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[EXCELSIOR LOGO APPEARS HERE]
Domestic Equity Portfolios
ANNUAL REPORT
March 31, 1999
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TABLE OF CONTENTS
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PAGE
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LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S DOMESTIC EQUITY MARKET REVIEW................................... 2
ADVISER'S INVESTMENT REVIEWS
Blended Equity Fund...................................................... 3
Income and Growth Fund................................................... 4
Value and Restructuring Fund............................................. 5
Small Cap Fund........................................................... 6
Energy and Natural Resources Fund........................................ 7
Large Cap Growth Fund.................................................... 8
Real Estate Fund......................................................... 9
Optimum Growth Fund...................................................... 10
Value Equity Fund........................................................ 11
STATEMENTS OF ASSETS AND LIABILITIES...................................... 12
STATEMENTS OF OPERATIONS.................................................. 14
STATEMENTS OF CHANGES IN NET ASSETS....................................... 16
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 18
PORTFOLIOS OF INVESTMENTS
Blended Equity Fund...................................................... 20
Income and Growth Fund................................................... 22
Value and Restructuring Fund............................................. 23
Small Cap Fund........................................................... 25
Energy and Natural Resources Fund........................................ 26
Large Cap Growth Fund.................................................... 27
Real Estate Fund......................................................... 28
Optimum Growth Fund...................................................... 29
Value Equity Fund........................................................ 30
NOTES TO FINANCIAL STATEMENTS............................................. 31
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS......................... 42
FEDERAL TAX INFORMATION................................................... 42
</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 ex-
penses 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>
LETTER TO SHAREHOLDERS
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Dear Shareholder:
I am pleased to present the annual report for the Excelsior Funds. Fiscal
1999 was an exciting year in the financial markets as a whole and for the fund
family.
Low interest rates and subdued inflation in tandem with turbulent Asian and
Latin American markets proved to be the catalysts for another year of strong--
though narrowly focused--domestic equity performance. At the same time, these
factors combined to constrain the returns on fixed-income investments to
modest levels. The search for consistency and predictability amidst
uncertainty--regarding heightened valuations here at home, international
economic crises, not to mention the course of the U.S. economy--created a
"flight to quality." Continuing the dominant trend of the past few years,
investors redirected much of their money to a relatively small group of
extremely large-capitalized growth companies within the Standard & Poor's 500
Index, leaving the broader market lagging well behind. As a result, small and
mid-sized companies as well as value-oriented investments underperformed
relative to growth-oriented investments. This environment made it difficult
for broadly diversified equity portfolios to meet or exceed the performance of
this narrowly focused market.
On the international front, economic crises and inflationary pressures in
Asia, Eastern Europe, and Latin America temporarily disrupted equity markets
around the world. Many of these troubled economies--and widespread investor
concerns about them--have begun to turn around and are showing sign of
recovery. In Western Europe, equity performance in general was strong, and the
conversion to a single currency, the Euro, was completed on time and without
disrupting the financial markets.
The financial markets will present many challenges and opportunities during
the coming year. U.S. fiscal policy continues to be effective in keeping
inflation under control, and we continue to be cautiously optimistic regarding
the domestic equity markets. International markets, while remaining attractive
on a long-term basis, will require continuous evaluation. In our new global
economy, events in international markets will have a direct impact on the U.S.
economy.
I am confident that the Excelsior fund family will continue to provide you
with the appropriate investment vehicles to respond to the always-changing
economic/financial market environment and to pursue your long-term investment
objectives.
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
1
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EXCELSIOR FUNDS DOMESTIC EQUITY MARKET REVIEW
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Although the U.S. economy remained surprisingly strong and inflation
subdued, the stock market did import some volatility in the past fiscal year.
Still, the general direction of domestic equities was decidedly upward.
The first quarter of the fiscal year began fitfully, as Asian concerns
caused markets to move sideways. Specifically, the falloff in Asian demand for
basic commodities had a correspondingly negative impact on commodity-related
stocks. There were some strong groups, however, which responded well to
healthy consumer demand (retailers, automakers, restaurants and broadcast
media and entertainment companies). Technology was mixed as communications
technology stocks and computer companies outperformed; technology in general
performed poorly through much of the quarter, only to rebound in the final two
weeks.
In the second fiscal quarter, many markets began slipping as investors grew
increasingly worried about Russia. The declines accelerated in August, when
Russia devalued its ruble and defaulted on local currency debt. In the U.S.,
the major indices backed off considerably. While weakness was broad-based,
small stocks suffered greater than large, as did stocks of companies perceived
to have heavy international exposure. Among the best-performing industry
sectors were computers, precious metals, semiconductors, electric utilities,
telephone systems, and large pharmaceutical companies. Among the worst
performers were financial services, oil drillers, and heavy machinery.
In the third fiscal quarter, the U.S. stock market shifted direction once
again, improving markedly. Part of this was the result of an aggressive
Federal Reserve, which lowered short-term interest rates three times in less
than two months, and a still-strong U.S. economy. Part also was the sense of
stabilizing- or bottoming--in Asia and other emerging markets. Still, the U.S.
stock market underwent a leadership rotation. The former market-leading "Nifty
50" blue chips--Coca-Cola, Gillette, Merck, and Procter & Gamble et al.--gave
way to technology, particularly PC and semiconductors, not to mention the
mounting Internet stock feeding frenzy. Other strong-performing groups in the
period included telecommunications, the financials, department stores, and
drug stocks. The weakest sector was energy, which wasn't surprising given the
collapse in oil prices. Also, large-cap stocks continued to significantly
outperform their medium- and smaller-capitalization peers.
Continuing these positive trends, the U.S. stock market began the fourth
fiscal quarter strongly. Breadth, once again, was narrow, and large caps
continued to dominate. Heading into February, however, the environment changed
dramatically as stocks of all capitalizations declined in the face of renewed
inflation fears. Technology took a major beating. Among the stronger-
performing sectors were health care, drugs in particular; the financials; and
the restaurants, leisure, and entertainment groups. Sentiment improved once
again in March, as a surge of optimism regarding large-cap earnings (banks,
oil producers, retailers--though not technology) and falling market interest
rates propelled the market upward. Interest-rate expectations suddenly shifted
from higher rates to lower rates. Shortly thereafter, news of Intel's proposed
antitrust settlement ignited a rally in technology stocks. Rallying oil and
bank stocks pushed the major large-cap stock indices higher through fiscal
year end.
We remain constructive regarding prospects going forward. Although we don't
believe that the uncertainties and the volatility have left the stock market
completely, we have begun to see what we believe could well be a fundamental
shift in market dynamics and leadership. The market appears to be broadening,
shifting away from recent market favorites (especially technology) and into
beaten-down but economically sensitive cyclical issues and even some long-
suffering small caps. Is this shift sustainable? No one knows for sure. But
for us at U.S. Trust, it's not critical. We make it our business to try to be,
not only where market favor is right now, but also where we feel it's likely
to be in the future. It really is the whole point of our diversified
investment approach--to be positioned for just the sorts of activities now
occurring in the marketplace. Whether what we're seeing now is temporary or
more long lasting, we will continue to implement our longstanding investment
policy--that is, an unwavering focus on long-term fundamental value, through
portfolio diversification, and selective concentration on stocks and areas
that we believe offer outstanding promise. We feel we have done this with some
considerable degree of success in the past and, with continued effort and
vigilance, will attempt to do so in the future.
2
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EXCELSIOR FUNDS, INC. BLENDED EQUITY FUND
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For the twelve months ended March 31, 1999, the Fund realized a total return
of 19.65%,* versus 18.46%** for the Standard & Poor's 500 Composite Stock
Price Index. Throughout the fiscal year, mirroring the overall market,
technology stocks (telecommunications in particular) drove the Fund's
performance. In the first fiscal quarter, Fund holdings in the retail and
financial services sectors contributed meaningfully to fund performance as
well. Heading into the second quarter, as turbulence in world financial
markets spread and its economic effects became more pronounced, share prices
of many multinational firms were negatively affected. Within the portfolio,
Gillette and Coca-Cola were hurt along with holdings in the financial services
area. The Fund's energy holdings lagged also, given falling oil prices.
Technology, as mentioned, remained strong, along with holdings in the
pharmaceutical industry. In the second half, financial services stocks
recovered somewhat as did the Fund's consumer stocks. Our basic investment
strategy remained consistent throughout the fiscal year; we emphasized a long-
term investment horizon, broad portfolio diversification across growth and
value strategies and investment themes, and solid good business values -- that
is, companies which have demonstrated and continue to demonstrate solid growth
in an uncertain environment. Also, a portion of the portfolio continued to be
managed utilizing quantitative analysis to complement the rest of the
portfolio by further diversifying it in relation to the S&P 500 and by
improving the tax efficiency of the portfolio.
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Blended Equity Fund+
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Average Annual Total Return Ended on 3/31/99*
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1 year 5 years 10 Years
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19.65% 23.75% 17.63%
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[LINE GRAPH APPEARS HERE]
S&P's 500 Composite
DATE Blended Equity Fund Stock Price Index**
- ------- ------------------- -------------------
3/31/89 10,000 10,000
3/31/90 11,198 11,934
3/31/91 11,770 13,651
3/31/92 13,757 15,159
3/31/93 16,406 17,470
3/31/94 17,479 17,729
3/31/95 20,039 20,482
3/31/96 25,618 27,052
3/31/97 28,149 32,405
3/31/98 42,454 47,953
3/31/99 50,796 56,802
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Blended Equity
Fund and a broad-based index over the past ten fiscal years. All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
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* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index
of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
3
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EXCELSIOR FUNDS, INC. INCOME AND GROWTH FUND
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For the twelve months ended March 31, 1999, the Fund realized a negative total
return of (2.81)%,* versus 18.46%** for the Standard & Poor's 500 Composite
Stock Price Index. As in the past, to provide the income component of the Fund,
we held a variety of fixed-income and convertible securities. Within the equity
component of the Fund, which comprises the balance of the portfolio, we
emphasize thorough diversification across three investment strategies: growth,
value, and small cap and longer-term investment themes. In all of our
investments, we focus on long term fundamental business value with special
attention to the breadth and depth of employee incentives (compensation,
safety, etc.). The Fund had a challenging fiscal year. Part of the reason for
its underperformance can be attributed to the fact that the portfolio did not
have significant representation in the largest companies, particularly those
few that enjoyed market favor. We also note an earlier asset allocation
decision to increase the yield of the portfolio; in response, we began to sell
some of the Fund's fixed-income securities and adjust the balance of small,
medium and large-capitalization concerns. In the second half, the Fund was
restructured and poor-performing stocks were sold and we concentrated on
companies with superior return records and, we feel, excellent management.
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Income and Growth Fund+
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Average Annual Total Return Ended on 3/31/99*
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1 year 5 years 10 Years
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(2.81)% 14.19% 12.27%
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[LINE GRAPH APPEARS HERE]
S&P's 500 Composite
DATE Income and Growth Fund Stock Price Index**
- ------- ---------------------- -------------------
3/31/89 10,000 10,000
3/31/90 10,614 11,934
3/31/91 10,476 13,651
3/31/92 11,778 15,159
3/31/93 15,634 17,470
3/31/94 16,391 17,729
3/31/95 17,333 20,482
3/31/96 21,900 27,052
3/31/97 24,560 32,405
3/31/98 32,762 47,953
3/31/99 31,840 56,802
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Income and
Growth Fund and a broad-based index over the past ten fiscal years. All
dividends and capital gain distributions are reinvested. The Fund's performance
takes into account fees and expenses. The index does not take into account
charges, fees and other expenses. Further information relating to Fund
performance is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation -- Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index
of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
4
<PAGE>
EXCELSIOR FUNDS, INC. VALUE AND RESTRUCTURING FUND
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For the twelve months ended March 31, 1999, the Fund realized a total return
of 1.48%,* versus 5.04%*** for The Russell 1000 Value Index. For the fiscal
year, the Fund's best performers were concentrated in the technology,
telecommunications and financial services sectors. As for portfolio structure
and strategy, we made no significant changes. We remained broadly diversified,
though with overweight positions in aerospace, financials, and technology, and
underweight positions in utilities, health care, and the big consumer names.
Throughout the year, we gradually diversified away from the high-flying large-
cap stocks, adding somewhat more defensive and higher-quality larger-
capitalization names. As of fiscal year end, roughly 75% of the fund's
holdings boasted market capitalizations in excess of $5 billion (up from 65%
12 months prior). We continue to believe firmly in the Fund's strategy.
