<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
</TABLE>
CARNEGIE TAX EXEMPT INCOME TRUST
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
[ X ] No fee required
<PAGE> 2
CARNEGIE TAX EXEMPT INCOME TRUST
1100 The Halle Building
1228 Euclid Avenue
Cleveland, Ohio 44115
August 13, 1999
Dear Shareholders:
Enclosed is the proxy statement for a special meeting of shareholders of
Carnegie Tax Exempt Income Trust to be held on October 4, 1999.
We have been pleased to have been able to provide this investment vehicle over
the many years of the Fund's operation. However, recent events have led us to
conclude that you most likely could obtain more favorable return by investing
your assets alternatively. These events and our reasons for our conclusion are
explained in the enclosed proxy statement.
o You are being asked to approve the termination of the Fund,
which would be implemented by liquidating its assets and
distributing them in cash form to all shareholders.
o Management of the Fund and the Board of Trustees believe this
is the most appropriate course of action in light of the
significant reduction in assets and current asset level of the
Fund, and the difficulty of furnishing a favorable investment
return at these asset levels.
o THE BOARD OF TRUSTEES IS RECOMMENDING THAT YOU APPROVE THE
PLAN OF LIQUIDATION AND DISSOLUTION TO TERMINATE THE FUND.
Please take a moment to read the proxy statement and to sign and return the
proxy card in the enclosed postage-paid envelope. YOUR VOTE IS IMPORTANT, EVEN
IF YOU HAVE REDEEMED YOUR SHARES AFTER THE RECORD DATE, AUGUST 6, 1999. In
order to make the liquidating distribution to shareholders, we need to receive
"For" votes from a majority of all shares outstanding on August 6. Your vote in
favor of the Plan of Liquidation and Dissolution will help us complete this
process, which we believe is in the best interests of all shareholders.
Sincerely,
George R. Mateyo
President and Chief Executive Officer
<PAGE> 3
CARNEGIE TAX EXEMPT INCOME TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
OCTOBER 4, 1999
A Special Meeting of Shareholders of Carnegie Tax Exempt Income Trust
(the "Fund"), an unincorporated business trust organized under the laws of the
State of Ohio, will be held at 1100 The Halle Building, 1228 Euclid Avenue,
Cleveland, Ohio 44115, on October 4, 1999 at 10:00 a.m., Cleveland time, for the
following purposes:
1. To consider a Plan of Liquidation and Dissolution to terminate the
Fund; and
2. To transact such other business as may properly come before the
meeting or any adjournment.
Shareholders of record as of the close of business on August 6, 1999
are entitled to notice of and to vote at the meeting. YOU DO NOT NEED TO BE
PRESENT IN PERSON TO VOTE AT THE MEETING. Your management would greatly
appreciate your completing, signing and returning the enclosed proxy promptly in
the envelope provided for that purpose.
In the event that the necessary quorum to transact business is not
obtained at the meeting, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the Fund's shares present in person or by proxy at the meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the proposal to approve the Plan of Liquidation
and Dissolution.
David E. Karam
Secretary
August 13, 1999
Cleveland, Ohio
- --------------------------------------------------------------------------------
IMPORTANT
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS AND CALLS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE
ENCLOSED PROXY. PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY IN ORDER
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE> 4
CARNEGIE TAX EXEMPT INCOME TRUST
1100 THE HALLE BUILDING
1228 EUCLID AVENUE
CLEVELAND, OHIO 44115
-------------------------
PROXY STATEMENT
-------------------------
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 4, 1999
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of Carnegie Tax Exempt Income Trust (the
"Fund") for use at the special meeting of shareholders of the Fund to be held on
October 4, 1999, and at any adjournment of the meeting.
