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Limited Term New York Municipal Fund
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350 Linden Oaks, Rochester, New York 14625
1-800-525-7048
Statement of Additional Information dated April 28, 1999,
Revised December 10, 1999
This Statement of Additional Information is not a Prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated April 28, 1999. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above or by downloading
it from the OppenheimerFunds Internet web site at www.oppenheimerfunds.com.
Contents Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks........2
The Fund's Investment Policies..........................................2
Municipal Securities....................................................3
Other Investment Techniques and Strategies.............................16
Investment Restrictions................................................24
How the Fund is Managed.....................................................27
Organization and History...............................................27
Trustees and Officers of the Fund......................................28
The Manager ...........................................................33
Brokerage Policies of the Fund..............................................34
Distribution and Service Plans..............................................36
Performance of the Fund.....................................................40
About Your Account
How To Buy Shares...........................................................46
How To Sell Shares..........................................................54
How to Exchange Shares......................................................59
Dividends and Taxes.........................................................61
Additional Information About the Fund.......................................64
Financial Information About the Fund
Report of Independent Accountants...........................................65
Financial Statements .......................................................66
Appendix A: Municipal Bond Ratings Definitions.............................A-1
Appendix B: Industry Classifications.......................................B-1
Appendix C: Special Sales Charge Arrangements and Waivers..................C-1
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<PAGE>
A B O U T T H E F U N D
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Additional Information About the Fund's Investment Policies and Risks
The investment objective and the principal investment policies of the Fund
are described in the Prospectus. This Statement of Additional Information
contains supplemental information about those policies and the types of
securities that the Fund's investment Manager, OppenheimerFunds, Inc., can
select for the Fund. Additional explanations are also provided about the
strategies the Fund can use to try to achieve its objective.
The Fund's Investment Policies. The composition of the Fund's portfolio and the
techniques and strategies that the Manager uses will vary over time. The Fund is
not required to use all of the investment techniques and strategies described
below in seeking its goal. The Fund does not make investments with the objective
of seeking capital growth. However, the values of the securities held by the
Fund may be affected by changes in general interest rates and other factors
prior to their maturity. Because the current value of debt securities varies
inversely with changes in prevailing interest rates, if interest rates increase
after a security is purchased, that security will normally fall in value.
Conversely, should interest rates decrease after a security is purchased,
normally its value will rise.
However, those fluctuations in value will not generally result in realized
gains or losses to the Fund unless the Fund sells the security prior to the
security's maturity. A debt security held to maturity is redeemable by its
issuer at full principal value plus accrued interest. The Fund does not usually
intend to dispose of securities prior to their maturity, but may do so for
liquidity purposes, or because of other factors affecting the issuer that cause
the Manager to sell the particular security. In that case, the Fund could
realize a capital gain or loss on the sale.
There are variations in the credit quality of municipal securities, both
within a particular rating classification and between classifications. These
variations depend on numerous factors. The yields of municipal securities depend
on a number of factors, including general conditions in the municipal securities
market, the size of a particular offering, the maturity of the obligation and
rating (if any) of the issue. These factors are discussed in greater detail
below.
|X| Determining the Average Effective Portfolio Maturity. In seeking to
maintain an average effective portfolio maturity of less than five years, the
Fund may purchase individual securities that have effective maturities of more
or less than five years. The effective maturity of a bond might lengthen if
market interest rates increase, and the effective maturity might shorten if
market interest rates decline. Increasing market interest rates therefore could
cause the average effective maturity of the portfolio to lengthen beyond five
years, absent any portfolio transactions.
If the average effective maturity of the portfolio should exceed five
years, the Fund will not purchase securities that have effective maturities
beyond five years. The Manager might also take steps to reduce the average
effective maturity of the portfolio below five years. Those steps might include
selling bonds with effective maturities beyond five years or buying bonds with
effective maturities less than five years.
In computing the Fund's average effective portfolio maturity, the Manager
intends to use the same effective maturity dates that are shorter than the
bond's stated maturity that are used in the marketplace for evaluating a bond
for trading and pricing purposes. That date might be the date of a mandatory
put, pre-refunded call, optional call or the average life to which a bond is
priced. A bond having a variable coupon rate or anticipated principal prepayment
may be assigned an effective maturity that is shorter than a stated call date,
put date or average life, to reflect more closely the reduced price volatility
expectations as to that bond.
|X| Portfolio Turnover. A change in the securities held by the Fund from
buying and selling investments is known as "portfolio turnover." Short-term
trading increases the rate of portfolio turnover and could increase the Fund's
transaction costs. However, the Fund ordinarily incurs little or no brokerage
expense because most of the Fund's portfolio transactions are principal trades
that do not require payment of brokerage commissions.
The Fund ordinarily does not trade securities to achieve capital gains,
because they would not be tax-exempt income. To a limited degree, the Fund may
engage in short-term trading to attempt to take advantage of short-term market
variations. It may also do so to dispose of a portfolio security prior to its
maturity. That might be done if, on the basis of a revised credit evaluation of
the issuer or other considerations, the Manager believes such disposition is
advisable or the Fund needs to generate cash to satisfy requests to redeem Fund
shares. In those cases, the Fund may realize a capital gain or loss on its
investments. The Fund's annual portfolio turnover rate normally is not expected
to exceed 50%.
Municipal Securities. The types of municipal securities in which the Fund may
invest are described in the Prospectus under "About the Fund's Investments."
Municipal securities are generally classified as general obligation bonds,
revenue bonds and notes. A discussion of the general characteristics of these
principal types of municipal securities follows below.
|X| Municipal Bonds. Long-term municipal securities (which have a maturity
of more than one year when issued) are classified as "municipal bonds." The
principal classifications of long-term municipal bonds are "general obligation"
bonds and "revenue" bonds (including "industrial development" bonds). They may
have fixed, variable or floating rates of interest, or may be "zero-coupon"
bonds, as described below.
Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date. To protect bondholders, callable bonds may be issued with
provisions that prevent them from being called for a set period of time.
Typically, that is 5 to 10 years from the issuance date. When interest rates
fall, if the call protection on a bond has expired, it is more likely that the
issuer may call the bond. If that occurs, the Fund might have to reinvest the
proceeds of the called bond in bonds that pay a lower rate of return. In turn,
that could reduce the Fund's yield.
|_| General Obligation Bonds. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and taxing
power, if any, for the repayment of principal and the payment of interest.
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. The rate of taxes that can be
levied for the payment of debt service on these bonds may be limited or
unlimited. Additionally, there may be limits as to the rate or amount of special
assessments that can be levied to meet these obligations.
|_| Revenue Bonds. The principal security for a revenue bond is
generally the net revenues 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. Examples include electric, gas, water and sewer systems;
highways, bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals.
Although the principal security for these types of bonds may vary
from bond to bond, many provide additional security in the form of a debt
service reserve fund that 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 provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve
fund.
|_| Industrial Development Bonds. Industrial development bonds are
considered municipal bonds if the interest paid is exempt from federal income
tax. They are issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and manufacturing,
housing, sports, and pollution control. These bonds may also be 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 dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property financed by the bond as security
for those payments.
The Fund will purchase particular industrial development bonds only
if the interest paid on the bonds is tax exempt under the Internal Revenue Code.
The Internal Revenue Code limits the types of facilities that may be financed
with tax-exempt industrial revenue and private-activity bonds (discussed below)
and the amounts of these bonds that each state can issue.
As an operating policy, the Fund will not invest more than 5% of its
assets in securities for which the obligation to pay interest and repay
principal are the responsibility of an industrial user with less than three
year's operating history.
|_| Private Activity Municipal Securities. The Tax Reform Act of
1986 (the "Tax Reform Act") reorganized, as well as amended, the rules governing
tax exemption for interest on certain types of municipal securities. The Tax
Reform Act generally did not change the tax treatment of bonds issued in order
to finance governmental operations. Thus, interest on general obligation bonds
issued by or on behalf of state or local governments, the proceeds of which are
used to finance the operations of such governments, continues to be tax-exempt.
However, the Tax Reform Act limited the use of tax-exempt bonds for
non-governmental (private) purposes. More stringent restrictions were placed on
the use of proceeds of such bonds. Interest on certain private activity bonds is
taxable under the revised rules. There is an exception for "qualified"
tax-exempt
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private activity bonds, for example, exempt facility bonds including certain
industrial development bonds, qualified mortgage bonds, qualified Section
501(c)(3) bonds, and qualified student loan bonds.
In addition, limitations as to the amount of private activity bonds which
each state may issue were revised downward by the Tax Reform Act, which will
reduce the supply of such bonds. The value of the Fund's portfolio could be
affected if there is a reduction in the availability of such bonds.
Interest on certain private activity bonds issued after August 7, 1986,
which continues to be tax-exempt, will be treated as a tax preference item
subject to the alternative minimum tax (discussed below) to which certain
taxpayers are subject. The Fund may hold municipal securities the interest on
which (and thus a proportionate share of the exempt-interest dividends paid by
the Fund) will be subject to the Federal alternative minimum tax on individuals
and corporations.
The Federal alternative minimum tax is designed to ensure that all persons
who receive income pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference items
that are used to calculate alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals and
corporations. Any exempt-interest dividend paid by a regulated investment
company will be treated as interest on a specific private activity bond to the
extent of the proportionate relationship the interest the investment company
receives on such bonds bears to all its exempt interest dividends.
In addition, corporate taxpayers subject to the alternative minimum tax
may, under some circumstances, have to include exempt-interest dividends in
calculating their alternative minimum taxable income. That could occur in
situations where the "adjusted current earnings" of the corporation exceeds its
alternative minimum taxable income.
To determine whether a municipal security is treated as a taxable private
activity bond, it is subject to a test for: (a) a trade or business use and
security interest, or (b) a private loan restriction. Under the trade or
business use and security interest test, an obligation is a private activity
bond if: (i) more than 10% of the bond proceeds are used for private business
purposes and (ii) 10% or more of the payment of principal or interest on the
issue is directly or indirectly derived from such private use or is secured by
the privately used property or the payments related to the use of the property.
For certain types of uses, a 5% threshold is substituted for this 10% threshold.
The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit. Under the private loan restriction, the amount of
bond proceeds that may be used to make private loans is limited to the lesser of
5% or $5.0 million of the proceeds. Thus, certain issues of municipal securities
could lose their tax-exempt status retroactively if the issuer fails to meet
certain requirements as to the expenditure of the proceeds of that issue or the
use of the bond-financed facility. The Fund makes no independent investigation
of the users of such bonds or their use of proceeds of the bonds. If the Fund
should hold a bond that loses its tax-exempt status retroactively, there might
be an adjustment to the tax-exempt income previously distributed to
shareholders.
Additionally, a private activity bond that would otherwise be a qualified
tax-exempt private activity bond will not, under Internal Revenue Code Section
147(a), be a qualified bond for any period during which it is held by a person
who is a "substantial user" of the facilities or by a "related person" of such a
substantial user. This "substantial user" provision applies primarily to exempt
facility bonds, including industrial development bonds. The Fund may invest in
industrial development bonds and other private activity bonds. Therefore, the
Fund may not be an appropriate investment for entities which are "substantial
users" (or persons related to "substantial users") of such exempt facilities.
Those entities and persons should consult their tax advisers before purchasing
shares of the Fund.
A "substantial user" of such facilities is defined generally as a
"non-exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be a
"related person" under the Internal Revenue Code unless such individual or the
individual's immediate family (spouse, brothers, sisters and immediate
descendants) own directly or indirectly in the aggregate more than 50% in value
of the equity of a corporation or partnership which is a "substantial user" of a
facility financed from the proceeds of exempt facility bonds.
|X| Municipal Notes. Municipal securities having a maturity (when the
security is issued) of less than one year are generally known as municipal
notes. Municipal notes generally are used to provide for short-term working
capital needs. Some of the types of municipal notes the Fund can invest in are
described below.
|_| Tax Anticipation Notes. These are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation of
various seasonal tax revenue, such as income, sales, use or other business
taxes, and are payable from these specific future taxes.
|_| Revenue Anticipation Notes. These are notes issued in expectation of
receipt of other types of revenue, such as Federal revenues available under
Federal revenue-sharing programs.
|_| Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. The
long-term bonds that are issued typically also provide the money for the
repayment of the notes.
|_| Construction Loan Notes. These are sold to provide project
construction financing until permanent financing can be secured. After
successful completion and acceptance of the project, it may receive permanent
financing through public agencies, such as the Federal Housing Administration.
|X| Tax-Exempt Commercial Paper. This type of short-term obligation
(usually having a maturity of 270 days or less) is issued by a municipality to
meet current working capital needs.
|X| Municipal Lease Obligations. The Fund's investments in municipal lease
obligations may be through certificates of participation that are offered to
investors by public entities. Municipal leases may take the form of a lease or
an installment purchase contract issued by a state or local government authority
to obtain funds to acquire a wide variety of equipment and facilities.
Some municipal lease securities may be deemed to be "illiquid" securities.
Their purchase by the Fund would be limited as described below in "Illiquid
Securities." Municipal lease obligations that the Manager has determined to be
liquid under guidelines set by the Board of Trustees are not subject to the
Fund's 15% limit on investments in illiquid securities.
Those guidelines require the Manager to evaluate:
|_| the frequency of trades and price quotations for such securities;
o the number of dealers or other potential buyers willing to purchase or
sell such securities;
o the availability of market-makers; and
|_| the nature of the trades for such securities.
Municipal leases have special risk considerations. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain 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 that purpose on a yearly basis. While the obligation
might be secured by the lease, it might be difficult to dispose of that property
in case of a default.
Projects financed with certificates of participation generally are not
subject to state constitutional debt limitations or other statutory requirements
that may apply to other municipal securities. Payments by the public entity on
the obligation underlying the certificates are derived from available revenue
sources. That revenue might be diverted to the funding of other municipal
service projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed and do not constitute an obligation of a state
or any of its political subdivisions.
Municipal leases may also be subject to "abatement risk." The leases
underlying certain municipal leas obligations may state that lease payments are
subject to partial or full abatement. That abatement might occur, for example,
if material damage to or destruction of the leased property interferes with the
lessee's use of the property. However, in some cases that risk might be reduced
by insurance covering the leased property, or by the use of credit enhancements
such as letters of credit to back lease payments, or perhaps by the lessee's
maintenance of reserve funds for lease payments.
In addition, municipal lease securities do not have as highly liquid a
market as conventional municipal bonds. Municipal leases, like other municipal
debt obligations, are subject to the risk of non-payment of interest or
repayment of principal by the issuer. The ability of issuers of municipal leases
to make timely lease payments may be adversely affected in general economic
downturns and as relative governmental cost burdens are reallocated among
federal, state and local governmental units. A default in payment of income
would result in a reduction of income to the Fund. It could also result in a
reduction in the value of the municipal lease and that, as well as a default in
repayment of principal, could result in a decrease in the net asset value of the
Fund. While the Fund holds these securities, the Manager will evaluate the
likelihood of a continuing market for these securities and their credit quality.
<PAGE>
The Fund attempts to reduce its exposure to some of these risks by not
investing more than 10% of its total assets in municipal leases obligations that
contain "non-appropriation" clauses. Also, the Fund will invest in lease with
non-appropriation clauses only if certain conditions are met: o the nature of
the leased equipment or property is such that its ownership or
use is essential to a governmental function of a municipality,
o appropriate covenants are obtained from the municipal obligor prohibiting
the substitution or purchase of similar equipment if lease payments are not
appropriated,
o the lease obligor has maintained good market acceptability in the past,
o the investment is of a size that will be attractive to institutional
investors, and
o the underlying leased equipment has elements of portability and/or use that
enhance its marketability if foreclosure is ever required on the underlying
equipment.
|X| Credit Ratings of Municipal Securities. Ratings by ratings
organizations such as Moody's Investors Service, Standard & Poor's Ratings Group
and Fitch IBCA, Inc. represent the respective rating agency's opinions of the
credit quality of the municipal securities they undertake to rate. However,
their ratings are general opinions and are not guarantees of quality. Municipal
securities that have the same maturity, coupon and rating may have different
yields, while other municipal securities that have the same maturity and coupon
but different ratings may have the same yield.
After the Fund buys a municipal security, it may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event requires the Fund to sell the security, but the Manager will
consider such events in determining whether the Fund should continue to hold the
security. To the extent that ratings given by Moody's, Standard & Poor's, or
Fitch change as a result of changes in those rating organizations or their
rating systems, the Fund will attempt to use comparable ratings as standards for
investments in accordance with the Fund's investment policies.
The Fund may buy municipal securities that are "pre-refunded." The
issuer's obligation to repay the principal value of the security is generally
collateralized with U.S. government securities placed in an escrow account. As a
result, the pre-refunded security has essentially the same risks of default as a
AAA-rated security.
The rating definitions of Moody's, Standard & Poor's, Duff & Phelps and
Fitch for municipal securities are contained in Appendix A to this Statement of
Additional Information. The Fund can purchase securities that are unrated by
nationally recognized rating organizations. The Manager will make its own
assessment of the credit quality of unrated issues the Fund buys. The Manager
will use criteria similar to those used by the rating agencies, and assign a
rating category to a security that is comparable to what the Manager believes a
rating agency would assign to that security. However, the Manager's rating does
not constitute a guarantee of the quality of a particular issue.
In evaluating the credit quality of a particular security, whether it is
rated or unrated, the Manager will normally take into consideration a number of
factors. Among them are the financial resources of the issuer, or the underlying
source of funds for debt service on a security, the issuer's
<PAGE>
sensitivity to economic conditions and trends, any operating history of the
facility financed by the obligation and the degree of community support for it,
the capabilities of the issuer's management and regulatory factors affecting the
issuer and the particular facility.
|_| Special Risks of Lower-Grade Securities. The Fund can invest up
to 5% of its assets in securities below investment grade. These are commonly
referred to as "junk bonds." Lower grade securities may have a higher yield than
securities rated in the higher rating categories. In addition to having a
greater risk of default than higher-grade, securities, there may be less of a
market for these securities. As a result they may be harder to sell at an
acceptable price. The additional risks mean that the Fund may not receive the
anticipated level of income from these securities, and the Fund's net asset
value may be affected by declines in the value of lower-grade securities.
However, because the added risk of lower quality securities might not be
consistent with the Fund's policy of prudent investment management, the Fund
limits its investments in lower quality securities and does not buy securities
rated below "Ba" by Moody's or "BB" by Standard & Poor's or Fitch (or unrated
securities that the Manager deems to be of comparable quality).
While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or
Duff & Phelps are investment grade, they may be subject to special risks and
have some speculative characteristics.
In the event of unanticipated financial difficulties, default or
bankruptcy of an issuer of an obligation or the underlying source of funds for
debt service on an obligation the Fund owns, the Fund can take such action as
the Manager considers appropriate. That might include, for example, retaining
the services of persons, firms, professional organizations and others to
evaluate or protect real estate, facilities or other assets securing the
obligation or acquired by the Fund as a result of such event. The Fund will
incur additional costs in taking protective action with respect to portfolio
obligations that are in default or the assets securing those obligations. As a
result, the Fund's share prices could be adversely affected. Any income derived
from the Fund's ownership or operation of assets acquired as a result of these
types of actions might not be tax-exempt.
Special Investment Considerations - New York Municipal Securities. As explained
in the Prospectus, the Fund concentrates its investment in securities issued by
the State of New York, its agencies, authorities and instrumentalities.
Therefore the Fund's investments are highly sensitive to the fiscal stability of
New York State (referred to in the section as the "State") and its subdivisions,
agencies, instrumentalities or authorities, including New York City, which issue
some of the municipal securities in which the Fund invests. The following
information on risk factors in concentrating in New York municipal securities is
only a summary, based on publicly-available official statements relating to
offerings by issuers of New York municipal securities on or prior to December
15, 1998 with respect to offerings of New York State, and on or prior to
December 15, 1998 with respect to offerings by New York City. No representation
is made as to the accuracy of this 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
<PAGE>
were successful in reducing the financial crisis. Any further financial problems
experienced by these Authorities or municipalities could have a direct adverse
effect on the New York municipal securities in which the Fund invests.
|X| Factors Affecting Investments in New York State Securities. The
forecast of the State's economy shows continued expansion during the 1998
calendar year, with employment growth gradually slowing as the year progressed.
The financial and business service sectors are expected to continue to do well,
while employment in the manufacturing and government sectors are expected to
post only small, if any, declines. On an average annual basis, the employment
growth rate in the State is expected to be higher than in 1997 and the
unemployment rate is expected to drop to 6.1%. Personal income is expected to
have recorded moderate gains in 1998. Wage growth in 1998 is expected to have
been slower than in the previous year, because the recent robust growth in bonus
payments has moderated.
The national economy has maintained a robust rate of growth with over 16.5
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 400,000 jobs since late 1992, employment growth in
the State has been hindered during recent years by significant cutbacks in the
computer and instrument manufacturing, utility, defense and banking industries.
Government downsizing has also moderated these job gains.
The State's General Fund (the major operating Fund of the State) was
projected in the 1997-1998 New York State Financial Plan (referred to in this
section as the "State Plan") to be balanced on a cash basis for the 1997-98
fiscal year. Total receipts and transfers from other funds are projected to
reach $37.84 billion an increase of over $3 billion from the prior fiscal year,
and disbursements and transfers to other funds are projected to be $36.78
billion, an increase of $2.43 billion from the total disbursed in the prior
fiscal year.
Projections of total State receipts in the State 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. In preparing projections of State receipts, economic forecasts
relating to personal income, wages, consumption, profits and employment have
been particularly important. The projection of receipts from most tax or revenue
sources is generally made by estimating the change in yield of such tax or
revenue source caused by economic and other factors, rather than by estimating
the total yield of such tax or revenue source from its estimated tax base. The
forecasting methodology, however, ensures that State fiscal year collection
estimates for taxes that are based on a computation of annual liability, such as
the business and personal income taxes, are consistent with estimates of total
liability under those taxes.
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 the 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.
In recent years, State actions affecting the level of receipts and
disbursements, the relative strength of the State and regional economy, and
actions of the federal government have help to create projected structural
budget gaps for the State. These gaps result 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.
The forecast for continued growth, and any resultant impact on the State
Plan, contains some uncertainties. Stronger-than-expected gains in employment
and wages could lead to surprisingly strong growth in consumer spending.
Investments could also remain robust. Conversely, net exports could plunge even
more sharply than expected, with adverse impacts on the growth of both consumer
spending and investment. The inflation rate may differ significantly from
expectations due to the upward pressure of a tight labor market and the downward
pressure of price reductions emanating from the current economic weakness in
Asia. In addition, the State economic forecast could over- or under-estimate the
level of future bonus payments or inflation growth, resulting in forecasted
average wage growth that could differ significantly from actual growth.
Similarly, the State forecast could fail to correctly account for declines in
banking employment and the direction of employment change that is likely to
accompany telecommunications and energy deregulation.
|_| State Governmental Funds Group. Substantially all State non-pension
financial operations are accounted for in the State's governmental funds group.
Governmental funds include:
o the General Fund, which receives all income not required by law to
be deposited in another fund;
o Special Revenue Funds, which receive most of the money the State gets
from the Federal government and other income the use of which is
legally restricted to certain purposes;
o Capital Projects Funds, used to finance the acquisition and
construction of major capital facilities by the State and to aid in
certain projects conducted by local governments or public authorities;
and
o Debt Service Funds, which are used for the accumulation of money for
the payment of principal of and interest on long-term debt and to meet
lease-purchase and other contractual-obligation commitments.
|_| Local Government Assistance Corporation. In 1990, as part of a
State fiscal reform program, legislation was enacted creating Local Government
Assistance Corporation, a public benefit corporation empowered to issue
long-term obligations to fund payments to local governments that had been
traditionally funded through the State's annual seasonal borrowing. The
legislation authorized the corporation to issue its bonds and notes in an amount
not in excess of $4.7 billion (exclusive of certain refunding bonds). Over a
period of years, the issuance of these long-term obligations, which are to be
amortized over no more than 30 years, was expected to eliminate the need for
continued short-term seasonal borrowing.
The legislation also dedicated revenues equal to one-quarter of the
four-cent State sales and use tax to pay debt service on these bonds. The
legislation also imposed a cap on the annual seasonal borrowing of the State at
$4.7 billion, less net proceeds of bonds issued by the corporation and bonds
issued to provide for capitalized interest. An exception is in cases where the
Governor and the legislative leaders have certified the need for additional
borrowing and have provided a schedule for reducing it to the cap. If borrowing
above the cap is thus permitted in any fiscal year, it is required by law to be
reduced to the cap by the fourth fiscal year after the limit was first exceeded.
This provision capping the seasonal borrowing was included as a covenant with
the corporation's bondholders in the resolution authorizing such bonds.
As of June 1995, the corporation had issued bonds and notes to provide net
proceeds of $4.7 billion completing the program. The impact of its borrowing, as
well as other changes in revenue and spending patterns, is that the State has
been able to meet its cash flow needs throughout the fiscal year without relying
on short-term seasonal borrowings.
|_| Authorities. The fiscal stability of the State is related to the
fiscal stability of its public Authorities. Authorities have various
responsibilities, including those which finance, construct and/or operate
revenue-producing public facilities. Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself, and may issue bonds and notes within the amounts, and restrictions set
forth in their legislative authorization. As of December 31, 1997, there were 17
Authorities that had outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of all Authorities was $84 billion,
only a portion of which constitutes State-supported or State-related debt.
Authorities are generally supported by revenues generated by the projects
financed or operated, such as tolls charged for use of highways, bridges or
tunnels, charges for electric power, electric and gas utility services, rentals
charged for and housing units and charges for occupancy at medical care
facilities. In addition, State legislation authorizes several financing
techniques for Authorities. 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.
|_| Ratings of the State's Securities. On January 13, 1992, Standard
& Poor's reduced its ratings on the State's general obligation bonds from "A" to
"A-" and, in addition, reduced its ratings on the State's moral obligation,
lease purchase, guaranteed and contractual obligation debt. Standard & Poor's
also continued its negative rating outlook assessment on State general
obligation debt. On April 26, 1993, Standard & Poor's revised its rating outlook
assessment to "stable." On February 14, 1994, Standard & Poor's raised its
outlook to "positive" and, on October 3, 1995, confirmed its A-rating. On August
28, 1997, Standard & Poor's raised its ratings on the State's general obligation
bonds from A- to A and, in addition, raised its ratings on the State's moral
obligation, lease purchase, guaranteed and contractual obligation debt.
On January 6, 1992, Moody's reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations from "A" to
"Baa1." On October 2, 1995, Moody's reconfirmed its "A" rating of the State's
general obligation long-term indebtedness. On February 10, 1997, Moody's
confirmed its "A2" rating of the State's general obligation long-term
indebtedness.
Ratings reflect only the views of the ratings organizations, and an
explanation of the significance of a rating may be obtained from the rating
agency furnishing the rating. There is no assurance that a particular rating
will continue for any given period of time or that a rating will not be revised
downward or withdrawn entirely, if, in the judgment of the agency originally
establishing the rating, circumstances warrant. A downward revision or
withdrawal of a ratings, could have an effect on the market price of the State
municipal securities in which the Fund invests.
|_| The State's General Obligation Debt. As of March 31, 1998, the
State had approximately $5.03 billion in general obligation bonds outstanding,
including $294 million in bond anticipation notes. Principal and interest due on
general obligation bonds and interest due on bond anticipation notes were $749.6
million for the 1998-99 fiscal year and are estimated to be $695 million for the
State's 1999-2000 fiscal year.
|_| Pending Litigation. The State is a defendant in numerous legal
proceedings pertaining to matters incidental to the performance of routine
governmental operations. That 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 1998-1999 fiscal year or thereafter.
The State believes that the State Plan includes sufficient reserves for
the payment of judgments that may be required during the 1998-99 fiscal year.
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 1998-1999 Financial Plan. The General Purpose Financial Statements for
the 1997-1998 fiscal year report estimated probable awarded and anticipated
unfavorable judgements of $872 million, of which $90 million is expected to be
paid during the 1998-1999 fiscal year.
In addition, the State is party to other claims and litigations that its
legal counsel has advised are not probable of adverse court decisions or are not
deemed to be materially adverse. 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 1998-99 fiscal year or thereafter.
|_| Other Factors. 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 in the State's 1998-99 fiscal year.
|X| Factors Affecting Investments in New York City Municipal Securities.
The fiscal health of New York City (referred to in this section as the "City")
has a more significant effect on the fiscal health of the State than any other
municipality. 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 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 Gross City Product increased, boosted by
strong wage gains.
After noticeable improvements in the City's economy during 1994, economic
growth slowed in 1995. It improved commencing in calendar year 1996, reflecting
improved securities industry earnings and employment in other sectors. Overall,
the City's economic improvement accelerated significantly in 1997 and 1998. The
City's current financial plan assumes that, after strong growth in 1993 - 1998
moderate economic growth will occur through calendar year 2002, with moderating
job growth and wage increases.
For each of the 1981 through 1998 fiscal years, the City had an operating
surplus, before discretionary and other transfers, and achieved balanced
operating results as reported in accordance with generally accepted accounting
principles. The City has been required to close substantial gaps between
forecast revenues and forecast expenditures in order to maintain balanced
operating results. There can be no assurance that the City will continue to
maintain balanced operating results as required by State law without tax or
other revenue increases or reductions in City services or entitlement 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 1999 through 2002 fiscal
years (referred to below as the "City's Financial Plan").
The City's projections set forth in the City's Financial Plan are based on
various assumptions and contingencies which are uncertain and which may not
materialize. Implementation of the City's Financial Plan is dependent upon the
City's ability to market its securities successfully. The City's financing
program for fiscal years 1999 through 2002 contemplates the issuance of $5.2
billion of general obligation bonds and $5.4 billion of bonds to be issued by
the New York City Transitional Finance Authority (the "Finance Authority") to
finance City capital projects. The Finance Authority was created to assist the
City in financing its capital program while 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 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, New York City Municipal Water Finance Authority ("Water
Authority") bonds and Finance Authority bonds will be subject to prevailing
market conditions. The City's planned capital and operating expenditures are
dependent upon the sale of its general obligation bonds and notes, and the Water
Authority and Finance Authority bonds. 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.
The City Comptroller and other agencies and public officials issue reports
and make public statements which, among other things, state that projected
revenues and expenditures may be different from those forecasted in the City's
Financial Plan. It is reasonable to expect that such reports and statements will
continue to be issued and to engender public comment.
|_| The City's Financial Plan. The City's Financial Plan projects
revenues and expenditures for the 1998 fiscal year balanced in accordance with
GAAP. The City's Financial Plan takes into account a projected increase in tax
revenues in 1999 and 2000 and a projected decrease in tax revenues in 2001 and
2002, an increase in planned expenditures for health insurance; a decrease in
projected pension expenditures; and other agency spending increases. In
addition, the City's Financial Plan includes a proposed discretionary transfer
to the 1999 fiscal year of $46.5
million to pay debt service due in fiscal year 2000. The City's Financial Plan
also sets forth projections for the 2000 through 2002 fiscal years and projects
gaps of $2.2 billion, $2.9 billion and $2.4 billion for the 2000 through 2002
fiscal years, respectively.
The City's Financial Plan assumes that the Governor and the State
Legislature approve extension of the 14% personal income tax surcharge, which is
scheduled to expire on December 31, 1999. That tax is projected to provide
revenue of $183 million, $524 million and $544 million in 2000, 2001 and 2002
fiscal years, respectively. It also assumes collection of the projected rent
payments for the City's airports, totaling $6 million, $365 million, $155
million and $185 million in the 1999 through 2002 fiscal years, respectively. A
substantial portion of those collections may depend on the successful completion
of negotiations with The Port Authority of New York and New Jersey or on the
enforcement of the City's rights under the existing leases through pending legal
actions. The City's Financial Plan provides no additional wage increases for
City employees after their contracts expire in fiscal years 2000 and 2001. In
addition, the economic and financial condition of the City may be affected by
various financial, social, economic and political factors that could have a
material effect on the City.
On July 23, 1998, the New York State Comptroller issued a report that
noted that a significant cause for concern is the budget gaps in the 1999-2000
and 2000-2001 fiscal year. The State Comptroller projected them at $1.8 billion
and $5.5 billion, respectively, after excluding the uncertain receipt by the
State of $250 million of funds from the tobacco settlement assumed for each of
such fiscal years, as well as the unspecified actions assumed in the State's
projections. The State Comptroller also stated that if the securities industry
or economy slows, the size of the gaps would increase.
