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[EXCELSIOR LOGO APPEARS HERE]
Domestic Equity Portfolios
ANNUAL REPORT
March 31, 2000
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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
Value and Restructuring Fund............................................. 4
Small Cap Fund........................................................... 5
Energy and Natural Resources Fund........................................ 6
Large Cap Growth Fund.................................................... 7
Real Estate Fund......................................................... 8
Optimum Growth Fund...................................................... 9
Value Equity Fund........................................................ 10
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
Value and Restructuring Fund............................................. 22
Small Cap Fund........................................................... 24
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................................................... 43
VOTING RESULTS OF SPECIAL MEETING OF SHAREHOLDERS......................... 44
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate tele-
phone 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 ex-
penses may be obtained by contacting Excelsior Funds, Inc., Excelsior Tax-Ex-
empt Funds, Inc. and Excelsior Institutional Trust 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., 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,
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:
The fiscal year ended March 31, 2000 was exciting and rewarding both
domestically and abroad. In the U.S. and around the world, preparations for
"Y2K" and millennium celebrations consumed everyone's thoughts. The U.S.
economy was in the midst of an extraordinary expansion. Simultaneously, Europe
prepared for and converted to a new central currency, the Euro. Meanwhile,
Asia rebounded from fiscal turmoil in several key markets in early 1999.
All the major domestic equity indices exhibited strong performance. As the
fiscal year ended, the breadth of performance extended from the familiar
large-capitalization stocks to the mid-sized and small-cap stocks. Technology
stocks led all market sectors to new highs. This occurred, despite several
interest rate hikes by the Federal Reserve Board. The rising interest rate
environment and continued economic expansion seemed to temper only the
performance of the fixed-income markets.
Given the continued rate of expansion of the U.S. economy, we believe
interest rate increases are inevitable. This environment will make the coming
year a challenging one in the financial markets. We are confident that the
broad array of domestic and international equity as well as taxable and tax-
exempt fixed-income funds will help you meet your financial objectives.
On May 31, 2000, U.S. Trust Corporation, parent of the advisers to the
Excelsior Fund family ("U.S. Trust"), merged with a subsidiary of The Charles
Schwab Corporation. Earlier in the month, shareholders of the Excelsior Funds
approved new advisory contracts that will enable U.S. Trust to remain as the
investment adviser to the Excelsior Funds after the merger. We look forward to
participating in the benefits which the merger of such outstanding
organizations may bring to Excelsior Funds.
Sincerely,
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
1
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EXCELSIOR FUNDS, INC. DOMESTIC EQUITY MARKET REVIEW
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The fiscal year ending on March 31, 2000 began on a positive note, with news
that the economy was continuing to grow strongly with little signs of
inflation. In the first week of April 1999, high-tech drove the market higher.
The technology-heavy NASDAQ Composite Index rose to a record for the first
time in two months. And the Dow Jones Industrial Average climbed over the
10,000 mark on April 7, aided by strong gains from the financial stocks. Small
caps continued to under perform the broader market.
The environment changed dramatically, however, beginning in the second week
of April. With surprising rapidity, investors abandoned the relatively small
number of growth stocks that had been driving the market for so long --
especially technology -- and poured into beaten-down but economically
sensitive cyclical issues and even the long-suffering mid- and small-cap
stocks. Part of the catalyst seemed related to the view that the world economy
would grow faster than expected. Part may also have been related to valuation
issues as well as mounting fears regarding the sustainability of earnings
growth. The broadening trend continued in May, though with some volatility.
The S&P 500, for instance, started the month strongly, but eventually gave it
all back. Small-cap stocks continued to outpace their large-cap brethren, and
value continued to outperform growth. Technology stocks continued to suffer,
and Internet stocks were hit especially hard.
Similar trends continued in June 1999. Mid- and small-cap, cyclical, and
value-oriented names continued to show strength, and even the pummeled
Internet stocks began to show signs of recovery in the latter half of the
month. In mid-June, both the equity and fixed-income markets responded
positively to Federal Reserve Chairman Alan Greenspan's comments that
suggested that the Fed would not raise rates aggressively. This did in fact
occur on the final day of the quarter.
The second quarter began on an encouraging note, rallying on the heels of
the rate hike and adoption of a neutral bias. This, along with optimism about
corporate profits, pushed the major indices to new highs in the first week of
the quarter. The stock market environment quickly grew more mixed thereafter,
though computer and tech stocks did manage to push the NASDAQ to record-high
territory by mid-month. August was mixed, as the broadening trend that began
in April seemed to run out of steam. The recovering cyclicals faded, growth
stocks trounced value stocks, big caps regained leadership versus small caps,
and technology rebounded. These trends held sway through September.
The third quarter, however, was remarkably strong for domestic equities.
Financial stocks, for instance, were given a boost at the end of October when
Congress agreed to repeal portions of the Glass-Steagall Act -- a move
expected to spur further consolidation in financial services. Heading into
November, the NASDAQ Composite Index continued to be the real story, posting
consecutive highs through calendar year end. Also noteworthy, small-cap stocks
-- paced by Internet stocks -- rebounded strongly in the quarter.
The fourth fiscal quarter, however, was decidedly bumpy. Concerns regarding
inflation, interest rates, and valuation levels fed speculation that the
market might rotate out of technology into the value areas of the market. In
fact, in the first days of January, the NASDAQ Composite Index declined, while
health care, energy and financials showed signs of life. But -- in a pattern
that would repeat itself over and over again in the quarter -- the "rotation"
didn't last. Technology came roaring back. Internet, semiconductors, fiber
optics, biotechnology, and small-cap stocks all saw strong gains. The same
pattern held in February. The start of March saw the DJIA regain some lost
ground. In the quarter's final weeks, both the DJIA and S&P 500 showed renewed
strength, while the NASDAQ and Russell 2000 Index of small company stocks
faltered and then recovered.
2
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EXCELSIOR FUNDS, INC. BLENDED EQUITY FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 22.90%,* versus 17.95%** for the Standard & Poor's 500 Composite Stock
Price Index. Our investment strategy remained consistent; we emphasized a
long-term investment horizon (as opposed to attempts at timing the market),
broad portfolio diversification across strategies and investment themes, and
solid good business values. Through much of the fiscal year, until well into
the fiscal fourth quarter, technology was by far the best-performing sector of
the market. Many technology companies were experiencing strong growth as
spending on all types of information and communication technology grew due to
the burgeoning Internet and the need to reduce costs and improve productivity.
Strong technology performers within the Fund included Cisco Systems, Sun
Microsystems, EMC, Microsoft, Nokia and Texas Instruments, as well as Yahoo
and America Online in the Internet space. The Fund's financial stocks
performed very well on a relative basis, despite the substantial increase in
long-term interest rates. Financial leaders were Morgan Stanley Dean Witter,
Citigroup and American International Group. Other strong performers included
CBS, Liberty Media, and Home Depot in the consumer category, General Electric
and Honeywell in capital goods and Nextel and General Motors Class H in
communications. Gillette and Coca-Cola showed considerable weakness within the
consumer staple group. Drug stocks were also weak, due in part to concerns
about potential legislation/regulation. Among our recent purchases were Nortel
Networks and Motorola, two leading telecommunication equipment companies, and
small positions in several promising biotechnology companies. During the
latter part of the fourth quarter we felt that actual fundamentals -- as
opposed to merely interesting concepts -- were suddenly important again. We
began trimming our technology holdings somewhat as we sought a balance of
growth and good business value opportunities -- that is, companies who we feel
have demonstrated and continue to demonstrate solid growth in a volatile
environment.
[GRAPH]
Blended Equity Fund S&P 500
3/31/99 10,000 10,000
3/31/91 10,511 11,439
3/31/92 12,284 12,703
3/31/93 14,650 14,639
3/31/94 15,608 14,857
3/31/95 17,895 17,163
3/31/96 22,628 22,669
3/31/97 25,138 27,155
3/31/98 37,912 40,184
3/31/99 45,361 47,598
3/31/00 55,747 56,141
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.
------------
* 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. VALUE AND RESTRUCTURING FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 42.41%,* far exceeding the Russell 1000 Value Index's return of 6.33%**,
and ranked 55 out of 372 funds, based on total return, in the Lipper Multi-Cap
Core Funds category*** for the same period. The Fund's long term performance
has been excellent as well, ranking 10 out of 120 funds in the same Lipper
category for the five years ended March 31, 2000, with a cumulative total
return of 254.32%.* The fiscal year began strongly for the Fund. We made few
alterations to the portfolio; as always, the Fund remained broadly
diversified, and consequently benefited from the broadening of the market that
we had been anticipating, specifically the better relative performance of
value vs. growth. That said, several of the Fund's more growth-oriented names
continued to do well, particularly those in the technology and transportation
areas. Conditions grew more challenging in the fiscal second quarter, however.
The largest factor impacting Fund performance was the screeching stop to the
value stocks' recovery. The portfolio's technology holdings did manage to
dampen the negative impact somewhat, however. The Fund's largest individual
holdings -- Texas Instruments, Qualcom, Nokia, IBM, Unisys-- proved to be the
Fund's best performing in the period. The financials have become a smaller
portion of the total, and much of our aerospace holdings were eliminated. We
continued to maintain a modest overweight in technology and autos. The Fund
had a particularly strong third quarter. Once again, the largest factor
impacting performance was the Fund's technology holdings, in particular our
long-held positions in Qualcom, Nokia, and IBM. Financials, which had been
such an aid to the fund in 1998, were an overall drag on performance. The Fund
had a solid fiscal fourth quarter. The performance was noteworthy for the fact
that technology and media companies were not the sole performance drivers.
Rather, the Fund began to see improved performance from some of the more
value-oriented and rate-sensitive holdings (Ford, GM, Centex, and the
financials), particularly heading into the quarter's final weeks. Comfortable
with its basic structure, we made few changes to the Fund during the quarter.
We did take some profits in some of the Fund's technology holdings that had
performed exceptionally well.
[GRAPH]
Value And Restructuring Fund Russell 1000 Value Index
12/31/92 10,000 10,000
3/31/93 11,014 10,967
3/31/94 13,922 11,400
3/31/95 15,522 12,678
3/31/96 21,184 16,924
3/31/97 25,017 19,983
3/31/98 38,052 29,408
3/31/99 38,615 30,891
3/31/00 54,992 32,846
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. 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 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 5000 Index which is
composed of 3,000 of the largest U.S. companies by market capitalization.
The Index includes dividends reinvested.
*** Source: Lipper Analytical Services, Inc--Lipper is an independent mutual
fund performance monitor.
+ 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. SMALL CAP FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 65.91%* strongly outpacing the Russell 2000 Index's return of 37.29%** and
ranked 50 out of 198 funds, based on total return, in the Lipper Small-Cap
Core Funds category*** for the same period. For the five years ended March 31,
2000, the Fund ranked 59 out of 63 funds in the same Lipper category, with a
cumulative total return of 78.78%.* The first fiscal quarter began strongly
for the Fund and small-cap issues in general -- which outperformed large caps
for the first time in more than two years. The Fund's strong performance was
driven by holdings in the technology and retail sectors. These contributions
were offset in part by weakness among some of the Fund's health care holdings.
The second quarter saw the positive trends reverse. Relative performance in
this period was dominated by Fund holdings in the technology and health care
sector. The fiscal third quarter, however, saw the return of small caps, and
Fund performance picked up accordingly. Performance was led by a variety of
issues in the technology, health care, and financial services sectors. The
strong performance continued into the fiscal fourth quarter, once again led by
technology and health care issues.
[GRAPH]
The Russell 2000
Small Cap Fund Stock Price 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
3/31/00 25,746 27,053
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.
*** Source: Lipper Analytical Services, Inc--Lipper is an independent mutual
fund performance monitor.
+ 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
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EXCELSIOR FUNDS, INC. ENERGY AND NATURAL RESOURCES FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 44.61%,* strongly outpacing the Standard & Poor's 500 Composite Stock Price
Index's return of 17.95%,** and ranked 12 out of 59 funds, based on total
return, in the Lipper Natural Resources Funds category*** for the same period.
