<PAGE>
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[LOGO OF EXCELSIOR FUNDS APPEARS HERE]
Tax-Exempt Fixed Income Portfolios
ANNUAL REPORT
March 31, 1999
<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
Short-Term Tax-Exempt Securities Fund.................................... 14
Intermediate-Term Tax-Exempt Fund........................................ 16
New York Intermediate-Term Tax-Exempt Fund............................... 18
Long-Term Tax-Exempt Fund................................................ 19
California Tax-Exempt Income Fund........................................ 21
NOTES TO FINANCIAL STATEMENTS.............................................. 28
INDEPENDENT AUDITORS' REPORT............................................... 34
FEDERAL TAX INFORMATION.................................................... 34
</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 (From overseas, call 617-557-8280)
. Current Price and Yield Information 1-800-446-1012
. Internet Address: http://www.excelsiorfunds.com
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and
expenses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc.
may be obtained by contacting the Funds at 1-800-446-1012.
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are distributed by
Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
Excelsior Funds
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
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Dear Shareholder:
I am pleased to present the annual report for the Excelsior Tax-Exempt
Funds, Inc. Fiscal 1999 was an exciting year in the financial markets as a
whole and for the fund family.
Low interest rates and subdued inflation in tandem with turbulent Asian and
Latin American markets proved to be the catalysts for another year of strong--
though narrowly focused--domestic equity performance. At the same time, these
factors combined to constrain the returns on fixed-income investments to
modest levels. The search for consistency and predictability amidst
uncertainty--regarding heightened valuations here at home, international
economic crises, not to mention the course of the U.S. economy--created a
"flight to quality." Continuing the dominant trend of the past few years,
investors redirected much of their money to a relatively small group of
extremely large-capitalized growth companies within the Standard & Poor's 500
Index, leaving the broader market lagging well behind. As a result, small and
mid-sized companies as well as value-oriented investments underperformed
relative to growth-oriented investments. This environment made it difficult
for broadly diversified equity portfolios to meet or exceed the performance of
this narrowly focused market.
On the international front, economic crises and inflationary pressures in
Asia, Eastern Europe, and Latin America temporarily disrupted equity markets
around the world. Many of these troubled economies--and widespread investor
concerns about them--have begun to turn around and are showing sign of
recovery. In Western Europe, equity performance in general was strong, and the
conversion to a single currency, the Euro, was completed on time and without
disrupting the financial markets.
The financial markets will present many challenges and opportunities during
the coming year. U.S. fiscal policy continues to be effective in keeping
inflation under control, and we continue to be cautiously optimistic regarding
the domestic equity markets. International markets, while remaining attractive
on a long-term basis, will require continuous evaluation. In our new global
economy, events in international markets will have a direct impact on the U.S.
economy.
I am confident that the Excelsior fund family will continue to provide you
with the appropriate investment vehicles to respond to the always-changing
economic/financial market environment and to pursue your long-term 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
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During the fiscal year ended March 31, 1999, the fixed-income markets were
again strong, though volatility was pronounced. The tug of war between
domestic inflationary forces and the crisis in Asia continued unabated in the
fiscal first quarter. The taxable market and the long end of the Treasury
market proved strong; municipals, however, underperformed, given a large
supply and lackluster interest from investors due to the low interest-rate
environment.
The fiscal second quarter saw a solid rally in the fixed-income markets
given global economic concerns combined with a lack of supply of U.S.
Treasuries. The yield on Treasury bonds actually reached a 30-year low, as
investors' rattled by crises in foreign markets and the prospect of slower
growth domestically, led to a flight to quality. The rally in Treasuries
marked a significant change in economic conditions and market sentiment. In
July, the Federal Reserve was close to raising rates, but finally lowered the
federal funds rate by 25 basis points. Shrinkage in the supply of Treasury
issues left the market with insufficient liquidity to hedge exposure
elsewhere, exacerbating demand. Consequently, Treasuries left other fixed-
income categories, such as municipals and mortgage-backed securities, far
behind in the rally.
In the fiscal third quarter, fears mounted that global problems would blow
up, that liquidity would dry up, and/or that the domestic economy would slow.
In response, the Federal Reserve elected to lower interest rates several
times. At the same time, many of the global problems were being acknowledged
and--if not solved--at least being addressed. Here at home, economic activity
(retailing, autos, housing starts, etc.) continued robust. Stocks, which had
stumbled earlier in the year, rallied. Bonds, which had already had an
excellent (if volatile) year, marked time.
In the fiscal fourth quarter, the fixed-income markets continued to mark
time. Treasury yields increased slightly, though more for longer maturities
than short. Municipal bond yields moved up and down, but in the end were
hardly changed from prior-quarter levels. On the taxable side, investors were
likely to find more opportunities--more spread products, newer products (new
TIPS issuance)--to produce yields. Municipal rates remained relatively
attractive.
The reasons? The economic situation remained much the same as it had in the
previous quarter. That is, the U.S. economy remained extremely strong with
very low inflation. Along with this, we noted a shortage of supply for both
Treasuries and municipals. Even as rates appeared to want to rise because of
the strong domestic economy, the consensus view at the start of the quarter
appeared to be that the U.S. economy would slow and the Federal Reserve would
ease interest rates. There were also concerns regarding Latin America and
Asia, and this bolstered the case for additional Fed easing of interest rates.
This view shifted gradually--as the U.S. economy continued to display strength
and emerging market concerns ebbed--toward a neutral Fed bias. In fact, the
Fed made no move to increase or decrease rates in the period. Rates basically
seemed to be adjusting to the Fed bias, the modest selloff a corrective to the
"easing" bias that had already been built into the market.
Looking forward, we remain cautiously optimistic. We don't see much that
would drive interest rates much lower over the near term; the economy and
stock market remain strong, and it is hard to conceive of the Fed lowering
rates anytime soon. But neither do we see anything looming that would drive
rates much higher--barring a sudden pickup in the inflation rate. Essentially,
continued low inflation and favorable technical factors point toward a
relatively narrow trading range in the months ahead, and perhaps lower rates
looking further out.
2
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC. SHORT-TERM TAX-EXEMPT SECURITIES FUND
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Our strategy remained consistent and, we feel, effective throughout the fiscal
year ended March 31, 1999. As a result, we made few changes to the portfolio.
Regarding portfolio activity, we did reduce cash in the period, selling some
higher-coupon for lower-coupon securities. As opportunities for yield pickup at
the short end of the market remained few, we continued to keep cash at a
minimum, remaining essentially fully invested in high-quality municipal
securities and utilizing laddered maturities with an average life more or less
constant at the maximum three years allowable under Fund guidelines. This
strategy proved effective as the Fund reported a positive total return of
4.51%* for the year ended March 31, 1999 and ranked 7 out of 29 funds, based on
total return, in the Lipper Short Municipal Debt Funds category**, for the same
period. While with a cumulative total return of 23.86%* for the five years
ended March 31, 1999, the Fund ranked 12 out of 18 funds in the same Lipper
category for the five year period. Looking forward, we remain cautiously
optimistic regarding market prospects and confident in the Fund's structure and
strategy.
- ---------------------------------------------
Short-Term Tax-Exempt Securities Fund+
- ---------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- ---------------------------------------------
1 year 5 years Since Inception (12/31/92)
- ---------------------------------------------
4.51% 4.38% 4.18%
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[LINE GRAPH APPEARS HERE]
Lehman Brothers 3 Year
Short-Term Tax-Exempt Securities Fund Municipal Bond Index***
------------------------------------- -----------------------
31-Dec-92 $10,000 $10,000
31-Mar-93 $10,165 $10,203
31-Mar-94 $10,425 $10,480
31-Mar-95 $10,784 $11,000
31-Mar-96 $11,369 $11,710
31-Mar-97 $11,773 $12,210
31-Mar-98 $12,363 $12,960
31-Mar-99 $12,921 $13,647
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: 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.
3
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC. INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
For the fiscal year ended March 31, 1999, the Fund posted a positive total
return of 5.53%* and ranked 22 out of 137 funds, based on total return, in the
Lipper Intermediate Municipal Debt Fund category** for the same period. The
Fund has also performed well longer term, ranking 15 and 6 among 85 and 24
funds, respectively, for the same Lipper category for the five and ten years
ended March 31, 1999, with cumulative total returns of 38.31%* and 101.88%,*
respectively. As yields moved temporarily higher at the start of the first
fiscal quarter, we put most of the Fund's cash to work to extend maturities.
Other portfolio activity in the quarter involved essentially improving the
Fund's structure, adding slightly lower coupon bonds and bonds with better
call protection. While the market didn't make a huge move in the quarter, our
decision to extend maturities proved advantageous as it allowed the Fund to
capture some higher yields in the backup that followed. The Fund's structure
and strategy proved beneficial during the second fiscal quarter, and we made
no major changes to the portfolio, essentially adjusting the average maturity
of the portfolio slightly downward to position the Fund for the longer term,
for a time when interest rates would drop. While rates did not drop in the
third quarter, the Fund still managed to perform well for the period. During
the fiscal fourth quarter, given the generally lackluster environment, no
substantive changes were made to the Fund's holdings, structure, or strategy.
As most of the Fund's restructuring was accomplished toward the end of the
prior quarter, we felt no further changes were warranted. The Fund remained
essentially fully invested. This stance resulted in performance in line with
and/or slightly below the various relevant benchmark indices. We remain
confident in the Fund's structure and strategy going forward.
