<PAGE>
[LOGO OF EXCELSIOR TAX-EXEMPT FUNDS INC. APPEARS HERE]
TAX-EXEMPT FIXED INCOME PORTFOLIOS
ANNUAL REPORT
MARCH 31, 1998
<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........................................ 27
NOTES TO FINANCIAL STATEMENTS.............................................. 32
INDEPENDENT AUDITORS' REPORT............................................... 39
FEDERAL TAX INFORMATION.................................................... 40
</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.
rProspectuses 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, U.S. TRUST COMPANY OF
CONNECTICUT, THEIR 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.
Fiscal 1998 was an exciting year in the financial markets as a whole and for
the fund family. Highlights included exceptional performance by many of the
funds, the reconfiguration of some of our existing equity funds, and the
commencement of several new fund offerings.
During the year, we introduced the Large Cap Growth Fund, Real Estate Fund and
Emerging Markets Fund. These funds provide access to important asset classes
and subclasses not previously offered by Excelsior. As always, we will
continue to evaluate the current Excelsior funds and will consider expanding
our offerings to help you meet your financial goals.
Buoyed by low interest rates and the lack of inflationary pressures, corporate
profits continued to grow. These factors combined to produce another year of
extraordinary returns on domestic equity investments. They also combined to
constrain returns on fixed-income investments to modest levels. International
markets were mixed, with strong returns in Europe, moderate Latin American
returns and down markets in Asia, brought on by a weakened economic
environment and currency devaluations in several countries.
The financial markets will present many challenges and opportunities during
the coming year. Fiscal policy has continued to be effective in keeping
inflation under control. We remain cautiously optimistic regarding the
domestic equity markets. International markets, as a whole, remain attractive.
A close watch will be required in Asia, as efforts are made to right their
recent economic woes. I am confident that the Excelsior fund family will
continue to provide you with the appropriate investment vehicles to respond to
economic environment and to 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
- --------------------------------------------------------------------------------
Through much of the fiscal year ended March 31, 1998, the market was divided
between two camps--one believing in a new paradigm of low inflation and the
other suspecting that the traditional business cycle would once again reassert
itself.
The bond market actually began fiscal 1998 on a down note due to a monthly
economic report which registered a greater-than-expected rise in wages and a
drop in the unemployment rate. Upon news of stronger-than-anticipated retail
sales a week later, the 30-year Treasury bond's yield quickly shot up to 7.125%
as market participants began to expect that strong demand would force the
Federal Reserve to raise rates.
The release of the Consumer Price Index in mid-April, however, rallied the
market. Contrary to expectations, strong demand was not pushing up inflation.
Price increases were smaller than anticipated. Continued gains in productivity
and some economic weakness overseas appeared to be helping to keep domestic and
worldwide inflation at bay. U.S. workers continued to seek job security more
than wage increases during this period. Through April, inflation had yet to
appear, and the long Treasury bond's yield finally dropped below 7%.
The market received more good news at the beginning of May when it was
announced that the President and Congress had come to an agreement to balance
the federal budget by the year 2002. More good news came about a week later
when Federal Reserve Chairman Greenspan hinted that the Federal Open Market
Committee (FOMC) might not raise rates soon. This became a reality when the
FOMC left rates unchanged following their meeting later that month.
Despite their volatility, yields continued to decline quite substantially
through the first half of the fiscal year, and seemed about to head higher
until the fiscal third quarter, when attention shifted to mounting economic
crisis in Asia. Concern then turned away from the specter of inflation toward
the deflation that could result from the Asian crisis.
In fact, in the early weeks of the fiscal fourth quarter, rates declined
sharply as the Asian economic crisis took a turn for the worse and talk of
global recession mounted. Suspicions that the Federal Reserve might ease grew,
and yields tumbled in response. The 30-year T-bond yield fell to 5.66%, a
twenty-year low, amid expectations that the economy would slow. But as the
quarter progressed, the U.S. economy's undiminished strength appeared to
dominate investors' thinking, and interest rates edged upward again. By early
March, the 30-year T-bond yield had climbed as high as 6.07%, before drifting
lower. In fact, had it not been for the Asian crisis, the Fed might actually
have been prompted to raise rates in the period.
As a result, bond yields finished the fiscal fourth quarter essentially where
they began it. At the long end of the spectrum, U.S. bond yields were flat or
slightly higher; the yield on the 30-year Treasury bond, for example, ended the
quarter at 5.97%, up slightly from 5.92% at the start of the quarter. Most
investors in these issues had to be content to earn their returns solely from
the coupon--which, in any event, proved a better option than owning cash.
Yields on shorter-term U.S. securities, however, generally ended the quarter
marginally lower, with the one-year Treasury note at 5.43%, down from 5.55% at
the beginning of the quarter.
2
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
SHORT-TERM TAX-EXEMPT SECURITIES FUND
- -------------------------------------------------------------------------------
Given the uncertain outlook for the economy and inflation during fiscal 1998,
we chose to remain neutral and maintain a fully invested portfolio of high
quality general obligation and revenue bonds throughout the year. Although
opportunities for yield pickup at the short end of the market remained few,
the Fund remained fully invested in high-quality municipal securities with an
average maturity of 2.5 years. This was slightly lower than the maximum
maturity permitted under the Fund's guidelines and accurately reflected our
continued neutral view of the market. For the fiscal year ended March 31,
1998, the Fund achieved a total return of 5.01%.* The Fund's cumulative total
return for the five years ended March 31, 1998 was 21.61.*
[GRAPH APPEARS HERE]
Short-Term Tax-Exempt Lehman Brothers 3 Yr.
Date Securities Fund Muni Bond Index**
---- --------------- -----------------
12/31/92 10000 10000
3/31/93 10165 10203
31-Mar-94 10425 10480
31-Mar-95 10784 11000
31-Mar-96 11369 11710
31-Mar-97 11773 12210
31-Mar-98 12363 12960
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.
** 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.
3
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
Reflecting our neutral view of the market given the uncertain outlook for the
economy and inflation, we remained essentially fully invested and well
diversified in high-quality "essential-service" revenue bonds as well as state
general obligation bonds and maintained an average maturity of eight years--at
least through the first three fiscal quarters of 1998. We headed into the
final fiscal quarter with modest cash levels, most of which we put to work in
higher-yielding 8- to 10-year noncallable municipal securities. This raised
the average maturity of the portfolio slightly, though we remained comfortably
below the maximum maturity allowable. Maintaining an essentially neutral
strategy worked well, allowing the Fund to complete the fiscal year ended
March 31, 1998, with a total return of 8.81%,* and ranking 39 out of 140
funds, based on total return, in the Lipper Intermediate Municipal Debt Fund
category** for the same period. The Fund has performed well long-term, ranking
14 and 10 among 119 and 23 funds, respectively, in the same Lipper category
for the five and ten years ended March 31, 1998, with cumulative total returns
of 34.43%* and 99.76%,* respectively.
[GRAPH APPEARS HERE]
Intermediate-Term Lehman Brothers 5 Yr. Municipal
Date Tax-Exempt Fund G.O. Bond Index***
---- --------------- ------------------
31-Mar-88 10000 10000
31-Mar-89 10558 10190
31-Mar-90 11344 11170
31-Mar-91 12272 12180
31-Mar-92 13304 13250
31-Mar-93 14860 14610
31-Mar-94 15244 14970
31-Mar-95 16210 15870
31-Mar-96 17556 17070
31-Mar-97 18359 17780
3/31/98 19976 19180
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 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.
** 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.
4
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
Throughout the year, we remained essentially fully invested in high quality
New York bonds and a small amount of high quality non-New York issues and
maintained an average maturity of eight years. We did begin the fourth fiscal
quarter with modest cash levels, however, and though we weren't overly
aggressive, we did get fully invested, putting our cash to work in higher
yielding securities in the 8- to 10-year maturity range. We note that Fund
performance was aided by some of our shorter-maturity holdings, which
outperformed in the period. For the fiscal year ended March 31, 1998, the Fund
posted a total return of 8.35%.* For the five year period ended March 31,
1998, the fund posted a cumulative total return of 30.55%.*
[GRAPH APPEARS HERE]
New York Intermediate- Lehman 5-Yr
Date Term Tax-Exempt Fund Muni Bond Index**
---- ------------------- -----------------
5/31/90 10000 10000
3/31/91 10754 10797
3/31/92 11552 11775
3/31/93 12623 12997
3/31/94 12988 13660
3/31/95 13638 14150
3/31/96 14561 15180
3/31/97 15210 15810
3/31/98 16480 17020
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.
** 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.
5
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
LONG-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
During fiscal 1998, given continued uncertainty regarding the outlook for the
economy and inflation, we maintained an essentially neutral stance regarding
portfolio strategy. During the first half of the year, we raised cash and
shortened maturities, neutralizing the Fund relative to its Lehman benchmark.
In the fiscal third quarter, feeling that interest rates had already dropped
substantially, we retained a cash position of approximately 20% and reduced
the duration of the Fund. During the final quarter, we put two thirds of the
cash to work in longer-term municipal securities, finishing the quarter at
roughly 6%-7% cash reserves. In retrospect, the strategy proved sound, as the
Fund finished the fiscal year ended March 31, 1998, with a total return of
12.18%* and ranking 16 out of 237 funds, based on total return, in the Lipper
General Municipal Debt Fund category.** The Fund's long-term performance has
been excellent as well, ranking second and first among 120 and 71 funds,
respectively, in the same Lipper category for the five and ten years ended
March 31, 1998, with cumulative total returns of 47.05%* and 150.73%,*
respectively.
[GRAPH APPEARS HERE]
Lehman Brothers Current
Date Long Term Tax-Exempt Fund Muni Bond Index**
---- ------------------------- -----------------
3/31/88 10000 10000
3/31/89 11014 10670
3/31/90 12189 11720
3/31/91 13372 12830
3/31/92 14655 14090
3/31/93 17051 15900
3/31/94 17457 16120
3/31/95 19379 17120
3/31/96 21192 18400
3/31/97 22351 19340
3/31/98 25073 21330
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.
** 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.
6
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
CALIFORNIA TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
The tax-exempt market was very strong through the first three quarters of the
fiscal year ended March 31, 1998. Yields fell as investors, convinced
inflation was under control, stepped into the market. California tax-exempt
bonds followed the rest of the market but witnessed an increase in the supply
of bonds during the second and third quarters as many municipalities took
advantage of lower rates to refinance debt obligations. The final quarter of
the fiscal year displayed some weekly volatility as domestic economic strength
and Asian weakness vied for center stage. By quarter's end, however, yields on
intermediate bonds were relatively unchanged from the beginning of the
quarter. We remained fully invested in high quality, California municipal
bonds with a target average maturity of 5 years. Our strategy continues to be
to distribute securities across a range of short to intermediate maturities
which offers our shareholders the benefits of liquidity, as well as
reinvestment opportunities. In general, we emphasize high quality credits
which will not be negatively impacted by the deregulatory trends in the power
industry or by California's Proposition 218. The Fund's total return of 7.42%*
for the fiscal year ended March 31, 1998, demonstrates its ability to
participate in strong markets while providing protection against downside
risks.