The Fund's long term performance has also been excellent as well, ranking 2 out
of 30 funds in the same Lipper category for the five years ended March 31,
2000, with a cumulative total return of 146.69%.* A major catalyst for the Fund
during the first quarter proved to be the March OPEC agreement to implement a
third round of production cuts to reduce surplus global inventory levels. The
Fund capitalized on this announcement via a shift of assets from the more
defensive major integrated oils and pipeline/utilities sectors into the
commodity-sensitive exploration & production and oil service sectors. In the
ensuing two quarters, however, the Fund basically treaded water. While oil
prices continued their ascent, investors remained skeptical as to the
sustainability of such a sharp advance. During this period, our top energy
holdings remained ExxonMobil, Royal Dutch Chevron and USX-Marathon -- which we
believed would be major beneficiaries of declining oil prices. We remained
overweighted in the oil service sector, given a cyclical up trend in capital
spending by the major oil companies. Fund performance picked up dramatically in
the fiscal fourth quarter as the energy sector benefited from a strong cyclical
up trend in oil and natural gas prices as field depletion and OPEC discipline
tightened supply. During the quarter, we initiated positions in Phillips
Petroleum, and Atlantic Richfield and added to British Petroleum and Tosco, an
independent refiner. Looking ahead, we believed that the major integrated oil
companies would outperform as oil prices declined. And given the recent OPEC
quota increase, we believe that oil will cede front-page coverage to natural
gas prices, which stand to rise due to field depletion and rising demand from
new gas-fired power generation plants. To capture this upside potential, during
the fourth quarter, we initiated positions in Unocal, Union Pacific Resources,
Barrett Resources, EEX Corp., El Paso Energy Corp., and Santa Fe Snyder.
[GRAPH]
Energy And Natural The Standard & Poors 500
Resources Fund Composite 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
3/31/00 28,622 40,026
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.
*** Source: Lipper Analytical Services, Inc--Lipper is an independent mutual
fund performance monitor.
+ 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
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EXCELSIOR FUNDS, INC. LARGE CAP GROWTH FUND
-------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 32.73%* versus 34.11%** for The Russell 1000 Growth Index. As always, we
continued to focus exclusively on high-quality, large-cap companies that we
believe have superior growth potential. We concentrate the Fund in roughly 25
names and we don't concern ourselves with issues of market timing and
valuation. Our policy is to let the winners run and to eliminate the losers
and/or those companies whose fundamental earnings outlook deteriorates for
what we expect will be a sustained period of time. As a result, the Fund's
largest holdings are generally its best performing as well. The Fund's top
holdings, as of fiscal year end, included EMC, America Online, Intel, Home
Depot, Dell Computer, Nokia, Microsoft, Medtronic, and Sun Microsystems.
Throughout the year, the Fund's technology companies continued to be important
contributors to performance. Among these, we would highlight BMC Software
(eliminated in the fiscal fourth quarter), Nokia, Sun Microsystems, America
Online, and JDS Uniphase. We feel all of our holdings have strong balance
sheets and use less debt financing than the average company, and continue to
benefit from several powerful trends; accelerating Internet activity, the
proliferation of wireless communication, increasing globalization of the
financial markets, and the trend toward outsourcing of non-mission-critical
business activities. We continue to focus on making long-term commitments to
leading companies in fast-growing industries.
[GRAPH]
Large Cap Growth Fund Russell 1000 Growth Index
10/1/97 10,000 10,000
3/31/98 12,157 11,690
9/30/98 12,157 11,110
3/31/99 20,429 14,976
9/30/99 19,757 14,979
3/31/00 27,115 20,084
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. 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 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.
7
<PAGE>
EXCELSIOR FUNDS, INC. REAL ESTATE FUND
-------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 0.58%* versus 2.94%** for the Morgan Stanley's REIT Index. The first fiscal
quarter saw REITs and real estate securities rebound. The group outperformed
broader markets in April and peaked in May. Thereafter, concerns about
inflation and interest rates put a damper on performance. The second quarter
saw the previous quarter's gains eroded. Non-REIT real estate holdings in the
Fund were particularly weak. Of the property types, hotels detracted from
performance. The apartment companies were among the Fund's better performers.
Difficult conditions persisted in the third quarter. In our view, higher
interest rates and the supply and demand issues in a few of the property
subsectors pressured the group downward. For the Fund, exposure to health care
hurt performance; however, an underweighting in the hotel segment and the
relative outperformance by apartment REITs served as an offset. In the fourth
quarter, fears of increasing interest rates and the strong performance of the
"new economy" companies both weighed on the group. Offsetting these factors
were the strong fundamental trends, current low valuations and high current
returns. The Fund was negatively impacted by weakness in some of the smaller-
cap stocks, while the health care and retail names helped. We retained
exposure to all major property types while reducing the number of overall
names slightly. We reduced exposure to the retail segment with the sale of
Developers Diversified. Looking ahead we view the fundamental prospects for
the industry as strong. We continue to be somewhat cautious on the hotel and
health care segments.
[GRAPH]
Real Estate Fund Morgan Stanley REIT Index
10/1/97 10,000 10,000
3/31/98 10,226 10,316
9/30/98 8,946 8,822
3/31/99 8,431 8,219
9/30/99 8,355 8,068
3/31/00 8,480 8,222
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. 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: 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.
8
<PAGE>
EXCELSIOR INSTITUTIONAL TRUST OPTIMUM GROWTH FUND
-------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 27.40%* versus 34.11%** for the Russell 1000 Growth Index. As always, we
continued to focus exclusively on high-quality, large-cap companies that we
believe have superior growth potential. We concentrate the Fund in roughly 25
names and we don't concern ourselves with issues of market timing and
valuation. Our policy is to let the winners run and to eliminate the losers
and/or those companies whose fundamental earnings outlook deteriorates for
what we expect will be a sustained period of time. As a result, the Fund's
largest holdings are generally its best performing as well. The Fund's top
holdings, as of fiscal year end, included EMC, America Online, Intel, Home
Depot, Dell Computer, Nokia, Microsoft, Medtronic, and Sun Microsystems. In
addition, a structured overlay, representing 30% of the Fund assets, consists
of a complimentary basket of stocks selected from the Russell 1000 growth
stocks. The overlay is designed to increase diversification and reduce
volatility without materially inhibiting return potential. Throughout the
year, the Fund's technology companies continued to be important contributions
to performance. Among these, we would highlight BMC Software, Nokia, Sun
Microsystems, America Online, and JDS Uniphase. We feel our holdings have
strong balance sheets and use less debt financing than the average company,
and continue to benefit from several powerful trends: accelerating Internet
activity, the proliferation of wireless communication, increasing
globalization of the financial markets, and the trend toward outsourcing of
non-mission-critcal business activities. We continue to focus on making long-
term commitments to leading companies in fast-growing industries.
[GRAPH]
Optimum Growth Fund Russell 1000 Growth Index****
6/1/96 10,000 10,000
9/30/96 10,121 10,360
3/31/97 10,331 11,047
9/30/97 13,544 14,121
3/31/98 16,572 16,507
9/30/98 16,948 15,689
3/31/99 27,841 21,136
9/30/99 26,764 21,145
3/31/00 35,469 28,386
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 6/1/96 (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. 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 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.
9
<PAGE>
EXCELSIOR INSTITUTIONAL TRUST VALUE EQUITY FUND
--------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 41.60%,* exceeding the Russell 1000 Value Index's return of 6.33%,** and
ranked 61 out of 372 funds, based on total return, in the Lipper Multi-Cap Core
Funds category*** for the same period. The fiscal year began strongly for the
Fund. We made few alterations to the portfolio; as always, the Fund remained
broadly diversified, and consequently benefited from the broadening of the
market that we had been anticipating, specifically the better relative
performance of value vs. growth. That said, several of the Fund's more growth-
oriented names continued to do well, particularly those in the technology and
transportation areas. Conditions grew more challenging in the fiscal second
quarter, however. The largest factor impacting Fund performance was the
screeching stop to the value stocks' recovery. The portfolio's technology
holdings did manage to dampen the negative impact somewhat, however. The Fund's
largest individual holdings include Nokia, Global Crossing, IBM, Texas
Instruments, Bristol Myers, AT&T, and Liberty Media. These were also among the
Fund's best performers in the quarter. Once again, at least in the third
quarter, technology was the principal performance driver -- in particular our
long-held positions in Nokia (the Fund's largest position) and IBM. Other
strong gains were seen in the Fund's small positions in Akamai Technologies,
Bluestone Software, and Broadbase Software. Financials, which had been such an
aid to the fund in 1998, were an overall drag on performance. In the final
quarter, however, the Fund began to see improved performance from some of the
more value-oriented and rate-sensitive holdings (Ford, GM, Centex, and the
financials). Comfortable with its basic structure, we made few changes to the
Fund during the quarter. We did take some profits in some technology holdings
that had performed exceptionally well.
[GRAPH]
Value Equity Fund Russell 1000 Value Index
6/1/96 10,000 10,000
9/30/96 9,600 10,299
3/31/97 9,379 11,607
9/30/97 12,649 14,657
3/31/98 14,171 17,096
9/30/98 11,764 15,183
3/31/99 14,821 17,958
9/30/99 15,452 18,024
3/31/00 20,987 19,095
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 6/1/96 (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. 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 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.
*** Source: Lipper Analytical Securities, Inc.--Lipper is an independent mutual
fund performance monitor.
+ 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>
[THIS PAGE LEFT INTENTIONALLY BLANK]
11
<PAGE>
Excelsior Funds, Inc.
Statements of Assets and Liabilities
March 31, 2000
<TABLE>
<CAPTION>
Value and
Blended Restructuring Small Cap
Equity Fund Fund Fund
-------------- -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at cost-see
accompanying portfolios....... $ 430,893,534 $ 797,411,228 $ 86,276,051
============== ============== ============
Investments, at value (Note
1)............................ $ 996,288,467 $1,219,188,316 $107,578,987
Cash.......................... 3,821 3,593,201 1,894,615
Dividends receivable.......... 590,024 508,704 21,894
Interest receivable........... 119,784 361,993 54,244
Receivable from fund
administrator................. -- -- --
Receivable for investments
sold.......................... 15,088,688 -- 490,046
Receivable for fund shares
sold.......................... 818,337 1,906,603 2,740
Prepaid expenses.............. 24,592 22,672 1,772
Unamortized organization costs
(Note 5)...................... -- -- --
-------------- -------------- ------------
Total Assets.................. 1,012,933,713 1,225,581,489 110,044,298
LIABILITIES:
Payable for investments
purchased..................... 15,187,222 15,540,799 2,003,609
Options written, at value
(Premiums received: Value and
Restructuring Fund --
$1,365,704) (Note 1).......... -- 1,343,750 --
Payable for fund shares
redeemed...................... 3,456,711 246,763 --
Investment advisory fees
payable (Note 2).............. 532,871 646,917 48,685
Administration fees payable
(Note 2)...................... 105,276 72,976 5,810
Administrative servicing fees
payable (Note 2).............. 76,743 236,532 15,707
Directors'/Trustees' fees
payable (Note 2).............. 5,225 5,043 352
Due to custodian bank......... -- -- --
Accrued expenses and other
payables...................... 160,560 244,416 29,121
-------------- -------------- ------------
Total Liabilities............. 19,524,608 18,337,196 2,103,284
-------------- -------------- ------------
NET ASSETS..................... 993,409,105 1,207,244,293 107,941,014
============== ============== ============
NET ASSETS consist of:
Undistributed net investment
income........................ $ 106,798 $ 368,312 $ 5,680
Accumulated net realized gain
(loss) on investments......... (963,687) (21,035,527) 7,572,435
Unrealized appreciation
(depreciation) of investments,
written options and foreign
currency translations......... 565,394,933 421,799,062 21,302,936
Par value (Note 4)............ 19,622 35,618 7,014
Paid-in capital in excess of
par value..................... 428,851,439 806,076,828 79,052,949
-------------- -------------- ------------
Total Net Assets............... $ 993,409,105 $1,207,244,293 $107,941,014
============== ============== ============
Net Assets:
Shares........................ $ 993,409,105 $1,207,244,293 $107,941,014
Institutional Shares.......... -- -- --
Shares outstanding (Note 4):
Shares........................ 19,621,666 35,617,956 7,014,232
Institutional Shares.......... -- -- --
NET ASSET VALUE PER SHARE (net
assets / shares outstanding):
Shares........................ $50.63 $33.89 $15.39
====== ====== ======
Institutional Shares.......... -- -- --
===== ===== =====
</TABLE>
See Notes to Financial Statements
12
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund
----------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
$50,041,114 $298,328,578 $38,406,097 $ 45,533,476 $27,881,992
=========== ============ =========== ============ ===========
$68,452,414 $502,782,778 $33,458,826 $107,059,564 $54,844,454
77,032 315 35,693 -- --
20,552 75,521 222,349 45,563 31,955
14,100 4,215 750 4,968 821
4,108 -- -- -- --
1,834,914 -- -- 1,988,020 356,222
1,404,756 1,333,752 -- 17,635 --
1,413 10,320 713 2,600 1,384
-- 32,413 15,748 280 280
----------- ------------ ----------- ------------ -----------
71,809,289 504,239,314 33,734,079 109,118,630 55,235,116
598,212 4,388,570 -- 955,387 274,537
-- -- -- -- --
36,991 1,085,708 -- -- --
17,868 250,917 14,043 28,911 21,904
-- 55,827 4,072 12,357 7,309
11,420 47,956 5,509 -- --
337 2,060 224 1,591 629
-- -- -- 147,106 599,821
18,791 94,178 6,788 117,779 16,669
----------- ------------ ----------- ------------ -----------
683,619 5,925,216 30,636 1,263,131 920,869
----------- ------------ ----------- ------------ -----------
71,125,670 498,314,098 33,703,443 107,855,499 54,314,247
=========== ============ =========== ============ ===========
$ 38,319 $ -- $ 164,424 $ -- $ 688
3,905,113 (15,320,174) (6,926,361) 11,006,925 884,672
18,411,300 204,454,200 (4,947,271) 61,526,088 26,962,472
4,674 26,260 6,464 35 25
48,766,264 309,153,812 45,406,187 35,322,451 26,466,390
----------- ------------ ----------- ------------ -----------
$71,125,670 $498,314,098 $33,703,443 $107,855,499 $54,314,247
=========== ============ =========== ============ ===========
$71,125,670 $498,314,098 $33,703,443 $ 21,966,660 $ 336,490
-- -- -- 85,888,839 53,977,757
4,674,763 26,259,855 6,464,246 718,607 15,766
-- -- -- 2,785,986 2,531,945
$15.21 $18.98 $5.21 $30.57 $21.34
====== ====== ===== ====== ======
-- -- -- $30.83 $21.32
===== ===== ===== ====== ======
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Funds, Inc.
