<PAGE>
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[LOGO OF EXCELSIOR FUNDS APPEARS HERE]
Fixed Income
Portfolios
SEMI-ANNUAL REPORT
September 30, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STATEMENTS OF ASSETS AND LIABILITIES...................................... 1
STATEMENTS OF OPERATIONS.................................................. 2
STATEMENTS OF CHANGES IN NET ASSETS....................................... 3
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS.................. 4
PORTFOLIOS OF INVESTMENTS
Managed Income Fund...................................................... 6
Intermediate-Term Managed Income Fund.................................... 7
Short-Term Government Securities Fund.................................... 9
NOTES TO FINANCIAL STATEMENTS............................................. 10
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. Initial Purchase and Prospectus Information and Shareholder Services 1-800-
446-1012 (From overseas, call 617-557-8280)
. Current Price and Yield Information 1-800-446-1012
. Internet Address: http://www.excelsiorfunds.com
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and
expenses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc.
may be obtained by contacting the Funds at 1-800-446-1012.
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are distributed by
Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
Excelsior Funds
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, THEIR
PARENT AND AFFILIATES AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
Excelsior Funds, Inc.
Statements of Assets and Liabilities
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Intermediate- Short-Term
Managed Term Managed Government
Income Income Securities
Fund Fund Fund
------------ ------------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at cost-see
accompanying portfolios......... $229,503,187 $180,320,653 $59,369,344
============ ============ ===========
Investments, at value (Note 1)... $227,407,360 $179,926,035 $59,189,970
Cash............................. -- 34,142 2,699
Interest receivable.............. 1,896,736 1,877,652 776,370
Receivable for investment
securities sold................. 2,518,950 7,044,633 --
Receivable for fund shares sold.. 973,502 537,405 87,032
Prepaid expenses................. 2,989 2,365 973
------------ ------------ -----------
Total Assets..................... 232,799,537 189,422,232 60,057,044
LIABILITIES:
Payable for dividends declared... 1,127,747 996,154 295,314
Payable for investments
purchased....................... 1,117,501 2,996,400 --
Payable for fund shares redeemed. 820,700 3,274 2,997
Investment advisory fees payable
(Note 2)........................ 96,516 23,349 7,094
Administration fees payable (Note
2).............................. 52,701 20,867 4,734
Administrative servicing fees
payable (Note 2)................ 14,928 36,504 8,184
Directors' fees payable (Note 2). 1,277 970 435
Due to custodian bank............ 12,564 -- --
Accrued expenses and other
payables........................ 45,065 24,072 12,232
------------ ------------ -----------
Total Liabilities................ 3,288,999 4,101,590 330,990
------------ ------------ -----------
NET ASSETS........................ $229,510,538 $185,320,642 $59,726,054
============ ============ ===========
NET ASSETS consist of:
Undistributed (distributions in
excess of) net investment
income.......................... $ 173,040 $ (5,133) $ (1,884)
Accumulated net realized loss on
investments..................... (4,718,129) (5,235,419) (691,647)
Unrealized depreciation of
investments..................... (2,095,827) (394,618) (179,374)
Par value (Note 4)............... 26,434 26,941 8,615
Paid in capital in excess of par
value........................... 236,125,020 190,928,871 60,590,344
------------ ------------ -----------
Total Net Assets.................. $229,510,538 $185,320,642 $59,726,054
============ ============ ===========
Shares of Common Stock Outstanding
(Note 4)......................... 26,434,383 26,940,671 8,615,248
NET ASSET VALUE PER SHARE......... $8.68 $6.88 $6.93
============ ============ ===========
</TABLE>
See Notes to Financial Statements
1
<PAGE>
Excelsior Funds, Inc.
