 4:
Class A 1,654,936
Class B 65,535
Class C 84,310
Class X 371,602
Transfer and shareholder servicing
agent fees--Note 4:
Class A 311,508
Class B 4,741
Class C 3,819
Class X 29,561
Accounting service fees--Note 4 225,111
Registration and filing fees 129,219
Shareholder reports 92,011
Custodian fees and expenses 89,285
Legal and auditing fees 62,239
Trustees' fees and expenses 35,788
Other 71,591
Interest 172,423
--------------
Total expenses 6,544,630
Less expenses paid indirectly (77,568)
--------------
Total net expenses 6,467,062
--------------
NET INVESTMENT INCOME 38,707,629
--------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 1,075,860
Net change in unrealized appreciation
or depreciation on investments 16,726,487
--------------
Net realized and unrealized gain 17,802,347
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $56,509,976
==============
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1997 1996
---- ----
OPERATIONS:
Net investment income $ 38,707,629 $ 34,000,693
Net realized gain (loss) 1,075,860 (242,301)
Net change in unrealized appreciation
or depreciation 16,726,487 (2,445,222)
------------- -------------
Net increase in net assets
resulting from operations 56,509,976 31,313,170
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment
income:
Class A (35,761,666) (32,233,558)
Class B (287,084) --
Class C (369,152) --
Class X (2,357,890) (1,354,963)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting
from beneficial interest
transactions--Note 2:
Class A 121,589,384 68,975,038
Class B 21,302,795 --
Class C 26,613,801 --
Class X 10,459,393 24,348,503
- --------------------------------------------------------------------------------
NET ASSETS:
Total increase 197,699,557 91,048,190
Beginning of period 674,999,750 583,951,560
------------- -------------
End of period (including undistributed
net investment income of $411,938
and $480,101, respectively) $ 872,699,307 $ 674,999,750
============= =============
See accompanying Notes to Financial Statements.
26
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
Year Ended December 31,
1997 1996(h) 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $3.26 $3.28 $3.15 $3.33 $3.18
----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.17 0.17 0.18 0.16 0.17
Net realized and unrealized gain (loss) 0.08 (0.02) 0.13 (0.18) 0.15
----------- ----------- ----------- ----------- -----------
Total income (loss) from investment operations 0.25 0.15 0.31 (0.02) 0.32
----------- ----------- ----------- ----------- -----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.17) (0.17) (0.18) (0.16) (0.17)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions to shareholders (0.17) (0.17) (0.18) (0.16) (0.17)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $3.34 $3.26 $3.28 $3.15 $3.33
=========== =========== =========== =========== ===========
TOTAL RETURN, AT NET ASSET VALUE (C) 8.01% 4.82% 10.01% (0.60%) 10.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $771,828 $634,172 $567,537 $496,452 $457,860
Average net assets (in thousands) $677,376 $606,742 $520,990 $491,038 $309,676
Ratios to average net assets:
Net investment income 5.27% 5.37% 5.44% 5.12% 4.94%
Expenses (e) 0.83% 0.89% 0.90% 0.89% 0.89%
Expenses (excluding interest) (e) (f) 0.81% 0.83% 0.84% 0.84% 0.86%
Portfolio turnover rate (g) 27.14% 24.35% 22.34% 34.58% 17.08%
- -----------------------------------------------------------------------------------------------------------------------------------
(c) 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.
(e) 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.
(f) 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.
(g) 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, 1997 were
$436,262,952 and $207,375,622, respectively.
(h) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
</TABLE>
See accompanying Notes to Financial Statements.
27
<PAGE>
<TABLE>
LIMITED TERM NEW YORK MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
CLASS B CLASS C CLASS X
------------- ------------- -------------------------------------------
Period Ended Period Ended Year Ended December 31,
December 31, December 31,
1997 (b) 1997 (b) 1997 1996(h) 1995(a)
---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $3.25 $3.25 $3.27 $3.28 $3.21
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.10 0.10 0.16 0.16 0.11
Net realized and unrealized gain (loss) 0.09 0.08 0.08 (0.01) 0.07
---------- ---------- ---------- ---------- ----------
Total income from investment operations 0.19 0.18 0.24 0.15 0.18
---------- ---------- ---------- ---------- ----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.10) (0.10) (0.16) (0.16) (0.11)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to shareholders (0.10) (0.10) (0.16) (0.16) (0.11)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $3.34 $3.33 $3.35 $3.27 $3.28
========== ========== ========== ========== ==========
TOTAL RETURN, AT NET ASSET VALUE (C) 5.89% 5.58% 7.44% 4.59% 5.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $21,500 $26,862 $52,510 $40,828 $16,415
Average net assets (in thousands) $9,873 $12,705 $49,563 $28,971 $8,869
Ratios to average net assets:
Net investment income 4.18%(d) 4.22%(d) 4.75% 4.85% 5.21%(d)
Expenses (e) 1.56%(d) 1.54%(d) 1.35% 1.38% 0.90%(d)
Expenses (excluding interest) (e) (f) 1.55%(d) 1.52%(d) 1.33% 1.32% 0.85%(d)
Portfolio turnover rate (g) 27.14% 27.14% 27.14% 24.35% 22.34%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 1, 1995 (inception of offering) to December 31,
1995.
(b) For the period from May 1, 1997 (inception of offering) to December 31,
1997.
(c) 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.
(d) Annualized.
(e) 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.
(f) 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.
(g) 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, 1997 were
$436,262,952 and $207,375,622, respectively.
(h) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
See accompanying Notes to Financial Statements.
28
<PAGE>
LIMITED TERM NEW YORK MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
The Limited Term New York Municipal Fund (the Fund), a series of Rochester
Portfolio Series, is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company. The
Fund's investment objective 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. The Fund's investment adviser is OppenheimerFunds, Inc. (the
Manager).
On May 1, 1997, the Fund redesignated the existing Class B shares as Class X
shares and introduced two new classes of shares, designated as Class B and Class
C.
The Fund offers Class A, Class B, Class C and Class X shares. Class A shares are
sold with a front-end sales charge. Class B, Class C and Class X shares may be
subject to a contingent deferred sales charge. All 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 and Class X 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. 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 date extends beyond six months and possibly as long as two
years or more beyond trade 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 or greater than 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.
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, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $9,100,000, which expires between 2002 and 2004.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B, Class C and Class X shares from net investment income each
day the New York Stock Exchange is open for business and pay such dividends
monthly. Distributions from net realized gains on investments, if any, will be
declared at least once each year.
29
<PAGE>
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 its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain (loss) was
recorded by the Fund.
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 Fund has authorized 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:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997(1) DECEMBER 31, 1996
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A:
Sold .............................. 61,960,243 $ 204,296,595 46,954,523 $ 152,448,902
Dividends and distributions
reinvested ...................... 7,129,620 23,469,719 6,569,019 21,305,028
Redeemed .......................... (32,348,973) (106,176,930) (32,312,398) (104,778,892)
----------- ------------- ----------- -------------
Net increase ...................... 36,740,890 $ 121,589,384 21,211,144 $ 68,975,038
=========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------
CLASS B:
Sold .............................. 6,693,115 $ 22,129,658 -- $ --
Dividends and distributions
reinvested ...................... 57,825 191,859 -- --
Redeemed .......................... (307,895) (1,018,722) -- --
----------- ------------- ----------- -------------
Net increase ...................... 6,443,045 $ 21,302,795 -- $ --
=========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------
CLASS C:
Sold .............................. 8,331,782 $ 27,526,872 -- $ --
Dividends and distributions
reinvested ...................... 85,390 283,099 -- --
Redeemed .......................... (360,671) (1,196,170) -- --
----------- ------------- ----------- -------------
Net increase ...................... 8,056,501 $ 26,613,801 -- $ --
=========== ============= =========== =============
- -----------------------------------------------------------------------------------------------------------
CLASS X:
Sold .............................. 4,101,380 $ 13,420,326 7,835,459 $ 25,456,582
Dividends and distributions
reinvested ...................... 493,631 1,628,470 287,435 933,386
Redeemed .......................... (1,395,249) (4,589,403) (630,627) (2,041,465)
----------- ------------- ----------- -------------
Net increase ...................... 3,199,762 $ 10,459,393 7,492,267 $ 24,348,503
=========== ============= =========== =============
- ----------
(1) For the year ended December 31, 1997 for Class A and Class X shares and for
the period from May 1, 1997 (inception of offering) to December 31, 1997
for Class B and Class C shares.
</TABLE>
30
<PAGE>
NOTE 3. PORTFOLIO INFORMATION:
The Fund held $13,917,181 in inverse floating rate municipal bonds at December
31, 1997, which represents 1.59% of the Fund's net assets.
