UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM N-CSRS
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04101
Excelsior Tax-Exempt Funds, Inc.
(Exact name of registrant as specified in charter)
---------
One Freedom Valley Drive
Oaks, Pennsylvania 19456
(Address of principal executive offices) (Zip code)
Michael R. Rosella, Esq.
Paul, Hastings, Janofsky & Walker LLP
75 East 55/th/ Street
New York, New York 10022
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-446-1012
Date of fiscal year end: March 31, 2004
Date of reporting period: September 30, 2003
Item 1. Reports to Stockholders.
Excelsior Tax-Exempt Funds, Inc. currently offers shares in seven managed
investment portfolios: Tax-Exempt Money Fund, New York Tax-Exempt Money Fund,
Long-Term Tax-Exempt Fund, Intermediate-Term Tax-Exempt Fund, Short-Term
Tax-Exempt Securities Fund, New York Intermediate-Term Tax-Exempt Fund and
California Tax-Exempt Income Fund. Each Portfolio is included in one of the two
reports included herein.
[LOGO] EXCELSIOR FUNDS
Advised by U.S. TRUST
MONEY MARKET
PORTFOLIOS
SEMI-ANNUAL REPORT
September 30, 2003
TABLE OF CONTENTS
PAGE
----
STATEMENTS OF ASSETS AND LIABILITIES...................... 1
STATEMENTS OF OPERATIONS.................................. 2
STATEMENTS OF CHANGES IN NET ASSETS....................... 3
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS 4
PORTFOLIOS OF INVESTMENTS
Money Fund............................................. 6
Government Money Fund.................................. 7
Treasury Money Fund.................................... 8
Tax-Exempt Money Fund.................................. 9
New York Tax-Exempt Money Fund......................... 14
NOTES TO FINANCIAL STATEMENTS............................. 17
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS......... 25
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 617-483-7297)
.. 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
P.O. Box 8529
Boston, MA 02266-8529
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, N.A.,
THEIR PARENT AND AFFILIATES AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. FUND
SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. ALTHOUGH THE FUNDS
SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
Excelsior Funds
Statements of Assets and Liabilities
September 30, 2003
New York
Government Treasury Tax-Exempt Tax-Exempt
Money Money Money Money Money
Fund Fund Fund Fund Fund
-------------- ------------ ------------ -------------- ------------
ASSETS:
Investments, at cost--see accompanying
portfolios.............................. $2,151,808,096 $710,327,807 $543,798,462 $2,036,429,782 $477,013,413
============== ============ ============ ============== ============
Investments, at value (Note 1)........... $2,151,808,096 $710,327,807 $543,798,462 $2,036,429,782 $477,013,413
Cash..................................... -- -- -- 7,810 --
Interest receivable...................... 312,574 10,605 8,805 2,772,624 1,222,757
Receivable for investments sold.......... -- -- -- -- 8,020,000
Receivable for fund shares sold.......... 345,052 2,604 550 8,183 51,300
-------------- ------------ ------------ -------------- ------------
Total Assets............................ 2,152,465,722 710,341,016 543,807,817 2,039,218,399 486,307,470
LIABILITIES:
Payable for dividends declared........... 973,166 325,244 144,807 785,276 138,581
Payable for fund shares redeemed......... 35,078 500 11,340 5,315 367,124
Payable for investments purchased........ -- -- -- -- 15,225,000
Investment advisory fees payable
(Note 2)................................ 146,661 104,344 107,019 227,905 117,956
Administration fees payable (Note 2)..... 80,661 65,771 47,047 190,771 44,340
Shareholder servicing fees payable
(Note 2)................................ 449,821 77,604 39,244 292,546 20,032
Directors' fees payable (Note 2)......... 13,561 133 3 7,279 1,863
Due to custodian bank.................... 633 544 -- -- 13,300
Accrued expenses and other payables...... 428,574 86,790 82,004 340,025 84,936
-------------- ------------ ------------ -------------- ------------
Total Liabilities....................... 2,128,155 660,930 431,464 1,849,117 16,013,132
-------------- ------------ ------------ -------------- ------------
NET ASSETS................................ $2,150,337,567 $709,680,086 $543,376,353 $2,037,369,282 $470,294,338
============== ============ ============ ============== ============
NET ASSETS consist of:
Distributions in excess of net investment
income.................................. $ (31) $ -- $ -- $ -- $ --
Accumulated net realized gain (loss) on
investments............................. (51,079) (34,877) 6,983 325,287 12,471
Par value (Note 4)....................... 2,150,585 709,781 543,379 2,037,294 470,283
Paid-in capital in excess of par value... 2,148,238,092 709,005,182 542,825,991 2,035,006,701 469,811,584
-------------- ------------ ------------ -------------- ------------
Total Net Assets.......................... $2,150,337,567 $709,680,086 $543,376,353 $2,037,369,282 $470,294,338
============== ============ ============ ============== ============
Net Assets:
Shares................................... $1,580,954,285 $709,680,086 $543,376,353 $2,037,369,282 $470,294,338
Institutional Shares..................... 569,383,282 -- -- -- --
Shares of Common Stock Outstanding
(Note 4):
Shares................................... 1,581,199,668 709,780,819 543,379,497 2,037,293,844 470,282,777
Institutional Shares..................... 569,384,980 -- -- -- --
NET ASSET VALUE PER SHARE:
Shares................................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Institutional Shares..................... $1.00 -- -- -- --
===== ===== ===== ===== =====
See Notes to Financial Statements.
1
Excelsior Funds
Statements of Operations
Six Months Ended September 30, 2003
New York
Government Treasury Tax-Exempt Tax-Exempt
Money Money Money Money Money
Fund Fund Fund Fund Fund
----------- ---------- ---------- ----------- ----------
INVESTMENT INCOME:
Interest income.......................... $12,840,477 $3,539,335 $2,814,766 $10,839,695 $2,587,705
----------- ---------- ---------- ----------- ----------
EXPENSES:
Investment advisory fees (Note 2)........ 2,774,183 806,183 808,894 2,652,368 1,288,303
Shareholder servicing fees--Shares
(Note 2)................................ 2,263,932 296,340 191,651 1,437,113 103,633
Shareholder servicing fees--Institutional
Shares (Note 2)......................... 252,640 -- -- -- --
Administration fees (Note 2)............. 1,678,381 487,203 407,821 1,604,998 389,882
Legal and audit fees..................... 145,442 50,086 44,362 168,688 42,304
Custodian fees........................... 87,082 18,867 24,239 98,013 28,284
Transfer agent fees...................... 60,345 9,428 15,642 12,970 9,002
Registration and filing fees............. 23,735 9,170 11,333 23,270 6,026
Directors' fees and expenses (Note 2).... 22,122 8,773 7,515 46,069 11,316
Shareholder reports...................... 10,491 3,084 2,806 11,365 2,784
Miscellaneous expenses................... 41,933 16,108 15,179 56,523 14,368
----------- ---------- ---------- ----------- ----------
Total Expenses.......................... 7,360,286 1,705,242 1,529,442 6,111,377 1,895,902
Fees waived and reimbursed by:
Investment adviser (Note 2)............. (1,901,821) (151,344) (99,874) (1,028,306) (525,445)
Administrators (Note 2)................. (1,127,848) (128,991) (107,853) (424,383) (103,065)
----------- ---------- ---------- ----------- ----------
Net Expenses............................ 4,330,617 1,424,907 1,321,715 4,658,688 1,267,392
----------- ---------- ---------- ----------- ----------
NET INVESTMENT INCOME..................... 8,509,860 2,114,428 1,493,051 6,181,007 1,320,313
----------- ---------- ---------- ----------- ----------
REALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain (loss) on security
transactions............................ (23,931) (5,556) 3,660 14,365 829
----------- ---------- ---------- ----------- ----------
Net increase in net assets resulting from
operations.............................. $ 8,485,929 $2,108,872 $1,496,711 $ 6,195,372 $1,321,142
=========== ========== ========== =========== ==========
See Notes to Financial Statements.
2
Excelsior Funds
Statements of Changes in Net Assets
New York
Government Treasury Tax-Exempt Tax-Exempt
Money Money Money Money Money
Fund Fund Fund Fund Fund
-------------- ------------- ------------ -------------- -------------
Six Months Ended September 30, 2003
Net investment income.................... $ 8,509,860 $ 2,114,428 $ 1,493,051 $ 6,181,007 $ 1,320,313
Net realized gain (loss) on security
transactions............................ (23,931) (5,556) 3,660 14,365 829
-------------- ------------- ------------ -------------- -------------
Net increase in net assets resulting from
operations.............................. 8,485,929 2,108,872 1,496,711 6,195,372 1,321,142
Distributions to shareholders:
From net investment income
Shares................................. (5,884,527) (2,114,428) (1,493,051) (6,181,007) (1,320,313)
Institutional Shares................... (2,625,364) -- -- -- --
-------------- ------------- ------------ -------------- -------------
Total distributions................. (8,509,891) (2,114,428) (1,493,051) (6,181,007) (1,320,313)
-------------- ------------- ------------ -------------- -------------
Increase (decrease) in net assets from
fund share transactions (Note 4):
Shares................................. (206,880,052) 115,189,492 (28,625,343) (243,907,733) (78,280,593)
Institutional Shares................... 21,263,945 -- -- -- --
-------------- ------------- ------------ -------------- -------------
Total from fund share
transactions....................... (185,616,107) 115,189,492 (28,625,343) (243,907,733) (78,280,593)
-------------- ------------- ------------ -------------- -------------
Net increase (decrease) in net assets.... (185,640,069) 115,183,936 (28,621,683) (243,893,368) (78,279,764)
NET ASSETS:
Beginning of period..................... 2,335,977,636 594,496,150 571,998,036 2,281,262,650 548,574,102
-------------- ------------- ------------ -------------- -------------
End of period (1)....................... $2,150,337,567 $ 709,680,086 $543,376,353 $2,037,369,282 $ 470,294,338
============== ============= ============ ============== =============
- --------
(1)Including distributions in excess of
net investment income $ (31) -- -- -- --
============== ============= ============ ============== =============
Year Ended March 31, 2003
Net investment income.................... $ 32,216,854 $ 8,597,692 $ 6,332,776 $ 23,541,551 $ 5,261,693
Net realized gain on security
transactions............................ 900 3,572 3,323 331,711 53,989
-------------- ------------- ------------ -------------- -------------
Net increase in net assets resulting from
operations.............................. 32,217,754 8,601,264 6,336,099 23,873,262 5,315,682
Distributions to shareholders:
From net investment income
Shares................................. (22,588,431) (8,291,220) (6,364,693) (23,466,099) (5,188,979)
Institutional Shares................... (9,382,533) -- -- -- --
From net realized gain on
investments............................ -- -- -- (24,155) (23,128)
-------------- ------------- ------------ -------------- -------------
Total distributions................. (31,970,964) (8,291,220) (6,364,693) (23,490,254) (5,212,107)
-------------- ------------- ------------ -------------- -------------
Increase (decrease) in net assets from
fund share transactions (Note 4):
Shares................................. (14,462,035) (201,100,703) (32,254,682) (241,575,086) (147,622,258)
Institutional Shares................... 238,227,587 -- -- -- --
-------------- ------------- ------------ -------------- -------------
Total from fund share
transactions....................... 223,765,552 (201,100,703) (32,254,682) (241,575,086) (147,622,258)
-------------- ------------- ------------ -------------- -------------
Net increase (decrease) in net assets.... 224,012,342 (200,790,659) (32,283,276) (241,192,078) (147,518,683)
NET ASSETS:
Beginning of year....................... 2,111,965,294 795,286,809 604,281,312 2,522,454,728 696,092,785
-------------- ------------- ------------ -------------- -------------
End of year............................. $2,335,977,636 $ 594,496,150 $571,998,036 $2,281,262,650 $ 548,574,102
============== ============= ============ ============== =============
See Notes to Financial Statements.
3
Excelsior Funds
Financial Highlights -- Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
Dividends Distributions
Net Asset Value, Net Net Realized Total From From Net From Net
Beginning of Investment Gain (Loss) Investment Investment Realized Gain
Period Income on Investments Operations Income on Investments
---------------- ---------- -------------- ---------- ---------- --------------
MONEY FUND
Shares -- (5/3/85*)
Year Ended March 31,
1999............................... $1.00 $0.04901 -- $0.04901 $(0.04901) --
2000............................... 1.00 0.05005 -- 0.05005 (0.05005) --
2001............................... 1.00 0.05804 -- 0.05804 (0.05804) --
2002............................... 1.00 0.02741 $ 0.00010 0.02751 (0.02751) --
2003............................... 1.00 0.01255 (0.00010) 0.01245 (0.01245) --
Six Months Ended September 30, 2003 1.00 0.00359 -- 0.00359 (0.00359) --
GOVERNMENT MONEY FUND -- (5/8/85*)
Year Ended March 31,
1999............................... $1.00 $0.04838 -- $0.04838 $(0.04838) --
2000............................... 1.00 0.05004 -- 0.05004 (0.05004) --
2001............................... 1.00 0.05752 -- 0.05752 (0.05752) --
2002............................... 1.00 0.02585 $ 0.00038 0.02623 (0.02623) --
2003............................... 1.00 0.01199 (0.00039) 0.01160 (0.01160) --
Six Months Ended September 30, 2003 1.00 0.00334 -- 0.00334 (0.00334) --
TREASURY MONEY FUND -- (2/13/91*)
Year Ended March 31,
1999............................... $1.00 $0.04543 $ 0.00002 $0.04545 $(0.04545) --
2000............................... 1.00 0.04560 -- 0.04560 (0.04560) --
2001............................... 1.00 0.05339 -- 0.05339 (0.05339) --
2002............................... 1.00 0.02451 (0.00002) 0.02449 (0.02449) --
2003............................... 1.00 0.01085 0.00004 0.01089 (0.01089) --
Six Months Ended September 30, 2003 1.00 0.00276 -- 0.00276 (0.00276) --
TAX-EXEMPT MONEY FUND -- (5/24/85*)
Year Ended March 31,
1999............................... $1.00 $0.02911 -- $0.02911 $(0.02911) --
2000............................... 1.00 0.02946 $(0.00001) 0.02945 (0.02945) --
2001............................... 1.00 0.03580 -- 0.03580 (0.03580) --
2002............................... 1.00 0.01862 0.00013 0.01875 (0.01865) $(0.00010)
2003............................... 1.00 0.00967 (0.00002) 0.00965 (0.00964) (0.00001)
Six Months Ended September 30, 2003 1.00 0.00291 -- 0.00291 (0.00291) --
NEW YORK TAX-EXEMPT MONEY FUND -- (8/3/98*)
Period Ended March 31, 1999........ $1.00 $0.01711 -- $0.01711 $(0.01711) --
Year Ended March 31,
2000............................... 1.00 0.02809 -- 0.02809 (0.02809) --
2001............................... 1.00 0.03431 -- 0.03431 (0.03431) --
2002............................... 1.00 0.01758 $ 0.00011 0.01769 (0.01769) --
2003............................... 1.00 0.00884 (0.00007) 0.00877 (0.00873) $(0.00004)
Six Months Ended September 30, 2003 1.00 0.00255 -- 0.00255 (0.00255) --
* Commencement of Operations
(1)Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
(2)Not Annualized
(3)Annualized
See Notes to Financial Statements.
4
Ratio of Net Ratio of Gross Ratio of Net
Operating Expenses Operating Expenses Investment Fee
Total Net Asset Value, Total Net Assets, End to Average to Average Income to Waivers
Distributions End of Period Return of Period (000's) Net Assets Net Assets(1) Average Net Assets (Note 2)
- ------------- ---------------- ------ ----------------- ------------------ ------------------ ------------------ --------
$(0.04901) $1.00 5.01% $ 973,668 0.48% 0.52% 4.85% $0.00049
(0.05005) 1.00 5.08% 1,467,183 0.47% 0.58% 5.05% 0.00104
(0.05804) 1.00 5.96% 1,891,042 0.47% 0.71% 5.84% 0.00238
(0.02751) 1.00 2.79% 1,802,136 0.44% 0.74% 2.76% 0.00295
(0.01245) 1.00 1.25% 1,787,852 0.39% 0.43% 1.25% 0.00033
(0.00359) 1.00 0.36%(2) 1,580,955 0.44%(3) 0.71%(3) 0.72%(3) 0.00137
$(0.04838) $1.00 4.95% $ 641,831 0.47% 0.50% 4.85% $0.00029
(0.05004) 1.00 5.08% 772,690 0.47% 0.50% 5.01% 0.00035
(0.05752) 1.00 5.91% 1,427,560 0.46% 0.48% 5.76% 0.00029
(0.02623) 1.00 2.65% 795,287 0.43% 0.49% 2.72% 0.00063
(0.01160) 1.00 1.17% 594,496 0.39% 0.47% 1.21% 0.00082
(0.00334) 1.00 0.33%(2) 709,680 0.44%(3) 0.53%(3) 0.66%(3) 0.00044
$(0.04545) $1.00 4.64% $ 499,217 0.52% 0.55% 4.55% $0.00029
(0.04560) 1.00 4.62% 525,394 0.51% 0.53% 4.58% 0.00021
(0.05339) 1.00 5.47% 615,926 0.50% 0.55% 5.35% 0.00046
(0.02449) 1.00 2.48% 604,281 0.48% 0.54% 2.42% 0.00062
(0.01089) 1.00 1.09% 571,998 0.45% 0.53% 1.08% 0.00075
(0.00276) 1.00 0.28%(2) 543,376 0.49%(3) 0.57%(3) 0.55%(3) 0.00039
$(0.02911) $1.00 2.95% $1,503,069 0.46% 0.52% 2.91% $0.00059
(0.02945) 1.00 2.96% 2,051,108 0.46% 0.52% 2.97% 0.00066
(0.03580) 1.00 3.64% 2,617,329 0.45% 0.53% 3.59% 0.00075
(0.01875) 1.00 1.89% 2,522,455 0.44% 0.58% 1.85% 0.00136
(0.00965) 1.00 0.97% 2,281,263 0.39% 0.54% 0.97% 0.00158
(0.00291) 1.00 0.29%(2) 2,037,369 0.44%(3) 0.58%(3) 0.58%(3) 0.00069
$(0.01711) $1.00 1.72%(2) $ 305,719 0.47%(3) 0.79%(3) 2.24%(3) $0.00219
(0.02809) 1.00 2.82% 421,393 0.54% 0.71% 2.84% 0.00174
(0.03431) 1.00 3.49% 682,445 0.51% 0.72% 3.43% 0.00214
(0.01769) 1.00 1.78% 696,093 0.48% 0.71% 1.76% 0.00228
(0.00877) 1.00 0.88% 548,574 0.44% 0.49% 0.89% 0.00043
(0.00255) 1.00 0.25%(2) 470,294 0.49%(3) 0.74%(3) 0.51%(3) 0.00122
See Notes to Financial Statements.
