<PAGE>
[LOGO OF EXCELSIOR FUNDS, INC. APPEARS HERE]
DOMESTIC EQUITY PORTFOLIOS
ANNUAL REPORT
MARCH 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S DOMESTIC EQUITY MARKET REVIEW................................... 2
ADVISER'S INVESTMENT REVIEWS
Equity Fund.............................................................. 3
Income and Growth Fund................................................... 4
Aging of America Fund.................................................... 5
Business and Industrial Restructuring Fund............................... 6
Communication and Entertainment Fund..................................... 7
Early Life Cycle Fund.................................................... 8
Environmentally-Related Products and Services Fund....................... 9
Global Competitors Fund.................................................. 10
Long-Term Supply of Energy Fund.......................................... 11
Productivity Enhancers Fund.............................................. 12
STATEMENTS OF ASSETS AND LIABILITIES...................................... 14
STATEMENTS OF OPERATIONS.................................................. 16
STATEMENTS OF CHANGES IN NET ASSETS....................................... 18
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 20
PORTFOLIOS OF INVESTMENTS
Equity Fund.............................................................. 22
Income and Growth Fund................................................... 23
Aging of America Fund.................................................... 25
Business and Industrial Restructuring Fund............................... 26
Communication and Entertainment Fund..................................... 28
Early Life Cycle Fund.................................................... 29
Environmentally-Related Products and Services Fund....................... 30
Global Competitors Fund.................................................. 31
Long-Term Supply of Energy Fund.......................................... 32
Productivity Enhancers Fund.............................................. 33
NOTES TO FINANCIAL STATEMENTS............................................. 34
INDEPENDENT AUDITORS' REPORT.............................................. 44
FEDERAL TAX INFORMATION................................................... 45
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. INITIAL PURCHASE AND PROSPECTUS INFORMATION AND SHAREHOLDER SERVICES 1-800-
446-1012
. CURRENT PRICE AND YIELD INFORMATION 1-800-233-9180
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and ex-
penses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. may
be obtained by contacting the Funds at 1-800-446-1012.
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are sponsored and
distributed by Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
EXCELSIOR FUNDS, INC.
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, ITS 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
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report for the Excelsior Funds, Inc. and
Excelsior Tax-Exempt Funds, Inc. for the fiscal year ended March 31, 1996.
There were several exciting developments during this tenth anniversary year
for the funds.
On January 1, 1996 the funds changed their name from UST Master Funds to
Excelsior Funds. This was done to more clearly differentiate our funds in the
marketplace and to make the funds more attractive to other financial
institutions through which we seek to distribute them. At the same time, the
funds entered alliances with a new distributor, Edgewood Services, and another
fund company, Excelsior Institutional Trust. These strategic alliances have
expanded our fund family's product offerings to reach new markets and have
enabled the funds to consolidate service providers, thereby reducing certain
operating expenses of the funds. These cost savings are being passed on to
shareholders.
The extended Excelsior Funds Family now consists of thirteen domestic
equity, five international, ten fixed-income, and five money market funds
totalling $4.2 billion in assets. These funds have been designed to provide a
comprehensive range of investment options and offer investors, both individual
and institutional, an opportunity to allocate holdings in accordance with
their specific investment objectives.
Excelsior Fund shareholders are serviced by a dedicated team of
professionals. We recognize the importance of excellent customer service and
are committed to meeting investor needs in a responsible and efficient manner.
We appreciate your participation in the funds during our first decade of
operation and look forward to serving you in the years to come.
(ART)
Alfred C. Tannachion
Chairman of the Board and President
1
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
ADVISER'S DOMESTIC EQUITY MARKET REVIEW
- -------------------------------------------------------------------------------
In stark contrast to fiscal 1995, the first three quarters of fiscal 1996
(April through December) saw spectacular gains from the domestic equity
markets as it became increasingly clear that the long hoped for soft landing
for the U.S. economy had occurred, inflation remained subdued, and interest
rates declined as sharply as they rose in the previous year. These positives
on the domestic front, along with continued strong corporate profitability,
shifted market focus away from the ailing U.S. dollar.
Productivity enhancers and restructuring companies--technology (at least
until the end of December) and financial stocks in particular--were among the
best-performing groups. Performing poorly, at least in relative terms, were
early life cycle/small capitalization stocks. Still, it would be fair to say
that the first three quarters of fiscal 1996 saw a broad-based market advance,
not simply good performance by one or a few sectors and lagging or even down
performances by others.
The market began the fiscal fourth quarter strongly, only to tail off
sharply upon news of greater-than-expected economic growth. Sector rotation
became the order of the day; energy picked up considerably just as technology
began to lag. Large-capitalization companies continued to perform well versus
their small- and mid-capitalization peers, as did consumer cyclicals. Earnings
uncertainties were on the rise, and earnings disappointments (even small ones)
were punished severely. At the same time, companies became increasingly
cautious on capital spending. We appeared increasingly to be in a classic
"stock picker's" market.
We feel the prospects for fiscal 1997 continue to be positive but not
robust, including the possible vagaries of election year monetary and fiscal
maneuvers.
2
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
EQUITY FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 26.45%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock
Price Index. During the first half of the fiscal year, the Fund benefitted
from ongoing strength in technology, the larger-capitalization stocks in
particular, as well as health care and financials. Laggards included the
Fund's energy and retail holdings. Although the Fund's overall structure and
strategy remained consistent, we attempted to minimize risk, looking for areas
of the market and companies that had yet to participate in the market's
advance. In the fiscal third quarter, weakness in technology had a negative,
but not huge, impact partly due to gains among the Fund's health care and
financial holdings. During the final quarter of the fiscal year, many of the
Fund's weaker holdings woke up, principally among them, holdings in the energy
sector. New positions were concentrated among the financials. We believe that
the portfolio is well positioned to benefit from what could well be
increasingly a "stock picker's" market. We continue to look to areas of
significant value, many times areas with a contrarian element. In technology,
we are maintaining a normal weighting, but we will not chase stocks; we do
believe they will represent good value eventually. Near-term concerns,
however, demand an opportunistic approach.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ---------------------------------------------------
Equity Fund+
- ---------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- ---------------------------------------------------
<S> <C> <C> <C>
Since inception
1 year 5 years 10 years (4/25/85)
- ---------------------------------------------------
20.75% 15.49% 11.58% 15.18%
- ---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Equity Fund Equity Fund Standard & Poor's 500
(reflects maximum sales charge) (exclusive of sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
4/25/85 9,550 10,000 10,000
3/31/86 14,969 15,674 13,760
3/31/87 17,604 18,434 17,360
3/31/88 15,626 16,362 15,910
3/31/89 18,519 19,392 18,810
3/31/90 20,739 21,716 22,440
3/31/91 21,799 22,826 25,670
3/31/92 25,477 26,677 28,510
3/31/93 30,383 31,815 32,850
3/31/94 32,370 33,895 33,340
3/31/95 37,098 38,860 38,520
3/31/96 46,908 49,138 50,880
</TABLE>
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 Equity Fund on
4/25/85 (inception date) to a $10,000 investment made in the Standard & Poor's
500 Composite Stock Price Index on that date. For comparative purposes, the
value of the Index on 3/31/85 is used as the beginning value on 4/25/85. All
dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The Standard & Poor's 500
Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
INCOME AND GROWTH FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 25.83%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock
Price Index. During much of the fiscal year, the Fund paid a price for
providing reasonable income. The government shutdown and continued budget
impasse among other factors made for difficulty in the fixed income markets;
these difficulties were reflected in the Fund's results. The Fund's structure
and strategy--to provide moderate current income and capital appreciation--
remained unchanged, and few changes were made to the portfolio.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------
Income and Growth Fund+
- --------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- --------------------------------------------------
<S> <C> <C>
Since inception
1 year 5 years (1/6/87)
- --------------------------------------------------
20.14% 14.73% 10.93%
- --------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Income and Growth Fund Income and Growth Fund Standard & Poor's 500
(reflects maximum sales charge) (exclusive of sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
1/6/87 9,550 10,000 10,000
3/31/87 10,680 11,188 12,130
3/31/88 10,100 10,580 11,120
3/31/89 11,954 12,522 13,140
3/31/90 12,688 13,291 15,680
3/31/91 12,524 13,119 17,940
3/31/92 14,080 14,749 19,920
3/31/93 18,367 19,239 22,960
3/31/94 19,595 20,525 23,300
3/31/95 20,720 21,705 26,920
3/31/96 26,072 27,311 35,550
</TABLE>
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost.
The above illustration compares a $10,000 investment made in Income and
Growth Fund on 1/6/87 (inception date) to a $10,000 investment made in the
Standard & Poor's 500 Composite Stock Price Index on that date. For
comparative purposes, the value of the Index on 12/31/86 is used as the
beginning value on 1/6/87. All dividends and capital gain distributions are
reinvested. The Fund's performance takes into account fees and expenses. The
Standard & Poor's 500 Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
4
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
AGING OF AMERICA FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 25.80%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock
Price Index. The Fund made steady progress in the fiscal first quarter, though
overshadowed by the explosion in technology issues and the broadbased shift in
market favor to basic industry/capital goods, both areas not heavily
represented in the Fund. The second quarter saw strength in the financial and
health care (particularly pharmaceutical) sectors. For the third quarter, we
began to prune positions where valuations were excessive as part of our
attempt to bring the overall P/E of the Fund down and the yield up (tilting
away from growth and toward value). The fourth quarter saw a pickup, aided by
solid showings from the Fund's health care and financial holdings. Going
forward, we believe the Fund is well diversified; nevertheless, it does remain
concentrated in the health care and financial services areas and consumer
staples/consumer cyclicals in general.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------
Aging of America Fund+
- ----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- ----------------------------------------------------
<S> <C>
Since inception
1 year (12/31/92)
- ----------------------------------------------------
20.14% 9.91%
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Aging of America Fund Aging of America Fund Standard & Poor's 500
(exclusive of sales charge) (reflects maximum sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 10,000 9,550 10,000
3/31/93 10,014 9,563 10,440
9/30/93 10,105 9,650 10,760
3/31/94 10,027 9,576 10,590
9/30/94 10,486 10,014 11,150
3/31/95 11,311 10,802 12,240
9/30/95 12,763 12,189 14,470
3/31/96 14,229 13,589 16,160
</TABLE>
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 Aging of
America Fund on 12/31/92 (inception date) to a $10,000 investment made in the
Standard & Poor's 500 Composite Stock Price Index on that date. All dividends
and capital gain distributions are reinvested. The Fund's performance takes
into account fees and expenses. The Standard & Poor's 500 Composite Stock
Price 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, without taking into account the maximum
initial sales charge.
** 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.
5
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
BUSINESS AND INDUSTRIAL RESTRUCTURING FUND
- --------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 36.48%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock Price
Index. In the first half, solid performance was driven by holdings of basic
industry/economically sensitive issues. Conditions grew difficult in the second
half, however, and it became increasingly hard to point to areas of market
leadership. Technology began to develop troubles, and strong performances from
the Fund's health care and financial positions meant they no longer appeared as
safe as in recent quarters. Individual stock selection, more than anything
else, appeared to carry the Fund. Our investment strategy was consistent
throughout the year, as we remained well diversified with continued emphasis on
health care, technology (avoiding those with inflated P/Es, and including a
strong representation in defense, particularly those moving from defense to
commercial area), the financials (banks), and specialty chemicals. We continued
to look for companies with low P/Es and at least market level returns on equity
and balance sheets. Toward year end, we focused somewhat more on early life
cycle/small-capitalization issues, which continued to sell at a discount to the
broader market.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Business and Industrial Restructuring Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
Since inception
1 year (12/31/92)
- -----------------------------------------------------
30.31% 24.24%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Business and Industrial Business and Industrial
Restructuring Fund Restructuring Fund Standard & Poor's 500
(reflecxts maximum sales charge) (exclusive of sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 10,518 11,014 10,440
9/30/93 11,808 12,365 10,760
3/31/94 13,296 13,922 10,590
9/30/94 14,293 14,967 11,150
3/31/95 14,823 15,522 12,240
9/30/95 18,031 18,881 14,470
3/31/96 20,231 21,184 16,160
</TABLE>
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 Business and
Industrial Restructuring Fund on 12/31/92 (inception date) to a $10,000
investment made in the Standard & Poor's 500 Composite Stock Price Index on
that date. All dividends and capital gain distributions are reinvested. The
Fund's performance takes into account fees and expenses. The Standard & Poor's
500 Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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.
6
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
COMMUNICATION AND ENTERTAINMENT FUND
- --------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 13.48%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock Price
Index. During the first half of the fiscal year, the Fund benefitted from the
strength in technology. Purchases focused on content providers (software
particularly) as opposed to transmission companies (phone, wireless, cable).