During 1997, 15.52% 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, 1997, net unrealized appreciation on investments of $31,456,995
was composed of gross appreciation of $31,809,209, and gross depreciation of
$352,214.
Unrealized appreciation (depreciation) at December 31, 1997 based on cost of
investments for federal income tax purposes of $882,251,101 was:
Gross unrealized appreciation ............................ $31,783,065
Gross unrealized depreciation ............................ (364,173)
-----------
Net unrealized appreciation .............................. $31,418,892
===========
At December 31, 1997, investments in securities included issues that were
purchased on a when-issued or delayed delivery basis. The Fund has recorded
these commitments and is valuing the when-issued securities at current market
value on each trading day. In addition, the Fund has segregated sufficient
liquid debt securities with its custodian to cover these commitments. The Fund
intends to invest no more than 10% of its net assets in when-issued or delayed
delivery securities. The aggregate cost of securities purchased on a when-issued
or delayed delivery basis at December 31, 1997 was $47,470,274, which represents
5.44% of the Fund's net assets. Information concerning these securities is as
follows:
<TABLE>
<CAPTION>
VALUATION PER UNIT
FACE AMOUNT ACQUISITION DELIVERY COST PER AS OF
SECURITY (IN THOUSANDS) DATE DATE UNIT DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MTA Service Contract, Series R:
5.20% due 7/1/08 $2,785 10/31/97 4/2/98 99.208% 101.469%
5.20% due 7/1/08 5,160 10/31/97 4/2/98 99.208 101.469
5.30% due 7/1/09 1,420 10/31/97 4/2/98 99.156 101.565
5.30% due 7/1/09 2,915 10/31/97 4/2/98 99.156 101.565
- ------------------------------------------------------------------------------------------------------------------
NYS Dorm (City University):
5.50% due 7/1/04 2,000 10/27/97 4/2/98 102.376 104.010
5.50% due 7/1/05 1,500 10/27/97 4/2/98 102.389 103.941
5.50% due 7/1/06 2,020 10/27/97 4/2/98 102.319 104.060
- ------------------------------------------------------------------------------------------------------------------
Suffolk IDA (Huntington Res Rec):
5.15% due 10/1/99 1,035 1/28/97 7/29/99 100.000 100.065
5.15% due 10/1/00 6,395 1/28/97 7/29/99 100.000 100.828
5.35% due 10/1/01 6,875 1/28/97 7/29/99 100.000 101.699
5.45% due 10/1/02 7,390 1/28/97 7/29/99 100.000 102.628
5.50% due 10/1/03 7,945 1/28/97 7/29/99 100.000 103.151
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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 of 0.50% on the first
$100 million of average annual net assets, 0.45% of the next $150 million, 0.40%
of the next $1,750 million, and 0.39% on net assets in excess of $2 billion.
During 1997, the Fund paid $3,140,951 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 1997, the Fund paid $225,111 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, and for other registered investment
companies. The Fund pays OFS an annual maintenance fee for each Fund shareholder
account
31
<PAGE>
and reimburses OFS for its out-of-pocket expenses. During 1997, the Fund paid a
total of $349,629 to OFS for transfer and shareholder servicing agent fees.
For the year ended December 31, 1997, commissions (sales charges paid by
investors) on sales of Class A shares totaled $2,677,697, of which $473,852 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B, Class
C and Class X shares totaled $648,027, $275,006 and $265,074, respectively, of
which $3,032, $9,746 and $5,067, respectively, were paid to an affiliated
broker/dealer. During the year ended December 31, 1997, OFDI received contingent
deferred sales charges of $15,712, $9,187 and $82,642, respectively, upon
redemption of Class B, Class C and Class X shares, as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
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 shareholder 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. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintaining accounts of their customers that hold Class A
shares. During the year ended December 31, 1997, OFDI paid $17,777 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is computed
on the average annual net assets of Class B and Class C shares, determined as of
the close of each regular business day. During the year ended December 31, 1997,
OFDI retained $65,563 and $84,618, respectively, as compensation for Class B and
Class C sales commissions and service fee advances, as well as financing costs.
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 OFDI for
distributing shares before the Plan was terminated. At December 31, 1997, OFDI
had incurred unreimbursed expenses of $642,821 for Class B and $452,980 for
Class C.
The Fund has adopted a Distribution and Service Plan for Class X shares to
compensate OFDI for its costs in distributing Class X 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 X shares for its services rendered in
distributing Class X shares. Currently, the Board of Trustees has limited the
asset-based sales charge to 0.50% per year on Class X shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class X shares. The fee is computed on the
average annual net assets of Class X shares, determined as of the close of each
regular business day. During the year ended December 31, 1997, OFDI paid $1,160
to an affiliated broker/dealer as reimbursement for Class X personal service and
maintenance expenses and retained $312,896 as compensation for Class X 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 distributing shares before
the Plan was terminated. At December 31, 1997, OFDI had incurred unreimbursed
expenses of $444,572 for Class X.
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 funds
managed by the Manager in an unsecured line of credit with a bank, which permits
borrowings up to $50 million, collectively. Interest is charged to each fund,
based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.625%.
In addition, a commitment fee of 0.07% is allocated among the three
participating funds at the end of each quarter, based on the average daily
unused portion of the committed line. The commitment fee is allocated among the
three funds based upon their respective average net assets for the period. The
commitment fee allocated to the Fund for the year ended December 31, 1997 was
$222.
The Fund had no borrowings outstanding at December 31, 1997. For the year ended
December 31, 1997, the average monthly loan balance was $2,647,453 at an average
interest rate of 6.352%. The maximum amount of borrowings outstanding at any
month-end was $20,870,000.
NOTE 6. ILLIQUID AND RESTRICTED SECURITIES:
At December 31, 1997, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily-available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limit. The aggregate value of illiquid securities
subject to this limitation at December 31, 1997 was $4,427,676, which represents
0.51% of the Fund's net assets.
<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
January 1, 1998. Combined taxable income refers to the net amount subject to
Federal income tax and New York State and New York City personal 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.
New York State Residents
Federal Effective Limited Term New York Municipal Fund
Yield of:
Taxable Tax
Income Bracket Is Approximately Equivalent To a
Taxable Yield of:
JOINT RETURN
Over Not overFederal NYS Combine1.0% 1.5% 2.00% 2.50% 3.00% 3.50% $ 22,000 $
26,00015.00% 5.25% 19.46% 1.24% 1.86%2.48% 3.10% 3.72% 4.35% $ 26,000 $
40,00015.00% 5.90% 20.01% 1.25% 1.88%2.50% 3.13% 3.75% 4.38% $ 40,000 $
42,35015.00% 6.85% 20.82% 1.26% 1.89%2.53% 3.16% 3.79% 4.42% $ 42,350
$102,30028.00% 6.85% 32.93% 1.49% 2.24%2.98% 3.73% 4.47% 5.22% $102,300
$155,95031.00% 6.85% 35.73% 1.56% 2.33%3.11% 3.89% 4.67% 5.45% $155,950
$278,45036.00% 6.85% 40.38% 1.68% 2.52%3.35% 4.19% 5.03% 5.87% $278,450 and
abov39.60% 6.85% 43.74% 1.78% 2.67%3.55% 4.44% 5.33% 6.22%
4.00% 4.50% 5.00%5.50% 6.00% 6.50% 7.00%
4.97% 5.59% 6.21%6.83% 7.45% 8.07%8.69%
5.00% 5.63% 6.25%6.88% 7.50% 8.13%8.75%
5.05% 5.68% 6.31%6.95% 7.58% 8.21%8.84%
5.96% 6.71% 7.46%8.20% 8.95% 9.69%10.44%
6.22% 7.00% 7.78%8.56% 9.34%10.11%10.89%
6.71% 7.55% 8.39%9.23% 10.06%10.90%11.74%
7.11% 8.00% 8.89%9.78% 10.66%11.55%12.44%
SINGLE RETURN