Various actions proposed in the City's Financial Plan are uncertain. If
these measures cannot be implemented, the City will be required to take other
actions to decrease expenditures or increase revenues to maintain a balanced
financial plan.
|_| Ratings of the City's Bonds. Moody's Investors Service, Inc. has
rated the City's general obligation bonds "A3." Standard & Poor's Ratings Group
has rated those bonds "A-." Fitch IBCA, Inc. has rated these bonds "A-." Those
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 those ratings will continue for any given period of time or
that they will not be revised downward or withdrawn entirely. Any downward
revision or withdrawal could have an adverse effect on the market prices of the
City's bonds. On July 10, 1995, Standard & Poor's revised its rating of City
bonds downward to "BBB+." On July 16, 1998, Standard & Poor's revised its rating
of City bonds upward to "A-." Moody's rating of City bonds was raised in
February 1998 to "A3" from "Baa1."
|_| The City's Outstanding Indebtedness. As of September 30, 1998,
the City and the Municipal Assistance Corporation for the City of New York had,
respectively, $26.391 billion and $3.141 billion of outstanding net long-term
debt.
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; that State budgets in future fiscal years will be
adopted by the April 1 statutory deadline, or interim appropriations enacted; or
that any such reductions or delays will not have adverse effects on the City's
cash flow or expenditures.
|_| Pending Litigation. The City is a defendant in lawsuits
pertaining to material matters, including claims asserted that are incidental to
performing routine governmental and other functions. That 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, 1998 and 1997, claims in
excess of $472 billion and $530 billion, respectively, were outstanding against
the City for which the City estimates its potential future liability to be $3.5
billion for each fiscal year.
Other Investment Techniques and Strategies. In seeking its objective, the Fund
may from time to time employ the types of investment strategies and investments
described below. It is not required to use all of these strategies at all times,
and at times may not use some of them.
|X| Floating Rate and Variable Rate Obligations. Variable rate obligations
may have a demand feature that allows the Fund to tender the obligation to the
issuer or a third party prior to its maturity. The tender may be at par value
plus accrued interest, according to the terms of the obligations.
The interest rate on a floating rate note is based on a stated prevailing
market rate, such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, or
some other standard, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate note is also based on a stated
prevailing market rate but is adjusted automatically at specified intervals of
not less than one year. Generally, the changes in the interest rate on such
securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations of the same maturity. The Manager may
determine that an unrated floating rate or variable rate obligation meets the
Fund's quality standards by reason of the backing provided by a letter of credit
or guarantee issued by a bank that meets those quality standards.
Floating rate and variable rate demand notes that have a stated maturity
in excess of one year may have features that permit the holder to recover the
principal amount of the underlying security at specified intervals not exceeding
one year and upon no more than 30 days' notice. The issuer of that type of note
normally has a corresponding right in its discretion, after a given period, to
prepay the outstanding principal amount of the note plus accrued interest.
Generally the issuer must provide a specified number of days' notice to the
holder.
|X| Inverse Floaters and Other Derivative Investments. "Inverse floaters"
are municipal obligations on which the interest rates typically fall as market
rates increase and increase as market rates fall. Changes in market interest
rates or the floating rate of the security inversely affect the residual
interest ate of an inverse floater. As a result, the price of an inverse floater
will be considerably more volatile than that of a fixed-rate obligation when
interest rates change.
To provide investment leverage, a municipal issuer might decide to issue
two variable rate obligations instead of a single long-term, fixed-rate bond.
The interest rate on one obligation reflects short-term interest rates. 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
a factor of two, minus the rate paid on the short-term instrument. The two
portions may be recombined to create a fixed-rate bond. The Manager might
acquire both portions of that type of offering, to reduce the effect of the
volatility of the individual securities. This provides the Manager with a
flexible portfolio management tool to vary the degree of investment leverage
efficiently under different market conditions. The Fund can invest up to 15% of
its net assets in inverse floaters.
Inverse floaters may offer relatively high current income, reflecting the
spread between short-term and long-term tax-exempt interest rates. As long as
the municipal yield curve remains relatively steep and short term rates remain
relatively low, owners of inverse floaters will have the opportunity to earn
interest at above-market rates because they receive interest at the higher
long-term rates but have paid for bonds with lower short-term rates. If the
yield curve flattens and shifts upward, an inverse floater will lose value more
quickly than a conventional long-term bond. The Fund might invest in inverse
floaters to seek higher tax-exempt yields than are available from fixed-rate
bonds that have comparable maturities and credit ratings. In some cases, the
holder of an inverse floater may have an option to convert the floater to a
fixed-rate bond, pursuant to a "rate-lock" option.
Some inverse floaters have a feature known as an interest rate "cap" as
part of the terms of the investment. Investing in inverse floaters that have
interest rate caps might be part of a portfolio strategy to try to maintain a
high current yield for the Fund when the Fund has invested in inverse floaters
that expose the Fund to the risk of short-term interest rate fluctuations.
"Embedded" caps might be used to hedge a portion of the Fund's exposure to
rising interest rates. When interest rates exceed a pre-determined rate, the cap
generates additional cash flows that offset the decline in interest rates on the
inverse floater, and the hedge is successful. However, the Fund bears the risk
that if interest rates do not rise above the pre-determined rate, the cap (which
is purchased for additional cost) will not provide additional cash flows and
will expire worthless.
Inverse floaters are a form of derivative investment. Certain derivatives,
can be used to increase or decrease the Fund's exposure to changing security
prices, interest rates or other factors that affect the value of securities.
However, these techniques could result in losses to the Fund if the Manager
judges market conditions incorrectly or employs a strategy that does not
correlate well with the Fund's other investments. These techniques can cause
losses if the counterparty does not perform its promises. An additional risk of
investing in municipal securities that are derivative investments is that their
market value could be expected to vary to a much greater extent than the market
value of municipal securities that are not derivative investments but have
similar credit quality, redemption provisions and maturities.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can
purchase securities on a "when-issued" basis, and may purchase or sell such
securities on a "delayed-delivery" (or "forward commitment") basis.
"When-issued" or "delayed-delivery" refers to securities whose terms and
indenture have been created. A market exists for the securities, but they are
not available for immediate delivery.
These transactions are negotiated, and the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made. Delivery
and payment for the securities take place at a later date. Normally the
settlement date is within six months of the purchase of municipal bonds and
notes. However, the Fund, from time to time, may purchase municipal securities
having a settlement date more than six months and possibly as long as two years
or more after the trade date. The securities are subject to change in value from
market fluctuation during the settlement period. The value at delivery might be
less than the purchase price. For example, changes in interest rates in a
direction other than that expected by the Manager before settlement will affect
the value of these securities and could cause loss to the Fund. No income begins
to accrue to the Fund on a when-issued security until the Fund receives the
security at the settlement of the trade.
The Fund will engage in when-issued transactions in order to secure what
is considered to be an advantageous price and yield at the time of entering into
the obligation. When the Fund engages in when-issued or delayed-delivery
transactions, it relies on the buyer or seller, as the case may be, to complete
the transaction. Its failure to do so may cause the Fund to lose the opportunity
to obtain the security at a price and yield it considers advantageous.
When the Fund engages in when-issued and delayed-delivery transactions, it
does so for the purpose of acquiring or selling securities consistent with its
investment objective and policies or for delivery pursuant to options contracts
it has entered into, and not for the purposes of investment leverage. Although
the Fund will enter into when-issued or delayed-delivery purchase transactions
to acquire securities, the Fund may dispose of a commitment prior to settlement.
If the Fund chooses to dispose of the right to acquire a when-issued security
prior to its acquisition or to dispose of its right to deliver or receive
against a forward commitment, it may incur a gain or loss.
At the time the Fund makes a commitment to purchase or sell a security on
a when-issued or forward commitment basis, it records the transaction on its
books and reflects the value of the security purchased. In a sale transaction,
it records the proceeds to be received, in determining its net asset value. The
Fund will identify on its books cash, U.S. government securities or other high
grade debt obligations at least equal to the value of purchase commitments until
the Fund pays for the investment.
When-issued transactions and forward commitments can be used by the Fund
as a defensive technique to hedge against anticipated changes in interest rates
and prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward commitment
basis to attempt to limit its exposure to anticipated falling prices. In periods
of falling interest rates and rising prices, the Fund might sell portfolio
securities and purchase the same or similar securities on a when-issued or
forward commitment basis, to obtain the benefit of currently higher cash yields.
|X| Zero-Coupon Securities. The Fund can buy zero-coupon and delayed
interest municipal securities. Zero-coupon securities do not make periodic
interest payments and are sold at a deep discount from their face value. The
buyer recognizes a rate of return determined by the gradual appreciation of the
security, which is redeemed at face value on a specified maturity date. This
discount depends on the time remaining until maturity, as well as prevailing
interest rates, the liquidity of the security and the credit quality of the
issuer. In the absence of threats to the issuer's credit quality, the discount
typically decreases as the maturity date approaches. Original issue discount on
these securities is included in the Fund's tax-free income. Some zero-coupon
securities are convertible, in that they are zero-coupon securities until a
predetermined date, at which time they convert to a security with a specified
coupon rate.
Because zero-coupon securities pay no interest and compound semi-annually
at the rate fixed at the time of their issuance, their value is generally more
volatile than the value of other debt securities. Their value may fall more
dramatically than the value of interest-bearing securities when interest rates
rise. When prevailing interest rates fall, zero-coupon securities tend to rise
more rapidly in value because they have a fixed rate of return.
The Fund's investment in zero-coupon securities may cause the Fund to
recognize income and make distributions to shareholders before it receives any
cash payments on the zero-coupon investment. To generate cash to satisfy those
distribution requirements, the Fund may have to sell portfolio securities that
it otherwise might have continued to hold or to use cash flows from other
sources such as the sale of Fund shares.
|X| Puts and Standby Commitments. When the Fund buys a municipal security
subject to a standby commitment to repurchase the security, the Fund is entitled
to same-day settlement from the purchaser. The Fund receives an exercise price
equal to the amortized cost of the underlying security plus any accrued interest
at the time of exercise. A put purchased in conjunction with a municipal
security enables the Fund to sell the underlying security within a specified
period of time at a fixed exercise price.
The Fund might purchase a standby commitment or put separately in cash or
it might acquire the security subject to the standby commitment or put (at a
price that reflects that additional feature). The Fund will enter into these
transactions only with banks and securities dealers that, in the Manager's
opinion, present minimal credit risks. The Fund's ability to exercise a put or
standby commitment will depend on the ability of the bank or dealer to pay for
the securities if the put or standby commitment is exercised. If the bank or
dealer should default on its obligation, the Fund might not be able to recover
all or a portion of any loss sustained from having to sell the security
elsewhere.
Puts and standby commitments are not transferable by the Fund. They
terminate if the Fund sells the underlying security to a third party. The Fund
intends to enter into these arrangements to facilitate portfolio liquidity,
although such arrangements might enable the Fund to sell a security at a
pre-arranged price that may be higher than the prevailing market price at the
time the put or standby commitment is exercised. However, the Fund might refrain
from exercising a put or standby commitment if the exercise price is
significantly higher than the prevailing market price, to avoid imposing a loss
on the seller that could jeopardize the Fund's business relationships with the
seller.
A put or standby commitment increases the cost of the security and reduces
the yield otherwise available from the security. Any consideration paid by the
Fund for the put or standby commitment will be reflected on the Fund's books as
unrealized depreciation while the put or standby commitment is held, and a
realized gain or loss when the put or commitment is exercised or expires.
Interest income received by the Fund from municipal securities subject to puts
or stand-by commitments may not qualify as tax exempt in its hands if the terms
of the put or stand-by commitment cause the Fund not to be treated as the tax
owner of the underlying municipal securities.
|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It might do so for temporary defensive purposes or for
liquidity purposes to meet anticipated redemptions of Fund shares, or pending
the investment of the proceeds from sales of Fund shares, or pending the
settlement of portfolio securities transactions.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to an approved vendor for delivery on an agreed upon
future date. The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during which the
repurchase agreement is in effect. Approved vendors include U.S. commercial
banks, U.S. branches of foreign banks or broker-dealers that have been
designated a primary dealer in government securities, which meet the credit
requirements set by the Fund's Board of Trustees from time to time.
The majority of these transactions run from day to day. Delivery pursuant
to resale typically will occur within one to five days of the purchase.
Repurchase agreements having a maturity beyond seven days are subject to the
Fund's limits on holding illiquid investments. The Fund cannot invest more than
20% of its total assets in taxable repurchase agreements offering taxable
income.
Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
impose creditworthiness requirements to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
<PAGE>
|X| Illiquid and Restricted Securities. The Fund has percentage
limitations that apply to purchases of illiquid and restricted securities, as
stated in the Prospectus. The Manager monitors holdings of illiquid and
restricted securities on an ongoing basis to determine whether to sell any
holdings to maintain adequate liquidity.
n Borrowing for Leverage. The Fund has the ability to borrow from banks on
an unsecured basis in amounts limited (as a fundamental policy) to a maximum of
10% of its total assets, to invest the borrowed funds in portfolio securities.
This technique is known as "leverage." The Fund may borrow only from banks. As a
fundamental policy, borrowings can be made only to the extent that the value of
the Fund's assets, less its liabilities other than borrowings, is equal to at
least 300% of all borrowings (including the proposed borrowing). If the value of
the Fund's assets sails to meet this 300% asset coverage requirement, the Fund
is required to reduce its bank debt within 3 days to meet the requirement. To do
so, the Fund might have to sell a portion of its investments at a
disadvantageous time.
The Fund will pay interest on these loans, and that interest expense will
raise the overall expenses of the Fund and reduce its returns. If it does
borrow, its expenses will be greater than comparable funds that do not borrow
for leverage. The interest on a loan might be more (or less) than the yield on
the securities purchased with the loan proceeds. Additionally, the Fund's net
asset value per share might fluctuate more than that of funds that do not
borrow.
n Investments in Other Investment Companies. On a temporary basis, the
Fund can invest up to 5% of its total assets in shares of other investment
companies that have an investment objective of seeking income exempt from
federal, New York State and New York City personal income taxes. It can invest
up to 5% of its total assets in any one investment company (but cannot own more
than 3% of the outstanding voting stock of that company). These limits do not
apply to shares acquired in a merger, consolidation, reorganization or
acquisition of another investment company. Because the Fund would be subject to
its ratable share of the other investment company's expenses, the Fund will not
make these investments unless the Manager believes that the potential investment
benefits justify the added costs and expenses.
|X| Hedging. The Fund can use hedging to attempt to protect against
declines in the market value of its portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities that have appreciated, or
to facilitate selling securities for investment reasons. To do so the Fund
could:
o buy puts on securities, or
|_| write covered calls on securities. Covered calls can also be written
on debt securities to attempt to increase the Fund's income, but that
income would not be tax-exempt. Therefore it is unlikely that the Fund
would write covered calls for that purpose.
The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Manager's discretion, as described below. The
particular options the Fund can use are described below. The Fund may employ
other hedging instruments and strategies in the future, if those investment
methods are consistent with the Fund's investment objective, are permissible
under applicable regulations governing the Fund and are approved by the Fund's
Board of Trustees.
|_| Put and Call Options. The Fund can buy and sell certain kinds of put
options (puts) and call options (calls). These strategies are described below.
|_| Writing Covered Call Options. The Fund can write (that is, sell) call
options. The Fund's call writing is subject to a number of restrictions:
(1) Calls the Fund sells must be listed on a national securities exchange.
(2) Each call the Fund writes must be "covered" while it is
outstanding. That means the Fund must own the investment on which the
call was written.
When the Fund writes a call on a security, it receives cash (a premium).
The Fund agrees to sell the underlying investment to a purchaser of a
corresponding call on the same security during the call period at a fixed
exercise price regardless of market price changes during the call period. The
call period is usually not more than nine months. The exercise price may differ
from the market price of the underlying security. The Fund has retained the risk
of loss that the price of the underlying security may decline during the call
period. That risk may be offset to some extent by the premium the Fund receives.
If the value of the investment does not rise above the call price, it is likely
that the call will lapse without being exercised. In that case the Fund would
keep the cash premium and the investment.
The Fund's custodian bank, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent through the facilities of the
Options Clearing Corporation ("OCC"), as to the investments on which the Fund
has written calls traded on exchanges, or as to other acceptable escrow
securities. In that way, no margin will be required for such transactions. OCC
will release the securities on the expiration of the calls or upon the Fund's
entering into a closing purchase transaction.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund will
then realize a profit or loss, depending upon whether the net of the amount of
the option transaction costs and the premium received on the call the Fund wrote
was more or less than the price of the call the Fund purchased to close out the
transaction. A profit may also be realized if the call lapses unexercised,
because the Fund retains the underlying investment and the premium received. Any
such profits are considered short-term capital gains for Federal tax purposes,
as are premiums on lapsed calls. When distributed by the Fund they are taxable
as ordinary income.
|_| Purchasing Calls and Puts. The Fund may buy calls only to
close out a call it has written, as discussed above. Calls the Fund buys must be
listed on a securities exchange. A call or put option may not be purchased if
the purchase would cause the value of all the Fund's put and call options to
exceed 5% of its total assets.
The Fund may buy only those puts that relate to securities that the Fund
owns or broadly-based municipal bond indices. The Fund may not sell puts other
than puts it has previously purchased, to close out a position.
When the Fund purchases a put, it pays a premium. The Fund then has the
right to sell the underlying investment to a seller of a corresponding put on
the same investment during the put period at a fixed exercise price. Puts on
municipal bond indices are settled in cash. Buying a put on a debt security,
interest rate future or municipal bond index future the Fund owns enables it to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price. If the market price of the
underlying investment is equal to or above the exercise price and as a result
the put is not exercised or resold, the put will become worthless at its
expiration date. In that case the Fund will lose its premium payment and the
right to sell the underlying investment. A put may be sold prior to expiration
(whether or not at a profit).
|_| Risks of Hedging with Options. The use of hedging instruments
requires special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management. If the Manager
uses a hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's returns.
The Fund's option activities could affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund might cause the
Fund to sell related portfolio securities, thus increasing its turnover rate.
The Fund could pay a brokerage commission each time it buys a call or put, sells
a call, or buys or sells an underlying investment in connection with the
exercise of a call or put. Such commissions might be higher on a relative basis
than the commissions for direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation to the market value
of the underlying investments. Consequently, put and call options offer large
amounts of leverage. The leverage offered by trading in options could result in
the Fund's net asset value being more sensitive to changes in the value of the
underlying investment.
If a covered call written by the Fund is exercised on an investment that
has increased in value, the Fund will be required to sell the investment at the
call price. It will not be able to realize any profit if the investment has
increased in value above the call price.
There is a risk in using short hedging by purchasing puts on municipal
bond indices or futures to attempt to protect against declines in the value of
the Fund's securities. The risk is that the prices of such futures or the
applicable index will correlate imperfectly with the behavior of the cash (that
is, market) prices of the Fund's securities. It is possible for example, that
while the Fund has used hedging instruments in a short hedge, the market might
advance and the value of debt securities held in the Fund's portfolio might
decline. If that occurred, the Fund would lose money on the hedging instruments
and also experience a decline in value of its debt securities. However, while
this could occur over a brief period or to a very small degree, over time the
value of a diversified portfolio of debt securities will tend to move in the
same direction as the indices upon which the hedging instruments are based.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable index.
To compensate for the imperfect correlation of movements in the price of debt
securities being hedged and movements in the price of the hedging instruments,
the Fund might use hedging instruments in a greater dollar amount than the
dollar amount of debt securities being hedged. It might do so if the historical
volatility of the prices of the debt securities being hedged is greater than the
historical volatility of the applicable index.
An option position may be closed out only on a market that provides
secondary trading for options of the same series. There is no assurance that a
liquid secondary market will exist for a particular option. If the Fund could
not effect a closing purchase transaction due to a lack of a market, it would
have to hold the callable investment until the call lapsed or was exercised, and
could experience losses.
|_| Regulatory Aspects of Hedging Instruments. Transactions in
options by the Fund are subject to limitations established by the option
exchanges. The exchanges limit the maximum number of options that may be written
or held by a single investor or group of investors acting in concert. Those
limits apply regardless of whether the options were written or purchased on the
same or different exchanges, or are held in one or more accounts or through one
or more different exchanges or through one or more brokers. Thus, the number of
options that the Fund may write or hold may be affected by options written or
held by other entities, including other investment companies having the same
adviser as the Fund (or an adviser that is an affiliate of the Fund's adviser).
The exchanges also impose position limits on futures transactions. An exchange
may order the liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be changed
only by the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, such a "majority" vote is defined as the vote
of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or |_| more than 50% of the
outstanding shares.
The Fund's investment objective is not a fundamental policy, but will not
be changed without approval by the Fund's Board of Trustees and notice to
shareholders. Other policies described in the Prospectus or this Statement of
Additional Information are "fundamental" only if they are identified as such.
The Fund's Board of Trustees can change non-fundamental policies without
shareholder approval. However, significant changes to investment policies will
be described in supplements or updates to the Prospectus or this Statement of
Additional Information, as appropriate. The Fund's most significant investment
policies are described in the Prospectus.
[_] Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund:
|_| The Fund cannot invest in common stocks, preferred stocks, warrants or
other equity securities.
|_| The Fund cannot make loans to others except in accordance with the
Fund's investment objective and policies. The Fund can also enter into contracts
that compensate service providers by means of compensating balances.
|_| The Fund cannot mortgage or pledge any of its assets, and the Fund can
borrow money only from a bank for temporary or emergency purposes or for
investment purposes in amounts not exceeding 10% of its total assets. When
borrowings are made for investment purposes, the Fund must comply with the
provisions of the Investment Company Act that require the Fund to maintain asset
coverage of at least 300% of all such borrowings. If asset coverage should fall
below 300%, the Fund will be required to reduce its borrowings within three days
to the extent needed to meet the 300% asset coverage requirement.
|_| The Fund cannot purchase the securities of any issuer if the Fund
would then own more than 10% of the voting securities of that issuer.
|_| The Fund cannot invest more than 25% of its assets in any industry or
industries. However, the Fund can invest more than 25% of its assets in
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities. Industrial revenue bonds whose interest and principal
payments are the responsibility of companies within the same industry are
grouped together as an "industry" for the purpose of this restriction.
|_| The Fund cannot purchase or sell real estate, real estate investment
trust securities, commodities, commodity contracts, or oil or gas interests.
However, the Fund can invest in municipal securities that are secured by real
estate or interests in real estate.
|_| The Fund cannot invest in companies for the purpose of exercising
control or management.
|_| The Fund cannot sell securities short, purchase securities on margin,
or write put options. The Fund can purchase securities that have puts attached.
|_| The Fund cannot underwrite securities of other issuers. A permitted
exception is in case the purchase of municipal obligations in accordance with
the Fund's investment objective and policies is deemed to be an underwriting,
whether the Fund buys the securities directly from the issuer or from an
underwriter for an issuer.
|_| The Fund cannot invest in or hold securities of any issuer if Trustees
of the Fund own more than 1/2 of 1% of the securities of that issuer and
together own more than 5% of the securities of that issuer.
|_| The Fund cannot issue "senior securities."
On November 10, 1998, the Board of Trustees of the Fund changed the Fund's
classification under the Investment Company Act from "non-diversified" to
"diversified." That change did not require the approval of shareholders. In
making that change, the Fund has adopted an operating policy on diversification
of its investments (which amplifies the restriction, stated above against owning
more than 10% of the voting securities of any issuer). This policy cannot be
changed without the approval of shareholders as in the case of a "fundamental"
policy. Under this policy,
|_| With respect to 75% of its assets, the Fund cannot purchase securities
issued or guaranteed by any one issuer (other than the U.S. government or its
agencies or instrumentalities), if more than 5% of the Fund's total assets would
be invested in securities of that issuer.
Unless the Prospectus or Statement of Additional Information states that a
percentage restriction applies on an ongoing basis, it applies only at the time
the Fund makes an investment. In that case 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.
Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund has
a number of other investment restrictions that are not fundamental policies,
which means that they can be changed by the Board of Directors without
shareholder approval.
In carrying out its policy prohibiting concentration of its assets, the
Fund has an operating policy that the Fund cannot invest 25% or more of its
assets in any particular industry or group of related industries. Subject to the
Fund's policy on concentration, the Fund may invest more than 25% of its total
assets in a particular segment of the municipal securities market, such as
general obligation bonds, pollution control bonds, hospital bonds or any other
industry segment listed in Appendix B to this Statement of Additional
Information. In that case, economic, business, political or other events
affecting that segment or an issuer in that segment might affect the value of
other bonds of issuers in the same segment and therefore would increase the
Fund's exposure to market risks.
In applying its policy prohibiting the issuance of senior securities, the
Fund interprets that policy not to prohibit certain investment activities for
which assets of the Fund are designated as segregated to cover the related
obligations. Examples of those activities include borrowing money, repurchase
agreements, delayed-delivery and when-issued transactions and contracts to buy
or sell derivatives.
Diversification. The Fund intends to be "diversified" as defined in the
Investment Company Act and to satisfy the restrictions against investing too
much of its assets in any one "issuer" as set forth in the restrictions above.
In implementing this policy, the identification of the issuer of a municipal
security depends on the terms and conditions of the security. When the assets
and revenues of an agency, authority, instrumentality or other political
subdivision are separate from those of the government creating it and the
security is backed only by the assets and revenues of the subdivision, agency,
authority or instrumentality, the latter would be deemed to be the sole issuer.
Similarly, if an industrial development bond is backed only by the assets and
revenues of the non-governmental user, then that user would be deemed to be the
sole issuer. However, if in either case the creating government or some other
entity guarantees a security, the guarantee would be considered a separate
security and would be treated as an issue of that government or other entity.
<PAGE>
How the Fund Is Managed
Organization and History. The Fund is a series of Rochester Portfolio Series, a
Massachusetts business trust that is an open-end, diversified management
investment company with an unlimited number of authorized shares of beneficial
interest (that trust is referred to in this section as the "Fund's parent Trust"
or the "Trust").
The Fund is currently the only series of the Trust.
The Fund and its parent Trust are governed by a Board of Trustees, which
is responsible for protecting the interests of shareholders under Massachusetts
law. The Trustees meet periodically throughout the year to oversee the Fund's
(and the Trust's) activities, review its performance, and review the actions of
the Manager.
|X| Classes of Shares. 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. Class X shares are no longer
offered for sale. They are described below in "Classes of Shares." All classes
invest in the same investment portfolio. Shares are freely transferable. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally on matters submitted to the vote of shareholders. Each class of
shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which the interests of one
class are different from the interests of another class, and o votes as a
class on matters that affect that class alone.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders of the Fund. The Trust will hold meetings when required to do so by
the Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, 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.
If the Trustees receive a request from at least 10 shareholders 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. The shareholders making the request
must have been shareholders for at least six months and must hold shares of the
Fund valued at $25,000 or more or constituting at least 1% of the Fund's
outstanding shares, whichever is less. The Trustees may also take other action
as permitted by the Investment Company Act.
|X| Shareholder and Trustee Liability. The Trust's Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Fund's or the Trust's obligations. It also provides for indemnification and
reimbursement of expenses out of the Trust's property for any shareholder held
personally liable for its obligations. The Declaration of Trust also states that
upon request, the Trust shall assume the defense of any claim made against a
shareholder for any act or obligation of the Trust and shall satisfy any
judgment on that claim. Massachusetts law permits a shareholder of a business
trust (such as the Trust) to be held personally liable as a "partner" under
certain circumstances. However, the risk that a Fund shareholder will incur
financial loss from being held liable as a "partner" of the Fund's parent Trust
is limited to the relatively remote circumstances in which the Trust would be
unable to meet its obligations.
The Fund's contractual arrangements state that any person doing business
with the Fund (and each shareholder of the Fund) agrees under the Declaration of
Trust to look solely to the assets of the Fund for satisfaction of any claim or
demand that may arise out of any dealings with the Fund. The contracts further
state that the Trustees shall have no personal liability to any such person, to
the extent permitted by law.
Trustees and Officers. The Trustees and officers and their principal occupations
and business affiliations during the past five years are listed below. Trustees
denoted with an asterisk (*) below are deemed to be "interested persons" of the
Fund under the Investment Company Act. Mr. Cannon is a Trustee of the Fund as
well as the Rochester Fund Municipals Fund and the Bond Fund Series. All of the
other Trustees are also trustees or directors of the following Oppenheimer
funds:
Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest For Value Funds, a series fund having the following series:
Oppenheimer Quest Small Cap Value Fund,
Oppenheimer Quest Balanced Value Fund and
Oppenheimer Quest Opportunity Value Fund,
Oppenheimer Quest Global Value Fund, Inc.,
Oppenheimer Quest Capital Value Fund, Inc.,
Rochester Portfolio Series, a series fund having one series:
Limited-Term New York Municipal Fund,
Bond Fund Series, a series fund having one series:
Oppenheimer Convertible Securities Fund,
Rochester Fund Municipals, and
Oppenheimer MidCap Fund
Ms. Macaskill and Messrs. Bishop, Bowen, Doll, Donohue, Farrar and Zack, who
are officers of the Fund, respectively hold the same offices of the other
Oppenheimer funds listed above. As of April 1, 1999, the Trustees and the
officers of the Fund as a group owned less than 1% of the outstanding shares of
the Fund. The foregoing statement does not reflect shares held of record by an
employee benefit plan for employees of the Manager other than shares
beneficially owned under that plan by the officers of the Fund listed below. Ms.
Macaskill and Mr.
Donohue are trustees of that plan.
Bridget A. Macaskill*, Chairman of the Board of Trustees and President; Age: 50
Two World Trade Center, New York, New York 10048-0203 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 Corp., an investment adviser subsidiary of the
Manager; Chairman and a director of Shareholder Services, Inc. (since August
1994) and Shareholder Financial Services, Inc. (since September 1995), transfer
agent subsidiaries of the Manager; President (since September 1995) and a
director (since October 1990) of Oppenheimer Acquisition Corp., the Manager's
parent holding company; President (since September 1995) and a director (since
November 1989) of Oppenheimer Partnership Holdings, Inc., 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 management subsidiary of
the Manager and of Oppenheimer Millennium Funds plc; President and a director of
other Oppenheimer funds; a director of Hillsdown Holdings plc (a U.K. food
company).
John Cannon, Trustee; Age: 69
620 Sentry Parkway West, Suite 220, Blue Bell, Pennsylvania 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: 68
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, both 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 65
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, both 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.
Robert G. Galli, Trustee; Age: 65
19750 Beach Road, Jupiter, Florida 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the following
positions: Vice Chairman of the Manager, OppenheimerFunds, Inc. (October 1995 to
December 1997); General Counsel of Oppenheimer Acquisition Corp., the Manager's
parent holding company; Executive Vice President of the Manager (December 1977
to October 1995); Executive Vice President and a director (April 1986 to October
1995) of HarbourView Asset Management Corporation.
Lacy B. Herrmann, Trustee; Age: 69
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, Inc.,
and Trustee of OCC Accumulation Trust, both of which are open-end investment
companies; Trustee Emeritus of Brown University.
George Loft, Trustee; Age: 84
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; Age: 50
350 Linden Oaks, Rochester, NY 14625
Senior Vice President (since January 1996) of the Manager; Chairman of the
Rochester Division of the Manager (since January 1996); an officer and portfolio
manager of other Oppenheimer funds; prior to joining the Manager in January
1996, he was President and a director of Rochester Capital Advisors, Inc.
(1993-1995), the Fund's prior investment advisor, and of Rochester Fund
Services, Inc. (1986-1995), the Fund's prior distributor; President and a
trustee of Limited Term New York Municipal Fund (1991-1995), Oppenheimer
Convertible Securities Fund (1986-1995) and Rochester Fund Municipals
(1986-1995); President and a director of Rochester Tax Manager Fund, Inc.
(1982-1995) and of Fielding Management Company, Inc. (1982-1995), an investment
advisor.
Andrew J. Donohue, Secretary; Age: 48
Two World Trade Center, New York, New York 10048-0203
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 Asset Management Corp., Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and (since September 1995) Oppenheimer
Partnership Holdings, Inc.; President and a director of Centennial Asset
Management Corporation (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 Oppenheimer
Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer; Age: 39.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the Manager; formerly
Principal and Chief Operating Officer, Bankers Trust Company - Mutual Fund
Services Division (1995-1999); Vice President and Chief Financial Officer of CS
First Boston Investment Management Corp. (1991-1995); and Vice President and
Accounting Manager, Merrill Lynch Asset Management (1987-1991).
Robert Bishop, Assistant Treasurer; Age: 40
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.
