<PAGE>
[LOGO OF EXCELSIOR APPEARS HERE]
TAX-EXEMPT FIXED INCOME PORTFOLIOS
ANNUAL REPORT
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LETTER TO SHAREHOLDERS..................................................... 1
ADVISER'S FIXED INCOME MARKET REVIEW....................................... 2
ADVISER'S INVESTMENT REVIEWS
Short-Term Tax-Exempt Securities Fund.................................... 3
Intermediate-Term Tax-Exempt Fund........................................ 4
New York Intermediate-Term Tax-Exempt Fund............................... 5
Long-Term Tax-Exempt Fund................................................ 6
California Tax-Exempt Income Fund........................................ 7
STATEMENTS OF ASSETS AND LIABILITIES....................................... 8
STATEMENTS OF OPERATIONS................................................... 9
STATEMENTS OF CHANGES IN NET ASSETS........................................ 10
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................. 12
PORTFOLIOS OF INVESTMENTS
Tax-Exempt Money Fund.................................................... 14
Short-Term Tax-Exempt Securities Fund.................................... 19
Intermediate-Term Tax-Exempt Fund........................................ 21
New York Intermediate-Term Tax-Exempt Fund............................... 23
Long-Term Tax-Exempt Fund................................................ 25
California Tax-Exempt Income Fund........................................ 26
NOTES TO FINANCIAL STATEMENTS.............................................. 29
INDEPENDENT AUDITORS' REPORT............................................... 36
FEDERAL TAX INFORMATION.................................................... 37
</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:
. INITIAL PURCHASE AND PROSPECTUS INFORMATION AND SHAREHOLDER SERVICES 1-800-
446-1012
. CURRENT PRICE AND YIELD INFORMATION 1-800-233-9180
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and
expenses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc.
may be obtained by contacting the Funds at 1-800-446-1012
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are sponsored and
distributed by Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
EXCELSIOR 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 the annual report for Excelsior Tax-Exempt Funds,
Inc. The 1997 fiscal year was another year of growth for the fund complex,
highlighted by strong financial markets and new fund offerings which helped
push the assets of the funds over the $5 billion milestone.
In our on-going efforts to provide you with investment opportunities that
are best suited to meet your investment needs in the ever-evolving financial
marketplace, we continually evaluate the current Excelsior fund offerings. In
the coming year, we may make recommendations to you which we believe can
achieve this goal. These recommendations may include, among other things, the
establishment of new funds and possibly the consolidation of certain equity
funds. We will keep you apprised of these developments as our assessment of
these matters progresses.
The coming year promises to be both interesting and exciting. We are
cautiously optimistic regarding the domestic equity markets, international
equity markets continue to look attractive, and fiscal policy has been
effective in keeping inflation under control. With this in mind, I am
confident that the Excelsior fund family will continue to provide you with the
appropriate investment vehicles and dedicated service staff to help you meet
your investment objectives.
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
1
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S FIXED INCOME MARKET REVIEW
- -------------------------------------------------------------------------------
Interest rates continued to spiral higher during the fiscal first quarter.
The main culprit, once again, was the fear that economic growth would lead to
higher inflation, the bane of fixed-income securities. The upsweep in interest
rates had a negative impact on fixed-income security investment results.
Municipal issues continued to outperform Treasuries -- especially shorter
maturities. Municipal outperformance can be attributed to an overall lack of
supply. Selling was light, refundings were few, and many deals that were
scheduled were cancelled.
A surprisingly robust economy at the start of the second quarter continued
to worry the bond market. Market participants remained concerned that a strong
economy and tight labor market would eventually set the stage for higher wages
and inflation. As a result, the long bond quickly jumped over the 7% level
early in July. Still, despite relatively strong economic data through August,
much of the negative sentiment was offset by a stronger U.S. dollar and
continued foreign buying of U.S. securities. In addition, retail sales and
consumer spending remained soft, and the market continued to witness only
moderate inflation through September. As a result, the Federal Reserve chose
not to raise rates at its September meeting, and the long bond dropped below
7% by quarter end. In fact, interest rates ended the quarter just about where
they were at the start. Municipals, again, slightly outperformed the
government market.
From the end of the second quarter through November, longer-term interest
rates declined. The driving forces remained much the same as in the previous
quarter: moderate economic growth and inflation combined with good foreign
buying of U.S. securities pushed rates down. Specifically, low interest rates
in Japan, a strong U.S. dollar, and high real rates of return in the U.S.
encouraged Japanese investors to be big buyers of U.S. debt. In addition,
improving fundamentals caused domestic portfolio managers to extend the
maturities of their portfolios, and the reelection of President Clinton and
the return of a Republican majority to Congress seemed to promise stability on
the political front.
Unfortunately, perceptions regarding interest rates turned negative in early
December following remarks by Federal Reserve Chairman Alan Greenspan that
were interpreted by some as a prelude to a Federal Reserve interest rate hike;
both the stock and bond markets plummeted the next day. Concerns that the
Japanese might stop or slow their buying of U.S. debt also helped to push
rates higher. Still, apart from the three-month Treasury, where the yield
increased slightly during the quarter, yields on U.S. government securities
managed to finish the quarter lower. Municipal issues outperformed taxable
bonds, becoming richly priced vis-a-vis Treasuries short to intermediate term.
Given the tightness of spreads, attractive opportunities became increasingly
scarce.
During the fiscal fourth quarter, interest rates jumped higher across the
yield curve. The reasons? As usual, stronger-than-expected U.S. economy and
the consequent fear that tight labor markets would eventually lead to more
inflation. Once again, municipal bond yields rose less than Treasury yields
during the period due to generally strong demand and relatively low levels of
supply.
2
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
SHORT-TERM TAX-EXEMPT SECURITIES FUND
- -------------------------------------------------------------------------------
Fiscal year 1997 proved to be a difficult year for the short-end of the
municipal bond market. The municipal yield curve flattened with Treasuries as
market participants began to anticipate an increase in the Federal Funds rate.
The anticipated increase in the Federal Funds rate became a reality on March
25, 1997. For much of the year, investor demand for short-term municipals
remained steady primarily from insurance companies, individuals and cautious
investors limiting their maturities. Light dealer inventories and investor
demand contributed to the relative strength of the municipal market.
Throughout fiscal year 1997, we maintained a portfolio of high quality bonds
with laddered maturities ranging from one to five years. The average maturity
was decreased from three years (at the start of the fiscal year) to two and
one-half years at year-end. This strategy produced a total rate of return of
3.55%* for the twelve months ended March 31, 1997.
----------------------------------------------
Short-Term Tax-Exempt Securities Fund+
----------------------------------------------
Average Annual Total Return Ended on 3/31/97*
----------------------------------------------
1 year Since Inception (12/31/92)
----------------------------------------------
3.55% 3.91%
----------------------------------------------
<TABLE>
<CAPTION>
Short-Term Tax-Exempt Securties Fund Short-Term Tax-Exempt Securties Fund Lehman Brothers 3 Year
(reflects prior maximum sales charge)++ (exclusive of sales charge) Municipal Bond Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 9,708 10,165 10,203
9/30/93 9,992 10,463 10,503
3/31/94 9,955 10,425 10,480
9/30/94 10,093 10,569 10,690
3/31/95 10,299 10,784 11,000
9/30/95 10,667 11,170 11,470
3/31/96 10,857 11,369 11,710
3/31/97 11,242 11,773 12,210
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RETURNS
AND PRINCIPAL VALUES WILL VARY AND SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN THEIR ORIGINAL COST. A PORTION OF THE FUND'S INCOME MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND SOME INVESTORS MAY BE SUBJECT TO
CERTAIN STATE AND LOCAL TAXES.
The above illustration compares a $10,000 investment made in Short-Term Tax-
Exempt Securities Fund and a broad-based index since 12/31/92 (inception
date). All dividends and capital gain distributions are reinvested.
The Fund's performance takes into account fees and expenses. The Lehman
Brothers 3 Year Municipal Bond Index is an unmanaged total return performance
benchmark for investment-grade tax exempt bonds maturing in three years,
calculated by using municipal bonds selected as representative of the market.
The Index does not take into account charges, fees and other expenses. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Lehman Brothers.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
3
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
Throughout the year, the Fund remained fully invested and well diversified,
utilizing high-quality "essential-service" revenue bonds as well as state
general obligation bonds.
Fund performance was hampered during the first fiscal quarter, as interest
rates rose moderately due to investor concerns that stronger-than-expected
economic growth in tandem with a dwindling labor force would spark inflation.
During the second fiscal quarter, in the belief that such concerns were
misplaced, given moderate economic growth and still-subdued inflation, we
restructured the Fund slightly--lowering coupons and lengthening maturities.
As interest rates declined through the second and third quarters, the Fund
performed exceptionally well. Concerns regarding economic growth and inflation
flared once again in the fourth fiscal quarter, bringing with them an
unexpected upturn in interest rates. In response, we slightly decreased the
average maturity of the Fund's holdings to enhance performance.
With a total return of 4.58%* the Fund completed the fiscal year ended March
31, 1997, ranking number 45 among 139 funds in the Lipper Intermediate
Municipal Debt Fund category.** The Fund's long term performance has been
excellent, ranking sixth and fifth among 35 and 19 funds, respectively, in the
same Lipper category for the five and ten years ended March 31, 1997, with
cumulative total returns of 38.00%* and 93.44%,* respectively.
-----------------------------------------------------------
Intermediate-Term Tax-Exempt Fund+
-----------------------------------------------------------
Average Annual Total Return Ended on 3/31/97*
-----------------------------------------------------------
1 year 5 years 10 years
-----------------------------------------------------------
4.58% 6.65% 6.81%
-----------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate-Term Tax-Exempt Fund Intermediate-Term Tax-Exempt Fund Lehman Brothers 5 Year
(reflects prior maximum sales charge)++ (exclusive of sales charge) Municipal G.O. Bond Index***
<S> <C> <C> <C>
3/31/87 9,550 10,000 10,000
3/31/88 10,062 10,537 10,390
3/31/89 10,624 11,125 10,590
3/31/90 11,415 11,953 11,600
3/31/91 12,348 12,930 12,650
3/31/92 13,387 14,018 13,760
3/31/93 14,953 15,658 15,170
3/31/94 15,339 16,062 15,550
3/31/95 16,311 17,080 16,480
3/31/96 17,665 18,498 17,730
3/31/97 18,474 19,344 18,470
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RETURNS
AND PRINCIPAL VALUES WILL VARY AND SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN THEIR ORIGINAL COST. A PORTION OF THE FUND'S INCOME MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND SOME INVESTORS MAY BE SUBJECT TO
CERTAIN STATE AND LOCAL TAXES.
The above illustration compares a $10,000 investment made in Intermediate-
Term Tax-Exempt Securities Fund and a broad-based index over the past ten
fiscal years. All dividends and capital gain distributions are reinvested.
The Fund's performance takes into account fees and expenses. The Lehman
Brothers 5 year Municipal G.O. Bond Index is an unmanaged total return
performance benchmark for investment-grade tax-exempt government obligation
bonds maturing in five years, calculated by using municipal bonds selected as
representative of the market. The Index does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Lipper Analytical Services, Inc.--Lipper is an independent mutual
fund performance monitor.