Statements of Operations
Year Ended March 31, 2000
<TABLE>
<CAPTION>
Value and
Blended Restructuring Small Cap
Equity Fund Fund Fund
------------ ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................... $ 566,507 $ 1,036,447 $ 352,990
Dividend income................... 8,014,342 8,211,375 188,188
------------ ------------ -----------
Total Income...................... 8,580,849 9,247,822 541,178
EXPENSES:
Investment advisory fees (Note
2)................................ 6,124,110 4,826,637 347,596
Administration fees (Note 2)...... 1,242,439 1,224,733 88,136
Administrative servicing fees
(Note 2).......................... 383,171 1,019,489 68,012
Custodian fees.................... 205,814 214,026 28,374
Shareholder servicing agent fees.. 151,681 657,411 35,382
Legal and audit fees.............. 88,155 80,652 4,897
Shareholder reports............... 64,983 69,593 4,359
Directors'/Trustees' fees and
expenses (Note 2)................. 20,705 20,278 1,176
Registration and filing fees...... 18,684 48,738 12,055
Amortization of organization costs
(Note 5).......................... -- -- --
Distribution fees (Note 2)........ -- -- --
Miscellaneous expenses............ 45,042 129,779 10,968
------------ ------------ -----------
Total Expenses.................... 8,344,784 8,291,336 600,955
Fees waived by investment adviser
and administrators (Note 2)....... (383,171) (1,019,489) (68,012)
------------ ------------ -----------
Net Expenses...................... 7,961,613 7,271,847 532,943
------------ ------------ -----------
NET INVESTMENT INCOME (LOSS)....... 619,236 1,975,975 8,235
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 1):
Net realized gain (loss):
Security transactions............. 14,070,026 (1,209,577) 11,251,028
Foreign currency transactions..... -- (4,458) --
------------ ------------ -----------
Total net realized gain (loss).... 14,070,026 (1,214,035) 11,251,028
Change in unrealized
appreciation/depreciation on
investments, written options and
foreign currency translations
during the year................... 191,700,096 294,661,200 19,556,536
------------ ------------ -----------
Net realized and unrealized gain
(loss) on investments............. 205,770,122 293,447,165 30,807,564
------------ ------------ -----------
Net increase (decrease) in net
assets resulting from operations.. $206,389,358 $295,423,140 $30,815,799
============ ============ ===========
</TABLE>
See Notes to Financial Statements
14
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund
----------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 129,390 $ 755,541 $ 62,599 $ 95,383 $ 10,808
593,976 982,182 2,454,715 523,906 515,638
----------- ------------ ----------- ----------- -----------
723,366 1,737,723 2,517,314 619,289 526,446
324,360 2,478,037 341,623 655,463 308,517
82,257 502,675 52,241 153,552 72,228
58,922 195,790 32,706 13,786 --
19,390 85,616 11,997 27,856 16,344
63,797 133,207 10,256 14,408 10,995
5,434 34,396 3,610 24,633 10,881
4,859 24,621 3,901 13,295 3,870
1,300 8,632 845 5,107 2,380
18,367 18,183 15,352 23,092 21,334
-- 4,487 5,918 245 245
-- -- -- 45,308 343
5,638 51,770 3,983 6,804 3,457
----------- ------------ ----------- ----------- -----------
584,324 3,537,414 482,432 983,549 450,594
(58,922) (195,790) (72,495) (135,244) (71,673)
----------- ------------ ----------- ----------- -----------
525,402 3,341,624 409,937 848,305 378,921
----------- ------------ ----------- ----------- -----------
197,964 (1,603,901) 2,107,377 (229,016) 147,525
----------- ------------ ----------- ----------- -----------
9,381,472 (11,743,135) (4,822,127) 22,425,776 1,293,913
(453) -- -- -- (2,680)
----------- ------------ ----------- ----------- -----------
9,381,019 (11,743,135) (4,822,127) 22,425,776 1,291,233
10,323,732 121,578,266 2,590,497 3,177,959 15,693,776
----------- ------------ ----------- ----------- -----------
19,704,751 109,835,131 (2,231,630) 25,603,735 16,985,009
----------- ------------ ----------- ----------- -----------
$19,902,715 $108,231,230 $ (124,253) $25,374,719 $17,132,534
=========== ============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Excelsior Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Value and
Blended Restructuring Small Cap
Equity Fund Fund Fund
------------ -------------- ------------
<S> <C> <C> <C>
Year Ended March 31, 2000
Net investment income (loss)...... $ 619,236 $ 1,975,975 $ 8,235
Net realized gain (loss) on
investments....................... 14,070,026 (1,209,577) 11,251,028
Net realized loss on foreign
currency transactions............. -- (4,458) --
Change in unrealized
appreciation/depreciation of
investments, written options and
foreign currency translations
during the year................... 191,700,096 294,661,200 19,556,536
------------ -------------- ------------
Net increase (decrease) in net
assets resulting from operations.. 206,389,358 295,423,140 30,815,799
Distributions to shareholders:
From net investment income
Shares........................... (1,149,475) (2,302,013) --
Institutional Shares............. -- -- --
From net realized gain on
investments
Shares........................... (24,632,190) -- --
Institutional Shares............. -- -- --
In excess of net realized gain on
investments
Shares........................... (963,687) -- --
------------ -------------- ------------
Total distributions............. (26,745,352) (2,302,013) --
------------ -------------- ------------
Increase (decrease) in net assets
from fund share transactions (Note
4)
Shares........................... 93,492,128 319,508,408 33,336,782
Institutional Shares............. -- -- --
------------ -------------- ------------
Total from fund share
transactions.................... 93,492,128 319,508,408 33,336,782
------------ -------------- ------------
Net increase in net assets........ 273,136,134 612,629,535 64,152,581
NET ASSETS:
Beginning of year................ 720,272,971 594,614,758 43,788,433
------------ -------------- ------------
End of year (1).................. $993,409,105 $1,207,244,293 $107,941,014
============ ============== ============
(1) Including undistributed net
investment income................ $ 106,798 $ 368,312 $ 5,680
============ ============== ============
Year Ended March 31, 1999
Net investment income (loss)...... $ 1,829,485 $ 3,230,272 $ (17,160)
Net realized gain (loss) on
investments....................... 10,562,173 (20,078,685) (3,681,149)
Net realized gain (loss) on
foreign currency transactions..... -- -- --
Change in unrealized
appreciation/depreciation of of
investments and foreign currency
translations during the year...... 101,900,285 20,524,738 (10,537,167)
------------ -------------- ------------
Net increase (decrease) in net
assets resulting from operations.. 114,291,943 3,676,325 (14,235,476)
Distributions to shareholders:
From net investment income
Shares........................... (2,123,860) (2,676,861) --
Institutional Shares............. -- -- --
From net realized gain on
investments
Shares........................... (8,071,808) (3,609,196) (601,984)
Institutional Shares............. -- -- --
------------ -------------- ------------
Total distributions............. (10,195,668) (6,286,057) (601,984)
------------ -------------- ------------
Increase (decrease) in net assets
from fund share transactions (Note
4)
Shares........................... 21,268,126 208,777,082 (9,922,033)
Institutional Shares............. -- -- --
------------ -------------- ------------
Total from fund share
transactions................... 21,268,126 208,777,082 (9,922,033)
------------ -------------- ------------
Net increase (decrease) in net
assets............................ 125,364,401 206,167,350 (24,759,493)
NET ASSETS:
Beginning of year................ 594,908,570 388,447,408 68,547,926
------------ -------------- ------------
End of year (2).................. $720,272,971 $ 594,614,758 $ 43,788,433
============ ============== ============
--------
(2) Including undistributed net
investment income................ $ 637,027 $ 812,147 $ --
============ ============== ============
</TABLE>
--------
See Notes to Financial Statements
16
<PAGE>
<TABLE>
<CAPTION>
Energy and Large Cap Optimum Value
Natural Resources Growth Real Estate Growth Equity
Fund Fund Fund Fund Fund
----------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
$ 197,964 $ (1,603,901) $ 2,107,377 $ (229,016) $ 147,525
9,381,472 (11,743,135) (4,822,127) 22,425,776 1,293,913
(453) -- -- -- (2,680)
10,323,732 121,578,266 2,590,497 3,177,959 15,693,776
----------- ------------ ----------- ------------ -----------
19,902,715 108,231,230 (124,253) 25,374,719 17,132,534
(250,304) -- (1,966,824) -- (342)
-- -- -- -- (231,511)
(2,177,387) -- -- (2,801,624) (1,336)
-- -- -- (11,457,427) (885,998)
-- -- -- -- --
----------- ------------ ----------- ------------ -----------
(2,427,691) -- (1,966,824) (14,259,051) (1,119,187)
----------- ------------ ----------- ------------ -----------
10,629,906 138,535,123 2,953,645 7,591,166 161,435
-- -- -- (11,310,189) (1,291,679)
----------- ------------ ----------- ------------ -----------
10,629,906 138,535,123 2,953,645 (3,719,023) (1,130,244)
----------- ------------ ----------- ------------ -----------
28,104,930 246,766,353 862,568 7,396,645 14,883,103
43,020,740 251,547,745 32,840,875 100,458,854 39,431,144
----------- ------------ ----------- ------------ -----------
$71,125,670 $498,314,098 $33,703,443 $107,855,499 $54,314,247
=========== ============ =========== ============ ===========
$ 38,319 $ -- $ 164,424 $ -- $ 688
=========== ============ =========== ============ ===========
$ 421,436 $ (602,021) $ 2,051,938 $ (27,456) $ 301,463
(3,055,181) (3,363,023) (2,123,845) 4,906,503 2,731,686
-- -- -- -- (1,063)
(3,816,865) 76,691,074 (7,647,372) 35,505,018 (1,255,930)
----------- ------------ ----------- ------------ -----------
(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)
-- -- -- -- (6,437)
-- -- -- -- (3,002,331)
----------- ------------ ----------- ------------ -----------
(363,702) -- (2,054,358) (10,785) (3,285,347)
----------- ------------ ----------- ------------ -----------
3,660,605 131,293,057 1,443,788 1,173,446 48,306
-- -- -- 869,600 6,048,555
----------- ------------ ----------- ------------ -----------
3,660,605 131,293,057 1,443,788 2,043,046 6,096,861
----------- ------------ ----------- ------------ -----------
(3,153,707) 204,019,087 (8,329,849) 42,416,326 4,587,670
46,174,447 47,528,658 41,170,724 58,042,528 34,843,474
----------- ------------ ----------- ------------ -----------
$43,020,740 $251,547,745 $32,840,875 $100,458,854 $39,431,144
=========== ============ =========== ============ ===========
$ 91,112 $ -- $ 23,871 $ -- $ 87,696
=========== ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Excelsior Funds, Inc.