If the enclosed form of proxy is properly executed and returned in time
to be voted at the meeting, the named proxies will vote the shares represented
by the proxy in accordance with the instructions marked on the proxy. Unmarked
proxies will be voted in favor of the proposal set forth in this proxy
statement. A proxy may be revoked at any time prior to its exercise by written
notice of revocation given to the Secretary of the Fund, execution and delivery
of a later dated proxy to the Secretary of the Fund, or attendance and voting at
the meeting. Attendance at the meeting will not in and of itself revoke a proxy.
The record date for the determination of shareholders entitled to
receive notice of and to vote at the meeting is August 6, 1999. Shareholders as
of the close of business on that date are entitled to one vote for each share
held and a fractional vote for a fractional share held. On August 6, 1999, there
were outstanding 909,448 shares of beneficial interest, $0.10 par value, of
the Fund. No person was known by the Fund to own 5% or more of the outstanding
shares of the Fund on that date. The trustees and officers of the Fund together
owned less than 1% of the Fund's outstanding shares on that date. The percentage
ownership of shares of the Fund changes from time to time depending on purchases
and redemptions by shareholders and the total number of shares outstanding. The
Fund expects to mail this proxy statement on or about August 16, 1999.
The cost of soliciting proxies for the meeting will be borne by the
Fund. The solicitation of proxies will be by mail, which may be supplemented by
solicitation by telephone or otherwise through officers of the Fund or officers
or employees of Carnegie Capital Management Company, the Fund's investment
adviser (the "Adviser"), acting without special compensation for those
activities. The business address of the Adviser and Carnegie Fund Distributors,
Inc., the distributor of the Fund's shares, is 1100 The Halle Building, 1228
Euclid Avenue, Cleveland, Ohio 44115. In addition, the Fund has engaged
Management Information Services Incorporated to assist in the solicitation of
proxies at an approximate cost of $6,000.
In certain instances, Management Information Services Incorporated
personnel may call shareholders to ask them to record their votes by telephone.
Such persons will not make any
1
<PAGE> 5
recommendation as to how a shareholder should vote on the Plan. The telephone
voting procedure is designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been recorded properly.
Shareholders voting by telephone will be asked for their social security number
or other identifying information and will be given an opportunity to authorize
proxies to vote their shares in accordance with their instructions. In order to
ensure that the shareholders' instructions have been recorded correctly,
shareholders will receive a confirmation of their instructions in the mail.
Although a shareholder's vote may be taken by telephone, each shareholder will
receive a copy of this proxy statement and is encouraged to vote by mail using
the enclosed proxy card.
PROPOSAL REGARDING
PLAN OF LIQUIDATION AND DISSOLUTION
TO TERMINATE THE FUND
On July 27, 1999, the Board of Trustees, following review and
deliberation of a proposal by the Fund's management, determined that it would be
advisable and in the best interests of the Fund and its shareholders for the
Fund to be liquidated and dissolved in accordance with Ohio law. Accordingly,
the Board approved the termination of the Fund, subject to shareholder approval,
pursuant to a Plan of Liquidation and Dissolution (the "Plan"), a copy of which
is attached as Appendix A. The Plan provides for the liquidation of the Fund's
assets and the distribution to shareholders of the Fund of all of the cash
proceeds of the liquidation, after paying or providing for all debts and
liabilities of the Fund, all in accordance with Section 11.2 of the Fund's
current Declaration of Trust.
The favorable vote of a majority of the outstanding shares of the Fund
entitled to vote at the meeting is required for approval of the Plan.
THE TRUSTEES OF THE FUND RECOMMEND THAT THE SHAREHOLDERS APPROVE THE
PLAN OF LIQUIDATION AND DISSOLUTION TO TERMINATE THE FUND.
REASONS FOR THE PLAN
The Fund commenced operations in 1986. Historically, a large number of
the Fund's shareholders were customers of one of four broker-dealer firms that
previously owned the Adviser. These broker-dealers sold their ownership
interests in the Adviser during 1991-1993, and shareholders of the Fund who were
or are customers of the broker-dealers have been redeeming their Fund shares
since that time. These redemptions have greatly exceeded purchases of Fund
shares since 1991, with the result that the assets of the Fund have declined
significantly. From a level of approximately $31 million at July 31, 1991, the
Fund's assets declined to approximately $9.7 million at January 1, 1999 and to
approximately $8.5 million at July 27, 1999.