Adele A. Campbell, Assistant Treasurer; Age 35
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).
Scott T. Farrar, Assistant Treasurer; Age: 33
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: 50
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of Shareholder Services, Inc. (since
May 1985), and Shareholder Financial Services, Inc. (since November 1989);
Assistant Secretary of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
n Remuneration of Trustees. The officers of the Fund and one Trustee, Ms.
Macaskill, are affiliated with the Manager and receive no salary or fee from the
Fund. The remaining Trustees received the compensation shown below. The
compensation from the Fund was paid during its fiscal year ended December 31,
1998. The table below also shows the total compensation from all of the
Oppenheimer funds listed above, including the compensation from the Fund. That
amount represents compensation received as a director, trustee, or member of a
committee of the Board during the calendar year 1998.
<PAGE>
- --------------------------------------------------------------------------------
Total Compensation
Aggregate Retirement From all Oppenheimer
Compensation Benefits Accrued Quest/Rochester
Trustee's Name From the Fund 1 as Part of Fund Funds2
Expenses
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Cannon $ 2,582 None $ 26,054
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Y. Clinton $18.487 $11,382 $ 71,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas W. Courtney $15,411 $ 8,306 $ 71,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert G. Galli $ 3,8163 None $113,383
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lacy B. Herrmann $19,899 $12,794 $ 71,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
George Loft $20,532 $13,427 $ 71,700
- --------------------------------------------------------------------------------
1. Aggregate compensation includes fees and any retirement plan benefits accrued
for a Trustee.
2. For the 1998 calendar year. Includes compensation for a portion of the year
paid by Oppenheimer Quest Officers Value Fund, which was reorganized into
another fund in June 1998. Each series of an investment company is considered
a separate "fund" for this purpose. For Mr. Galli, compensation is for the
period from 6/2/98 to 12/31/98.
3. For Mr. Galli, the aggregate compensation from the fund is for the period
from 6/2/98 to 10/31/98. His total compensation for the 1998 calendar year
also includes compensation from 20 other Oppenheimer funds for which he
serves as a trustee or director.
|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan
that provides for payments to retired Trustees. Payments are up to 80% of the
average compensation paid during a Trustee's five years of service in which the
highest compensation was received. A Trustee must serve as Trustee for any of
the Oppenheimer Quest/Rochester/MidCap funds listed above for at least 15 years
to be eligible for the maximum payment. Each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of service.
Therefore the amount of those benefits cannot be determined at this time, nor
can we estimate the number of years of credited service that will be used to
determine those benefits.
|X| Deferred Compensation Plan for Trustees. The Board of Trustees has
adopted a Deferred Compensation Plan for disinterested trustees that enables
them 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 or net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level 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 without shareholder approval for the limited purpose of
determining the value of the Trustee's deferred fee account.
|X| Major Shareholders. As of April 1, 1999, the only person who owned of
record or who were known by the Fund to own beneficially 5% or more of any class
of the Fund's outstanding shares was:
Merrill Lynch Pierce Fenner & Smith Inc. 4800 Deer Lake Drive East, Floor
3, Jacksonville, Florida 32246, which owned 49,432,645.176 Class A shares
(approximately 16% of the Class A shares then outstanding), 4,337,429.544
Class B shares (approximately 20% of the Class B shares then outstanding,
6,823,222.616 Class C shares (approximately 21% of the Class C shares then
outstanding), and 3,228,860.804 Class X shares (approximately 23% of the
Class X shares then outstanding), for the benefit of its customers.
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company. 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 enforced by the
Manager.
The portfolio manager of the Fund is principally responsible for the
day-to-day management of the Fund's investment portfolio. Other members of the
Manager's fixed-income portfolio department, in particular Anthony A. Tanner, an
Assistant Portfolio Manager of the Fund, provide the Fund's portfolio manager
with research and support in managing the Fund's portfolio. Mr. Tanner is a Vice
President of the Rochester Division of the Manager and served as an officer of
the Fund's prior investment advisor.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to day business. That agreement
requires the Manager, at its expense, to provide the Fund with adequate office
space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective corporate administration for the Fund. Those
responsibilities include the compilation and maintenance of records with respect
to the Fund's 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.
The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The investment advisory agreement lists examples of expenses
paid by the Fund. The major categories relate to interest, taxes, fees to
disinterested Trustees, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs,
brokerage commissions, and non-recurring expenses, including litigation cost.
The management fees paid by the Fund to the Manager are calculated at the rates
described in the Prospectus, which are applied to the assets of the Fund as a
whole. The fees are allocated to each class of shares based upon the relative
proportion of the Fund's net assets represented by that class. The management
fees paid by the Fund to the Manager during its last three fiscal years are
listed below.
The investment advisory agreement states 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 investment 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 under the
agreement. The 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 Manager may withdraw the Fund's right to use the name
"Oppenheimer" as part of its name.
o Accounting and Record-Keeping Services. The Manager provides
accounting and record-keeping services to the Fund pursuant to an Accounting and
Administration Agreement approved by the Board of Trustees. Under that
agreement, the Manager maintains the general ledger accounts and records
relating to the Fund's business and calculates the daily net asset values of the
Fund's shares.
- --------------------------------------------------------------------------------
Accounting and Administrative
Management Fee Paid to Services Fee Paid to
Fiscal Year Ended OppenheimerFunds, Inc. OppenheimerFunds, Inc.
12/31
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1996 $2,687,2131 $193,682
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1997 $3,140,951 $225,111
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 $4,331,766 $314,752
- --------------------------------------------------------------------------------
1. The Fund paid its prior investment advisor, Rochester Capital Advisors, L.P.,
$27,896 for services in the fiscal year ended 12/31/96.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the investment advisory agreement is to buy and sell portfolio
securities for the Fund. The investment advisory agreement allows the Manager to
use broker-dealers to effect the Fund's portfolio transactions. Under the
agreement, the Manager may employ those broker-dealers (including "affiliated"
brokers, as that term is defined in the Investment Company Act) that, the
Manager thinks in its best judgment based on all relevant factors, will
implement the Fund's policy to obtain, at reasonable expense, the "best
execution" of portfolio transactions. "Best execution" refers to prompt and
reliable execution at the most favorable price obtainable. The Manager need not
seek competitive commission bidding. However, the Manager 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 investment advisory agreement, the Manager may select brokers
that provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment discretion.
The commissions paid to such brokers may be higher than another qualified broker
would charge, if the Manager makes a good faith determination that the
commission is fair and reasonable in relation to the services provided. Subject
to those other
considerations, as a factor in selecting brokers for the Fund's portfolio
transactions, the Manager may also consider sales of shares of the Fund and
other investment companies managed by the Manager or its affiliates.
Brokerage Practices Followed by the Manager. The Manager allocates brokerage for
the Fund subject to the provisions of the investment advisory agreement and the
procedures and rules described above. Generally the Manager's portfolio traders
allocate brokerage upon recommendations from the Manager's portfolio managers.
In certain instances, portfolio managers may directly place trades and allocate
brokerage. In either case, the Manager's executive officers supervise the
allocation of brokerage.
Most securities purchases made by the Fund are in principal transactions
at net prices. 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 the Manager determines that a better price or execution may
be obtained by using the services of a broker. Therefore, the Fund does not
incur substantial brokerage costs. Portfolio securities purchased from
underwriters include a commission or concession paid by the issuer to the
underwriter in the price of the security. Portfolio securities purchased 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. In an option transaction, the Fund ordinarily uses the same broker
for the purchase or sale of the option and any transaction in the investment to
which the option relates.
Other funds advised by the Manager have investment objectives and policies
similar to those of the Fund. Those other funds may purchase or sell the same
securities as the Fund at the same time as the Fund, which could affect the
supply and price of the securities. When possible, the Manager tries to combine
concurrent orders to purchase or sell the same security by more than one of the
accounts managed by the Manager or its affiliates. The transactions under those
combined orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
The investment advisory agreement permits the Manager to allocate
brokerage for research services. 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. Investment research received by the Manager for the
commissions paid by those other accounts may be useful both to the Fund and one
or more of the Manager's other accounts. Investment research services may be
supplied to the Manager by a third party at the instance of a broker through
which trades are placed. Investment research services include information and
analysis on particular companies and industries as well as market or economic
trends and portfolio strategy, 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 in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional views
and comparisons for consideration and helps the Manager to obtain market
information for the valuation of securities that are either held in the Fund's
portfolio or are being considered for purchase. The Manager provides information
to the Board of the Fund about the commissions paid to brokers furnishing
research services, together with the Manager's representation that the amount of
such commissions was reasonably related to the value or benefit of such
services.
------------------------------------------------------------------------------
Fiscal Year Ended 12/31 Total Brokerage Commissions Paid by the Fund1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1996 None
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1997 None
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 None
------------------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal amounts on a net
trade basis.
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund. The Distributor is not
obligated to sell a specific number of shares. Expenses normally attributable to
sales are borne by the Distributor. They exclude payments under the Distribution
and Service Plans but include advertising and the cost of printing and mailing
prospectuses (other than those furnished to existing shareholders).
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is discussed in the table below:
------------------------------------------------------------------------------
Aggregate Class A Commissions Commissions Commissions
Fiscal Front-End Front-End on Class A on Class B on Class C
Year Sales Sales Shares Shares Shares
Ended Charges on Charges Advanced by Advanced by Advanced by
12/31: Class A Retained by Distributor1 Distributor1 Distributor1
Shares Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1996 $1,623,032 $290,035 $-0- $ N/A $ N/A
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1997 $2,677,697 $473,852 $ 255,046 $648,027 $275,006
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 $3,768,254 $509,884 $1,394,666 $1,284,173 $748,672
------------------------------------------------------------------------------
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale. During the fiscal years ended 12/31/96 and
12/31/97, the Fund also offered Class X shares (previously designated as
Class B shares). The Fund ceased to offer Class X shares after January 5,
1998. The commissions advanced by the Distributor on sales of Class X shares
during 1996 and 1997 were $498,857 and $265,074, respectively.
- --------------------------------------------------------------------------------
Class A Class B Class C Class X
Fiscal Year Contingent Contingent Contingent Contingent
Ended 12/31: Deferred Sales Deferred Sales Deferred Sales Deferred Sales
Charges Charges Charges Charge Retained
Retained by Retained Retained by by Distributor
Distributor by Distributor Distributor
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 $10,477 $69,962 $50,046 $87,454
- --------------------------------------------------------------------------------
Distribution and Service Plans. The Fund has adopted a Service Plan for its
Class A shares and Distribution and Service Plans for its Class B, Class C and
Class X shares under Rule 12b-1 of the Investment Company Act. Under those
plans, the Fund makes payments to the Distributor in connection with the
distribution and/or servicing of the shares of the particular class.
Each plan has been approved by a vote of 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. Each plan has also been
approved by a vote of the holders of a "majority" (as defined in the Investment
Company Act) of the shares of each class. For the Class B and Class C plans, the
Manager cast that vote as the sole initial holder of Class B and Class C shares.
* In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not have
any direct or indirect financial interest in the operation of the distribution
plan or any agreement under the plan.
Under the plans the Manager and the Distributor, in their sole discretion,
from time to time may use their own resources (at no direct cost to the Fund) to
make payments to brokers, dealers or other financial institutions for
distribution and administrative services they perform. The Manager may use
profits from the advisory fee it receives from the Fund. The Distributor and the
Manager may, in their sole discretion, increase or decrease the amount of
payments they make to plan recipients from their own resources.
Unless a plan is terminated as described below, the plan continues in
effect from year to year, but only if the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A 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.
The Board and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of payments
to be made under the plan must be approved by shareholders of the class affected
by the amendment. Because Class B and Class X shares automatically convert into
Class A shares after six years, the Fund must obtain the approval of Class A as
well as Class B and Class X shareholders for an amendment to the Class A plan
that would materially increase the amount to be paid under that plan. That
approval must be by a "majority" (as defined in the Investment Company Act) of
the shares of each class, voting separately by Class.
While the plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Fund's Board of Trustees at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Trustees in
the exercise of their fiduciary duty.
Each plan states that while it is in effect, the selection or replacement
and nomination of those Trustees of the Fund who are not "interested persons" of
the Fund is committed to the discretion of the Independent Trustees. This
provision does not prevent the involvement of others in the selection and
nomination process as long as the final decision as to selection or nomination
is approved by a majority of the Independent Trustees.
Under the plans for a class, no payment will be made to any recipient in
any quarter in which the aggregate net asset value of all Fund shares of that
class held by the recipient for itself and its customers does not exceed a
minimum amount, if any, that may be set 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 allowed under the Class A, Class B and Class C plans and has
set no minimum asset amount needed to qualify for payments. The Class X plan
permits the Fund to pay an asset-based sales charge of up to 0.75% per year of
average daily net assets attributable to Class X shares, but the Board of
Trustees has set that asset-based sales charge 0.50% per year of the average
daily net assets attributable to Class X shares.
|X| Class A Service Plan. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers who
hold Class A shares. The services 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. The Distributor makes
payments to plan recipients 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 service
providers or their customers.
For the fiscal year ended December 31, 1998, payments under the Plan for
Class A shares totaled $2,210,694, all of which was paid by the Distributor to
recipients. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares for any fiscal year may not be recovered in subsequent years. The
Distributor may not use payments received under the Class A plan to pay any of
its interest expenses, carrying charges, other financial costs, or allocation of
overhead.
|X| Class B, Class C and Class X Service and Distribution Plan Fees. Under
each plan, service fees and distribution 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 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 under the plans during that period. The types of services that
recipients provide are similar to the services provided under the Class A
service plan described above. Under the Class X plan, the Distributor receives a
service fee of 0.25% of the average annual net assets of Class X shares and
makes payments to plan recipients quarterly at an annual rate not to exceed
0.25% of the average net assets of Class X shares held in accounts of the
service providers or their customers.
The plans permit the Distributor to retain both the asset-based sales
charges and the service fee on shares or to pay recipients the service fee on a
quarterly basis, without payment in advance. However, the Distributor presently
intends to pay recipients the service fee on Class B and Class C shares in
advance for the first year the shares are outstanding. The advance payment is
based on the net asset value of shares sold. Shares purchased by exchange do not
qualify for an advance service fee payment. After the first year shares are
outstanding, the Distributor makes service fee payments quarterly on outstanding
shares under each plan. If Class B or Class C shares are redeemed during the
first year after their purchase, the recipient of the service fees on those
shares will be obligated to repay the Distributor a pro rata portion of the
advance payment made on those shares.
The Distributor retains the asset-based sales charge on Class B and Class
X shares. The Distributor retains the asset-based sales charge on Class C shares
during the first year the shares are outstanding. It pays the asset-based sales
charge as an ongoing commission to the dealer on Class C shares outstanding for
a year or more. If a dealer has a special agreement with the Distributor, the
Distributor will pay the Class B and/or Class C service fees and the asset-based
sales charge to the dealer quarterly in lieu of paying the sales commission and
service fee in advance at the time of purchase.
The asset-based sales charge on Class B and Class C shares allows
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Distributor's
actual expenses in selling Class B and Class 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 plans. The Fund pays the asset-based
sales charge to the Distributor for its services rendered in distributing Class
B and Class C shares. The payments are made to the Distributor in recognition
that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of
sale and pays service fees as described in the Prospectus,
o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide such financing
from its own resources or from the resources of an affiliate,
o employs personnel to support distribution of shares, and o bears the
costs of sales literature, advertising and prospectuses (other
than those furnished to current shareholders) and state "blue sky" registration
fees and certain other distribution expenses.
<PAGE>
- --------------------------------------------------------------------------------
Class B Distribution Fees for the Year Ended 12/31/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distributor's Distributor's
Total Payments Payments Aggregate Unreimbursed Expenses
Under Class B Plan Retained By Unreimbursed as % of Class B Net
Distributor Expenses Under Plan Assets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$435,015 $393,188 $1,802,894 2.8%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Distribution Fees for the Year Ended 12/31/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distributor's Distributor's
Total Payments Payments Aggregate Unreimbursed Expenses
Under Class C Plan Retained by Unreimbursed as % of Class C Net
Distributor Expenses Under Plan Assets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$615,304 $555,357 $1,248,644 1.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class X Distribution Fees for the Year Ended 12/31/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distributor's Distributor's
Total Payments Payments Aggregate Unreimbursed Expenses
Under Class X Plan Retained by Unreimbursed as % of Class X Net
Distributor Expenses Under Plan Assets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$374,098* $246,974 $174,590 0.4%
- --------------------------------------------------------------------------------
If a plan is terminated by the Fund, the Board of Trustees may allow the
Fund to continue payments of the asset-based sales charge to the Distributor for
distributing shares before the plan was terminated. All payments under the 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 to NASD members.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its performance. These terms include "standardized yield,"
"tax-equivalent yield," "dividend yield," "average annual total return,"
"cumulative total return," "average annual total return at net asset value" and
"total return at net asset value." An explanation of how yields and total
returns are calculated is set forth below. The charts below show the Fund's
performance as of its most recent fiscal year end for its classes of shares that
are currently offered to investors. You can obtain current performance
information by calling the Fund's Transfer Agent at 1-800-525-7048 or by
visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of shares
of the Fund. Those returns must be shown 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 (or its submission for
publication). Certain types of yields may also be shown, provided that they are
accompanied by standardized average annual total returns.
Use of standardized performance calculations 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 the
Fund's performance information as a basis for comparison with other investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Fund over various periods and do not show the performance of each
shareholder's account. Your account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time and
price than the shares used in the model.
|_| The Fund's performance returns do not reflect the effect of taxes on
distributions.
|_| An investment in the Fund is not insured by the FDIC or any other
government agency.
|_| The principal value of the Fund's shares, and its yields and total
returns are not guaranteed and normally will fluctuate on a daily basis.
|_| When an investor's shares are redeemed, they may be worth more or less
than their original cost.
|_| Yields and total returns for any given past period represent
historical performance information and are not, and should not be considered, a
prediction of future yields or returns.
The performance of each class of shares is shown separately, because the
performance of each class of shares will usually be different. That is because
of the different kinds of expenses each class bears. The yields and total
returns of each class of shares of the Fund are affected by market conditions,
the quality of the Fund's investments, the maturity of those investments, the
types of investments the Fund holds, and its operating expenses that are
allocated to the particular class.
|X| Yields. The Fund uses a variety of different yields to illustrate its
current returns. Each class of shares calculates its yield separately because of
the different expenses that affect each class.
|_| Standardized Yield. The "standardized yield" (sometimes referred
to just 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.
Standardized yield 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:
(a-b) 6
Standardized Yield = 2 ((--- + 1) - 1)
( cd)
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense assumptions).
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 particular 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.
|_| Dividend Yield. The Fund may quote a "dividend yield" for each
class of its shares. Dividend yield is based on the dividends paid on a class of
shares during the actual dividend period. To calculate dividend yield, the
dividends of a class declared during a stated 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 current 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.
|_| Tax-Equivalent Yield. The "tax-equivalent yield" of a class of
shares is the equivalent yield that would have to be earned on a taxable
investment to achieve the after-tax results represented by the Fund's
tax-equivalent yield. It adjusts the Fund's standardized yield, as calculated
above, by a stated tax rate. Using different tax rates to show different tax
equivalent yields shows investors in different tax brackets the tax equivalent
yield of the Fund based on their own tax bracket.
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. The result is added 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. Your tax bracket is determined by your Federal and state taxable income
(the net amount subject to Federal and state income tax after deductions and
exemptions). The tax-equivalent yield table assumes that the investor is taxed
at the highest bracket, regardless of whether a switch to non-taxable
investments would cause a lower bracket to apply.
<PAGE>
- --------------------------------------------------------------------------------
The Fund's Yields for the 30-Day Periods Ended 12/31/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tax-Equivalent Yield
(46.43% Combined
Federal/New York Tax
Class of Standardized Yield Dividend Yield Bracket)
Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Without Without Without
Sales After Sales After Sales After
Charge Sales Charge Sales Charge Sales
Charge Charge Charge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A 3.85% 3.72% 4.63% 4.47% 7.19% 6.94%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B 3.07% N/A 3.74% N/A 5.73% N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C 3.09% N/A 3.76% N/A 5.77% N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class Y 3.32% N/A 4.02% N/A 6.20% N/A
- --------------------------------------------------------------------------------
|X| Total Return Information. There are different types of "total returns"
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
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. 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 actual year-by-year performance. The
Fund uses standardized calculations for its total returns as prescribed by the
SEC. The methodology is discussed below.
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 without sales charge, as
described below). For Class B shares, payment of the applicable contingent
deferred sales charge is applied, depending on the period for which the return
is shown: 4.0% in the first year, 3.0% in the second year, 2.0% in the third and
fourth years, 1.0% in the fifth year, and none thereafter. For Class C shares,
the 1% contingent deferred sales charge is deducted for returns for the 1-year
period.
|_| Average Annual Total Return. 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" in the
formula) of that investment, according to the following formula:
- ---------------------------------------------------------------------------
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
- -----------------------------------------------------------------------------
<PAGE>
|_| Cumulative Total Return. The "cumulative total return"
calculation measures the change in value of a hypothetical investment of $1,000
over an entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis.
Cumulative total return is determined as follows:
- --------------------------------------------------------------------------------
ERV - P
------- = Total Return
P
- --------------------------------------------------------------------------------
|_| Total Returns at Net Asset Value. From time to time the Fund may
also quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B or Class C 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 Fund's Total Returns for the Periods Ended 12/31/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cumulative Total Average Annual Total Returns
Returns (10 years
or life of class)
Class of
Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5-Years 10-Years
1-Year (or life of (or life of
class) class)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A 59.04%1 64.81%1 2.23% 5.94% 4.85% 5.60% 6.58%1 7.10%1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B 8.32%* 11.32%* 1.13% 5.13% 4.91%1 6.64% N/A N/A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C N/A 11.02%** 4.15% 5.15% N/A 6.48%** N/A N/A
- --------------------------------------------------------------------------------
1 Inception of Class A: 9/18/91.
*Inception of Class B: 5/1/97.
**Inception of Class C: 5/1/97.
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. The Fund may also compare its performance to
that of other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.
|X| Lipper Rankings. From time to time the Fund may publish the ranking of
the performance of its classes of shares by Lipper Analytical Services, Inc.
("Lipper"). Lipper is 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 is
ranked by Lipper against all other bond funds, other than money market funds,
and all intermediate municipal debt 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. Lipper also publishes "peer-group" indices of the performance of
all mutual funds in a category that it monitors and averages of the performance
of the funds in particular categories.
|X| Morningstar Rankings. From time to time the Fund may publish the star
ranking of the performance of its classes of 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. The Fund is ranked among municipal
bond funds.
Morningstar star rankings are based on risk-adjusted total investment
return. Investment return measures a fund's (or class's) one, three, five and
ten-year average annual total returns (depending on the inception of the fund or
class) in excess of 90-day U.S. Treasury bill returns after considering the
fund's sales charges and expenses. Risk measures a fund's (or class's)
performance below 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%
of funds in a category), 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 date 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.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The performance of the
Fund's classes of shares may be compared in publications to the performance of
various market indices or other investments, and averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.
Investors may also wish to compare the Fund's returns to the return on
fixed-income investments available from banks and thrift institutions. Those
include 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 or insured 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. Repayment of principal and payment of interest on
Treasury securities is backed by the full faith and credit of the U.S.
government.
From time to time, the Fund may publish rankings or ratings of the Manager
or Transfer Agent, and of the investor services provided by them to shareholders
of the Oppenheimer funds, other than performance rankings of the Oppenheimer
funds themselves. Those ratings or rankings of shareholder and investor services
by third parties may include comparisons of their services to those provided by
other mutual fund families selected by the rating or ranking services. They may
be based upon the opinions of the rating or ranking service itself, using its
research or judgment, or based upon surveys of investors, brokers, shareholders
or others.
- --------------------------------------------------------------------------------
A B O U T Y O U R A C C O U N T
- --------------------------------------------------------------------------------
How to Buy Shares
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about the
special sales charge arrangements offered by the Fund, and the circumstances in
which sales charges may be reduced or waived for certain classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25. 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
with the proceeds of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of The New York
Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. If Federal Funds are received on a business day after the close
of the Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular business day. The proceeds of ACH transfers are normally
received by the Fund 3 days after the transfers are initiated. The Distributor
and the Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. 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 Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker
incurs little or no selling expenses.
|X| 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 for your joint accounts, or for trust or custodial
accounts on behalf of your children who are minors, and
|_|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, and
|_|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.
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. 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 reduced sales charge will apply only to current purchases. You must
request it when you buy shares.
n The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and
currently include the following:
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street California
Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Growth & Income
Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund Oppenheimer Convertible
Securities Fund Oppenheimer Multiple Strategies Fund Oppenheimer Developing
Markets Fund Oppenheimer Municipal Bond Fund Oppenheimer Disciplined Allocation
Fund Oppenheimer New York Municipal Fund Oppenheimer Disciplined Value Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Discovery Fund Oppenheimer
Pennsylvania Municipal Fund Oppenheimer Enterprise Fund Oppenheimer Quest
Balanced Value Fund Oppenheimer Equity Income Fund Oppenheimer Quest Capital
Value Fund,
Inc.
Oppenheimer Florida Municipal Fund Oppenheimer Quest Global Value Fund,
Inc.
Oppenheimer Global Fund Oppenheimer Quest Opportunity Value Fund Oppenheimer
Global Growth & Income Fund Oppenheimer Quest Small Cap Value Fund Oppenheimer
Gold & Special Minerals Oppenheimer Quest Value Fund, Inc. Fund Oppenheimer
Growth Fund Oppenheimer Real Asset Fund Oppenheimer High Yield Fund Oppenheimer
Strategic Income Fund Oppenheimer Insured Municipal Fund Oppenheimer Total
Return Fund, Inc. Oppenheimer Intermediate Municipal Fund Oppenheimer U.S.
Government Trust Oppenheimer International Bond Fund Oppenheimer World Bond Fund
Oppenheimer International Growth Fund Limited-Term New York Municipal Fund
Oppenheimer International Small Rochester Fund Municipals Company Fund
Oppenheimer Large Cap Growth Fund
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust 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 the money market funds. Under certain
circumstances described in this Statement of Additional Information, redemption
proceeds of certain money market fund shares may be subject to a contingent
deferred sales charge.
n Letters of Intent. Under a Letter of Intent, if you purchase Class A
shares or Class A and 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
both Class A and Class B shares will determine the reduced sales charge rate for
the Class A shares purchased during that period. You can include purchases made
up to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class B
shares of the Fund (and other Oppenheimer funds) during a 13-month period (the
"Letter of Intent period"). At the investor's request, this may 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
purchased under the Letter to obtain the reduced sales charge rate on purchases
of Class A shares of the Fund (and other Oppenheimer funds) that applies under
the Right of Accumulation to current purchases of Class A shares. Each purchase
of Class A shares under the Letter will be made at the 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. However, 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. That amount is described in "Terms of
Escrow," below (those terms may be amended by the Distributor 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 a Letter of
Intent. If those terms are amended, as they may be from time to time by the
Fund, the investor agrees to be bound by the amended terms and 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 Prospectus, the sales
charges paid will be adjusted to the lower rate. That adjustment will be made
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 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. That sales charge adjustment will
apply to any shares redeemed prior to the completion of the Letter. If the
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 sold
with a front-end sales charge or subject to a Class A
contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either (1) Class
A shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or
(2) 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 to buy shares directly
from a bank account, you must enclose a check (minimum $25) for the initial
purchase with your application. Shares purchased by Asset Builder Plan payments
from bank accounts are subject to the redemption restrictions for recent
purchases described in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use their fund account to make
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 Application. Neither
the Distributor, the Transfer Agent nor the Fund shall be responsible for any
delays in purchasing shares resulting from delays in ACH transmissions.
Before initiating Asset Builder payments, obtain a prospectus of the
selected fund(s) from the Distributor or your financial advisor and request an
application from the Distributor, complete it and return it. 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. The Transfer Agent
requires a reasonable period (approximately 15 days) after receipt of such
instructions to implement them. The Fund reserves the right to amend, suspend,
or discontinue offering Asset Builder 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.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class B,
Class C or Class X shares and the dividends payable on Class B or Class C or
Class X shares will be reduced by incremental expenses borne solely by that
class. Those expenses include the asset-based sales charges to which Class B,
Class C and Class X shares are subject.
The availability of three classes of shares permits an investor to choose
the method of purchasing shares that is more appropriate for the investor. That
may depend on the amount of the purchase, the length of time the investor
expects to hold shares, and other relevant circumstances. Class A shares
normally are sold subject to an initial sales charge. While Class B and Class C
shares have no initial sales charge, the purpose of the deferred sales charge
and asset-based sales charge on Class B and Class C shares is the same as that
of the initial sales charge on Class A shares to compensate the Distributor and
brokers, dealers and financial institutions that sell shares of the Fund. A
salesperson who is entitled to receive compensation from his or her firm for
selling Fund shares may receive different levels of compensation for selling one
class of shares than another.
The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus accounts). That
is because generally it will be more advantageous for that investor to purchase
Class A shares of the Fund.
Class X Shares. Effective January 6, 1998, the Fund ceased offering
Class X shares to investors. Prior to May 1, 1997, Class X shares had been
designated as the Fund's Class B shares. On that date, the Fund re-designated
its Class B shares as Class X shares and commenced offering shares of a new
Class B. Already-issued Class X shares remain outstanding until they are
redeemed or exchanged or converted. (Class X shares of the Fund may be exchanged
only for Class B shares of other Oppenheimer funds.)
Class X shares were originally sold at net asset value without 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 contingent deferred sales charge will not be assessed
on shares purchased by reinvestment of dividends or capital gains distributions,
nor on the amount of the account value represented by any increase in the net
asset value of shares over the original net asset value. The contingent deferred
sales charge is assessed on the lesser of the original net asset value or the
net asset value of the shares at the time of redemption. The contingent deferred
sales charge is paid to compensate the Distributor for its expenses incurred in
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
redeemed shares, the Fund redeems shares in the same order as for Class B and
Class C shares. The contingent deferred sales charge is not imposed in the
circumstances that apply to waivers of the Class B and Class C contingent
deferred sales charge as set forth in Appendix C to this Statement of Additional
Information. 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:
<PAGE>
- --------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in that Year (as % of Amount
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. In applying the sales charge, all
purchases are considered to have been made on the first regular business day of
the month in which the purchase was made.
|X| Class B and Class X Conversion. The conversion of Class B shares 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 shareholder under
Federal income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in which event no
further conversions of Class B shares or Class X shares would occur while such
suspension remained in effect. Although Class B and 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 shareholder, and absent such exchange, Class
B and Class X shares might continue to be subject to the asset-based sales
charge for longer than six years.
|X| Allocation of Expenses. 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 shares, and therefore are indirectly borne by shareholders
through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are allocated
pro rata to the shares of all classes. The allocation is based on the percentage
of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general
expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to unaffiliated
Trustees, custodian expenses, share issuance costs, organization and start-up
costs, interest, taxes and brokerage commissions, and non-recurring expenses,
such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of such
expenses include distribution and service plan (12b-1) fees, transfer and
shareholder servicing agent fees and expenses, and shareholder meeting expenses
(to the extent that such expenses pertain only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share of
each class of shares of the Fund are determined as of the close of business of
The New York Stock Exchange on each day that the Exchange is open. It is done by
dividing the value of the Fund's net assets attributable to that class by the
number of shares of that class that are outstanding. The Exchange normally
closes at 4:00 P.M., New York time, but may close earlier on some other days
(for example, in case of weather emergencies or on days falling before a
holiday). The Exchange's most recent annual announcement (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 municipal
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. The Fund's net asset
values will not be calculated on those days, and the values of some of the
Fund's portfolio securities may change significantly on those days when
shareholders may not purchase or redeem shares.
|X| Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
|_| Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" 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.
|_| The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry: (1) debt instruments that have a
maturity of more than 397 days when issued, (2) debt instruments that had a
maturity of 397 days or less when issued and have
a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60 days or
less.
|_| The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1) money market 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
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
|_| 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, a security may be priced at the mean between the "bid" and "asked"
prices provided by a single active market maker (which in certain cases may be
the "bid" price if no "asked" price is available).
In the case of municipal securities, when last sale information is not
generally available, the Manager may use pricing services approved by the Board
of Trustees. The pricing service may use "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, and maturity. Other
special factors may be involved (such as the tax-exempt status of the interest
paid by municipal securities). The Manager will monitor the accuracy of the
pricing services. That monitoring may include comparing prices used for
portfolio valuation to actual sales prices of selected securities.
