<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[EXCELSIOR LOGO APPEARS HERE]
Domestic Equity
Portfolios
SEMI-ANNUAL REPORT
September 30, 1999
<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
Value and Restructuring Fund............................................. 11
Small Cap Fund........................................................... 13
Energy and Natural Resources Fund........................................ 14
Large Cap Growth Fund.................................................... 15
Real Estate Fund......................................................... 16
Optimum Growth Fund...................................................... 17
Value Equity Fund........................................................ 18
NOTES TO FINANCIAL STATEMENTS............................................. 19
</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:
Excelsior Funds, Inc. 1-800-446-1012 (From overseas, call 617-557-8280)
Excelsior Institutional Trust 1-800-909-1989 (From overseas, call 617-557-
1755)
. Current Price and Yield Information:
Excelsior Funds, Inc. 1-800-446-1012
Excelsior Institutional Trust 1-800-861-3430
. 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 may be obtained by contacting Excelsior Funds, Inc., and Excelsior
Tax-Exempt Funds, Inc. at 1-800-446-1012 and Excelsior Institutional Trust at
1-800-909-1989.
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., Excelsior Tax-Exempt Funds, Inc. and
Excelsior Institutional Trust at the following address:
Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, U.S. TRUST COMPANY OF
CONNECTICUT THEIR PARENT OR AFFILIATES AND SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
<PAGE>
Excelsior Funds
Statements of Assets and Liabilities
September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Value and
Blended Restructuring
Equity Fund Fund
------------ -------------
<S> <C> <C>
ASSETS:
Investments, at cost--see accompanying
portfolios...................................... $403,803,224 $555,844,929
============ ============
Investments, at value (Note 1).................. $776,584,188 $706,066,754
Cash............................................ 502,998 402,751
Dividends receivable............................ 695,054 763,184
Interest receivable............................. 22,152 45,290
Receivable for investments sold................. -- 1,063,262
Receivable for fund shares sold................. 50 --
Prepaid expenses................................ 4,623 862
Unamortized organization costs (Note 5)......... -- --
------------ ------------
Total Assets.................................... 777,809,065 708,342,103
LIABILITIES:
Payable for investments purchased............... -- 2,495,867
Payable for fund shares redeemed................ -- 1,751,569
Dividends payable............................... -- --
Investment advisory fees payable (Note 2)....... 920,474 514,335
Administration fees payable (Note 2)............ 101,928 56,591
Administrative servicing fees payable (Note 2).. 63,652 221,755
Directors'/Trustees' fees payable (Note 2)...... 5,891 2,843
Due to custodian bank........................... -- --
Accrued expenses and other payables............. 177,540 241,152
------------ ------------
Total Liabilities............................... 1,269,485 5,284,112
------------ ------------
NET ASSETS....................................... 776,539,580 703,057,991
============ ============
NET ASSETS consist of:
Undistributed net investment income (loss)...... $ 363,339 $ 600,120
Accumulated net realized gain (loss) on
investments..................................... 32,022,085 (15,641,705)
Unrealized appreciation (depreciation) of
investments and foreign currency translations... 372,780,964 150,221,825
Par value (Note 4).............................. 18,406 27,961
Paid-in capital in excess of par value.......... 371,354,786 567,849,790
------------ ------------
Total Net Assets................................. $776,539,580 $703,057,991
============ ============
Net Assets:
Shares.......................................... $776,539,580 $703,057,991
Institutional Shares............................ -- --
Shares outstanding (Note 4):
Shares.......................................... 18,406,123 27,960,758
Institutional Shares............................ -- --
NET ASSET VALUE PER SHARE (net assets / shares
outstanding):
Shares ......................................... $42.19 $25.14
====== ======
Institutional Shares............................ -- --
==== ====
</TABLE>
See Notes to Financial Statements
1
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Small Cap Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund Fund
----------- ----------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$46,622,459 $46,203,772 $201,306,727 $42,597,225 $50,028,546 $31,734,131
=========== =========== ============ =========== =========== ===========
$47,952,353 $55,820,035 $284,293,869 $34,997,283 $93,605,353 $43,945,624
65,324 636,009 178,874 14,295 52,849 --
15,919 18,157 28,480 283,882 58,557 55,117
20,230 6,821 1,404 197 4,723 774
258,790 2,759,747 -- -- -- 249,431
-- 11,400 1,500 2,500 -- --
670 222 85 142 11 142
-- -- 34,656 18,707 402 402
----------- ----------- ------------ ----------- ----------- -----------
48,313,286 59,252,391 284,538,868 35,317,006 93,721,895 44,251,490
88,785 3,408,311 -- 431,923 -- 437,216
-- 191,510 2,352 -- -- --
-- -- -- -- -- --
35,487 40,016 317,681 37,847 85,322 37,642
8,177 11,488 44,766 4,619 14,746 7,156
12,005 11,332 24,114 10,320 2,761 --
396 352 1,270 260 1,309 370
-- -- -- -- -- 47,009
27,398 15,911 41,348 1,553 81,425 13,561
----------- ----------- ------------ ----------- ----------- -----------
172,248 3,678,920 431,531 486,522 185,563 542,954
----------- ----------- ------------ ----------- ----------- -----------
48,141,038 55,573,471 284,107,337 34,830,484 93,536,332 43,708,536
=========== =========== ============ =========== =========== ===========
$ (45,970) $ 43,922 $ (643,990) $ 382,188 $ (93,238) $ (64)
(125,426) 2,839,912 (13,055,627) (3,674,490) 13,444,133 1,075,844
1,329,894 9,616,262 82,987,142 (7,599,942) 43,576,807 12,211,337
4,834 4,267 20,539 6,523 35 27
46,977,706 43,069,108 214,799,273 45,716,205 36,608,595 30,421,392
----------- ----------- ------------ ----------- ----------- -----------
$48,141,038 $55,573,471 $284,107,337 $34,830,484 $93,536,332 $43,708,536
=========== =========== ============ =========== =========== ===========
$48,141,038 $55,573,471 $284,107,337 $34,830,484 $16,778,127 $ 63,060
-- -- -- -- 76,758,205 43,645,476
4,834,268 4,267,289 20,538,911 6,523,336 636,924 3,951
-- -- -- -- 2,895,384 2,738,558
$9.96 $13.02 $13.83 $5.34 $26.34 $15.96
===== ====== ====== ===== ====== ======
-- -- -- -- $26.51 $15.94
==== ===== ===== ==== ====== ======
</TABLE>
See Notes to Financial Statements
2
<PAGE>
Excelsior Funds
Statements of Operations
Six Months Ended September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Value and
Blended Restructuring
Equity Fund Fund
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income.................................. $ 238,736 $ 176,669
Dividend income.................................. 3,996,627 3,959,230
Less: Foreign taxes withheld..................... -- --
----------- -----------
Total Income..................................... 4,235,363 4,135,899
EXPENSES:
Investment advisory fees (Note 2)................ 2,864,315 2,073,928
Administration fees (Note 2)..................... 581,787 527,381
Administrative servicing fees (Note 2)........... 177,222 593,526
Custodian fees................................... 97,294 103,149
Shareholder servicing agent fees................. 72,592 337,095
Legal and audit fees............................. 44,622 37,380
Shareholder reports.............................. 29,159 26,146
Directors'/Trustees' fees and expenses (Note 2).. 11,497 9,270
Registration and filing fees..................... 6,711 30,216
Amortization of organization costs (Note 5)...... -- --
Distribution fees (Note 2)....................... -- --
Miscellaneous expenses........................... 15,013 84,452
----------- -----------
Total Expenses................................... 3,900,212 3,822,543
Fees waived by investment adviser and
administrators (Note 2).......................... (177,222) (593,526)
----------- -----------
Net Expenses..................................... 3,722,990 3,229,017
----------- -----------
NET INVESTMENT INCOME (LOSS)...................... 512,373 906,882
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(Note 1):
Net realized gain (loss):
Security transactions............................ 21,459,911 4,301,944
Foreign currency translations.................... -- (4,360)
----------- -----------
Total net realized gain (loss)................... 21,459,911 4,297,584
Change in unrealized appreciation/depreciation on
investments and foreign currency translations
during the period................................ (913,873) 23,083,963
----------- -----------
Net realized and unrealized gain (loss) on
investments...................................... 20,546,038 27,381,547
----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. $21,058,411 $28,288,429
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Small Cap Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund Fund
---------- ----------------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$ 82,348 $ 54,025 $ 283,406 $ 24,630 $ 23,817 $ 6,597
94,414 308,969 462,878 1,240,298 285,935 274,054
-- -- -- -- -- (347)
---------- ---------- ------------ ---------- ----------- ----------
176,762 362,994 746,284 1,264,928 309,752 280,304
142,547 158,896 1,037,475 179,788 314,669 143,617
36,190 40,339 210,721 27,478 73,858 33,667
33,794 36,323 86,479 20,331 12,760 --
13,223 8,728 40,846 6,424 12,989 6,831
17,400 26,451 49,966 5,356 3,970 3,846
2,429 2,751 15,519 2,120 10,186 4,049
2,510 2,568 10,534 1,717 2,075 1,312
625 683 4,196 485 2,628 956
5,793 9,102 9,134 7,017 12,045 12,931
-- -- 2,244 2,959 123 123
-- -- -- -- 19,400 124
2,015 1,818 9,639 2,082 1,943 1,989
---------- ---------- ------------ ---------- ----------- ----------
256,526 287,659 1,476,753 255,757 466,646 209,445
(33,794) (36,323) (86,479) (40,097) (63,656) (33,686)
---------- ---------- ------------ ---------- ----------- ----------
222,732 251,336 1,390,274 215,660 402,990 175,759
---------- ---------- ------------ ---------- ----------- ----------
(45,970) 111,658 (643,990) 1,049,268 (93,238) 104,545
---------- ---------- ------------ ---------- ----------- ----------
