<PAGE>
---------------------------------------------
UST
MASTER TAX-EXEMPT FUNDS, INC.
---------------------------------------------
TAX-EXEMPT FIXED INCOME PORTFOLIOS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LETTER TO SHAREHOLDERS..................................................... 1
STATEMENTS OF ASSETS AND LIABILITIES....................................... 2
STATEMENTS OF OPERATIONS................................................... 3
STATEMENTS OF CHANGES IN NET ASSETS........................................ 4
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................. 6
PORTFOLIOS OF INVESTMENTS
Short-Term Tax-Exempt Fund .............................................. 8
Short-Term Tax-Exempt Securities Fund.................................... 13
Intermediate-Term Tax-Exempt Fund........................................ 15
New York Intermediate-Term Tax-Exempt Fund............................... 17
Long-Term Tax-Exempt Fund................................................ 19
NOTES TO FINANCIAL STATEMENTS.............................................. 20
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. SHAREHOLDER SERVICES 1-800-446-1012
. CURRENT PRICE AND YIELD INFORMATION 1-800-233-9180
. INITIAL PURCHASE AND PROSPECTUS INFORMATION 1-800-233-1136
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and
expenses regarding UST Master Funds, Inc. and UST Master Tax-Exempt Funds, Inc.
may be obtained by contacting the Funds at 1-800-233-1136
Investors should read the current prospectus carefully prior to investing or
sending money.
UST Master Funds, Inc. and UST Master Tax-Exempt Funds, Inc. are sponsored and
distributed by Edgewood Services, Inc.
You may write to UST Master Funds, Inc. and UST Master Tax-Exempt Funds, Inc.
at the following address:
UST MASTER FUNDS, INC.
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, ITS PARENT OR AFFILIATES
AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. FUND SHARES ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
LETTER TO SHAREHOLDERS
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present UST Master Funds and UST Master Tax-Exempt Funds semi-
annual reports for the six months ended September 30, 1995.
The U.S. stock market continued to make strong gains for the period.
International markets remained difficult overall, though conditions are
looking up. Bond markets both home and abroad were somewhat volatile, yet the
spectacular gains of early 1995 were not eroded. While the general market has
been very favorable and some segments have been spectacular, the market also
continues to be variable and unforgiving to those companies which fail to meet
earnings expectations. In this environment, our outlook is somewhat cautious.
Much of the good news may already be in the markets, and further broad gains
will depend on continued good news about earnings and interest rates.
Investment performance continued to be strong in several of our equity and
fixed income funds. The Early Life Cycle Fund, with a return of 31.16%* ranked
105th among 288 Small Company Growth Funds ranked by Lipper Analytical
Services, Inc.** (Lipper) for the one year period ended September 30, 1995.
The Communication and Entertainment Fund returned 30.98%,* Global Competitors
returned 28.77%,* ranking 121st, and 184th, respectively, among 550 Growth
Funds ranked by Lipper for the same period. Among our fixed-income funds, The
Managed Income returned 16.98%* ranking 8th among 77 Corporate BBB Funds***
tracked by Lipper. The Intermediate-Term Managed Income Funds returned 14.61%*
ranking 13th among 144 Lipper Intermediate-Term Investment Grade Bond Funds.
Three Tax-Exempt funds turned in the best relative performance in our family
of funds during the one year period. Lipper ranked both the Long-Term Tax-
Exempt, 16.03%,* and the N.Y. Intermediate-Term Funds, 10.37%,* number 1 among
213 General Municipal Bond Funds,*** and 22 among N.Y. State Municipal Bond
Funds,*** respectively. The Intermediate-Term Tax Exempt Fund ranked 2nd among
111 Lipper Intermediate-Term Municipal Bond Funds*** with a return of 11.16%.*
With a diversified portfolio of professionally managed funds, we are prepared
to fulfill your investment needs. We appreciate your participation in UST
Master Funds and UST Master Tax-Exempt Funds and look forward to serving you
in the years to come.
Alfred C. Tannachion
Chairman of the Board and President
- --------
* Past performance is not predictive of future performance. Total return
represents the change during the period in a hypothetical account with
dividends reinvested, without taking into account the maximum initial
sales charge of 4.5%. Investment return and principal value will fluctuate
so that an investor's shares when redeemed, may be worth more or less than
their original cost.
The average annual total returns on 9/30/95, including the maximum 4.5%
sales charge for one year and since inception (12/31/92) were 25.25% and
20.50%, respectively, for Early Life Cycle Fund, 25.13% and 23.54%,
respectively, for Communication and Entertainment Fund, 22.96% and 12.77%,
respectively, for Global Competitors Fund and 9.49% and 4.86%, respectively,
for Intermediate-Term Managed Income Fund. The average annual total returns
on 9/30/95, including the maximum 4.5% sales charge for one year, five year
and since inception were 11.66%, 9.14% and 10.68%, respectively, for Managed
Income Fund (1/9/86 inception), 10.78%, 9.35% and 10.69%, respectively, for
Long Term Tax-Exempt Fund (2/5/86 inception), 5.38%, 6.01% and 6.05%,
respectively, for N.Y. Intermediate-Term Tax-Exempt Fund (5/31/90 inception)
and 6.10%, 7.14% and 7.95%, respectively, for Intermediate-Term Tax-Exempt
Fund (12/3/85 inception).
A portion of the tax-exempt funds' income may be subject to the Alternative
Minimum Tax and some investors may be subject to certain state and local
taxes.
Each fund is currently waiving certain fees. Had the funds not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
** Lipper Analytical Services, Inc. is an independent mutual fund performance
monitor whose rankings are based on total return excluding sales charges.
*** For the five year period ended 9/30/95, Lipper ranked Managed Income Fund
19 among 26 Corporate BBB Funds, Long-Term Tax-Exempt Fund 2 among 98
General Municpal Bond Funds, N.Y. Intermediate-Term Tax-Exempt Fund 5
among 5 N.Y. State Municipal Bond Funds and Intermediate-Term Tax-Exempt
Fund 5 among 32 Intermediate-Term Municipal Bond Funds.
1
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE-
SHORT-TERM TAX-EXEMPT TERM TERM LONG-TERM
TAX-EXEMPT SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND FUND FUND
------------ ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost -- see
accompanying portfolios.... $782,439,892 $47,595,700 $234,898,760 $90,923,123 $75,172,100
============ =========== ============ =========== ===========
Investments, at value
(Note 1)................... $782,439,892 $48,286,517 $246,532,400 $93,338,707 $77,312,160
Cash........................ -- 532 248 80 --
Interest receivable......... 5,041,428 698,103 3,658,865 1,407,349 1,380,712
Receivable for investments
sold....................... 6,760,000 -- -- 4,509,163 8,026,694
Receivable for fund shares
sold....................... 32,673 107,044 433,073 21,262 1,229,282
Prepaid expenses............ 4,974 370 1, 731 635 541
Unamortized organization
costs (Note 5)............. -- 9,429 -- -- --
------------ ----------- ------------ ----------- -----------
TOTAL ASSETS................ 794,278,967 49,101,995 250,626,317 99,277,196 87,949,389
LIABILITIES:
Payable for investments
purchased.................. -- -- -- 2,576,971 --
Payable for dividends
declared................... 2,174,115 151,042 880,652 308,243 327,763
Payable for fund shares
redeemed................... -- 16,648 411,181 13,000 16,797
Investment advisory fees
payable (Note 2)........... 144,303 10,270 65,040 39,170 36,188
Administration fees and
shareholder servicing fees
payable (Note 2)........... 107,265 6,629 34,172 12,816 12,568
Due to custodian............ 81,811 -- -- -- 95
Accrued expenses and other
payables................... 318,004 18,777 81,216 111,434 98,330
------------ ----------- ------------ ----------- -----------
TOTAL LIABILITIES........... 2,825,498 203,366 1,472,261 3,061,634 491,741
------------ ----------- ------------ ----------- -----------
NET ASSETS................... $791,453,469 $48,898,629 $249,154,056 $96,215,562 $87,457,648
============ =========== ============ =========== ===========
NET ASSETS consist of:
Undistributed/(distributions
in excess of) net
investment income.......... $ -- $ 7,605 $ (60,661) $ -- $ 38,696
Accumulated net realized
gain/(loss) on
investments................ (46,948) (1,157,004) (9,028,297) (2,177,595) 238,996
Unrealized appreciation/
(depreciation) on
investments................ -- 690,817 11,633,640 2,415,584 2,140,060