Financial Highlights--Selected Per Share Data and Ratios
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
Net Realized Distributions 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,
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) --
2000.................... 42.51 0.03 9.54 9.57 (0.06) (1.34) $(0.05)
Trust Shares --
(11/12/96*)
Period Ended March 31,
1997................... 26.30 0.04 0.03 0.07 (0.03) (0.56) --
Period from April 1,
1997 to October
27,1997................ 25.78 0.02 4.67 4.69 (0.05) -- --
VALUE AND RESTRUCTURING
FUND -- (12/31/92*)
Shares:
Year Ended March 31,
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) --
2000.................... 23.88 0.07 10.03 10.10 (0.09) -- --
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,
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) --
2000.................... 9.27 -- ++ 6.12 6.12 -- -- --
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,
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) -- --
2000.................... 11.02 0.04 4.72 4.76 (0.06) (0.51) --
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 -- -- --
2000.................... 14.30 (0.06) 4.74 4.68 -- -- --
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) -- --
2000.................... 5.50 0.34 (0.31) 0.03 (0.32) -- --
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 -- -- --
2000.................... 27.40 (0.11) 7.16 7.05 -- $(3.88) --
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) --
2000.................... 15.35 0.01 6.35 6.36 (0.05) (0.32) --
</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>
$(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
(1.45) 50.63 22.90 % 993,409 0.97% 1.02% 0.08 % 24% 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
$(0.33) $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
(0.09) 33.89 42.41 % 1,207,244 0.90% 1.03% 0.25 % 20% 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 --
$(0.69) $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
-- 15.39 65.91 % 107,941 0.92% 1.03% 0.01 % 134% 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 --
$(0.07) $ 9.55 21.60 % $ 23,294 0.96% 1.09% 0.88 % 43% $0.01
(1.12) 11.12 28.28 % 33,393 0.93% 0.98% 0.84 % 87% --
(1.24) 12.66 24.97 % 46,174 0.99% 1.07% 0.69 % 88% 0.01
(0.09) 11.02 (12.23)% 43,021 0.98% 1.09% 0.97 % 96% 0.01
(0.57) 15.21 44.61 % 71,126 0.97% 1.08% 0.37 % 138% 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% -- ++
-- 18.98 32.73 % 498,314 1.01% 1.07% (0.48)% 20% $0.01
$(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
(0.32) 5.21 0.58 % 33,703 1.20% 1.41% 6.17 % 27% 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
(3.88) 30.57 27.40 % 21,967 1.05% 1.18% (0.43)% 44% 0.03
-- $11.33 (6.21)%** $ 56 1.05%*** 1.43%*** 0.54 %*** 64%*** $0.01
$(0.86) 16.11 51.09 % 78 1.05% 1.35% 0.47 % 51% 0.05
(1.39) 15.35 4.59 % 125 1.05% 1.32% 0.53 % 55% 0.04
(0.37) 21.34 41.60 % 336 1.05% 1.20% 0.02 % 45% 0.05
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Blended Equity Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 96.15%
CAPITAL GOODS -- 6.18%
55,400 Boeing Co............................................... $ 2,101,738
90,000 Dover Corp.............................................. 4,308,750
10,000 Emerson Electric Co..................................... 528,750
276,100 General Electric Co. ................................... 42,847,269
209,666 Illinois Tool Works, Inc................................ 11,584,046
------------
61,370,553
------------
COMMUNICATIONS SERVICES -- 7.89%
120,000 +America Online, Inc.................................... 8,070,000
259,109 AT&T Corp............................................... 14,574,881
171,000 Bell Atlantic Corp...................................... 10,452,375
108,300 BellSouth Corp.......................................... 5,090,100
316,500 +MCI WorldCom, Inc...................................... 14,361,187
60,000 +NEXTEL Communications, Inc., Class A................... 8,891,250
137,480 SBC Communications, Inc................................. 5,774,160
50,000 Sprint Corp. (FON Group)................................ 3,150,000
114,800 Tyco International Ltd.................................. 5,725,650
13,400 +Yahoo!, Inc............................................ 2,295,588
------------
78,385,191
------------
CONSUMER CYCLICAL -- 21.27%
315,000 Abbott Laboratories..................................... 11,084,062
200,000 +Analog Devices, Inc. .................................. 16,112,500
167,700 Bristol-Myers Squibb Co. ............................... 9,684,675
140,600 +CBS Corp. ............................................. 7,961,475
96,000 +Comcast Corp., Class A Special......................... 4,158,000
8,300 +eBay, Inc.............................................. 1,460,281
200,000 Ford Motor Co........................................... 9,187,500
56,200 Gap, Inc................................................ 2,799,463
57,000 General Motors Corp..................................... 4,720,313
50,000 +General Motors Corp., Class H.......................... 6,225,000
100,000 Herman Miller, Inc...................................... 2,793,750
137,550 Home Depot, Inc. ....................................... 8,871,975
93,750 Honeywell International, Inc............................ 4,939,453
204,225 Johnson & Johnson Co.................................... 14,308,514
250,000 McDonald's Corp......................................... 9,390,625
139,600 Medtronic, Inc.......................................... 7,180,675
128,000 Merck & Co., Inc........................................ 7,952,000
282,750 +O'Reilly Automotive, Inc............................... 4,011,516
808,200 Pfizer, Inc............................................. 29,549,812
25,000 +RCN Corp............................................... 1,345,313
220,000 Schering-Plough Corp.................................... 8,085,000
157,500 Target Corp............................................. 11,773,125
500,000 Wal-Mart Stores, Inc.................................... 27,750,000
------------
211,345,027
------------
CONSUMER STAPLES -- 6.54%
102,700 Bestfoods, Inc.......................................... 4,807,644
187,500 Coca-Cola Co............................................ 8,800,781
44,210 CVS Corp. .............................................. 1,660,638
125,000 General Mills, Inc...................................... 4,523,438
239,000 Gillette Co............................................. 9,007,312
30,000 PepsiCo, Inc............................................ 1,036,875
113,200 Procter & Gamble Co..................................... 6,367,500
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- ------------
<C> <S> <C>
CONSUMER STAPLES -- (continued)
173,510 Time Warner, Inc...................................... $ 17,351,000
171,045 Walt Disney Co........................................ 7,076,987
13,000 Warner Lambert Co..................................... 1,267,500
40,000 WM. Wrigley Jr. Co. .................................. 3,072,500
------------
64,972,175
------------
ENERGY -- 4.94%
60,000 Chevron Corp.......................................... 5,546,250
492,483 Exxon Mobil Corp...................................... 38,321,333
73,000 Royal Dutch Petroleum Co.............................. 4,202,063
33,200 Unocal Corp........................................... 987,700
------------
49,057,346
------------
FINANCIAL -- 13.74%
29,000 American Express Co................................... 4,319,188
145,687 American International Group, Inc..................... 15,952,726
386,634 Associates First Capital Corp......................... 8,288,466
29,687 Bank of America Corp.................................. 1,556,712
2,287 +Berkshire Hathaway, Inc., Class B.................... 4,162,340
165,000 Citigroup, Inc........................................ 9,786,562
75,000 Firstar Corp.......................................... 1,720,313
342,306 Fleet Boston Financial Corp........................... 12,494,169
81,702 Household International, Inc.......................... 3,048,506
604,152 Mellon Financial Corp................................. 17,822,484
465,388 Morgan Stanley Dean Witter & Co....................... 37,958,209
156,300 State Street Boston Corp.............................. 15,141,562
104,100 Wells Fargo Co........................................ 4,261,594
------------
136,512,831
------------
RAW/INTERMEDIATE MATERIALS -- 0.24%
44,203 E.I. du Pont de Nemours & Co.......................... 2,337,234
------------
TECHNOLOGY -- 33.96%
32,000 +Applied Material, Inc................................ 3,016,000
1,006,628 +Cisco Systems, Inc................................... 77,824,927
112,000 Compaq Computer Corp.................................. 2,982,000
13,500 Corning, Inc.......................................... 2,619,000
172,200 +Dell Computer Corp................................... 9,288,037
57,000 +EMC Corp............................................. 7,125,000
45,000 +Global Crossing Ltd.................................. 1,842,188
60,600 GTE Corp. ............................................ 4,302,600
62,000 Hewlett-Packard Co.................................... 8,218,875
300,000 Intel Corp............................................ 39,543,750
126,000 International Business Machines Corp.................. 14,868,000
6,166 +JDS Uniphase Corp.................................... 743,003
186,640 Lucent Technologies, Inc.............................. 11,338,380
400,980 +Microsoft Corp....................................... 42,754,492
72,000 Nokia Corp., Class A, ADR............................. 15,642,000
90,000 Nortel Networks Corp.................................. 11,340,000
192,000 +Oracle Corp. ........................................ 14,976,000
50,096 +QUALCOMM, Inc........................................ 7,473,697
136,000 +SDL, Inc............................................. 28,959,500
</TABLE>
See Notes to Financial Statements
20
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Blended Equity Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
TECHNOLOGY -- (continued)
148,308 +Sun Microsystems, Inc.................................. $ 13,894,606
116,000 Texas Instruments, Inc. ................................ 18,560,000
------------
337,312,055
------------
TRANSPORTATION -- 0.41%
175,000 CSX Corp................................................ 4,112,500
------------
UTILITIES -- 0.98%
80,000 +AES Corp. ............................................. 6,300,000
9,262 Enron Corp. ............................................ 693,492
41,800 +Sprint Corp. (PCS Group)............................... 2,730,063
------------
9,723,555
------------
TOTAL COMMON STOCKS
(Cost $389,733,534)..................................... 955,128,467
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
DEMAND NOTES -- 4.14%
$20,600,000 Associates Corp. of North America Master Notes...... $ 20,600,000
20,560,000 General Electric Co. Promissory Notes............... 20,560,000
------------
TOTAL DEMAND NOTES
(Cost $41,160,000).................................. 41,160,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $430,893,534*)...................................... 100.29% $996,288,467
OTHER ASSETS AND LIABILITIES (NET)........................ (0.29) (2,879,362)
------ ------------
NET ASSETS................................................ 100.00% $993,409,105
====== ============
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$430,893,534.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
21
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Value and Restructuring Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 96.98%
CAPITAL GOODS -- 4.45%
210,000 Cordant Technologies, Inc................................ $11,878,125
2 Delphi Automotive Systems Corp........................... 32
405,000 Honeywell International, Inc. ........................... 21,338,437
325,000 United Technologies Corp. ............................... 20,535,938
-----------
53,752,532
-----------
COMMUNICATIONS SERVICES -- 6.90%
260,000 +AT&T Corp............................................... 14,625,000
210,000 BCE, Inc................................................. 26,323,836
375,000 CenturyTel, Inc. ........................................ 13,921,875
695,000 +Global Crossing Ltd. ................................... 28,473,281
-----------
83,343,992
-----------
CONSUMER CYCLICAL -- 20.60%
360,000 +Adelphia Communications, Inc............................ 17,617,500
400,000 Black & Decker Corp...................................... 15,025,000
425,400 +CBS Corp................................................ 24,088,275
610,000 Centex Corp.............................................. 14,525,625