Statements of Operations
Six Months Ended September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Intermediate- Short-Term
Term Managed Government
Managed Income Securities
Income Fund Fund Fund
----------- ------------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income...................... $ 7,609,639 $5,994,867 $1,865,467
----------- ---------- ----------
EXPENSES:
Investment advisory fees (Note 2).... 850,220 307,851 90,507
Administration fees (Note 2)......... 172,330 133,695 45,857
Administrative servicing fees (Note
2).................................. 41,305 112,334 25,318
Custodian fees....................... 29,329 23,067 8,166
Shareholder servicing agent fees..... 15,876 9,377 6,201
Registration and filing fees......... 7,990 6,448 6,231
Legal and audit fees................. 7,930 7,052 2,713
Shareholder reports.................. 5,554 6,194 2,342
Directors' fees and expenses (Note
2).................................. 2,028 1,620 653
Miscellaneous expenses............... 15,747 6,560 1,734
----------- ---------- ----------
Total Expenses....................... 1,148,309 614,198 189,722
Fees waived and reimbursed by
investment adviser
and administrators (Note 2)......... (154,667) (112,334) (25,312)
----------- ---------- ----------
Net Expenses......................... 993,642 501,864 164,410
----------- ---------- ----------
NET INVESTMENT INCOME................. 6,615,997 5,493,003 1,701,057
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 1):
Net realized loss on security
transactions........................ (222,844) (889,972) (195,423)
Change in unrealized
appreciation/depreciation of
investments during the period....... 3,622,182 3,707,923 693,772
----------- ---------- ----------
Net realized and unrealized gain on
investments.......................... 3,399,338 2,817,951 498,349
----------- ---------- ----------
Net increase in net assets resulting
from operations...................... $10,015,335 $8,310,954 $2,199,406
=========== ========== ==========
</TABLE>
See Notes to Financial Statements
2
<PAGE>
Excelsior Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Intermediate- Short-Term
Managed Term Managed Government
Income Income Securities
Fund Fund Fund
------------ ------------- -----------
<S> <C> <C> <C>
Six Months Ended September 30, 2000
(Unaudited)
Net investment income............... $ 6,615,997 $ 5,493,003 $ 1,701,057
Net realized loss on investments.... (222,844) (889,972) (195,423)
Change in unrealized
appreciation/depreciation of
investments during the period...... 3,622,182 3,707,923 693,772
------------ ------------ -----------
Net increase in net assets resulting
from operations.................... 10,015,335 8,310,954 2,199,406
Distributions to shareholders:
From net investment income......... (6,615,997) (5,493,003) (1,701,057)
Increase (decrease) in net assets
from fund share transactions
(Note 4)........................... 5,631,675 27,019,411 (79,495)
------------ ------------ -----------
Net increase in net assets.......... 9,031,013 29,837,362 418,854
NET ASSETS:
Beginning of period................ 220,479,525 155,483,280 59,307,200
------------ ------------ -----------
End of period (1).................. $229,510,538 $185,320,642 $59,726,054
============ ============ ===========
(1) Including undistributed
(distributions in excess of)
net investment income.......... $ 173,040 $ (5,133) $ (1,884)
============ ============ ===========
Year Ended March 30, 2000
Net investment income............... $ 11,677,695 $ 8,412,308 $ 3,062,511
Net realized loss on investments.... (4,413,800) (4,090,886) (518,006)
Change in unrealized
appreciation/depreciation of
investments during the year........ (5,471,309) (3,334,594) (681,513)
------------ ------------ -----------
Net increase in net assets resulting
from operations.................... 1,792,586 986,828 1,862,992
Distributions to shareholders:
From net investment income......... (11,677,695) (8,412,308) (3,062,511)
From net realized gain on
investments....................... (757,970) -- (159,335)
Increase in net assets from fund
share transactions (Note 4)........ 15,354,432 35,165,375 8,076,780
------------ ------------ -----------
Net increase in net assets.......... 4,711,353 27,739,895 6,717,926
NET ASSETS:
Beginning of year.................. 215,768,172 127,743,385 52,589,274
------------ ------------ -----------
End of year (2).................... $220,479,525 $155,483,280 $59,307,200
============ ============ ===========
--------
(2) Including undistributed
(distributions in excess of)
net investment income.......... $ 173,040 $ (5,133) $ (1,884)
============ ============ ===========
--------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
Excelsior Funds, Inc.
Financial Highlights -- Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
Net
Realized
and Distributions Distributions
Net Asset Unrealized Dividends From Net in Excess of
Value, Net Gain (Loss) Total From From Net Realized Gain Net Realized
Beginning Investment on Investment Investment on Gain on
of Period Income Investments Operations Income Investments Investments
--------- ---------- ----------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
MANAGED INCOME FUND -- (1/9/86*)
Year Ended March 31,
1996................... $8.39 $0.55 $ 0.44 $0.99 $(0.54) -- --
1997................... 8.84 0.51 (0.24) 0.27 (0.51) -- --
1998................... 8.60 0.49 0.58 1.07 (0.49) $(0.01) --
1999................... 9.17 0.46 0.08 0.54 (0.46) (0.26) --
2000................... 8.99 0.47 (0.41) 0.06 (0.47) (0.03) --
Six Months Ended Sep-
tember 30, 2000 (Unau-
dited)................ 8.55 0.25 0.13 0.38 (0.25) -- --
INTERMEDIATE-TERM MANAGED INCOME FUND -- (12/31/92*)
Year Ended March 31,
1996................... $6.75 $0.43 $ 0.31 $0.74 $(0.43) -- --
1997................... 7.06 0.41 (0.19) 0.22 (0.41) -- --
1998................... 6.87 0.41 0.36 0.77 (0.41) -- --
1999................... 7.23 0.39 0.04 0.43 (0.39) $(0.13) $(0.01)
2000................... 7.13 0.40 (0.36) 0.04 (0.40) -- --
Six Months Ended Sep-
tember 30, 2000 (Unau-
dited)................ 6.77 0.21 0.11 0.32 (0.21) -- --
SHORT-TERM GOVERNMENT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1996................... $6.89 $0.40 $ 0.09 $0.49 $(0.40) -- --
1997................... 6.98 0.38 (0.06) 0.32 (0.37) -- --
1998................... 6.93 0.37 0.07 0.44 (0.37) -- --
1999................... 7.00 0.34 0.04 0.38 (0.34) -- --
2000................... 7.04 0.35 (0.15) 0.20 (0.35) $(0.02) --
Six Months Ended
September 30, 2000
(Unaudited)........... 6.87 0.19 0.06 0.25 (0.19) -- --
</TABLE>
* Commencement of operations
(1) Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
(2) Annualized
(3) Not Annualized
(4) Amount represents less than $0.01 per share.