Toward the end of the period, we began to scale back on some of the best-
performing technology holdings in the Fund. Reversing momentum sharply in the
second half, the Fund was negatively impacted by the implosion of technology
stocks. Entertainment stocks proved no help, and wireless stocks were down over
concerns about slowing cellular subscriber growth. The Fund weathered a rough
six months. This was likely the result of profound industry changes, the most
significant of which is increasing competition--particularly in markets that
were previously monopolies. In response, we have begun to restructure the Fund
by 1) spreading bets among packages of companies, 2) increasing the number of
names, and 3) adding more early life cycle/small-capitalization companies.
Acknowledging the increased competition, the Fund is making a relatively small
commitment to wireless (except for paging). Main areas of emphasis now include
transmission (though still below a market weighting) and information
management. The Fund has also gained exposure to the Internet with various
leading hardware/equipment and service providers.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Communication and Entertainment Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
1 year Since Inception (12/31/92)
- -----------------------------------------------------
8.42% 15.51%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Communication and Entertainment Fund Communication and Entertainment Fund Standard & Poor's 500
(reflects maximum sales charge) (exclusive of sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 10,382 10,871 10,440
9/30/93 12,557 13,149 10,760
3/31/94 12,466 13,054 10,590
9/30/94 13,650 14,293 11,150
3/31/95 14,071 14,734 12,240
9/30/95 17,878 18,721 14,470
3/31/96 15,968 16,720 16,160
</TABLE>
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 Communication
and Entertainment Fund on 12/31/92 (inception date) to a $10,000 investment
made in the Standard & Poor's 500 Composite Stock Price Index on that date. All
dividends and capital gain distributions are reinvested. The Fund's performance
takes into account fees and expenses. The Standard & Poor's 500 Composite Stock
Price 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, without taking into account the maximum
initial sales charge.
** Source: Standard & Poor's Corporation--Reflects the reinvestment of income
dividends and, where applicable, capital gain distributions. The Standard &
Poor's 500 Composite Stock Price Index is a widely accepted unmanaged index
of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
7
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
EARLY LIFE CYCLE FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 18.29%*, versus 29.10%** for the Russell 2000 Index and 32.10%*** for the
Standard & Poor's 500 Composite Stock Price Index. The first half of fiscal
1996, small-capitalization stocks, led by the technology sector, came briefly
to life. Other solid areas included the Fund's health care holdings as well as
the subprime used-car lenders. We made no major structural changes, attempting
to maintain focus and broad diversification, adding consumer staples and
looking to health care information technology. While we trimmed from our
technology holdings, we continued to maintain roughly a 30% weighting in the
sector. The second half presented quite a different picture, however, as
small-capitalization stocks resumed their relative underperformance and
technology stocks collapsed. The Fund was also impacted by several salient
implosions--generally the result of near-term earnings disappointments. Long
term, we continue to believe fully in the Fund's potential and have not
significantly altered the portfolio structure and general investment strategy.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Early Life Cycle Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
Since inception
1 year (12/31/92)
- -----------------------------------------------------
12.97% 16.16%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Early Life Cycle Fund Early Life Cycle Fund
(reflects maximum sales charge) (exclusive of sales charge) Russell 2000 Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 10,095 10,571 10,440
9/30/93 11,951 12,514 11,600
3/31/94 11,940 12,503 11,590
9/30/94 12,729 13,329 11,900
3/31/95 13,750 14,398 12,210
9/30/95 16,695 17,488 14,680
3/31/96 16,264 17,031 15,770
</TABLE>
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 Early Life
Cycle Fund on 12/31/92 (inception date) to a $10,000 investment made in the
Russell 2000 Index on that date. All dividends and capital gain distributions
are reinvested. The Fund's performance takes into account fees and expenses.
The Russell 2000 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, without taking into account the maximum
initial sales charge.
** 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: Standard and 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.
8
<PAGE>
EXCELSIOR FUNDS, INC.
(formerly UST Master Funds, Inc.)
ADVISER'S INVESTMENT REVIEW
ENVIRONMENTALLY-RELATED PRODUCTS AND SERVICES FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund achieved a total return
of 24.48%* versus 32.10%** for the Standard & Poor's 500 Composite Stock Price
Index. Performance improved throughout the fiscal year, driven largely by
holdings in the solid waste area, where we gradually moved to an overweight
position. Not only are there many fewer landfills than there were 20 years
ago; as a result of increased government regulation, the cost of making one
has skyrocketed. Barriers to entry have therefore increased, and pricing has
improved. At the same time, cost-constrained municipalities are increasingly
privatizing this function. Well-positioned mid-cap companies with the
requisite expertise and capital are experiencing dramatic internal growth as
well as growth through acquisitions. In other areas, we began to emphasize
water, particularly the need for clean water for many of today's most
sophisticated manufacturing processes. We also began to expand the reach of
the environmental theme from a focus solely on products and services that aid
in the protection, conservation, and remediation of the natural environment
(land, water, air) to products, services and distribution innovations related
to the environment which enhance/improve lives, create more competitive
products and which provide improved resource utilization (the built
environment). Areas within this subtheme include 1) infrastructure/economic
development and 2) the personal environment.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Environmentally-Released Products and Services Fund+
- -----------------------------------------------------
Average Annual Total Retrun Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
1 year Since inception (12/31/92)
- -----------------------------------------------------
18.92% 1.74%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Environmentally-Related Environmentally-Related
Products and Services Fund Products and Services Fund Standard & Poor's
(reflects maximum sales charge) (exclusive of sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 9,482 9,929 10,440
9/30/93 8,614 9,021 10,760
3/31/94 8,519 8,920 10,590
9/30/94 8,696 9,106 11,150
3/31/95 8,496 8,897 12,240
9/30/95 10,056 10,530 14,470
3/31/96 10,576 11,075 16,160
</TABLE>
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
Environmentally-Related Products and Services Fund on 12/31/92 (inception
date) to a $10,000 investment made in the Standard & Poor's 500 Composite
Stock Price Index on that date. All dividends and capital gain distributions
are reinvested. The Fund's performance takes into account fees and expenses.
The Standard & Poor's 500 Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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.
9
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
ADVISER'S INVESTMENT REVIEW
GLOBAL COMPETITORS FUND
- -------------------------------------------------------------------------------
The Fund posted a total return of 27.39%* for the twelve months ended March
31, 1996 versus 32.10%** for the Standard & Poor's 500 Composite Stock Price
Index. During the fiscal first quarter, we added to positions across the
board, with an emphasis on technology. Sensing a shift in stock market
leadership in the fiscal second quarter, we changed directions, scaling back
on technology and increasing our weighting of dominant branded consumer
products companies. During the fiscal third and fourth quarters, the Fund was
hampered by the ongoing rationalization in the technology sector, though our
consumer staples holdings--such as Gillette, Luxottica, Procter & Gamble,
Pfizer, etc.--did provide a partial offset. Also strong, at least toward year
end, were the Fund's energy holdings, as investors responded to the earlier-
than-normal onset of cold winter weather and consequently higher oil and gas
prices. Our focus continues to center on high-quality, broad-based
multinationals--companies with leading brand names, a broad and expanding
international presence, superior secular growth rates driven by participation
in emerging markets, an improving and higher margin mix of products, growing
profitability, as well as good financial leverage and reinvestment of free
cash flow (debt reduction, share repurchase, or synergistic acquisitions).
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN GLOBAL COMPETITORS
FUND AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Global Competitors Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
1 year Since inception (12/31/92)
- -----------------------------------------------------
21.72% 13.67%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Global Competitors Fund Global Competitors Fund Standard & Poor's 500
(exclusive of sales charge) (reflects maximum sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 9,932 10,400 10,440
9/30/93 10,786 11,295 10,760
3/31/94 10,556 11,054 10,590
9/30/94 10,805 11,315 11,150
3/31/95 11,900 12,461 12,240
9/30/95 13,913 14,569 14,470
3/31/96 15,159 15,874 16,160
</TABLE>
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 Global
Competitors Fund on 12/31/92 (inception date) to a $10,000 investment made in
the Standard & Poor's 500 Composite Stock Price Index on that date. All
dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The Standard & Poor's 500
Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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.
10
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
ADVISER'S INVESTMENT REVIEW
LONG-TERM SUPPLY OF ENERGY FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 21.60%* versus 32.10%** for the Standard & Poor's 500 Composite Stock Price
Index. The Fund, and the energy sector overall, suffered from an overall
lackluster environment for oil and natural gas prices during the first half of
fiscal 1996. The situation improved in the second half, however, as energy
prices rose in response to a colder-than-normal onset of winter and other
factors. Strongest performance continued to come from the exploration &
production and oil services companies. The major integrated oils performed
roughly in line with the market and held back concerns that Iraqi oil would
flow back into the market. The Fund's lagging alternative energy holdings
dampened performance considerably. Nevertheless, knowing that these high
prices were unsustainable, our focus remained (and remains) on worldwide
energy demand growth, since consumption of oil and gas is growing much more
rapidly overseas than in the mature and highly competitive U.S. market. To
capture this growth, we are emphasizing the international oils. Other areas of
concentration include a shift to the upstream, the oil service sector, which
should benefit from 1) the increasing capital expenditures devoted to
exploration and production as well as the winding down of environmental
remediation in the downstream (refining and marketing) end of the business;
and 2) promising new technologies improving the odds of finding hydrocarbons.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN LONG-TERM SUPPLY OF
ENERGY FUND AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Long-Term Supply of Energy Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
1 year Since inception (12/31/92)
- -----------------------------------------------------
16.17% 9.52%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Long-Term Supply Energy Fund Long-Term Supply Energy Fund Standard & Poor's 500
(exclusive of sales charge) (reflects maximum sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 9,550 10,000 10,000
3/31/93 10,655 11,157 10,440
9/30/93 11,916 12,478 10,760
3/31/94 10,595 11,094 10,590
9/30/94 11,046 11,567 11,150
3/31/95 11,048 11,568 12,240
9/30/95 12,009 12,575 14,470
3/31/96 13,433 14,067 16,160
</TABLE>
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 Long-Term
Supply of Energy Fund on 12/31/92 (inception date) to a $10,000 investment
made in the Standard & Poor's 500 Composite Stock Price Index on that date.
All dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The Standard & Poor's 500
Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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.
11
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
ADVISER'S INVESTMENT REVIEW
PRODUCTIVITY ENHANCERS FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1996, the Fund realized a total return
of 26.97%*, versus 32.10%** for the Standard & Poor's 500 Composite Stock
Price Index. During the first half, the Fund benefitted from the overall
strength in technology as well as from some standout performances from the
capital goods area. Recognizing the volatility of technology stocks, and the
fact that the market was showing no forgiveness for stocks that failed to meet
earnings expectations, we felt that early life cycle/small-capitalization
stocks were most vulnerable in this regard. As a result, we shifted portfolio
emphasis toward some of the leading larger-capitalization technology concerns.
These actions provided some insulation in the second half, as the Fund was
able to avoid some of the hardest-hit areas of technology, such as
semiconductors. Going forward, we have not changed the Fund's emphasis on
technology (roughly a 60% weighting) and capital goods (13% weighting). Other
areas of concentration include consumer cyclicals (about a 20% weighting) and
financials (a 3% weighting).
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PRODUCTIVITY
ENHANCERS FUND AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------
Productivity Enhancers Fund+
- -----------------------------------------------------
Average Annual Total Return Ended on 3/31/96
Reflects Maximum Sales Charge of 4.5%
- -----------------------------------------------------
<S> <C>
1 year Since inception (12/31/92)
- -----------------------------------------------------
21.30% 11.63%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Productivity Enhancers Fund Productivity Enhancers Fund Standard & Poor's 500
(exclusive of sales charge) (reflects maximum sales charge) Composite Stock Price Index**
<S> <C> <C> <C>
12/31/92 10,000 9,550 10,000
3/31/93 9,914 9,468 10,440
9/30/93 10,582 10,105 10,760
3/31/94 11,283 10,775 10,590
9/30/94 11,234 10,728 11,150
3/31/95 11,786 11,255 12,240
9/30/95 14,138 13,501 14,470
3/31/96 14,965 14,291 16,160
</TABLE>
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 Productivity
Enhancers Fund on 12/31/92 (inception date) to a $10,000 investment made in
the Standard & Poor's 500 Composite Stock Price Index on that date. All
dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The Standard & Poor's 500
Composite Stock Price 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, without taking into account the maximum
initial sales charge.