Par value (Note 4).......... 791,750 6,924 27,252 11,352 9,170
Paid in capital in excess of
par value.................. 790,708,667 49,350,287 246,582,122 95,966,221 85,030,726
------------ ----------- ------------ ----------- -----------
TOTAL NET ASSETS............. $791,453,469 $48,898,629 $249,154,056 $96,215,562 $87,457,648
============ =========== ============ =========== ===========
Shares of Common Stock
Outstanding................. 791,750,476 6,923,515 27,252,034 11,352,527 9,169,596
NET ASSET VALUE PER SHARE.... $1.00 $7.06 $9.14 $8.48 $9.54
===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
2
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE-
SHORT-TERM TAX-EXEMPT TERM TERM LONG-TERM
TAX-EXEMPT SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND FUND FUND
----------- ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........ $16,086,481 $1,156,266 $ 6,347,830 $2,325,119 $2,397,191
----------- ---------- ----------- ---------- ----------
EXPENSES:
Investment advisory
fees (Note 2)......... 1,001,181 72,330 431,633 232,956 209,091
Administration fees
(Note 2).............. 617,169 37,156 190,055 71,803 64,447
Administrative service
fees (Note 2)......... 145,296 11,035 53,614 10,795 23,036
Shareholder servicing
agent fees (Note 2)... 14,343 4,691 12,584 5,469 13,927
Custodian fees
(Note 2).............. 211,304 8,237 62,926 24,172 22,577
Registration and filing
fees.................. 3,176 6,495 4,477 219 891
Legal and audit fees... 49,729 4,275 18,478 2,709 3,586
Directors' fees and
expenses (Note 2)..... 26,821 1,661 8,588 3,123 1,752
Shareholder reports.... 11,793 2,040 8,802 4,049 2,087
Amortization of
organization costs
(Note 5).............. -- 2,105 -- 1,448 --
Miscellaneous
expenses.............. 21,058 2,189 9,062 3,314 2,755
----------- ---------- ----------- ---------- ----------
TOTAL EXPENSES......... 2,101,870 152,214 800,219 360,057 344,149
Fees waived by
investment adviser and
administrators
(Note 2).............. (145,296) (11,035) (53,614) (10,795) (23,036)
----------- ---------- ----------- ---------- ----------
NET EXPENSES........... 1,956,574 141,179 746,605 349,262 321,113
----------- ---------- ----------- ---------- ----------
NET INVESTMENT INCOME... 14,129,907 1,015,087 5,601,225 1,975,857 2,076,078
----------- ---------- ----------- ---------- ----------
REALIZED AND UNREALIZED
GAIN/(LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain/
(loss) on security
transactions.......... 18,666 370,078 2,118,720 1,263,005 2,514,122
Change in unrealized
appreciation/
(depreciation) on
investments during
the period............ -- 339,977 7,046,168 1,308,909 (111,788)
----------- ---------- ----------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS......... 18,666 710,055 9,164,888 2,571,914 2,402,334
----------- ---------- ----------- ---------- ----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $14,148,573 $1,725,142 $14,766,113 $4,547,771 $4,478,412
=========== ========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE-
SHORT-TERM TAX-EXEMPT TERM TERM LONG-TERM
TAX-EXEMPT SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND FUND FUND
------------ ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
PERIOD ENDED SEPTEMBER
30, 1995 (UNAUDITED)
Net investment income... $ 14,129,907 $ 1,015,087 $ 5,601,225 $ 1,975,857 $ 2,076,078
Net realized gain/(loss)
on investments......... 18,666 370,078 2,118,720 1,263,005 2,514,122
Change in unrealized
appreciation/
(depreciation) on
investments during
the period............. -- 339,977 7,046,168 1,308,909 (111,788)
------------ ----------- ------------ ----------- -----------
Net increase in net
assets resulting from
operations............. 14,148,573 1,725,142 14,766,113 4,547,771 4,478,412
Distributions to
shareholders:
From net investment
income................ (14,129,907) (1,007,482) (5,524,112) (1,975,857) (2,038,898)
Increase/(decrease) in
net assets from fund
share transactions
(Note 4)............... (23,454,943) (6,574) 4,921,835 6,480,117 6,137,684
------------ ----------- ------------ ----------- -----------
Net increase/(decrease)
in net assets.......... (23,436,277) 711,086 14,163,836 9,052,031 8,577,198
NET ASSETS:
Beginning of period.... 814,889,746 48,187,543 234,990,220 87,163,531 78,880,450
------------ ----------- ------------ ----------- -----------
End of period (1)...... $791,453,469 $48,898,629 $249,154,056 $96,215,562 $87,457,648
============ =========== ============ =========== ===========
YEAR ENDED MARCH 31,
1995
Net investment income... $ 22,096,467 $ 1,942,218 $ 10,837,080 $ 3,790,054 $ 3,891,872
Net realized gain/(loss)
on investments......... 6,384 (1,527,080) (10,580,690) (3,440,595) (2,250,004)
Change in unrealized
appreciation/
(depreciation) on
investments during
the year............... -- 1,273,807 14,115,147 4,729,153 5,825,370
------------ ----------- ------------ ----------- -----------
Net increase in net
assets resulting from
operations............. 22,102,851 1,688,945 14,371,537 5,078,612 7,467,238
Distributions to
shareholders:
From net investment
income................ (22,096,467) (1,942,218) (10,837,080) (3,790,054) (3,891,872)
From net realized gain
on investments........ -- (106,754) -- (1,095,691) (904,671)
Increase/(decrease) in
net assets from fund
share transactions
(Note 4)............... 120,302,035 (9,180,054) (66,805,438) (20,518,090) (5,941,615)
------------ ----------- ------------ ----------- -----------
Net increase/(decrease)
in net assets.......... 120,308,419 (9,540,081) (63,270,981) (20,325,223) (3,270,920)
NET ASSETS:
Beginning of year...... 694,581,327 57,727,624 298,261,201 107,488,754 82,151,370
------------ ----------- ------------ ----------- -----------
End of year (2)........ $814,889,746 $48,187,543 $234,990,220 $87,163,531 $78,880,450
============ =========== ============ =========== ===========
</TABLE>
(1) Including accumulated/(distributions in excess of) net investment income
of $7,605 for Short-Term Tax-Exempt Securities Fund, ($60,661) for
Intermediate-Term Tax-Exempt Fund and $38,696 for Long-Term Tax-Exempt
Fund.
(2) Including accumulated/(distributions in excess of) net investment income
of ($137,774) for Intermediate-Term Tax-Exempt Fund and $1,516 for Long-
Term Tax-Exempt Fund.
See Notes to Financial Statements
4
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS
For a fund share outstanding throughout each year.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT REALIZED GAIN
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME ON INVESTMENTS
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT FUND -- (5/24/85*)
Year Ended March 31,
1991................... $1.00 $0.05292 $(0.00001) $0.05291 $(0.05292) $0.00000
1992................... 1.00 0.03849 0.00000 0.03849 (0.03849) 0.00000
1993................... 1.00 0.02395 0.00000 0.02395 (0.02395) 0.00000
1994................... 1.00 0.01938 0.00000 0.01938 (0.01938) 0.00000
1995................... 1.00 0.02825 0.00000 0.02825 (0.02825) 0.00000
Period Ended September
30, 1995 (Unaudited)... 1.00 0.01765 0.00000 0.01765 (0.01765) 0.00000
SHORT-TERM TAX-EXEMPT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1993................... $7.00 $ 0.05 $ 0.07 $ 0.12 $ (0.05) $ 0.00
1994................... 7.07 0.21 (0.03) 0.18 (0.21) (0.05)
1995................... 6.99 0.25 (0.02) 0.23 (0.25) (0.01)
Period Ended September
30, 1995 (Unaudited)... 6.96 0.15 0.10 0.25 (0.15) 0.00
INTERMEDIATE-TERM TAX-EXEMPT FUND -- (12/3/85*)
Year Ended March 31,
1991................... $8.67 $ 0.56 $ 0.16 $ 0.72 $ (0.56) $ 0.00
1992................... 8.83 0.49 0.19 0.68 (0.49) (0.07)
1993................... 8.95 0.42 0.59 1.01 (0.42) (0.30)
1994................... 9.24 0.34 (0.09) 0.25 (0.34) (0.26)
1995................... 8.64 0.37 0.16 0.53 (0.37) 0.00
Period Ended September
30, 1995 (Unaudited)... 8.80 0.20 0.34 0.54 (0.20) 0.00
N.Y. INTERMEDIATE-TERM TAX-EXEMPT FUND -- (5/31/90*)
Year Ended March 31,
1991................... $8.00 $ 0.39 $ 0.20 $ 0.59 $ (0.39) $ 0.00
1992................... 8.20 0.41 0.19 0.60 (0.41) (0.08)
1993................... 8.31 0.34 0.41 0.75 (0.34) (0.11)
1994................... 8.61 0.31 (0.13) 0.18 (0.31) (0.22)
1995................... 8.18 0.33 0.15 0.48 (0.33) (0.09)
Period Ended September
30, 1995 (Unaudited)... 8.24 0.18 0.24 0.42 (0.18) 0.00
LONG-TERM TAX-EXEMPT FUND -- (2/5/86*)
Year Ended March 31,
1991................... $8.87 $ 0.54 $ 0.33 $ 0.87 $ (0.54) $ (0.05)
1992................... 9.15 0.51 0.30 0.81 (0.51) (0.20)
1993................... 9.25 0.46 0.99 1.45 (0.46) (0.48)
1994................... 9.76 0.42 (0.12) 0.30 (0.42) (0.50)
1995................... 8.87 0.43 0.50 0.93 (0.43) (0.10)
Period Ended September
30, 1995 (Unaudited)... 9.27 0.23 0.27 0.50 (0.23) 0.00
</TABLE>
* Commencement of operations
** Annualized
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Total return data does not reflect the sales load payable on purchases of
fund shares.