5
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2003
Money Fund
Principal Value
Amount Rate (Note 1)
- ------------- ---- ------------
CERTIFICATE OF DEPOSIT -- 4.65%
$ 100,000,000 Wells Fargo Co., 10/28/03 (Cost $100,000,000)..... 1.06% $100,000,000
------------
COMMERCIAL PAPER -- 37.18%
100,000,000 Abbey National, Discount Note, 10/15/03........... 1.05 99,959,167
50,000,000 American Express, Discount Note, 10/15/03......... 1.05 49,979,583
100,000,000 Atlantic Asset, Discount Note, 10/20/03........... 1.06 99,944,055
50,000,000 Coca-Cola Co., Discount Note, 10/14/03............ 1.02 49,981,583
50,000,000 General Electric Capital Corp., Discount Note,
11/17/03......................................... 1.07 49,930,153
50,000,000 General Electric Co., Discount Note, 10/15/03..... 1.04 49,979,778
50,000,000 Household Finance Corp., Discount Note, 11/25/03.. 1.06 49,919,028
50,000,000 IBM Credit Corp., Discount Note, 10/16/03......... 1.02 49,978,750
50,000,000 Morgan Stanley, Discount Note, 10/15/03........... 1.04 49,979,778
50,000,000 Mortgage Interest Networking Trust, Discount
Note, 10/15/03................................... 1.07 49,979,194
50,000,000 Proctor & Gamble, Discount Note, 10/09/03......... 1.03 49,988,556
50,000,000 Receivables Capital, Discount Note, 10/15/03...... 1.06 49,979,389
100,000,000 Toronto Dominion Holding, Discount Note, 10/17/03. 1.05 99,953,333
------------
TOTAL COMMERCIAL PAPER (Cost $799,552,347)........ 799,552,347
------------
CORPORATE BONDS -- 6.52%
45,000,000 #American Express Credit, MTN, Series B, 11/10/03. 1.19 45,004,270
Principal Value
Amount Rate (Note 1)
- ------------- ---- --------------
CORPORATE BONDS -- (continued)
$ 40,000,000 #International Lease Finance Corp., 02/13/04...... 1.33% $ 40,024,062
55,000,000 #International Lease Finance Corp., MTN, Series
M, 11/03/03...................................... 2.01 55,035,189
--------------
TOTAL CORPORATE BONDS (Cost $140,063,521) 140,063,521
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 51.35%
75,000,000 Federal Farm Credit Bank, Discount Note, 10/03/03. 1.00 74,995,833
350,000,000 Federal Home Loan Bank, Discount Note, 10/03/03... 1.03 349,980,031
Federal Home Loan Mortgage Corporation, Discount
Note,
100,000,000 10/30/03......................................... 1.06 99,914,611
250,000,000 12/11/03......................................... 1.08 249,467,500
Federal National Mortgage Association, Discount
300,000,000 Note, 10/15/03................................... 1.03 299,879,833
30,000,000 10/22/03......................................... 1.03 29,981,975
--------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $1,104,219,783) 1,104,219,783
--------------
Shares
- -------------
OTHER SHORT-TERM INVESTMENT -- 0.37%
7,972,445 @Dreyfus Government Cash Management Fund (Cost
$7,972,445)..................................... 7,972,445
--------------
TOTAL INVESTMENTS (Cost $2,151,808,096*).......... 100.07% $2,151,808,096
OTHER ASSETS & LIABILITIES (NET).................. (0.07) (1,470,529)
------ --------------
NET ASSETS........................................ 100.00% $2,150,337,567
====== ==============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
# Variable or floating rate securities--rate disclosed is as of September 30,
2003.
Discount Note--The rate reported on the Portfolio of Investments is the
discount rate at the time of purchase.
MTN--Medium Term Note
See Notes to Financial Statements.
6
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2003
Government Money Fund
Principal Value
Amount Rate (Note 1)
- ------------ ---- ------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.60%
$ 50,000,000 Federal Farm Credit Bank, Discount Note, 10/02/03. 1.00% $ 49,998,611
75,000,000 10/06/03......................................... 0.98 74,989,792
Federal Home Loan Bank, Discount Note,
75,000,000 10/01/03......................................... 1.03 75,000,000
150,000,000 10/03/03......................................... 1.03 149,991,442
200,000,000 10/24/03......................................... 1.03 199,868,708
30,000,000 10/29/03......................................... 1.05 29,975,523
100,000,000 Federal Home Loan Mortgage Corporation, Discount
Note, 10/28/03................................... 1.04 99,922,000
20,000,000 Federal National Mortgage Association, Discount
Note, 10/22/03................................... 1.03 19,987,983
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost
$699,734,059).......................................... 699,734,059
------------
Value
Shares (Note 1)
- ---------- - ------------
OTHER SHORT-TERM INVESTMENT -- 1.49%
10,593,748 @Dreyfus Treasury Prime Cash Management
Fund (Cost $10,593,748)......................... $ 10,593,748
------------
TOTAL INVESTMENTS (Cost $710,327,807*)................... 100.09% $710,327,807
OTHER ASSETS & LIABILITIES (NET)......................... (0.09) (647,721)
------ ------------
NET ASSETS............................................... 100.00% $709,680,086
= ====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
Discount Note--The rate reported on the Portfolio of Investments is the
discount rate at the time of purchase.
See Notes to Financial Statements.
7
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2003
Treasury Money Fund
Principal Value
Amount Rate (Note 1)
- ------------ ---- ------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.39%
$ 75,000,000 Federal Farm Credit Bank, Discount Note, 10/03/03. 1.00% $ 74,995,833
+United States Treasury Bills,
30,000,000 10/02/03......................................... 0.84 29,999,300
45,000,000 10/09/03......................................... 0.65 44,993,500
200,000,000 10/23/03......................................... 0.90 199,893,361
85,000,000 10/30/03......................................... 0.95 84,934,952
100,000,000 12/26/03......................................... 0.92 99,780,222
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost
$534,597,168).......................................... 534,597,168
------------
Value
Shares (Note 1)
- ----------- ------------
OTHER SHORT-TERM INVESTMENT -- 1.69%
9,201,294 @Dreyfus Treasury Prime Cash Management Fund (Cost
$9,201,294)............................................................. $ 9,201,294
------------
TOTAL INVESTMENTS
(Cost $543,798,462*).......................................................... 100.08% $543,798,462
OTHER ASSETS & LIABILITIES (NET)............................................... (0.08) (422,109)
------ ------------
NET ASSETS..................................................................... 100.00% $543,376,353
====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ The rate shown is the effective yield at the time of purchase.
Discount Note--The rate reported on the Portfolio of Investments is the
discount rate at the time of purchase.
See Notes to Financial Statements.
8
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Tax-Exempt Money Fund
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- 86.36%
$11,000,000 +Alaska State, Housing Finance Authority, State
Capital Project, Revenue Bonds, Series C,
(MBIA), 1.080%, 07/01/22......................... $11,000,000
16,750,000 Ann Arundell County, Maryland, Commercial
Paper, 1.000%, 11/10/03.......................... 16,750,000
10,000,000 +Atlanta, Georgia, Water & Waste Authority,
Revenue Bonds, Series B, (FSA), 1.050%, 11/01/38. 10,000,000
10,500,000 Baltimore, Maryland, Commercial Paper, 0.890%,
11/07/03......................................... 10,500,000
45,000,000 Burke County, Georgia, Commercial Paper, 0.900%,
12/11/03......................................... 45,000,000
4,800,000 +Carbon County, Wyoming, Pollution Control, Amoco
Project, Revenue Bonds, 1.100%, 11/01/14......... 4,800,000
44,430,000 +Charlotte, North Carolina, Water & Sewer System,
Revenue Bonds, Series B, 1.100%, 07/01/27........ 44,430,000
12,200,000 +Chicago, Illinois, Board of Education, General
Obligation Bonds, Series D, (FSA), 1.100%,
03/01/32......................................... 12,200,000
30,000,000 +Chicago, Illinois, Metropolitan Water
Reclamation District Project, General Obligation
Bonds, Series A, 1.100%, 12/01/31................ 30,000,000
20,595,000 +Chicago, Illinois, Sales Tax, Revenue Bonds,
(FGIC), 1.100%, 01/01/34......................... 20,595,000
10,000,000 +Clark County, Nevada, School District, General
Obligation Bonds, Series A, (FSA), 1.150%,
06/15/21......................................... 10,000,000
15,000,000 +Cleveland, Ohio, Waterworks Revenue Authority,
Revenue Bonds, Series L, (FGIC), 0.950%, 01/01/33 15,000,000
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$ 7,820,000 Connecticut State, General Obligation Bonds,
Series C, 3.000%, 12/15/03....................... $ 7,853,606
7,510,000 +Dallas, Texas, General Obligation Bonds, 1.140%,
02/15/15......................................... 7,510,000
10,000,000 +Detroit, Michigan, Sewage Disposal, Revenue
Bonds, Series A, (MBIA), 1.050%, 07/01/23........ 10,000,000
39,170,000 +Detroit, Michigan, Sewage Disposal, Revenue
Bonds, Series C-1, (FSA), 1.050%, 07/01/27....... 39,170,000
51,805,000 +Detroit, Michigan, Sewage Disposal, Revenue
Bonds, Series C-2, (FGIC), 1.050%, 07/01/29...... 51,805,000
23,900,000 +District of Columbia, General Obligation Bonds,
Series D, (FGIC), 1.100%, 06/01/29............... 23,900,000
9,000,000 Dover & Sherborn, Massachusetts, Regional School
District, Bond Anticipation Notes, 1.250%,
11/14/03......................................... 9,001,940
13,665,000 +Florida State, Board of Education, General
Obligation Bonds, Series 374, 1.140%, 06/01/22... 13,665,000
9,304,000 Gainesville, Florida, Commercial Paper, 0.900%,
12/10/03......................................... 9,304,000
15,000,000 +Gwinnett County, Georgia, Development Authority,
Civic & Cultural Project, Revenue Bonds, 1.050%,
09/01/31......................................... 15,000,000
10,420,000 +Hawaii State, Munitops Certificates Trust,
General Obligation Bonds, (FSA), 1.260%, 07/01/10 10,420,000
12,520,000 +Hennepin County, Minnesota, General Obligation
Bonds, Series B, 0.950%, 12/01/20................ 12,520,000
See Notes to Financial Statements.
9
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$23,000,000 Intermountain Power Agency, Utah, Commercial
Paper, Series B, 0.900%, 10/09/03................ $23,000,000
31,500,000 Intermountain Power Agency, Utah, Commercial
Paper, Series B-5, 0.850%, 10/08/03.............. 31,500,000
15,185,000 +Intermountain Power Agency, Utah, Revenue Bonds,
Series F, (AMBAC), 0.950%, 07/01/18.............. 15,185,000
10,000,000 Jacksonville, Florida, Commercial Paper, Series
C-1, 0.850%, 10/07/03............................ 10,000,000
8,505,000 +Jacksonville, Florida, Water & Sewer System,
Revenue Bonds, Series N-8, 1.170%, 10/01/23...... 8,505,000
24,105,000 +Kansas State, Department of Highway
Transportation, Revenue Bonds, Series B-3,
1.050%, 09/01/19................................. 24,105,000
11,000,000 +Kansas State, Department of Highway
Transportation, Revenue Bonds, Series C-1,
1.050%, 09/01/19................................. 11,000,000
25,700,000 King County, Washington, Sewer Authority,
Commercial Paper, 0.850%, 11/13/03............... 25,700,000
5,950,000 +Lincoln County, Wyoming, Pollution Control,
Amoco Project, Revenue Bonds, 1.050%, 10/01/12... 5,950,000
13,400,000 Long Island Power Authority, New York, Commercial
Paper, 0.950%, 02/09/04.......................... 13,400,000
12,500,000 +Loudoun County, Virginia, Industrial Development
Authority, Howard Hughes Medical Project,
Revenue Bonds, Series F, 1.050%, 02/15/38........ 12,500,000
17,300,000 +Mecklenburg County, North Carolina, General
Obligation Bonds, Series 1996B, 1.050%, 03/01/15. 17,300,000
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$23,600,000 +Mecklenburg County, North Carolina, General
Obligation Bonds, Series 1996C, 1.050%, 03/01/14. $23,600,000
Metropolitan Government Nashville & Davidson
10,000,000 County, Commercial Paper, 0.900%, 12/03/03....... 10,000,000
16,000,000 0.900%, 01/07/04................................. 16,000,000
8,000,000 0.970%, 02/11/04................................. 8,000,000
39,300,000 +Metropolitan Government Nashville & Davidson
County, Health & Educational Facilities Board,
Revenue Bonds, Series A, 1.000%, 10/01/30........ 39,300,000
18,000,000 Michigan State, Building Authority, Commercial
Paper, 1.000%, 10/23/03.......................... 18,000,000
45,000,000 +Michigan State, Building Authority, Multimodal
Facilities Program, Revenue Bonds, 1.100%,
10/15/37......................................... 45,000,000
20,000,000 +Michigan State, Building Authority, Revenue
Bonds, 1.000%, 10/15/36.......................... 20,000,000
10,000,000 Michigan State, Commercial Paper, 0.950%, 10/14/03 10,000,000
18,397,500 +Michigan State, Municipal Board Authority,
Revenue Bonds, Series 718, 1.140%, 10/01/20...... 18,397,500
10,000,000 +Michigan State, Technological University,
Revenue Bonds, Series A, (AMBAC), 1.050%,
10/01/18......................................... 10,000,000
12,795,000 +Minneapolis, Minnesota, Convention Center
Project, General Obligation Bonds, 0.950%,
12/01/18......................................... 12,795,000
12,000,000 +Minneapolis, Minnesota, General Obligation
Bonds, 0.950%, 12/01/18.......................... 12,000,000
2,000,000 +Minneapolis, Minnesota, General Obligation
Bonds, Series A, 0.950%, 03/01/27................ 2,000,000
2,235,000 +Minneapolis, Minnesota, General Obligation
Bonds, Series B, 0.950%, 12/01/07................ 2,235,000
See Notes to Financial Statements.
10
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$ 5,500,000 Montgomery County, Maryland, Commercial
Paper, 0.800%, 10/10/03.......................... $ 5,500,000
16,120,000 Needham, Massachusetts, Bond Anticipation
Notes, 1.000%, 11/06/03.......................... 16,123,121
20,000,000 New Hampshire State, Commercial Paper, Series A,
0.900%, 11/06/03................................. 20,000,000
10,000,000 New York City, New York, Mass Transit Authority,
Commercial Paper, Series A, 0.850%, 10/02/03..... 10,000,000
4,000,000 New York State, Commercial Paper, 1.050%, 11/10/03 4,000,000
14,300,000 0.900%, 12/08/03................................. 14,300,000
8,000,000 New York State, Power Authority, Commercial
Paper, 0.850%, 11/06/03.......................... 8,000,000
+North Carolina State, General Obligation Bonds,
15,800,000 Series D, 2.000%, 02/01/04....................... 15,854,575
36,000,000 1.000%, 06/01/19................................. 36,000,000
27,100,000 +Ohio State, Infrastructure Import, General
Obligation Bonds, Series B, 1.050%, 08/01/21..... 27,100,000
45,000,000 +Ohio State, Infrastructure Improvement Bonds,
General Obligation Bonds, Series D, 1.050%,
02/01/19......................................... 45,000,000
26,825,000 +Oklahoma State, Water Resource Board, Revenue
Bonds, 1.100%, 09/01/32.......................... 26,825,000
10,000,000 Oklahoma State, Water Resource Board, Revenue
Bonds, Series A, 0.870%, 10/01/36................ 10,000,000
Omaha, Nebraska, Commercial Paper, 0.950%,
30,000,000 02/09/04......................................... 30,000,000
20,000,000 0.950%, 02/13/04................................. 20,000,000
10,000,000 +Palm Beach County, Florida, School Board
Certificate of Participation, Series B, (FSA),
1.070%, 08/01/27................................. 10,000,000
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$40,640,000 +Pennsylvania State University, Revenue Bonds,
Series A, 1.040%, 04/01/31....................... $40,640,000
35,000,000 +Pennsylvania State, Turnpike Commission, Revenue
Bonds, Series A-2, 1.080%, 12/01/30.............. 35,000,000
3,905,000 +Phoenix, Arizona, Civic Improvement, Revenue
Bonds, Class A, 1.150%, 07/01/17................. 3,905,000
3,875,000 +Round Rock, Texas, Independent School District,
General Obligation Bonds, Series 578, 1.140%,
08/01/20......................................... 3,875,000
Salt River, Arizona, Commercial Paper, 0.900%,
48,000,000 10/06/03......................................... 48,000,000
29,000,000 0.850%, 12/11/03................................. 29,000,000
San Antonio, Texas, Commercial Paper, 0.880%,
38,000,000 10/08/03......................................... 38,000,000
11,000,000 0.800%, 10/14/03................................. 11,000,000
15,000,000 San Antonio, Texas, Gas & Electric Authority,
Commercial Paper, Series A, 0.850%, 11/18/03..... 15,000,000
26,560,000 +Snohomish County, Washington, Public Utilities
Authority, District No. 1 Generation System,
Revenue Bonds, (MBIA), 1.200%, 01/01/25.......... 26,560,000
8,400,000 +Snohomish County, Washington, Public Utilities
Authority, District No. 1 Generation System,
Revenue Bonds, Series A-1, (FSA), 1.100%,
12/01/19......................................... 8,400,000
39,000,000 St. James Parish, Louisiana, Texaco, Commercial
Paper, Series B, 0.900%, 12/16/03................ 39,000,000
25,640,000 Texas State, Munitops Certificates Trust, General
Obligation Bonds, 1.050%, 02/15/11............... 25,640,000
See Notes to Financial Statements.