** 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.
12
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
13
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
STATEMENTS OF ASSETS AND LIABILITIES
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
INCOME AND AGING OF
EQUITY GROWTH AMERICA
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments, at cost--see
accompanying portfolios............. $133,152,694 $ 98,795,630 $35,112,542
============ ============ ===========
Investments, at value (Note 1)...... $188,526,058 $126,962,206 $44,841,558
Cash................................ 687 -- 146
Dividends receivable................ 184,924 153,137 33,242
Interest receivable................. 16,071 527,909 9,910
Receivable for investments sold..... -- -- --
Receivable for fund shares sold..... 1,035,344 106,846 62,827
Receivable from administrator (Note
2).................................. -- -- --
Receivable from investment adviser
(Note 2)............................ -- -- --
Prepaid expenses.................... 5,534 3,753 1,207
Unamortized organization costs (Note
5).................................. -- -- 7,347
------------ ------------ -----------
TOTAL ASSETS........................ 189,768,618 127,753,851 44,956,237
LIABILITIES:
Payable for investments purchased... -- -- --
Payable for fund shares redeemed.... 992,786 92,841 121,301
Investment advisory fee payable
(Note 2)............................ 107,613 73,231 20,531
Due to custodian bank............... -- 25,711 --
Accrued expenses and other
payables............................ 94,415 67,401 22,632
------------ ------------ -----------
TOTAL LIABILITIES................... 1,194,814 259,184 164,464
------------ ------------ -----------
NET ASSETS........................... $188,573,804 $127,494,667 $44,791,773
============ ============ ===========
NET ASSETS consist of:
Undistributed/(distributions in
excess of) net investment income.... $ 110,580 $ 992,864 $ 48,027
Accumulated net realized gain/(loss)
on investments...................... 4,681,559 1,469,088 (311,601)
Unrealized appreciation of
investments and foreign currency
translations........................ 55,373,364 28,166,576 9,729,016
Par value (Note 4).................. 7,718 8,821 4,564
Paid-in capital in excess of par
value............................... 128,400,583 96,857,318 35,321,767
------------ ------------ -----------
TOTAL NET ASSETS..................... $188,573,804 $127,494,667 $44,791,773
============ ============ ===========
Shares of Common Stock Outstanding... 7,718,433 8,821,024 4,564,329
NET ASSET VALUE PER SHARE............ $24.43 $14.45 $9.81
====== ====== =====
</TABLE>
See Notes to Financial Statements
14
<PAGE>
<TABLE>
<CAPTION>
BUSINESS AND COMMUNICATION ENVIRONMENTALLY- LONG-TERM
INDUSTRIAL AND EARLY LIFE RELATED PRODUCTS GLOBAL SUPPLY PRODUCTIVITY
RESTRUCTURING ENTERTAINMENT CYCLE AND SERVICES COMPETITORS OF ENERGY ENHANCERS
FUND FUND FUND FUND FUND FUND FUND
------------- ------------- ----------- ---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
$60,156,582 $43,126,354 $68,843,720 $2,986,202 $59,549,591 $19,789,140 $27,889,799
=========== =========== =========== ========== =========== =========== ===========
$75,265,089 $47,912,747 $78,977,275 $3,996,581 $71,554,155 $23,345,663 $28,819,875
734 779 815 -- 98 978 899
69,934 19,584 12,269 2,142 33,162 29,032 17,353
12,986 44,135 22,082 293 27,864 2,704 4,187
-- -- 7,187 -- -- -- 1,002,766
137,565 148,014 162,504 2,420 105,606 7,162 11,470
-- -- -- 1,004 -- -- --
-- -- -- 4,101 -- -- --
1,691 1,460 2,406 149 1,603 787 930
7,347 7,347 7,347 7,347 7,347 7,347 7,347
----------- ----------- ----------- ---------- ----------- ----------- -----------
75,495,346 48,134,066 79,191,885 4,014,037 71,729,835 23,393,673 29,864,827
1,260,000 789,925 819,205 -- 260,450 -- 540,900
121,373 347,922 240,648 55,610 105,820 70,107 217,536
33,256 21,951 33,386 -- 32,754 10,617 13,927
-- -- -- 1,661 -- -- --
28,414 24,928 37,800 10,000 26,320 18,458 23,185
----------- ----------- ----------- ---------- ----------- ----------- -----------
1,443,043 1,184,726 1,131,039 67,271 425,344 99,182 795,548
----------- ----------- ----------- ---------- ----------- ----------- -----------
$74,052,303 $46,949,340 $78,060,846 $3,946,766 $71,304,491 $23,294,491 $29,069,279
=========== =========== =========== ========== =========== =========== ===========
$ 137,328 $ (158) $ -- $ -- $ 121,474 $ 38,043 $ --
1,218,389 243,366 2,012,144 (484,088) (86,661) 260,420 1,997,760
15,108,469 4,786,393 10,133,555 1,010,379 12,004,547 3,556,523 930,076
5,278 4,548 7,240 511 6,584 2,440 3,291
57,582,839 41,915,191 65,907,907 3,419,964 59,258,547 19,437,065 26,138,152
----------- ----------- ----------- ---------- ----------- ----------- -----------
$74,052,303 $46,949,340 $78,060,846 $3,946,766 $71,304,491 $23,294,491 $29,069,279
=========== =========== =========== ========== =========== =========== ===========
5,277,747 4,548,484 7,240,420 510,900 6,583,892 2,440,017 3,290,836
$14.03 $10.32 $10.78 $7.73 $10.83 $9.55 $8.83
====== ====== ====== ===== ====== ===== =====
</TABLE>
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
INCOME AND AGING OF
EQUITY GROWTH AMERICA
FUND FUND FUND
----------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income....................... $ 372,685 $ 2,370,505 $ 100,960
Dividend income....................... 2,219,613 2,188,359 388,893
Less: Foreign taxes withheld.......... -- -- --
----------- ----------- ----------
TOTAL INCOME.......................... 2,592,298 4,558,864 489,853
EXPENSES:
Investment advisory fees (Note 2)..... 1,217,504 854,674 201,117
Administration fees (Note 2).......... 250,754 176,019 51,787
Administrative service fees (Note 2).. 112,827 71,628 15,685
Shareholder servicing agent fees (Note
2)................................... 90,104 67,801 12,252
Custodian fees (Note 2)............... 86,538 61,415 22,245
Registration and filing fees.......... 5,831 5,614 8,725
Legal and audit fees.................. 20,880 13,703 4,893
Directors' fees and expenses (Note
2)................................... 5,455 3,967 992
Shareholder reports................... 14,921 9,407 3,138
Amortization of organization costs
(Note 5)............................. -- -- 4,187
Miscellaneous expenses................ 7,956 6,275 1,353
----------- ----------- ----------
TOTAL EXPENSES........................ 1,812,770 1,270,503 326,374
Fees waived by investment adviser and
administrators (Note 2).............. (112,827) (71,628) (15,963)
----------- ----------- ----------
NET EXPENSES.......................... 1,699,943 1,198,875 310,411
----------- ----------- ----------
NET INVESTMENT INCOME/(LOSS)........... 892,355 3,359,989 179,442
----------- ----------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain/(loss):
Security transactions................. 12,290,132 3,102,820 229,173
Foreign currency translations......... -- -- --
----------- ----------- ----------
Total net realized gain............... 12,290,132 3,102,820 229,173
Change in unrealized
appreciation/(depreciation) on in-
vestments and foreign currency trans-
lations during the year.............. 24,331,637 19,139,107 7,454,373
----------- ----------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS........... 36,621,769 22,241,927 7,683,546
----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $37,514,124 $25,601,916 $7,862,988
=========== =========== ==========
</TABLE>
See Notes to Financial Statements
16
<PAGE>
<TABLE>
<CAPTION>
BUSINESS AND COMMUNICATION ENVIRONMENTALLY- LONG-TERM
INDUSTRIAL AND EARLY LIFE RELATED PRODUCTS GLOBAL SUPPLY PRODUCTIVITY
RESTRUCTURING ENTERTAINMENT CYCLE AND SERVICES COMPETITORS OF ENERGY ENHANCERS
FUND FUND FUND FUND FUND FUND FUND
------------- ------------- ----------- ---------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 74,744 $ 284,964 $ 206,013 $ 4,827 $ 140,516 $ 47,062 $ 62,054
802,868 195,392 271,946 29,961 592,116 336,339 250,546
(2,818) -- -- -- (1,959) -- --
----------- ---------- ----------- -------- ----------- ---------- ----------
874,794 480,356 477,959 34,788 730,673 383,401 312,600
294,144 240,369 394,136 25,855 270,651 125,432 158,849
75,742 61,889 101,482 50,000 69,690 50,000 50,000
21,172 18,414 58,058 4,404 16,737 10,946 11,169
25,313 28,193 34,952 6,838 16,731 11,778 13,101
21,871 12,617 23,882 3,467 20,908 9,889 26,919
8,613 7,983 8,337 9,001 7,422 8,695 7,512
6,738 5,842 10,512 782 6,238 3,606 3,488
1,391 1,263 2,004 165 1,245 661 858
4,224 3,907 6,096 469 3,812 2,166 2,745
4,187 4,187 4,187 4,187 4,187 4,187 4,187
2,324 2,099 3,266 691 2,000 967 1,349
----------- ---------- ----------- -------- ----------- ---------- ----------
465,719 386,763 646,912 105,859 419,621 228,327 280,177
(21,172) (18,414) (58,058) (63,361) (16,737) (28,641) (20,924)
----------- ---------- ----------- -------- ----------- ---------- ----------
444,547 368,349 588,854 42,498 402,884 199,686 259,253
----------- ---------- ----------- -------- ----------- ---------- ----------
430,247 112,007 (110,895) (7,710) 327,789 183,715 53,347
----------- ---------- ----------- -------- ----------- ---------- ----------
2,636,482 2,475,230 3,934,385 31,865 721,320 521,934 5,861,616
(6,531) (363) -- -- 43 -- --
----------- ---------- ----------- -------- ----------- ---------- ----------
2,629,951 2,474,867 3,934,385 31,865 721,363 521,934 5,861,616
11,536,487 1,240,983 6,178,733 923,672 9,216,453 3,435,626 (172,413)
----------- ---------- ----------- -------- ----------- ---------- ----------
14,166,438 3,715,850 10,113,118 955,537 9,937,816 3,957,560 5,689,203
----------- ---------- ----------- -------- ----------- ---------- ----------
$14,596,685 $3,827,857 $10,002,223 $947,827 $10,265,605 $4,141,275 $5,742,550
=========== ========== =========== ======== =========== ========== ==========
</TABLE>
See Notes to Financial Statements
17
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME AND AGING OF
EQUITY GROWTH AMERICA
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
YEAR ENDED MARCH 31, 1996
Net investment income/(loss)......... $ 892,355 $ 3,359,989 $ 179,442
Net realized gain on investments..... 12,290,132 3,102,820 229,173
Change in unrealized
appreciation/(depreciation) on
investments and foreign currency
translations during the year........ 24,331,637 19,139,107 7,454,373
------------ ------------ -----------
Net increase in net assets resulting
from operations..................... 37,514,124 25,601,916 7,862,988
Distributions to shareholders:
From net investment income.......... (775,213) (2,643,489) (162,762)
In excess of net investment income.. -- -- --
From net realized gain on
investments........................ (14,900,357) (495,121) --
In excess of net realized gain on
investments........................ -- -- --
Increase/(decrease) in net assets
from fund share transactions (Note
4).................................. 29,318,351 5,106,774 14,917,963
------------ ------------ -----------
Net increase/(decrease) in net
assets.............................. 51,156,905 27,570,080 22,618,189
NET ASSETS:
Beginning of year................... 137,416,899 99,924,587 22,173,584
------------ ------------ -----------
End of year(1)...................... $188,573,804 $127,494,667 $44,791,773
============ ============ ===========
YEAR ENDED MARCH 31, 1995
Net investment income/(loss)......... $ 434,763 $ 3,316,405 $ 97,235
Net realized gain/(loss) on
investments......................... 8,541,411 (122,305) (407,075)
Change in unrealized
appreciation/(depreciation) on
investments and foreign currency
translations during the year........ 8,328,610 1,813,647 2,415,478
------------ ------------ -----------
Net increase/(decrease) in net assets
resulting from operations........... 17,304,784 5,007,747 2,105,638
Distributions to shareholders:
From net investment income.......... (234,920) (3,030,356) (81,800)
In excess of net investment income.. -- -- --
From net realized gain on
investments........................ (2,880,896) (3,536,012) --
Increase/(decrease) in net assets
from fund share transactions (Note
4).................................. 966,098 4,800,766 9,566,820
------------ ------------ -----------
Net increase/(decrease) in net
assets.............................. 15,155,066 3,242,145 11,590,658
NET ASSETS:
Beginning of year................... 122,261,833 96,682,442 10,582,926
------------ ------------ -----------
End of year(2)...................... $137,416,899 $ 99,924,587 $22,173,584
============ ============ ===========
</TABLE>
(1) Including undistributed/(distributions in excess of) net investment income
of $110,580 for Equity Fund, $992,864 for Income and Growth Fund, $48,027
for Aging America Fund, $137,328 for Business and Industrial Restructuring
Fund, ($158) for Communication and Entertainment Fund, $121,474 for Global
Competitors Fund and $38,043 for Long-Term Supply of Energy Fund.