See Notes to Financial Statements
6
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTIONS RATIO OF NET RATIO OF GROSS RATIO OF NET
IN EXCESS OF NET ASSETS, OPERATING OPERATING INVESTMENT
NET REALIZED NET ASSET END OF EXPENSES EXPENSES INCOME PORTFOLIO FEE
GAIN ON TOTAL VALUE, END TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER WAIVERS
INVESTMENTS DISTRIBUTIONS OF PERIOD RETURN++ (000) NET ASSETS NET ASSETS+ NET ASSETS RATE (NOTE 2)
- ------------- ------------- ---------- -------- ----------- ------------ -------------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00000 $(0.05292) $1.00 5.42% $662,337 0.53% 0.53% 5.28% -- $0.00000
0.00000 (0.03849) 1.00 3.92% 666,351 0.52% 0.52% 3.84% -- 0.00000
0.00000 (0.02395) 1.00 2.42% 659,327 0.52% 0.52% 2.39% -- 0.00000
0.00000 (0.01938) 1.00 1.96% 694,581 0.52% 0.52% 1.94% -- 0.00003
0.00000 (0.02825) 1.00 2.86% 814,890 0.49% 0.52% 2.85% -- 0.00030
0.00000 (0.01765) 1.00 1.78% 791,453 0.49%** 0.52%** 3.53%** -- 0.00018
$ 0.00 $ (0.05) $7.07 1.65% $ 28,598 0.60%** 0.84%** 2.80%** -- $ 0.00
0.00 (0.26) 6.99 2.55% 57,728 0.59% 0.60% 2.94% 539% 0.00
0.00 (0.26) 6.96 3.45% 48,188 0.59% 0.61% 3.60% 565% 0.00
0.00 (0.15) 7.06 3.58% 48,899 0.59%** 0.63%** 4.21%** 126%** 0.00
$ 0.00 $ (0.56) $8.83 8.64% $122,615 0.66% 0.66% 6.47% 216% $ 0.00
0.00 (0.56) 8.95 7.95% 223,201 0.64% 0.64% 5.48% 276% 0.00
0.00 (0.72) 9.24 11.70% 285,317 0.64% 0.64% 4.57% 429% 0.00
(0.25) (0.85) 8.64 2.58% 298,261 0.64% 0.64% 3.74% 379% 0.00
0.00 (0.37) 8.80 6.34% 234,990 0.61% 0.64% 4.28% 362% 0.00
0.00 (0.20) 9.14 6.21% 249,154 0.61%** 0.65%** 4.54%** 64%** 0.00
$ 0.00 $ (0.39) $8.20 7.54% $ 25,883 0.86%** 0.86%** 5.72%** 105% $ 0.00
0.00 (0.49) 8.31 7.42% 52,238 0.88% 0.88% 4.82% 106% 0.00
0.00 (0.45) 8.61 9.27% 88,249 0.89% 0.89% 3.94% 339% 0.00
(0.08) (0.61) 8.18 1.87% 107,489 0.87% 0.87% 3.55% 326% 0.00
0.00 (0.42) 8.24 6.05% 87,164 0.78% 0.80% 4.06% 563% 0.00
0.00 (0.18) 8.48 5.12% 96,216 0.75%** 0.77%** 4.24%** 191%** 0.00
$ 0.00 $ (0.59) $9.15 10.11% $ 38,040 0.86% 0.86% 6.01% 197% $ 0.00
0.00 (0.71) 9.25 9.19% 62,732 0.85% 0.85% 5.52% 218% 0.00
0.00 (0.94) 9.76 16.35% 85,520 0.86% 0.86% 4.73% 300% 0.00
(0.27) (1.19) 8.87 2.38% 82,151 0.85% 0.86% 4.25% 252% 0.00
0.00 (0.53) 9.27 11.01% 78,880 0.80% 0.83% 4.86% 214% 0.00
0.00 (0.23) 9.54 5.44% 87,458 0.77%** 0.82%** 4.96%** 234%** 0.00
</TABLE>
See Notes to Financial Statements
7
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT FUND (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- 56.97%
$20,000,000 California State Revenue Anticipation Warrants,
Series C, 5.750%, 04/25/1996(1)..................... $ 20,198,154
4,000,000 Gainsville, Florida, Utilities Systems Revenue
Bonds, Series C, 4.000%, 10/02/1995................. 4,000,000
5,000,000 Gainsville, Florida, Utilities Systems Revenue
Bonds, Series C, 3.850%, 10/16/1995................. 5,000,000
5,000,000 Gainsville, Florida, Utilities Systems Revenue
Bonds, Series C, 3.700%, 12/06/1995................. 5,000,000
3,640,000 Gulf Coast Waste Disposal Authority, Texas, Water &
Pollution Control Revenue Bonds, Amoco Oil Project,
3.850%, 07/15/2008+................................. 3,640,000
5,000,000 Gwinnett County, Georgia, School District Refunding
General Obligation Bonds, 4.400%, 02/01/1996........ 5,014,529
2,000,000 Hawaii State, General Obligation Bonds, Series BG-
1986, 6.000%, 11/01/1995............................ 2,003,986
4,500,000 Houston, Texas, General Obligation Revenue Bonds,
Series A, 3.750%, 12/07/1995........................ 4,500,000
5,400,000 Houston, Texas, General Obligation Revenue Bonds,
Series A, 3.750%, 12/12/1995........................ 5,400,000
10,300,000 Houston, Texas, Public Improvement General
Obligation Revenue Bonds, Series A,
4.200%, 04/01/1998+................................. 10,300,000
12,300,000 Houston, Texas, Public Improvement General
Obligation Revenue Bonds, Series B,
4.200%, 04/01/2014+................................. 12,300,000
7,900,000 Indianapolis, Indiana, Local Public Improvement
Bonds, Series B, 4.250%, 01/11/1996(2).............. 7,916,034
8,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series E,
3.750%, 10/30/1995.................................. 8,000,000
5,200,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series F,
3.500%, 11/10/1995.................................. 5,200,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (CONTINUED)
$10,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series F,
3.750%, 12/13/1995.................................. $ 10,000,000
5,700,000 Jacksonville, Florida, Electric Authority Revenue
Bonds, 3.600%, 12/12/1995........................... 5,700,000
4,760,000 Lower Colorado River Authority, Texas, Revenue
Bonds, Series B, 3.900%, 10/11/1995................. 4,760,000
10,000,000 Massachusetts State General Obligation Notes, Series
A, 3.850%, 11/29/1995............................... 10,000,000
6,000,000 Massachusetts Bay Transit Authority, Series C,
5.500%, 03/01/1996.................................. 6,045,110
11,655,000 New York City, New York, Revenue Anticipation Notes,
Series A, 4.500%, 04/11/1996........................ 11,694,405
49,500,000 New York City, New York, Tax Anticipation Notes,
Series A, 4.500%, 02/15/1996........................ 49,644,482
13,500,000 Nueces River, Texas, Industrial Development
Authority, Pollution Control Refunding Revenue
Bonds, San Miguel Electric Coop, 3.900%,
10/05/1995(3)....................................... 13,500,000
10,000,000 Nueces River, Texas, Industrial Development
Authority, Pollution Control Refunding Revenue
Bonds, San Miguel Electric Coop, 3.900%,
10/10/1995(3)....................................... 10,000,000
2,750,000 Ohio State University, General Receipts Revenue
Bonds, Series B, 4.200%, 12/01/2012+................ 2,750,000
13,725,000 Oklahoma State Water Resources Board State Loan
Program Revenue Bonds, Series A,
3.950%, 09/01/2023++................................ 13,725,000
10,000,000 Omaha, Nebraska, Public Power District,
3.700%, 10/17/1995.................................. 10,000,000
7,500,000 Orlando, Florida, Waste Water Systems, Series A,
4.000%, 10/02/1995.................................. 7,500,000
11,775,000 Petersburg, Indiana, Pollution Control Refunding
Revenue Bonds, Indianapolis Power & Light Co.,
3.700%, 10/24/1995.................................. 11,775,000
3,000,000 Plaquemines, Louisiana, Port Harbor and Terminal,
Marine Terminal Facilities, Electro-Coal Transfer
Revenue Bonds, Series D, 3.700%, 12/11/1995......... 3,000,000
</TABLE>
See Notes to Financial Statements
8
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (CONTINUED)
$ 2,400,000 Platte River, Colorado, Power Authority Revenue
Bonds, Subseries S-1, 3.900%, 12/07/1995............ $ 2,400,000
10,000,000 Putnam County, Florida, Development Authority,
Pollution Control Revenue Bonds, Seminole Electric
Coop, Series 1984-D, 3.400%, 12/15/2009(3)++........ 10,000,000
1,500,000 Salt River Project, Arizona, Agricultural
Improvement & Power District, 3.400%, 10/11/1995.... 1,500,000
10,000,000 Salt River Project, Arizona, Agricultural
Improvement & Power District, 3.850%, 10/18/1995.... 10,000,000
5,000,000 Salt River Project, Arizona, Agricultural
Improvement & Power District, 3.800%, 11/09/1995.... 5,000,000
11,000,000 Salt River Project, Arizona, Agricultural
Improvement & Power District, 3.600%, 12/12/1995.... 11,000,000
2,100,000 Salt River Project, Arizona, Agricultural
Improvement & Power District, 3.750%, 12/14/1995.... 2,100,000
7,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
4.150%, 10/03/1995.................................. 7,000,000
15,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
3.900%, 10/11/1995.................................. 15,000,000
5,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
3.900%, 10/11/1995.................................. 5,000,000
1,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
3.750%, 12/07/1995.................................. 1,000,000
2,600,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
3.900%, 12/07/1995.................................. 2,600,000
4,500,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
3.750%, 12/08/1995.................................. 4,500,000
2,000,000 San Antonio, Texas, Water System Revenue Bonds,
3.900%, 10/11/1995.................................. 2,000,000
5,000,000 Texas A&M University, Permanent University Fund,
Series B, 3.900%, 10/02/1995........................ 5,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (CONTINUED)
$ 5,000,000 Texas A&M University, Revenue Bonds, 3.700%,
11/14/1995......................................... $ 5,000,000
5,000,000 Texas A&M University, Revenue Bonds, 3.700%,
12/06/1995......................................... 5,000,000
1,000,000 Texas Municipal Power Agency Revenue Bonds,
3.450%, 10/02/1995................................. 1,000,000
8,200,000 Texas Municipal Power Agency Revenue Bonds,