Puts and calls are valued at the last sale price on the principal exchange
on which they are traded or on Nasdaq, as applicable, as determined by a pricing
service approved by the Board of Trustees or by the Manager. If there were no
sales that day, they shall be valued at the last sale price on the preceding
trading day if it is within the spread of the closing "bid" and "asked" prices
on the principal exchange or on Nasdaq on the valuation date. If not, the value
shall be the closing bid price on the principal exchange or on Nasdaq on the
valuation date. If the put, call or future is not traded on an exchange or on
Nasdaq, it shall be valued by the mean between "bid" and "asked" prices obtained
by the Manager from two active market makers. In certain cases that may be at
the "bid" price if no "asked" price is available.
When the Fund writes an option, an amount equal to the premium received is
included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is adjusted
("marked-to-market") to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call or put written by the Fund
is exercised, the proceeds are increased by the premium received. If a call
written by the Fund expires, the Fund has a gain in the amount of the premium.
If the Fund enters into a closing purchase transaction, it will have a gain or
loss, depending on whether the premium received was more or less than the cost
of the closing transaction. If the Fund exercises a put it holds, the amount the
Fund receives on its sale of the underlying investment is reduced by the amount
of premium paid by the Fund.
How to Sell Shares
The information below supplements the terms and conditions for redeeming
shares set forth in the Prospectus.
Checkwriting. When a check is presented to the Fund's 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 to receive 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 listed on the check or at the Fund's custodian bank.
That 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.
In choosing to take advantage of the Checkwriting privilege by signing the
Account Application or by completing a Checkwriting card, each individual who
signs: (1) for individual accounts, represents that they are the registered
owner(s) of
the shares of the Fund in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other
fiduciary or agent, as applicable, duly authorized to act on behalf of
such registered owner(s);
(3) authorizes the Fund, its Transfer Agent and any bank through which the
Fund's drafts (checks) are payable to pay all checks drawn on the Fund
account of such person(s) and to redeem a sufficient amount of shares
from that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be
honored if there is 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 the
account, even if that account is registered in the names of more than
one person or more than one authorized signature appears on the
Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or
amended at any time by the Fund and/or the Fund's bank; and
(6) acknowledges and agrees that neither the Fund nor its bank shall incur
any liability for that amendment or termination of checkwriting
privileges or for redeeming shares to pay checks reasonably believed by
them to be genuine, or for returning or not paying checks that have not
been accepted for any reason.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
|_| Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
|_| Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.
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. Reinvestment
will be at the net asset value next computed after the Transfer Agent receives
the reinvestment order. The shareholder must ask the Transfer Agent for that
privilege at the time of reinvestment. This privilege does not apply to Class C
or Class X shares. 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.
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.
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 liquid securities from the
portfolio of the Fund, in lieu of cash.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, 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 Fund will value securities used to pay redemptions in
kind using the same method the Fund uses to value its portfolio securities
described above under "Determination of Net Asset Values Per Share." That
valuation will be made as of the time the redemption price is determined.
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 such shares has fallen
below the stated minimum solely as a result of market fluctuations. If the Board
exercises this right, it may also fix the requirements for any notice to be
given to the shareholders in question (not less than 30 days). The Board may
alternatively set requirements for the shareholder to increase the investment,
or set other terms and conditions so that the shares would not be involuntarily
redeemed.
Transfers of Shares. A transfer of shares to a different registration is not an
event that triggers the payment of sales charges. Therefore, 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. It does not matter
whether the transfer occurs by absolute assignment, gift or bequest, as long as
it does not involve, directly or indirectly, a public sale of the shares. When
shares subject to a contingent deferred sales charge are transferred, the
transferred shares will remain subject to the contingent deferred sales charge.
It will be 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
or 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. Shareholders should contact their
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
an order placed by the dealer or broker. However, 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, the Exchange closes at 4:00 P.M., but
may do so earlier on some days. Additionally, the order must have been
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 of the required redemption documents in
proper form. The signature(s) of the registered owners on the redemption
documents must be guaranteed 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
(having a value of at least $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. Payments must also be sent to the address of record for
the account and the address must not have 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 Account
Application or by signature-guaranteed instructions sent to the Transfer Agent.
Shares are normally redeemed pursuant to an Automatic Withdrawal Plan three
business days before the payment transmittal 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. The
Fund reserves the right to amend, suspend or discontinue offering these 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 Appendix C, below).
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated below.
These provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, any amendments will automatically apply to existing
Plans.
|X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent 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.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. 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.
|X| Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first. 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
these plans should not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither the Fund
nor the Transfer Agent shall incur any liability to the Planholder for any
action taken or not taken by the Transfer Agent in good faith to administer the
Plan. Share 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.
Shares will be redeemed to make withdrawal payments at the net asset value
per share determined on the redemption date. Checks or AccountLink payments
representing the proceeds of Plan withdrawals will normally be transmitted three
business days prior to the date selected for receipt of the payment, according
to the choice specified in writing by the Planholder. Receipt of payment on the
date selected cannot be guaranteed.
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 after 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 to redeem all, or any part of, the
shares held under the Plan. That notice must be in proper form in accordance
with the requirements of the then-current Prospectus of the Fund. In that case,
the Transfer Agent will redeem the number of shares requested at the net asset
value per share in effect and will mail a check for the proceeds to the
Planholder.
The Planholder may terminate a Plan at any time by writing to the Transfer
Agent. The Fund may also give directions to the Transfer Agent to terminate a
Plan. The Transfer Agent will also terminate a Plan upon its receipt of evidence
satisfactory to it that the Planholder has died or is legally incapacitated.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that have
not been redeemed will be held in uncertificated form in the name of the
Planholder. The account will continue as a dividend-reinvestment, uncertificated
account unless and until proper instructions are received from the Planholder,
his or her executor or guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop. 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, 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 Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. You can obtain a current list showing which funds offer which classes
by calling the Distributor at 1-800-525-7048.
|_| All of the Oppenheimer funds currently offer Class A, B and C shares
except Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial California
Tax Exempt Trust, Centennial New York Tax Exempt Trust, and Centennial America
Fund, L.P., which only offer Class A shares.
|_| Oppenheimer Main Street California Municipal Fund currently offers
only Class A and Class B shares.
|_| Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other Oppenheimer
funds or through OppenheimerFunds-sponsored 401 (k) plans. o Class Y shares of
Oppenheimer Real Asset Fund are not exchangeable. o Class X shares of this Fund
can be exchanged only for Class B shares of other
Oppenheimer funds and no exchanges can be made to Class X shares.
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. They may also be used to
purchase shares of Oppenheimer funds subject to a contingent deferred sales
charge.
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 30 days 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. 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. If requested, they must
supply proof of entitlement to this privilege.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Convertible Securities Fund, Class M shares can be exchanged only
for Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Convertible Securities Fund are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange of Class M shares. No other exchanges may be made to Class
M shares.
Shares of the Fund acquired by reinvestment of dividends or distributions
from any of the other 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.
|X| How Exchanges Affect Contingent Deferred Sales Charges. 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 18
months of the end of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares. The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within 6 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, Class C or Class X 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 the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the exchange
may affect 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 which class of shares they wish to exchange.
|X| Limits on Multiple Exchange Orders. 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.
|X| Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange is
to be made. Otherwise, the investors must obtain a Prospectus of that fund
before the exchange request may be submitted. 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.
|X| Processing 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 Fund may refuse the
request.
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.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. 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 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 will not be declared or paid
on newly purchased shares 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 (that is, up 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.
The Fund's practice of attempting to pay dividends on Class A shares at a
constant level requires the Manager to monitor the Fund's portfolio and, if
necessary, to select higher-yielding securities when it is deemed appropriate to
seek income at the level needed to meet the target. Those securities must be
within the Fund's investment parameters, however. The Fund expects to pay
dividends at a targeted level from its net investment income and other
distributable income without any impact on the net asset values per share.
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.
Reinvestment will be made 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. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders or
their representatives for compliance with those laws in good faith.
The amount of a distribution paid on a class of shares 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. 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, Class C and Class X shares are
expected to be lower than dividends on Class A shares. That is due to the effect
of the asset-based sales charge on Class B, Class C and Class X shares. Those
dividends will also differ in amount as a consequence of any difference in net
asset value among the different classes of shares.
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 that
are derived from net investment income earned by the Fund on municipal
securities 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 that are free from Federal
income taxes. This allocation will be made by the use of one designated
percentage applied uniformly to all income dividends paid during the Fund's tax
year. That designation will normally be made following the end of each fiscal
year
<PAGE>
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.
A portion of the exempt-interest dividends paid by the Fund may be an item
of tax preference for shareholders subject to the federal 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.
A shareholder receiving a dividend from income earned by the Fund from one
or more of the following sources must treat the dividend as ordinary income in
the computation of the shareholder's gross income, regardless of whether the
dividend is reinvested:
(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;
and
(4) any excess of net short-term capital gain over net long-term capital loss.
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 (and the extent to which) such benefits are subject to federal income
tax. Losses realized by shareholders on the redemption of Fund shares within six
months of purchase 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 tax on amounts
it pays as dividends and other distributions. That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without having to pay tax on them. 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 qualifies. The Fund might not
meet those tests in a particular year. If it does not qualify, the Fund will be
treated for tax purposes as an ordinary corporation and will receive no tax
deduction for payments of dividends and other distributions made to
shareholders.
In any year in which the Fund qualifies as a regulated investment company
under the Internal Revenue Code, the Fund will also be exempt from New York
corporate income and franchise taxes. It will also be qualified under New York
law to pay exempt-interest dividends that will be exempt from New York State and
New York City personal income taxes. That exemption applies to the extent that
the Fund's distributions are attributable to interest on New York municipal
securities. Distributions from the Fund attributable to income from sources
other than New York municipal securities and U.S. government obligations will
generally be subject to New York State and New York City personal income taxes
as ordinary income.
Distributions by the Fund from investment income and long- and short-term
capital gains will generally not be excludable from taxable net investment
income in determining New York corporate franchise tax and New York City general
corporation tax for corporate shareholders of the Fund. Additionally, certain
distributions paid to corporate shareholders of the Fund may be includable in
income subject to the New York alternative minimum tax.
Under the Internal Revenue Code, by December 31 each year the Fund must
distribute at least 98% of the sum of its taxable investment income earned from
January 1 through December 31 of that year and its net capital gains realized in
the period from November 1 of the prior year through October 31 of the current
year. If it does not, the Fund must pay an excise tax on the amounts not
distributed. It is presently anticipated that the Fund will meet those
requirements. However, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders 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.
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 above. Reinvestment will be
made at net asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and must have an existing
account in the fund selected for reinvestment. Otherwise the shareholder must
first obtain a prospectus for that fund and an application from the Transfer
Agent 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 other distributions from certain of
the other Oppenheimer funds may be invested in shares of this Fund on the same
basis.
Additional Information About the Fund
The Transfer Agent. The Fund's Transfer Agent, OppenheimerFunds Services, is a
division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders of the Fund. It also handles
shareholder servicing and administrative functions. It is paid on the basis of a
fixed fee per account.
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities, and handling the delivery of such securities to and from
the Fund. It will be the practice of the Fund to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Fund's cash balances with the Custodian in
excess of $100,000 are not protected by Federal Deposit Insurance. Those
uninsured balances may at times be substantial.
Independent Accountants. PricewaterhouseCoopers LLP are the independent
accountants of the Fund. They audit the Fund's financial statements and perform
other related audit services. 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, 1998, 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, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
January 22, 1999
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
MUNICIPAL BONDS AND NOTES--101.2%
============================================================================================================================
NEW YORK--86.4%
<S> <C> <C>
<C> <C> <C>
$ 409,336 Albany Hsg. Authority 0.000 %
10/01/12 10/01/02(a) $ 112,224
1,975,000 Albany IDA (H. Johnson Office Park) 5.250
03/01/18 03/01/99(d) 1,996,172
200,000 Albany IDA (Port of Albany) 6.250
02/01/05 04/24/02(c) 210,796
60,000 Albany IDA (Spectrapark) 7.250
12/01/99 -- 61,346
50,000 Albany IDA (Spectrapark) 7.500
12/01/03 12/01/99(b) 51,116
3,525,000 Albany IDA (Spectrapark) 7.600
12/01/09 (s) 12/01/99(b) 3,605,370
40,000 Albany Parking Authority 0.000
09/15/02 -- 33,748
25,000 Albany Parking Authority 0.000
09/15/03 -- 20,054
625,000 Albany Parking Authority 0.000
09/15/04 -- 454,550
20,000 Albany Parking Authority 0.000
09/15/05 -- 14,513
1,610,000 Albany Parking Authority 6.850
11/01/12 (s) 11/01/01(b) 1,754,530
5,040,000 Albany Parking Authority 7.150
09/15/16 (s) 09/15/01(b) 5,408,676
275,000 Albany Water Finance Authority 7.500
12/01/17 (s) 12/01/99(b) 281,421
645,000 Allegany County IDA (Alfred University) 6.900
09/01/99 -- 660,177
100,000 Allegany County IDA (Atlantic Richfield) 6.625
09/01/16 09/01/02(b) 108,605
4,800,000 Amherst IDA (Amherst Rink) 5.550
10/01/17 (s) 10/01/09(b) 4,990,752
430,000 Babylon IDA (WWH Ambulance) 7.000
09/15/01 09/27/00(c) 447,299
60,000 Baldwinsville Devel. Corp. 7.200
06/01/10 (s) 07/01/99(b) 61,666
710,000 Batavia Hsg. Authority (Trocaire Place) (i) 7.650
04/01/08 05/11/04(c) 713,550
200,000 Battery Park City Authority 5.650
12/01/13 (s) 12/01/99(b) 200,268
680,000 Blauvelt Volunteer Fire Company 6.000
10/15/08 10/03/04(c) 694,919
40,000 Brookhaven GO 6.400
10/01/10 10/01/02(b) 44,072
185,000 Brookhaven IDA (Dowling College) 6.200
03/01/01 -- 192,370
195,000 Brookhaven IDA (Dowling College) 6.300
03/01/02 -- 205,690
205,000 Brookhaven IDA (Dowling College) 6.400
03/01/03 -- 219,473
1,240,000 Carnegie Redevelopment Corp. 6.250
09/01/05 11/02/02(c) 1,307,766
1,550,000 Carnegie Redevelopment Corp. 6.500
09/01/11 05/17/09(c) 1,672,961
490,000 Clifton Park IDA (Caldor) 11.250
12/01/12 12/01/99(b) 503,798
835,000 Clifton Springs Hospital & Clinic 7.000
01/01/01 01/16/00(c) 856,960
35,000 Colonie IDA (Homeowner Association) 7.250
10/01/02 04/01/99(b) 35,134
20,000 Cortland County IDA (Paul Bunyon Products) 8.000
07/01/00 (s) 07/01/99(b) 20,442
275,000 Dutchess County IDA (Bard College) 6.500
11/01/03 -- 300,415
1,175,000 Dutchess County Res Rec (Solid Waste) 6.800
01/01/10 (s) 12/01/02(g) 1,324,178
290,000 Elmira HDC 7.500
08/01/08 02/01/99(b) 299,054
20,000 Elmira HDC 7.500
08/01/09 02/01/99(b) 20,624
440,000 Erie County IDA (FMC Corp.) 6.000
02/01/03 (s) 02/01/99(b) 456,047
245,000 Erie County IDA (Medaille College) 7.400
12/30/02 02/19/01(c) 261,114
35,000 Erie County IDA (Medishield) 7.200
08/01/04 02/01/99(b) 35,191
660,000 Erie County IDA (Mercy Hospital) 5.900
06/01/03 12/12/01(c) 676,421
2,410,000 Franklin County IDA (COP) 8.125
08/01/06 02/16/04(c) 2,787,767
1,390,000 Franklin County IDA (Correctional Facilities) 6.375
11/01/02 05/31/01(c) 1,436,718
60,000 Franklin County IDA (Correctional Facilities) 6.750
11/01/12 (s) 11/01/02(b) 65,456
2,120,000 Franklin County SWMA 6.000
06/01/05 11/19/03(c) 2,208,256
1,350,000 Franklin County SWMA 6.125
06/01/09 12/28/07(c) 1,402,636
130,000 Genesee County IDA (USGC) 7.250
05/01/14 05/01/99(b) 136,318
870,000 Hamilton Elderly Hsg. Corp. 11.250
01/01/15 (s) 05/01/99(b) 906,462
15,000 Hempstead IDA (UCP) 7.500
10/01/09 10/01/99(b) 15,589
1,080,000 Herkimer County IDA (Burrows Paper) 7.250
01/01/01 07/09/00(c) 1,105,801
3,000,000 Herkimer County IDA (Burrows Paper) 8.000
01/01/09 10/28/05(c) 3,256,440
2,700,000 Herkimer Hsg. Authority 7.150
03/01/11 (s) 04/06/05(g) 2,955,933
</TABLE>
9 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 2,000,000 Housing NY Corp. 5.500 %
11/01/10 11/01/05(b) $ 2,085,340
440,000 Hudson IDA (Have, Inc.) 7.125
12/01/07 05/27/04(c) 463,681
90,000 Islip IDA (WJL Realty) 7.400
03/01/99 -- 90,172
1,160,000 Islip Res Rec 5.850
07/01/02 -- 1,240,980
330,000 Jamestown GO 7.000
03/15/99 -- 332,647
250,000 Jamestown GO 7.000
03/15/00 -- 260,615
2,965,000 Jamestown Hsg. Authority 6.125
07/01/10 12/30/05(c) 3,116,037
18,265,000 L.I. Power Authority 5.750
12/01/24 06/01/08(b) 19,589,943
70,752 Locke Fire District #1 (i) 7.500
07/01/02 03/21/01(c) 75,974
1,300,000 Lockport HDC 6.000
10/01/18 10/01/09(b) 1,368,822
1,570,000 Madison County IDA (Morrisville College) 6.750
07/01/07 10/11/03(c) 1,649,238
200,000 Medina Hsg. Corp. 8.250
08/15/11 (s) 02/15/99(b) 206,600
560,000 Middleton IDA (Fleurchem) 7.125
12/01/08 01/15/05(c) 590,481
700,000 Middleton IDA (Southwinds) 7.250
03/01/03 04/21/01(c) 735,168
5,000 Monroe County Airport Authority (GRIA) 0.000
01/01/04 -- 4,110
2,590,000 Monroe County Airport Authority (GRIA) 7.250
01/01/09 (s) 01/01/00(b) 2,734,392
8,610,000 Monroe County COP 8.050
01/01/11 07/01/99(b) 8,972,395
30,000 Monroe County GO 6.100
05/01/03 -- 30,577
2,625,000 Monroe County IDA (Al Sigl Center) 6.125
12/15/08 12/07/04(c) 2,896,976
1,090,000 Monroe County IDA (Al Sigl Center) 6.375
12/15/05 03/13/03(c) 1,141,263
1,135,000 Monroe County IDA (Al Sigl Center) 6.750
12/15/10 01/31/09(c) 1,211,647
10,000 Monroe County IDA (Cohber) 7.500
12/01/00 06/01/99(b) 10,271
100,000 Monroe County IDA (Cohber) 7.550
12/01/01 06/01/99(b) 102,366
820,000 Monroe County IDA (Geva Theatre) 7.750
04/01/02 11/02/00(c) 822,517
360,000 Monroe County IDA (Geva Theatre) 7.750
04/01/03 -- 361,105
1,840,000 Monroe County IDA (Piano Works) 6.625
11/01/06 04/08/03(c) 1,948,174
300,000 Monroe County IDA (Roberts Wesleyan College) 6.200
09/01/05 -- 308,871
170,000 Monroe County IDA (West End Business) 6.750
12/01/04 09/27/02(c) 179,872
885,000 Montgomery County IDA (Amsterdam) (i) 6.500
01/15/03 02/17/01(c) 619,500
50,000 MTA Service Contract 7.000
07/01/09 (s) 07/01/01(b) 54,938
75,000 MTA Service Contract, Series 5 6.000
07/01/18 (s) 07/01/01(b) 77,159
6,495,000 MTA Service Contract, Series 7 5.625
07/01/16 (s) 07/01/05(b) 6,748,954
150,000 MTA Service Contract, Series P 5.750
07/01/15 (s) 07/01/05(b) 157,431
12,865,000 MTA Service Contract, Series P 5.750
07/01/15 (s) 07/01/03(b) 13,502,332
2,785,000 MTA Service Contract, Series R 5.200
07/01/08 -- 2,970,954
5,160,000 MTA Service Contract, Series R 5.200
07/01/08 -- 5,504,533
2,915,000 MTA Service Contract, Series R 5.300