*** Source: Lehman Brothers.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
4
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
Fiscal year 1997 proved to be a very good year for the New York
Intermediate-Term Tax-Exempt Fund. The Fund began the year essentially fully
invested in high quality New York bonds and a modest amount of high quality
non-New York issues. As strong economic data was released during the second
fiscal quarter additional cash was raised in order to become more defensively
positioned for the possibility of an interest rate hike by the Federal
Reserve. In the third fiscal quarter the same strategy prevailed, with cash
equivalents increasing to 10% and the maturity structure slightly shorter than
it was at the beginning of the year. This served the Fund well because in the
final fiscal quarter interest rates were raised by the Federal Reserve. Our
strategy worked well producing a total rate of return of 4.46%* for the twelve
months ended March 31, 1997. For the five year period ended March 31, 1997,
the Fund produced a cumulative return of 31.67%.*
----------------------------------------------
New York Intermediate-Term Tax-Exempt Fund+
----------------------------------------------
Average Annual Total Return Ended on 3/31/97*
----------------------------------------------
1 year 5 years Since Inception (5/31/90)
----------------------------------------------
4.46% 5.65% 6.32%
----------------------------------------------
<TABLE>
<CAPTION>
New York Intermediate-Term New York Intermediate-Term
Tax-Exempt Fund Tax-Exempt Fund Lehman Brothers 5 Year
(reflects prior maximum sales charge)++ (exclusive of sales charge) Municipal Bond Index**
<S> <C> <C> <C>
5/31/90 9,550 10,000 10,000
3/31/91 10,267 10,754 10,797
3/31/92 11,028 11,552 11,775
3/31/93 12,050 12,623 12,997
3/31/94 12,399 12,988 13,660
3/31/95 13,019 13,638 14,150
3/31/96 13,900 14,561 15,180
3/31/97 14,520 15,210 15,810
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RETURNS
AND PRINCIPAL VALUES WILL VARY AND SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN THEIR ORIGINAL COST. A PORTION OF THE FUND'S INCOME MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX.
The above illustration compares a $10,000 investment made in New York
Intermediate-Term Tax-Exempt Fund and a broad-based index since 5/31/90
(inception date). All dividends and capital gain distributions are reinvested.
The Fund invests primarily in New York municipal securities and its
performance takes into account fees and expenses. The Lehman Brothers 5 Year
Municipal Bond Index is an unmanaged total return performance benchmark for
investment-grade tax exempt bonds maturing in five years, calculated by using
municipal bonds selected as representative of the market. The Index does not
take into account charges, fees and other expenses. Further information
relating to Fund performance is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Lehman Brothers.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
5
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
LONG-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
The Fund began the year fully invested in a diverse number of high quality
"essential service" revenue bonds and State general obligation bonds. During
the first fiscal quarter, interest rates rose moderately as the markets were
concerned about strong economic growth--particularly the non-farm payroll
numbers. The markets feared that stronger growth and a dwindling labor force
would cause inflation and interest rates to rise. As a result, the Fund
performed below average during the first quarter. Recognizing that this was an
aberration given otherwise moderate economic growth and inflation, the Fund was
restructured slightly with lower coupons and longer maturity issues during the
second quarter. As interest rates declined for the balance of 1996, the Fund
performed exceptionally well.
The final fiscal quarter saw interest rates rise unexpectedly as market
participants once again anticipated stronger economic growth and inflation.
Since the Fund remained relatively fully invested from the previous quarter,
its performance was considerably below average during the final quarter.
However, with a total return of 5.47%*, the Fund completed a good fiscal year
ended March 31, 1997, ranking 60 out of 228 funds in the Lipper General
Municipal Debt Fund category.** The Fund's long term performance has been
excellent, ranking first among 103 and 65 funds, respectively, in the same
Lipper category for the five and ten years ended March 31, 1997, with
cumulative total returns of 52.51%* and 146.20%*, respectively.
-----------------------------------------------------------
Long-Term Tax-Exempt Fund+
-----------------------------------------------------------
Average Annual Total Return Ended on 3/31/97*
-----------------------------------------------------------
1 year 5 years 10 years
-----------------------------------------------------------
5.47% 8.80% 9.42%
-----------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Tax-Exempt Fund Long-Term Tax-Exempt Fund Lehman Brothers Current
(reflects prior maximum sales charge)++ (exclusive of sales charge) Municipal Bond Index***
<S> <C> <C> <C>
3/31/87 9,550 10,000 10,000
3/31/88 10,520 11,015 10,236
3/31/89 11,586 12,132 10,929
3/31/90 12,823 13,427 11,998
3/31/91 14,066 14,729 13,141
3/31/92 15,417 16,143 14,441
3/31/93 17,937 18,782 16,329
3/31/94 18,364 19,230 16,559
3/31/95 20,386 21,347 17,577
3/31/96 22,293 23,344 18,896
3/31/97 23,462 24,568 19,854
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RETURNS
AND PRINCIPAL VALUES WILL VARY AND SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN THEIR ORIGINAL COST. A PORTION OF THE FUND'S INCOME MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND SOME INVESTORS MAY BE SUBJECT TO
CERTAIN STATE AND LOCAL TAXES.
The above illustration compares a $10,000 investment made in Long-Term Tax-
Exempt Fund and a broad-based index over the past ten fiscal years. All
dividends and capital gain distributions are reinvested.
The Fund's performance takes into account fees and expenses. The Lehman
Brothers Current Municipal Bond Index is an unmanaged total return performance
benchmark for the long-term, investment-grade tax exempt bond market,
calculated by using municipal bonds selected as representative of the market.
The Index does not take into account charges, fees and other expenses. Further,
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Lipper Analytical Services, Inc.--Lipper is an independent mutual
fund performance monitor.
*** Source: Lehman Brothers.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
6
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
CALIFORNIA TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
The six months following the inception of the Fund proved a difficult period
for municipal bonds. After declining somewhat late in 1996, interest rates
rose sharply during the first quarter of 1997. Concerns over possible
inflation and imminent rate hikes by the Fed sidelined many investors and
drove bond prices lower. California municipals were supported somewhat through
the quarter by a relative lack of supply, but gave ground quickly when the Fed
raised short term rates on March 25. We built the portfolio around current
coupon issues in the 4-7 year range, which offered better value than did
shorter maturities, with a portfolio average maturity between five and six
years. Our focus was on high grade general obligation and essential purpose
revenue bonds, as well as on pre-refunded and insured issues. In general we
avoided credits which we felt might be vulnerable either to the passage in
November 1996 of California Proposition 218, the most recent tax limitation
initiative, or to deregulatory trends in the public power sector. For the six
month period October 1, 1996 (inception date) through March 31, 1997 the Fund
produced a total rate of return of 1.05%*.
----------------------------------------------
California Tax-Exempt Income Fund+
----------------------------------------------
Average Annual Total Return Ended on 3/31/97*
----------------------------------------------
Since Inception (10/1/96)
----------------------------------------------
1.05%
----------------------------------------------
<TABLE>
<CAPTION>
California Tax-Exempt California Tax-Exempt
Income Fund Income Fund Merrill Lynch 3-7 Year
(reflects prior maximum sales charge)++ (exclusive of sales charge) Municipal Index**
<S> <C> <C> <C>
10/1/96 9,550 10,000 10,000
10/31/96 9,575 10,026 10,090
11/30/96 9,670 10,126 10,210
12/31/96 9,672 10,128 10,200
1/31/97 9,674 10,130 10,220
2/28/97 9,715 10,173 10,290
3/31/97 9,651 10,105 10,190
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RETURNS
AND PRINCIPAL VALUES WILL VARY AND SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN THEIR ORIGINAL COST. A PORTION OF THE FUND'S INCOME MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX.
The above illustration compares a $10,000 investment made in California Tax-
Exempt Income Fund and a broad-based index since 10/1/96 (inception date). All
dividends and capital gain distributions are reinvested.
The Fund invests primarily in California municipal securities and its
performance takes into account fees and expenses. The Merrill Lynch 3-7 Year
Municipal Index is a widely-accepted unmanaged market-weighted index comprised
of fixed-rate, coupon-bearing bonds issued within five years of the most
recent month-end with greater than $50 million principle amount having a
Moody's investment grade rating and maturities of three to seven years. The
Index does not take into account charges, fees and other expenses. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Merrill Lynch.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
7
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1997
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE- CALIFORNIA
TAX-EXEMPT TAX-EXEMPT TERM TERM LONG-TERM TAX-EXEMPT
MONEY SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT INCOME
FUND FUND FUND FUND FUND FUND
-------------- ----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost--
see accompanying
portfolios............ $1,066,851,282 $40,681,742 $235,116,148 $ 99,884,721 $ 84,752,090 $13,677,573
============== =========== ============ ============ ============ ===========
Investments, at value
(Note 1).............. $1,066,851,282 $40,697,224 $241,638,300 $101,066,544 $ 86,124,950 $13,572,166
Cash................... -- 24 35 34 49 1
Interest receivable.... 6,251,932 498,130 3,463,481 1,479,008 1,328,420 190,920
Receivable for
investments sold...... -- -- -- -- 36,969,339 --
Receivable for fund
shares sold........... -- 53,794 168,772 174,337 54,990 91,302
Receivable due from
investment advisor.... -- -- -- -- -- 14,587
Prepaid expenses....... 36,217 1,287 8,934 3,545 4,013 296
Unamortized
organization costs
(Note 5).............. -- 3,171 -- -- -- 28,325
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL ASSETS........... 1,073,139,431 41,253,630 245,279,522 102,723,468 124,481,761 13,897,597
LIABILITIES:
Payable for dividends
declared.............. 2,710,897 117,990 867,209 348,773 416,720 38,336
Payable for fund shares
redeemed.............. -- 25,963 193,244 783 187,173 3,996
Payable for investments
purchased............. -- -- -- -- 15,818,491 592,682
Investment advisory
fees payable (Note
2).................... 181,110 9,151 65,350 41,360 42,796 --
Due to custodian bank.. 144,988 -- -- -- -- --
Accrued expenses and
other payables........ 416,217 22,878 103,442 80,559 90,129 30,610
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL LIABILITIES...... 3,453,212 175,982 1,229,245 471,475 16,555,309 665,624
-------------- ----------- ------------ ------------ ------------ -----------
NET ASSETS.............. $1,069,686,219 $41,077,648 $244,050,277 $102,251,993 $107,926,452 $13,231,973
============== =========== ============ ============ ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ -- $ (116) $ (46) $ -- $ 29,622 $ --
Accumulated net
realized loss on
investments........... (112,089) (637,295) (4,843,450) (1,450,193) (7,283) (609)
Unrealized appreciation
(depreciation) on
investments........... -- 15,482 6,522,152 1,181,823 1,372,860 (105,407)
Par value (Note 4)..... 1,070,048 5,841 26,788 12,107 11,450 1,905
Paid in capital in
excess of par value... 1,068,728,260 41,693,736 242,344,833 102,508,256 106,519,803 13,336,084
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL NET ASSETS........ $1,069,686,219 $41,077,648 $244,050,277 $102,251,993 $107,926,452 $13,231,973
============== =========== ============ ============ ============ ===========
Shares of Common Stock
Outstanding............ 1,070,048,369 5,841,143 26,787,923 12,106,702 11,449,983 1,904,900
NET ASSET VALUE PER
SHARE.................. $1.00 $7.03 $9.11 $8.45 $9.43 $6.95
===== ===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE- CALIFORNIA
TAX EXEMPT TAX-EXEMPT TERM TERM LONG-TERM TAX-EXEMPT
MONEY SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT INCOME
FUND FUND FUND FUND FUND FUND*
----------- ---------- ------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........... $33,663,667 $1,777,804 $12,970,792 $4,799,141 $5,838,419 $ 168,263
----------- ---------- ----------- ---------- ---------- ---------
EXPENSES:
Investment advisory fees
(Note 2)................. 2,394,097 123,772 882,221 482,027 526,442 19,111
Administrators' fees (Note
2)....................... 1,472,582 63,439 387,600 148,210 161,910 5,856
Administrative servicing
fees (Note 2)............ 502,764 28,304 141,258 30,408 70,956 16,689
Shareholder servicing
agent fees............... 26,562 9,183 21,697 10,905 30,615 2,177
Custodian fees............ 311,743 11,826 80,449 31,790 33,875 2,373
Registration and filing
fees..................... 19,839 12,608 12,041 -- 4,826 1,935
Legal and audit fees...... 110,353 6,597 38,875 6,050 10,837 3,502
Directors' fees and ex-
penses (Note 2).......... 55,062 3,073 19,504 6,420 4,815 305
Shareholder reports....... 17,936 2,104 9,375 6,721 3,647 71
Amortization of organiza-
tion costs (Note 5)...... -- 4,176 -- -- -- 3,136
Miscellaneous expenses.... 51,523 3,207 12,397 4,749 4,553 3,983
----------- ---------- ----------- ---------- ---------- ---------
TOTAL EXPENSES............ 4,962,461 268,289 1,605,417 727,280 852,476 59,138
Fees waived by investment
adviser and
administrators (Note 2).. (502,764) (28,304) (141,258) (30,408) (70,956) (33,697)
----------- ---------- ----------- ---------- ---------- ---------
NET EXPENSES.............. 4,459,697 239,985 1,464,159 696,872 781,520 25,441
----------- ---------- ----------- ---------- ---------- ---------
NET INVESTMENT INCOME...... 29,203,970 1,537,819 11,506,633 4,102,269 5,056,899 142,822
----------- ---------- ----------- ---------- ---------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain (loss)
on security
transactions............. (43,443) 7,159 2,576,821 93,370 1,286,294 (609)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... -- (66,439) (2,844,780) (205,500) (726,474) (105,407)
----------- ---------- ----------- ---------- ---------- ---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS............... (43,443) (59,280) (267,959) (112,130) 559,820 (106,016)
----------- ---------- ----------- ---------- ---------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................ $29,160,527 $1,478,539 $11,238,674 $3,990,139 $5,616,719 $ 36,806
=========== ========== =========== ========== ========== =========
</TABLE>
* California Tax-Exempt Income Fund commenced operations on October 1, 1996.