- ---------------------------------------------
Intermediate-Term Tax-Exempt Fund+
- ---------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- ---------------------------------------------
1 year 5 years 10 years
- ---------------------------------------------
5.53% 6.69% 7.15%
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[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers 5 Year
Intermediate-Term Tax-Exempt Fund Municipal G.O. Bond Index***
--------------------------------- ----------------------------
<S> <C> <C>
31-Mar-89 $10,000 $10,000
31-Mar-90 $10,744 $10,957
31-Mar-91 $11,672 $11,948
31-Mar-92 $12,600 $13,002
31-Mar-93 $14,075 $14,334
31-Mar-94 $14,438 $14,694
31-Mar-95 $15,353 $15,569
31-Mar-96 $16,646 $16,754
31-Mar-97 $17,388 $17,447
31-Mar-98 $18,920 $18,826
31-Mar-99 $19,967 $19,898
</TABLE>
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. A portion of the Fund's income may be
subject to the Alternative Minimum Tax and some investors may be subject to
certain state and local taxes.
The above illustration compares a $10,000 investment made in Intermediate-
Term Tax-Exempt 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. NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
For the first fiscal quarter of the year ended March 31, 1999, as yields
edged higher, we utilized most of the Fund's available cash to extend
maturities. We also worked to improve the portfolio's overall quality and call
protection--selling higher-coupon bonds with shorter call protection in favor
of modestly lower-coupon securities with better (ten-year) call protection.
While the market didn't make a huge move in the quarter, our decision to
extend maturities proved effective as it permitted the Fund to capture some
higher yields in the backup that followed. The Fund's structure and strategy
proved beneficial during the second fiscal quarter as well; as a result, we
made no major changes to the portfolio, essentially adjusting the average
maturity of the portfolio slightly downward to position the Fund for the
longer term, for a time when interest rates would drop. While rates did not in
fact decline in the third fiscal quarter, the Fund still managed to perform
well for the period. During the fiscal fourth quarter, given the generally
lackluster environment, no substantive changes were made to the Fund's
holdings, structure, or strategy. As most of the Fund's restructuring was
accomplished toward the end of the prior quarter, we felt no further changes
were warranted. The Fund remained essentially fully invested. The Fund
completed the fiscal year ended March 31, 1999, with a total return of 5.16%*.
For the five years ended March 31, 1999, the Fund posted a cumulative total
return of 34.73%*. Going forward, we remain confident in the Fund's structure
and strategy, and cautiously optimistic regarding near-term market prospects.
- ---------------------------------------------
New York Intermediate-Term Tax-Exempt Fund+
- ---------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- ---------------------------------------------
1 year 5 year Since Inception (5/31/90)
- ---------------------------------------------
5.16% 6.14% 6.42%
- ---------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers 5 Year
New York Intermediate-Term Tax-Exempt Fund Municipal Bond Index**
------------------------------------------ ---------------------------
<S> <C> <C>
31-May-90 $10,000 $10,000
31-Mar-91 $10,754 $10,797
31-Mar-92 $11,552 $11,775
31-Mar-93 $12,623 $12,997
31-Mar-94 $12,988 $13,660
31-Mar-95 $13,638 $14,150
31-Mar-96 $14,561 $15,180
31-Mar-97 $15,210 $15,810
31-Mar-98 $16,480 $17,020
31-Mar-99 $17,330 $17,999
</TABLE>
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. A portion of the Fund's income may be
subject to the Alternative Minimum Tax.
The above illustration compares a $10,000 investment made in New York
Intermediate-Term Tax-Exempt Fund and a broad-based index since 5/31/90
(inception date). All dividends and capital gain distributions are reinvested.
The Fund invests primarily in New York municipal securities and its
performance takes into account fees and expenses. The Lehman Brothers 5 Year
Municipal Bond Index is an unmanaged total return performance benchmark for
investment-grade tax exempt bonds maturing in five years, calculated by using
municipal bonds selected as representative of the market. The Index does not
take into account charges, fees and other expenses. Further information
relating to Fund performance is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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. LONG-TERM TAX-EXEMPT FUND
- -------------------------------------------------------------------------------
The Fund finished the fiscal year ended March 31, 1999, with a total return
of 5.42%* and ranking 63 out of 252 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 first among 146 and 75 funds,
respectively, in the same Lipper category for both the five and ten years
ended March 31, 1999, with cumulative total returns of 51.34%* and 139.93%,*
respectively. Regarding portfolio activity, at the start of the fiscal year,
we deployed most of the Fund's cash to lengthen maturities. We also improved
the Fund's structure, adding lower coupon bonds and bonds with better call
protection. Our decision to extend maturities proved fortuitous as the Fund
was able to capture some higher yields later in the quarter. In the ensuing
quarters of the fiscal year, as we were satisfied with the Fund's structure
and strategy, we made no significant changes to the portfolio. In the second
fiscal quarter, in anticipation of an eventual drop in interest rates, we did
bring the average maturity of the portfolio down slightly. While rates did not
drop in the third quarter, the Fund still managed to perform well in the
period. In the final quarter of the fiscal year, we did raise a modest amount
of cash; we note that the Fund's slightly longer average maturity, relative to
most of its peers, led the fund to modestly underperform its benchmark indices
for the three-month period. Short-term performance issues aside, we continue
to believe firmly in the Fund's long-term prospects.
- ---------------------------------------------
Long-Term Tax-Exempt Fund+
- ---------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- ---------------------------------------------
1 year 5 years 10 years
- ---------------------------------------------
5.42% 8.64% 9.14%
- ---------------------------------------------
[LINE GRAPH APPEARS HERE]
Lehman Brothers Current
Long Term Tax-Exempt Fund Municipal Bond Index***
------------------------- ------------------------------
03-Mar-89 $10,000 $10,000
31-Mar-90 $11,067 $10,997
31-Mar-91 $12,186 $12,017
31-Mar-92 $13,306 $13,203
31-Mar-93 $15,481 $14,898
31-Mar-94 $15,850 $15,106
31-Mar-95 $17,595 $16,035
31-Mar-96 $19,281 $17,242
31-Mar-97 $20,293 $18,117
31-Mar-98 $22,765 $19,983
31-Mar-99 $23,999 $21,203
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 CALIFORNIA.TAX-EXEMPT INCOME FUND
- -------------------------------------------------------------------------------
The municipal bond market remained remarkably steady during the fiscal year
ended March 31, 1999 despite a volatile Treasury bond market. While Treasuries
responded to the "tug of war" between a strong domestic economy and slowing
global economies, supply and demand factors kept municipal bond yields in a
much narrower range. The supply of tax-exempt bonds soared during calendar
year 1998 as municipalities took advantage of low rates. Total issuance for
the year was $284 billion, just below the all-time record of $292 billion in
1993. The tax-exempt bond market performed strongly despite the
significant rise in new bond issuance. Regarding portfolio activity, we kept
the portfolio fully invested during the entire fiscal year with an average
maturity of just under 5 years. We downplayed uninsured credits which we felt
might be impacted either by the deregulatory trends in the power industry, or
by the effects of Proposition 218 in California. Additionally, we emphasized
high quality bonds over lower rated credits because of relatively tight credit
spreads. For the fiscal year ended March 31, 1999 the Fund posted a total
return 4.74%*. We remain confident in the Fund's structure and strategy going
forward.
- ---------------------------------------------
California Tax-Exempt Income Fund+
- ---------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- ---------------------------------------------
1 year Since Inception (10/1/96)
- ---------------------------------------------
4.74% 5.27%
- ---------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Merrill Lynch 3-7 Year
California Tax-Exempt Income Fund Municipal Index**
--------------------------------- ----------------------
<S> <C> <C>
01-Oct-96 $10,000 $10,000
31-Mar-97 $10,105 $10,188
30-Sep-97 $10,574 $10,670
31-Mar-98 $10,855 $10,975
30-Sep-98 $11,199 $11,407
31-Mar-99 $11,370 $11,611
</TABLE>
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. A portion of the Fund's income may be
subject to the Alternative Minimum Tax.
The above illustration compares a $10,000 investment made in California Tax-
Exempt Income Fund and a broad-based index since 10/1/96 (inception date). All
dividends and capital gain distributions are reinvested.
