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[LOGO OF EXCELSIOR FUNDS]
Tax-Exempt
Fixed Income
Portfolios
ANNUAL REPORT
March 31, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<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................. 11
PORTFOLIOS OF INVESTMENTS
Short-Term Tax-Exempt Securities Fund.................................... 13
Intermediate-Term Tax-Exempt Fund........................................ 15
New York Intermediate-Term Tax-Exempt Fund............................... 17
Long-Term Tax-Exempt Fund................................................ 19
California Tax-Exempt Income Fund........................................ 21
NOTES TO FINANCIAL STATEMENTS.............................................. 27
INDEPENDENT AUDITORS' REPORT............................................... 33
FEDERAL TAX INFORMATION.................................................... 34
VOTING RESULTS OF SPECIAL MEETING OF SHAREHOLDERS.......................... 35
</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, THEIR
PARENT OR AFFILIATES AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
Dear Shareholder:
The fiscal year ended March 31, 2000 was exciting and rewarding both
domestically and abroad. In the U.S. and around the world, preparations for
"Y2K" and millennium celebrations consumed everyone's thoughts. The U.S.
economy was in the midst of an extraordinary expansion. Simultaneously, Europe
prepared for and converted to a new central currency, the Euro. Meanwhile, Asia
rebounded from fiscal turmoil in several key markets in early 1999.
All the major domestic equity indices exhibited strong performance. As the
fiscal year ended, the breadth of performance extended from the familiar large-
capitalization stocks to the mid-sized and small-cap stocks. Technology stocks
led all market sectors to new highs. This occurred, despite several interest
rate hikes by the Federal Reserve Board. The rising interest rate environment
and continued economic expansion seemed to temper only the performance of the
fixed-income markets.
Given the continued rate of expansion of the U.S. economy, we believe
interest rate increases are inevitable. This environment will make the coming
year a challenging one in the financial markets. We are confident that the
broad array of domestic and international equity as well as taxable and tax-
exempt fixed-income funds will help you meet your financial objectives.
On May 31, 2000, U.S. Trust Corporation, parent of the advisers to the
Excelsior Fund family ("U.S. Trust"), merged with a subsidiary of The Charles
Schwab Corporation. Earlier in the month, shareholders of the Excelsior Funds
approved new advisory contracts that will enable U.S. Trust to remain as the
investment adviser to the Excelsior Funds after the merger. We look forward to
participating in the benefits which the merger of such outstanding
organizations may bring to Excelsior Funds.
Sincerely,
/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
-------------------------------------------------------------------------------
The fixed-income markets struggled during the first three quarters of the
fiscal year ended March 31, 2000. At the outset of the year, the bond market
came under increasing pressure in the second quarter, as inflation fears drove
the yield on the long bond to over 6.0%.
Continued signs of strength in the U.S. economy, rising oil prices, and an
improving global outlook fueled investor concerns about rising inflation and
led the Fed to announce a bias toward tightening monetary policy in May.
However, solid evidence of inflation remained elusive. True to its
indications, the Fed did in fact raise the federal funds rate by 25 basis
points at the end of June, and signaled a return to a neutral bias.
The challenging conditions persisted unabated in the second quarter. In the
period, the Treasury curve moved barely at all. In many ways, the quarter was
marked by uncertainty about interest rates, inflation, and economic growth.
Economic growth proved to be relatively low in the first fiscal quarter, but
stronger growth was expected in the second. Inflation concerns were propelled
by higher oil prices, strong employment and some glimpses of wage pressure.
Still, however, Producer Price Index and Consumer Price Index numbers remained
moderate in the period, but eventually data published in a National
Association of Purchasing Managers survey spooked the market. On the interest-
rate front, everyone believed that the Fed was on hold after the June increase
-- at least until its rate hike and return to a tightening bias late in the
quarter.
Municipal securities had a poor quarter as well, as the market showed
disdain for longer-maturity securities in particular.
Corporate, mortgage, asset-backed and government agency securities' yield to
Treasury spreads were volatile as well. This was the result of unusually large
issuance in the second quarter driven by concerns that liquidity would dry up
at calendar year end on Y2K fears.
The third quarter only saw more of the same challenges. Interest rates rose
across the board, though taxables rose more than municipal securities.
The fourth quarter, however, saw the fixed-income markets rally strongly --
though not across the board. While yields moved up at the short end of the
Treasury yield curve, 5-year Treasuries were basically flat, 10-year issues
were down, and the long bond declined.
Still, the quarter began with yield increases for all maturities due to
persistent concerns about economic growth and fear of additional Federal
Reserve interest-rate hikes. In February, however, the government announced a
$30 billion Treasury buyback, which ignited a rally -- though mostly at the
long end. When the Fed increased rates again in March, the market seemed to
take it as a sign that rate hikes were at (or nearing) an end, and the rally
continued.
Much the same was true for municipal securities, though as usual they lagged
Treasuries. There wasn't much demand for long munis in the period, but a
decline in supply kept the market in decent shape.
On the taxable side, spreads widened through the first half of the quarter.
Momentum picked up toward quarter end due to the announced Treasury buyback as
well as news of possible limits on Treasury backing of the Government
Sponsored Enterprises (FNMA, FHLMC, SLMA, FHLB, FFCB, and TVA).
2
<PAGE>
EXCELSIOR TAX-EXEMPT FUNDS, INC. SHORT-TERM TAX-EXEMPT SECURITIES FUND
-------------------------------------------------------------------------------
In the first quarter of the fiscal year ended March 31, 2000, we increased
cash slightly -- from 7.5% to 10.0%. Otherwise, our goal throughout the first
three quarters was to extend the average maturity of the portfolio closer to
the three-year maximum allowed under fund guidelines -- from 2.4 to 2.8
years-- as we headed toward what we believed was a peak in interest rates. In
the fiscal fourth quarter, however, we restructured the Fund significantly. At
the start of the quarter, the Fund's positions ranged from cash all the way
out to 4.5 years. We sold the shorter- and longer-maturity securities and
reinvested the proceeds (along with the Fund's other cash reserves) at the
peak of the yield curve -- the two to three year area. While the average
maturity remained the same, the yield increased by roughly 40 basis points for
the quarter.
[GRAPH]
Short-Term Tax-Exempt Lehman 3 Yr. Muni Bond
Securities Fund Index
12/31/92 10,000 10,000
3/31/93 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
3/31/99 12,921 13,647
3/31/00 13,101 13,919
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. A portion of the Fund's income may be
subject to the Alternative Minimum Tax and some investors may be subject to
certain state and local taxes.
The above illustration compares a $10,000 investment made in Short-Term Tax-
Exempt Securities Fund and a broad-based index since 12/31/92 (inception
date). All dividends and capital gain distributions are reinvested.
The Fund's performance takes into account fees and expenses. The Lehman
Brothers 3 Year Municipal Bond Index is an unmanaged total return performance
benchmark for investment-grade tax exempt bonds maturing in three years,
calculated by using municipal bonds selected as representative of the market.
The Index does not take into account charges, fees and other expenses. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
--------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Lehman Brothers.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
3
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EXCELSIOR TAX-EXEMPT FUNDS, INC. INTERMEDIATE-TERM TAX-EXEMPT FUND
-------------------------------------------------------------------------------
For the fiscal year ended March 31, 2000, the Fund realized a negative total
return of (0.58)%* and ranked 76 out of 126 funds, based on total return, in
the Lipper Intermediate Municipal Debt Fund category** for the same period.
The Fund has performed well in the longer term, ranking 17 and 7 among 102 and
24 funds, respectively, for the same Lipper category for the five and ten
years ended March 31, 2000, with cumulative total returns of 29.38%* and
84.90*, respectively. In the first quarter, we extended the average maturity
of the Fund by about six months, from 7.5 to 8.0 years. Fund activity focused
on selling shorter-maturity issues (under five years) and using the proceeds
and additional cash to purchase eight to ten year securities, which appeared
particularly well valued in the period. As the year progressed, we continued
to deploy cash reserves, utilizing the rise in rates to extend the average
maturity of the portfolio closer to the ten year maximum permitted under Fund
guidelines -- increasing from a seven year average in January to eight years
by December. We also worked to eliminate positions in securities with
restrictive call features. The Fund began the fiscal fourth quarter
essentially fully invested with a modest amount of cash available for
redemptions. Changes in the period were minimal, as we were satisfied with the
structure of the Fund. We held securities in the six to ten year range, with
an average maturity of 8 years and duration of 6.3 years. Duration is a
measure of a security's price sensitivity to changes in interest rates.
Securities with longer duration are more sensitive to changes in interest
rates than securities of shorter durations. Most of the Fund's securities were
non-callable, and all of them were high quality. The maturity and duration
declined slightly for the three months due mainly to the winding down of
positions.
[GRAPH]
Intermediate-Term Lehman Brothers 5 Year Municipal*
Tax-Exempt Fund G.O. Bond Index**
3/31/90 10,000 10,000
3/31/91 10,864 10,904
3/31/92 11,727 11,866
3/31/93 13,100 13,082
3/31/94 13,438 13,410
3/31/95 14,290 14,210
3/31/96 15,493 15,291
3/31/97 16,184 15,922
3/31/98 17,610 17,180
3/31/99 18,584 18,160
3/31/00 18,477 18,316
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
--------------------------------------------------------------------------------
At the start of the fiscal year ended March 31, 2000, we extended the average
maturity of the portfolio by about six months, from 7.5 to 8.0 years. Portfolio
activity focused on selling shorter-maturity issues (under five years) and
using the proceeds and additional cash to purchase eight to ten year
securities, which appeared particularly attractively valued in the period. As
the year progressed, we continued to deploy cash reserves, utilizing the rise
in rates to extend the average maturity of the portfolio closer to the ten year
maximum permitted under fund guidelines -- increasing from a seven year average
in January to eight years by December. We also worked to eliminate positions in
securities with restrictive call features. The Fund began the fiscal fourth
quarter essentially fully invested with a modest amount of cash available for
redemptions. Changes in the period were minimal, as we were satisfied with the
structure of the Fund. We held securities in the six to ten year range, with an
average maturity of 8 years and duration of 6.3 years. Duration is a measure of
a security's price sensitivity to changes in interest rates. Securities with
longer duration are more sensitive to changes in interest rates than securities
of shorter durations. Most of the Fund's securities were non-callable, and all
of then were high quality. The maturity and duration declined slightly for the
three months due mainly to the winding down of positions. All in all, this
strategy proved increasingly effective as the year progressed.