11
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$10,480,000 +University of Michigan, Board of Regents,
Revenue Bonds, 1.050%, 04/01/32.................. $10,480,000
19,100,000 +University of Minnesota, Board of Regents,
Revenue Bonds, Series A, 1.120%, 01/01/34........ 19,100,000
12,400,000 +University of Pittsburgh, Commonwealth of Higher
Education, University Capital Project, Revenue
Bonds, Series A, 1.050%, 09/15/29................ 12,400,000
15,425,000 University of Texas, Board of Regents, Commercial
Paper, Series A, 0.890%, 11/05/03................ 15,425,000
12,300,000 University of Texas, Commercial Paper, 0.900%,
12/16/03......................................... 12,301,021
10,500,000 +University of Virginia, Revenue Bonds, Series
A, 1.020%, 06/01/34.............................. 10,500,000
65,400,000 +Valdez, Alaska, Marine Terminal, BP Pipelines
Project, Revenue Bonds, Series B, 1.200%,
07/01/37......................................... 65,400,000
4,420,000 +Whiting, Indiana, Pollution Control, Amoco
Project, Revenue Bonds, 1.000%, 08/15/04......... 4,412,353
13,000,000 Wichita, Kansas, Temporary Notes, Renewal &
Improvements Project, General Obligation Bonds,
Series 208, 2.000%, 02/19/04..................... 13,050,743
14,200,000 +Wilmington, North Carolina, General Obligation
Bonds, 1.100%, 06/01/15.......................... 14,200,000
13,980,000 +Winston-Salem, North Carolina, Water & Sewer
Systems Authority, Revenue Bonds, Series
C, 1.100%, 06/01/28.............................. 13,980,000
34,500,000 Wisconsin State, Transportation Authority,
Commercial Paper, 0.800%, 10/07/03............... 34,500,000
Principal Value
Amount (Note 1)
- ----------- --------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$25,020,000 Wisconsin State, Transportation Authority,
Commercial Paper, Series 97-A, 1.100%, 01/22/04.. $ 25,020,000
--------------
TOTAL TAX-EXEMPT CASH EQUIVALENT SECURITIES (Cost
$1,759,388,859).................................. 1,759,388,859
--------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT -- 12.88%
BANK OF AMERICA
---------------
22,000,000 +Des Moines, Iowa, Hospital Facilities Authority,
Methodist Medical Center Project, Revenue
Bonds, 1.130%, 08/01/15.......................... 22,000,000
15,000,000 +District of Columbia, Phillips College Issue,
General Obligation Bonds, 1.100%, 08/01/33....... 15,000,000
5,300,000 +New York City, New York, Industrial Development
Agency, Revenue Bonds, New York Stock Exchange
Project, Series B, 1.100%, 05/01/33.............. 5,300,000
19,100,000 +Washington State, Public Power, Revenue
Bonds, Series A1-2, 1.050%, 07/01/17............. 19,100,000
BANK ONE LOUISIANA
------------------
16,400,000 +Louisiana State, Offshore Terminal Authority,
Deepwater Port Project, Series 1999, 1.100%,
10/01/19......................................... 16,400,000
BANK ONE N.A.
-------------
6,850,000 +Chicago, Illinois, Water Authority, Revenue
Bonds, 1.050%, 11/01/30.......................... 6,850,000
9,000,000 +Illinois State, Development Financial Authority,
Museum Contemporary Art Project, 1.150%, 02/01/29 9,000,000
See Notes to Financial Statements.
12
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT -- (continued)
$20,000,000 Indiana State, Highway Transportation Finance
Authority, Bond Anticipation Notes, 1.500%,
10/03/03......................................... $20,000,597
BNP PARIBAS
-----------
29,700,000 +Baltimore, Maryland, Port Facilities Authority,
Revenue Bonds, 0.950%, 10/14/11.................. 29,700,000
FIRST UNION NATIONAL BANK
-------------------------
13,200,000 +Virginia State, Capital Region Airport Community
Authority, Revenue Bonds, Series B, 1.100%,
06/01/29......................................... 13,200,000
LANDESBANK HESSEN
-----------------
37,600,000 +King County, Washington, Water & Sewage, Revenue
Bonds, Series A, 1.050%, 01/01/32................ 37,600,000
13,000,000 +Northampton County, Pennsylvania, Higher
Education Authority, Lafayette College Project,
Revenue Bonds, Series A, 1.020%, 11/01/28........ 13,000,000
MORGAN GUARANTY TRUST
---------------------
7,000,000 +Kenton County, Kentucky, Industrial Building
Authority, Redken Labs Incorporated Project,
Revenue Bonds, 0.900%, 12/01/14.................. 7,000,000
NORTHERN TRUST COMPANY
----------------------
14,800,000 +Illinois State, Health Facilities Authority,
Ingalls Memorial Hospital Project, Revenue
Bonds, Series 85-B, 1.050%, 01/01/16............. 14,800,000
11,600,000 +Illinois State, Health Facilities Authority,
Ingalls Memorial Hospital Project, Revenue
Bonds, Series C, 1.050%, 01/01/16................ 11,600,000
14,500,000 +Illinois State, Health Facilities Authority,
Revenue Bonds, Series A, 1.050%, 10/01/10........ 14,500,000
Principal Value
Amount (Note 1)
- ---------- --------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT -- (continued)
WESTDEUTSHE LANDESBANK
----------------------
$7,450,000 +Long Island, New York, Power Authority, Revenue
Bonds, Sub-Series 2A, 1.050%, 05/01/33........... $ 7,450,000
--------------
TOTAL TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT (Cost $262,500,597).. 262,500,597
--------------
Shares
- ----------
OTHER SHORT-TERM INVESTMENTS -- 0.71%
1 @Dreyfus Tax Exempt Fund.......................... 1
14,540,325 @Provident Tax-Exempt Municipal Fund.............. 14,540,325
--------------
TOTAL OTHER SHORT-TERM INVESTMENTS (Cost
$14,540,326)..................................... 14,540,326
--------------
TOTAL INVESTMENTS (Cost $2,036,429,782*).......... 99.95% $2,036,429,782
OTHER ASSETS & LIABILITIES (NET).................. 0.05 939,500
------ --------------
NET ASSETS........................................ 100.00% $2,037,369,282
====== ==============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ 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 September 30, 2003, approximately, 13% of the net assets are invested in
municipal securities that have letter of credit enhancement features or escrows
in U.S. Government securities backing them, on which the Fund relies. Without
such features, the securities may or may not meet the quality standards of
securities purchased by the Fund.
At September 30, 2003, approximately, 11% of the net assets are invested in
Michigan municipal securities. Economic changes affecting the state and certain
of its public bodies and municipalities may affect the ability of the issuers
to pay the required principal and interest payments of the municipal securities.
See Notes to Financial Statements.
13
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
New York Tax-Exempt Money Fund
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- 84.76%
$ 5,000,000 Arlington, New York, Central School District, Tax
Anticipation Notes, 1.250%, 11/07/03............. $ 5,001,980
4,500,000 Carmel, New York, Central School District, Bond
Anticipation Notes, 1.750%, 04/30/04............. 4,516,875
9,100,000 +Erie County, New York, Water Authority Revenue
Bonds, Series A, (AMBAC), 1.000%, 12/01/16....... 9,100,000
10,000,000 Katonah-Lewisboro, New York, Union Free School
District, Tax Anticipation Notes, 1.000%,
10/17/03......................................... 10,001,077
10,000,000 Long Island Power Authority, New York, Commercial
Paper, 0.950%, 02/09/04.......................... 10,000,000
25,500,000 Mass Transit Authority, New York, Commercial
Paper, 0.850%, 10/02/03.......................... 25,500,000
23,600,000 Mass Transit Authority, New York, Commercial
Paper, Series A, 1.050%, 10/06/03................ 23,600,000
17,175,000 +Nassau County, New York, Financial Authority,
Sales Tax, Revenue Bonds, Series B, (FSA),
1.050%, 11/15/22................................. 17,175,000
10,100,000 +New York City, New York, Multi- Family Housing
Development Corporation Authority, Parkgate
Development Project, Series A, (FNMA), 0.970%,
10/15/28......................................... 10,100,000
5,500,000 +New York City, New York, Municipal Water
Financing Authority, Revenue Bonds, Sub- Series
C-2, 1.050%, 06/15/18............................ 5,500,000
10,000,000 New York City, New York, Transitional Finance
Authority, Bond Anticipation Notes, 2.500%,
11/06/03......................................... 10,008,931
5,000,000 +New York City, New York, Transitional Finance
Authority, New York City Recovery Project,
Revenue Bonds, Sub-Series 1-A, 1.050%, 11/01/22.. 5,000,000
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$12,875,000 +New York City, New York, Transitional Finance
Authority, Revenue Bonds, (MBIA), 1.100%,
05/01/15......................................... $12,875,000
10,870,000 +New York City, New York, Transitional Finance
Authority, Revenue Bonds, Class A, 1.110%,
02/01/31......................................... 10,870,000
11,245,000 +New York City, New York, Transitional Finance
Authority, Revenue Bonds, Series 283, 1.140%,
11/15/18......................................... 11,245,000
4,995,000 +New York City, New York, Transitional Finance
Authority, Revenue Bonds, Series 307,
(AMBAC), 1.120%, 08/01/19........................ 4,995,000
New York State, Commercial Paper,
10,000,000 1.050%, 11/10/03................................. 10,000,000
7,000,000 0.900%, 12/08/03................................. 7,000,000
10,000,000 New York State, Dormitory Authority, Columbia
University, Commercial Paper, 0.850%, 01/09/04... 10,000,000
New York State, Dormitory Authority, Cornell
2,600,000 University, Commercial Paper, 0.900%, 12/18/03... 2,600,000
22,160,000 0.850%, 12/18/03................................. 22,160,000
4,895,000 +New York State, Dormitory Authority, Public
Library Project, Revenue Bonds, Series A,
(MBIA), 1.050%, 07/01/28......................... 4,895,000
8,989,000 +New York State, Environmental Facilities
Authority, Revenue Bonds, Series 731, 1.100%,
06/15/22......................................... 8,989,000
11,865,000 +New York State, Metropolitan Transportation
Authority, Revenue Bonds, Series 275,
(FGIC), 1.120%, 11/15/19......................... 11,865,000
10,000,000 +New York State, Metropolitan Transportation
Authority, Revenue Bonds, Series B, (FSA),
1.070%, 11/01/22................................. 10,000,000
See Notes to Financial Statements.
14
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
New York Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$ 3,000,000 +New York State, Metropolitan Transportation
Authority, Revenue Bonds, Series D-1,
(FSA), 1.050%, 11/01/29.......................... $ 3,000,000
10,000,000 +New York State, Metropolitan Transportation
Authority, Revenue Bonds, Series D-2,
(FSA), 1.050%, 11/01/32.......................... 10,000,000
10,000,000 New York State, Power Authority, Commercial
Paper, 0.850%, 11/06/03.......................... 10,000,000
+New York State, Power Authority, Revenue &
General Purpose Obligation Bonds, 0.898%,
4,700,000 03/01/16......................................... 4,700,000
4,000,000 0.900%, 03/01/20................................. 4,000,000
11,300,000 +New York State, Power Authority, Revenue Bonds,
Series 3, 1.050%, 11/15/11....................... 11,300,000
New York State, Township Authority, Commercial
3,500,000 Paper, 0.850%, 10/23/03.......................... 3,500,000
10,000,000 0.850%, 11/06/03................................. 10,000,000
21,100,000 +New York State, Triborough Bridge & Tunnel
Authority, Revenue Bonds, Series B,
(AMBAC), 1.050%, 01/01/32........................ 21,100,000
11,400,000 +New York State, Triborough Bridge & Tunnel
Authority, Revenue Bonds, Series C, (FSA),
1.050%, 01/01/31................................. 11,400,000
13,700,000 +Niagara Falls, New York, Bridge Community Toll
Authority, Series A, (FGIC), 1.010%, 10/01/19.... 13,700,000
9,600,000 Port Authority of New York & New Jersey,
Commercial Paper, 0.930%, 01/12/04............... 9,600,000
10,300,000 Port Authority of New York & New Jersey, Revenue
Bonds, Series UU, 2.000%, 10/15/03............... 10,303,822
Principal Value
Amount (Note 1)
- ---------- ------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES -- (continued)
$3,000,000 Port Authority of New York & New Jersey, Special
Obligation Revenue Bonds, Versatile Structure
Obligations, Series 5, 1.200%, 08/01/24.......... $ 3,000,000
3,000,000 Rockland County, New York, Bond Anticipation
Notes, 1.500%, 02/26/04.......................... 3,006,610
7,000,000 +Suffolk County, New York, Water Authority, Bond
Anticipation Notes, 1.050%, 06/01/06............. 7,000,000
------------
TOTAL TAX-EXEMPT CASH EQUIVALENT SECURITIES (Cost
$398,608,295).................................... 398,608,295
------------
TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT -- 16.21%
BANK OF AMERICA
---------------
5,000,000 +New York City, New York, Industrial Development
Agency, Revenue Bonds, New York Stock Exchange
Project, Series B, 1.100%, 05/01/33.............. 5,000,000
BANK OF NEW YORK
----------------
4,200,000 +Yonkers, New York, Industrial Development
Agency, Civic Facility Revenue Bonds, Consumers
Union Facility, 1.030%, 07/01/19................. 4,200,000
BANK OF NOVA SCOTIA
-------------------
1,900,000 +New York State, Local Government Assistance
Corp., Revenue Bonds, Series G, 1.000%, 04/01/25. 1,900,000
BAYERISCHE LANDESBANK
---------------------
10,000,000 +New York State, Local Government Assistance
Corp., Revenue Bonds, Series A, 1.030%, 04/01/22. 10,000,000
BAYERISCHE VEREINSBANK
----------------------
10,000,000 +Long Island Power Authority, New York,
Electrical Systems Revenue Bonds, Series 1A,
1.030%, 05/01/33................................. 10,000,000
See Notes to Financial Statements.
15
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
New York Tax-Exempt Money Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT CASH EQUIVALENT SECURITIES --
BACKED BY LETTERS OF CREDIT -- (continued)
CHASE MANHATTAN BANK
--------------------
$5,225,000 +New York City, New York, Trust for Cultural
Preservation, Asia Society Project, Revenue
Bonds, 1.050%, 04/01/30.......................... $ 5,225,000
LANDESBANK HESSEN
-----------------
7,000,000 New York State, Housing Finance Agency Services,
Revenue Bonds, Series I, 1.030%, 03/15/31........ 7,000,000
MANUFACTURERS & TRADERS
-----------------------
8,800,000 +New York City, New York, Industrial Development
Agency, Civic Facility Revenue Bonds, Jewish
Community Center Project, 1.170%, 03/01/30....... 8,800,000
MORGAN GUARANTY TRUST
---------------------
2,000,000 +New York City, New York, General Obligation
Bonds, Series F-3, 1.020%, 02/15/13.............. 2,000,000
STATE STREET BANK & TRUST
-------------------------
2,300,000 +New York City, New York, General Obligation
Bonds, Sub-Series E-4, 1.190%, 08/01/22.......... 2,300,000
TORONTO DOMINION BANK
---------------------
10,000,000 +New York City, New York, General Obligation
Bonds, Series F-2, 0.990%, 02/15/12.............. 10,000,000
WESTDEUTSCHE LANDESBANK
-----------------------
9,800,000 +New York State, Local Government Assistance
Corp., Revenue Bonds, Series E, 1.050%, 04/01/23. 9,800,000
-----------
TOTAL TAX-EXEMPT CASH EQUIVALENT SECURITIES--
BACKED BY LETTERS OF CREDIT (Cost $76,225,000)... 76,225,000
-----------
Value
Shares (Note 1)
- --------- ------------
OTHER SHORT-TERM INVESTMENTS -- 0.46%
1 @Dreyfus New York Tax Exempt Fund................. $ 1
2,180,117 @Provident Institutional New York Money Market
Fund............................................. 2,180,117
------------
TOTAL OTHER SHORT-TERM INVESTMENTS (Cost
$2,180,118)...................................... 2,180,118
------------
TOTAL INVESTMENTS (Cost $477,013,413*)............ 101.43% $477,013,413
OTHER ASSETS & LIABILITIES (NET).................. (1.43) (6,719,075)
------ ------------
NET ASSETS........................................ 100.00% $470,294,338
====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ 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.
