<PAGE>
[LOGO OF EXCELSIOR FUNDS INC.]
DOMESTIC EQUITY PORTFOLIOS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STATEMENTS OF ASSETS AND LIABILITIES...................................... 1
STATEMENTS OF OPERATIONS.................................................. 3
STATEMENTS OF CHANGES IN NET ASSETS....................................... 5
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 7
PORTFOLIOS OF INVESTMENTS
Blended Equity Fund ..................................................... 9
Income and Growth Fund................................................... 11
Value and Restructuring Fund ............................................ 12
Small Cap Fund .......................................................... 14
Energy and Natural Resources Fund ....................................... 15
Large Cap Growth Fund.................................................... 16
Real Estate Fund......................................................... 17
NOTES TO FINANCIAL STATEMENTS............................................. 18
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. INITIAL PURCHASE AND PROSPECTUS INFORMATION AND SHAREHOLDER SERVICES 1-800-
446-1012
. CURRENT PRICE AND YIELD INFORMATION 1-800-233-9180
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and ex-
penses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. may
be obtained by contacting the Funds at 1-800-446-1012.
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are sponsored and
distributed by Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
EXCELSIOR FUNDS, INC.
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, U.S . TRUST COMPANY OF
CONNECTICUT, THEIR PARENT OR AFFILIATES AND SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
INCOME AND
BLENDED EQUITY GROWTH
FUND FUND
-------------- -----------
<S> <C> <C>
ASSETS:
Investments, at cost--see accompanying portfo-
lios............................................ $321,872,770 $63,631,119
============ ===========
Investments, at value (Note 1)................... $549,527,771 $82,434,929
Cash............................................. 492,860 --
Dividends receivable............................. 613,230 83,598
Interest receivable.............................. 9,355 480,830
Receivable for investments sold.................. -- 3,882,391
Receivable for fund shares sold.................. 107,781 2,745
Withholding tax receivable....................... -- 2,833
Prepaid expenses................................. 13,906 3,900
Unamortized organization costs (Note 5).......... -- --
------------ -----------
TOTAL ASSETS..................................... 550,764,903 86,891,226
LIABILITIES:
Payable for investments purchased................ -- 3,649,008
Payable for fund shares redeemed................. 100,624 60,557
Investment advisory fees payable (Note 2)........ 308,302 45,596
Administration fees payable (Note 2)............. 57,147 8,873
Administrative service fees payable (Note 2)..... 37,387 15,897
Directors' fees payable (Note 2)................. 8,941 2,363
Due to custodian bank............................ -- 20,274
Accrued expenses and other payables.............. 276,801 29,963
------------ -----------
TOTAL LIABILITIES................................ 789,202 3,832,531
------------ -----------
NET ASSETS........................................ $549,975,701 $83,058,695
============ ===========
NET ASSETS consist of:
Undistributed net investment income (loss)....... $ 708,211 $ 336,248
Accumulated net realized gain (loss) on invest-
ments........................................... 4,614,692 15,932,956
Unrealized appreciation (depreciation) of
investments and foreign currency translations... 227,655,105 18,803,511
Par value (Note 4)............................... 16,559 5,970
Paid-in capital in excess of par value........... 316,981,134 47,980,010
------------ -----------
TOTAL NET ASSETS.................................. $549,975,701 $83,058,695
============ ===========
Shares of Common Stock Outstanding................ 16,559,384 5,914,029
NET ASSET VALUE PER SHARE......................... $33.21 $14.04
====== ======
</TABLE>
See Notes to Financial Statements
1
<PAGE>
<TABLE>
<CAPTION>
VALUE AND ENERGY AND LARGE CAP
RESTRUCTURING SMALL CAP NATURAL RESOURCES GROWTH REAL ESTATE
FUND FUND FUND FUND FUND
------------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
$512,524,107 $41,880,218 $41,854,862 $81,163,612 $45,729,669
============ =========== =========== =========== ===========
$482,602,821 $35,623,300 $45,209,834 $86,437,188 $39,489,147
-- 82,126 104,755 1,647 --
526,737 6,402 38,954 7,050 310,331
1,886 8,616 23,258 188 200
11,002,593 48,817 -- -- --
747,571 266 107,575 164,788 --
4,672 -- -- -- --
79,349 1,977 1,110 467 691
-- -- -- 39,633 24,609
------------ ----------- ----------- ----------- -----------
494,965,629 35,771,504 45,485,486 86,650,961 39,824,978
335,950 139,630 964,119 93,140 337,924
707,963 50,813 41,144 4,993 104,305
197,679 15,997 12,562 49,651 22,409
23,565 4,945 8,946 10,833 4,122
129,251 7,501 2,471 3,663 5,776
384 610 521 146 328
9,830,230 -- -- -- 29,491
42,285 34,831 27,011 29,155 15,630
------------ ----------- ----------- ----------- -----------
11,267,307 254,327 1,056,774 191,581 519,985
------------ ----------- ----------- ----------- -----------
$483,698,322 $35,517,177 $44,428,712 $86,459,380 $39,304,993
============ =========== =========== =========== ===========
$ 587,952 $ (32,242) $ 127,883 $ (185,287) $ 347,467
2,394,413 (1,310,873) (479,349) (1,733,165) (313,555)
(29,921,870) (6,256,918) 3,354,972 5,273,576 (6,240,522)
25,935 4,411 4,239 10,161 6,483
510,611,892 43,112,799 41,420,967 83,094,095 45,505,120
------------ ----------- ----------- ----------- -----------
$483,698,322 $35,517,177 $44,428,712 $86,459,380 $39,304,993
============ =========== =========== =========== ===========
25,934,565 4,411,701 4,239,250 10,160,624 6,482,915
$18.65 $8.05 $10.48 $8.51 $6.06
====== ===== ====== ===== =====
</TABLE>
See Notes to Financial Statements
2
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
INCOME AND
BLENDED EQUITY GROWTH
FUND FUND
-------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................... $ 98,660 $ 773,514
Dividend income............................... 3,861,000 661,408
------------ ------------
TOTAL INCOME.................................. 3,959,660 1,434,922
EXPENSES:
Investment advisory fees (Note 2)............. 2,260,166 428,900
Administration fees (Note 2).................. 461,074 87,495
Administrative servicing fees (Note 2)........ 116,341 51,571
Shareholder servicing agent fees.............. 98,357 33,226
Custodian fees................................ 75,396 16,553
Legal and audit fees.......................... 56,082 10,242
Shareholder reports........................... 18,014 2,968
Amortization of organization costs (Note 5)... -- --
Registration and filing fees.................. 17,962 7,334
Directors' fees and expenses (Note 2)......... 13,505 2,804
Miscellaneous expenses........................ 29,943 7,554
------------ ------------
TOTAL EXPENSES................................ 3,146,840 648,647
Fees waived by investment adviser and
administrators (Note 2)...................... (243,684) (51,571)
------------ ------------
NET EXPENSES.................................. 2,903,156 597,076
------------ ------------
NET INVESTMENT INCOME (LOSS)................... 1,056,504 837,846
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain (loss):
Security transactions......................... (5,131,431) 7,163,650
Foreign currency translations................. -- --
------------ ------------
Total net realized gain (loss)................ (5,131,431) 7,163,650
Change in unrealized appreciation/depreciation
on investments
and foreign currency translations during the
period....................................... (44,139,447) (32,558,204)
------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS.................................. (49,270,878) (25,394,554)
------------ ------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $(48,214,374) $(24,556,708)
============ ============
</TABLE>
See Notes to Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
VALUE AND ENERGY AND LARGE CAP
RESTRUCTURING SMALL CAP NATURAL RESOURCES GROWTH REAL ESTATE
FUND FUND FUND FUND FUND
------------- ------------ ----------------- ----------- -----------
<S> <C> <C> <C> <C>
$ 339,835 $ 62,289 $ 114,630 $ 56,958 $ 63,476
3,383,229 166,184 343,280 139,135 1,250,126
------------- ------------ ----------- ----------- -----------
3,723,064 228,473 457,910 196,093 1,313,602
1,570,803 165,637 135,990 281,786 207,011
400,555 42,238 34,677 57,484 31,712
326,149 25,322 18,135 12,462 13,339
113,039 19,541 19,764 5,466 2,596
74,898 11,658 7,720 12,627 9,096
26,567 4,732 2,978 2,644 2,723
8,654 1,496 7,466 2,859 5,497
-- -- -- 1,742 2,959
18,875 10,843 10,153 4,968 6,298
7,018 1,205 877 796 766
21,731 3,365 2,613 11,008 1,910
------------- ------------ ----------- ----------- -----------
2,568,289 286,037 240,373 393,842 283,907
(326,149) (25,322) (18,135) (12,462) (35,011)
------------- ------------ ----------- ----------- -----------
2,242,140 260,715 222,238 381,380 248,896
------------- ------------ ----------- ----------- -----------
1,480,924 (32,242) 235,672 (185,287) 1,064,706
------------- ------------ ----------- ----------- -----------
(1,221,083) (1,939,575) (236,215) (1,519,149) (333,166)
(16,015) -- -- -- --
------------- ------------ ----------- ----------- -----------
(1,237,098) (1,939,575) (236,215) (1,519,149) (333,166)
(136,534,994) (18,540,485) (8,549,461) (911,284) (6,350,126)