3.800%, 12/01/1995................................. 8,200,000
6,600,000 Texas State Public Finance Authority Revenue Bonds,
Series 93-A, 3.750%, 11/07/1995.................... 6,600,000
7,500,000 Texas State General Obligation Bonds, Correctional
Facilities Improvement, Series B, 7.500%,
10/01/1995......................................... 7,500,000
1,600,000 Texas State Tax & Revenue Anticipation Notes,
Series 95-A, 4.750%, 08/30/1996.................... 1,611,067
3,800,000 University of Michigan, University Hospital, Series
A, 4.500%, 12/01/2027++............................ 3,800,000
10,000,000 University of Texas Permanent University Fund,
Series A, 3.850%, 11/13/1995....................... 10,000,000
6,500,000 University of Texas Permanent University Fund,
Series B, 3.600%, 11/27/1995....................... 6,500,000
5,000,000 University of Texas Permanent University Fund,
Series A, 3.600%, 12/13/1995....................... 5,000,000
15,000,000 University of Texas, University Revenue Bonds,
Series A, 3.550%, 10/10/1995....................... 15,000,000
5,000,000 University of Texas, University Revenue Bonds,
Series A, 3.600%, 12/13/1995....................... 5,000,000
8,000,000 University of Texas, University Revenue Bonds,
Series A, 3.800%, 12/13/1995....................... 8,000,000
5,000,000 Virginia State Housing Development Authority,
Commonwealth Mortgage Revenue Bonds, Series D,
3.650%, 01/01/2019++............................... 5,000,000
5,000,000 Wichita, Kansas, Public Improvement General
Obligation Bonds, 4.400%, 10/01/1995............... 5,000,000
------------
450,877,767
------------
</TABLE>
See Notes to Financial Statements
9
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS -- BACKED BY LETTERS OF CREDIT --
41.89%
ABN AMRO
--------
$ 7,000,000 Illinois Health Facilities Authority Revenue Bonds,
Palos Community Hospital, Series B,
4.000%, 12/01/2015+................................ $ 7,000,000
3,300,000 Illinois Health Facilities Authority Revenue Bonds,
Ingalls Memorial Hospital, Series C,
4.500%, 01/01/2016+................................ 3,300,000
BANK OF NEW YORK
----------------
10,000,000 Ohio County, Kentucky, Pollution Control Revenue
Bonds, Big Rivers Electric Corp., Series 1983,
4.300%, 06/01/2013+................................ 10,000,000
BANK OF NOVA SCOTIA
-------------------
10,200,000 Gary, Indiana, Environmental Improvement Revenue
Notes, U.S. Steel Corporation Project, Series 1984,
4.050%, 07/15/2002+................................ 10,200,000
3,400,000 New Hampshire State Industrial Development
Authority, Pollution Control Revenue Bonds, Bangor
Hydro-Electric Co. Project, Series 1983, 3.500%,
01/01/2009+........................................ 3,400,000
BANK OF TOKYO
-------------
7,350,000 University of Iowa, Facilities Revenue Bonds, Human
Biology Research, Series A, 4.500%, 06/01/2005+.... 7,350,000
BARCLAYS BANK
-------------
7,700,000 Bucks County, Pennsylvania, Industrial Development
Authority Revenue Bonds, Tru Realty--Toys R Us
Project, 3.750%, 12/01/2018+....................... 7,700,000
4,000,000 Jasper County, Indiana, Pollution Control Refunding
Revenue Bonds, Northern Indiana Public Service Co.,
Series D, 3.750%, 11/15/1995....................... 4,000,000
CANADIAN IMPERIAL BANK
----------------------
4,500,000 Maricopa County, Arizona, Pollution Control
Refunding Revenue Bonds, Public Service Co., New
Mexico, Series A, 4.400%, 11/01/2022+.............. 4,500,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
COOPERATIVE FINANCE CORP.
-------------------------
$ 2,440,000 Clark County, Kentucky, Pollution Control Revenue
Bonds, 4.150%, 10/15/2014++......................... $ 2,439,805
CREDIT SUISSE
-------------
6,900,000 Garden City, Kansas, Industrial Development Revenue
Bonds, Inland Container Corp. Project, Temple Series
1983, 3.350%, 01/01/2008+........................... 6,900,000
10,000,000 Los Angeles County, California, Tax & Revenue
Anticipation Notes, 4.500%, 07/01/1996.............. 10,036,796
10,440,000 Marshall County, West Virginia, Pollution Control
Revenue Bonds, Mobay Chemical Corp. Project, 3.750%,
12/01/2000+......................................... 10,440,000
2,500,000 Marshall County, West Virginia, Pollution Control
Revenue Bonds, Mountaineer Carbon Co. Project,
4.850%, 12/01/2020+................................. 2,500,000
2,200,000 South Louisiana Port Commission, Marine Terminal
Facilities Refunding Revenue Bonds, Occidental
Petroleum, 4.400%, 07/01/2021+...................... 2,200,000
CREDIT LYONNAISE
----------------
5,300,000 Kenton County, Kentucky, Industrial Building Revenue
Bonds, Redken Labs, Inc. Project, Series 1984,
4.110%, 12/01/2014+................................. 5,300,000
DEUTSCHE BANK
-------------
3,000,000 Massachusetts Bay Transit Authority, Series C,
3.850%, 10/06/1995.................................. 2,999,850
FUJI BANK
---------
13,300,000 Oregon State General Obligation Bonds, Series 73G,
4.500%, 12/01/2018+................................. 13,300,000
MITSUBISHI BANK
---------------
37,700,000 Connecticut State Special Assessment, Unemployment
Compensation Advanced Fund Revenue Bonds, Series B,
4.350%, 11/15/2001+................................. 37,700,000
</TABLE>
See Notes to Financial Statements
10
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
MORGAN GUARANTY TRUST CO.
-------------------------
$26,000,000 Baltimore, Maryland, Port Facilities Revenue Bonds,
Occidental Petroleum, Series 1981,
3.750%, 10/14/2011+................................ $ 26,000,000
11,000,000 Birmingham, Alabama, Medical Clinic Board Revenue
Bonds, 4.950%, 12/01/2026+......................... 11,000,000
NATIONAL WESTMINSTER BANK
-------------------------
20,000,000 Essex County, New Jersey, Tax Anticipation Notes,
Series C, 4.250%, 11/22/1995....................... 20,020,580
NORDDEUTSCHE LANDESBANK
-----------------------
9,900,000 Brazos, Texas, Harbor Industrial Development Corp.
Revenue Bonds, Badische Corp., 3.750%,
12/01/2013+........................................ 9,900,000
NORTHERN TRUST/HARRIS TRUST & SAVINGS BANK
------------------------------------------
1,200,000 Illinois Educational Facilities Authority Revenue
Bonds, Illinois Institute of Technology, Series A,
4.500%, 09/01/2025+................................ 1,200,000
SANWA BANK
----------
2,975,000 District of Columbia Aces, Georgetown University
Revenue Bonds, Series 1988-B, 4.350%, 04/01/2004+.. 2,975,000
6,500,000 District of Columbia Aces, Georgetown University
Revenue Bonds, Series 1988-C, 4.350%, 04/01/2012+.. 6,500,000
12,100,000 Illinois Health Facilities Authority Revenue Bonds,
Elmhurst Memorial Hospital, Series B, 4.850%,
01/01/2020+........................................ 12,100,000
4,600,000 Michigan State Job Development Authority Revenue
Bonds, Hitachi Metals International Project,
3.600%, 01/01/2004+................................ 4,600,000
6,000,000 Missouri State Environmental Improvement & Energy
Resources Authority, Pollution Control Refunding
Revenue Bonds, Noranda Aluminum, Inc. Project,
4.500%, 10/01/2002+................................ 6,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
SUMITOMO BANK
-------------
$ 6,100,000 Wake County, North Carolina, Industrial Facilities
& Pollution Control Financing Authority Revenue
Bonds, Carolina Power & Light Co. Project, Series
1985-B, 4.500%, 09/01/2015+........................ $ 6,100,000
11,700,000 Wake County, North Carolina, Industrial Facilities
& Pollution Control Financing Authority Revenue
Bonds, Carolina Power & Light Co. Project, Series
1985-C, 4.500%, 10/01/2015+........................ 11,700,000
SWISS BANK
----------
2,251,000 Austin, Texas, Utilities Systems Revenue Bonds,
3.400%, 10/10/1995................................. 2,251,000
9,950,000 Austin, Texas, Utilities Systems Revenue Bonds,
3.800%, 12/11/1995................................. 9,950,000
3,600,000 Louisiana Public Facilities Authority, Pollution
Control Revenue Bonds, Ciba-Geigy Corp. Project,
4.400%, 12/01/2004+................................ 3,600,000
TORONTO DOMINION BANK
---------------------
1,900,000 Burlington, Kansas, Pollution Control Refunding
Revenue Bonds, Kansas City Power & Light Co.,
Series 87-A, 3.700%, 10/02/1995.................... 1,900,000
13,400,000 Maricopa County, Arizona, Pollution Control
Refunding Revenue Bonds, Arizona Public Service
Co., Series 94-C, 4.850%, 05/01/2029+.............. 13,400,000
UNION BANK OF SWITZERLAND
-------------------------
4,600,000 Chicago, Illinois, General Obligation Bonds, Series
A-2 3.500%, 10/31/1995............................. 4,597,813
12,000,000 Chicago, Illinois, General Obligation Bonds, Series
A, 4.600%, 10/31/1996+............................. 12,001,281
WESTDEUTSCHE LANDESBANK
-----------------------
14,500,000 Chicago, Illinois, O'Hare Airport Special
Facilities Revenue Bonds, American Airlines, Inc.