[GRAPH]
New York Intermediate-Term Lehman 5-Yr Muni Bond
Tax-Exempt Fund Index
5/31/90 10,000 10,000
3/31/91 10,754 10,797
3/31/92 11,552 11,775
3/31/93 12,623 12,997
3/31/94 12,988 13,660
3/31/95 13,638 14,150
3/31/96 14,561 15,180
3/31/97 15,210 15,810
3/31/98 16,480 17,020
3/31/99 17,330 17,999
3/31/00 17,242 18,161
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
-------------------------------------------------------------------------------
Mirroring the fixed-income markets as a whole, Fund performance proved
disappointing through the first three months of the fiscal year ended March
31, 2000. Since the Fund was positioned with a relatively long average
maturity, it underperformed both its benchmark and peer group in this period.
However, given our longer-term investment horizon, we did not alter the Fund's
structure dramatically during the course of the year as interest rates rose.
The Fund has historically had a long maturity that has provided the
opportunity for better long-term Fund performance than its peer group. In the
face of a greater-than-expected decline in municipal bond prices and lack of
liquidity, we elected not to sell our positions. Consequently, we finished the
third quarter fully invested with minimal cash. All of this changed in the
fiscal fourth quarter, as the Fund's strategy proved markedly effective. We
began the quarter with a relatively long average maturity of 23 years and a
duration of 13 years. Duration is a measure of a security's price sensitivity
to changes in interest rates. Securities with longer duration are more
sensitive to changes in interest rates than securities of shorter durations.
While our emphasis of high-quality deep-discount 20- to 30-year municipal
bonds had been a major drag on the Fund in the first three quarters, we
continued to believe the market was over-reacting and so we maintained our
positions. Toward the end of the first quarter, given the market's strong
rally, and some uncertainty regarding the near-term outlook, we adopted a more
defensive posture. We sold some positions to raise cash (25%) and lowered the
Fund's average maturity and duration to 19 years and 9 years, respectively.
For the twelve months ended March 31, 2000, the Fund realized a negative total
return of (4.01)%* and ranked 228 our of 270 funds, based on total return, in
the Lipper General Municipal Debt Fund category**. The Fund's long-term
performance has been very strong, ranking 37 and 2 among 180 and 84 funds,
respectively, for the same Lipper category for the five an ten years ended
March 31, 2000, with cumulative total returns of 30.96* and 108.18*,
respectively.
[GRAPH]
Long-Term Tax-Exempt Lehman Brothers Current
Fund Municipal Bond Index***
3/31/90 10,000 10,000
3/31/91 11,011 10,947
3/31/92 12,023 12,027
3/31/93 13,988 13,571
3/31/94 14,322 13,761
3/31/95 15,899 14,607
3/31/96 17,422 15,707
3/31/97 18,336 16,503
3/31/98 20,570 18,203
3/31/99 21,685 19,315
3/31/00 20,815 18,541
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 fiscal year ended March 31, 2000, was a year of rising interest rates
and considerable volatility in the bond markets. The Federal Open Market
Committee raised short-term interest rates by 125 basis points over the fiscal
year and yields rose in all sectors. Municipal bonds were not immune, with
yields on 5-year AAA municipal bonds increasing by about 100 basis points.
Higher taxable bond rates and a lack of institutional demand kept upward
pressure on tax-exempt rates despite a decline in new issuance volume. The
California market diverged from the national market, with yield increases
dampened somewhat by a pronounced lack of local supply. Inventories of
secondary offerings increased late in 1999 as retail clients swapped out of
low coupon bonds to take tax losses. As 2000 began the Fed continued to raise
short-term rates, but bond prices stabilized and bond returns increased. The
Fund's average maturity of just less than 5 years, and the quality and
structure of the bonds purchased, cushioned the impact of rising yields. In
particular, an emphasis on premium bonds allowed the Fund largely to avoid the
severe price declines suffered by lower-coupon bonds, which were adversely
affected by the tax treatment of large price discounts.
[GRAPH]
California Tax-Exempt Merrill Lynch 3-7 Year
Income Fund Municipal Bond Index
10/1/96 10,000 10,000
3/31/97 10,105 10,188
9/30/97 10,574 10,670
3/31/98 10,855 10,975
9/30/98 11,199 11,407
3/31/99 11,370 11,611
9/30/99 11,321 11,581
3/31/00 11,498 11,718
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, 2000
<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............ $52,973,548 $302,913,351 $127,203,734 $131,940,378 $64,947,450
=========== ============ ============ ============ ===========
Investments, at value
(Note 1).............. $52,860,790 $298,791,877 $125,313,705 $125,930,040 $64,497,963
Cash................... 704,463 189,529 37,079 -- --
Interest receivable.... 720,380 4,877,907 1,559,979 1,496,614 877,245
Receivable for
investments sold...... -- -- -- -- 796,580
Receivable for fund
shares sold........... 2,215,839 1,087,740 -- 17,622 2,653
Prepaid expenses....... 1,375 8,869 3,869 5,876 1,816
Unamortized
organization costs
(Note 5).............. -- -- -- -- 9,441
----------- ------------ ------------ ------------ -----------
Total Assets........... 56,502,847 304,955,922 126,914,632 127,450,152 66,185,698
LIABILITIES:
Payable for dividends
declared.............. 176,233 954,588 424,167 493,190 204,859
Payable for fund shares
redeemed.............. -- -- -- 269 --
Payable for investments
purchased............. 2,061,800 11,144,805 -- 4,774,700 881,242
Investment advisory
fees payable (Note
2).................... 10,054 68,005 48,681 48,973 23,132
Administration fees
payable (Note 2)...... 6,414 42,151 18,609 14,464 8,857
Administrative
servicing fees payable
(Note 2).............. 7,489 29,045 4,005 14,322 18,156
Directors' fees payable
(Note 2).............. 415 3,423 1,777 2,011 701
Due to custodian bank.. -- -- -- 77,515 997
Accrued expenses and
other payables........ 14,627 42,465 39,215 27,186 14,123
----------- ------------ ------------ ------------ -----------
Total Liabilities...... 2,277,032 12,284,482 536,454 5,452,630 1,152,067
----------- ------------ ------------ ------------ -----------
NET ASSETS.............. $54,225,815 $292,671,440 $126,378,178 $121,997,522 $65,033,631
=========== ============ ============ ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (123) $ 69,764 $ (31) $ 41,735 $ 13,538
Accumulated net
realized loss on
investments........... (678,115) (17,821) (2,546,219) (5,623,954) (44,868)
Unrealized depreciation
of investments........ (112,758) (4,121,474) (1,890,029) (6,010,338) (449,487)
Par value (Note 4)..... 7,727 32,311 15,154 13,573 9,200
Paid in capital in
excess of par value... 55,009,084 296,708,660 130,799,303 133,576,506 65,505,248
----------- ------------ ------------ ------------ -----------
Total Net Assets........ $54,225,815 $292,671,440 $126,378,178 $121,997,522 $65,033,631
=========== ============ ============ ============ ===========
Shares of Common Stock
Outstanding............ 7,726,751 32,311,094 15,154,329 13,567,454 9,200,406
NET ASSET VALUE PER
SHARE.................. $7.02 $9.06 $8.34 $8.99 $7.07
===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Statements of Operations
Year Ended March 31, 2000
<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........... $1,874,741 $ 14,218,731 $ 6,603,629 $ 8,096,062 $ 2,649,441
---------- ------------ ----------- ------------ -----------
EXPENSES:
Investment advisory fees
(Note 2)................. 137,025 1,073,658 726,003 765,312 317,994
Administration fees (Note
2)....................... 69,539 467,194 221,156 232,998 96,808
Administrative servicing
fees (Note 2)............ 31,733 215,366 29,387 120,625 108,281
Registration and filing
fees..................... 12,369 16,116 1,809 17,093 2,343
Custodian fees............ 12,722 78,057 37,178 39,683 16,780
Shareholder servicing
agent fees............... 9,481 21,722 13,142 47,968 27,986
Legal and audit fees...... 4,302 35,497 25,220 16,915 12,178
Directors' fees and
expenses (Note 2)........ 1,958 14,639 7,149 7,872 3,159
Shareholder reports....... 3,339 23,564 14,232 14,368 5,310
Amortization of
organization costs
(Note 5)................. -- -- -- -- 6,306
Miscellaneous expenses.... 6,042 21,969 11,578 11,784 5,787
---------- ------------ ----------- ------------ -----------
Total Expenses............ 288,510 1,967,782 1,086,854 1,274,618 602,932
Fees waived and reimbursed
by investment adviser and
administrators (Note 2).. (31,733) (215,366) (29,387) (120,625) (284,945)
---------- ------------ ----------- ------------ -----------
Net Expenses.............. 256,777 1,752,416 1,057,467 1,153,993 317,987
---------- ------------ ----------- ------------ -----------
NET INVESTMENT INCOME...... 1,617,964 12,466,315 5,546,162 6,942,069 2,331,454
---------- ------------ ----------- ------------ -----------
REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (Note
1):
Net realized loss on
security transactions.... (359,297) (17,821) (2,546,219) (5,551,954) (34,204)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... (578,736) (14,981,103) (4,535,806) (9,976,476) (1,617,902)
---------- ------------ ----------- ------------ -----------
Net realized and unrealized
loss on investments....... (938,033) (14,998,924) (7,082,025) (15,528,430) (1,652,106)