See Notes to Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Ratio of
Net Gross Net
Net Asset Net Assets, Operating Operating Investment
Value, End Expenses Expenses Income Portfolio Fee
Total End Total of Period to Average to Average to Average Turnover Waivers
Distributions of Period Return (000's) Net Assets Net Assets (1) Net Assets Rate (Note 2)
------------- --------- ------ ----------- ---------- -------------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.54) $8.84 11.86% $ 88,900 0.96% 1.12% 6.09% 165% $0.01
(0.51) 8.60 3.17% 185,896 0.90% 1.04% 5.90% 238% 0.01
(0.50) 9.17 12.79% 196,097 0.90% 1.02% 5.51% 538% 0.01
(0.72) 8.99 5.95% 215,768 0.90% 1.03% 4.96% 268% 0.01
(0.50) 8.55 0.72% 220,480 0.88% 1.00% 5.42% 112% 0.01
(0.25) 8.68 4.47%(3) 229,511 0.88%(2) 1.01%(2) 5.84%(2) 45%(2) 0.01
$(0.43) $7.06 11.13% $ 68,640 0.64% 0.68% 6.06% 129% --
(0.41) 6.87 3.25% 78,441 0.63% 0.68% 5.91% 129% --
(0.41) 7.23 11.37% 94,935 0.61% 0.66% 5.68% 86% --
(0.53) 7.13 6.02% 127,743 0.60% 0.67% 5.29% 229% --
(0.40) 6.77 0.59% 155,483 0.58% 0.65% 5.80% 122% -- (4)
(0.21) 6.88 4.79%(3) 185,321 0.57%(2) 0.70%(2) 6.25%(2) 88%(2) -- (4)
$(0.40) $6.98 7.27% $ 25,068 0.61% 0.80% 5.72% 77% $0.01
(0.37) 6.93 4.77% 30,804 0.61% 0.70% 5.42% 82% 0.01
(0.37) 7.00 6.47% 32,547 0.62% 0.69% 5.28% 35% --
(0.34) 7.04 5.54% 52,589 0.58% 0.67% 4.79% 114% 0.01
(0.37) 6.87 3.02% 59,307 0.54% 0.62% 5.07% 90% 0.01
(0.19) 6.93 3.56%(3) 59,726 0.54%(2) 0.63%(2) 5.64%(2) 73%(2) -- (4)
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2000 (Unaudited)
Managed Income Fund
<TABLE>
<CAPTION>
Principal Coupon Value
Amount Rate (Note 1)
----------- ------ ------------
<C> <S> <C> <C>
ASSET BACKED SECURITIES -- 17.06%
$ 3,000,000 California Infrastructure SDG&E, 1997-1 A5,
09/25/05................................... 6.19% $ 2,966,895
2,912,776 Caterpillar Financial Asset Trust, 1998-A
A3, 04/25/03............................... 5.85 2,900,441
8,550,000 Citibank Credit Card Issuance Trust, 2000-
A1 A1, 10/17/07............................ 6.90 8,544,785
8,000,000 CIT RV Trust, 1999-A A4, 06/15/13.......... 6.16 7,864,920
8,075,000 Green Tree Home Equity Loan Trust, 1999-A
A2, 02/15/14............................... 5.78 8,044,759
5,000,000 Peco Energy Transition Trust, 1999-A A4,
03/01/07................................... 5.80 4,828,575
3,975,000 PP&L Transition Bond Co., LLC, 1999-1 A6,
12/26/07................................... 6.96 4,000,659
------------
TOTAL ASSET BACKED SECURITIES
(Cost $39,373,649)......................... 39,151,034
------------
CERTIFICATE OF DEPOSIT -- 2.40%
6,000,000 Mercantile Safe Deposit & Trust, 05/17/04
(Cost $6,000,000).......................... 6.10 5,520,000
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 16.02%
6,000,000 Commercial Mortgage Asset Trust, 1999-C1 B,
07/17/13................................... 7.23 5,903,817
9,000,000 +DLJ Mortgage Acceptance Corp., 1997-CF2
A3, 09/15/07............................... 6.99 8,784,168
5,627,766 Government National Mortgage Association,
1999-19 A, 08/16/25........................ 6.50 5,477,250
5,000,000 Morgan Stanley Capital I, 1999-WF1 B,
10/15/08................................... 6.32 4,728,503
3,513,792 Mortgage Capital Funding, Inc., 1998-MC1
A1, 06/18/07............................... 6.42 3,452,814
4,250,000 Mortgage Capital Funding, Inc., 1998-MC1 C,
01/18/08................................... 6.95 4,146,176
4,400,000 Nomura Asset Securities Corp., 1998-D6 A1B,
03/17/28................................... 6.59 4,273,690
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $37,357,692)......................... 36,766,418
------------
CORPORATE BONDS -- 14.07%
500,000 Armco, Inc., 12/01/08...................... 8.88 478,750
5,000,000 Associates Corp. of North America, Series
H, 09/27/02................................ 6.71 4,990,535
4,575,000 Conagra, Inc., 09/15/10.................... 7.88 4,625,151
8,000,000 Ford Motor Credit Co., 02/23/04............ 5.75 7,637,256
1,000,000 Global Crossing, 11/15/06.................. 9.13 995,000
3,000,000 Lehman Brothers Holding, 04/01/04.......... 6.63 2,942,571
500,000 +Mandalay Resort, 08/01/07................. 10.25 518,125
</TABLE>
<TABLE>
<CAPTION>
Principal Coupon Value
Amount Rate (Note 1)
----------- ------ ------------
<C> <S> <C> <C>
CORPORATE BONDS -- (continued)
$ 5,000,000 Morgan Stanley Dean Witter & Co., 08/01/02. 6.38% $ 4,965,760
5,190,000 US Bancorp, 12/01/04....................... 6.88 5,132,671
------------
TOTAL CORPORATE BONDS (Cost $32,469,433)... 32,285,819
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 48.40%
Federal Home Loan Mortgage