Over Not overFederal NYS Combine1.00% 1.5% 2.00% 2.50% 3.00% 3.50%
- ---- --------------- --- -------
$20,000 $ 25,35015.00% 6.85% 20.82% 1.26% 1.89%2.53% 3.16% 3.79% 4.42%
$ 25,350 $ 61,40028.00% 6.85% 32.93% 1.49% 2.24%2.98% 3.73% 4.47% 5.22%
$ 61,400 $128,10031.00% 6.85% 35.73% 1.56% 2.33%3.11% 3.89% 4.67% 5.45%
$128,100 $278,45036.00% 6.85% 40.38% 1.68% 2.52%3.35% 4.19% 5.03% 5.87%
$278,450 and abov39.60% 6.85% 43.74% 1.78% 2.67%3.55% 4.44% 5.33% 6.22%
4.00% 4.50% 5.00%5.50% 6.00% 6.50% 7.00%
5.05% 5.68% 6.31 6.95% 7.58% 8.21%8.84%
5.96% 6.71% 7.46 8.20% 8.95% 9.69%10.44%
6.22% 7.00% 7.78 8.56% 9.34%10.11%10.89%
6.71% 7.55% 8.39 9.23%10.06%10.90%11.74%
7.11% 8.00% 8.89 9.78%10.66%11.55%12.44%
New York City Residents
Federal Effective Limited Term New York Municipal Fund
Yield of:
Taxable Tax
Income Bracket Is Approximately Equivalent To a
Taxable Yield of:
JOINT RETURN
Over Not overFederal NYS NYC Combined 1.1.50% 2.00% 2.50% 3.00%
- ---- --------------- --- --- --------
3.50%
$ 27,000 $ 40,00015.00% 5.90% 4.39% 23.75% 1.311.97% 2.62% 3.28% 3.93%
4.59%
$ 40,000 $ 42,35015.00% 6.85% 4.39% 24.55% 1.331.99% 2.65% 3.31% 3.98%
4.64%
$ 42,350 $ 45,00028.00% 6.85% 4.39% 36.09% 1.562.35% 3.13% 3.91% 4.69%
5.48%
$ 45,000 $ 90,00028.00% 6.85% 4.40% 36.10% 1.562.35% 3.13% 3.91% 4.69%
5.48%
$ 90,000 $102,30028.00% 6.85% 4.46% 36.14% 1.572.35% 3.13% 3.92% 4.70%
5.48%
$102,300 $108,00031.00% 6.85% 4.46% 38.80% 1.632.45% 3.27% 4.09% 4.90%
5.72%
$108,000 $155,95031.00% 6.85% 4.46% 38.80% 1.632.45% 3.27% 4.09.%4.90%
5.72%
$155,950 $278,45036.00% 6.85% 4.46% 43.24% 1.762.64% 3.52% 4.40% 5.29%
6.17%
$278,450 and abov39.60% 6.85% 4.46% 46.43% 1.872.80% 3.73% 4.67% 5.60%
6.53%
4.00% 4.50% 5.00%5.50% 6.00% 6.50% 7.00%
5.25% 5.90% 6.56%7.21% 7.87% 8.52%9.18%
5.30% 5.96% 6.63%7.29% 7.95% 8.62%9.28%
6.26% 7.04% 7.82%8.61% 9.39% 10.1710.95%
6.26% 7.04% 7.82%8.61% 9.39% 10.1710.95%
6.26% 7.05% 7.83%8.61% 9.40% 10.1810.96%
6.54% 7.35% 8.17%8.99% 9.80% 10.6211.44%
6.54% 7.35% 8.17%8.99% 9.80% 10.6211.44%
7.05% 7.93% 8.81%9.69% 10.57% 11.4512.33%
7.47% 8.40%
9.33% 10.27% 11.20% 113.07%
SINGLE RETURN
Over Not overFederal NYS NYC Combined 1.1.50% 2.00% 2.50% 3.00%
- ---- --------------- --- --- --------
3.50%
$ 20,000 $ 25,00015.0% 6.85% 4.39% 24.55% 1.331.99% 2.65% 3.31% 3.98%
4.64%
$ 25,000 $ 25,35015.0% 6.85% 4.40% 24.56% 1.331.99% 2.65% 3.31% 3.98%
4.64%
$ 25,350 $ 50,00028.0% 6.85% 4.40% 36.10% 1.562.35% 3.13% 3.91% 4.69%
5.48%
$ 50,000 $ 61,40028.0% 6.85% 4.46% 36.14% 1.572.35% 3.13% 3.92% 4.70%
5.48%
$ 61,400 $128,10031.0% 6.85% 4.46% 38.80% 1.632.45% 3.27% 4.09% 4.90%
5.72%
$128,100 $278,45036.0% 6.85% 4.46% 43.24% 1.762.64% 3.52% 4.40% 5.29%
6.17%
$278,450 and abov39.6% 6.85% 4.46% 46.43% 1.872.80% 3.73% 4.67% 5.60%
6.53%
4.00% 4.50% 5.00%5.50% 6.00% 6.50% 7.00%
5.30% 5.96% 6.63 7.29% 7.95% 8.62%9.28%
5.30% 5.97% 6.63 7.29% 7.95% 8.62%9.28%
6.26% 7.04% 7.82 8.61% 9.39%10.17%10.95%
6.26% 7.05% 7.83 8.61% 9.40%10.18%10.96%
6.54% 7.35% 8.17 8.99% 9.80%10.62%11.44%
7.05% 7.93% 8.81 9.69%10.57%11.45%12.33%
7.47% 8.40% 9.3310.27%11.20%12.13%13.07%
C-1
<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:
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 reaccess 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.
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.
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,
economconditions 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 fiincrease investment ay
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-2
<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 Accountants
Price Waterhouse LLP
950 Seventeenth Street, Suite 2500 Denver, CO 80202
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
<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) By-laws - filed with Registrant's initial Registration Statement
filed July 1, 1991 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
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 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) Distribution and Service Plan and Agreement for Class B
Shares dated as of February 3, 1998 under Rule 12b-1 of the
Investment Company Act of 1940 - Filed herewith.
(iii) Distribution and Service Plan and Agreement for Class C
Shares dated as of February 3, 1998 under Rule 12b-1 of the
Investment Company Act of 1940 - Filed herewith.
(iv) Distribution and Service Plan and Agreement for Class X
Shares dated as of February 3, 1998 under Rule 12b-1 of the
Investment Company Act of 1940 - Filed herewith.
(16) Performance Data Computation Schedule - Filed
herewith
(17) (a) Financial Data Schedule for Class A Shares -
Filed herewith
(b) Financial Data Schedule for Class B Shares
- Filed herewith
(c) Financial Data Schedule for Class C Shares -
Filed herewith
(d) 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
--- 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 1, 1998
-------------- ----------------------
Shares of beneficial
interest, Class A 12,827
Shares of beneficial
interest, Class B 827
Shares of beneficial
interest, Class C 756
Shares of beneficial
interest, Class X 1,089
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 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 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 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.
Name and Current Position with Other Business and Connections
OppenheimerFunds, During the Past Two
Years
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 Asset Management
Corporation
("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 Manager
at First of America Investment
Corp.
John R. Blomfield, Formerly, Senior Product Manager
(November, 1996 - August,
Vi1997) of International Home Foods
and American Home Products
(March, 1994 - October, 1996).
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice President (January
1992 - February, 1996) of Asian
Equities for Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President
Vice President of
Mutual Fund Accounting (since May
1996); an officer of other
Oppenheimer funds; formerly, an
Assistant
Vice President of OFI/Mutual Fund
Accounting (April 1994-
May 1996), and a Fund Controller
for
OFI.
George C. Bowen,
Senior Vice President & Treasurer
Vice President
(since June 1983) and Treasurer
(since March 1985) of
OppenheimerFunds Distributor,
Inc. (the
"Distributor"); Vice President
(since October 1989) and
Treasurer (since April 1986) of
HarbourView; Senior Vice
President (since February 1992),
Treasurer (since July 1991)and
a director (since December 1991)
of Centennial; President,
Treasurer and a director of
Centennial Capital Corporation
(since June 1989); Vice
President and Treasurer (since
August
1978) and Secretary (since April
1981) of Shareholder
Services, Inc. ("SSI"); Vice
President, Treasurer and Secretary
of Shareholder Financial
Services, Inc. ("SFSI") (since
November 1989); Treasurer of
Oppenheimer Acquisition Corp.
("OAC") (since June 1990);
Treasurer of Oppenheimer
Partnership Holdings, Inc. (since
November 1989); Vice
President and Treasurer of
ORAMI
(since July 1996); Chief
Executive Officer, Treasurer and
a director of MultiSource
Services, Inc.
, a broker-dealer
(since December 1995); an
officer of other Oppenheimer
funds.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President
None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice
President of Rochester Fund
Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
John Cardillo,
Assistant Vice President None.
Ruxandra Chivu,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 present) of
Awhtolia College - Greece.
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Craig P. Dinsell
Senior Vice President Formerly, Senior Vice President
of Human Resources for Fidelity
Investments-Retail Division
(January, 1995 - January,
1996), Fidelity Investments FMR
Co. (January, 1996 - June,
1997) and Fidelity Investments
FTPG (June, 1997 - January,
1998).
Robert Doll, Jr.,
Executive Vice President &
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,
General Counsel and Director
Executive Vice President (since
September 1993), and a director
(since January 1992) of the
Distributor; Executive Vice
President,
General Counsel
and a director of HarbourView,
SSI,
SFSI and Oppenheimer Partnership
Holdings, Inc. since
(September 1995) and
MultiSource Services, Inc.