500,000 +Charter Communications, Inc. ........................... 7,156,250
575,000 Deluxe Corp. ............................................ 15,237,500
400,000 Ford Motor Co............................................ 18,375,000
250,000 General Motors Corp...................................... 20,703,125
285,000 +General Motors Corp., Class H........................... 35,482,500
250,800 Harman International Industries, Inc..................... 15,048,000
630,000 +Infinity Broadcasting Corp. ............................ 20,396,250
450,000 Lennox International, Inc................................ 3,937,500
500,000 News Corp., Ltd. ADR..................................... 28,125,000
700,000 +Paxson Communications Corp.............................. 5,425,000
332,500 Viad Corp. .............................................. 7,605,938
-----------
248,748,463
-----------
CONSUMER STAPLES -- 6.75%
585,000 +AT&T Corp.-Liberty Media Group, Class A................. 34,661,250
600,000 Avon Products, Inc. ..................................... 17,437,500
305,000 General Mills, Inc. ..................................... 11,037,188
455,000 +Suiza Foods Corp........................................ 18,313,750
-----------
81,449,688
-----------
ENERGY -- 3.27%
425,000 Conoco, Inc., Class B.................................... 10,890,625
272,550 Dynergy, Inc. ........................................... 17,102,513
800,000 +Ocean Energy, Inc....................................... 11,500,000
-----------
39,493,138
-----------
FINANCIAL -- 15.16%
225,000 Amvescap plc ADR......................................... 15,975,000
260,000 Chase Manhattan Corp..................................... 22,668,750
410,000 Citigroup, Inc........................................... 24,318,125
360,000 Donaldson, Lufkin & Jenrette, Inc.-DLJ................... 18,630,000
235,000 Fannie Mae............................................... 13,262,812
625,000 +Golden State Bancorp, Inc. ............................. 9,335,938
490,000 Mellon Financial Corp.................................... 14,455,000
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------------
<C> <S> <C>
FINANCIAL -- (continued)
315,000 Morgan Stanley Dean Witter & Co...................... $ 25,692,187
340,000 PNC Bank Corp........................................ 15,321,250
370,000 SLM Holding Corp..................................... 12,325,625
200,000 XL Capital Ltd., Class A............................. 11,075,000
--------------
183,059,687
--------------
HEALTH CARE -- 3.65%
270,000 American Home Products Corp.......................... 14,478,750
775,000 +AmeriSource Health Corp., Class A................... 11,625,000
310,000 Bristol-Myers Squibb Co.............................. 17,902,500
--------------
44,006,250
--------------
RAW/INTERMEDIATE
MATERIALS -- 1.48%
410,000 Cambrex Corp......................................... 17,835,000
--------------
TECHNOLOGY -- 29.30%
250,000 Alcatel Alsthom ADR.................................. 10,953,125
200,000 +Bell & Howell Holdings Co........................... 6,250,000
375,000 Harris Corp. ........................................ 12,960,937
245,000 International Business Machines Corp................. 28,910,000
230,000 Nokia Corp., Class A, ADR............................ 49,967,500
201,600 +Plantronics, Inc. .................................. 18,786,600
525,000 +QUALCOMM, Inc....................................... 78,323,437
300,000 Raytheon Co., Class A................................ 5,643,750
162,597 Sabre Holdings Corp. ................................ 6,005,916
407,629 Sensormatic Electronics Corp......................... 9,146,176
420,000 Texas Instruments, Inc............................... 67,200,000
650,000 +Unisys Corp......................................... 16,575,000
530,000 +Vishay Intertechnology, Inc......................... 29,481,250
520,000 Xerox Corp. ......................................... 13,520,000
--------------
353,723,691
--------------
TRANSPORTATION -- 5.42%
275,000 +AMR Corp............................................ 8,765,625
500,000 CNF Transportation, Inc.............................. 13,875,000
350,000 Kansas City Southern Industries, Inc................. 30,078,125
325,000 Union Pacific Corp................................... 12,715,625
--------------
65,434,375
--------------
TOTAL COMMON STOCKS
(Cost $750,656,533).................................. 1,170,846,816
--------------
CONVERTIBLE PREFERRED STOCKS -- 0.68%
TECHNOLOGY -- 0.68%
260,000 ++Sensormatic Electronics Corp., Preferred Exchange,
6.50%
(Cost $6,570,695).................................... 8,157,500
--------------
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Value and Restructuring Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
--------- --------------
<C> <S> <C>
DEMAND NOTES -- 3.33%
$20,100,000 Associates Corp. of North America Master Notes.... $ 20,100,000
20,084,000 General Electric Co. Promissory Notes............. 20,084,000
--------------
TOTAL DEMAND NOTES
(Cost $40,184,000)................................ 40,184,000
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $797,411,228*)..................................... 100.99% $1,219,188,316
====== ==============
</TABLE>
<TABLE>
<CAPTION>
Market Value
Contracts of Options
--------- --------------
<C> <S> <C>
CALL OPTIONS WRITTEN -- (0.11)%
500 QUALCOMM, Inc.
May 2000@ 170...................................... (487,500)
500 QUALCOMM, Inc.
July 2000@ 170..................................... (856,250)
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL CALL OPTIONS WRITTEN (Premiums received,
($1,365,704)............................................... (1,343,750)
--------------
</TABLE>
<TABLE>
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (NET)...................... (0.88) (10,600,273)
------ --------------
NET ASSETS.............................................. 100.00% $1,207,244,293
====== ==============
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$798,245,948.
+ Non-income producing security
++ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31, 2000,
these securities amounted to $8,157,500 or 0.68% of net assets.
ADR -- American Depositary Receipt
See Notes to Financial Statements
23
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Small Cap Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 75.94%
CAPITAL GOODS -- 5.82%
82,100 +AmeriSource Health Corp.,
Class A.................................................. $ 1,231,500
51,200 +Hain Food Group, Inc. (The)............................. 1,446,400
35,000 +Pentair, Inc............................................ 1,297,188
65,000 Teleflex, Inc............................................ 2,307,500
-----------
6,282,588
-----------
CONSUMER CYCLICAL -- 1.65%
16,200 +24/7 Media, Inc......................................... 635,850
60,000 +O'Reilly Automotive, Inc................................ 851,250
3,775 +UTStarcom, Inc.......................................... 294,922
-----------
1,782,022
-----------
ENERGY -- 1.29%
44,000 +Patterson Energy, Inc................................... 1,391,500
-----------
FINANCIAL -- 5.37%
32,500 Cullen/Frost Bankers, Inc................................ 859,219
37,600 +Silicon Valley Bancshares............................... 2,660,200
41,000 StanCorp Financial Group, Inc............................ 1,122,375
43,000 Valley National Bancorp.................................. 1,155,625
-----------
5,797,419
-----------
HEALTH CARE -- 10.73%
8,000 +Celgene Corp............................................ 796,000
20,300 +CONMED Corp............................................. 508,769
7,800 +Gene Logic, Inc......................................... 325,650
5,300 +Human Genome Sciences, Inc.............................. 439,900
16,000 +Maxim Pharmaceuticals, Inc.............................. 751,000
65,000 +MedQuist, Inc........................................... 1,763,125
195,000 +TLC Laser Eye Centers, Inc.............................. 1,950,000
17,400 +United Therapeutics Corp................................ 1,352,850
66,600 +Ventana Medical Systems, Inc............................ 2,834,662
37,500 Vital Signs, Inc......................................... 860,156
-----------
11,582,112
-----------
RAW/INTERMEDIATE
MATERIALS -- 3.93%
100,000 Caraustar Industries, Inc................................ 1,412,500
141,300 Millennium Chemicals, Inc................................ 2,826,000
-----------
4,238,500
-----------
TECHNOLOGY -- 26.27%
69,200 +American Xtal Technology, Inc........................... 2,236,025
630 +Avanex Corp............................................. 95,603
207,400 +Cambridge Technology Partners, Inc...................... 2,812,862
56,800 +Caminus Corp............................................ 1,104,050
65,000 +Computer Horizons Corp.................................. 1,109,062
51,750 +Dendrite International, Inc............................. 1,083,516
79,200 +Exchange Applications, Inc.............................. 4,187,700
42,500 +Fairchild Semiconductor Corp.,
Class A.................................................. 1,551,250
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- -----------
<C> <S> <C>
TECHNOLOGY -- (continued)
25,000 +Filenet Corp............................................ $ 742,188
10,500 +Finisar Corp............................................ 1,538,250
29,800 +Hyperion Solutions Corp................................. 968,500
3,200 +Intersil Holding Corp................................... 165,400
41,250 +J.D. Edwards & Co....................................... 1,343,203
37,700 +Manugistics Group, Inc.................................. 1,917,987
1,249 +MatrixOne, Inc.......................................... 49,882
55,000 +Metamor Worldwide, Inc.................................. 1,553,750
35,400 +Onyx Software Corp...................................... 1,128,375
13,000 +SDL, Inc................................................ 2,768,187
11,400 +Spectra-Physics Lasers, Inc............................. 520,125
1,500 +Sycamore Networks, Inc.................................. 193,125
21,500 +Three-Five Systems, Inc................................. 1,290,000
1 Timberline Software Corp................................. 9
-----------
28,359,049
-----------
TELECOMMUNICATION AND
INFORMATION SERVICES -- 18.83%
42,200 +Cypress Communications, Inc............................. 1,033,900
54,000 +FASTNET Corp............................................ 648,000
2,500 +FirstWorld Communications Inc., Class B................. 50,781
8,000 +Gilat Satellite Networks Ltd............................ 936,000
36,000 +Globecomm Systems, Inc.................................. 958,500
30,000 +hi/fn, Inc.............................................. 1,951,875
72,400 Inter-Tel, Inc........................................... 1,959,325
5,500 +Intertrust Technologies Corp............................ 233,406
47,000 +Multex.com, Inc......................................... 1,744,875
47,500 +Natural Microsystems Corp............................... 4,067,187
13,000 +Net2Phone, Inc.......................................... 763,750
75,000 +NetZero, Inc............................................ 1,185,938
55,000 +RSL Communications Ltd.................................. 1,299,375
31,000 +Sirius Satellite Radio, Inc............................. 1,765,063
50,000 +XM Satellite Radio Holdings, Inc., Class A.............. 1,728,125
-----------
20,326,100
-----------
UTILITIES -- 2.05%
200,800 +Navigant Consulting, Inc................................ 2,208,800
-----------
TOTAL COMMON STOCKS
(Cost $60,665,154)....................................... 81,968,090
-----------
</TABLE>
See Notes to Financial Statements
24
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Small Cap Fund -- (continued)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ------------
<C> <S> <C>
DEMAND NOTES -- 9.46%
$5,105,000 Associates Corp. of North America Master Notes....... $ 5,105,000
5,104,000 General Electric Co. Promissory Notes................ 5,104,000
------------
TOTAL DEMAND NOTES
(Cost $10,209,000)................................... 10,209,000
------------
U.S. GOVERNMENT OBLIGATIONS -- 14.27%
15,465,000 U.S. Treasury Bills
5.67%, 4/27/00
(Cost $15,401,897)................................... 15,401,897
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $86,276,051*)....................................... 99.67% $107,578,987
OTHER ASSETS AND LIABILITIES (NET)........................ 0.33 362,027
------ ------------
NET ASSETS................................................ 100.00% $107,941,014
====== ============
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$86,276,051.