[GRAPH APPEARS HERE]
California Tax-Exempt Merrill Lynch 3-7 Year
Date Income Fund Municipal Index**
---- ----------- -----------------
10/1/96 10000 10000
12/31/96 10128 10200
3/31/97 10105 10190
6/30/97 10354 10450
9/30/97 10574 10670
12/31/97 10708 10860
3/31/98 10855 10980
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.
** 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.
7
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
<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............ $1,460,119,976 $42,606,556 $265,410,829 $144,768,393 $139,553,434 $31,443,717
============== =========== ============ ============ ============ ===========
Investments, at value
(Note 1).............. $1,460,119,976 $42,972,352 $278,603,400 $149,219,257 $147,895,480 $32,124,449
Cash................... 7,115 38 -- -- 14 12,182
Interest receivable.... 7,962,247 594,188 3,900,150 1,654,891 2,273,414 451,939
Receivable for fund
shares sold........... -- -- -- 1,700,070 57,631 --
Receivable due from
investment adviser.... -- -- -- -- -- 87,473
Prepaid expenses....... 52,400 2,019 12,004 5,545 6,060 1,461
Unamortized
organization costs
(Note 5).............. -- -- -- -- -- 22,036
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL ASSETS........... 1,468,141,738 43,568,597 282,515,554 152,579,763 150,232,599 32,699,540
LIABILITIES:
Payable for dividends
declared.............. 3,495,534 129,970 964,281 419,868 539,205 104,658
Payable for fund shares
redeemed.............. -- -- -- 6,000 57,905 --
Payable for investments
purchased............. 67,444,700 1,063,467 10,379,944 20,759,889 -- --
Investment advisory
fees payable (Note
2).................... 227,281 10,009 66,807 49,513 48,212 --
Administration fees
payable (Note 2)...... 184,151 4,480 38,150 17,675 17,292 4,078
Administrative service
fees payable (Note
2).................... 55,331 2,286 12,487 3,367 7,401 10,172
Directors' fees payable
(Note 2).............. 23,471 962 5,342 2,626 2,645 526
Due to custodian bank.. -- -- 42 27 -- --
Accrued expenses and
other payables........ 180,226 11,946 32,664 27,043 24,774 14,291
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL LIABILITIES...... 71,610,694 1,223,120 11,499,717 21,286,008 697,434 133,725
-------------- ----------- ------------ ------------ ------------ -----------
NET ASSETS.............. $1,396,531,044 $42,345,477 $271,015,837 $131,293,755 $149,535,165 $32,565,815
============== =========== ============ ============ ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ 12 $ (121) $ -- $ (32) $ 55,607 $ --
Accumulated net
realized gain (loss)
on investments........ (136,156) (562,887) (1,708,737) (283,646) (49,489) 13,541
Unrealized appreciation
of investments........ -- 365,796 13,192,571 4,450,864 8,342,046 680,732
Par value (Note 4)..... 1,396,918 5,958 28,580 14,940 14,908 4,535
Paid in capital in
excess of par value... 1,395,270,270 42,536,731 259,503,423 127,111,629 141,172,093 31,867,007
-------------- ----------- ------------ ------------ ------------ -----------
TOTAL NET ASSETS........ $1,396,531,044 $42,345,477 $271,015,837 $131,293,755 $149,535,165 $32,565,815
============== =========== ============ ============ ============ ===========
Shares of Common Stock
Outstanding............ 1,396,917,742 5,957,618 28,580,318 14,940,460 14,908,458 4,534,713
NET ASSET VALUE PER
SHARE.................. $1.00 $7.11 $9.48 $8.79 $10.03 $7.18
===== ===== ===== ===== ====== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
<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........... $43,478,393 $1,790,752 $12,712,543 $5,587,962 $ 6,527,086 $1,137,948
----------- ---------- ----------- ---------- ----------- ----------
EXPENSES:
Investment advisory fees
(Note 2)................. 2,953,178 123,368 879,660 583,250 634,757 129,359
Administration fees (Note
2)....................... 1,807,345 62,917 384,537 178,474 194,236 39,584
Administrative servicing
fees (Note 2)............ 627,413 24,462 134,309 33,519 94,008 91,274
Shareholder servicing
agent fees............... 26,840 9,814 18,978 9,632 32,428 15,226
Custodian fees............ 306,833 12,029 63,139 29,696 33,567 7,881
Registration and filing
fees..................... 18,033 13,054 15,785 -- 7,298 724
Legal and audit fees...... 169,679 6,312 36,879 13,454 14,922 7,849
Directors' fees and ex-
penses (Note 2).......... 95,729 3,495 20,730 7,316 6,258 2,031
Shareholder reports....... 43,588 3,272 18,989 4,586 6,649 13,329
Amortization of organiza-
tion costs (Note 5)...... -- 3,171 -- -- -- 6,289
Miscellaneous expenses.... 162,951 5,268 25,561 5,643 6,322 8,049
----------- ---------- ----------- ---------- ----------- ----------
TOTAL EXPENSES............ 6,211,589 267,162 1,598,567 865,570 1,030,445 321,595
Fees waived and reimbursed
by investment adviser and
administrators (Note 2).. (627,413) (24,462) (134,309) (33,519) (94,008) (192,412)
----------- ---------- ----------- ---------- ----------- ----------
NET EXPENSES.............. 5,584,176 242,700 1,464,258 832,051 936,437 129,183
----------- ---------- ----------- ---------- ----------- ----------
NET INVESTMENT INCOME...... 37,894,217 1,548,052 11,248,285 4,755,911 5,590,649 1,008,765
----------- ---------- ----------- ---------- ----------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain (loss)
on security transac-
tions.................... (24,067) 74,408 3,134,713 1,166,547 1,490,047 14,150
Change in unrealized
appreciation/depreciation
of investments during the
year..................... -- 350,314 6,670,419 3,269,041 6,969,186 786,139
----------- ---------- ----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS................ (24,067) 424,722 9,805,132 4,435,588 8,459,233 800,289
----------- ---------- ----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.. $37,870,150 $1,972,774 $21,053,417 $9,191,499 $14,049,882 $1,809,054
=========== ========== =========== ========== =========== ==========
</TABLE>
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, 1998
Net investment income..... $ 37,894,217 $ 1,548,052 $ 11,248,285 $ 4,755,911 $ 5,590,649 $ 1,008,765
Net realized gain (loss)
on investments........... (24,067) 74,408 3,134,713 1,166,547 1,490,047 14,150
Change in unrealized
appreciation/depreciation
of investments during the
year..................... -- 350,314 6,670,419 3,269,041 6,969,186 786,139
-------------- ----------- ------------ ------------ ------------ -----------
Net increase in net assets
resulting from
operations............... 37,870,150 1,972,774 21,053,417 9,191,499 14,049,882 1,809,054
Distributions to
shareholders:
From net investment
income.................. (37,894,205) (1,547,934) (10,925,984) (4,755,911) (5,521,851) (1,008,765)
In excess of net
investment income....... -- (123) -- (32) -- --
From net realized gain on
investments............. -- -- (322,255) -- (1,525,577) --
In excess of net realized
gain on investments..... -- -- -- -- (49,489) --
Increase in net assets
from fund share
transactions (Note 4).... 326,868,880 843,112 17,160,382 24,606,206 34,655,748 18,533,553
-------------- ----------- ------------ ------------ ------------ -----------
Net increase in net
assets................... 326,844,825 1,267,829 26,965,560 29,041,762 41,608,713 19,333,842
NET ASSETS:
Beginning of year........ 1,069,686,219 41,077,648 244,050,277 102,251,993 107,926,452 13,231,973
-------------- ----------- ------------ ------------ ------------ -----------
End of year (1).......... $1,396,531,044 $42,345,477 $271,015,837 $131,293,755 $149,535,165 $32,565,815
============== =========== ============ ============ ============ ===========
(1) Including
undistributed
(distributions in excess
of) net investment
income................... $ 12 $ (121) $ -- $ (32) $ 55,607 $ --
============== =========== ============ ============ ============ ===========
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 (2).......... $1,069,686,219 $41,077,648 $244,050,277 $102,251,993 $107,926,452 $13,231,973
============== =========== ============ ============ ============ ===========
--------
(2) Including
undistributed
(distributions in excess
of) net investment
income................... $ -- (116) $ (46) $ -- $ 29,622 $ --
============== =========== ============ ============ ============ ===========
</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 period.
<TABLE>
<CAPTION>
DIVIDENDS DISTRIBUTIONS
NET ASSET NET REALIZED DIVIDENDS IN EXCESS OF FROM NET
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET NET REALIZED
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT GAIN ON
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
--------- ---------- -------------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-EXEMPT MONEY FUND--(5/24/85*)
Year Ended March 31,
1994................... $1.00 $0.01938 -- $0.01938 $(0.01938) -- --
1995................... 1.00 0.02825 -- 0.02825 (0.02825) -- --
1996................... 1.00 0.03362 -- 0.03362 (0.03362) -- --
1997................... 1.00 0.03050 -- 0.03050 (0.03050) -- --
1998................... 1.00 0.03216 -- 0.03216 (0.03216) -- --
SHORT-TERM TAX-EXEMPT SECURITIES FUND--(12/31/92*)
Year Ended March 31,
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) -- --
1997................... 7.05 0.26 (0.01) 0.25 (0.27) -- # --
1998................... 7.03 0.27 0.08 0.35 (0.27) -- # --
INTERMEDIATE-TERM TAX-EXEMPT FUND--(12/3/85*)
Year Ended March 31,
1994................... $9.24 $ 0.34 $(0.09) $ 0.25 $ (0.34) -- $(0.26)
1995................... 8.64 0.37 0.16 0.53 (0.37) -- --
1996................... 8.80 0.40 0.32 0.72 (0.40) -- --
1997................... 9.12 0.40 -- 0.40 (0.41) -- # --
1998................... 9.11 0.42 0.37 0.79 (0.41) -- (0.01)
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND--(5/31/90*)
Year Ended March 31,
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) -- --
1997................... 8.44 0.36 0.01++ 0.37 (0.36) -- --
1998................... 8.45 0.35 0.34 0.69 (0.35) -- # --
LONG-TERM TAX-EXEMPT FUND--(2/5/86*)
Year Ended March 31,
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)
1998................... 9.43 0.44 0.71 1.15 (0.43) -- (0.12)
CALIFORNIA TAX-EXEMPT INCOME FUND--(10/1/96*)
Period ended March 31,
1997................... $7.00 $ 0.12 $(0.05) $ 0.07 $ (0.12) -- --
Year ended March 31,
1998.................. 6.95 0.28 0.23 0.51 (0.28) -- --
</TABLE>
* Commencement of operations.
** Annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if
any) by adviser and administrators.
++ The amount shown for the year ended March 31, 1997 for a share outstanding
throughout that year does not accord with the aggregate net gains on
investments for that year 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>
RATIO OF RATIO OF RATIO OF
DISTRIBUTIONS NET GROSS 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'S) NET ASSETS NET ASSETS+ NET ASSETS RATE (NOTE 2)
------------- ------------- ---------- ------ ----------- ---------- ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- $(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
-- (0.03216) 1.00 3.26% 1,396,531 0.47% 0.53% 3.21% -- 0.00053
-- $ (0.26) $6.99 2.55% $ 57,728 0.59% 0.60% 2.94% 539% --
-- (0.26) 6.96 3.45% 48,188 0.59% 0.61% 3.60% 565% --
-- (0.28) 7.05 5.42% 42,970 0.58% 0.64% 4.05% 124% --
-- (0.27) 7.03 3.55% 41,078 0.58% 0.65% 3.73% 87% -- #
-- (0.27) 7.11 5.01% 42,345 0.59% 0.65% 3.76% 58% -- #
$(0.25) $ (0.85) $8.64 2.58% $ 298,261 0.64% 0.64% 3.74% 379% --
-- (0.37) 8.80 6.34% 234,990 0.61% 0.64% 4.28% 362% --
-- (0.40) 9.12 8.30% 255,178 0.60% 0.65% 4.44% 50% --
-- (0.41) 9.11 4.58% 244,050 0.58% 0.64% 4.56% 28% -- #
-- (0.42) 9.48 8.81% 271,016 0.58% 0.64% 4.47% 30% -- #
$(0.08) $ (0.61) $8.18 1.87% $ 107,489 0.87% 0.87% 3.55% 326% --
-- (0.42) 8.24 6.05% 87,164 0.78% 0.80% 4.06% 563% --
-- (0.35) 8.44 6.77% 96,407 0.75% 0.77% 4.15% 154% --
-- (0.36) 8.45 4.46% 102,252 0.72% 0.75% 4.25% 89% -- #
-- (0.35) 8.79 8.35% 131,294 0.71% 0.74% 4.08% 47% -- #
$(0.27) $ (1.19) $8.87 2.38% $ 82,151 0.85% 0.86% 4.25% 252% --
-- (0.53) 9.27 11.01% 78,880 0.80% 0.83% 4.86% 214% --
-- (0.60) 9.53 9.35% 91,058 0.77% 0.82% 4.85% 185% $ 0.01
-- # (0.59) 9.43 5.47% 107,926 0.74% 0.81% 4.80% 125% 0.01
-- # (0.55) 10.03 12.18% 149,535 0.74% 0.81% 4.40% 83% 0.01
-- $ (0.12) $6.95 2.12%** $ 13,232 0.66%** 1.53%** 3.69%** 7%** $ 0.03
-- (0.28) 7.18 7.42% 32,566 0.50% 1.24% 3.90% 14% 0.05
</TABLE>
See Notes to Financial Statements
13
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- 64.68%
$ 4,200,000 Ascension Parish, Louisiana, Pollution Control
Refunding Revenue Bonds, Shell Oil Co. Project,
3.800%, 09/01/2023+............................... $ 4,200,000
25,000,000 Burke County, Georgia, Development Authority
Commercial Paper,
Oglethorpe Power Corp., (AMBAC),
3.750%, 04/03/1998................................ 25,000,000
21,200,000 Burke County, Georgia, Development Authority,
Pollution Control Refunding Revenue Bonds,
Oglethorpe Power Corp., Series A, (AMBAC),
3.650%, 01/01/2016+............................... 21,200,000
19,750,000 Burke County, Georgia, Development Authority,
Pollution Control Refunding Revenue Bonds,
Oglethorpe Power Corp., Vogtle, Series B, (AMBAC),
3.800%, 05/28/1998+............................... 19,749,714
12,000,000 Custer County, Idaho, Pollution Control Refunding
Revenue Bonds, Amoco Project Standard Oil
Industries,
3.750%, 10/01/2009+............................... 12,000,000
23,300,000 Emery County, Utah, Pacificorp. Pollution Control
Refunding Revenue Bonds, (AMBAC),
Liquidity with Bank of Nova Scotia,
3.800%, 11/01/2024................................ 23,300,000
15,000,000 Harris County, Texas, Health Facilities
Development Corp., Hospital Refunding Revenue
Bonds, Memorial Hospital System Project, Series B,
(MBIA),
Liquidity with Societe Generale,
3.850%, 06/01/2024+............................... 15,000,000
5,000,000 Houston, Texas, General Obligation Commercial
Paper,
3.350%, 04/03/1998................................ 5,000,000
12,500,000 Houston, Texas, General Obligation Commercial
Paper, Series A, 3.350%, 05/18/1998............... 12,500,000
12,000,000 Houston, Texas, General Obligation Commercial
Paper, Series A, 3.650%, 05/18/1998............... 12,000,000
7,500,000 Houston, Texas, General Obligation Commercial
Paper, Series B, 3.500%, 04/20/1998............... 7,500,000
6,600,000 Houston, Texas, General Obligation Commercial
Paper, Series B, 3.550%, 04/20/1998............... 6,600,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$ 4,700,000 Illinois Health Facilities Authority Revenue
Bonds, Hospital Sisters Service, Series E, (MBIA),
Liquidity with Morgan
Guaranty Trust,
3.650%, 12/01/2015+............................... $ 4,700,000
30,000,000 Intermountain Power Agency, Utah, Commercial
Paper,
3.150%, 04/02/1998................................ 30,000,000
30,000,000 Jacksonville, Florida, Electric Authority
Commercial Paper, 3.550%, 05/12/1998.............. 30,000,000
23,600,000 Jacksonville, Florida, Pollution Control Refunding
Revenue Bonds, Florida Power & Light Co. Project,
3.800%, 05/01/2029+............................... 23,600,000
4,000,000 Jasper County, Indiana, Commercial Paper, Northern
Indiana Public Services,
3.250%, 04/01/1998................................ 4,000,000
27,200,000 Jasper County, Indiana, Commercial Paper, Northern
Indiana Public Services,
3.800%, 04/07/1998................................ 27,200,000
3,000,000 Jasper County, Indiana, Commercial Paper, Northern
Indiana Public Services,
3.350%, 05/13/1998................................ 3,000,000
20,650,000 Jasper County, Indiana, Commercial Paper, Northern
Indiana Public Services,
3.450%, 05/13/1998................................ 20,650,000
19,000,000 King County, Washington, Commercial Paper,
3.350%, 05/15/1998................................ 19,000,000
10,000,000 Michigan Technological University Revenue Bonds,
Series A, (AMBAC),
Liquidity with Bank of America,
3.700%, 10/01/2018+............................... 10,000,000
1,200,000 Minneapolis, Minnesota, Community Development
Agency, Pollution Control Refunding Revenue Bonds,
Northern States Power Co. Project,
3.800%, 03/01/2011+............................... 1,200,000
8,800,000 Mobile, Alabama, Industrial Development Board,
Pollution Control Refunding Revenue Bonds, Alabama
Power Co. Project, 3.750%, 06/01/2015+............ 8,800,000
</TABLE>
See Notes to Financial Statements
14
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$17,290,000 Mount Vernon, Indiana, General Electric,
Commercial Paper,
3.550%, 05/19/1998................................ $ 17,290,000
30,000,000 Nassau County, New York, Bond Anticipation Notes,
Series B, 4.000%, 08/17/1998...................... 30,044,700
22,000,000 New Jersey State Transportation, Commercial Paper,
3.300%, 04/02/1998................................ 22,000,000
5,100,000 New York City, New York, General Obligation Bonds,
Subseries B5, (MBIA), Liquidity with Rabobank
Nederlander,
3.700%, 08/15/2022+............................... 5,100,000
25,000,000 New York City, New York, Revenue Anticipation
Notes, Series A, 4.500%, 06/30/1998............... 25,057,699
26,500,000 Nueces River, Texas, San Miguel Electric Corp.,
Commercial Paper, CFC Guaranty,
3.450%, 05/19/1998................................ 26,500,000
6,500,000 Pleasant Prairie, Wisconsin, Pollution Control
Refunding Revenue Bonds, Wisconsin Electric Power
Co., Series A, 3.750%, 09/01/2030+................ 6,500,000
5,000,000 Pleasant Prairie, Wisconsin, Pollution Control
Refunding Revenue Bonds, Wisconsin Electric Power
Co., Series C, 3.750%, 09/01/2030+................ 5,000,000
3,000,000 Purdue University, Indiana, University Revenue
Bonds, Student Fee, Series L,
3.600%, 07/01/2020+............................... 3,000,000
20,000,000 Purdue University, Indiana, University Revenue
Bonds, Student Fee, Series O,
3.600%, 07/01/2019+............................... 20,000,000
17,150,000 Sabine River Authority, Texas Pollution Control
Refunding Revenue Bonds, Texas Utilities Project,
Series A, (AMBAC), Liquidity with Bank of New
York,
3.800%, 03/01/2026+............................... 17,150,000
21,800,000 Salt River, Arizona, Electric & Gas Commercial
Paper,
3.500%, 05/19/1998................................ 21,800,000
24,439,000 Salt River, Arizona, Electric & Gas Commercial
Paper,
3.550%, 07/14/1998................................ 24,439,000
10,000,000 San Antonio, Texas, Electric & Gas Commercial
Paper,
3.400%, 04/01/1998................................ 10,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$10,000,000 San Antonio, Texas, Electric & Gas Commercial
Paper,
3.400%, 04/03/1998................................ $ 10,000,000
25,800,000 San Antonio, Texas, Electric & Gas Commercial
Paper, 3.450%, 04/07/1998......................... 25,800,000
20,000,000 San Antonio, Texas, Electric & Gas Commercial
Paper, 3.400%, 05/01/1998......................... 20,000,000
20,000,000 Shelby County, Tennessee, Commercial Paper,
3.550%, 07/14/1998................................ 20,000,000
10,000,000 Shelby County, Tennessee, Commercial Paper,
3.550%, 07/14/1998................................ 10,000,000
5,000,000 South Carolina State, Public Service Authority
Commercial Paper,
3.600%, 05/19/1998................................ 5,000,000
35,630,000 South Carolina State, Public Service Authority
Commercial Paper,
3.550%, 07/16/1998................................ 35,630,000
15,800,000 State of Texas, General Obligation Commercial
Paper, 3.750%, 04/09/1998......................... 15,800,000
15,000,000 State of Texas, General Obligation Commercial
Paper, 3.400%, 07/17/1998......................... 15,000,000
10,000,000 Tennessee, General Obligation Commercial Paper,
3.500%, 04/09/1998................................ 10,000,000
10,000,000 Tennessee State, Bond Anticipation Notes, Series
A, 3.650%, 07/01/2001............................. 10,000,000
9,000,000 Texas A & M University, Commercial Paper,
3.350%, 04/01/1998................................ 9,000,000
80,000,000 Texas State, Tax and Revenue Anticipation Notes,
Series A, 4.750%, 08/31/1998...................... 80,389,663
5,100,000 University of Maryland, University Revenue Bonds,
Equipment Loan Program, Series A,