Distributor.(a broker-
dealer) (since December 1995);
President and a director of
Centennial (since September
1995); President and a director
of
ORAMI (since July 1996); General
Counsel (since May 1996)
and Secretary (since April 1997)
of OAC; Vice President of
OppenheimerFunds International,
Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc
(since October 1997); an
officer of other Oppenheimer
funds.
Patrick Dougherty, None.
Assistant Vice President
Bruce Dunbar, None.
Vice President
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of
Oppenheimer
Millennium Funds plc (since
October 1997); an officer of
other Oppenheimer funds;
formerly, an Assistant Vice
President of OFI/Mutual Fund
Accounting (April 1994-May 1996),
and a Fund Controller for
OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
the Distributor
; Secretary of HarbourView
,
MultiSource and
Centennial
; 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 ;
Presently he holds the following
other
positions: Director (since 1995)
of ICI Mutual Insurance
Company; Governor (since 1994) of
St. John's College; Director
(since 1994 - present) of
International Museum of
Photography
at George Eastman House; Director
(since 1986) of GeVa
Theatre. Formerly, he held the
following positions: 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.; Director (1993 - 1997)
of VehiCare Corp.; Director (1993
- 1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly, she held the following
positions: An officer of certain
former Rochester
funds (May, 1993 - January,
1996); Secretary
of Rochester Capital Advisors,
Inc. and
General Counsel (June,
1993 - January 1996) of Rochester
Capital
Advisors, L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director
(1990-1996) for Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds
. Formerly, Vice President
and General Counsel of Oppenheimer
Acquisition Corp.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly, Vice President for
Schroder Capital Management
International.
Jill Glazerman,
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President
None.
Jeremy Griffiths,
Chief Financial Officer Currently a Member and Fellow of
the Institute of Chartered
Accountants; formerly, an
accountant for Arthur Young
(London, U.K.).
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 .
Elaine T. Hamann,
Vice President Formerly, Vice President
(September, 1989 - January, 1997)
of Bankers Trust Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President
(1994-1997) of Retirement Plans
Services for OppenheimerFunds
Services.
Robert Haley
Assistant Vice PresidenFormerly, Vice President of
Information Services for Bankers Trust Company
(January, 1991 - November, 1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice 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, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly, a Senior Vice President
and Portfolio Manager for
Warburg, Pincus Counsellors, Inc.
(1993-1997), Co-manager of
Warburg, Pincus Emerging Markets
Fund (12/94 - 10/97), Co-
manager Warburg, Pincus
Institutional Emerging Markets
Fund
- Emerging Markets Portfolio
(8/96 - 10/97), Warburg Pincus
Japan OTC Fund, Associate
Portfolio Manager of Warburg
Pincus International Equity Fund,
Warburg Pincus Institutional Fund
- Intermediate Equity Portfolio,
and Warburg Pincus EAFE
Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice None.dent
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Thomas W. Keffer,
Global. Senior Vice President None.
Avram Kornberg,
Vice President
None.
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
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 for certain
Oppenheimer funds; a Chartered
Financial Analyst; a Vice
President of
HarbourView; prior to March 1996
, the senior bond portfolio
manager for Panorama Series
Fund, Inc., other mutual funds and
pension accounts managed by G.R.
Phelps; 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.
Steve Macchia,
Assistant Vice PresidenNone.
Bridget Macaskill,
President, Chief Executive Officer
and Director
Chief Executive
Officer (since September 1995);
President and director (since
June 1991) of HarbourView;
Chairman and a
director of SSI (since August
1994), and SFSI (September 1995);
President (since September 1995)
and a director (since
October 1990) of OAC; President
(since September 1995) and
a director (since November 1989)
of Oppenheimer Partnership
Holdings, Inc.
, a
holding company subsidiary of
OFI; a director
of ORAMI (since July 1996) ;
President and a director (since
October 1997) of OFIL, an
offshore fund manager subsidiary
of
OFI and Oppenheimer Millennium
Funds plc (since October
1997); President and a director
of other Oppenheimer funds; a
director of the NASDAQ Stock
Market, Inc. and of Hillsdown
Holdings plc (a U.K. food
company); formerly, an Executive
Vice President of OFI.
Wesley Mayer,
Vice President Formerly
, Vice President
(January, 1995 - June, 1996) of
Manufacturers Life Insurance
Company.
Loretta McCarthy,
Executive Vice President None.
Kelley A. McCarthy-Kane
Assistant Vice President Formerly , Product Manager,
Assistant Vice President (June 1995- October,
1997) of Merrill Lynch Pierce Fenner & Smith.
Beth Michnowski, Formerly, Senior Marketing
Manager (May, 1996 - June, 1997)
Assistant Vice President and Director of Product Marketing
(August, 1992 - May, 1996) with Fidelity
Investments.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
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.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
James Phillips
Assistant Vice President None.
Caitlin Pincus, Formerly, Manager (June, 1995 -
December, 1997) of McKinsey
Vice President & Co.
John Pirie,
Assistant Vice President Formerly, a Vice President with
Cohane Rafferty Securities, Inc.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Michael Quinn,
Assistant Vice PresFormerly, Assistant Vice
President (April, 1995 - January,
1998) of Van Kampen American
Capital.
Russell Read,
Senior Vice President Vice President of Oppenheimer
Real Asset Management, Inc.
(since March, 1995).
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly, a
Securities Analyst for the
Manager.
Adam Rochlin,
Vice President None.
Michael S. Rosen,
Vice President; President,
Rochester Division 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.
Lawrence Rudnick,
Assistant Vice President
None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Scott Scharer
Assistant Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President None.
Richard Soper,
Vice President None.
Stuart J. Speckman
Vice President Formerly, Vice President and
Wholesaler for Prudential
Securities (December, 1990 -
July, 1997).
Nancy Sperte,
Executive Vice President None.
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.
Richard A. Stein,
Vice President: Rochester DivisioAssistant Vice President (since
1995) of Rochester Capitol
Advisors, L.P.
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
None.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView
.
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.
Jay Tracey,
Vice President
An officer
and/or portfolio manager of
certain Oppenheimer funds.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant TreasurerAssistant 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 Webman,
Senior Vice President Director of New York-based
tax-exempt fixed income
Oppenheimer
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
.
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.; Point of
Contact: Finance Supporters of
Children; Member of the Oncology
Advisory Board of the
Childrens Hospital; Member of the
Board of Directors of the
Colorado Museum of Contemporary
Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant
Secretary of
Funds SSI (since May 1985), and
SFSI (since November 1989);
Assistant Secretary of
Oppenheimer
Millennium Funds plc (since
October 1997); an officer of
other
Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester Funds, as 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 Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
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
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
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
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 Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer
Funds, the 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 the Rochester-based funds is 350 Linden Oaks, Rochester,
New York 14625- 2807.
Item 29. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the 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:
Name & Principal Positions & Offices Positions &
Offices
Business Address with Underwriter with
Registrant
- ----------------George C.Vice President and Vice President and
Treasurer of the
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(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
Rhonda Dixon-Gunner(1) Assistant Vice
President None
Andrew John Donohue(2) Executive Vice Secretary of
the
PresideOppenheimer funds.
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. FieldVice President
None
Reed F. Finley Vice President None
1215 W. 10th
Street
Apt. 510
Cleveland, OH 44113
Birmingham, MI 48009
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National None
Sales Manager
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
C. Webb Heidinger(2) Vice President None
Byron Ingram(2) Assistant Vice PresidentNone
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Michael KeoVice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice PresidenNone
560 Beacon Hill Drive
Orange Village, OH 44022
Ilene Kutno(2) Assistant Vice PresidentNone
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
39 Coleman Avenue
Chatham, N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant Vice PresidentNone
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marke Nakamura Vice President None
2870 White Ridge Place, #24
Thousand Oaks, CA 91362
Chad V. Noel Vice President None
60 Myrtle Beach Drive
Henderson, NV 89014
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
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
Vice PresidenNone
2555 N. Clark, #209
Chicago, IL 60614
Elaine PuleoVice President None
Minnie Ra Vice President None
895 Thirty-First Ave
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI 48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(3Vice President
None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon
Blvd. #123
Falls Church, VA 22042
Philip St. John TrVice President None
201 Summerfield
Northbrook, IL 60062
Sarah TurpiVice President None
2735 Dover Road
Atlanta, GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen VanVice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
(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) Not applicable.
C-1
<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
21st day of April, 1998.