The Fund invests primarily in California municipal securities and its
performance takes into account fees and expenses. The Merrill Lynch 3-7 Year
Municipal Index is a widely-accepted unmanaged market-weighted index comprised
of fixed-rate, coupon-bearing bonds issued within five years of the most
recent month-end with greater than $50 million principle amount having a
Moody's investment grade rating and maturities of three to seven years. The
Index does not take into account charges, fees and other expenses. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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, 1999
<TABLE>
<CAPTION>
New York
Short-Term Intermediate- Intermediate- California
Tax-Exempt Term Term Long-Term Tax-Exempt
Securities Tax-Exempt Tax-Exempt Tax-Exempt Income
Fund Fund Fund Fund Fund
----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost--
see accompanying
portfolios............ $46,805,976 $309,337,561 $150,446,510 $177,100,146 $63,991,190
=========== ============ ============ ============ ===========
Investments, at value
(Note 1).............. $47,271,954 $320,197,190 $153,092,287 $181,066,284 $65,159,605
Cash................... 31 40 13 5 --
Interest receivable.... 554,439 4,874,832 2,036,451 2,422,336 862,312
Receivable for fund
shares sold........... 7,936 115,481 402,736 176,167 199,998
Receivable due from
investment adviser.... -- -- -- -- 47,488
Prepaid expenses....... 1,050 7,057 3,386 5,051 1,258
Unamortized
organization costs
(Note 5).............. -- -- -- -- 15,747
----------- ------------ ------------ ------------ -----------
Total Assets........... 47,835,410 325,194,600 155,534,873 183,669,843 66,286,408
LIABILITIES:
Payable for dividends
declared.............. 125,658 1,011,819 399,759 624,828 190,078
Payable for fund shares
redeemed.............. 157,389 5,352 190,000 469,363 9,998
Payable for investments
purchased............. 2,360,849 -- -- -- 1,141,513
Investment advisory
fees payable (Note
2).................... 10,149 69,884 60,264 52,702 --
Administration fees
payable (Note 2)...... 4,884 47,839 21,746 21,940 8,421
Administration service
fees payable (Note
2).................... 2,341 19,702 2,419 13,926 8,708
Directors' fees payable
(Note 2).............. 527 4,299 2,179 2,459 638
Accrued expenses and
other payables........ 12,333 47,890 31,421 37,159 16,003
----------- ------------ ------------ ------------ -----------
Total Liabilities...... 2,674,130 1,206,785 707,788 1,222,377 1,375,359
----------- ------------ ------------ ------------ -----------
NET ASSETS.............. $45,161,280 $323,987,815 $154,827,085 $182,447,466 $64,911,049
=========== ============ ============ ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (121) $ (1) $ (31) $ 28,847 $ 13,538
Accumulated net
realized gain (loss)
on investments........ (318,820) 186,056 1,577,857 1,044,303 (10,664)
Unrealized appreciation
of investments........ 465,978 10,859,629 2,645,777 3,966,138 1,168,415
Par value (Note 4)..... 6,296 34,128 17,598 18,492 8,949
Paid in capital in
excess of par value... 45,007,947 312,908,003 150,585,884 177,389,686 63,730,811
----------- ------------ ------------ ------------ -----------
Total Net Assets........ $45,161,280 $323,987,815 $154,827,085 $182,447,466 $64,911,049
=========== ============ ============ ============ ===========
Shares of Common Stock
Outstanding............ 6,296,243 34,128,463 17,597,945 18,492,281 8,948,750
NET ASSET VALUE PER
SHARE.................. $7.17 $9.49 $8.80 $9.87 $7.25
===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Statements of Operations
Year Ended March 31, 1999
<TABLE>
<CAPTION>
New York
Short-Term Intermediate- Intermediate- California
Tax-Exempt Term Term Long-Term Tax-Exempt
Securities Tax-Exempt Tax-Exempt Tax-Exempt Income
Fund Fund Fund Fund Fund
---------- ------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........... $1,678,199 $13,334,376 $6,536,631 $8,296,207 $1,999,826
---------- ----------- ---------- ---------- ----------
EXPENSES:
Investment advisory fees
(Note 2)................. 120,879 1,030,742 729,969 841,704 240,924
Administration fees (Note
2)....................... 61,649 450,581 223,371 257,561 73,723
Administrative servicing
fees (Note 2)............ 28,718 187,595 33,738 165,129 139,233
Registration and filing
fees..................... 13,524 15,869 1,741 20,317 3,154
Custodian fees............ 13,112 74,618 38,000 45,611 12,223
Shareholder servicing
agent fees............... 11,953 19,339 10,047 49,336 22,662
Legal and audit fees...... 5,701 33,646 24,569 19,698 6,380
Directors' fees and
expenses (Note 2)........ 2,208 17,145 8,600 10,158 2,739
Shareholder reports....... 1,855 17,270 8,665 10,843 2,269
Amortization of
organization costs (Note
5)....................... -- -- -- -- 6,289
Miscellaneous expenses.... 4,295 38,523 13,607 25,829 11,549
---------- ----------- ---------- ---------- ----------
Total Expenses............ 263,894 1,885,328 1,092,307 1,446,186 521,145
Fees waived and reimbursed
by investment adviser and
administrators (Note 2).. (28,718) (187,595) (33,738) (165,129) (280,438)
---------- ----------- ---------- ---------- ----------
Net Expenses.............. 235,176 1,697,733 1,058,569 1,281,057 240,707
---------- ----------- ---------- ---------- ----------
NET INVESTMENT INCOME...... 1,443,023 11,636,643 5,478,062 7,015,150 1,759,119
---------- ----------- ---------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(Note 1):
Net realized gain (loss)
on security
transactions............. 244,067 6,083,660 3,648,244 5,951,423 (10,664)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... 100,182 (2,332,942) (1,805,087) (4,375,908) 487,683
---------- ----------- ---------- ---------- ----------
Net realized and unrealized
gain on investments....... 344,249 3,750,718 1,843,157 1,575,515 477,019
---------- ----------- ---------- ---------- ----------
Net increase in net assets
resulting from
operations................ $1,787,272 $15,387,361 $7,321,219 $8,590,665 $2,236,138
========== =========== ========== ========== ==========
</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 Term Term Long-Term Tax-Exempt
Securities Tax-Exempt Tax-Exempt Tax-Exempt Income
Fund Fund Fund Fund Fund
----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Year Ended March 31, 1999
Net investment income..... $ 1,443,023 $ 11,636,643 $ 5,478,062 $ 7,015,150 $ 1,759,119
Net realized gain (loss)
on investments........... 244,067 6,083,660 3,648,244 5,951,423 (10,664)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... 100,182 (2,332,942) (1,805,087) (4,375,908) 487,683
----------- ------------ ------------ ------------ -----------
Net increase in net assets
resulting from
operations............... 1,787,272 15,387,361 7,321,219 8,590,665 2,236,138
Distributions to
shareholders:
From net investment
income.................. (1,442,902) (10,672,361) (5,408,610) (7,009,654) (1,759,122)
In excess of net
investment income....... (121) (964,283) (31) -- --
From net realized gain on
investments............. -- (4,188,867) (1,856,161) (4,889,887) --
Increase in net assets
from fund share
transactions (Note 4).... 2,471,554 53,410,128 23,476,913 36,221,177 31,868,218
----------- ------------ ------------ ------------ -----------
Net increase in net
assets................... 2,815,803 52,971,978 23,533,330 32,912,301 32,345,234
NET ASSETS:
Beginning of year........ 42,345,477 271,015,837 131,293,755 149,535,165 32,565,815
----------- ------------ ------------ ------------ -----------
End of year (1).......... $45,161,280 $323,987,815 $154,827,085 $182,447,466 $64,911,049
=========== ============ ============ ============ ===========
(1) Including
undistributed
(distributions in excess
of) net investment
income................... $ (121) $ (1) $ (31) $ 28,847 $ 13,538
=========== ============ ============ ============ ===========
Year Ended March 31, 1998
Net investment income..... $ 1,548,052 $ 11,248,285 $ 4,755,911 $ 5,590,649 $ 1,008,765
Net realized gain on
investments.............. 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............... 1,972,774 21,053,417 9,191,499 14,049,882 1,809,054
Distributions to
shareholders:
From net investment
income.................. (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).... 843,112 17,160,382 24,606,206 34,655,748 18,533,553
----------- ------------ ------------ ------------ -----------
Net increase in net
assets................... 1,267,829 26,965,560 29,041,762 41,608,713 19,333,842
NET ASSETS:
Beginning of year........ 41,077,648 244,050,277 102,251,993 107,926,452 13,231,973
----------- ------------ ------------ ------------ -----------
End of year (2).......... $42,345,477 $271,015,837 $131,293,755 $149,535,165 $32,565,815
=========== ============ ============ ============ ===========
--------
(2) Including
undistributed
(distributions in excess
of) net investment
income................... $ (121) $ -- $ (32) $ 55,607 $ --
=========== ============ ============ ============ ===========
</TABLE>
--------
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 Total Dividends in Excess of From Net
Value, Net and Unrealized From From Net Net Realized
Beginning Investment Gain (Loss) Investment Investment Investment Gain on
of Period Income on Investments Operations Income Income Investments
--------- ---------- -------------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHORT-TERM TAX-EXEMPT SECURITIES FUND--(12/31/92*)
Year Ended March 31,
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) -- # --
1999................... 7.11 0.26 0.06 0.32 (0.26) -- --
INTERMEDIATE-TERM TAX-EXEMPT FUND--(12/3/85*)
Year Ended March 31,
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)
1999................... 9.48 0.38 0.14 0.52 (0.35) $(0.03) (0.13)
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND--(5/31/90*)
Year Ended March 31,
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) -- # --
1999................... 8.79 0.33 0.12 0.45 (0.33) -- (0.11)
LONG-TERM TAX-EXEMPT FUND--(2/5/86*)
Year Ended March 31,
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)
1999................... 10.03 0.42 0.12 0.54 (0.42) -- (0.28)
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) -- --
1999................... 7.18 0.27 0.07 0.34 (0.27) -- --
</TABLE>
* Commencement of operations
** Annualized
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
# 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 Asset Net Assets, Operating Operating Investment
Net Realized Value, End Expenses Expenses Income Portfolio Fee
Gain on Total End Total of 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>
-- $(0.26) $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% -- #
-- (0.26) 7.17 4.51% 45,161 0.58% 0.65% 3.58% 47% -- #
-- $(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% -- #
-- (0.51) 9.49 5.53% 323,988 0.58% 0.64% 3.95% 48% -- #
-- $(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% -- #
-- (0.44) 8.80 5.16% 154,827 0.73% 0.75% 3.75% 65% -- #
-- $(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
-- (0.70) 9.87 5.42% 182,447 0.76% 0.86% 4.17% 88% 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
-- (0.27) 7.25 4.74% 64,911 0.50% 1.08% 3.65% 5% 0.04
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Short-Term Tax-Exempt Securities Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 103.35%
$1,900,000 Boston, Massachusetts, General Obligation Bonds,
Series A, (FGIC), 4.500%, 01/01/2002................. $ 1,938,802
1,700,000 Burlington County, New Jersey, General Obligation
Bonds, 5.20%, 10/01/2000............................. 1,752,690
1,275,000 Chicago, Illinois, Sales Tax Revenue Bonds, (FGIC),
4.000%, 01/01/2001................................... 1,285,676
1,000,000 Cobb County & Marietta, Georgia, Water Authority,
Water Refunding Revenue Bonds, 4.900%, 11/01/2002.... 1,041,942
1,000,000 Columbus, Ohio, General Obligation Revenue Bonds,
Series 1, 5.000%, 06/15/2005......................... 1,056,666
1,000,000 Connecticut State Special Assessment Unemployment
Compensation Advisory Fund, Refunding Revenue Bonds,
Series A, (AMBAC), 5.500%, 05/15/2001................ 1,041,146
1,000,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure
Purposes, Series C, (FGIC), 5.500%, 10/01/2000....... 1,035,359
2,000,000 Delaware State, General Obligation Bonds, Series A,
4.250%, 03/01/2004................................... 2,034,572
1,800,000 Fort Worth, Texas, Water & Sewer Refunding Revenue
Bonds, 5.000%, 02/15/2004............................ 1,888,637
1,900,000 Georgia State Tollway Authority, State Guaranteed
Refunding Revenue Bonds, Georgia 400 Project,
4.500%, 07/01/2001................................... 1,944,815
1,500,000 Hawaii State General Obligation Bonds, Series CS,
(MBIA), 5.250%, 04/01/2004........................... 1,586,997
1,250,000 Honolulu, Hawaii, City & County General Obligation
Bonds, Series C, (FGIC),
5.000%, 07/01/2004................................... 1,307,986
2,000,000 Jackson County, Mississippi, Port Facilities Revenue
Bonds, Chevron USA, Inc. Project,
3.150%, 06/01/2023+.................................. 2,000,000
1,800,000 Michigan State Building Authority Revenue Bonds,
Series 1, 4.500%, 10/15/2004......................... 1,855,118
1,700,000 Minneapolis, Minnesota, Special School District No.