3,555,748 6,138,883 (9,478,588) (1,570,256) 10,829,425 639,448
-- -- -- -- -- (2,628)
---------- ---------- ------------ ---------- ----------- ----------
3,555,748 6,138,883 (9,478,588) (1,570,256) 10,829,425 636,820
(416,506) 1,528,694 111,208 (62,174) (14,771,322) 942,641
---------- ---------- ------------ ---------- ----------- ----------
3,139,242 7,667,577 (9,367,380) (1,632,430) (3,941,897) 1,579,461
---------- ---------- ------------ ---------- ----------- ----------
$3,093,272 $7,779,235 $(10,011,370) $ (583,162) $(4,035,135) $1,684,006
========== ========== ============ ========== =========== ==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Excelsior Funds
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Value and
Blended Restructuring
Equity Fund Fund
------------ -------------
<S> <C> <C>
Six Months Ended September 30, 1999 (Unaudited)
Net investment income (loss)..................... $ 512,373 $ 906,882
Net realized gain (loss) on investments.......... 21,459,911 4,301,944
Net realized loss on foreign currency
transactions..................................... -- (4,360)
Change in unrealized appreciation/depreciation on
investments and foreign currency translations
during the period................................ (913,873) 23,083,963
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. 21,058,411 28,288,429
Distributions to shareholders:
From net investment income
Shares.......................................... (786,061) (1,118,909)
Institutional Shares............................ -- --
From net realized gain on investments
Shares.......................................... -- --
Institutional Shares............................ -- --
------------ ------------
Total distributions............................ (786,061) (1,118,909)
------------ ------------
Increase (decrease) in net assets from fund share
transactions (Note 4)
Shares.......................................... 35,994,259 81,273,713
Institutional Shares............................ -- --
------------ ------------
Total from fund share transactions............. 35,994,259 81,273,713
------------ ------------
Net increase (decrease) in net assets............ 56,266,609 108,443,233
NET ASSETS:
Beginning of period............................. 720,272,971 594,614,758
------------ ------------
End of period (1)............................... $776,539,580 $703,057,991
============ ============
--------
(1) Including undistributed net investment
income (loss)................................... $ 363,339 $ 600,120
============ ============
Year Ended March 31, 1999
Net investment income (loss)..................... $ 1,829,485 $ 3,230,272
Net realized gain (loss) on investments.......... 10,562,173 (20,078,685)
Net realized loss on foreign currency
transactions..................................... -- --
Change in unrealized appreciation/depreciation on
investments and foreign currency translations
during the year.................................. 101,900,285 20,524,738
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. 114,291,943 3,676,325
Distributions to shareholders:
From net investment income
Shares.......................................... (2,123,860) (2,676,861)
Institutional Shares............................ -- --
From net realized gain on investments
Shares.......................................... (8,071,808) (3,609,196)
Institutional Shares............................ -- --
------------ ------------
Total distributions............................ (10,195,668) (6,286,057)
------------ ------------
Increase (decrease) in net assets from fund share
transactions (Note 4)
Shares.......................................... 21,268,126 208,777,082
Institutional Shares............................ -- --
------------ ------------
Total from fund share transactions............. 21,268,126 208,777,082
------------ ------------
Net increase (decrease) in net assets............ 125,364,401 206,167,350
NET ASSETS:
Beginning of year............................... 594,908,570 388,447,408
------------ ------------
End of year (2)................................. $720,272,971 $594,614,758
============ ============
--------
(2) Including undistributed net investment
income.......................................... $ 637,027 $ 812,147
============ ============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Small Cap Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund Fund
------------ ----------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ (45,970) $ 111,658 $ (643,990) $ 1,049,268 $ (93,238) $ 104,545
3,555,748 6,138,883 (9,478,588) (1,570,256) 10,829,425 639,448
-- -- -- -- -- (2,628)
(416,506) 1,528,694 111,208 (62,174) (14,771,322) 942,641
------------ ----------- ------------ ----------- ------------ -----------
3,093,272 7,779,235 (10,011,370) (583,162) (4,035,135) 1,684,006
-- (158,848) -- (690,951) -- (328)
-- -- -- -- -- (191,977)
-- -- -- -- -- --
-- -- -- -- -- --
------------ ----------- ------------ ----------- ------------ -----------
-- (158,848) -- (690,951) -- (192,305)
------------ ----------- ------------ ----------- ------------ -----------
1,259,333 4,932,344 42,570,962 3,263,722 5,122,274 (65,507)
-- -- -- -- (8,009,661) 2,851,198
------------ ----------- ------------ ----------- ------------ -----------
1,259,333 4,932,344 42,570,962 3,263,722 (2,887,387) 2,785,691
------------ ----------- ------------ ----------- ------------ -----------
4,352,605 12,552,731 32,559,592 1,989,609 (6,922,522) 4,277,392
43,788,433 43,020,740 251,547,745 32,840,875 100,458,854 39,431,144
------------ ----------- ------------ ----------- ------------ -----------
$ 48,141,038 $55,573,471 $284,107,337 $34,830,484 $ 93,536,332 $43,708,536
============ =========== ============ =========== ============ ===========
$ (45,970) $ 43,922 $ (643,990) $ 382,188 $ (93,238) $ (64)
============ =========== ============ =========== ============ ===========
$ (17,160) $ 421,436 $ (602,021) $ 2,051,938 $ (27,456) $ 301,463
(3,681,149) (3,055,181) (3,363,023) (2,123,845) 4,906,503 2,731,686
-- -- -- -- -- (1,063)
(10,537,167) (3,816,865) 76,691,074 (7,647,372) 35,505,018 (1,255,930)
------------ ----------- ------------ ----------- ------------ -----------
(14,235,476) (6,450,610) 72,726,030 (7,719,279) 40,384,065 1,776,156
-- (363,702) -- (2,054,358) -- (217)
-- -- -- -- (10,785) (276,362)
(601,984) -- -- -- -- (6,437)
-- -- -- -- -- (3,002,331)
------------ ----------- ------------ ----------- ------------ -----------
(601,984) (363,702) -- (2,054,358) (10,785) (3,285,347)
------------ ----------- ------------ ----------- ------------ -----------
(9,922,033) 3,660,605 131,293,057 1,443,788 1,173,446 48,306
-- -- -- -- 869,600 6,048,555
------------ ----------- ------------ ----------- ------------ -----------
(9,922,033) 3,660,605 131,293,057 1,443,788 2,043,046 6,096,861
------------ ----------- ------------ ----------- ------------ -----------
(24,759,493) (3,153,707) 204,019,087 (8,329,849) 42,416,326 4,587,670
68,547,926 46,174,447 47,528,658 41,170,724 58,042,528 34,843,474
------------ ----------- ------------ ----------- ------------ -----------
$ 43,788,433 $43,020,740 $251,547,745 $32,840,875 $100,458,854 $39,431,144
============ =========== ============ =========== ============ ===========
$ -- $ 91,112 $ -- $ 23,871 $ -- $ 87,696
============ =========== ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Excelsior Funds
Financial Highlights--Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
Net Realized Distributions Distributions in
Net Asset Net and Unrealized Dividends From Net Excess of Net
Value, Investment Gain (Loss) Total From From Net Realized Gain Realized Gain
Beginning Income on Investments Investment Investment on Investments on Investments
of Period (Loss) and Options Operations Income and Options and Options
--------- ---------- -------------- ---------- ---------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
BLENDED EQUITY FUND --
(4/25/85*)
Shares:
Year Ended March 31,
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) --
1999.................... 36.12 0.11 6.90 7.01 (0.13) (0.49) --
Six Months Ended
September 30, 1999
(Unaudited)............ 42.51 0.03 (0.30)+++ (0.27) (0.05) -- --
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) -- --
VALUE AND RESTRUCTURING
FUND -- (12/31/92*)
Shares:
Year Ended March 31,
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) --
1999.................... 23.79 0.13 0.21 0.34 (0.11) (0.14) --
Six Months Ended
September 30, 1999
(Unaudited)............ 23.88 0.03 1.27 1.30 (0.04) -- --
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,
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) $(0.39)
1998.................... 8.83 (0.01) 3.13 3.12 -- -- --
1999.................... 11.95 -- (2.56) (2.56) -- (0.12) --
Six Months Ended
September 30, 1999
(Unaudited)............ 9.27 (0.01) 0.70 0.69 -- -- --
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,
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) $(0.07)
1999.................... 12.66 0.10 (1.65) (1.55) (0.09) -- --
Six Months Ended
September 30, 1999
(Unaudited)............ 11.02 0.03 2.01 2.04 (0.04) -- --
LARGE CAP GROWTH FUND --
(10/1/97*)
Period Ended March 31,
1998................... $ 7.00 -- $1.51 $ 1.51 -- -- --
Year Ended March 31,
1999................... 8.51 $(0.03) 5.82 5.79 -- -- --
Six Months Ended
September 30, 1999
(Unaudited)............ 14.30 (0.03) (0.44) (0.47) -- -- --
REAL ESTATE FUND --
(10/1/97*)
Period Ended March 31,
1998................... $ 7.00 $ 0.15 $ 0.01 $ 0.16 $(0.11) -- --
Year Ended March 31,
1999................... 7.05 0.33 (1.55) (1.22) (0.33) -- --
Six Months Ended
September 30, 1999
(Unaudited)............ 5.50 0.17 (0.21) (0.04) (0.12) -- --
OPTIMUM GROWTH FUND --
(7/3/96*)
Shares:
Period Ended March 31,
1997................... $ 9.87 $ 0.02 $ 0.31 $ 0.33 $(0.02) -- --
Year Ended March 31,
1998.................... 10.18 (0.01) 6.15 6.14 (0.01) -- --
1999.................... 16.31 (0.06) 11.15 11.09 -- -- --
Six Months Ended
September 30, 1999
(Unaudited)............ 27.40 (0.05) (1.01) (1.06) -- -- --
VALUE EQUITY FUND --
(1/15/97*)
Shares:
Period Ended March 31,
1997................... $12.08 $ 0.01 $(0.76) $(0.75) -- -- --
Year Ended March 31,
1998.................... 11.33 0.07 5.57 5.64 $(0.06) $(0.80) --
1999.................... 16.11 0.08 0.55 0.63 (0.07) (1.32) --
Six Months Ended
September 30, 1999
(Unaudited)............ 15.35 -- 0.65 0.65 (0.04) -- --
</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.