FNMA--Federal National Mortgage Association
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 September 30, 2003, approximately, 16% 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, on which the Fund relies. Without
such features, the securities may or may not meet the quality standards of
securities purchased by the Fund.
At September 30, 2003, approximately, 100% of the net assets are invested in
New York municipal securities. Economic changes affecting the state and certain
of its public bodies and municipalities may affect the ability of the issuers
to pay the required principal and interest payments of the municipal securities.
See Notes to Financial Statements.
16
EXCELSIOR FUNDS
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Excelsior Funds, Inc. ("Excelsior Fund") and Excelsior Tax-Exempt Funds,
Inc. ("Excelsior Tax-Exempt Fund") and collectively with Excelsior Fund, (the
"Funds") were incorporated under the laws of the State of Maryland on August 2,
1984 and August 8, 1984, respectively, and are registered under the Investment
Company Act of 1940, as amended, as open-end management investment companies.
Excelsior Fund and Excelsior Tax-Exempt Fund currently offer shares in
seventeen and seven managed investment portfolios, respectively, each having
its own investment objectives and policies. The following is a summary of
significant accounting policies for Money Fund, Government Money Fund, Treasury
Money Fund, portfolios of Excelsior Fund, Tax-Exempt Money Fund and New York
Tax-Exempt Money Fund, portfolios of Excelsior Tax-Exempt Fund (the
"Portfolios"). Such policies are in conformity with accounting principles
generally accepted in the United States of America and are consistently
followed by the Funds in the preparation of their financial statements.
Accounting principles generally accepted in the United States of America
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 Money Fund offers two classes of shares: Shares and Institutional
Shares. The Financial Highlights of the Institutional Shares as well as the
financial statements for the remaining portfolios of the Funds are presented
separately.
With regard to the Portfolios, it is the Funds' policy, to the extent
possible, to maintain a continuous net asset value per share of $1.00. Each of
the Portfolios has adopted certain investment portfolio, valuation and dividend
distribution policies to enable it to do so. However, there can be no assurance
that the net asset value per share of the Portfolios will not vary.
(a) Portfolio valuation:
Securities are valued at amortized cost, which has been determined by
each Fund's Board of Directors to represent the fair value of the
Portfolios' investments. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium.
(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, including, where applicable, amortization of premiums and,
when appropriate, discounts on investments, is earned from settlement date
and is recorded on the accrual basis.
(c) Repurchase agreements:
Excelsior Fund may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to
the seller's agreement to repurchase and Excelsior
17
Fund's agreement to resell such securities at mutually agreed upon prices.
Securities purchased subject to such repurchase agreements are deposited
with Excelsior Fund's custodian or subcustodian or are maintained in the
Federal Reserve/Treasury book-entry system and must have, at all times, an
aggregate market value not less than the repurchase price (including accrued
interest).
If the value of the underlying securities falls below the value of the
repurchase price, Excelsior Fund will require the seller to deposit
additional collateral by the next business day. Default or bankruptcy of the
seller may, however, expose the applicable Portfolio of Excelsior Fund to
possible delay in connection with the disposition of the underlying
securities or loss to the extent that proceeds from a sale of the underlying
securities were less than the repurchase price under the agreement.
(d) Dividends and distributions to shareholders:
Net investment income dividends are declared daily and paid monthly. Net
realized capital gains, unless offset by any available capital loss
carryforwards, are distributed to shareholders annually or more frequently
to maintain a net asset value of $1.00 per share.
(e) Expense Allocation:
Expenses directly attributable to a Portfolio are charged to that
Portfolio and expenses directly attributable to a particular class of shares
are charged to such a class. Other expenses are allocated to the respective
Portfolios based on average daily net assets.
2. Investment Advisory Fee, Administration Fee, Shareholder Servicing Fees and
Related Party Transactions
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company, N.A. (collectively with U.S. Trust NY, "U.S. Trust"), acting through
their respective registered investment advisory divisions, U.S. Trust New York
Asset Management Division and U.S. Trust Company, N.A. Asset Management
Division, serve as the investment adviser to the Portfolios. For the services
provided pursuant to the Investment Advisory Agreements, U.S. Trust is entitled
to receive a fee, computed daily and paid monthly, at the annual rates of 0.25%
of the average daily net assets of the Money Fund, the Government Money Fund
and the Tax-Exempt Money Fund, 0.30% of the average daily net assets of the
Treasury Money Fund, and 0.50% of the average daily net assets of the New York
Tax-Exempt Money 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,
N.A. is a national bank organized under the laws of the United States. Each is
a wholly-owned subsidiary of U.S. Trust Corporation, a registered bank holding
company. U.S. Trust Corporation is a wholly-owned subsidiary of The Charles
Schwab Corporation ("Schwab").
U.S. Trust Company, N.A., SEI Investments Global Funds Services and
Federated Services Company ("FSC") (collectively, the "Administrators") provide
administrative services to the Funds. 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 Fund, Excelsior Tax-Exempt Fund and Excelsior Funds Trust
(excluding the international equity portfolios of Excelsior Fund and Excelsior
Funds Trust), all of which are affiliated investment companies, as follows:
0.200% of
18
the first $200 million, 0.175% of the next $200 million, and 0.150% 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. Until further notice to the
Funds, U.S. Trust Company, N.A. has voluntarily agreed to waive its portion of
the administration fee in an amount equal to an annual rate of 0.04% of the
average daily net assets of each Portfolio. For the six months ended September
30, 2003, administration fees charged by U.S. Trust Company, N.A., net of
waivers, were as follows:
Money Fund.................... $178,557
Government Money Fund......... 251,134
Treasury Money Fund........... 209,358
Tax-Exempt Money Fund......... 824,363
New York Tax-Exempt Money Fund 200,031
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 six months ended September 30, 2003, and until further
notice, U.S. Trust has contractually agreed to waive investment advisory fees
and to reimburse other ordinary operating expenses to the extent necessary to
keep total operating expenses from exceeding the following annual percentages
of each Portfolio's average daily net assets:
Money Fund -- Shares.......... 0.50%
Government Money Fund......... 0.50%
Treasury Money Fund........... 0.55%
Tax-Exempt Money Fund......... 0.50%
New York Tax-Exempt Money Fund 0.60%
With regard to the Institutional Shares of Money Fund, for the six months
ended September 30, 2003, and until further notice, U.S. Trust contractually
agreed to waive fees and reimburse expenses to the extent necessary to maintain
an annual expense ratio of not more than 0.25%.
For the six months ended September 30, 2003, pursuant to the above,
investment advisory fees waived by U.S. Trust were as follows:
Money Fund.................... $1,901,821
New York Tax-Exempt Money Fund 503,584
The Funds have also entered into shareholder servicing agreements with
various service organizations (which may include U.S. Trust and its affiliates)
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 a shareholder servicing fee at the annual
rate of up to 0.25% (0.40% prior to July 29, 2003) 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.
19
During the six months ended September 30, 2003, a portion of the shareholder
servicing fees charged to the Portfolios were paid to affiliates of U.S. Trust.
U.S. Trust has voluntarily agreed to waive investment advisory and
administration fees payable in an amount equal to a portion of the shareholder
servicing fees paid to subsidiaries of U.S. Trust Corporation. For the six
months ended September 30, 2003, shareholder servicing fees paid to affiliates
of U.S. Trust and waivers by U.S. Trust of investment advisory and
administration fees for shareholder servicing fees paid by the Portfolios are
as follows:
Amount Amount
Amount Waived as Waived as
Paid to Investment Administration
Affiliates Advisory Fees Fees
---------- ------------- --------------
Money Fund.................... $2,508,062 -- $683,974
Government Money Fund......... 295,880 $ 151,344 --
Treasury Money Fund........... 191,258 99,874 --
Tax-Exempt Money Fund......... 1,437,113 1,028,306 --
New York Tax-Exempt Money Fund 103,633 21,861 --
With regard to multi-class Portfolios, U.S. Trust receives shareholder
servicing fees at the annual rate of up to 0.25% of the average daily net asset
value of each multi-class Portfolio's Shares class for which it provides
shareholder servicing.
Edgewood Services, Inc. ("the Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the distributor of the Funds. Shares of
each Portfolio are sold without a sales charge on a continuous basis by the
Distributor.
Boston Financial Data Services, Inc. ("BFDS") serves as transfer agent to
the Portfolios.
Each Independent Director of the Funds receives an annual fee of $15,000,
plus a meeting fee of $2,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $7,500. Each member of the Nominating Committee receives an
annual fee of $1,000 for services in connection with this committee.
3. Federal Taxes
It is the policy of the Funds 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.
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.
Dividends and distributions are determined in accordance with Federal income
tax regulations which may differ from accounting principles generally accepted
in the United States of America. 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").
20
The tax character of dividends and distributions paid during the six months
ended September 30, 2003 and the year ended March 31, 2003 were as follows:
Long-Term
Ordinary Tax-Exempt Capital
Income Income Gains Total
----------- ----------- --------- -----------
Money Fund
Six months ended September 30, 2003*. $ 8,509,891 -- -- $ 8,509,891
Year ended March 31, 2003............ 31,970,964 -- -- 31,970,964
Government Money Fund
Six months ended September 30, 2003*. 2,114,428 -- -- 2,114,428
Year ended March 31, 2003............ 8,291,220 -- -- 8,291,220
Treasury Money Fund
Six months ended September 30, 2003*. 1,493,051 -- -- 1,493,051
Year ended March 31, 2003............ 6,364,693 -- -- 6,364,693
Tax-Exempt Money Fund
Six months ended September 30, 2003*. -- $ 6,181,007 -- 6,181,007
Year ended March 31, 2003............ 16,257 23,449,842 $24,155 23,490,254
New York Tax-Exempt Money Fund
Six months ended September 30, 2003*. -- 1,320,313 -- 1,320,313
Year ended March 31, 2003............ 4,787 5,184,192 23,128 5,212,107
- --------
* Tax character of distributions cannot be determined until the portfolio has
completed its taxable year ending March 31, 2004, therefore distributions
have currently been reflected as paid from ordinary/tax-exempt income.
As of March 31, 2003, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Long-Term Other
Ordinary Tax-Exempt Capital Capital Loss Temporary
Income Income Gains Carryforward Difference Total
---------- ---------- --------- ------------ ----------- --------
Money Fund........... $2,158,220 -- -- $(27,148) $(2,158,220) $(27,148)
Government Money Fund 504,315 -- -- (29,321) (504,315) (29,321)
Treasury Money Fund.. 349,304 -- -- -- (345,981) 3,323
Tax-Exempt Money Fund 31,316 $1,520,489 $279,677 -- (1,520,560) 310,922
New York Tax-Exempt
Money Fund......... 424 396,130 11,642 -- (396,554) 11,642
21
For Federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. To the extent that such
carryforwards are utilized, capital gain distributions will be reduced. At
March 31, 2003, the following Portfolios had capital loss carryforwards for
Federal tax purposes available to offset future net capital gains through the
indicated expiration dates:
Government
Money Money
Fund Fund
------- ----------
Expiration Date March 31:
2004.................. $ 3,436 $ 1,189
2005.................. 12,049 --
2006.................. -- 5,931
2007.................. -- 3,297
2008.................. -- 18,904
2011.................. 11,663 --
------- -------
Total.................... $27,148 $29,321
======= =======
4. Capital Transactions:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
30.875 billion of which is currently classified to represent interests in
certain classes of shares. Excelsior Tax-Exempt Fund has authorized capital of
24 billion shares of Common Stock, 15 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: 4
billion shares each of Money Fund and Government Money Fund, 2.5 billion shares
of Treasury Money Fund, 2 billion shares of New York Tax-Exempt Money Fund and
5.5 billion shares for Tax-Exempt Money Fund.
Each share has a par value of $0.001 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 earnings on the
assets belonging to such Portfolio as are declared at the discretion of each
Fund's Board of Directors. Since the Portfolios have sold, reinvested and
redeemed shares only at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions is
the same as the amounts shown below for such transactions.
Money Fund
--------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
---------------- ---------------
Sold:
Shares........................... $ 2,339,025,382 $ 5,589,273,181
Institutional Shares............. 1,318,657,114 3,536,340,479
Issued as reinvestment of dividends:
Shares........................... 443,065 1,812,339
Institutional Shares............. 1,135,947 4,944,129
Redeemed:
Shares........................... (2,546,348,499) (5,605,547,555)
Institutional Shares............. (1,298,529,116) (3,303,057,021)
--------------- ---------------
Net Increase (Decrease)............. $ (185,616,107) $ 223,765,552
=============== ===============
22
Government Money Fund
--------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
---------------- ---------------
Sold............................... $ 1,613,719,922 $ 3,904,759,634
Issued as reinvestment of dividends 163,748 744,985
Redeemed........................... (1,498,694,178) (4,106,605,322)
--------------- ---------------
Net Increase (Decrease)............ $ 115,189,492 $ (201,100,703)
=============== ===============
Treasury Money Fund
--------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
---------------- ---------------
Sold............................... $ 1,206,883,845 $ 2,645,547,298
Issued as reinvestment of dividends 387,943 1,846,537
Redeemed........................... (1,235,897,131) (2,679,648,517)
--------------- ---------------
Net (Decrease)..................... $ (28,625,343) $ (32,254,682)
=============== ===============
Tax-Exempt Money Fund
--------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
---------------- ---------------
Sold............................... $ 3,045,776,641 $ 7,097,135,009
Issued as reinvestment of dividends 197,273 801,978
Redeemed........................... (3,289,881,647) (7,339,512,073)
--------------- ---------------
Net (Decrease)..................... $ (243,907,733) $ (241,575,086)
=============== ===============
New York Tax-Exempt Money Fund
--------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
---------------- ---------------
Sold............................... $ 722,410,311 $ 1,902,878,709
Issued as reinvestment of dividends 226,887 832,736
Redeemed........................... (800,917,791) (2,051,333,703)
--------------- ---------------
Net (Decrease)..................... $ (78,280,593) $ (147,622,258)
=============== ===============
5. Line of Credit:
The Portfolios and other affiliated funds participate in a $50 million
unsecured line of credit provided by The JPMorgan Chase Bank 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 0.50% per year. In
addition, a commitment fee, equal to an annual rate of 0.15% of the average
daily unused portion of the line of credit, is allocated among the
participating Portfolios at the end of each quarter. For the six months ended
September 30, 2003, the Portfolios had no borrowings under the agreement.
23
6. Subsequent Events:
U.S. Trust and Excelsior Fund, Excelsior Funds Trust and Excelsior
Tax-Exempt Fund (Excelsior Fund, Excelsior Funds Trust and Excelsior Tax-Exempt
Fund, collectively, the "Companies") have been contacted by the Office of the
New York State Attorney General (the "NYAG") and U.S. Trust has been contacted
by the U.S. Securities and Exchange Commission (the "SEC") in connection with
their investigation of practices in the mutual fund industry identified as
"market timing" and "late trading" of mutual fund shares. U.S. Trust and the
Companies have been providing full cooperation with respect to these
investigations.
U.S. Trust continues to review the facts and circumstances relevant to the
SEC's and the NYAG's investigations. At the present time, management of U.S.
Trust is unable to estimate the impact, if any, that the outcome of these
investigations may have on the Companies.
On November 20, 2003, a class action complaint was filed in the United
States District Court for the Northern District of California against Schwab,
Charles Schwab & Co., Inc. (collectively, "Charles Schwab"), U.S. Trust, the
Companies and Doe Defendants. The action, which is brought on behalf of all
purchasers, redeemers and holders of the Companies, who purchased, held or
otherwise acquired shares of the Companies from November 23, 1998, through
November 14, 2003, inclusive (the "Class Period"), alleges violations of the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940 and for common law breach of fiduciary duties. The
complaint alleges that during the Class Period, Charles Schwab, U.S. Trust and
the Companies allowed the Doe Defendants and others to engage in illegal and
improper trading practices, in concert with certain institutional traders,
which caused financial injury to the shareholders of the Companies. U.S. Trust
and the Companies are evaluating the claims in the complaint and intend to
vigorously defend them. At the present time, management of U.S. Trust is unable
to estimate the impact, if any, that the outcome of this action may have on the
Companies. U.S. Trust believes that additional lawsuits, similar to this
lawsuit, may be filed in the future against Charles Schwab, U.S. Trust, the
Companies and related parties.