3.650%, 07/01/2015+............................... 5,100,000
30,100,000 Utah, General Obligation Commercial Paper,
3.150%, 04/01/1998................................ 30,100,000
11,300,000 Valdez, Alaska, Marine Term Refunding Revenue
Bonds, Exxon Pipeline Co. Project, Series C,
3.750%, 12/01/2033+............................... 11,300,000
</TABLE>
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENT
SECURITIES -- (CONTINUED)
$10,000,000 Wisconsin State, General Obligation Commercial
Paper, 3.200%, 04/08/1998........................ $ 10,000,000
--------------
903,200,776
--------------
TAX-EXEMPT CASH EQUIVALENTS --BACKED BY LETTERS OF CREDIT -- 39.70%
ABN AMRO BANK
18,100,000 Flint, Michigan, Hospital Building Authority
Revenue Bonds, Hurley Medical Center, Series B,
3.700%, 07/01/2015+.............................. 18,100,000
8,950,000 Illinois Health Facilities Authority Revenue
Bonds, Palos Community Hospital, Series B,
3.650%, 12/01/2015+.............................. 8,950,000
BANK OF AMERICA
10,100,000 California Pollution Control Financing Authority,
Pollution Control Refunding Revenue Bonds,
Pacific Gas & Electric, Series C,
3.700%, 11/01/2026+.............................. 10,100,000
18,835,000 Des Moines, Iowa, Hospital Facilities Revenue
Bonds, Iowa Methodist Medical Center Project,
3.700%, 08/01/2015+.............................. 18,835,000
BANK OF NEW YORK
10,000,000 Ohio County, Kentucky, Pollution Control Revenue
Bonds, Big Rivers Electric Corp., Series 1983,
4.300%, 06/01/2013+.............................. 10,000,000
BANK OF NOVA SCOTIA
10,200,000 Gary, Indiana, Environmental Improvement Revenue
Notes, U.S. Steel Corp. Project, Series 1984,
3.350%, 07/15/2002+.............................. 10,200,000
3,400,000 New Hampshire State Industrial Development
Authority, Pollution Control Revenue Bonds,
Bangor Hydro-Electric Co. Project, Series 1983,
3.500%, 01/01/2009+.............................. 3,400,000
BANK OF TOKYO
15,640,000 University of Iowa, Facilities Revenue Bonds,
Human Biology Research, Series A,
3.900%, 06/01/2005+.............................. 15,640,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --BACKED BY LETTERS OF CREDIT -- (CONTINUED)
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
10,500,000 North Carolina Eastern Municipal Power
Authority, Commercial Paper,
3.400%, 07/15/1998................................ 10,500,000
CREDIT SUISSE
6,900,000 Garden City, Kansas, Industrial Development
Revenue Bonds, Inland Container Corp. Project,
Temple Series 1983, 3.450%, 01/01/2008+........... 6,900,000
10,075,000 Idaho Health Facilities Authority Revenue Bonds,
St. Lukes Regional Medical Center Project, 3.800%,
05/01/2022+....................................... 10,075,000
FIRST NATIONAL BANK OF CHICAGO
45,650,000 Coastal Bend Health Facilities Development Corp.,
Texas, Incarnate Health System,
3.700%, 08/15/2027+............................... 45,650,000
KREDIETBANK, N.V.
8,495,000 Illinois Health Facilities Authority Revenue
Bonds, Memorial Medical Center, Series C, 3.700%,
01/01/2016+....................................... 8,495,000
LASALLE NATIONAL BANK
14,000,000 Illinois Health Facilities Authority Revenue
Bonds, Ingalls Memorial Hospital, Series B,
3.700%, 01/01/2016+............................... 14,000,000
4,000,000 Illinois Health Facilities Authority Revenue
Bonds, Ingalls Memorial Hospital, Series C,
3.700%, 01/01/2016+............................... 4,000,000
MORGAN GUARANTY TRUST
6,900,000 Kenton County, Kentucky, Industrial Building
Revenue Bonds, Redken Labs, Inc. Project, Series
1984, 3.400%, 12/01/2014+......................... 6,900,000
13,720,000 Louisiana State Offshore Terminal Authority
Deepwater Port Revenue Bonds,
3.700%, 09/01/2008+............................... 13,720,000
</TABLE>
See Notes to Financial Statements
16
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
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)
$ 7,500,000 Missouri State Health and Educational
Facilities--SSM Health, Commercial Paper, Series
C,
3.750%, 05/18/1998............................... $ 7,500,000
NORDDEUTSCHE LANDESBANK
14,800,000 Brazos, Texas, Harbor Industrial Development
Corp. Revenue Bonds, Badische Corp.,
3.400%, 12/01/2013+.............................. 14,800,000
NORTHERN TRUST
21,500,000 Illinois Health Facilities Authority Revenue
Bonds, Healthcorp Affiliates, Series A,
3.650%, 11/01/2015+.............................. 21,500,000
5,500,000 Montgomery, Ohio, Miami Hospital, Commercial
Paper,
3.350%, 05/12/1998............................... 5,500,000
RABOBANK NEDERLANDER
6,100,000 Illinois Health Facilities Authority Revenue
Bonds, Healthcorp Affiliates,
3.650%, 11/01/2015+.............................. 6,100,000
30,500,000 Indiana Health Facilities Financing Authority
Revenue Bonds, St. Anthony's Medical Center
Project,
3.650%, 12/01/2014+.............................. 30,500,000
12,670,000 Indiana Health Facility Financing Authority
Revenue Bonds, St. Anthony's Medical Center
Project,
3.650%, 12/01/2017+.............................. 12,670,000
12,125,000 Mississippi Hospital Equipment & Facilities
Authority Revenue Bonds, Mississippi Baptist
Medical Center, 3.650%, 07/01/2012+.............. 12,125,000
SANWA BANK
4,600,000 Michigan State Job Development Authority Revenue
Bonds, Hitachi Metals International Project,
3.700%, 01/01/2004+.............................. 4,600,000
SUMITOMO BANK LTD.
2,800,000 District of Columbia, Revenue Bonds, George
Washington University,
4.400%, 03/01/2006+.............................. 2,800,000
3,200,000 District of Columbia, Revenue Bonds, George
Washington University, Series A,
4.400%, 03/01/2006............................... 3,200,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- --------------
<C> <S> <C>
TAX-EXEMPT CASH EQUIVALENTS --
BACKED BY LETTERS OF CREDIT -- (CONTINUED)
$10,200,000 Wake County, North Carolina, Industrial
Facilities & Pollution Control Financing
Authority Revenue Bonds, Carolina Power & Light
Co. Project, Series 1985-B, 4.500%, 09/01/2015+.. $ 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, 4.500%, 10/01/2015+.. 12,900,000
TORONTO DOMINION BANK LTD.
29,600,000 Wisconsin State Health Facilities Authority
Revenue Bonds, Wheaton Franciscan Health Care,
3.700%, 08/15/2016+.............................. 29,600,000
UNION BANK OF SWITZERLAND
5,000,000 Michigan State Strategic Fund,
Pollution Control Refunding Revenue Bonds
Consumer Power Project,
3.800%, 04/15/2018+.............................. 5,000,000
WACHOVIA BANK
26,000,000 Baltimore, Maryland, Port Facilities
Revenue Bonds, Occidental Petroleum,
3.250%, 10/14/2011+.............................. 26,000,000
WESTDEUTSCHE LANDESBANK
40,000,000 Massachusetts State General
Obligation Refunding Bonds, Series B,
3.650%, 08/01/2015+.............................. 40,000,000
12,400,000 Port Corpus Christi Authority, Texas, Nueces
County Marine Term Revenue Bonds, Reynolds Metals
Co., 3.600%, 09/01/2014+......................... 12,400,000
CREDIT SUISSE/SWISS BANK
30,000,000 Dallas Area Rapid Transit, Commercial Paper,
3.550%, 07/13/1998............................... 30,000,000
MORGAN GUARANTY TRUST/UNION BANK OF SWITZERLAND
13,910,000 North Carolina Eastern Municipal Power Authority,
Commercial Paper,
3.200%, 04/01/1998............................... 13,910,000
WACHOVIA BANK/MORGAN GUARANTY TRUST/BANK OF AMERICA/BAYERCSHE
LANDESBANK/LANDESBANK HESSEN
30,000,000 Georgia Municipal Gas Authority, Gas Revenue
Bonds, Gas Portfolio II Project, Series C,
3.650%, 01/01/2008+.............................. 30,000,000
--------------
554,470,000
==============
</TABLE>
See Notes to Financial Statements
17
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT MONEY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
SHARES
----------
<C> <S> <C>
OTHER INVESTMENTS--0.17%
$2,449,200 Dreyfus Tax-Exempt Cash Management Fund............ $ 2,449,200
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $1,460,119,976*)................ 104.55% $1,460,119,976
OTHER ASSETS & LIABILITIES (NET)........................ (4.55) (63,588,932)
------ --------------
NET ASSETS.............................................. 100.00% $1,396,531,044
====== ==============
</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.
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, 1998, approximately, 40% 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, 1998, approximately, 28% 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, 1998
SHORT-TERM TAX-EXEMPT SECURITIES FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 88.71%
$1,900,000 Boston, Massachusetts, General Obligation Bonds,
Series A,
4.500%, 01/01/2002................................... $ 1,929,355
1,700,000 Burlington County, New Jersey, General Obligation
Bonds,
5.200%, 10/01/2000................................... 1,752,564
1,000,000 Cobb County & Marietta, Georgia, Water Authority,
Water Refunding Revenue Bonds,
4.900%, 11/01/2002................................... 1,034,350
1,500,000 Connecticut State General Obligation Bonds, Series C,
5.100%, 03/15/2000................................... 1,537,530
1,000,000 Connecticut State Special Assessment Unemployment
Compensation Advisory Fund, Refunding Revenue Bonds,
Series A, (AMBAC),
5.500%, 05/15/2001................................... 1,041,780
1,100,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure
Purposes, Series C, (FGIC),
5.500%, 10/01/2000................................... 1,143,131
4,000,000 Delaware State General Obligation Bonds, Series B,
5.000%, 05/01/2000................................... 4,091,920
1,900,000 Georgia State Tollway Authority, State Guaranteed
Refunding Revenue Bonds, Georgia 400 Project,
4.500%, 07/01/2001................................... 1,923,959
1,700,000 Minneapolis, Minnesota, Special School District No.