---------- ------------ ----------- ------------ -----------
Net increase (decrease) in
net assets resulting from
operations................ $ 679,931 $ (2,532,609) $(1,535,863) $ (8,586,361) $ 679,348
========== ============ =========== ============ ===========
</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, 2000
Net investment income..... $ 1,617,964 $ 12,466,315 $ 5,546,162 $ 6,942,069 $ 2,331,454
Net realized loss on
investments.............. (359,297) (17,821) (2,546,219) (5,551,954) (34,204)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... (578,736) (14,981,103) (4,535,806) (9,976,476) (1,617,902)
----------- ------------ ------------ ------------ -----------
Net increase (decrease) in
net assets resulting from
operations............... 679,931 (2,532,609) (1,535,863) (8,586,361) 679,348
Distributions to
shareholders:
From net investment
income................... (1,617,964) (12,396,542) (5,499,882) (6,933,273) (2,331,454)
From net relized gain on
investments.............. -- (129,800) (1,457,670) (1,016,099) --
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 10,002,568 (16,257,424) (19,955,492) (43,914,211) 1,774,688
----------- ------------ ------------ ------------ -----------
Net increase (decrease) in
net assets............... 9,064,535 (31,316,375) (28,448,907) (60,449,944) 122,582
NET ASSETS:
Beginning of year........ 45,161,280 323,987,815 154,827,085 182,447,466 64,911,049
----------- ------------ ------------ ------------ -----------
End of year (1).......... $54,225,815 $292,671,440 $126,378,178 $121,997,522 $65,033,631
=========== ============ ============ ============ ===========
(1) Including
undistributed
(distributions in
excess of) net
investment income.... $ (123) $ 69,764 $ (31) $ 41,735 $ 13,538
=========== ============ ============ ============ ===========
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 (2).......... $45,161,280 $323,987,815 $154,827,085 $182,447,466 $64,911,049
=========== ============ ============ ============ ===========
--------
(2) Including
undistributed
(distributions in
excess of) net
investment income.... $ (121) $ (1) $ (31) $ 28,847 $ 13,538
=========== ============ ============ ============ ===========
</TABLE>
--------
See Notes to Financial Statements
10
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Financial Highlights -- Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
Dividends Distributions
Net Asset Net Realized Dividends in Excess of From Net
Value, Net and Unrealized Total From From Net Net Realized Gain
Beginning Investment Gain (Loss) Investment Investment Investment 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,
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) -- --
2000................... 7.17 0.25 (0.15) 0.10 (0.25) -- --
INTERMEDIATE-TERM TAX-EXEMPT FUND -- (12/3/85*)
Year Ended March 31,
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)
2000................... 9.49 0.37 (0.43) (0.06) (0.37) -- --
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND -- (5/31/90*)
Year Ended March 31,
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)
2000................... 8.80 0.32 (0.37) (0.05) (0.32) -- (0.09)
LONG-TERM TAX-EXEMPT FUND -- (2/5/86*)
Year Ended March 31,
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)
2000................... 9.87 0.42 (0.82) (0.40) (0.42) -- (0.06)
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) -- --
2000................... 7.25 0.26 (0.18) 0.08 (0.26) -- --
</TABLE>
* Commencement of operations
** Annualized
*** Not 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
11
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of
Net Gross
Net Operating Operating Ratio of
Assets, Expenses Expenses Net
Net Asset End to to Investment
Value, of Average Average Income Portfolio Fee
Total End Total Period Net Net to Average Turnover Waivers
Distributions of Period Return (000's) Assets Assets+ Net Assets Rate (Note 2)
------------- --------- ------ -------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(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% -- #
(0.25) 7.02 1.39% 54,226 0.56% 0.63% 3.54% 130% -- #
$(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% -- #
(0.37) 9.06 (0.58)% 292,671 0.57% 0.64% 4.06% 91% $0.01
$(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% -- #
(0.41) 8.34 (0.51)% 126,378 0.73% 0.75% 3.82% 64% -- #
$(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
(0.48) 8.99 (4.01)% 121,998 0.75% 0.83% 4.54% 78% 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
(0.26) 7.07 1.13% 65,034 0.50% 0.95% 3.67% 16% 0.03
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Short-Term Tax-Exempt Securities Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 96.73%
$2,000,000 Alabama State General Obligation Bonds, Series A,
5.500%, 10/01/2003................................... $ 2,045,262
2,000,000 Arizona State Transportation Board Excise Tax Revenue
Bonds, Maricopa County Regional Area Project, Series
A, (AMBAC),
5.500%, 07/01/2002................................... 2,033,240
2,000,000 Clark County, Nevada, School District General
Obligation Bonds, Series A, (MBIA), 5.250%,
06/15/2003........................................... 2,028,670
1,500,000 Colorado, Water Resource Power Development Authority,
Clean Water Revenue Bonds, Series A, 5.000%,
09/01/2002........................................... 1,513,517
2,000,000 Dallas, Texas, General Obligation Bonds, 6.000%,
02/15/2002........................................... 2,046,310
2,000,000 Hawaii State Highway Revenue Bonds, (FGIC), 5.000%,
07/01/2003........................................... 2,013,550
2,000,000 Honolulu, Hawaii, City & County General Obligation
Bonds, Series C, (FGIC), 5.000%, 07/01/2003.......... 2,011,160
2,000,000 Long Island Power Authority, New York Electric
Systems Revenue Bonds, (MBIA), 5.000%, 04/01/2002.... 2,009,812
1,500,000 Maryland, State & Local Facilities Public
Improvements 2nd Series, 5.000%, 07/15/2003.......... 1,518,016
2,000,000 Milwaukee, Wisconsin, Metropolitan Sewer District
General Obligation Bonds, Series A, 4.500%,
10/01/2002........................................... 1,992,064
1,700,000 Minneapolis, Minnesota, Special School District
No. 001, Certificates of Participation, Series A,
(MBIA), 5.500%, 02/01/2003........................... 1,734,663
2,000,000 Mississippi State General Obligation Bonds, Series E,
5.000%, 09/01/2002................................... 2,017,112
2,000,000 Mississippi State Highway Revenue Bonds, Four Lane
Highway Program, 5.250%, 06/01/2004.................. 2,032,732
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
$2,000,000 New Hampshire Municipal Bond Bank, Revenue Bonds,
Series A, (AMBAC), 5.250%, 08/15/2002................ $ 2,029,688
2,000,000 New Jersey State General Obligation Bonds, Series D,
5.400%, 02/15/2003................................... 2,036,552
2,000,000 New Jersey State Transportation Corp. Revenue Bonds,
Capital Grant Anticipation Notes, Series A, (FSA),
5.250%, 09/01/2001................................... 2,014,674
1,000,000 Omaha Public Power District, Nebraska, Electric
Revenue Bonds, Series A, 5.00%, 02/01/2001........... 1,007,080
2,000,000 Pennsylvania State General Obligation Bonds, 2nd
Series, 5.000%, 08/01/2004........................... 2,009,914
2,000,000 Shelby County, Tennessee, General Obligation Bonds,
Series A, 6.750%, 04/01/2003......................... 2,114,058
2,000,000 South Carolina State Public Services Authority
Revenue Bonds, Series A, 5.000%, 01/01/2003.......... 2,016,704
2,000,000 South Carolina, State Capital Improvement General
Obligation Bonds, Series B, 5.750%, 08/01/2002....... 2,052,422
2,000,000 Stamford, Connecticut, General Obligation Bonds,
5.00%, 07/15/2002.................................... 2,022,686
2,000,000 Texas State General Obligation Bonds, Series B,
5.00%, 10/01/2001.................................... 2,017,814
2,000,000 University of Texas, Permanent University Fund
Revenue Bonds, 5.000%, 07/01/2002.................... 2,013,374
2,000,000 University of Texas, University Financing Systems
Revenue Bonds, Series A, 6.000%, 08/15/2002.......... 2,056,236
2,000,000 Utah State General Obligation Bonds, Series A,
5.000%, 07/01/2002................................... 2,019,754
2,000,000 Virginia State Public School Authority Revenue Bonds,
6.000%, 01/01/2002................................... 2,048,426
-----------
52,455,490
-----------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Short-Term Tax-Exempt Securities Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
OTHER INVESTMENTS -- 0.75%
405,300 Provident Tax-Exempt Municipal
Fund................................................. $ 405,300
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $52,973,548*)........................................ 97.48% $52,860,790
OTHER ASSETS AND LIABILITIES (NET)......................... 2.52 1,365,025
------ -----------
NET ASSETS................................................. 100.00% $54,225,815
====== ===========
</TABLE>
--------
* Aggregate cost for Federal tax 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, 2000, approximately, 15% of the net assets are invested in Texas
municipal securities. Economic changes affecting the state and certain of its
public bodies and municipalities may affect the ability of issuers to pay the
required principal and interest payments of the municipal securities.