Project, Series A, 4.850%, 12/01/2017+............. 14,500,000
------------
331,562,125
------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
----------
<C> <S> <C>
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $782,439,892*).................... 98.86% $782,439,892
OTHER ASSETS & LIABILITIES (NET).......................... 1.14 9,013,577
------ ------------
NET ASSETS................................................ 100.00% $791,453,469
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
++ Variable rate put bonds and notes with demand features to mature within one
year.
(1) Secured by irrevocable warrant purchase agreement between the state and
certain banks.
(2) Secured in part by investment agreement with AIG Matched Funding Corp.
(3) Secured in part by CFC (National Rural Utilities Cooperative Corp.)
Guarantee.
Note:
These municipal securities meet the two highest rating categories assigned by
Moody's Investors Services, Inc. or Standard and Poor's Corporation or, where
not rated, are determined by the Investment Adviser, under the supervision of
the Board of Directors, to be of comparable quality at the time of purchase
to rated instruments that may be acquired by the Fund.
At September 30, 1995, approximately 42% of the net assets are invested in
municipal securities that have letter of credit enhancement features backing
them, which the Fund relies on. Without such features, the securities may or
may not meet the quality standards of securities purchased by the Fund.
At September 30, 1995, approximately 26% of the net assets are invested in
Texas municipal securities. Economic changes affecting the state and certain
of its public bodies and municipalities may affect the ability of issuers to
pay the required principal and interest payments of the municipal securities.
See Notes to Financial Statements
12
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT SECURITIES FUND (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 87.95%
$2,000,000 Alabama State Refunding General Obligation Bonds,
5.900%, 03/01/1999.................................. $ 2,095,560
2,000,000 California State Revenue Anticipation Warrants,
Series C, (FGIC), 5.750%, 04/25/1996................ 2,018,960
5,000,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure
Purposes, Series C, (FGIC), 5.500%, 10/01/2000...... 5,246,950
1,425,000 Florida State Board of Education, Public Education
Capital Outlay General Obligation Bonds, Series B,
5.625%, 06/01/2000.................................. 1,504,372
2,000,000 Harris County, Texas, Refunding Bonds, 5.750%,
10/01/1998.......................................... 2,086,680
2,000,000 Hawaii State Public Improvements General Obligation
Bonds, Series CK, 5.000%, 09/01/1998................ 2,052,920
1,900,000 Illinois State Sales Tax Refunding Revenue Bonds,
Series Q, 5.300%, 06/15/2000........................ 1,969,464
1,130,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series B,
4.800%, 07/01/1996.................................. 1,139,289
1,000,000 Massachusetts State Water Pollution Abatement Trust
Revenue Bonds, Pool Loan Program, Series 2,
4.400%, 02/01/1997.................................. 1,006,030
1,250,000 Milwaukee, Wisconsin, General Obligation Bonds,
Series A5, 5.500%, 02/15/1999....................... 1,297,425
1,900,000 Mississippi State General Obligation Bonds, Series
B, 5.000%, 08/01/1999............................... 1,958,026
2,200,000 Nevada State Highway Improvement, Motor Vehicle Fuel
Tax Revenue Bonds, 7.000%, 04/01/1999............... 2,391,378
4,000,000 New Jersey State Transportation Trust Fund
Authority, Transportation System Revenue Bonds,
Series B, 5.000%, 06/15/1999........................ 4,103,120
2,000,000 New York State Environmental Facilities Corp.
Pollution Control Revenue Bonds, New York City
Municipal Water, Revolving Fund, 5.500%,
06/15/1999.......................................... 2,079,980
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$1,250,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A, 5.750%, 04/01/1998......... $ 1,296,825
2,000,000 North Dakota State Student Loan Refunding Bonds,
Series A, 5.400%, 07/01/1996........................ 2,018,560
2,000,000 Ohio State Public Facilities Commission, Higher
Education Capital Facilities Revenue Bonds, Series
II-A, 5.200%, 05/01/1997............................ 2,039,920
2,000,000 Pennsylvania State General Obligation Bonds, Series
A, 5.700%, 11/15/1999............................... 2,104,760
1,000,000 Seattle, Washington, Municipal Light & Power Revenue
Bonds, 6.000%, 07/01/1998........................... 1,047,630
1,250,000 Washington State General Obligation Bonds, Series
1995C, AT-8, and R-95B, 5.500%, 07/01/1997.......... 1,282,462
2,135,000 Wisconsin State Public Improvements, Water Utility &
Highway Improvements, Series A, 5.750%, 05/01/2000.. 2,263,506
-----------
43,003,817
-----------
TAX-EXEMPT SECURITIES --
BACKED BY LETTERS OF CREDIT -- 10.43%
LASALLE NATIONAL BANK
---------------------
1,900,000 Illinois Health Facilities Authority Revenue Bonds,
Ingalls Memorial Hospital, Series B,
4.500%, 01/01/2016+................................. 1,900,000
SANWA BANK
----------
2,000,000 Missouri State Environmental Improvement and Energy
Resources Authority, Pollution Control Refunding
Revenue Bonds, Noranda Aluminum, Inc. Project,
4.500%, 10/01/2002+................................. 2,000,000
TORONTO DOMINION BANK
---------------------
1,200,000 Wisconsin State Health Facilities Authority
Refunding Revenue Bonds, Franciscan Health Care,
Series A-2, 4.400%, 01/01/2016+..................... 1,200,000
-----------
5,100,000
-----------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
SHORT-TERM TAX-EXEMPT SECURITIES FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<C> <S> <C>
OTHER INVESTMENTS -- 0.37%
182,700 Dreyfus Tax-Exempt Cash Management Fund.............. $ 182,700
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $47,595,700*)...................... 98.75% $48,286,517
OTHER ASSETS & LIABILITIES (NET)........................... 1.25 612,112
------ -----------
NET ASSETS................................................. 100.00% $48,898,629
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
FGIC -- Financial Guaranty Insurance Corp.
Note:
These municipal securities meet the three highest rating categories assigned
by Moody's Investors Services, Inc. or Standard and Poor's Corporation or,
where not rated, are determined by the Investment Adviser, under the
supervision of the Board of Directors, to be of comparable quality at the
time of purchase to rated instruments that may be acquired by the Fund.
At September 30, 1995, approximately 10% of the net assets are invested in
municipal securities that have letter of credit enhancement features backing
them, which the Fund relies on. Without such features, the securities may or
may not meet the quality standards of securities purchased by the Fund.