Corp
8,900,000 03/15/10................................... 7.00 9,049,680
Federal National Mortgage
Association
6,600,000 09/15/09................................... 6.63 6,550,731
10,000,000 06/01/17................................... 0.00 3,126,050
5,493,831 Pool #516791, 12/01/29..................... 7.50 5,487,639
8,163,295 Pool #525909, 12/01/29..................... 7.50 8,154,095
Government National
Mortgage Association
4,347,074 Pool #2562, 03/20/28....................... 6.00 4,061,245
5,152,226 Pool #2576, 04/20/28....................... 6.00 4,813,457
2,738,380 Pool #2687, 12/20/28....................... 6.00 2,558,326
6,581,080 Pool #80311, 08/20/29...................... 5.50 6,486,872
U.S. Treasury Bond
33,165,000 08/15/17................................... 8.88 42,668,862
U.S. Treasury Notes
7,300,000 02/15/10................................... 11.75 8,855,812
115,000 05/15/05................................... 6.75 119,169
U.S. Treasury Inflation Index Bond
4,871,596 04/15/29................................... 3.88 4,841,149
U.S. Treasury Inflation Index Note
4,311,132 07/15/02................................... 3.63 4,309,787
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $111,701,198)........................ 111,082,874
------------
<CAPTION>
Shares
-----------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 1.13%
1,299,385 Dreyfus Government Cash Management Fund.... 1,299,385
1,301,830 Fidelity U.S. Treasury II Fund............. 1,301,830
------------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $2,601,215).......................... 2,601,215
------------
TOTAL INVESTMENTS
(Cost $229,503,187*).................................... 99.08% $227,407,360
OTHER ASSETS & LIABILITIES (NET)........................ 0.92 2,103,178
------ ------------
NET ASSETS.............................................. 100.00% $229,510,538
====== ============
</TABLE>
--------
* Aggregate cost for Federal tax and book purposes.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At September 30, 2000, this
security amounted to $9,302,293 or 4.05% of net assets.
See Notes to Financial Statements
6
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2000 (Unaudited)
Intermediate-Term Managed Income Fund
<TABLE>
<CAPTION>
Principal Coupon Value
Amount Rate (Note 1)
---------- ------ ------------
<C> <S> <C> <C>
ASSET BACKED SECURITIES -- 8.18%
$1,000,000 American Express Credit Account Master Trust,
2000-1 A, 09/17/07........................... 7.20% $ 1,017,655
5,025,000 Citibank Credit Card Issuance Trust, 2000-A1
A1, 10/17/07................................. 6.90 5,021,935
4,300,000 CIT RV Trust, 1999-A A4, 06/15/13............ 6.16 4,227,394
2,000,000 First Security Auto Owner Trust, 2000-1 A4,
10/17/05..................................... 7.40 2,037,310
2,820,000 Toyota Auto Receivables Owner
Trust, 2000-A A4, 04/15/07................... 2,859,917
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $15,047,991)........................... 15,164,211
------------
CERTIFICATE OF DEPOSIT -- 2.68%
5,000,000 Mercantile Safe Deposit & Trust, 01/25/02
(Cost $5,000,000)............................ 7.22 4,959,375
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 15.70%
2,000,000 Commercial Mortgage Asset Trust, 1999 C1 B,
07/17/13..................................... 7.23 1,967,939
2,000,000 Federal Home Mortgage Corp., Series 16 PH,
04/25/21..................................... 6.75 1,973,290
1,927,770 Mortgage Capital Funding, Inc., 1996-MC2 C,
09/20/06..................................... 7.22 1,917,396
1,439,980 Mortgage Capital Funding, Inc., 1997-MC2 A1,
01/20/07..................................... 6.53 1,424,067
1,629,766 Mortgage Capital Funding, Inc., 1998-MC1 A1,
06/18/07..................................... 6.42 1,601,483
2,500,000 Mortgage Capital Funding, Inc., 1998-MC1 C,
01/18/08..................................... 6.95 2,438,927
2,660,000 Morgan Stanley Co., 11/15/08................. 6.92 2,634,677
1,792,340 Morgan Stanley Capital I, 2000-LIFE A1,
11/15/08..................................... 7.42 1,825,226
2,500,000 Nationslink Funding Corp., 1999-2 B,
11/20/08..................................... 7.53 2,512,163
5,250,000 Nomura Asset Securities Corp., 1998-D6 A1B,
03/17/28..................................... 6.59 5,099,289
2,200,000 +Paine Webber Mortgage Acceptance Corp.,
1995-M1 A, 01/15/07.......................... 6.70 2,180,959
3,454,244 Salomon Brothers Mortgage Securities VII,
2000-C1 A1, 11/18/08......................... 7.46 3,516,725
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $29,082,124)........................... 29,092,141