------------- ------------ ----------- ----------- -----------
(137,772,092) (20,480,060) (8,785,676) (2,430,433) (6,683,292)
------------- ------------ ----------- ----------- -----------
$(136,291,168) $(20,512,302) $(8,550,004) $(2,615,720) $(5,618,586)
============= ============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME AND
BLENDED EQUITY GROWTH
FUND FUND
-------------- ------------
<S> <C> <C>
SIX MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
Net investment income (loss)...................... $ 1,056,504 $ 837,846
Net realized gain (loss) on investments........... (5,131,431) 7,163,650
Change in unrealized appreciation/depreciation on
investments and foreign currency translations
during the period................................ (44,139,447) (32,558,204)
------------ ------------
Net decrease in net assets resulting from
operations....................................... (48,214,374) (24,556,708)
Distributions to shareholders:
From net investment income....................... (1,262,484) (1,165,624)
Increase (decrease) in net assets from fund share
transactions (Note 4)............................ 4,543,989 (29,271,757)
------------ ------------
Net increase (decrease) in net assets............. (44,932,869) (54,994,089)
NET ASSETS:
Beginning of period.............................. 594,908,570 138,052,784
------------ ------------
End of period (1)................................ $549,975,701 $ 83,058,695
============ ============
--------
(1) Including undistributed net investment income
(loss).......................................... $ 708,211 $ 336,248
============ ============
YEAR ENDED MARCH 31, 1998
Net investment income (loss)...................... $ 2,565,250 $ 2,995,948
Net realized gain (loss) on investments........... 41,083,134 19,207,907
Change in unrealized appreciation/depreciation on
investments and foreign currency translations
during the year.................................. 205,385,468 19,295,523
------------ ------------
Net increase in net assets resulting from
operations....................................... 249,033,852 41,499,378
Distributions to shareholders:
From net investment income:
Shares........................................... (2,290,458) (2,916,488)
Trust Shares..................................... (146) --
From net realized gain on investments:
Shares........................................... (38,374,555) (15,371,776)
In excess of net realized gain on investments:
Shares........................................... -- --
------------ ------------
Total distributions............................. (40,665,159) (18,288,264)
------------ ------------
Increase (decrease) in net assets from fund share
transactions (Note 4)
Shares........................................... 79,577,598 (17,925,868)
Trust Shares..................................... (108,359) --
------------ ------------
Total from fund share transactions.............. 79,469,239 (17,925,868)
------------ ------------
Net increase in net assets........................ 287,837,932 5,285,246
NET ASSETS:
Beginning of year................................ 307,070,638 132,767,538
------------ ------------
End of year (2).................................. $594,908,570 $138,052,784
============ ============
--------
(2) Including undistributed net investment
income.......................................... $ 914,191 $ 664,026
============ ============
</TABLE>
* Large Cap Growth Fund and Real Estate Fund commenced operations on October 1,
1997.
See Notes to Financial Statements
5
<PAGE>
<TABLE>
<CAPTION>
VALUE AND ENERGY AND LARGE CAP
RESTRUCTURING SMALL CAP NATURAL RESOURCES GROWTH REAL ESTATE
FUND FUND FUND FUND* FUND*
------------- ------------ ----------------- ----------- -----------
<S> <C> <C> <C> <C>
$ 1,480,924 $ (32,242) $ 235,672 $ (185,287) $ 1,064,706
(1,237,098) (1,939,575) (236,215) (1,519,149) (333,166)
(136,534,994) (18,540,485) (8,549,461) (911,284) (6,350,126)
------------- ------------ ----------- ----------- -----------
(136,291,168) (20,512,302) (8,550,004) (2,615,720) (5,618,586)
(1,167,563) -- (140,511) -- (743,530)
232,709,645 (12,518,447) 6,944,780 41,546,442 4,496,385
------------- ------------ ----------- ----------- -----------
95,250,914 (33,030,749) (1,745,735) 38,930,722 (1,865,731)
388,447,408 68,547,926 46,174,447 47,528,658 41,170,724
------------- ------------ ----------- ----------- -----------
$ 483,698,322 $ 35,517,177 $44,428,712 $86,459,380 $39,304,993
============= ============ =========== =========== ===========
$ 587,952 $ (32,242) $ 127,883 $ (185,287) $ 347,467
============= ============ =========== =========== ===========
$ 1,134,103 $ (83,679) $ 292,606 $ (17,327) $ 693,157
4,596,344 3,491,186 3,347,027 (214,016) (749)
80,592,450 12,326,916 4,846,663 6,184,860 109,604
------------- ------------ ----------- ----------- -----------
86,322,897 15,734,423 8,486,296 5,953,517 802,012
(855,654) -- (309,721) -- (474,266)
(58) -- -- -- --
(2,883,915) -- (3,856,927) -- --
-- -- (243,134) -- --
------------- ------------ ----------- ----------- -----------
(3,739,627) -- (4,409,782) -- (474,266)
------------- ------------ ----------- ----------- -----------
181,862,594 (441,310) 8,704,842 41,575,141 40,842,978
(61,525) (11,276) -- -- --
------------- ------------ ----------- ----------- -----------
181,801,069 (452,586) 8,704,842 41,575,141 40,842,978
------------- ------------ ----------- ----------- -----------
264,384,339 15,281,837 12,781,356 47,528,658 41,170,724
124,063,069 53,266,089 33,393,091 -- --
------------- ------------ ----------- ----------- -----------
$ 388,447,408 $ 68,547,926 $46,174,447 $47,528,658 $41,170,724
============= ============ =========== =========== ===========
$ 274,591 $ -- $ 32,722 $ -- $ 26,291
============= ============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
NET REALIZED DISTRIBUTIONS
NET ASSET NET AND UNREALIZED DIVIDENDS FROM NET
VALUE, INVESTMENT GAIN (LOSS) TOTAL FROM FROM NET REALIZED GAIN
BEGINNING INCOME ON INVESTMENTS INVESTMENT INVESTMENT ON INVESTMENTS
OF PERIOD (LOSS) AND OPTIONS OPERATIONS INCOME AND OPTIONS
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
BLENDED EQUITY FUND -- (4/25/85*)
Shares:
Year Ended March 31,
1994.................... $18.77 $ 0.05 $ 1.16 $ 1.21 $(0.08) $(0.39)
1995.................... 19.17 0.07 2.67 2.74 (0.04) (0.47)
1996.................... 21.40 0.12 5.21 5.33 (0.11) (2.19)
1997.................... 24.43 0.18 2.50 2.68 (0.14) (1.16)
1998.................... 25.81 0.16 12.59 12.75 (0.16) (2.28)
Six Months Ended
September 30, 1998
(Unaudited)............ 36.12 0.06 (2.89) (2.83) (0.08) --
Trust Shares --
(11/12/96*)
Period ended March 31,
1997................... 26.30 0.04 0.03 0.07 (0.03) (0.56)
Period from April 1,
1997 to October 27,
1997................... 25.78 0.02 4.67 4.69 (0.05) --
INCOME AND GROWTH FUND -- (1/6/87*)
Year Ended March 31,
1994.................... $11.45 $ 0.31 $ 0.46 $ 0.77 $(0.27) $(0.01)
1995.................... 11.94 0.38 0.26 0.64 (0.35) (0.41)
1996.................... 11.82 0.39 2.61 3.00 (0.31) (0.06)
1997.................... 14.45 0.33 1.45 1.78 (0.35) (0.63)
1998.................... 15.25 0.36 4.53 4.89 (0.34) (1.85)
Six Months Ended
September 30, 1998
(Unaudited)............ 17.95 0.13 (3.88) (3.75) (0.16) --
VALUE AND RESTRUCTURING FUND -- (12/31/92*)
Shares:
Year Ended March 31,
1994.................... $ 7.71 $ 0.06 $ 1.96 $ 2.02 $(0.07) $(0.02)
1995.................... 9.64 0.07 1.02 1.09 (0.06) (0.12)
1996.................... 10.55 0.10 3.71 3.81 (0.09) (0.24)
1997.................... 14.03 0.13 2.36 2.49 (0.12) (0.47)
1998.................... 15.93 0.10 8.12 8.22 (0.09) (0.27)
Six Months Ended
September 30, 1998
(Unaudited)............ 23.79 0.06 (5.14) (5.08) (0.06) --
Trust Shares --
(9/19/96*)
Period ended March 31,
1997................... 14.61 0.05 1.53 1.58 (0.05) (0.23)
Period from April 1,
1997 to June 30, 1997.. 15.91 0.02 2.94 2.96 (0.02) --
SMALL CAP FUND -- (12/31/92*)
Shares:
Year Ended March 31,
1994.................... $ 7.40 $(0.01) $ 1.36 $ 1.35 -- $(0.09)
1995.................... 8.66 (0.02) 1.31 1.29 -- (0.18)
1996.................... 9.77 (0.02) 1.72 1.70 -- (0.69)
1997.................... 10.78 (0.03) (1.43) (1.46) -- (0.10)
1998.................... 8.83 (0.01) 3.13 3.12 -- --
Six Months Ended
September 30, 1998
(Unaudited)............ 11.95 (0.01) (3.89) (3.90) -- --
Trust Shares --
(9/6/96*)
Period ended March 31,
1997................... 9.98 (0.03) (0.92) (0.95) -- (0.22)
Period from April 1,
1997 to October 27,
1997................... 8.81 (0.03) 2.52 2.49 -- --
ENERGY AND NATURAL RESOURCES FUND -- (12/31/92*)
Year Ended March 31,
1994.................... $ 7.81 $ 0.08 $(0.12) $(0.04) $(0.07) --
1995.................... 7.70 0.09 0.24 0.33 (0.10) $(0.01)
1996.................... 7.92 0.07 1.63 1.70 (0.07) --
1997.................... 9.55 0.09 2.60 2.69 (0.09) (1.03)
1998.................... 11.12 0.09 2.69 2.78 (0.10) (1.07)
Six Months Ended
September 30, 1998
(Unaudited)............ 12.66 0.06 (2.20) (2.14) (0.04) --
LARGE CAP GROWTH FUND -- (10/1/97*)
Period Ended March 31,
1998................... $ 7.00 -- ++ $ 1.51 $ 1.51 -- --
Six Months Ended
September 30, 1998
(Unaudited)............ 8.51 $(0.02) 0.02 -- -- --
REAL ESTATE FUND -- (10/1/97*)
Period Ended March 31,
1998................... $ 7.00 $ 0.15 $ 0.01 $ 0.16 $(0.11) --
Six Months Ended
September 30, 1998
(Unaudited)............ 7.05 0.17 (1.04) (0.87) (0.12) --
</TABLE>
* Commencement of operations ** Not Annualized *** Annualized
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Amount represents less than $0.01 per share.