001, Certificates of Participation, Series A, (MBIA),
5.500%, 02/01/2003................................... 1,799,467
1,275,000 Monmouth County, New Jersey, General Obligation
Bonds,
5.000%, 10/01/2000................................... 1,307,793
1,900,000 Monroe County, New York, Refunding Public Improvement
General Obligation Bonds, Series A,
5.000%, 03/01/2001................................... 1,952,288
2,000,000 Municipal Assistance Corporation for New York City,
New York, Revenue Bonds, Series E,
5.500%, 07/01/2000................................... 2,066,420
2,000,000 New Jersey State Transportation Corp. Revenue Bonds,
Capital Grant Anticipation Notes, Series A, (FSA),
5.250%, 09/01/2001................................... 2,068,120
2,000,000 New York City, New York, Trust for Cultural
Resources, Museum of Modern Art Revenue Bonds, Series
A, (AMBAC),
5.000%, 01/01/2000................................... 2,039,460
1,500,000 Omaha Public Power District, Nebraska, Electric
Refunding Revenue Bonds, Series A,
5.000%, 02/01/2001................................... 1,540,125
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$4,000,000 Pennsylvania State General Obligation Bonds, 2nd
Series,
5.400%, 07/01/2000................................... $ 4,133,040
1,000,000 South Columbia Basin, Washington, Irrigation
District, Refunding Revenue Bonds,
5.750%, 12/01/2000................................... 1,041,730
2,000,000 Stamford, Connecticut, Refunding General Obligation
Bonds,
5.000%, 07/15/2002................................... 2,068,420
2,000,000 Texas State General Obligation Bonds, Series B,
5.000%, 10/01/2001................................... 2,060,100
1,000,000 Union County, New Jersey, Improvement Authority
Revenue Bonds, Correctional Facilities Project,
5.400%, 06/15/2000................................... 1,031,340
-----------
37,562,892
-----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 5.22%
2,000,000 New York State, Local Assistance Corp. Revenue Bonds,
Series B,
7.250%, 04/01/2005 (Prerefunded 04/01/2001).......... 2,212,160
-----------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 2.60%
MORGAN GUARANTY TRUST
1,100,000 Maricopa County, Arizona, Pollution Control Corp.,
Pollution Control Refunding Revenue Bonds, Arizona
Public Service Co., Series A,
3.750%, 05/01/2029+.................................. 1,100,000
-----------
<CAPTION>
SHARES
----------
<C> <S> <C>
OTHER INVESTMENTS -- 4.95%
1,429,800 Dreyfus Tax-Exempt Cash Management Fund.............. 1,429,800
667,500 Shearson Tax-Exempt Municipal Fund................... 667,500
-----------
2,097,300
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $42,606,556*)...................... 101.48% $42,972,352
OTHER ASSETS & LIABILITIES (NET)........................... (1.48) (626,875)
------ -----------
NET ASSETS................................................. 100.00% $42,345,477
====== ===========
</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.
FSA--Financial Security Assurance
MBIA--Municipal Bond Insurance Assoc.
See Notes to Financial Statements
19
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
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, 1998, approximately, 8% 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, 1998, approximately, 20% 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
20
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 98.41%
$10,000,000 Alabama State Public School & College Authority,
Capital Improvement Revenue Bonds, (MBIA),
5.250%, 11/01/2005................................. $ 10,642,100
10,000,000 Bartow County, Georgia, Development Authority
Pollution Control Refunding Revenue Bonds, Georgia
Power Company Bowen, Series 1,
3.650%, 06/01/2023+................................ 10,000,000
10,000,000 California State Public Improvement General
Obligation Bonds, (FGIC), 7.500%, 11/01/2003....... 11,675,500
10,000,000 Cobb County, Georgia School District, General
Obligation Bonds, (FGIC),
4.750%, 02/01/2005................................. 10,305,300
10,000,000 Connecticut State General Obligation Bonds, Series
C, 5.500%, 08/01/2006.............................. 10,767,100
10,000,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure,
Series A, 5.125%, 09/01/2005....................... 10,522,100
10,000,000 Fairfax County, Virginia, Refunding General
Obligation Bonds, Series C, 5.250%, 05/01/2008..... 10,474,900
10,000,000 Florida State Board of Education Refunding General
Obligation Bonds, Series B, 5.125%, 06/01/2008..... 10,379,100
10,000,000 Florida State Division Board Finance Department,
General Services Refunding Revenue Bonds,
Environment Protection-Preservation 2000, Series A,
(FSA), 5.500%, 07/01/2008.......................... 10,838,800
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 07/01/2004................................. 11,269,600
10,000,000 Hawaii State General Obligation Bonds, Series CJ,
5.900%, 01/01/2006................................. 10,873,100
10,000,000 Honolulu, Hawaii, City & County General Obligation
Refunding Bonds, Series C, (FGIC),
5.500%, 11/01/2006................................. 10,905,800
10,000,000 Jacksonville, Florida, Electric Authority Refunding
Revenue Bonds, St. Johns River, Issue 2-15, 5.500%,
10/01/2006......................................... 10,854,300
10,000,000 Lower Colorado River Authority of Texas, Refunding
Revenue Bonds, 6th Series,
5.000%, 01/01/2009................................. 10,358,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$10,000,000 Maryland State & Local Facilities, Public
Improvements Correctional Facilities, 3rd Series,
5.700%, 10/15/2006................................. $ 10,834,200
10,000,000 Massachusetts State Public Improvements, General
Obligation Bonds, Series C, (MBIA),
5.625%, 08/01/2011................................. 10,699,800
10,000,000 New Jersey State Refunding General Obligation
Bonds, Series D,
5.625%, 02/15/2005................................. 10,833,300
10,000,000 New Jersey State, Transportation Trust Fund Revenue
Bonds, Transportation System, Series A, (AMBAC),
5.250%, 06/15/2008................................. 10,574,900
10,000,000 New York City, New York, Municipal Assistance
Corp., Series G,
6.000%, 07/01/2006................................. 11,118,100
10,000,000 New York State Power Authority & General Purpose
Refunding Revenue Bonds, Series A,
5.000%, 02/15/2007................................. 10,421,400
10,000,000 New York State Power Authority & General Purpose
Refunding Revenue Bonds, Series CC,
4.900%, 01/01/2006................................. 10,306,300
10,000,000 Ocean County, New Jersey, Utilities Authority
Wastewater Revenue Bonds,
5.000%, 01/01/2009................................. 10,421,800
10,000,000 Ohio State Public Facilities Commission Revenue
Bonds,
Series II-B, (MBIA),
5.000%, 11/01/2007................................. 10,383,000
10,000,000 Texas State Refunding Bonds,
Series A,
5.800%, 10/01/2004................................. 10,907,800
10,000,000 Wisconsin State Refunding General Obligation Bonds,
Series 3,
4.875%, 11/01/2005................................. 10,326,000
------------
266,692,800
------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 4.39%
10,000,000 Dreyfus Tax-Exempt Cash Management Fund............ 10,000,000
1,910,600 Shearson Tax-Exempt Municipal Fund................. 1,910,600
------------
11,910,600
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $265,410,829*).................... 102.80% $278,603,400
OTHER ASSETS & LIABILITIES (NET).......................... (2.80) (7,587,563)
------ ------------
NET ASSETS................................................ 100.00% $271,015,837
====== ============
</TABLE>
See Notes to Financial Statements
21
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
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.
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, 1998, approximately, 12% of the net assets are invested in
Florida 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, 1998
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 99.23%
$3,000,000 Hempstead, New York, General Obligation Bonds,
(AMBAC), 5.000%, 02/15/2010......................... $ 3,091,800
3,825,000 Metropolitan Transportation Authority of New York,
Commuter Facilities Revenue Bonds, Series A, (MBIA),
7.000%, 07/01/2006.................................. 4,494,911
5,000,000 Metropolitan Transportation Authority of New York,
Dedicated Tax Fund Revenue Bonds, Series A, (MBIA),
5.300%, 04/01/2010.................................. 5,258,550
5,000,000 Monroe County, New York, Public Improvement
Refunding General Obligation Bonds, Series A,
5.500%, 03/01/2006.................................. 5,405,750
5,000,000 Municipal Assistance Corp., City of New York, Series
E,
6.000%, 07/01/2005.................................. 5,517,700
10,000,000 Municipal Assistance Corp., City of New York, Series
G,
6.000%, 07/01/2007.................................. 11,180,100
3,900,000 Nassau County, New York, Combined Sewer Districts
Refunding General Obligation Bonds, Series G,
(MBIA),
5.100%, 01/15/2003.................................. 4,055,727
6,250,000 New York City, New York, City Transitional Finance
Authority, Future Tax Revenue Bonds, Series A,
5.250%, 08/15/2009.................................. 6,621,437
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.................................. 3,139,200
5,000,000 New York State Dormitory Authority, City University
System Revenue Bonds, Series F,
5.375%, 07/01/2007.................................. 5,329,700
5,000,000 New York State Dormitory Authority, Cornell
University Revenue Bonds,
5.125%, 07/01/2006.................................. 5,257,050
5,000,000 New York State Environmental Facilities Corp.,
Pollution Control Revenue Bonds, State Water
Revolving Fund, Series E, (MBIA), 5.500%,
06/15/2007.......................................... 5,412,300
4,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A,
5.400%, 04/01/2005.................................. 4,256,080
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$20,000,000 New York State Power Authority & General Purpose
Revenue Bonds, Series A,
5.000%, 02/15/2007................................. $ 20,842,800
4,300,000 New York State Power Authority & General Purpose
Revenue Bonds, Series CC,
4.800%, 01/01/2005................................. 4,419,454
4,000,000 New York State Thruway Authority General Revenue
Bonds, Series C, (FGIC),
5.400%, 01/01/2005................................. 4,250,320
4,450,000 New York State Thruway Authority Highway & Bridge
Revenue Bonds, Series B, (MBIA),
5.750%, 04/01/2006................................. 4,857,709
2,165,000 Orange County, New York, Refunding General
Obligation Bonds,
5.500%, 11/15/2006................................. 2,347,163
4,725,000 Port Authority of New York & New Jersey, Revenue
Bonds, Cons-103 Series, (MBIA),
5.125%, 12/15/2009................................. 4,919,056
10,000,000 Puerto Rico Telephone Authority Revenue Bonds,
Reserve 1, (AMBAC),
5.050%, 01/01/2004................................. 10,424,400
4,000,000 Texas State, Water Development Revenue Bonds,
Series A,
3.800%, 03/01/2015+................................ 4,000,000
5,000,000 Triborough Bridge & Tunnel Authority, New York,
Revenue and General Purpose Bonds, Series A,
5.000%, 01/01/2008................................. 5,207,250
------------
130,288,457
------------
TAX-EXEMPT SECURITIES -- BACKED BY
LETTERS OF CREDIT -- 13.62%
MORGAN GUARANTY TRUST
6,080,000 Syracuse, New York, Industrial Development Agency
Civic Facilities Revenue Bonds, Syracuse University
Project, 3.700%, 03/01/2023+....................... 6,080,000
TORONTO DOMINION BANK LTD.