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Value and Restructuring Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year 5 years Since Inception (12/31/92)
- --------------------------------------------------------------------------------
1.48% 22.61% 24.12%
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[LINE GRAPH APPEARS HERE]
Value and S&P's 500 Composite Russell 1000
Date Restructing Fund Stock Price Index** Value Index**
- -------- ---------------- ------------------- -------------
12/31/92 10,000 10,000 10,000
3/31/93 11,014 10,440 10,967
3/31/94 13,922 10,590 11,400
3/31/95 15,522 12,240 12,678
3/31/96 21,184 16,160 16,924
3/31/97 25,017 19,365 19,983
3/31/98 38,052 28,650 29,408
3/31/99 38,615 33,935 30,891
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Value and
Restructuring Fund and a broad-based index since 12/31/92 (inception date).
All dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The index does not take into
account charges, fees and other expenses. Beginning with this report, we are
now comparing the Fund's performance to The Russell 1000 Value Index rather
than the Standard & Poor's 500 Composite Stock Price Index as this index
better represents the Fund's investment universe. Further information relating
to Fund performance is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
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* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged
index of U.S. stock market performance.
*** Source: The Russell Company--The Russell 1000 Value Index is an unmanaged
index composed of those Russell 1000 Index companies with lower price-to-
book ratios and lower forecasted growth values. The Russell 1000 Index is
composed of the 1000 largest companies in The Russell 3000 Index which is
composed of 3,000 of the largest U.S. Companies by market capitalization.
The Index includes dividends reinvested.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
5
<PAGE>
EXCELSIOR FUNDS, INC. SMALL CAP FUND
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For the twelve months ended March 31, 1999, the Fund realized a negative total
return of (21.41)%,* versus negative (16.26)%** for the Russell 2000 Index.
During the first half, the Fund's performance was impacted by extremely
volatile market conditions, particularly with respect to continued poor
investor sentiment toward small-cap stocks in general. We note as well the
Fund's overweighted positions in the technology and capital goods sectors and
an underweighted position in the health care sector, each of which contributed
to the Fund's underperformance relative to peers and The Russell 2000 Index.
As a result, we restructured the portfolio, increasing the number of
positions, shifting stock selection emphasis away from small-cap growth stocks
and toward value, decreasing technology holdings, and increasing health care
holdings. Heading into the second half, the Fund rebounded dramatically.
Strong contributors included the Fund's recently added specialty retail and
health care stocks, as well as individual strong advances from large holdings
in Travel Systems International, OReilly Automotive and SDL Inc. While the
environment once again grew challenging for small caps in the fourth fiscal
quarter, the Fund did have some strong individual performances in technology
(SDL), financial services (Silicon Valley Banchshares, Executive Risk), and
consumer services (Big Flower Holdings). Still, these contributions were
offset in part by weakness among some of the Fund's health care, travel and
technology services holdings.
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Small Cap Fund+
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Average Annual Total Return Ended on 3/31/99*
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1 year 5 years Since Inception (12/31/92)
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(21.41)% 4.41% 7.28%
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[LINE GRAPH APPEARS HERE]
DATE Small Cap Fund Russell 2000 Index**
- -------- -------------- --------------------
12/31/92 10,000 10,000
3/31/93 10,571 10,440
3/31/94 12,503 11,590
3/31/95 14,398 12,210
3/31/96 17,031 15,770
3/31/97 14,590 16,576
3/31/98 19,745 23,530
3/31/99 15,518 19,705
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. There is greater volatility associated
with an investment in the Small Cap Market.
The above illustration compares a $10,000 investment made in Small Cap Fund
and a broad-based index since 12/31/92 (inception date). All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: The Russell Company--The Russell 2000 Index is an unmanaged index
and is composed of the 2,000 smallest companies in the Russell 3000 Index.
The Russell 3000 Index is composed of 3,000 of the largest U.S. companies
by market capitalization. The index includes dividends reinvested.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
6
<PAGE>
EXCELSIOR FUNDS, INC. ENERGY AND NATURAL RESOURCES FUND
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For the twelve months ended March 31, 1999, the Fund realized a total return
of negative (12.23)%,* versus 18.46%** for the Standard & Poor's 500 Composite
Stock Price Index. The energy sector and the Fund grappled with a challenging
macro-environment in fiscal 1999. During the first half, reflecting the
sector's broad-based weakness, only seven of the 37 stocks in the Fund
outperformed the S&P 500. Regarding portfolio strategy, as the Asian downturn
impacted all commodity producers, we reduced our natural resource (non-energy)
component from 9% to 5%. Also, given the protracted downturn in oil prices, we
continued to reduce our weighting in the oilfield service group from 24% to
22%. Later, toward the end of the second fiscal quarter, given initial
evidence of OPEC supply control, we gradually raised our weighting in the
Exploration & Production and oil service sectors in advance of the winter
heating season. This posture was reflected in our portfolio weighting, which
favored the major international oil companies, natural gas pipelines and
utilities while maintaining exposure to the commodity-sensitive oil service
and E&P sectors, particularly those companies exposed to natural gas. During
the third fiscal quarter, a mid-quarter reduction in our holdings of the
commodity-sensitive E&P and oil service companies mitigated the negative
impact of another collapse in oil prices and fall-off in natural gas prices.
In March, an OPEC agreement to implement a third round of production cuts to
reduce surplus global oil inventory levels, triggered a rebound for energy
stocks. The Fund capitalized on this announcement via a shift of funds from
the more defensive major integrated oils and pipeline/utilities sectors into
the commodity-sensitive E&P and oil service sectors. We positioned the Fund to
take advantage of any opportunities arising from commodity price volatility.
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Energy and Natural Resources Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year 5 years Since Inception (12/31/92)
- --------------------------------------------------------------------------------
(12.23)% 4.41% 11.54%
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Energy and S&P's 500 Composite
DATE Natural Resources Fund Stock Price Index**
- -------- ---------------------- -------------------
12/31/92 10,000 10,000
3/31/93 11,157 10,440
3/31/94 11,094 10,590
3/31/95 11,568 12,240
3/31/96 14,067 16,160
3/31/97 18,045 19,365
3/31/98 22,551 28,650
3/31/99 19,793 33,935
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Energy and
Natural Resources Fund and a broad-based index since 12/31/92 (inception
date). All dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The index does not take into
account charges, fees and other expenses. Further information relating to Fund
performance is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index
of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
7
<PAGE>
EXCELSIOR FUNDS, INC. LARGE CAP GROWTH FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1999, the Fund realized a total return
of 68.04%*, strongly out pacing The Russell 1000 Growth Index's return of
28.06%, **** and ranked sixth out of 1,022 funds, based on total returns, in
the Lipper Growth category*** for the same time period. As always, we
continued to focus exclusively on high-quality, large-cap companies which we
believe have superior growth potential. We maintain a concentrated portfolio
and we don't concern ourselves with issues of market timing and valuation. The
Fund includes 25 names, and, as always, we let the winners run and eliminated
the losers. As a result, the Fund's largest holdings are generally its best
performing as well. Throughout the fiscal year, we focused on several secular
trends and areas where we have been able to identify the most rapid growth
potential: technology (PC and Internet), globally dominant financial
intermediaries, and globally dominant brand names. Among the Fund's strongest
performers for the year were America Online and Charles Schwab. Microsoft,
Dell and EMC were notably strong as well. Among the Fund's weaker performers
was PeopleSoft, which was eliminated from the portfolio in the fourth fiscal
quarter.
- --------------------------------------------------------------------------------
Large Cap Growth Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year Since Inception (10/1/97)
- --------------------------------------------------------------------------------
68.04% 60.93%
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Large Cap S&P 500 Composite Russell 1000
DATE Growth Fund Stock Price Index** Growth Index****
-------- ----------- ------------------- ----------------
10/1/97 10,000 10,000 10,000
12/31/97 10,143 10,287 10,152
3/31/98 12,157 11,723 11,690
6/30/98 13,400 12,110 12,220
9/30/98 12,157 10,906 11,110
12/31/98 16,943 13,228 14,081
3/31/99 20,429 13,886 14,976
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Large Cap
Growth Fund and a broad-based index since 10/1/97 (inception date). All
dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The index does not take into
account charges, fees and other expenses. Beginning with this report, we are
now comparing the Fund's performance to the Russell 1000 Growth Index rather
than the Standard & Poor's 500 Composite Stock Price Index as this index
better represents the Fund's investment universe. Further information relating
to Fund performance is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
*** Source: Lipper Analytical Services, Inc.--Lipper is an independent
mutual fund performance monitor.
**** Source: The Russell Company -- The Russell 1000 Growth Index is an
unmanaged index composed of those Russell 1000 Index companies with
higher price-to-book ratios and higher forecasted growth values. The
Russell 1000 Index is composed of the 1000 largest companies in The
Russell 3000 Index which is composed of 3,000 of the largest U.S.
Companies by market capitalization. The Index includes dividends
reinvested.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
8
<PAGE>
EXCELSIOR FUNDS, INC. REAL ESTATE FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1999, the Fund realized a negative total
return of (17.55)%,* versus negative (20.33)%*** for the Morgan Stanley's REIT
Index. REIT's underperformed the broader market throughout the fiscal year.
This weakness was driven by several factors: First, the positive-spread
investment opportunities which had been available for several years became
scarce as both public and private bidders began to compete intensely for
properties, bringing down initial returns on investment across property
sectors. Second, we began to see development in certain sectors, raising fears
of overbuilding. And third, the real estate cycle completed its rapid recovery
phase and entered a normal growth phase, implying single-digit growth rates as
opposed to the high-teens rates seen of the recent past. The more aggressive,
growth-oriented REIT's such as hotel and office/industrial, and the more deal-
oriented REIT's were the worst performers through much of the fiscal year, in
the final quarter, however, the lodging, apartment and office/industrial
sectors saw improved relative performance. For the most part, performance for
the Fund reflected weakness in the real estate sector. We did manage to
sidestep the weakness in Mortgage REITs, however, as we maintain no
representation in that area. Also, the Fund's performance was impacted
positively by the non-REIT real estate names, Catellus in particular. Freddie
Mac and Forest City added to performance as well. Regarding portfolio
activity, as we were comfortable with the fund's structure -- with a full
weighting in the office/industrial sector and a slight deemphasis on apartment
and hotel REITs -- we made few changes.
- --------------------------------------------------------------------------------
Real Estate Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year Since Inception (10/1/97)
- --------------------------------------------------------------------------------
(17.55)% (10.75)%
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Standard & Poor's Morgan Stanley
Date Real Estate Fund REIT Composite Index** REIT Index***
- -------- ---------------- ---------------------- --------------
10/1/97 10,000 10,000 10,000
12/31/97 10,338 10,112 10,098
3/31/98 10,226 10,080 10,316
6/30/98 9,817 9,543 9,864
9/30/98 8,946 8,427 8,822
12/31/98 8,937 8,079 8,635
3/31/99 8,431 7,691 8,219
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Real Estate
Fund and a broad-based index since 10/1/97 (inception date). All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the Morgan Stanley REIT Index rather than the Standard
of Poor's REIT Composite Index as this index better represents the Fund's
investment universe. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard
& Poor's REIT Composite Index is a capitalization-weighted index of 100
stocks designed to measure the performance of Real Estate Investment
Trusts, commonly known as REITS.
*** Source: Morgan Stanley & Co., Incorporated--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Morgan Stanley REIT Index is an unmanaged capitalization-weighted index
composed of the largest and most actively traded REITS designed to provide
a broad measure of real estate equity performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
9
<PAGE>
EXCELSIOR INSTITUTIONAL TRUST OPTIMUM GROWTH FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1999, the Fund realized a total return
of 68.00%,* strongly out pacing The Russell 1000 Growth Index's return of
28.06%,**** and ranked fifth out of 1,022 funds, based on total return, in the
Lipper Growth category*** for the same period. As always, we continued to
focus exclusively on high-quality, large-cap companies which we believe have
superior growth potential. We maintain a concentrated portfolio and we don't
concern ourselves with issues of market timing and valuation. The Fund
includes 25 names, and, as always, we let the winners run and eliminated the
losers. As a result, the Fund's largest holdings are generally its best
performing as well. In addition, a structured overlay, representing 30% of
Fund assets, consists of a complimentary basket of stocks selected from the
Russell 1000 Growth Index, which includes growth-oriented issuers selected
from among the 1000 largest U.S. issuers. The overlay is designed to increase
diversification and reduce volatility without materially inhibiting return
potential. Throughout the fiscal year, we focused on several secular trends
and areas where we have been able to identify the most rapid growth potential:
technology (PC and Internet), globally dominant financial intermediaries, and
globally dominant brand names. Among the Fund's strongest performers for the
year were America Online and Charles Schwab. Microsoft, Dell and EMC were
notably strong as well. Among the Fund's weaker performers was PeopleSoft,
which was eliminated from the portfolio in the fourth fiscal quarter. The
structured overlay continued to do well and helped dampen the overall
volatility of the Fund.