------------
CORPORATE BONDS -- 31.36%
500,000 Armco, Inc., 12/01/08........................ 8.88 478,750
3,000,000 Avnet, Inc., 02/15/05........................ 7.88 2,989,065
2,000,000 Bank One Corp., 08/01/05..................... 7.63 2,042,954
5,275,000 BankBoston N.A., 09/15/07.................... 7.00 5,179,559
4,075,000 BB&T Corp., 06/30/05......................... 6.38 3,911,703
3,900,000 Comerica Bank, 10/15/02...................... 7.25 3,930,186
3,600,000 Conagra Foods, Inc.,
09/15/10..................................... 7.88 3,639,463
</TABLE>
<TABLE>
<CAPTION>
Principal Coupon Value
Amount Rate (Note 1)
----------- ------ ------------
<C> <S> <C> <C>
CORPORATE BONDS -- (continued)
$ 5,000,000 Countrywide Home Loans, Inc., Series F,
10/08/02................................... 6.00% $ 4,937,240
1,000,000 Dayton Hudson, 10/01/01.................... 6.80 996,436
4,000,000 Ford Motor Credit Co.,
02/23/04................................... 5.75 3,818,628
3,000,000 General Electric Capital Corp., Series A,
10/08/02................................... 6.52 2,991,990
3,600,000 General Motors Corp.,
05/01/05................................... 6.25 3,491,042
1,000,000 Global Crossing Holding Ltd, 11/15/06...... 9.13 995,000
3,125,000 Household Finance Corp., 05/09/05.......... 8.00 3,229,894
5,000,000 John Deere Capital Corp., 10/15/02......... 7.00 5,008,880
2,125,000 MBNA America Bank N.A., 09/15/05........... 7.75 2,136,900
1,125,000 McDonald's Corp., 06/23/02................. 6.00 1,109,719
4,000,000 Morgan Stanley Dean Witter & Co., 01/15/03. 7.13 4,025,664
500,000 Times Mirror Co., 10/15/01................. 6.65 498,674
2,650,000 Worldcom, Inc., 05/15/03................... 7.88 2,713,656
------------
TOTAL CORPORATE BONDS (Cost $58,268,707)... 58,125,403
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 35.76%
Federal Home Loan Mortgage Corp.
1,804 Pool #218374, 07/01/02..................... 10.50 1,805
Federal National Mortgage Association
5,000,000 02/13/04................................... 5.13 4,804,475
5,042,466 Pool #437416, 09/01/28..................... 6.00 4,714,065
1,251,993 Pool #439102, 09/01/28..................... 6.00 1,170,454
4,273,576 Pool #516791, 12/01/29..................... 7.50 4,268,760
3,189,665 Pool #525818, 12/01/29..................... 7.50 3,186,070
3,000,001 Pool #541244, 07/01/30..................... 7.00 2,941,117
500,000 Pool #543005, 09/01/30..................... 7.00 490,186
Government National Mortgage Association
41,883 Pool #195801, 01/15/17..................... 8.50 43,105
108,611 Pool #195833, 04/15/17..................... 8.50 111,781
34,326 Pool #212760, 04/15/17..................... 8.50 35,328
2,675,287 Pool # 781036, 10/15/17.................... 8.50 2,725,778
52,518 Pool #334299, 05/15/23..................... 8.00 53,509
1,311,732 Pool #367412, 11/15/23..................... 6.00 1,231,631
2,713,941 Pool #366379, 12/15/23..................... 6.50 2,616,063
2,585,619 Pool #353454, 05/15/27..................... 7.50 2,595,147
2,762,449 Pool #2689, 12/20/28....................... 6.50 2,649,874
4,594,697 Pool #2699, 01/20/29....................... 6.00 4,292,586
3,303,471 Pool #2867, 01/20/30....................... 7.50 3,301,192
7,437,952 Pool #80393, 04/20/30...................... 6.00 7,325,763
5,966,120 Pool #2908, 04/20/30....................... 7.50 5,962,003
1,358,046 Pool #2921, 05/20/30....................... 7.50 1,357,109
U.S. Treasury Note
10,400,000 11/15/04................................... 5.88 10,393,500
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $66,608,227)......................... 66,271,301
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2000 (Unaudited)
Intermediate-Term Managed Income Fund--(continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ------------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 3.41%
3,156,840 Dreyfus Government Cash Management Fund....... $ 3,156,840
3,156,764 Fidelity U.S. Treasury II Fund................ 3,156,764
------------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $6,313,604)............................. 6,313,604
------------
TOTAL INVESTMENTS (Cost $180,320,653*)................... 97.09% $179,926,035
OTHER ASSETS & LIABILITIES (NET)......................... 2.91 5,394,607
------ ------------
NET ASSETS............................................... 100.00% $185,320,642
====== ============
</TABLE>
--------
* Aggregate cost for Federal tax and book purposes
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At September 30, 2000, this
security amounted to $2,180,959 or 1.18% of net assets.