See Notes to Financial Statements
7
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTIONS IN RATIO OF NET RATIO OF GROSS RATIO OF NET
EXCESS OF NET NET ASSETS, OPERATING OPERATING INVESTMENT
REALIZED GAIN NET ASSET END EXPENSES EXPENSES INCOME (LOSS) PORTFOLIO
ON INVESTMENTS TOTAL VALUE, END TOTAL OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER
AND OPTIONS DISTRIBUTIONS OF PERIOD RETURN (000) NET ASSETS NET ASSETS + NET ASSETS RATE
---------------- ------------- ---------- ------ ----------- ------------ -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.34) $(0.81) $19.17 6.54% $122,262 1.14% 1.14% 0.25% 17%
-- (0.51) 21.40 14.65% 137,417 1.05% 1.08% 0.36% 23%
-- (2.30) 24.43 26.45% 188,574 1.05% 1.12% 0.55% 27%
-- (1.30) 25.81 11.09% 306,990 1.01% 1.06% 0.71% 39%
-- (2.44) 36.12 50.82% 594,909 0.99% 1.06% 0.55% 28%
-- (0.08) 33.21 (7.87)%** 549,976 0.96%*** 1.04%*** 0.35%*** 11%***
-- (0.59) 25.78 0.23%** 81 1.36%*** 1.41%*** 0.45%*** 39%***
-- (0.05) 30.42 17.57%** -- 1.34%*** 1.41%*** 0.20%*** N/A
-- $(0.28) $11.94 6.69% $ 96,682 1.17% 1.17% 2.77% 28%
-- (0.76) 11.82 5.74% 99,925 1.06% 1.09% 3.31% 36%
-- (0.37) 14.45 25.83% 127,495 1.05% 1.11% 2.95% 22%
-- (0.98) 15.25 12.61% 132,768 1.03% 1.11% 2.17% 25%
-- (2.19) 17.95 33.29% 138,053 1.02% 1.10% 2.04% 32%
-- (0.16) 14.04 (21.08)%** 83,059 1.05%*** 1.14%*** 1.47%*** 35%***
-- $(0.09) $ 9.64 26.40% $ 14,440 0.99% 1.73% 0.77% 75%
-- (0.18) 10.55 11.49% 30,183 0.98% 1.08% 0.83% 82%
-- (0.33) 14.03 36.48% 74,052 0.91% 0.95% 0.88% 56%
-- (0.59) 15.93 18.09% 124,011 0.91% 0.95% 0.90% 62%
-- (0.36) 23.79 52.10% 388,447 0.89% 0.93% 0.54% 30%
-- (0.06) 18.65 (21.42)%** 483,698 0.86%*** 0.98%*** 0.57%*** 45%***
-- (0.28) 15.91 10.85%** 52 1.26%*** 1.30%*** 0.54%*** 62%***
-- (0.02) 18.85 18.61%** -- 1.21%*** 1.25%*** 0.47%*** N/A
-- $(0.09) $ 8.66 18.27% $ 24,951 0.95% 1.15% (0.25)% 20%
-- (0.18) 9.77 15.16% 47,782 0.96% 1.04% (0.23)% 42%
-- (0.69) 10.78 18.29% 78,061 0.90% 0.98% (0.17)% 38%
$(0.39) (0.49) 8.83 (14.33)% 53,258 0.94% 1.02% (0.26)% 55%
-- -- 11.95 35.33% 68,548 0.94% 1.01% (0.14)% 73%
-- -- 8.05 (32.64)%** 35,517 0.95%*** 1.04%*** (0.12)%*** 93%***
-- (0.22) 8.81 (9.77)%** 8 1.29%*** 1.40%*** (0.87)%*** 55%***
-- -- 11.30 29.29%** -- 1.25%*** 1.31%*** (0.59)%*** N/A
-- $(0.07) $ 7.70 (0.57)% $ 6,830 0.99% 2.03% 1.21% 6%
-- (0.11) 7.92 4.28% 15,813 0.98% 1.35% 1.18% 31%
-- (0.07) 9.55 21.60% 23,294 0.96% 1.09% 0.88% 43%
-- (1.12) 11.12 28.28% 33,393 0.93% 0.98% 0.84% 87%
$(0.07) (1.24) 12.66 24.97% 46,174 0.99% 1.07% 0.69% 88%
-- (0.04) 10.48 (16.97)%** 44,429 0.98%*** 1.06%*** 1.04%*** 51%***
-- -- $ 8.51 21.57%** $ 47,529 1.05%*** 1.20%*** (0.16)%*** 12%***
-- -- 8.51 0.00%** 86,459 1.02%*** 1.05%*** (0.49)%*** 7%***
-- $(0.11) $ 7.05 2.26%** $ 41,171 1.20%*** 1.40%*** 5.02%*** 30%***
-- (0.12) 6.06 (12.52)%** 39,305 1.20%*** 1.37%*** 5.14%*** 14%***
<CAPTION>
FEE
WAIVERS
(NOTE 2)
--------
<C>
--
--
$ 0.02
0.01
0.02
0.01
--
0.01
--
--
$ 0.01
0.01
0.01
0.01
$ 0.06
0.01
--
0.01
0.01
0.01
--
--
$ 0.01
0.01
0.01
0.01
0.01
0.01
--
--
$ 0.07
0.03
0.01
--
0.01
--
-- ++
-- ++
$ 0.01
0.01
</TABLE>
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
BLENDED EQUITY FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 99.76%
CONSUMER STAPLES -- 22.79%
420,000 Abbott Laboratories.................................. $ 18,243,750
84,000 Bestfoods, Inc. ..................................... 4,068,750
187,500 Coca-Cola Company.................................... 10,804,687
10,500 Corn Products International, Inc. ................... 265,125
44,210 CVS Corp. ........................................... 1,936,951
104,000 Gillette Co. ........................................ 3,978,000
61,700 +Healthsouth Corp. .................................. 651,706
272,300 Johnson & Johnson.................................... 21,307,475
7,400 Lilly (Eli) & Co. ................................... 579,512
98,730 Mattel, Inc. ........................................ 2,764,440
49,000 Merck & Co., Inc. ................................... 6,348,562
15,000 Novartis AG ADR...................................... 1,202,222
30,000 PepsiCo, Inc. ....................................... 883,125
269,400 Pfizer, Inc. ........................................ 28,539,563
113,200 Procter & Gamble Co. ................................ 8,030,125
110,000 Schering-Plough Corp. ............................... 11,391,875
260,000 Stewart Enterprises, Inc., Class A................... 4,355,000
------------
125,350,868
------------
CONSUMER CYCLICAL -- 21.51%
32,600 CBS Corp. ........................................... 790,550
201,400 Centex Corp. ........................................ 6,948,300
52,000 Chevron Corp. ....................................... 4,371,250
40,000 Comcast Corp., Class A Special....................... 1,877,500
212,500 Dayton Hudson Corp. ................................. 7,596,875
200,000 Ford Motor Co. ...................................... 9,387,500
311,000 General Electric Co. ................................ 24,743,937
43,800 General Motors Corp. ................................ 2,395,313
38,500 Goodyear Tire and Rubber Co. ........................ 1,977,938
330,000 Luxottica Group S.p.A. ADR........................... 3,691,875
95,000 McDonald's Corp. .................................... 5,670,312
211,000 +MCI WorldCom, Inc. ................................. 10,312,625
40,000 Meredith Corp. ...................................... 1,280,000
43,500 New York Times Co., Class A.......................... 1,196,250
224,400 +O'Reilly Automotive, Inc. .......................... 8,078,400
39,000 Reuters Group plc ADR................................ 1,925,625
5,100 +Saks, Inc. ......................................... 114,431
50,000 Time Warner, Inc. ................................... 4,378,125
25,000 Tribune Co. ......................................... 1,257,813
250,000 Wal-Mart Stores, Inc. ............................... 13,656,250
171,045 Walt Disney Co. ..................................... 4,329,577
37,800 Wiley (John) & Sons, Inc., Class A................... 2,322,337
------------
118,302,783
------------
FINANCIAL -- 18.23%
30,000 Allstate Corp. ...................................... 1,250,625
19,000 American Express Co. ................................ 1,474,875
56,250 American International Group, Inc. .................. 4,331,250
277,817 Associates First Capital Corp. ...................... 18,127,559
75,600 BankBoston........................................... 2,494,800
40,200 Citicorp............................................. 3,736,087
COMMON STOCKS -- (CONTINUED)
FINANCIAL -- (CONTINUED)
20,000 First Union Corp. (North Carolina)................... $ 1,023,750
170,000 Fleet Financial Group, Inc. ......................... 12,484,375
21,790 General Re Corp. .................................... 4,423,370
81,702 Household International, Inc. ....................... 3,063,825
114,200 MBIA, Inc. .......................................... 6,131,112
302,076 Mellon Bank Corp. ................................... 16,633,060
202,694 Morgan Stanley, Dean Witter & Co. ................... 8,728,510
29,687 Nationsbank Corp. ................................... 1,588,255
32,600 Norwest Corp. ....................................... 1,167,488
156,300 State Street Boston Corp. ........................... 8,528,119
102,200 UNUM Corp. .......................................... 5,078,063
------------
100,265,123
------------
TECHNOLOGY -- 17.44%
341,033 +Cisco Systems, Inc. ................................ 21,080,071
50,000 Compaq Computer Corp. ............................... 1,581,250
30,000 Computer Associates International, Inc. ............. 1,110,000
70,000 +Dell Computer Corp. ................................ 4,602,500
36,100 Emerson Electric, Co. ............................... 2,247,225