+++ The amount shown for the six month period ended September 30, 1999 for a
share outstanding thoughout that period does not accord with the aggregate
net gains on investments for that period because of the timing of sales
and repurchases of the Portfolio shares in relation to fluctuating market
value of the investments of the Portfolio.
See Notes to Financial Statements
7
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net Ratio of Gross Ratio of Net
Net Assets, Operating Operating Investment
Net Asset End Expenses Expenses Income (Loss) Portfolio Fee
Total Value, End Total of Period to Average to Average to Average Turnover Waivers
Distributions of Period Return (000) Net Assets Net Assets+ Net Assets Rate (Note 2)
------------- ---------- ------ ----------- ------------ -------------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(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% $0.02
(1.30) 25.81 11.09 % 306,990 1.01% 1.06% 0.71 % 39% 0.01
(2.44) 36.12 50.82 % 594,909 0.99% 1.06% 0.55 % 28% 0.02
(0.62) 42.51 19.65 % 720,273 0.95% 1.01% 0.29 % 20% 0.02
(0.05) 42.19 (0.65)%** 776,540 0.97%*** 1.02%*** 0.13 %*** 23%*** 0.01
(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 0.01
$(0.18) $10.55 11.49 % $ 30,183 0.98% 1.08% 0.83 % 82% $0.01
(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% 0.01
(0.36) 23.79 52.10 % 388,447 0.89% 0.93% 0.54 % 30% 0.01
(0.25) 23.88 1.48 % 594,615 0.93% 1.07% 0.59 % 43% 0.03
(0.04) 25.14 5.45 %** 703,058 0.94%*** 1.11%*** 0.26 %*** 13%*** 0.02
(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 --
$(0.18) $ 9.77 15.16 % $ 47,782 0.96% 1.04% (0.23)% 42% $0.01
(0.69) 10.78 18.29 % 78,061 0.90% 0.98% (0.17)% 38% 0.01
(0.49) 8.83 (14.33)% 53,258 0.94% 1.02% (0.26)% 55% 0.01
-- 11.95 35.33 % 68,548 0.94% 1.01% (0.14)% 73% 0.01
(0.12) 9.27 (21.41)% 43,788 0.94% 1.05% (0.04)% 115% 0.01
-- 9.96 7.44 %** 48,141 0.94%*** 1.08%*** (0.19)%*** 118%*** 0.01
(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 --
$(0.11) $ 7.92 4.28 % $ 15,813 0.98% 1.35% 1.18 % 31% $0.03
(0.07) 9.55 21.60 % 23,294 0.96% 1.09% 0.88 % 43% 0.01
(1.12) 11.12 28.28 % 33,393 0.93% 0.98% 0.84 % 87% --
(1.24) 12.66 24.97 % 46,174 0.99% 1.07% 0.69 % 88% 0.01
(0.09) 11.02 (12.23)% 43,021 0.98% 1.09% 0.97 % 96% 0.01
(0.04) 13.02 18.54 %** 55,573 0.95%*** 1.08%*** 0.42 %*** 121%*** 0.01
-- $ 8.51 21.57 %** $ 47,529 1.05%*** 1.20%*** (0.16)%*** 12%*** --
-- 14.30 68.04 % 251,548 1.04% 1.08% (0.53)% 4% -- ++
-- 13.83 (3.29)%** 284,107 1.00%*** 1.07%*** (0.46)%*** 16%*** -- ++
$(0.11) $ 7.05 2.26 %** $ 41,171 1.20%*** 1.40%*** 5.02 %*** 30%*** $0.01
<PAGE>
(0.33) 5.50 (17.55)% 32,841 1.20% 1.43% 5.37 % 28% 0.01
(0.12) 5.34 (0.90)%** 34,830 1.20%*** 1.42%*** 5.84 %*** 12%*** 0.01
$(0.02) $10.18 3.31 %** $ 3,357 1.05%*** 1.47%*** 0.33 %*** 20%*** $0.03
(0.01) 16.31 60.41 % 6,602 1.05% 1.32% (0.12)% 19% 0.03
-- 27.40 68.00 % 12,414 1.05% 1.26% (0.34)% 22% 0.04
-- 26.34 (3.87)%** 16,778 1.05%*** 1.17%*** (0.39)%*** 38%*** 0.02
-- $11.33 (6.21)%** $ 56 1.05%*** 1.43%*** 0.54 %*** 64%*** $0.01
$(0.86) 16.11 51.09 % 78 1.05% 1.35% 0.47 % 51% 0.05
(1.39) 15.35 4.59 % 125 1.05% 1.32% 0.53 % 55% 0.04
(0.04) 15.96 4.26 %** 63 1.05%*** 1.20%*** 0.21 %*** 45%*** 0.02
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Blended Equity Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 99.32%
TECHNOLOGY -- 21.97%
503,314 +Cisco Systems, Inc. ................................... $ 34,477,009
35,000 Compaq Computer Corp. .................................. 802,813
176,000 +Dell Computer Corp. ................................... 7,359,000
57,000 +EMC Corp. ............................................. 4,071,937
50,000 Honeywell Corp. ........................................ 5,565,625
300,000 Intel Corp. ............................................ 22,293,750
126,000 International Business Machines Corp. .................. 15,293,250
30,000 +Level 3 Communications, Inc. .......................... 1,565,625
186,640 Lucent Technologies, Inc. .............................. 12,108,270
400,980 +Microsoft Corp. ....................................... 36,313,751
72,000 Nokia Corp., Class A, ADR............................... 6,466,500
60,000 +Oracle Corp. .......................................... 2,730,000
80,000 +SDL, Inc. ............................................. 6,105,000
64,000 +Sun Microsystems, Inc. ................................ 5,952,000
116,000 Texas Instruments, Inc. ................................ 9,541,000
------------
170,645,530
------------
FINANCIAL -- 16.23%
29,000 American Express Co. ................................... 3,904,125
145,688 American International Group, Inc. ..................... 12,665,707
386,634 Associates First Capital Corp. ......................... 13,918,824
54,687 Bank of America Corp. .................................. 3,045,382
90,600 BankBoston Corp. ....................................... 3,929,775
2,287 +Berkshire Hathaway, Inc., Class B...................... 4,244,672
165,000 Citigroup, Inc. ........................................ 7,260,000
75,000 Firstar Corp. .......................................... 1,921,875
340,000 Fleet Financial Group, Inc. ............................ 12,452,500
81,702 Household International, Inc. .......................... 3,278,293
604,152 Mellon Bank Corp. ...................................... 20,390,130
232,694 Morgan Stanley Dean Witter & Co. ....................... 20,753,396
90,000 Mutual Risk Management Ltd. ............................ 1,102,500
15,000 Progressive Corp. ...................................... 1,225,313
50,200 Schwab (Charles) Corp. ................................. 1,691,113
156,300 State Street Boston Corp. .............................. 10,100,887
104,100 Wells Fargo Co. ........................................ 4,124,962
------------
126,009,454
------------
CONSUMER CYCLICAL -- 12.87%
100,000 +Analog Devices, Inc. .................................. 5,125,000
140,600 +CBS Corp. ............................................. 6,502,750
96,000 Comcast Corp., Class A Special.......................... 3,822,000
157,500 Dayton Hudson Corp. .................................... 9,459,844
8,300 +eBay, Inc. ............................................ 1,170,300
200,000 Ford Motor Co. ......................................... 10,037,500
45,000 General Motors Corp. ................................... 2,832,188
50,000 +General Motors Corp., Class H.......................... 2,862,500
100,000 Herman Miller, Inc. .................................... 2,387,500
91,700 Home Depot, Inc. ....................................... 6,292,912
250,000 McDonald's Corp. ....................................... 10,750,000
141,375 +O'Reilly Automotive, Inc. ............................. 6,732,984
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
CONSUMER CYCLICAL -- (continued)
25,000 +RCN Corp. ............................................. $ 1,018,750
150,000 ServiceMaster Ltd. Partnership.......................... 2,409,375
500,000 Wal-Mart Stores, Inc. .................................. 23,781,250
100,000 Wiley (John) & Sons, Inc.,
Class A................................................. 1,568,750
76,500 Xerox Corp. ............................................ 3,208,219
------------
99,961,822
------------
HEALTH CARE -- 12.05%
315,000 Abbott Laboratories..................................... 11,576,250
167,700 Bristol-Myers Squibb Co. ............................... 11,319,750
204,225 Johnson & Johnson....................................... 18,763,172
139,600 Medtronic, Inc. ........................................ 4,955,800
128,000 Merck & Co., Inc. ...................................... 8,296,000
808,200 Pfizer, Inc. ........................................... 29,044,687
220,000 Schering-Plough Corp. .................................. 9,597,500
------------
93,553,159
------------
CAPITAL GOODS -- 9.59%
90,000 Dover Corp. ............................................ 3,678,750
99,100 Emerson Electric Co. ................................... 6,261,881
276,100 General Electric Co. ................................... 32,735,107
209,666 Illinois Tool Works, Inc. .............................. 15,633,221
80,000 Ingersoll-Rand Co. ..................................... 4,395,000
80,000 Rockwell International Corp. ........................... 4,200,000
73,000 Tyco International Ltd. ................................ 7,537,250
------------
74,441,209
------------
COMMUNICATION SERVICES -- 8.91%
60,000 +America Online, Inc. .................................. 6,240,000
50,000 Ameritech Corp. ........................................ 3,359,375
259,109 AT&T Corp. ............................................. 11,271,242
171,000 Bell Atlantic Corp. .................................... 11,510,437
90,000 BellSouth Corp. ........................................ 4,050,000
211,000 +MCI WorldCom, Inc. .................................... 15,152,437
60,000 +NEXTEL Communications, Inc., Class A................... 4,068,750
90,000 Northern Telecom Ltd. .................................. 4,590,000
98,000 SBC Communications, Inc. ............................... 5,004,125
50,000 Sprint Corp. ........................................... 2,712,500
6,700 +Yahoo! Inc. ........................................... 1,201,394
------------
69,160,260
------------
CONSUMER STAPLES -- 8.64%