24
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Boards of Directors of
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Money, Government Money,
Treasury Money, Tax-Exempt Money, and New York Tax-Exempt Money Funds (three of
the portfolios constituting the Excelsior Funds, Inc. and two of the portfolios
constituting the Excelsior Tax-Exempt Funds, Inc.) (collectively, the "Funds")
as of September 30, 2003, and the related statements of operations for the
period from April 1, 2003 to September 30, 2003, the statements of changes in
net assets for the period from April 1, 2003 to September 30, 2003 and for the
year ended March 31, 2003, 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. Our procedures included confirmation of securities
owned as of September 30, 2003, by correspondence with the custodian and
brokers. 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
the Money, Government Money, Treasury Money, Tax-Exempt Money and New York
Tax-Exempt Money Funds at September 30, 2003, the results of their operations
for the period from April 1, 2003 to September 30, 2003, the changes in their
net assets for the period from April 1, 2003 to September 30, 2003 and for the
year ended March 31, 2003, and the financial highlights for each of the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
Boston, Massachusetts /s/ Ernst & Young LLP
November 11, 2003
25
SA-MM-0903
[LOGO] EXCELSIOR FUNDS
Advised by U.S. TRUST
TAX-EXEMPT
FIXED INCOME
PORTFOLIOS
SEMI-ANNUAL REPORT
September 30, 2003
TABLE OF CONTENTS
PAGE
----
STATEMENTS OF ASSETS AND LIABILITIES............................. 1
STATEMENTS OF OPERATIONS......................................... 2
STATEMENTS OF CHANGES IN NET ASSETS.............................. 3
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS......... 4
PORTFOLIOS OF INVESTMENTS
Long-Term Tax-Exempt Fund..................................... 6
Intermediate-Term Tax-Exempt Fund............................. 7
Short-Term Tax-Exempt Securities Fund......................... 9
New York Intermediate-Term Tax-Exempt Fund.................... 11
California Tax-Exempt Income Fund............................. 13
NOTES TO FINANCIAL STATEMENTS.................................... 18
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS................ 26
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 617-483-7297)
.. 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
P.O. Box 8529
Boston, MA 02266-8529
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, N.A.,
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.
Excelsior Tax-Exempt Funds, Inc.
Statements of Assets and Liabilities
September 30, 2003
New York
Intermediate- Short-Term Intermediate- California
Long-Term Term Tax-Exempt Term Tax-Exempt
Tax-Exempt Tax-Exempt Securities Tax-Exempt Income
Fund Fund Fund Fund Fund
----------- ------------- ------------ ------------- -----------
ASSETS:
Investments, at cost-see accompanying
portfolios............................ $72,089,432 $384,397,449 $306,583,620 $171,479,308 $59,343,712
=========== ============ ============ ============ ===========
Investments, at value (Note 1)......... $72,938,580 $399,937,550 $308,836,438 $176,945,335 $62,573,969
Interest receivable.................... 801,607 4,460,789 2,531,555 2,248,222 714,399
Receivable for investments sold........ 7,058,740 -- -- 2,250,250 --
Receivable for fund shares sold........ 357 1,344,420 1,300,314 890,246 1,250
----------- ------------ ------------ ------------ -----------
Total Assets.......................... 80,799,284 405,742,759 312,668,307 182,334,053 63,289,618
LIABILITIES:
Payable for dividends declared......... 178,107 800,470 271,545 327,290 156,693
Payable for fund shares redeemed....... 106,976 75,434 577,561 10,897 237
Payable for investments purchased...... -- -- 10,000,000 -- --
Investment advisory fees payable
(Note 2).............................. 30,925 101,567 50,855 71,813 2,470
Administration fees payable
(Note 2).............................. 7,438 36,586 27,534 16,364 5,713
Shareholder servicing fees payable
(Note 2).............................. 5,174 31,257 23,469 1,953 12,925
Directors' fees payable (Note 2)....... 397 1,719 1,250 738 251
Accrued expenses and other
payables.............................. 20,612 68,224 49,527 24,174 10,576
----------- ------------ ------------ ------------ -----------
Total Liabilities..................... 349,629 1,115,257 11,001,741 453,229 188,865
----------- ------------ ------------ ------------ -----------
NET ASSETS.............................. $80,449,655 $404,627,502 $301,666,566 $181,880,824 $63,100,753
=========== ============ ============ ============ ===========
NET ASSETS consist of:
Distributions in excess of net
investment income..................... $ -- $ -- $ -- $ -- $ (1,555)
Accumulated net realized gain (loss) on
investments........................... (1,032,023) 13,528,705 (66,619) 5,786,208 7,177
Unrealized appreciation of
investments........................... 849,148 15,540,101 2,252,818 5,466,027 3,230,257
Par value (Note 5)..................... 8,085 40,552 41,714 19,736 8,385
Paid-in capital in excess of par value. 80,624,445 375,518,144 299,438,653 170,608,853 59,856,489
----------- ------------ ------------ ------------ -----------
Total Net Assets........................ $80,449,655 $404,627,502 $301,666,566 $181,880,824 $63,100,753
=========== ============ ============ ============ ===========
Shares of Common Stock
Outstanding........................... 8,085,173 40,552,372 41,714,017 19,736,151 8,385,023
NET ASSET VALUE PER SHARE............... $9.95 $9.98 $7.23 $9.22 $7.53
===== ===== ===== ===== =====
See Notes to Financial Statements.
1
Excelsior Tax-Exempt Funds, Inc.
Statements of Operations
Six Months Ended September 30, 2003
New York
Intermediate- Short-Term Intermediate- California
Long-Term Term Tax-Exempt Term Tax-Exempt
Tax-Exempt Tax-Exempt Securities Tax-Exempt Income
Fund Fund Fund Fund Fund
----------- ------------- ---------- ------------- ----------
INVESTMENT INCOME:
Interest income.......................... $ 1,531,708 $6,456,576 $2,334,974 $ 2,906,347 $1,184,627
----------- ---------- ---------- ----------- ----------
EXPENSES:
Investment advisory fees (Note 2)........ 223,981 715,115 452,372 461,753 161,457
Administration fees (Note 2)............. 67,771 309,083 228,087 139,704 48,847
Shareholder servicing fees (Note 2)...... 22,563 155,311 136,606 11,988 51,934
Transfer agent fees (Note 2)............. 11,813 12,122 3,461 4,167 1,434
Legal and audit fees..................... 7,201 33,488 24,686 15,664 8,118
Custodian fees........................... 5,813 16,692 12,728 9,460 3,491
Registration and filing fees............. 4,806 9,474 5,880 3,818 2,184
Directors' fees and expenses (Note 2).... 2,040 8,831 6,341 4,029 1,398
Shareholder reports...................... 975 5,262 4,047 2,288 830
Miscellaneous expenses................... 2,751 11,420 7,538 5,288 1,973
----------- ---------- ---------- ----------- ----------
Total Expenses.......................... 349,714 1,276,798 881,746 658,159 281,666
Fees waived and reimbursed by:
Investment adviser (Note 2).............. (15,884) (76,808) (132,694) (9,278) (107,292)
Administrators (Note 2).................. (17,919) (81,728) (60,317) (36,941) (12,917)
----------- ---------- ---------- ----------- ----------
Net Expenses............................ 315,911 1,118,262 688,735 611,940 161,457
----------- ---------- ---------- ----------- ----------
NET INVESTMENT INCOME..................... 1,215,797 5,338,314 1,646,239 2,294,407 1,023,170
----------- ---------- ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 1):
Net realized gain on security
transactions............................ 1,543,149 4,874,682 23,819 3,376,881 5,621
Change in unrealized appreciation/
depreciation of investments during the
period.................................. (1,594,235) (977,446) 1,395,431 (1,468,039) 300,256
----------- ---------- ---------- ----------- ----------
Net realized and unrealized gain
(loss) on investments................... (51,086) 3,897,236 1,419,250 1,908,842 305,877
----------- ---------- ---------- ----------- ----------
Net increase in net assets resulting from
operations.............................. $ 1,164,711 $9,235,550 $3,065,489 $ 4,203,249 $1,329,047
=========== ========== ========== =========== ==========
See Notes to Financial Statements.
2
Excelsior Tax-Exempt Funds, Inc.
Statements of Changes in Net Assets
New York
Intermediate- Short-Term Intermediate- California
Long-Term Term Tax-Exempt Term Tax-Exempt
Tax-Exempt Tax-Exempt Securities Tax-Exempt Income
Fund Fund Fund Fund Fund
------------ ------------- ------------ ------------- -----------
Six Months Ended September 30, 2003
Net investment income.................... $ 1,215,797 $ 5,338,314 $ 1,646,239 $ 2,294,407 $ 1,023,170
Net realized gain on security
transactions............................ 1,543,149 4,874,682 23,819 3,376,881 5,621
Change in unrealized appreciation/
depreciation of investments during the
period.................................. (1,594,235) (977,446) 1,395,431 (1,468,039) 300,256
------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting from
operations.............................. 1,164,711 9,235,550 3,065,489 4,203,249 1,329,047
Distributions to shareholders from net
investment income....................... (1,215,797) (5,338,314) (1,646,239) (2,294,407) (1,023,114)
Increase (decrease) in net assets from
fund share transactions (Note 5)........ (14,464,741) (6,371,389) 8,965,371 (7,428,188) (3,398,926)
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets.... (14,515,827) (2,474,153) 10,384,621 (5,519,346) (3,092,993)
NET ASSETS:
Beginning of period..................... 94,965,482 407,101,655 291,281,945 187,400,170 66,193,746
------------ ------------ ------------ ------------ -----------
End of period (1)....................... $ 80,449,655 $404,627,502 $301,666,566 $181,880,824 $63,100,753
- -------- ============ ============ ============ ============ ===========
(1) Including distributions in excess of
net investment income.................. -- -- -- -- $ (1,555)
============ ============ ============ ============ ===========
Year Ended March 31, 2003
Net investment income.................... $ 3,287,309 $ 12,324,648 $ 3,701,564 $ 5,630,120 $ 2,096,862
Net realized gain on security
transactions............................ 1,512,685 11,353,856 1,826 5,908,606 23
Change in unrealized appreciation/
depreciation of investments during the
year.................................... 4,049,677 11,066,477 679,319 4,637,865 1,810,327
------------ ------------ ------------ ------------ -----------
Net increase in net assets resulting from
operations.............................. 8,849,671 34,744,981 4,382,709 16,176,591 3,907,212
Distributions to shareholders:
From net investment income.............. (3,310,944) (12,412,447) (3,712,472) (5,629,628) (2,115,423)
From net realized gain on
investments............................ -- (2,583,052) -- (2,636,726) (11,988)
------------ ------------ ------------ ------------ -----------
Total distributions to
shareholders....................... (3,310,944) (14,995,499) (3,712,472) (8,266,354) (2,127,411)
Increase (decrease) in net assets from
fund share transactions (Note 5)........ (25,750,812) 17,333,876 124,921,748 882,030 6,184,103
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets.... (20,212,085) 37,083,358 125,591,985 8,792,267 7,963,904
NET ASSETS:
Beginning of year....................... 115,177,567 370,018,297 165,689,960 178,607,903 58,229,842
------------ ------------ ------------ ------------ -----------
End of year (2)......................... $ 94,965,482 $407,101,655 $291,281,945 $187,400,170 $66,193,746
- -------- ============ ============ ============ ============ ===========
(2) Including distributions in excess of
net investment income.................. -- -- -- -- $ (1,611)
============ ============ ============ ============ ===========
See Notes to Financial Statements.
3
Excelsior Tax-Exempt Funds, Inc.
Financial Highlights -- Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
Net Asset Net Realized Dividends Distributions
Value, Net and Unrealized Total From From Net From Net
Beginning Investment Gain (Loss) on Investment Investment Realized Gain
of Period Income Investments Operations Income on Investments
--------- ---------- -------------- ---------- ---------- --------------
LONG-TERM TAX-EXEMPT FUND -- (2/5/86*)
Year Ended March 31,
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)
2001............................... 8.99 0.40 0.63 1.03 (0.40) --
2002............................... 9.62 0.36 (0.14) 0.22 (0.36) --
2003............................... 9.48 0.29 0.47 0.76 (0.29) --
Six Months Ended September 30, 2003 9.95 0.14 -- 0.14 (0.14) --
INTERMEDIATE-TERM TAX-EXEMPT FUND -- (12/3/85*)
Year Ended March 31,
1999............................... $ 9.48 $0.38 $ 0.14 $ 0.52 $(0.38) $(0.13)
2000............................... 9.49 0.37 (0.43) (0.06) (0.37) --
2001............................... 9.06 0.38 0.51 0.89 (0.38) --
2002............................... 9.57 0.35 (0.12) 0.23 (0.35) (0.06)
2003............................... 9.39 0.31 0.55 0.86 (0.31) (0.06)
Six Months Ended September 30, 2003 9.88 0.13 0.10 0.23 (0.13) --
SHORT-TERM TAX-EXEMPT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1999............................... $ 7.11 $0.26 $ 0.06 $ 0.32 $(0.26) --
2000............................... 7.17 0.25 (0.15) 0.10 (0.25) --
2001............................... 7.02 0.28 0.13 0.41 (0.28) --
2002............................... 7.15 0.20 0.03 0.23 (0.20) $(0.01)
2003............................... 7.17 0.12 0.03 0.15 (0.12) --
Six Months Ended September 30, 2003 7.20 0.04 0.03 0.07 (0.04) --
NEW YORK INTERMEDIATE-TERM TAX-EXEMPT FUND -- (5/31/90*)
Year Ended March 31,
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)
2001............................... 8.34 0.33 0.49 0.82 (0.33) --
2002............................... 8.83 0.31 (0.09) 0.22 (0.31) --
2003............................... 8.74 0.27 0.51 0.78 (0.27) (0.13)
Six Months Ended September 30, 2003 9.12 0.11 0.10 0.21 (0.11) --
CALIFORNIA TAX-EXEMPT INCOME FUND -- (10/1/96*)
Year Ended March 31,
1999............................... $ 7.18 $0.27 $ 0.07 $ 0.34 $(0.27) --
2000............................... 7.25 0.26 (0.18) 0.08 (0.26) --
2001............................... 7.07 0.26 0.23 0.49 (0.26) --
2002............................... 7.30 0.26 (0.02) 0.24 (0.26) $(0.01)
2003............................... 7.27 0.25 0.22 0.47 (0.25) --(2)
Six Months Ended September 30, 2003 7.49 0.12 0.04 0.16 (0.12) --
* Commencement of Operations
(1)Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
(2)Amount represents less than $0.01 per share.
(3)Not Annualized
(4)Annualized
See Notes to Financial Statements.
4
Ratio of Ratio of
Net Gross
Operating Operating Ratio of
Net Asset Net Expenses Expenses Net
Value, Assets, to to Investment
End End of Average Average Income to Portfolio Fee
Total of Total Period Net Net Average Turnover Waivers
Distributions Period Return (000's) Assets Assets(1) Net Assets Rate (Note 2)
- ------------- --------- ------ -------- --------- --------- ---------- --------- --------
$(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
(0.40) 9.62 11.69% 135,515 0.77% 0.83% 4.33% 60% 0.01
(0.36) 9.48 2.29% 115,178 0.72% 0.82% 3.66% 35% 0.01
(0.29) 9.95 8.12% 94,965 0.70% 0.77% 2.99% 51% 0.01
(0.14) 9.95 1.38%(3) 80,450 0.71%(4) 0.78%(4) 2.71%(4) 101% --(2)
$(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
(0.38) 9.57 10.07% 341,170 0.57% 0.64% 4.17% 84% 0.01
(0.41) 9.39 2.41% 370,018 0.52% 0.64% 3.67% 67% 0.01
(0.37) 9.88 9.31% 407,102 0.51% 0.59% 3.15% 48% 0.01
(0.13) 9.98 2.34%(3) 404,628 0.55%(4) 0.62%(4) 2.61%(4) 23% --(2)
$(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% --
(0.28) 7.15 5.94% 83,336 0.58% 0.65% 3.97% 42% --
(0.21) 7.17 3.20% 165,690 0.48% 0.55% 2.60% 111% $0.01
(0.12) 7.20 2.04% 291,282 0.46% 0.58% 1.57% 31% 0.01
(0.04) 7.23 0.97%(3) 301,667 0.46%(4) 0.58%(4) 1.09%(4) 37% --(2)
$(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% --
(0.33) 8.83 10.02% 144,421 0.73% 0.75% 3.90% 39% --
(0.31) 8.74 2.54% 178,608 0.67% 0.72% 3.53% 45% --
(0.40) 9.12 8.96% 187,400 0.67% 0.72% 2.96% 43% --(2)
(0.11) 9.22 2.36%(3) 181,881 0.66%(4) 0.71%(4) 2.48%(4) 26% --(2)
$(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
(0.26) 7.30 7.09% 54,605 0.50% 0.97% 3.69% 6% 0.03
(0.27) 7.27 3.32% 58,230 0.50% 0.87% 3.55% 4% 0.03
(0.25) 7.49 6.59% 66,194 0.46% 0.50% 3.36% 9% --(2)
(0.12) 7.53 2.14%(3) 63,101 0.50%(4) 0.87%(4) 3.17%(4) 9% 0.01
See Notes to Financial Statements.