- --------------------------------------------------------------------------------
Optimum Growth Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year Since Inception 3/31/99*
- --------------------------------------------------------------------------------
68.00% 42.83%
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Standard & Poor's 500 Russell 1000
DATE Optimum Growth Fund Composite Stock Price Index** Growth Index****
------- ------------------- ----------------------------- ----------------
7/3/96 10,000 10,000 10,000
9/30/96 10,121 10,308 10,360
3/31/97 10,331 11,466 11,047
9/30/97 13,544 14,474 14,121
3/31/98 16,572 16,967 16,507
9/30/98 16,948 15,785 15,689
3/31/99 27,841 20,098 21,136
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Optimum Growth
Fund and a broad-based index since 7/3/96 (inception date). All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the Russell 1000 Growth Index rather than the Standard &
Poor's 500 Composite Stock Price Index as this index better represents the
Fund's investment universe. Further information relating to Fund performance
is contained in the Financial Highlights section of the Prospectus and
elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
*** Source: Lipper Analytical Services, Inc.--Lipper is an independent mutual
fund performance monitor.
**** Source: The Russell Company--The Russell 1000 Growth Index is an
unmanaged index and is composed of the 1,000 companies with higher price-
to-book ratios and higher forecasted growth values in the Russell 3000
Index. The Russell 3000 Index is composed of 3,000 of the largest U.S.
Companies by market capitalization. The Index includes dividends
reinvested.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
10
<PAGE>
EXCELSIOR INSTITUTIONAL TRUST VALUE EQUITY FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1999, the Fund realized a total return
of 4.59%,* versus 5.04%*** for The Russell 1000 Value Index. For the fiscal
year, the Fund's best performers were concentrated in the technology and
telecommunications sectors. As for portfolio structure and strategy, we made
no significant changes. We remained broadly diversified, though with
overweight positions in aerospace, financials, and technology, and underweight
positions in utilities, health care, and the big consumer names. Throughout
the year, we gradually diversified away from the high-flying large-cap stocks,
adding somewhat more defensive and, we feel, higher-quality larger-
capitalization names. As of fiscal year end, roughly 75% of the Fund's
holdings boasted market capitalizations in excess of $5 billion, up from 65% a
year ago. We continue to believe firmly in the Fund's strategy.
- --------------------------------------------------------------------------------
Value Equity Fund+
- --------------------------------------------------------------------------------
Average Annual Total Return Ended on 3/31/99*
- --------------------------------------------------------------------------------
1 year Since Inception (1/15/97)
- --------------------------------------------------------------------------------
4.59% 23.03%
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Value S&P's 500 Composite Russell 1000
DATE Equity Fund Stock Price Index** Value Index***
- ------- ----------- ------------------- --------------
1/15/97 10,000 10,000 10,000
3/31/97 9,379 10,268 10,256
9/30/97 12,649 12,961 12,940
3/31/98 14,171 15,194 15,094
9/30/98 11,764 14,136 13,405
3/31/99 14,821 17,998 15,855
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Value Equity
Fund and a broad-based index since 1/15/97 (inception date). All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the Russell 1000 Value Index rather than the Standard &
Poor's 500 Composite Stock Price Index as this index better represents the
Fund's investment universe. Further information relating to Fund performance
is contained in the Financial Highlights section of the Prospectus and
elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard
& Poor's 500 Composite Stock Price Index is a widely accepted unmanaged
index of U.S. stock market performance.
*** Source: The Russell Company--The Russell 1000 Value Index is an unmanaged
index and is composed of the 1,000 companies with lower price-to-book
ratios and lower forecasted growth values in the Russell 3000 Index. The
Russell 3000 Index is composed of 3,000 of the largest U.S. Companies by
market capitalization. The Index includes dividends reinvested.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
11
<PAGE>
Excelsior Funds
Statements of Assets and Liabilities
March 31, 1999
<TABLE>
<CAPTION>
Income and Value and
Blended Growth Restructuring
Equity Fund Fund Fund
------------ ----------- -------------
<S> <C> <C> <C>
ASSETS:
Investments, at cost-see
accompanying portfolios............. $347,238,807 $37,761,323 $470,144,749
============ =========== ============
Investments, at value (Note 1)...... $720,933,644 $65,268,591 $597,282,611
Cash................................ 483 806 --
Dividends receivable................ 727,103 40,550 855,254
Interest receivable................. 30,599 213,726 901
Receivable for investments sold..... -- -- 8,250,180
Receivable for fund shares sold..... 372,638 21,881 702,837
Prepaid expenses.................... 12,527 2,739 8,415
Unamortized organization costs (Note
5).................................. -- -- --
------------ ----------- ------------
Total Assets........................ 722,076,994 65,548,293 607,100,198
LIABILITIES:
Payable for investments purchased... -- -- 5,401,995
Payable for fund shares redeemed.... 1,125,505 47,169 2,626,183
Dividends payable................... 64 -- --
Investment advisory fees payable
(Note 2)............................ 429,726 39,669 193,685
Administration fees payable (Note
2).................................. 69,938 6,567 22,376
Administrative service fees payable
(Note 2)............................ 23,601 4,528 58,037
Directors'/Trustees' fees payable
(Note 2)............................ 5,088 1,088 3,173
Due to custodian bank............... -- -- 4,023,231
Accrued expenses and other
payables............................ 150,101 21,369 156,760
------------ ----------- ------------
Total Liabilities................... 1,804,023 120,390 12,485,440
------------ ----------- ------------
NET ASSETS........................... 720,272,971 65,427,903 594,614,758
============ =========== ============
NET ASSETS consist of:
Undistributed net investment
income.............................. $ 637,027 $ 253,007 $ 812,147
Accumulated net realized gain (loss)
on investments...................... 10,562,174 9,389,132 (19,939,289)
Unrealized appreciation
(depreciation) of investments and
foreign currency translations....... 373,694,837 27,507,268 127,137,862
Par value (Note 4).................. 16,945 4,239 24,898
Paid-in capital in excess of par
value............................... 335,361,988 28,274,257 486,579,140
------------ ----------- ------------
Total Net Assets..................... $720,272,971 $65,427,903 $594,614,758
============ =========== ============
Net Assets:
Shares.............................. $720,272,971 $65,427,903 $594,614,758
Institutional Shares................ -- -- --
Shares outstanding (Note 4):
Shares.............................. 16,945,407 4,239,131 24,898,088
Institutional Shares................ -- -- --
NET ASSET VALUE PER SHARE (net
assets/shares outstanding):
Shares.............................. $42.51 $15.43 $23.88
====== ====== ======
Institutional Shares................ -- -- --
==== ==== ====
</TABLE>
See Notes to Financial Statements
12
<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>
$42,680,998 $33,894,017 $168,430,504 $40,720,151 $ 41,784,940 $28,434,616
=========== =========== ============ =========== ============ ===========
$44,427,398 $41,981,585 $251,306,438 $33,182,383 $100,133,069 $39,702,423
532 6,339 299 -- 117 --
15,979 27,788 55,529 226,275 56,858 60,998
12,445 4,238 1,193 138 3,571 2,231
437,589 1,424,989 -- -- -- 1,605,827
1,303 296,437 506,529 103,564 400,200 26,803
1,463 1,009 1,358 918 1,163 685
-- -- 36,900 21,666 525 525
----------- ----------- ------------ ----------- ------------ -----------
44,896,709 43,742,385 251,908,246 33,534,944 100,595,503 41,399,492
1,027,850 586,725 -- 115,663 -- 1,215,600
29,729 98,751 134,011 313 18,401 --
-- -- -- -- -- --
16,603 6,464 130,813 17,089 40,480 15,415
5,871 7,329 28,385 3,831 12,229 5,176
4,941 4,051 7,141 2,226 -- --
469 352 592 309 1,210 517
-- -- -- 548,571 -- 720,280
22,813 17,973 59,559 6,067 64,329 11,360
----------- ----------- ------------ ----------- ------------ -----------
1,108,276 721,645 360,501 694,069 136,649 1,968,348
----------- ----------- ------------ ----------- ------------ -----------
43,788,433 43,020,740 251,547,745 32,840,875 100,458,854 39,431,144
=========== =========== ============ =========== ============ ===========
$ -- $ 91,112 $ -- $ 23,871 $ -- $ 87,696
(3,681,174) (3,298,971) (3,577,039) (2,104,234) 2,614,708 439,024
1,746,400 8,087,568 82,875,934 (7,537,768) 58,348,129 11,268,696
4,725 3,905 17,586 5,968 36 26
45,718,482 38,137,126 172,231,264 42,453,038 39,495,981 27,635,702
----------- ----------- ------------ ----------- ------------ -----------
$43,788,433 $43,020,740 $251,547,745 $32,840,875 $100,458,854 $39,431,144
=========== =========== ============ =========== ============ ===========
$43,788,433 $43,020,740 $251,547,745 $32,840,875 $ 12,414,087 $ 124,544
-- -- -- -- 88,044,767 39,306,600
4,725,201 3,904,746 17,586,380 5,967,751 453,003 8,115
-- -- -- -- 3,195,972 2,563,525
$9.27 $11.02 $14.30 $5.50 $27.40 $15.35
===== ====== ====== ===== ====== ======
-- -- -- -- $27.55 $15.33
==== ===== ===== ==== ====== ======
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Funds
Statements of Operations
Year Ended March 31, 1999
<TABLE>
<CAPTION>
Value and
Blended Income and Restructuring
Equity Fund Growth Fund Fund
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................... $ 257,532 $ 1,161,184 $ 374,036
Dividend income................... 7,510,623 899,292 7,932,679
------------ ----------- -----------
Total Income...................... 7,768,155 2,060,476 8,306,715
EXPENSES:
Investment advisory fees (Note
2)................................ 4,680,470 702,594 3,264,279
Administration fees (Note 2)...... 954,816 143,329 832,391
Administrative service fees (Note
2)................................ 234,639 75,271 759,496
Shareholder servicing agent fees.. 104,216 61,148 541,799
Custodian fees.................... 156,073 27,695 172,027
Legal and audit fees.............. 77,593 14,160 69,661
Shareholder reports............... 33,071 9,925 34,666
Amortization of organization costs
(Note 5).......................... -- -- --
Registration and filing fees...... 16,839 13,330 61,326
Directors'/Trustees' fees and
expenses (Note 2)................. 22,014 3,426 21,253
Distribution fees (Note 2)........ -- -- --
Miscellaneous expenses............ 20,936 10,097 79,041
------------ ----------- -----------
Total Expenses.................... 6,300,667 1,060,975 5,835,939
Fees waived by investment adviser
and administrators (Note 2)....... (361,997) (75,271) (759,496)
------------ ----------- -----------
Net Expenses...................... 5,938,670 985,704 5,076,443
------------ ----------- -----------
NET INVESTMENT INCOME (LOSS)....... 1,829,485 1,074,772 3,230,272
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 1):
Net realized gain (loss):
Security transactions............. 10,562,173 13,915,494 (20,062,670)
Foreign currency translations..... -- -- (16,015)
------------ ----------- -----------
Total net realized gain (loss).... 10,562,173 13,915,494 (20,078,685)
Change in unrealized
appreciation/depreciation on
investments and foreign currency
translations during the year...... 101,900,285 (23,854,447) 20,524,738
------------ ----------- -----------
Net realized and unrealized gain
(loss) on investments............. 112,462,458 (9,938,953) 446,053
------------ ----------- -----------
Net increase (decrease) in net
assets resulting from operations.. $114,291,943 $(8,864,181) $ 3,676,325
============ =========== ===========
</TABLE>
See Notes to Financial Statements
14
<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>
$ 139,698 $ 185,440 $ 148,848 $ 75,918 $ 37,768 $ 8,154
303,745 663,838 430,206 2,434,866 464,280 538,890
------------ ----------- ----------- ----------- ----------- ----------
443,443 849,278 579,054 2,510,784 502,048 547,044
293,697 261,505 848,103 382,231 460,546 226,293
74,893 66,688 173,013 58,481 108,405 53,266
51,910 48,699 45,682 37,486 -- --
37,311 45,334 35,256 6,028 10,845 7,636
22,874 14,167 40,783 10,462 19,921 9,052
6,929 5,693 11,263 5,324 15,358 6,956
5,216 9,736 14,671 20,424 10,627 4,961
-- -- 4,475 5,902 244 244
13,067 18,191 18,461 14,034 22,178 22,709
1,983 1,613 3,207 1,548 5,002 2,400
-- -- -- -- 27,903 273
4,633 4,915 31,843 3,375 4,284 3,046
------------ ----------- ----------- ----------- ----------- ----------
512,513 476,541 1,226,757 545,295 685,313 336,836
(51,910) (48,699) (45,682) (86,449) (155,809) (91,255)
------------ ----------- ----------- ----------- ----------- ----------