001, Certificates of Participation, Series A, (MBIA),
5.500%, 02/01/2003................................... 1,807,710
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$1,275,000 Monmouth County, New Jersey, General Obligation
Bonds, 5.000%, 10/01/2000............................ $ 1,311,941
1,900,000 Monroe County, New York, Refunding Public Improvement
General Obligation Bonds, Series A, 5.000%,
03/01/2001........................................... 1,957,678
1,000,000 Municipal Assistance Corporation for New York City,
New York, Revenue Bonds, Series E,
5.500%, 07/01/2000................................... 1,028,903
3,000,000 Municipal Assistance Corporation for New York City,
New York, Revenue Bonds, Series I,
5.250%, 07/01/2003................................... 3,166,644
1,000,000 Nebraska Public Power Distribution Revenue Bonds,
Series B, 5.000%, 01/01/2002......................... 1,033,904
2,000,000 New Jersey State Transportation Corp. Revenue Bonds,
Capital Grant Anticipation Notes, Series A, (FSA),
5.250%, 09/01/2001................................... 2,064,276
1,000,000 New York City, New York, General Obligation Bonds,
Subseries E-3, 2.650%, 08/01/2023+................... 1,000,000
1,700,000 North Carolina State General Obligation Unlimited
Revenue Bonds, Series A, 4.750%, 04/01/2003.......... 1,765,164
1,500,000 Omaha Public Power District, Nebraska, Electric
Refunding Revenue Bonds, Series A,
5.000%, 02/01/2001................................... 1,539,548
1,000,000 Pennsylvania Intergovernmental Coop Authority Special
Tax Revenue Bonds, Philadelphia Funding Program,
(FGIC), 5.000%, 06/15/2004........................... 1,046,037
2,000,000 Stamford, Connecticut, Refunding General Obligation
Bonds, 5.000%, 07/15/2002............................ 2,091,700
1,000,000 Suffolk County, New York, Industrial Development
Agency, Southwest Sewer Systems Revenue Bonds,
(MBIA),
4.250%, 02/01/2001................................... 1,014,767
2,000,000 Texas State General Obligation Bonds, Series B,
5.000%, 10/01/2001................................... 2,076,076
2,000,000 Valdez, Alaska Marine Terminal, Exxon Pipeline Co.
Project Revenue Bonds,
3.150%, 10/01/2025+.................................. 2,000,000
-----------
46,674,754
-----------
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Short-Term Tax-Exempt Securities Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- ------------
<C> <S> <C>
OTHER INVESTMENTS -- 1.32%
270,700 Dreyfus Tax-Exempt Cash Management Fund.............. $ 270,700
326,500 Shearson Tax-Exempt Municipal Fund................... 326,500
------------
597,200
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $46,805,976*)........................................ 104.67% $47,271,954
OTHER ASSETS AND LIABILITIES (NET)......................... (4.67) (2,110,674)
------ -----------
NET ASSETS................................................. 100.00% $45,161,280
====== ===========
</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.
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, 1999, approximately, 18% and 11% of the net assets are invested
in New York and New Jersey municipal securities, respectively. 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
15
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Intermediate-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 97.11%
$10,000,000 Alabama State Public School & College Authority,
Capital Improvement Revenue Bonds, (MBIA),
5.250%, 11/01/2005................................. $ 10,740,810
10,000,000 Arapahoe County, Colorado, Capital Improvement
Transportation Fund, Highway Revenue Bonds,
7.000%, 08/31/2026................................. 11,921,590
10,000,000 Chicago, Illinois, General Obligation Bonds, Series
A, (FGIC),
5.500%, 01/01/2008................................. 10,453,370
10,000,000 Connecticut State General Obligation Bonds, Series
C, 5.500%, 08/01/2006.............................. 10,924,710
20,000,000 Connecticut State Special Tax Obligation Refunding
Revenue Bonds, Transportation Infrastructure,
Series A, (FGIC), 5.500%, 10/01/2010............... 22,121,260
10,000,000 Fairfax County, Virginia, Refunding General
Obligation Bonds, Series C, 5.250%, 05/01/2008..... 10,585,790
10,000,000 Florida State Board of Education Refunding General
Obligation Bonds, Series A, 5.000%, 06/01/2007..... 10,597,350
10,000,000 Florida State Division Board Finance Department,
General Services Refunding Revenue Bonds, Series A,
Environment Protection-Preservation 2000, Series A,
(FSA), 5.500%, 07/01/2008.......................... 11,076,190
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 07/01/2004................................. 11,273,390
10,000,000 Hawaii State General Obligation Bonds, Series CS,
(MBIA), 5.000%, 04/01/2007......................... 10,531,890
10,000,000 Honolulu, Hawaii, City & County General Obligation
Refunding Bonds, Series C, (FGIC),
5.500%, 11/01/2006................................. 10,809,450
10,000,000 Jacksonville, Florida, Electric Authority Refunding
Revenue Bonds, St. Johns River, Issue 2-15, 5.500%,
10/01/2006......................................... 10,956,910
10,000,000 Lower Colorado River Authority of Texas, Refunding
Revenue Bonds, 6th Series,
5.000%, 01/01/2009................................. 10,416,430
</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................................. $ 10,866,720
10,000,000 Massachusetts State Public Improvements, General
Obligation Bonds, Series C, (MBIA),
5.625%, 08/01/2011................................. 10,981,570
10,000,000 New Jersey State, Transportation Trust Fund Revenue
Bonds, Transportation System, Series A, (AMBAC),
5.250%, 06/15/2008................................. 10,686,010
10,000,000 New York City, New York, Municipal Assistance
Corp., Series G, 6.000%, 07/01/2006................ 11,134,090
10,000,000 New York State Dormitory Authority, State
University Educational Facilities, Series A,
6.000%, 05/15/2025................................. 11,267,910
10,000,000 New York State Power Authority & General Purpose
Refunding Revenue Bonds, Series A,
5.000%, 02/15/2007................................. 10,544,780
10,000,000 New York State, Environmental Facilities Corp.
Pollution Control, State Water Sub-Revolving Fund,
Series E, (MBIA), 5.500%, 06/15/2005............... 10,816,470
10,000,000 New York State, Local Government Assistance Corp.
Revenue Bonds, Series A, (AMBAC),
5.500%, 04/01/2005................................. 10,793,150
10,000,000 Ocean County, New Jersey, Utilities Authority
Wastewater Revenue Bonds,
5.000%, 01/01/2009................................. 10,519,500
10,000,000 Ohio State Public Facilities Commission Revenue
Bonds, Series II-B, (MBIA), 5.000%, 11/01/2007..... 10,537,930
10,000,000 Pennsylvania State General Obligation Refunding
Revenue Bonds, (AMBAC), 5.125%, 09/15/2006......... 10,729,020
10,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A, 5.000%, 02/01/2008....................... 10,554,530
10,000,000 Triborough Bridge & Tunnel Authority, New York,
Special Obligation Revenue Bonds, Series A, (FGIC),
5.500%, 01/01/2008................................. 10,843,920
10,000,000 Utah State General Obligation Bonds, Series A,
5.000%, 07/01/2007................................. 10,660,020
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Intermediate-Term Tax-Exempt Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$10,000,000 Wisconsin State Refunding General Obligation
Revenue Bonds, 6.200%, 05/01/2006.................. $ 11,285,830
------------
314,630,590
------------
<CAPTION>
Shares
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 1.72%
5,566,600 Dreyfus Tax-Exempt Cash Management Fund............ 5,566,600
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $309,337,561*)...................................... 98.83% $320,197,190
OTHER ASSETS AND LIABILITIES (NET)........................ 1.17 3,790,625
------ ------------
NET ASSETS................................................ 100.00% $323,987,815
====== ============
</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, 1999, approximately, 20% of the net assets are invested in New
York municipal securities and approximately 10% of the net assets are
invested in each of the Connecticut and 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
17
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
New York Intermediate-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 88.86%
$10,000,000 Long Island Power Authority, New York, Electric
Systems Revenue Bonds, Series A, (AMBAC), 5.500%,
12/01/2009.......................................... $ 10,910,000
6,000,000 Metropolitan Transportation Authority of New York,
Transportation Facilities Revenue Bonds, Series M,
(FGIC), 5.500%, 07/01/2008.......................... 6,568,278
5,000,000 Monroe County, New York, Public Improvement
Refunding General Obligation Bonds, Series A,
5.500%, 03/01/2006.................................. 5,452,250
10,000,000 Municipal Assistance Corp., City of New York, Series
G, 6.000%, 07/01/2007............................... 11,206,340
5,000,000 Nassau County, New York, General Obligation Bonds,
Series Z, (FGIC),
4.750%, 09/01/2006.................................. 5,222,135
5,000,000 New York & New Jersey Port Authority Revenue Bonds,
4.250%, 12/01/2005.................................. 5,107,535
10,000,000 New York City, New York, City Transitional Finance
Authority, Future Tax Revenue Bonds, Series A,
5.250%, 08/15/2009.................................. 10,680,600
5,000,000 New York City, New York, General Obligation Bonds,
Series G, 5.250%, 08/01/2008........................ 5,279,015
5,000,000 New York State Dormitory Authority, Cornell
University Revenue Bonds, 5.125%, 07/01/2006........ 5,339,380
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.......................................... 5,454,145
10,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A, (FGIC),
5.000%, 04/01/2009.................................. 10,497,720
5,000,000 New York State Power Authority & General Purpose
Revenue Bonds, Series A,
5.000%, 02/15/2007.................................. 5,272,390
5,000,000 New York State Thruway Authority General Revenue
Bonds, Series E, 5.500%, 01/01/2006................. 5,414,905
5,000,000 New York State Thruway Authority Highway & Bridge
Revenue Bonds, Series G, (FGIC),
5.500%, 04/01/2008.................................. 5,424,460
7,000,000 New York State Thruway Authority Service Contract
Revenue Bonds, Local Highway & Bridge,
6.000%, 04/01/2005.................................. 7,677,719
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$10,000,000 Puerto Rico Commonwealth Public Improvement General
Obligation Bonds, (MBIA), 5.000%, 07/01/2005....... $ 10,564,560
5,000,000 Suffolk County, New York, Industrial Development
Agency, Southwest Sewer Systems Revenue Bonds,
(FGIC), 6.000%, 02/01/2008......................... 5,634,555
5,000,000 Suffolk County, New York, Water Authority
Waterworks Revenue Refunded Balance Bonds, Series
A, (AMBAC),
5.250%, 06/01/2017................................. 5,327,280
10,000,000 Triborough Bridge & Tunnel Authority, New York,
Revenue and General Purpose Bonds, Series A,
5.000%, 01/01/2008................................. 10,535,160
------------
137,568,427
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 6.80%
10,000,000 Puerto Rico Telephone Authority Revenue Bonds,
Reserve 1, (AMBAC), 5.050%, 01/01/2004 (Prerefunded
01/01/2003)........................................ 10,533,560
------------
<CAPTION>
Shares
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 3.22%
4,990,300 Shearson New York Tax-Exempt Money Fund............ 4,990,300
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $150,446,510*).................... 98.88% $153,092,287
OTHER ASSETS AND LIABILITIES (NET)........................ 1.12 1,734,798
------ ------------
NET ASSETS................................................ 100.00% $154,827,085
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
MBIA--Municipal Bond Insurance Assoc.