+ Non-income producing
See Notes to Financial Statements
25
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Energy and Natural Resources Fund
<TABLE>
<CAPTION>
Value (Note
Shares 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 94.42%
BASIC MATERIALS -- 1.35%
24,000 Willamette Industries.................................... $ 963,000
-----------
ENERGY -- 75.74%
51,000 Anadarko Petroleum Corp.................................. 1,973,062
20,000 Atlantic Richfield Co.................................... 1,700,000
70,000 Baker Hughes, Inc. ...................................... 2,117,500
55,000 +Barrett Resources Corp.................................. 1,639,688
29,340 BP Amoco plc ADR......................................... 1,556,854
15,000 Chevron Corp. ........................................... 1,386,563
30,000 +Cooper Cameron Corp..................................... 2,006,250
150,000 +EEX Corp................................................ 506,250
50,000 EL Paso Energy Corp...................................... 2,018,750
39,762 Exxon Mobil Corp. ....................................... 3,093,981
155,000 +Global Industries Ltd................................... 2,266,875
45,000 +Nabors Industries, Inc.................................. 1,746,562
191,630 +Ocean Energy, Inc. ..................................... 2,754,681
67,000 +Patterson Energy, Inc................................... 2,118,875
95,000 +Pennaco Energy, Inc..................................... 1,300,313
25,000 Phillips Petroleum Co. .................................. 1,156,250
25,000 +Precision Drilling Corp................................. 834,375
95,000 +R & B Falcon Corp....................................... 1,870,312
65,000 +Rowan Cos., Inc......................................... 1,913,437
34,000 Royal Dutch Petroleum Co................................. 1,957,125
45,000 Santa Fe International Corp.............................. 1,665,000
20,000 +Santa Fe Snyder Corp. .................................. 192,500
24,000 Schlumberger Ltd......................................... 1,836,000
20,000 +Smith International, Inc................................ 1,550,000
25,000 Suncor Energy, Inc....................................... 1,062,500
20,000 Texaco, Inc.............................................. 1,072,500
76,000 Tosco Corp............................................... 2,313,250
4,646 Transocean Sedco Forex, Inc.............................. 238,398
95,000 +Triton Energy Ltd....................................... 3,330,937
40,000 Union Pacific Resources Group, Inc. ..................... 580,000
40,000 Unocal Corp.............................................. 1,190,000
55,000 USX-Marathon Group....................................... 1,433,438
20,000 Vastar Resources, Inc.................................... 1,486,250
-----------
53,868,476
-----------
RAW/INTERMEDIATE
MATERIALS -- 4.17%
10,000 E.I. du Pont de Nemours & Co............................. 528,750
25,000 Georgia-Pacific Group.................................... 989,062
25,000 Newmont Mining Corp...................................... 560,938
15,000 Southdown, Inc........................................... 885,000
-----------
2,963,750
-----------
UTILITIES -- 13.16%
25,000 +AES Corp. .............................................. 1,968,750
10,000 +Calpine Corp............................................ 940,000
31,000 Enron Corp. ............................................. 2,321,125
35,000 Montana Power Co......................................... 2,240,000
43,000 Williams Cos., Inc....................................... 1,889,313
-----------
9,359,188
-----------
TOTAL COMMON STOCKS
(Cost $48,743,114)....................................... 67,154,414
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value (Note
Amount 1)
--------- -----------
<C> <S> <C>
DEMAND NOTES -- 1.82%
$600,000 Associates Corp. of North America Master Notes......... $ 600,000
698,000 General Electric Co. Promissory Notes.................. 698,000
-----------
TOTAL DEMAND NOTES
(Cost $1,298,000)...................................... 1,298,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $50,041,114*)........................................ 96.24% $68,452,414
OTHER ASSETS & LIABILITIES (NET)........................... 3.76 2,673,256
------ -----------
NET ASSETS................................................. 100.00% $71,125,670
====== ===========
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$50,063,590.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
26
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Large Cap Growth Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 95.74%
COMMUNICATIONS SERVICES -- 11.22%
376,000 +America Online, Inc.................................... $ 25,286,000
87,000 +Exodus Communications, Inc............................. 12,223,500
405,250 +MCI WorldCom, Inc...................................... 18,388,219
------------
55,897,719
------------
CONSUMER CYCLICAL -- 11.13%
169,800 +Clear Channel Communications, Inc...................... 11,726,812
145,600 Harley-Davidson, Inc.................................... 11,557,000
355,550 Home Depot, Inc......................................... 22,932,975
99,000 Omnicom Group, Inc...................................... 9,250,313
------------
55,467,100
------------
FINANCIAL -- 15.28%
198,750 American International Group, Inc....................... 21,763,125
354,500 Citigroup, Inc.......................................... 21,026,281
130,000 Morgan Stanley Dean Witter & Co......................... 10,603,125
400,700 Schwab (Charles) Corp................................... 22,764,769
------------
76,157,300
------------
HEALTH CARE -- 12.47%
65,000 +Genentech, Inc......................................... 9,880,000
444,200 Medtronic, Inc......................................... 22,848,537
116,000 PE Corp. - PE Biosystems Group......................... 11,194,000
497,850 Pfizer, Inc............................................ 18,202,641
------------
62,125,178
------------
TECHNOLOGY -- 45.64%
448,000 +Cisco Systems, Inc..................................... 34,636,000
489,600 +Dell Computer Corp..................................... 26,407,800
216,000 +EMC Corp............................................... 27,000,000
224,300 Intel Corp.............................................. 29,565,544
125,000 +JDS Uniphase Corp...................................... 15,062,500
198,900 +Microsoft Corp......................................... 21,207,712
104,200 Nokia Corp., Class A, ADR............................... 22,637,450
320,600 +Solectron Corp......................................... 12,844,038
245,000 +Sun Microsystems, Inc.................................. 22,953,437
240,000 +Tellabs, Inc........................................... 15,105,000
------------
227,419,481
------------
TOTAL COMMON STOCKS
(Cost $272,612,578)..................................... 477,066,778
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
----------- ------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 5.16%
$25,716,000 Agreement with Chase Securities, Inc. 5.90% dated
3/31/00, due 4/03/00, to be repurchased at
$25,728,644, collateralized by $28,590,000 Federal
Home Loan Mortgage Corp., 5.75% due 4/15/08, valued
at $26,892,151
(Cost $25,716,000)................................. $ 25,716,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $298,328,578*)...................................... 100.90% $502,782,778
OTHER ASSETS AND LIABILITIES (NET)........................ (0.90) (4,468,680)
------ ------------
NET ASSETS................................................ 100.00% $498,314,098
====== ============
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$298,328,578.
+ Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
27
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Real Estate Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ----------
<C> <S> <C>
COMMON STOCKS -- 92.35%
CONSUMER CYCLICAL -- 1.28%
48,800 Host Marriott Corp......................................... $ 433,100
----------
FINANCIAL -- 1.31%
10,000 Freddie Mac................................................ 441,875
----------
REAL ESTATE -- 89.76%
28,000 Apartment Investment & Management Co....................... 1,069,250
34,684 Avalonbay Communities, Inc................................. 1,270,301
55,000 Bedford Property Investors, Inc............................ 883,438
34,000 Boston Properties, Inc..................................... 1,081,625
60,000 Cabot Industrial Trust..................................... 1,117,500
85,000 +Catellus Development Corp................................. 1,179,375
37,000 Chateau Communities, Inc................................... 943,500
25,000 Cousins Properties, Inc.................................... 920,312
25,000 Crescent Real Estate Equity Co............................. 437,500
59,000 Duke Realty Investment, Inc................................ 1,128,375
52,703 Equity Office Properties Trust............................. 1,324,163
29,860 Equity Residential Properties Trust........................ 1,199,999
42,000 First Washington Realty Trust.............................. 779,625
35,000 Forest City Enterprises, Inc., Class A..................... 1,028,125
25,000 Glenborough Realty Trust, Inc.............................. 362,500
30,000 Health Care Property Investors, Inc........................ 763,125
42,000 Healthcare Realty Trust, Inc............................... 703,500
23,000 Highwoods Properties, Inc.................................. 488,750
42,000 Home Properties of New York, Inc........................... 1,123,500
39,000 Hospitality Properties Trust............................... 789,750
47,000 HRPT Properties Trust...................................... 408,313
31,000 KIMCO Realty Corp.......................................... 1,162,500
41,000 Mack-Cali Realty Corp...................................... 1,045,500
52,000 Pacific Gulf Properties, Inc............................... 1,020,500
60,000 ProLogis Trust............................................. 1,155,000
46,200 Public Storage, Inc........................................ 970,200
48,000 Simon Property Group, Inc.................................. 1,152,000
33,000 Spieker Properties, Inc.................................... 1,468,500
90,000 Taubman Center, Inc........................................ 1,001,250
30,000 Vornado Realty Trust....................................... 1,005,000
34,500 Weingarten Realty Investors................................ 1,267,875
----------
30,250,851
----------
TOTAL COMMON STOCKS
(Cost $36,073,097)......................................... 31,125,826
----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value (Note
Amount 1)
---------- -----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 6.92%
$2,333,000 Agreement with Chase Securities, Inc. 5.90% dated
3/31/00, due 4/03/00, to be repurchased at
$2,334,147, collateralized by $2,380,000 Federal Home
Loan Bank, 7.10% due 3/01/02, valued at $2,393,844
(Cost $2,333,000).................................... $ 2,333,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $38,406,097*)........................................ 99.27% $33,458,826
OTHER ASSETS & LIABILITIES (NET)........................... 0.73 244,617
------ -----------
NET ASSETS................................................. 100.00% $33,703,443
====== ===========
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$38,406,097.
+ Non-income producing
See Notes to Financial Statements
28
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments March 31, 2000
Optimum Growth Fund
<TABLE>
<CAPTION>
Shares Value
------- ------------
<C> <S> <C>
COMMON STOCKS -- 99.26%
CAPITAL GOODS -- 7.02%
41,600 General Electric Co. ................................... $ 6,455,800
15,000 Vastar Resources, Inc. ................................. 1,114,687
------------
7,570,487
------------
COMMUNICATIONS
SERVICES -- 9.35%
76,000 +America Online, Inc. .................................. 5,111,000
16,900 +Exodus Communications, Inc. ........................... 2,374,450
57,250 +MCI WorldCom, Inc. .................................... 2,597,719
------------
10,083,169
------------
CONSUMER CYCLICAL -- 13.66%
2,000 +Analog Devices, Inc. .................................. 161,125
25,000 +Clear Channel Communications, Inc. 1,726,562
18,000 Dow Jones & Co., Inc. .................................. 1,292,625
35,000 Harley-Davidson, Inc. .................................. 2,778,125
72,000 Home Depot, Inc. ....................................... 4,644,000
10,000 McDonald's Corp. ....................................... 375,625
13,200 Omnicom Group, Inc. .................................... 1,233,375
45,500 Wal-Mart Stores, Inc. .................................. 2,525,250
------------
14,736,687
------------
CONSUMER STAPLES -- 2.30%
6,800 Coca-Cola Co. .......................................... 319,175
21,600 Time Warner, Inc. ...................................... 2,160,000
------------
2,479,175
------------
FINANCIAL -- 10.08%
25,000 American International Group, Inc. ..................... 2,737,500
88,400 Schwab (Charles) Corp. ................................. 5,022,225
52,500 Citigroup, Inc. ........................................ 3,113,906
------------
10,873,631
------------
HEALTH CARE -- 10.31%
7,000 Amgen, Inc. ............................................ 429,188
6,000 Genentech, Inc. ........................................ 912,000
83,710 Medtronic, Inc. ........................................ 4,305,833
3,000 Merck & Co., Inc. ...................................... 186,375
10,000 PE Corp.-PE Biosystems Group ........................... 965,000
66,000 Pfizer, Inc. ........................................... 2,413,125
4,300 Schering-Plough Corp. .................................. 158,025
18,000 Warner Lambert Co. ..................................... 1,755,000
------------
11,124,546
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
------- ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
TECHNOLOGY -- 46.54%
10,000 Applied Material, Inc. ................................. $ 942,500
1,200 Bea Systems, Inc. ...................................... 87,900
600 Broadcom Corp. ......................................... 145,725
83,000 Cisco Systems, Inc. .................................... 6,416,937
103,000 Dell Computer Corp. .................................... 5,555,562
43,900 EMC Corp. .............................................. 5,487,500
1,000 Hewlett-Packard Co. .................................... 132,563
42,100 Intel Corp. ............................................ 5,549,306
10,000 International Business Machines Corp. .................. 1,180,000
16,000 JDS Uniphase Corp. ..................................... 1,928,000
26,600 Lucent Technologies, Inc. .............................. 1,615,950
45,000 Microsoft Corp. ........................................ 4,798,125
22,000 Nokia Oyj., Class A ADR................................. 4,779,500
24,500 Oracle Corp. ........................................... 1,911,000
1,200 PMC-Sierra, Inc. ....................................... 244,350
6,000 QUALCOMM, Inc. ......................................... 895,125
700 Siebel Systems, Inc. ................................... 83,563
36,000 Solectron Corp. ........................................ 1,442,250
33,000 Sun Microsystems, Inc. ................................. 3,091,688
36,000 Tellabs, Inc. .......................................... 2,265,750
6,500 Texas Instruments, Inc. ................................ 1,040,000
3,000 VERITAS Software Corp. ................................. 393,000
1,200 Yahoo!, Inc. ........................................... 205,575
------------
50,191,869
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $45,533,476*)..................... 99.26% $107,059,564
OTHER ASSETS AND
LIABILITIES (NET)........................................ 0.74 795,935
------ ------------
NET ASSETS................................................ 100.00% $107,855,499
====== ============
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$45,533,476.