100,000 Air Products & Chemicals, Inc. ......................... 2,906,250
102,700 Bestfoods, Inc. ........................................ 4,980,950
187,500 Coca-Cola Company....................................... 9,011,719
44,210 CVS Corp. .............................................. 1,804,321
239,000 Gillette Co. ........................................... 8,111,062
48,500 Mattel, Inc. ........................................... 921,500
40,000 Novo-Nordisk A.S., ADR.................................. 2,390,000
66,000 PepsiCo, Inc. .......................................... 1,996,500
200,000 Philip Morris Companies, Inc. .......................... 6,837,500
113,200 Procter & Gamble Co. ................................... 10,612,500
158,700 Time Warner, Inc. ...................................... 9,641,025
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Blended Equity Fund--(continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
CONSUMER STAPLES -- (continued)
171,045 Walt Disney Co. ........................................ $ 4,425,789
50,000 WM. Wrigley Jr. Co. .................................... 3,440,625
------------
67,079,741
------------
ENERGY -- 7.52%
23,000 Chevron Corp. .......................................... 2,041,250
262,000 Exxon Corp. ............................................ 19,895,625
178,300 Mobil Corp. ............................................ 17,963,725
136,000 Phillips Petroleum Co. ................................. 6,630,000
73,000 Royal Dutch Petroleum Co. .............................. 4,311,563
58,000 Texaco, Inc. ........................................... 3,661,250
105,200 Unocal Corp. ........................................... 3,898,975
------------
58,402,388
------------
RAW/INTERMEDIATE MATERIALS -- 0.93%
60,000 E.I. du Pont de Nemours & Co. .......................... 3,652,500
90,000 Pioneer Hi-Bred International, Inc. .................... 3,583,125
------------
7,235,625
------------
UTILITIES -- 0.61%
80,000 +AES Corp. ............................................. 4,720,000
------------
TOTAL COMMON STOCKS
(Cost $398,428,224)..................................... 771,209,188
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
DEMAND NOTES -- 0.69%
$2,600,000 Associates Corp. of North America Master Notes....... $ 2,600,000
2,775,000 General Electric Co. Promissory Notes................ 2,775,000
------------
TOTAL DEMAND NOTES
(Cost $5,375,000).................................... 5,375,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $403,803,224*)...................................... 100.01% $776,584,188
OTHER ASSETS AND LIABILITIES (NET)........................ (0.01) (44,608)
------ ------------
NET ASSETS................................................ 100.00% $776,539,580
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
10
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Value and Restructuring Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 99.09%
TECHNOLOGY -- 35.13%
350,000 Alcatel Alsthom ADR..................................... $ 9,712,500
135,000 AT&T Corp. ............................................. 5,872,500
235,000 BCE, Inc. .............................................. 11,703,290
310,000 +Bell & Howell Holdings Co. ............................ 11,373,125
275,000 +General Motors Corp., Class H.......................... 15,743,750
635,500 +Global Crossing Ltd. .................................. 16,820,891
6,688 Intermedia Communications, Inc. ........................ 145,046
193,000 International Business Machines Corp. .................. 23,425,375
260,000 Nokia Corp., Class A, ADR............................... 23,351,250
200,000 +Plantronics, Inc. ..................................... 9,950,000
160,000 QUALCOMM, Inc. ......................................... 30,260,000
190,000 Raytheon Co., Class A................................... 9,215,000
254,955 Sensormatics Electronics Corp. ......................... 3,234,742
400,000 Texas Instruments, Inc. ................................ 32,900,000
380,000 +Unisys Corp. .......................................... 17,147,500
500,000 +Vishay Intertechnology, Inc. .......................... 11,875,000
340,000 Xerox Corp. ............................................ 14,258,750
------------
246,988,719
------------
FINANCIAL -- 17.65%
190,000 Amvescap plc ADR........................................ 7,778,125
280,000 ARM Financial Group, Inc.,
Class A................................................. 26,600
175,000 Bank One Corp. ......................................... 6,092,188
230,000 Bear Stearns Companies, Inc. ........................... 8,840,625
200,000 Chase Manhattan Corp. .................................. 15,075,000
345,000 Citigroup, Inc. ........................................ 15,180,000
325,000 Donaldson, Lufkin & Jenrette, Inc. ..................... 12,857,812
200,000 Fannie Mae.............................................. 12,537,500
280,000 Mellon Bank Corp. ...................................... 9,450,000
140,000 Morgan Stanley Dean Witter & Co. ....................... 12,486,250
135,000 PNC Bank Corp. ......................................... 7,112,813
235,000 SLM Holding Corp. ...................................... 10,105,000
145,000 XL Capital Ltd., Class A................................ 6,525,000
------------
124,066,913
------------
CONSUMER STAPLES -- 15.26%
450,000 +AT&T Corp. -- Liberty Media Group, Class A............. 16,706,250
405,000 Avon Products, Inc. .................................... 10,049,063
260,000 Bristol-Myers Squibb Co. ............................... 17,550,000
285,000 Deluxe Corp. ........................................... 9,690,000
250,000 Eastman Kodak Co. ...................................... 18,859,375
105,000 General Mills, Inc. .................................... 8,518,125
385,000 Philip Morris Companies, Inc. .......................... 13,162,187
340,000 +Suiza Foods Corp. ..................................... 12,750,000
------------
107,285,000
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
CONSUMER CYCLICAL -- 14.59%
365,000 +CBS Corp. ............................................. $ 16,881,250
200,000 Centex Corp. ........................................... 5,912,500
255,002 Delphi Automotive Systems Corp. ........................ 4,095,971
260,000 Ford Motor Co. ......................................... 13,048,750
200,000 General Motors Corp. ................................... 12,587,500
235,800 Harman International Industries, Inc. .................. 9,918,337
105,000 Lennox International Inc. .............................. 1,627,500
248,200 +Newmark Homes Corp. ................................... 1,737,400
420,000 News Corp. Ltd. ADR..................................... 11,943,750
405,000 +Outdoor Systems, Inc. ................................. 14,478,750
505,000 +Paxson Communications Corp. ........................... 6,186,250
300,000 Rite Aid Corp. ......................................... 4,143,750
------------
102,561,708
------------
TRANSPORTATION -- 5.82%
170,000 +AMR Corp. ............................................. 9,265,000
205,000 CNF Transportation, Inc. ............................... 7,636,250
290,000 Kansas City Southern Industries, Inc. .................. 13,466,875
220,000 Union Pacific Corp. .................................... 10,573,750
------------
40,941,875
------------
CAPITAL GOODS -- 5.55%
270,000 AlliedSignal, Inc. ..................................... 16,014,375
185,000 Cordant Technologies, Inc. ............................. 5,630,937
435,000 +TriStar Aerospace Co. ................................. 2,664,375
245,000 United Technologies Corp. .............................. 14,684,688
------------
38,994,375
------------
RAW/INTERMEDIATE
MATERIALS -- 3.26%
355,000 Cambrex Corp. .......................................... 9,385,312
150,380 E.I. du Pont de Nemours & Co. .......................... 9,154,383
163,500 Fort James Corp. ....................................... 4,363,406
------------
22,903,101
------------
ENERGY -- 1.83%
401,000 Dynegy, Inc. ........................................... 8,295,688
450,000 +Ocean Energy, Inc. .................................... 4,584,375
------------
12,880,063
------------
TOTAL COMMON STOCKS
(Cost $544,964,233)..................................... 696,621,754
------------
CONVERTIBLE PREFERRED STOCKS -- 0.73%
TECHNOLOGY -- 0.73%
260,000 ++Sensormatic Electronics Corp.
(Cost $6,570,696) ...................................... 5,135,000
------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Value and Restructuring Fund--(continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
DEMAND NOTES -- 0.61%
$2,100,000 Associates Corp. of North America, Master Notes...... $ 2,100,000
2,210,000 General Electric Co., Promissory Notes............... 2,210,000
------------
TOTAL DEMAND NOTES
(Cost $4,310,000).................................... 4,310,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $555,844,929*)...................................... 100.43% $706,066,754
OTHER ASSETS AND LIABILITIES (NET)........................ (0.43) (3,008,763)
------ ------------
NET ASSETS................................................ 100.00% $703,057,991
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
++ 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,
1999, these securities amounted to $5,135,000 or 0.73% of net assets.