See Notes to Financial Statements
14
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Intermediate-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 98.26%
$10,000,000 Alabama State Public School & College Authority,
Capital Improvement Revenue Bonds, Series D, (FGIC),
5.750%, 08/01/2010.................................. $ 10,516,280
10,000,000 Chicago, Illinois, General Obligation Bonds, Series
A, (FGIC),
5.000%, 01/01/2008.................................. 9,935,850
10,000,000 Connecticut State General Obligation Bonds, Series
C,
5.500%, 08/01/2006.................................. 10,350,100
10,000,000 Connecticut State Special Tax Obligation Revenue
Bonds, Transportation Infrastructure, Series A,
(FGIC),
5.500%, 10/01/2010.................................. 10,371,510
10,000,000 Denver, Colorado, City & County General Obligation
Bonds, Various Purpose Projects, Series B,
5.750%, 08/01/2008.................................. 10,491,380
10,000,000 Florida State Board of Education General Obligation
Bonds, Series A,
5.000%, 06/01/2007.................................. 10,059,150
10,000,000 Florida State Division Board Finance Department,
General Services Revenue Bonds, Series A,
Environmental Protection-Preservation 2000, (FGIC),
5.375%, 07/01/2010.................................. 10,252,770
10,000,000 Florida State Division Board Finance Department,
General Services Revenue Bonds, Series A,
Environmental Protection-Preservation 2000, (FSA),
5.500%, 07/01/2008.................................. 10,361,150
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 07/01/2007.................................. 10,959,140
10,000,000 Hawaii State General Obligation Bonds, Series CS,
(MBIA),
5.000%, 04/01/2007.................................. 10,000,000
10,000,000 Honolulu, Hawaii, City & County General Obligation
Bonds, Series C, (FGIC),
5.500%, 11/01/2006.................................. 10,271,440
10,000,000 Jacksonville, Florida, Electric Authority Revenue
Bonds, St. Johns River, Issue 2-15,
5.500%, 10/01/2006.................................. 10,386,920
10,000,000 Kentucky State Turnpike Authority, Economic
Development Road Revitalization Projects Revenue
Bonds, (AMBAC),
5.500%, 07/01/2008.................................. 10,313,330
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$10,000,000 Long Island Power Authority, New York, Electric
Systems Revenue Bonds, Series A, (AMBAC),
5.500%, 12/01/2010................................. $ 10,300,290
10,000,000 Lower Colorado River Authority of Texas, Revenue
Bonds, Series B,
6.000%, 05/15/2010................................. 10,679,590
10,000,000 Maryland State & Local Facilities, Public
Improvements Correctional Facilities, 3rd Series,
5.700%, 10/15/2006................................. 10,370,190
10,000,000 Metropolitan Atlanta Rapid Transportation
Authority, Georgia, Sales Tax Revenue Bonds, Series
A, (MBIA),
6.250%, 07/01/2007................................. 10,789,250
10,000,000 Municipal Assistance Corp., City of New York, New
York, Revenue Bonds, Series O,
5.250%, 07/01/2007................................. 10,161,830
10,000,000 Oklahoma State, Grand River Dam Authority Revenue
Bonds, (AMBAC),
6.250%, 06/01/2011................................. 10,969,040
10,000,000 Pennsylvania State General Obligation Bonds,
(AMBAC),
5.125%, 09/15/2006................................. 10,098,210
10,175,000 Purdue University, Indiana, Various Students Fees
University Revenue Bonds, Series K,
3.650%, 07/01/2020+................................ 10,175,000
10,000,000 Salt River Project, Arizona, Agricultural
Improvement & Power Distribution, Electric Systems
Revenue Bonds, Series C,
6.500%, 01/01/2009................................. 11,029,240
10,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A,
5.000%, 02/01/2008................................. 9,960,900
10,000,000 Tennessee State General Obligation Bonds, Series A,
5.000%, 05/01/2007................................. 10,023,220
10,000,000 Texas State General Obligation Bonds, Series A,
6.000%, 10/01/2009................................. 10,694,320
10,000,000 Utah State General Obligation Bonds, Series A,
5.000%, 07/01/2007................................. 10,047,530
8,400,000 Valdez, Alaska, Marine Terminal, Revenue Bonds,
Exxon Pipeline Co. Project, Series A,
3.800%, 12/01/2033+................................ 8,400,000
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Intermediate-Term Tax-Exempt Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 9,000,000 Wisconsin State General Obligation Revenue Bonds,
6.200%, 05/01/2006................................. $ 9,603,747
------------
287,571,377
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 1.95%
MORGAN GUARANTY TRUST
---------------------
5,700,000 New York State, Energy Research & Development
Authority Pollution Control Revenue Bonds, New York
State Electric & Gas, Series C, 3.700%,
06/01/2029+........................................ 5,700,000
------------
<CAPTION>
Shares
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 1.88%
1,235,200 Dreyfus Tax-Exempt Cash Management Fund............ 1,235,200
4,285,300 Shearson Tax-Exempt Municipal Fund................. 4,285,300
------------
5,520,500
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $302,913,351*).................... 102.09% $298,791,877
OTHER ASSETS AND LIABILITIES (NET) ....................... (2.09) (6,120,437)
------ ------------
NET ASSETS................................................ 100.00% $292,671,440
====== ============
</TABLE>
--------
* Aggregate cost for Federal tax 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, 2000, approximately, 14% and 11% of the net assets are invested
in Florida and Texas 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
16
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
New York Intermediate-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 94.15%
$ 5,000,000 Hempstead Town, New York, General Obligation Bonds,
(AMBAC),
5.500%, 02/15/2006.................................. $ 5,161,470
10,000,000 Long Island Power Authority, New York, Electric
Systems General Revenue Bonds, Series A, (AMBAC),
5.500%, 12/01/2009.................................. 10,316,930
5,000,000 Metropolitan Transportation Authority of New York,
Transportation Facilities Revenue Bonds, Series M,
(FGIC),
5.500%, 07/01/2008.................................. 5,166,895
5,000,000 Monroe County, New York, Public Improvement General
Obligation Bonds,
5.500%, 03/01/2006.................................. 5,165,210
5,000,000 Municipal Assistance Corp., City of New York Revenue
Bonds, Series G,
6.000%, 07/01/2006.................................. 5,292,590
10,000,000 New York City, New York, City Transitional Finance
Authority, Future Tax Revenue Bonds, Series A,
5.250%, 08/15/2009.................................. 10,184,640
5,000,000 New York State Dormitory Authority, Columbia
University Revenue Bonds, Series A,
5.750%, 07/01/2008.................................. 5,274,735
5,000,000 New York State Dormitory Authority, Cornell
University Revenue Bonds,
5.125%, 07/01/2006.................................. 5,077,045
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.................................. 5,170,690
5,000,000 New York State Local Government Assistance Corp.
Revenue Bonds, Series A, (FGIC),
5.000%, 04/01/2009.................................. 4,971,390
10,000,000 New York State Power Authority & General Purpose
Revenue Bonds, Series A,
5.000%, 02/15/2007.................................. 10,045,600
5,000,000 New York State Thruway Authority General Revenue
Bonds, Series E,
5.500%, 01/01/2006.................................. 5,150,865
5,000,000 New York State Thruway Authority Highway & Bridge
Revenue Bonds, Series C, (FGIC),
5.500%, 04/01/2008.................................. 5,169,845
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 5,000,000 New York State Urban Development Corp.,
Correctional Facilities Revenue Bonds, Series A,
6.500%, 01/01/2010................................. $ 5,471,685
5,000,000 Puerto Rico Commonwealth Electric Power Authority
Revenue Bonds, Series BB, (MBIA),
6.000%, 07/01/2011................................. 5,412,360
10,000,000 Puerto Rico Commonwealth Public Buildings Authority
Guaranteed, Education & Health Facilities Revenue
Bonds, Series M, (AMBAC)
5.750%, 07/01/2010................................. 10,603,180
5,000,000 Suffolk County, New York, Industrial Development
Agency, Southwest Sewer Systems Revenue Bonds,
(FGIC),
6.000%, 02/01/2008................................. 5,327,065
10,000,000 Triborough Bridge & Tunnel Authority, New York,
Revenue and General Purpose Bonds, Series A,
5.000%, 01/01/2008................................. 10,024,710
------------
118,986,905
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 3.09%
BANK ONE CHICAGO N.A.
---------------------
3,900,000 New York State Energy Research & Development
Authority, Pollution Control Revenue Bonds, New
York State Electric & Gas Co., Series D, 3.700%,
10/01/2029+........................................ 3,900,000
------------
<CAPTION>
Shares
-----------
<C> <S> <C>
OTHER INVESTMENTS -- 1.92%
2,426,800 Provident Institutional New York Tax-Exempt Money
Fund............................................... 2,426,800
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $127,203,734*).................... 99.16% $125,313,705
OTHER ASSETS AND LIABILITIES (NET)........................ 0.84 1,064,473
------ ------------
NET ASSETS................................................ 100.00% $126,378,178
====== ============
</TABLE>
--------
* Aggregate cost for Federal tax and book purposes.
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
MBIA--Municipal Bond Insurance Assoc.
See Notes to Financial Statements
17
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
New York Intermediate-Term Tax-Exempt Fund -- (continued)
Note:
These municipal securities meet the three highest ratings assigned by Moody's
Investors Services, Inc. or Standard and Poor's Corporation or, where not
rated, are determined by the Investment Adviser, under the supervision of the
Board of Directors, to be of comparable quality at the time of purchase to
rated instruments that may be acquired by the Fund.
At March 31, 2000, approximately, 85% and 13% of the net assets are invested
in New York and Commonwealth of Puerto Rico 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
18
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Long-Term Tax-Exempt Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 84.33%
$5,000,000 Atlanta, Georgia, Airport Revenue Bonds, Series A,
(FGIC),
5.500%, 01/01/2026.................................. $ 4,774,700
5,000,000 Chicago, Illinois, General Obligation Bonds, (FGIC),
5.250%, 01/01/2028.................................. 4,545,745
5,000,000 East Bay California Municipal Utility Distribution
Water System Revenue Bonds, (FGIC),
5.000%, 06/01/2026.................................. 4,539,265
5,000,000 Florida State Board of Education Capital Outlay
General Obligation Bonds, Series A,
5.000%, 06/01/2027.................................. 4,493,555
5,000,000 Florida State Turnpike Authority Revenue Bonds,
Series B, (FGIC),
5.000%, 07/01/2027.................................. 4,424,010
5,000,000 Fulton County, Georgia, Water & Sewer Revenue Bonds,
(FGIC),
4.750%, 01/01/2028.................................. 4,231,105
4,900,000 Gulf Coast Waste Disposal Authority, Texas,
Pollution Control Revenue Bonds, Amoco Oil Co.