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEW YORK
SHORT-TERM INTERMEDIATE- INTERMEDIATE- CALIFORNIA
TAX-EXEMPT TAX-EXEMPT TERM TERM LONG-TERM TAX-EXEMPT
MONEY SECURITIES TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT INCOME
FUND FUND FUND FUND FUND FUND*
-------------- ----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED MARCH 31,
1997
Net investment income... $ 29,203,970 $ 1,537,819 $ 11,506,633 $ 4,102,269 $ 5,056,899 $ 142,822
Net realized gain (loss)
on investments......... (43,443) 7,159 2,576,821 93,370 1,286,294 (609)
Change in unrealized
appreciation/
depreciation of
investments during the
year................... -- (66,439) (2,844,780) (205,500) (726,474) (105,407)
-------------- ----------- ------------ ------------ ------------ -----------
Net increase in net
assets resulting from
operations............. 29,160,527 1,478,539 11,238,674 3,990,139 5,616,719 36,806
Distributions to
shareholders:
From net investment
income................. (29,203,970) (1,556,834) (11,583,746) (4,102,269) (5,103,668) (142,822)
In excess of net
investment income...... -- (116) (46) -- -- --
From net realized gain
on investments........ -- -- -- -- (1,426,068) --
In excess of net
realized gain on
investments............ -- -- -- -- (7,283) --
Increase (decrease) in
net assets from fund
share transactions
(Note 4)............... 103,018,169 (1,813,779) (10,782,881) 5,957,341 17,788,296 13,337,989
-------------- ----------- ------------ ------------ ------------ -----------
Net increase (decrease)
in net assets.......... 102,974,726 (1,892,190) (11,127,999) 5,845,211 16,867,996 13,231,973
NET ASSETS:
Beginning of year...... 966,711,493 42,969,838 255,178,276 96,406,782 91,058,456 --
-------------- ----------- ------------ ------------ ------------ -----------
End of year (1)........ $1,069,686,219 $41,077,648 $244,050,277 $102,251,993 $107,926,452 $13,231,973
============== =========== ============ ============ ============ ===========
--------
(1)Including
undistributed
(distributions in excess
of) net investment
income.................. $ -- $ (116) $ (46) $ -- $ 29,622 $ --
============== =========== ============ ============ ============ ===========
YEAR ENDED MARCH 31,
1996
Net investment income... $ 28,104,738 $ 1,924,423 $ 11,057,236 $ 3,927,143 $ 4,260,065 --
Net realized gain (loss)
on investments......... (3,032) 882,628 3,726,746 1,897,037 3,728,907 --
Change in unrealized
appreciation/
depreciation of
investments during the
year................... -- (268,919) 4,779,461 280,648 (152,514) --
-------------- ----------- ------------ ------------ ------------ -----------
Net increase in net
assets resulting from
operations............. 28,101,706 2,538,132 19,563,443 6,104,828 7,836,458 --
Distributions to
shareholders:
From net investment
income................. (28,104,738) (1,905,408) (10,980,123) (3,927,143) (4,185,190) --
From net realized gain
on investments........ -- -- -- -- (1,314,007) --
Increase (decrease) in
net assets from fund
share transactions
(Note 4)............... 151,824,779 (5,850,429) 11,604,736 7,065,566 9,840,745 --
-------------- ----------- ------------ ------------ ------------ -----------
Net increase (decrease)
in net assets.......... 151,821,747 (5,217,705) 20,188,056 9,243,251 12,178,006 --
NET ASSETS:
Beginning of year...... 814,889,746 48,187,543 234,990,220 87,163,531 78,880,450 --
-------------- ----------- ------------ ------------ ------------ -----------
End of year (2)........ $ 966,711,493 $42,969,838 $255,178,276 $ 96,406,782 $ 91,058,456 --
============== =========== ============ ============ ============ ===========
--------
(2)Including
undistributed net
investment income....... $ -- $ 19,015 $ 77,113 $ -- $ 76,391 --
============== =========== ============ ============ ============ ===========
</TABLE>
* California Tax-Exempt Income Fund commenced operations on October 1, 1996.
See Notes to Financial Statements
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
EXCELSIOR 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 DIVIDENDS DISTRIBUTIONS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET IN EXCESS OF FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT REALIZED GAIN
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME ON INVESTMENTS
--------- ---------- -------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-EXEMPT MONEY FUND--(5/24/85*)
Year Ended March 31,
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
1996................... 1.00 0.03362 0.00000 0.03362 (0.03362) -- 0.00000
1997................... 1.00 0.03050 0.00000 0.03050 (0.03050) -- 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)
1996................... 6.96 0.28 0.09 0.37 (0.28) -- 0.00
1997................... 7.05 0.26 (0.01) 0.25 (0.27) $0.00# 0.00
INTERMEDIATE-TERM TAX-EXEMPT FUND--(12/3/85*)
Year Ended March 31,
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
1996................... 8.80 0.40 0.32 0.72 (0.40) -- 0.00
1997................... 9.12 0.40 0.00 0.40 (0.41) $0.00# 0.00
N.Y. INTERMEDIATE-TERM TAX-EXEMPT FUND--(5/31/90*)
Year Ended March 31,
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)
1996................... 8.24 0.35 0.20 0.55 (0.35) -- 0.00
1997................... 8.44 0.36 0.01+++ 0.37 (0.36) -- 0.00
LONG-TERM TAX-EXEMPT FUND--(2/5/86*)
Year Ended March 31,
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)
1996................... 9.27 0.47 0.39 0.86 (0.46) -- (0.14)
1997................... 9.53 0.46 0.03 0.49 (0.46) -- (0.13)
CALIFORNIA TAX-EXEMPT INCOME FUND--(10/1/96*)
Period ended March 31,
1997................... $7.00 $ 0.12 $ (0.05) $ 0.07 $ (0.12) -- $ 0.00
</TABLE>
* Commencement of operations.
** Not annualized.
*** Annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Total return data, for periods prior to March 31, 1997, does not reflect
the sales load payable on purchases of shares. The sales load was
eliminated effective February 14, 1997.
+++ The amount shown for the year ended March 31, 1997 for a share outstanding
throughout that period does not accord with the aggregate net gains on
investments for that period because of the timing of sales and repurchases
of the Portfolio shares in relation to fluctuating market value of the
investments of the Portfolio.