The Adviser and the distributor of the Fund's shares believe it is
unlikely that the Fund will experience material growth in assets in the
foreseeable future. In light of this determination and because of the relatively
higher costs, disadvantageous economies of scale and lower yields resulting from
the Fund's small asset base, the Fund's management has concluded that it would
be in the best
2
<PAGE> 6
interests of the Fund and its shareholders to liquidate the Fund and recommended
this course of action to the Fund's Board of Trustees.
At a meeting on July 27, 1999, the Board of Trustees considered whether
it would be appropriate and in the best interests of the Fund and its
shareholders to liquidate the Fund and, after careful consideration of the
matter, the Board approved the termination and liquidation of the Fund pursuant
to the terms of the Plan. The Board also directed that the Plan be submitted to
shareholders for approval. In evaluating the Plan, the Trustees considered a
number of factors, including the declining level of the Fund's total assets, the
increase in the Fund's expense ratio as its assets have declined, the likelihood
of additional sales of the Fund's shares that could increase the assets to a
more viable level, and the likelihood of identifying another investment company
that would be interested in acquiring the Fund's assets through merger or
otherwise. Based upon consideration of the foregoing factors and all other
factors deemed relevant by it, the Board of Trustees determined that approval of
the Plan was in the best interests of the Fund and its shareholders. In view of
this determination, the Fund has suspended all further sales of shares of the
Fund to new investors pending shareholder consideration of the Plan. This
suspension does not affect the sale of shares pursuant to the reinvestment of
dividends and other distributions or any sales of additional shares to existing
shareholders. In addition, in light of the Board's determination, the Adviser
agreed to waive its advisory fee for advisory services it performs from August
1, 1999 until November 30, 1999 or any earlier distribution of assets to
shareholders pursuant to the Plan.
If shareholders of the Fund fail to approve the Plan, the Fund will not
be liquidated and will continue to operate and be managed in accordance with the
investment objective and policies of the Fund as currently in effect. However,
in such case, the Trustees would determine what action, if any, should be taken
in the best interests of shareholders of the Fund.
SUMMARY OF THE PLAN
Effective date of the Plan and cessation of the Fund's activities as an
investment company. The effective date of the Plan will be the date of its
approval by shareholders of the Fund. As soon as reasonably practicable after
the effective date, the Fund will sell its portfolio securities in order to
convert its assets to cash and will not engage in any business activity except
for the purpose of winding up its business and affairs, preserving the value of
its assets and, after the payment or reservation of assets for payment to all
creditors of the Fund, distributing assets to shareholders. After the
distribution of assets to shareholders, the Fund will be dissolved in accordance
with the Plan and Ohio law. The Plan provides that the Trustees may authorize
variations from the provisions of the Plan, or amendments to the Plan, as may be
necessary or appropriate to effect the dissolution, liquidation and termination
of the Fund in accordance with the purposes intended to be accomplished by the
Plan.
Liquidating Distribution. As soon as reasonably practicable after the
effective date, and in any event within 60 days after the effective date, the
Fund will mail to each shareholder of record that has not redeemed its shares a
liquidating distribution equal to the shareholder's proportionate interest in
the remaining assets of the Fund.
3
<PAGE> 7
Expenses of Liquidation and Dissolution. Except as otherwise may be
agreed between the Fund and the Adviser, the Fund will bear all expenses related
to carrying out the Plan, deregistering the Fund as an investment company and
dissolving the Fund under Ohio law.
Continued Operation of the Fund. The adoption of the Plan will not
affect the right of shareholders to redeem shares of the Fund at their then
current net asset value. All officers of the Fund will continue in their present
positions and capacities, and the Adviser and other entities providing services
to the Fund will continue to provide those services, until such time as the Fund
is liquidated and dissolved.