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:
Signatures Title Date
- ---------- ----- ----
/s/ Bridget A. Macaskill Chairman of the Board,
- ----------------------------* President (Principal April 21,
1998
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen
- -------------------------* Treasurer (Principal April 21,
1998
George C. Bowen Financial and Accounting
Officer)
/s/ John Cannon
- -------------------* Trustee April 21,
1998
John Cannon
/s/ Paul Y. Clinton
- ----------------------* Trustee April 21,
1998
Paul Y. Clinton
/s/ Thomas W. Courtney
- --------------------------* Trustee April 21,
1998
Thomas W. Courtney
/s/ Lacy B. Herrmann
- -------------------------* Trustee April 21,
1998
Lacy B. Herrmann
/s/ George Loft
- ------------------* Trustee April 21,
1998
George Loft
*By: /s/ Robert G. Zack
---------------------------------------
Robert G. Zack, Attorney-in-Fact
C-2
<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)(15)(ii) Distribution and Service Plan and Agreement
for Class B Shares
24(b)(15)(iii) Distribution and Service Plan and Agreement
for Class C Shares
24(b)(15)(iv) Distribution and Service Plan and Agreement
for Class X Shares
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 B Shares
24(b)(17)(iii) Financial Data Schedule for Class C Shares
24(b)(17)(iv) Financial Data Schedule for Class X Shares
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 28, 1998, relating to the financial statements and financial highlights
of Limited Term New York Municipal Fund (the sole portfolio constituting
Rochester Portfolio Series), 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 "Independent Accountants" in
such Statement of Additional Information and to the reference to us under the
heading "Financial Highlights" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Denver, Colorado
April 20, 1998
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
With
OppenheimerFunds Distributor, Inc.
For Class B Shares of
Rochester Portfolio Series
Limited Term New York Municipal Fund
THIS AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") is dated as of the 3rd day of February, 1998, by and between Rochester
Portfolio Series, on behalf of Limited Term New York Municipal Fund (the "Fund")
and OppenheimerFunds Distributor, Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 as it may
be amended from time to time (the "Rule") under the Investment Company Act of
1940 (the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services in connection with the distribution of Shares, and
the personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any amendment or successor to such rule (the "NASD
Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution to which the Fund is
subject under any order on which the Fund relies, issued at any time by the U.S.
Securities and Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory or other clients of a Recipient, and/or accounts as to which such
Recipient provides administrative support services or is a custodian or other
fiduciary.
1
<PAGE>
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
Customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) Payments to the Distributor. In consideration of the payments made by
the Fund to the Distributor under this Plan, the Distributor shall provide
administrative support services and distribution assistance services to the
Fund. Such services include distribution assistance and administrative support
services rendered in connection with Shares (1) sold in purchase transactions,
(2) issued in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (3) issued pursuant to
a plan of reorganization to which the Fund is a party. If the Board believes
that the Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the
following payments to the Distributor:
(i) Administrative Support Services Fees. Within forty-five (45)
days of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed as
of the close of each business day (the "Service Fee"). Such Service Fee payments
received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render as
described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within
ten (10) days of the end of each month, the Fund will make payments in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the
month of the aggregate net asset value of Shares computed as of the close of
each business day (the "Asset-Based Sales Charge") outstanding for no more than
six years (the "Maximum Holding Period"). Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor for providing
distribution assistance in connection with the sale of Shares.
The distribution assistance to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and/or paying such persons "Advance Service
Fee Payments" (as defined below) in advance of, and/or in amounts greater than,
the amount provided for in Section 3(b) of this Agreement; (ii) paying
compensation to and expenses of personnel of the Distributor who support
distribution of Shares by Recipients; (iii) obtaining financing or providing
such financing from its own resources, or from an affiliate, for the interest
and other borrowing costs of the Distributor's unreimbursed expenses incurred in
rendering distribution
2
<PAGE>
assistance and administrative support services to the Fund; and (iv) paying
other direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those prospectuses
furnished to current holders of the Fund's shares ("Shareholders")) and state
"blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the Plan
to pay Recipients (1) distribution assistance fees for rendering distribution
assistance in connection with the sale of Shares and/or (2) service fees for
rendering administrative support services with respect to Accounts. However, no
such payments shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such quarter, the
minimum amount ("Minimum Qualified Holdings"), if any, that may be set from time
to time by a majority of the Independent Trustees. All fee payments made by the
Distributor hereunder are subject to reduction or chargeback so that the
aggregate service fee payments and Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by the NASD
Conduct Rules. The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient or retains such payments if the Distributor qualifies
as a Recipient.
(i) Service Fee. In consideration of the administrative support
services provided by a Recipient during a calendar quarter, the Distributor
shall make service fee payments to that Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter, at a rate not to exceed 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum period (the
"Minimum Holding Period"), if any, that may be set from time to time by a
majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the
following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (i) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified Holdings, sold
by the Recipient during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) service fee payments at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year. At the Distributor's sole option, the Advance Service Fee Payments may be
made more often than quarterly, and sooner than the end of the calendar quarter.
In the event Shares are redeemed less than one year after the date such Shares
were sold, the Recipient is obligated to and will repay the Distributor on
demand a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such Shares were held to one (1) year.
The administrative support services to be rendered by Recipients in
connection with the Accounts may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment plans and
3
<PAGE>
dividend payment options available, and providing such other information and
services in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably request.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge)
Payments. In its sole discretion and irrespective of whichever alternative
method of making service fee payments to Recipients is selected by the
Distributor, in addition the Distributor may make distribution assistance fee
payments to a Recipient quarterly, within forty-five (45) days after the end of
each calendar quarter, at a rate not to exceed 0.1875% (0.75% on an annual
basis) of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day constituting
Qualified Holdings owned beneficially or of record by the Recipient or its
Customers for no more than six years and for any minimum period that the
Distributor may establish. Distribution assistance fee payments shall be made
only to Recipients that are registered with the SEC as a broker-dealer or are
exempt from registration.
The distribution assistance to be rendered by the Recipients in
connection with the sale of Shares may include, but shall not be limited to, the
following:
distributing sales literature and
prospectuses other than those furnished to current Shareholders, providing
compensation to and paying expenses of personnel of the Recipient who support
the distribution of Shares by the Recipient, and providing such other
information and services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
(c) A majority of the Independent Trustees may at any time or from time to
time increase or decrease the rate of fees to be paid to the Distributor or to
any Recipient, but not to exceed the rates set forth above, and/or direct the
Distributor to increase or decrease the Maximum Holding Period, any Minimum
Holding Period or any Minimum Qualified Holdings. The Distributor shall notify
all Recipients of any Minimum Qualified Holdings, Maximum Holding Period and
Minimum Holding Period, that are established, and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current prospectus shall
constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination under the limits to which the Distributor is, or may
become, subject under of the NASD Conduct Rules.
(e) Under the Plan, payments may also be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from the proceeds of its borrowings, in either case, in
the discretion of OFI or the Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares that entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified
4
<PAGE>
Holdings, a Recipient may not be rendering appropriate distribution assistance
in connection with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall require the
Recipient to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or services in
this regard. If the Distributor or the Board of Trustees still is not satisfied
after the receipt of such report, either may take appropriate steps to terminate
the Recipient's status as such under the Plan, whereupon such Recipient's rights
as a third-party beneficiary hereunder shall terminate. Additionally, in their
discretion, a majority of the Fund's Independent Trustees at any time may remove
any broker, dealer, bank or other person or entity as a Recipient, where upon
such person's or entity's rights as a third-party beneficiary hereof shall
terminate. Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. The Distributor has
no obligation to pay any Service Fees or Distribution Assistance Fees to any
Recipient if the Distributor has not received payment of Service Fees or
Distribution Fees from the Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of persons to be Trustees of the Fund who are not
"interested persons" of the Fund ("Disinterested Trustees") shall be committed
to the discretion of the incumbent Disinterested Trustees. Nothing herein shall
prevent the incumbent Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nominations as long as the final
decision on any such selection and nomination is approved by a majority of the
incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing the amount
of all payments made under this Plan and the purpose for which the payments were
made. The reports shall be provided quarterly, and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class B voting shares; (ii) such termination
shall be on not more than sixty days' written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its "assignment" (as defined in the 1940 Act); (iv) such agreement shall go into
effect when approved by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such agreement; and (v)
such agreement shall, unless terminated as herein provided, continue in effect
from year to year only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 3, 1998, for the
purpose of voting on this Plan, and replaces the Fund's prior Distribution and
Service Plan for Class B shares. Unless terminated as hereinafter provided, it
shall continue in effect until renewed by the Board in accordance with the Rule
and thereafter from year to year or as the Board may otherwise determine, but
only so long as such continuance is specifically
5
<PAGE>
approved at least annually by a vote of the Board and its Independent Trustees
cast in person at a meeting called for the purpose of voting on such
continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan, without approval of the Class B Shareholders at a
meeting called for that purpose, and all material amendments must be approved by
a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
Rochester Portfolio Series, on behalf of
Limited Term New York Municipal Fund
By: /s/ Andrew J. Donohue
-------------------------
Andrew J. Donohue, Secretary
OppenheimerFunds Distributor, Inc.