5
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Long-Term Tax-Exempt Fund
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- 84.58%
$4,000,000 Connecticut State Health & Education, Connecticut
State University Revenue Bonds, Series E,
(FGIC), 5.000%, 11/01/33......................... $ 4,064,040
4,000,000 District of Columbia Water & Sewer Revenue Bonds,
(FGIC), 5.000%, 10/01/33......................... 4,056,560
3,500,000 +East Baton Rouge, Louisiana, Pollution Control
Authority Revenue Bonds, Exxon Project,
1.100%, 03/01/22................................. 3,500,000
4,000,000 Florida State Jea St. Johns River Power Park
System Revenue Bonds, 17th Series,
5.250%, 10/01/13................................. 4,460,840
4,000,000 Houston, Texas, Water & Sewer Revenue Bonds,
Series A, (FSA), 5.000%, 12/01/30................ 4,028,960
4,000,000 Los Angeles, California, Department of Water &
Power Revenue Bonds, Series A, (FGIC),
5.000%, 07/01/36................................. 4,033,520
3,500,000 Marshall County, West Virginia, Pollution Control
Authority, Mountaineer Carbon Revenue
Bonds, 1.220%, 12/01/20.......................... 3,500,000
4,000,000 New York State Metropolitan Transportation
Authority Revenue Bonds, Series A,
5.750%, 07/01/31................................. 4,434,120
4,000,000 Orange County, California, Sanitation District
Certificates of Participation, (FGIC),
5.000%, 02/01/33................................. 4,039,960
4,000,000 Orlando & Orange County Expressway Authority
Revenue Bonds, Series B, (AMBAC),
5.000%, 07/01/35................................. 4,052,080
4,000,000 Pennsylvania State General Obligation Bonds, 2nd
Series, (FSA), 5.500%, 05/01/16.................. 4,574,560
3,500,000 Pennsylvania State University Revenue Bonds,
Series A, 1.040%, 04/01/31....................... 3,500,000
4,000,000 Seattle, Washington, Municipal Light & Power
Revenue Bonds, (FSA), 5.000%, 11/01/28........... 4,040,880
4,000,000 Triborough Bridge & Tunnel Authority Revenue
Bonds, Series A, 5.000%, 01/01/27................ 4,040,080
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$4,000,000 University of California Revenue Bonds,
Multi-Purpose Projects, Series Q, (FSA),
5.000%, 09/01/34................................. $ 4,040,320
3,500,000 +University of Missouri Revenue Bonds, System
Facilities, Series A, 1.220%, 11/01/31........... 3,500,000
4,000,000 Washington State, General Obligation Bonds,
Series C, (FSA), 5.250%, 01/01/26................ 4,180,160
-----------
68,046,080
-----------
TAX-EXEMPT SECURITY -- BACKED BY
LETTERS OF CREDIT -- 4.35%
BAYERISCHE LANDESBANK
---------------------
3,500,000 +Baltimore, Maryland, Industrial Development
Authority, Capital Acquisition Revenue Bonds,
1.100%, 08/01/16................................. 3,500,000
-----------
Shares
- ----------
OTHER INVESTMENTS -- 1.73%
1 @Dreyfus Tax Exempt Cash Fund..................... 1
1,392,499 @Provident Tax-Exempt Municipal Fund.............. 1,392,499
-----------
1,392,500
-----------
TOTAL INVESTMENTS (Cost $72,089,432*)............. 90.66% $72,938,580
OTHER ASSETS & LIABILITIES (NET).................. 9.34 7,511,075
------ -----------
NET ASSETS........................................ 100.00% $80,449,655
====== ===========
- --------
* For Federal tax purposes, the tax basis of investments aggregates $72,117,336.
@ Registered Investment Company
+ 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
Notes:
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 September 30, 2003, approximately, 15%, 11%, 11%, 10% and 10% of the net
assets are invested in California, Florida, New York, Pennsylvania and
Washington 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.
6
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Intermediate-Term Tax-Exempt Fund
Principal Value
Amount (Note 1)
- ----------- ------------
TAX-EXEMPT SECURITIES -- 86.46%
$10,000,000 +Alaska State Housing Finance Authority, Capital
Project Revenue Bonds, Series C,
(MBIA), 1.080%, 07/01/22......................... $ 10,000,000
10,000,000 Colorado Springs, Colorado, Utilities Revenue
Bonds, Series A, 5.250%, 11/15/10................ 11,487,100
10,000,000 Connecticut State Special Tax Obligation Revenue
Bonds, Transportation Infrastructure, Series A,
(FGIC), 5.500%, 10/01/10......................... 11,614,700
10,000,000 Cook County, Illinois, General Obligation Bonds,
Series D, (AMBAC), 5.250%, 11/15/11.............. 11,385,900
10,000,000 Dallas, Texas, Water Works & Sewer System Revenue
Bonds, (FSA), 5.375%, 10/01/12................... 11,436,100
10,000,000 Detroit, Michigan, Sewer Disposal Revenue Bonds,
Series A, (FSA), 5.000%, 07/01/14................ 11,063,500
15,100,000 +East Baton Rouge, Louisiana, Pollution Control
Authority Revenue Bonds, Exxon Project,
1.100%, 03/01/22................................. 15,100,000
10,000,000 Florida State Division Board Finance Department,
General Services Revenue Bonds, Series A,
Department of Environmental Protection-
Preservation 2000, (FSA), 6.000%, 07/01/13....... 11,984,500
10,000,000 Florida State Jea St. Johns River Power Park
System Revenue Bonds, 17th Series,
5.250%, 10/01/13................................. 11,152,100
10,000,000 Georgia State General Obligation Bonds, Series C,
6.500%, 04/01/10................................. 12,134,900
Principal Value
Amount (Note 1)
- ----------- ------------
TAX-EXEMPT SECURITIES -- (continued)
$10,000,000 +Georgia State Municipal Electric Authority
Revenue Bonds, Project One, Series B, (FSA),
1.050%, 01/01/16................................. $ 10,000,000
10,000,000 Hawaii State General Obligation Bonds, Series CY,
(FSA), 5.500%, 02/01/12.......................... 11,464,600
15,000,000 +Hennepin County, Minnesota, General Obligation
Bonds, Series B, 0.950%, 12/01/20................ 15,000,000
10,000,000 Illinois State General Obligation Bonds, First
Series, (MBIA), 5.500%, 08/01/14................. 11,574,000
10,000,000 Illinois State Sales Tax Revenue Bonds, First
Series, (FSA), 5.250%, 06/15/13.................. 11,305,300
14,800,000 Iowa State, Finance Authority, Multifamily
Housing Village Court Association Revenue Bonds,
Series B, 1.150%, 11/01/15....................... 14,800,000
10,000,000 Jefferson County, Colorado, School District
General Obligation Bonds, (MBIA),
6.500%, 12/15/11................................. 12,338,600
10,000,000 +Kansas State Department of Transportation
Highway Revenue Bonds, Series C-1, 1.050%,
09/01/19......................................... 10,000,000
10,000,000 Los Angeles, California, Department of Water &
Power Revenue Bonds, Series B, (MBIA), 5.000%,
07/01/13......................................... 11,141,500
10,000,000 +Loudon County, Virginia, Industrial Development
Authority Revenue Bonds, Howard Hughes Medical,
Series A, 1.150%, 02/15/38....................... 10,000,000
10,000,000 Maryland State General Obligation Bonds, State &
Local Facilities Loan, 1st Series, 5.250%,
03/01/13......................................... 11,453,000
See Notes to Financial Statements.
7
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Intermediate-Term Tax-Exempt Fund -- (continued)
Principal Value
Amount (Note 1)
- ----------- ------------
TAX-EXEMPT SECURITIES -- (continued)
$10,000,000 Michigan State Building Authority Revenue Bonds,
Facilities Program, Series I, (FSA), 5.250%,
10/15/14......................................... $ 11,298,100
10,000,000 New Jersey State General Obligation Bonds, Series
D, 6.000%, 02/15/11.............................. 11,781,100
20,000,000 New Jersey State Transportation Trust Fund
Authority, Transportation Systems Revenue Bonds,
Series C, (FSA), 5.500%, 12/15/10................ 23,243,400
10,000,000 New York State Dormitory Authority, State
University Educational Facilities Revenue Bonds,
Series B, (FSA), 5.250%, 05/15/11................ 11,353,900
10,000,000 Pennsylvania State General Obligation Bonds,
5.500%, 02/01/13................................. 11,568,200
10,000,000 Pennsylvania State General Obligations Bonds,
Second Series, (FGIC), 5.250%, 10/01/14.......... 11,474,500
10,000,000 South Carolina State Public Services Authority
Revenue Bonds, Series A, (FSA), 5.500%, 01/01/11. 11,504,100
10,000,000 Texas State, A & M University Revenue Bonds,
Financing Systems, Series B, 5.250%, 05/15/14.... 11,201,300
------------
349,860,400
------------
TAX-EXEMPT SECURITY -- BACKED BY
LETTERS OF CREDIT -- 2.47%
PNC BANK N.A.
-------------
10,000,000 +Pennsylvania State, Higher Educational
Facilities Authority, Association of Independent
Colleges Revenue Bonds, Series E-3,
1.020%, 11/01/14................................. 10,000,000
------------
TAX-EXEMPT SECURITIES -- ESCROWED
IN U.S. GOVERNMENTS -- 8.48%
10,000,000 Chicago, Illinois, Metropolitan Water Reclamation
District Authority General Obligation Bonds,
Series A, 5.250%, 12/01/10 (Escrowed to Maturity) 11,509,400
Principal Value
Amount (Note 1)
- ----------- ------------
TAX-EXEMPT SECURITIES -- ESCROWED
IN U.S. GOVERNMENTS -- (continued)
$10,000,000 Jefferson County, Alabama, Sewer Revenue Bonds,
Series D, (FGIC), 5.000%, 02/01/42 (Prerefunded
08/01/12 @100)................................... $ 11,308,600
10,000,000 New Jersey State Transportation Trust Fund
Authority, Transportation Systems Revenue Bonds,
Series A, 5.250%, 06/15/11 (Escrowed to Maturity) 11,484,400
------------
34,302,400
------------
Shares
- -----------
OTHER INVESTMENTS -- 1.43%
3,448,831 @Dreyfus Tax Exempt Cash Fund..................... 3,448,831
2,325,919 @Provident Tax-Exempt Municipal Fund.............. 2,325,919
------------
5,774,750
------------
TOTAL INVESTMENTS (Cost $384,397,449*)............ 98.84% $399,937,550
OTHER ASSETS & LIABILITIES (NET).................. 1.16 4,689,952
------ ------------
NET ASSETS........................................ 100.00% $404,627,502
====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ 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.
Notes:
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 September 30, 2003, approximately, 11% 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, on which the Fund relies.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 2003, approximately, 11% and 11% of the net assets are
invested in Illinois and New Jersey municipal securities, respectively.
Economic changes affecting the state and certain of its public bodies and
municipalities may affect the ability of issuers to pay the required principal
and interest payments of the municipal securities.
See Notes to Financial Statements.
8
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Short-Term Tax-Exempt Securities Fund
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT SECURITIES -- 86.80%
$ 5,000,000 Alabama State General Obligation Bonds, Series
A, 5.500%, 10/01/03.............................. $ 5,000,000
7,000,000 Chicago, Illinois, General Obligation Bonds,
Series A, (AMBAC), 5.000%, 01/01/04.............. 7,068,950
5,000,000 Colorado Springs, Colorado Utilities Revenue
Bonds, Series A, 5.000%, 11/15/03................ 5,023,450
5,000,000 Connecticut State General Obligation Bonds,
Series F, 5.000%, 11/15/03....................... 5,023,550
5,000,000 Connecticut State Special Tax Obligation Revenue
Bonds, Transportation Infrastructure, Series
B, 5.000%, 10/01/03.............................. 5,000,000
6,000,000 Delaware River Port Authority Revenue Bonds of
Pennsylvania & New Jersey, Series B,
(AMBAC), 5.250%, 01/01/04........................ 6,062,760
10,000,000 +Detroit, Michigan, Water Supply System Revenue
Bonds, Series C, (FGIC), 1.070%, 07/01/29........ 10,000,000
14,000,000 +Hurley, New Mexico, Pollution Control Authority
Revenue Bonds, Kennecott Santa Fe, 1.200%,
12/01/15......................................... 14,000,000
10,000,000 Maryland State General Obligation Bonds, State &
Local Facilities Loan, 2nd Series, 4.000%,
02/01/04......................................... 10,100,100
30,000,000 Massachusetts State General Obligation Bonds,
Series B, 4.000%, 08/01/06....................... 32,146,200
7,000,000 +Minneapolis, Minnesota, General Obligation
Bonds, 0.950%, 12/01/18.......................... 7,000,000
5,000,000 Mississippi State General Obligation Bonds,
Gaming Counties Highway Improvements Project,
Series B, 4.500%, 10/01/03....................... 5,000,000
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$5,000,000 Nassau County, New York, Interim Finance
Authority Revenue Bonds, Series B, 4.000%,
11/15/05......................................... $ 5,290,600
5,000,000 New Jersey State General Obligation Bonds, Series
D, 5.500%, 02/15/04.............................. 5,082,650
12,000,000 New Jersey State, Economic Development Authority
Revenue Bonds, School Facilities, Series
F, 5.000%, 06/15/07.............................. 13,313,640
10,000,000 New York City, New York, Mass Transit Authority,
Series A, 0.900%, 11/10/03....................... 9,995,000
5,000,000 Ohio State Highway Capital Improvements Authority
General Obligation Bonds, Series F, 5.000%,
05/01/04......................................... 5,115,200
12,300,000 +Orlando, Florida, Utilities Commission Water &
Electric Revenue Bonds, Series A, 1.050%,
10/01/17......................................... 12,300,000
12,000,000 Seattle, Washington, Municipal Light & Power
Revenue Bonds, (FSA), 5.000%, 11/01/06........... 13,289,160
5,000,000 Snohomish County, Washington, Public Utility
District No. 1 Electric Revenue Bonds, 5.000%,
12/01/05......................................... 5,365,100
11,500,000 Tennessee State Commercial Paper, 0.900%, 10/15/03 11,500,000
12,000,000 Texas State Public Finance Authority General
Obligation Bonds, Series A, 5.250%, 10/01/07..... 13,527,960
33,000,000 Texas State Public Finance Authority Revenue
Bonds, Series A, (FSA), 5.000%, 12/15/07......... 37,124,340
10,000,000 Topeka, Kansas, General Obligation Bonds, Series
A, 4.000%, 12/01/03.............................. 10,050,300
See Notes to Financial Statements.
9
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
Short-Term Tax-Exempt Securities Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- ------------
TAX-EXEMPT SECURITIES -- (continued)
$8,000,000 University of Maryland Revenue Bonds, Auxiliary
Facility & Tuition, Series A, 5.000%, 04/01/05... $ 8,457,520
------------
261,836,480
------------
TAX-EXEMPT SECURITY -- BACKED BY LETTERS OF
CREDIT -- 3.31%
BANK ONE N.A.
-------------
10,000,000 Indiana State Highway Transportation Finance
Authority Bond Anticipation Notes, 1.500%,
10/03/03......................................... 10,000,500
------------
TAX-EXEMPT SECURITIES -- ESCROWED IN
U.S. GOVERNMENTS -- 10.41%
5,000,000 Atlanta, Georgia, Water & Sewer Revenue
Bonds, 5.000%,
01/01/09 (Prerefunded 01/01/04 @ 102)............ 5,149,650
5,000,000 Connecticut State General Obligation Bonds,
Series A, 5.650%,
03/15/12 (Prerefunded 03/15/04 @ 101.5).......... 5,181,100
5,000,000 Georgia State Municipal Electric Authority
Revenue Bonds, Project One, Sub-Series A,
(AMBAC), 6.250%,
01/01/14 (Prerefunded 01/01/04 @ 102)............ 5,164,850
5,000,000 Harris County, Texas, Toll Road Revenue Bonds,
Series A, (MBIA), 6.375%,
08/15/24 (Prerefunded 08/15/04 @ 102)............ 5,334,950
10,000,000 New Jersey State Economic Development, Authority
Market Transition Facilities Revenue Bonds,
Series A, (MBIA), 5.875%,
07/01/11 (Prerefunded 07/01/04 @ 102)............ 10,566,800
------------
31,397,350
------------
Value
Shares (Note 1)
- --------- ------------
OTHER INVESTMENTS -- 1.86%
1,234,032 @Dreyfus Tax Exempt Cash Fund..................... $ 1,234,032
4,368,076 @Provident Tax-Exempt Municipal Fund.............. 4,368,076
------------
5,602,108
------------
TOTAL INVESTMENTS (Cost $306,583,620*)............ 102.38% $308,836,438
OTHER ASSETS & LIABILITIES (NET).................. (2.38) (7,169,872)
------ ------------
NET ASSETS........................................ 100.00% $301,666,566
====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ 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.
Notes:
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 September 30, 2003, approximately, 14% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, on which the Fund relies.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 2003, approximately, 11%, 10% and 19% of the net assets are
invested in Massachusetts, New Jersey 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.
10
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
New York Intermediate-Term Tax-Exempt Fund
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT SECURITIES -- 90.52%
$ 8,095,000 +Babylon, New York, General Obligation Bonds,
(AMBAC), 1.000%, 09/01/17........................ $ 8,095,000
Long Island Power Authority, New York Electric
Authority Revenue Bonds, Series A,
10,000,000 (AMBAC), 5.500%, 12/01/09........................ 11,640,800
10,000,000 5.500%, 12/01/11................................. 11,616,600
5,000,000 Nassau County, New York, Interim Finance
Authority Revenue Bonds, Series A,
(MBIA), 5.750%, 11/15/11......................... 5,812,450
15,000,000 Nassau County, New York, Interim Finance
Authority Revenue Bonds, Series B,
(AMBAC), 5.000%, 11/15/12........................ 16,817,400
6,000,000 +New York City, New York, Multi- Family Housing
Development Corporation Authority, Parkgate
Development Project, Series A, (FNMA), 0.970%,
10/15/28......................................... 6,000,000
10,000,000 New York City, New York, Transitional Finance
Authority Revenue Bonds, Series A,
5.250%, 11/01/10................................. 11,411,300
10,000,000 New York State Dormitory Authority Revenue Bonds,
Series B, 5.250%, 11/15/23....................... 10,971,800
5,000,000 New York State Dormitory Authority, New York
University Revenue Bonds, Series A,
(AMBAC), 5.750%, 07/01/12........................ 5,865,550
7,435,000 +New York State Dormitory Authority, Public
Library Project, Revenue Bonds, Series A,
(MBIA), 1.050%, 07/01/28......................... 7,435,000
7,000,000 New York State Dormitory Authority, State
Personal Income Tax Revenue Bonds, Series
A, 5.500%, 03/15/12.............................. 7,983,360
Principal Value
Amount (Note 1)
- ---------- ------------
TAX-EXEMPT SECURITIES -- (continued)
$5,000,000 New York State Local Government Assistance
Authority Revenue Bonds, Series A-1, (FSA),
5.000%, 04/01/12................................. $ 5,558,650
7,000,000 New York State Metropolitan Transportation
Authority Revenue Bonds, Series A,
(AMBAC), 5.500%, 11/15/15........................ 7,938,210
5,000,000 New York State Thruway Authority Revenue
Bonds, Series A, (MBIA), 5.000%, 04/01/11........ 5,584,900
10,000,000 New York State Thruway Authority Service
Construction Revenue Bonds, Local Highway &
Bridge Project, 5.500%, 04/01/14................. 11,185,800
5,000,000 New York State Urban Development Revenue Bonds,
Correctional Facilities, Series A, 6.500%,
01/01/10......................................... 5,951,850
2,290,000 +Port Authority of New York & New Jersey Special
Obligation Revenue Bonds, Versatile Structure
Obligations, Series 5, 1.200%, 08/01/24.......... 2,290,000
5,000,000 Puerto Rico Electric Power Authority Revenue
Bonds, Series BB, (MBIA), 6.000%, 07/01/11....... 5,983,650
8,000,000 +Suffolk County, New York, Water Authority, Bond
Anticipation Notes, 1.050%, 01/01/08............. 8,000,000
8,500,000 West Chester County, New York, Health Revenue
Bonds, Series C-1, 0.850%, 11/01/19.............. 8,500,000
------------
164,642,320
------------
See Notes to Financial Statements.