At September 30, 1995, approximately 11% of the net assets are invested in
Connecticut municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
14
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
INTERMEDIATE-TERM TAX-EXEMPT FUND (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 73.79%
$10,000,000 California State Public Improvements General
Obligation Bonds, (FGIC), 7.500%, 11/01/2003........ $ 11,791,800
10,000,000 Connecticut State General Obligation Bonds, Series
D, 6.250%, 11/15/2009............................... 10,620,200
10,000,000 Fairfax County, Virginia, Refunding General
Obligation Bonds, Series C, 5.250%, 05/01/2008...... 9,990,400
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 07/01/2004.................................. 11,271,300
10,000,000 Hawaii State Refunding General Obligation Bonds,
Series CI, 4.500%, 11/01/2005....................... 9,722,900
10,000,000 Hawaii State General Obligation Bonds, Series CJ,
5.900%, 01/01/2006.................................. 10,697,700
10,000,000 Maryland State & Local Facilities Loan, Refunding
General Obligation Bonds, 3rd Series, 4.400%,
07/15/2004.......................................... 9,806,500
10,000,000 Maryland State & Local Facilities, Public
Improvements Correctional Facilities, 3rd Series,
5.700%, 10/15/2006.................................. 10,536,000
10,000,000 Maryland State Department of Transportation,
Consolidated Transportation Bonds, Second Issue,
4.375%, 12/15/2003.................................. 9,717,000
10,000,000 Massachusetts State Public Improvements, General
Obligation Bonds, Series C, (MBIA),
5.625%, 08/01/2011.................................. 10,024,900
10,000,000 New Jersey State Refunding General Obligation Bonds,
Series D, 5.625%, 02/15/2005........................ 10,636,100
10,000,000 New Jersey State, Transportation Authority Revenue
Bonds, Series A, 4.625%, 06/15/2002................. 10,056,700
10,000,000 New Jersey State, Transportation Trust Fund Revenue
Bonds, Transportation System, Series A, 5.250%,
06/15/2008.......................................... 9,916,900
8,000,000 Ohio State University & College Improvements Revenue
Bonds, Series B, 4.400%, 12/01/2006+................ 8,000,000
10,000,000 Pennsylvania Intergovernmental Cooperation Authority
Special Tax Refunding Revenue Bonds, City of
Philadelphia Funding Program, (FGIC),
5.350%, 06/15/2007.................................. 10,144,200
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$10,000,000 Puerto Rico Telephone Authority Revenue Bonds,
(AMBAC), 4.950%, 01/01/2003........................ $ 10,157,600
10,000,000 Texas State Refunding Bonds, Series A,
5.800%, 10/01/2004................................. 10,746,900
10,000,000 Wisconsin State Refunding General Obligation Bonds,
Series 3, 4.875%, 11/01/2005....................... 10,007,500
------------
183,844,600
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 13.60%
10,000,000 Fairfax County, Virginia, Industrial Development
Authority Revenue Bonds, Fairfax Hospital System,
6.801%, 08/29/2023 (Prerefunded 08/15/2001)........ 11,307,400
10,000,000 Sacramento, California, City Financing Authority
Revenue Bonds, 6.700%, 11/01/2011
(Prerefunded 11/01/2001)........................... 11,364,000
10,000,000 South Carolina State Public Service Authority
Revenue Bonds, Santee-Cooper Project, Series D,
(MBIA), 6.625%, 07/01/2031 (Prerefunded
07/01/2002)........................................ 11,220,800
------------
33,892,200
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 10.80%
FIRST NATIONAL BANK OF CHICAGO
------------------------------
6,900,000 Illinois Health Facilities Authority Revenue Bonds,
Evangelical Hospitals Corp., Series A,
4.450%, 01/01/2016+................................ 6,900,000
FUJI BANK
---------
10,000,000 Illinois Health Facilities Authority, Healthcorp
Affiliates, Series A, 4.500%, 11/01/2015+.......... 10,000,000
SANWA BANK
----------
10,000,000 Indiana Health Facilities Financing Authority, St.
Anthony's Medical Center Project Revenue Bonds,
4.500%, 12/01/2014+................................ 10,000,000
------------
26,900,000
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
INTERMEDIATE-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<C> <S> <C>
OTHER INVESTMENTS -- 0.76%
1,395,600 Dreyfus Tax-Exempt Cash Management Fund............. $ 1,395,600
500,000 Shearson Tax-Exempt Municipal Fund.................. 500,000
------------
1,895,600
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $234,898,760*).................... 98.95% $246,532,400
OTHER ASSETS & LIABILITIES (NET).......................... 1.05 2,621,656
------ ------------
NET ASSETS................................................ 100.00% $249,154,056
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
MBIA--Municipal Bond Insurance Assoc.
Note:
These municipal securities meet the three highest ratings assigned by Moody's
Investors Services, Inc. or Standard and Poor's Corporation or, where not
rated, are determined by the Investment Adviser, under the supervision of the
Board of Directors, to be of comparable quality at the time of purchase to
rated instruments that may be acquired by the Fund.
At September 30, 1995, approximately 24% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, which the Fund relies on.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 1995, approximately 12% of the net assets are invested in
New Jersey municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
16
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 68.71%
$3,825,000 Metropolitan Transportation Authority of New York,
Commuter Facilities Revenue Bonds, Series A, (MBIA),
7.000%, 07/01/2006.................................. $ 4,437,765
4,000,000 Municipal Assistance Corp., City of New York, Series
C, (AMBAC), 5.000%, 07/01/2006...................... 3,976,680
2,500,000 Municipal Assistance Corp., City of New York, Series
D, (AMBAC), 5.250%, 07/01/2002...................... 2,587,375
3,900,000 Nassau County, New York, Combined Sewer Districts
Refunding General Obligation Bonds, Series G,
(MBIA), 5.100%, 01/15/2003.......................... 4,004,832
3,500,000 New York State Dormitory Authority, City University
System Revenue Bonds, Series A, (FGIC),
5.600%, 07/01/2004.................................. 3,705,660
4,000,000 New York State Dormitory Authority, Columbia
University Refunding Revenue Bonds, Series A,
4.500%, 07/01/2005.................................. 3,910,160
7,500,000 New York State Environmental Facilities Corp.,
Pollution Control Revenue Bonds, State Water
Revolving Fund, Series A, 7.250%, 06/15/2010........ 8,445,750
2,500,000 New York State Housing Finance Agency Special
Obligation Bonds, New York City Health Facilities,
Series A, 6.900%, 05/01/2003........................ 2,856,425
4,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A, 5.400%, 04/01/2005......... 4,110,720
3,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series B, 7.500%, 04/01/2020......... 3,483,150
4,000,000 New York State Power Authority Revenue and General
Purpose Bonds, Series CC, 5.000%, 01/01/2008........ 3,889,000
4,000,000 New York State Refunding General Obligation Bonds,
Series B, 5.500%, 08/15/2006........................ 4,132,080
4,000,000 New York State Thruway Authority General Revenue
Bonds, Series C, (FGIC), 5.400%, 01/01/2005......... 4,141,040
4,000,000 Puerto Rico Telephone Authority Revenue Bonds,
(MBIA), 5.250%, 01/01/2005.......................... 4,117,880
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$5,000,000 Puerto Rico Telephone Authority Revenue Bonds,
Reserve 1, (AMBAC), 5.050%, 01/01/2004............... $ 5,101,100
3,000,000 Triborough Bridge & Tunnel Authority, New York,
Revenue Bonds, Series T, 6.000%, 01/01/2001.......... 3,209,730
-----------
66,109,347
-----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 18.07%
4,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer Systems Revenue Bonds,
Series C, 7.750%, 06/15/2020......................... 4,696,680
4,000,000 New York State Dormitory Authority, City University
System Revenue Bonds, Series A, 7.625%, 07/01/2020... 4,613,760
3,000,000 New York State Dormitory Authority, State University
Refunding Revenue Bonds, Series A, 7.250%,
05/15/2018 (Prerefunded 05/15/02).................... 3,495,780
4,000,000 New York State Urban Development Revenue Bonds,
Correctional Facilities Project, Series B,
7.750%, 01/01/2014 (Prerefunded 01/01/00)............ 4,582,640
-----------
17,388,860
-----------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 8.32%
INDUSTRIAL BANK OF JAPAN
------------------------
4,000,000 New York City, New York, General Obligation Bonds,
Subseries E2, 4.850%, 08/01/2021+.................... 4,000,000
SWISS BANK
----------
2,500,000 New York City, New York, Industrial Development
Agency, Civic Facility Revenue Bonds, National
Audubon Society Project, 4.850%, 12/01/2014+......... 2,500,000
1,500,000 New York City, New York, Trust for Cultural
Resources, Revenue Bonds, Soloman R. Guggenheim,
Series B, 4.850%, 12/01/2015+........................ 1,500,000
-----------
8,000,000
-----------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<C> <S> <C>
OTHER INVESTMENTS -- 1.91%
1,840,500 Shearson New York Tax-Exempt Money Fund.............. $ 1,840,500
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $90,923,123*)....................... 97.01% $93,338,707
OTHER ASSETS & LIABILITIES (NET)............................ 2.99 2,876,855
------ -----------
NET ASSETS.................................................. 100.00% $96,215,562
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
AMBAC--American Municipal Bond Assurance Corp.
FGIC --Financial Guaranty Insurance Corp.
MBIA --Municipal Bond Insurance Assoc.
Note:
These municipal securities meet the three highest rating categories assigned
by Moody's Investors Services, Inc. or Standard and Poor's Corporation or,
where not rated, are determined by the Investment Adviser, under the
supervision of the Board of Directors, to be of comparable quality at the
time of purchase to rated instruments that may be acquired by the Fund.