460,603 427,842 1,181,075 458,846 529,504 245,581
------------ ----------- ----------- ----------- ----------- ----------
(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)
------------ ----------- ----------- ----------- ----------- ----------
(3,681,149) (3,055,181) (3,363,023) (2,123,845) 4,906,503 2,730,623
(10,537,167) (3,816,865) 76,691,074 (7,647,372) 35,505,018 (1,255,930)
------------ ----------- ----------- ----------- ----------- ----------
(14,218,316) (6,872,046) 73,328,051 (9,771,217) 40,411,521 1,474,693
------------ ----------- ----------- ----------- ----------- ----------
$(14,235,476) $(6,450,610) $72,726,030 $(7,719,279) $40,384,065 $1,776,156
============ =========== =========== =========== =========== ==========
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Excelsior Funds
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Value and
Blended Income and Restructuring
Equity Fund Growth Fund Fund
------------ ------------ -------------
<S> <C> <C> <C>
Year Ended March 31, 1999
Net investment income (loss)....... $ 1,829,485 $ 1,074,772 $ 3,230,272
Net realized gain (loss) on
investments........................ 10,562,173 13,915,494 (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 (23,854,447) 20,524,738
------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations... 114,291,943 (8,864,181) 3,676,325
Distributions to shareholders:
From net investment income
Shares............................ (2,123,860) (1,820,821) (2,676,861)
Institutional Shares.............. -- -- --
From net realized gain on
investments
Shares............................ (8,071,808) (8,104,713) (3,609,196)
Institutional Shares.............. -- -- --
------------ ------------ ------------
Total distributions.............. (10,195,668) (9,925,534) (6,286,057)
------------ ------------ ------------
Increase (decrease) in net assets
from fund share transactions (Note
4)
Shares............................ 21,268,126 (53,835,166) 208,777,082
Institutional Shares.............. -- -- --
------------ ------------ ------------
Total from fund share
transactions..................... 21,268,126 (53,835,166) 208,777,082
------------ ------------ ------------
Net increase (decrease) in net
assets ............................ 125,364,401 (72,624,881) 206,167,350
NET ASSETS:
Beginning of period............... 594,908,570 138,052,784 388,447,408
------------ ------------ ------------
End of period (1)................. $720,272,971 $ 65,427,903 $594,614,758
============ ============ ============
(1) Including undistributed net
investment income................. $ 637,027 $ 253,007 $ 812,147
============ ============ ============
Year Ended March 31, 1998
Net investment income (loss)....... $ 2,565,250 $ 2,995,948 $ 1,134,103
Net realized gain (loss) on
investments........................ 41,083,134 19,207,907 4,596,344
Change in unrealized
appreciation/depreciation on
investments and foreign currency
translations during the year....... 205,385,468 19,295,523 80,592,450
------------ ------------ ------------
Net increase in net assets
resulting from operations.......... 249,033,852 41,499,378 86,322,897
Distributions to shareholders:
From net investment income:
Shares............................ (2,290,458) (2,916,488) (855,654)
Trust Shares...................... (146) -- (58)
Institutional Shares.............. -- -- --
From net realized gain on
investments:
Shares............................ (38,374,555) (15,371,776) (2,883,915)
Trust Shares...................... -- -- --
Institutional Shares.............. -- -- --
In excess of net realized gain on
investments:
Shares............................ -- -- --
------------ ------------ ------------
Total distributions.............. (40,665,159) (18,288,264) (3,739,627)
------------ ------------ ------------
Increase (decrease) in net assets
from fund share transactions (Note
4)
Shares............................ 79,577,598 (17,925,868) 181,862,594
Trust Shares...................... (108,359) -- (61,525)
Institutional Shares.............. -- -- --
------------ ------------ ------------
Total from fund share
transactions..................... 79,469,239 (17,925,868) 181,801,069
------------ ------------ ------------
Net increase in net assets......... 287,837,932 5,285,246 264,384,339
NET ASSETS:
Beginning of year................. 307,070,638 132,767,538 124,063,069
------------ ------------ ------------
End of year (2)................... $594,908,570 $138,052,784 $388,447,408
============ ============ ============
--------
(2) Including undistributed net
investment income................. $ 914,191 $ 664,026 $ 274,591
============ ============ ============
</TABLE>
--------
See Notes to Financial Statements
16
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Value
Small Cap Natural Resources Growth Real Estate Optimum Equity
Fund Fund Fund Fund Growth Fund Fund
------------ ----------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ (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
============ =========== ============ =========== ============ ===========
$ (83,679) $ 292,606 $ (17,327) $ 693,157 $ 81,809 $ 243,228
3,491,186 3,347,027 (214,016) (749) (2,090,039) 2,142,877
12,326,916 4,846,663 6,184,860 109,604 22,166,451 9,909,167
------------ ----------- ------------ ----------- ------------ -----------
15,734,423 8,486,296 5,953,517 802,012 20,158,221 12,295,272
-- (309,721) -- (474,266) (4,167) (363)
-- -- -- -- -- --
-- -- -- -- (123,146) (230,995)
-- (3,856,927) -- -- -- (5,580)
-- -- -- -- -- --
-- -- -- -- -- (1,695,764)
-- (243,134) -- -- -- --
------------ ----------- ------------ ----------- ------------ -----------
-- (4,409,782) -- (474,266) (127,313) (1,932,702)
------------ ----------- ------------ ----------- ------------ -----------
(441,310) 8,704,842 41,575,141 40,842,978 897,093 (4,020)
(11,276) -- -- -- -- --
-- -- -- -- 6,574,901 741,644
------------ ----------- ------------ ----------- ------------ -----------
(452,586) 8,704,842 41,575,141 40,842,978 7,471,994 737,624
------------ ----------- ------------ ----------- ------------ -----------
15,281,837 12,781,356 47,528,658 41,170,724 27,502,902 11,100,194
53,266,089 33,393,091 -- -- 30,539,626 23,743,280
------------ ----------- ------------ ----------- ------------ -----------
$ 68,547,926 $46,174,447 $ 47,528,658 $41,170,724 $ 58,042,528 $34,843,474
============ =========== ============ =========== ============ ===========
$ -- $ 32,722 $ -- $ 26,291 $ 6,771 $ 63,875
============ =========== ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements
17
<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) --
Trust Shares --
(11/12/96*)
Period ended March 31,
1997................... 26.30 0.04 0.03 0.07 (0.03) (0.56) --
Period from April 1,
1997 to October 27,
1997................... 25.78 0.02 4.67 4.69 (0.05) -- --
INCOME AND GROWTH
FUND -- (1/6/87*)
Year Ended March 31,
1995.................... $11.94 $ 0.38 $ 0.26 $ 0.64 $(0.35) $(0.41) --
1996.................... 11.82 0.39 2.61 3.00 (0.31) (0.06) --
1997.................... 14.45 0.33 1.45 1.78 (0.35) (0.63) --
1998.................... 15.25 0.36 4.53 4.89 (0.34) (1.85) --
1999.................... 17.95 0.17 (0.85) (0.68) (0.28) (1.56) --
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) --
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) --
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) -- --
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 -- -- --
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) -- --
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 -- -- --
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) --
</TABLE>
* Commencement of operations. ** Not Annualized. *** Annualized
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Amount represents less than $0.01 per share.
See Notes to Financial Statements
18
<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
(0.59) 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
$(0.76) $11.82 5.74 % $ 99,925 1.06% 1.09% 3.31 % 36% --
(0.37) 14.45 25.83 % 127,495 1.05% 1.11% 2.95 % 22% $0.01
(0.98) 15.25 12.61 % 132,768 1.03% 1.11% 2.17 % 25% 0.01
(2.19) 17.95 33.29 % 138,053 1.02% 1.10% 2.04 % 32% 0.01
(1.84) 15.43 (2.81)% 65,428 1.05% 1.13% 1.15 % 36% 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
(0.28) 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
(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
-- $ 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% -- ++
$(0.11) $ 7.05 2.26 %** $ 41,171 1.20%*** 1.40%*** 5.02 %*** 30%*** $0.01
(0.33) 5.50 (17.55)% 32,841 1.20% 1.43% 5.37 % 28% 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
-- $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
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Blended Equity Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 99.12%
FINANCIAL -- 20.18%
19,000 American Express Co. ................................... $ 2,232,500
56,250 American International Group, Inc. ..................... 6,785,156
539,634 Associates First Capital Corp. ......................... 24,283,530
90,600 Bank of Boston Corp. ................................... 3,924,113
54,687 BankAmerica Corp. ...................................... 3,862,269
2,287 +Berkshire Hathaway, Inc., Class B...................... 5,376,737
110,000 Citigroup, Inc. ........................................ 7,026,250
25,000 Fannie Mae.............................................. 1,731,250
50,000 First Union Corp. (North Carolina)...................... 2,671,875
340,000 Fleet Financial Group, Inc. ............................ 12,792,500
81,702 Household International, Inc. .......................... 3,727,654
114,200 MBIA, Inc. ............................................. 6,623,600
302,076 Mellon Bank Corp. ...................................... 21,258,598
202,694 Morgan Stanley, Dean Witter & Co. ...................... 20,256,732
15,000 Schwab (Charles) Corp. ................................. 1,441,875
156,300 State Street Boston Corp. .............................. 12,845,906
102,200 UNUM Corp. ............................................. 4,860,888
104,100 Wells Fargo Co. ........................................ 3,650,006
------------
145,351,439
------------
TECHNOLOGY -- 19.41%
251,657 +Cisco Systems, Inc. ................................... 27,572,170
35,000 Compaq Computer Corp. .................................. 1,109,063
176,000 +Dell Computer Corp. ................................... 7,194,000
28,500 +EMC Corp. ............................................. 3,640,875
126,480 Hewlett-Packard Co. .................................... 8,576,925
50,000 Honeywell Corp. ........................................ 3,790,625
150,000 Intel Corp. ............................................ 17,831,250
63,000 International Business Machines Corp. .................. 11,166,750
93,320 Lucent Technologies, Inc. .............................. 10,055,230
338,480 +Microsoft Corp. ....................................... 30,315,115
36,000 Nokia Corp., Class A, ADR............................... 5,607,000
120,000 +Oracle Corp. .......................................... 3,165,000
32,000 +Sun Microsystems, Inc. ................................ 4,000,000
58,000 Texas Instruments, Inc. ................................ 5,756,500
------------
139,780,503
------------
HEALTH CARE -- 16.10%
420,000 Abbott Laboratories..................................... 19,661,250
200,000 Bristol-Myers Squibb Co. ............................... 12,862,500
204,225 Johnson & Johnson....................................... 19,133,330
7,400 Lilly (Eli) & Co. ...................................... 628,075
88,000 Medtronic, Inc. ........................................ 6,314,000
98,000 Merck & Co., Inc. ...................................... 7,858,375
269,400 Pfizer, Inc. ........................................... 37,379,250
220,000 Schering-Plough Corp. .................................. 12,168,750
------------
116,005,530
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
CONSUMER CYCLICAL -- 12.36%
140,600 +CBS Corp. ............................................. $ 5,755,812
196,400 Centex Corp. ........................................... 6,554,850
48,000 Comcast Corp., Class A Special.......................... 3,021,000
157,500 Dayton Hudson Corp. .................................... 10,493,437
200,000 Ford Motor Co. ......................................... 11,350,000
78,000 General Motors Corp. ................................... 6,776,250
63,000 Home Depot, Inc. ....................................... 3,921,750
190,000 McDonald's Corp. ....................................... 8,609,375
141,375 +O'Reilly Automotive, Inc. ............................. 6,317,695
250,000 Wal-Mart Stores, Inc. .................................. 23,046,875
75,600 Wiley (John) & Sons, Inc., Class A...................... 3,175,200
------------
89,022,244
------------
COMMUNICATION SERVICES -- 8.23%
60,000 America Online, Inc. ................................... 8,760,000
42,000 Ameritech Corp. ........................................ 2,430,750
172,443 AT&T Corp. ............................................. 13,763,107
171,000 Bell Atlantic Corp. .................................... 8,838,562