126,480 Hewlett-Packard Co. ................................. 6,695,535
30,300 Honeywell Corp. ..................................... 1,941,094
150,000 Intel Corp. ......................................... 12,862,500
63,000 International Business Machines Corp. ............... 8,064,000
69,000 L.M. Ericsson Telephone Co. ADR ..................... 1,267,875
93,320 Lucent Technologies, Inc. ........................... 6,444,913
169,240 +Microsoft Corp. .................................... 18,626,977
36,000 Nokia Corp., Class A, ADR ........................... 2,823,750
60,000 SBC Communications, Inc. ............................ 2,666,250
25,500 Texas Instruments, Inc. ............................. 1,345,125
46,000 Tyco International Ltd. ............................. 2,541,500
------------
95,900,565
------------
ENERGY -- 7.86%
13,000 British Petroleum Company plc ADR.................... 1,134,250
167,907 Burlington Resources, Inc. .......................... 6,275,524
120,100 Exxon Corp. ......................................... 8,429,519
47,000 Minnesota Mining & Manufacturing..................... 3,463,313
178,300 Mobil Corp. ......................................... 13,539,656
162,100 Royal Dutch Petroleum Co. ........................... 7,720,012
73,200 Unocal Corp. ........................................ 2,653,500
------------
43,215,774
------------
UTILITIES -- 6.50%
53,400 +AES Corp. .......................................... 1,979,138
30,000 Ameritech Corp. ..................................... 1,421,250
172,443 AT&T Corp. .......................................... 10,077,138
163,000 Bell Atlantic Corp. ................................. 7,895,312
</TABLE>
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
BLENDED EQUITY FUND -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
57,500 Duke Energy Corp. .................................. $ 3,805,781
60,000 +NEXTEL Communications, Inc., Class A............... 1,211,250
133,700 Southern Co. ....................................... 3,935,794
116,400 Texas Utilities Co. ................................ 5,419,875
------------
35,745,538
------------
CAPITAL GOODS -- 3.61%
24,000 Boeing Co. ......................................... 823,500
12,600 Cordant Technologies, Inc. ......................... 533,137
20,000 Dover Corp. ........................................ 617,500
275,266 Illinois Tool Works, Inc. .......................... 15,001,997
24,700 +Lear Corp. ........................................ 1,080,625
2,000 Raychem Corp. ...................................... 48,750
76,875 +Thermo Electron Corp. ............................. 1,157,930
11,700 Waste Management, Inc. ............................. 562,331
------------
19,825,770
------------
RAW/INTERMEDIATE MATERIALS -- 1.82%
67,300 E.I. du Pont de Nemours & Co. ...................... 3,777,212
62,100 Monsanto Co. ....................................... 3,500,888
105,000 Pioneer Hi-Bred International, Inc. ................ 2,756,250
------------
10,034,350
------------
TOTAL COMMON STOCKS
(Cost $320,985,770)................................. 548,640,771
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
<C> <S> <C>
DEMAND NOTES -- 0.16%
$400,000 Associates Corp. of North America Master Notes....... $ 400,000
487,000 General Electric Co. Promissory Notes................ 487,000
------------
TOTAL DEMAND NOTES
(Cost $887,000)...................................... 887,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $321,872,770*)...................................... 99.92% $549,527,771
OTHER ASSETS AND LIABILITIES (NET)........................ 0.08 447,930
------ ------------
NET ASSETS................................................ 100.00% $549,975,701
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security
ADR -- American Depositary Receipt
See Notes to Financial Statements
10
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 80.55%
CONSUMER CYCLICAL -- 20.70%
100,000 Herman Miller, Inc. ................................. $ 1,975,000
73,000 Luxottica Group S.p.A. ADR........................... 816,687
70,000 McDonald's Corp. .................................... 4,178,125
150,000 ServiceMaster Ltd. Partnership....................... 3,281,250
80,000 Wiley (John) & Sons, Inc., Class A................... 4,915,000
280,000 +Ziff-Davis, Inc. ................................... 2,030,000
------------
17,196,062
------------
CONSUMER STAPLES -- 14.96%
60,000 Gillette Co. ........................................ 2,295,000
40,000 Johnson & Johnson.................................... 3,130,000
15,000 Merck & Co., Inc. ................................... 1,943,438
40,000 Novo-Nordisk A.S., ADR............................... 2,400,000
35,000 WM. Wrigley Jr. Co. ................................. 2,657,812
------------
12,426,250
------------
TECHNOLOGY -- 11.04%
200,000 +Analog Devices, Inc. ............................... 3,212,500
30,000 +Cisco Systems, Inc. ................................ 1,854,375
695,200 +Interleaf, Inc. .................................... 716,925
15,000 +Microsoft Corp. .................................... 1,650,938
103,500 +SDL, Inc. .......................................... 1,293,750
41,800 +Unitrode Corp. ..................................... 444,125
------------
9,172,613
------------
FINANCIAL -- 9.21%
20,000 American International Group, Inc. .................. 1,540,000
35,000 Morgan Stanley, Dean Witter & Co. ................... 1,507,188
130,000 Mutual Risk Management Ltd. ......................... 4,598,750
------------
7,645,938
------------
ENERGY -- 8.21%
44,000 Exxon Corp. ......................................... 3,088,250
90,000 +SEACOR Holdings, Inc. .............................. 3,735,000
------------
6,823,250
------------
UTILITIES -- 7.19%
110,000 +AES Corp. .......................................... 4,076,875
94,000 +NEXTEL Communications, Inc., Class A................ 1,897,625
------------
5,974,500
------------
RAW/INTERMEDIATE
MATERIALS -- 5.52%
100,000 Pall Corp. .......................................... 2,218,750
90,000 Pioneer Hi-Bred International, Inc. ................. 2,362,500
------------
4,581,250
------------
CAPITAL GOODS -- 3.72%
100,000 Dover Corp. ......................................... 3,087,500
------------
TOTAL COMMON STOCKS (Cost $45,934,477)............... 66,907,363
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
CORPORATE BONDS -- 2.43%
MATERIALS -- 2.43%
$2,000,000 AK Steel Corp.,
9.125%, 12/15/06
(Cost $2,080,000)................................... $ 2,015,000
-----------
CONVERTIBLE BONDS -- 10.35%
TECHNOLOGY -- 7.76%
2,810,000 Kollmorgen Corp.,
Sub-Debenture,
8.75%, 05/01/09..................................... 2,848,638
3,959,000 Network Equipment Technologies, Inc.,
Sub-Debenture,
7.25%, 05/15/14..................................... 3,597,741
-----------
6,446,379
-----------
CONSUMER CYCLICAL -- 2.13%
1,925,000 Avatar Holdings 7.00%, 04/01/05..................... 1,766,187
-----------
TRANSPORTATION -- 0.46%
3,500,000 World Corp., Inc., 7.00%, 05/15/04.................. 385,000
-----------
TOTAL CONVERTIBLE BONDS (Cost $10,701,642).......... 8,597,566
-----------
DEMAND NOTES -- 5.92%
2,400,000 Associates Corp. of North America Master Notes...... 2,400,000
2,515,000 General Electric Co. Promissory Notes............... 2,515,000
-----------
TOTAL DEMAND NOTES
(Cost $4,915,000)................................... 4,915,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $63,631,119*)...................... 99.25% $82,434,929
OTHER ASSETS AND LIABILITIES (NET)......................... 0.75 623,766
------ -----------
NET ASSETS................................................. 100.00% $83,058,695
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security
ADR -- American Depositary Receipt