At September 30, 1995, approximately 26% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, which the Fund relies on.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 1995, approximately 86% of the net assets are invested in
New York municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
18
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
LONG-TERM INTERMEDIATE-TERM TAX-EXEMPT FUND (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 87.23%
$ 4,000,000 Austin, Texas, Combined Utility Systems Refunding
Revenue Bonds, Series A, (MBIA), 5.750%,
11/15/2014......................................... $ 3,922,440
4,000,000 Fulton County, Georgia, School District General
Obligation Bonds, 5.625%, 01/01/2021............... 3,858,560
20,000,000 Illinois State General Obligation Bonds,
5.750%, 07/01/2020................................. 19,457,800
4,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series A,
5.500%, 07/01/2020................................. 3,728,800
4,000,000 Maryland State Community Development
Administration, Department of Housing & Community
Development Refunding Revenue Bonds, Single Family
Project, 1st Series, 5.800%, 04/01/2009............ 4,025,000
4,000,000 Massachusetts State General Obligation Bonds,
Series C, 5.625%, 08/01/2013....................... 3,946,480
4,000,000 Michigan State Trunk Line Fund Refunding Revenue
Bonds, Series A, 5.500%, 10/01/2021................ 3,728,360
4,000,000 New Jersey State Transportation Trust Fund
Authority Refunding Revenue Bonds, Series A,
5.250%, 06/15/2014................................. 3,776,600
4,000,000 New York State Medical Care Facilities Finance
Agency Refunding Revenue Bonds, New York Hospital,
FHA Insured, Series A, (AMBAC), 5.500%,
08/15/2024......................................... 3,701,080
4,000,000 Orlando, Florida, Utilities Commission, Water &
Electric Revenue Bonds, Series A,
5.250%, 10/01/2023................................. 3,655,960
4,000,000 Orlando & Orange County Expressway Authority
Refunding Revenue Bonds, (AMBAC), 5.250%,
07/01/2012......................................... 3,827,800
4,000,000 San Antonio, Texas, Electric & Gas Refunding
Revenue Bonds, 5.000%, 02/01/2014.................. 3,612,040
4,000,000 Texas Water Development Board Revenue Bonds, State
Revolving Fund, 5.250%, 07/15/2015................. 3,715,960
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$4,000,000 Valdez, Alaska, Marine Terminal Refunding Revenue
Bonds, BP Pipeline, Inc. Project, Series B, 5.500%,
10/01/2028.......................................... $ 3,639,680
4,000,000 Washington State General Obligation Bonds, Series A,
5.750%, 09/01/2019.................................. 3,908,360
4,000,000 Wisconsin State Transportation Refunding Revenue
Bonds, Series B, 5.500%, 07/01/2022................. 3,785,640
-----------
76,290,560
-----------
<CAPTION>
SHARES
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 1.17%
1,021,600 Shearson Tax-Exempt Municipal Fund.................. 1,021,600
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $75,172,100*)....................... 88.40% $77,312,160
OTHER ASSETS & LIABILITIES (NET)............................ 11.60 10,145,488
------ -----------
NET ASSETS.................................................. 100.00% $87,457,648
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
AMBAC--American Municipal Bond Assurance Corp.
MBIA--Municipal Bond Insurance Assoc.
Note:
These municipal securities meet the three highest ratings assigned by Moody's
Investors Services, Inc. or Standard and Poor's Corporation or, where not
rated, are determined by the Investment Adviser, under the supervision of the
Board of Directors, to be of comparable quality at the time of purchase to
rated instruments that may be acquired by the Fund.
At September 30, 1995, approximately 22% of the net assets are invested in
Illinois municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
19
<PAGE>
UST MASTER TAX-EXEMPT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
UST Master Tax-Exempt Funds, Inc. ("Master Tax-Exempt Fund") was incorporated
under the laws of the State of Maryland on August 8, 1984 and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
Master Tax-Exempt Fund currently offers shares in five managed investment
portfolios, each having its own investment objectives and policies. The
financial statements for UST Master Funds, Inc. ("Master Fund") are presented
separately.
With regard to Short-Term Tax-Exempt Fund, it is Master Tax-Exempt Fund's
policy, to the extent possible, to maintain a continuous net asset value per
share of $1.00. The Portfolio has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so.
However, there can be no assurance that the net asset value per share of the
Portfolio will not vary.
(A) PORTFOLIO VALUATION:
Short-Term Tax-Exempt Fund: Securities are valued at amortized cost.
Amortized cost valuation involves valuing an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of
any discount or premium.
Short-Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt Fund,
New York Intermediate-Term Tax-Exempt Fund and Long-Term Tax-Exempt
Fund: Securities are valued each business day as of the close of the New
York Stock Exchange after consultation with an independent pricing service
(the "Service"). When in the judgement of the Service, quoted bid prices for
securities are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and ask
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Short-term debt instruments with remaining maturities
of 60 days or less, and variable rate demand notes and securities with put
options exercisable within one year, are valued at amortized cost, which
approximates market value. Securities and other assets for which market
quotations are not readily available are valued at fair value pursuant to
guidelines adopted by Master Tax-Exempt Fund's Board of Directors.
The net asset value of the shares in Short-Term Tax-Exempt Securities
Fund, Intermediate-Term Tax-Exempt Fund, New York Intermediate-Term Tax-
Exempt Fund, and Long-Term Tax-Exempt Fund will fluctuate as the market
values of their portfolio securities change in response to changing market
rates of interest and other factors.
(B) SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Security transactions are recorded on a trade date basis. Realized gains
and losses on investments sold are recorded on the basis of identified cost.
Interest income, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is earned from settlement date and is
recorded on the accrual basis.
20
<PAGE>
(C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Short-Term Tax-Exempt Fund: Net investment income dividends are declared
daily and paid monthly. Net realized capital gains, unless offset by any
available capital loss carryforward, are distributed to shareholders
annually or more frequently to maintain a net asset value of $1.00 per
share.
Short-Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt Fund,
New York Intermediate-Term Tax-Exempt Fund and Long-Term Tax-Exempt
Fund: Dividends from net investment income are declared daily and paid
monthly. Net realized capital gains, unless offset by any available capital
loss carryforward, are distributed to shareholders at least annually.
Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
deferral of losses on wash sales and post-October losses.
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
(D) FEDERAL TAXES:
It is the policy of Master Tax-Exempt Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of the
Internal Revenue Code applicable to regulated investment companies, and by
distributing substantially all of its taxable earnings to its shareholders.
At March 31, 1995, the following Portfolios had approximate capital loss
carryforwards for Federal tax purposes available to offset future net
capital gains as follows:
<TABLE>
<CAPTION>
EXPIRATION DATE MARCH 31,
--------------------------------------------
1996 2001 2002 2003 TOTAL
------ ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Short-Term Tax-Exempt Fund.... $4,000 $22,000 $31,000 -- $ 57,000
Short-Term Tax-Exempt Securi-
ties Fund.................... -- -- -- $ 658,000 658,000
Intermediate-Term Tax-Exempt
Fund......................... -- -- -- 8,425,000 8,425,000
New York Intermediate-Term
Tax-Exempt Fund.............. -- -- -- 2,617,000 2,617,000
Long-Term Tax-Exempt Fund..... -- -- -- 833,000 833,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gains
distributions will be made.
Net capital losses incurred after October 31 and within the taxable year
are deemed to arise on the first business day of a Portfolio's next taxable
year. Short-Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt
Fund, New York Intermediate-Term Tax-Exempt Fund and Long-Term Tax-Exempt
Fund incurred, and elected to defer, net capital losses of approximately
$869,000, $2,722,000, $824,000 and $1,220,000 for the year ended March 31,
1995, respectively.
21
<PAGE>
At September 30, 1995, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION (DEPRECIATION) APPRECIATION
------------ -------------- ------------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities
Fund............................. $ 690,817 $ -- $ 690,817
Intermediate-Term Tax-Exempt
Fund............................. 11,859,531 (225,891) 11,633,640
New York Intermediate-Term Tax-
Exempt Fund...................... 2,444,944 (29,360) 2,415,584
Long-Term Tax-Exempt Fund......... 2,569,120 (429,060) 2,140,060
</TABLE>
(E) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS
United States Trust Company of New York ("U.S. Trust") serves as the
investment adviser to Master Tax-Exempt Fund. For the services provided
pursuant to the Investment Advisory Agreements, U.S. Trust is entitled to
receive a fee, computed daily and paid monthly, at the annual rates of .25% of
the average daily net assets of Short-Term Tax-Exempt Fund, .30% of the average
daily net assets of Short-Term Tax-Exempt Securities Fund, .35% of the average
daily net assets of Intermediate-Term Tax-Exempt Fund and .50% of the average
daily net assets of New York Intermediate-Term Tax-Exempt Fund and Long-Term
Tax-Exempt Fund.
Effective September 1, 1995, Chase Global Funds Services Company ("CGFSC"),
formerly, Mutual Funds Service Company ("MFSC"), and Federated Administrative
Services ("Administrators") provide administrative services to Master Tax-
Exempt Fund. For the services provided to the Portfolios, the Administrators
are entitled jointly to annual fees, computed daily and paid monthly, based on
the combined aggregate average daily net assets of Master Tax-Exempt Fund and
Master Fund (excluding Master Fund's international equity portfolios), an
affiliated investment company, as follows: .200% of the first $200 million,
.175% of the next $200 million, and .150% over $400 million. Administration
fees payable by each Portfolio of the two investment companies are determined
in proportion to the relative average daily net assets of the respective
Portfolios for the period paid. After such allocation has been made, the
Administrators are entitled jointly to an annual minimum fee of $18,000 and
$39,000 for the first and second full years, respectively, after they commenced
operations, and $50,000 for each full year thereafter from Short-Term Tax-
Exempt Securities Fund. Effective August 1, 1995 through August 31, 1995, MFSC
and Federated Administrative Services served as administrators to Master Tax-
Exempt Fund and prior to August 1, 1995, MFSC and Concord Holding Company
served as administrators to Master Tax-Exempt Fund all under the same terms,
conditions and fees as stated above. For the period ended September 30, 1995,
administration fees charged by MFSC were as follows:
<TABLE>
<S> <C>
Short-Term Tax-Exempt Fund............................................. $475,645
Short-Term Tax-Exempt Securities Fund.................................. 28,638
Intermediate-Term Tax-Exempt Fund...................................... 146,288
New York Intermediate-Term Tax-Exempt Fund............................. 55,112
Long-Term Tax-Exempt Fund.............................................. 49,454
</TABLE>
22
<PAGE>
From time to time, as they may deem appropriate in their sole discretion, or
pursuant to applicable state expense limitations, U.S. Trust and the
Administrators may undertake to waive a portion or all of the fees payable to
them and also may reimburse the Portfolios for a portion of other expenses.