211,000 +MCI WorldCom, Inc. .................................... 18,673,500
60,000 +NEXTEL Communications, Inc., Class A................... 2,197,500
98,000 SBC Communications, Inc. ............................... 4,618,250
------------
59,281,669
------------
CONSUMER STAPLES -- 7.98%
44,000 Bestfoods, Inc. ........................................ 2,068,000
187,500 Coca-Cola Company....................................... 11,507,812
69,210 CVS Corp. .............................................. 3,287,475
122,000 Gillette Co. ........................................... 7,251,375
48,500 Mattel, Inc. ........................................... 1,206,437
15,000 Novartis AG ADR......................................... 1,216,599
62,000 PepsiCo, Inc. .......................................... 2,429,625
113,200 Procter & Gamble Co. ................................... 11,086,525
150,000 RJR Nabisco Holdings Corp. ............................. 3,750,000
100,000 Time Warner, Inc. ...................................... 7,106,250
211,045 Walt Disney Co. ........................................ 6,568,776
------------
57,478,874
------------
CAPITAL GOODS -- 7.98%
15,100 Emerson Electric, Co. .................................. 799,356
311,000 General Electric Co. ................................... 34,404,375
275,266 Illinois Tool Works, Inc. .............................. 17,032,084
73,000 Tyco International Ltd. ................................ 5,237,750
------------
57,473,565
------------
ENERGY -- 5.32%
23,000 Chevron Corp. .......................................... 2,034,063
218,000 Exxon Corp. ............................................ 15,382,625
3,000 Minnesota Mining & Manufacturing........................ 212,250
178,300 Mobil Corp. ............................................ 15,690,400
73,000 Royal Dutch Petroleum Co. .............................. 3,796,000
33,200 Unocal Corp. ........................................... 1,222,175
------------
38,337,513
------------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Blended Equity Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
UTILITIES -- 1.56%
57,500 Duke Energy Corp. ...................................... $ 3,140,938
133,700 Southern Co. ........................................... 3,116,881
119,400 Texas Utilities Co. .................................... 4,977,488
------------
11,235,307
------------
TOTAL COMMON STOCKS (Cost $340,271,807)................. 713,966,644
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
DEMAND NOTES -- 0.97%
$3,400,000 Associates Corp. of North America Master Notes....... $ 3,400,000
3,567,000 General Electric Co. Promissory Notes................ 3,567,000
------------
TOTAL DEMAND NOTES (Cost $6,967,000)................. 6,967,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $347,238,807*)...................................... 100.09% $720,933,644
OTHER ASSETS AND LIABILITIES (NET)........................ (0.09) (660,673)
------ ------------
NET ASSETS................................................ 100.00% $720,272,971
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$347,238,807.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
21
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Income and Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 83.86%
CONSUMER STAPLES -- 17.15%
50,000 Gillette Co. ............................................ $ 2,971,875
15,000 Johnson & Johnson........................................ 1,405,313
30,000 Merck & Co., Inc. ....................................... 2,405,625
40,000 Novo-Nordisk A.S., ADR................................... 2,180,000
25,000 WM. Wrigley Jr. Co. ..................................... 2,260,937
-----------
11,223,750
-----------
FINANCIAL -- 16.82%
20,000 American International Group, Inc. ...................... 2,412,500
30,000 Morgan Stanley, Dean Witter & Co. ....................... 2,998,125
90,000 Mutual Risk Management Ltd. ............................. 3,442,500
15,000 Progressive Corp. ....................................... 2,152,500
-----------
11,005,625
-----------
CONSUMER CYCLICAL -- 16.07%
100,000 Herman Miller, Inc. ..................................... 1,806,250
60,000 McDonald's Corp. ........................................ 2,718,750
25,000 +RCN Corp. .............................................. 839,062
150,000 ServiceMaster Ltd. Partnership........................... 3,046,875
50,000 Wiley (John) & Sons, Inc., Class A....................... 2,100,000
-----------
10,510,937
-----------
TECHNOLOGY -- 14.82%
100,000 +Analog Devices, Inc. ................................... 2,975,000
30,000 +Level 3 Communications, Inc. ........................... 2,184,375
50,000 +SDL, Inc. .............................................. 4,534,375
-----------
9,693,750
-----------
RAW/INTERMEDIATE
MATERIALS -- 5.18%
90,000 Pioneer Hi-Bred International, Inc. ..................... 3,386,250
-----------
ENERGY -- 4.75%
44,000 Exxon Corp. ............................................. 3,104,750
-----------
UTILITIES -- 4.55%
80,000 +AES Corp. .............................................. 2,980,000
-----------
CAPITAL GOODS -- 4.52%
90,000 Dover Corp. ............................................. 2,958,750
-----------
TOTAL COMMON STOCKS (Cost $26,904,362)................... 54,863,812
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
CONVERTIBLE BONDS -- 8.32%
TECHNOLOGY -- 5.22%
$1,000,000 Kollmorgen Corp.,
Sub-Debenture, 8.75%, 05/01/09........................ $ 1,021,250
2,959,000 Network Equipment Technologies, Inc.,
Sub-Debenture, 7.25%, 05/15/14........................ 2,393,091
-----------
3,414,341
-----------
CONSUMER CYCLICAL -- 3.10%
2,275,000 Avatar Holdings 7.00%, 04/01/05....................... 2,030,438
-----------
TOTAL CONVERTIBLE BONDS
(Cost $5,896,961)..................................... 5,444,779
-----------
DEMAND NOTES -- 7.58%
2,600,000 Associates Corp. of North America Master Notes........ 2,600,000
2,360,000 General Electric Co. Promissory Notes................. 2,360,000
-----------
TOTAL DEMAND NOTES (Cost $4,960,000).................. 4,960,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $37,761,323*)........................................ 99.76% $65,268,591
OTHER ASSETS AND LIABILITIES (NET)......................... 0.24 159,312
------ -----------
NET ASSETS................................................. 100.00% $65,427,903
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$37,761,323.
+ Non-income producing
ADR--American Depositary Receipt
See Notes to Financial Statements
22
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Value and Restructuring Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 98.74%
TECHNOLOGY -- 24.26%
380,000 Alcatel Alsthom ADR..................................... $ 8,668,750
200,000 BCE, Inc. .............................................. 8,862,500
265,000 +Bell & Howell Holdings Co. ............................ 7,767,812
135,000 Cordant Technologies, Inc. ............................. 5,374,688
290,000 Frontier Corp. ......................................... 15,043,750
5,001 +Intermedia Communications, Inc. ....................... 133,152
87,000 International Business Machines Corp. .................. 15,420,750
125,000 +IXC Communications, Inc. .............................. 5,734,375
125,000 Nokia Corp., Class A, ADR............................... 19,468,750
130,000 +Plantronics, Inc. ..................................... 8,133,125
180,000 Raytheon Co., Class A................................... 10,395,000
35,322 +Sensormatics Electronics Corp. ........................ 335,559
195,000 Texas Instruments, Inc. ................................ 19,353,750
435,000 +TriStar Aerospace Co. ................................. 3,969,375
360,000 +Unisys Corp. .......................................... 9,967,500
385,000 +Vishay Intertechnology, Inc. .......................... 5,606,562
------------
144,235,398
------------
FINANCIAL -- 23.17%
145,000 Amvescap plc ADR........................................ 7,422,188
280,000 ARM Financial Group, Inc., Class A...................... 4,182,500
150,000 Astoria Financial Corp. ................................ 7,481,250
170,000 Bank One Corp. ......................................... 9,360,625
200,000 Bear Stearns Companies, Inc. ........................... 8,937,500
185,000 Chase Manhattan Corp. .................................. 15,042,812
220,000 Citigroup, Inc. ........................................ 14,052,500
275,000 Donaldson, Lufkin & Jenrette, Inc. ..................... 19,181,250
162,000 Fannie Mae.............................................. 11,218,500
120,000 Mellon Bank Corp. ...................................... 8,445,000
115,000 Morgan Stanley, Dean Witter & Co. ...................... 11,492,812
130,000 PNC Bank Corp. ......................................... 7,223,125
205,000 SLM Holding Corp. ...................................... 8,558,750
85,000 XL Capital Ltd., Class A................................ 5,163,750
------------
137,762,562
------------
CONSUMER CYCLICAL -- 20.03%
221,000 +AT&T Corp. -- Liberty Media Group, Class A............. 11,630,125
360,000 +CBS Corp. ............................................. 14,737,500
188,000 Ford Motor Co. ......................................... 10,669,000
150,000 General Motors Corp. ................................... 13,031,250
168,000 +General Motors Corp., Class H.......................... 8,473,500
190,000 Harman International Industries, Inc. .................. 6,982,500
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
CONSUMER CYCLICAL -- (continued)
298,000 +Newmark Homes Corp. ................................... $ 1,862,500
360,000 News Corp. Ltd. ADR..................................... 10,620,000
380,000 +Outdoor Systems, Inc. ................................. 11,400,000
425,200 +Paxson Communications Corp. ........................... 3,640,775
85,000 +QUALCOMM, Inc. ........................................ 10,561,250
290,000 XEROX Corp. ............................................ 15,478,750
------------
119,087,150
------------
CONSUMER STAPLES -- 15.78%
340,000 Avon Products, Inc. .................................... 16,001,250
135,000 Bestfoods, Inc. ........................................ 6,345,000
240,000 Bristol-Myers Squibb Co. ............................... 15,435,000
230,000 Deluxe Corp. ........................................... 6,698,750
220,000 Eastman Kodak Co. ...................................... 14,052,500
155,000 Fort James Corp. ....................................... 4,911,563
85,000 General Mills, Inc. .................................... 6,422,812
150,000 +Pepsi Bottling Group, Inc. ............................ 3,253,125
340,000 Philip Morris Companies, Inc. .......................... 11,963,750
260,000 +Suiza Foods Corp....................................... 8,758,750
------------
93,842,500
------------
TRANSPORTATION -- 6.91%
110,000 +AMR Corp. ............................................. 6,441,875
100,000 CNF Transportation Inc. ................................ 3,781,250
255,000 +Coach USA, Inc. ....................................... 7,012,500
225,000 Kansas City Southern Industries, Inc. .................. 12,825,000
207,000 Union Pacific Corp. .................................... 11,061,563
------------
41,122,188
------------
CAPITAL GOODS -- 4.86%
230,000 AlliedSignal, Inc. ..................................... 11,313,125
130,000 United Technologies Corp. .............................. 17,606,875
------------
28,920,000
------------
RAW/INTERMEDIATE
MATERIALS -- 2.41%
280,000 Cambrex Corp. .......................................... 6,195,000
140,000 E.I. du Pont de Nemours & Co. .......................... 8,128,750
------------
14,323,750
------------
ENERGY -- 1.32%
400,000 Dynegy, Inc. ........................................... 5,625,000
325,000 +Ocean Energy, Inc. .................................... 2,214,063
------------
7,839,063
------------
TOTAL COMMON STOCKS
(Cost $458,404,054)..................................... 587,132,611
------------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Value and Restructuring Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 1.71%
TRANSPORTATION -- 0.67%
80,000 ++Union Pacific Capital Trust, Preferred Exchange,
6.25%.................................................... $3,990,000
----------
TECHNOLOGY -- 1.04%
45,000 ++Intermedia Communications, Inc., Preferred Exchange,
7.00%.................................................... 1,642,500
260,000 ++Sensormatic Electronics Corp., Preferred Exchange,
6.50%.................................................... 4,517,500
----------
6,160,000
----------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $11,740,695)....................................... 10,150,000
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $470,144,749*)...................................... 100.45% $597,282,611
OTHER ASSETS AND LIABILITIES (NET)........................ (0.45) (2,667,853)
------ ------------
NET ASSETS................................................ 100.00% $594,614,758
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$470,322,653.