07/01/09 -- 3,126,104
1,420,000 MTA Service Contract, Series R 5.300
07/01/09 -- 1,522,836
3,640,000 MTA Service Contract, Series R 5.500
07/01/17 (s) 07/01/10(b) 3,811,735
7,945,000 MTA, Series A 5.500
07/01/14 07/01/10(b) 8,428,453
5,000,000 MTA, Series A 5.500
07/01/15 07/01/10(b) 5,270,900
15,000 MTA, Series H 5.500
07/01/14 02/01/99(b) 15,000
65,000 MTA, Series K 6.250
07/01/11 (s) 07/01/02(b) 71,084
20,000 Nassau County GO 6.375
05/15/13 05/15/02(b) 21,835
345,000 Nassau County IDA (ACLDD) 7.250
10/01/04 06/06/02(c) 365,100
895,000 New Rochelle IDA (CNR) 6.000
07/01/02 01/26/01(c) 954,428
260,000 New Rochelle IDA (CNR) 6.300
07/01/03 -- 283,431
275,000 New Rochelle IDA (CNR) 6.400
07/01/04 -- 299,821
245,000 Newark Sr. Citizen Hsg. Corp. 9.000
03/01/11 03/01/99(b) 264,294
2,035,000 Newark/Wayne Community Hospital 7.600
09/01/15 (s) 04/26/03(g) 2,201,666
1,000,000 Niagara County IDA (Niagara University) 5.250
10/01/18 (s) 10/01/10(b) 1,028,920
1,750,000 Niagara County IDA (Sevenson Hotel) 5.750
05/01/03 04/30/01(c) 1,771,665
</TABLE>
10 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 1,290,000 Niagara Falls HDC (Niagara Towers) 5.150 %
10/01/10 01/23/09(c) $ 1,315,671
115,000 Niagara Frontier Transit Authority 7.000
02/15/00 02/15/99(b) 117,645
575,000 North Country Devel. Authority 6.600
07/01/02 -- 595,982
2,995,000 North Country Devel. Authority 6.750
07/01/12 (s) 07/01/99(b) 3,106,504
170,000 NYC GO 0.000
04/01/00 -- 162,205
2,000,000 NYC GO 0.000
08/15/00 -- 1,880,620
1,500,000 NYC GO 0.000
02/01/01 -- 1,383,180
630,000 NYC GO 0.000
04/01/01 -- 577,181
50,000 NYC GO 0.000
08/15/01 -- 45,149
1,460,000 NYC GO 0.000
02/01/02 -- 1,289,049
1,000,000 NYC GO 0.000
02/01/03 -- 842,890
18,125,000 NYC GO 5.125
08/01/10 02/01/08(b) 19,108,644
2,000,000 NYC GO 5.375
08/01/15 08/01/10(b) 2,087,620
20,000 NYC GO 5.500
10/01/14 10/01/05(b) 20,865
15,000 NYC GO 5.600
12/01/10 06/01/99(b) 15,070
10,000 NYC GO 5.625
10/01/13 10/01/05(b) 10,463
15,000 NYC GO 5.625
08/01/14 08/01/06(b) 15,744
140,000 NYC GO 5.750
08/15/11 08/15/05(b) 149,047
45,000 NYC GO 5.750
05/15/12 05/15/05(b) 49,075
45,000 NYC GO 5.750
05/15/12 05/15/05(b) 47,442
20,000 NYC GO 5.750
08/15/12 08/15/05(b) 21,126
20,000 NYC GO 5.750
08/15/12 08/15/03(b) 21,859
35,000 NYC GO 5.750
05/15/13 05/15/05(b) 36,979
465,000 NYC GO 5.750
08/01/13 08/01/09(b) 504,971
80,000 NYC GO 5.750
08/15/13 08/15/05(b) 84,502
280,000 NYC GO 5.750
08/15/13 08/15/05(b) 295,758
55,000 NYC GO 5.750
10/15/13 10/15/09(b) 59,212
130,000 NYC GO 5.750
02/01/14 (s) 02/01/08(b) 139,655
5,000 NYC GO 5.750
05/15/14 05/15/03(b) 5,446
10,000 NYC GO 5.750
05/15/14 05/15/03(b) 10,537
1,665,000 NYC GO 5.750
08/15/14 08/15/05(b) 1,758,706
65,000 NYC GO 5.750
08/18/14 08/15/05(b) 68,658
135,000 NYC GO 5.750
02/01/15 (s) 02/01/08(b) 143,689
170,000 NYC GO 5.750
08/01/15 08/01/05(b) 179,301
25,000 NYC GO 5.750
08/01/15 08/01/05(b) 26,478
75,000 NYC GO 5.750
08/15/15 08/15/05(b) 79,125
605,000 NYC GO 5.750
08/15/16 08/15/05(b) 635,438
70,000 NYC GO 5.750
02/01/19 (s) 02/01/08(b) 74,202
60,000 NYC GO 5.800
08/01/13 08/01/05(b) 63,481
445,000 NYC GO 5.875
03/15/13 03/15/06(b) 484,325
50,000 NYC GO 6.000
08/01/06 08/01/99(b) 50,831
5,000 NYC GO 6.000
08/01/06 08/01/99(a) 5,085
45,000 NYC GO 6.000
08/01/06 08/01/99(b) 45,675
1,750,000 NYC GO 6.000
04/15/09 -- 1,962,817
30,000 NYC GO 6.000
08/01/10 08/01/03(b) 32,601
55,000 NYC GO 6.000
02/01/11 02/01/06(b) 60,747
50,000 NYC GO 6.000
02/15/11 02/15/05(b) 55,839
25,000 NYC GO 6.000
02/15/11 02/15/07(b) 27,433
30,000 NYC GO 6.000
08/01/11 02/01/99(b) 30,065
5,000 NYC GO 6.000
08/01/11 02/01/99(b) 5,011
15,000 NYC GO 6.000
02/15/12 02/15/05(b) 16,752
90,000 NYC GO 6.000
02/15/12 02/15/05(b) 98,761
</TABLE>
11 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 30,000 NYC GO 6.000 %
08/01/12 02/01/99(b) $ 30,066
15,000 NYC GO 6.000
02/15/14 02/15/05(b) 16,726
20,000 NYC GO 6.000
02/15/14 02/15/05(b) 21,834
15,000 NYC GO 6.000
02/15/15 02/15/05(b) 16,726
25,000 NYC GO 6.000
02/15/15 02/15/05(b) 27,292
15,000 NYC GO 6.000
05/15/15 05/15/05(b) 16,489
20,000 NYC GO 6.000
05/15/15 05/15/05(b) 21,654
10,000 NYC GO 6.000
08/01/16 (s) 08/01/06(b) 10,863
50,000 NYC GO 6.000
08/01/16 (s) 08/01/06(b) 55,065
1,130,000 NYC GO 6.000
08/01/17 (s) 08/01/07(b) 1,233,192
1,530,000 NYC GO 6.000
08/01/17 (s) 08/01/07(b) 1,669,720
55,000 NYC GO 6.000
05/15/19 05/15/03(a) 60,529
10,000 NYC GO 6.000
05/15/19 05/15/03(b) 10,649
10,000 NYC GO 6.000
02/15/25 02/15/07(b) 10,734
100,000 NYC GO 6.125
08/01/10 08/01/04(b) 110,720
65,000 NYC GO 6.125
08/01/11 08/01/04(b) 71,848
2,500,000 NYC GO 6.250
08/01/08 08/01/06(b) 2,830,625
30,000 NYC GO 6.250
10/01/08 10/01/02(b) 33,062
15,000 NYC GO 6.250
10/01/08 10/01/02(b) 16,440
10,550,000 NYC GO 6.250
08/01/09 08/01/06(b) 11,945,237
205,000 NYC GO 6.250
08/01/10 08/01/06(b) 231,558
75,000 NYC GO 6.250
08/01/10 08/01/04(b) 83,502
2,000,000 NYC GO 6.250
08/01/12 08/01/06(b) 2,242,580
4,270,000 NYC GO 6.250
08/01/13 08/01/06(b) 4,767,455
5,000 NYC GO 6.250
04/01/16 04/01/06(b) 5,731
45,000 NYC GO 6.250
04/01/16 04/01/06(b) 49,503
10,000 NYC GO 6.250
08/01/16 08/01/02(b) 10,803
40,000 NYC GO 6.250
08/01/17 (s) 08/01/06(b) 44,215
45,000 NYC GO 6.250
08/01/19 08/01/02(b) 48,639
75,000 NYC GO 6.250
08/01/21 08/01/02(b) 78,891
175,000 NYC GO 6.300
08/15/08 08/15/05(b) 199,363
875,000 NYC GO 6.300
08/15/08 08/15/05(b) 982,712
45,000 NYC GO 6.375
02/15/06 02/15/05(a) 51,164
955,000 NYC GO 6.375
02/15/06 -- 1,069,504
90,000 NYC GO 6.375
08/01/06 08/01/02(a) 99,238
530,000 NYC GO 6.375
08/01/06 08/01/02(b) 578,511
670,000 NYC GO 6.375
08/01/07 08/01/02(a) 738,775
1,445,000 NYC GO 6.375
08/01/07 08/01/02(b) 1,565,802
2,835,000 NYC GO 6.375
08/15/09 08/15/05(a) 3,247,294
10,665,000 NYC GO 6.375
08/15/09 08/15/05(b) 12,020,202
395,000 NYC GO 6.375
08/01/10 08/01/05(a) 452,176
1,495,000 NYC GO 6.375
08/01/10 08/01/05(b) 1,684,192
215,000 NYC GO 6.375
08/15/10 08/15/05(a) 246,267
815,000 NYC GO 6.375
08/15/10 08/15/05(b) 918,562
30,000 NYC GO 6.375
08/15/11 08/15/05(a) 34,363
105,000 NYC GO 6.375
08/15/11 08/15/05(b) 118,051
2,100,000 NYC GO 6.375
08/01/12 08/15/05(a) 2,405,403
7,900,000 NYC GO 6.375
08/01/12 08/15/05(b) 8,819,165
15,000 NYC GO 6.500
08/01/05 08/01/02(a) 16,586
95,000 NYC GO 6.500
08/01/05 08/01/02(b) 104,088
20,000 NYC GO 6.500
08/01/06 08/01/02(b) 21,913
600,000 NYC GO 6.500
02/15/08 02/15/05(a) 686,226
</TABLE>
12 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 20,000 NYC GO 6.500 %
08/01/08 08/01/02(a) $ 22,115
105,000 NYC GO 6.500
08/01/08 08/01/02(b) 115,044
4,275,000 NYC GO 6.500
08/01/11 08/01/02(a) 4,731,613
8,725,000 NYC GO 6.500
08/01/11 08/01/02(b) 9,543,143
35,000 NYC GO 6.500
08/01/12 08/01/02(a) 38,738
65,000 NYC GO 6.500
08/01/12 08/01/02(b) 70,799
25,000 NYC GO 6.500
08/01/13 08/01/02(a) 27,670
55,000 NYC GO 6.500
08/01/13 08/01/02(b) 60,157
22,000 NYC GO 6.500
08/01/14 08/01/05(a) 25,342
78,000 NYC GO 6.500
08/01/14 08/15/05(b) 87,966
5,000 NYC GO 6.500
12/01/15 06/01/99(b) 5,098
10,000 NYC GO 6.500
08/01/16 08/01/05(a) 11,519
40,000 NYC GO 6.500
08/01/16 08/01/05(b) 44,867
10,000 NYC GO 6.500
08/01/19 08/01/05(b) 11,519
70,000 NYC GO 6.500
08/01/19 (s) 08/01/05(b) 78,517
1,175,000 NYC GO 6.600
02/15/10 02/15/05(a) 1,350,181
270,000 NYC GO 6.600
02/15/10 (s) 02/15/05(b) 305,616
4,625,000 NYC GO 6.600
10/01/16 10/01/02(a) 5,143,000
9,375,000 NYC GO 6.600
10/01/16 10/01/02(b) 10,271,156
9,800,000 NYC GO 6.625
02/15/14 02/15/05(a) 11,274,312
200,000 NYC GO 6.625
02/15/14 02/15/05(b) 224,638
1,520,000 NYC GO 6.750
10/01/05 10/01/02(a) 1,701,549
30,000 NYC GO 6.750
10/01/05 10/01/02(b) 33,232
25,000 NYC GO 6.750
10/01/06 10/01/02(b) 27,958
15,000 NYC GO 6.750
10/01/06 10/01/02(b) 16,522
5,000 NYC GO 6.750
01/15/12 01/15/99(b) 5,076
55,000 NYC GO 6.750
10/01/17 10/01/02(a) 61,508
15,000 NYC GO 7.000
08/15/99 02/15/99(b) 15,182
210,000 NYC GO 7.000
02/01/00 02/01/99(b) 211,714
50,000 NYC GO 7.000
02/01/00 02/01/99(b) 50,401
10,000 NYC GO 7.000
08/01/00 02/01/99(b) 10,107
65,000 NYC GO 7.000
02/01/01 02/01/99(b) 69,549
425,000 NYC GO 7.000
02/01/01 02/01/99(b) 428,272
20,000 NYC GO 7.000
02/01/01 02/01/99(b) 20,161
5,000 NYC GO 7.000
02/01/02 02/01/99(a) 5,485
20,000 NYC GO 7.000
08/15/02 02/15/99(b) 20,289
35,000 NYC GO 7.000
02/01/03 02/01/99(b) 35,285
5,000 NYC GO 7.000
08/01/05 08/01/99(b) 5,054
2,860,000 NYC GO 7.000
02/01/06 02/01/02(a) 3,173,313
390,000 NYC GO 7.000
02/01/06 02/01/02(b) 429,214
60,000 NYC GO 7.000
12/01/06 06/01/99(b) 61,402
365,000 NYC GO 7.000
08/01/07 -- 433,792
5,000 NYC GO 7.000
08/01/07 02/01/99(b) 5,054
5,000 NYC GO 7.000
12/01/08 06/01/99(b) 5,111
5,000 NYC GO 7.000
02/01/09 02/01/99(b) 5,039
5,000 NYC GO 7.000
08/01/09 02/01/99(b) 5,052
10,000 NYC GO 7.000
08/01/09 02/01/99(b) 10,107
715,000 NYC GO 7.000
10/01/09 10/01/02(a) 805,798
15,000 NYC GO 7.000
10/01/09 10/01/02(b) 16,745
50,000 NYC GO 7.000
10/01/10 10/01/02(a) 56,406
5,000 NYC GO 7.000
10/01/10 10/01/02(b) 5,582
5,000 NYC GO 7.000
12/01/10 06/01/99(b) 5,111
</TABLE>
13 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 5,000 NYC GO 7.000 %
02/01/11 02/01/99(a) $ 5,040
30,000 NYC GO 7.000
02/01/12 02/01/99(b) 30,240
8,960,000 NYC GO 7.000
10/01/13 10/01/02(a) 10,097,830
185,000 NYC GO 7.000
10/01/13 10/01/02(b) 206,238
25,000 NYC GO 7.000
10/01/14 10/01/02(a) 28,203
25,000 NYC GO 7.000
10/01/15 10/01/99(b) 25,697
2,000,000 NYC GO 7.000
02/01/16 02/01/02(b) 2,194,180
10,000 NYC GO 7.000
08/01/16 08/01/02(a) 11,234
5,000 NYC GO 7.000
08/01/16 08/01/02(b) 5,546
1,360,000 NYC GO 7.000
08/15/16 08/15/04(a) 1,585,094
70,000 NYC GO 7.000
10/01/16 10/01/99(b) 71,821
15,000 NYC GO 7.000
02/01/17 02/01/02(b) 16,456
20,000 NYC GO 7.000
02/01/18 02/01/02(b) 21,942
35,000 NYC GO 7.000
10/01/18 10/01/99(b) 35,976
15,000 NYC GO 7.000
10/01/19 10/01/99(b) 15,390
10,000 NYC GO 7.100
02/01/04 02/01/99(b) 10,074
100,000 NYC GO 7.100
08/15/07 08/15/04(a) 116,864
2,010,000 NYC GO 7.100
02/01/09 02/01/02(a) 2,235,763
265,000 NYC GO 7.100
02/01/09 02/01/02(b) 292,406
170,000 NYC GO 7.100
02/01/10 02/01/02(a) 189,094
30,000 NYC GO 7.100
02/01/10 02/01/02(b) 33,103
25,000 NYC GO 7.200
08/01/01 02/01/99(b) 25,267
5,000 NYC GO 7.200
08/01/02 08/01/00(a) 5,369
30,000 NYC GO 7.200
08/01/02 08/01/00(b) 31,982
5,000 NYC GO 7.200
02/01/05 02/01/99(a) 5,041
1,450,000 NYC GO 7.200
08/15/08 08/15/04(b) 1,701,473
20,000 NYC GO 7.200
02/01/15 02/01/02(a) 22,302
100,000 NYC GO 7.250
02/01/07 02/01/99(b) 100,836
5,000 NYC GO 7.250
02/01/07 02/01/99(b) 5,040
15,000 NYC GO 7.250
08/15/17 08/15/99(b) 15,596
5,000,000 NYC GO 7.250
08/15/19 08/15/04(a) 5,887,400
360,000 NYC GO 7.250
08/15/24 08/15/01(a) 392,911
10,000 NYC GO 7.250
08/15/24 (s) 08/15/01(b) 10,799
500,000 NYC GO 7.400
02/01/00 -- 521,855
10,000 NYC GO 7.400
08/15/00 02/15/99(b) 10,147
265,000 NYC GO 7.400
02/01/02 -- 293,458
20,000 NYC GO 7.400
02/01/02 -- 22,071
5,000 NYC GO 7.500
08/01/01 08/01/99(b) 5,191
5,000 NYC GO 7.500
08/15/01 02/15/99(b) 5,062
90,000 NYC GO 7.500
08/15/03 08/15/99(b) 93,582
20,000 NYC GO 7.500
12/01/03 12/01/99(b) 20,360
10,125,000 NYC GO 7.500
02/01/04 02/01/02(b) 11,288,565
15,000 NYC GO 7.500
02/01/05 02/01/02(a) 16,855
65,000 NYC GO 7.500
02/01/05 02/01/02(b) 72,470
5,000 NYC GO 7.500
08/15/05 02/15/99(b) 5,062
6,450,000 NYC GO 7.500
02/01/06 02/01/02(b) 7,191,234
20,000 NYC GO 7.500
08/15/06 08/15/99(b) 20,796
220,000 NYC GO 7.500
02/01/07 02/01/02(b) 245,282
2,425,000 NYC GO 7.500
02/01/09 02/01/02(b) 2,703,681
15,000 NYC GO 7.500
03/15/09 03/15/00(b) 15,973
155,000 NYC GO 7.500
03/15/09 03/15/00(b) 164,475
50,000 NYC GO 7.625
02/01/13 02/01/02(a) 56,412
</TABLE>
14 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 3,980,000 NYC GO 7.650 %
02/01/07 02/01/02(a) $ 4,493,261
40,000 NYC GO 7.650
02/01/07 02/01/02(b) 44,769
295,000 NYC GO 7.700
02/01/09 02/01/02(a) 333,468
5,000 NYC GO 7.700
02/01/09 02/01/02(b) 5,603
370,000 NYC GO 7.750
08/15/01 08/15/99(b) 385,292
595,000 NYC GO 7.750
08/15/05 08/15/01(a) 664,912
55,000 NYC GO 7.750
08/15/05 08/15/01(b) 60,998
310,000 NYC GO 7.750
08/15/06 08/15/01(a) 346,425
205,000 NYC GO 7.750
08/15/06 08/15/01(b) 227,355
1,460,000 NYC GO 7.750
08/15/07 02/01/03(a) 1,631,550
40,000 NYC GO 7.750
08/15/07 08/15/01(b) 44,362
1,530,000 NYC GO 7.750
08/15/09 08/15/01(a) 1,709,775
25,000 NYC GO 7.750
08/15/09 08/15/01(b) 27,726
55,000 NYC GO 7.750
02/01/10 02/01/02(b) 62,148
5,000 NYC GO 7.750
02/01/10 02/01/02(b) 5,611
45,000 NYC GO 7.750
08/15/11 08/15/01(a) 50,287
160,000 NYC GO 7.750
08/15/12 08/15/01(a) 178,800
20,000 NYC GO 7.750
08/15/12 08/15/01(b) 22,168
5,000 NYC GO 7.875
08/01/00 02/01/99(b) 5,093
40,000 NYC GO 7.875
08/01/04 08/01/00(b) 43,166
15,000 NYC GO 8.000
08/01/01 02/01/99(b) 15,276
5,000 NYC GO 8.000
08/01/03 02/01/99(b) 5,093
1,560,000 NYC GO 8.000
08/01/03 08/01/01(a) 1,750,585
125,000 NYC GO 8.000
08/01/03 08/01/01(b) 139,229
110,000 NYC GO 8.250
11/15/10 11/15/01(a) 125,429
5,000 NYC GO 8.250
08/01/11 08/01/01(b) 5,597
1,355,000 NYC GO CAB 0.000 (t)
05/15/14 05/15/08(b) 1,159,568
10,000 NYC GO DIAMONDS 0.000 (t)
08/01/07 08/01/02(b) 8,592
11,870,000 NYC GO Indexed Inverse Floater 2.730 (r)
08/15/10 08/15/05(b) 12,603,566
2,000,000 NYC GO LIMO 0.000 (t)
02/01/04 02/01/00(b) 2,051,940
1,950,000 NYC GO LIMO 0.000 (t)
02/01/07 02/01/02(e) 1,727,895
115,000 NYC GO PRAMS 0.000 (t)
10/01/06 10/01/02(b) 98,941
50,000 NYC GO PRAMS 0.000 (t)
02/01/12 02/01/02(b) 45,126
500,000 NYC HDC (Barclay Avenue) 5.750
04/01/07 07/29/03(c) 522,990
1,715,000 NYC HDC (Multi-Family) 6.550
10/01/15 (s) 04/01/03(b) 1,845,340
110,000 NYC HDC (Multi-Family) 7.300
06/01/10 (s) 06/01/01(b) 117,560
30,000 NYC HDC (Multi-Family) 7.350
06/01/19 (s) 06/01/01(b) 32,095
9,810,000 NYC HDC (Multi-Family), Series A 5.500
11/01/09 (s) 05/01/08(b) 10,450,201
5,000,000 NYC HDC (Multi-Family), Series A 5.625
05/01/12 (s) 05/01/08(b) 5,287,750
5,145,000 NYC HDC (Multi-Family), Series B 5.700
11/01/13 (s) 05/01/05(b) 5,343,700
1,540,000 NYC HDC (Multi-Family), Series B 5.850
05/01/26 (s) 05/01/05(b) 1,605,943
1,970,000 NYC HDC (Pass Through Certificate) (i) 6.500
09/20/03 11/20/02(c) 2,074,154
705,000 NYC HDC (South Bronx Cooperatives) 8.100
09/01/23 (s) 08/24/00(g) 748,936
1,670,000 NYC HDC (South Williamsburg Cooperatives) 7.900
02/01/23 (s) 01/27/00(g) 1,746,569
2,600,000 NYC Health & Hospital Corp. 5.625
02/15/13 (s) 02/15/05(b) 2,783,508
1,000,000 NYC Hsg. Authority, Series A 5.650
07/01/10 (s) 05/17/09(g) 1,056,790
1,985,000 NYC IDA (Acme Architectural Products) 5.875
11/01/09 10/23/05(c) 1,989,863
960,000 NYC IDA (ALA Realty) 7.000
12/01/05 03/06/03(c) 1,034,323
1,800,000 NYC IDA (American Airlines) 6.900
08/01/24 08/01/04(b) 1,995,768
4,030,000 NYC IDA (American Airlines) 7.750
07/01/19 07/01/99(b) 4,122,085
8,540,000 NYC IDA (American Airlines) 8.000
07/01/20 07/01/99(b) 8,736,932
575,000 NYC IDA (Amster Novelty) (u) 7.375
12/01/05 07/27/02(c) 373,750
</TABLE>
15 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 740,000 NYC IDA (Atlantic Veal & Lamb) 7.250 %
12/01/08 12/30/04(c) $ 781,425
370,000 NYC IDA (BHMS) 7.500
01/01/07 11/07/03(c) 386,291
2,095,000 NYC IDA (Blood Center) 6.800
05/01/02 03/22/01(c) 2,287,970
785,000 NYC IDA (CCM) 5.750
11/01/08 02/22/04(c) 788,509
310,000 NYC IDA (CCM) 5.750
11/01/08 10/08/04(c) 310,434
700,000 NYC IDA (CCM) 7.250
12/01/06 11/02/03(c) 742,077
360,000 NYC IDA (CNR) 6.200
09/01/10 (s) 09/01/05(b) 397,382
615,000 NYC IDA (College of Aeronautics) 5.500
05/01/12 05/01/10(b) 636,199
450,000 NYC IDA (College of Aeronautics) 5.500
05/01/13 05/01/10(b) 462,388
1,205,000 NYC IDA (Composite Offering XIV), Series C 7.625
11/01/09 (s) 05/01/99(b) 1,210,880
1,026,876 NYC IDA (Cummins Engine) 6.500
03/01/05 04/30/02(c) 1,033,992
740,000 NYC IDA (EPG) 7.400
07/30/02 03/01/01(c) 799,045
1,000,000 NYC IDA (Essie Cosmetics) 5.500
11/01/08 10/13/04(c) 1,002,710
45,000 NYC IDA (Federation Protestant Welfare) 6.950
11/01/11 (s) 11/01/01(b) 48,973
1,815,000 NYC IDA (Friends Seminary School) 6.125
12/01/07 11/30/03(c) 1,827,179
1,440,000 NYC IDA (Gabrielli Truck Sales) 7.250
12/01/07 05/23/04(c) 1,506,427
1,515,000 NYC IDA (JBFS) 6.500
12/15/02 07/13/01(c) 1,587,690
450,000 NYC IDA (Koenig Manufacturing) 7.375
12/01/10 05/08/06(c) 476,059
25,000 NYC IDA (Lighthouse) 6.375
07/01/10 (s) 07/01/02(b) 27,534
150,000 NYC IDA (Lighthouse) 6.500
07/01/22 (s) 07/01/02(b) 165,811
1,340,000 NYC IDA (Little Red Schoolhouse) 5.750
11/01/07 03/15/04(c) 1,341,353
2,000,000 NYC IDA (Northwest Airlines) 6.000
06/01/27 06/01/09(b) 2,067,160
435,000 NYC IDA (Ohel Children's Home and Family
Services) 7.125
03/15/03 05/08/01(c) 447,393
2,965,000 NYC IDA (Plaza Packaging) 7.650
12/01/09 (s) 12/01/99(b) 3,100,412
695,000 NYC IDA (Precision Gear) 5.875
11/01/09 10/26/05(c) 694,986
650,000 NYC IDA (Promotional Slideguide) 7.000
12/01/05 03/15/03(c) 694,544
50,000 NYC IDA (Sharif Designs) 7.375
11/01/09 05/01/99(b) 50,154
3,255,000 NYC IDA (St. Bernard's School) 6.125
12/01/11 09/29/06(c) 3,268,118
50,000 NYC IDA (St. Christopher Ottilie) 6.750
07/01/99 -- 50,870
215,000 NYC IDA (Streamline Plastics) 7.125
12/01/05 03/21/03(c) 227,190
13,180,000 NYC IDA (Terminal One Group Assoc.) 6.000
01/01/15 (s) 01/01/04(b) 14,086,652
170,000 NYC IDA (Terminal One Group Assoc.) 6.000
01/01/19 (s) 01/01/06(b) 180,834
1,135,000 NYC IDA (Terminal One Group Assoc.) 6.125
01/01/24 (s) 01/01/04(b) 1,207,833
160,000 NYC IDA (United Nations School) 6.050
12/01/05 -- 174,206
170,000 NYC IDA (United Nations School) 6.100
12/01/06 -- 186,293
180,000 NYC IDA (United Nations School) 6.150
12/01/07 -- 198,439
1,900,000 NYC IDA (Visy Paper) 7.550
01/01/05 06/21/02(c) 2,031,309
4,000,000 NYC IDA (Visy Paper) 7.800
01/01/16 (s) 01/01/06(b) 4,446,200
60,000 NYC IDA, Series B 8.125
11/01/09 (s) 05/01/99(b) 60,947
275,000 NYC Municipal Water Finance Authority 5.750
06/15/16 (s) 06/15/07(b) 295,911
40,000 NYC Municipal Water Finance Authority 5.750
06/15/18 (s) 06/15/04(b) 41,835
140,000 NYC Municipal Water Finance Authority 5.750
06/15/18 (s) 06/15/04(b) 146,423
25,000 NYC Public Hsg. Authority 6.000
01/01/04 07/01/99(b) 25,599
2,085,000 NYS COP 7.625
03/01/09 (s) 05/18/01(g) 2,282,470
2,670,000 NYS Dorm (4201 Schools Program) 5.250
07/01/13 07/01/11(b) 2,775,251
3,340,000 NYS Dorm (4201 Schools Program) 5.250
07/01/14 07/01/11(b) 3,453,727
2,000,000 NYS Dorm (4201 Schools Program) 5.250
07/01/15 07/01/11(b) 2,054,780
1,300,000 NYS Dorm (853 Schools Program) 5.500
07/01/18 07/01/10(b) 1,372,982
30,000 NYS Dorm (Adelphi University) 8.000
07/01/02 07/01/99(b) 30,565
25,000 NYS Dorm (Adelphi University) 8.200
07/01/05 07/01/99(b) 25,475
200,000 NYS Dorm (Adelphi University) 8.250
07/01/06 07/01/99(b) 203,808
700,000 NYS Dorm (Albany County Airport) 5.250
04/01/11 -- 737,590
</TABLE>
16 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 20,000 NYS Dorm (Albany Law School) 7.900 %
07/01/01 07/01/99(b) $ 20,176
3,130,000 NYS Dorm (City University) 5.250
07/01/14 07/01/10(b) 3,278,769
1,500,000 NYS Dorm (City University) 5.500
07/01/05 -- 1,620,105
2,020,000 NYS Dorm (City University) 5.500
07/01/06 -- 2,189,478
1,050,000 NYS Dorm (City University) 5.600
07/01/10 (s) 07/01/05(b) 1,113,682
1,900,000 NYS Dorm (City University) 6.000
07/01/10 07/01/06(b) 2,112,078
35,000 NYS Dorm (City University) 6.000
07/01/16 (s) 07/01/00(b) 35,670
50,000 NYS Dorm (Dept. of Health) 5.900
07/01/09 07/01/04(b) 54,416
15,000 NYS Dorm (ECC) 7.100
07/01/09 (s) 07/01/99(b) 15,049
635,000 NYS Dorm (Hebrew School) 5.625
02/01/17 02/01/09(b) 668,934
10,000 NYS Dorm (Higher Education) 8.200
12/01/99 06/01/99(b) 10,084
70,000 NYS Dorm (Higher Education) 8.500
06/01/03 (s) 12/01/99(b) 70,614
1,000,000 NYS Dorm (Ideal Senior Living Center) 5.900
08/01/26 08/01/06(b) 1,060,780
90,000 NYS Dorm (Iroquois Nursing) 7.000
02/01/15 02/01/01(b) 96,184
40,000 NYS Dorm (Jewish Geriatric) 7.150
08/01/14 08/01/04(b) 46,219
50,000 NYS Dorm (Jewish Geriatric) 7.350
08/01/29 (s) 08/01/04(b) 57,623
20,000 NYS Dorm (JGB Health Facilities) 7.000
07/01/09 (s) 07/01/99(b) 20,058
25,000 NYS Dorm (Manhattan College) 6.500
07/01/19 (s) 07/01/02(b) 27,256
750,000 NYS Dorm (MEET) 5.375
07/01/12 06/18/10(c) 755,085
1,300,000 NYS Dorm (Mental Health) 5.625
02/15/21 (s) 02/15/09(b) 1,373,892
75,000 NYS Dorm (MHMC) 8.625
07/01/10 (s) 07/01/99(b) 75,257
10,000,000 NYS Dorm (Montefiore Medical Center) 5.250
02/01/15 02/15/09(b) 10,375,400
35,000 NYS Dorm (Mount Sinai) 6.750
07/01/15 (s) 07/01/01(b) 38,003
50,000 NYS Dorm (Nursing Homes) 5.500
07/01/10 (s) 07/01/07(b) 53,263
225,000 NYS Dorm (NY Medical College) 6.875
07/01/03 -- 252,250
1,150,000 NYS Dorm (Nyack Hospital) 6.250
07/01/13 (s) 03/31/08(g) 1,236,054
90,000 NYS Dorm (Park Ridge Hsg.) 7.850
02/01/29 02/01/99(b) 92,056
1,290,000 NYS Dorm (PCP) 7.800
12/01/05 (s) 06/01/99(b) 1,335,305
5,000 NYS Dorm (RGH) 8.750
07/01/02 (s) 07/01/99(b) 5,496
75,000 NYS Dorm (St. Francis G&H) 7.375
08/01/10 08/01/00(b) 81,108
20,000 NYS Dorm (St. Vincent's Hospital) 5.750
08/01/15 08/01/06(b) 21,541
25,000 NYS Dorm (St. Vincent's Hospital) 7.375
08/01/11 08/01/01(b) 27,557
20,480,000 NYS Dorm (State University) 5.500
05/15/16 05/15/10(b) 21,626,266
1,150,000 NYS Dorm (State University) 5.750
05/15/10 05/15/08(b) 1,265,069
3,600,000 NYS Dorm (State University) 5.750
05/15/16 (s) 05/15/08(b) 3,856,896
610,000 NYS Dorm (State University) 6.000
05/15/17 05/15/00(b) 628,025
8,730,000 NYS Dorm (State University) 6.375
05/15/14 05/15/03(a) 9,794,187
2,935,000 NYS Dorm (State University) 7.000
05/15/16 (s) 05/15/00(b) 3,118,408
115,000 NYS Dorm (State University) 7.000
05/15/16 (s) 05/15/00(b) 122,267
70,000 NYS Dorm (State University) 7.125
05/15/09 05/15/99(b) 72,392
3,565,000 NYS Dorm (Suffolk-Judicial) 9.000
10/15/01 (s) 04/15/99(b) 3,888,167
155,000 NYS Dorm (Suffolk-Judicial) 9.000
10/15/01 (s) 04/15/99(b) 171,683
1,500,000 NYS Dorm (Suffolk-Judicial) 9.250
04/15/06 (s) 04/15/99(b) 1,671,915
1,000,000 NYS Dorm (Teresian House) 5.250
07/01/17 07/01/09(b) 1,005,210
55,000 NYS Dorm (UCC) 5.625
07/01/12 (s) 07/01/04(b) 58,887
280,000 NYS Dorm (UCC) 5.625
07/01/14 (s) 07/01/06(b) 292,970
35,000 NYS Dorm (UCC) 5.875
07/01/16 (s) 07/01/09(b) 37,287
1,250,000 NYS Dorm (UCC) 6.200
07/01/15 (s) 07/01/05(b) 1,361,062
3,305,000 NYS Dorm (United Health Services) 5.500
08/01/17 02/01/10(b) 3,487,072
300,000 NYS Dorm (United Health Services) 7.150
08/01/07 02/01/00(a) 317,418
145,000 NYS Dorm (University of Rochester) 6.500
07/01/09 (s) 07/01/99(b) 147,569
20,000 NYS Dorm (University of Rochester) 6.500
07/01/09 (s) 07/01/99(b) 20,351
</TABLE>
17 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 870,000 NYS Dorm (Wesley Gardens) 5.850 %
08/01/26 08/01/09(b) $ 933,493
200,000 NYS Environ. (Consolidated Water) 7.150
11/01/14 (s) 11/01/04(b) 218,888
115,000 NYS Environ. (Huntington Res Rec) 7.375
10/01/99 -- 116,570
7,550,000 NYS Environ. (Huntington Res Rec) 7.500
10/01/12 (s) 10/01/99(b) 7,902,509
20,000 NYS Environ. (New Rochelle Water) 6.400
12/01/24 06/01/02(b) 21,219
330,000 NYS Environ. (RSP) 7.100
04/01/01 -- 355,103
50,000 NYS Environ. (State Park Infrastructure) 5.750
03/15/13 (s) 03/15/04(b) 52,415
15,000 NYS ERDA (Central Hudson G&E) 6.250
06/01/07 (s) 06/01/99(b) 15,027
10,000 NYS ERDA (Central Hudson G&E) 7.375
10/01/14 10/01/99(b) 10,568
6,115,000 NYS ERDA (Con Ed) 6.750
01/15/27 01/15/01(b) 6,475,540
6,690,000 NYS ERDA (Con Ed) 6.750
01/15/27 01/15/01(b) 7,093,875
9,290,000 NYS ERDA (Con Ed) 6.750
01/15/27 01/15/01(b) 9,847,121
1,280,000 NYS ERDA (Con Ed) 7.250
11/01/24 05/01/99(b) 1,307,955
85,000 NYS ERDA (Con Ed) 7.250
11/01/24 05/01/99(b) 86,105
8,100,000 NYS ERDA (Con Ed) 7.500
07/01/25 07/01/99(b) 8,334,900
160,000 NYS ERDA (Con Ed) 7.500
01/01/26 01/01/00(b) 167,240
325,000 NYS ERDA (LILCO) 6.900
08/01/22 01/21/03(b) 367,266
145,000 NYS ERDA (LILCO) 6.900
08/01/22 02/01/02(b) 161,502
260,000 NYS ERDA (LILCO) 7.150
09/01/19 06/14/02(b) 292,344
205,000 NYS ERDA (LILCO) 7.150
09/01/19 06/15/02(b) 224,885
615,000 NYS ERDA (LILCO) 7.150
06/01/20 06/15/02(b) 674,655
540,000 NYS ERDA (LILCO) 7.150
12/01/20 06/15/02(b) 598,790
940,000 NYS ERDA (LILCO) 7.150
02/01/22 06/15/02(b) 1,056,936
20,000 NYS ERDA (LILCO) 7.150
02/01/22 06/15/02(b) 22,177
170,000 NYS ERDA (LILCO) 7.500
12/01/06 (s) 12/01/99(b) 170,474
470,000 NYS ERDA (LILCO) (i) 7.800
12/01/09 (s) 12/01/99(b) 477,144
15,000 NYS GO 6.000
11/15/07 11/15/02(b) 16,366
40,000 NYS GO 6.600
12/01/14 06/01/99(b) 41,350
80,000 NYS HFA (Children's Rescue) 7.400
11/01/00 -- 82,126
65,000 NYS HFA (Children's Rescue) 7.500
05/01/01 -- 67,064
140,000 NYS HFA (Children's Rescue) 7.500
11/01/01 -- 145,326
114,000 NYS HFA (General Hsg.) 6.500
11/01/03 -- 116,547
10,000 NYS HFA (General Hsg.) 6.600
11/01/05 11/01/00(b) 10,224
30,000 NYS HFA (General Hsg.) 6.600
11/01/06 11/01/00(b) 30,673
5,000 NYS HFA (H&NH) 5.500
11/01/05 05/01/99(a) 5,330
5,000 NYS HFA (H&NH) 5.500
11/01/12 05/01/99(a) 5,288
15,000 NYS HFA (H&NH) 5.875
11/01/10 11/01/01(b) 15,372
10,000 NYS HFA (H&NH) 5.875
11/01/11 11/01/01(b) 10,248
5,000 NYS HFA (H&NH) 5.900
11/01/03 05/01/99(a) 5,435
30,000 NYS HFA (H&NH) 5.900
11/01/05 05/01/99(a) 33,203
5,000 NYS HFA (H&NH) 5.900
11/01/10 05/01/99(a) 5,689
35,000 NYS HFA (H&NH) 6.000
11/01/14 05/01/99(b) 35,335
10,000 NYS HFA (H&NH) 6.375
11/01/01 -- 10,753
20,000 NYS HFA (H&NH) 6.875
11/01/99 -- 20,445
10,000 NYS HFA (H&NH) 6.875
11/01/04 05/01/99(a) 10,131
5,000 NYS HFA (H&NH) 6.875
11/01/05 05/01/99(a) 5,067