(2) Including undistributed net investment income of $199,843 for Equity Fund,
$279,523 for Income and Growth Fund, $31,347 for Aging of America Fund,
$64,066 for Business and Industrial Restructuring Fund, $21,964 for
Communication and Entertainment Fund, $50,305 for Global Competitors Fund,
and $22,348 for Long-Term Supply of Energy Fund.
See Notes to Financial Statements
18
<PAGE>
<TABLE>
<CAPTION>
BUSINESS AND COMMUNICATION ENVIRONMENTALLY- LONG-TERM
INDUSTRIAL AND EARLY LIFE RELATED PRODUCTS GLOBAL SUPPLY PRODUCTIVITY
RESTRUCTURING ENTERTAINMENT CYCLE AND SERVICES COMPETITORS OF ENERGY ENHANCERS
FUND FUND FUND FUND FUND FUND FUND
------------- ------------- ----------- ---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 430,247 $ 112,007 $ (110,895) $ (7,710) $ 327,789 $ 183,715 $ 53,347
2,629,951 2,474,867 3,934,385 31,865 721,363 521,934 5,861,616
11,536,487 1,240,983 6,178,733 923,672 9,216,453 3,435,626 (172,413)
----------- ----------- ----------- ----------- ----------- ----------- -----------
14,596,685 3,827,857 10,002,223 947,827 10,265,605 4,141,275 5,742,550
(345,537) (105,302) -- -- (257,433) (168,020) (53,347)
-- -- -- -- -- -- (50,322)
(987,000) (2,340,896) (4,027,696) -- (85,339) -- (4,101,238)
-- -- -- -- (86,658) -- --
30,605,398 15,653,291 24,303,965 (1,360,084) 35,973,688 3,508,362 9,266,366
----------- ----------- ----------- ----------- ----------- ----------- -----------
43,869,546 17,034,950 30,278,492 (412,257) 45,809,863 7,481,617 10,804,009
30,182,757 29,914,390 47,782,354 4,359,023 25,494,628 15,812,874 18,265,270
----------- ----------- ----------- ----------- ----------- ----------- -----------
$74,052,303 $46,949,340 $78,060,846 $ 3,946,766 $71,304,491 $23,294,491 $29,069,279
=========== =========== =========== =========== =========== =========== ===========
$ 192,090 $ 117,720 $ (83,566) $ (4,222) $ 165,153 $ 136,166 $ (17,295)
(288,156) 195,440 2,652,580 (298,761) (604,095) (261,515) 337,213
2,845,780 2,850,750 3,235,122 280,050 2,802,463 463,608 583,278
----------- ----------- ----------- ----------- ----------- ----------- -----------
2,749,714 3,163,910 5,804,136 (22,933) 2,363,521 338,259 903,196
(139,348) (103,532) -- -- (133,461) (133,084) --
-- -- -- (9,193) -- -- --
(258,199) (445,488) (656,959) -- -- (5,138) (207,461)
13,390,609 6,275,130 17,684,135 (141,805) 13,205,903 8,782,842 1,867,860
----------- ----------- ----------- ----------- ----------- ----------- -----------
15,742,776 8,890,020 22,831,312 (173,931) 15,435,963 8,982,879 2,563,595
14,439,981 21,024,370 24,951,042 4,532,954 10,058,665 6,829,995 15,701,675
----------- ----------- ----------- ----------- ----------- ----------- -----------
$30,182,757 $29,914,390 $47,782,354 $ 4,359,023 $25,494,628 $15,812,874 $18,265,270
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
19
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
NET REALIZED DISTRIBUTIONS
NET ASSET NET AND UNREALIZED DIVIDENDS DIVIDENDS FROM NET
VALUE, INVESTMENT GAIN/(LOSS) TOTAL FROM FROM NET IN EXCESS OF REALIZED GAIN
BEGINNING INCOME/ ON INVESTMENTS INVESTMENT INVESTMENT NET INVESTMENT ON INVESTMENTS
OF PERIOD (LOSS) AND OPTIONS OPERATIONS INCOME INCOME AND OPTIONS
--------- ---------- -------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUND -- (4/25/85*)
Year Ended March 31,
1992.................... $14.13 $ 0.13 $ 2.23 $ 2.36 $(0.21) $ 0.00 $ 0.00
1993.................... 16.28 0.08 3.01 3.09 (0.09) 0.00 (0.51)
1994.................... 18.77 0.05 1.16 1.21 (0.08) 0.00 (0.39)
1995.................... 19.17 0.07 2.67 2.74 (0.04) 0.00 (0.47)
1996.................... 21.40 0.12 5.21 5.33 (0.11) 0.00 (2.19)
INCOME AND GROWTH FUND -- (1/6/87*)
Year Ended March 31,
1992.................... $ 8.36 $ 0.30 $ 0.72 $ 1.02 $(0.28) $ 0.00 $ 0.00
1993.................... 9.10 0.27 2.43 2.70 (0.35) 0.00 0.00
1994.................... 11.45 0.31 0.46 0.77 (0.27) 0.00 (0.01)
1995.................... 11.94 0.38 0.26 0.64 (0.35) 0.00 (0.41)
1996.................... 11.82 0.39 2.61 3.00 (0.31) 0.00 (0.06)
AGING OF AMERICA FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.01 $ 0.00 $ 0.01 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.01 0.03 (0.02) 0.01 (0.03) 0.00 0.00
Year Ended March 31,
1995................... 6.99 0.04 0.85 0.89 (0.04) 0.00 0.00
Year Ended March 31,
1996................... 7.84 0.05 1.97 2.02 (0.05) 0.00 0.00
BUSINESS AND INDUSTRIAL RESTRUCTURING FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.02 $ 0.69 $ 0.71 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.71 0.06 1.96 2.02 (0.07) 0.00 (0.02)
Year Ended March 31,
1995................... 9.64 0.07 1.02 1.09 (0.06) 0.00 (0.12)
Year Ended March 31,
1996................... 10.55 0.10 3.71 3.81 (0.09) 0.00 (0.24)
COMMUNICATION AND ENTERTAINMENT FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.01 $ 0.60 $ 0.61 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.61 0.02 1.52 1.54 (0.03) 0.00 (0.37)
Year Ended March 31,
1995................... 8.75 0.04 1.06 1.10 (0.04) 0.00 (0.17)
Year Ended March 31,
1996................... 9.64 0.03 1.30 1.33 (0.03) 0.00 (0.62)
EARLY LIFE CYCLE FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.00 $ 0.40 $ 0.40 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.40 (0.01) 1.36 1.35 0.00 0.00 (0.09)
Year Ended March 31,
1995................... 8.66 (0.02) 1.31 1.29 0.00 0.00 (0.18)
Year Ended March 31,
1996................... 9.77 (0.02) 1.72 1.70 0.00 0.00 (0.69)
ENVIRONMENTALLY-RELATED PRODUCTS AND SERVICES FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.00 $(0.05) $(0.05) $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 6.95 0.00 (0.71) (0.71) 0.00 0.00 0.00
Year Ended March 31,
1995................... 6.24 (0.01) (0.01) (0.02) 0.00 (0.01) 0.00
Year Ended March 31,
1996................... 6.21 (0.02) 1.54 1.52 0.00 0.00 0.00
GLOBAL COMPETITORS FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.01 $ 0.27 $ 0.28 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.28 0.05 0.41 0.46 (0.05) 0.00 0.00
Year Ended March 31,
1995................... 7.69 0.07 0.90 0.97 (0.07) 0.00 0.00
Year Ended March 31,
1996................... 8.59 0.07 2.27 2.34 (0.06) 0.00 (0.02)
LONG-TERM SUPPLY OF ENERGY FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.01 $ 0.80 $ 0.81 $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 7.81 0.08 (0.12) (0.04) (0.07) 0.00 0.00
Year Ended March 31,
1995................... 7.70 0.09 0.24 0.33 (0.10) 0.00 (0.01)
Year Ended March 31,
1996................... 7.92 0.07 1.63 1.70 (0.07) 0.00 0.00
PRODUCTIVITY ENHANCERS FUND -- (12/31/92*)
Period Ended March 31,
1993................... $ 7.00 $ 0.01 $(0.07) $(0.06) $ 0.00 $ 0.00 $ 0.00
Year Ended March 31,
1994................... 6.94 0.00 0.96 0.96 0.00 (0.02) 0.00
Year Ended March 31,
1995................... 7.88 (0.01) 0.35 0.34 0.00 0.00 (0.10)
Year Ended March 31,
1996................... 8.12 0.02 2.12 2.14 (0.02) (0.01) (1.40)
</TABLE>
* Commencement of operations
** Annualized
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by investment adviser and administrators.
++ Total return data does not reflect sales load payable on purchases of Fund
shares.