+ 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 March 31, 1999,
these securities amounted to $10,150,000 or 1.71% of net assets.
ADR -- American Depositary Receipt
See Notes to Financial Statements
24
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Small Cap Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 95.69%
CONSUMER CYCLICAL -- 29.44%
52,200 +Big Flower Holdings, Inc. .............................. $ 1,624,725
21,000 +CD Radio, Inc. ......................................... 542,063
52,000 +Childrens Place Retail Stores, Inc. .................... 1,400,750
27,500 +CONMED Corp. ........................................... 849,062
14,000 +Linens 'n Things, Inc. ................................. 635,250
25,000 Mattel, Inc. ............................................ 621,875
87,000 +OfficeMax, Inc. ........................................ 750,375
33,000 +O'Reilly Automotive, Inc. .............................. 1,474,687
128,900 +PSS World Medical, Inc. ................................ 1,119,819
15,100 +Scholastic Corp. ....................................... 738,012
60,550 +Travel Services International, Inc. .................... 635,775
10,000 +Valley Media, Inc. ..................................... 226,250
102,100 +Ventana Medical Systems, Inc. .......................... 2,271,725
-----------
12,890,368
-----------
TECHNOLOGY -- 21.79%
47,800 +Cambridge Technology Partners, Inc. .................... 663,225
17,000 +Conexant Systems, Inc. ................................. 469,625
51,000 +Exchange Applications, Inc. ............................ 1,281,375
11,000 +Gilat Satellite Networks Ltd. .......................... 655,875
12,400 +Human Genome Sciences, Inc. ............................ 429,350
23,950 +Incyte Pharmaceuticals, Inc. ........................... 479,000
25,500 +Integrated Circuit Systems, Inc. ....................... 460,594
45,900 Inter-Tel, Inc. ......................................... 711,450
35,800 +ITI Technologies, Inc. ................................. 1,074,000
40,000 +Metamor Worldwide, Inc. ................................ 555,000
134,800 +Natural Microsystems Corp. ............................. 665,575
12,000 +Newbridge Networks, Corp. .............................. 372,000
15,900 +SDL, Inc. .............................................. 1,441,931
10,266 Timberline Software Corp. ............................... 117,417
39,800 +VIALOG Corp. ........................................... 164,175
-----------
9,540,592
-----------
CONSUMER STAPLES -- 14.33%
38,800 +American Italian Pasta Co. ............................. 970,000
29,800 +AmeriSource Health Corp., Class A....................... 1,018,787
32,718 +BAESA ADR............................................... --
13,200 +Chattem, Inc. .......................................... 412,500
41,200 +Hain Food Group, Inc. (The)............................. 679,800
43,650 +IDEXX Laboratories, Inc. ............................... 1,044,872
32,300 Omnicare, Inc. .......................................... 615,719
33,750 +Sunrise Assisted Living, Inc. .......................... 1,533,516
-----------
6,275,194
-----------
FINANCIAL -- 14.14%
21,500 Cabot Industrial Trust................................... 405,813
10,300 Cullen/Frost Bankers, Inc. .............................. 493,756
9,300 Executive Risk, Inc. .................................... 660,300
13,900 First American Corp. (Tennessee)......................... 512,563
56,600 Freedom Securities Corp. ................................ 902,062
14,400 Greenpoint Financial Corp. .............................. 500,400
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
FINANCIAL -- (continued)
30,000 Healthcare Realty Trust, Inc. ........................ $ 570,000
49,000 +Silicon Valley Bancshares............................ 1,010,625
58,600 Sovereign Bancorp, Inc. .............................. 717,850
10,600 Weingarten Realty Investors........................... 420,025
-----------
6,193,394
-----------
CAPITAL GOODS -- 5.91%
28,400 Baldor Electric Co. .................................. 571,550
27,500 Hughes Supply, Inc. .................................. 625,625
33,500 Juno Lighting, Inc. .................................. 745,375
18,900 Teleflex, Inc. ....................................... 643,781
-----------
2,586,331
-----------
ENERGY -- 4.88%
19,000 +Metzler Group, Inc. ................................. 593,750
48,000 +Newfield Exploration Co. ............................ 1,086,000
67,000 +Ocean Energy Inc. ................................... 456,437
-----------
2,136,187
-----------
RAW/INTERMEDIATE MATERIALS -- 4.03%
67,800 Millennium Chemicals, Inc. ........................... 1,347,525
40,200 +Rock of Ages Corp. .................................. 419,588
-----------
1,767,113
-----------
TRANSPORTATION -- 1.17%
18,500 +Avis Rent A Car, Inc. ............................... 512,219
-----------
TOTAL COMMON STOCKS
(Cost $40,154,998).................................... 41,901,398
-----------
<CAPTION>
Principal
Amount
----------
<C> <S> <C>
DEMAND NOTES -- 5.77%
$1,300,000 Associates Corp. of North America Master Notes........ 1,300,000
1,226,000 General Electric Co. Promissory Notes................. 1,226,000
-----------
TOTAL DEMAND NOTES
(Cost $2,526,000)..................................... 2,526,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $42,680,998*)....................................... 101.46% $44,427,398
OTHER ASSETS & LIABILITIES (NET)........................... (1.46) (638,965)
------ -----------
NET ASSETS................................................. 100.00% $43,788,433
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$42,717,226.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
25
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Energy and Natural Resources Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 96.59%
ENERGY -- 68.77%
46,000 Anadarko Petroleum Corp. ................................ $ 1,736,500
50,000 Baker Hughes, Inc. ...................................... 1,215,625
30,000 +Barrett Resources Corp. ................................ 751,875
75,000 +BJ Services Co. ........................................ 1,757,813
22,170 BP Amoco plc ADR......................................... 2,237,784
22,000 Chevron Corp. ........................................... 1,945,625
25,000 Exxon Corp. ............................................. 1,764,062
120,000 +Global Industries Ltd. ................................. 1,215,000
50,000 +HS Resources, Inc. ..................................... 437,500
26,000 Mobil Corp. ............................................. 2,288,000
30,000 +Newfield Exploration Co. ............................... 678,750
360,300 +Ocean Energy, Inc. ..................................... 2,454,544
30,000 +Precision Drilling Corp. ............................... 390,000
48,000 Royal Dutch Petroleum Co. ............................... 2,496,000
12,000 Schlumberger Ltd. ....................................... 722,250
30,000 Southdown, Inc. ......................................... 1,610,625
30,000 Texaco, Inc. ............................................ 1,702,500
51,000 Tosco Corp. ............................................. 1,265,438
13,500 Total S.A. ADR........................................... 823,500
55,000 +Transmontaigne Oil Co................................... 666,875
15,000 Vastar Resources, Inc. .................................. 716,250
50,000 +Veritas DGC Inc. ....................................... 709,375
-----------
29,585,891
-----------
UTILITIES -- 12.41%
30,000 +AES Corp. .............................................. 1,117,500
11,888 Duke Energy Corp. ....................................... 649,382
23,000 Enron Corp. ............................................. 1,477,750
53,000 Williams Cos., Inc. ..................................... 2,093,500
-----------
5,338,132
-----------
CONSUMER CYCLICAL -- 4.91%
22,000 Montana Power Co. ....................................... 1,618,375
10,000 Phelps Dodge Corp. ...................................... 492,500
-----------
2,110,875
-----------
BASIC MATERIALS -- 3.29%
30,000 Barrick Gold, Corp. ..................................... 511,875
24,000 Willamette Industries.................................... 906,000
-----------
1,417,875
-----------
CONSUMER STAPLES -- 2.51%
50,000 Ultramar Diamond Shamrock Corp. ......................... 1,081,250
-----------
TECHNOLOGY -- 2.09%
40,000 Georgia--Pacific Corp. (Timber Group).................... 897,500
-----------
RAW/INTERMEDIATE
MATERIALS -- 1.84%
30,000 +Stillwater Mining Co. .................................. 791,250
-----------
CAPITAL GOODS -- 0.77%
25,000 Inco Ltd. ............................................... 332,812
-----------
TOTAL COMMON STOCKS
(Cost $33,468,017)....................................... 41,555,585
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
--------- -----------
<C> <S> <C>
DEMAND NOTES -- 0.99%
$426,000 General Electric Co. Promissory Notes (Cost
$426,000)............................................. $ 426,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $33,894,017*)....................................... 97.58% $41,981,585
OTHER ASSETS AND LIABILITIES (NET)......................... 2.42 1,039,155
------ -----------
NET ASSETS................................................. 100.00% $43,020,740
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$33,894,017.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
26
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Large Cap Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ------------
<C> <S> <C>
COMMON STOCKS -- 96.23%
TECHNOLOGY -- 43.72%
188,000 America Online, Inc................................... $ 27,448,000
112,000 +Cisco Systems, Inc................................... 12,271,000
266,000 +Dell Computer Corp................................... 10,872,750
108,000 +EMC Corp............................................. 13,797,000
95,000 Intel Corp............................................ 11,293,125
156,000 Medtronic, Inc........................................ 11,193,000
138,000 +Microsoft Corp....................................... 12,359,625
110,000 +Tellabs, Inc......................................... 10,752,500
------------
109,987,000
------------
FINANCIAL -- 22.88%
87,000 American International Group, Inc..................... 10,494,375
154,000 Citigroup, Inc........................................ 9,836,750
132,000 Fannie Mae............................................ 9,141,000
125,000 Merrill Lynch & Co.................................... 11,054,687
177,000 Schwab (Charles) Corp. ............................... 17,014,125
------------
57,540,937
------------
CONSUMER CYCLICAL -- 15.75%
151,000 +BMC Software, Inc.................................... 5,596,438
100,000 +Clear Channel Communications, Inc.................... 6,706,250
127,000 Harley-Davidson, Inc.................................. 7,302,500
169,000 Home Depot, Inc....................................... 10,520,250
175,000 +Sylvan Learning Systems, Inc......................... 4,768,750
152,000 Walt Disney Co........................................ 4,731,000
------------
39,625,188
------------
CONSUMER STAPLES -- 13.88%
110,000 Coca-Cola Company..................................... 6,751,250
107,000 Gillette Co........................................... 6,359,813
35,000 Nokia Corp., Class A, ADR............................. 5,451,250
80,000 Pfizer, Inc. ......................................... 11,100,000
140,000 +Quintiles Transnational Corp......................... 5,250,000
------------
34,912,313
------------
TOTAL COMMON STOCKS
(Cost $159,189,504)................................... 242,065,438
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 3.67%
$9,241,000 Agreement with Chase Securities Inc., 4.65% dated
3/31/99, due 4/01/99, to be repurchased at
$9,242,194, collateralized by $9,090,000 U.S.