+ Non-income producing security
ADR -- American Depositary Receipt
See Notes to Financial Statements
29
<PAGE>
Excelsior Institutional Trust
Portfolio of Investments March 31, 2000
Value Equity Fund
<TABLE>
<CAPTION>
Shares Value
------- -----------
<C> <S> <C>
COMMON STOCKS -- 98.36%
CAPITAL GOODS -- 2.39%
10,000 Honeywell International, Inc. ........................... $ 526,875
1,500 Quantum Effect Devices, Inc. ............................ 119,438
40,000 Timken Co. .............................................. 650,000
-----------
1,296,313
-----------
COMMUNICATION SERVICES -- 13.22%
10,000 +Alamosa PCS Holdings, Inc. ............................. 374,375
13,000 AT&T Corp. .............................................. 731,250
10,000 BCE, Inc. ............................................... 1,245,355
20,000 CenturyTel, Inc. ........................................ 742,500
86,100 +Global Crossing Ltd. ................................... 3,524,719
25,000 +Snyder Communications, Inc. ............................ 562,500
-----------
7,180,699
-----------
CONSUMER CYCLICALS -- 22.81%
15,000 +Adelphia Communications, Inc. .......................... 734,063
1,700 +Avanex Corp. ........................................... 257,975
5,000 Black & Decker Corp. .................................... 187,813
25,000 +CBS Corp. .............................................. 1,415,625
35,000 Centex Corp. ............................................ 833,437
33,000 Deluxe Corp. ............................................ 874,500
25,000 Ford Motor Co. .......................................... 1,148,437
18,000 +General Motors Corp., Class H........................... 2,241,000
32,000 News Corp., Ltd., ADR.................................... 1,800,000
1,500 +Universal Access, Inc. ................................. 50,625
50,000 +Varian, Inc. ........................................... 1,918,750
19,700 Young & Rubicam, Inc..................................... 925,900
-----------
12,388,125
-----------
CONSUMER STAPLE -- 9.34%
45,760 +AT&T Corp. - Liberty Media Group, Class A............... 2,711,280
37,000 Avon Products, Inc. ..................................... 1,075,313
32,000 +Suiza Foods Corp. ...................................... 1,288,000
-----------
5,074,593
-----------
ENERGY -- 2.40%
20,000 Conoco, Inc., Class B.................................... 512,500
55,000 +Ocean Energy, Inc. ..................................... 790,625
-----------
1,303,125
-----------
FINANCIAL -- 10.66%
20,000 Chase Manhattan Corp. ................................... 1,743,750
12,000 Citigroup, Inc. ......................................... 711,750
20,000 Donaldson Lufkin & Jenrette, Inc., - DLJ................. 1,035,000
13,000 Fannie Mae............................................... 733,687
22,000 SLM Holding Corp. ....................................... 732,875
15,000 XL Capital Ltd., Class A................................. 830,625
-----------
5,787,687
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
HEALTH CARE -- 3.75%
10,000 American Home Products Corp. .......................... $ 536,250
26,000 Bristol-Meyers Squibb Co. ............................. 1,501,500
-----------
2,037,750
-----------
TECHNOLOGY -- 29.86%
1,250 +ArrowPoint Communications, Inc. ...................... 148,047
5,000 +Cypress Communications, Inc. ......................... 122,500
30,000 Harris Corp. .......................................... 1,036,875
4,500 +Infineon Technologies AG.............................. 258,469
2,454 Intermedia Communications, Inc. ....................... 118,406
18,000 International Business Machines Corp. ................. 2,124,000
30,000 Nokia Corp., Class A ADR............................... 6,517,500
3,500 +Plantronics, Inc. .................................... 326,156
300 +Selectica, Inc. ...................................... 26,456
20,000 Texas Instruments, Inc. ............................... 3,200,000
35,000 +Unisys Corp. ......................................... 892,500
1,150 +ValueClick, Inc....................................... 24,078
1,600 +Webmethods, Inc. ..................................... 385,800
40,000 Xerox Corp. ........................................... 1,040,000
-----------
16,220,787
-----------
TRANSPORTATION -- 3.93%
13,000 +AMR Corp. ............................................ 414,375
20,000 Kansas City Southern Industries, Inc. ................. 1,718,750
-----------
2,133,125
-----------
TOTAL COMMON STOCKS (Cost $27,297,585)................. 53,422,204
-----------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
CONVERTIBLE BONDS -- 2.61%
TECHNOLOGY -- 2.61%
$22,000 Intermedia Communications, Inc., (Cost $578,407)....... 1,416,250
-----------
DEMAND NOTES -- 0.01%
6,000 General Electric Co. Promissory Notes (Cost $6,000).... 6,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $27,881,992*)........................................ 100.98% $54,844,454
OTHER ASSETS AND LIABILITIES (NET)......................... (0.98) (530,207)
------ -----------
NET ASSETS................................................. 100.00% $54,314,247
====== ===========
</TABLE>
--------
* For Federal tax purposes, the tax basis of investments aggregates
$27,881,992.
+ Non-income producing security
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 six
managed investment portfolios, respectively, each having its own investment
objectives and policies. The following is a summary of significant accounting
policies for the Blended Equity Fund, Value and Restructuring Fund, Small Cap
Fund, Energy and Natural Resources Fund, Large Cap Growth Fund, and Real
Estate Fund, Portfolios of Excelsior Fund and Optimum Growth Fund and Value
Equity Fund, Portfolios of the Trust (the "Portfolios"). Such policies are in
conformity with generally accepted accounting principles and are consistently
followed by Excelsior Fund and the Trust in the preparation of the financial
statements. Generally accepted accounting principles require management to
make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from
these estimates.
With regard to Optimum Growth Fund and Value Equity Fund, they offer two
classes of shares: Institutional Shares and Shares. The Financial Highlights
of the Institutional Shares as well as the financial statements for the
remaining portfolios of Excelsior Fund, the Trust and Excelsior Tax-Exempt
Fund, Inc. ("Excelsior Tax-Exempt Fund") are presented separately.
(a) Portfolio valuation:
Investments in securities that are traded on a recognized domestic stock
exchange are valued at the last sale price on the exchange on which such
securities are primarily traded or at the last sale price on a national
securities market. Securities traded over-the-counter are valued each
business day on the basis of closing over-the-counter bid prices.
Securities for which there were no transactions are valued at the average
of the most recent bid and asked prices (as calculated by an independent
pricing service (the "Service") based upon its evaluation of the market for
such securities) when, in the judgment of the Service, quoted bid and asked
prices for securities are readily available and are representative of the
market. Bid price is used when no asked price is available. Investments in
securities that are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on
their respective exchanges, except that when an occurrence subsequent to
the time a value is so established is likely to have changed such value,
then a fair value of those securities will be determined by consideration
of other factors under the direction of the Board of Directors with regard
to Excelsior Fund or the Board of Trustees with regard to the Trust. A
security which is traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market on which the
security is traded.
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
31
<PAGE>
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.
Options Written: The Portfolios may write (sell) covered options as a
hedge to provide protection against adverse movements in the price of
securities in the Portfolio or to enhance investment performance. When a
Portfolio writes an option, an amount equal to the premium received by the
Portfolio is recorded as a liability and is subsequently adjusted on a
daily basis to the current market price of the option written. Premiums
received from writing options which expire unexercised are recognized as
gains on the expiration date. Premiums received from writing options which
are exercised or are canceled in closing purchase transactions are offset
against the cost of any securities purchased or added to the proceeds or
netted against the amount paid on the transaction to determine the realized
gain or loss. In writing options, a Portfolio must assume that the option
may be exercised at any time prior to the expiration of its obligation as a
writer, and that in such circumstances the net proceeds of the sale or cost
of purchase of the underlying securities and currencies pursuant to the
call or put option may be substantially below or above the prevailing
market price. A Portfolio also has the additional risk of not being able to
enter into a closing purchase transaction if a liquid secondary market does
not exist and bears the risk of unfavorable changes in the price of the
financial instruments underlying the options. At March 31, 2000 the Value
and Restructuring Fund had the following option transactions:
<TABLE>
<CAPTION>
Number of
Written Option Transactions Contracts Premiums
-------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, beginning of year............................ -- $ --
Options written........................................... 1,000 1,365,704
----- ----------
Outstanding, end of year.................................. 1,000 $1,365,704
===== ==========
</TABLE>
32
<PAGE>
(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 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 Portfolio's 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.
33
<PAGE>
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 Expiration Date
March 31, March 31,
2007 2008
--------------- ---------------
<S> <C> <C>
Value & Restructuring....................... $3,476,000 $16,725,000
Large Cap Growth............................ 1,733,000 11,322,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gain
distributions will be made. During the year ended March 31, 2000, Small Cap
Fund and Energy and Natural Resources Fund utilized capital loss
carryforwards for Federal tax purposes totaling approximately $3,645,000,
and $1,872,000, respectively.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Energy & Natural Resources Fund incurred,
and elected to defer, a net currency loss of approximately $450, for the
year ended March 31, 2000. In addition, Blended Equity Fund, and Large Cap
Growth Fund incurred, and elected to defer, net capital losses of
approximately $964,000, and $2,265,000, respectively, for the year ended
March 31, 2000.
At March 31, 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 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............. $570,336,857 $(4,941,924) $565,394,933
Value and Restructuring Fund.... 460,311,447 (39,369,079) 420,942,368
Small Cap Fund.................. 26,386,617 (5,083,681) 21,302,936
Energy and Natural Resources
Fund........................... 18,722,547 (333,724) 18,388,823
Large Cap Growth Fund........... 208,909,069 (4,454,869) 204,454,200
Real Estate Fund................ 382,686 (5,329,957) (4,947,271)
Optimum Growth Fund............. 63,032,056 (1,505,968) 61,526,088
Value Equity Fund............... 28,230,348 (1,267,886) 26,962,462
</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.
34
<PAGE>
2. Investment Advisory Fee, Administration Fee, Distribution Expenses and
Related Party Transactions
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company (collectively with U.S. Trust NY, "U.S. Trust") serve as the
investment adviser to the Portfolios. For the services provided pursuant to
the Investment Advisory Agreements, U.S. Trust is entitled to receive a fee,
computed daily and paid monthly, at the annual rates of 0.75% of the average
daily net assets of the Blended Equity Fund and Large Cap Growth Fund, 0.60%
of the average daily net assets of the Value and Restructuring Fund, Small Cap
Fund and Energy and Natural Resources Fund, 1.00% of the average daily net
assets of the Real Estate Fund and 0.65% of the average daily net assets of
each of the Optimum Growth Fund and Value Equity Fund. U.S. Trust NY is a
state-chartered bank and trust company and a member bank of the Federal
Reserve System. U.S. Trust Company is a Connecticut state bank and trust
company. Each is a wholly-owned subsidiary of U.S. Trust Corporation, a
registered bank holding company.
On January 12, 2000, The Charles Schwab Corporation ("Schwab") and U.S.
Trust Corporation entered into a definitive agreement to merge (the "Merger").
After the Merger, U.S. Trust Corporation will be a wholly-owned subsidiary of
Schwab. The Merger is subject to the approval of U.S. Trust Corporation
shareholders. The Merger is expected to take place on or about May 31, 2000,
but could occur later.
As a consequence of the Merger and in order to provide continuity of
investment advisory services, each of the Board of Directors of Excelsior Fund
and the Board of Trustees of the Trust proposed for the approval of its
respective shareholders new advisory agreements with U.S. Trust. The new
proposed advisory agreements were submitted to and approved by a vote of each
of Excelsior Fund's and the Trust's respective shareholders. The election of
Trustees for the Trust, as proposed, was also approved at the meeting for the
Trust -- see "Voting Results of Special Meeting of Shareholders". The new
advisory agreements will become effective on the date of the Merger.
U.S. Trust Company, Chase Global Funds Services Company ("CGFSC"), a
corporate affiliate of The Chase Manhattan Bank and Federated Administrative
Services (collectively, the "Administrators") provide administrative services
to Excelsior Fund and the Trust. For the services provided to the Portfolios,
the Administrators are entitled jointly to annual fees, computed daily and
paid monthly, based on the combined aggregate average daily net assets of
Excelsior Fund, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust
(excluding the international equity portfolios of Excelsior Fund and Excelsior
Institutional Trust) all of which are affiliated investment companies, as
follows: 0.200% of the first $200 million, 0.175% of the next $200 million,
and 0.150% over $400 million. Administration fees payable by each Portfolio of
the three investment companies are determined in proportion to the relative
average daily net assets of the respective Portfolios for the period paid. For
the year ended March 31, 2000, administration fees charged by U.S. Trust
Company were as follows:
<TABLE>
<S> <C>
Blended Equity Fund................................................... $363,552
Value and Restructuring Fund.......................................... 353,550
Small Cap Fund........................................................ 25,652
Energy and Natural Resources Fund..................................... 23,550
Large Cap Growth Fund................................................. 145,576
Real Estate Fund...................................................... 14,795
Optimum Growth Fund................................................... 43,955
Value Equity Fund..................................................... 20,761
</TABLE>
35
<PAGE>
From time to time, as they may deem appropriate in their sole discretion,
U.S. Trust and the Administrators may undertake to waive a portion or all of
the fees payable to them and also may reimburse the Portfolios for a portion
of other expenses. For the period from April 1, 1999 through November 18,
1999, U.S. Trust voluntarily waived fees and reimbursed expenses to the extent
necessary to maintain an annual expense ratio of not more than: 1.05% for
Large Cap Growth Fund, Shares of each of Optimum Growth Fund and Value Equity
Fund; 1.20% for Real Estate Fund; and .80% for Institutional Shares of each of
Optimum Growth Fund and Value Equity Fund. Beginning November 19, 1999, U.S.