See Notes to Financial Statements
20
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTIONS IN RATIO OF NET RATIO OF GROSS RATIO OF NET
EXCESS OF NET NET ASSETS, OPERATING OPERATING INVESTMENT
REALIZED GAIN NET ASSET END EXPENSES EXPENSES INCOME (LOSS) PORTFOLIO FEE
ON INVESTMENTS TOTAL VALUE, END TOTAL OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER WAIVERS
AND OPTIONS DISTRIBUTIONS OF PERIOD RETURN++ (000) NET ASSETS NET ASSETS+ NET ASSETS RATE (NOTE 2)
---------------- ------------- ---------- -------- ----------- ------------ -------------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $(0.21) $16.28 16.87% $ 71,614 1.15% 1.15% 0.87% 20% $0.00
0.00 (0.60) 18.77 19.26% 106,144 1.08% 1.08% 0.51% 24% 0.00
(0.34) (0.81) 19.17 6.54% 122,262 1.14% 1.14% 0.25% 17% 0.00
0.00 (0.51) 21.40 14.65% 137,417 1.05% 1.08% 0.36% 23% 0.00
0.00 (2.30) 24.43 26.45% 188,574 1.05% 1.12% 0.55% 27% 0.02
$ 0.00 $(0.28) $ 9.10 12.42% $ 23,254 1.23% 1.23% 3.52% 81% $0.00
0.00 (0.35) 11.45 30.45% 51,303 1.15% 1.15% 2.76% 28% 0.00
0.00 (0.28) 11.94 6.69% 96,682 1.17% 1.17% 2.77% 28% 0.00
0.00 (0.76) 11.82 5.74% 99,925 1.06% 1.09% 3.31% 36% 0.00
0.00 (0.37) 14.45 25.83% 127,495 1.05% 1.11% 2.95% 22% 0.01
$ 0.00 $ 0.00 $ 7.01 0.14% $ 2,389 0.99%** 3.87%** 0.77%** 14%** $0.03
0.00 (0.03) 6.99 0.13% 10,583 0.99% 1.82% 0.59% 24% 0.04
0.00 (0.04) 7.84 12.80% 22,174 0.99% 1.26% 0.63% 14% 0.02
0.00 (0.05) 9.81 25.80% 44,792 0.93% 0.97% 0.54% 34% 0.00
$ 0.00 $ 0.00 $ 7.71 10.14% $ 1,935 0.99%** 5.85%** 2.48%** 9%** $0.04
0.00 (0.09) 9.64 26.40% 14,440 0.99% 1.73% 0.77% 75% 0.06
0.00 (0.18) 10.55 11.49% 30,183 0.98% 1.08% 0.83% 82% 0.01
0.00 (0.33) 14.03 36.48% 74,052 0.91% 0.95% 0.88% 56% 0.00
$ 0.00 $ 0.00 $ 7.61 8.71% $ 5,785 0.99%** 2.20%** 1.06%** 25%** $0.01
0.00 (0.40) 8.75 20.07% 21,024 0.98% 1.16% 0.29% 60% 0.01
0.00 (0.21) 9.64 12.87% 29,914 0.98% 1.06% 0.46% 56% 0.01
0.00 (0.65) 10.32 13.48% 46,949 0.92% 0.97% 0.28% 65% 0.00
$ 0.00 $ 0.00 $ 7.40 5.71% $ 5,512 0.99%** 2.70%** 0.12%** 4%** $0.01
0.00 (0.09) 8.66 18.27% 24,951 0.95% 1.15% (0.25)% 20% 0.01
0.00 (0.18) 9.77 15.16% 47,782 0.96% 1.04% (0.23)% 42% 0.01
0.00 (0.69) 10.78 18.29% 78,061 0.90% 0.98% (0.17)% 38% 0.01
$ 0.00 $ 0.00 $ 6.95 (0.71)% $ 2,452 0.99%** 2.83%** 0.32%** 0%** $0.02
0.00 0.00 6.24 (10.15)% 4,533 0.99% 2.20% (0.07)% 28% 0.05
0.00 (0.01) 6.21 (0.27)% 4,359 0.99% 2.42% (0.10)% 61% 0.09
0.00 0.00 7.73 24.48% 3,947 0.99% 2.46% (0.18)% 64% 0.12
$ 0.00 $ 0.00 $ 7.28 4.00% $ 2,037 0.99%** 3.97%** 0.82%** 0%** $0.03
0.00 (0.05) 7.69 6.29% 10,059 0.99% 1.72% 0.81% 19% 0.05
0.00 (0.07) 8.59 12.73% 25,495 0.97% 1.18% 1.04% 29% 0.01
(0.02) (0.10) 10.83 27.39% 71,304 0.89% 0.93% 0.73% 17% 0.00
$ 0.00 $ 0.00 $ 7.81 11.57% $ 1,457 0.99%** 7.03%** 1.69%** 0%** $0.05
0.00 (0.07) 7.70 (0.57)% 6,830 0.99% 2.03% 1.21% 6% 0.07
0.00 (0.11) 7.92 4.28% 15,813 0.98% 1.35% 1.18% 31% 0.03
0.00 (0.07) 9.55 21.60% 23,294 0.96% 1.09% 0.88% 43% 0.01
$ 0.00 $ 0.00 $ 6.94 (0.86)% $ 3,369 0.99%** 4.23%** 1.29%** 183%** $0.03
0.00 (0.02) 7.88 13.81% 15,702 0.99% 1.49% 0.01% 198% 0.10
0.00 (0.10) 8.12 4.45% 18,265 0.99% 1.21% (0.10)% 276% 0.02
0.00 (1.43) 8.83 26.97% 29,069 0.98% 1.06% 0.20% 472% 0.01
</TABLE>
See Notes to Financial Statements
21
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
EQUITY FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 95.99%
FINANCIAL -- 21.56%
100,000 Firstar Corp. .......................................... $ 4,475,000
18,240 General Re Corp. ....................................... 2,658,480
45,000 MBIA, Inc. ............................................. 3,375,000
115,000 Mellon Bank Corp. ...................................... 6,339,375
88,000 Morgan Stanley Group, Inc. ............................. 4,554,000
120,000 State Street Boston Corp. .............................. 6,000,000
100,000 United Asset Management Corp. .......................... 4,637,500
95,000 UNUM Corp. ............................................. 5,652,500
100,000 Washington Mutual, Inc. ................................ 2,975,000
------------
40,666,855
------------
CONSUMER CYCLICAL -- 20.48%
146,000 Centex Corp. ........................................... 4,526,000
65,000 Dayton Hudson Corp...................................... 5,516,875
80,000 Ford Motor Co. ......................................... 2,750,000
170,000 Heilig-Meyers Co........................................ 3,506,250
90,000 Houghton Mifflin Co..................................... 3,971,250
60,000 Luxottica Group S.p.A. ADR.............................. 4,687,500
70,000 McDonald's Corp......................................... 3,360,000
75,000 +O'Reilly Automotive, Inc............................... 2,606,250
55,000 Reuters Holdings plc ADR................................ 3,568,125
60,000 +Scholastic Corp........................................ 4,125,000
------------
38,617,250
------------
CONSUMER STAPLES -- 15.23%
120,000 Abbott Laboratories..................................... 4,890,000
171,500 +FHP International Corp. ............................... 5,423,687
90,000 +Forest Laboratories, Inc. ............................. 4,387,500
55,000 +Genzyme Corp........................................... 3,025,000
55,800 Johnson & Johnson....................................... 5,147,550
60,900 Pfizer, Inc............................................. 4,080,300
111,600 +Physician Corp. of America............................. 1,771,650
------------
28,725,687
------------
TECHNOLOGY -- 13.51%
160,000 +Cerner Corp............................................ 3,640,000
130,000 +Informix Corp.......................................... 3,428,750
132,300 +Intersolv, Inc. ....................................... 1,504,913
50,000 MCI Communications Corp. ............................... 1,512,500
50,510 +Microsoft Corp......................................... 5,202,530
50,000 Motorola, Inc........................................... 2,650,000
70,000 Texas Instruments, Inc. ................................ 3,561,250
111,220 Tyco International Ltd. ................................ 3,976,115
------------
25,476,058
------------
ENERGY -- 12.10%
115,000 Enron Corp. ............................................ 4,240,625
100,000 Louisiana Land & Exploration Co......................... 4,662,500
40,000 Mobil Corp.............................................. 4,635,000
190,500 +United Meridian Corp................................... 4,548,188
141,680 Unocal Corp............................................. 4,728,570
------------
22,814,883
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
CAPITAL GOODS -- 6.86%
70,000 Illinois Tool Works, Inc............................. $ 4,523,750
61,250 Thermo Electron Corp. ............................... 3,644,375
150,000 WMX Technologies, Inc. .............................. 4,762,500
------------
12,930,625
------------
UTILITIES -- 4.28%
82,940 AT&T Corp............................................ 5,080,075
80,000 Vodafone Group plc ADR............................... 3,000,000
------------
8,080,075
------------
RAW/INTERMEDIATE MATERIALS -- 1.97%
145,000 Pall Corp............................................ 3,715,625
------------
TOTAL COMMON STOCKS
(Cost $125,653,694).................................. 181,027,058
------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 3.98%
$3,185,000 Associates Corp. of North America Master Notes....... 3,185,000
4,314,000 General Electric Co. Promissory Notes................ 4,314,000
------------
TOTAL DEMAND NOTES
(Cost $7,499,000).................................... 7,499,000
</TABLE>
<TABLE>
<S> <C> <C>
------------
TOTAL INVESTMENTS
(Cost $133,152,694*)...................................... 99.97% $188,526,058
OTHER ASSETS & LIABILITIES (NET).......................... 0.03 47,746
------ ------------
NET ASSETS................................................ 100.00% $188,573,804
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$133,154,635.
+ Non-income producing security.
ADR -- American Depositary Receipt.
See Notes to Financial Statements
22
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 66.00%
CONSUMER CYCLICAL -- 16.01%
62,500 Clayton Homes, Inc................................... $ 1,304,687
68,000 Cooper Tire & Rubber Co.............................. 1,751,000
80,000 Heilig-Meyers Co..................................... 1,650,000
63,000 Herman Miller, Inc................................... 1,953,000
40,000 Luxottica Group S.p.A. ADR........................... 3,125,000
56,000 McDonald's Corp...................................... 2,688,000
80,000 ServiceMaster Ltd. Partnership....................... 2,590,000
95,000 Smart & Final, Inc................................... 2,351,250
90,000 Wiley (John) & Sons, Inc., Class A................... 3,003,750
------------
20,416,687
------------
FINANCIAL -- 9.14%
21,750 American International Group, Inc. .................. 2,036,344
26,000 Household International, Inc. ....................... 1,748,500
48,000 Morgan Stanley Group, Inc............................ 2,484,000
40,000 Mutual Risk Management Ltd........................... 1,655,000
87,000 Pennsylvania Real Estate Investment Trust............ 1,827,000
87,000 Wellsford Residential Properties..................... 1,903,125
------------
11,653,969
------------
TECHNOLOGY -- 9.09%
57,000 Adobe Systems, Inc................................... 1,831,125
105,000 +Analog Devices, Inc................................. 2,940,000
115,000 ECI Telecommunications Limited Designs............... 2,558,750
210,000 +Interleaf, Inc...................................... 1,837,500
100,000 +Unitrode Corp....................................... 2,425,000
------------
11,592,375
------------
CAPITAL GOODS -- 9.09%
62,000 Baldor Electric Co................................... 1,247,750
62,000 Dover Corp........................................... 2,836,500
30,000 Duracell International, Inc. ........................ 1,488,750
41,300 Lincoln Electric Co.................................. 1,094,450
41,000 Raychem Corp......................................... 2,644,500
50,000 Trinity Industries, Inc.............................. 1,743,750
6,300 Woodward Governor Co................................. 533,925
------------
11,589,625
------------
RAW/INTERMEDIATE
MATERIALS -- 7.16%
50,000 Fort Howard Corp. ................................... 1,125,000
41,000 Nucor Corp........................................... 2,424,125
70,000 Pall Corp............................................ 1,793,750
36,000 Pioneer Hi-Bred International, Inc................... 1,894,500
95,000 Worthington Industries, Inc.......................... 1,888,125
------------
9,125,500
------------
CONSUMER STAPLES -- 7.02%
43,000 Gillette Co.......................................... 2,225,250
30,000 Johnson & Johnson.................................... 2,767,500
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
26,000 Kellogg Co. ......................................... $ 1,969,500
62,000 Novo-Nordisk A.S., ADR............................... 1,984,000
-----------
8,946,250
-----------
ENERGY -- 5.23%
41,000 Norsk Hydro A.S., ADR................................ 1,793,750
60,000 +SEACOR Holdings, Inc................................ 2,205,000
112,000 +United Meridian Corp................................ 2,674,000
-----------
6,672,750
-----------
UTILITIES -- 2.16%
65,000 +NEXTEL Communications, Inc., Class A................ 1,218,750
72,000 UGI Corp............................................. 1,530,000
-----------
2,748,750
-----------
TRANSPORTATION -- 1.10%
20,000 +Federal Express Corp. .............................. 1,397,500
-----------
TOTAL COMMON STOCKS
(Cost $57,803,643)................................... 84,143,406
-----------
CONVERTIBLE PREFERRED STOCKS -- 8.49%
FINANCIAL -- 6.72%
325,000 Capstead Mortgage Corp.,
Series B, Preferred
Exchange $1.26....................................... 4,346,875
80,000 Catellus Development Corp., Series A, Preferred
Exchange $3.75....................................... 4,220,000
-----------
8,566,875
-----------
ENERGY -- 1.77%
80,000 Callon Petro Co., Series A, Preferred Exchange
$2.13................................................ 2,260,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $10,742,158)................................... 10,826,875
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
CORPORATE BONDS -- 6.10%
ENERGY -- 2.29%
$3,000,000 Vintage Petro Sr. Sub-Notes, 9.00%, 12/15/2005 ...... 2,925,000
-----------
TRANSPORTATION -- 2.15%
2,975,000 Greyhound Lines, Inc., Debenture,
10.00%, 07/31/2001................................... 2,737,000
-----------
RAW/INTERMEDIATE MATERIALS -- 1.66%
2,100,000 Fort Howard Sr. Notes,
9.25%, 03/15/2001 ................................... 2,121,000
-----------
TOTAL CORPORATE BONDS (Cost $7,889,420).............. 7,783,000
-----------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
INCOME AND GROWTH FUND--(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- ------------
<C> <S> <C>
CONVERTIBLE BONDS -- 16.30%
TECHNOLOGY -- 9.07%
$4,452,000 Kollmorgen Corp.,
Sub-Debenture,
8.75%, 05/01/2009.................................... $ 4,468,695
1,959,000 Network Equipment Technologies, Inc.,
Sub-Debenture,
7.25%, 05/15/2014.................................... 2,145,105
1,500,000 Storage Technology Corp.,
Sub-Debenture,
7.00%, 03/15/2008.................................... 1,743,750
3,200,000 Storage Technology Corp., 8.00%, 05/31/2015.......... 3,208,000
------------
11,565,550
------------
ENERGY -- 3.85%
4,600,000 AES Corp., Sub-Debenture, 6.50%, 03/15/2002.......... 4,910,500
------------
CONSUMER STAPLES -- 3.38%
4,900,000 Novacare, Inc., Sub-Debenture, 5.50%, 01/15/2000..... 4,305,875
------------
TOTAL CONVERTIBLE BONDS (Cost $18,933,409)........... 20,781,925
------------
DEMAND NOTES -- 2.69%
133,000 Associates Corp. of North America Master Notes....... 133,000
3,294,000 General Electric Co. Promissory Notes................ 3,294,000
------------
TOTAL DEMAND NOTES
(Cost $3,427,000).................................... 3,427,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $98,795,630*)....................................... 99.58% $126,962,206
OTHER ASSETS & LIABILITIES (NET).......................... 0.42 532,461
------ ------------
NET ASSETS................................................ 100.00% $127,494,667
====== ============
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$98,800,957.