Project,
3.800%, 10/01/2017+................................. 4,900,000
5,000,000 Houston, Texas, Independent School District General
Obligation Bonds, Permanent School Fund Guaranteed,
Series A,
4.750%, 02/15/2022.................................. 4,287,335
5,000,000 Los Angeles, California, Department of Water and
Power Waterworks Revenue Bonds,
4.500%, 10/15/2024.................................. 4,109,465
5,000,000 Louisville & Jefferson County, Kentucky,
Metropolitan Sewer District Revenue Bonds, Sewer &
Drain Systems, Series A, (FGIC),
4.750%, 05/15/2028.................................. 4,233,155
5,000,000 Massachusetts State Port Authority Revenue Bonds,
Series A,
5.000%, 07/01/2027.................................. 4,374,915
5,000,000 Massachusetts Bay Transportation Authority,
Massachusetts General Transportation System Revenue
Bonds, Series A, (MBIA),
4.500%, 03/01/2026.................................. 4,059,200
5,000,000 Massachusetts State Turnpike Authority, Metropolitan
Highway Systems Revenue Bonds, Series A, (AMBAC),
5.250%, 01/01/2029.................................. 4,577,960
5,000,000 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds, Series B, (FGIC),
4.750%, 07/01/2026.................................. 4,236,795
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$5,000,000 New Jersey Health Care Facilities Financing
Authority Revenue Bonds, St. Barnabas Health Center,
Series B, (MBIA),
4.750%, 07/01/2028.................................. $ 4,183,600
5,000,000 New York City, New York, Municipal Water Finance
Authority, Water & Sewer System Revenue Bonds,
Series B, (MBIA),
5.500%, 06/15/2027.................................. 4,769,225
5,000,000 New York City, New York, Transitional Financing
Authority Revenue Bonds, Future Tax Secured, Series
C,
4.750%, 05/01/2023.................................. 4,296,690
5,000,000 Port Seattle, Washington, Revenue Bonds, Series A,
(FGIC),
5.500%, 10/01/2022.................................. 4,818,900
5,000,000 Puerto Rico Commonwealth Infrastructure Financing
Authority, Series A, (AMBAC),
5.000%, 07/01/2028.................................. 4,447,040
5,200,000 Salt Lake County, Utah, Pollution Control Revenue
Bonds, Service Station Holdings Project, Series B,
3.850%, 08/01/2007+................................. 5,200,000
5,000,000 San Antonio, Texas, Electric & Gas Revenue Bonds,
Series A,
4.500%, 02/01/2021.................................. 4,161,250
5,000,000 Utah, State Board of Regents, University of Utah
Auxiliary & Campus Revenue Bonds, Series A, (MBIA),
4.750%, 04/01/2025.................................. 4,224,430
5,000,000 Valdez, Alaska, Marine Terminal Revenue Bonds, Exxon
Pipeline Co. Project, Series A,
3.800%, 12/01/2033+................................. 5,000,000
------------
102,888,340
------------
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- 15.33%
LANDESBANK HESSEN-THURINGEN
---------------------------
4,400,000 Jacksonville, Florida Electric Authority, Electric
Systems Revenue Bonds, Series B,
3.850%, 10/01/2010+................................. 4,400,000
BANK OF AMERICA N.A.
--------------------
5,000,000 Mecklenburg County, North Carolina, Public
Improvement General Obligation Bonds, Series C,
3.850%, 02/01/2020+................................. 5,000,000
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
Long-Term Tax-Exempt Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- BACKED BY LETTERS OF CREDIT -- (continued)
STATE STREET BANK & TRUST CO.
-----------------------------
$4,200,000 Texas State, Multi-Model Water Development Board
Revenue Bonds, Series A,
4.000%, 03/01/2015+................................. $ 4,200,000
BANK ONE
--------
5,100,000 Wake County, North Carolina, Industrial Facilities &
Pollution Control Financing Authority Revenue Bonds,
Carolina Power & Light Co. Project, Series A,
3.750%, 06/15/2014+................................. 5,100,000
------------
18,700,000
------------
<CAPTION>
Shares
----------
<C> <S> <C>
OTHER INVESTMENTS -- 3.56%
4,341,700 Dreyfus Tax-Exempt Cash Management Fund............. 4,341,700
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $131,940,378*).................... 103.22% $125,930,040
OTHER ASSETS AND LIABILITIES (NET)........................ (3.22) (3,932,518)
------ ------------
NET ASSETS................................................ 100.00% $121,997,522
====== ============
</TABLE>
--------
* For Federal income tax purposes, the tax basis of investments aggregates
$132,000,378
+ 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, 2000, approximately, 15% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, which the Fund relies on.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At March 31, 2000, approximately, 14% and 11% of the net assets are invested
in Texas and Florida municipal securities, respectively and approximately 10%
of the net assets are invested in each of the New York and Massachusetts
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, 2000
California Tax-Exempt Income Fund
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- 74.51%
$ 65,000 Anaheim, California, Electric Revenue Bonds, (AMBAC),
4.750%, 10/01/2002................................... $ 65,855
200,000 Antelope Valley-East Kern, California, Water Agency
General Obligation Bonds, (AMBAC),
4.500%, 08/01/2001................................... 201,638
200,000 Bakersfield, California, City School District General
Obligation Bonds, (MBIA),
5.000%, 08/01/2005................................... 205,542
595,000 Berkeley, California, Unified School District General
Obligation Bonds, (FGIC),
4.375%, 08/01/2006................................... 588,165
605,000 Beverly Hills, California, Public Financing Authority
Lease Revenue Bonds, Series A, (MBIA),
4.000%, 06/01/2002................................... 601,996
250,000 Burbank, California, Unified School District General
Obligation Bonds, (FGIC),
4.100%, 08/01/2003................................... 247,686
35,000 California Educational Facilities Authority, Santa
Clara University Revenue Bonds, (MBIA),
4.900%, 09/01/2006................................... 35,811
150,000 California Educational Facilities Authority, St.
Marys College Revenue Bonds,
4.800%, 10/01/2002................................... 151,477
150,000 California Educational Facilities Authority, Stanford
University Revenue Bonds, Series J,
5.900%, 11/01/2003................................... 156,693
225,000 California Health Facilities Financing Authority
Revenue Bonds, Cedars-Sinai Medical Center, Series A,
(MBIA),
4.250%, 08/01/2003................................... 224,021
200,000 California Industrial Urban Development Agency, Tax
Allocation Bonds, (MBIA),
4.300%, 05/01/2002................................... 200,587
275,000 California State Department of Transportation,
Certificates of Participation, Series A, (MBIA),
4.400%, 03/01/2004................................... 275,089
250,000 California State Department of Water Resources,
Central Valley Project Revenue Bonds, Series L,
8.000%, 12/01/2001................................... 265,531
500,000 California State Department of Water Resources,
Central Valley Project Revenue Bonds, Series U,
4.00%, 12/01/2006.................................... 477,932
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 250,000 California State Public Works Board, Lease Revenue
Bonds, Department of Corrections, Series D, (MBIA),
4.850%, 09/01/2008................................... $ 252,919
700,000 California State Public Works Board, Lease Revenue
Bonds, Department of Health Services, Series A,
4.350%, 11/01/2003................................... 685,663
500,000 California State Public Works Board, Lease Revenue
Bonds, Various California State University Projects,
Series A,
5.600%, 10/01/2001................................... 510,147
750,000 California State, General Obligation Bonds, (MBIA),
7.500%, 10/01/2007................................... 884,566
300,000 California State, General Obligation Bonds,
6.000%, 09/01/2001................................... 308,381
750,000 California State, General Obligation Bonds,
6.100%, 11/01/2001................................... 773,902
750,000 California State, General Obligation Bonds,
6.250%, 04/01/2008................................... 822,586
230,000 California State, General Obligation Bonds,
6.700%, 02/01/2004................................... 248,119
250,000 Central Coast Water Authority, California, Revenue
Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
4.375%, 10/01/2001................................... 251,660
315,000 Central Coast Water Authority, California, Revenue
Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
6.000%, 10/01/2005................................... 338,589
550,000 Central Valley School District Financing Authority,
California School District General Obligation Revenue
Bonds, Series A, (MBIA),
5.850%, 08/01/2004................................... 582,449
545,000 Chino Basin California Regional Financing Authority
Revenue Bonds, Municipal Water District Sewer System
Project, (AMBAC),
7.000%, 08/01/2005................................... 608,649
350,000 Contra Costa County, California, Certificates of
Participation, Capital Projects Program, (AMBAC),
4.625%, 02/01/2007................................... 349,776
1,000,000 Contra Costa, California, Transportation Authority
Sales Tax Revenue Bonds, Series A, (FGIC),
6.000%, 03/01/2004................................... 1,057,315
</TABLE>
See Notes to Financial Statements
21
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
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.................................... $ 594,137
1,000,000 Contra Costa, California, Transportation Authority
Sales Tax Revenue Bonds, Series A, (FGIC),
6.000%, 03/01/2008.................................... 1,083,007
750,000 East Bay, California, Regional Park District General
Obligation Bonds,
5.000%, 09/01/2007.................................... 767,223
250,000 Escondido, California, Unified School District, Series
A, (FGIC),
5.000%, 09/01/2008.................................... 255,503
400,000 Fairfield, California, Water Revenue Bonds, (AMBAC),
4.700%, 04/01/2005.................................... 405,154
155,000 Fresno, California, Sewer Revenue Bonds, Series A-1,
(AMBAC),
4.800%, 09/01/2006.................................... 157,734
695,000 Golden West Schools Financing Authority, California
School District General Obligation Revenue Bonds,