Until further notice to Master Tax-Exempt Fund, U.S. Trust and/or the
Administrators intend to voluntarily waive fees and reimburse expenses to the
extent necessary for Short-Term Tax-Exempt Fund and Short-Term Tax-Exempt
Securities Fund to maintain an annual expense ratio of not more than .60%.
Master Tax-Exempt Fund has also entered into shareholder servicing agreements
with various service organizations (which may include affiliates of U.S. Trust)
requiring them to provide administrative support services to their customers
owning shares of the Portfolios. As a consideration for the administrative
services provided by each service organization to its customers, each Portfolio
will pay the service organizations an administrative service fee at the annual
rate of up to .40% of the average daily net asset value of its shares held by
the service organizations' customers. Such services may include assisting in
processing purchase, exchange and redemption requests; transmitting and
receiving funds in connection with customer orders to purchase, exchange or
redeem shares; and providing periodic statements. Until further notice to
Master Tax-Exempt Fund, U.S. Trust and the Administrators have voluntarily
agreed to waive investment advisory and administration fees payable by each
Portfolio in an amount equal to the administrative service fees payable by such
Portfolio. For the period ended September 30, 1995, U.S. Trust and the
Administrators waived investment advisory and administration fees in amounts
equal to the administrative service fees for the Portfolios as set forth below:
<TABLE>
<CAPTION>
U.S. TRUST ADMINISTRATORS
---------- --------------
<S> <C> <C>
Short-Term Tax-Exempt Fund............................ $145,296 $ --
Short-Term Tax-Exempt Securities Fund................. 10,869 166
Intermediate-Term Tax-Exempt Fund..................... 52,923 691
New York Intermediate-Term Tax-Exempt Fund............ 10,628 167
Long-Term Tax-Exempt Fund............................. 21,766 1,270
</TABLE>
Effective August 1, 1995, Edgewood Services, Inc. (the "Distributor"), a
wholly-owned subsidiary of Federated Investors, replaced UST Distributors, Inc.
as the sponsor and distributor of the Master Tax-Exempt Funds. Certain sales of
Master Tax-Exempt Fund's shares are subject to a maximum sales charge of 4 1/2%
of the offering price. Shares of each Portfolio are sold on a continuous basis
by the Distributor.
Each Director of Master Tax-Exempt Fund receives an annual fee of $9,000,
plus a meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000. No person who is an officer, director or employee of U.S.
Trust or the Administrators, or of any parent or subsidiary thereof, who serves
as an officer, director or employee of Master Tax-Exempt Fund receives any
compensation from Master Tax-Exempt Fund.
U.S. Trust serves as the shareholder servicing and dividend disbursing agent
to Master Tax-Exempt Fund and effective September 1, 1995, CGFSC serves as the
sub-shareholder servicing agent. Prior to September 1, 1995, MFSC served as the
sub-shareholder servicing agent. For the period ended September 30, 1995,
shareholder servicing fees charged by U.S. Trust and MFSC were as follows:
<TABLE>
<S> <C>
Short-Term Tax-Exempt Fund............................................. $11,707
Short-Term Tax-Exempt Securities Fund.................................. 3,754
Intermediate-Term Tax-Exempt Fund...................................... 10,329
New York Intermediate-Term Tax-Exempt Fund............................. 4,313
Long-Term Tax-Exempt Fund.............................................. 11,311
</TABLE>
23
<PAGE>
Effective September 1, 1995, the Chase Manhattan Bank, N.A. ("Chase") serves
as custodian of Master Tax-Exempt Fund's assets. Prior to September 1, 1995,
U.S. Trust served as the custodian of Master Tax-Exempt Fund's assets. For the
period ended September 30, 1995, custody fees charged by U.S. Trust were as
follows:
<TABLE>
<S> <C>
Short-Term Tax-Exempt Fund............................................. $175,440
Short-Term Tax-Exempt Securities Fund.................................. 6,851
Intermediate-Term Tax-Exempt Fund...................................... 52,322
New York Intermediate-Term Tax-Exempt Fund............................. 20,107
Long-Term Tax-Exempt Fund.............................................. 18,621
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales and maturities of securities, excluding short-term
investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Short-Term Tax-Exempt Securities Fund.................. $29,526,576 $26,557,752
Intermediate-Term Tax-Exempt Fund...................... 68,455,300 99,770,621
New York Intermediate-Term Tax-Exempt Fund............. 77,664,873 79,912,720
Long-Term Tax-Exempt Fund.............................. 92,343,200 85,077,200
</TABLE>
4. COMMON STOCK:
Master Tax-Exempt Fund currently offers five classes of shares, each
representing interests in one of five separate Portfolios. Authorized capital
for each Portfolio is as follows: 1,500 million shares of Short-Term Tax-Exempt
Fund and 500 million shares each of Short-Term Tax-Exempt Securities Fund,
Intermediate-Term Tax-Exempt Fund, New York Intermediate-Term Tax-Exempt Fund
and Long-Term Tax-Exempt Fund.
Each share has a par value of $.001 and represents an equal proportionate
interest in the particular Portfolio with other shares of the same Portfolio,
and is entitled to such dividends and distributions of taxable and tax-exempt
earnings on the assets belonging to such Portfolio as are declared at the
discretion of Master Tax-Exempt Fund's Board of Directors. Since Short-Term
Tax-Exempt Fund has sold, reinvested and redeemed shares only at a constant net
asset value of $1.00 per share, the number of shares represented by such sales,
reinvestments and redemptions is the same as the amount shown below for such
transactions.
<TABLE>
<CAPTION>
SHORT-TERM TAX-EXEMPT FUND
--------------------------------
PERIOD ENDED YEAR ENDED
09/30/95 03/31/95
--------------- ---------------
<S> <C> <C>
Sold.......................................... $ 1,562,772,228 $ 3,360,809,326
Issued as reinvestment of dividends........... 728,990 1,153,926
Redeemed...................................... (1,586,956,161) (3,241,661,217)
--------------- ---------------
Net Increase/(Decrease)....................... $ (23,454,943) $ 120,302,035
=============== ===============
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM TAX-EXEMPT SECURITIES FUND
----------------------------------------------------
PERIOD ENDED YEAR ENDED
09/30/95 03/31/95
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 2,749,014 $ 19,306,482 5,191,784 $ 36,086,132
Issued as reinvestment
of dividends........... 13,744 96,502 36,054 250,323
Redeemed................ (2,766,926) (19,409,558) (6,560,697) (45,516,509)
---------- ------------ ----------- -------------
Net (Decrease).......... (4,168) $ (6,574) (1,332,859) $ (9,180,054)
========== ============ =========== =============
<CAPTION>
INTERMEDIATE-TERM TAX-EXEMPT FUND
----------------------------------------------------
PERIOD ENDED YEAR ENDED
09/30/95 03/31/95
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 3,933,458 $ 35,405,957 8,364,943 $ 71,548,913
Issued as reinvestment
of dividends........... 36,497 329,310 86,329 742,840
Redeemed................ (3,408,333) (30,813,432) (16,301,349) (139,097,191)
---------- ------------ ----------- -------------
Net
Increase/(Decrease).... 561,622 $ 4,921,835 (7,850,077) $ (66,805,438)
========== ============ =========== =============
<CAPTION>
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
----------------------------------------------------
PERIOD ENDED YEAR ENDED
09/30/95 03/31/95
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 2,215,984 $ 18,590,371 5,744,893 $ 45,807,741
Issued as reinvestment
of dividends........... 14,874 125,000 31,117 250,999
Redeemed................ (1,456,546) (12,235,254) (8,346,243) (66,576,830)
---------- ------------ ----------- -------------
Net
Increase/(Decrease).... 774,312 $ 6,480,117 (2,570,233) $ (20,518,090)
========== ============ =========== =============
<CAPTION>
LONG-TERM TAX-EXEMPT FUND
----------------------------------------------------
PERIOD ENDED YEAR ENDED
09/30/95 03/31/95
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 2,643,145 $ 24,921,338 6,687,768 $ 58,879,514
Issues in connection
with US Affinity
Acquisition (Note 6)... -- -- 217,206 2,050,770
Issued as reinvestment
of dividends........... 22,218 210,054 59,438 522,710
Redeemed................ (2,006,951) (18,993,708) (7,715,183) (67,394,609)
---------- ------------ ----------- -------------
Net
Increase/(Decrease).... 658,412 $ 6,137,684 (750,771) $ (5,941,615)
========== ============ =========== =============
</TABLE>
25
<PAGE>
5. ORGANIZATION COSTS:
Master Tax-Exempt Fund has borne all costs in connection with the initial
organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under Federal and state securities
regulations. All such costs are being amortized on the straight-line basis
over periods of five years from the dates on which each Portfolio commenced
operations.
6. ASSET ACQUISITION:
On March 10, 1995, the Long-Term Tax-Exempt Fund acquired certain assets of
$2,050,770 (excluding unamortized organization costs) from USAffinity Tax-Free
Municipal Fund in a tax-free exchange for 217,206 shares of the Long-Term Tax-
Exempt Fund.
USTEFXS995
26