# Amount represents less than $0.01 per share.
See Notes to Financial Statements
12
<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>
-- $(0.02395) $1.00 2.42% $ 659,327 0.52% 0.52% 2.39% -- $0.00000
-- (0.01938) 1.00 1.96% 694,581 0.52% 0.52% 1.94% -- 0.00003
-- (0.02825) 1.00 2.86% 814,890 0.49% 0.52% 2.85% -- 0.00030
-- (0.03362) 1.00 3.41% 966,711 0.49% 0.53% 3.35% -- 0.00042
-- (0.03050) 1.00 3.09% 1,069,686 0.47% 0.52% 3.05% -- 0.00053
-- $ (0.05) $7.07 1.65%** $ 28,598 0.60%*** 0.84%*** 2.80%*** -- $ 0.00
-- (0.26) 6.99 2.55% 57,728 0.59% 0.60% 2.94% 539% 0.00
-- (0.26) 6.96 3.45% 48,188 0.59% 0.61% 3.60% 565% 0.00
-- (0.28) 7.05 5.42% 42,970 0.58% 0.64% 4.05% 124% 0.00
-- (0.27) 7.03 3.55% 41,078 0.58% 0.65% 3.73% 87% 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
-- (0.37) 8.80 6.34% 234,990 0.61% 0.64% 4.28% 362% 0.00
-- (0.40) 9.12 8.30% 255,178 0.60% 0.65% 4.44% 50% 0.00
-- (0.41) 9.11 4.58% 244,050 0.58% 0.64% 4.56% 28% 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
-- (0.42) 8.24 6.05% 87,164 0.78% 0.80% 4.06% 563% 0.00
-- (0.35) 8.44 6.77% 96,407 0.75% 0.77% 4.15% 154% 0.00
-- (0.36) 8.45 4.46% 102,252 0.72% 0.75% 4.25% 89% 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
-- (0.53) 9.27 11.01% 78,880 0.80% 0.83% 4.86% 214% 0.00
-- (0.60) 9.53 9.35% 91,058 0.77% 0.82% 4.85% 185% 0.01
0.00# (0.59) 9.43 5.47% 107,926 0.74% 0.81% 4.80% 125% 0.01
-- $ (0.12) $6.95 2.12%*** $ 13,232 0.66%*** 1.53%*** 3.69%*** 7%*** $ 0.03
</TABLE>
See Notes to Financial Statements
13
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- 64.02%
$10,000,000 Austin, Texas, Combined Utility System Notes,
Series A,
3.300%, 05/21/1997................................ $ 10,000,000
5,500,000 Becker, Minnesota, Pollution Control Revenue
Bonds, Northern State Power Co. Project, Series A,
3.500%, 04/09/1997................................ 5,500,000
10,000,000 Becker, Minnesota, Pollution Control Refunding
Revenue Bonds, Northern State Power Co. Project,
Series B,
3.550%, 05/12/1997................................ 10,000,000
9,550,000 Burlington, Kansas, Pollution Control Revenue
Bonds, Series C-2, 3.500%, 04/01/1997............. 9,550,000
6,425,000 Dallas, Texas, Waterworks & Sewer System Revenue
Bonds, Series A, 3.650%, 05/15/1997............... 6,425,000
9,400,000 Gulf Coast Waste Disposal Authority, Texas,
Pollution Control Refunding Revenue Bonds, Amoco
Oil Co. Project,
3.800%, 10/01/2017................................ 9,400,000
8,000,000 Houston, Texas, General Obligation Bonds, Series
A,
3.500%, 04/10/1997................................ 8,000,000
2,000,000 Houston, Texas, General Obligation Bonds, Series
B,
3.400%, 05/14/1997................................ 2,000,000
6,000,000 Houston, Texas, General Obligation Bonds, Series
B,
3.450%, 05/14/1997................................ 6,000,000
2,000,000 Houston, Texas, General Obligation Bonds, Series
E,
3.900%, 04/01/1997++.............................. 2,000,000
10,000,000 Indianapolis, Indiana, Gas Utility Revenue Bonds,
3.300%, 05/20/1997................................ 10,000,000
4,000,000 Intermountain Power Agency, Utah, Power Supply
Revenue Bonds, 3.450%, 05/14/1997................. 4,000,000
5,600,000 Intermountain Power Agency, Utah, Power Supply
Revenue Bonds, Series F,
3.550%, 05/09/1997................................ 5,600,000
10,200,000 Intermountain Power Agency, Utah, Power Supply
Revenue Bonds, Series F,
3.550%, 05/12/1997................................ 10,200,000
5,000,000 Jacksonville, Florida, Electric Authority Revenue
Bonds,
Series D-3,
3.300%, 04/01/1997................................ 5,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$ 4,000,000 Jacksonville, Florida, Electric Authority Revenue
Bonds,
Series D-3,
3.450%, 04/01/1997................................ $ 4,000,000
5,500,000 Jasper, Indiana, Pollution Control Revenue Bonds,
Northern Indiana Public Service Co., Series B,
3.550%, 04/14/1997................................ 5,500,000
14,500,000 Jasper, Indiana, Pollution Control Revenue Bonds,
Northern Indiana Public Service Co., Series B,
3.300%, 05/16/1997................................ 14,500,000
8,500,000 Jasper, Indiana, Pollution Control Revenue Bonds,
Northern Indiana Public Service Co., Series B,
3.450%, 05/21/1997................................ 8,500,000
4,500,000 Jasper, Indiana, Pollution Control Revenue Bonds,
Northern Indiana Public Service Co., Series C,
3.550%, 04/08/1997................................ 4,500,000
8,000,000 Jefferson County, Kentucky, Pollution Control
Revenue Bonds, Louisville Gas & Electric Co.
Project, Series A,
3.350%, 04/09/1997................................ 8,000,000
13,000,000 Jefferson County, Kentucky, Pollution Control
Revenue Bonds, Louisville Gas & Electric Co.
Project, Series A,
3.500%, 04/09/1997................................ 13,000,000
5,300,000 Lincoln County, Wyoming, Pollution Control
Refunding Revenue Bonds, Pacificorp Project,
3.450%, 05/22/1997................................ 5,300,000
10,000,000 Massachusetts State Water Resources Authority,
3.450%, 05/21/1997................................ 10,000,000
5,000,000 Memphis, Tennessee, General Obligation Bonds,
Series A,
3.450%, 08/01/2004+............................... 5,000,000
5,000,000 Memphis, Tennessee, General Obligation Bonds,
Series A,
3.450%, 08/01/2007+............................... 5,000,000
3,010,000 Metropolitan Government, Nashville & Davidson
County, Tennessee, Health & Educational Facilities
Revenue Bonds,
3.550%, 05/08/1997................................ 3,010,000
6,750,000 Michigan State Building Authority Revenue Bonds,
Series 1,
3.550%, 05/01/1997................................ 6,750,000
10,000,000 Michigan State General Obligation Bonds,
4.500%, 09/30/1997................................ 10,049,323
</TABLE>
See Notes to Financial Statements
14
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$ 5,000,000 Mount Vernon, Indiana, Pollution Control & Solid
Waste Disposal Revenue Bonds, General Electric
Corp., Series A,
3.400%, 04/04/1997................................ $ 5,000,000
4,000,000 Mount Vernon, Indiana, Pollution Control & Solid
Waste Disposal Revenue Bonds, General Electric
Corp., Series A,
3.400%, 04/04/1997................................ 4,000,000
10,000,000 New Jersey State Tax & Revenue Anticipation Notes,
Series A, 3.150%, 04/01/1997...................... 10,000,000
7,000,000 New York City, New York, General Obligation Bonds,
Series B, (MBIA),
3.800%, 08/15/2005+............................... 7,000,000
11,000,000 New York City, New York, General Obligation Bonds,
Series B, (MBIA),
3.800%, 08/15/2022+............................... 11,000,000
10,000,000 New York City, New York, Municipal Water Finance
Authority, Series A,
3.600%, 04/07/1997................................ 10,000,000
21,500,000 New York City, New York, General Obligation
Unlimited Notes,
Series A,
4.500%, 04/15/1997+............................... 21,507,638
10,500,000 North Carolina Eastern Municipal Power Agency,
3.450%, 05/20/1997................................ 10,500,000
10,000,000 North Carolina Eastern Municipal Power Agency,
Series B,
3.300%, 04/01/1997................................ 10,000,000
11,500,000 North Carolina Municipal Power Agency, Catawba
Electrical Revenue Bonds, Series A,
3.500%, 05/14/1997................................ 11,500,000
26,500,000 Nueces River, Texas, Industrial Development
Authority, Pollution Control Refunding Revenue
Bonds,
3.500%, 05/06/1997................................ 26,500,000
10,000,000 Oklahoma State Water Resources Board State Loan
Program Revenue Bonds,
3.500%, 09/01/2024................................ 10,000,000
10,000,000 Omaha Public Power District, Nebraska Electric
Revenue Notes, Series A,
3.300%, 05/13/1997................................ 10,000,000
3,700,000 Orlando, Florida, Waste Water Systems Refunding
Revenue Bonds, Series A, (AMBAC),
3.450%, 04/08/1997................................ 3,700,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$ 7,480,000 Peninsula Port Authority, Virginia, Refunding
Revenue Bonds, Dominion Term Project, Series B,
3.450%, 04/09/1997................................ $ 7,480,000
6,300,000 Peninsula Ports Authority, Virginia, Refunding
Revenue Bonds, Shell Oil Co.,
3.850%, 12/01/2005................................ 6,300,000
5,300,000 Pennsylvania State Tax Anticipation Notes,
4.500%, 06/30/1997+............................... 5,311,288
4,000,000 Plaquemines, Louisiana, Port Harbor and Terminal,
Marine Terminal Facilities, Electro-Coal Transfer
Revenue Bonds, Series B, 3.350%, 05/15/1997....... 4,000,000
6,500,000 Pleasant Prairie, Wisconsin, Pollution Control
Refunding Revenue Bonds, Wisconsin Electric Power
Co., Series A,
3.500%, 09/01/2030+............................... 6,500,000
5,000,000 Pleasant Prairie, Wisconsin, Pollution Control
Refunding Revenue Bonds, Wisconsin Electric Power
Co., Series C,
3.500%, 09/01/2030+............................... 5,000,000
2,260,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.550%, 05/07/1997................................ 2,260,000
5,500,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.450%, 05/07/1997................................ 5,500,000
12,400,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.550%, 05/07/1997................................ 12,400,000
10,800,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.400%, 05/09/1997................................ 10,800,000
6,639,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.300%, 05/19/1997................................ 6,639,000
13,950,000 Salt River Project, Arizona, Agricultural
Improvement & Power District,
3.450%, 05/19/1997................................ 13,950,000
4,000,000 San Antonio, Texas,
3.450%, 05/20/1997................................ 4,000,000
12,400,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A,
3.450%, 04/09/1997................................ 12,400,000
</TABLE>
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$15,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A,
3.350%, 05/13/1997................................ $ 15,000,000
7,050,000 San Antonio, Texas, Water System Notes,
3.550%, 05/08/1997................................ 7,050,000
15,000,000 South Carolina State, Public Service Authority
Revenue Bonds,
3.500%, 04/11/1997................................ 15,000,000
20,700,000 South Carolina State, Public Service Authority
Revenue Bonds,
3.400%, 05/15/1997................................ 20,700,000
5,000,000 Texas Municipal Power Authority, Bond Anticipation
Notes,
3.450%, 05/16/1997................................ 5,000,000
10,000,000 Texas Municipal Power Authority, Bond Anticipation
Notes,
3.450%, 05/16/1997................................ 10,000,000
47,700,000 Texas State Tax & Revenue Anticipation Notes,
4.750%, 08/29/1997+............................... 47,922,627
4,900,000 Toledo Lucas County, Ohio Port Authority Revenue
Bonds,
3.450%, 04/09/1997................................ 4,900,000
3,500,000 University of Minnesota, Series A, 3.450%,
04/04/1997........................................ 3,500,000
3,000,000 University of Minnesota, Series A, 3.500%,
04/04/1997........................................ 3,000,000
10,000,000 University of Minnesota, Series A, 3.500%,
04/04/1997........................................ 10,000,000
12,210,000 University of Texas Permanent University Fund,
Series A,
3.500%, 04/14/1997................................ 12,210,000
1,500,000 University of Texas Permanent University Fund,
Series A,
3.500%, 05/09/1997................................ 1,500,000
11,000,000 University of Texas Permanent University Fund,
Series A,
3.550%, 05/09/1997................................ 11,000,000
10,000,000 University of Texas, University Revenue Bonds,
Series A,
3.550%, 05/21/1997................................ 10,000,000