See Notes to Financial Statements
11
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
VALUE AND RESTRUCTURING FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 97.53%
TECHNOLOGY -- 23.96%
308,000 Alcatel Alsthom ADR.................................. $ 5,236,000
160,000 BCE, Inc. ........................................... 4,470,000
250,000 +Bell & Howell Holdings Co. ......................... 6,484,375
130,300 Computer Associates International, Inc. ............. 4,821,100
120,000 Cordant Technologies, Inc. .......................... 5,077,500
270,000 Frontier Corp. ...................................... 7,391,250
335,000 +Industri-Matematik International Corp. ............. 1,695,938
3,001 +Intermedia Communications, Inc. .................... 73,524
106,800 International Business Machines Corp. ............... 13,670,400
165,000 +IXC Communications, Inc. ........................... 4,908,750
138,000 Nokia Corp., Class A, ADR............................ 10,824,375
136,800 +Plantronics, Inc. .................................. 6,592,050
165,000 Raytheon Co., Class A................................ 8,549,062
6,314 +Sensormatics Electronics Corp. ..................... 37,095
262,000 +Smallworldwide plc ADR.............................. 2,849,250
425,000 +Telecom-TCI Ventures Group, Class A................. 7,596,875
190,000 Texas Instruments, Inc. ............................. 10,022,500
420,000 +TriStar Aerospace Co. .............................. 4,042,500
330,000 +Unisys Corp. ....................................... 7,507,500
334,050 +Vishay Intertechnology, Inc. ....................... 4,029,478
------------
115,879,522
------------
FINANCIAL -- 21.12%
291,235 ++Akbank T.A.S. ADR.................................. 793,616
270,000 +Amerin Corp. ....................................... 5,011,875
110,000 Amvescap plc ADR..................................... 3,190,000
280,000 ARM Financial Group, Inc., Class A................... 4,970,000
135,000 Astoria Financial Corp. ............................. 5,686,875
147,000 Banc One Corp. ...................................... 6,265,875
150,000 Canadian Imperial Bank of Commerce................... 2,756,250
170,000 Chase Manhattan Corp. ............................... 7,352,500
130,614 Corporacion Bancaria de Espana S.p.A. ADR............ 5,118,436
237,000 Donaldson, Lufkin & Jenrette, Inc. .................. 6,058,312
150,000 Everest Re Holdings, Inc. ........................... 5,596,875
71,505 EXEL Ltd. ........................................... 4,504,815
157,000 Fannie Mae........................................... 10,087,250
215,000 FBL Financial Group, Inc., Class A................... 4,958,438
110,000 Mellon Bank Corp. ................................... 6,056,875
105,000 Morgan Stanley, Dean Witter & Co. ................... 4,521,563
125,000 PNC Bank Corp. ...................................... 5,625,000
205,000 SLM Holding Corp. ................................... 6,649,687
185,000 Travelers Group, Inc. ............................... 6,937,500
------------
102,141,742
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
CONSUMER STAPLES -- 16.84%
290,000 Avon Products, Inc. .......................... $8,138,125
108,000 Bestfoods, Inc. .............................. 5,231,250
104,000 Bristol-Myers Squibb Co. ..................... 10,803,000
220,000 Deluxe Corp. ................................. 6,256,250
168,000 Eastman Kodak Co. ............................ 12,988,500
180,000 Fort James Corp. ............................. 5,906,250
102,000 General Mills, Inc. .......................... 7,140,000
225,000 +MAPICS, Inc. ................................ 4,921,875
300,000 Philip Morris Companies, Inc. ................ 13,818,750
200,000 +Suiza Foods Corp. ........................... 6,250,000
----------
81,454,000
----------
CONSUMER CYCLICAL -- 15.91%
170,000 +American Standard Cos., Inc. ................ 4,483,750
300,000 CBS Corp. .................................... 7,275,000
140,000 Ford Motor Co. ............................... 6,571,250
135,000 General Motors Corp. ......................... 7,382,813
130,000 Harman International Industries, Inc. ........ 4,769,375
250,000 +LandCARE USA, Inc. .......................... 1,687,500
305,000 +Newmark Homes Corp. ......................... 2,058,750
275,000 News Corp. Ltd. ADR........................... 7,046,875
210,000 Olin Corp. ................................... 6,024,375
370,000 +Outdoor Systems, Inc. ....................... 7,215,000
430,000 +Paxson Communications Corp. ................. 3,950,625
160,000 +QUALCOMM, Inc. .............................. 7,670,000
128,000 XEROX Corp. .................................. 10,848,000
----------
76,983,313
----------
CAPITAL GOODS -- 6.36%
225,000 AlliedSignal, Inc. ........................... 7,959,375
245,000 Boeing Co. ................................... 8,406,563
320,000 +Coltec Industries, Inc. ..................... 4,840,000
125,000 United Technologies Corp. .................... 9,554,687
----------
30,760,625
----------
TRANSPORTATION -- 5.29%
230,000 Canadian Pacific Ltd. ........................ 4,758,125
160,000 +Coach USA, Inc. ............................. 3,950,000
202,500 +Hvide Marine, Inc., Class A.................. 1,417,500
185,000 Kansas City Southern Industries, Inc. ........ 6,475,000
180,000 +Trailer Bridge, Inc. ........................ 393,750
202,000 Union Pacific Corp. .......................... 8,610,250
----------
25,604,625
----------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
VALUE AND RESTRUCTURING FUND -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ENERGY -- 5.12%
425,000 Dynegy, Inc. ....................................... $ 5,710,938
13,700 +Miller Exploration, Co. ........................... 65,931
82,000 Mobil Corp. ........................................ 6,226,875
260,000 +Nabors Industries, Inc. ........................... 3,948,750
285,000 +Ocean Energy, Inc. ................................ 3,740,625
195,000 YPF S.A., ADR....................................... 5,070,000
------------
24,763,119
------------
RAW/INTERMEDIATE MATERIALS -- 2.89%
270,000 Cambrex Corp. ...................................... 6,361,875
115,000 E.I. du Pont de Nemours & Co. ...................... 6,454,375
139,500 +PalEx, Inc. ....................................... 1,150,875
------------
13,967,125
------------
UTILITIES -- 0.04%
40,000 +Leap Wireless International, Inc. ................. 185,000
------------
TOTAL COMMON STOCKS
(Cost $497,649,662)................................. 471,739,071
------------
CONVERTIBLE PREFERRED STOCKS -- 2.24%
TECHNOLOGY -- 1.51%
45,000 ++Intermedia Communications, Inc., Preferred
Exchange, 7.00%..................................... 1,546,875
65,000 Intermedia Communications, Inc., Series D, Preferred
Exchange, 7.00%..................................... 2,234,375
260,000 ++Sensormatic Electronics Corp., Preferred Exchange,
6.50%............................................... 3,542,500
------------
7,323,750
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- (CONTINUED)
TRANSPORTATION -- 0.73%
80,000 ++Union Pacific Capital Trust,
Preferred Exchange, 6.25%............................ $ 3,540,000
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $14,874,445)................................... 10,863,750
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $512,524,107*)...................................... 99.77% $482,602,821
OTHER ASSETS AND LIABILITIES (NET)........................ 0.23 1,095,501
------ ------------
NET ASSETS................................................ 100.00% $483,698,322
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security
++ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
1998 these securities amounted to $9,422,991, or 1.95% of net assets.