Series A, (MBIA),
6.200%, 02/01/2003.................................... 729,066
745,000 Los Altos, California School District, General
Obligation Bonds, Series A, (FSA),
5.000%, 08/01/2006.................................... 765,698
200,000 Los Angeles County, California, Public Works Financing
Authority Lease Revenue Bonds, Series A, (MBIA),
6.000%, 09/01/2003.................................... 210,429
300,000 Los Angeles County, California, Public Works Financing
Authority Lease Revenue Bonds, Series A, (MBIA),
6.000%, 09/01/2004.................................... 319,188
655,000 Los Angeles County, California, Public Works Financing
Authority Revenue Bonds, Regional Park & Open Space
District, Series A,
5.000%, 10/01/2004.................................... 671,156
300,000 Los Angeles County, California, Public Works Financing
Authority Revenue Bonds, Regional Park & Open Space
District, Series A,
5.250%, 10/01/2005.................................... 311,595
230,000 Los Angeles County, California, Schools Regionalized
Business Services Certificate of Participation, Series
B, (MBIA),
4.400%, 07/01/2003.................................... 231,093
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 500,000 Los Angeles, California, Department of Airports,
Airport Revenue Bonds, Series A, (FGIC),
6.000%, 05/15/2005................................... $ 533,941
305,000 Los Angeles, California, Harbor Department Revenue
Bonds, Series C,
4.875%, 11/01/2002................................... 310,391
250,000 Los Angeles, California, Municipal Improvement
Corporation, Equipment Real Property, Certificates of
Participation, (AMBAC),
4.500%, 12/01/2001................................... 252,346
150,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
4.875%, 02/01/2006................................... 152,965
400,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series B, (AMBAC),
4.300%, 02/01/2004................................... 398,722
750,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series B, (AMBAC)
4.600%, 02/01/2006................................... 754,533
250,000 Los Angeles, California, Municipal Improvement
Corporation, Sanitation Equipment Charge Revenue
Bonds, Series A, (FSA),
5.000%, 02/01/2001................................... 252,220
400,000 Los Angeles, California, State Building Authority
Lease Revenue Bonds, California Department of General
Services, Series A,
5.600%, 05/01/2004................................... 417,138
500,000 Los Angeles, California, Unified School District
General Obligation Bonds, Series A, (FGIC),
4.400%, 07/01/2003................................... 501,623
1,000,000 Marin, California Municipal Water District, Water
Revenue Bonds,
5.250%, 07/01/2005................................... 1,029,938
500,000 Metropolitan Water District of Southern California,
General Obligation Bonds, Series A,
5.250%, 03/01/2008................................... 520,332
100,000 Metropolitan Water District of Southern California,
General Obligation Bonds, Series A1,
5.000%, 03/01/2002................................... 101,732
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$1,000,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds,
5.750%, 07/01/2009.................................... $ 1,071,751
250,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series A,
4.250%, 07/01/2003.................................... 249,686
400,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series A,
7.000%, 07/01/2002.................................... 423,419
200,000 Metropolitan Water District of Southern California,
Waterworks Revenue Bonds, Series B, (MBIA),
5.250%, 07/01/2007.................................... 208,173
1,000,000 Modesto, California High School District, Stanislaus
County General Obligation Bonds, (FGIC),
5.000%, 08/01/2001.................................... 1,013,974
200,000 Modesto, California Irrigation District Financing
Authority Revenue Bonds, Series A, (MBIA),
4.850%, 10/01/2001.................................... 202,742
975,000 Modesto, California Irrigation District Financing
Authority Revenue Bonds, Series A, (MBIA),
5.450%, 10/01/2007.................................... 1,025,174
350,000 M-S-R Public Power Agency, California, San Juan
Project Revenue Bonds, Series F, (AMBAC),
5.650%, 07/01/2003.................................... 364,703
250,000 Northern California Power Agency, Public Power Revenue
Bonds, Geothermal Project, Series A, (AMBAC),
5.500%, 07/01/2005.................................... 262,748
125,000 Northern California Power Agency, Public Power Revenue
Bonds, Series A, (AMBAC),
5.600%, 07/01/2006.................................... 132,549
250,000 Novato, California, General Obligation Bonds, Series
A, (MBIA),
6.250%, 08/01/2007.................................... 275,739
1,100,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Senior,
(AMBAC),
6.000%, 02/15/2008.................................... 1,190,864
175,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Senior,
5.600%, 02/15/2002.................................... 179,231
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 300,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 2nd Senior,
(FGIC),
4.700%, 02/15/2005................................... $ 303,894
1,000,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 2nd Senior,
(FGIC),
6.000%, 02/15/2007................................... 1,079,183
100,000 Orange County, California, Municipal Water District,
Water Facilities Corporation, Certificates of
Participation, (MBIA),
4.800%, 07/01/2003................................... 101,677
250,000 Sacramento County, California, Public Facilities
Project, Certificates of Participation, (MBIA),
4.875%, 02/01/2005................................... 255,051
400,000 Sacramento County, California, Sanitation District
Financing Authority Revenue Bonds,
5.500%, 12/01/2005................................... 420,806
255,000 Sacramento, California, City Financing Authority
Lease Revenue Bonds, Series A, (AMBAC),
5.050%, 11/01/2006................................... 263,198
250,000 Sacramento, California, Municipal Utilities District
Electric Revenue Bonds, Series Z, (FGIC),
6.000%, 07/01/2001................................... 256,142
300,000 San Bernardino County, California, Certificates of
Participation, Medical Center Financing Project,
(MBIA),
5.500%, 08/01/2007................................... 315,101
200,000 San Bernardino County, California, Transportation
Authority Sales Tax Revenue Bonds, Series A, (FSA),
4.500%, 03/01/2006................................... 200,199
255,000 San Bernardino County, California, Transportation
Authority Sales Tax Revenue Bonds, Series A, (MBIA),
4.625%, 03/01/2005................................... 257,335
150,000 San Diego County, California, Regional Transportation
Commission, Sales Tax Revenue Bonds, 2nd Senior,
Series A, (FGIC),
5.250%, 04/01/2006................................... 156,018
200,000 San Diego County, California, Regional Transportation
Commission, Sales Tax Revenue Bonds, 2nd Senior,
Series A, (FGIC),
5.500%, 04/01/2004................................... 208,436
750,000 San Diego, California, Metropolitan Transportation
District Board Authority Lease Revenue Bonds,
5.100%, 09/01/2003................................... 767,892
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 175,000 San Diego, California, Open Space Park Facilities
District No.1, General Obligation Bonds,
5.500%, 01/01/2004................................... $ 181,636
300,000 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series B, (FGIC),
5.000%, 05/15/2008................................... 306,409
250,000 San Diego, California, Public Safety Communications
Project, General Obligation Bonds,
6.500%, 07/15/2008................................... 280,030
875,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds,
5.500%, 07/01/2007................................... 923,569
1,500,000 San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds,
Series 20, (MBIA),
5.000%, 05/01/2006................................... 1,541,076
680,000 San Francisco, California, City and County General
Obligation Bonds, Series 1, (FGIC),
4.500%, 06/15/2005................................... 683,093
1,020,000 San Francisco, California, City and County Parking
Authority, Parking Meter Revenue Bonds, Series 1,
(FGIC),
4.000%, 06/01/2006................................... 980,520
325,000 San Francisco, California, City and County Public
Utilities Commission, Water Revenue Bonds, Series A,
6.500%, 11/01/2004................................... 351,915
200,000 San Francisco, California, State Building Authority
Lease Revenue Bonds, San Francisco Civic Center
Complex, Series A, (AMBAC),
4.125%, 12/01/2000................................... 200,671
100,000 San Jose, California, Airport Revenue Bonds, (FGIC),
5.500%, 03/01/2002................................... 102,570
625,000 San Jose, California, Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment Project,
(AMBAC),
4.750%, 08/01/2005................................... 635,263
200,000 San Jose, California, Redevelopment Agency, Tax
Allocation Revenue Bonds, Merged Area Redevelopment
Project, (MBIA),
4.750%, 08/01/2003................................... 202,756
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 500,000 San Jose, California, Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment Project,
(AMBAC),
5.000%, 08/01/2007................................... $ 512,925
325,000 San Jose, California, Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment Project,
(MBIA),
5.375%, 08/01/2004................................... 337,424
250,000 San Jose, California, Unified School District, Santa
Clara County General Obligation Bonds, Series A,
(FGIC),
4.400%, 08/01/2005................................... 249,399
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................................... 313,314
500,000 San Mateo County, California, Transportation
Authority Revenue Bonds, Series A, (MBIA),
4.200%, 06/01/2004................................... 495,268
750,000 San Mateo County, California, Transportation District
Sales Tax Revenue Bonds, Series A, (FSA),
5.000%, 06/01/2009................................... 761,526
150,000 Santa Barbara County, California, Local
Transportation Authority Sales Tax Revenue Bonds,
(FGIC),
4.900%, 04/01/2006................................... 153,283
100,000 Santa Clara County, California, Financing Authority