5,808,000 University of Texas, University Revenue Bonds,
Series A,
3.500%, 05/22/1997................................ 5,808,000
15,000,000 Vermont State, General Obligation Revenue
Anticipation Notes,
Series I,
3.550%, 05/13/1997................................ 15,000,000
4,000,000 Virginia State, General Obligation Bond
Anticipation Notes,
3.300%, 05/19/1997................................ 4,000,000
20,000,000 Virginia State, General Obligation Bond
Anticipation Notes,
3.400%, 05/19/1997................................ 20,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$ 3,245,000 Wisconsin State, General Obligation Bonds, Series
C,
4.500%, 05/01/1997+.............................. $ 3,247,506
--------------
684,870,382
--------------
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- 35.69%
ABN AMRO BANK
7,300,000 Guadalupe, Texas, Blanco River Authority
Pollution Control Refunding Revenue Bonds,
Central Power & Light Co. Project,
3.850%, 11/01/2015............................... 7,300,000
7,150,000 Illinois Health Facilities Authority Revenue
Bonds, Palos Community Hospital, Series B,
3.400%, 12/01/2015+.............................. 7,150,000
BANK OF NEW YORK
10,000,000 Ohio County, Kentucky, Pollution Control Revenue
Bonds, Big Rivers Electric Corp., Series 1983,
4.000%, 06/01/2013+.............................. 10,000,000
BANK OF NOVA SCOTIA
10,200,000 Gary, Indiana, Environmental Improvement Revenue
Notes, U.S. Steel Corp. Project, Series 1984,
3.450%, 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,
3.400%, 01/01/2009+.............................. 3,400,000
BANK OF TOKYO
15,025,000 University of Iowa, Facilities Revenue Bonds,
Human Biology Research, Series A,
3.650%, 06/01/2005+.............................. 15,025,000
BARCLAYS BANK, PLC
7,700,000 Bucks County, Pennsylvania, Industrial
Development Authority Revenue Bonds, Tru Realty--
Toys R Us Project,
3.400%, 12/01/2018+.............................. 7,700,000
CANADIAN IMPERIAL BANK OF COMMERCE
5,200,000 Maricopa County, Arizona, Pollution Control
Refunding Revenue Bonds, Public Service Co. New
Mexico, Series A,
3.450%, 11/01/2022+.............................. 5,200,000
</TABLE>
See Notes to Financial Statements
16
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
TAX-EXEMPT MONEY FUND -- (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,
3.400%, 10/14/2011+.............................. $ 26,000,000
6,900,000 Kenton County, Kentucky, Industrial Building
Revenue Bonds, Redken Labs, Inc. Project, Series
1984,
3.500%, 12/01/2014+.............................. 6,900,000
NORDEUTSCHE LANDESBANK
10,000,000 Brazos, Texas, Harbor Industrial Development
Corp. Revenue Bonds, Badische Corp.,
3.500%, 12/01/2013+.............................. 10,000,000
NORTHERN TRUST
4,300,000 Illinois Health Facilities Authority Revenue
Bonds, Healthcorp Affiliates, Series A,
3.400%, 11/01/2015+.............................. 4,300,000
RABOBANK NEDERLANDER
2,300,000 Alma, Wisconsin, Pollution Control Refunding
Revenue Bonds, Dairyland Power Coop Project,
3.600%, 02/01/2015............................... 2,300,000
13,300,000 Illinois Health Facilities Authority Revenue
Bonds, Healthcorp Affiliates,
3.400%, 11/01/2015+.............................. 13,300,000
30,400,000 Indiana Health Facilities Financing Authority
Revenue Bonds, St. Anthony's Medical Center
Project,
3.400%, 12/01/2014+.............................. 30,400,000
ROYAL BANK OF CANADA
6,900,000 Chicago, Illinois, O'Hare International Airport
Revenue Bonds, American Airlines, Inc. Project,
Series B,
3.850%, 12/01/2017............................... 6,900,000
SANWA BANK
4,600,000 Michigan State Job Development Authority Revenue
Bonds, Hitachi Metals International Project,
3.600%, 01/01/2004+.............................. 4,600,000
13,010,000 Mississippi Hospital Equipment & Facilities
Authority Revenue Bonds, Mississippi Baptist
Medical Center,
3.400%, 07/01/2012+.............................. 13,010,000
32,600,000 Missouri State Environmental Improvement & Energy
Resources Authority, Pollution Control Revenue
Bonds, Noranda Aluminum, Inc. Project,
3.650%, 10/01/2002+.............................. 32,600,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
CITIBANK, NY
$ 4,160,000 La Crosse, Wisconsin, Industrial Development
Authority Revenue Bonds, Dairyland Power
Cooperative Project,
3.600%, 02/01/2015+............................... $ 4,160,000
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
10,440,000 Marshall County, West Virginia, Pollution Control
Revenue Bonds, Mobay Chemical Corp. Project,
3.500%, 12/01/2000+............................... 10,440,000
1,300,000 Missouri State Environmental Improvement & Energy
Resources Authority, Pollution Control Revenue
Bonds, Mobay Chemical Corp. Project,
3.500%, 12/01/2000................................ 1,300,000
DEUTSCHE BANK, A.G.
9,000,000 Connecticut State Development Authority, Pollution
Control Refunding Revenue Bonds, Connecticut Light
& Power Co. Project, Series A,
3.500%, 09/01/2028................................ 9,000,000
FUJI BANK LTD NY
7,135,000 Des Moines, Iowa, Hospital Facilities Revenue
Bonds, Iowa Methodist Medical Center Project,
3.450%, 08/01/2015+............................... 7,135,000
KREDIETBANK, N.V.
11,885,000 Illinois Health Facilities Authority Revenue
Bonds, Memorial Medical Center, Series C,
3.450%, 01/01/2016+............................... 11,885,000
LASALLE NATIONAL BANK
12,900,000 Flint, Michigan, Hospital Building Authority
Revenue Bonds, Hurley Medical Center, Series B,
3.450%, 07/01/2015+............................... 12,900,000
11,050,000 Illinois Health Facilities Authority Revenue
Bonds, Ingalls Memorial Hospital, Series B,
3.450%, 01/01/2016+............................... 11,050,000
11,940,000 Illinois Health Facilities Authority Revenue
Bonds, Ingalls Memorial Hospital, Series C,
3.450%, 01/01/2016+............................... 11,940,000
</TABLE>
See Notes to Financial Statements
17
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
SUMITOMO BANK LTD.
$ 2,750,000 District of Columbia, Revenue Bonds, George
Washington University,
3.600%, 03/01/2006+.............................. $ 2,750,000
3,200,000 District of Columbia, Revenue Bonds, George
Washington University, Series A,
3.600%, 03/01/2006+.............................. 3,200,000
10,200,000 Wake County, North Carolina, Industrial
Facilities & Pollution Control Financing
Authority Revenue Bonds, Carolina Power & Light
Co. Project,
Series 1985-B,
3.650%, 09/01/2015+.............................. 10,200,000
12,900,000 Wake County, North Carolina, Industrial
Facilities & Pollution Control Financing
Authority Revenue Bonds, Carolina Power & Light
Co. Project,
Series 1985-C,
3.650%, 10/01/2015+.............................. 12,900,000
SWISS BANK
5,000,000 Intermountain Power Agency, Utah, Power Supply
Revenue Bonds, Series E,
3.500%, 07/01/2014++............................. 5,000,000
4,300,000 Louisiana Public Facilities Authority, Pollution
Control Revenue Bonds, Ciba-Geigy Corp. Project,
3.450%, 12/01/2004+.............................. 4,300,000
5,900,000 McIntosh, Alabama, Industrial Development Board,
Pollution Control Revenue Bonds, Ciba-Geigy Corp.
Project, Series A, 3.450%, 12/01/2003+........... 5,900,000
TORONTO DOMINION BANK LTD.
18,850,000 Wisconsin State Health and Educational
Facilities, Authority Revenue Bonds, Wheaton
Franciscan Services,
3.350%, 08/15/2016............................... 18,850,000
15,700,000 Wisconsin State Health Facilities Authority
Revenue Bonds, Franciscan Health Care,
Series A-2,
3.100%, 01/01/2016+.............................. 15,700,000
--------------
381,795,000
--------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -------------
<C> <S> <C>
OTHER INVESTMENTS -- 0.02%
185,900 Dreyfus Tax-Exempt Cash Management Fund............ $ 185,900
-------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $1,066,851,282*).................................. 99.73% $1,066,851,282
OTHER ASSETS & LIABILITIES (NET)........................ 0.27 2,834,937
------ --------------
NET ASSETS.............................................. 100.00% $1,069,686,219
====== ==============
</TABLE>
- --------
* For Federal income tax purposes, the tax basis of investments aggregates
$1,066,863,607.
+ 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.
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 March 31, 1997, approximately, 36% 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 March 31, 1997, approximately, 21% 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
18
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
SHORT-TERM TAX-EXEMPT SECURITIES FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 91.90%
$2,000,000 Alabama State Refunding General Obligation Bonds,
5.900%, 03/01/1999.................................... $ 2,058,920
1,700,000 Burlington County, New Jersey, General Obligation
Bonds,
5.200%, 10/01/2000.................................... 1,742,568
1,500,000 Connecticut State General Obligation Bonds, Series C,
5.100%, 03/15/2000.................................... 1,522,950
1,100,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure Purposes,
Series C, (FGIC),
5.500%, 10/01/2000.................................... 1,133,462
2,000,000 Hawaii State, Public Improvements General Obligation
Bonds,
Series CK,
5.000%, 09/01/1998.................................... 2,026,380
1,500,000 Houston, Texas, Refunding General Obligation Bonds,
Series C,
5.500%, 03/01/1999.................................... 1,533,825
2,000,000 Massachusetts State Turnpike Authority, Anticipation
Notes, Series A,
5.000%, 06/01/1999.................................... 2,026,480
1,700,000 Metropolitan Atlanta Rapid Transit Authority, Georgia,
Sales Tax Refunding Revenue Bonds,
Series M, (MBIA),
5.900%, 07/01/1999.................................... 1,760,197
1,900,000 Mississippi State General Obligation Bonds, Series B,
5.000%, 08/01/1999.................................... 1,931,236
1,275,000 Monmouth County, New Jersey, General Obligation Bonds,
5.000%, 10/01/2000.................................... 1,298,320
1,900,000 Monroe County, New York, Refunding Public Improvement
General Obligation Bonds, Series A,
5.000%, 03/01/2001.................................... 1,926,885
2,000,000 Municipal Assistance Corporation for New York City,
New York, Revenue Bonds, Series E,
5.500%, 07/01/2000.................................... 2,060,300
4,000,000 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series B,
5.000%, 06/15/1999.................................... 4,060,600
1,900,000 New York City, New York, Trust for Cultural Resources,
Museum of Modern Art Revenue Bonds,
Series A, (AMBAC),
5.000%, 01/01/2000.................................... 1,924,681
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$2,000,000 New York State Local Government Assistance
Corporation, Revenue Bonds, Series B,
5.100%, 04/01/1999................................... $ 2,028,060
4,000,000 Pennsylvania State General Obligation Bonds, 2nd
Series,
5.400%, 07/01/2000................................... 4,098,920
1,000,000 South Columbia Basin, Washington, Irrigation
District, Refunding Revenue Bonds,
5.750%, 12/01/2000................................... 1,042,780
1,500,000 Union County, New Jersey, Improvement Authority
Revenue Bonds, Correctional Facilities Project,
5.400%, 06/15/2000................................... 1,541,580
2,000,000 Virginia Beach, Virginia, Refunding General
Obligation Bonds,
5.250%, 02/01/1999................................... 2,034,080
-----------
37,752,224
-----------
TAX-EXEMPT SECURITIES -- BACKED BY
LETTERS OF CREDIT -- 6.82%
ABN-AMRO BANK, NY
1,800,000 Illinois Health Facilities Authority Revenue Bonds,
Palos Community Hospital, Series B,
3.400%, 12/01/2015+.................................. 1,800,000
TORONTO DOMINION BANK, LTD.