ADR -- American Depositary Receipt
See Notes to Financial Statements
13
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
SMALL CAP FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C> <C>
COMMON STOCKS -- 96.08%
CONSUMER CYCLICAL -- 32.62%
39,000 +Big Flower Holdings, Inc. ....................... $ 911,625
16,000 +CD Radio, Inc. .................................. 304,000
36,900 +Children's Place Retail Stores, Inc. ............ 369,000
50,000 Claire's Stores, Inc. ............................ 900,000
20,000 +CONMED Corp. .................................... 457,500
11,300 Fair Isaac & Co., Inc. ........................... 377,138
31,000 +Linens'n Things, Inc. ........................... 852,500
26,700 +Men's Wearhouse, Inc. ........................... 457,237
81,000 +Natural MicroSystems Corp. ...................... 840,375
35,000 +O'Reilly Automotive, Inc. ....................... 1,260,000
40,300 +Paxar Corp. ..................................... 357,663
15,600 Polaris Industries, Inc. ......................... 483,600
54,000 +PSS World Medical, Inc. ......................... 999,000
46,300 +RDO Equipment Co., Class A....................... 419,594
26,500 +Scientific Games Holdings Corp. ................. 518,406
22,250 +Sunrise Assisted Living, Inc. ................... 763,453
13,500 Tiffany & Co. .................................... 423,562
24,850 +Travel Services International, Inc. ............. 337,028
32,000 +Ventana Medical Systems, Inc. ................... 552,000
-----------
11,583,681
-----------
FINANCIAL -- 19.46%
34,000 ARM Financial Group, Inc., Class A................ 603,500
7,400 Associates First Capital Corp., Class A........... 482,850
21,500 Cabot Industrial Trust............................ 454,188
15,300 Cullen/Frost Bankers, Inc. ....................... 738,225
9,400 Executive Risk, Inc. ............................. 423,588
13,900 First American Corp. (Tennessee).................. 533,412
76,300 Freedom Securities Corp. ......................... 1,010,975
14,400 Greenpoint Financial Corp. ....................... 459,000
15,000 Mutual Risk Management Ltd. ...................... 530,625
52,600 Sovereign Bancorp, Inc. .......................... 693,662
11,000 UNUM Corp. ....................................... 546,562
10,600 Weingarten Realty Investors....................... 434,600
-----------
6,911,187
-----------
TECHNOLOGY -- 17.54%
29,000 +Boole & Babbage, Inc. ........................... 659,750
21,000 First Data Corp. ................................. 493,500
19,000 Hughes Supply, Inc. .............................. 541,500
9,100 +Human Genome Sciences, Inc. ..................... 267,313
20,300 +Incyte Pharmaceuticals, Inc. .................... 426,300
32,800 +ITI Technologies, Inc. .......................... 787,200
29,200 +MICROS Systems, Inc. ............................ 874,175
17,600 +Newbridge Networks, Corp. ....................... 315,700
50,000 +Perceptron, Inc. ................................ 293,750
12,250 +Phoenix Technologies Ltd. ....................... 68,906
33,200 +Rock of Ages Corp. .............................. 365,200
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
40,000 +SDL, Inc. ........................................... $ 500,000
10,000 Timberline Software Corp. ............................ 187,500
42,200 +Unitrode Corp. ...................................... 448,375
-----------
6,229,169
-----------
CONSUMER STAPLES -- 10.23%
11,000 Avon Products, Inc. .................................. 308,688
19,000 Carnival Corp., Class A............................... 604,438
21,000 CVS Corp. ............................................ 920,062
34,600 +Hain Food Group, Inc. ............................... 514,675
21,250 +IDEXX Laboratories, Inc. ............................ 502,031
36,000 Schweitzer-Mauduit International, Inc. ............... 783,000
-----------
3,632,894
-----------
ENERGY -- 9.08%
84,500 +Ocean Energy, Inc. .................................. 1,109,063
56,500 +R & B Falcon Corp. .................................. 678,000
24,000 +Silicon Valley Bancshares............................ 381,000
30,900 +TETRA Technologies, Inc. ............................ 370,800
82,000 +Varco International, Inc. ........................... 686,750
-----------
3,225,613
-----------
CAPITAL GOODS -- 6.21%
24,400 Baldor Electric Co. .................................. 533,750
26,500 Juno Lighting, Inc. .................................. 586,312
34,450 Lindsay Manufacturing Co. ............................ 512,444
16,400 Teleflex, Inc. ....................................... 574,000
-----------
2,206,506
-----------
RAW/INTERMEDIATE
MATERIALS -- 0.94%
18,000 Millenium Chemicals, Inc. ............................ 335,250
-----------
TOTAL COMMON STOCKS
(Cost $40,381,218).................................... 34,124,300
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 4.22%
$700,000 Associates Corp. of North America Master Notes........ 700,000
799,000 General Electric Co. Promissory Notes................. 799,000
-----------
TOTAL DEMAND NOTES
(Cost $1,499,000)..................................... 1,499,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $41,880,218*)........................................ 100.30% $35,623,300
OTHER ASSETS AND LIABILITIES (NET)......................... (0.30) (106,123)
------ -----------
NET ASSETS................................................. 100.00% $35,517,177
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non income producing security
See Notes to Financial Statements
14
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
ENERGY AND NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 95.58%
ENERGY -- 71.88%
26,000 Anadarko Petroleum Corp. ............................ $ 1,022,125
20,000 +Atwood Oceanics..................................... 416,250
41,000 +BJ Services Co. .................................... 666,250
33,986 British Petroleum Company plc ADR.................... 2,965,278
25,000 Burlington Resources, Inc. .......................... 934,375
40,000 +Cal Dive International, Inc. ....................... 710,000
22,000 Chevron Corp. ....................................... 1,849,375
30,000 +Cooper Cameron Corp. ............................... 843,750
40,000 Exxon Corp. ......................................... 2,807,500
95,000 +Global Industries Ltd. ............................. 1,092,500
10,000 +Marine Drilling Cos., Inc. ......................... 114,375
26,000 Mobil Corp. ......................................... 1,974,375
30,000 +Nabors Industries, Inc. ............................ 455,625
50,000 +Newfield Exploration Co. ........................... 1,125,000
30,000 +Newpark Resources, Inc. ............................ 206,250
10,000 Noble Affiliates, Inc. .............................. 318,750
135,300 +Ocean Energy, Inc. ................................. 1,775,812
73,000 +R & B Falcon Corp. ................................. 876,000
55,000 Royal Dutch Petroleum Co. ........................... 2,619,375
18,000 Schlumberger Ltd. ................................... 905,625
100,000 +Superior Energy Services, Inc. ..................... 343,750
20,000 Texaco, Inc. ........................................ 1,253,750
37,000 Tosco Corp. ......................................... 795,500
17,500 Total S.A. ADR....................................... 1,099,219
65,000 +Transmontaigne Oil Co. ............................. 901,875
30,000 +U.S. Filter Corp. .................................. 480,000
25,000 Valero Energy Corp. ................................. 496,875
95,000 +Varco International, Inc. .......................... 795,625
32,000 Vastar Resources, Inc. .............................. 1,440,000
30,000 +Weatherford International, Inc. .................... 648,750
------------
31,933,934
------------
BASIC MATERIALS -- 6.82%
50,000 Barrick Gold, Corp. ................................. 1,000,000
10,000 E.I. du Pont de Nemours & Co. ....................... 561,250
20,000 Fort James Corp. .................................... 656,250
14,000 Mead Corp. .......................................... 412,125
14,000 Willamette Industries................................ 401,625
------------
3,031,250
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- 16.88%
25,000 +AES Corp. ......................................... $ 926,562
42,000 Coastal Corp. ...................................... 1,417,500
30,888 Duke Energy Corp. .................................. 2,044,400
23,000 Enron Corp. ........................................ 1,214,688
23,000 KN Energy, Inc. .................................... 1,178,750
25,000 Williams Cos., Inc. ................................ 718,750
-----------
7,500,650
-----------
TOTAL COMMON STOCKS
(Cost $39,110,862).................................. 42,465,834
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 6.18%
$1,505,000 Associates Corp. of North America Master Notes...... 1,505,000
1,239,000 General Electric Co. Promissory Notes............... 1,239,000
-----------
TOTAL DEMAND NOTES
(Cost $2,744,000)................................... 2,744,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $41,854,862*)........................................ 101.76% $45,209,834
OTHER ASSETS AND LIABILITIES (NET)......................... (1.76) (781,122)
------ -----------
NET ASSETS................................................. 100.00% $44,428,712
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non income producing security
ADR -- American Depositary Receipt
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 98.48%
TECHNOLOGY -- 42.38%
47,000 America On-Line, Inc. ............................... $ 5,228,750
72,000 +Cisco Systems, Inc. ................................ 4,450,500
90,000 +Dell Computer Corp. ................................ 5,917,500
90,000 +EMC Corp. .......................................... 5,146,875
53,000 Intel Corp. ......................................... 4,544,750
77,000 Medtronic, Inc. ..................................... 4,456,375
41,000 +Microsoft Corp. .................................... 4,512,562
60,000 +Tellabs, Inc. ...................................... 2,388,750
------------
36,646,062
------------
FINANCIAL -- 20.59%
48,000 American International Group, Inc. .................. 3,696,000
30,000 Citicorp............................................. 2,788,125
64,000 Fannie Mae........................................... 4,112,000
54,000 Merrill Lynch & Co. ................................. 2,558,250
118,000 Schwab (Charles) Corp. .............................. 4,646,250
------------
17,800,625
------------
CONSUMER CYCLICAL -- 20.24%
67,000 +BMC Software, Inc. ................................. 4,020,000
83,000 Harley-Davidson, Inc. ............................... 2,438,125
101,000 Home Depot, Inc. .................................... 3,989,500
69,000 +PeopleSoft, Inc. ................................... 2,251,125
91,000 +Sylvan Learning Systems, Inc. ...................... 2,093,000
107,000 Walt Disney Co. ..................................... 2,708,438
------------
17,500,188
------------
CONSUMER STAPLES -- 15.27%
49,000 Coca-Cola Co. ....................................... 2,823,625
72,000 Gillette Co. ........................................ 2,754,000
41,000 Pfizer, Inc. ........................................ 4,343,438
75,000 +Quintiles Transnational Corp. ...................... 3,281,250
------------
13,202,313
------------
TOTAL COMMON STOCKS
(Cost $79,875,612)................................... 85,149,188
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS -- 1.49%
$1,288,000 Agreement with Chase Securities Inc., 5.25%, dated
9/30/98, due 10/01/98, to be repurchased at
$1,288,188, collateralized by $1,085,000 U.S.