Note:
These municipal securities meet the three highest ratings assigned by Moody's
Investors Services, Inc. or Standard and Poor's Corporation or, where not
rated, are determined by the Investment Adviser, under the supervision of the
Board of Directors, to be of comparable quality at the time of purchase to
rated instruments that may be acquired by the Fund.
At March 31, 1999, approximately, 7% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, which the Fund relies on.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At March 31, 1999, approximately, 83% of the net assets are invested in New
York municipal securities. Economic changes affecting the state and certain
of its public bodies and municipalities may affect the ability of issuers to
pay the required principal and interest payments of the municipal securities.
See Notes to Financial Statements
18
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Long-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 90.94%
$6,000,000 California State Department of Water Resources,
Central Valley Project Revenue Bonds, Series Q,
(MBIA), 5.375%, 12/01/2027.......................... $ 6,170,100
6,000,000 East Bay California Municipal Utility Distribution
Water System Revenue Bonds, (FGIC),
5.000%, 06/01/2026.................................. 5,911,884
6,000,000 Florida State Board of Education Capital Outlay,
Series A, 5.000%, 06/01/2027........................ 5,945,850
6,000,000 Florida State Turnpike Authority Revenue Bonds,
Series B, (FGIC), 5.000%, 07/01/2027................ 5,927,946
6,000,000 Fulton County, Georgia, Water & Sewer Revenue Bonds,
(FGIC), 4.750%, 01/01/2028.......................... 5,650,122
6,000,000 Intermountain Power Agency, Utah, Power Supply
Refunding Revenue Bonds, Series D,
5.000%, 07/01/2021.................................. 5,888,934
6,000,000 Los Angeles, California, Department of Water and
Power Waterworks Revenue Bonds, 4.500%, 10/15/2024.. 5,505,084
6,000,000 Louisville & Jefferson County, Kentucky,
Metropolitan Sewer District Revenue Bonds, Sewer &
Drain Systems, Series A, (FGIC), 4.750%,
05/15/2028.......................................... 5,735,448
6,000,000 Massachusetts Bay Transportation Authority,
Massachusetts General Transportation System Revenue
Bonds, Series A, (MBIA), 4.500%, 03/01/2026......... 5,467,692
6,000,000 Massachusetts Bay Transportation Authority,
Massachusetts General Transportation System
Refunding Revenue Bonds, Series C,
5.000%, 03/01/2024.................................. 5,833,182
6,000,000 Massachusetts State Industrial Financing Agency
Revenue Bonds, Series H, (MBIA),
4.750%, 02/15/2028.................................. 5,632,428
6,000,000 Massachusetts State Water Resource Authority, Series
B, (MBIA), 5.000%, 12/01/2025....................... 5,869,854
6,000,000 Metropolitan Pier & Exposition Authority, Illinois,
State Tax Refunding Revenue Bonds, McCormick Place
Exposition Project, Series A, (AMBAC), 5.250%,
06/15/2027.......................................... 6,047,442
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$6,000,000 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds, Series B, (FGIC),
4.750%, 07/01/2026.................................. $ 5,675,298
6,000,000 New Jersey Health Care Facilities Financing
Authority Revenue Bonds, Series B, (MBIA),
4.750%, 07/01/2028.................................. 5,690,898
6,000,000 New Jersey State Transportation Fund Revenue Bonds,
Series B, 5.250%, 06/15/2016........................ 6,186,072
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........ 6,008,262
6,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Refunding Revenue
Bonds, Series B, (MBIA), 5.500%, 06/15/2027......... 6,268,224
6,000,000 New York City, New York, Transitional Financing
Authority Revenue Bonds, Future Tax Secured, Series
C, 4.750%, 05/01/2023............................... 5,686,530
6,000,000 New York State Thruway Authority, General Refunding
Revenue Bonds, Series E,
4.750%, 01/01/2019.................................. 5,754,504
6,000,000 Orange County, Florida, Tourist Development Tax
Refunding Revenue Bonds, Series A, (AMBAC),
4.750%, 10/01/2024.................................. 5,718,690
6,000,000 Port Authority of New York & New Jersey, Revenue
Bonds, Series 104, (AMBAC),
5.200%, 07/15/2021.................................. 6,088,326
6,000,000 Port Seattle, Washington, Revenue Bonds, Series A,
(FGIC), 5.500%, 10/01/2022.......................... 6,270,840
6,000,000 Portland, Oregon, Sewer Systems Revenue Bonds,
Series A, (MBIA), 4.500%, 06/01/2018................ 5,725,044
6,000,000 Puerto Rico Commonwealth Infrastructure Financing
Authority, Series A, (AMBAC), 5.000%, 07/01/2028.... 5,953,938
8,000,000 Purdue University, Indiana, University Revenue
Bonds, Student Fee, Series H, 2.900%, 07/01/2017+... 8,000,000
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
Long-Term Tax-Exempt Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$6,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A, 4.500%, 02/01/2021........................ $ 5,581,122
6,000,000 Utah, State Board of Regents, University of Utah
Auxiliary & Campus Refunding Revenue Bonds,
Series A, (MBIA),
4.750%, 04/01/2025.................................. 5,732,670
------------
165,926,384
------------
<CAPTION>
Shares
----------
<C> <S> <C>
OTHER INVESTMENTS -- 8.30%
8,000,000 Dreyfus Tax-Exempt Cash Management Fund............. 8,000,000
7,139,900 Shearson Tax-Exempt Municipal Fund.................. 7,139,900
------------
15,139,900
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $177,100,146*).................... 99.24% $181,066,284
OTHER ASSETS AND LIABILITIES (NET)........................ 0.76 1,381,182
------ ------------
NET ASSETS................................................ 100.00% $182,447,466
====== ============
</TABLE>
- --------
* For federal income tax purposes, the tax basis of investments aggregates
$177,172,146.
+ 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, 1999, approximately, 19% and 12% of the net assets are invested
in New York and Massachusetts municipal securities, respectively and
approximately 10% of the net assets are invested in each of the California
and Georgia 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, 1999
California Tax-Exempt Income Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 72.98%
$ 125,000 Anaheim, California, Electric Refunding Revenue
Bonds, (AMBAC),
4.750%, 10/01/2002................................... $ 129,980
200,000 Antelope Valley, East Kern, California, Water Agency
Refunding General Obligation Bonds, (AMBAC),
4.500%, 08/01/2001................................... 205,158
200,000 Bakersfield, California, City School District,
Refunding General Obligation Bonds, (MBIA),
5.000%, 08/01/2005................................... 212,923
595,000 Berkeley, California, University School District,
(FGIC), 4.375%, 08/01/2006........................... 611,512
605,000 Beverly Hills, California, Public Financing Authority
Lease Refunding Revenue Bonds, Series A, (MBIA),
4.000%, 06/01/2002................................... 613,426
250,000 Burbank, California, University School District,
(FGIC), 4.100%, 08/01/2003........................... 255,065
150,000 California Educational Facilities Authority, St.