PROCEDURE FOR DISSOLUTION
The Plan provides for the dissolution of the Fund under the laws of the
State of Ohio. If the shareholders approve the Plan, the Fund intends to file a
certificate of dissolution with the Secretary of the State of Ohio. This
certificate will state that the Board of Trustees and the shareholders of the
Fund have approved the termination of the Fund pursuant to the Plan and will
include such other information required by Ohio law. Ohio law does not provide
rights of appraisal or similar rights of dissent to shareholders with respect to
the proposed liquidation and dissolution.
TAX EFFECTS OF LIQUIDATION
The Fund has been advised by its counsel, Squire, Sanders & Dempsey
L.L.P., that upon the liquidation of the Fund, assuming shares are held as a
capital asset, a shareholder will realize a capital gain or loss to the extent
that the amount received upon liquidation exceeds or is less than the
shareholder's adjusted basis in its shares of the Fund. The realized gain or
loss will be long-term if the shareholder has held shares for more than one year
and short-term if held for one year or less.
The Fund has qualified as a regulated investment company for federal
income tax purposes for each fiscal year since its inception. Following
completion of the proposed liquidation and dissolution, shareholders will be
furnished information concerning the tax treatment of all dividend and other
distributions, including the final liquidation distribution, made by the Fund.
Certain shareholders who have not furnished a correct taxpayer
identification number may be subject to backup withholding at a rate of 31% of
the amount of distributions. This discussion does not address the treatment of
tax-exempt shareholders or nonresident shareholders or state or local taxes.
Shareholders are urged to consult with their own tax advisers with respect to
those issues.
DEREGISTRATION AS AN INVESTMENT COMPANY
Promptly after the dissolution of the Fund, an application will be
filed with the Securities and Exchange Commission for an order deregistering the
Fund as an investment company. Upon issuance of such an order, the Fund will no
longer be registered under or subject to the provisions of the Investment
Company Act of 1940.
4
<PAGE> 8
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business is not
obtained at the meeting, the persons named as proxies may propose one or more
adjournments of the meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the Fund's shares present in person or by proxy at the meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the proposal to approve the Plan of Liquidation
and Dissolution and will vote against such adjournment those proxies required to
be voted against such proposal.
Abstentions and, if applicable, broker "non-votes" will not count as
votes in favor of the proposal, and broker "non-votes" will not be deemed to be
present at the meeting for purposes of determining whether the proposal to be
voted upon has been approved. Broker "non-votes" are shares held in street name
for which the broker indicates that instructions have not been received from the
beneficial owners or other persons entitled to vote and for which the broker
does not have discretionary voting authority.
REPORTS TO SHAREHOLDERS
THE FUND'S MOST RECENT ANNUAL REPORT FOR THE FISCAL YEAR ENDED JULY 31,
1998 AND THE FUND'S SEMI-ANNUAL REPORT FOR THE SIX-MONTH PERIOD ENDED JANUARY
31, 1999 PREVIOUSLY HAVE BEEN SENT TO THE FUND'S SHAREHOLDERS AND ARE
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT. ADDITIONAL COPIES ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST FROM DAVID E. KARAM, 1100 THE HALLE
BUILDING, 1228 EUCLID AVENUE, CLEVELAND, OHIO 44115, TELEPHONE: 1-800-321-2322
(TOLL FREE).
SHAREHOLDER PROPOSALS
The Fund does not hold annual meetings of shareholders. In the event
that the Fund is not liquidated and dissolved, shareholders desiring to submit
proposals for consideration for inclusion in a proxy statement for the next
meeting of Fund shareholders that may be held should present their written
proposal to the Fund a reasonable time prior to the mailing of the proxy
materials sent in connection with the meeting.