1,000,000 Wisconsin State Health Facilities Authority Revenue
Bonds Refunding, Franciscan Health Care, Series A-2,
3.100%, 01/01/2016+.................................. 1,000,000
-----------
2,800,000
-----------
<CAPTION>
SHARES
----------
<C> <S> <C>
OTHER INVESTMENTS -- 0.35%
145,000 Dreyfus Tax-Exempt Cash Management Fund.............. 145,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $40,681,742*)........................................ 99.07% $40,697,224
OTHER ASSETS & LIABILITIES (NET)........................... 0.93 380,424
------ -----------
NET ASSETS................................................. 100.00% $41,077,648
====== ===========
</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.
See Notes to Financial Statements
19
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
SHORT-TERM TAX-EXEMPT SECURITIES FUND -- (CONTINUED)
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 March 31, 1997, approximately, 7% 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 March 31, 1997, approximately, 21% 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
20
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
INTERMEDIATE-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 83.59%
$10,000,000 Alabama State Public School & College Authority,
Capital Improvement Revenue Bonds, (MBIA),
5.250%, 11/01/2005.................................. $ 10,165,300
10,000,000 California State Public Improvement General
Obligation Bonds, (FGIC),
7.500%, 11/01/2003.................................. 11,556,900
10,000,000 Cobb County, Georgia School District, General
Obligation Bonds,
4.750%, 02/01/2005.................................. 9,877,200
10,000,000 Connecticut State General Obligation Bonds, Series
D,
6.250%, 11/15/2009.................................. 10,787,600
10,000,000 Connecticut State Special Tax Obligation Revenue
Refunding Bonds, Transportation Infrastructure,
Series A,
5.125%, 09/01/2005.................................. 10,026,700
10,000,000 Fairfax County, Virginia, Refunding General
Obligation Bonds,
Series C,
5.250%, 05/01/2008.................................. 10,012,600
10,000,000 Florida State Board of Education Refunding General
Obligation Bonds, Series B,
5.125%, 06/01/2008.................................. 10,007,700
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 07/01/2004.................................. 10,971,900
10,000,000 Hawaii State General Obligation Bonds, Series CJ,
5.900%, 01/01/2006.................................. 10,519,000
10,000,000 Maryland State & Local Facilities, Public
Improvements Correctional Facilities, 3rd Series,
4.400%, 07/15/2004.................................. 9,725,800
10,000,000 Maryland State & Local Facilities, Public
Improvements Correctional Facilities, 3rd Series,
5.700%, 10/15/2006.................................. 10,495,100
10,000,000 Maryland State Department of Transportation,
Consolidated Transportation Bonds,
Second Issue,
4.375%, 12/15/2003.................................. 9,766,500
10,000,000 Massachusetts State Public Improvements, General
Obligation Bonds, Series C, (MBIA),
5.625%, 08/01/2011.................................. 10,061,400
10,000,000 New Jersey State Refunding General Obligation Bonds,
Series D,
5.625%, 02/15/2005.................................. 10,451,700
10,000,000 New Jersey State, Transportation Trust Fund Revenue
Bonds, Transportation System, Series A,
5.250%, 06/15/2008.................................. 10,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$10,000,000 New York State Power Authority & General Purpose
Refunding Revenue Bonds, Series CC,
4.900%, 01/01/2006................................. $ 9,852,500
10,000,000 Ohio State Public Facilities Commission Revenue
Bonds, Series II-B, (MBIA),
5.000%, 11/01/2007................................. 9,830,400
10,000,000 Texas State Refunding Bonds,
Series A,
5.800%, 10/01/2004................................. 10,584,900
10,000,000 University of Texas Permanent University Fund,
Refunding Revenue Bonds, (PUFG),
4.500%, 07/01/2007................................. 9,456,100
10,000,000 Wisconsin State Refunding General Obligation Bonds,
Series 3,
4.875%, 11/01/2005................................. 9,854,900
------------
204,004,200
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 4.49%
10,000,000 Fairfax County, Virginia, Industrial Development
Authority Revenue Bonds, Fairfax Hospital System,
6.801%, 08/29/2023
(Prerefunded 08/15/2001).......................... 10,967,100
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 8.20%
FUJI BANK LTD NY
10,000,000 Des Moines, Iowa, Hospital Facilities Revenue
Bonds, Iowa Methodist Medical Center Project,
3.450%, 08/01/2015+................................ 10,000,000
NORTHERN TRUST CO.
10,000,000 Illinois Health Facilities Authority Revenue Bonds,
Healthcorp Affiliates, Series A,
3.400%, 11/01/2015+................................ 10,000,000
------------
20,000,000
------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 2.73%
6,667,000 Shearson Tax-Exempt Municipal Fund................. 6,667,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $235,116,148*)...................................... 99.01% $241,638,300
OTHER ASSETS & LIABILITIES (NET).......................... 0.99 2,411,977
------ ------------
NET ASSETS................................................ 100.00% $244,050,277
====== ============
</TABLE>
See Notes to Financial Statements
21
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
INTERMEDIATE-TERM TAX-EXEMPT FUND -- (CONTINUED)
- --------
* 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.
MBIA--Municipal Bond Insurance Assoc.
PUFG--Permanent University Fund Guaranty.
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 March 31, 1997, approximately, 13% 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 March 31, 1997, approximately, 12% of the net assets are invested in
Maryland 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
22
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 89.73%
$3,825,000 Metropolitan Transportation Authority of New York,
Commuter Facilities Revenue Bonds, Series A, (MBIA),
7.000%, 07/01/2006.................................. $ 4,385,630
5,000,000 Metropolitan Transportation Authority of New York,
Dedicated Tax Fund Revenue Bonds, Series A, (MBIA),
5.300%, 04/01/2010.................................. 4,949,100
5,000,000 Monroe County, New York, Public Improvement
Refunding General Obligation Bonds, Series A,
5.500%, 03/01/2004.................................. 5,194,750
4,130,000 Municipal Assistance Corp., City of New York, Series
E, 6.000%, 07/01/2005............................... 4,414,681
3,900,000 Nassau County, New York, Combined Sewer Districts
Refunding General Obligation Bonds, Series G,
(MBIA), 5.100%, 01/15/2003.......................... 3,958,228
4,000,000 New Jersey State, Refunding General Obligation
Bonds, Series E,
5.000%, 07/15/2004.................................. 4,043,520
3,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Revenue Bonds,
Series B, (AMBAC), 5.125%, 06/15/2004............... 3,037,620
5,000,000 New York State Dormitory Authority, City University
System Revenue Bonds, Series F, 5.375%, 07/01/2007.. 5,023,050
5,000,000 New York State Dormitory Authority, Cornell
University Revenue Bonds, 5.125%, 07/01/2006........ 5,028,900
7,500,000 New York State Environmental Facilities Corp.,
Pollution Control Revenue Bonds, State Water
Revolving Fund, Series A, 7.250%, 06/15/2010........ 8,308,350
2,500,000 New York State Housing Finance Agency Special
Obligation Bonds, New York City Health Facilities,
Series A,
6.900%, 05/01/2003.................................. 2,778,175
4,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A,
5.400%, 04/01/2005.................................. 4,101,800
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$5,000,000 New York State Power Authority & General Purpose
Revenue Bonds, Series CC,
4.800%, 01/01/2005.............................. $ 4,958,200
4,000,000 New York State, Refunding General Obligation
Bonds, Series B, (AMBAC),
5.500%, 08/15/2006.............................. 4,123,800
4,000,000 New York State Thruway Authority General Revenue
Bonds, Series C, (FGIC),
5.400%, 01/01/2005.............................. 4,101,440
4,450,000 New York State Thruway Authority Highway &
Bridge Revenue Bonds, Series B, (MBIA),
5.750%, 04/01/2006.............................. 4,650,161
4,725,000 Port Authority of New York & New Jersey, Revenue
Bonds, Cons-103 Series, (MBIA),
5.125%, 12/15/2009.............................. 4,638,154
4,000,000 Puerto Rico Telephone Authority Revenue Bonds,
(MBIA), 5.250%, 01/01/2005...................... 4,073,560
5,000,000 Puerto Rico Telephone Authority Revenue Bonds,
Reserve 1, (AMBAC),
5.050%, 01/01/2004.............................. 5,050,850
5,000,000 Triborough Bridge & Tunnel Authority, New York,
Revenue and
General Purpose Bonds, Series A,
5.000%, 01/01/2008.............................. 4,930,150
------------
91,750,119
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS --
2.76%
2,500,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Revenue Bonds,
Series C,
7.750%, 06/16/2020
(Prerefunded 06/15/2001)........................ 2,819,525
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT --
3.91%
MORGAN GUARANTY TRUST
4,000,000 New York State Energy Research & Development
Authority,
Pollution Control Refunding Revenue Bonds, New
York State
Electric & Gas Co., Series C,
3.650%, 06/01/2029+............................. 4,000,000
------------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
OTHER INVESTMENTS--2.44%
2,434,500 Provident Institutional Muni-Money Fund.............. $ 2,434,500
62,400 Shearson Tax-Exempt Municipal Fund................... 62,400
------------
2,496,900
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $99,884,721*)........................................ 98.84% $101,066,544
OTHER ASSETS &
LIABILITIES (NET).......................................... 1.16 1,185,449
------ ------------
NET ASSETS................................................. 100.00% $102,251,993
====== ============
</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 March 31, 1997, approximately, 7% 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 March 31, 1997, approximately, 84% 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
24
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
LONG-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 76.63%
$4,000,000 Alaska State Housing Finance Agency Refunding
Revenue Bonds, Series A,
5.400%, 12/01/2013.................................. $ 3,777,120
5,000,000 Dade County, Florida, Water & Sewer Systems Revenue
Bonds, (FGIC),
5.500%, 10/01/2025.................................. 4,745,450
4,000,000 Florida State Municipal Power Agency Refunding
Revenue Bonds, St. Lucie Project, (FGIC),
5.250%, 10/01/2021.................................. 3,660,520
4,000,000 Illinois State Sales Tax Refunding Revenue Bonds,
Series Q,
5.500%, 06/15/2020.................................. 3,727,160
4,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series A,
5.500%, 07/01/2020.................................. 3,726,920
4,000,000 New Jersey State Transportation Trust Fund Authority
Refunding Revenue Bonds, Series A,
5.250%, 06/15/2014.................................. 3,842,040
5,000,000 New York State Dormitory Authority, Montefiore
Medical Center Refunding Revenue Bonds, FHA Insured,
(AMBAC),
5.250%, 02/01/2015.................................. 4,691,200
4,000,000 New York State Local Assistance Corp. Refunding
Revenue Bonds, Series B,
5.500%, 04/01/2021.................................. 3,766,680
4,000,000 New York State Medical Care Facilities Finance
Agency Refunding Revenue Bonds, New York Hospital,
Series A, FHA Insured, (MBIA),
5.500%, 08/15/2024.................................. 3,757,960
5,000,000 New York State Power Authority & General Purpose
Refunding Revenue Bonds, Series CC,
5.000%, 01/01/2014.................................. 4,635,250
4,000,000 Orlando & Orange County Expressway Authority
Refunding Revenue Bonds, (AMBAC),
5.250%, 07/01/2012.................................. 3,901,320
4,000,000 Port Authority of New York & New Jersey, Revenue
Bonds, Series 104, (AMBAC),
5.200%, 07/15/2021.................................. 3,689,040
5,000,000 Port Seattle, Washington, Revenue Bonds, Series A,
(FGIC),
5.500%, 09/01/2021.................................. 4,736,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$4,000,000 St. Petersburg, Florida, Excise Tax Refunding
Revenue Bonds, (FGIC),
5.150%, 10/01/2013................................. $ 3,811,920
4,000,000 Salt River, Arizona, Agricultural Project Refunding
Revenue Bonds, Series C,
5.000%, 01/01/2013................................. 3,770,640
5,000,000 San Antonio, Texas, Electric & Gas Refunding
Revenue Bonds,
5.000%, 02/01/2014................................. 4,639,300