Treasury Notes, 7.875% due 11/15/04, valued at
$1,319,524
(Cost $1,288,000)................................... $ 1,288,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $81,163,612*)........................................ 99.97% $86,437,188
OTHER ASSETS AND LIABILITIES (NET)......................... 0.03 22,192
------ -----------
NET ASSETS................................................. 100.00% $86,459,380
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security
See Notes to Financial Statements
16
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
REAL ESTATE FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- 96.98%
REAL ESTATE -- 94.47%
38,000 Arden Realty Group, Inc. ............................ $ 847,875
31,884 Avalon Bay Communities, Inc. ........................ 1,086,049
55,000 Bedford Property Investors, Inc. .................... 990,000
36,000 Boston Properties, Inc. ............................. 1,026,000
57,000 Cabot Industrial Trust............................... 1,204,125
62,000 +Catellus Development Corp. ......................... 806,000
70,500 CenterTrust Retail Properties, Inc. ................. 916,500
35,500 Chateau Communities, Inc. ........................... 991,781
33,000 Crescent Real Estate Equity, Co. .................... 833,250
60,000 Developers Divers Realty, Corp. ..................... 1,095,000
55,000 Duke Realty Investment, Inc. ........................ 1,275,312
44,203 Equity Office Properties Trust ...................... 1,082,974
47,500 First Washington Realty Trust........................ 1,128,125
37,000 Forest City Enterprises, Inc., Class A............... 777,000
38,000 Glenborough Realty Trust, Inc. ...................... 807,500
53,500 Glimcher Realty Trust................................ 916,188
35,500 Golf Trust of America, Inc. ......................... 1,056,125
39,000 Health Care REIT, Inc. .............................. 1,038,375
35,000 Healthcare Realty Trust, Inc. ....................... 892,500
32,000 Highwoods Properties, Inc. .......................... 888,000
38,000 Hospitality Properties Trust......................... 1,130,500
54,000 HRPT Properties Trust................................ 870,750
32,000 KIMCO Realty Corp. .................................. 1,216,000
31,900 Mack-Cali Realty Corp. .............................. 957,000
36,500 Meditrust Corp. ..................................... 622,781
52,000 Merry Land & Investment Companies, Inc. ............. 1,163,500
54,000 Pacific Gulf Properties, Inc. ....................... 1,086,750
40,000 Prentiss Properties Trust............................ 955,000
46,000 ProLogis Trust....................................... 1,040,750
44,000 Public Storage, Inc. ................................ 1,179,750
37,000 Simon Property Group, Inc. .......................... 1,100,750
29,000 Spieker Properties, Inc. ............................ 1,065,750
26,000 Starwood Hotels & Resorts............................ 793,000
90,000 Taubman Center, Inc. ................................ 1,260,000
77,000 United Dominion Realty Trust......................... 875,875
28,500 Vornado Realty Trust................................. 944,062
29,500 Weingarten Realty Investors.......................... 1,209,500
-----------
37,130,397
-----------
COMMON STOCKS -- (CONTINUED)
FINANCIAL -- 2.51%
20,000 Freddie Mac.......................................... $ 988,750
-----------
TOTAL COMMON STOCKS
(Cost $44,359,669)................................... 38,119,147
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 3.49%
$1,370,000 Agreement with Chase Securities Inc., 5.25%, dated
9/30/98, due 10/01/98, to be repurchased at
$1,370,200, collateralized by $1,155,000 U.S.
Treasury Notes, 7.875% due 11/15/04, valued at
$1,404,655
(Cost $1,370,000).................................... 1,370,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $45,729,669*)........................................ 100.47% $39,489,147
OTHER ASSETS AND LIABILITIES (NET)......................... (0.47) (184,154)
------ -----------
NET ASSETS................................................. 100.00% $39,304,993
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security
REIT -- Real Estate Investment Trust
See Notes to Financial Statements
17
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Excelsior Funds, Inc. ("Excelsior Fund") was incorporated under the laws of
the State of Maryland on August 2, 1984 and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Excelsior Fund currently offers shares in eighteen managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for the Blended
Equity Fund, Income and Growth Fund, Value and Restructuring Fund, Small Cap
Fund, Energy and Natural Resources Fund, Large Cap Growth Fund and Real Estate
Fund (the "Portfolios"). Such policies are in conformity with generally
accepted accounting principles and are consistently followed by Excelsior Fund
in the preparation of the financial statements. Generally accepted accounting
principles require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates. The financial statements for the
remaining portfolios of Excelsior Fund and Excelsior Tax-Exempt Funds, Inc.
("Excelsior Tax-Exempt Fund") are presented separately.
(A) PORTFOLIO VALUATION:
Investments in securities that are traded on a recognized stock exchange
are valued at the last sale price on the exchange on which such securities
are primarily traded or at the last sale price on the national securities
market. Securities traded over-the-counter are valued each business day on
the basis of the closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid
prices (as calculated by an independent pricing service (the "Service")
based upon its evaluation of the market for such securities) when, in the
judgment of the Service, quoted bid prices for securities are readily
available and are representative of the bid side of the market. Portfolio
securities that are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on
their respective exchanges, except that when an occurrence subsequent to
the time a value was so established is likely to have changed such value,
then a fair value of those securities will be determined by consideration
of other factors under the direction of the Board of Directors. A security
which is traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market on which the security is
traded. Securities for which market quotations are not readily available
are valued at fair value, pursuant to guidelines adopted by Excelsior
Fund's Board of Directors. Short-term debt instruments with remaining
maturities of 60 days or less are valued at amortized cost, which
approximates market value.
All other foreign securities are valued at the last current bid quotation
if market quotations are available, or at fair value as determined in
accordance with policies established by the Board of Directors. Investment
valuations, other assets, and liabilities initially expressed in foreign
currencies are converted each business day into U.S. dollars based upon
current exchange rates. Purchases and sales of foreign investments and
income and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing on the respective dates of such transactions.
Gains and losses attributable to foreign currency exchange rates are
recorded for financial statement purposes as net realized gains and losses
on investments. That portion of both realized and unrealized gains and
18
<PAGE>
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Forward foreign currency exchange contracts: The Portfolios'
participation in forward currency exchange contracts will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging involves the purchase or sale of foreign currency with
respect to specific receivables or payables of a Portfolio generally
arising in connection with the purchase or sale of its portfolio
securities. Risk may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts
and is generally limited to the amount of unrealized gain on the contracts,
if any, at the date of default. Risk may also arise from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Contracts are marked-to-market daily and the change in market value is
recorded as unrealized appreciation or depreciation. Realized gains or
losses arising from such transactions are included in net realized gains or
losses from foreign currency transactions.
(B) SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Security transactions are recorded on a trade date basis. Realized gains
and losses on investments sold are recorded on the basis of identified
cost. Interest income, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except for certain
dividends from foreign securities, which are recorded as soon as the
Portfolios are informed of the dividend.
(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 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 sub-custodian 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.
If the value of the underlying security 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:
Dividends from net investment income are declared and paid quarterly. Net
realized capital gains, unless offset by any available capital loss
carryforward, are distributed to shareholders at least annually. Dividends
and distributions are recorded on the ex-dividend date.
Dividends and distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
net operating losses, foreign currency transactions, partnership income,
deferral of losses on wash sales, dividends received from real estate
investment trusts (REITs) and net capital losses and net currency losses
incurred after October 31 and within the
19
<PAGE>
taxable year ("Post-October losses"). Due to the nature of distributions
that the Real Estate Fund receives from REITs, the Real Estate Fund
anticipates that it will have a tax basis return of capital.
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.
(E) FEDERAL TAXES:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
At September 30, 1998, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities for which there
was an excess of tax cost over value is as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Blended Equity Fund............. $232,622,673 $ (4,967,672) $227,655,001
Income and Growth Fund.......... 25,465,243 (6,661,433) 18,803,810
Value and Restructuring Fund ... 43,674,450 (73,595,736) (29,921,286)
Small Cap Fund.................. 2,518,576 (8,775,494) (6,256,918)
Energy and Natural Resources
Fund........................... 8,249,656 (4,894,684) 3,354,972
Large Cap Growth Fund........... 14,615,243 (9,341,667) 5,273,576
Real Estate Fund................ 390,236 (6,630,758) (6,240,522)
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average daily net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE, DISTRIBUTION EXPENSES AND
RELATED PARTY TRANSACTIONS
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and, collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment adviser to the Portfolios. 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 0.75% of the average daily net assets of the Blended Equity Fund,
Income and Growth Fund and Large Cap Growth Fund, 0.60% of the average daily
net assets of the Value and Restructuring Fund, Small Cap Fund and Energy and
Natural Resources Fund, and 1.00% of the average daily net assets of the Real
Estate Fund. U.S. Trust NY and U.S. Trust CT are wholly-owned subsidiaries of
U.S. Trust Corporation, a registered bank holding company.