See Notes to Financial Statements
8
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments September 30, 2000 (Unaudited)
Short-Term Government Securities Fund
<TABLE>
<CAPTION>
Principal Coupon Value
Amount Rate (Note 1)
---------- ------ -----------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.53%
Federal Home Loan Bank
$2,000,000 10/06/00...................................... 6.38%+ $ 1,998,564
9,000,000 02/26/02...................................... 5.13 8,841,942
Federal Home Loan Mortgage Corp.
2,730,000 05/15/02...................................... 5.50 2,690,281
Federal National Mortgage Association
619,349 Pool #73821 12/01/01.......................... 6.47 613,845
1,561,542 03/25/02...................................... 6.59 1,551,923
5,150,000 12/26/02...................................... 6.15 5,097,866
3,000,000 07/23/03...................................... 5.96 2,950,161
2,000,000 08/06/03...................................... 5.94 1,965,476
2,500,000 05/06/04...................................... 5.74 2,431,145
3,996,382 Pool #382552, 07/01/05........................ 7.27 4,045,697
2,491,575 Pool #382316, 04/01/10........................ 7.57 2,490,796
Government National Mortgage Association
1,911,317 Pool #781036, 10/15/17........................ 8.00 1,947,389
2,046,229 Pool #8378, 07/20/18.......................... 6.75 2,073,918
2,167,799 Pool #80385, 03/20/30......................... 6.00 2,134,424
2,479,161 Pool #80393, 04/20/30......................... 6.00 2,441,767
U.S. Treasury Notes
2,000,000 11/15/00...................................... 5.75 1,998,750
7,000,000 09/30/01...................................... 6.38 7,006,566
3,000,000 04/30/02...................................... 6.38 3,012,189
U.S. Treasury Inflation Indexed Note
3,556,410 07/15/02...................................... 3.63 3,555,300
-----------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $59,027,373)............................ 58,847,999
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 0.57%
170,980 Dreyfus Government Cash Management Fund.......... $ 170,980
170,991 Fidelity U.S. Treasury II Fund................... 170,991
-----------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $341,971).................................. 341,971
-----------
TOTAL INVESTMENTS
(Cost $59,369,344*).............................. 99.10% $59,189,970
OTHER ASSETS & LIABILITIES (NET).......................... 0.90 536,084
------ -----------
NET ASSETS................................................ 100.00% $59,726,054
====== ===========
</TABLE>
--------
* Aggregate cost for Federal tax and book purposes.
+ Discount Rate
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Significant Accounting Policies
Excelsior Funds, Inc. ("Excelsior Fund") was incorporated under the laws of
the State of Maryland on August 2, 1984 and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Excelsior Fund currently offers shares in eighteen managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for Managed Income
Fund, Intermediate-Term Managed Income Fund and Short-Term Government
Securities Fund (the "Portfolios"). Such policies are in conformity with
generally accepted accounting principles and are consistently followed by
Excelsior Fund in the preparation of the financial statements. Generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates. The financial
statements for the remaining portfolios of Excelsior Fund and Excelsior Tax-
Exempt Funds, Inc. ("Excelsior Tax-Exempt Fund") are presented separately.
(a) Portfolio Valuation:
Investments in securities that are traded on a recognized stock exchange
are valued at the last sale price on the exchange on which such securities
are primarily traded or at the last sale price on the national securities
market. Securities traded over-the-counter are valued each business day on
the basis of closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid
prices (as calculated by an independent pricing service (the "Service")
based upon its evaluation of the market for such securities) when, in the
judgment of the Service, quoted bid prices for securities are readily
available and are representative of the bid side of the market. Short-term
debt instruments with remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. Securities and other
assets for which market quotations are not readily available are valued at
fair value pursuant to guidelines adopted by Excelsior Fund's Board of
Directors.
Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an occurrence
subsequent to the time a value was so established is likely to have changed
such value, then the fair value of those securities will be determined by
consideration of other factors under the direction of the Board of
Directors. A security which is listed or traded on more than one exchange
is valued at the quotation on the exchange determined to be the primary
market for such security.