5,000,000 Seattle, Washington, Drain & Wastewater Utilities,
Refunding Revenue Bonds, (MBIA),
5.250%, 12/01/2025................................. 4,591,450
5,000,000 Valdez, Alaska, Marine Terminal Refunding Revenue
Bonds, BP Pipeline, Inc. Project, Series B,
5.500%, 10/01/2028................................. 4,524,350
4,000,000 Washington State General Obligation Bonds, Series
A,
5.750%, 09/01/2019................................. 3,955,080
5,000,000 Wisconsin State Transportation Refunding Revenue
Bonds, Series B,
5.500%, 07/01/2022................................. 4,757,450
------------
82,707,350
------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 3.17%
3,417,600 Shearson Tax-Exempt Municipal Fund................. 3,417,600
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $84,752,090*)....................................... 79.80% $ 86,124,950
OTHER ASSETS & LIABILITIES (NET).......................... 20.20 21,801,502
------ ------------
NET ASSETS................................................ 100.00% $107,926,452
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
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 March 31, 1997, approximately, 19% 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
25
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
CALIFORNIA TAX-EXEMPT INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 76.98%
$105,000 Alameda County, California, Transportation Authority,
Sales Tax Revenue Bonds, (FGIC),
5.200%, 05/01/1999..................................... $ 107,007
125,000 Anaheim, California, Electric Refunding Revenue Bonds,
(AMBAC),
4.750%, 10/01/2002..................................... 125,420
200,000 Antelope Valley, East Kern, California, Water Agency
Refunding General Obligation Bonds, (AMBAC),
4.500%, 08/01/2001..................................... 199,288
200,000 Bakersfield, California, City School District,
Refunding General Obligation Bonds, (MBIA),
5.000%, 08/01/2005..................................... 200,798
150,000 California Educational Facilities Authority, St Mary's
College Refunding Revenue Bonds,
4.800%, 10/01/2002..................................... 149,856
135,000 California Educational Facilities Authority, Santa
Clara University Refunding Revenue Bonds, (MBIA),
4.900%, 09/01/2006..................................... 134,190
150,000 California Educational Facilities Authority, Stanford
University Refunding Revenue Bonds, Series J,
5.900%, 11/01/2003..................................... 158,253
200,000 California Industrial Urban Development Agency,
Refunding Tax Allocation Bonds, (MBIA),
4.300%, 05/01/2002..................................... 196,502
250,000 California State Department of Water Resources, Central
Valley Project Refunding Revenue Bonds, Series L,
8.000%, 12/01/2001..................................... 286,100
230,000 California State, General Obligation Bonds,
6.700%, 02/01/2004..................................... 252,367
150,000 California State, General Obligation Bonds, (AMBAC),
6.250%, 06/01/2004..................................... 162,762
250,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Series D, (MBIA),
4.850%, 09/01/2008..................................... 240,860
300,000 California State University, Institutional Lease
Refunding Revenue Bonds, (AMBAC),
5.500%, 06/01/2003..................................... 312,210
250,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
4.375%, 10/01/2001..................................... 248,287
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$155,000 Fresno, California, Sewer Revenue Bonds, Series A-1,
(AMBAC),
4.800%, 09/01/2006.................................... $ 151,778
200,000 Los Angeles, California, Convention & Exhibition
Center Authority, Refunding Certificates of
Participation, (AMBAC),
6.600%, 08/15/1999.................................... 210,348
250,000 Los Angeles, California, Department of Water & Power,
Electrical Plant Refunding Revenue Bonds, (AMBAC),
4.600%, 08/15/2006.................................... 242,940
305,000 Los Angeles, California, Harbor Department Refunding
Revenue Bonds, Series C,
4.875%, 11/01/2002.................................... 308,553
250,000 Los Angeles, California, Municipal Improvement
Corporation, Equipment Real-Estate Property,
Certificates of Participation, (AMBAC),
4.500%, 12/01/2001.................................... 249,155
250,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
5.000%, 02/01/2001.................................... 253,637
150,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
4.875%, 02/01/2006.................................... 147,247
250,000 Los Angeles, California, Wastewater Systems Refunding
Revenue Bonds, Series A, (FGIC),
6.000%, 02/01/2003.................................... 265,347
200,000 Los Angeles County, California, Public Works Financing
Authority, Lease Refunding Revenue Bonds, Series A,
(MBIA),
6.000%, 09/01/2003.................................... 212,770
100,000 Metropolitan Water District of Southern California,
Refunding General Obligation Bonds, Series A1,
5.000%, 03/01/2002.................................... 101,563
150,000 Metropolitan Water District of Southern California,
Refunding General Obligation Bonds, Series A3,
4.700%, 03/01/2000.................................... 151,296
200,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
4.850%, 10/01/2001.................................... 202,580
</TABLE>
See Notes to Financial Statements
26
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$250,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
5.450%, 10/01/2007.................................... $ 255,415
250,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series A,
(AMBAC),
5.600%, 07/01/2006.................................... 259,477
100,000 Orange County, California, Municipal Water District,
Water Facilities Corporation, Refunding Certificates
of Participation, (MBIA),
4.800%, 07/01/2003.................................... 99,833
200,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA),
4.700%, 02/01/2003.................................... 198,680
250,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA),
4.875%, 02/01/2005.................................... 246,625
255,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(MBIA),
4.625%, 03/01/2005.................................... 249,696
300,000 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series B, (FGIC),
5.000%, 05/15/2008.................................... 292,983
150,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Refunding Revenue Bonds, 2nd
Series, Series A, (FGIC),
5.200%, 04/01/2005.................................... 152,650
150,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Refunding Revenue Bonds, 2nd
Series, Series A, (FGIC),
5.250%, 04/01/2006.................................... 151,824
200,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC),
5.500%, 04/01/2004.................................... 207,518
50,000 San Diego County, California, Water Authority, Water
Revenue Certificates of Participation, Series A,
6.250%, 05/01/2004.................................... 53,231
50,000 San Francisco, California, City & County Airport
Communication, International Airport Refunding Revenue
Bonds, 2nd Series, Issue 2, (MBIA),
6.350%, 05/01/2000.................................... 52,736
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$325,000 San Francisco, California, City & County Public
Utilities Communication, Water Refunding Revenue
Bonds, Series A,
6.500%, 11/01/2004.................................... $ 359,106
225,000 San Francisco, California, City & County, School
District Facilities Improvements Project, Series C,
(FGIC),
6.000%, 06/15/1999.................................... 232,999
200,000 San Francisco, California, State Building Authority
Lease Revenue Bonds, San Francisco Civic Center
Complex, Series A, (AMBAC),
4.125%, 12/01/2000.................................... 197,912
100,000 San Jose, California, Airport Refunding Revenue Bonds,
(FGIC),
5.500%, 03/01/2002.................................... 103,338
200,000 San Jose, California, Redevelopment Agency, Tax
Allocation Refunding Bonds, Merged Area Redevelopment
Project, (MBIA),
4.750%, 08/01/2003.................................... 200,096
325,000 San Jose, California, Redevelopment Agency, Tax
Allocation Refunding Bonds, Merged Area Redevelopment
Project, (MBIA),
5.375%, 08/01/2004.................................... 335,101
150,000 Santa Barbara County, California, Local Transportation
Authority, Sales Tax Revenue Bonds, (FGIC),
4.900%, 04/01/2006.................................... 148,602
300,000 Southern California Public Power Authority, Refunding
Revenue Bonds, Palo Verde Project, Series A, (AMBAC),
4.000%, 07/01/1998.................................... 300,057
200,000 Southern California Public Power Authority, Refunding
Revenue Bonds, Palo Verde Project, Series A, (AMBAC),
5.500%, 07/01/2004.................................... 207,602
200,000 Tri City, California, Hospital District Refunding
Revenue Bonds, Series B, (MBIA),
5.500%, 02/15/2000.................................... 205,430
150,000 University of California, Refunding Revenue Bonds,
Series C, (AMBAC),
4.600%, 09/01/2005.................................... 145,613
250,000 West & Central Basin Financing Authority, California
Refunding Revenue Bonds, (AMBAC),
5.500%, 08/01/2001.................................... 258,435
-----------
10,186,073
-----------
</TABLE>
See Notes to Financial Statements
27
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 19.58%
$350,000 Alameda County, California, Correctional Facility
Improvements, Certificates of Participation, (MBIA),
7.250%, 06/01/2013
(Prerefunded 12/01/2000).............................. $ 387,741
200,000 California Health Facilities Financing Authority
Revenue Bonds, (AMBAC),
7.625%, 10/01/2015
(Prerefunded 10/01/1998).............................. 213,936
200,000 California State Public Works Board, Lease Revenue
Bonds, Series A,
6.400%, 12/01/2016
(Prerefunded 12/01/2002).............................. 220,116
200,000 California State Public Works Board, Lease Revenue
Bonds, Series A,
6.600%, 12/01/2022
(Prerefunded 12/01/2002).............................. 221,348
200,000 Concord, California, Redevelopment Agency, Tax
Allocation Refunding Bonds, Series 3, (MBIA),
8.000%, 07/01/2018
(Prerefunded 07/01/1998).............................. 213,218
250,000 Cupertino, California, Certificates of Participation,
Open Space Acquisition Project,
7.125%, 04/01/2016
(Prerefunded 04/01/2001).............................. 278,018
250,000 East Bay, California, Municipal Utilities District
Wastewater Treatment System Revenue Bonds, (AMBAC),
6.375%, 06/01/2021
(Prerefunded 12/01/2001).............................. 271,978
300,000 Los Angeles, California, Convention & Exhibition
Center Authority, Refunding Certificates of
Participation, Series A,
6.500%, 08/15/2021
(Prerefunded 08/15/1999).............................. 314,094
175,000 Los Angeles County, California, Transportation
Communications Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2019
(Prerefunded 07/01/2002).............................. 193,986
100,000 Northern California Transmission Refunding Revenue
Bonds, Ore Transportation Project, Series A, (MBIA),
7.000%, 05/01/2024
(Prerefunded 05/01/2000).............................. 108,275
150,000 Paramount, California, Redevelopment Agency Refunding
Tax Allocation Bonds,
7.350%, 08/01/2021
(Prerefunded 08/01/2001).............................. 168,237
-----------
2,590,947
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT --BACKED BY LETTER OF CREDIT -- 0.76%
CANADIAN IMPERIAL BANK
$100,000 San Diego County, California, Tax & Revenue
Anticipation Notes, General Obligation Bonds,
4.375%, 09/30/1997.................................... $ 100,238
-----------
<CAPTION>
SHARES
------
<C> <S> <C>
OTHER INVESTMENTS -- 5.25%
296,128 Federated California Money Fund....................... 296,128
398,780 Provident California Money Fund....................... 398,780
-----------
694,908
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $13,677,573*)........................................ 102.57% $13,572,166
OTHER ASSETS & LIABILITIES (NET)........................... (2.57) (340,193)
------ -----------
NET ASSETS................................................. 100.00% $13,231,973
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
FSA--Financial Security Assurance
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 March 31, 1997, approximately, 20% 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 March 31, 1997, approximately, 100% of the net assets are invested in
California 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
28
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Excelsior Tax-Exempt Funds, Inc. ("Excelsior 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.