Mary's College Refunding Revenue Bonds,
4.800%, 10/01/2002................................... 155,770
135,000 California Educational Facilities Authority, Santa
Clara University Refunding Revenue Bonds, (MBIA),
4.900%, 09/01/2006................................... 143,350
150,000 California Educational Facilities Authority, Stanford
University Refunding Revenue Bonds, Series J, 5.900%,
11/01/2003........................................... 161,246
225,000 California Health Facilities Financing Authority
Revenue Bonds, Cedars-Sinai Medical Center, Series A,
(MBIA),
4.250%, 08/01/2003................................... 230,538
200,000 California Industrial Urban Development Agency,
Refunding Tax Allocation Bonds, (MBIA),
4.300%, 05/01/2002................................... 204,105
275,000 California State Department of Transportation,
Refunding Certificates of Participation, Series A,
(MBIA),
4.400%, 03/01/2004................................... 283,824
250,000 California State Department of Water Resources,
Central Valley Project Refunding Revenue Bonds,
Series L, 8.000%, 12/01/2001......................... 277,174
375,000 California State Department of Water Resources,
Central Valley Project Refunding Revenue Bonds,
Series S, 4.250%, 12/01/1999......................... 378,232
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 500,000 California State Department of Water Resources,
Central Valley Project Refunding Revenue Bonds,
Series U, 4.000%, 12/01/2006......................... $ 502,276
300,000 California State, General Obligation Bonds,
6.000%, 09/01/2001................................... 317,725
750,000 California State, General Obligation Bonds,
6.100%, 11/01/2001................................... 798,121
750,000 California State, General Obligation Bonds,
6.250%, 04/01/2008................................... 865,460
230,000 California State, General Obligation Bonds,
6.700%, 02/01/2004................................... 259,400
250,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Department of Corrections, Series D,
(MBIA),
4.850%, 09/01/2008................................... 264,918
500,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Series A,
5.600%, 10/01/2001................................... 524,071
300,000 California State University, Institutional Lease
Refunding Revenue Bonds, (AMBAC),
5.500%, 06/01/2003................................... 321,496
250,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional
Facilities, Series A, (AMBAC), 4.375%, 10/01/2001.... 256,127
315,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional
Facilities, Series A, (AMBAC), 6.000%, 10/01/2005.... 354,004
550,000 Central Valley School District Financing Authority,
California School District General Obligation
Refunding Revenue Bonds, Series A, (MBIA),
5.850%, 08/01/2004................................... 605,889
545,000 Chino Basin California Regional Financing Authority
Revenue Bonds, Municipal Water District Sewer System
Project, (AMBAC), 7.000%, 08/01/2005................. 640,970
350,000 Contra Costa, California, Certificates of
Participation, Capital Projects Program, (AMBAC),
4.625%, 02/01/2007................................... 364,931
</TABLE>
See Notes to Financial Statements
21
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 550,000 Contra Costa, California, Transportation Authority
Sales Tax Revenue Bonds, Series A, (FGIC), 6.000%,
03/01/2007........................................... $ 622,796
1,000,000 Contra Costa, California, Transportation Authority
Sales Tax Revenue Bonds, Series A, (FGIC), 6.000%,
03/01/2008........................................... 1,138,266
750,000 East Bay, California, Regional Park Refunding Revenue
Bonds, 5.000%, 09/01/2007............................ 804,234
250,000 Escondido, California, School District, Series A,
(FGIC), 5.000%, 09/01/2008........................... 267,826
400,000 Fairfield, California, Water Refunding Revenue Bonds,
(AMBAC), 4.700%, 04/01/2005.......................... 418,279
155,000 Fresno, California, Sewer Revenue Bonds, Series A-1,
(AMBAC), 4.800%, 09/01/2006.......................... 163,598
695,000 Golden West Schools Financing Authority, California
School District Refunding Revenue General Obligation
Bonds, Series A, (MBIA), 6.200%, 02/01/2003.......... 757,043
200,000 Los Angeles, California, Convention & Exhibition
Center Authority, Refunding Certificates of
Participation, (AMBAC), 6.600%, 08/15/1999........... 202,609
500,000 Los Angeles, California, Department of Airports,
Airport Refunding Revenue Bonds, Series A, (FGIC),
6.000%, 05/15/2005................................... 557,246
250,000 Los Angeles, California, Department of Water & Power,
Electrical Plant Refunding Revenue Bonds, (AMBAC),
4.600%, 08/15/2006................................... 259,208
305,000 Los Angeles, California, Harbor Department Refunding
Revenue Bonds, Series C, 4.875%, 11/01/2002.......... 316,552
250,000 Los Angeles, California, Municipal Improvement
Corporation, Equipment Real Estate Property,
Certificates of Participation, (AMBAC),
4.500%, 12/01/2001................................... 257,008
150,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA), 4.875%, 02/01/2006........... 158,370
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 250,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA), 5.000%, 02/01/2001........... $ 257,355
400,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series B, (AMBAC), 4.300%, 02/01/2004......... 410,872
750,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series B, (AMBAC), 4.600%, 02/01/2006......... 779,821
500,000 Los Angeles, California, School District, Series A,
(FGIC), 4.400%, 07/01/2003........................... 516,007
745,000 Los Angeles, California, School District, Series A,
(FSA), 5.000%, 08/01/2006............................ 794,833
225,000 Los Angeles, California, State Building Authority
Lease Refunding Revenue Bonds, California Department
of General Services, Series A,
4.400%, 05/01/1999................................... 225,238
400,000 Los Angeles, California, State Building Authority
Lease Refunding Revenue Bonds, California Department
of General Services, Series A,
5.600%, 05/01/2004................................... 429,542
250,000 Los Angeles, California, Wastewater Systems Revenue
Bonds, Series A, (FGIC),
6.000%, 02/01/2003................................... 271,011
200,000 Los Angeles County, California, Public Works
Financing Authority, Lease Refunding Revenue Bonds,
Series A, (MBIA), 6.000%, 09/01/2003................. 219,175
300,000 Los Angeles County, California, Public Works
Financing Authority, Lease Refunding Revenue Bonds,
Series A, (MBIA), 6.000%, 09/01/2004................. 333,110
655,000 Los Angeles County, California, Public Works
Financing Authority, Refunding Revenue Bonds,
Regional Park & Open Space District, Series A,
5.000%, 10/01/2004................................... 694,349
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................................... 322,522
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 230,000 Los Angeles County, California, SCHS Regionalized
Business Services Certificate Participation, Local
Educational Agencies, Series B, (MBIA),
4.400%, 07/01/2003.................................... $ 236,906
1,000,000 Marin, California Municipal Water District, Water
Revenue Bonds, 5.250%, 07/01/2005..................... 1,072,169
100,000 Metropolitan Water District of Southern California,
Refunding General Obligation Bonds, Series A1, 5.000%,
03/01/2002............................................ 103,869
500,000 Metropolitan Water District of Southern California,
Refunding General Obligation Bonds, Series A, 5.250%,
03/01/2008............................................ 545,295
250,000 Metropolitan Water District Southern California,
Waterworks Revenue Bonds, Series A,
4.250%, 07/01/2003.................................... 256,538
200,000 Metropolitan Water District Southern California,
Waterworks Revenue Bonds, Series B, (MBIA),
5.250%, 07/01/2007.................................... 216,969
1,000,000 Metropolitan Water District Southern California,
Waterworks Revenue Bonds, Series A,
5.250%, 07/01/2007.................................... 1,079,743
400,000 Metropolitan Water District Southern California,
Waterworks Revenue Bonds, Series A,
7.000%, 07/01/2002.................................... 443,535
200,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
4.850%, 10/01/2001.................................... 206,506
250,000 Modesto, California, Irrigation District Financing
Authority, Refunding Revenue Bonds, Series A, (MBIA),
5.450%, 10/01/2007.................................... 275,336
350,000 MSR Public Power Agency, California, San Juan Project
Refunding Revenue Bonds, Series F, (AMBAC),
5.650%, 07/01/2003.................................... 377,448
1,000,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series A,
(AMBAC),
4.750%, 07/01/2003.................................... 1,043,691
250,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series A,
(AMBAC),
5.500%, 07/01/2005.................................... 272,995
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 125,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Geothermal Project, Series
A, (AMBAC),
5.600%, 07/01/2006................................... $ 138,050
500,000 Northern California Transmission Refunding Revenue
Bonds, Ore Transportation Project, Series A, (MBIA),
7.000%, 05/01/2000................................... 519,836
250,000 Novato, California, Refunding General Obligation
Bonds, Series A, (MBIA),
6.250%, 08/01/2007................................... 288,938
175,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Series,
5.600%, 02/15/2002................................... 184,315
1,100,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Series,
(AMBAC),
6.000%, 02/15/2008................................... 1,251,446
300,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 2nd Series,
(FGIC),
4.700%, 02/15/2005................................... 313,597
100,000 Orange County, California, Municipal Water District,
Water Facilities Corporation, Refunding Certificates
of Participation, (MBIA), 4.800%, 07/01/2003......... 104,564
255,000 Sacramento, California, City Financing Authority
Lease Refunding Revenue Bonds, Series A, (AMBAC),
5.050%, 11/01/2006................................... 273,564
250,000 Sacramento, California, Municipal Utilities District
Electric Refunding Revenue Bonds, Series Z, (FGIC),
6.000%, 07/01/2001................................... 263,727
200,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA), 4.700%, 02/01/2003........................... 208,312
250,000 Sacramento County, California, Public Facilities
Project, Refunding Certificates of Participation,
(MBIA), 4.875%, 02/01/2005........................... 263,464
400,000 Sacramento County, California, Sanitation District
Financing Authority Revenue Bonds,
5.500%, 12/01/2005................................... 436,495
300,000 San Bernardino County, California, Certificates of
Participation, Medical Center Financing Project,
(MBIA), 5.500%, 08/01/2007........................... 330,936
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 200,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(FSA),
4.500%, 03/01/2006.................................... $ 206,840
255,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(MBIA),
4.625%, 03/01/2005.................................... 265,430
315,000 San Bernardino County, California, Transportation
Authority Sales Tax Refunding Revenue Bonds, Series A,
(MBIA),
5.000%, 03/01/2000.................................... 320,102
750,000 San Diego, California, Metropolitan Transportation
District Board Authority Lease Revenue Bonds, 5.100%,
09/01/2003............................................ 796,167
175,000 San Diego, California, Open Space Park Facilities
District, Refunding General Obligation Revenue Bonds,
5.500%, 01/01/2004.................................... 188,754
300,000 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series B, (FGIC),