1,200,000 New York State Energy Research & Development
Authority Pollution Control Refunding Revenue
Bonds, Niagara Mohawk Power Corp., Series A,
3.950%, 07/01/2015+................................ 1,200,000
</TABLE>
See Notes to Financial Statements
23
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------ ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES--BACKED BY
LETTERS OF CREDIT -- (CONTINUED)
$ 1,500,000 New York State Energy Research & Development
Authority, Pollution Control Refunding Revenue
Bonds, Niagara Mohawk Power Corp., Series A,
3.700%, 03/01/2027+............................... $ 1,500,000
UNION BANK OF SWITZERLAND
6,000,000 New York State Energy Research & Development
Authority Pollution Control Refunding Revenue
Bonds, New York State Electric & Gas Co., Series
D,
3.650%, 10/01/2029+............................... 6,000,000
WESTDEUTSCHE LANDESBANK
3,100,000 New York City, New York, Trust for Cultural
Resources, Soloman R. Guggenheim Revenue Bonds,
Series B, 3.700%, 12/01/2015+..................... 3,100,000
------------
17,880,000
------------
<CAPTION>
SHARES
------------
<C> <S> <C>
OTHER INVESTMENTS -- 0.80%
1,050,800 Dreyfus Tax-Exempt Cash Management Fund........... 1,050,800
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $144,768,393*).................... 113.65% $149,219,257
OTHER ASSETS & LIABILITIES (NET).......................... (13.65) (17,925,502)
------ ------------
NET ASSETS................................................ 100.00% $131,293,755
====== ============
</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, 1998, approximately, 14% 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, 1998, approximately, 102% 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, 1998
LONG-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 94.37%
$5,000,000 California State Department of Water Resources,
Central Valley Project Revenue Bonds, Series Q,
(MBIA),
5.375%, 12/01/2027.................................. $ 5,117,650
5,000,000 Clark County, Nevada, School District Building &
Renovation General Obligation Bonds, Series B,
(FGIC),
5.250%, 06/15/2017.................................. 5,082,600
5,000,000 Cook County, Illinois, General Obligation Bonds,
Series B, (MBIA)
5.375%, 11/15/2018.................................. 5,074,600
5,000,000 Dade County, Florida, Water & Sewer Systems Revenue
Bonds, (FGIC),
5.250%, 10/01/2026.................................. 5,047,300
6,000,000 East Bay California Municipal Utility Distribution
Water System Revenue Bonds, (FGIC),
5.000%, 06/01/2026.................................. 5,805,900
6,000,000 Florida State Board of Education Capital Outlay,
Series A,
5.000%, 06/01/2027.................................. 5,846,820
5,000,000 Illinois State Sales Tax Refunding Revenue Bonds,
Series Q,
5.500%, 06/15/2020.................................. 5,075,600
6,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series D,
5.000%, 07/01/2021.................................. 5,776,020
6,000,000 Massachusetts Bay Transportation Authority,
Massachusetts General Transportation System
Refunding Revenue Bonds, Series C,
5.000%, 03/01/2024.................................. 5,805,120
6,000,000 Massachusetts State Water Resource Authority, Series
B, (MBIA),
5.000%, 12/01/2025.................................. 5,824,560
5,000,000 Metropolitan Pier & Exposition Authority, Illinois,
State Tax Refunding Revenue Bonds, McCormick Place
Exposition Project, Series A, (AMBAC),
5.250%, 06/15/2027.................................. 5,023,150
5,000,000 Michigan State Hospital Finance Authority Refunding
Revenue Bonds, Henry Ford Health System, Series A,
5.250%, 11/15/2025.................................. 4,963,650
5,000,000 New Jersey State Transportation Fund Revenue Bonds ,
Series B,
5.250%, 06/15/2016.................................. 5,101,550
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$ 6,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Refunding Revenue
Bonds, Series A, (AMBAC),
5.125%, 06/15/2021................................. $ 5,919,360
5,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Revenue Bonds,
Series B, (MBIA),
5.500%, 06/15/2027................................. 5,141,150
5,000,000 New York State Dormitory Authority, Montefiore
Medical Center Refunding Revenue Bonds, FHA
Insured, (AMBAC),
5.250%, 02/01/2015................................. 5,065,650
5,000,000 New York State Dormitory Authority, New York &
Presbyterian Hospital Revenue Bonds, FHA Insured,
(AMBAC),
4.750%, 08/01/2014................................. 4,801,900
5,000,000 New York State Local Assistance Corp. Refunding
Revenue Bonds, Series B,
5.500%, 04/01/2021................................. 5,081,200
6,000,000 New York State Medical Care Facilities Agency
Refunding Revenue Bonds, Presbyterian Hospital,
Series A, (FHA),
5.375%, 02/15/2025................................. 6,064,800
5,000,000 Port Authority of New York & New Jersey, Revenue
Bonds, Series 104, (AMBAC),
5.200%, 07/15/2021................................. 5,045,450
5,000,000 Port Seattle, Washington, Revenue Bonds, Series A,
(FGIC),
5.500%, 10/01/2022................................. 5,132,400
5,000,000 San Antonio, Texas, Electric & Gas Refunding
Revenue Bonds,
5.000%, 02/01/2014................................. 5,018,950
5,000,000 Triborough Bridge & Tunnel Authority, New York,
General Purpose Revenue Bonds, Series B,
5.200%, 01/01/2022................................. 4,972,600
4,200,000 University of Michigan, University Revenue Bonds,
Medical Service Plan, Series A,
3.800%, 12/01/2027+................................ 4,200,000
10,000,000 Valdez, Alaska, Marine Terminal Refunding Revenue
Bonds, BP Pipeline, Inc. Project, Series B,
5.500%, 10/01/2028................................. 10,079,400
</TABLE>
See Notes to Financial Statements
25
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
LONG-TERM TAX-EXEMPT FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$5,000,000 Wisconsin State Transportation Refunding Revenue
Bonds, Series B,
5.500%, 07/01/2022................................. $ 5,054,200
------------
141,121,580
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 3.34%
NORTHERN TRUST COMPANY
5,000,000 Illinois Health Facilities Authority Revenue Bonds,
Healthcorp Affiliates, Series A,
3.650%, 11/01/2015+................................ 5,000,000
------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 1.19%
1,773,900 Dreyfus Tax-Exempt Cash Management Fund............ 1,773,900
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $139,553,434*).................... 98.90% $147,895,480
OTHER ASSETS & LIABILITIES (NET).......................... 1.10 1,639,685
------ ------------
NET ASSETS................................................ 100.00% $149,535,165
====== ============
</TABLE>
- --------
* For federal income tax purposes, the tax basis of investments aggregates
$139,592,748.
+ 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.
FHA--Federal Housing Authority.
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, 1998, approximately, 3% 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, 1998, approximately, 28% 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 Note to Financial Statements
26
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 77.68%
$350,000 Alameda County, California, Transportation Authority,
Sales Tax Revenue Bonds, (AMBAC),
4.000%, 11/01/1998..................................... $ 350,934
125,000 Anaheim, California, Electric Refunding Revenue Bonds,
(AMBAC), 4.750%, 10/01/2002............................ 128,982
200,000 Antelope Valley, East Kern, California, Water Agency
Refunding General Obligation Bonds, (AMBAC),
4.500%, 08/01/2001..................................... 203,520
200,000 Bakersfield, California, City School District,
Refunding General Obligation Bonds, (MBIA),
5.000%, 08/01/2005..................................... 210,256
135,000 California Educational Facilities Authority, Santa
Clara University Refunding Revenue Bonds, (MBIA),
4.900%, 09/01/2006..................................... 141,931
150,000 California Educational Facilities Authority, Stanford
University Refunding Revenue Bonds, Series J, 5.900%,
11/01/2003............................................. 160,129
150,000 California Educational Facilities Authority, St. Mary's
College Refunding Revenue Bonds,
4.800%, 10/01/2002..................................... 154,834
225,000 California Health Facilities Financing Authority
Revenue Bonds, Cedars-Sinai Medical Center, Series A,
(MBIA),
4.250%, 08/01/2003..................................... 227,452
200,000 California Industrial Urban Development Agency,
Refunding Tax Allocation Bonds, (MBIA),
4.300%, 05/01/2002..................................... 202,008
275,000 California State Department of Transportation,
Refunding Certificates of Participation, Series A,
(MBIA),
4.400%, 03/01/2004..................................... 278,998
250,000 California State Department of Water Resources Central
Valley Project Refunding Revenue Bonds, Series L,
8.000%, 12/01/2001..................................... 284,960
375,000 California State Department of Water Resources Central
Valley Project Refunding Revenue Bonds, Series S,
4.250%, 12/01/1999..................................... 378,165
300,000 California State, General Obligation Bonds,
6.000%, 09/01/2001..................................... 318,282
230,000 California State, General Obligation Bonds,
6.700%, 02/01/2004..................................... 260,475
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$250,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Department of Corrections , Series D,
(MBIA),
4.850%, 09/01/2008..................................... $ 258,887
300,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Secretary of State, Series A,
6.750%, 12/01/2012..................................... 338,535
300,000 California State University, Institutional Lease
Refunding Revenue Bonds, (AMBAC),
5.500%, 06/01/2003..................................... 320,511
250,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
4.375%, 10/01/2001..................................... 253,565
315,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
6.000%, 10/01/2005..................................... 353,956
545,000 Chino Basin California Regional Financing Authority
Revenue Bonds, Municipal Water District Sewer System
Project, (AMBAC),
7.000%, 08/01/2005..................................... 643,056
350,000 Contra Costa, California, Certificates of
Participation, Capital Projects Program, (AMBAC),
4.625%, 02/01/2007..................................... 357,623
550,000 Contra Costa, California, Transportation Authority
Sales Tax Revenue Bonds, Series A, (FGIC), 6.000%,
03/01/2007............................................. 619,921
250,000 Escondido, California, School District, Series A,
(FGIC),
5.000%, 09/01/2008..................................... 261,990
400,000 Fairfield, California, Water Refunding Revenue Bonds,
(AMBAC),
4.700%, 04/01/2005..................................... 413,740
155,000 Fresno, California, Sewer Revenue Bonds, Series A-1,
(AMBAC),
4.800%, 09/01/2006..................................... 161,866
200,000 Los Angeles, California, Convention & Exhibition Center
Authority, Refunding Certificates of Participation,
(AMBAC),
6.600%, 08/15/1999..................................... 207,626
250,000 Los Angeles, California, Department of Water & Power,
Electrical Plant Refunding Revenue Bonds, (AMBAC),
4.600%, 08/15/2006..................................... 252,792
</TABLE>
See Notes to Financial Statements
27
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$305,000 Los Angeles, California, Harbor Department Refunding
Revenue Bonds, Series C,
4.875%, 11/01/2002.................................... $ 316,389
250,000 Los Angeles, California, Municipal Improvement
Corporation, Equipment Real Estate Property,
Certificates of Participation, (AMBAC),
4.500%, 12/01/2001.................................... 255,410
150,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
4.875%, 02/01/2006.................................... 155,931
250,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
5.000%, 02/01/2001.................................... 257,500
400,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series B, (AMBAC),
4.300%, 02/01/2004.................................... 401,620
500,000 Los Angeles, California, School District, Series A ,
(FGIC),
4.400%, 07/01/2003.................................... 508,885
225,000 Los Angeles, California, State Building Authority
Lease Refunding Revenue Bonds, California Department
of General Services, Series A,
4.400%, 05/01/1999.................................... 226,127
400,000 Los Angeles, California, State Building Authority
Lease Refunding Revenue Bonds, California Department
of General Services, Series A,