660,000 NYS HFA (H&NH) 6.875
11/01/07 (s) 05/01/99(a) 721,307
5,000 NYS HFA (H&NH) 6.875
11/01/09 05/01/99(a) 5,470
3,000 NYS HFA (H&NH) 6.875
11/01/10 05/01/99(a) 3,283
590,000 NYS HFA (H&NH) 7.000
11/01/17 11/01/99(b) 717,298
1,435,000 NYS HFA (Health Facility) 6.000
05/01/07 -- 1,608,291
2,165,000 NYS HFA (Health Facility) 6.000
05/01/08 05/01/06(b) 2,413,390
</TABLE>
18 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 7,465,000 NYS HFA (Health Facility) 7.900 %
11/01/99 08/02/99(c) $ 7,589,740
1,590,000 NYS HFA (HELP/Bronx) 8.050
11/01/05 (s) 11/01/99(b) 1,653,489
120,000 NYS HFA (Meadow Manor) 7.750
11/01/19 (s) 05/01/99(b) 121,465
125,000 NYS HFA (Monroe County Health Facilities) 7.625
05/01/05 (s) 03/28/00(g) 135,917
475,000 NYS HFA (Multi-Family) 0.000
11/01/08 11/01/06(b) 300,019
240,000 NYS HFA (Multi-Family) 0.000
11/01/09 11/01/06(b) 142,764
10,000 NYS HFA (Multi-Family) 0.000
11/01/10 11/01/06(b) 5,554
100,000 NYS HFA (Multi-Family) 0.000
11/01/11 11/01/06(b) 52,234
1,580,000 NYS HFA (Multi-Family) 0.000
11/01/12 11/01/06(b) 771,451
130,000 NYS HFA (Multi-Family) 0.000
11/01/13 11/01/06(b) 59,489
1,000,000 NYS HFA (Multi-Family) 6.100
08/15/16 (s) 08/15/08(b) 1,074,440
2,015,000 NYS HFA (Multi-Family) 6.100
08/15/28 (s) 08/15/06(b) 2,188,270
25,000 NYS HFA (Multi-Family) 6.200
08/15/12 (s) 08/15/02(b) 26,631
2,060,000 NYS HFA (Multi-Family) 6.250
08/15/14 (s) 08/15/04(b) 2,234,317
150,000 NYS HFA (Multi-Family) 6.250
08/15/23 (s) 08/15/02(b) 159,000
1,000,000 NYS HFA (Multi-Family) 6.450
08/15/14 (s) 08/15/02(b) 1,064,490
350,000 NYS HFA (Multi-Family) 6.850
11/01/19 (s) 11/01/04(b) 383,894
100,000 NYS HFA (Multi-Family) 6.950
08/15/12 (s) 08/15/02(b) 109,017
1,875,000 NYS HFA (Multi-Family) 6.950
08/15/24 (s) 07/02/02(g) 1,986,862
40,000 NYS HFA (Multi-Family) 7.300
11/01/04 11/01/99(b) 41,288
359,000 NYS HFA (Multi-Family) 7.450
11/01/28 (s) 10/30/99(g) 372,735
1,040,000 NYS HFA (Multi-Family) 7.750
11/01/20 (s) 10/24/00(g) 1,108,401
570,000 NYS HFA (Multi-Family) 8.000
11/01/08 (s) 09/19/00(g) 616,489
400,000 NYS HFA (Multi-Family) 10.000
11/15/99 (s) -- 402,116
5,000 NYS HFA (Non Profit) 6.000
11/01/12 11/01/00(b) 5,106
45,000 NYS HFA (Non Profit) 6.100
11/01/99 -- 46,000
5,000 NYS HFA (Non Profit) 6.200
11/01/06 05/01/99(b) 5,111
40,000 NYS HFA (Non Profit) 6.200
11/01/08 05/01/99(b) 40,881
60,000 NYS HFA (Non Profit) 6.200
11/01/11 05/01/99(b) 61,326
40,000 NYS HFA (Non Profit) 6.400
11/01/00 -- 40,888
15,000 NYS HFA (Non Profit) 6.400
11/01/02 11/01/00(b) 15,333
25,000 NYS HFA (Non Profit) 6.400
11/01/04 11/01/00(b) 25,549
25,000 NYS HFA (Non Profit) 6.400
11/01/05 11/01/00(b) 25,549
5,000 NYS HFA (Non Profit) 6.400
11/01/06 11/01/00(b) 5,109
10,000 NYS HFA (Non Profit) 6.400
11/01/08 11/01/00(b) 10,218
80,000 NYS HFA (Non Profit) 6.400
11/01/09 11/01/01(b) 81,746
5,000 NYS HFA (Non Profit) 6.400
11/01/11 11/01/00(b) 5,109
10,000 NYS HFA (Non Profit) 6.400
11/01/13 05/01/99(b) 10,218
10,000 NYS HFA (Non Profit) 6.500
11/01/00 -- 10,224
60,000 NYS HFA (Non Profit) 6.500
11/01/02 -- 61,321
5,000 NYS HFA (Non Profit) 6.500
11/01/03 -- 5,112
25,000 NYS HFA (Non Profit) 6.600
11/01/00 05/01/99(b) 25,561
30,000 NYS HFA (Non Profit) 6.600
11/01/01 -- 30,667
10,000 NYS HFA (Non Profit) 6.600
11/01/02 05/01/99(b) 10,221
225,000 NYS HFA (Non Profit) 6.600
11/01/03 -- 230,053
75,000 NYS HFA (Non Profit) 6.600
11/01/05 05/01/99(b) 76,688
50,000 NYS HFA (Non Profit) 6.600
11/01/05 11/01/00(b) 51,125
15,000 NYS HFA (Non Profit) 6.600
11/01/06 11/01/00(b) 15,338
5,000 NYS HFA (Non Profit) 6.600
11/01/07 05/01/99(b) 5,113
10,000 NYS HFA (Non Profit) 6.600
11/01/09 05/01/99(b) 10,224
15,000 NYS HFA (Non Profit) 6.600
11/01/09 05/01/99(b) 15,338
15,000 NYS HFA (Non Profit) 6.600
11/01/10 05/01/99(b) 15,338
</TABLE>
19 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 15,000 NYS HFA (Non Profit) 6.600 %
11/01/11 11/01/03(b) $ 15,339
5,000 NYS HFA (Non Profit) 6.600
11/01/11 05/01/99(b) 5,113
25,000 NYS HFA (Non Profit) 6.600
11/01/13 05/01/99(b) 25,564
10,000 NYS HFA (Non Profit) 6.750
11/01/00 05/01/99(b) 10,225
20,000 NYS HFA (Non Profit) 6.750
11/01/01 05/01/99(b) 20,451
100,000 NYS HFA (Non Profit) 6.750
11/01/04 05/01/99(b) 104,180
5,000 NYS HFA (Non Profit) 6.750
11/01/05 05/01/99(b) 5,109
5,000 NYS HFA (Non Profit) 6.750
11/01/08 05/01/99(b) 5,113
15,000 NYS HFA (Non Profit) 6.750
11/01/09 05/01/99(b) 15,339
1,420,000 NYS HFA (Non Profit) 6.750
11/01/11 05/01/99(b) 1,464,474
61,000 NYS HFA (Non Profit) 6.875
11/01/10 05/01/99(b) 61,805
20,000 NYS HFA (Non Profit) (i) 6.500
11/01/01 -- 20,446
195,000 NYS HFA (Phillips Village) 6.700
02/15/02 -- 203,880
250,000 NYS HFA (Phillips Village) 6.700
08/15/02 -- 263,050
175,000 NYS HFA (Phillips Village) 6.900
02/15/04 -- 185,738
85,000 NYS HFA (Phillips Village) 6.900
08/15/04 -- 90,652
65,000 NYS HFA (Service Contract) 5.625
09/15/13 (s) 09/15/05(b) 68,373
100,000 NYS HFA (Service Contract) 5.875
03/15/11 (s) 09/15/05(b) 106,137
410,000 NYS HFA (Simeon Dewitt) 8.000
11/01/18 (s) 05/01/99(b) 413,436
113,000 NYS HFA (Westchester/HELP) 7.500
11/01/00 (s) 05/01/99(b) 113,382
40,000 NYS HFA (Westchester/HELP) 7.550
11/01/02 05/01/00(b) 41,145
5,500,000 NYS LGAC 5.375
04/01/14 (s) 08/15/06(b) 5,765,045
9,900,000 NYS LGAC 5.500
04/01/21 (s) 04/01/05(b) 10,202,247
50,000 NYS LGAC 6.000
04/01/18 (s) 04/01/02(b) 54,351
710,000 NYS LGSC (SCSB) 6.375
12/15/09 07/18/05(c) 750,328
5,000 NYS Medcare (AOFMH) 6.500
11/01/19 11/01/01(b) 5,411
685,000 NYS Medcare (Beth Israel Medical Center) 7.125
11/01/06 (s) 05/01/99(b) 703,495
290,000 NYS Medcare (Beth Israel Medical Center) 7.200
11/01/14 (s) 05/01/99(b) 290,905
100,000 NYS Medcare (Brookdale Hospital) 6.250
08/15/15 (s) 02/15/05(b) 109,270
260,000 NYS Medcare (Brookdale Hospital) 6.600
02/15/03 -- 287,992
615,000 NYS Medcare (Brookdale Hospital) 6.600
08/15/03 -- 687,748
20,000 NYS Medcare (Buffalo General Hospital) 6.000
08/15/14 08/15/06(b) 21,348
10,000 NYS Medcare (Central Suffolk Hospital) 5.875
11/01/05 12/12/03(c) 9,993
365,000 NYS Medcare (Downtown Hospital) 6.550
02/15/06 02/15/05(a) 421,736
945,000 NYS Medcare (Downtown Hospital) 6.550
08/15/06 02/15/05(a) 1,091,891
40,000 NYS Medcare (H&NH) 5.650
08/15/02 -- 41,866
100,000 NYS Medcare (H&NH) 5.650
08/15/13 08/15/05(b) 107,697
745,000 NYS Medcare (H&NH) 5.750
02/15/05 -- 771,723
4,500,000 NYS Medcare (H&NH) 5.750
08/15/19 (s) 08/15/04(b) 4,664,475
210,000 NYS Medcare (H&NH) 5.950
08/15/09 08/15/02(b) 221,724
10,000 NYS Medcare (H&NH) 6.100
08/15/13 (s) 08/15/02(b) 10,983
790,000 NYS Medcare (H&NH) 6.125
02/15/14 (s) 02/15/04(b) 885,511
835,000 NYS Medcare (H&NH) 6.125
02/15/14 (s) 02/15/04(b) 887,830
30,000 NYS Medcare (H&NH) 6.150
02/15/02 02/15/99(b) 32,184
25,000 NYS Medcare (H&NH) 6.200
08/15/22 08/15/02(b) 26,635
100,000 NYS Medcare (H&NH) 6.250
02/15/15 08/15/05(b) 110,107
2,570,000 NYS Medcare (H&NH) 6.400
08/15/14 08/15/04(b) 2,815,718
75,000 NYS Medcare (H&NH) 6.400
11/01/14 (s) 05/01/02(b) 81,754
3,210,000 NYS Medcare (H&NH) 6.500
08/15/12 (s) 08/15/02(b) 3,559,441
570,000 NYS Medcare (H&NH) 6.500
08/15/12 (s) 08/15/02(b) 623,683
25,000 NYS Medcare (H&NH) 6.550
08/15/12 08/15/02(b) 27,440
760,000 NYS Medcare (H&NH) 7.100
11/01/99 -- 777,548
</TABLE>
20 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 115,000 NYS Medcare (H&NH) 7.100 %
11/01/00 -- $ 117,630
25,000 NYS Medcare (H&NH) 7.200
11/01/00 02/15/99(b) 25,579
685,000 NYS Medcare (H&NH) 7.200
11/01/01 05/01/99(b) 700,728
85,000 NYS Medcare (H&NH) 7.250
11/01/02 05/01/99(b) 86,955
395,000 NYS Medcare (H&NH) 7.250
11/01/03 05/01/99(b) 404,085
110,000 NYS Medcare (H&NH) 7.300
08/15/11 08/15/01(b) 118,086
250,000 NYS Medcare (H&NH) 7.350
02/15/29 (s) 08/15/99(b) 260,682
55,000 NYS Medcare (H&NH) 7.350
02/15/29 (s) 02/15/99(b) 57,538
30,000 NYS Medcare (H&NH) 7.350
02/15/29 (s) 02/15/99(b) 31,301
730,000 NYS Medcare (H&NH) 7.400
11/01/16 (s) 05/01/99(b) 747,045
5,000 NYS Medcare (H&NH) 7.500
02/15/09 02/15/99(b) 5,126
15,000 NYS Medcare (H&NH) 7.500
02/15/09 02/15/99(b) 15,370
170,000 NYS Medcare (H&NH) 7.600
02/15/29 02/15/99(b) 174,223
3,810,000 NYS Medcare (H&NH) 8.000
02/15/27 02/15/99(b) 3,860,482
30,000 NYS Medcare (H&NH) 8.000
02/15/28 02/15/99(b) 30,697
300,000 NYS Medcare (H&NH) 8.625
02/15/06 02/15/99(b) 301,215
605,000 NYS Medcare (H&NH) 9.375
11/01/16 (s) 05/01/99(b) 632,177
5,000 NYS Medcare (H&NH) (i) 7.900
02/15/08 08/15/00(b) 5,117
825,000 NYS Medcare (H&NH) (i) 9.000
02/15/26 02/15/99(b) 851,647
2,435,000 NYS Medcare (H&NH) (i) 10.000
11/01/06 (s) 05/01/99(b) 2,595,466
10,000 NYS Medcare (Hospital Insured Mortgage) 7.100
02/15/00 -- 10,410
1,915,000 NYS Medcare (Huntington Hospital) 6.500
11/01/14 (s) 11/01/04(b) 2,080,226
20,000 NYS Medcare (Mental Health) 0.000
08/15/01 -- 17,444
5,000 NYS Medcare (Mental Health) 0.000
02/15/03 02/15/99(b) 3,880
5,000 NYS Medcare (Mental Health) 0.000
08/15/03 02/15/99(b) 3,739
75,000 NYS Medcare (Mental Health) 5.550
08/15/01 02/15/99(b) 75,113
10,000 NYS Medcare (Mental Health) 5.700
02/15/03 02/15/99(b) 10,015
65,000 NYS Medcare (Mental Health) 6.000
02/15/11 (s) 02/15/99(b) 65,086
5,000 NYS Medcare (Mental Health) 6.100
08/15/13 (s) 08/15/02(b) 5,449
70,000 NYS Medcare (Mental Health) 6.375
08/15/14 (s) 08/15/04(b) 78,072
120,000 NYS Medcare (Mental Health) 6.375
08/15/14 (s) 08/15/04(b) 137,006
5,000 NYS Medcare (Mental Health) 6.375
08/15/14 (s) 08/15/04(b) 5,603
4,005,000 NYS Medcare (Mental Health) 6.375
08/15/14 (s) 08/15/04(b) 4,572,589
85,000 NYS Medcare (Mental Health) 6.500
08/15/24 (s) 08/15/04(b) 97,578
5,000 NYS Medcare (Mental Health) 6.500
08/15/24 (s) 08/15/04(b) 5,656
85,000 NYS Medcare (Mental Health) 6.850
08/15/00 -- 89,429
45,000 NYS Medcare (Mental Health) 7.000
02/15/01 -- 48,021
15,000 NYS Medcare (Mental Health) 7.100
02/15/02 08/15/99(b) 15,592
50,000 NYS Medcare (Mental Health) 7.200
08/15/00 -- 52,872
10,000 NYS Medcare (Mental Health) 7.200
02/15/04 08/15/99(b) 10,401
5,000 NYS Medcare (Mental Health) 7.300
08/15/10 (s) 08/15/99(b) 5,216
50,000 NYS Medcare (Mental Health) 7.300
02/15/21 (s) 08/15/01(b) 54,787
1,020,000 NYS Medcare (Mental Health) 7.375
02/15/14 (s) 08/12/99(g) 1,063,799
45,000 NYS Medcare (Mental Health) 7.400
08/15/00 -- 47,724
25,000 NYS Medcare (Mental Health) 7.400
02/15/02 02/15/00(b) 26,438
5,000 NYS Medcare (Mental Health) 7.400
02/15/03 08/15/01(b) 5,472
10,000 NYS Medcare (Mental Health) 7.500
08/15/07 (s) 02/15/01(b) 10,920
145,000 NYS Medcare (Mental Health) 7.625
02/15/07 08/15/01(b) 160,099
10,000 NYS Medcare (Mental Health) 7.625
08/15/07 08/15/01(b) 11,041
100,000 NYS Medcare (Mental Health) 7.625
02/15/08 (s) 02/15/99(b) 102,335
1,085,000 NYS Medcare (Mental Health) 7.700
02/15/18 (s) 02/15/99(b) 1,110,324
25,000 NYS Medcare (Mental Health) 7.750
08/15/10 (s) 02/15/00(b) 26,642
</TABLE>
21 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 145,000 NYS Medcare (Mental Health) 7.800 %
02/15/19 (s) 02/15/99(b) $ 148,669
140,000 NYS Medcare (Mental Health) 7.875
08/15/15 (s) 02/15/99(b) 143,289
125,000 NYS Medcare (Mental Health) 7.875
08/15/15 (s) 02/15/99(b) 127,946
6,045,000 NYS Medcare (Mental Health) 7.875
08/15/20 (s) 08/15/00(b) 6,533,436
1,230,000 NYS Medcare (Mental Health) 8.250
02/15/99 -- 1,237,700
35,000 NYS Medcare (Mental Health) 8.250
08/15/99 04/01/99(b) 35,497
2,360,000 NYS Medcare (Mental Health) 8.875
08/15/07 (s) 02/15/99(b) 2,393,984
85,000 NYS Medcare (Montefiore Medical Center) 5.700
02/15/12 02/15/07(b) 92,210
30,000 NYS Medcare (North Shore University Hospital) 7.125
11/01/08 (s) 11/01/00(b) 32,573
20,000 NYS Medcare (North Shore University Hospital) 7.125
11/01/08 (s) 11/01/00(b) 21,635
145,000 NYS Medcare (North Shore University Hospital) 7.200
11/01/20 (s) 11/01/00(a) 157,621
165,000 NYS Medcare (Saranac Lake General Hospital) 7.875
11/01/10 (s) 10/01/00(g) 180,135
380,000 NYS Medcare (St. Francis Hospital) 7.625
11/01/21 (s) 05/01/99(b) 388,911
85,000 NYS Medcare (St. Luke's Hospital) 5.600
08/15/13 (s) 12/12/04(g) 89,113
70,000 NYS Medcare (St. Luke's Hospital) 5.625
08/15/18 (s) 12/12/04(g) 72,536
500,000 NYS Medcare (St. Luke's Hospital) 5.625
08/15/18 (s) 12/12/04(g) 517,830
110,000 NYS Medcare (St. Luke's Hospital) 7.375
02/15/19 (s) 02/15/00(b) 115,303
60,000 NYS Medcare (St. Luke's Hospital) 7.400
02/15/09 02/15/00(b) 63,739
90,000 NYS Medcare (St. Luke's Hospital) 7.500
11/01/11 (s) 11/01/99(b) 94,659
715,000 NYS Medcare (WHMC) 6.850
02/15/00 -- 744,043
250,000 NYS Medcare (WHMC) 6.950
02/15/01 -- 267,375
530,000 NYS Thruway Authority 0.000
01/01/01 -- 489,254
250,000 NYS Thruway Authority 0.000
01/01/05 -- 192,658
385,000 NYS Thruway Authority 0.000
01/01/06 -- 282,143
1,870,000 NYS Thruway Authority 5.250
04/01/13 04/01/10(b) 1,968,979
50,000 NYS Thruway Authority 5.500
04/01/15 (s) 04/01/07(b) 52,611
500,000 NYS Thruway Authority 6.000
04/01/11 04/01/07(b) 551,345
3,000,000 NYS Thruway Authority 6.000
04/01/12 04/01/07(b) 3,303,720
20,000 NYS UDC (Correctional Facilities) 0.000
01/01/99 -- 20,000
10,000 NYS UDC (Correctional Facilities) 0.000
01/01/00 -- 9,633
25,000 NYS UDC (Correctional Facilities) 0.000
01/01/03 -- 21,404
30,000 NYS UDC (Correctional Facilities) 0.000
01/01/07 -- 20,932
1,375,000 NYS UDC (Correctional Facilities) 5.250
01/01/13 (s) 01/01/06(b) 1,412,648
4,050,000 NYS UDC (Correctional Facilities) 5.500
01/01/15 (s) 01/01/05(b) 4,184,581
17,700,000 NYS UDC (Correctional Facilities) 5.500
01/01/15 (s) 01/01/05(b) 18,288,171
1,000,000 NYS UDC (Correctional Facilities) 5.700
01/01/16 (s) 01/01/09(b) 1,056,580
85,000 NYS UDC (Correctional Facilities) 5.750
01/01/13 (s) 01/01/05(b) 89,775
35,000 NYS UDC (South Mall) 0.000
01/01/03 -- 29,019
130,000 NYS UDC (South Mall) 0.000
01/01/05 -- 96,832
50,000 NYS UDC (South Mall) 0.000
01/01/05 06/24/04(c) 37,353
450,000 NYS UDC (South Mall) 0.000
01/01/11 04/08/08(c) 233,298
400,000 NYS UDC (South Mall) 0.000
01/01/11 04/08/08(c) 208,592
10,000,000 NYS UDC (Sub Lien) 5.500
07/01/16 (s) 07/01/08(b) 10,432,100
90,000 Oneida Healthcare Corp. 7.100
08/01/11 08/01/01(b) 96,949
1,150,000 Oneida-Herkimer SWMA 6.600
04/01/04 -- 1,273,924
3,045,000 Oneida-Herkimer SWMA 6.750
04/01/14 (s) 04/01/03(b) 3,439,084
155,000 Oneida-Herkimer SWMA 6.750
04/01/14 (s) 04/01/03(b) 166,901
110,000 Onondaga County IDA (Sysco Foods) 7.750
04/01/03 04/01/99(b) 111,269
8,650,000 Onondaga County Res Rec 6.625
05/01/00 11/06/99(c) 8,836,754
8,385,000 Onondaga County Res Rec 6.875
05/01/06 01/12/04(c) 8,903,361
7,350,000 Onondaga County Res Rec 7.000
05/01/15 (s) 05/01/02(b) 7,888,020
130,000 Orange County IDA (Glen Arden) 5.400
01/01/08 -- 131,282
</TABLE>
22 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 1,485,000 Orange County IDA (Kingston Manufacturing) 7.250 %
11/01/03 12/25/01(c) $ 1,515,502
40,000 Orange County IDA (Mental Health) 6.000
05/01/08 -- 44,123
10,000 Orange County IDA (Mental Health) 6.125
05/01/16 (s) 05/01/06(b) 11,033
575,000 Oswego County IDA (SLRHF) 5.150
02/01/13 03/22/11(c) 591,968
1,805,000 Oswego County Res Rec 6.500
06/01/04 05/23/03(c) 1,935,790
1,750,000 Otsego County IDA (AOFMH) 5.350
10/01/17 (s) 10/01/10(b) 1,817,200
20,000 Pendelton, NY GO (i) 7.600
09/01/15 03/01/99(a) 20,549
50,000 Philadelphia, NY GO 7.500
12/15/09 -- 62,885
15,000 Port Authority NY/NJ 5.000
02/01/03 (s) 02/01/99(b) 15,014
75,000 Port Authority NY/NJ (Delta Airlines) 6.950
06/01/08 06/01/02(b) 80,657
1,000,000 Port Authority NY/NJ (KIAC) 6.750
10/01/11 (s) 05/03/10(c) 1,108,460
275,000 Port Authority NY/NJ (KIAC) 6.750
10/01/19 (s) 10/01/06(b) 304,827
10,000,000 Port Authority NY/NJ (KIAC) 7.000
10/01/07 05/02/05(c) 11,184,300
20,000 Port Authority NY/NJ, 52nd Series 9.000
11/01/14 (s) 11/01/99(b) 20,942
75,000 Port Authority NY/NJ, 67th Series 6.875
01/01/25 (s) 01/01/00(b) 78,240
25,000 Port Authority NY/NJ, 68th Series 7.250
08/15/09 02/15/00(b) 26,251
15,000 Port Authority NY/NJ, 68th Series 7.250
08/15/11 02/15/00(b) 15,716
90,000 Port Authority NY/NJ, 69th Series 7.125
06/01/25 (s) 06/01/00(b) 95,289
15,000 Port Authority NY/NJ, 70th Series 7.250
08/01/25 (s) 08/01/00(b) 15,811
100,000 Port Authority NY/NJ, 73rd Series 6.750
04/15/26 (s) 04/15/01(b) 106,548
30,000 Port Authority NY/NJ, 83rd Series 6.375
10/15/17 (s) 10/15/02(b) 32,833
15,000 Portchester Community Devel. Corp. 8.100
08/01/10 10/10/05(c) 16,078
1,275,000 Putnam County IDA (Brewster Plastics) 7.375
12/01/08 12/27/04(c) 1,370,778
120,000 Rensselaer Hsg. Authority (Renwyck) 7.650
01/01/11 (s) 08/25/02(g) 130,644
1,440,000 Rensselaer Municipal Leasing Corp. 6.250
06/01/04 12/28/02(c) 1,572,307
60,000 Rensselaer Municipal Leasing Corp. 6.900
06/01/24 06/01/04(b) 66,357
15,000 Riverhead HDC 8.250
08/01/10 (s) 02/01/99(b) 15,949
2,915,000 Rochester Hsg. Authority (Crossroads) 7.300
07/01/05 10/01/02(c) 3,191,867
745,000 Rochester Hsg. Authority (Stonewood) 5.900
09/01/09 03/17/05(c) 773,750
595,000 Rockland County IDA (DC) 7.000
03/01/03 04/21/01(c) 639,940
350,000 Rockland Gardens Hsg. Corp. 10.500
05/01/11 05/01/99(b) 376,600
50,000 Rome, NY GO 6.900
12/15/07 12/15/03(b) 56,520
225,000 Roxbury CSD GO 6.400
06/15/10 06/15/05(b) 251,420
235,000 Roxbury CSD GO 6.400
06/15/11 06/15/05(b) 262,032
190,000 Saratoga County IDA (ARC) 7.250
03/01/01 03/10/00(c) 194,790
360,000 Saratoga County IDA (City Center) 10.000
10/01/08 (s) 10/01/99(b) 374,400
1,945,000 Saratoga County IDA (Saratoga Sheraton) 6.750
12/31/07 08/14/03(c) 2,076,268
50,000 Schodack IDA (Hamilton Printing) 7.600
07/01/00 -- 50,294
60,000 Schodack IDA (Hamilton Printing) 7.625
07/01/01 -- 62,898
120,000 Schuyler County IDA (Cargill) 7.900
04/01/07 04/01/99(b) 123,472
5,000 SONYMA, Series 1 0.000
10/01/14 (s) 04/01/99(b) 1,159
200,000 SONYMA, Series 10-A 8.000
10/01/08 (s) 04/01/99(b) 204,340
70,000 SONYMA, Series 10-B 6.500
10/01/02 (s) 04/01/99(b) 70,118
15,000 SONYMA, Series 11 6.875
04/01/16 (s) 04/01/99(b) 15,044
30,000 SONYMA, Series 12 0.000
04/01/99 -- 29,608
60,000 SONYMA, Series 12 0.000
10/01/99 04/01/99(b) 57,428
100,000 SONYMA, Series 12 0.000
10/01/00 04/01/99(b) 88,769
30,000 SONYMA, Series 12 0.000
10/01/01 04/01/99(b) 24,651
30,000 SONYMA, Series 12 0.000
04/01/03 04/01/99(b) 21,920
695,000 SONYMA, Series 12 7.300
10/01/12 (s) 04/01/99(b) 701,999
240,000 SONYMA, Series 12 8.250
04/01/17 (s) 04/01/99(b) 243,679
315,000 SONYMA, Series 2 0.000
10/01/14 (s) 04/01/99(b) 71,303
</TABLE>
23 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 65,000 SONYMA, Series 2 0.000 %
10/01/14 (s) 04/01/01(b) $ 14,793
100,000 SONYMA, Series 29-A 5.250
04/01/15 01/28/12(c) 102,205
25,000 SONYMA, Series 29-B 6.450
04/01/15 (s) 03/01/03(b) 26,802
445,000 SONYMA, Series 30-B 6.000
04/01/19 (s) 03/01/05(b) 458,363
165,000 SONYMA, Series 30-C 5.850
10/01/25 (s) 10/01/05(b) 171,691
10,000 SONYMA, Series 34 5.550
09/30/25 (s) 03/01/06(b) 10,261
65,000 SONYMA, Series 36-A 6.125
10/01/20 (s) 06/06/06(b) 67,681
100,000 SONYMA, Series 39 5.750
10/01/10 (s) 04/01/06(b) 104,505
55,000 SONYMA, Series 39 6.000
10/01/17 (s) 04/01/06(b) 58,271
50,000 SONYMA, Series 40-A 6.350
04/01/21 (s) 06/01/04(b) 52,660
30,000 SONYMA, Series 41-A 6.450
10/01/14 (s) 06/01/04(b) 32,769
50,000 SONYMA, Series 41-B 6.250
10/01/14 (s) 08/01/04(b) 54,202
35,000 SONYMA, Series 42 6.000
10/01/23 (s) 09/01/06(b) 36,314
25,000 SONYMA, Series 42 6.400
10/01/20 (s) 09/01/04(b) 26,234
50,000 SONYMA, Series 43 6.100
04/01/09 09/01/06(b) 52,204
25,000 SONYMA, Series 43 6.100
10/01/09 09/01/06(b) 26,102
690,000 SONYMA, Series 43 6.450
10/01/17 (s) 09/01/04(b) 751,362
125,000 SONYMA, Series 44 6.900
04/01/06 11/01/04(b) 135,078
50,000 SONYMA, Series 44 7.000
10/01/07 11/01/04(b) 53,787
25,000 SONYMA, Series 46 6.500
04/01/13 (s) 03/28/05(b) 27,228
65,000 SONYMA, Series 47 6.375
10/01/17 (s) 03/28/07(b) 70,764
50,000 SONYMA, Series 48 6.000
04/01/13 06/29/07(b) 53,462
1,770,000 SONYMA, Series 48 6.050
04/01/17 (s) 06/29/07(b) 1,893,564
25,000 SONYMA, Series 48 6.100
04/01/25 (s) 06/29/05(b) 26,829
10,000 SONYMA, Series 50 6.250
04/01/10 09/13/07(b) 10,705
25,000 SONYMA, Series 51 6.400
10/01/17 (s) 09/13/05(b) 27,269
50,000 SONYMA, Series 53 5.750
10/01/11 (s) 01/04/08(b) 53,441
280,000 SONYMA, Series 54 6.100
10/01/15 (s) 03/05/08(g) 302,249
135,000 SONYMA, Series 56 5.875
10/01/19 (s) 07/01/08(b) 141,506
90,000 SONYMA, Series 6 9.375
04/01/10 (s) 10/01/99(b) 92,718
13,105,000 SONYMA, Series 60 6.050
04/01/26 (s) 01/01/09(b) 14,092,069
1,000,000 SONYMA, Series 61 5.800
10/01/17 (s) 01/01/09(b) 1,058,320
200,000 SONYMA, Series 63 6.000
04/01/17 (s) 04/01/09(b) 215,372
75,000 SONYMA, Series 66 5.600
10/01/17 (s) 07/01/09(b) 78,082
1,000,000 SONYMA, Series 67 5.600
10/01/14 (s) 09/01/09(b) 1,046,540
500,000 SONYMA, Series 67 5.700
10/01/17 (s) 09/01/09(b) 526,510
4,000,000 SONYMA, Series 67 5.800
10/01/28 (s) 09/01/09(b) 4,244,760
75,000 SONYMA, Series 7 (i) 9.250
10/01/14 (s) 04/01/99(b) 77,000
45,000 SONYMA, Series 8-A 0.000
10/01/99 -- 42,892
250,000 SONYMA, Series 8-A 0.000
04/01/00 04/01/99(b) 230,283
30,000 SONYMA, Series 8-A 0.000
10/01/00 04/01/99(b) 26,725
85,000 SONYMA, Series 8-A 0.000
04/01/01 04/01/99(b) 73,072
70,000 SONYMA, Series 8-A 0.000
10/01/01 04/01/99(b) 58,171
85,000 SONYMA, Series 8-A 0.000
04/01/02 04/01/99(b) 68,275
70,000 SONYMA, Series 8-A 0.000
10/01/02 04/01/99(b) 54,351
385,000 SONYMA, Series 8-A 6.875
04/01/17 (s) 04/01/99(b) 397,416
90,000 SONYMA, Series 8-A 6.875
04/01/17 (s) 04/01/99(b) 90,194
120,000 SONYMA, Series 8-A 6.875
04/01/17 (s) 04/01/99(b) 120,281
50,000 SONYMA, Series 8-B 7.200
04/01/99 -- 50,276
435,000 SONYMA, Series 8-E 8.100
10/01/17 (s) 04/01/99(b) 444,788
5,000 SONYMA, Series 9-A 8.250
10/01/08 (s) 04/01/99(b) 5,080
75,000 SONYMA, Series 9-C 8.400
10/01/02 (s) 04/01/99(b) 75,601
</TABLE>
24 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 70,000 SONYMA, Series AA 7.700 %
04/01/99 -- $ 70,353
15,000 SONYMA, Series EE-2 7.050
10/01/00 01/07/00(c) 15,506
85,000 SONYMA, Series EE-2 7.450
10/01/10 (s) 09/11/99(g) 87,916
1,100,000 SONYMA, Series EE-2 7.500
04/01/16 (s) 09/14/99(b) 1,138,104
125,000 SONYMA, Series EE-3 7.125
10/01/00 01/07/00(c) 128,561
50,000 SONYMA, Series EE-3 7.650
04/01/16 (s) 10/01/00(b) 52,364
50,000 SONYMA, Series EE-3 7.750
04/01/16 (s) 04/01/00(b) 52,401
100,000 SONYMA, Series EE-4 7.050
10/01/00 01/10/00(c) 102,593
115,000 SONYMA, Series EE-4 7.800
10/01/13 (s) 10/01/00(b) 120,980
50,000 SONYMA, Series HH-2 7.700
10/01/09 (s) 09/09/99(g) 51,536
14,715,000 SONYMA, Series HH-2 7.750
04/01/22 (s) 09/14/99(b) 15,182,348
25,000 SONYMA, Series HH-2 7.850
04/01/22 (s) 09/14/99(b) 25,938
185,000 SONYMA, Series HH-3 7.875
10/01/09 (s) 05/14/00(g) 193,395
3,600,000 SONYMA, Series HH-3 7.950
04/01/22 (s) 06/07/00(b) 3,764,016
30,000 SONYMA, Series HH-4 7.700
10/01/09 (s) 08/20/00(g) 31,172
325,000 SONYMA, Series II 0.000
04/01/05 04/01/99(b) 208,010
45,000 SONYMA, Series II 0.000
10/01/05 04/01/99(b) 27,707
35,000 SONYMA, Series II 0.000
04/01/06 04/01/02(b) 20,726
40,000 SONYMA, Series II 0.000
10/01/06 04/01/99(b) 22,787
90,000 SONYMA, Series II 0.000
04/01/07 04/01/99(b) 49,125
120,000 SONYMA, Series II 0.000
10/01/07 04/01/99(b) 62,995
580,000 SONYMA, Series II 0.000
10/01/08 04/01/99(b) 281,607
175,000 SONYMA, Series II 0.000
04/01/09 04/01/99(b) 81,704
300,000 SONYMA, Series II 0.000
10/01/09 04/01/99(b) 134,709
90,000 SONYMA, Series JJ 0.000
04/01/00 -- 86,231
10,000 SONYMA, Series JJ 0.000
10/01/00 -- 9,343
255,000 SONYMA, Series JJ 0.000
04/01/01 -- 229,322
95,000 SONYMA, Series JJ 0.000
10/01/01 -- 82,405
175,000 SONYMA, Series JJ 0.000
04/01/02 -- 146,134
40,000 SONYMA, Series JJ 0.000
10/01/02 -- 32,210
215,000 SONYMA, Series JJ 0.000
04/01/03 10/01/99(b) 166,548
75,000 SONYMA, Series JJ 0.000
10/01/03 10/01/99(b) 56,012
30,000 SONYMA, Series JJ 0.000
04/01/04 10/01/99(b) 21,538
10,000 SONYMA, Series JJ 0.000
10/01/04 10/01/99(b) 6,920
210,000 SONYMA, Series JJ 0.000
04/01/05 10/01/99(b) 140,009
185,000 SONYMA, Series JJ 0.000
10/01/05 10/01/99(b) 118,883
90,000 SONYMA, Series JJ 0.000
04/01/06 10/01/99(b) 55,550
425,000 SONYMA, Series JJ 0.000
10/01/06 10/01/99(b) 251,048
200,000 SONYMA, Series JJ 0.000
04/01/07 10/01/99(b) 114,584
125,000 SONYMA, Series JJ 0.000
10/01/07 10/01/99(b) 69,010
150,000 SONYMA, Series JJ 0.000
10/01/08 10/01/99(b) 76,839
275,000 SONYMA, Series JJ 7.500
10/01/17 (s) 10/01/99(b) 285,313
10,000 SONYMA, Series KK 7.050
10/01/99 04/07/99(c) 10,159
60,000 SONYMA, Series KK 7.800
10/01/20 (s) 10/01/99(b) 62,113
80,000 SONYMA, Series MM-1 7.500
04/01/13 (s) 02/04/01(b) 83,480
5,000 SONYMA, Series MM-1 7.600
10/01/02 02/04/01(b) 5,247
25,000 SONYMA, Series MM-1 7.650
10/01/03 02/04/01(b) 26,185
100,000 SONYMA, Series MM-1 7.700
10/01/04 02/04/01(b) 104,458
50,000 SONYMA, Series MM-1 7.750
04/01/05 02/04/01(b) 52,157
10,000 SONYMA, Series MM-2 7.550
04/01/02 10/01/00(b) 10,447
10,000 SONYMA, Series MM-2 7.700
10/01/05 10/01/00(b) 10,395
25,000 SONYMA, Series NN 7.100
04/01/02 01/01/00(b) 25,881
</TABLE>
25 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 20,000 SONYMA, Series NN 7.150 %
10/01/03 01/01/00(b) $ 20,683
50,000 SONYMA, Series NN 7.450
10/01/10 (s) 01/01/00(b) 52,093
20,000 SONYMA, Series QQ 7.600
10/01/12 04/01/00(b) 20,790
2,135,000 SONYMA, Series QQ 7.700
10/01/12 04/01/00(b) 2,221,937
50,000 SONYMA, Series RR 7.600
10/01/10 (s) 10/01/00(b) 52,813
25,000 SONYMA, Series RR 7.700
10/01/10 (s) 10/01/00(b) 26,302
25,000 SONYMA, Series TT 6.850
10/01/01 -- 26,046