+ Non-income producing security.
ADR -- American Depositary Receipt.
See Notes to Financial Statements
24
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
AGING OF AMERICA FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 93.83%
CONSUMER STAPLES -- 33.97%
20,000 American Greetings Corp., Class A......................... $ 552,500
25,000 +Assisted Living Concepts, Inc. .......................... 459,375
13,000 Campbell Soup Co. ........................................ 791,375
26,000 Carnival Corp., Class A................................... 715,000
15,000 Columbia/HCA Healthcare Corp. ............................ 866,250
12,000 Eastman Kodak Co. ........................................ 852,000
12,000 +Forest Laboratories, Inc. ............................... 585,000
24,000 Gaylord Entertainment..................................... 648,000
12,000 General Mills, Inc. ...................................... 700,500
10,000 +Genzyme Corp. ........................................... 550,000
15,000 Gillette Co. ............................................. 776,250
25,000 Integrated Health Services, Inc........................... 584,375
9,000 Johnson & Johnson......................................... 830,250
20,000 +Living Centers of America, Inc. ......................... 745,000
37,500 Mattel, Inc. ............................................. 1,017,187
17,000 Medtronic, Inc. .......................................... 1,013,625
10,000 PepsiCo, Inc. ............................................ 632,500
14,000 Pfizer, Inc. ............................................. 938,000
15,500 United Healthcare Corp. .................................. 953,250
15,715 Walt Disney Co. .......................................... 1,003,796
-----------
15,214,233
-----------
CONSUMER CYCLICAL -- 29.97%
24,000 +American Medical Response................................ 852,000
22,000 Black & Decker Corp. ..................................... 833,250
19,000 +Coleman Co., Inc. ....................................... 838,375
22,500 Fisher Scientific International........................... 860,625
11,000 Gannett Co., Inc. ........................................ 739,750
43,000 +General Nutrition Cos., Inc. ............................ 1,075,000
35,000 Heartstream, Inc. ........................................ 533,750
24,000 Lowe's Cos., Inc. ........................................ 858,000
21,000 Marriott International, Inc. ............................. 997,500
18,000 Masco Corp. .............................................. 522,000
23,250 Pittway Corp., Class A.................................... 1,150,875
30,000 +Proffitt's, Inc. ........................................ 945,000
25,000 Rite Aid Corp. ........................................... 771,875
25,000 Stewart Enterprises, Inc., Class A........................ 1,068,750
16,000 Time Warner, Inc. ........................................ 654,000
35,000 U.S. West Media Group..................................... 721,875
-----------
13,422,625
-----------
FINANCIAL -- 16.88%
19,000 American Express Co. ..................................... 938,125
12,500 Barnett Banks of Florida, Inc. ........................... 778,125
9,800 BayBanks, Inc. ........................................... 1,053,500
16,000 Dean Witter Discover & Co. ............................... 916,000
30,000 Meditrust Corp. .......................................... 1,016,250
15,000 Mellon Bank Corp. ........................................ 826,875
16,000 Standard Federal Bancorporation........................... 680,000
23,400 Summit Bancorp (New Jersey)............................... 865,800
8,200 UNUM Corp. ............................................... 487,900
-----------
7,562,575
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
UTILITIES -- 5.34%
11,000 AT&T Corp. ........................................... $ 673,750
15,000 General Motors Corp. ................................. 798,750
20,000 +Worldcom, Inc. ...................................... 920,000
-----------
2,392,500
-----------
TECHNOLOGY -- 4.88%
36,500 +Cerner Corp. ........................................ 830,375
18,000 +Compaq Computer...................................... 695,250
12,500 Motorola, Inc. ....................................... 662,500
-----------
2,188,125
-----------
CAPITAL GOODS -- 2.79%
21,000 Thermo Electron Corp. ................................ 1,249,500
-----------
TOTAL COMMON STOCKS
(Cost $32,300,542).................................... 42,029,558
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 6.28%
$ 967,000 Associates Corp. of North America Master Notes........ 967,000
1,845,000 General Electric Co. Promissory Notes................. 1,845,000
-----------
TOTAL DEMAND NOTES
(Cost $2,812,000)..................................... 2,812,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $35,112,542*)........................................ 100.11% $44,841,558
OTHER ASSETS & LIABILITIES (NET)........................... (0.11) (49,785)
------ -----------
NET ASSETS................................................. 100.00% $44,791,773
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security.
See Notes to Financial Statements
25
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
BUSINESS AND INDUSTRIAL RESTRUCTURING FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 92.65%
FINANCIAL -- 23.49%
15,000 Bankers Trust New York Corp. ............................ $ 1,063,125
20,000 CRA Managed Care, Inc. .................................. 715,000
33,600 Donaldson, Lufkin & Jenrette, Inc. ...................... 1,125,600
101,250 Fidelity Federal Bank, Class A........................... 911,250
18,000 First Chicago Corp. ..................................... 747,000
12,000 First Union Corp. (N.C.)................................. 726,000
21,000 GCR Holdings, Ltd. ...................................... 519,750
34,000 Health and Retirement Properties Trust................... 586,500
51,000 ISB Financial Corp. ..................................... 790,500
66,000 Imperial Thrift & Loan Association....................... 907,500
28,000 Invesco PLC-Sponsored ADR................................ 1,123,500
18,000 Mellon Bank Corp. ....................................... 992,250
28,000 Mid Ocean Limited........................................ 1,081,500
30,000 PNC Bank Corp. .......................................... 922,500
65,000 Prime Retail, Inc. ...................................... 1,072,500
63,000 Prudential Reinsurance Holdings, Inc. ................... 1,488,375
60,000 +Riggs National Corp. ................................... 735,000
10,000 Student Loan Marketing Association....................... 765,000
17,000 Travelers, Inc. ......................................... 1,122,000
-----------
17,394,850
-----------
CONSUMER STAPLES -- 21.80%
34,200 Allied Healthcare Products, Inc. ........................ 436,050
32,000 Amerisource Health Corp.,
Class A.................................................. 1,040,000
35,000 +Apria Healthcare Group, Inc. ........................... 1,111,250
11,500 Avon Products, Inc. ..................................... 986,125
12,000 Bristol-Myers Squibb Co. ................................ 1,027,500
13,000 CPC International, Inc. ................................. 901,875
14,600 CSG Systems International, Inc. ......................... 335,800
36,000 Dial Corp. .............................................. 1,008,000
18,000 Eastman Kodak Co. ....................................... 1,278,000
31,000 +FHP International Corp. ................................ 980,375
17,000 General Mills, Inc. ..................................... 992,375
47,000 Integrated Health Services, Inc. ........................ 1,098,625
33,000 IVAX Corp. .............................................. 853,875
28,000 +MediSense, Inc. ........................................ 1,246,000
64,000 Pepsi-Cola Puerto Rico Bottling Co., Class B............. 600,000
66,000 Sunbeam Corp. ........................................... 1,122,000
9,000 United Wisconsin Services, Inc. ......................... 194,625
9,000 Warner Lambert Co. ...................................... 929,250
-----------
16,141,725
-----------
TECHNOLOGY -- 11.87%
31,000 Bell & Howell Holdings Co. .............................. 1,015,250
63,000 +General DataComm Industries, Inc. ...................... 669,375
11,000 International Business Machines Corp. ................... 1,222,375
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- -----------
<C> <S> <C>
TECHNOLOGY -- (CONTINUED)
45,000 +International Rectifier Corp. .......................... $ 810,000
74,000 +Intersolv, Inc. ........................................ 841,750
60,000 +Phoenix Technologies Ltd. .............................. 832,500
24,000 +Plantronics, Inc. ...................................... 906,000
135,000 +Plasma-Therm, Inc. ..................................... 405,000
20,000 Texas Instruments, Inc. ................................. 1,017,500
30,000 Watkins Johnson Co. ..................................... 1,072,500
-----------
8,792,250
-----------
CONSUMER CYCLICAL -- 10.98%
14,000 Computer Associates International, Inc. ................. 1,002,750
70,000 +D.R. Horton, Inc. ...................................... 752,500
107,000 Data Documents, Inc. .................................... 936,250
38,000 Ford Motor Co. .......................................... 1,306,250
57,400 Innotech, Inc. .......................................... 466,375
67,000 Red Roof Inns, Inc. ..................................... 996,625
16,500 Sterling Commerce, Inc. ................................. 507,375
70,000 +Woolworth Corp. ........................................ 1,093,750
8,500 XEROX Corp. ............................................. 1,066,750
-----------
8,128,625
-----------
RAW/INTERMEDIATE MATERIALS -- 8.82%
21,000 Cambrex Corp. ........................................... 968,625
14,000 Dow Chemical Co. ........................................ 1,216,250
50,000 Fort Howard Corp. ....................................... 1,125,000
34,000 Rayonier, Inc. .......................................... 1,232,500
15,500 St. Joe Paper Co. ....................................... 895,125
14,000 W.R. Grace Co. .......................................... 1,095,500
-----------
6,533,000
-----------
ENERGY -- 5.82%
61,000 +Flores & Rucks, Inc. ................................... 1,128,500
10,500 Mobil Corp. ............................................. 1,216,687
70,000 +Nabors Industries, Inc. ................................ 997,500
48,000 YPF S.A. ADR............................................. 966,000
-----------
4,308,687
-----------
UTILITIES -- 4.02%
40,000 Mobilemedia Corp., Class A............................... 815,000
55,000 Westinghouse Electric Corp. ............................. 1,058,750
24,000 +Worldcom, Inc. ......................................... 1,104,000
-----------
2,977,750
-----------
CAPITAL GOODS -- 3.78%
15,000 Allied Signal, Inc. ..................................... 886,875
10,500 McDonnell Douglas Corp. ................................. 962,063
8,500 United Technologies Corp. ............................... 954,125
-----------
2,803,063
-----------
HOLDING COMPANY DIVERSIFIED -- 1.32%
12,000 Internatio-Muller N.V. .................................. 976,389
-----------
</TABLE>
See Notes to Financial Statements
26
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
BUSINESS AND INDUSTRIAL RESTRUCTURING FUND--(CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
TRANSPORTATION -- 0.75%
32,000 Canadian National Railway Co. ........................ $ 552,000
-----------
TOTAL COMMON STOCKS
(Cost $53,567,421).................................... 68,608,339
-----------
CONVERTIBLE PREFERRED STOCKS -- 2.69%
CONSUMER STAPLES -- 0.99%
120,000 RJR Nabisco Holdings, Series C........................ 735,000
-----------
UTILITIES -- 1.70%
30,000 Nortel Investors S.A. ................................ 1,260,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,031,961)..................................... 1,995,000
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
CONVERTIBLE BONDS -- 0.97%
ENERGY -- 0.97%
$ 25,000 Atlantic Richfield 9.00%, 9/15/97 (Cost $614,200)..... $ 718,750
-----------
DEMAND NOTES -- 5.33%
1,061,000 Associates Corp. of North America Master Notes........ 1,061,000
2,882,000 General Electric Co. Promissory Notes................. 2,882,000
-----------
TOTAL DEMAND NOTES
(Cost $3,943,000)..................................... 3,943,000
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $60,156,582*)........................................ 101.64% $75,265,089
OTHER ASSETS & LIABILITIES (NET)........................... (1.64) (1,212,786)
------ -----------
NET ASSETS................................................. 100.00% $74,052,303
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$60,294,428.
+ Non-income producing security.
ADR--American Depositary Receipt.