Treasury Notes, 6.25% due 8/31/02, valued at
$9,443,349 (Cost $9,241,000)........................ $ 9,241,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $168,430,504*)...................................... 99.90% $251,306,438
OTHER ASSETS & LIABILITIES (NET).......................... 0.10 241,307
------ ------------
NET ASSETS................................................ 100.00% $251,547,745
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$168,430,504.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
27
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Real Estate Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 97.78%
REAL ESTATE -- 93.04%
30,000 Arden Realty Group, Inc................................... $ 667,500
30,684 Avalonbay Communities, Inc................................ 970,381
52,000 Bedford Property Investors, Inc........................... 760,500
34,000 Boston Properties, Inc.................................... 1,075,250
54,000 Cabot Industrial Trust.................................... 1,019,250
63,000 +Catellus Development Corp................................ 842,625
44,000 CenterTrust Retail Properties, Inc........................ 506,000
22,000 Chateau Communities, Inc.................................. 605,000
38,000 Crescent Real Estate Equity, Co........................... 817,000
65,000 Developers Divers Realty, Corp............................ 930,312
49,000 Duke Realty Investment, Inc............................... 1,053,500
41,203 Equity Office Properties Trust............................ 1,048,101
24,860 Equity Residential Properties Trust....................... 1,025,475
42,000 First Washington Realty Trust............................. 900,375
35,000 Forest City Enterprises, Inc., Class A.................... 846,563
40,000 Glenborough Realty Trust, Inc............................. 680,000
24,200 Health Care REIT, Inc..................................... 520,300
52,000 Healthcare Realty Trust, Inc.............................. 988,000
35,000 Highwoods Properties, Inc................................. 824,688
40,000 Home Properties of New York, Inc.......................... 925,000
39,000 Hospitality Properties Trust.............................. 1,055,437
47,000 HRPT Properties Trust..................................... 634,500
23,000 KIMCO Realty Corp......................................... 848,125
33,000 Mack-Cali Realty Corp..................................... 969,375
47,000 Meditrust Corp............................................ 584,563
50,000 Pacific Gulf Properties, Inc.............................. 900,000
35,000 Prentiss Properties Trust................................. 651,875
44,000 ProLogis Trust............................................ 902,000
42,200 Public Storage, Inc....................................... 1,055,000
40,000 Simon Property Group, Inc................................. 1,097,500
30,000 Spieker Properties, Inc................................... 1,057,500
29,000 Starwood Hotels & Resorts Worldwide, Inc.................. 828,313
78,000 Taubman Center, Inc....................................... 955,500
29,000 Vornado Realty Trust...................................... 1,000,500
25,500 Weingarten Realty Investors............................... 1,010,437
-----------
30,556,445
-----------
FINANCIAL -- 3.05%
17,500 Freddie Mac............................................... 999,688
-----------
CONSUMER CYCLICAL -- 1.69%
50,000 Host Marriott Corp........................................ 556,250
-----------
TOTAL COMMON STOCKS
(Cost $39,650,151)........................................ 32,112,383
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 3.26%
$1,070,000 Agreement with Chase Securities Inc., 4.65% dated
3/31/99, due 4/01/99, to be repurchased at
$1,070,138, collateralized by $1,055,000 U.S.
Treasury Notes, 6.25% due 8/31/02, valued at
$1,096,010 (Cost $1,070,000)......................... $ 1,070,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $40,720,151*)........................................ 101.04% $33,182,383
OTHER ASSETS & LIABILITIES (NET)........................... (1.04) (341,508)
------ -----------
NET ASSETS................................................. 100.00% $32,840,875
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$40,720,151.
+ Non-income producing
REIT -- Real Estate Investment Trust
See Notes to Financial Statements
28
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments March 31, 1999
Optimum Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 97.97%
TECHNOLOGY -- 29.51%
25,000 +BMC Software, Inc. .................................... $ 926,563
50,000 +Cisco Systems, Inc. ................................... 5,478,125
126,000 +Dell Computer Corp. ................................... 5,150,250
54,000 +EMC Corp. ............................................. 6,898,500
27,000 Intel Corp. ............................................ 3,209,625
3,000 Lucent Technologies, Inc. .............................. 323,250
52,000 +Microsoft Corp. ....................................... 4,657,250
8,000 Nokia Oyj, Class A ADR.................................. 1,246,000
18,000 +Tellabs, Inc. ......................................... 1,759,500
------------
29,649,063
------------
COMMUNICATION
SERVICES -- 15.84%
100,000 America Online, Inc. ................................... 14,600,000
8,000 Ameritech Corp. ........................................ 463,000
14,000 GTE Corp. .............................................. 847,000
------------
15,910,000
------------
FINANCIAL -- 15.55%
20,000 American International Group, Inc. ..................... 2,412,500
64,500 Charles Schwab Corp. ................................... 6,200,062
35,000 Citigroup, Inc. ........................................ 2,235,625
28,000 Fannie Mae.............................................. 1,939,000
32,000 Merrill Lynch & Co., Inc. .............................. 2,830,000
------------
15,617,187
------------
HEALTH CARE -- 13.75%
16,000 Abbott Laboratories..................................... 749,000
13,300 American Home Products Corp. ........................... 867,825
18,000 Bristol-Myers Squibb Co. ............................... 1,157,625
7,000 Eli Lilly & Co. ........................................ 594,125
11,000 Johnson & Johnson....................................... 1,030,562
41,855 Medtronic, Inc. ........................................ 3,003,096
24,600 Merck & Co., Inc. ...................................... 1,972,612
22,000 Pfizer, Inc. ........................................... 3,052,500
20,000 +Quintiles Transnational Corp. ......................... 750,000
11,400 Schering-Plough Corp. .................................. 630,562
------------
13,807,907
------------
CONSUMER STAPLES -- 10.34%
13,500 Bestfoods............................................... 634,500
6,000 Brown-Forman Corp., Class B............................. 345,750
19,000 Coca-Cola Co. .......................................... 1,166,125
25,200 General Mills, Inc. .................................... 1,904,175
28,000 Gillette Co. ........................................... 1,664,250
8,000 Hannaford Brothers Co. ................................. 363,500
10,500 H.J. Heinz Co. ......................................... 497,438
11,500 PepsiCo, Inc. .......................................... 450,656
9,600 Procter & Gamble Co. ................................... 940,200
12,000 Sara Lee Corp. ......................................... 297,000
11,800 Time Warner, Inc. ...................................... 838,538
8,487 Tootsie Roll Industries, Inc. .......................... 390,942
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ------------
<C> <S> <C>
CONSUMER STAPLES -- continued
20,000 Walt Disney Co. ...................................... $ 622,500
3,000 Wrigley (WM.) Jr. Co. ................................ 271,313
------------
10,386,887
------------
CONSUMER CYCLICAL -- 9.51%
25,000 +Clear Channel Communications, Inc. .................. 1,676,563
35,000 Harley-Davidson, Inc. ................................ 2,012,500
48,000 Home Depot, Inc. ..................................... 2,988,000
13,200 McDonald's Corp. ..................................... 598,125
35,000 +Sylvan Learning Systems, Inc. ....................... 953,750
11,000 Wal-Mart Stores, Inc. ................................ 1,014,062
600 Washington Post Co., Class B.......................... 312,900
------------
9,555,900
------------
CAPITAL GOODS -- 2.97%
27,000 General Electric Co. ................................. 2,986,875
------------
UTILITIES -- 0.50%
12,000 Texas Utilities Co. .................................. 500,250
------------
TOTAL COMMON STOCKS
(Cost $40,065,940).................................... 98,414,069
------------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
DEMAND NOTES -- 1.71%
$800,000 Associates Corp. of North America Master Notes........ 800,000
919,000 General Electric Co. Promissory Notes................. 919,000
------------
TOTAL DEMAND NOTES
(Cost $1,719,000)..................................... 1,719,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $41,784,940*)....................................... 99.68% $100,133,069
OTHER ASSETS AND LIABILITIES (NET)........................ 0.32 325,785
------ ------------
NET ASSETS................................................ 100.00% $100,458,854
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$41,784,940.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
29
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments March 31, 1999
Value Equity Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 98.36%
CONSUMER STAPLES -- 23.77%
22,000 Avon Products, Inc....................................... $ 1,035,375
21,000 Bestfoods................................................ 987,000
26,000 Bristol-Myers Squibb Co.................................. 1,672,125
22,000 Deluxe Corp.............................................. 640,750
19,000 Eastman Kodak Co......................................... 1,213,625
29,625 Fort James Corp.......................................... 938,742
50,000 Pepsi Bottling Group, Inc................................ 1,084,375
32,000 Philip Morris Companies, Inc............................. 1,126,000
20,000 +Suiza Foods Corp........................................ 673,750
-----------
9,371,742
-----------
TECHNOLOGY -- 21.16%
44,000 Alcatel SA ADR........................................... 1,003,750
30,000 +Bell & Howell Co........................................ 879,375
15,000 Cordant Technologies, Inc................................ 597,187
714 +Intermedia Communications, Inc.......................... 19,010
9,000 International Business Machines Corp..................... 1,595,250
17,000 Nokia Oyj, Class A ADR................................... 2,647,750
30,000 Xerox Corp............................................... 1,601,250
-----------
8,343,572
-----------
FINANCIAL -- 19.48%
50,000 +Amerin Corp............................................. 1,015,625
35,000 ARM Financial Group, Inc., Class A....................... 522,813
17,000 Astoria Financial Corp................................... 847,875
10,000 Bank One Corp............................................ 550,625
20,000 Chase Manhattan Corp..................................... 1,626,250
12,000 Fannie Mae............................................... 831,000
14,000 People's Bank Bridgeport................................. 416,500
21,000 SLM Holding Corp......................................... 876,750
16,344 XL Capital Ltd., Class A................................. 992,898
-----------
7,680,336
-----------
CONSUMER CYCLICAL -- 15.12%
22,880 +AT&T Corp. -- Liberty Media Group, Class A.............. 1,204,060
24,000 +CBS Corp................................................ 982,500
25,000 Ford Motor Co............................................ 1,418,750
22,000 +Unisys Corp............................................. 609,125
100,000 +Varian, Inc............................................. 943,750
19,700 +Young & Rubicam, Inc.................................... 802,775
-----------
5,960,960
-----------
TRANSPORTATION -- 5.98%
11,000 +AMR Corp................................................ 644,188
16,000 +General Motors Corp., Class H........................... 807,000
17,000 Union Pacific Corp....................................... 908,437
-----------
2,359,625
-----------
UTILITIES -- 5.53%
2,500 +Autobytel.com, Inc...................................... 104,375
40,000 Frontier Corp............................................ 2,075,000
-----------
2,179,375
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
CAPITAL GOODS -- 5.41%
20,000 Kansas City Southern Industries, Inc.................. $ 1,140,000
10,000 Texas Instruments, Inc................................ 992,500
-----------
2,132,500
-----------
RAW/INTERMEDIATE MATERIALS -- 1.91%
13,000 E.I. du Pont de Nemours and Co........................ 754,813
-----------
TOTAL COMMON STOCKS
(Cost $27,770,606).................................... 38,782,923
-----------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
CONVERTIBLE BONDS -- 2.31%
TECHNOLOGY -- 2.31%
$25,000 Intermedia Communications, Inc., Series D (Preferred)
7.00%, 12/31/2049 (Cost $657,010)..................... 912,500
-----------
DEMAND NOTES -- 0.02%
7,000 General Electric Co. Promissory Notes (Cost $7,000)... 7,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $28,434,616*)........................................ 100.69% $39,702,423
OTHER ASSETS AND LIABILITIES (NET)......................... (0.69) (271,279)
------ -----------
NET ASSETS................................................. 100.00% $39,431,144
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$28,447,285.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
30
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
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 eighteen and seven
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, Income and Growth 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 (formerly, "Trust 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.
31
<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
32
<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>
To the extent that such carryforwards are utilized, no capital gain
distributions will be made. During the year ended March 31, 1999, Optimum
Growth Fund utilized capital loss carryforwards for Federal tax purposes
totaling approximately $1,494,000.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Value and Restructuring Fund, Energy and
Natural Resources Fund, Large Cap Growth Fund, and Value Equity Fund
incurred, and elected to defer, net capital losses of approximately
$16,172,000, $1,427,000, $1,844,000, and $7,000, respectively, for the year
ended March 31, 1999.
33
<PAGE>
At March 31, 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............. $375,573,515 $ (1,878,678) $373,694,837
Income and Growth Fund.......... 27,982,487 (475,219) 27,507,268
Value and Restructuring Fund.... 149,178,645 (22,218,687) 126,959,958
Small Cap Fund.................. 6,080,792 (4,370,620) 1,710,172
Energy and Natural Resources
Fund........................... 8,758,695 (671,127) 8,087,568
Large Cap Growth Fund........... 86,408,885 (3,532,951) 82,875,934
Real Estate Fund................ 242,494 (7,780,262) (7,537,768)
Optimum Growth Fund............. 58,670,054 (321,925) 58,348,129
Value Equity Fund............... 12,620,906 (1,365,768) 11,255,138
</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 of Connecticut ("U.S. Trust CT" and, collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment adviser to the Portfolios. For the
services provided pursuant to the Investment Advisory Agreements, U.S. Trust
is entitled to receive a fee, computed daily and paid monthly, at the annual
rates of 0.75% of the average daily net assets of the Blended Equity Fund,
Income and Growth Fund and Large Cap Growth Fund, 0.60% of the average daily
net assets of the Value and Restructuring Fund, Small Cap Fund, 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 and U.S. Trust CT are wholly-
owned subsidiaries of U.S. Trust Corporation, a registered bank holding
company.