20,000 SONYMA, Series TT 6.950
04/01/02 -- 20,952
125,000 SONYMA, Series TT 7.150
04/01/04 04/01/01(b) 130,778
25,000 SONYMA, Series TT 7.200
10/01/05 04/01/01(b) 26,114
25,000 SONYMA, Series UU 6.850
10/01/99 -- 25,339
75,000 SONYMA, Series UU 6.950
04/01/00 -- 76,528
15,745,000 SONYMA, Series UU 7.650
10/01/23 04/01/01(b) 16,581,532
1,615,000 SONYMA, Series UU 7.750
10/01/23 (s) 04/01/01(b) 1,699,335
40,000 SONYMA, Series VV 6.600
04/01/00 -- 40,897
25,000 SONYMA, Series VV 6.800
10/01/02 -- 26,424
60,000 SONYMA, Series VV 6.900
04/01/03 -- 63,502
50,000 SONYMA, Series VV 7.000
04/01/04 10/01/01(b) 52,713
100,000 SONYMA, Series VV 7.000
10/01/04 10/01/01(b) 105,491
645,000 SONYMA, Series VV 7.250
10/01/07 (s) 10/01/01(b) 684,990
13,315,200 SONYMA, Series VV 7.375
10/01/11 (s) 10/01/01(b) 14,196,799
125,000 Springville HDC (Springbrook) 5.950
01/01/10 06/29/05(c) 132,241
965,000 St. Casimer's Elderly Hsg. Corp. 7.375
09/01/10 (s) 03/01/99(b) 995,533
1,215,000 St. Lawrence IDA (PACES) 5.875
06/30/07 11/24/03(c) 1,212,752
1,605,000 Suffolk County IDA (ACLDD) 5.750
03/01/06 11/04/02(c) 1,607,311
240,000 Suffolk County IDA (Dowling College) 6.500
12/01/06 -- 258,588
2,385,000 Suffolk County IDA (HFAS) 6.025
11/01/08 10/25/04(c) 2,399,072
1,035,000 Suffolk County IDA (Huntington Res Rec) (w) 5.150
10/01/99 -- 1,038,581
6,395,000 Suffolk County IDA (Huntington Res Rec) (w) 5.150
10/01/00 -- 6,481,524
6,875,000 Suffolk County IDA (Huntington Res Rec) (w) 5.350
10/01/01 -- 7,048,525
7,390,000 Suffolk County IDA (Huntington Res Rec) (w) 5.450
10/01/02 -- 7,654,858
7,945,000 Suffolk County IDA (Huntington Res Rec) (w) 5.500
10/01/03 -- 8,304,273
20,000 Suffolk County IDA (Marbar Assoc.) 8.150
03/01/04 03/01/99(b) 20,024
25,000 Suffolk County IDA (Marbar Assoc.) 8.200
03/01/05 03/01/99(b) 25,011
50,000 Suffolk County IDA (OBPWC) 7.000
11/01/02 07/14/01(c) 50,810
270,000 Suffolk County IDA (Printing Assoc.) (i) 6.800 (v)
12/01/00 07/01/99(f) 270,000
1,170,000 Suffolk County IDA (Rimland Facilities) (i) 6.000 (v)
12/01/04 12/01/99(f) 1,170,000
40,000 Suffolk County Water Authority 5.625
06/01/16 (s) 06/01/04(b) 41,713
2,315,000 Sunnybrook EHC 11.250
12/01/14 (s) 04/01/99(b) 2,476,471
345,000 Syracuse IDA (Rockwest Center I) (i) 7.250
06/01/03 07/26/01(c) 353,625
930,000 Syracuse IDA (Rockwest Center II) 7.000
12/01/05 03/25/03(c) 929,972
795,000 Syracuse IDA (St. Joseph's Hospital) 7.250
06/01/01 06/19/00(c) 838,439
195,000 Tompkins County IDA (Kendall at Ithaca) 7.875
06/01/15 (s) 06/01/05(b) 208,851
295,000 Tompkins Healthcare Corp. 10.800
02/01/28 08/01/05(b) 380,108
3,755,000 Tonawanda HDC (Tonawanda Towers) 6.150
10/01/11 09/05/06(c) 3,988,336
230,000 Triborough Bridge & Tunnel Authority 5.500
01/01/19 (s) 07/01/99(b) 230,205
85,000 Triborough Bridge & Tunnel Authority 6.000
01/01/13 (s) 01/01/00(b) 86,596
10,000 Triborough Bridge & Tunnel Authority 6.625
01/01/17 (s) 01/01/03(b) 10,710
13,050,000 Triborough Bridge & Tunnel Authority 6.875
01/01/15 (s) 01/01/01(b) 14,050,022
75,000 Tupper Lake HDC 8.125
10/01/10 03/15/02(b) 75,340
760,000 Union Hsg. Authority (Methodist Homes) 6.800
11/01/04 07/15/02(c) 799,756
6,975,000 United Nations Devel. Corp., Series B 5.400
07/01/14 (s) 07/01/99(b) 6,995,786
</TABLE>
26 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 3,865,000 United Nations Devel. Corp., Series B 5.500 %
07/01/17 (s) 07/01/99(b) $ 3,891,050
4,000,000 United Nations Devel. Corp., Series B 5.600
07/01/26 07/01/99(b) 4,029,000
6,070,000 United Nations Devel. Corp., Series C 5.500
07/01/17 (s) 07/01/99(b) 6,110,912
500,000 Utica IDA (Utica College) 5.300
08/01/08 02/07/04(c) 510,790
55,000 Utica Sr. Citizen Hsg. Corp. (Brook Apartments) 0.000
01/01/99 -- 55,000
10,000 Utica Sr. Citizen Hsg. Corp. (Brook Apartments) 0.000
07/01/99 -- 9,548
40,000 Utica Sr. Citizen Hsg. Corp. (Brook Apartments) 0.000
01/01/02 -- 30,162
100,000 Utica Sr. Citizen Hsg. Corp. (Steinhorst
Apartments 6.500
04/15/08 (s) 10/07/04(g) 111,431
10,000 Valley Health Devel. Corp. 7.850
02/01/02 11/07/99(c) 10,636
95,000 Valley Health Devel. Corp. 11.300
02/01/07 08/01/00(b) 112,144
875,000 Valley Health Devel. Corp. 11.300
02/01/23 (s) 12/15/00(b) 1,029,560
95,000 Watervliet Elderly Hsg. Corp. 8.000
11/15/00 04/15/99(b) 96,313
95,000 Watervliet Elderly Hsg. Corp. 8.000
11/15/01 04/15/99(b) 96,313
100,000 Watervliet Elderly Hsg. Corp. 8.000
11/15/02 04/15/99(b) 101,382
45,000 Wayne County IDA (Hauser Machine) 7.700
12/01/09 12/01/01(d) 46,983
410,000 Westchester County IDA (BAH) 7.250
12/01/09 09/26/04(c) 448,179
1,000,000 Westchester County IDA (JBFS) 6.500
12/15/02 07/14/01(c) 1,051,850
510,000 Westchester County IDA (JDAM) 6.250
04/01/05 06/28/02(c) 539,942
1,000,000 Westchester County IDA (JDAM) 6.750
04/01/16 (s) 04/01/06(b) 1,074,120
150,000 Westchester County IDA (Westchester Airport) 5.950
08/01/24 (s) 08/01/01(b) 153,224
2,650,000 Westchester County IDA (WRC) 5.500
07/01/09 07/01/08(b) 2,797,446
1,000,000 Yonkers IDA (St. Joseph's Hospital), Series 98-B 5.900
03/01/08 03/01/06(c) 1,009,610
==============
1,025,210,988
==============
============================================================================================================================
U.S. POSSESSIONS--14.8%
300,000 American Samoa Power Authority 6.750
09/01/99 -- 306,537
700,000 American Samoa Power Authority 6.900
09/01/99 -- 715,827
700,000 American Samoa Power Authority 7.000
09/01/00 -- 733,747
13,635,000 Guam Airport Authority, Series B 6.600
10/01/10 (s) 10/01/03(b) 14,910,282
12,985,000 Guam Airport Authority, Series B 6.700
10/01/23 (s) 10/01/03(b) 14,178,581
14,075,000 Guam GO 5.375
11/15/13 (s) 11/15/05(b) 14,308,364
8,080,000 Guam GO 5.400
11/15/18 (s) 11/15/05(b) 8,170,496
2,750,000 Guam GO 5.750
09/01/04 03/01/99(b) 2,756,573
1,000,000 Guam GO 5.900
09/01/05 03/01/99(b) 1,002,480
1,000,000 Guam GO 6.000
09/01/06 03/01/99(b) 1,002,460
850,000 Guam Power Authority 5.250
10/01/13 07/08/10(c) 856,894
1,200,000 Guam Power Authority 6.300
10/01/12 (s) 10/01/02(b) 1,292,040
3,030,000 Guam Power Authority 6.375
10/01/08 (s) 10/01/02(b) 3,251,645
2,950,000 Guam Power Authority 6.625
10/01/14 (s) 10/01/04(b) 3,267,863
1,147,624 Puerto Rico Aqueduct & Sewer (i) 7.250
03/21/00 09/24/99(c) 1,166,101
3,525,000 Puerto Rico Commonwealth Infrastructure 7.500
07/01/09 (s) 07/01/99(b) 3,606,639
235,000 Puerto Rico Commonwealth Infrastructure 7.600
07/01/00 07/01/99(b) 240,461
30,000 Puerto Rico Commonwealth Infrastructure 7.700
07/01/01 07/01/99(b) 30,701
5,000 Puerto Rico Commonwealth Infrastructure 7.700
07/01/01 07/01/99(b) 5,117
1,915,000 Puerto Rico Commonwealth Infrastructure 7.750
07/01/08 (s) 07/01/99(b) 1,959,734
3,140,000 Puerto Rico Commonwealth Infrastructure 7.900
07/01/07 (s) 07/01/99(b) 3,213,727
2,771,851 Puerto Rico Dept. of Corrections Equipment
Lease (i) 9.000
01/08/03 03/01/01(c) 2,931,427
30,000 Puerto Rico Electric Power Authority 6.000
07/01/10 (s) 07/01/99(b) 30,401
25,000 Puerto Rico Electric Power Authority 6.000
07/01/16 (s) 07/01/04(b) 27,169
30,000 Puerto Rico Electric Power Authority 6.000
07/01/16 (s) 07/01/04(b) 33,066
50,000 Puerto Rico GO 6.000
07/01/14 (s) 07/01/02(b) 53,550
5,000 Puerto Rico GO 6.000
07/01/14 (s) 07/01/02(b) 5,389
</TABLE>
27 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 1,800,000 Puerto Rico GO YCN 8.737 %(r)
07/01/08 (s) 07/01/02(b) $ 2,038,500
55,000 Puerto Rico HBFA 5.850
10/01/09 04/01/07(b) 58,341
410,000 Puerto Rico HBFA 6.100
10/01/15 (s) 04/01/07(b) 436,158
2,661,421 Puerto Rico Health Dept. Equipment Lease (i) 7.099
07/23/03 05/21/01(c) 2,744,431
25,000 Puerto Rico HFC 0.000
10/15/04 03/15/99(b) 16,479
45,000 Puerto Rico HFC 0.000
04/15/08 03/15/99(b) 22,804
10,000 Puerto Rico HFC 0.000
10/15/08 03/15/99(b) 4,882
125,000 Puerto Rico HFC 6.000
02/01/09 (s) 02/01/02(b) 129,270
100,000 Puerto Rico HFC 6.650
10/15/10 (s) 10/01/01(b) 105,799
10,000 Puerto Rico HFC 6.750
10/15/13 (s) 10/01/01(b) 10,576
45,000 Puerto Rico HFC 6.800
10/01/99 -- 45,722
5,000 Puerto Rico HFC 7.000
04/15/99 -- 5,031
40,000 Puerto Rico HFC 7.000
04/01/00 -- 41,054
10,000 Puerto Rico HFC 7.100
10/15/00 04/01/99(b) 10,216
10,000 Puerto Rico HFC 7.100
04/01/02 04/01/00(b) 10,530
615,000 Puerto Rico HFC 7.200
04/01/03 04/01/00(b) 648,321
65,000 Puerto Rico HFC 7.300
04/01/06 04/01/00(b) 68,600
55,000 Puerto Rico HFC 7.400
04/01/07 04/01/00(b) 58,112
20,000 Puerto Rico HFC 7.450
10/15/09 (s) 09/27/00(b) 21,055
10,000 Puerto Rico HFC 7.500
10/15/12 (s) 09/27/00(b) 10,527
3,600,000 Puerto Rico HFC 7.500
10/01/15 (s) 04/01/00(b) 3,808,044
7,295,000 Puerto Rico HFC 7.500
04/01/22 (s) 04/01/00(b) 7,722,049
390,000 Puerto Rico HFC 7.650
10/15/22 (s) 09/27/00(b) 411,641
3,450,000 Puerto Rico Highway & Transportation Authority 5.500
07/01/19 07/01/05(b) 3,563,091
25,000 Puerto Rico Highway & Transportation Authority 6.625
07/01/12 (s) 07/01/02(b) 27,317
806,412 Puerto Rico HR Vehicle Lease (i) 8.000
12/01/00 03/26/00(c) 826,225
82,274 Puerto Rico HR Vehicle Lease (i) 8.000
03/12/01 03/10/00(c) 84,643
275,000 Puerto Rico IMEPCF (Abbott Labs) 6.500
07/01/09 07/01/99(b) 281,188
500,000 Puerto Rico IMEPCF (Motorola) (q) 6.750
01/01/14 01/01/02(b) 547,635
3,500,000 Puerto Rico IMEPCF (PepsiCo) 6.250
11/15/13 11/15/02(b) 3,847,270
585,000 Puerto Rico IMEPCF (Squibb) 6.500
07/01/04 (s) 07/01/99(b) 600,210
3,270,000 Puerto Rico IMEPCF (Upjohn) 7.500
12/01/23 12/01/99(b) 3,378,531
100,000 Puerto Rico IMEPCF (Warner Lambert) 7.600
05/01/14 05/01/99(b) 104,341
1,450,000 Puerto Rico ITEMECF (MGH) 5.625
07/01/17 (s) 10/09/07(g) 1,488,933
1,995,000 Puerto Rico ITEMECF (MGH) 6.500
07/01/12 (s) 02/25/06(g) 2,169,822
1,045,000 Puerto Rico ITEMECF (RMH) 6.400
05/01/09 (s) 05/01/04(b) 1,136,260
247,874 Puerto Rico MA Bus Lease (i) 8.500
02/02/02 09/01/00(c) 257,323
514,384 Puerto Rico MA Carts Lease (i) 8.000
02/02/01 02/16/00(c) 526,302
597,741 Puerto Rico MA Equipment Lease (i) 8.000
01/26/02 08/24/00(c) 615,685
313,434 Puerto Rico MA Truck Lease (i) 8.500
10/15/01 08/06/00(c) 325,128
507,944 Puerto Rico Natural Res. Dept. Equipment
Lease (i) 7.250
11/23/01 09/10/00(c) 538,771
1,720,007 Puerto Rico Natural Res. Dept. Equipment
Lease (i) 7.250
10/26/03 04/26/02(c) 1,764,934
559,401 Puerto Rico Off. of the Governor Computer
Lease (i) 6.906
09/30/02 06/24/00(c) 566,701
55,000 Puerto Rico Port Authority 5.700
07/01/03 (s) 07/01/99(b) 55,809
50,000 Puerto Rico Port Authority 7.000
07/01/14 (s) 07/01/01(b) 54,254
115,000 Puerto Rico Port Authority 7.300
07/01/07 (s) 07/01/99(b) 115,229
100,000 Puerto Rico Port Authority (American Airlines) 6.300
06/01/23 06/01/03(b) 106,370
30,000 Puerto Rico Port Authority (i) 5.750
07/01/02 (s) 07/01/99(b) 30,033
127,796 Puerto Rico Port Authority Computer Lease (i) 9.000
05/15/99 -- 129,523
3,000,000 Puerto Rico Public Buildings Authority 5.700
07/01/16 (s) 07/01/03(b) 3,146,340
20,000 Puerto Rico Public Buildings Authority 6.000
07/01/12 (s) 07/01/99(b) 20,260
425,000 Puerto Rico Public Buildings Authority 6.000
07/01/12 07/01/99(b) 430,529
</TABLE>
28 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
STATEMENT OF INVESTMENTS December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Effective
Face
Maturity Market
Amount Description Coupon
Maturity Date * Value
============================================================================================================================
<S> <C> <C>
<C> <C> <C>
$ 988,413 Puerto Rico State Courts Telephone System
Lease (i) 7.250 %
06/04/02 12/29/00(c) $ 1,041,244
155,000 Puerto Rico Urban Renewal 7.875
10/01/04 (s) 10/01/99(b) 162,164
58,273 Puerto Rico Vocational Rehab. Vehicle Lease (i) 8.000
02/17/02 09/15/00(c) 60,130
155,000 University of Puerto Rico 5.500
06/01/12 (s) 06/01/99(b) 156,269
195,000 University of V.I. 6.500
10/01/99 -- 197,927
500,000 University of V.I. 7.500
10/01/09 (s) 10/01/04(b) 568,600
500,000 University of V.I. 7.650
10/01/14 (s) 10/01/04(b) 570,955
662,000 V.I. GO (Hugo Insurance Claims Program) 7.750
10/01/06 (s) 06/19/01(g) 730,663
65,000 V.I. HFA 6.500
03/01/25 (s) 03/01/05(b) 69,567
5,000,000 V.I. Public Finance Authority 5.500
10/01/15 10/01/10(b) 5,143,500
2,830,000 V.I. Public Finance Authority 6.000
10/01/05 -- 2,972,830
175,000 V.I. Public Finance Authority 6.000
10/01/22 (s) 10/01/10(b) 183,022
1,500,000 V.I. Public Finance Authority 6.800
10/01/00 -- 1,588,335
2,000,000 V.I. Public Finance Authority 7.250
10/01/18 (s) 10/01/02(a) 2,283,080
2,000,000 V.I. Water & Power Authority 5.000
07/01/09 (s) -- 1,986,300
1,000,000 V.I. Water & Power Authority 5.300
07/01/21 (s) 07/01/10(b) 1,006,420
1,500,000 V.I. Water & Power Authority 7.200
01/01/02 01/18/01(c) 1,562,790
12,605,000 V.I. Water & Power Authority 7.400
07/01/11 (s) 05/09/01(g) 13,834,744
15,270,000 V.I. Water & Power Authority 8.500
01/01/10 (s) 07/01/99(b) 16,032,737
==============
175,358,868
==============
============================================================================================================================
TOTAL INVESTMENTS, AT VALUE (COST
$1,158,704,566)--101.2%
1,200,569,856
LIABILITIES IN EXCESS OF OTHER
ASSETS--(1.2%)
(14,571,348)
- --------------
NET
ASSETS--100.0%
$1,185,998,508
==============
</TABLE>
* Call Date, Put Date or Average Life of Sinking Fund, if applicable, as
detailed:
(a) Date of prerefunded call, or maturity date if escrowed to maturity.
(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 applicable optional call date.
(i) Illiquid security--See Note 5 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 $547,635, or 0.05% of
the Fund's net assets, at December 31, 1998.
(r) Represents the current interest rate for a variable rate bond known as an
"inverse floater" which pays interest at a rate that varies inversely with
short-term interest rates. As interest rates rise, inverse floaters
produce less current income. Their price may be more volatile than the
price of a comparable fixed-rate security. Inverse floaters amount to
$14,642,066, or 1.19% of the Fund's total assets as of December 31, 1998.
(s) Security also has mandatory sinking fund principal payments prior to
maturity and an average life which is shorter than the stated final
maturity.
(t) Security will convert to a fixed coupon at a date prior to maturity. (u)
Non-income accruing security--Issuer is in default of interest payment.
(v) Represents the current interest rate for a variable rate security that
fluctuates as a percentage of prime rate.
(w) When-issued security--See Note 3 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
29 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
PORTFOLIO ABBREVIATIONS
- --------------------------------------------------------------------------------
To simplify the listing of securities in the Statement of Investments,
abbreviations are used per the table below:
ACLDD Adults and Children with Learning and
Developmental Disabilities
AOFMH Aurelia Osborn Fox Memorial Hospital
ARC Association of Retarded Citizens
BAH Beth Abraham Hospital
BHMS Brooklyn Heights Montessori School
CAB Capital Appreciation Bond
CCM Comprehensive Care Management
CNR College of New Rochelle
Con Ed Consolidated Edison Company
COP Certificate of Participation
CSD Central School District
DC Dominican College
Devel. Development
DIAMONDS Direct Investment of Accrued Municipals
ECC Erie Community College
EHC Elderly Housing Corporation
EPG Elmhurst Parking Garage
ERDA Energy Research and Development
Authority
G&E Gas and Electric
G&H Geriatric and Healthcare
GO General Obligation
GRIA Greater Rochester International Airport
H&NH Hospital and Nursing Home
HBFA Housing Bank and Finance Agency
HDC Housing Development Corporation
HELP Homeless Economic Loan Program
HFA Housing Finance Agency
HFAS Huntington First Aid Squad
HFC Housing Finance Corporation
HR House of Representatives
Hsg. Housing
IDA Industrial Development Authority
IMEPCF Industrial, Medical and Environmental
Pollution Control Facilities
ITEMECF Industrial, Tourist, Educational, Medical
and Environmental Community Facilities
JBFS Jewish Board of Family Services
JDAM Julia Dyckman Angus Memorial
L.I. Long Island
LGAC Local Government Assistance Corporation
LGSC Local Government Services Corporation
LILCO Long Island Lighting Corporation
LIMO Limited Interest Municipal Obligation
MA Municipality of Aquadilla
MEET Manhattan Eye, Ear and Throat
MGH Mennonite General Hospital
MHMC Montefiore Hospital and Medical Center
MTA Metropolitan Transit Authority
NJ New Jersey
NY New York
NYC New York City
NYS New York State
OBPWC Ocean Bay Park Water Corporation
PACES Potsdam Auxiliary & College Educational
Service
PCP Pooled Capital Program
PRAMS Prudential Receipts of Accrual Municipal
Securities
Res Rec Resource Recovery Facility
RGH Rochester General Hospital
RMH Ryder Memorial Hospital
RSP Riverbank State Park
SCSB Schuyler Community Services Board
SLRHF St. Luke Residential Healthcare Facility
SONYMA State of New York Mortgage Agency
SWMA Solid Waste Management Authority
UCC Upstate Community Colleges
UCP United Cerebral Palsy
UDC Urban Development Corporation
USGC United States Gypsum Company
V.I. United States Virgin Islands
WHMC Wyckoff Heights Medical Center
WRC Westchester Resco Company
WWH Wyandach/Wheatley Heights
YCN Yield Curve Note
30 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
INDUSTRY CONCENTRATIONS December 31, 1998
- --------------------------------------------------------------------------------
Distribution of investments by industry, as a percentage of total investments at
value, is as follows:
Industry Market Value Percent
================================================================================
General Obligation $263,740,829 22.0 %
Municipal Leases 112,312,234 9.3
Hospital/Healthcare 102,953,714 8.6
Electric Utilities 94,928,388 7.9
Single-Family Housing 91,065,547 7.6
Multi-Family Housing 88,318,438 7.4
Highways/Railways 76,071,066 6.3
Resource Recovery 69,537,578 5.8
Marine/Aviation Facilities 64,967,402 5.4
Higher Education 62,067,998 5.2
Non Profit Organization 33,697,242 2.8
Corporate Backed 29,418,232 2.4
Sales Tax Revenue 21,281,498 1.8
Water Utilities 20,680,047 1.7
Manufacturing, Non-Durable Goods 19,368,293 1.6
Education 19,256,694 1.6
Pollution Control 12,845,263 1.1
Other 18,059,393 1.5
----------------- ------------
$1,200,569,856 100.0 %
================= ============
================================================================================
SUMMARY OF RATINGS December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Distribution of investments by rating category, as a percentage of total
investments at value, is as follows:
Rating Percent
================================================================================
AAA 15.2 %
AA 9.6
A 47.6
BBB 22.8
BB 0.2
B 0.0
CCC 0.0
CC 0.0
C 0.0
Not Rated 4.6
------------
100.0 %
============
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 are included in the "Not Rated"
category. For further information see "Credit Quality" in the Prospectus.
31 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C> <C>
ASSETS
Investments, at value (cost $1,158,704,566)--see accompanying
statement $ 1,200,569,856
Cash
262,469
Receivables:
Interest
22,876,812
Investments
sold
3,415,641
Shares of beneficial interest
sold 3,233,075
Other
38,254
- ---------------
Total
assets
1,230,396,107
- ---------------
LIABILITIES
Payables and other liabilities:
Investments
purchased
43,131,803
Shares of beneficial interest
redeemed 704,827
Dividends
318,123
Trustees' fees--Note
1 54,108
Other
188,738
- ---------------
Total
liabilities
44,397,599
- ---------------
NET
ASSETS
$ 1,185,998,508
===============
=======================================================================================================
COMPOSITION OF NET ASSETS
Paid-in
capital $
1,153,938,014
Excess of distributions over net investment
income (45,907)
Accumulated net realized loss on investment
transactions (9,758,889)
Net unrealized appreciation on investments--Note
3 41,865,290
- ---------------
Net
assets $
1,185,998,508
===============
=======================================================================================================
NET ASSET VALUE PER SHARE
CLASS A SHARES:
Net asset value and redemption price per share (based on net assets of
$979,315,897 and 290,581,474 shares of beneficial interest
outstanding) $ 3.37
Maximum offering price per share (net asset value plus sales charge of
3.50% of offering
price) $ 3.49
- -------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales
charge) and offering price per share (based on net assets of $64,388,087 and
19,127,581 shares of beneficial interest
outstanding) $ 3.37
- -------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales
charge) and offering price per share (based on net assets of $94,870,499 and
28,207,733 shares of beneficial interest
outstanding) $ 3.36
- -------------------------------------------------------------------------------------------------------
CLASS X SHARES:
Net asset value, redemption price (excludes applicable contingent deferred
sales
charge) and offering price per share (based on net assets of $47,424,025 and
14,045,974 shares of beneficial interest
outstanding) $ 3.38
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
32 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 58,392,892
------------
EXPENSES
Management fees--Note 4 4,331,766
Distribution and service plan
fees--Note 4:
Class A 2,210,694
Class B 435,015
Class C 615,304
Class X 374,098
Transfer and shareholder servicing agent fees--Note 4:
Class A 435,707
Class B 33,320
Class C 34,207
Class X 34,657
Accounting service fees--Note 4 314,752
Registration and filing fees 144,469
Shareholder reports 135,933
Trustees' fees and expenses--Note 1 80,728
Legal, auditing and other professional fees 54,955
Custodian fees and expenses 48,662
Other 86,582
Interest 238,516
------------
Total expenses 9,609,365
------------
NET INVESTMENT INCOME 48,783,527
------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investments (479,664)
Net change in unrealized appreciation
or depreciation on investments 10,408,295
------------
Net realized and unrealized gain 9,928,631
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 58,712,158
============
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
- ---- ----
<S> <C>
<C>
OPERATIONS
Net investment income $ 48,783,527 $
38,707,629
Net realized gain (loss)
(479,664) 1,075,860
Net change in unrealized appreciation or depreciation 10,408,295
16,726,487
---------------
- ---------------
Net increase in net assets resulting from operations 58,712,158
56,509,976
- -----------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment
income:
Class A (42,908,426)
(35,761,666)
Class B
(1,728,342) (287,084)
Class C
(2,438,783) (369,152)
Class X (2,182,644)
(2,357,890)
- -----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from beneficial interest
transactions--Note 2:
Class A 199,445,734
121,589,384
Class B 42,482,889
21,302,795
Class C 67,445,258
26,613,801
Class X (5,528,643)
10,459,393
- -----------------------------------------------------------------------------------------------
NET ASSETS
Total increase 313,299,201
197,699,557
Beginning of period 872,699,307
674,999,750
---------------
- ---------------
End of period (including excess of distributions over
net investment income of $45,907 and undistributed
net investment income of $411,938, respectively) $ 1,185,998,508 $
872,699,307
===============
===============
</TABLE>
See accompanying Notes to Financial Statements.
33 LIMITED TERM NEW YORK MUNICIPAL FUNDS
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
- ------------------------------------------------------------------------------
Year Ended December 31,
1998
1997 1996 (b) 1995 1994
----------- -----------
- ----------- ----------- -----------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 3.34 $ 3.26
$ 3.28 $ 3.15 $ 3.33
----------- -----------
- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.16
0.17 0.17 0.18 0.16
Net realized and unrealized gain (loss) 0.03
0.08 (0.02) 0.13 (0.18)
----------- -----------
- ----------- ----------- -----------
Total income (loss) from investment operations 0.19
0.25 0.15 0.31 (0.02)
----------- -----------
- ----------- ----------- -----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.16)
(0.17) (0.17) (0.18) (0.16)
----------- -----------
- ----------- ----------- -----------
Total dividends and distributions to shareholders (0.16)
(0.17) (0.17) (0.18) (0.16)
----------- -----------
- ----------- ----------- -----------
Net asset value, end of period $ 3.37 $ 3.34
$ 3.26 $ 3.28 $ 3.15
=========== ===========
=========== =========== ===========
TOTAL RETURN, AT NET ASSET VALUE (D) 5.94%
8.01% 4.82% 10.01% (0.60%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 979,316 $ 771,828
$ 634,172 $ 567,537 $ 496,452
Average net assets (in thousands) $ 884,849 $ 677,376
$ 606,742 $ 520,990 $ 491,038
Ratios to average net assets:
Net investment income 4.80%
5.27% 5.37% 5.44% 5.12%
Expenses 0.82%
0.83%(f) 0.89%(f) 0.90%(f) 0.89%
Expenses (excluding interest) (g) 0.80%
0.81%(f) 0.83%(f) 0.84%(f) 0.84%
Portfolio turnover rate (h) 25.2%
27.1% 24.4% 22.3% 34.6%
==================================================================================================================================
</TABLE>
(a) For the period from May 1, 1995 (inception of offering) to December 31,
1995.