Excelsior Tax-Exempt Fund currently offers shares in six managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for Tax-Exempt Money
Fund, Short-Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt
Fund, New York Intermediate Term Tax-Exempt Fund, Long-Term Tax-Exempt Fund
and California Tax-Exempt Income Fund (the "Portfolios"). Such policies are in
conformity with generally accepted accounting principles and are consistently
followed by Excelsior Tax-Exempt Fund in the preparation of the financial
statements. Generally accepted accounting principles require management to
make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from
these estimates. The financial statements for Excelsior Funds, Inc.
("Excelsior Fund") are presented separately.
With regard to Tax-Exempt Money Fund, it is Excelsior 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:
Tax-Exempt Money Fund: Securities are valued at amortized cost, which has
been determined by the Fund's Board of Directors to represent the fair
value of the Fund's investments. 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, Long-Term Tax-Exempt Fund and
California Tax-Exempt Income 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
Excelsior 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, Long-Term Tax-Exempt Fund and California Tax-Exempt Income
Fund will fluctuate as the market values of their portfolio securities
change in response to changing market rates of interest and other factors.
29
<PAGE>
(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.
(C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Tax-Exempt Money 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, Long-Term Tax-Exempt Fund and
California Tax-Exempt Income 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 Excelsior 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, 1997, 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,
---------------------------------------------
2001 2002 2003 2005 TOTAL
------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money Fund.......... $18,000 $31,000 $ -- $51,000 $ 100,000
Short-Term Tax-Exempt Securi-
ties Fund..................... -- -- 637,000 -- 637,000
Intermediate-Term Tax-Exempt
Fund.......................... -- -- 4,843,000 -- 4,843,000
New York Intermediate-Term
Tax-Exempt Fund............... -- -- 1,450,000 -- 1,450,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gains
distributions will be made. During the year ended March 31, 1997, Short-
Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt Fund and New
York Intermediate-Term Tax-Exempt Fund utilized capital loss carryforwards
for Federal Tax purposes totaling approximately $7,000, $2,577,000, and
$94,000, respectively.
30
<PAGE>
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. Long-Term Tax-Exempt Fund and California Tax-Exempt Income Fund
incurred, and elected to defer, net capital losses of approximately $4,000
and $1,000, respectively, for the year ended March 31, 1997.
At March 31, 1997, 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>
NET
TAX BASIS TAX BASIS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Tax-Exempt Money Fund........... $ -- $ (12,325) $ (12,325)
Short-Term Tax-Exempt Securities
Fund........................... 83,607 (68,125) 15,482
Intermediate-Term Tax-Exempt
Fund........................... 7,239,543 (717,391) 6,522,152
New York Intermediate-Term Tax-
Exempt Fund.................... 1,503,967 (322,144) 1,181,823
Long-Term Tax-Exempt Fund....... 1,467,572 (94,712) 1,372,860
California Tax-Exempt Income
Fund........................... 110 (105,517) (105,407)
</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 Excelsior 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 Tax-Exempt Money 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, Long-Term Tax-
Exempt Fund and California Tax-Exempt Income Fund.
U.S. Trust, Chase Global Funds Services Company ("CGFSC"), a subsidiary of
The Chase Manhattan Bank and Federated Administrative Services (collectively,
the "Administrators") provide administrative services to Excelsior 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 Excelsior Tax-Exempt Fund,
Excelsior Fund (excluding the international equity portfolios of Excelsior
Fund and Excelsior Institutional Trust), and Excelsior Institutional Trust,
all of which are affiliated investment companies, 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 three investment
companies are determined in proportion to the relative average daily net
assets of the respective Portfolios for the period paid. For the year ended
March 31, 1997, Administration fees charged by U.S. Trust were as follows:
31
<PAGE>
<TABLE>
<S> <C>
Tax-Exempt Money Fund................................................. $163,353
Short-Term Tax-Exempt Securities Fund................................. 6,794
Intermediate-Term Tax-Exempt Fund..................................... 41,896
New York Intermediate-Term Tax-Exempt Fund............................ 16,258
Long-Term Tax-Exempt Fund............................................. 18,066
California Tax-Exempt Income Fund..................................... 872
</TABLE>
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 Excelsior Tax-Exempt Fund, U.S. Trust intends to
voluntarily waive fees and reimburse expenses to the extent necessary for
Short-Term Tax-Exempt Securities Fund to maintain an annual expense ratio of
not more than .60%. For the year ended March 31, 1997, no fees were waived or
expenses reimbursed pursuant to this voluntary limitation. Effective March 6,
1997, U.S. Trust has voluntarily agreed to temporarily waive fees necessary
for the California Tax-Exempt Income Fund to maintain an annual expense ratio
of not more than .50%. Prior to March 6, 1997, U.S. Trust voluntarily waived
fees necessary to maintain the expense ratio at not more than .70%. For the
year ended March 31, 1997, pursuant to these voluntary fee waivers U.S. Trust
waived investment advisory fees totaling $17,008 for California Tax-Exempt
Income Fund.
Excelsior Tax-Exempt Fund has also entered into administrative 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 organization 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 Excelsior 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 year ended
March 31, 1997, 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>
Tax-Exempt Money Fund................................. $502,764 $ --
Short-Term Tax-Exempt Securities Fund................. 28,208 96
Intermediate-Term Tax-Exempt Fund..................... 140,769 489
New York Intermediate-Term Tax-Exempt Fund............ 30,358 50
Long-Term Tax-Exempt Fund............................. 69,305 1,651
California Tax-Exempt Income Fund..................... 16,689 --
</TABLE>
- - Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Tax-
Exempt Fund. Effective February 14, 1997, shares of each Portfolio are sold
without a sales charge. Prior to February 14, 1997, certain sales of Excelsior
Tax-Exempt Fund's shares were subject to a maximum sales charge of 4.50% of
the offering price.
32
<PAGE>
Each Director of Excelsior 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended March 31, 1997, 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................ $ 33,160,219 $ 33,600,864
Intermediate-Term Tax-Exempt Fund.................... 62,691,750 65,316,100
New York Intermediate-Term Tax-Exempt Fund........... 85,990,786 79,852,515
Long-Term Tax-Exempt Fund............................ 121,705,720 130,149,310
California Tax-Exempt Income Fund.................... 13,162,073 251,550
</TABLE>
4. COMMON STOCK:
Excelsior Tax-Exempt Fund currently offers six classes of shares, each
representing interests in one of six separate Portfolios. Authorized capital
for each Portfolio is as follows: 1,500 million shares of Tax-Exempt Money
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,
Long-Term Tax-Exempt Fund and California Tax-Exempt Income 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 Excelsior Tax-Exempt Fund's Board of Directors. Since Tax-Exempt
Money 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>
TAX-EXEMPT MONEY FUND
--------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
--------------- ---------------
<S> <C> <C>
Sold.......................................... $ 3,573,643,154 $ 3,563,760,620
Issued as reinvestment of dividends........... 1,323,711 1,453,070
Redeemed...................................... (3,471,948,696) (3,413,388,911)
--------------- ---------------
Net Increase.................................. $ 103,018,169 $ 151,824,779
=============== ===============
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM TAX-EXEMPT SECURITIES FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,617,630 $ 18,422,170 4,138,581 $ 29,147,090
Issued as reinvestment of
dividends................ 15,976 112,475 22,472 158,308
Redeemed.................. (2,891,228) (20,348,424) (4,989,971) (35,155,827)
---------- ------------ ---------- ------------
Net Decrease.............. (257,622) $ (1,813,779) (828,918) $ (5,850,429)
========== ============ ========== ============
<CAPTION>
INTERMEDIATE-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 5,916,061 $ 53,851,557 7,022,612 $ 64,053,421
Issued as reinvestment of
dividends................ 69,565 635,343 72,517 662,041
Redeemed.................. (7,163,758) (65,269,781) (5,819,486) (53,110,726)
---------- ------------ ---------- ------------
Net Increase (Decrease)... (1,178,132) $(10,782,881) 1,275,643 $ 11,604,736
========== ============ ========== ============
<CAPTION>
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,768,339 $ 23,489,127 3,519,848 $ 29,757,136
Issued as reinvestment of
dividends................ 24,174 204,804 28,744 243,592
Redeemed.................. (2,104,494) (17,736,590) (2,708,124) (22,935,162)
---------- ------------ ---------- ------------
Net Increase.............. 688,019 $ 5,957,341 840,468 $ 7,065,566
========== ============ ========== ============
<CAPTION>
LONG-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 4,928,889 $ 46,839,960 5,294,884 $ 50,924,332
Issued as reinvestment of
dividends................ 56,726 542,894 60,003 582,920
Redeemed.................. (3,093,327) (29,594,558) (4,308,376) (41,666,507)
---------- ------------ ---------- ------------
Net Increase.............. 1,892,288 $ 17,788,296 1,046,511 $ 9,840,745
========== ============ ========== ============
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-EXEMPT
INCOME FUND
----------------------
10/01/96* - 03/31/97
----------------------
SHARES AMOUNT
--------- -----------
<S> <C> <C>
Sold.................... 2,037,537 $14,268,915
Issued as reinvestment
of dividends........... 73 508
Redeemed................ (132,710) (931,434)
--------- -----------
Net Increase............ 1,904,900 $13,337,989
========= ===========
</TABLE>
- --------
* Commencement of operations.
5. ORGANIZATION COSTS:
Excelsior 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.
35
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders
and Board of Directors
Excelsior Tax-Exempt Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Tax-Exempt Money, Short-Term
Tax-Exempt Securities, Intermediate-Term Tax-Exempt, New York Intermediate-Term
Tax-Exempt, Long-Term Tax-Exempt and the California Tax-Exempt Income
Portfolios (the six portfolios constituting the Excelsior Tax-Exempt Funds,
Inc. (formerly UST Master Tax-Exempt Funds, Inc.)) as of March 31, 1997, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1997 by correspondence with the custodian and brokers, or other
appropriate auditing procedures where replies from brokers were not received.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned Portfolios of Excelsior Tax-Exempt Funds, Inc. at March
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 9, 1997
36
<PAGE>
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended March 31, 1997, the percentage of exempt interest
dividends paid and the designation of long-term capital gain are approximated
as follows:
<TABLE>
<CAPTION>
EXEMPT LONG-TERM
INTEREST DIVIDENDS CAPITAL GAIN
------------------- ------------
<S> <C> <C>
Tax-Exempt Money Fund......................... 100% --
Short-Term Tax-Exempt Securities Fund......... 100% --
Intermediate-Term Tax-Exempt Fund............. 97% --
New York Intermediate-Term Tax-Exempt Fund.... 100% --
Long-Term Tax-Exempt Fund..................... 100% $922,000
California Tax-Exempt Income Fund............. 91% --
</TABLE>
37