5.600%, 05/01/2004.................................... 429,552
250,000 Los Angeles, California, Wastewater Systems Revenue
Bonds, Series A, (FGIC),
6.000%, 02/01/2003.................................... 271,532
200,000 Los Angeles County, California, Public Works Financing
Authority, Lease Refunding Revenue Bonds, Series A,
(MBIA),
6.000%, 09/01/2003.................................... 218,588
300,000 Los Angeles County, California, Public Works Financing
Authority, Refunding Revenue Bonds, Regional Park &
Open Space District, Series A,
5.250%, 10/01/2005.................................... 318,699
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$230,000 Los Angeles County, California, SCHS Regionalized
Business Services Certificates of Participation, Local
Educational Agencies, Series B, (MBIA),
4.400%, 07/01/2003.................................... $ 234,087
100,000 Metropolitan Water District of Southern California,
Refunding General Obligation Bonds, Series A1, 5.000%,
03/01/2002............................................ 103,846
250,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series A,
4.250%, 07/01/2003.................................... 252,685
400,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series A,
7.000%, 07/01/2002.................................... 448,600
200,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series B, (MBIA), 5.250%,
07/01/2007............................................ 215,628
200,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
4.850%, 10/01/2001.................................... 206,028
250,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
5.450%, 10/01/2007.................................... 271,823
350,000 MSR Public Power Agency, California, San Juan Project
Refunding Revenue Bonds, Series F, (AMBAC),
5.650%, 07/01/2003.................................... 376,565
250,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series A,
(AMBAC),
5.500%, 07/01/2005.................................... 271,415
250,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series A,
(AMBAC),
5.600%, 07/01/2006.................................... 273,808
250,000 Novato, California, Refunding General Obligation
Bonds, Series A, (MBIA), 6.250%, 08/01/2007........... 287,758
175,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Series,
5.600%, 02/15/2002.................................... 184,814
300,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 2nd Series, (FGIC),
4.700%, 02/15/2005.................................... 310,308
</TABLE>
See Notes to Financial Statements
28
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$100,000 Orange County, California, Municipal Water District,
Water Facilities Corporation, Refunding Certificates
of Participation, (MBIA),
4.800%, 07/01/2003.................................... $ 103,653
255,000 Sacramento, California, City Financing Authority Lease
Refunding Revenue Bonds, Series A, (AMBAC),
5.050%, 11/01/2006.................................... 270,099
250,000 Sacramento, California, Municipal Utilities District
Electric Refunding Revenue Bonds, Series Z, (FGIC),
6.000%, 07/01/2001.................................... 265,628
200,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA),
4.700%, 02/01/2003.................................... 205,910
250,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA),
4.875%, 02/01/2005.................................... 261,055
400,000 Sacramento County, California, Sanitation District
Financing Authority Revenue Bonds,
5.500%, 12/01/2005.................................... 434,580
300,000 San Bernardino County, California, Certificates of
Participation, Medical Center Financing Project,
(MBIA), 5.500%, 08/01/2007............................ 325,734
255,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(MBIA),
4.625%, 03/01/2005.................................... 262,443
315,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(MBIA),
5.000%, 03/01/2000.................................... 321,738
200,000 San Bernardino County, California, Transportation
Authority Sales Tax Revenue Bonds, Series A, (FSA),
4.500%, 03/01/2006.................................... 203,730
175,000 San Diego, California, Open Space Park Facilities
District, Refunding General Obligation Revenue Bonds,
5.500%, 01/01/2004.................................... 188,633
300,000 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series B, (FGIC),
5.000%, 05/15/2008.................................... 315,312
250,000 San Diego, California, Public Safety Communications
Project, General Obligation Bonds,
6.500%, 07/15/2008.................................... 292,598
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$215,000 San Diego, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC),
6.250%, 04/01/2003.................................... $ 236,625
150,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Refunding Revenue Bonds, 2nd
Series, Series A, (FGIC),
5.250%, 04/01/2006.................................... 160,925
200,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Refunding Revenue Bonds, 2nd
Series, Series A, (FGIC),
5.500%, 04/01/2004.................................... 215,532
300,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC),
5.000%, 04/01/1999.................................... 304,029
325,000 San Francisco, California, City & County Public
Utilities Communication, Water Refunding Revenue
Bonds, Series A,
6.500%, 11/01/2004.................................... 368,189
680,000 San Francisco, California, City & County Refunding
Bonds, Series 1, (FGIC),
4.500%, 06/15/2005.................................... 695,932
225,000 San Francisco, California, City & County School
District Facilities Improvements Project, Series C,
(FGIC),
6.000%, 06/15/1999.................................... 231,086
200,000 San Francisco, California, State Building Authority
Lease Revenue Bonds, San Francisco Civic Center
Complex, Series A, (AMBAC),
4.125%, 12/01/2000.................................... 201,498
100,000 San Jose, California, Airport Refunding Revenue Bonds,
(FGIC),
5.500%, 03/01/2002.................................... 105,496
200,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(MBIA),
4.750%, 08/01/2003.................................... 206,838
325,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(MBIA),
5.375%, 08/01/2004.................................... 349,300
250,000 San Jose, California, Santa Clara County School
District, Series A, (FGIC),
4.400%, 08/01/2005.................................... 253,588
</TABLE>
See Notes to Financial Statements
29
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$300,000 San Mateo County, California, JT Powers Authority Lease
Revenue Bonds, San Mateo Community Health Care Center,
Series A, (FSA),
5.600%, 07/15/2004..................................... $ 325,050
500,000 San Mateo County, California, Transportation Authority,
Series A, (MBIA),
4.200%, 06/01/2004..................................... 503,220
150,000 Santa Barbara County, California, Local Transportation
Authority, Sales Tax Revenue Bonds, (FGIC),
4.900%, 04/01/2006..................................... 156,932
300,000 Santa Clara County, California, Certificates of
Participation, Technology Projects, Series A,
5.000%, 05/15/2000..................................... 305,910
100,000 Santa Clara County, California, Financing Authority
Refunding Lease Revenue Bonds, Series A, (AMBAC),
4.200%, 11/15/2002..................................... 100,959
175,000 Santa Clara County, California, Financing Authority
Refunding Lease Revenue Bonds, Series A, (AMBAC),
4.300%, 11/15/2003..................................... 177,438
285,000 Santa Clara County, California, Refunding Certificates
of Participation, Capital Project I, (AMBAC)
6.200%, 10/01/2000..................................... 300,957
500,000 Santa Clara County, California, Transportation District
Sales Tax Refunding Revenue Bonds, Series A,
4.500%, 06/01/2006..................................... 507,830
300,000 Southern California Public Power Authority, Refunding
Revenue Bonds, Palo Verde Project, Series A, (AMBAC),
4.000%, 07/01/1998..................................... 300,369
200,000 Southern California Public Power Authority, Refunding
Revenue Bonds, Palo Verde Project, Series A, (AMBAC),
5.500%, 07/01/2004..................................... 215,630
300,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series A, (MBIA),
6.100%, 09/01/2000..................................... 315,636
150,000 University of California, Refunding Revenue Bonds,
Series C, (AMBAC),
4.600%, 09/01/2005..................................... 154,074
250,000 West & Central Basin Financing Authority, California
Refunding Revenue Bonds, (AMBAC),
5.500%, 08/01/2001..................................... 261,738
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (CONTINUED)
$250,000 West Basin, California, Municipal Water District,
Revenue Certificates of Participation, Series A,
(AMBAC),
3.875%, 08/01/2002.................................... $ 249,003
100,000 West Basin, California, Municipal Water District,
Revenue Certificates of Participation, Series A,
(AMBAC),
4.000%, 08/01/2000.................................... 100,394
-----------
25,297,883
-----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 14.88%
350,000 Alameda County, California, Correctional Facility
Improvements Certificates of Participation, (MBIA),
7.250%, 06/01/2013 (Prerefunded 12/01/2000)........... 385,900
700,000 California Health Facilities Financing Authority
Revenue Bonds, (AMBAC),
7.625%, 10/01/2015 (Prerefunded 10/01/1998)........... 727,790
200,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Various California University Projects,
Series A,
6.400%, 12/01/2016 (Prerefunded 12/01/2002)........... 222,834
260,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Various California State University
Projects, Series A,
6.625%, 10/01/2010 (Prerefunded 10/01/2002)........... 291,236
200,000 California State Public Works Board, Lease Revenue
Bonds, Various University of California Projects,
Series A,
6.600%, 12/01/2022 (Prerefunded 12/01/2002)........... 224,428
250,000 Cupertino, California, Certificates of Participation,
Open Space Acquisition Project,
7.125%, 04/01/2016 (Prerefunded 04/01/2001)........... 278,698
250,000 East Bay, California, Municipal Utilities District
Wastewater Treatment System Revenue Bonds, (AMBAC),
6.375%, 06/01/2021 (Prerefunded 12/01/2001)........... 274,418
330,000 Los Angeles, California, Community Redevelopment
Agency, Refunding Tax Allocation, North Hollywood,
Series C, (MBIA),
7.000%, 07/01/2005 (Prerefunded 07/01/1999)........... 349,714
</TABLE>
See Notes to Financial Statements
30
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT INCOME FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS --
(CONTINUED)
$125,000 Los Angeles, California, Harbor Department Revenue
Bonds, Series A, 6.500%, 08/01/2025
(Prerefunded 08/01/02)................................ $ 138,994
225,000 Los Angeles, California, Wastewater Systems Revenue
Bonds, Series D, (MBIA),
6.700%, 12/01/2021 (Prerefunded 12/01/2000)........... 244,973
175,000 Los Angeles County, California, Transportation
Communications Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2019 (Prerefunded 07/01/2002)........... 195,997
390,000 Los Angeles County, California, Transportation
Communications Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2020 (Prerefunded 07/01/2001)........... 429,460
300,000 Madera, California, Sewer Improvements, Certificates
of Participation,
7.375%, 05/01/2020 (Prerefunded 05/01/1999)........... 317,538
460,000 San Bernardino County, California, School Health Care
System Revenue Bonds, Sisters of Charity, Series A,
7.000%, 07/01/2021 (Prerefunded 07/01/2001)........... 509,864
235,000 Southern California Public Power Authority, Power
Project Revenue Bonds,
7.000%, 07/01/2009 (Prerefunded 07/01/2000)........... 254,890
-----------
4,846,734
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- -----------
<C> <S> <C>
OTHER INVESTMENTS -- 6.08%
1,086,403 Federated California Money Fund........................ $ 1,086,403
893,429 Provident California Money Fund........................ 893,429
-----------
1,979,832
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $31,443,717*)...................... 98.64% $32,124,449
OTHER ASSETS & LIABILITIES (NET)........................... 1.36 441,366
------ -----------
NET ASSETS................................................. 100.00% $32,565,815
====== ===========
</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, 1998, approximately, 15% 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, 1998, approximately, 99% 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
31
<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 Fund 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 Fund will not
vary.