OTHER BUSINESS
Management of the Fund knows of no other matters that may be presented
at the meeting. However, if any matters not now known properly come before the
meeting, it is intended that the persons named in the attached form of proxy, or
their substitutes, will vote such proxy in accordance with their judgment on
such matters.
By Order of the Board of Trustees
David E. Karam
Secretary
5
<PAGE> 9
APPENDIX A
CARNEGIE TAX EXEMPT INCOME TRUST
PLAN OF LIQUIDATION AND DISSOLUTION
This Plan of Liquidation and Dissolution (the "Plan") of Carnegie Tax
Exempt Income Trust (the "Fund"), a trust organized and existing under the laws
of the State of Ohio, which has operated as an open-end diversified management
investment company registered under the Investment Company Act of 1940, is
intended to provide for the termination and complete liquidation and dissolution
of the Fund in accordance with the provisions of Section 11.2 of the Fund's
Declaration of Trust dated September 19, 1985, and the provisions of Ohio law.
The Fund's Board of Trustees has determined it is advisable and in the
best interests of the Fund and its shareholders to liquidate and to dissolve the
Fund, and has determined to recommend to the shareholders the termination of the
Fund pursuant to this Plan.
The liquidation and dissolution of the Fund shall be carried out in the
manner set forth below.
1. Effective Date of Plan. This Plan shall be effective only upon the
approval of the Plan, at a meeting of shareholders of the Fund called for the
purpose of voting upon the Plan, by the vote of a majority of the outstanding
shares of the Fund entitled to vote at the meeting. The date of the adoption and
approval of the Plan by shareholders will be the effective date of the Plan.
2. Dissolution. As promptly as reasonably practicable after the
effective date, consistent with the provisions of this Plan, the Fund shall be
liquidated and dissolved pursuant to applicable provisions of Ohio law.
3. Cessation of Business. After the effective date, the Fund shall not
engage in any business activities except for the purpose of winding up its
business and affairs, preserving the value of its assets and distributing its
assets to shareholders in accordance with the provisions of this Plan after the
payment, or reservation of assets for payment, to all creditors of the Fund.
Prior to the making of the final liquidating distribution, the Fund shall
continue to honor requests for the redemption of shares and may, as determined
to be appropriate by the Board of Trustees, make payment of dividends and other
distributions to shareholders and permit the reinvestment in additional shares.
4. Liquidation of Assets. The Fund shall cause the liquidation of its
assets to cash form as soon as is reasonably practicable consistent with the
terms of this Plan.
5. Payment of Debts. As soon as reasonably practicable after the
effective date, the Fund shall determine and pay, or reserve sufficient amounts
to pay, the amount of all known or reasonably ascertainable liabilities of the
Fund incurred or expected to be incurred prior to the date of the liquidating
distribution provided below.
6. Liquidating Distribution. As soon as reasonably practicable after
the effective date, and in any event within 60 days after the effective date,
the Fund will mail to each shareholder of
A-1
<PAGE> 10
record who has not redeemed its shares a liquidating distribution equal to the
shareholder's proportionate interest in the remaining assets of the Fund, after
the payments and creation of the reserves contemplated by Section 5 above.
7. Expenses of Liquidation and Dissolution. Except as otherwise may be
agreed between the Fund and its investment adviser, all expenses incurred by or
allocable to the Fund in carrying out this Plan, deregistering the Fund as an
investment company and dissolving the Fund under Ohio law shall be borne by the
Fund.
8. Power of the Board of Trustees. The Board of Trustees and the
officers of the Fund shall have authority to do or to authorize to be done any
and all acts and things as provided for in this Plan and any and all such
further acts and things as they may consider necessary or desirable to carry out
the purposes of this Plan, including without limitation, the execution and
filing of all certificates, documents, information returns, tax returns, forms,
and other papers which may be necessary or appropriate to implement this Plan or
which may be required by the provisions of the Investment Company Act of 1940,
the Securities Act of 1933, the Internal Revenue Code of 1986 and applicable
Ohio law.