By: /s/ Katherine P. Feld
----------------------------
Katherine P. Feld,
Vice President & Secretary
OFMI\355.b98
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
With
OppenheimerFunds Distributor, Inc.
For Class C Shares of
Rochester Portfolio Series
Limited Term New York Municipal Fund
THIS AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") is dated as of the 3rd day of February, 1998, by and between Rochester
Portfolio Series, on behalf of Limited Term New York Municipal Fund (the "Fund")
and OppenheimerFunds Distributor, Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class C shares of the Fund (the "Shares"), contemplated by Rule 12b-1 as it may
be amended from time to time (the "Rule") under the Investment Company Act of
1940 (the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services in connection with the distribution of Shares, and
the personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any applicable amendment or successor to such rule
(the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution to which the Fund is
subject under any order on which the Fund relies, issued at any time by the U.S.
Securities and Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory or other clients of a Recipient, and/or accounts as to which such
Recipient provides administrative support services or is a custodian or other
fiduciary.
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<PAGE>
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
Customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) Payments to the Distributor. In consideration of the payments made by
the Fund to the Distributor under this Plan, the Distributor shall provide
administrative support services and distribution services to the Fund. Such
services include distribution assistance and administrative support services
rendered in connection with Shares (1) sold in purchase transactions, (2) issued
in exchange for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (3) issued pursuant to a plan of
reorganization to which the Fund is a party. If the Board believes that the
Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the
following payments to the Distributor:
(i) Administrative Support Services Fees. Within forty-five (45) days
of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed as
of the close of each business day (the "Service Fee"). Such Service Fee payments
received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render as
described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within
ten (10) days of the end of each month, the Fund will make payments in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the
month of the aggregate net asset value of Shares computed as of the close of
each business day (the "Asset-Based Sales Charge"). Such Asset-Based Sales
Charge payments received from the Fund will compensate the Distributor for
providing distribution assistance in connection with the sale of Shares.
The distribution assistance services to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and/or paying such persons "Advance Service
Fee Payments" (as defined below) in advance of, and/or in amounts greater than,
the amount provided for in Section 3(b) of this Agreement; (ii) paying
compensation to and expenses of personnel of the Distributor who support
distribution of Shares by Recipients; (iii) obtaining financing or providing
such financing from its own resources, or from an affiliate, for the interest
and other borrowing costs of the Distributor's unreimbursed expenses incurred in
rendering distribution assistance and administrative support services to the
Fund; and (iv) paying other direct distribution
2
<PAGE>
costs, including without limitation the costs of sales literature, advertising
and prospectuses (other than those prospectuses furnished to current holders of
the Fund's shares ("Shareholders")) and state "blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the
Plan to pay Recipients (1) distribution assistance fees for rendering
distribution assistance in connection with the sale of Shares and/or (2) service
fees for rendering administrative support services with respect to Accounts.
However, no such payments shall be made to any Recipient for any quarter in
which its Qualified Holdings do not equal or exceed, at the end of such quarter,
the minimum amount ("Minimum Qualified Holdings"), if any, that may be set from
time to time by a majority of the Independent Trustees. All fee payments made by
the Distributor hereunder are subject to reduction or chargeback so that the
aggregate service fee payments and Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by the NASD
Conduct Rules. The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient or retains such payments if the Distributor qualifies
as a Recipient.
In consideration of the services provided by Recipients, the Distributor
shall make the following payments to Recipients:
(i) Service Fee. In consideration of administrative support services
provided by a Recipient during a calendar quarter, the Distributor shall make
service fee payments to that Recipient quarterly, within forty-five (45) days of
the end of each calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, that may be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the following
service fee payments to any Recipient quarterly, within forty-five (45) days of
the end of each calendar quarter: (A) "Advance Service Fee Payments" at a rate
not to exceed 0.25% of the average during the calendar quarter of the aggregate
net asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings, sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (B) service fee payments at a rate not to exceed 0.0625% (0.25%
on an annual basis) of the average during the calendar quarter of the aggregate
net asset value of Shares, computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than one (1) year. At the Distributor's
sole option, Advance Service Fee Payments may be made more often than quarterly,
and sooner than the end of the calendar quarter. In the event Shares are
redeemed less than one year after the date such Shares were sold, the Recipient
is obligated to and will repay the Distributor on demand a pro rata portion of
such Advance Service Fee Payments, based on the ratio of the time such Shares
were held to one (1) year.
The administrative support services to be rendered by
Recipients in connection with the
Accounts may include, but shall not be limited to, the following:
answering routine inquiries
3
<PAGE>
concerning the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption transactions, making
the Fund's investment plans and dividend payment options available, and
providing such other information and services in connection with the rendering
of personal services and/or the maintenance of Accounts, as the Distributor or
the Fund may reasonably request.
(ii) Distribution Assistance Fee (Asset-Based Sales Charge Payments).
Irrespective of whichever alternative method of making service fee payments to
Recipients is selected by the Distributor, in addition the Distributor shall
make distribution assistance fee payments to each Recipient quarterly, within
forty-five (45) days after the end of each calendar quarter, at a rate not to
exceed 0.1875% (0.75% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the close of
each business day constituting Qualified Holdings owned beneficially or of
record by the Recipient or its Customers for a period of more than one (1) year.
Alternatively, at its sole option, the Distributor may make distribution
assistance fee payments to a Recipient quarterly, at the rate described above,
on Shares constituting Qualified Holdings owned beneficially or of record by the
Recipient or its customers without regard to the one-year holding period
described above. Distribution assistance fee payments shall be made only to
Recipients that are registered with the SEC as a broker-dealer or are exempt
from registration.
The distribution assistance to be rendered by the Recipients in connection
with the sale of Shares may include, but shall not be limited to, the following:
distributing sales literature and prospectuses other than those furnished to
current Shareholders, providing compensation to and paying expenses of personnel
of the Recipient who support the distribution of Shares by the Recipient, and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
(c) A majority of the Independent Trustees may at any time or from time to
time (i) increase or decrease the rate of fees to be paid to the Distributor or
to any Recipient, but not to exceed the rates set forth above, and/or (ii)
direct the Distributor to increase or decrease any Minimum Holding Period, any
maximum period set by a majority of the Independent Trustees during which fees
will be paid on Shares constituting Qualified Holdings owned beneficially or of
record by a Recipient or by its Customers (the "Maximum Holding Period"), or
Minimum Qualified Holdings. The Distributor shall notify all Recipients of any
Minimum Qualified Holdings, Maximum Holding Period and Minimum Holding Period,
that are established, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such provisions or
a change in such provisions in a supplement or amendment to or revision of the
prospectus of the Fund shall constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination under the limits to which the Distributor is, or may
become, subject under the NASD Conduct Rules.
(e) Under the Plan, payments may also be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it
4
<PAGE>
receives from the Fund), or (ii) by the Distributor (a subsidiary of OFI), from
its own resources, from Asset-Based Sales Charge payments or from the proceeds
of its borrowings, in either case, in the discretion of OFI or the Distributor,
respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares that entitle it to payments under the Plan. If
either the Distributor or the Board believe that, notwithstanding the level of
Qualified Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other information to verify
that said Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees still is
not satisfied after the receipt of such report, either may take appropriate
steps to terminate the Recipient's status as a Recipient under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate. Additionally, in their discretion a majority of the Fund's
Independent Trustees at any time may remove any broker, dealer, bank or other
person or entity as a Recipient, whereupon such person's or entity's rights as a
third-party beneficiary hereof shall terminate. Notwithstanding any other
provision of this Plan, this Plan does not obligate or in any way make the Fund
liable to make any payment whatsoever to any person or entity other than
directly to the Distributor. The Distributor has no obligation to pay any
Service Fees or Distribution Assistance Fees to any Recipient if the Distributor
has not received payment of Service Fees or Distribution Assistance Fees from
the Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of persons to be Trustees of the Fund who are not
"interested persons" of the Fund ("Disinterested Trustees") shall be committed
to the discretion of the incumbent Disinterested Trustees. Nothing herein shall
prevent the incumbent Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination as long as the final
decision on any such selection and nomination is approved by a majority of the
incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing the amount
of all payments made under this Plan and the purpose for which the payments were
made. The reports shall be provided quarterly, and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting Class C shares; (ii) such termination
shall be on not more than sixty days' written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its "assignment" (as defined in the 1940 Act); (iv) such agreement shall go into
effect when approved by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such agreement; and (v)
such agreement shall, unless terminated as herein provided, continue in effect
from year to year only so long as such continuance is specifically approved at
least annually by a vote of the Board and its
5
<PAGE>
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 3, 1998, for the
purpose of voting on this Plan, and replaces the Fund's prior Distribution and
Service Plan for Class C shares. Unless terminated as hereinafter provided, it
shall continue in effect until renewed by the Board in accordance with the Rule
and thereafter from year to year or as the Board may otherwise determine, but
only so long as such continuance is specifically approved at least annually by a
vote of the Board and its Independent Trustees cast in person at a meeting
called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan, without approval of the Class C Shareholders at a
meeting called for that purpose, and all material amendments must be approved by
a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class C voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
Rochester Portfolio Series, on behalf of
Limited Term New York Municipal Fund
By: /s/ Andrew J. Donohue
-------------------------
Andrew J. Donohue, Secretary
OppenheimerFunds Distributor, Inc.