Investment in foreign debt securities having maturities of 60 days or
less are valued at amortized cost, which approximates market value. All
other foreign securities are valued at the last current bid quotation if
market quotations are available, or at fair value as determined in
accordance with policies established by the Board of Directors. For
valuation purposes, quotations of foreign securities in foreign currency
are converted to United States dollars equivalent at the prevailing market
rate on the day of conversion.
(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
10
<PAGE>
amortization of premiums and, when appropriate, discounts on investments,
is earned from settlement date and is recorded on the accrual basis.
(c) Repurchase agreements:
Excelsior Fund may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to
the seller's agreement to repurchase and Excelsior Fund's agreement to
resell such securities at mutually agreed upon prices. Securities purchased
subject to such repurchase agreements are deposited with Excelsior Fund's
custodian or sub-custodian or are maintained in the Federal
Reserve/Treasury book-entry system and must have, at all times, an
aggregate market value not less than the repurchase price (including
accrued interest).
If the value of the underlying security falls below the value of the
repurchase price, Excelsior Fund will require the seller to deposit
additional collateral by the next business day. Default or bankruptcy of
the seller may, however, expose the applicable Portfolio of Excelsior Fund
to possible delay in connection with the disposition of the underlying
securities or loss to the extent that proceeds from a sale of the
underlying securities were less than the repurchase price under the
agreement.
(d) Dividends and distributions to shareholders:
Dividends from net investment income are declared daily and paid monthly.
Net realized capital gains, unless offset by any available capital loss
carryforward, are distributed to shareholders at least annually.
Dividends and distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
deferral of losses on wash sales and net capital losses incurred after
October 31 and within the taxable year ("Post-October losses").
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
(e) Federal taxes:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
At March 31, 2000, 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, 2008
---------------
<S> <C>
Managed Income Fund........................................ $2,229,000
Intermediate-Term Managed Income Fund ..................... 2,113,000
Short-Term Government Securities Fund...................... 381,000
</TABLE>
At September 30, 2000, 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 in which there
was an excess of tax cost over value were as follows:
11
<PAGE>
<TABLE>
<CAPTION>
Tax Basis Tax Basis Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) Depreciation
------------ -------------- ------------
<S> <C> <C> <C>
Managed Income Fund.............. $1,237,707 $(3,333,534) $(2,095,827)
Intermediate-Term Managed Income
Fund............................ 1,456,445 (1,851,063) (394,618)
Short-Term Government Securities
Fund............................ 74,136 (253,510) (179,374)
</TABLE>
(f) Expense Allocation:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average daily net assets.
2. Investment Advisory Fee, Administration Fee and Related Party Transactions
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company (collectively with U.S. Trust NY, "U.S. Trust") serve as the
investment adviser to the Portfolios. For the services provided pursuant to
the Investment Advisory Agreements, U.S. Trust is entitled to receive a fee,
computed daily and paid monthly, at the annual rates of .75% of the average
daily net assets of the Managed Income Fund, .35% of the average daily net
assets of the Intermediate-Term Managed Income Fund and .30% of the average
daily net assets of the Short-Term Government Securities Fund. U.S. Trust NY
is a state-chartered bank and trust company and a member bank of the Federal
Reserve System. U.S. Trust Company is a Connecticut state bank and trust
company. Each is a wholly-owned subsidiary of U.S. Trust Corporation, a
registered bank holding company. U.S. Trust Corporation is a wholly-owned
subsidiary of The Charles Schwab Corporation ("Schwab").
U.S. Trust Company, Chase Global Funds Services Company, a corporate
affiliate of The Chase Manhattan Bank, and Federated Administrative Services
(collectively, the "Administrators") provide administrative services to
Excelsior Fund. For the services provided to the Portfolios, the
Administrators are entitled jointly to annual fees, computed daily and paid
monthly, based on the combined aggregate average daily net assets of Excelsior
Fund, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust (excluding
the international equity portfolios of Excelsior Fund and Excelsior
Institutional Trust), all of which are affiliated investment companies, as
follows: .200% of the first $200 million, .175% of the next $200 million, and
.150% over $400 million. Administration fees payable by each Portfolio of the
three investment companies are determined in proportion to the relative
average daily net assets of the respective Portfolios for the period paid. For
the six months ended September 30, 2000, administration fees charged by U.S.
Trust Company were as follows:
<TABLE>
<S> <C>
Managed Income Fund............................................... $56,058
Intermediate-Term Managed Income Fund............................. 43,497
Short-Term Government Securities Fund............................. 14,916
</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. U.S. Trust has contractually agreed to waive investment
advisory fees and to reimburse other ordinary operating expenses through March
31, 2001 to the extent necessary to keep total operating expenses from
exceeding the following annual percentages of each Portfolio's average daily
net assets:
12
<PAGE>
<TABLE>
<S> <C>
Managed Income Fund.................................................. 0.90%
Intermediate-Term Managed Income Fund................................ 0.65%
Short-Term Government Securities Fund................................ 0.60%
</TABLE>
In addition, currently, U.S. Trust is voluntarily limiting its investment
advisory fee to .65% of the average daily net assets for Managed Income Fund.