The death, resignation or other disability of any Trustee or any
officer of the Fund shall not impair the authority of the surviving or remaining
Trustees or officers to exercise any of the powers provided for in this Plan.
9. Amendment of the Plan. The Board of Trustees shall have the
authority to authorize those variations from or amendments to the provisions of
this Plan (other than the terms of the liquidating distribution) as may be
necessary or appropriate to effect the dissolution, complete liquidation and
termination of the existence of the Fund, including the distribution of assets
to shareholders, in accordance with the purposes intended to be accomplished by
this Plan.
A-2
<PAGE> 11
CARNEGIE TAX EXEMPT INCOME TRUST
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints George R. Mateyo and David E. Karam, or either
of them, proxies, each with the power of substitution, to vote on behalf of the
undersigned at the Special Meeting of Shareholders of Carnegie Tax Exempt Income
Trust on October 4, 1999 at 10:00 a.m., Cleveland time, and at any adjournment,
with respect to the proposal set forth in the related Notice of Special Meeting
of Shareholders as indicated on the reverse side of this proxy card.
YOUR SHARES WILL BE VOTED IN THE MANNER DIRECTED BY YOU ON THE REVERSE SIDE OF
THIS PROXY CARD. IF NO DIRECTION IS MADE, YOUR SHARES WILL BE VOTED FOR THE
PROPOSAL SET FORTH ON THE REVERSE SIDE, AS RECOMMENDED BY THE BOARD OF TRUSTEES.
IMPORTANT - THIS PROXY CARD MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK VOTE
AS IN THIS EXAMPLE
FOR AGAINST ABSTAIN
Approval of Plan of Liquidation and [ ] [ ] [ ]
Dissolution of the Fund
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ABOVE PROPOSAL.
SIGNATURE(S) __________________________ DATE _______ NOTE: Please sign exactly as name appears.
Joint owners should each sign. When signing
as attorney, executor, administrator, trustee
or guardian, please give full title as such.
SIGNATURE(S) __________________________ DATE _______ In case of a corporation, a duly authorized
officer should sign on its behalf.
- ------------------------------------------------------------------------------
IMPORTANT
YOU ARE URGED TO DATE AND SIGN THIS PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS AND
CALLS TO SHAREHOLDERS WHO HAVE NOT RESPONDED.
- ------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000785973
<NAME> CARNEGIE TAX EXEMPT INCOME TRUST
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<INVESTMENTS-AT-COST> 9,074,123
<INVESTMENTS-AT-VALUE> 9,630,569
<RECEIVABLES> 118,479
<ASSETS-OTHER> 48,113
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,797,161
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,563
<TOTAL-LIABILITIES> 9,563
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,787,598
<SHARES-COMMON-STOCK> 1,006,472
<SHARES-COMMON-PRIOR> 956,516
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (515,727)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 557,558
<NET-ASSETS> 9,787,598
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 268,141
<OTHER-INCOME> 0
<EXPENSES-NET> 38,739
<NET-INVESTMENT-INCOME> 229,402
<REALIZED-GAINS-CURRENT> 16,405
<APPREC-INCREASE-CURRENT> 65,546
<NET-CHANGE-FROM-OPS> 311,353
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (229,402)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,936
<NUMBER-OF-SHARES-REDEEMED> (31,528)
<SHARES-REINVESTED> 15,548
<NET-CHANGE-IN-ASSETS> 567,102
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,182
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38,739
<AVERAGE-NET-ASSETS> 9,305,710
<PER-SHARE-NAV-BEGIN> 9.64
<PER-SHARE-NII> 0.239
<PER-SHARE-GAIN-APPREC> 0.085
<PER-SHARE-DIVIDEND> 0.239
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.72
<EXPENSE-RATIO> 0.83<F1>
<FN>
<F1>Annualized
</FN>
</TABLE>