(A) PORTFOLIO VALUATION:
Tax-Exempt Money Fund: Securities are valued at amortized cost, which has
been determined by Excelsior Tax-Exempt Fund's Board of Directors to
represent the fair value of the Funds' 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.
32
<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 net capital losses incurred after
October 31 and within the taxable year ("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, 1998, 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 2006 TOTAL
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Money Fund... $18,000 $31,000 $ -- $51,000 $35,000 $ 135,000
Short-Term Tax-Exempt
Securities Fund........ -- -- 563,000 -- -- 563,000
Intermediate-Term Tax-
Exempt Fund............ -- -- 1,708,000 -- -- 1,708,000
New York Intermediate-
Term Tax-Exempt Fund... -- -- 284,000 -- -- 284,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gains
distributions will be made. During the year ended March 31, 1998, Short-
Term Tax-Exempt Securities Fund, Intermediate-
33
<PAGE>
Term Tax-Exempt Fund, and New York Intermediate-Term Tax-Exempt Fund
utilized capital loss carryforwards for Federal Tax purposes totaling
approximately $74,000, $3,135,000, and $1,166,000, respectively.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Tax-Exempt Money Fund incurred, and elected
to defer, net capital losses of approximately $2,000 for the year ended
March 31, 1998.
At March 31, 1998, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities
Fund........................... $ 389,489 $ (23,693) $ 365,796
Intermediate-Term Tax-Exempt
Fund........................... 13,229,551 (36,980) 13,192,571
New York Intermediate-Term Tax-
Exempt Fund.................... 4,450,864 -- 4,450,864
Long-Term Tax-Exempt Fund....... 8,424,405 (121,673) 8,302,732
California Tax-Exempt Income
Fund........................... 682,204 (1,472) 680,732
</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 NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment advisers to the Portfolios. U.S. Trust
has delegated the daily management of the security holdings of the California
Tax-Exempt Income Fund to U.S. Trust Company of California (the "Sub-
Adviser"). 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 each of New
York Intermediate-Term Tax-Exempt Fund, Long-Term Tax-Exempt Fund and
California Tax-Exempt Income Fund. The Sub-Adviser is compensated only by U.S.
Trust and receives no fee directly from California Tax-Exempt Income Fund.
Prior to May 16, 1997, U.S. Trust NY served as the Portfolios' investment
adviser pursuant to investment advisory agreements substantially similar to
those currently in effect for the Portfolios. U.S. Trust NY and U.S. Trust CT
are wholly-owned subsidiaries of U.S. Trust Corporation, a registered bank
holding company.
U.S. Trust CT, Chase Global Funds Services Company ("CGFSC"), a corporate
affiliate of The
Chase Manhattan Bank, and Federated Administrative Services ("FAS")
(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
34
<PAGE>
paid monthly, based on the combined aggregate average daily net assets of
Excelsior Tax-Exempt Fund, Excelsior Fund, and Excelsior Institutional Trust
(excluding the international equity portfolios of Excelsior Fund 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.
Prior to May 16, 1997, U.S. Trust NY, CGFSC and FAS served as the Portfolio's
administrators pursuant to administration agreements substantially similar to
those currently in effect for the Portfolios. For the year ended March 31,
1998, administration fees charged by U.S. Trust were as follows:
<TABLE>
<S> <C>
Tax-Exempt Money Fund................................................. $336,650
Short-Term Tax-Exempt Securities Fund................................. 11,608
Intermediate-Term Tax-Exempt Fund..................................... 71,119
New York Intermediate-Term Tax-Exempt Fund............................ 33,130
Long-Term Tax-Exempt Fund............................................. 36,209
California Tax-Exempt Income Fund..................................... 7,443
</TABLE>
From time to time, as they may deem appropriate in their sole discretion,
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, 1998, no
fees were waived or expenses reimbursed pursuant to this voluntary limitation.
In addition, U.S. Trust has voluntarily agreed to temporarily waive fees and
reimburse expenses necessary for the California Tax-Exempt Income Fund to
maintain an annual expense ratio of not more than .50%. For the year ended
March 31, 1998, U.S. Trust waived investment advisory fees totaling $38,085
for California Tax-Exempt Income Fund. In addition U.S. Trust reimbursed
expenses totaling $63,053 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 organization's 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.
Administrative service fees paid to affiliates of U.S. Trust amounted to
$986,318, for the year ended March 31, 1998. 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 (including fees
paid to affiliates of U.S. Trust) by such Portfolio. For the year ended March
31, 1998, 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:
35
<PAGE>
<TABLE>
<CAPTION>
U.S. TRUST ADMINISTRATORS
---------- --------------
<S> <C> <C>
Tax-Exempt Money Fund................................. $627,413 $ --
Short-Term Tax-Exempt Securities Fund................. 24,358 104
Intermediate-Term Tax-Exempt Fund..................... 133,635 674
New York Intermediate-Term Tax-Exempt Fund............ 33,485 34
Long-Term Tax-Exempt Fund............................. 89,459 4,549
California Tax-Exempt Income Fund..................... 91,274 --
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Tax-
Exempt Fund. Shares of each Portfolio are sold without a sales charge on a
continuous basis by the Distributor.
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, 1998, 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................. $ 24,726,596 $22,828,704
Intermediate-Term Tax-Exempt Fund..................... 103,714,200 71,801,200
New York Intermediate-Term Tax-Exempt Fund............ 79,362,318 51,787,932
Long-Term Tax-Exempt Fund............................. 131,776,635 86,184,830
California Tax-Exempt Income Fund..................... 20,169,616 3,421,968
</TABLE>
4. COMMON STOCK:
Excelsior Tax-Exempt Fund has authorized capital of 14 billion shares of
Common Stock, 10.5 billion of which is currently classified to represent
interests in one of six separate investment portfolios. Authorized capital
currently classified 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
03/31/98 03/31/97
--------------- ---------------
<S> <C> <C>
Sold.......................................... $ 4,454,235,468 $ 3,573,643,154
Issued as reinvestment of dividends........... 1,926,989 1,323,711
Redeemed...................................... (4,129,293,577) (3,471,948,696)
--------------- ---------------
Net Increase.................................. $ 326,868,880 $ 103,018,169
=============== ===============
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM TAX-EXEMPT SECURITIES FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,733,984 $ 19,392,724 2,617,630 $ 18,422,170
Issued as reinvestment of
dividends................ 17,281 122,405 15,976 112,475
Redeemed.................. (2,634,790) (18,672,017) (2,891,228) (20,348,424)
---------- ------------ ---------- ------------
Net Increase (Decrease)... 116,475 $ 843,112 (257,622) $ (1,813,779)
========== ============ ========== ============
<CAPTION>
INTERMEDIATE-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 6,372,050 $ 59,944,634 5,916,061 $ 53,851,557
Issued as reinvestment of
dividends................ 64,384 602,980 69,565 635,343
Redeemed.................. (4,644,039) (43,387,232) (7,163,758) (65,269,781)
---------- ------------ ---------- ------------
Net Increase (Decrease)... 1,792,395 $ 17,160,382 (1,178,132) $(10,782,881)
========== ============ ========== ============
<CAPTION>
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 6,677,428 $ 57,944,807 2,768,339 $ 23,489,127
Issued as reinvestment of
dividends................ 40,167 348,885 24,174 204,804
Redeemed.................. (3,883,837) (33,687,486) (2,104,494) (17,736,590)
---------- ------------ ---------- ------------
Net Increase.............. 2,833,758 $ 24,606,206 688,019 $ 5,957,341
========== ============ ========== ============
<CAPTION>
LONG-TERM TAX-EXEMPT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 6,182,806 $ 61,622,593 4,928,889 $ 46,839,960
Issued as reinvestment of
dividends................ 83,665 833,374 56,726 542,894
Redeemed.................. (2,807,996) (27,800,219) (3,093,327) (29,594,558)
---------- ------------ ---------- ------------
Net Increase.............. 3,458,475 $ 34,655,748 1,892,288 $ 17,788,296
========== ============ ========== ============
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-EXEMPT INCOME FUND
-----------------------------------------------
YEAR ENDED
03/31/98 10/01/96*-03/31/97
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold......................... 3,835,056 $27,133,029 2,037,537 $14,268,915
Issued as reinvestment of
dividends................... 759 5,420 73 508
Redeemed..................... (1,206,002) (8,604,896) (132,710) (931,434)
---------- ----------- --------- -----------
Net Increase................. 2,629,813 $18,533,553 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.
6. LINE OF CREDIT:
The Portfolios and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 2% per year. In
addition a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating Portfolios at the end of
each quarter. For the year ended March 31, 1998, the Portfolios had no
borrowings under the agreement.
38
<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. (the "Fund")) as of March 31, 1998, 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, 1998 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, 1998, 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 8, 1998
39
<PAGE>
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended March 31, 1998, the percentage of exempt interest
dividends paid and the designation of long-term capital gain are approximated
as follows:
<TABLE>
<CAPTION>
28% 20%
EXEMPT LONG-TERM LONG-TERM
INTEREST DIVIDENDS CAPITAL GAIN CAPITAL GAIN
------------------- ------------ ------------
<S> <C> <C> <C>
Tax-Exempt Money Fund........... 100% -- --
Short-Term Tax-Exempt Securities
Fund........................... 100% -- --
Intermediate-Term Tax-Exempt
Fund........................... 100% -- --
New York Intermediate-Term Tax-
Exempt Fund.................... 100% -- --
Long-Term Tax-Exempt Fund....... 99% $544,000 $220,000
California Tax-Exempt Income
Fund........................... 100% -- --
</TABLE>
40
<PAGE>
USTTEA398