See Notes to Financial Statements
27
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
COMMUNICATION AND ENTERTAINMENT FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 91.41%
CONSUMER CYCLICAL -- 36.94%
60,000 +Activision, Inc. ....................................... $ 787,500
60,000 +Banyan Systems, Inc. ................................... 442,500
20,000 +Bay Networks, Inc. ..................................... 615,000
12,000 +Cisco Systems, Inc. .................................... 556,500
50,000 Comcast Corp., Class A Special........................... 881,250
20,000 CyberCash, Inc. ......................................... 655,000
42,500 +Franklin Electronic Publishers, Inc. ................... 1,046,563
50,000 GT Interactive Software.................................. 525,000
40,000 Gaylord Entertainment.................................... 1,080,000
10,000 International Business Machines Corp. ................... 1,111,250
24,800 +King World Productions, Inc. ........................... 1,026,100
48,500 +Paging Network, Inc. ................................... 1,212,500
10,000 Premenos Technologies Corp. ............................. 180,000
17,700 Scholastic Corp. ........................................ 1,216,875
25,000 +Symbol Technologies, Inc. .............................. 878,125
25,000 System Software Associates, Inc.......................... 631,250
40,000 Tele-Communications, Inc., Class A....................... 1,045,000
23,884 +Viacom, Inc., Class B................................... 1,006,113
18,550 Walt Disney Co. ......................................... 1,184,881
37,800 Wiley (John) & Sons, Inc., Class A....................... 1,261,575
-----------
17,342,982
-----------
TECHNOLOGY -- 31.03%
30,600 Adobe Systems, Inc. ..................................... 983,025
40,000 +Cerner Corp. ........................................... 910,000
80,000 Computer Learning Centers, Inc. ......................... 680,000
65,900 ECI Telecommunications Limited Designs................... 1,466,275
38,200 +Electronic Arts, Inc. .................................. 1,012,300
92,400 +General DataComm Industries, Inc. ...................... 981,750
32,600 +Informix Corp. ......................................... 859,825
100,000 +Interleaf, Inc. ........................................ 875,000
29,500 Nokia Corp., Class A ADR................................. 1,010,375
88,900 +Phoenix Technologies Ltd. .............................. 1,233,488
30,000 SDL, Inc. ............................................... 930,000
75,000 +Spectrum Holobyte, Inc. ................................ 609,375
19,000 Texas Instruments, Inc. ................................. 966,625
25,000 +3Com Corp. ............................................. 993,750
43,500 +Unitrode Corp. ......................................... 1,054,875
-----------
14,566,663
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
UTILITIES -- 17.77%
24,000 Ameritech Corp. ...................................... $ 1,308,000
20,800 AT&T Corp. ........................................... 1,274,000
34,600 +DSC Communications Corp. ............................ 929,875
30,000 +Intermedia Communications of Florida................. 540,000
46,600 MCI Communications Corp. ............................. 1,409,650
21,400 +MFS Communications Co., Inc. ........................ 1,332,150
20,000 NYNEX Corp. .......................................... 997,500
12,000 +Worldcom, Inc. ...................................... 552,000
-----------
8,343,175
-----------
CONSUMER STAPLES -- 5.67%
30,000 +CUC International, Inc. ............................. 877,500
30,000 Learning Tree International........................... 577,500
33,800 +Sylvan Learning Systems, Inc. ....................... 1,208,350
-----------
2,663,350
-----------
TOTAL COMMON STOCKS
(Cost $38,221,222).................................... 42,916,170
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
CONVERTIBLE BONDS -- 2.20%
TECHNOLOGY -- 2.20%
$1,031,000 Storage Technology Corp.
8.00%, 05/31/2015
(Cost $942,132)....................................... 1,033,577
-----------
DEMAND NOTES -- 8.44%
903,000 Associates Corp. of North America Master Notes........ 903,000
3,060,000 General Electric Co. Promissory Notes................. 3,060,000
-----------
TOTAL DEMAND NOTES
(Cost $3,963,000)..................................... 3,963,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $43,126,354*)........................................ 102.05% $47,912,747
OTHER ASSETS & LIABILITIES (NET)........................... (2.05) (963,407)
------ -----------
NET ASSETS................................................. 100.00% $46,949,340
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security.
ADR--American Depositary Receipt.
See Notes to Financial Statements
28
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
EARLY LIFE CYCLE FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- -----------
<C> <S> <C>
COMMON STOCKS -- 95.18%
TECHNOLOGY -- 34.31%
32,900 Adobe Systems, Inc. ..................................... $ 1,056,913
49,000 +Asyst Technologies, Inc. ............................... 1,114,750
64,500 +Cerner Corp. ........................................... 1,467,375
14,100 +Cyrix Corp. ............................................ 334,875
71,300 +Hyperion Software Corp. ................................ 1,515,125
60,000 +Informix Corp. ......................................... 1,582,500
155,400 +Interleaf, Inc. ........................................ 1,359,750
115,900 +Intersolv, Inc. ........................................ 1,318,363
81,900 +Metricom, Inc. ......................................... 1,003,275
105,000 +Perceptron, Inc. ....................................... 2,677,500
134,000 +Phoenix Technologies Ltd. .............................. 1,859,250
58,200 Premenos Technology Corp. ............................... 1,047,600
66,700 +Pyxis Corp. ............................................ 1,709,187
65,000 SDL, Inc. ............................................... 2,015,000
46,000 +StrataCom, Inc. ........................................ 1,679,000
91,500 System Software Associates, Inc. ........................ 2,310,375
81,000 +Thermedics, Inc. ....................................... 2,288,250
28,700 +Wall Data, Inc. ........................................ 444,850
-----------
26,783,938
-----------
CONSUMER STAPLES -- 18.99%
155,000 +Alliance Pharmaceutical Corp. .......................... 2,673,750
70,700 Allied Healthcare Products, Inc. ........................ 901,425
31,900 +Coastal Physician Group, Inc. .......................... 283,112
91,000 Goodmark Foods........................................... 1,319,500
118,686 +Ligand Pharmaceuticals, Class B......................... 1,379,725
114,500 Pepsi-Cola Puerto Rico Bottling Co., Class B............. 1,073,437
56,500 Pharmacopeia, Inc. ...................................... 1,377,188
40,800 +Physician Reliance Network, Inc. ....................... 1,591,200
113,700 +Resound Corp. .......................................... 1,250,700
57,000 +Sunrise Medical, Inc. .................................. 798,000
80,800 +Veterinary Centers of America, Inc. .................... 2,171,500
-----------
14,819,537
-----------
CONSUMER CYCLICAL -- 16.10%
120,000 +Activision, Inc. ....................................... 1,575,000
65,700 Allen Group, Inc. ....................................... 1,272,937
71,000 AMRE, Inc. .............................................. 1,322,375
30,000 Exide Corp. ............................................. 701,250
48,300 +Franklin Electronic Publishers, Inc. ................... 1,189,388
30,000 +Holophane Corp. ........................................ 525,000
76,000 +Recovery Engineering, Inc. ............................. 779,000
98,600 +Renters Choice, Inc. ................................... 1,713,175
137,800 +Spectrum Holobyte, Inc. ................................ 1,119,625
105,000 +Stimsonite Corp. ....................................... 971,250
80,000 +Westcott Communications, Inc. .......................... 1,400,000
-----------
12,569,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
FINANCIAL -- 10.32%
145,000 +Americredit Corp. ................................... $ 2,011,875
98,500 +Capsure Holdings Corp. .............................. 1,637,563
21,300 First American Corp. (Tennessee)...................... 945,187
61,000 +Homestate Holdings, Inc. ............................ 594,750
62,000 Integon Corp. ........................................ 1,263,250
106,000 +National Auto Credit, Inc. .......................... 1,603,250
-----------
8,055,875
-----------
CAPITAL GOODS -- 9.26%
116,700 +BE Aerospace, Inc. .................................. 1,254,525
13,500 Harmon Industries, Inc. .............................. 185,625
91,500 Juno Lighting, Inc. .................................. 1,258,125
54,000 Lindsay Manufacturing Co. ............................ 1,863,000
28,000 Teleflex, Inc. ....................................... 1,263,500
64,000 TriMas Corp. ......................................... 1,408,000
-----------
7,232,775
-----------
TRANSPORTATION -- 3.30%
63,000 Air Express International Corp. ...................... 1,606,500
75,000 SkyWest, Inc. ........................................ 965,625
-----------
2,572,125
-----------
RAW/INTERMEDIATE MATERIALS -- 2.05%
72,700 NN Ball & Roller, Inc. ............................... 1,599,400
-----------
ENERGY -- 0.76%
71,000 Snyder Oil Corp. ..................................... 594,625
-----------
UTILITIES -- 0.09%
72,000 +New World Power Corp. ............................... 72,000
-----------
TOTAL COMMON STOCKS
(Cost $64,165,720).................................... 74,299,275
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 5.99%
$1,245,000 Associates Corp. of North America Master Notes........ 1,245,000
3,433,000 General Electric Co. Promissory Notes................. 3,433,000
-----------
TOTAL DEMAND NOTES
(Cost $4,678,000)..................................... 4,678,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $68,843,720*)........................................ 101.17% $78,977,275
OTHER ASSETS & LIABILITIES (NET)........................... (1.17) (916,429)
------ -----------
NET ASSETS................................................. 100.00% $78,060,846
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$68,877,045.
+ Non-income producing security.
See Notes to Financial Statements
29
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
ENVIRONMENTALLY-RELATED PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ----------
<C> <S> <C>
COMMON STOCKS -- 101.26%
CAPITAL GOODS -- 33.01%
10,000 BHA Group, Inc. ........................................... $ 127,500
17,000 +Continental Waste Industries, Inc. ....................... 178,500
3,000 Harsco Corp. .............................................. 198,750
6,000 IMCO Recycling, Inc. ...................................... 118,500
3,000 +Republic Waste Industries, Inc. .......................... 93,750
5,000 +U.S. Filter Corp. ........................................ 140,000
5,500 +U.S.A. Waste Services, Inc. .............................. 140,250
5,000 WMX Technologies, Inc. .................................... 158,750
3,000 York International Corp. .................................. 147,000
----------
1,303,000
----------
TECHNOLOGY -- 27.26%
15,000 Advanced Lighting Technologies, Inc. ...................... 208,125
3,500 +Asyst Technologies, Inc. ................................. 79,625
5,000 +Cerner Corp. ............................................. 113,750
3,000 Honeywell Corp. ........................................... 165,750
9,000 Memtec Ltd. ADR............................................ 239,625
3,500 +Thermedics, Inc. ......................................... 98,875
5,625 +Thermo Instrument Systems, Inc. .......................... 170,156
----------
1,075,906
----------
RAW/INTERMEDIATE
MATERIAL -- 14.52%
7,000 Fort Howard Corp. ......................................... 157,500
4,500 Minerals Technologies, Inc. ............................... 155,813
5,000 Pall Corp. ................................................ 128,125
2,500 Pioneer Hi-Bred International, Inc. ....................... 131,562
----------
573,000
----------
ENERGY -- 12.50%
2,000 Fluor Corp. ............................................... 136,500
4,000 Newpark Resources, Inc. ................................... 119,000
4,000 Thermo Electron Corp. ..................................... 238,000
----------
493,500
----------
UTILITIES -- 6.11%
6,000 +California Energy Co., Inc. .............................. 159,750
2,500 Culligan Water Technologies, Inc. ......................... 81,250
----------
241,000
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ----------
<C> <S> <C>
CONSUMER CYCLICAL -- 5.31%
1,200 General Electric Co. ...................................... $ 93,450
3,600 Olsten Corp. .............................................. 116,100
----------
209,550
----------
CONSUMER STAPLES -- 2.55%
5,000 Equifax, Inc. ............................................. 100,625
----------
TOTAL COMMON STOCKS
(Cost $2,986,202).......................................... 3,996,581
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $2,986,202*).......................................... 101.26% $3,996,581
OTHER ASSETS AND LIABILITIES (NET).......................... (1.26) (49,815)
------ ----------
NET ASSETS.................................................. 100.00% $3,946,766
====== ==========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$3,002,702.
+ Non-income producing security.
ADR -- American Depositary Receipt.