ADR -- American Depositary Receipt
See Notes to Financial Statements
12
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Small Cap Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 84.28%
TECHNOLOGY -- 32.25%
50,000 +American Xtal Technology, Inc. ......................... $ 1,068,750
94,900 +Cambridge Technology Partners, Inc. .................... 1,370,119
9,800 +CareInsite, Inc. ....................................... 490,000
14,000 +Conexant Systems, Inc. ................................. 1,016,750
55,000 +Exchange Applications, Inc. ............................ 1,567,500
37,500 +Fairchild Semiconductor Corp.,
Class A.................................................. 881,250
17,000 +Gilat Satellite Networks Ltd. .......................... 905,250
5,000 +Human Genome Sciences, Inc. ............................ 368,125
17,950 +Incyte Pharmaceuticals, Inc. ........................... 413,972
57,400 Inter-Tel, Inc. ........................................ 1,004,500
23,800 +MedQuist, Inc. ......................................... 794,325
40,000 +Metamor Worldwide, Inc. ................................ 707,500
89,800 +Natural Microsystems Corp. ............................. 1,240,363
9,250 +Net2Phone, Inc. ........................................ 481,578
14,500 +SDL, Inc. .............................................. 1,106,531
20,000 +Shire Pharmaceuticals Group plc ADR..................... 575,000
1 Timberline Software Corp. ............................... 18
40,000 +TLC The Laser Center, Inc. ............................. 975,000
70,000 +U.S. Concrete, Inc. .................................... 560,000
-----------
15,526,531
-----------
CONSUMER CYCLICAL -- 24.43%
5,775 +Bluestone Software, Inc. ............................... 133,547
21,000 +CD Radio, Inc. ......................................... 534,187
38,100 +Childrens Place Retail Stores, Inc. .................... 1,009,650
27,500 +CONMED Corp. ........................................... 673,750
6,050 +eToys, Inc. ............................................ 402,325
45,700 +GST Telecommunications, Inc. ........................... 319,900
24,000 +Linens 'n Things, Inc. ................................. 810,000
30,000 +O'Reilly Automotive, Inc. .............................. 1,428,750
79,000 +OfficeMax, Inc. ........................................ 459,187
128,900 +PSS World Medical, Inc. ................................ 1,148,016
16,100 +Salem Communications Corp.,
Class A.................................................. 410,550
55,000 +Sylvan Learning Systems, Inc. .......................... 1,065,625
75,250 +Travel Services International, Inc. .................... 865,375
109,100 +Ventana Medical Systems, Inc. .......................... 1,834,244
1,500 Vital Signs, Inc. ....................................... 30,000
16,800 +24/7 Media, Inc. ....................................... 635,250
-----------
11,760,356
-----------
FINANCIAL -- 9.90%
32,500 Cullen/Frost Bankers, Inc. .............................. 812,500
71,300 Freedom Securities Corp. ................................ 962,550
14,400 Greenpoint Financial Corp. .............................. 382,500
3,400 Riggs National Corp. .................................... 57,375
43,000 +Silicon Valley Bancshares............................... 1,037,375
31,000 StanCorp Financial Group, Inc. .......................... 693,625
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- ----------
<C> <S> <C>
FINANCIAL -- (continued)
33,000 Valley National Bancorp................................ $ 820,875
----------
4,766,800
----------
CONSUMER STAPLES -- 9.63%
38,100 +AmeriSource Health Corp.,
Class A................................................ 902,494
32,718 +BAESA ADR............................................. --
16,000 +Eclipse Surgical Technologies, Inc. .................. 260,000
41,200 +Hain Food Group, Inc. (The)........................... 1,014,550
52,350 +Sunrise Assisted Living, Inc. ........................ 1,390,547
37,000 +United Therapeutics Corp. ............................ 1,068,375
----------
4,635,966
----------
RAW/INTERMEDIATE
MATERIALS -- 2.39%
56,300 Millennium Chemicals, Inc. ............................ 1,150,631
----------
ENERGY -- 2.18%
57,000 +Ocean Energy, Inc. ................................... 580,687
95,000 +Titan Exploration, Inc. .............................. 469,063
----------
1,049,750
----------
UTILITIES -- 1.83%
19,000 +Navigant Consulting, Inc. ............................ 881,125
----------
TRANSPORTATION -- 1.67%
38,500 +Avis Rent A Car, Inc. ................................ 803,688
----------
TOTAL COMMON STOCKS
(Cost $39,244,953)..................................... 40,574,847
----------
<CAPTION>
Principal
Amount
----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS -- 1.65%
$ 799,000 U.S. Treasury Bill
4.42%, 11/26/99
(Cost $793,506)........................................ 793,506
----------
DEMAND NOTES -- 13.68%
3,200,000 Associates Corp. of North America Master Notes......... 3,200,000
3,384,000 General Electric Co. Promissory Notes.................. 3,384,000
----------
TOTAL DEMAND NOTES
(Cost $6,584,000)...................................... 6,584,000
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $46,622,459*)....................................... 99.61% $47,952,353
OTHER ASSETS AND LIABILITIES (NET)......................... 0.39 188,685
------ -----------
NET ASSETS................................................. 100.00% $48,141,038
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
13
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Energy and Natural Resources Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 99.73%
ENERGY -- 73.73%
56,000 Anadarko Petroleum Corp. ................................ $ 1,711,500
15,000 Atlantic Richfield Co. .................................. 1,329,375
40,000 +Azurix Corp. ........................................... 687,500
45,000 Baker Hughes, Inc. ...................................... 1,305,000
30,000 +Barrett Resources Corp. ................................ 1,108,125
65,000 +BJ Services Co. ........................................ 2,067,813
9,670 BP Amoco plc ADR......................................... 1,071,557
50,000 Conoco, Inc., Class A.................................... 1,387,500
17,000 Exxon Corp. ............................................. 1,290,937
82,600 +Forest Oil Corp. ....................................... 1,409,362
90,000 +HS Resources, Inc. ..................................... 1,473,750
18,000 Mobil Corp. ............................................. 1,813,500
85,000 +Nabors Industries, Inc. ................................ 2,125,000
60,000 +Noble Drilling Corp. ................................... 1,312,500
221,630 +Ocean Energy, Inc. ..................................... 2,257,856
97,000 +Patterson Energy, Inc. ................................. 1,473,187
60,000 +Precision Drilling Corp. ............................... 1,391,250
34,000 Royal Dutch Petroleum Co. ............................... 2,008,125
24,000 Schlumberger Ltd. ....................................... 1,495,500
30,000 Southdown, Inc. ......................................... 1,605,000
25,000 Suncor Energy, Inc. ..................................... 977,735
25,000 Texaco, Inc. ............................................ 1,578,125
152,000 +Titan Exploration, Inc. ................................ 750,500
71,000 Tosco Corp. ............................................. 1,792,750
75,000 +Transmontaigne Oil Co. ................................. 1,125,000
25,000 +Ulster Petroleums Ltd. ................................. 269,650
65,000 Union Pacific Resources Group, Inc. ..................... 1,044,063
15,000 Vastar Resources, Inc. .................................. 938,438
30,000 +Weatherford International, Inc. ........................ 960,000
65,000 Western Gas Resources, Inc. ............................. 1,214,687
-----------
40,975,285
-----------
UTILITIES -- 10.79%
25,000 +AES Corp. .............................................. 1,475,000
66,000 Enron Corp. ............................................. 2,722,500
48,000 Williams Cos., Inc. ..................................... 1,797,000
-----------
5,994,500
-----------
RAW/INTERMEDIATE
MATERIALS -- 8.32%
70,000 +Apex Silver Mines Ltd. ................................. 1,032,500
55,000 Newmont Mining Corp. .................................... 1,423,125
45,000 +Stillwater Mining Co. .................................. 1,209,375
120,000 +U.S. Concrete, Inc. .................................... 960,000
-----------
4,625,000
-----------
BASIC MATERIALS -- 2.64%
20,000 Barrick Gold Corp. ...................................... 435,000
24,000 Willamette Industries.................................... 1,035,000
-----------
1,470,000
-----------
CONSUMER CYCLICAL -- 2.19%
40,000 Montana Power Co. ....................................... 1,217,500
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
TECHNOLOGY -- 2.06%
50,000 Georgia-Pacific Corp.
(Timber Group)......................................... $ 1,143,750
-----------
TOTAL COMMON STOCKS
(Cost $45,809,772)..................................... 55,426,035
-----------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
DEMAND NOTES -- 0.71%
$394,000 General Electric Co.
Promissory Notes (Cost
$394,000)............................................ 394,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $46,203,772*)....................................... 100.44% $55,820,035
OTHER ASSETS AND LIABILITIES (NET)......................... (0.44) (246,564)
------ -----------
NET ASSETS................................................. 100.00% $55,573,471
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
14
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Large Cap Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ------------
<C> <S> <C>
COMMON STOCKS -- 96.54%
TECHNOLOGY -- 44.02%
239,000 +BMC Software, Inc. .................................. $ 17,088,500
224,000 +Cisco Systems, Inc. ................................. 15,344,000
346,000 +Dell Computer Corp. ................................. 14,467,125
216,000 +EMC Corp. ........................................... 15,430,500
213,500 Intel Corp. ......................................... 15,865,719
138,000 +Microsoft Corp. ..................................... 12,497,625
96,000 Nokia Corp., Class A, ADR............................. 8,622,000
82,000 +Solectron Corp. ..................................... 5,888,625
79,000 +Sun Microsystems, Inc. .............................. 7,347,000
220,000 +Tellabs, Inc. ....................................... 12,526,250
------------
125,077,344
------------
FINANCIAL -- 19.91%
131,250 American International Group, Inc. ................... 11,410,547
271,000 Citigroup, Inc. ...................................... 11,924,000
156,000 Fannie Mae............................................ 9,779,250
171,500 Merrill Lynch & Co. .................................. 11,522,656
354,000 Schwab (Charles) Corp. ............................... 11,925,375
------------
56,561,828
------------
COMMUNICATION
SERVICES -- 10.42%
188,000 +America Online, Inc. ................................ 19,552,000
140,000 +MCI WorldCom, Inc. .................................. 10,053,750
------------
29,605,750
------------
CONSUMER CYCLICAL -- 10.03%
100,000 +Clear Channel Communications, Inc. .................. 7,987,500
127,000 Harley-Davidson, Inc. ................................ 6,357,938
206,300 Home Depot, Inc. ..................................... 14,157,337
------------
28,502,775
------------
HEALTH CARE -- 9.15%
344,000 Medtronic, Inc. ...................................... 12,212,000
383,250 Pfizer, Inc. ......................................... 13,773,047
------------
25,985,047
------------
CONSUMER STAPLES -- 3.01%
178,000 Coca-Cola Company..................................... 8,555,125
------------
TOTAL COMMON STOCKS
(Cost $191,300,727)................................... 274,287,869
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 3.52%
$10,006,000 Agreement with Chase Securities, Inc., 5.05% dated
9/30/99, due 10/01/99, to be repurchased at
$10,007,404, collateralized by $9,900,000 U.S.