By: /s/ Katherine P. Feld
---------------------------
Katherine P. Feld, Vice President
& Secretary
ofmi\355.c98
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
With
OppenheimerFunds Distributor, Inc.
For Class X Shares of
Rochester Portfolio Series
Limited Term New York Municipal Fund
THIS AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") is dated as of the 3rd day of February, 1998, by and between ROCHESTER
PORTFOLIO SERIES (the "Trust"), on behalf of LIMITED TERM NEW YORK MUNICIPAL
FUND (the "Fund"), and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class X shares of the Fund (the "Shares") which, prior to May 1, 1997, were
designated as Class B shares of the Fund. This plan is contemplated by Rule
12b-1 as it may be amended from time to time (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund will compensate
the Distributor for its services in connection with the distribution of Shares,
and the personal service and maintenance of shareholder accounts that hold
Shares ("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940 Act,
(ii) the Rule, (iii) Rule 2830, of the Conduct Rules of the National Association
of Securities Dealers, Inc., or any amendment or successor (the "NASD Conduct
Rules") and (iv) any conditions pertaining either to distribution- related
expenses or to a plan of distribution, to which the Fund is subject under any
order on which the Fund relies, issued at any time by the U.S. Securities and
Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or
indirect financial interest in the operation of this Plan or in any agreement
relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory or other clients of a Recipient, and/or accounts as to which such
Recipient provides administrative support services or is a custodian or other
fiduciary.
-1-
<PAGE>
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) Payments to the Distributor. In consideration of the payments made by
the Fund to the Distributor under this Plan, the Distributor shall provide
administrative support services and distribution assistance services to the
Fund. Such services include distribution assistance and administrative support
services rendered in connection with Shares (1) sold in purchase transactions,
(2) issued in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (3) issued pursuant to
a plan of reorganization to which the Fund is a party. If the Board believes
that the Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the
following payments to the Distributor:
(i) Administrative Support Services Fees. Within forty-five (45)
days of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed as
of the close of each business day (the "Service Fee"). Such Service Fee payments
received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render as
described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within
ten (10) days of the end of each month, the Fund will make payments in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the
month of the aggregate net asset value of Shares computed as of the close of
each business day (the "Asset-Based Sales Charge") outstanding for no more than
six years (the "Maximum Holding Period"). Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor for providing
distribution assistance in connection with the sale of Shares.
The distribution assistance to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and/or paying such persons "Advance Service
Fee Payments" (as defined below) in advance of, and/or in amounts greater than,
the amount provided for in Section 3(b) of this Agreement; (ii) paying
compensation to and expenses of personnel of the Distributor who support
distribution of Shares by Recipients; (iii) obtaining financing or providing
such financing from its own resources, or from an affiliate, for the interest
and other
-2-
<PAGE>
borrowing costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund; and
(iv) paying other direct distribution costs, including without limitation the
costs of sales literature, advertising and prospectuses (other than those
prospectuses furnished to current holders of the Fund's shares ("Shareholders")
and state "blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the Plan
to pay Recipients (1) distribution assistance fees for rendering distribution
assistance in connection with the sale of Shares and/or (2) service fees for
rendering administrative support services with respect to Accounts. However, no
such payments shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such quarter, the
minimum amount ("Minimum Qualified Holdings"), if any, that may be set from time
to time by a majority of the Independent Trustees. All fee payments made by the
Distributor hereunder are subject to reduction or chargeback so that the
aggregate service fee payments and Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by the NASD
Conduct Rules. The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient or retain such payments if the Distributor qualifies as
a Recipient.
(i) Service Fee. In consideration of the administrative support services
provided by a Recipient during a calendar quarter, the Distributor shall make
service fee payments to that Recipient quarterly, within forty-five (45) days of
the end of each calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, that may be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the
following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (i) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified Holdings, sold
by the Recipient during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) service fee payments at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year. At the Distributor's sole option, the Advance Service Fee Payments may be
made more often quarterly, and sooner than the end of the calendar quarter. In
the event Shares are redeemed less than one year after the date such Shares were
sold, the Recipient is obligated to and will repay the Distributor on demand a
pro rata portion of such Advance Service Fee Payments, based on the ratio of the
time such Shares were held to one (1) year.
The administrative support services to be rendered by Recipients in
connection with the Accounts may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in the
establishment and maintenance of accounts or sub-accounts in
-3-
<PAGE>
the Fund and processing Share redemption transactions, making the Fund's
investment plans and dividend payment options available, and providing such
other information and services in connection with the rendering of personal
services and/or the maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge)
Payments. In its sole discretion and irrespective of whichever alternative
method of making service fee payments to Recipients is selected by the
Distributor, in addition the Distributor may make distribution assistance fee
payments to a Recipient quarterly, within forty-five (45) days after the end of
each calendar quarter, at a rate not to exceed 0.1875% (0.75% on an annual
basis) of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day constituting
Qualified Holdings owned beneficially or of record by the Recipient or its
Customers for no more than six years and for any minimum period that the
Distributor may establish. Distribution assistance fee payments shall be made
only to Recipients that are registered with the SEC as a broker-dealer or are
exempt from registration.
The distribution assistance to be rendered by the Recipients in
connection with the sale of Shares may include, but shall not be limited to, the
following:
distributing sales literature and
prospectuses other than those furnished to current Shareholders, providing
compensation to and paying expenses of personnel of the Recipient who support
the distribution of Shares by the Recipient, and providing such other
information and services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
(c) A majority of the Independent Trustees may at any time or from time to
time increase or decrease the rate of fees to be paid to the Distributor or to
any Recipient, but not to exceed the rates set forth above, and/or direct the
Distributor to increase or decrease the Maximum Holding Period, any Minimum
Holding Period or any Minimum Qualified Holdings. The Distributor shall notify
all Recipients of any Minimum Qualified Holdings, Maximum Holding Period and
Minimum Holding Period, that are established, and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current prospectus shall
constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination under the limits to which the Distributor is, or may
become, subject under the NASD Conduct Rules.
(e) Under the Plan, payments may also be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from the proceeds of its borrowings, in either case, in
discretion of OFI or the Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it
-4-
<PAGE>
has Qualified Holdings of Shares that entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied after the receipt of
such report, either may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's rights as a
third-party beneficiary hereunder shall terminate. Additionally, in their
discretion, a majority of the Fund's Independent Trustees at any time may remove
any broker, dealer, bank or other person or entity as a Recipient, where upon
such person's or entity's rights as a third-party beneficiary hereof shall
terminate. Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. The Distributor has
no obligation to pay any Service Fees or Distribution Assistance Fees to any
Recipient if the Distributor has not received payment of Service Fees or
Distribution Fees from the Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of persons to be Trustees of the Trust who are not
"interested persons" of the Trust ("Disinterested Trustees") shall be committed
to the discretion of such the
incumbent Disinterested Trustees.
Nothing herein shall prevent the incumbent Disinterested Trustees from
soliciting the views or the involvement of others in such selection or
nominations as long as the final decision on any such selection and nomination
is approved by a majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide written reports to the Trust's Board for its review, detailing the
amount of all payments made under this Plan and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall state
whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class X voting shares; (ii) such termination
shall be on not more than sixty days' written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its "assignment" (as defined in the 1940 Act); (iv) such agreement shall go into
effect when approved by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such agreement; and (v)
such agreement shall, unless terminated as herein provided, continue in effect
from year to year only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 3, 1998, for the
purpose of voting on this Plan, and replaces the Fund's prior Distribution and
Service Plan for Class X shares. Unless terminated as hereinafter provided, it
shall
-5-
<PAGE>
continue in effect until renewed by the Board in accordance with the Rule and
thereafter from year to year or as the Board may otherwise determine but only so
long as such continuance is specifically approved at least annually by a vote of
the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan without approval of the Class X Shareholders, at a
meeting called for that purpose, and all material amendments must be approved by
a vote of the Board and of the Independent Trustees. This Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding Class X shares. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be entitled
to payment from the Fund of all or a portion of the Service Fee and/or the
Asset-Based Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee of the Trust or shareholder of the Fund personally, but bind only the
Fund and the Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Trust disclaiming shareholder
and Trustee liability for acts or obligations of the Fund.