Trust contractually agreed to waive investment advisory fees and to reimburse
other ordinary operating expenses through March 31, 2000 to the extent
necessary to keep total operating expenses from exceeding these annual
percentages. U.S Trust has extended this contractual agreement through the
fiscal year ended March 31, 2001. With regard to Value and Restructuring Fund,
Small Cap Fund, and Energy and Natural Resources Fund, for the year ended
March 31, 2000, U.S. Trust voluntarily waived fees and reimbursed expenses to
the extent necessary to maintain an annual expense ratio of not more than
.99%. This voluntary agreement will remain in effect until further notice to
Excelsior Fund. With regard to Blended Equity Fund, beginning November 19,
1999, U.S. Trust contractually agreed to waive investment advisory fees and to
reimburse other ordinary operating expenses through March 31, 2000 to the
extent necessary to keep total operating expenses from exceeding 1.05% of the
Fund's average daily net assets. U.S. Trust has extended this contractual
agreement through the fiscal year ended March 31, 2001.
For the year ended March 31, 2000, pursuant to the above, U.S. Trust waived
investment advisory fees as follows:
<TABLE>
<S> <C>
Real Estate Fund....................................................... $ 39,789
Optimum Growth Fund.................................................... 121,458
Value Equity Fund...................................................... 71,673
</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.
36
<PAGE>
Administrative service fees paid to affiliates of U.S. Trust amounted to
$858,953, for the year ended March 31, 2000. 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 expense (including fees paid
to affiliates of U.S. Trust) by that Portfolio. For the year ended March 31,
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 follows:
<TABLE>
<CAPTION>
U.S.
Trust Administrators
-------- --------------
<S> <C> <C>
Blended Equity Fund..................................... $379,382 $ 3,789
Value and Restructuring Fund............................ 829,279 190,210
Small Cap Fund.......................................... 67,988 24
Energy and Natural Resources Fund....................... 48,015 10,907
Large Cap Growth Fund................................... 178,145 17,645
Real Estate Fund........................................ 32,660 46
Optimum Growth Fund..................................... 12,241 1,545
</TABLE>
For the year ended March 31, 2000, no administrative service fees have been
charged to the Value Equity Fund.
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the distributor of Excelsior Fund and the
Trust. Each Portfolio's Shares are sold on a continuous basis by the
Distributor.
The Trust has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act, under which the Shares of Optimum Growth Fund and Value Equity Fund
may compensate the Distributor monthly for its services which are intended to
result in the sale of Portfolio Shares, in an amount not to exceed the annual
rate of 0.25% of the average daily net asset value of each Portfolio's
outstanding Shares.
Each Independent 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.
37
<PAGE>
3. Purchases and Sales of Securities:
For the year ended March 31, 2000, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Blended Equity Fund.................................. $201,040,137 $194,074,371
Value and Restructuring Fund......................... 448,728,964 160,436,908
Small Cap Fund....................................... 80,032,154 70,773,027
Energy and Natural Resources Fund.................... 76,685,271 70,791,646
Large Cap Growth Fund................................ 189,674,506 64,508,297
Real Estate Fund..................................... 10,094,026 8,848,953
Optimum Growth Fund.................................. 44,134,756 61,093,240
Value Equity Fund.................................... 21,063,778 22,909,314
</TABLE>
4. Capital Transactions:
Excelsior Fund currently 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 portfolios. Authorized capital currently
offered for each Portfolio is as follows: 375 million shares of the Blended
Equity Fund and 500 million shares each of Value and Restructuring Fund, Small
Cap Fund, Energy and Natural Resources Fund, Large Cap Growth Fund and Real
Estate Fund. Each share has a par value of $.001, and represents an equal
proportionate interest in the particular Portfolio with other shares of the
same Portfolio, and is entitled to such dividends and distributions of taxable
earnings on the assets belonging to such Portfolio as are declared at the
discretion of Excelsior Fund's Board of Directors. The Trust currently has
authorized an unlimited number of shares of beneficial interest of each class
of each Portfolio. Each share has a par value of $.00001 and represents an
equal proportionate interest in the particular Portfolio with other shares of
the same Portfolio, and is entitled to such dividends and distributions of
taxable earnings on the assets belonging to such Portfolio as are declared at
the discretion of the Trust's Board of Trustees.
<TABLE>
<CAPTION>
Blended Equity Fund
----------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold.................... 5,015,065 $ 197,998,563 4,387,348 $ 166,477,501
Issued in connection
with reorganization.... 1,324,542 59,663,830 -- --
Issued as reinvestment
of dividends........... 166,532 7,730,323 77,350 2,895,711
Redeemed................ (3,829,880) (171,900,588) (3,990,290) (148,105,086)
---------- ------------- ---------- -------------
Net Increase............ 2,676,259 $ 93,492,128 474,408 $ 21,268,126
========== ============= ========== =============
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Value and Restructuring Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 20,158,719 $ 588,694,745 23,806,528 $ 537,163,371
Issued as reinvestment
of dividends........... 33,413 916,287 158,688 3,460,364
Redeemed................ (9,472,264) (270,102,624) (15,392,807) (331,846,653)
----------- ------------- ----------- -------------
Net Increase............ 10,719,868 $ 319,508,408 8,572,409 $ 208,777,082
=========== ============= =========== =============
<CAPTION>
Small Cap Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 4,828,421 $ 60,118,324 6,294,363 $ 56,377,737
Issued as reinvestment
of dividends........... -- -- 9,749 88,720
Redeemed................ (2,539,390) (26,781,542) (7,314,821) (66,388,490)
----------- ------------- ----------- -------------
Net Increase (De-
crease)................ 2,289,031 $ 33,336,782 (1,010,709) $ (9,922,033)
=========== ============= =========== =============
<CAPTION>
Energy and Natural Resources Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 3,848,740 $ 49,911,978 2,852,458 $ 31,234,166
Issued as reinvestment
of dividends........... 77,531 920,549 9,736 103,347
Redeemed................ (3,156,254) (40,202,621) (2,605,823) (27,676,908)
----------- ------------- ----------- -------------
Net Increase............ 770,017 $ 10,629,906 256,371 $ 3,660,605
=========== ============= =========== =============
<CAPTION>
Large Cap Growth Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 20,262,617 $ 312,425,480 15,703,486 $ 169,544,034
Issued as reinvestment
of dividends........... -- -- -- --
Redeemed................ (11,589,142) (173,890,357) (3,700,511) (38,250,977)
----------- ------------- ----------- -------------
Net Increase............ 8,673,475 $ 138,535,123 12,002,975 $ 131,293,057
=========== ============= =========== =============
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Real Estate Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,854,909 $ 15,380,329 2,933,843 $ 18,323,252
Issued as reinvestment of
dividends................ 2,584 13,758 3,809 22,665
Redeemed.................. (2,360,998) (12,440,442) (2,810,143) (16,902,129)
---------- ------------ ---------- ------------
Net Increase.............. 496,495 $ 2,953,645 127,509 $ 1,443,788
========== ============ ========== ============
<CAPTION>
Optimum Growth Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Shares.................. 454,057 $ 12,791,975 105,092 $ 2,171,420
Institutional Shares.... 663,763 18,585,551 812,340 16,636,464
Issued as reinvestment of
dividends:
Shares.................. 60,107 1,662,560 -- --
Institutional Shares.... 61,937 1,726,809 35 569
Redeemed:
Shares.................. (248,560) (6,863,369) (56,822) (997,974)
Institutional Shares.... (1,135,686) (31,622,549) (766,399) (15,767,433)
---------- ------------ ---------- ------------
Net Increase (Decrease)... (144,382) $ (3,719,023) 94,246 $ 2,043,046
========== ============ ========== ============
<CAPTION>
Value Equity Fund
--------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Shares.................. 15,650 $ 298,897 3,120 $ 46,060
Institutional Shares.... 299,695 5,023,385 466,461 6,929,195
Issued as reinvestment of
dividends:
Shares.................. 72 1,355 190 2,707
Institutional Shares.... 1 40 -- --
Redeemed:
Shares.................. (8,071) (138,817) (31) (461)
Institutional Shares.... (331,276) (6,315,104) (59,957) (880,640)
---------- ------------ ---------- ------------
Net Increase (Decrease)... (23,929) $ (1,130,244) 409,783 $ 6,096,861
========== ============ ========== ============
</TABLE>
5. Organization Costs:
Excelsior Fund and the Trust have borne all costs in connection with the
initial organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under Federal and
40
<PAGE>
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 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 year ended March 31, 2000, the Portfolios had no
borrowings under the agreement.
7. Plan of Reorganization:
On June 30, 1999, shareholders approved a tax free Plan of Reorganization
(effective July 8, 1999) providing for the transfer of all of the assets and
liabilities of Income and Growth Fund to the Blended Equity Fund, in exchange
for shares of the Blended Equity Fund corresponding to the same net assets as
shares held in the Income and Growth Fund. At the time of the reorganization,
the Income and Growth Fund had 4,345,042 outstanding shares and net assets of
$59,663,830 including $29,839,357 of unrealized appreciation. The Blended
Equity Fund's net assets immediately before the reorganization were
$769,819,613.
41
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
Excelsior Funds Inc.
and Board of Trustees of
Excelsior Institutional Trust
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Blended Equity, Value and
Restructuring, Small Cap, Energy and Natural Resources, Large Cap Growth, Real
Estate, Optimum Growth and Value Equity Funds (six of the portfolios
constituting the Excelsior Funds, Inc., and two of the portfolios constituting
the Excelsior Institutional Trust) (collectively the "Funds") as of March 31,
2000, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended 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 auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of March 31, 2000, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of the
Blended Equity, Value and Restructuring, Small Cap, Energy and Natural
Resources, Large Cap Growth, Real Estate, Optimum Growth and Value Equity
Funds at March 31, 2000, and the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated
therein, in conformity with accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 24, 2000
42
<PAGE>
Federal Tax Information: (Unaudited)
For the year ended March 31, 2000, 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................. 100% $25,595,877 --
Value and Restructuring Fund........ 100% -- --
Small Cap Fund...................... -- -- 32.14%
Energy and Natural Resources Fund... 69.83% 2,177,386 --
Large Cap Growth Fund............... -- -- --
Optimum Growth Fund................. -- 14,259,000 11.56%
Value Equity Fund................... 30.54% 16,000 --
</TABLE>
43
<PAGE>
Voting Results of Special Meeting of Shareholders (Unaudited)
The proposal described below was submitted to a vote of shareholders of
Excelsior Funds at a special meeting of shareholders held on June 30, 1999
(the "Meeting"):
Proposal--Approval of a Plan of Reorganization pursuant to which Income and
Growth Fund will be reorganized into Blended Equity Fund.
At the Meeting, the shareholders of the Income and Growth Fund approved the
proposal as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
2,120,173 85,323 145,090
</TABLE>
44
<PAGE>
Voting Results of Special Meetings of Shareholders (Unaudited)
The proposals described below were submitted to a vote of shareholders of
Excelsior Funds and the Trust at a special meeting of shareholders held on May
3, 2000 (the "Meetings"):
Proposal No. 1 -- With respect to the Trust, to elect Messrs. Wonham,
Tannachion, Campbell, Dugan, Frankl, Robinson, Drake and Piel as trustees.
At the Meeting the shareholders of the Trust approved Proposal No. 1 as
follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
43,808,516 538 89,706
</TABLE>
Proposal No. 2 -- Approval of new investment advisory agreements between the
Portfolios of Excelsior Funds and U.S. Trust and between the Portfolios of the
Trust and U.S. Trust.
At the Meetings the shareholders of each Portfolio approved Proposal No. 2 as
follows:
<TABLE>
<CAPTION>
Excelsior Fund For Against Abstain
-------------- ---------- ------- -------
<S> <C> <C> <C>
Blended Equity 11,059,103 74,232 125,328
Value & Restructuring 21,107,565 230,617 460,022
Small Cap 4,055,434 9,577 96,275
Energy & Natural Resources 2,856,577 32,323 66,932
Large Cap Growth 14,567,230 94,809 226,441
Real Estate 4,198,057 2,586 351
<CAPTION>
Excelsior Institutional
Trust
-----------------------
<S> <C> <C> <C>
Optimum Growth 3,378,334 538 19,710
Value Equity 2,570,704 -- 42
</TABLE>
45
<PAGE>