Treasury Notes, 6.625% due 6/30/01, valued at
$10,223,297 (Cost $10,006,000)..................... $ 10,006,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $201,306,727*)...................................... 100.06% $284,293,869
OTHER ASSETS AND LIABILITIES (NET)........................ (0.06) (186,532)
------ ------------
NET ASSETS................................................ 100.00% $284,107,337
====== ============
</TABLE>
- --------
*Aggregate cost for Federal tax and book purposes.
+Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
15
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 1999 (Unaudited)
Real Estate Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 96.45%
REAL ESTATE -- 92.94%
33,000 Apartment Investment &
Management Co. ........................................... $ 1,262,250
27,000 Arden Realty Group, Inc. ................................. 587,250
36,684 Avalonbay Communities, Inc. .............................. 1,242,670
60,000 Bedford Property Investors, Inc. ......................... 1,012,500
34,000 Boston Properties, Inc. .................................. 1,043,375
54,000 Cabot Industrial Trust.................................... 1,039,500
63,000 +Catellus Development Corp. .............................. 740,250
34,000 Center Trust, Inc. ....................................... 378,250
40,000 Chateau Communities, Inc. ................................ 1,040,000
24,000 Crescent Real Estate Equity, Co. ......................... 432,000
57,000 Developers Divers Realty, Corp. .......................... 798,000
59,000 Duke Realty Investment, Inc. ............................. 1,150,500
52,703 Equity Office Properties Trust............................ 1,225,345
29,860 Equity Residential Properties Trust....................... 1,265,317
42,000 First Washington Realty Trust............................. 882,000
35,000 Forest City Enterprises, Inc.,
Class A................................................... 780,938
50,000 Glenborough Realty Trust, Inc. ........................... 825,000
19,200 Health Care REIT, Inc. ................................... 384,000
58,000 Healthcare Realty Trust, Inc. ............................ 1,083,875
45,000 Highwoods Properties, Inc. ............................... 1,164,375
44,000 Home Properties of New York, Inc. ........................ 1,174,250
39,000 Hospitality Properties Trust.............................. 860,438
47,000 HRPT Properties Trust..................................... 546,375
28,000 KIMCO Realty Corp. ....................................... 1,001,000
41,000 Mack-Cali Realty Corp. ................................... 1,099,312
52,000 Pacific Gulf Properties, Inc. ............................ 1,036,750
25,000 Prentiss Properties Trust................................. 554,688
60,000 ProLogis Trust............................................ 1,132,500
46,200 Public Storage, Inc. ..................................... 1,163,662
40,000 Simon Property Group, Inc. ............................... 897,500
30,000 Spieker Properties, Inc. ................................. 1,040,625
26,000 Starwood Hotels & Resorts Worldwide, Inc. ................ 580,125
83,000 Taubman Center, Inc. ..................................... 954,500
32,000 Vornado Realty Trust...................................... 1,040,000
25,500 Weingarten Realty Investors............................... 953,063
-----------
32,372,183
-----------
CONSUMER CYCLICAL -- 2.01%
73,800 Host Marriott Corp. ...................................... 701,100
-----------
FINANCIAL -- 1.50%
10,000 Freddie Mac............................................... 520,000
-----------
TOTAL COMMON STOCKS
(Cost $41,193,225)........................................ 33,593,283
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 4.03%
$1,404,000 Agreement with Chase Securities, Inc., 5.05% dated
9/30/99, due 10/01/99, to be repurchased at
$1,404,197, collateralized by $1,390,000 U.S.
Treasury Notes, 6.625% due 6/30/01, valued at
$1,435,392 (Cost $1,404,000)......................... $ 1,404,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $42,597,225*)........................................ 100.48% $34,997,283
OTHER ASSETS & LIABILITIES (NET)........................... (0.48) (166,799)
------ -----------
NET ASSETS................................................. 100.00% $34,830,484
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
REIT -- Real Estate Investment Trust
See Notes to Financial Statements
16
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments September 30, 1999 (Unaudited)
Optimum Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 98.10%
TECHNOLOGY -- 37.37%
25,000 +BMC Software, Inc. .................................... $ 1,787,500
82,000 +Cisco Systems, Inc. ................................... 5,617,000
103,000 +Dell Computer Corp. ................................... 4,306,688
85,000 +EMC Corp. ............................................. 6,072,187
54,000 Intel Corp. ............................................ 4,012,875
32,000 Lucent Technologies, Inc. .............................. 2,076,000
52,000 +Microsoft Corp. ....................................... 4,709,250
22,000 Nokia Oy, Class A, ADR.................................. 1,975,875
14,500 +Solectron Corp. ....................................... 1,041,281
14,000 +Sun Microsystems, Inc. ................................ 1,302,000
36,000 +Tellabs, Inc. ......................................... 2,049,750
------------
34,950,406
------------
HEALTH CARE -- 13.93%
16,000 Abbott Laboratories..................................... 588,000
13,300 American Home Products Corp. ........................... 551,950
23,000 Bristol-Myers Squibb Co. ............................... 1,552,500
12,000 Eli Lilly & Co. ........................................ 768,000
11,000 Johnson & Johnson....................................... 1,010,625
83,710 Medtronic, Inc. ........................................ 2,971,705
31,000 Merck & Co., Inc. ...................................... 2,009,187
66,000 Pfizer, Inc. ........................................... 2,371,875
20,000 Schering-Plough Corp. .................................. 872,500
5,000 Warner Lambert Co. ..................................... 331,875
------------
13,028,217
------------
FINANCIAL -- 12.15%
25,000 American International Group, Inc. ..................... 2,173,437
52,500 Citigroup, Inc. ........................................ 2,310,000
28,000 Fannie Mae.............................................. 1,755,250
32,000 Merrill Lynch & Co., Inc. .............................. 2,150,000
88,400 Schwab (Charles) Corp. ................................. 2,977,975
------------
11,366,662
------------
CONSUMER STAPLES -- 10.15%
23,500 Bestfoods............................................... 1,139,750
19,000 Coca-Cola Co. .......................................... 913,188
21,900 General Mills, Inc. .................................... 1,776,637
11,500 H.J. Heinz Co. ......................................... 494,500
16,500 PepsiCo, Inc. .......................................... 499,125
12,600 Procter & Gamble Co. ................................... 1,181,250
10,000 Quaker Oats Co. ........................................ 618,750
14,000 Sara Lee Corp. ......................................... 328,125
11,800 Time Warner, Inc. ...................................... 716,850
12,000 Times Mirror Co., Class A............................... 789,750
8,487 Tootsie Roll Industries, Inc. .......................... 279,010
11,000 Wrigley (WM.) Jr. Co. .................................. 756,938
------------
9,493,873
------------
CONSUMER CYCLICAL -- 9.86%
25,000 +Clear Channel Communications, Inc. .................... 1,996,875
35,000 Harley-Davidson, Inc. .................................. 1,752,188
48,000 Home Depot, Inc. ....................................... 3,294,000
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- ------------
<C> <S> <C>
CONSUMER CYCLICAL -- (continued)
13,200 McDonald's Corp. .................................... $ 567,600
34,000 Wal-Mart Stores, Inc. ............................... 1,617,125
------------
9,227,788
------------
COMMUNICATION
SERVICES -- 9.15%
45,000 +America Online, Inc. ............................... 4,680,000
8,000 Ameritech Corp. ..................................... 537,500
14,000 GTE Corp. ........................................... 1,076,250
31,500 +MCI WorldCom, Inc. ................................. 2,262,094
------------
8,555,844
------------
CAPITAL GOODS -- 5.49%
37,000 General Electric Co. ................................ 4,386,813
12,000 Vastar Resources, Inc. .............................. 750,750
------------
5,137,563
------------
TOTAL COMMON STOCKS
(Cost $48,183,546)................................... 91,760,353
------------
<CAPTION>
Principal
Amount
----------
<C> <S> <C>
DEMAND NOTES -- 1.97%
$1,845,000 Associates Corp. of North America Master Notes
(Cost $1,845,000).................................... 1,845,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $50,028,546*)....................................... 100.07% $ 93,605,353
OTHER ASSETS AND LIABILITIES (NET)........................ (0.07) (69,021)
------ ------------
NET ASSETS................................................ 100.00% $ 93,536,332
====== ============
</TABLE>
- --------
*Aggregate cost for Federal tax and book purposes.
+Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
17
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments September 30, 1999 (Unaudited)
Value Equity Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 96.58%
TECHNOLOGY -- 28.43%
10,000 BCE, Inc. ................................................ $ 496,802
30,000 +Bell & Howell Co. ....................................... 1,100,625
5,000 +Broadbase Software, Inc. ................................ 79,375
22,000 Cordant Technologies, Inc. ............................... 669,625
86,100 +Global Crossing Ltd. .................................... 2,278,959
25,000 Harris Corp. ............................................. 690,625
1,651 Intermedia Communications, Inc. .......................... 35,806
1,000 +Internap Network Services Corp. ......................... 44,625
18,000 International Business Machines Corp. .................... 2,184,750
32,000 Nokia Oy, Class A, ADR.................................... 2,874,000
3,500 +Plantronics, Inc. ....................................... 174,125
30,000 +Snyder Communications, Inc. ............................. 455,625
32,000 Xerox Corp. .............................................. 1,342,000
-----------
12,426,942
-----------
CONSUMER CYCLICAL -- 20.70%
11,000 AT&T Corp. ............................................... 478,500
45,760 +AT&T Corp. -- Liberty Media Group, Class A............... 1,698,840
7,000 +Bluestone Software, Inc. ................................ 161,875
25,000 +CBS Corp. ............................................... 1,156,250
25,000 Ford Motor Co. ........................................... 1,254,687
8,000 +Luminant Worldwide Corp. ................................ 246,000
27,000 News Corp. Ltd. ADR....................................... 767,812
22,000 +Unisys Corp. ............................................ 992,750
75,000 +Varian, Inc. ............................................ 1,326,562
10,000 +Ventiv Health, Inc. ..................................... 98,750
19,700 Young & Rubicam, Inc. .................................... 866,800
-----------
9,048,826
-----------
CONSUMER STAPLES -- 17.25%
25,000 Avon Products, Inc. ...................................... 620,313
26,000 Bristol-Myers Squibb Co. ................................. 1,755,000
22,000 Deluxe Corp. ............................................. 748,000
20,000 Eastman Kodak Co. ........................................ 1,508,750
36,000 Philip Morris Companies, Inc. ............................ 1,230,750
40,000 Rite Aid Corp. ........................................... 552,500
30,000 +Suiza Foods Corp. ....................................... 1,125,000
-----------
7,540,313
-----------
FINANCIAL -- 12.91%
17,000 Bear Stearns Companies, Inc. ............................. 653,437
20,000 Chase Manhattan Corp. .................................... 1,507,500
8,000 Citigroup, Inc. .......................................... 352,000
16,000 Donaldson, Lufkin & Jenrette, Inc. --DLJ.................. 633,000
13,000 Fannie Mae................................................ 814,938
22,000 SLM Holding Corp. ........................................ 946,000
16,344 XL Capital Ltd., Class A.................................. 735,480
-----------
5,642,355
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
TRANSPORTATION -- 7.38%
13,000 +AMR Corp. ........................................... $ 708,500
18,000 CNF Transportation, Inc. ............................. 670,500
18,000 +General Motors Corp., Class H........................ 1,030,500
17,000 Union Pacific Corp. .................................. 817,063
-----------
3,226,563
-----------
CAPITAL GOODS -- 7.37%
20,000 Kansas City Southern Industries, Inc. ................ 928,750
20,000 Texas Instruments, Inc. .............................. 1,645,000
40,000 Timken Co. ........................................... 645,000
-----------
3,218,750
-----------
RAW/INTERMEDIATE MATERIALS -- 1.81%
13,000 E.I. du Pont de Nemours and Co. ...................... 791,375
-----------
UTILITY -- 0.73%
12,500 +Salem Communications Corp.,
Class A............................................... 318,750
-----------
TOTAL COMMON STOCKS
(Cost $30,114,121).................................... 42,213,874
-----------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
CONVERTIBLE BONDS -- 1.76%
TECHNOLOGY -- 1.76%
$ 25,000 Intermedia Communications, Inc., Series D (Preferred)
7.00%, 12/31/2049 (Cost $657,010)..................... 768,750
-----------
DEMAND NOTES -- 2.20%
400,000 Associates Corp. of North America Master Notes........ 400,000
563,000 General Electric Co. Promissory Notes................. 563,000
-----------
TOTAL DEMAND NOTES
(Cost $963,000)....................................... 963,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $31,734,131*)........................................ 100.54% $43,945,624
OTHER ASSETS AND LIABILITIES (NET)......................... (0.54) (237,088)
------ -----------
NET ASSETS................................................. 100.00% $43,708,536
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
18
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
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. Excelsior Institutional Trust (the
"Trust") is a business trust organized under the laws of the State of Delaware
on May 11, 1994. Excelsior Fund and the Trust are registered under the
Investment Company Act of 1940 (the "1940 Act"), as amended, as open-ended
diversified management investment companies.
Excelsior Fund and the Trust currently offer shares in seventeen and six
managed investment portfolios, respectively, each having its own investment
objectives and policies. The following is a summary of significant accounting
policies for the Blended Equity Fund, Value and Restructuring Fund, Small Cap
Fund, Energy and Natural Resources Fund, Large Cap Growth Fund, and Real
Estate Fund, Portfolios of Excelsior Fund, Optimum Growth Fund and Value
Equity Fund, Portfolios of the Trust (the "Portfolios"). Such policies are in
conformity with generally accepted accounting principles and are consistently
followed by Excelsior Fund and the Trust 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.
With regard to Optimum Growth Fund and Value Equity Fund, they offer two
classes of shares: Institutional Shares and Shares. The Financial Highlights
of the Institutional Shares as well as the financial statements for the
remaining portfolios of Excelsior Fund, the Trust and Excelsior Tax-Exempt
Fund, Inc. ("Excelsior Tax-Exempt Fund") are presented separately.
(a) Portfolio valuation:
Investments in securities that are traded on a recognized domestic 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 a national
securities market. Securities traded over-the-counter are valued each
business day on the basis of closing over-the-counter bid prices.
Securities for which there were no transactions are valued at the average
of the most recent bid and asked 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 and asked
prices for securities are readily available and are representative of the
market. Bid price is used when no asked price is available. Investments in
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 is 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 with regard
to Excelsior Fund or the Board of Trustees with regard to the Trust. 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.
19
<PAGE>
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 with regard
to Excelsior Fund or the Board of Trustees with regard to the Trust.
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 upon 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
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Securities for which market quotations are not readily available are
valued at fair value pursuant to guidelines adopted by the Board of
Directors with regard to Excelsior Fund or the Board of Trustees with
regard to the Trust. Short-term debt instruments with remaining maturities
of 60 days or less are valued at amortized cost, which approximates market
value.
Forward foreign currency exchange contracts: The Portfolios'
participation in forward foreign 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:
The Portfolios' may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to
the seller's agreement to repurchase and the Portfolios' agreement to
resell such securities at mutually agreed upon prices. Securities purchased
subject to such repurchase agreements are deposited with the Portfolios'
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, the Portfolios' 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 to possible delay
in
20
<PAGE>
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 equal to all or substantially all of each Portfolios' 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, but the Portfolios' may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. 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 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 and the Trust that each Portfolio
continue to qualify as a regulated investment company, if such
qualification is in the best interest of the shareholders, by complying
with the requirements of the Internal Revenue Code applicable to regulated
investment companies, and by distributing substantially all of its taxable
earnings to its shareholders.
At March 31, 1999, the following Portfolios had approximate capital loss
carryforwards for Federal tax purposes available to offset future net
capital gains through the indicated expiration dates:
<TABLE>
<CAPTION>
Expiration Date
March 31,
2007
---------------
<S> <C>
Value and Restructuring Fund................................. $3,589,000
Small Cap Fund............................................... 3,645,000
Energy and Natural Resources Fund............................ 1,872,000
Large Cap Growth Fund........................................ 1,733,000
</TABLE>
21
<PAGE>
At September 30, 1999, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities 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............. $379,170,599 $ (6,389,635) $372,780,964
Value and Restructuring Fund.... 185,320,250 (35,098,425) 150,221,825
Small Cap Fund.................. 6,242,075 (4,912,181) 1,329,894
Energy and Natural Resources
Fund........................... 10,415,522 (799,259) 9,616,263
Large Cap Growth Fund........... 90,129,705 (7,142,563) 82,987,142
Real Estate Fund................ 150,607 (7,750,549) (7,599,942)
Optimum Growth Fund............. 44,515,939 (939,132) 43,576,807
Value Equity Fund............... 14,216,748 (2,005,255) 12,211,493
</TABLE>
(f) Expense allocation:
Expenses incurred by Excelsior Fund and the Trust with respect to any two
or more of their respective Portfolios' are allocated in proportion to the
average net assets of each of their respective Portfolios', except where
allocations of direct expenses to each Portfolio can otherwise be fairly
made. Expenses directly attributable to a Portfolio are charged to that
Portfolio and expenses directly attributable to a particular class of
shares in a Portfolio are charged to such class.
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 (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, and Large Cap Growth Fund, 0.60%
of the average daily net assets of the Value and Restructuring Fund, Small Cap
Fund, Energy and Natural Resources Fund, 1.00% of the average daily net assets
of the Real Estate Fund and 0.65% of the average daily net assets of each of
the Optimum Growth Fund and Value Equity Fund. U.S. Trust NY is a state-
chartered bank and trust company and a member bank of the Federal Reserve
System. U.S. Trust Company is a Connecticut state bank and trust company. Each
is a wholly-owned subsidiary of U.S. Trust Corporation, a registered bank
holding company.
U.S. Trust Company, Chase Global Funds Services Company ("CGFSC"), a
corporate affiliate of The Chase Manhattan Bank and Federated Administrative
Services (collectively, the "Administrators") provide administrative services
to Excelsior Fund and the Trust. 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
22
<PAGE>
relative average daily net assets of the respective Portfolios for the period
paid. For the six months ended September 30, 1999, administration fees charged
by U.S. Trust Company were as follows:
<TABLE>
<S> <C>
Blended Equity Fund................................................... $164,887
Value and Restructuring Fund.......................................... 142,582
Small Cap Fund........................................................ 9,835
Energy and Natural Resources Fund..................................... 10,964
Large Cap Growth Fund................................................. 57,256
Real Estate Fund...................................................... 7,424
Optimum Growth Fund................................................... 20,022
Value Equity Fund..................................................... 9,136
</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 the 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, Energy and Natural Resources Fund; and not more than 1.05% and
1.20% for Large Cap Growth Fund and Real Estate Fund, respectively, and until
further notice to the Trust, U.S. Trust intends to voluntarily waive fees to
the extent necessary to maintain an annual expense ratio of not more than
1.05% of average daily net assets of the Shares of the Optimum Growth Fund and
Value Equity Fund. For the six months ended September 30, 1999, U.S. Trust
waived fees as follows:
<TABLE>
<S> <C>
Real Estate Fund........................................................ $19,766
Optimum Growth Fund..................................................... 50,896
Value Equity Fund....................................................... 33,686
</TABLE>
With regard to the Blended Equity Fund, effective November 19, 1999, U.S.
Trust has contractually agreed to waive investment advisory fees and to
reimburse other ordinary operating expenses through March 31, 2000 to the
extent necessary to keep total operating expenses from exceeding 1.05% of the
Portfolio's average daily net assets.