U.S. Trust CT, Chase Global Funds Services Company, a corporate affiliate of
The Chase Manhattan Bank, and Federated Administrative Services (collectively,
the "Administrators") provide administrative
20
<PAGE>
services to Excelsior 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
Fund, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust (excluding
the international equity portfolios of Excelsior Fund and Excelsior
Institutional Trust), all of which are affiliated investment companies, as
follows: 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. For
the six months ended September 30, 1998, Administration fees charged by U.S.
Trust CT were as follows:
<TABLE>
<S> <C>
Blended Equity Fund................................................... $107,796
Income and Growth Fund................................................ 20,405
Value and Restructuring Fund.......................................... 93,637
Small Cap Fund........................................................ 9,839
Energy and Natural Resources Fund..................................... 8,144
Large Cap Growth Fund................................................. 13,466
Real Estate Fund...................................................... 7,413
</TABLE>
From time to time, as they may deem appropriate in their sole discretion,
U.S. Trust and the Administrators may undertake to waive a portion or all of
the fees payable to them and also may reimburse the Portfolios for a portion
of other expenses. Until further notice to Excelsior Fund, U.S. Trust intends
to voluntarily waive fees to the extent necessary to maintain an annual
expense ratio of not more than 0.99% for Value and Restructuring Fund, Small
Cap Fund and Energy and Natural Resources Fund, and not more than 1.05% and
1.20% for Large Cap Growth Fund and Real Estate Fund, respectively. For the
six months ended September 30, 1998, U.S. Trust waived fees as follows:
<TABLE>
<S> <C>
Blended Equity Fund.................................................... $127,343
Real Estate Fund....................................................... 21,672
</TABLE>
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S.
Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
administrative services provided by each service organization to its
customers, each Portfolio will pay the service organization an administrative
service fee at the annual rate of up to 0.40% 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.
Administrative service fees paid to affiliates of U.S. Trust amounted to
$300,380 for the six months ended September 30, 1998. Until further notice to
Excelsior Fund, U.S. Trust and the Administrators have voluntarily agreed to
waive investment advisory and administration fees payable by each Portfolio in
an amount equal to administrative service fees payable (including fees paid to
affiliates of U.S. Trust) by that Portfolio. For the six months ended
September 30, 1998, U.S. Trust and the Administrators
21
<PAGE>
waived investment advisory and administration fees in amounts equal to the
administrative service fees for the Portfolios as follows:
<TABLE>
<CAPTION>
U.S.
TRUST ADMINISTRATORS
-------- --------------
<S> <C> <C>
Blended Equity Fund..................................... $115,491 $ 850
Income and Growth Fund.................................. 51,323 248
Value and Restructuring Fund............................ 276,461 49,688
Small Cap Fund.......................................... 25,303 19
Energy and Natural Resources Fund....................... 16,256 1,879
Large Cap Growth Fund................................... 12,372 90
Real Estate............................................. 13,336 3
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc. serves as the sponsor and distributor of Excelsior
Fund. Shares of each Portfolio are sold on a continuous basis by the
Distributor.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000.
3. PURCHASES AND SALES OF SECURITIES:
For the six months ended September 30, 1998, purchases and sales of
securities, excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Blended Equity Fund.................................. $ 37,593,295 $ 32,770,179
Income and Growth Fund............................... 19,454,833 59,698,389
Value and Restructuring Fund......................... 345,908,056 111,304,900
Small Cap Fund....................................... 24,086,564 34,447,367
Energy and Natural Resources Fund.................... 18,459,811 10,491,950
Large Cap Growth Fund................................ 44,799,827 2,477,082
Real Estate Fund..................................... 7,708,630 2,675,858
</TABLE>
4. COMMON STOCK:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
23.875 billion of which is currently classified to represent interests in one
of eighteen separate portfolios. Authorized capital currently classified for
each Portfolio is as follows: 375 million shares of the Blended Equity and
Income and Growth Funds and 500 million shares each of Value and Restructuring
Fund, Small Cap Fund, Energy and Natural Resources Fund, Large Cap Growth Fund
and Real Estate Fund. As of August 1, 1997 Trust Shares are no longer offered,
and at September 30, 1998 there were no Trust Shares outstanding.
Each share has a par value of $.001, and represents an equal proportionate
interest in the particular Portfolio with other shares of the same Portfolio,
and is entitled to such dividends and distributions of
22
<PAGE>
taxable earnings on the assets belonging to such Portfolio as are declared at
the discretion of Excelsior Fund's Board of Directors.
<TABLE>
<CAPTION>
BLENDED EQUITY FUND
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold:
Shares................ 1,835,245 $ 66,227,633 1,830,335 $ 59,664,729
Trust Shares.......... -- -- 454 --
Issued in connection
with previous
reorganization
Shares................ -- -- 5,809,320 118,382,388
Issued as reinvestment
of dividends:
Shares................ 9,496 353,114 365,826 11,596,023
Trust Shares.......... -- -- 6 146
Redeemed:
Shares................ (1,756,356) (62,036,758) (3,428,336) (110,065,542)
Trust Shares.......... -- -- (3,604) (108,505)
---------- ------------- ---------- -------------
Net Increase............ 88,385 $ 4,543,989 4,574,001 $ 79,469,239
========== ============= ========== =============
<CAPTION>
INCOME AND GROWTH FUND
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold.................... 342,298 $ 5,593,585 1,061,028 $ 18,205,158
Issued as reinvestment
of dividends........... 22,747 405,482 370,069 6,178,623
Redeemed................ (2,143,219) (35,270,824) (2,444,213) (42,309,649)
---------- ------------- ---------- -------------
Net Decrease............ (1,778,174) $ (29,271,757) (1,013,116) $ (17,925,868)
========== ============= ========== =============
<CAPTION>
VALUE AND RESTRUCTURING FUND
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold
Shares................ 14,919,350 $ 342,693,196 9,949,197 $ 210,533,502
Issued as reinvestment
of dividends:
Shares................ 22,992 550,389 32,739 680,550
Trust Shares.......... -- -- 4 58
Redeemed:
Shares................ (5,333,456) (110,533,940) (1,440,113) (29,351,458)
Trust Shares.......... -- -- (3,268) (61,583)
---------- ------------- ---------- -------------
Net Increase............ 9,608,886 $ 232,709,645 8,538,559 $ 181,801,069
========== ============= ========== =============
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
SMALL CAP FUND
-------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold:
Shares................... 2,133,506 $ 19,500,764 1,742,160 $19,925,198
Trust Shares............. -- -- 991 10,266
Issued as reinvestment of
dividends
Shares................... -- -- 1 4
Redeemed:
Shares................... (3,457,715) (32,019,211) (2,036,998) (20,366,512)
Trust Shares............. -- -- (1,905) (21,542)
---------- ------------ ---------- -----------
Net Decrease............... (1,324,209) $(12,518,447) (295,751) $ (452,586)
========== ============ ========== ===========
<CAPTION>
ENERGY AND NATURAL RESOURCES FUND
-------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold....................... 1,364,986 $ 15,938,400 1,589,555 $20,278,480
Issued as reinvestment of
dividends................. 2,665 32,245 57,892 738,380
Redeemed................... (776,776) (9,025,865) (1,001,470) (12,312,018)
---------- ------------ ---------- -----------
Net Increase............... 590,875 $ 6,944,780 645,977 $ 8,704,842
========== ============ ========== ===========
<CAPTION>
LARGE CAP GROWTH FUND
-------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98*
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold....................... 5,679,608 $ 51,211,417 5,724,639 $42,655,392
Issued as reinvestment of
dividends................. -- -- -- --
Redeemed................... (1,102,389) (9,664,975) (141,234) (1,080,251)
---------- ------------ ---------- -----------
Net Increase............... 4,577,219 $ 41,546,442 5,583,405 $41,575,141
========== ============ ========== ===========
<CAPTION>
REAL ESTATE FUND
-------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98*
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold....................... 1,747,749 $ 11,513,412 5,989,568 $41,874,511
Issued as reinvestment of
dividends................. 1,260 8,381 481 3,364
Redeemed................... (1,106,336) (7,025,408) (149,807) (1,034,897)
---------- ------------ ---------- -----------
Net Increase............... 642,673 $ 4,496,385 5,840,242 $40,842,978
========== ============ ========== ===========
</TABLE>
- --------
* For the period 10/1/97 (commencement of operations) through 3/31/98.
24
<PAGE>
5. ORGANIZATION COSTS:
Excelsior Fund has borne all costs in connection with the initial
organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under Federal and state securities
regulations. All such costs are being amortized on the straight-line basis
over periods of five years from the dates on which each Portfolio commenced
operations.
6. LINE OF CREDIT:
The Portfolios and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 2% per year. In
addition a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating Portfolios at the end of
each quarter. For the six months ended September 30, 1998, the Portfolios had
no borrowings under the agreement.
25