Rochester Portfolio Series, on behalf of
Limited Term New York Municipal Fund
By: /s/ Andrew J. Donohue
-------------------------
Andrew J. Donohue, Secretary
OppenheimerFunds Distributor, Inc.
By: /s/ Katherine P. Feld
---------------------------
Katherine P. Feld, Vice President
& Secretary
ofmi\355.x98
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:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term
Reinvestment
(Ex)Date Income Capital Gains Price
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
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
<PAGE>
Limited Term New York Municipal Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term
Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (Continued)
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
01/28/97 0.0140000 0.0000000 3.250
02/25/97 0.0140000 0.0000000 3.270
03/25/97 0.0140000 0.0000000 3.250
04/22/97 0.0140000 0.0000000 3.240
05/27/97 0.0140000 0.0000000 3.270
06/24/97 0.0140000 0.0000000 3.290
07/22/97 0.0150000 0.0000000 3.310
08/26/97 0.0150000 0.0000000 3.300
09/23/97 0.0150000 0.0000000 3.320
10/28/97 0.0150000 0.0000000 3.320
11/25/97 0.0150000 0.0000000 3.320
12/29/97 0.0150000 0.0000000 3.340
Class B Shares
05/27/97 0.0091800 0.0000000 3.260
06/24/97 0.0119000 0.0000000 3.290
07/22/97 0.0129000 0.0000000 3.310
08/26/97 0.0129000 0.0000000 3.300
09/23/97 0.0129000 0.0000000 3.310
10/28/97 0.0129000 0.0000000 3.310
11/25/97 0.0129724 0.0000000 3.320
12/29/97 0.0125916 0.0000000 3.340
Class C Shares
05/27/97 0.0091800 0.0000000 3.260
06/24/97 0.0119000 0.0000000 3.280
07/22/97 0.0129000 0.0000000 3.310
08/26/97 0.0129000 0.0000000 3.300
09/23/97 0.0129000 0.0000000 3.310
10/28/97 0.0129000 0.0000000 3.310
11/25/97 0.0130576 0.0000000 3.320
12/29/97 0.0127036 0.0000000 3.330
Class X Shares
05/23/95 0.0111714 0.0000000 3.240
06/27/95 0.0136000 0.0000000 3.240
07/25/95 0.0136000 0.0000000 3.230
<PAGE>
Limited Term New York Municipal Fund
Page 3
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term
Reinvestment
(Ex)Date Income Capital Gains Price
Class X Shares (Continued)
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
01/28/97 0.0126000 0.0000000 3.260
02/25/97 0.0126000 0.0000000 3.280
03/25/97 0.0126000 0.0000000 3.260
04/22/97 0.0126000 0.0000000 3.250
05/27/97 0.0126000 0.0000000 3.270
06/24/97 0.0126000 0.0000000 3.290
07/22/97 0.0136000 0.0000000 3.320
08/26/97 0.0136000 0.0000000 3.310
09/23/97 0.0136000 0.0000000 3.320
10/28/97 0.0136000 0.0000000 3.320
11/25/97 0.0136963 0.0000000 3.330
12/29/97 0.0134442 0.0000000 3.350
<PAGE>
Limited Term New York Municipal Fund
Page 4
1. Average Annual Total Returns for the Periods Ended 12/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total
return
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 Examples at NAV:
sales charge of 3.50%:
One Year One Year
{($1,042.27/$1,000)^ 1} - 1 = 4.{($1,080.07/$1,000)^ 1} - 1 =
8.01%
Five Year Five Year
{($1,317.40/$1,000)^.2} - 1 = 5.{($1,365.18/$1,000)^.2} - 1 =
6.42%
Inception Inception
{($1,504.36/$1,000)^.1591}- 1 = 6.{($1,558.91/$1,000)^.1591}- 1 =
7.32%
Class X Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 2.50% for the first year, and
1.50% for the inception year:
One Year One Year
{($1,049.39/$1,000)^ 1} - 1 = 4.9{($1,074.39/$1,000)^ 1} - 1 =
7.44%
Inception Inception
{($1,171.37/$1,000)^.3750}- 1 = 6.1{($1,186.37/$1,000)^.3750}- 1 =
6.62%
<PAGE>
Limited Term New York Municipal Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 12/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum Examples at NAV:
sales charge of 3.50%:
One Year One Year
$1,042.27 - $1,000/$1,000 = 4.23$1,080.07 - $1,000/$1,000 = 8.01%
Five Year Five Year
$1,317.40 - $1,000/$1,000 = 31.74$1,365.18 - $1,000/$1,000 = 36.52%
Inception Inception
$1,504.36 - $1,000/$1,000 = 50.44$1,558.91 - $1,000/$1,000 = 55.89%
Class B Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 4.00% for the first year, and
4.00% for the inception year:
Inception Inception
$1,018.90 - $1,000/$1,000 = 1.89%$1,058.90 - $1,000/$1,000 = 5.89%
Class C Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year:
Inception Inception
$1,045.82 - $1,000/$1,000 = 4.58%$1,055.82 - $1,000/$1,000 = 5.58%
<PAGE>
Limited Term New York Municipal Fund
Page 6
2. Cumulative Total Returns for the Periods Ended 12/31/97: (Continued)
Class X Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 2.50% for the first year, and
1.50% for the inception year:
One Year One Year
$1,049.39 - $1,000/$1,000 = 4.94$1,074.39 - $1,000/$1,000 = 7.44%
Inception Inception
$1,171.37 - $1,000/$1,000 = 17.14$1,186.37 - $1,000/$1,000 = 18.64%
<PAGE>
Limited Term New York Municipal Fund
Page 7
3. Standardized Yield for the 30-Day Period Ended 12/31/97:
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 3.50%:
$3,038,458.17 - $495,284.96 6
2{(--------------------------- + 1) - 1} = 3.93%
226,547,742 x $3.46
Class B
Example at NAV:
$ 76,688.06 - $ 24,983.10 6
2{(--------------------------- + 1) - 1} = 3.27%
5,713,883 x $3.34
Class C
Example at NAV:
$100,695.54 - $ 32,125.78 6
2{(--------------------------- + 1) - 1} = 3.31%
7,514,760 x $3.33
Class X
Example at NAV:
$210,335.06 - $ 56,393.48 6
2{(--------------------------- + 1) - 1} = 3.55%
15,659,981 x $3.35
<PAGE>
Limited Term New York Municipal Fund
Page 8
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/97
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = (a x 12) / b or c
The symbols above represent the following factors:
a = The last dividend earned during the period. b = The Fund's maximum
offering price (including sales charge)
per share on payable date.
c = The Fund's net asset value (excluding sales charge) per share on
payable date.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering$.0150000 x 12 / $ 3.46 = 5.20%
Dividend Yield
at Net Asset Value $.0150000 x 12 / $ 3.34 = 5.39%
Class B (358) Shares
Dividend Yield
at Net Asset Value $.0125916 x 12 / $ 3.34 = 4.52%
Class C Shares
Dividend Yield
at Net Asset Value $.0127036 x 12 / $ 3.33 = 4.58%
Class X Shares
Dividend Yield
at Net Asset Value $.0134442 x 12 / $ 3.35 = 4.82%
<PAGE>
Limited Term New York Municipal Fund
Page 9
5. TAX-EQUIVALENT YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/97:
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
[ 0.0393 / ( 1 - 0.4608 )] + 0 = 7.29%
Class B Shares
[ 0.0327 / ( 1 - 0.4608 ) ] + 0 = 6.06%
Class C Shares
[ 0.0331 / ( 1 - 0.4608 ) ] + 0 = 6.14%
Class X Shares
[ 0.0355 / ( 1 - 0.4608 ) ] + 0 = 6.58%
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 6.850% state tax bracket filing singly).
f = Stated New York City tax rate (e.g., for an individual in the 39.6%
federal and 3.88% City tax bracket filing singly).
Example: 1 - {(1 - .3960)(1 - (.06850+.03880))} = 46.08%
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<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
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<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
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<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
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<S> <C>
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000876409
<NAME> ROCHESTER PORTFOLIO SERIES, LIMITED TERM NY MUNICIPAL FUND
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<S> <C>
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