Lease Revenue Bonds, Series A, (AMBAC),
4.200%, 11/15/2002................................... 100,144
175,000 Santa Clara County, California, Financing Authority
Lease Revenue Bonds, Series A, (AMBAC),
4.300%, 11/15/2003................................... 175,051
500,000 Santa Clara County, California, Transportation
District Sales Tax Revenue Bonds, Series A,
4.500%, 06/01/2006................................... 497,844
200,000 Southern California Public Power Authority Revenue
Bonds, Palo Verde Project, Series A, (AMBAC),
5.500%, 07/01/2004................................... 208,507
1,000,000 Southern California Public Power Authority, Sub
Southern Transmission Project Revenue Bonds, (MBIA),
5.250%, 07/01/2009................................... 1,034,730
1,000,000 University of California Revenue Bonds, Multiple
Purpose Projects, Series A, (MBIA),
6.000%, 09/01/2002................................... 1,040,915
</TABLE>
See Notes to Financial Statements
24
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- (continued)
$ 150,000 University of California Revenue Bonds, Multiple
Purpose Projects, Series C, (AMBAC),
4.600%, 09/01/2005................................... $ 151,427
600,000 University of California Revenue Bonds, Multiple
Purpose Projects, Series F, (FGIC),
5.000%, 09/01/2008................................... 613,207
390,000 University of California Revenue Bonds, Multiple
Purpose Projects, Series G, (FGIC),
4.500%, 09/01/2004................................... 392,315
500,000 Ventura County, California, Community College
District, Certificates of Participation, (AMBAC),
4.000%, 12/01/2002................................... 495,739
250,000 West Basin, California, Municipal Water District,
Certificates of Participation, Series A, (AMBAC),
3.875%, 08/01/2002................................... 247,681
-----------
48,455,500
-----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- 20.25%
350,000 Alameda County, California, Certificates of
Participation,
7.250%, 06/01/2013
(Prerefunded 12/01/00 @102).......................... 364,818
60,000 Anaheim, California, Electric Revenue Bonds, (AMBAC),
4.750%, 10/01/2002
(Prerefunded 10/01/2002 @100)........................ 60,818
100,000 California Educational Facilities Authority, Santa
Clara University Revenue Bonds, (MBIA),
4.900%, 09/01/2006
(Prerefunded 09/01/2006 @100)........................ 101,259
300,000 California State Public Works Board, Lease Revenue
Bonds, Secretary of State, Series A,
6.750%, 12/01/2012
(Prerefunded 12/01/2002 @102)........................ 323,665
200,000 California State Public Works Board, Lease Revenue
Bonds, Various California State University Projects,
Series A, (AMBAC),
6.400%, 12/01/2016
(Prerefunded 12/01/02 @102).......................... 213,979
200,000 California State Public Works Board, Lease Revenue
Bonds, Various California State University Projects,
Series A,
6.600%, 12/01/2022
(Prerefunded 12/01/2002 @102)........................ 215,029
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- (continued)
$ 260,000 California State Public Works Board, Lease Revenue
Bonds, Various California State University Projects,
Series A,
6.625%, 10/01/2010
(Prerefunded 10/01/02 @102).......................... $ 278,894
750,000 California State, General Obligation Bonds, (FGIC),
6.000%, 08/01/2019
(Prerefunded 08/01/04 @102).......................... 805,852
1,305,000 California State, General Obligation Bonds,
5.900%, 04/01/2023
(Prerefunded 04/01/03 @102).......................... 1,381,982
750,000 Castaic Lake Water Agency Revenue Bonds, (MBIA),
7.125%, 08/01/2016
(Prerefunded 08/01/2000 @102)........................ 773,000
500,000 Central Coast Water Authority, California Revenue
Bonds, State Water Project Regional Facilities,
Series A, (AMBAC),
6.600%, 10/01/2022
(Prerefunded 10/01/02 @102).......................... 535,852
250,000 Cupertino, California, Certificates of Participation,
Open Space Acquisition Project,
7.125%, 04/01/2016
(Prerefunded 04/01/2001 @102)........................ 262,252
250,000 East Bay, California, Municipal Utilities District
Wastewater Treatment System Revenue Bonds, (AMBAC),
6.375%, 06/01/2021
(Prerefunded 12/01/01 @102).......................... 263,916
1,000,000 Long Beach, California, Water Revenue Bonds,
6.250%, 05/01/2024
(Prerefunded 05/01/04 @102).......................... 1,081,636
390,000 Los Angeles County, California, Transportation
Commission Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2020
(Prerefunded 07/01/2001 @102)........................ 410,046
175,000 Los Angeles County, California, Transportation
Commission Sales Tax Revenue Bonds, Series A,
6.750%, 07/01/2019
(Prerefunded 07/01/2002 @102)........................ 187,228
250,000 Los Angeles, California, Department of Water & Power,
Electric Plant Revenue Bonds, (AMBAC),
4.600%, 08/15/2006
(Prerefunded 08/15/2006 @100)........................ 250,696
</TABLE>
See Notes to Financial Statements
25
<PAGE>
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments March 31, 2000
California Tax-Exempt Income Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- (continued)
$ 125,000 Los Angeles, California, Harbor Department Revenue
Bonds, Series A,
6.500%, 08/01/2025
(Prerefunded 08/01/02 @102).......................... $ 133,327
225,000 Los Angeles, California, Wastewater Systems Revenue
Bonds, Series D, (MBIA),
6.700%, 12/01/2021
(Prerefunded 12/01/00 @102).......................... 233,689
125,000 Northern California Power Agency, Public Power
Revenue Bonds, Series A, (AMBAC),
5.600%, 07/01/2006
(Prerefunded 07/01/2006 @100)........................ 131,229
750,000 Richmond, California, Redevelopment Agency Tax
Allocation Revenue Bonds, Harbor Redevelopment
Project, (FSA),
7.000%, 07/01/2009
(Prerefunded 07/01/02 @102).......................... 806,718
825,000 San Bernardino County California, Medical Center
Financing Project Certificates of Participation,
Series A, (MBIA),
5.500%, 08/01/2022
(Prerefunded 08/01/05 @102).......................... 859,072
460,000 San Bernardino County, California SCH Health Care
Systems Revenue Bonds, Sisters of Charity, Series A,
7.000%, 07/01/2021
(Prerefunded 07/01/2001@102)......................... 485,031
500,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds, (FGIC),
5.500%, 07/01/2020
(Prerefunded 07/01/05 @101).......................... 526,111
650,000 San Joaquin Hills, California, Transportation
Corridor Agency, Toll Road Revenue Bonds,
6.750%, 01/01/2032
(Prerefunded 01/01/03 @102).......................... 702,397
500,000 Santa Clara, California, Electric Revenue Bonds,
Series A, (MBIA),
6.250%, 07/01/2013
(Prerefunded 07/01/01 @102).......................... 522,749
250,000 Santa Monica-Malibu, California, Malibu Unified
School District, Public Schools Facilities
Reconstruction Projects,
5.500%, 08/01/2015
(Prerefunded 08/01/03 @102).......................... 262,828
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S. GOVERNMENTS -- (continued)
$ 700,000 Sacramento, California, City Financing Authority
Revenue Bonds,
6.800%, 11/01/2020
(Prerefunded 11/01/01 @102).......................... $ 742,342
250,000 West & Central Basin Financing Authority, California
Revenue Bonds, (AMBAC),
5.500%, 08/01/2001
(Prerefunded 08/01/2001 @100)........................ 254,938
-----------
13,171,353
-----------
<CAPTION>
Shares
----------
<C> <S> <C>
OTHER INVESTMENTS -- 4.42%
1,521,266 Federated California Money Fund...................... 1,521,266
1,349,844 Provident California Money Fund...................... 1,349,844
-----------
2,871,110
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $64,947,450*)...................... 99.18% $64,497,963
OTHER ASSETS AND LIABILITIES (NET)......................... 0.82 535,668
------ -----------
NET ASSETS................................................. 100.00% $65,033,631
====== ===========
</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, 2000, approximately, 20% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, which the Fund relies on.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At March 31, 2000, approximately, 99% of the net assets are invested in
California municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements
26
<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 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").
27
<PAGE>
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, 2000, 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 2008 Total
-------- ---------- ----------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities Fund........ $319,000 $ 66,000 $ 385,000
Intermediate-Term Tax-Exempt Fund............ -- 18,000 18,000
New York Intermediate-Term Tax-Exempt Fund... -- 1,353,000 1,353,000
Long-Term Tax-Exempt Fund.................... -- 1,690,000 1,690,000
California Tax-Exempt Income Fund............ -- 18,000 18,000
</TABLE>
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Short-Term Tax-Exempt Securities Fund, New
York Intermediate-Term Tax-Exempt Fund, Long-Term Tax-Exempt Fund and
California Tax-Exempt Income Fund incurred, and elected to defer, net
capital losses of approximately $294,000, $1,193,000, $3,874,000 and
$27,000 respectively for the year ended March 31, 2000.
At March 31, 2000, 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 Depreciation
------------ ------------ ------------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities
Fund.............................. $ 72,665 $ (185,423) $ (112,758)
Intermediate-Term Tax-Exempt Fund.. 1,165,321 (5,286,795) (4,121,474)
New York Intermediate-Term Tax-
Exempt Fund....................... 469,592 (2,359,621) (1,890,029)
Long-Term Tax-Exempt Fund.......... 424,511 (6,494,849) (6,070,338)
California Tax-Exempt Income Fund.. 273,286 (722,773) (449,487)
</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.
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 (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
28
<PAGE>
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 is a state-chartered bank and trust company and a
member bank of the Federal Reserve System. U.S. Trust Company is a Connecticut
state bank and trust company. U.S. Trust, N.A. is a national bank. Each is a
wholly-owned subsidiary of U.S. Trust Corporation, a registered bank holding
company.
On January 12, 2000, The Charles Schwab Corporation ("Schwab") and U.S.
Trust Corporation entered into a definitive agreement to merge (the "Merger").