For the six months ended September 30, 2000, no reimbursements were required
for Intermediate-Term Managed Income Fund or Short-Term Government Securities
Fund and U.S Trust waived investment advisory fees totaling $113,362 for
Managed Income Fund.
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S.
Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
administrative services provided by each service organization to its
customers, each Portfolio will pay the service organization an administrative
service fee at the annual rate of up to .40% of the average daily net asset
value of its shares held by the service organization's customers. Such
services may include assisting in processing purchase, exchange and redemption
requests; transmitting and receiving funds in connection with customer orders
to purchase, exchange or redeem shares; and providing periodic statements.
Administrative service fees paid to affiliates of U.S. Trust amounted to
$176,739 for the six months ended September 30, 2000. Through July 31, 2000,
U.S. Trust and the Administrators voluntarily agreed to waive investment
advisory and administration fees payable by each Portfolio in an amount equal
to the administrative service fees expense (including fees paid to affiliates
of U.S. Trust) by such Portfolio. Effective August 1, 2000, U.S. Trust has
voluntarily agreed to continue waiving investment advisory and administration
fees payable by each portfolio in an amount equal to the administrative
services fees expense paid to subsidiaries of U.S. Trust Corporation. For the
six months ended September 30, 2000, U.S. Trust and the Administrators waived
investment advisory and administration fees in amounts equal to the
administrative service fees for the Portfolios as set forth below:
<TABLE>
<CAPTION>
U.S. Trust Administrators
---------- --------------
<S> <C> <C>
Managed Income Fund.............................. $ 40,981 $324
Intermediate-Term Managed Income Fund............ 112,126 208
Short-Term Government Securities Fund............ 24,947 371
</TABLE>
Edgewood Services, Inc. ("the Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the distributor of Excelsior Fund. Shares
of each Portfolio are sold without a sales charge on a continuous basis by the
Distributor.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000. Each member of the Nominating Committee receives an
annual fee of $2,000 for services in connection with this committee.
3. Purchases and Sales of Securities:
For the six months ended September 30, 2000, purchases and sales of
securities, excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchase Sales
----------- -----------
<S> <C> <C>
Managed Income Fund............................... $56,952,693 $49,364,104
Intermediate-Term Managed Income Fund............. 97,487,665 73,598,627
Short-Term Government Securities Fund............. 37,766,836 20,270,004
</TABLE>
13
<PAGE>
4. Common Stock:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
28.875 billion of which is currently classified to represent interests in one
of eighteen separate investment portfolios. Authorized capital currently
classified for each Portfolio is as follows: 375 million shares of the Managed
Income Fund, and 500 million shares each of the Intermediate-Term Managed
Income Fund and Short-Term Government Securities Fund.
Each share has a par value of $.001 and represents an equal proportionate
interest in the particular Portfolio with other shares of the same Portfolio,
and is entitled to such dividends and distributions of taxable earnings on the
assets belonging to such Portfolio as are declared at the discretion of
Excelsior Fund's Board of Directors.
<TABLE>
<CAPTION>
Managed Income Fund
----------------------------------------------------
Six Months Ended
09/30/00 Year Ended 03/31/00
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold..................... 3,515,052 $ 30,149,126 8,709,982 $ 75,343,096
Issued as reinvestment of
dividends............... 119,115 1,023,149 208,735 1,805,948
Redeemed................. (2,975,713) (25,540,600) (7,148,559) (61,794,612)
----------- ------------ ----------- ------------
Net Increase............. 658,454 $ 5,631,675 1,770,158 $ 15,354,432
=========== ============ =========== ============
<CAPTION>
Intermediate-Term Managed Income Fund
----------------------------------------------------
Six Months Ended
09/30/00 Year Ended 03/31/00
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold..................... 8,044,735 $ 54,636,542 12,866,252 $ 88,475,071
Issued as reinvestment of
dividends............... 43,288 293,797 51,115 351,757
Redeemed................. (4,112,002) (27,910,928) (7,864,681) (53,661,453)
----------- ------------ ----------- ------------
Net Increase............. 3,976,021 $ 27,019,411 5,052,686 $ 35,165,375
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Short-Term Government Securities Fund
----------------------------------------------------
Six Months Ended
09/30/00 Year Ended 03/31/00
------------------------ --------------------------
Shares Amount Shares Amount
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold..................... 2,527,387 $ 17,408,817 19,559,354 $ 135,260,251
Issued as reinvestment of
dividends............... 57,927 398,651 84,441 585,766
Redeemed................. (2,596,961) (17,886,963) (18,490,692) (127,769,237)
---------- ------------ ----------- -------------
Net Increase (Decrease).. (11,647) $ (79,495) 1,153,103 $ 8,076,780
========== ============ =========== =============
</TABLE>
5. 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 up to 2% per year.
In addition, a commitment fee, based on the average daily unused portion of
the line of credit, is allocated among the participating Portfolios at the end
of each quarter. For the six months ended September 30, 2000, the Portfolios
had no borrowings under the agreement.
14