5.000%, 05/15/2008.................................... 319,657
250,000 San Diego, California, Public Safety Communications
Project, General Obligation Bonds,
6.500%, 07/15/2008.................................... 295,307
215,000 San Diego, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC), 6.250%, 04/01/2003.................. 235,462
300,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC), 5.000%, 04/01/1999.................. 300,000
150,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC), 5.250%, 04/01/2006.................. 162,015
200,000 San Diego County, California, Regional Transportation
Communication, Sales Tax Revenue Bonds, 2nd Series,
Series A, (FGIC), 5.500%, 04/01/2004.................. 215,917
875,000 San Francisco, California, Bay Area Rapid
Transportation District, Sales Tax Revenue Bonds,
5.500%, 07/01/2007.................................... 964,460
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 680,000 San Francisco, California, City and County Refunding
Bonds, Series 1, (FGIC),
4.500%, 06/15/2005................................... $ 704,918
1,500,000 San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds,
(MBIA), 5.000%, 05/01/2006........................... 1,598,349
325,000 San Francisco, California, City and County Public
Utilities Communication, Water Refunding Revenue
Bonds, Series A, 6.500%, 11/01/2004.................. 370,161
225,000 San Francisco, California, City and County School
District Facilities Improvements Project, Series C,
(FGIC),
6.000%, 06/15/1999................................... 226,336
200,000 San Francisco, California, State Building Authority
Lease Revenue Bonds, San Francisco Civic Center
Complex, Series A, (AMBAC), 4.125%, 12/01/2000....... 203,184
100,000 San Jose, California, Airport Refunding Revenue
Bonds, (FGIC), 5.500%, 03/01/2002.................... 105,128
200,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(MBIA),
4.750%, 08/01/2003................................... 208,816
625,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(AMBAC),
4.750%, 08/01/2005................................... 657,034
500,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(AMBAC),
5.000%, 08/01/2007................................... 534,014
325,000 San Jose, California, Redevelopment Agency, Tax
Allocation Bonds, Merged Area Redevelopment Project,
(MBIA),
5.375%, 08/01/2004................................... 350,545
250,000 San Jose, California, Santa Clara County School
District, Series A, (FGIC),
4.400%, 08/01/2005................................... 257,935
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.......... 326,534
</TABLE>
See Notes to Financial Statements
24
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 500,000 San Mateo County, California, Transportation
Authority, Series A, (MBIA),
4.200%, 06/01/2004.................................... $ 510,693
150,000 Santa Barbara County, California, Local Transportation
Authority, Sales Tax Revenue Bonds, (FGIC), 4.900%,
04/01/2006............................................ 157,782
300,000 Santa Clara County, California, Certificates of
Participation, Technology Projects, Series A, 5.000%,
05/15/2000............................................ 305,629
100,000 Santa Clara County, California, Financing Authority
Refunding Lease Revenue Bonds, Series A, (AMBAC),
4.200%, 11/15/2002.................................... 102,256
175,000 Santa Clara County, California, Financing Authority
Refunding Lease Revenue Bonds, Series A, (AMBAC),
4.300%, 11/15/2003.................................... 180,318
285,000 Santa Clara County, California, Refunding Certificates
of Participation, Capital Project I, (AMBAC),
6.200%, 10/01/2000.................................... 297,255
500,000 Santa Clara County, California, Transportation
District Sales Tax Refunding Revenue Bonds, Series A,
4.500%, 06/01/2006.................................... 520,799
200,000 Southern California Public Power Authority, Refunding
Revenue Bonds, Palo Verde Project, Series A, (AMBAC),
5.500%, 07/01/2004.................................... 216,725
1,000,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series A, (MBIA),
6.000%, 09/01/2002.................................... 1,076,809
300,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series A, (MBIA),
6.100%, 09/01/2000.................................... 311,819
150,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series C, (AMBAC), 4.600%,
09/01/2005............................................ 156,511
600,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series F, (FGIC),
5.000%, 09/01/2008.................................... 639,447
390,000 University of California, Refunding Revenue Bonds,
Multiple Purpose Projects, Series G, (FGIC),
4.500%, 09/01/2004.................................... 404,401
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 500,000 Ventura County, California, Community College
District, Revenue Certificates of Participation,
(AMBAC),
4.000%, 12/01/2002................................... $ 500,147
250,000 West Basin, California, Municipal Water District,
Revenue Certificates of Participation, Series A,
(AMBAC), 3.875%, 08/01/2002.......................... 252,642
100,000 West Basin, California, Municipal Water District,
Revenue Certificates of Participation, Series A,
(AMBAC), 4.000%, 08/01/2000.......................... 101,059
-----------
47,370,162
-----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 22.92%
350,000 Alameda County, California, Correctional Facility
Improvements Certificates of Participation, (MBIA),
7.250%, 06/01/2013, (Prerefunded 12/01/2000)......... 380,166
500,000 California Health Facilities Financing Authority
Revenue Bonds, Pomona Valley Hospital Medical Center,
7.375%, 01/01/2014, (Prerefunded 01/01/2000)......... 525,638
1,305,000 California State, General Obligation Bonds,
5.900%, 04/01/2023,
(Prerefunded 04/01/2003)............................. 1,435,948
750,000 California State, General Obligation Bonds, (FGIC),
6.000%, 08/01/2019,
(Prerefunded 08/01/2004)............................. 843,923
300,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Secretary of State, Series A,
6.750%, 12/01/2012, (Prerefunded 12/01/2002)......... 338,099
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)............................. 290,835
200,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Various California State University
Projects, Series A, (AMBAC), 6.400%, 12/01/2016,
(Prerefunded 12/01/2002)............................. 222,939
</TABLE>
See Notes to Financial Statements
25
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
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)
$ 200,000 California State Public Works Board, Lease Refunding
Revenue Bonds, Various California State University
Projects, Series A, 6.600%, 12/01/2022,
(Prerefunded 12/01/2002)............................. $ 224,376
750,000 Castaic Lake Water Agency Revenue Bonds,
Transportation District, Prerefunded Sales Tax,
(MBIA), 7.125%, 08/01/2016,
(Prerefunded 08/01/2000)............................. 803,436
500,000 Central Coast Water Authority, California Refunding
Revenue Bonds, State Water Project Regional
Facilities, Series A, (AMBAC), 6.600%, 10/01/2022,
(Prerefunded 10/01/2002)............................. 558,619
295,000 Cotati-Rohnert Park, California University School
District General Obligation, (FGIC),
6.000%, 08/01/2014, (Prerefunded 08/01/1999)......... 303,834
250,000 Cupertino, California, Certificates of Participation,
Open Space Acquisition Project, 7.125%, 04/01/2016,
(Prerefunded 04/01/2001)............................. 272,816
250,000 East Bay, California, Municipal Utilities District
Wastewater Treatment System Revenue Bonds, (AMBAC),
6.375%, 06/01/2021,
(Prerefunded 12/01/2001)............................. 273,400
750,000 Fresno, California, Sewer Revenue Bonds, Series C,
(FSA), 5.375%, 08/01/2021, (Prerefunded 08/01/2005).. 825,718
330,000 Los Angeles, California, Community Redevelopment
Agency Refunding Tax Allocation Bonds, (MBIA),
7.000%, 07/01/2015, (Prerefunded 07/01/1999)......... 339,886
125,000 Los Angeles, California, Harbor Department Revenue
Bonds, Series A,
6.500%, 08/01/2025, (Prerefunded 08/01/2002)......... 138,796
225,000 Los Angeles, California, Wastewater Systems Revenue
Bonds, Series D, (MBIA),
6.700%, 12/01/2021,
(Prerefunded 12/01/2000)............................. 242,321
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- (continued)
$ 175,000 Los Angeles County, California, Transportation
Communications Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2019, (Prerefunded 07/01/2002)......... $ 195,156
390,000 Los Angeles County, California, Transportation
Communications Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2020, (Prerefunded 07/01/2001)......... 425,452
300,000 Madera, California, Sewer Improvements, Certificates
of Participation,
7.375%, 05/01/2020, (Prerefunded 05/01/1999)......... 307,081
125,000 Northern California Power Agency, Public Power
Refunding Revenue Bonds, Series A, (AMBAC),
5.600%, 07/01/2006, (Prerefunded 07/01/2006)......... 137,306
525,000 Northern California Transmission Refunding Revenue
Bonds, Ore Transportation Project, Series A, (MBIA),
7.000%, 05/01/2024, (Prerefunded 05/01/2000)......... 554,246
750,000 Richmond, California, Redevelopment Authority Tax
Allocation Refunding Revenue Bonds, Harbor
Redevelopment Project, (FSA), 7.000%, 07/01/2009,
(Prerefunded 07/01/2002)............................. 842,581
500,000 Riverside County, California, Asset Leasing
Corporation Leasehold Revenue Bonds, Riverside County
Hospital Project, Series A, 7.400%, 06/01/2014,
(Prerefunded 09/01/1999)............................. 513,633
700,000 Sacramento, California, City Financing Authority
General Obligation Revenue Bonds, County Hospital
Project, Series A, 6.800%, 11/01/2020,
(Prerefunded 11/01/2001)............................. 771,375
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)......... 504,180
500,000 San Francisco, California, Bay Area Rapid
Transportation District, Sales Tax Revenue Bonds,
(FGIC), 5.500%, 07/01/2020,
(Prerefunded 07/01/2005)............................. 549,934
</TABLE>
See Notes to Financial Statements
26
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 1999
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)
$ 650,000 San Joaquin Hills, California, Transportation
Corridor Agency, Toll Road Revenue Bonds,
6.750%, 01/01/2032, (Prerefunded 01/01/2003)......... $ 732,550
500,000 Santa Clara, California, Electric Revenue Bonds,
Series A, (MBIA), 6.250%, 07/01/2013,
(Prerefunded 07/01/2001)............................. 539,967
250,000 Santa Monica, California, Malibu University School
District, Public Schools Facilities Reconstruction
Project,
5.500%, 08/01/2015, (Prerefunded 08/01/2003)......... 272,855
235,000 Southern California Public Power Authority, Power
Project Revenue Bonds,
7.000%, 07/01/2009, (Prerefunded 07/01/2000)......... 250,690
250,000 West & Central Basin Financing Authority, California
Revenue Bonds, (AMBAC),
5.500%, 08/01/2001, (Prerefunded 08/01/2001)......... 261,440
-----------
14,879,196
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
OTHER INVESTMENTS -- 4.48%
1,486,561 Federated California Money Fund....................... $ 1,486,561
1,423,686 Provident California Money Fund....................... 1,423,686
-----------
2,910,247
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $63,991,190*)...................... 100.38% $65,159,605
OTHER ASSETS AND LIABILITIES (NET)......................... (0.38) (248,556)
------ -----------
NET ASSETS................................................. 100.00% $64,911,049
====== ===========
</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, 1999, approximately, 23% 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, 1999, approximately, 100% of the net assets are invested in
California municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
27
<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 seven managed
investment portfolios, each having its own investment objectives and policies.