After the Merger, U.S. Trust Corporation will be a wholly-owned subsidiary of
Schwab. The Merger is subject to the approval of U.S. Trust Corporation
shareholders. The Merger is expected to take place on or about May 31, 2000,
but could occur later.
As a consequence of the Merger and in order to provide continuity of
investment advisory services, the Board of Directors of Excelsior Tax-Exempt
Fund proposed for the approval of its shareholders new advisory agreements
with U.S. Trust and, with regard to California Tax-Exempt Income Fund, a new
sub-advisory agreement among U.S. Trust and U.S. Trust N.A. The new proposed
advisory and sub-advisory agreements were submitted to and approved by a vote
of Excelsior Tax-Exempt Fund shareholders -- see "Voting Results of Special
Meeting of Shareholders". The new advisory and sub-advisory agreements will
become effective on the date of the Merger.
U.S. Trust Company, 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, 2000, administration fees charged by U.S. Trust
Company were as follows:
<TABLE>
<S> <C>
Short-Term Tax-Exempt Securities Fund................................. $ 20,000
Intermediate-Term Tax-Exempt Fund..................................... 132,845
New York Intermediate-Term Tax-Exempt Fund............................ 62,603
Long-Term Tax-Exempt Fund............................................. 65,851
California Tax-Exempt Income Fund..................................... 27,613
</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. For the period from April 1, 1999 through November 18,
1999, U.S. Trust voluntarily waived fees and reimbursed expenses to the extent
necessary for Short-Term Tax-Exempt Securities Fund and California Tax-Exempt
Income Fund to maintain an annual expense ratio of not more than .60% and
.50%, respectively. Beginning November 19, 1999, U.S.
29
<PAGE>
Trust contractually agreed to waive investment advisory fees and to reimburse
other ordinary operating expenses through March 31, 2000 to the extent
necessary to keep total operating expenses from exceeding certain annual
percentages of each Portfolio's average daily net asset specified below. U.S.
Trust has extended this contractual agreement through the fiscal year ended
March 31, 2001.
<TABLE>
<S> <C>
Short-Term Tax-Exempt Securities Fund..................................... 0.60%
Intermediate-Term Tax-Exempt Fund......................................... 0.65%
New York Intermediate-Term Tax-Exempt Fund................................ 0.80%
Long-Term Tax-Exempt Fund................................................. 0.80%
California Tax-Exempt Income fund......................................... 0.50%
</TABLE>
For the year ended March 31, 2000, no reimbursements was required for Short-
Term Tax-Exempt Securities Fund and U.S. Trust waived investment advisory fees
totaling $176,664 for California Tax-Exempt Income Fund.
Excelsior Tax-Exempt Fund has also entered into administrative servicing
agreements with various service organizations (which may include affiliates of
U.S. Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
administrative services provided by each service organization to its
customers, each Portfolio will pay the service organization an administrative
service fee at the annual rate of up to .40% of the average daily net asset
value of its shares held by the service organization's customers. Such
services may include assisting in processing purchase, exchange and redemption
requests; transmitting and receiving funds in connection with customer orders
to purchase, exchange or redeem shares; and providing periodic statements.
Administrative service fees paid to affiliates of U.S. Trust by the
Portfolios amounted to $435,695 for the year ended March 31, 2000. Through the
year ended March 31, 2000, U.S. Trust and the Administrators voluntarily
agreed to waive investment advisory and administration fees payable by each
Portfolio in an amount equal to the administrative service fees expense
(including fees paid to affiliates of U.S. Trust) by such Portfolio. They will
continue to do so through July 31, 2000. Effective August 1, 2000, U.S. Trust
has voluntarily agreed to continue waving investment advisor and
administration fees payable by each Portfolio in an amount equal to the
administrative service fees expense paid to subsidiaries of U.S. Trust
Corporation. For the year ended March 31, 2000, 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................. $ 31,657 $ 76
Intermediate-Term Tax-Exempt Fund..................... 213,990 1,376
New York Intermediate-Term Tax-Exempt Fund............ 29,152 235
Long-Term Tax-Exempt Fund............................. 107,456 13,169
California Tax-Exempt Income Fund..................... 108,281 --
</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.
30
<PAGE>
Each Director of Excelsior Tax-Exempt Fund receives an annual fee of $9,000,
plus a meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000. Effective March 3, 2000, each member of the Nominating
Committee receives an annual fee of $2,000 for services in connection with
this committee.
3. Purchases and Sales of Securities
For the year ended March 31, 2000, 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................ $ 62,897,226 $ 50,923,368
Intermediate-Term Tax-Exempt Fund.................... 270,198,750 299,210,420
New York Intermediate-Term Tax-Exempt Fund........... 88,673,520 109,911,040
Long-Term Tax-Exempt Fund............................ 111,893,880 132,801,220
California Tax-Exempt Income Fund.................... 11,465,210 9,816,099
</TABLE>
4. Common Stock:
Excelsior Tax-Exempt Fund currently has authorized capital of 24 billion
shares of Common Stock, 14 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
03/31/00 03/31/99
-------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold.................... 5,815,331 $ 40,964,486 3,516,897 $ 25,176,264
Issued as reinvestment
of dividends........... 15,153 107,218 15,451 110,353
Redeemed................ (4,399,976) (31,069,136) (3,193,723) (22,815,063)
----------- ------------- ---------- ------------
Net Increase............ 1,430,508 $ 10,002,568 338,625 $ 2,471,554
=========== ============= ========== ============
<CAPTION>
Intermediate-Term Tax-Exempt Fund
----------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold.................... 10,371,591 $ 94,757,413 11,346,154 $108,730,236
Issued as reinvestment
of dividends........... 73,949 674,958 86,884 830,904
Redeemed................ (12,262,909) (111,689,795) (5,884,893) (56,151,012)
----------- ------------- ---------- ------------
Net Increase
(Decrease)............. (1,817,369) $ (16,257,424) 5,548,145 $ 53,410,128
=========== ============= ========== ============
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
New York Intermediate-Term Tax-Exempt Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------- -----------------------
Shares Amount Shares Amount
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold...................... 7,826,206 $ 66,787,349 7,193,182 $63,714,519
Issued as reinvestment of
dividends................ 79,644 674,800 117,100 1,040,023
Redeemed.................. (10,349,466) (87,417,641) (4,652,797) (41,277,629)
----------- ------------ ---------- -----------
Net Increase (Decrease)... (2,443,616) $(19,955,492) 2,657,485 $23,476,913
=========== ============ ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Long-Term Tax-Exempt Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 4,796,719 $ 43,954,116 7,696,897 $ 77,522,869
Issued as reinvestment of
dividends................ 175,131 1,600,713 225,193 2,263,258
Redeemed.................. (9,896,677) (89,469,040) (4,338,267) (43,564,950)
---------- ------------ ---------- ------------
Net Increase (Decrease)... (4,924,827) $(43,914,211) 3,583,823 $ 36,221,177
========== ============ ========== ============
<CAPTION>
California Tax-Exempt Income Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 3,813,698 $ 27,079,234 6,869,035 $ 49,621,017
Issued as reinvestment of
dividends................ 3,378 23,890 2,297 16,621
Redeemed.................. (3,565,420) (25,328,436) (2,457,295) (17,769,420)
---------- ------------ ---------- ------------
Net Increase.............. 251,656 $ 1,774,688 4,414,037 $ 31,868,218
========== ============ ========== ============
</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 up to 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, 2000, the Portfolios had no
borrowings under the agreement.
32
<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
(five of the portfolios constituting the Excelsior Tax-Exempt Fund, Inc.) (the
"Funds") as of March 31, 2000, 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 Funds' 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 auditing standards generally
accepted in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 2000, by correspondence with
the custodian and brokers or by 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, 2000, 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 accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 24, 2000
33
<PAGE>
Federal Tax Information: (Unaudited)
For the year ended March 31, 2000, 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.............. 99.50% $ 130,000
New York Intermediate-Term Tax-Exempt Fund..... 100.00% 1,322,000
Long-Term Tax-Exempt Fund...................... 100.00% 801,000
California Tax-Exempt Income Fund.............. 100.00% --
</TABLE>
34
<PAGE>
Voting Results of Special Meetings of Shareholders: (Unaudited)
The proposals described below were submitted to a vote of shareholders of
Excelsior Tax-Exempt Fund at a special meeting of shareholders held on May 3,
2000 with regard to Long-Term Tax-Exempt Fund and California Tax-Exempt Income
Fund and on May 19, 2000 with regard to Short-Term Tax-Exempt Securities Fund,
Intermediate-Term Tax-Exempt Fund and New York Intermediate-Term Tax-Exempt
Fund (the "Meetings"):
Proposal No. 1 -- Approval of a new investment advisory agreement between the
Portfolios and U.S. Trust:
At the Meetings the shareholders of each Portfolio approved Proposal No. 1 as
follows:
<TABLE>
<CAPTION>
Portfolio For Against Abstain
--------- ---------- ------- -------
<S> <C> <C> <C>
Short-Term Tax-Exempt Securities Fund................ 4,304,273 114 34,107
Intermediate-Term Tax-Exempt Fund.................... 16,630,969 61,755 122,275
New York Intermediate-Term Tax-Exempt Fund........... 8,411,727 57,135 62,698
Long-Term Tax-Exempt Fund............................ 8,011,613 115,854 226,930
California Tax-Exempt Income Fund.................... 8,096,847 -- --
</TABLE>
Proposal No. 2 -- With respect to the California Tax-Exempt Income Fund only,
approval of a new sub-advisory agreement among U.S. Trust and U.S. Trust, N.A.:
At the Meeting, the shareholders of the California Tax-Exempt Income Fund
approved Proposal No. 2 as follows:
<TABLE>
<CAPTION>
For Against Abstain
--------- ------- -------
<S> <C> <C> <C>
8,096,847 -- --
</TABLE>
35