U.S. Trust CT, Chase Global Funds Services Company ("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
34
<PAGE>
relative average daily net assets of the respective Portfolios for the period
paid. For the year ended March 31, 1999, administration fees charged by U.S.
Trust CT were as follows:
<TABLE>
<S> <C>
Blended Equity Fund................................................... $232,940
Income and Growth Fund................................................ 34,464
Value and Restructuring Fund.......................................... 203,040
Small Cap Fund........................................................ 18,104
Energy and Natural Resources Fund..................................... 16,176
Large Cap Growth Fund................................................. 43,012
Real Estate Fund...................................................... 14,155
Optimum Growth Fund................................................... 26,583
Value Equity Fund..................................................... 12,977
</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. With regard to the Blended Equity Fund, for the period
April 1, 1998 through September 15, 1998, U.S. Trust voluntarily waived fees
to the extent necessary to maintain certain specified annual expense ratios.
For the year ended March 31, 1999, U.S. Trust waived fees as follows:
<TABLE>
<S> <C>
Blended Equity Fund.................................................... $127,358
Real Estate Fund....................................................... 48,963
Optimum Growth Fund.................................................... 155,809
Value Equity Fund...................................................... 91,255
</TABLE>
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
$651,651, for the year ended March 31, 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 year ended March 31,
1999, U.S. Trust and the Administrators waived investment advisory and
administration fees in amounts equal to the administrative service fees for
the Portfolios as follows:
35
<PAGE>
<TABLE>
<CAPTION>
U.S.
Trust Administrators
-------- --------------
<S> <C> <C>
Blended Equity Fund..................................... $232,682 $ 1,957
Income and Growth Fund.................................. 74,631 640
Value and Restructuring Fund............................ 639,405 120,091
Small Cap Fund.......................................... 51,882 28
Energy and Natural Resources Fund....................... 41,522 7,177
Large Cap Growth Fund................................... 44,157 1,525
Real Estate Fund........................................ 37,443 43
</TABLE>
For the year ended March 31, 1999, no administrative service fees have been
charged to Optimum Growth Fund or 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 0.75% of the average daily net asset
value of each Portfolio's outstanding Shares. Prior to March 8, 1999, Shares
bore the expense of such distribution fees at the annual rate of 0.35% of the
average daily net asset value of the Portfolios' outstanding Shares. Effective
March 8, 1999, Shares bear the expense of such distribution fees at the annual
rate of 0.25% of the average daily net asset value of the Portfolios'
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 year ended March 31, 1999, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Blended Equity Fund.................................. $131,313,036 $122,897,489
Income and Growth Fund............................... 33,014,696 105,916,638
Value and Restructuring Fund......................... 439,815,449 229,047,909
Small Cap Fund....................................... 53,873,667 62,719,115
Energy and Natural Resources Fund.................... 43,784,543 38,640,561
Large Cap Growth Fund................................ 128,044,562 4,564,050
Real Estate Fund..................................... 12,229,967 10,116,034
Optimum Growth Fund.................................. 16,608,455 15,744,552
Value Equity Fund.................................... 22,683,489 19,361,891
</TABLE>
36
<PAGE>
For the fiscal year ended March 31, 1999, the Value and Restructuring Fund
paid brokerage commissions aggregating $278,966, of which $525 was paid to UST
Securities Corp. For the same period, the percentage of total commissions paid
by the Portfolio to UST Securities Corp. was 0.19%, and the percentage of the
total amount of the Portfolios' brokerage transactions involving the payment
of commissions that was effected through UST Securities Corp. was 0.24%. For
the same period, the average commissions per share paid by the Fund to UST
Securities Corp. and other unaffiliated brokers were $0.07 and $0.06,
respectively.
UST Securities Corp is a wholly-owned subsidiary of U.S. Trust Company of
New Jersey which is a wholly-owned subsidiary of U.S.Trust Corporation.
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 eighteen separate portfolios. Authorized capital
currently offered for each Portfolio is as follows: 375 million shares of the
Blended Equity and Income and Growth Funds and 500 million shares each of
Value and Restructuring Fund, Small Cap Fund, Energy and Natural Resources
Fund, Large Cap Growth Fund and Real Estate Fund. As of August 1, 1997 Trust
Shares are no longer offered. 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
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold:
Shares................ 4,387,348 $ 166,477,501 1,830,335 $ 59,664,729
Trust Shares.......... -- -- 454 --
Issued in connection
with previous
reorganization Shares.. -- -- 5,809,320 118,382,388
Issued as reinvestment
of dividends:
Shares................ 77,350 2,895,711 365,826 11,596,023
Trust Shares.......... -- -- 6 146
Redeemed:
Shares................ (3,990,290) (148,105,086) (3,428,336) (110,065,542)
Trust Shares.......... -- -- (3,604) (108,505)
---------- ------------- ---------- -------------
Net Increase............ 474,408 $ 21,268,126 4,574,001 $ 79,469,239
========== ============= ========== =============
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Income and Growth Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 623,378 $ 9,712,721 1,061,028 $ 18,205,158
Issued as reinvestment of
dividends............... 298,629 4,288,782 370,069 6,178,623
Redeemed................. (4,375,079) (67,836,669) (2,444,213) (42,309,649)
----------- ------------ ---------- ------------
Net Decrease............. (3,453,072) $(53,835,166) (1,013,116) $(17,925,868)
=========== ============ ========== ============
<CAPTION>
Value and Restructuring Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold Shares.............. 23,806,528 $537,163,371 9,949,197 $210,533,502
Issued as reinvestment of
dividends:
Shares................. 158,688 3,460,364 32,739 680,550
Trust Shares........... -- -- 4 58
Redeemed:
Shares................. (15,392,807) (331,846,653) (1,440,113) (29,351,458)
Trust Shares........... -- -- (3,268) (61,583)
----------- ------------ ---------- ------------
Net Increase............. 8,572,409 $208,777,082 8,538,559 $181,801,069
=========== ============ ========== ============
<CAPTION>
Small Cap Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Shares................. 6,294,363 $ 56,377,737 1,742,160 $ 19,925,198
Trust Shares........... -- -- 991 10,266
Issued as reinvestment of
dividends Shares...... 9,749 88,720 1 4
Redeemed:
Shares................. (7,314,821) (66,388,490) (2,036,998) (20,366,512)
Trust Shares........... -- -- (1,905) (21,542)
----------- ------------ ---------- ------------
Net Decrease............. (1,010,709) $ (9,922,033) (295,751) $ (452,586)
=========== ============ ========== ============
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Energy and Natural Resources Fund
--------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,852,458 $ 31,234,166 1,589,555 $ 20,278,480
Issued as reinvestment of
dividends................ 9,736 103,347 57,892 738,380
Redeemed.................. (2,605,823) (27,676,908) (1,001,470) (12,312,018)
---------- ------------ ---------- ------------
Net Increase.............. 256,371 $ 3,660,605 645,977 $ 8,704,842
========== ============ ========== ============
<CAPTION>
Large Cap Growth Fund
--------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98*
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 15,703,486 $169,544,034 5,724,639 $ 42,655,392
Issued as reinvestment of
dividends................ -- -- -- --
Redeemed.................. (3,700,511) (38,250,977) (141,234) (1,080,251)
---------- ------------ ---------- ------------
Net Increase.............. 12,002,975 $131,293,057 5,583,405 $ 41,575,141
========== ============ ========== ============
<CAPTION>
Real Estate Fund
--------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98*
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,933,843 $ 18,323,252 5,989,568 $ 41,874,511
Issued as reinvestment of
dividends................ 3,809 22,665 481 3,364
Redeemed.................. (2,810,143) (16,902,129) (149,807) (1,034,897)
---------- ------------ ---------- ------------
Net Increase.............. 127,509 $ 1,443,788 5,840,242 $ 40,842,978
========== ============ ========== ============
<CAPTION>
Optimum Growth Fund
--------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Shares.................. 105,092 $ 2,171,420 210,824 $ 2,776,946
Institutional Shares.... 812,340 16,636,464 614,403 8,293,581
Issued as reinvestment of
dividends:
Shares.................. -- -- 83 875
Institutional Shares.... 35 569 332 4,030
Redeemed:
Shares.................. (56,822) (997,974) (135,970) (1,880,728)
Institutional Shares.... (766,399) (15,767,433) (132,059) (1,722,710)
---------- ------------ ---------- ------------
Net Increase.............. 94,246 $ 2,043,046 557,613 $ 7,471,994
========== ============ ========== ============
</TABLE>
- --------
*For the period 10/1/97 (commencement of operations) through 3/31/98.
39
<PAGE>
<TABLE>
<CAPTION>
Value Equity Fund
----------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------- -------------------
Shares Amount Shares Amount
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold:
Shares............................. 3,120 $ 46,060 2,111 $ 31,723
Institutional Shares............... 466,461 6,929,195 131,715 1,679,381
Issued as reinvestment of dividends:
Shares............................. 190 2,707 123 1,672
Institutional Shares............... -- -- -- --
Redeemed:
Shares............................. (31) (461) (2,373) (37,415)
Institutional Shares............... (59,957) (880,640) (65,278) (937,737)
------- ---------- ------- ----------
Net Increase......................... 409,783 $6,096,861 66,298 $ 737,624
======= ========== ======= ==========
</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 year ended March 31, 1999, the Portfolios had no
borrowings under the agreement.
7. Subsequent Event:
On April 8, 1999, the Board of Directors of Excelsior Fund, Inc., approved
the proposed reorganization of the Income and Growth Fund into the Blended
Equity Fund. The proposed reorganization will be submitted to a vote of the
shareholders of the Income and Growth Fund on or about June 30, 1999. If the
reorganization is approved by shareholders, and certain other conditions are
satisfied, the assets and liabilities of the Income and Growth Fund will be
transferred to the Blended Equity Fund, and the shareholders of the Income and
Growth Fund will become shareholders of the Blended Equity Fund. If the
reorganization is approved by shareholders, it is expected that the
reorganization will occur in or about mid-July 1999.
40
<PAGE>
8. Year 2000 Risk (Unaudited):
Like other investment companies, financial and business organizations and
individuals around the world, the Portfolios could be affected adversely if
the computer systems used by the investment managers and the Portfolios' other
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Problem." The investment managers and the Portfolios' other
service providers have informed Excelsior Fund and the Trust 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 Portfolios 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 Portfolios as a result of the Year 2000 Problem.
41
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors Excelsior Funds, Inc.
and Board of Trustees
Excelsior Institutional Trust
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Blended Equity, Income and
Growth, Value and Restructuring, Small Cap, Energy and Natural Resources,
Large Cap Growth, Real Estate, Optimum Growth and Value Equity Portfolios
(seven of the portfolios constituting the Excelsior Funds, Inc., and two of
the portfolios constituting the Excelsior Institutional Trust) as of March 31,
1999, and the related statements of operations for the year then ended, the
statements of changes in net assets and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of March 31, 1999 by correspondence with the custodian and brokers or
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Blended Equity, Income and Growth, Value and Restructuring, Small Cap, Energy
and Natural Resources, Large Cap Growth, Real Estate, Optimum Growth and Value
Equity Portfolios of Excelsior Funds, Inc. and Excelsior Institutional Trust
at March 31, 1999, the results of their operations for the year ended and the
changes in their net assets and the financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
[SIGNATURE LOGO APPEARS HERE]
Boston, Massachusetts
May 7, 1999
- -------------------------------------------------------------------------------
Federal Tax Information: (Unaudited)
For the year ended March 31, 1999, the percentage of dividends paid that
qualify for the 70.0% dividends received deduction for corporate shareholders,
the designation of long-term capital gain, and the percentage of income earned
from direct U.S. Treasury obligations for the Portfolios are approximated as
follows:
<TABLE>
<CAPTION>
20% Treasury
Dividends Received Long-Term Income
Fund Deduction Capital Gain Percentage
- ---- ------------------ ------------ ----------
<S> <C> <C> <C>
Blended Equity Fund................. 93.20% $ 8,089,000 --
Income and Growth Fund.............. 46.06% 11,469,000 3.42%
Value and Restructuring Fund........ 100.00% 3,609,000 --
Small Cap Fund...................... -- 602,000 --
Energy and Natural Resources Fund... 93.53% -- --
Large Cap Growth Fund............... -- -- --
Optimum Growth Fund................. 100.00% 4,000 --
Value Equity Fund................... 47.95% 2,315,000 --
</TABLE>
42