Excelsior Fund and the Trust have 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
$471,459, for the six months ended September 30, 1999. Until further notice to
Excelsior Fund and the Trust, 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, 1999, U.S. Trust and the
23
<PAGE>
Administrators 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..................................... $175,212 $ 2,010
Value and Restructuring Fund............................ 497,920 95,606
Small Cap Fund.......................................... 33,733 61
Energy and Natural Resources Fund....................... 30,267 6,056
Large Cap Growth Fund................................... 79,168 7,311
Real Estate Fund........................................ 19,481 850
Optimum Growth Fund..................................... 11,602 1,158
</TABLE>
For the six months ended September 30, 1999, no administrative service fees
have been charged to the Value Equity Fund.
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the distributor of Excelsior Fund and the Trust.
Each Portfolios' Shares are sold on a continuous basis by the Distributor.
With regard to the Trust, the Trust has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act, under which the Shares of Optimum Growth Fund
and Value Equity Fund may compensate the Distributor monthly for its services
which are intended to result in the sale of Portfolio Shares, in an amount not
to exceed the annual rate of 0.25% of the average daily net asset value of each
Portfolio's outstanding Shares.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended. The Chairman receives an
additional annual fee of $5,000. Independent Trustees of Excelsior Trust
receive an annual fee of $4,000 plus a meeting fee of $250 for each meeting
attended. In addition, Directors and Trustees are reimbursed by Excelsior Fund
and the Trust, respectively for reasonable expenses incurred when acting in
their capacity as Directors and Trustees.
3. Purchases and Sales of Securities:
For the six months ended September 30, 1999, purchases and sales of
securities, excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchases Sales
------------ -----------
<S> <C> <C>
Blended Equity Fund................................... $ 95,783,601 $87,531,041
Value and Restructuring Fund.......................... 121,252,115 44,163,879
Small Cap Fund........................................ 26,279,371 30,745,164
Energy and Natural Resources Fund..................... 36,251,516 30,048,644
Large Cap Growth Fund................................. 62,941,019 21,351,208
Real Estate Fund...................................... 5,135,401 2,022,071
Optimum Growth Fund................................... 18,345,218 21,057,038
Value Equity Fund..................................... 11,422,157 9,718,090
</TABLE>
24
<PAGE>
4. Capital Transactions:
Excelsior Fund currently has authorized capital classified of 35 billion
shares of Common Stock, 26.375 billion of which is currently classified to
represent interests in one of seventeen separate portfolios. Authorized
capital currently offered for each Portfolio is as follows: 375 million shares
of the Blended Equity Fund 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. Each share has a par value of $.001, and
represents an equal proportionate interest in the particular Portfolio with
other shares of the same Portfolio, and is entitled to such dividends and
distributions of taxable earnings on the assets belonging to such Portfolio as
are declared at the discretion of Excelsior Fund's Board of Directors. The
Trust currently has authorized an unlimited number of shares of beneficial
interest of each class of each Portfolio. Each share has a par value of
$.00001 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 the Trust's Board of
Trustees.
<TABLE>
<CAPTION>
Blended Equity Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 2,082,965 $ 60,459,556 4,387,348 $ 166,477,501
Issued in connection
with reorganization.... 1,324,542 59,663,830 -- --
Issued as reinvestment
of dividends........... 4,854 219,000 77,350 2,895,711
Redeemed................ (1,951,645) (84,348,127) (3,990,290) (148,105,086)
---------- ------------ ----------- -------------
Net Increase............ 1,460,716 $ 35,994,259 474,408 $ 21,268,126
========== ============ =========== =============
<CAPTION>
Value and Restructuring Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 6,776,820 $178,273,233 23,806,528 $ 537,163,371
Issued as reinvestment
of dividends........... 22,657 592,316 158,688 3,460,364
Redeemed................ (3,736,807) (97,591,836) (15,392,807) (331,846,653)
---------- ------------ ----------- -------------
Net Increase............ 3,062,670 $ 81,273,713 8,572,409 $ 208,777,082
========== ============ =========== =============
<CAPTION>
Small Cap Fund
----------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 1,925,288 $ 19,382,665 6,294,363 $ 56,377,737
Issued as reinvestment
of dividends........... -- -- 9,749 88,720
Redeemed................ (1,816,221) (18,123,332) (7,314,821) (66,388,490)
---------- ------------ ----------- -------------
Net Increase
(Decrease)............. 109,067 $ 1,259,333 (1,010,709) $ (9,922,033)
========== ============ =========== =============
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Energy and Natural Resources Fund
---------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------- ------------------------
Shares Amount Shares Amount
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 2,459,639 $ 31,918,419 2,852,458 $ 31,234,166
Issued as reinvestment of
dividends............... 5,372 65,206 9,736 103,347
Redeemed................. (2,102,468) (27,051,281) (2,605,823) (27,676,908)
---------- ------------- ---------- ------------
Net Increase............. 362,543 $ 4,932,344 256,371 $ 3,660,605
========== ============= ========== ============
<CAPTION>
Large Cap Growth Fund
---------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------- ------------------------
Shares Amount Shares Amount
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 10,199,650 $ 144,571,859 15,703,486 $169,544,034
Issued as reinvestment of
dividends............... -- -- -- --
Redeemed................. (7,247,119) (102,000,897) (3,700,511) (38,250,977)
---------- ------------- ---------- ------------
Net Increase............. 2,952,531 $ 42,570,962 12,002,975 $131,293,057
========== ============= ========== ============
<CAPTION>
Real Estate Fund
---------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------- ------------------------
Shares Amount Shares Amount
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 1,145,294 $ 6,720,377 2,933,843 $ 18,323,252
Issued as reinvestment of
dividends............... 1,449 8,134 3,809 22,665
Redeemed................. (591,158) (3,464,789) (2,810,143) (16,902,129)
---------- ------------- ---------- ------------
Net Increase............. 555,585 $ 3,263,722 127,509 $ 1,443,788
========== ============= ========== ============
<CAPTION>
Optimum Growth Fund
---------------------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
------------------------- ------------------------
Shares Amount Shares Amount
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Shares................. 232,970 $ 6,428,385 105,092 $ 2,171,420
Institutional Shares... 237,730 7,026,430 812,340 16,636,464
Issued as reinvestment of
dividends:
Shares................. -- -- -- --
Institutional Shares... -- -- 35 569
Redeemed:
Shares................. (49,049) (1,306,111) (56,822) (997,974)
Institutional Shares... (538,318) (14,429,366) (766,399) (15,767,433)
---------- ------------- ---------- ------------
Net Increase (Decrease).. (116,667) $ (2,280,662) 94,246 $ 2,043,046
========== ============= ========== ============
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Value Equity Fund
-----------------------------------------
Six Months Ended Year Ended
09/30/99 03/31/99
-------------------- -------------------
Shares Amount Shares Amount
------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Sold:
Shares.................. 1,778 $ 29,703 3,120 $ 46,060
Institutional Shares.... 242,347 4,298,862 466,461 6,929,195
Issued as reinvestment of
dividends:
Shares.................. 4 56 190 2,707
Institutional Shares.... -- 19 -- --
Redeemed:
Shares.................. (5,946) (95,266) (31) (461)
Institutional Shares.... (67,314) (1,109,974) (59,957) (880,640)
------- ----------- ------- ----------
Net Increase.............. 170,869 $ 3,123,400 409,783 $6,096,861
======= =========== ======= ==========
</TABLE>
5. Organization Costs:
Excelsior Fund and the Trust have 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, 1999, the Portfolios had
no borrowings under the agreement.
7. Plan of Reorganization:
On June 30, 1999, shareholders approved a Plan of Reorganization (effective
July 8, 1999) providing for the transfer of all of the assets and liabilities
of Income and Growth Fund to the Blended Equity Fund, in exchange for shares
of the Blended Equity Fund corresponding to the same net assets as shares held
in the Income and Growth Fund. At the time of the reorganization, the Income
and Growth Fund had 4,345,042 outstanding shares and net assets of $59,663,830
including $29,839,357 of unrealized appreciation. The Blended Equity Fund's
net assets immediately before the reorganization were $769,819,613.
27
<PAGE>
8. Year 2000 Risk:
The Funds depend on the smooth functioning of computer systems in almost
every aspect of their business. Like other mutual funds, businesses and
individuals around the world, the Funds could be adversely affected if the
computer systems used by their service providers do not properly process dates
on and after January 1, 2000, and distinguish between the year 2000 and the
year 1900. This is commonly known as the "Year 2000 Problem." The investment
adviser and the Funds' other service providers advise that they are taking
steps to address the Year 2000 Problem with respect to the computer systems
that they use. Currently, they do not anticipate that the transition to the
21st Century will have any material impact on their ability to continue to
service the Funds at current levels. At this time, however, there can be no
assurance that their efforts will be sufficient to avoid any adverse impact on
the Funds as a result of the Year 2000 Problem. In addition, the Funds and
their shareholders may experience losses as a result of computer difficulties
experienced by issuers of portfolio securities or third parties, such as
custodians, banks, broker-dealers or others with which the Funds do business.
Furthermore, many foreign countries are not as prepared as the U.S. for the
year 2000 transition. As a result, computer difficulties in foreign markets
and with foreign institutions as a result of the Year 2000 Problem may add to
the possibility of losses to the Funds and their shareholders.
28
<PAGE>
Voting Results of Special Meeting of Shareholders
The proposal described below was submitted to a vote of shareholders of
Excelsior Funds, Inc. ("Excelsior") at a special meeting of shareholders held
on June 30, 1999 (the "Meeting"):
Proposal--Approval of a Plan of Reorganization pursuant to which Excelsior's
Income and Growth Fund will be reorganized into Excelsior's Blended Equity
Fund.
At the Meeting, the shareholders of the Income and Growth Fund approved the
proposal as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
2,120,173 85,323 145,090
</TABLE>
29