11
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
New York Intermediate-Term Tax-Exempt Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- ----------
TAX-EXEMPT SECURITY -- ESCROWED IN U.S.
GOVERNMENTS -- 4.49%
$7,000,000 New York State Metropolitan Transportation
Authority Revenue Bonds, Service Contract,
Series 8,
(FSA), 5.375%, 07/01/21, (Prerefunded 07/01/13 @ 100) $8,163,470
----------
Shares
- ----------
OTHER INVESTMENTS -- 2.28%
1 @Dreyfus New York Tax Exempt Cash Fund................ 1
4,139,544 @Provident Institutional New York Money Fund.......... 4,139,544
----------
4,139,545
----------
TOTAL INVESTMENTS (Cost $171,479,308*)............ 97.29% $176,945,335
OTHER ASSETS & LIABILITIES (NET).................. 2.71 4,935,489
------ ------------
NET ASSETS........................................ 100.00% $181,880,824
====== ============
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
+ Variable rate demand bonds and notes are payable upon not more than seven
business days notice.
AMBAC--American Municipal Bond Assurance Corp.
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance
MBIA--Municipal Bond Insurance Assoc.
Notes:
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 September 30, 2003, approximately, 4% 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, on which the Fund relies.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 2003, approximately, 92% of the net assets are invested in
New York municipal securities. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers to pay the required principal and interest payments of the municipal
securities.
See Notes to Financial Statements.
12
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
California Tax-Exempt Income Fund
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- 89.12%
$ 545,000 Alameda-Contra Costa, California, Certificates of
Participation, Transportation District,
(AMBAC), 4.000%, 08/01/12........................ $ 565,388
595,000 Berkeley, California, Unified School District,
General Obligation Bonds, (FGIC),
4.375%, 08/01/06................................. 645,974
35,000 California Educational Facilities Authority,
Santa Clara University Revenue Bonds,
(MBIA), 4.900%, 09/01/06......................... 38,609
750,000 California Educational Facilities Authority,
Stanford University Revenue Bonds, Series
R, 5.000%, 11/01/11.............................. 848,257
275,000 California State Department of Transportation,
Certificates of Participation, Series A, (MBIA),
4.400%, 03/01/04................................. 278,847
1,000,000 California State Department of Water Resources
Central Valley Project Revenue Bonds, Series
T, 5.000%, 12/01/11.............................. 1,111,110
500,000 California State Department of Water Resources
Central Valley Project Revenue Bonds, Series
U, 4.000%, 12/01/06.............................. 541,185
750,000 California State Infrastructure & Economic
Revenue Bonds, Bay Area Toll Bridges, Series A,
(FSA), 5.000%, 07/01/11.......................... 844,657
250,000 California State Public Works Board, Lease
Revenue Bonds, Department of Corrections, Series
D, (MBIA), 4.850%, 09/01/08...................... 279,082
700,000 California State Public Works Board, Lease
Revenue Bonds, Department of Health Services,
Series A, 4.350%, 11/01/03....................... 701,526
750,000 California State, General Obligation
Bonds, 6.250%, 04/01/08.......................... 864,720
Principal Value
Amount (Note 1)
- ---------- -------------
TAX-EXEMPT SECURITIES -- (continued)
$ 750,000 California State, General Obligation Bonds,
(MBIA), 7.500%, 10/01/07......................... $ 908,565
315,000 Central Coast, Water Authority, California,
Revenue Bonds, State Water Project, Series A,
(AMBAC), 6.000%, 10/01/05........................ 345,168
Central Valley School District Financing
Authority, California, School District General
Obligation Bonds, Series A, (MBIA), 6.150%,
1,000,000 08/01/09......................................... 1,196,760
550,000 5.850%, 08/01/04................................. 571,928
1,100,000 Cerritos, California, Public Financing Authority
Tax Allocation Bonds, Redevelopment Project,
Series A, (AMBAC), 3.000%, 11/01/10.............. 1,108,382
545,000 Chino Basin, California, Regional Financing
Authority Municipal Water District Sewer System
Project, (AMBAC), 7.000%, 08/01/05............... 602,699
350,000 Contra Costa County, California, Certificates of
Participation, Capital Projects, (AMBAC),
4.625%, 02/01/07................................. 384,170
Contra Costa, California, Transportation
Authority Sales Tax Revenue Bonds, Series A,
1,000,000 (FGIC), 6.000%, 03/01/04......................... 1,020,530
550,000 6.000%, 03/01/07................................. 629,029
1,000,000 6.000%, 03/01/08................................. 1,168,060
750,000 East Bay, California, Regional Park District
Authority General Obligation Bonds, 5.000%,
09/01/07......................................... 841,747
250,000 Escondido, California, Unified School District
General Obligation Bonds, Series A,
(FGIC), 5.000%, 09/01/08......................... 282,195
See Notes to Financial Statements.
13
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
California Tax-Exempt Income Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$1,150,000 Fairfield-Suisun, Unified School District,
California, General Obligation Bonds, (MBIA),
4.250%, 08/01/10................................. $ 1,246,991
155,000 Fresno, California, Sewer Revenue Bonds, Series
A-1, (AMBAC), 4.800%, 09/01/06................... 170,540
750,000 Glendale, California, Unified School District
General Obligation Bonds, Series D,
(MBIA), 4.500%, 09/01/13......................... 796,087
745,000 Los Altos, California, School District General
Obligation Bonds, Series A, (FSA), 5.000%,
08/01/06......................................... 821,713
Los Angeles County, California, Public Works
Financing Authority, Revenue Bonds, Regional
Park & Open Space District, Series A, 5.250%,
300,000 10/01/05......................................... 324,309
655,000 5.000%, 10/01/04................................. 680,859
500,000 Los Angeles, California, Department of Airports
Revenue Bonds, Series A, (FGIC), 6.000%, 05/15/05 538,890
150,000 Los Angeles, California, Municipal Improvement
Revenue Bonds, Series A, (FSA), 4.875%, 02/01/06. 162,687
Los Angeles, California, Municipal Improvement
Revenue Bonds, Series B, (AMBAC), 4.600%,
750,000 02/01/06......................................... 808,710
400,000 4.300%, 02/01/04................................. 404,328
1,000,000 Los Angeles, California, Sanitation Equipment
Revenue Bonds, Series A, (FSA), 5.000%, 02/01/10. 1,129,200
400,000 Los Angeles, California, State Building Authority
Revenue Bonds, State of California Department of
General Services, Series A, 5.600%, 05/01/04..... 408,996
Principal Value
Amount (Note 1)
- ----------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$ 1,000,000 Los Angeles, California, Wastewater System
Revenue Bonds, Series A, (FGIC), 5.500%, 06/01/10 $ 1,161,020
1,120,000 Marin, California, Municipal Water District
Revenue Bonds, (AMBAC), 4.000%, 07/01/10......... 1,196,350
700,000 Metropolitan Water District of Southern
California, General Obligation Bonds, 4.250%,
03/01/08......................................... 767,725
1,000,000 Metropolitan Water District of Southern
California, General Obligation Bonds, Series
A, 3.000%, 03/01/08.............................. 1,044,160
960,000 Metropolitan Water District of Southern
California, Revenue Bonds, 5.750%, 07/01/09...... 1,125,946
200,000 Metropolitan Water District of Southern
California, Revenue Bonds, Series B,
(MBIA), 5.250%, 07/01/07......................... 223,926
1,000,000 Modesto, California, Irrigation District
Financing Authority Certificates of
Participation, Series A, (MBIA), 4.000%, 07/01/09 1,079,770
975,000 Modesto, California, Irrigation District
Financing Authority Revenue Bonds, Series A,
(MBIA), 5.450%, 10/01/07......................... 1,099,839
1,000,000 Moulton-Niguel, California, Water District
General Obligation Bonds, (AMBAC), 4.000%,
09/01/10......................................... 1,069,710
500,000 Napa County, California, Flood Protection &
Watershed Improvement Revenue Bonds, Series A,
(FGIC), 5.000%, 06/15/13......................... 543,880
250,000 Northern California Power Agency, Public Power
Revenue Bonds, Geothermal Project, Series A,
(AMBAC), 5.500%, 07/01/05........................ 269,268
See Notes to Financial Statements.
14
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
California Tax-Exempt Income Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$ 125,000 Northern California Power Agency, Public Power
Revenue Bonds, Series A, (AMBAC), 5.600%,
07/01/06......................................... $ 139,514
250,000 Novato, California, General Obligation Bonds,
Series A, (MBIA), 6.250%, 08/01/07............... 289,178
1,100,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 1st Senior,
(AMBAC), 6.000%, 02/15/08........................ 1,283,073
1,000,000 Orange County, California, Local Transportation
Authority Sales Tax Revenue Bonds, 2nd Senior,
(FGIC), 6.000%, 02/15/07......................... 1,141,860
1,000,000 Oxnard, California, Wastewater District Financing
Authority Revenue Bonds, (FGIC), 3.500%, 06/01/09 1,057,880
1,000,000 Rancho, California, Water District Financing
Authority Revenue Bonds, Series A,
(FSA), 5.500%, 08/01/10.......................... 1,161,300
250,000 Sacramento County, California, Certificates of
Participation, Public Facilities Project,
(MBIA), 4.875%, 02/01/05......................... 262,470
255,000 Sacramento, California, City Financing Authority
Lease Revenue Bonds, Series A, (AMBAC), 5.050%,
11/01/06......................................... 283,920
300,000 San Bernardino County, California, Certificates
of Participation, Medical Center Financing
Project, (MBIA), 5.500%, 08/01/07................ 340,872
255,000 San Bernardino County, California, Transportation
Authority Sales Tax Revenue Bonds, Series A,
(MBIA), 4.625%, 03/01/05......................... 267,623
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
$1,000,000 San Diego County, California, Certificates of
Participation, (AMBAC), 5.000%, 11/01/11......... $ 1,131,010
250,000 San Diego, California, General Obligation Bonds,
Public Safety Communication Project, 6.500%,
07/15/08......................................... 300,433
175,000 San Diego, California, Open Space Park General
Obligation Bonds, 5.500%, 01/01/04............... 176,897
1,000,000 San Diego, California, Public Facilities
Financing Authority Sewer Revenue Bonds,
(MBIA), 5.000%, 08/01/11......................... 1,127,410
300,000 San Diego, California, Public Facilities
Financing Authority Sewer Revenue Bonds, Series
B, (FGIC), 5.000%, 05/15/08...................... 335,151
875,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds, 5.500%,
07/01/07......................................... 991,699
1,500,000 San Francisco, California, City & County Airports
Commission Airport Revenue Bonds, 2nd Series,
Issue 20, (MBIA), 5.000%, 05/01/06............... 1,643,040
1,000,000 San Francisco, California, City & County General
Obligation Bonds, (FSA), 5.000%, 06/15/08........ 1,133,910
680,000 San Francisco, California, City & County General
Obligation Bonds, Series 1, (FGIC), 4.500%,
06/15/05......................................... 719,651
1,020,000 San Francisco, California, City & County Parking
Authority Revenue Bonds, Parking Meter Project,
Series 1, (FGIC), 4.000%, 06/01/06............... 1,093,736
325,000 San Francisco, California, City & County Public
Utilities Commission Water Revenue Bonds, Series
A, 6.500%, 11/01/04.............................. 342,664
See Notes to Financial Statements.
15
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
California Tax-Exempt Income Fund -- (continued)
Principal Value
Amount (Note 1)
- ---------- -----------
TAX-EXEMPT SECURITIES -- (continued)
San Jose, California, Redevelopment Agency Tax
Allocation Bonds, Merged Area Redevelopment
$ 500,000 Project, (AMBAC), 5.000%, 08/01/07............... $ 559,900
625,000 4.750%, 08/01/05................................. 666,394
300,000 San Mateo County, California, Joint Powers
Financing Authority Revenue Bonds, San Mateo
County Health Care Center, Series A,
(FSA), 5.600%, 07/15/04.......................... 310,785
500,000 San Mateo County, California, Transportation
Authority Revenue Bonds, Series A,
(MBIA), 4.200%, 06/01/04......................... 510,580
750,000 San Mateo County, California, Transportation
District, Sales Tax Revenue Bonds, Series A,
(FSA), 5.000%, 06/01/09.......................... 852,623
510,000 Santa Barbara, California, Waterfront
Certificates of Participation, (AMBAC), 4.125%,
10/01/12......................................... 536,423
Santa Clara County, California, Financing
1,075,000 Authority, Series A, (AMBAC), 4.500%, 05/15/12... 1,131,932
175,000 4.300%, 11/15/03................................. 175,681
500,000 Santa Clara County, California, Transportation
District, Sales Tax Revenue Bonds, Series
A, 4.500%, 06/01/06.............................. 541,300
1,000,000 Southern California Public Power Authority
Revenue Bonds, Series A, (MBIA), 5.250%, 07/01/09 1,135,970
1,000,000 Southern California Public Power Authority
Revenue Bonds, Southern Transmission, Series B,
(FSA), 4.250%, 07/01/11.......................... 1,075,030
600,000 University of California Revenue Bonds,
Multi-Purpose Projects, Series F,
(FGIC), 5.000%, 09/01/08......................... 664,428
-----------
56,237,829
-----------
Principal Value
Amount (Note 1)
- ---------- ----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S.
GOVERNMENTS -- 6.85%
$ 100,000 California Educational Facilities Authority
Revenue Bonds, Santa Clara University Project,
(MBIA), 4.900%, 09/01/06 (Escrowed to Maturity).. $ 110,250
750,000 California State, General Obligation Bonds,
(FGIC), 6.000%, 08/01/19 (Prerefunded 08/01/04 @
102)............................................. 796,350
1,000,000 Long Beach, California, Water Revenue
Bonds, 6.250%, 05/01/24 (Prerefunded 05/01/04 @
102)............................................. 1,050,650
125,000 Los Angeles, California, Department of Water &
Power Revenue Bonds, (AMBAC), 4.600%,
08/15/06 (Escrowed to Maturity).................. 128,929
40,000 Metropolitan Water District of Southern
California, Revenue Bonds, 5.750%,
07/01/09 (Escrowed to Maturity).................. 47,314
125,000 Northern California Power Agency, Public Power
Revenue Bonds, Series A, (AMBAC), 5.600%,
07/01/06 (Escrowed to Maturity).................. 139,875
400,000 Sacramento County, California, Sanitation
District Revenue Bonds, 5.500%,
12/01/05 (Escrowed to Maturity).................. 437,928
825,000 San Bernardino County, California, Certificates
of Participation, Medical Center Financing
Project, Series A, (MBIA), 5.500%,
08/01/22 (Prerefunded 08/01/05 @ 102)............ 909,059
500,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds,
(FGIC), 5.500%, 07/01/20 (Prerefunded 07/01/05 @
101)............................................. 544,175
See Notes to Financial Statements.
16
Excelsior Tax-Exempt Funds, Inc.
Portfolio of Investments September 30, 2003
California Tax-Exempt Income Fund -- (continued)
Principal Value
Amount (Note 1)
- --------- ----------
TAX-EXEMPT SECURITIES -- ESCROWED IN U.S.
GOVERNMENTS -- (continued)
$150,000 Santa Barbara County, California, Local
Transportation Authority Sales Tax Revenue
Bonds, (FGIC), 4.900%, 04/01/06 (Prerefunded
04/01/04 @ 101).................................. $ 154,446
----------
4,318,976
----------
Shares
- ---------
OTHER INVESTMENTS -- 3.20%
1,151,644 @Federated California Money Fund.................. 1,151,644
865,520 @Provident California Money Fund.................. 865,520
----------
2,017,164
----------
TOTAL INVESTMENTS (Cost $59,343,712*)............. 99.17% $62,573,969
OTHER ASSETS & LIABILITIES (NET).................. 0.83 526,784
------ -----------
NET ASSETS........................................ 100.00% $63,100,753
====== ===========
- --------
* Aggregate cost for Federal tax and book purposes.
@ Registered Investment Company
AMBAC--American Municipal Bond Assurance Corp.
FGIC--Financial Guaranty Insurance Corp.