(b) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
(c) For the period from May 1, 1997 (inception of offering) to December 31,
1997.
(d) 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) Annualized.
(f) Expense ratio reflects the effect of expenses paid indirectly by the Fund.
(g) 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.
(h) 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, 1998 were
$551,144,473 and $268,552,064, respectively.
See accompanying Notes to Financial Statements.
34 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS
B CLASS C
- -----------------------------------------------------------------------------
Year Ended December
31, Year Ended December 31,
1998 1997
(c) 1998 1997 (c)
----------
- ---------- ---------- ----------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 3.34 $
3.25 $ 3.33 $ 3.25
----------
- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.14
0.10 0.14 0.10
Net realized and unrealized gain 0.03
0.09 0.03 0.08
----------
- ---------- ---------- ----------
Total income from investment operations 0.17
0.19 0.17 0.18
----------
- ---------- ---------- ----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.14)
(0.10) (0.14) (0.10)
----------
- ---------- ---------- ----------
Total dividends and distributions to shareholders (0.14)
(0.10) (0.14) (0.10)
----------
- ---------- ---------- ----------
Net asset value, end of period $ 3.37 $
3.34 $ 3.36 $ 3.33
==========
========== ========== ==========
TOTAL RETURN, AT NET ASSET VALUE (D) 5.13%
5.89% 5.15% 5.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 64,388 $
21,500 $ 94,870 $ 26,862
Average net assets (in thousands) $ 43,620 $
9,873 $ 61,717 $ 12,705
Ratios to average net assets:
Net investment income 3.97%
4.18%(e) 3.98% 4.22%(e)
Expenses 1.59%
1.56%(e)(f) 1.57% 1.54%(e)(f)
Expenses (excluding interest) (g) 1.57%
1.55%(e)(f) 1.55% 1.52(e)(f)
Portfolio turnover rate (h) 25.2%
27.1% 25.2% 27.1%
========================================================================================================================
</TABLE>
(a) For the period from May 1, 1995 (inception of offering) to December 31,
1995.
(b) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
(c) For the period from May 1, 1997 (inception of offering) to December 31,
1997.
(d) 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) Annualized.
(f) Expense ratio reflects the effect of expenses paid indirectly by the Fund.
(g) 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.
(h) 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, 1998 were
$551,144,473 and $268,552,064, respectively.
See accompanying Notes to Financial Statements.
35 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS
X
- -----------------------------------------------------------------------
Year Ended
December 31,
1998
1997 1996 (b) 1995 (a)
----------
- ---------- ---------- ----------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 3.35 $
3.27 $ 3.28 $ 3.21
----------
- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.15
0.16 0.16 0.11
Net realized and unrealized gain (loss) 0.03
0.08 (0.01) 0.07
----------
- ---------- ---------- ----------
Total income from investment operations 0.18
0.24 0.15 0.18
----------
- ---------- ---------- ----------
Dividends and distributions to shareholders:
Dividends from net investment income (0.15)
(0.16) (0.16) (0.11)
----------
- ---------- ---------- ----------
Total dividends and distributions to shareholders (0.15)
(0.16) (0.16) (0.11)
----------
- ---------- ---------- ----------
Net asset value, end of period $ 3.38 $
3.35 $ 3.27 $ 3.28
==========
========== ========== ==========
TOTAL RETURN, AT NET ASSET VALUE (D) 5.38%
7.44% 4.59% 5.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 47,424 $
52,510 $ 40,828 $ 16,415
Average net assets (in thousands) $ 49,866 $
49,563 $ 28,971 $ 8,869
Ratios to average net assets:
Net investment income 4.30%
4.75% 4.85% 5.21%(e)
Expenses 1.35%
1.35%(f) 1.38%(f) 0.90%(e)(f)
Expenses (excluding interest) (g) 1.32%
1.33%(f) 1.32%(f) 0.85%(e)(f)
Portfolio turnover rate (h) 25.2%
27.1% 24.4% 22.3%
========================================================================================================================
</TABLE>
(a) For the period from May 1, 1995 (inception of offering) to December 31,
1995.
(b) On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor
to the Fund.
(c) For the period from May 1, 1997 (inception of offering) to December 31,
1997.
(d) 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) Annualized.
(f) Expense ratio reflects the effect of expenses paid indirectly by the Fund.
(g) 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.
(h) 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, 1998 were
$551,144,473 and $268,552,064, respectively.
See accompanying Notes to Financial Statements.
36 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Limited Term New York Municipal Fund (the Fund) is a separate series of
Rochester Portfolio Series, a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended. 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 advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B and Class C shares. As of January 6, 1998, the
Fund is no longer offering Class X shares (Class X shares were designated as
Class B shares prior to May 1, 1997). 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 that class and exclusive
voting rights with respect to matters affecting that 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. Portfolio securities are valued as of the close of the New
York Stock Exchange on each trading day. Long- term debt securities are valued
by a portfolio pricing service approved by the Board of Trustees. Such
securities which cannot be valued by an approved portfolio pricing service are
valued using dealer-supplied valuations provided the Manager is satisfied that
the firm rendering the quotes is reliable and that the quotes reflect current
market value, or are valued under consistently applied procedures established by
the Board of Trustees to determine fair value in good faith.
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. As of December 31, 1998, the Fund had entered into outstanding
when-issued or forward commitments (see Note 3).
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, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $9,730,000, which expires between 2002 and 2006.
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
December 31, 1998, a provision of $45,909 was made for the Fund's projected
benefit obligations. No payments were made under this plan during 1998. At
December 31, 1998, the Fund had recognized an accumulated liability of $45,909.
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.
37 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
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 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 was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
December 31, 1998, amounts have been reclassified to reflect a decrease in
paid-in capital of $16,823, and a decrease in excess of distributions over net
investment income of $16,823.
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. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Interest income is accrued on a daily basis. In
computing net investment income, the Fund amortizes premiums and accretes
original issue discount, which is in accordance with federal income tax
requirements. For municipal bonds acquired 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. Realized gains and losses
on investments and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes.
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.
38 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR
ENDED YEAR ENDED
- ---------- ----------
DECEMBER 31, 1998
DECEMBER 31, 1997 (1)
-----------------
- ---------------------
SHARES AMOUNT
SHARES AMOUNT
========================================================================================================
<S> <C> <C>
<C> <C>
CLASS A:
Sold 85,263,031 $ 285,730,451
61,960,243 $ 204,296,595
Dividends and distributions
reinvested 8,362,718 28,044,127
7,129,620 23,469,719
Redeemed (34,100,531) (114,328,844)
(32,348,973) (106,176,930)
------------- -------------
- ------------- -------------
Net increase 59,525,218 $ 199,445,734
36,740,890 $ 121,589,384
============= =============
============= =============
========================================================================================================
CLASS B:
Sold 13,306,853 $ 44,568,293
6,693,115 $ 22,129,658
Dividends and distributions
reinvested 360,864 1,209,382
57,825 191,859
Redeemed (983,181) (3,294,786)
(307,895) (1,018,722)
------------- -------------
- ------------- -------------
Net increase 12,684,536 $ 42,482,889
6,443,045 $ 21,302,795
============= =============
============= =============
========================================================================================================
CLASS C:
Sold 22,535,160 $ 75,428,610
8,331,782 $ 27,526,872
Dividends and distributions
reinvested 552,623 1,849,561
85,390 283,099
Redeemed (2,936,551) (9,832,913)
(360,671) (1,196,170)
------------- -------------
- ------------- -------------
Net increase 20,151,232 $ 67,445,258
8,056,501 $ 26,613,801
============= =============
============= =============
========================================================================================================
CLASS X:
Sold 5,830 $ 19,325
4,101,380 $ 13,420,326
Dividends and distributions
reinvested 443,451 1,488,806
493,631 1,628,470
Redeemed (2,094,913) (7,036,774)
(1,395,249) (4,589,403)
------------- -------------
- ------------- -------------
Net increase (decrease) (1,645,632) $ (5,528,643)
3,199,762 $ 10,459,393
============= =============
============= =============
</TABLE>
(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.
NOTE 3. PORTFOLIO INFORMATION
At December 31, 1998, net unrealized appreciation on investments of $41,865,290
was composed of gross appreciation of $43,219,230, and gross depreciation of
$1,353,940.
Unrealized appreciation (depreciation) at December 31, 1998 based on cost of
investments for federal income tax purposes of $1,158,733,221 was:
Gross unrealized appreciation $ 43,192,642
Gross unrealized depreciation (1,356,007)
------------
Net unrealized appreciation $ 41,836,635
============
39 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
At December 31, 1998, 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, 1998 was $29,640,000, which represents
2.50% 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, 1998
===========================================================================================
Suffolk County IDA
(Huntington Res Rec):
<S> <C> <C> <C> <C>
<C>
5.15% due 10/01/99 $1,035 1/28/97 7/29/99 100.000%
100.346%
5.15% due 10/01/00 6,395 1/28/97 7/29/99 100.000
101.353
5.35% due 10/01/01 6,875 1/28/97 7/29/99 100.000
102.524
5.45% due 10/01/02 7,390 1/28/97 7/29/99 100.000
103.584
5.50% due 10/01/03 7,945 1/28/97 7/29/99 100.000
104.522
===========================================================================================
</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% of the first
$100 million of the Fund's average annual net assets, 0.45% of the next $150
million, 0.40% of the next $1,750 million, and 0.39% of the net assets in excess
of $2 billion. During the year ended December 31, 1998, the Fund paid $4,331,766
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 the year ended December 31, 1998, the Fund paid $314,752
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 and reimburses OFS for its out-of-pocket expenses. During the year ended
December 31, 1998, the Fund paid a total of $537,891 to OFS for transfer and
shareholder servicing agent fees.
For the year ended December 31, 1998, commissions (sales charges paid by
investors) on sales of Class A shares totaled $3,768,254, of which $509,884 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 A, Class
B and Class C shares totaled $1,394,666, $1,284,173 and $748,672, respectively.
Amounts paid to an affiliated broker/dealer for Class B and Class C shares were
$15,425 and $10,389, respectively. During the year ended December 31, 1998, OFDI
received contingent deferred sales charges of $10,477, $69,962, $50,046 and
$87,454, respectively, upon redemption of Class A, 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 maintenance of accounts of their customers that hold Class
A shares. During the year ended December 31, 1998, OFDI paid $37,874 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
40 LIMITED TERM NEW YORK MUNICIPAL FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
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, 1998,
OFDI paid $2,243 to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $393,188 and $555,357,
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 costs incurred in distributing shares
before the Plan was terminated. At December 31, 1998, OFDI had incurred excess
distribution and servicing costs of $1,802,894 for Class B and $1,248,644 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 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. Each 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, 1998, OFDI paid $1,521 to an
affiliated broker/dealer as compensation for Class X personal service and
maintenance expenses and retained $246,974 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 costs incurred in
distributing shares before the Plan was terminated. At December 31, 1998, OFDI
had incurred excess distribution and servicing costs of $174,590 for Class X.
NOTE 5. ILLIQUID AND RESTRICTED SECURITIES
At December 31, 1998, 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, 1998 was $22,932,773, which
represents 1.93% of the Fund's net assets.
NOTE 6. 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 $100 million, collectively. Interest is charged to each fund,
based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.625%.
The Fund also pays a commitment fee equal to its pro rata share of the average
unutilized amount of the credit facility at a rate of 0.07% per annum. The
commitment fee allocated to the Fund for the year ended December 31, 1998 was
$5,662.
The Fund had no borrowings outstanding at December 31, 1998. For the year ended
December 31, 1998, the average monthly loan balance was $3,958,493 at an average
interest rate of 6.030%. The maximum amount of borrowings outstanding at any
month-end was $16,600,000.
<PAGE>
A-6
Appendix A
- -------------------------------------------------------------------------------
MUNICIPAL BOND RATINGS DEFINITIONS
- -------------------------------------------------------------------------------
Below are summaries of the rating definitions used by the nationally-recognized
rating agencies listed below for municipal securities. Those ratings represent
the opinion of the agency as to the credit quality of issues that they rate. The
summaries below are based upon publicly-available information provided by the
rating organizations.
Moody's Investors Service, Inc.
- -------------------------------------------------------------------------------
Long-Term Bond Ratings
Aaa: Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk. Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as with Aaa securities or fluctuation 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 those of Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered medium grade obligations; that is, they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered well-assured. Often the protection of interest and principal
payments may be very moderate and not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B: Bonds rated B generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing and may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree
and are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
<PAGE>
Con. (...): Bonds for which the security depends on the completion of some act
or the fulfillment of some condition are rated conditionally. These bonds are
secured by (a) earnings of projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals that begin when facilities are
completed, or (d) payments to which some other limitation attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition. Moody's applies numerical
modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa.
The modifier "1" indicates that the obligation ranks in the higher end of its
category; the modifier "2" indicates a mid-range ranking and the modifier "3"
indicates a ranking in the lower end of the category. Advanced refunded issues
that are secured by certain assets are identified with a # symbol.
Short-Term Ratings - U.S. Tax-Exempt Municipals
There are four ratings below for short-term obligations that are investment
grade. Short-term speculative obligations are designated SG. For variable rate
demand obligations, a two-component rating is assigned. The first (MIG) element
represents an evaluation by Moody's of the degree of risk associated with
scheduled principal and interest payments, and the other (VMIG) represents an
evaluation of the degree of risk associated with the demand feature.
MIG 1/VMIG 1: Denotes best quality. There is strong protection by established
cash flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing..
MIG 2/VMIG 2: Denotes high quality. Margins of protection are ample although not
as large as in the preceding group.
MIG 3/VMIG 3: Denotes favorable quality. All security elements are accounted for
but there is lacking the undeniable strength of the preceding grades. Liquidity
and cash flow protection may be narrow and market access for refinancing is
likely to be less well established.
MIG 4/VMIG 4: Denotes adequate quality. Protection commonly regarded as required
of an investment security is present and although not distinctly or
predominantly speculative, there is specific risk.
SG: Denotes speculative quality. Debt instruments in this category lack margins
of protection.
Standard & Poor's Rating Services
- --------------------------------------------------------------------------------
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong.
BBB: Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
Bonds rated BB, B, CCC, CC and C are regarded as having significant speculative
characteristics. BB indicates the least degree of speculation and C the highest.
While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.
BB: Bonds rated BB are less vulnerable to nonpayment than other speculative
issues. However, these face major uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B: A bond rated B is more vulnerable to nonpayment than an obligation rated BB,
but the obligor currently has the capacity to meet its financial commitment on
the obligation.
CCC: A bond rated CCC is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may used where a bankruptcy petition has been filed or similar
action has been taken, but payments on this obligation are being continued.
D: Bonds rated D are in default. Payments on the obligation are not being made
on the date due.
The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.
Short-Term Issue Credit Ratings
A-1: Rated in the highest category. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category, a plus (+) sign
designation indicates the issuer's capacity to meet its financial obligation is
very strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is satisfactory.
A-3: Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
B: Regarded as having significant speculative characteristics. The obligor
currently has the capacity to meet its financial commitment on the obligation.
However, it faces major ongoing uncertainties which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
C: Currently vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation.
D: In payment default. Payments on the obligation have not been made on the due
date. The rating may also be used if a bankruptcy petition has been filed or
similar actions jeopardize payments on the obligation. Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
International Long-Term Credit Ratings
Investment Grade:
AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. Securities are not meeting current obligations and are
extremely speculative. "DDD" designates the highest potential for recovery of
amounts outstanding on any securities involved.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the rating category. Plus and minus signs are not added
to the "AAA" category or to categories below "CCC."
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment. May have an
added "+" to denote exceptionally strong credit feature.
F2: Good credit quality. A satisfactory capacity for timely payment, but the
margin of safety is not as great as in higher ratings.
F3: Fair credit quality. Capacity for timely payment is adequate. However,
near-term adverse changes could result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment, plus vulnerability to
near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility, Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D: Default. Denotes actual or imminent payment default.
Duff & Phelps Credit Rating Co. Ratings
- -------------------------------------------------------------------------------
Long-Term Debt and Preferred Stock
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
A+, A & A-: Protection factors are average but adequate. However, risk factors
are more variable in periods of greater economic stress.
BBB+, BBB & BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB & BB-: Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions. Overall quality may move up or down frequently within the
category.
B+, B & B-: Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a higher of
lower rating grade.
CCC: Well below investment-grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP: Preferred stock with dividend arrearages.
Short-Term Debt:
High Grade:
D-1+: Highest certainty of timely payment. Safety is just below risk-free U.S.
Treasury short-term debt.
D-1: Very high certainty of timely payment. Risk factors are minor.
D-1-: High certainty of timely payment. Risk factors are very small.
Good Grade:
D-2: Good certainty of timely payment. Risk factors are small.
Satisfactory Grade:
D-3: Satisfactory liquidity and other protection factors qualify issues as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
Non-Investment Grade:
D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service.
Default:
D-5: Issuer failed to meet scheduled principal and/or interest payments.
<PAGE>
B-2
Appendix B
Municipal Bond Industry Classifications
Adult Living Facilities
Bond Anticipation Notes
Education
Electric Utilities
Gas Utilities
General Obligation
Higher Education
Highways/Railways
Hospital/Healthcare
Manufacturing, Durable Goods
Manufacturing, Non Durable Goods
Marine/Aviation Facilities
Multi-Family Housing
Municipal Leases
Non Profit Organization
Parking Fee Revenue
Pollution Control
Resource Recovery
Revenue Anticipation Notes
Sales Tax Revenue
Sewer Utilities
Single Family Housing
Special Assessment
Special Tax
Sports Facility Revenue
Student Loans
Tax Anticipation Notes
Tax & Revenue Anticipation Notes
Telephone Utilities
Water Utilities
<PAGE>
C-11
Appendix C
OppenheimerFunds Special Sales Charge Arrangements and Waivers
In certain cases, the initial sales charge that applies to purchases of
Class A shares1 of the Oppenheimer funds or the contingent deferred sales charge
that may apply to Class A, Class B or Class C shares may be waived. That is
because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors.
Not all waivers apply to all funds. For example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares of
those funds are not available for purchase by or on behalf of retirement plans.
Other waivers apply only to shareholders of certain funds that were merged into
or became Oppenheimer funds.
For the purposes of some of the waivers described below and in the
Prospectus and Statement of Additional Information of the applicable Oppenheimer
funds, the term "Retirement Plan" refers to the following types of plans: (1)
plans qualified under Sections 401(a) or 401(k) of the Internal Revenue
Code,
(2) non-qualified deferred compensation plans, (3) employee benefit plans2 (4)
Group Retirement Plans3 (5) 403(b)(7) custodial plan accounts (6) Individual
Retirement Accounts ("IRAs"), including traditional IRAs, Roth
IRAs, SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a
special arrangement or waiver in a particular case is in the sole discretion of
the Distributor or the transfer agent (referred to in this document as the
"Transfer Agent") of the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the
"Manager").
Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
- --------------
1. Certain waivers also apply to Class M. shares of Oppenheimer Convertible
Securities Fund.
2. An "employee benefit plan" means any plan or arrangement, whether or not it
is "qualified" under the Internal Revenue Code, under which Class A shares of
an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single
employer or of affiliated employers. These may include, for example, medical
savings accounts, payroll deduction plans or similar plans. The fund accounts
must be registered in the name of the fiduciary or administrator purchasing
the shares for the benefit of participants in the plan.
3. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members of
the group participating in (or who are eligible to participate in) the plan
purchase Class A shares of an Oppenheimer fund or funds through a single
investment dealer, broker or other financial institution designated by the
group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and
403(b) plans other than plans for public school employees. The term "Group
Retirement Plan" also includes qualified retirement plans and non-qualified
deferred compensation plans and IRAs that purchase Class A shares of an
Oppenheimer fund or funds through a single investment dealer, broker or
other financial institution that has made special arrangements with the
Distributor enabling those plans to purchase Class A shares at net asset
value but subject to the Class A contingent deferred sales charge.
- --------------------------------------------------------------------------------
I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
- --------------------------------------------------------------------------------
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial
Sales Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any of
the Oppenheimer funds in the cases listed below. However, these purchases may be
subject to the Class A contingent deferred sales charge if redeemed within 18
months of the end of the calendar month of their purchase, as described in the
Prospectus (unless a waiver described elsewhere in this Appendix applies to the
redemption). Additionally, on shares purchased under these waivers that are
subject to the Class A contingent deferred sales charge, the Distributor will
pay the applicable commission described in the Prospectus under "Class A
Contingent Deferred Sales Charge."1 This waiver provision applies to:
1 However, that commission will not be paid on purchases of shares in amounts of
$1 million or more (including any right of accumulation) by a Retirement Plan
that pays for the purchase with the redemption proceeds of Class C shares of one
or more Oppenheimer funds held by the Plan for more than one year.
o Purchases of Class A shares aggregating $1 million or more.
o Purchases by a Retirement Plan (other than an IRA or 403(b)(7) custodial plan)
that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible employees or
total plan assets of $500,000 or more, or
(3) certifies to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
o Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those
purchases, or
(2) by a direct rollover of a distribution from a qualified Retirement
Plan if the administrator of that Plan has made special arrangements
with the Distributor for those purchases.
o Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
Inc. ("Merrill Lynch") on a daily valuation basis for the Retirement Plan.
On the date the plan sponsor signs the record-keeping service agreement
with Merrill Lynch, the Plan must have $3 million or more of its assets
invested in (a) mutual funds, other than those advised or managed by
Merrill Lynch Asset Management, L.P. ("MLAM"), that are made available
under a Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor, and (b) funds advised or managed by
MLAM (the funds described in (a) and (b) are referred to as "Applicable
Investments").
(2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided under a
contract or arrangement between the Retirement Plan and Merrill Lynch. On
the date the plan sponsor signs the record keeping service agreement with
Merrill Lynch, the Plan must have $3 million or more of its assets
(excluding assets invested in money market funds) invested in Applicable
Investments.
(3) The record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor signs
that agreement, the Plan has 500 or more eligible employees (as
determined by the Merrill Lynch plan conversion manager).
o Purchases by a Retirement Plan whose record keeper had a
cost-allocation agreement with the Transfer Agent on or before May 1,
1999.
<PAGE>
II. Waivers of Class A Sales Charges of Oppenheimer Funds
A. 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 (and no commissions are paid by the Distributor on such
purchases):
o The Manager or its affiliates.
o Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's spouse,
a spouse's siblings, aunts, uncles, nieces and nephews; relatives by
virtue of a remarriage (step-children, step-parents, etc.) are
included.
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 which are
identified as such 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 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 for the
purchase or sale of Fund shares.
o 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.
o "Rabbi trusts" that buy shares for their own accounts, if the purchases
are made through a broker or agent or other financial intermediary that
has made special arrangements with the Distributor for those purchases.
o Clients of 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 (or its successor) 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.
o A unit investment trust that has entered into an appropriate agreement
with the Distributor.
o Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
o
<PAGE>
Retirement Plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under
sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code),
in each case if those purchases are made through a broker, agent or
other financial intermediary that has made special arrangements with
the Distributor for those purchases.
o A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value
Fund were exchanged for Class A shares of that Fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995.
o A qualified Retirement Plan that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
arrangement was consummated and share purchases commenced by December
31, 1996.
B. 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 sales charges (and no commissions are paid by the Distributor on such
purchases): 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 through a broker-dealer that has entered into a
special agreement with the Distributor to allow the broker's customers
to purchase and pay for shares of Oppenheimer funds using 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 shares of the Fund, and the Distributor may require
evidence of qualification for this waiver.
o Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
o Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an affiliate
acts as sponsor.
C. 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 account value measured at the time the Plan is
established, adjusted annually.
o Involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (please refer to "Shareholder Account
Rules and Policies," in the applicable fund Prospectus).
o For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:
(1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established.
(2) To return excess contributions.
(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.2
2 This provision does not apply to IRAs.
(5) Under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t)
of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.
(9) Separation from service.3
3 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.
(10)Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary of
the Manager) if the plan has made special arrangements with the
Distributor.
(11) Plan termination or "in-service distributions," if the redemption
proceeds are rolled over directly to an OppenheimerFunds-sponsored
IRA.
o For distributions from Retirement Plans having 500 or more eligible
employees, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.
o For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing
this waiver.
III. Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
The Class B and Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions or redeemed in certain
circumstances described below.
A. Waivers for Redemptions in Certain Cases.
The Class B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases: o Shares redeemed involuntarily,
as described in "Shareholder Account Rules and
Policies," in the applicable Prospectus.
o Redemptions from accounts other than Retirement Plans 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.
o Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.
o Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
o Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose.
o Redemptions requested in writing by a Retirement Plan sponsor of Class
C shares of an Oppenheimer fund in amounts of $1 million or more held
by the Retirement Plan for more than one year, if the redemption
proceeds are invested in Class A shares of one or more Oppenheimer
funds.
o Distributions from Retirement Plans or other employee benefit plans for
any of the following purposes:
(1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
(2) To return excess contributions made to a participant's account.
(3) To
return contributions made due to a mistake of fact.
(4) To make hardship withdrawals, as defined in the plan.4
4 This provision does not apply to IRAs.
(5) To make distributions required under a Qualified Domestic Relations Order
or, in the case of an IRA, a divorce or separation agreement described in
Section 71(b) of the Internal Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t)
of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.5
5 This provision does not apply to loans from 403(b)(7) custodial plans.
(9) On account of the participant's separation from service.6
6 This provision does not apply to 403(b)(7) custodial plans if the participant
is less than age 55, nor to IRAs.
(10) Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary
of the Manager) offered as an investment option in a Retirement
Plan if the plan has made special arrangements with the
Distributor.
(11) Distributions made on account of a plan termination or
"in-service" distributions," if the redemption proceeds are
rolled over directly to an OppenheimerFunds-sponsored IRA.
(12) Distributions from Retirement Plans having 500 or more eligible
employees, but excluding distributions made because of the
Plan's elimination as investment options under the Plan of all
of the Oppenheimer funds that had been offered.
(13) For distributions from a participant's account under an
Automatic Withdrawal Plan after the participant reaches age
59 1/2 as long as the aggregate value of the distributions
does not exceed 10% of the account's value annually (measured
from the establishment of the Automatic Withdrawal Plan).
B. 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.
o Shares issued in plans of reorganization to which the Fund is a party.
<PAGE>
IV. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers for Class A,
Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described below
for certain persons who were shareholders of the former Quest for Value Funds.
To be eligible, those persons must have been shareholders on November 24, 1995,
when OppenheimerFunds, Inc. became the investment advisor to those former Quest
for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc. Oppenheimer Quest Small Cap Value
Fund
Oppenheimer Quest Balanced Value Oppenheimer Quest Global Value Fund
Fund
Oppenheimer Quest Opportunity
Value Fund
These arrangements also apply to shareholders of the following funds when
they merged (were reorganized) into various Oppenheimer funds on November 24,
1995:
Quest for Value U.S. Government Income Quest for Value New York Tax-Exempt
Fund Fund
Quest for Value Investment Quality Quest for Value National Tax-Exempt
Income Fund Fund
Quest for Value Global Income Fund Quest for Value California Tax-Exempt
Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent deferred
sales charges described in this Appendix apply to shares of an Oppenheimer fund
that are either: o acquired by such shareholder pursuant to an exchange of
shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds or
o purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of the
Former Quest for Value Funds into that other Oppenheimer fund on November
24, 1995.
A. Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest
for Value Funds Shareholders. 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. The rates in the table apply 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.
- --------------------------------------------------------------------------------
Initial Sales Initial Sales
Number of Eligible Charge as a % of Charge as a % of Commission as %
Employees or Members Offering Price Net Amount Invested of Offering Price
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
- --------------------------------------------------------------------------------
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 in the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either 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 Right of Accumulation described
in the applicable fund's Prospectus and Statement of Additional Information.
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
Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders 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 who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.
|X| 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 purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
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.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.
|X| 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 an Oppenheimer fund. The
shares must have been 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. Those shares must have been
purchased prior to March 6, 1995 in connection with: o 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
o 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.
|X| 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 an Oppenheimer fund. The shares must have been 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
Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995: o redemptions following the
death or disability of the shareholder(s) (as evidenced by a determination of
total disability by the U.S. Social Security Administration);
o 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
o 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 Oppenheimer fund described in this section if the proceeds are
invested in the same Class of shares in that fund or another Oppenheimer fund
within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix) of
the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
o Oppenheimer U. S. Government Trust,
o Oppenheimer Bond Fund,
o Oppenheimer Disciplined Value Fund and
o Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return
Account
Connecticut Mutual Government Securities CMIA LifeSpan Capital Appreciation
Account Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account
A. Prior Class A CDSC and Class A Sales Charge Waivers.
? Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund
and the other Former Connecticut Mutual Funds are entitled to continue to make
additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other
Former Connecticut Mutual Funds were $500,000 prior to March 18, 1996,
as a result of direct purchases or purchases pursuant to the Fund's
policies on Combined Purchases or Rights of Accumulation, who still
hold those shares in that Fund or other Former Connecticut Mutual
Funds, and
(2) persons whose intended purchases under a Statement of Intention entered
into prior to March 18, 1996, with the former general distributor of
the Former Connecticut Mutual Funds to purchase shares valued at
$500,000 or more over a 13-month period entitled those persons to
purchase shares at net asset value without being subject to the Class A
initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18,
1996, remain subject to the prior Class A CDSC, or if any additional
shares are purchased by those shareholders at net asset value pursuant to
this arrangement they will be subject to the prior Class A CDSC.
? Class A Sales Charge Waivers. Additional Class A shares of a Fund may be
purchased without a sales charge, by a person who was in one (or more) of the
categories below and acquired Class A shares prior to March 18, 1996, and still
holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more, including investments made pursuant to the Combined
Purchases, Statement of Intention and Rights of Accumulation features
available at the time of the initial purchase and such investment is
still held in one or more of the Former Connecticut Mutual Funds or a
Fund into which such Fund merged;
(2) any participant in a qualified plan, provided that the total initial
amount invested by the plan in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the
spouses and minor dependent children of such persons, pursuant to a
marketing program between CMFS and such group; and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the Fund
or any one or more of the Former Connecticut Mutual Funds, provided the
institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.
B. Class A and Class B Contingent Deferred Sales Charge Waivers. In addition to
the waivers set forth in the Prospectus and in this Appendix, above, the
contingent deferred sales charge will be waived for redemptions of Class A and
Class B shares of a Fund and exchanges of Class A or Class B shares of a Fund
into Class A or Class B shares of a Former Connecticut Mutual Fund provided that
the Class A or Class B shares of the Fund to be redeemed or exchanged were (i)
acquired prior to March 18, 1996 or (ii) were acquired by exchange from an
Oppenheimer fund that was a Former Connecticut Mutual Fund. Additionally, the
shares of such Former Connecticut Mutual Fund must have been purchased prior to
March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section
72(m)(7) of the Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a) or
403(b)(7)of the Code, or from IRAs, deferred compensation plans created
under Section 457 of the Code, or other employee benefit plans;
(4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws from
paying a sales charge or commission in connection with the purchase of
shares of any registered investment management company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original value
annually; or
(9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's Articles of Incorporation, or as
adopted by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of Advance America
Funds, Inc.
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund who
acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer
funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on
March 30, 1990, may purchase Class A shares of those four Oppenheimer funds at a
maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer
Convertible Securities Fund
Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge: o the Manager and its
affiliates, o present or former officers, directors, trustees and employees (and
their
"immediate families" as defined in the Fund's Statement of Additional
Information) of the Fund, the Manager and its affiliates, and
retirement plans established by them or the prior investment advisor of
the Fund for their employees,
o registered management investment companies or separate accounts of
insurance companies that had an agreement with the Fund's prior
investment advisor or 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 in the preceding section or financial institutions
that have entered into sales arrangements with those dealers or brokers
(and whose identity is made known to the Distributor) or with the
Distributor, but only if the purchaser certifies to the Distributor at
the time of purchase that the purchaser meets these qualifications,
o dealers, brokers, or registered investment advisors that had entered
into an agreement with the Distributor or the prior distributor of the
Fund specifically providing for the use of Class M shares of the Fund
in specific investment products made available to their clients, and
o dealers, brokers or registered investment advisors that had entered
into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee
retirement plans for which the dealer, broker, or investment advisor
provides administrative services.
<PAGE>
- --------------------------------------------------------------------------------
Limited Term New York Municipal Fund
- --------------------------------------------------------------------------------
Internet Web Site:
www.oppenheimerfunds.com
Investment Adviser
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 Bank
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Accountants
PricewaterhouseCoopers LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
67890
PX0355.0499