The following is a summary of significant accounting policies for 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 the remaining portfolios of Excelsior Tax-Exempt Fund
and Excelsior Funds, Inc. ("Excelsior Fund") are presented separately.
(a) Portfolio Valuation:
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.
(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:
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
28
<PAGE>
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, 1999, 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,
-------------------------------------
2003 2004 2005 2006 2007 Total
-------- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Short-Term Tax-Exempt Securities
Fund............................... $319,000 -- -- -- -- $319,000
California Tax-Exempt Income Fund... -- -- -- -- $49 49
</TABLE>
To the extent that such carryforwards are utilized, no capital gains
distributions will be made. During the year ended March 31, 1999, Short-
Term Tax-Exempt Securities Fund, Intermediate-Term Tax-Exempt Fund, and New
York Intermediate-Term Tax-Exempt Fund utilized capital loss carryforwards
for Federal Tax purposes totaling approximately $244,000, $1,709,000 and
$284,000, respectively.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. California Tax-Exempt Income Fund incurred,
and elected to defer, net capital losses of approximately $10,600 for the
year ended March 31, 1999.
At March 31, 1999, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
Tax Basis Tax Basis Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
------------ ------------ ------------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities
Fund............................... $ 475,224 $ (9,246) $ 465,978
Intermediate-Term Tax-Exempt Fund... 11,065,170 (205,541) 10,859,629
New York Intermediate-Term Tax-
Exempt Fund........................ 2,993,666 (347,889) 2,645,777
Long-Term Tax-Exempt Fund........... 4,375,185 (481,047) 3,894,138
California Tax-Exempt Income Fund... 1,235,520 (67,105) 1,168,415
</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 daily net assets.
29
<PAGE>
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 adviser 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, N.A. ("U.S. Trust, N.A."). 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 .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. U.S. Trust, N.A. is compensated only by U.S. Trust
and receives no fee directly from California Tax-Exempt Income Fund. U.S.
Trust NY, U.S. Trust CT and U.S. Trust, N.A. are wholly-owned subsidiaries of
U.S. Trust Corporation, a registered bank holding company.
U.S. Trust CT, Chase Global Funds Services Company, a corporate affiliate of
The Chase Manhattan Bank and Federated Administrative Services (collectively,
the "Administrators") provide administrative services to Excelsior Tax-Exempt
Fund. For the services provided to the Portfolios, the Administrators are
entitled jointly to annual fees, computed daily and paid monthly, based on the
combined aggregate average daily net assets of Excelsior Tax-Exempt Fund,
Excelsior Fund, 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. For the year ended
March 31, 1999, administration fees charged by U.S. Trust CT were as follows:
<TABLE>
<S> <C>
Short-Term Tax-Exempt Securities Fund................................. $ 14,994
Intermediate-Term Tax-Exempt Fund..................................... 109,836
New York Intermediate-Term Tax-Exempt Fund............................ 54,383
Long-Term Tax-Exempt Fund............................................. 62,751
California Tax-Exempt Income Fund..................................... 18,064
</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, 1999, 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 to the extent 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, 1999, U.S. Trust waived investment advisory fees totaling
$101,691 for California Tax-Exempt Income Fund. In addition, U.S. Trust
reimbursed expenses totaling $39,514 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
30
<PAGE>
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 by the
Portfolios amounted to $498,841 for the year ended March 31, 1999. 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, 1999, U.S. Trust and the
Administrators waived investment advisory and administration fees in amounts
equal to the administrative service fees for the Portfolios as set forth
below:
<TABLE>
<CAPTION>
U.S. Trust Administrators
---------- --------------
<S> <C> <C>
Short-Term Tax-Exempt Securities Fund................. $ 28,715 $ 3
Intermediate-Term Tax-Exempt Fund..................... 186,350 1,245
New York Intermediate-Term Tax-Exempt Fund............ 33,685 53
Long-Term Tax-Exempt Fund............................. 150,919 14,210
California Tax-Exempt Income Fund..................... 139,233 --
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the 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, 1999, 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................ $ 19,983,681 $ 18,159,017
Intermediate-Term Tax-Exempt Fund.................... 189,752,800 134,561,300
New York Intermediate-Term Tax-Exempt Fund........... 109,453,602 89,025,732
Long-Term Tax-Exempt Fund............................ 156,587,730 137,275,035
California Tax-Exempt Income Fund.................... 34,355,702 2,292,055
</TABLE>
31
<PAGE>
4. Common Stock:
Excelsior Tax-Exempt Fund currently has authorized capital of 14 billion
shares of Common Stock, 13 billion of which is currently classified to
represent interests in one of seven separate investment portfolios. Authorized
capital currently classified for each Portfolio is as follows: 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.
<TABLE>
<CAPTION>
Short-Term Tax-Exempt Securities Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.................... 3,516,897 $ 25,176,264 2,733,984 $ 19,392,724
Issued as reinvestment
of dividends........... 15,451 110,353 17,281 122,405
Redeemed................ (3,193,723) (22,815,063) (2,634,790) (18,672,017)
----------- ------------ ----------- ------------
Net Increase............ 338,625 $ 2,471,554 116,475 $ 843,112
=========== ============ =========== ============
<CAPTION>
Intermediate-Term Tax-Exempt Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.................... 11,346,154 $108,730,236 6,372,050 $ 59,944,634
Issued as reinvestment
of dividends........... 86,884 830,904 64,384 602,980
Redeemed................ (5,884,893) (56,151,012) (4,644,039) (43,387,232)
----------- ------------ ----------- ------------
Net Increase............ 5,548,145 $ 53,410,128 1,792,395 $ 17,160,382
=========== ============ =========== ============
<CAPTION>
New York Intermediate-Term Tax-Exempt Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.................... 7,193,182 $ 63,714,519 6,677,428 $ 57,944,807
Issued as reinvestment
of dividends........... 117,100 1,040,023 40,167 348,885
Redeemed................ (4,652,797) (41,277,629) (3,883,837) (33,687,486)
----------- ------------ ----------- ------------
Net Increase............ 2,657,485 $ 23,476,913 2,833,758 $ 24,606,206
=========== ============ =========== ============
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Long-Term Tax-Exempt Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.................... 7,696,897 $ 77,522,869 6,182,806 $ 61,622,593
Issued as reinvestment
of dividends........... 225,193 2,263,258 83,665 833,374
Redeemed................ (4,338,267) (43,564,950) (2,807,996) (27,800,219)
----------- ------------ ----------- ------------
Net Increase............ 3,583,823 $ 36,221,177 3,458,475 $ 34,655,748
=========== ============ =========== ============
<CAPTION>
California Tax-Exempt Income Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.................... 6,869,035 $ 49,621,017 3,835,056 $ 27,133,029
Issued as reinvestment
of dividends........... 2,297 16,621 759 5,420
Redeemed................ (2,457,295) (17,769,420) (1,206,002) (8,604,896)
----------- ------------ ----------- ------------
Net Increase............ 4,414,037 $ 31,868,218 2,629,813 $ 18,533,553
=========== ============ =========== ============
</TABLE>
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, 1999, the Portfolios had no
borrowings under the agreement.
7. Year 2000 Risk (Unaudited):
Like other investment companies, financial and business organizations and
individuals around the world, the Portfolios could be affected adversely if
the computer systems used by the investment managers and the Portfolios' other
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Problem." The investment managers and the Portfolios' other
service providers have informed Excelsior Tax-Exempt Fund that they are taking
steps to address the Year 2000 problem with respect to the computer systems
that they use. Currently, they do not anticipate that the transition to the
21st Century will have any material impact on their ability to continue to
service the Portfolios at current levels. At this time, however, there can be
no assurance that their efforts will be sufficient to avoid any adverse impact
on the Portfolios as a result of the Year 2000 Problem.
33
<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 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 five portfolios of the Excelsior Tax-Exempt Funds, Inc. (the "Fund")) as
of March 31, 1999, 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, 1999 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, 1999, 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 the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 7, 1999
- --------------------------------------------------------------------------------
Federal Tax Information (Unaudited):
For the year ended March 31, 1999, the percentage of exempt interest
dividends paid and the designation of long-term capital gain are approximated
as follows:
<TABLE>
<CAPTION>
20%
Exempt Long-Term
Interest Dividends Capital Gain
------------------ ------------
<S> <C> <C>
Short-Term Tax-Exempt Securities Fund.......... 100.00% --
Intermediate-Term Tax-Exempt Fund.............. 100.00% 4,189,000
New York Intermediate-Term Tax-Exempt Fund..... 100.00% 1,787,000
Long-Term Tax-Exempt Fund...................... 99.78% 4,382,000
California Tax-Exempt Income Fund.............. 100.00% --
</TABLE>
34