FSA--Financial Security Assurance
MBIA--Municipal Bond Insurance Assoc.
Notes:
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 September 30, 2003, approximately 7% of the net assets are invested in
municipal securities that have letter of credit enhancement features or
escrows in U.S. Government securities backing them, on which the Fund relies.
Without such features, the securities may or may not meet the quality
standards of securities purchased by the Fund.
At September 30, 2003, approximately, 96% 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.
17
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 (the "1940
Act"), 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 Long-Term
Tax-Exempt Fund, Intermediate-Term Tax-Exempt Fund, Short-Term Tax-Exempt
Securities Fund, New York Intermediate-Term Tax-Exempt Fund and California
Tax-Exempt Income Fund (the "Portfolios"). Such policies are in conformity with
accounting principles generally accepted in the United States of America and
are consistently followed by Excelsior Tax-Exempt Fund in the preparation of
the financial statements. Accounting principles generally accepted in the
United States of America 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 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, including, where applicable, 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.
(d) 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.
18
2. Investment Advisory Fee, Administration Fee, Shareholder Servicing Fees and
Related Party Transactions
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company, N.A. (collectively with U.S. Trust NY, "U.S. Trust"), acting through
their respective registered investment advisory divisions, U.S. Trust New York
Asset Management Division and U.S. Trust Company, N.A. Asset Management
Division, serve as the investment adviser to the Portfolios. For the services
provided pursuant to the Investment Advisory Agreements, U.S. Trust is entitled
to receive a fee, computed daily and paid monthly, at the annual rates of 0.30%
of the average daily net assets of Short-Term Tax-Exempt Securities Fund, 0.35%
of the average daily net assets of Intermediate-Term Tax-Exempt Fund and 0.50%
of the average daily net assets of each of Long-Term Tax-Exempt Fund, New York
Intermediate-Term Tax-Exempt Fund and 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, N.A. is a national bank organized
under the laws of the United States. Each is a wholly-owned subsidiary of U.S.
Trust Corporation, a registered bank holding company. U.S. Trust Corporation is
a wholly-owned subsidiary of The Charles Schwab Corporation ("Schwab").
U.S. Trust Company, N.A., SEI Investments Global Funds Services and
Federated Services Company ("FSC") (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 Funds, Inc. and Excelsior
Funds Trust (excluding the international equity portfolios of Excelsior Funds,
Inc. and Excelsior Funds Trust), all of which are affiliated investment
companies, as follows: 0.200% of the first $200 million, 0.175% of the next
$200 million, and 0.150% 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. Until further notice to the Portfolios, U.S. Trust Company, N.A. has
voluntarily agreed to waive its portion of the administration fee in an amount
equal to an annual rate of 0.04% of the average daily net assets of each
Portfolio. For the six months ended September 30, 2003, administration fees
charged by U.S. Trust Company, N.A., net of waivers, were as follows:
Long-Term Tax-Exempt Fund................. $ 34,734
Intermediate-Term Tax-Exempt Fund......... 158,689
Short-Term Tax-Exempt Securities Fund..... 117,200
New York Intermediate-Term Tax-Exempt Fund 71,713
California Tax-Exempt Income Fund......... 25,070
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 six months ended September 30, 2003, and until further
notice, U.S. Trust has contractually agreed to waive investment advisory fees
and to reimburse other ordinary operating expenses to the extent necessary to
keep total operating expenses from exceeding the following annual percentages
of each Portfolio's average daily net assets:
Long-Term Tax-Exempt Fund................. 0.80%
Intermediate-Term Tax-Exempt Fund......... 0.65%
Short-Term Tax-Exempt Securities Fund..... 0.60%
New York Intermediate-Term Tax-Exempt Fund 0.80%
California Tax-Exempt Income Fund......... 0.50%
19
For the six months ended September 30, 2003, pursuant to the above, U.S.
Trust waived investment advisory fees totaling $57,644 for the California
Tax-Exempt Income Fund.
Excelsior Tax-Exempt Fund has also entered into shareholder servicing
agreements with various service organizations (which may include U.S. Trust and
its affiliates) 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 a shareholder servicing fee at
the annual rate of up to 0.25% (0.40% prior to July 29, 2003) of the average
daily net asset value of its shares held by the service organizations'
customers. Such services may include assisting in processing purchase, exchange
and redemption requests; transmitting and receiving funds in connection with
customer orders to purchase, exchange or redeem shares; and providing periodic
statements.
During the six months ended September 30, 2003, a portion of the shareholder
servicing fees charged to the Portfolios were paid to affiliates of U.S. Trust.
U.S. Trust has voluntarily agreed to waive investment advisory and
administration fees payable in an amount equal to a portion of the shareholder
servicing fees paid to subsidiaries of U.S. Trust Corporation. For the six
months ended September 30, 2003, shareholder servicing fees paid to affiliates
of U.S. Trust and waivers by U.S. Trust of investment advisory fees for
shareholder servicing fees paid by the Portfolios are as follows:
Amount
Waived as
Amount Investment
Paid to Advisory
Affiliates Fees
---------- ----------
Long-Term Tax-Exempt Fund................. $ 20,819 $ 15,884
Intermediate-Term Tax-Exempt Fund......... 152,595 76,808
Short-Term Tax-Exempt Securities Fund..... 136,606 132,694
New York Intermediate-Term Tax-Exempt Fund 11,812 9,278
California Tax-Exempt Income Fund......... 50,772 49,648
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.
Boston Financial Data Services, Inc. ("BFDS") serves as transfer agent to
the Portfolios.
Each Independent Director of the Portfolios receives an annual fee of
$15,000, plus a meeting fee of $2,500 for each meeting attended, and is
reimbursed for expenses incurred for attending meetings. The Chairman receives
an additional annual fee of $7,500. Each member of the Nominating Committee
receives an annual fee of $1,000 for services in connection with this committee.
20
3. Purchases and Sales of Securities
For the six months ended September 30, 2003, purchases and sales and
maturities of securities, excluding short-term investments, for the Portfolios
aggregated:
Purchases Sales
------------ -----------
Long-Term Tax-Exempt Fund................. $ 58,417,098 $58,054,613
Intermediate-Term Tax-Exempt Fund......... 66,816,300 69,364,985
Short-Term Tax-Exempt Securities Fund..... 126,862,000 64,292,800
New York Intermediate-Term Tax-Exempt Fund 34,152,650 43,947,930
California Tax-Exempt Income Fund......... 5,139,483 5,491,750
4. 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.
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.
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").
21
The tax character of dividends and contributions paid during the six months
ended September 30, 2003 and the year ended March 31, 2003 were as follows:
Tax-Exempt Ordinary Long-Term
Income Income Capital Gains Total
----------- -------- ------------- -----------
Long-Term Tax-Exempt Fund
Six months ended September 30, 2003*..... $ 1,215,797 -- -- $ 1,215,797
Year ended March 31, 2003................ 3,309,713 $1,231 -- 3,310,944
Intermediate-Term Tax-Exempt Fund
Six months ended September 30, 2003*..... 5,338,314 -- -- 5,338,314
Year ended March 31, 2003................ 12,412,447 -- $2,583,052 14,995,499
Short-Term Tax-Exempt Fund
Six months ended September 30, 2003*..... 1,646,239 -- -- 1,646,239
Year ended March 31, 2003................ 3,712,472 -- -- 3,712,472
New York Intermediate-Term Tax-Exempt Fund
Six months ended September 30, 2003*..... 2,294,407 -- -- 2,294,407
Year ended March 31, 2003................ 5,629,628 -- 2,636,726 8,266,354
California Tax-Exempt Income Fund
Six months ended September 30, 2003*..... 1,023,114 -- -- 1,023,114
Year ended March 31, 2003................ 2,115,479 -- 11,932 2,127,411
- --------
* Tax character of distributions cannot be determined until the portfolio has
completed its taxable year ending March 31, 2004, therefore distributions
have currently been reflected as paid from tax-exempt income.
As of March 31, 2003, the components of distributable earnings (accumulated
losses) on a tax basis were as follows:
Long-Term Other
Tax-Exempt Ordinary Capital Capital Loss Unrealized Temporary
Income Income Gains Carryforward Appreciation Difference Total
---------- -------- ---------- ------------ ------------ ---------- -----------
Long-Term Tax-
Exempt Fund.. $218,630 -- -- $(2,547,268) $ 2,415,479 $(218,630) $ (131,789)
Intermediate-
Term Tax-
Exempt Fund.. 991,985 $645,921 $8,008,102 -- 16,517,547 (991,985) 25,171,570
Short-Term Tax-
Exempt Fund.. 278,967 -- -- (90,438) 857,387 (278,967) 766,949
New York
Intermediate-
Term Tax-
Exempt Fund.. 431,798 196,192 2,213,135 -- 6,934,066 (431,798) 9,343,393
California Tax-
Exempt Income
Fund......... 197,965 -- -- -- 2,931,557 (199,576) 2,929,946
22
For Federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. To the extent that such
carryforwards are utilized, capital gain distributions will be reduced. At
March 31, 2003, the following Portfolios had capital loss carryforwards for
Federal tax purposes available to offset future net capital gains through the
indicated expiration dates:
Expiration Date
--------------------
March 31, March 31,
2009 2011 Total
---------- --------- ----------
Long-Term Tax-Exempt Fund............ $2,547,268 -- $2,547,268
Short-Term Tax-Exempt Securities Fund -- $90,438 90,438
At September 30, 2003, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over estimated tax cost and
aggregate gross unrealized depreciation for all securities for which there was
an excess of estimated tax cost over value is as follows:
Estimated Tax Basis Tax Basis Net
Federal Unrealized Unrealized Unrealized
Tax Cost Appreciation (Depreciation) Appreciation
------------ ------------ -------------- ------------
Long-Term Tax-Exempt Fund............ $ 72,117,336 $ 1,130,438 $(309,194) $ 821,244
Intermediate-Term Tax-Exempt Fund.... 384,397,449 15,721,684 (181,583) 15,540,101
Short-Term Tax-Exempt Securities Fund 306,583,620 2,257,818 (5,000) 2,252,818
New York Intermediate-Term Tax-Exempt
Fund............................... 171,479,308 5,680,484 (214,457) 5,466,027
California Tax-Exempt Income Fund.... 59,343,712 3,237,321 (7,064) 3,230,257
5. Common Stock
Excelsior Tax-Exempt Fund currently has authorized capital of 24 billion
shares of Common Stock, 15 billion of which is currently classified to
represent interests in certain classes of shares. Authorized capital currently
classified for each Portfolio is as follows: 1.5 billion shares each of
Long-Term Tax-Exempt Fund, Intermediate-Term Tax-Exempt Fund, Short-Term
Tax-Exempt Securities Fund, New York Intermediate-Term Tax-Exempt Fund, and
California Tax-Exempt Income Fund.
Each share has a par value of $0.001 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.
Long-Term Tax-Exempt Fund
--------------------------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
Sold............................... 1,565,336 $ 15,655,513 5,081,297 $ 49,458,276
Issued as reinvestment of dividends 18,705 185,574 48,822 477,558
Redeemed........................... (3,043,326) (30,305,828) (7,739,473) (75,686,646)
---------- ------------ ---------- ------------
Net (Decrease)..................... (1,459,285) $(14,464,741) (2,609,354) $(25,750,812)
========== ============ ========== ============
23
Intermediate-Term Tax-Exempt Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Sold............................... 6,551,008 $ 65,049,757 15,584,952 $ 152,155,618
Issued as reinvestment of dividends 36,535 362,501 107,316 1,050,586
Redeemed........................... (7,219,668) (71,783,647) (13,904,896) (135,872,328)
---------- ------------ ----------- -------------
Net Increase (Decrease)............ (632,125) $ (6,371,389) 1,787,372 $ 17,333,876
========== ============ =========== =============
Short-Term Tax-Exempt Securities Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Sold............................... 10,787,452 $ 77,612,020 30,230,078 $ 217,600,870
Issued as reinvestment of dividends 7,329 52,744 13,775 99,187
Redeemed........................... (9,548,465) (68,699,393) (12,887,229) (92,778,309)
---------- ------------ ----------- -------------
Net Increase....................... 1,246,316 $ 8,965,371 17,356,624 $ 124,921,748
========== ============ =========== =============
New York Intermediate-Term Tax-Exempt Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Sold............................... 2,158,369 $ 19,724,975 6,548,542 $ 59,361,443
Issued as reinvestment of dividends 24,454 224,218 76,380 692,836
Redeemed........................... (2,990,427) (27,377,381) (6,515,400) (59,172,249)
---------- ------------ ----------- -------------
Net Increase (Decrease)............ (807,604) $ (7,428,188) 109,522 $ 882,030
========== ============ =========== =============
California Tax-Exempt Income Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/03 03/31/03
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
Sold............................... 783,087 $ 5,862,646 2,748,255 $ 20,492,940
Issued as reinvestment of dividends 7,855 58,898 13,055 97,474
Redeemed........................... (1,247,479) (9,320,470) (1,931,582) (14,406,311)
---------- ------------ ----------- -------------
Net Increase (Decrease)............ (456,537) $ (3,398,926) 829,728 $ 6,184,103
========== ============ =========== =============
6. Line of Credit
The Portfolios and other affiliated funds participate in a $50 million
unsecured line of credit provided by The JPMorgan Chase Bank 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 0.50% per year. In
addition, a commitment fee, equal to an annual rate of 0.15% of the average
daily unused portion of the line of credit, is allocated among the
participating Portfolios at the end of each quarter. For the six months ended
September 30, 2003, the Portfolios had no borrowings under the agreement.
24
7. Subsequent Events:
U.S. Trust and Excelsior Fund, Excelsior Funds Trust and Excelsior
Tax-Exempt Fund (Excelsior Fund, Excelsior Funds Trust and Excelsior Tax-Exempt
Fund, collectively, the "Companies") have been contacted by the Office of the
New York State Attorney General (the "NYAG") and U.S. Trust has been contacted
by the U.S. Securities and Exchange Commission (the "SEC") in connection with
their investigation of practices in the mutual fund industry identified as
"market timing" and "late trading" of mutual fund shares. U.S. Trust and the
Companies have been providing full cooperation with respect to these
investigations.
U.S. Trust continues to review the facts and circumstances relevant to the
SEC's and the NYAG's investigations. At the present time, management of U.S.
Trust is unable to estimate the impact, if any, that the outcome of these
investigations may have on the Companies.
On November 20, 2003, a class action complaint was filed in the United
States District Court for the Northern District of California against Schwab,
Charles Schwab & Co., Inc. (collectively, "Charles Schwab"), U.S. Trust, the
Companies and Doe Defendants. The action, which is brought on behalf of all
purchasers, redeemers and holders of the Companies, who purchased, held or
otherwise acquired shares of the Companies from November 23, 1998, through
November 14, 2003, inclusive (the "Class Period"), alleges violations of the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940 and for common law breach of fiduciary duties. The
complaint alleges that during the Class Period, Charles Schwab, U.S. Trust and
the Companies allowed the Doe Defendants and others to engage in illegal and
improper trading practices, in concert with certain institutional traders,
which caused financial injury to the shareholders of the Companies. U.S. Trust
and the Companies are evaluating the claims in the complaint and intend to
vigorously defend them. At the present time, management of U.S. Trust is unable
to estimate the impact, if any, that the outcome of this action may have on the
Companies. U.S. Trust believes that additional lawsuits, similar to this
lawsuit, may be filed in the future against Charles Schwab, U.S. Trust, the
Companies and related parties.
25
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Boards of Directors of
Excelsior Tax-Exempt Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Long-Term Tax-Exempt,
Intermediate-Term Tax-Exempt, Short-Term Tax-Exempt Securities, New York
Intermediate-Term Tax-Exempt, and California Tax-Exempt Income Portfolios (five
of the portfolios constituting the Excelsior Tax-Exempt Funds, Inc.) (the
"Funds") as of September 30, 2003, and the related statements of operations for
the period from April 1, 2003 to September 30, 2003, the statements of changes
in net assets for the period from April 1, 2003 to September 30, 2003 and for
the year ended March 31, 2003 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. Our procedures included confirmation of securities
owned as of September 30, 2003, 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 Long-Term Tax-Exempt, Intermediate-Term Tax-Exempt, Short-Term
Tax-Exempt Securities, New York Intermediate-Term Tax-Exempt, and California
Tax-Exempt Income Funds at September 30, 2003, the results of their operations
for the period from April 1, 2003 to September 30, 2003, the changes in their
net assets for the period from April 1, 2003 to September 30, 2003 and for the
year ended March 31, 2003, and the financial highlights for each of the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
Boston, Massachusetts /s/ Ernst & Young LLP
November 11, 2003
SA-TXEX-0903
26
Item 2. Code of Ethics.
Not applicable - only effective for annual reports for periods ending on or
after July 15, 2003.
Item 3. Audit Committee Financial Expert.
Not applicable - only effective for annual reports for periods ending on or
after July 15, 2003.
Item 4. Principal Accountant Fees and Services.
Not applicable - only effective for annual reports for periods ending on or
after December 15, 2003.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. (Reserved)
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. (Reserved)
Item 9. Controls and Procedures.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Items 10. Exhibits.
(a)(1) Not applicable.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Excelsior Tax-Exempt Funds, Inc.
By (Signature and Title) \s\ James L. Bailey
-------------------
James L. Bailey
President
Date: December 8, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) \s\ James L. Bailey
-------------------
James L. Bailey
President
Date: December 8, 2003
By (Signature and Title) \s\ Keith O'Connor
------------------
Keith O'Connor
Chief Financial Officer and
Treasurer
Date: December 8, 2003