See Notes to Financial Statements
30
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
GLOBAL COMPETITORS FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ -----------
<C> <S> <C>
COMMON STOCKS -- 91.25%
CONSUMER STAPLES -- 20.97%
23,000 CPC International, Inc.................................... $ 1,595,625
40,000 Duracell International, Inc............................... 1,985,000
13,200 Estee Lauder Companies, Class A........................... 471,900
35,000 Gillette Co............................................... 1,811,250
3,000 L'Oreal................................................... 940,499
30,000 Libbey, Inc. ............................................. 656,250
26,000 Pfizer, Inc. ............................................. 1,742,000
25,000 Procter & Gamble Co....................................... 2,118,750
35,000 Schering-Plough Corp...................................... 2,034,375
25,000 Walt Disney Co. .......................................... 1,596,875
-----------
14,952,524
-----------
TECHNOLOGY -- 16.71%
35,000 Adobe Systems, Inc........................................ 1,124,375
33,000 Astra AB, Class A Free.................................... 1,517,338
34,000 Goodyear Tire and Rubber Co. ............................. 1,734,000
35,000 +Informix Corp............................................ 923,125
60,000 +Intersolv, Inc. ......................................... 682,500
60,000 +Hyperion Software Corp................................... 1,275,000
5,000 International Business Machines Corp...................... 555,625
15,000 Motorola, Inc. ........................................... 795,000
14,000 Texas Instruments, Inc. .................................. 712,250
50,000 ThermoSpectra Corp........................................ 868,750
60,000 +ThermoLase Corp. ........................................ 1,455,000
10,000 Vishay Intertechnology, Inc. ............................. 270,000
-----------
11,912,963
-----------
CONSUMER CYCLICAL -- 14.78%
35,000 General Motors, Class E................................... 1,995,000
10,000 Hilton Hotels Corp........................................ 940,000
32,000 Luxottica Group S.p.A. ADR................................ 2,500,000
36,000 McDonald's Corp. ......................................... 1,728,000
25,000 +Nu-Kote Holdings, Inc., Class A.......................... 443,750
27,500 ThermoQuest Corp. ........................................ 467,500
35,000 +Thermo Fibertek, Inc..................................... 778,750
40,000 +Viacom, Inc., Class B.................................... 1,685,000
-----------
10,538,000
-----------
FINANCIAL -- 10.70%
22,000 American International Group, Inc. ....................... 2,059,750
28,000 Citicorp.................................................. 2,240,000
30,000 Donaldson, Lufkin & Jenrette, Inc. ....................... 1,005,000
45,000 Morgan Stanley Group, Inc. ............................... 2,328,750
-----------
7,633,500
-----------
CAPITAL GOODS -- 8.39%
28,000 General Electric Co. ..................................... 2,180,500
22,000 Illinois Tool Works, Inc.................................. 1,421,750
35,000 Thermo Electron Corp. .................................... 2,082,500
15,000 +Thermo Voltek Corp. ..................................... 296,250
-----------
5,981,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- -----------
<C> <S> <C>
UTILITIES -- 8.28%
20,000 +AirTouch Communications, Inc. ...................... $ 622,500
15,000 AT&T Corp............................................ 918,750
75,000 +LCI International, Inc. ............................ 1,837,500
40,000 MCI Communications Corp. ............................ 1,210,000
35,000 Vodafone Group plc ADR............................... 1,312,500
-----------
5,901,250
-----------
ENERGY -- 8.21%
10,000 Anadarko Petroleum Corp. ............................ 555,000
21,000 Chevron Corp......................................... 1,178,625
18,500 Mobil Corp. ......................................... 2,143,687
14,000 Royal Dutch Petroleum Co............................. 1,977,500
-----------
5,854,812
-----------
RAW/INTERMEDIATE MATERIALS -- 2.73%
40,000 +Crown Cork & Seal Co., Inc.......................... 1,950,000
-----------
TRANSPORTATION -- 0.48%
5,000 Union Pacific Corp................................... 343,125
-----------
TOTAL COMMON STOCKS
(Cost $53,206,112)................................... 65,067,174
-----------
CONVERTIBLE PREFERRED STOCKS -- 1.97%
TRANSPORTATION -- 1.97%
23,000 Delta Air Lines, Inc., Series C, Preferred Exchange
$3.50
(Cost $1,226,370).................................... 1,405,875
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
CONVERTIBLE BONDS -- 0.73%
CONSUMER CYCLICAL -- 0.73%
$ 435,000 General Instruments Corp., Jr. Subordinated, 5.00%,
06/15/2000 (Cost $553,109)........................... 517,106
-----------
DEMAND NOTES -- 6.40%
1,373,000 Associates Corp. of North America Master Notes....... 1,373,000
3,191,000 General Electric Co. Promissory Notes................ 3,191,000
-----------
TOTAL DEMAND NOTES
(Cost $4,564,000).................................... 4,564,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $59,549,591*)........................................ 100.35% $71,554,155
OTHER ASSETS & LIABILITIES (NET)........................... (0.35) (249,664)
------ -----------
NET ASSETS................................................. 100.00% $71,304,491
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security.
ADR -- American Depositary Receipt.
See Notes to Financial Statements
31
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
LONG-TERM SUPPLY OF ENERGY FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------- ----------
<C> <S> <C>
COMMON STOCKS -- 96.49%
ENERGY -- 83.40%
14,000 Amoco Corp................................................ $1,011,500
15,500 Anadarko Petroleum Corp................................... 860,250
8,500 British Petroleum Company plc............................. 903,125
13,500 +Chesapeake Energy Corp. ................................. 624,375
9,000 Chevron Corp. ............................................ 505,125
34,000 +Crown Central Petroleum, Class B......................... 595,000
13,000 Enron Corp. .............................................. 479,375
15,000 Exxon Corp. .............................................. 1,224,375
20,000 Falcon Drilling Company, Inc.............................. 445,000
46,000 +Flores & Rucks, Inc...................................... 851,000
70,000 +Hugoton Energy Corp...................................... 498,750
14,000 KN Energy, Inc. .......................................... 435,750
11,000 Louisiana Land & Exploration Co. ......................... 512,875
120,000 +McFarland Energy, Inc.................................... 930,000
11,500 Mobil Corp................................................ 1,332,563
50,000 +Nabors Industries, Inc................................... 712,500
15,000 Norsk Hydro A.S., ADR..................................... 656,250
18,000 Panhandle Eastern Corp. .................................. 560,250
9,000 Royal Dutch Petroleum Co.................................. 1,271,250
37,000 +SEACOR Holdings, Inc..................................... 1,359,750
10,000 Schlumberger Ltd.......................................... 791,250
15,800 +Tejas Gas Corp........................................... 772,225
59,000 +Tejas Power Corp., Class A............................... 523,625
42,000 +United Meridian Corp..................................... 1,002,750
9,500 +Western Atlas, Inc....................................... 570,000
----------
19,428,913
----------
UTILITIES -- 5.00%
45,000 +AES Corp................................................. 1,113,750
50,000 +New World Power Corp..................................... 50,000
----------
1,163,750
----------
CONSUMER CYCLICAL -- 4.26%
20,000 Duracell International, Inc............................... 992,500
----------
TECHNOLOGY -- 3.83%
70,000 +Energy Research Corp..................................... 892,500
----------
TOTAL COMMON STOCKS
(Cost $18,921,140)........................................ 22,477,663
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<C> <S> <C>
DEMAND NOTES -- 3.73%
$ 75,000 Associates Corp. of North America Master Notes......... 75,000
793,000 General Electric Co. Promissory Notes.................. 793,000
-----------
TOTAL DEMAND NOTES
(Cost $868,000)........................................ 868,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $19,789,140*)........................................ 100.22% $23,345,663
OTHER ASSETS & LIABILITIES (NET)........................... (0.22) (51,172)
------ -----------
NET ASSETS................................................. 100.00% $23,294,491
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Non-income producing security.
ADR--American Depositary Receipt.
See Notes to Financial Statements
32
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
PORTFOLIO OF INVESTMENTS MARCH 31, 1996
PRODUCTIVITY ENHANCERS FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
-------- -----------
<C> <S> <C>
COMMON STOCKS -- 98.25%
TECHNOLOGY -- 54.68%
15,000 +Applied Material, Inc.................................. $ 521,250
20,000 +Bay Networks, Inc...................................... 615,000
15,000 +Cabletron Systems, Inc................................. 993,750
20,000 +Cisco Systems, Inc..................................... 927,500
25,000 +Cognex Corp............................................ 643,750
20,000 +Digital Equipment Corp................................. 1,102,500
15,000 Hewlett-Packard Co...................................... 1,410,000
18,000 Intel Corp.............................................. 1,021,500
12,000 International Business Machines Corp. .................. 1,333,500
15,000 +Littlefuse, Inc........................................ 562,500
8,000 +Microsoft Corp......................................... 824,000
10,000 Motorola, Inc........................................... 530,000
10,000 Objective Systems Integrators, Inc...................... 455,000
15,000 +Oracle System Corp. ................................... 703,125
35,000 +Perceptron, Inc........................................ 892,500
50,000 +Robotic Vision Systems, Inc............................ 793,750
15,000 +Sun Microsystems, Inc. ................................ 656,250
15,000 Texas Instruments, Inc.................................. 763,125
30,000 +Vishay Intertechnology, Inc............................ 810,000
6,500 Xylan Corp.............................................. 336,375
-----------
15,895,375
-----------
CONSUMER CYCLICAL -- 21.35%
15,000 +AutoZone, Inc.......................................... 508,125
13,000 Chrysler, Corp.......................................... 809,250
25,000 Danaher Corp............................................ 925,000
30,000 Ford Motor Co. ......................................... 1,031,250
10,000 Genuine Parts Co........................................ 450,000
8,000 Goodyear Tire and Rubber Co............................. 408,000
20,000 +O'Reilly Automotive, Inc. ............................. 695,000
10,000 Pep Boys--Manny, Moe & Jack............................. 335,000
10,000 Snap-On Tools Corp...................................... 467,500
25,000 Wal-Mart Stores, Inc.................................... 578,125
-----------
6,207,250
-----------
CAPITAL GOODS -- 13.10%
20,000 Crane, Co............................................... 807,500
10,000 Dover Corp.............................................. 457,500
2,000 Emerson Electric, Co.................................... 161,500
25,000 IDEX Corp............................................... 971,875
7,000 Illinois Tool Works, Inc................................ 452,375
6,000 MSC Industrial Direct Co., Inc.......................... 173,250
5,000 Thermo Electron Corp.................................... 297,500
12,000 +Wolverine Tube, Inc.................................... 487,500
-----------
3,809,000
-----------
RAW/INTERMEDIATE
MATERIALS -- 4.54%
60,000 NN Ball & Roller, Inc................................... 1,320,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- -----------
<C> <S> <C>
FINANCIAL -- 2.75%
10,000 Citicorp.............................................. $ 800,000
-----------
UTILITIES -- 1.83%
15,000 +NEXTEL Communications, Inc., Class A................. 281,250
10,000 +Paging Network, Inc.................................. 250,000
-----------
531,250
-----------
TOTAL COMMON STOCKS
(Cost $27,632,799).................................... 28,562,875
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
DEMAND NOTES -- 0.89%
$257,000 General Electric Co. Promissory Notes (Cost
$257,000)............................................. 257,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $27,889,799*)........................................ 99.14% $28,819,875
OTHER ASSETS & LIABILITIES (NET)........................... 0.86 249,404
------ -----------
NET ASSETS................................................. 100.00% $29,069,279
====== ===========
</TABLE>
- --------
* For Federal tax purposes, the tax basis of investments aggregates
$28,481,034.
+ Non-income producing security.
See Notes to Financial Statements
33
<PAGE>
EXCELSIOR FUNDS, INC.
(FORMERLY UST MASTER FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Excelsior Funds, Inc. ("Excelsior Fund") (formerly UST Master Funds, Inc.)
was incorporated under the laws of the State of Maryland on August 2, 1984 and
is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
Excelsior Fund currently offers shares in twenty managed investment
portfolios, each having its own investment objectives and policies.
The following is a summary of significant accounting policies for Equity
Fund, Income and Growth Fund, Aging of America Fund, Business and Industrial
Restructuring Fund, Communication and Entertainment Fund, Early Life Cycle
Fund, Environmentally-Related Products and Services Fund, Global Competitors
Fund, Long-Term Supply of Energy Fund and Productivity Enhancers Fund (the
"Portfolios"). Such policies are in conformity with generally accepted
accounting principles for investment companies and are consistently followed
by Excelsior Fund in the preparation of the financial statements. Generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates. The financial
statements for the remaining portfolios of Excelsior Fund and Excelsior Tax-
Exempt Fund, Inc. ("Excelsior Tax-Exempt Fund") are presented separately.
(A) PORTFOLIO VALUATION:
Investments in securities that are traded on a recognized stock exchange
are valued at the last sale price on the exchange on which such securities
are primarily traded or at the last sale price on the national securities
market. Securities traded over-the-counter are valued each business day on
the basis of the closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid
prices (as calculated by an independent pricing service (the "Service")
based upon its evaluation of the market for such securities) when, in the
judgement of the Service, quoted bid prices for securities are readily
available and are representative of the bid side of the market. Portfolio
securities that are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on
their respective exchanges, except that when an occurrence subsequent to
the time a value was so established is likely to have changed such value,
then a fair value of those securities will be determined by consideration
of other factors under the direction of the Board of Directors. A security
which is traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market on which the security is
traded. Securities for which market quotations are not readily available
are valued at fair value, pursuant to guidelines adopted by Excelsior
Fund's Board of Directors. Short-term debt instruments with remaining
maturities of 60 days or less are valued at amortized cost, which
approximates market value.
All other foreign securities are valued at the last current bid quotation
if market quotations are available, or at fair value as determined in
accordance with policies established by the Board of Directors. Investment
valuations, other assets, and liabilities initially expressed in foreign
currencies
34
<PAGE>
are converted each business day into U.S. dollars based upon current
exchange rates. Purchases and sales of foreign investments and income and
expenses are converted into U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions. Gains and losses
attributable to foreign currency exchange rates are recorded for financial
statement purposes as net realized gains and losses on investments. That
portion of both realized and unrealized gains and losses on investments
that results from fluctuations in foreign currency exchange rates is not
separately disclosed.
Forward foreign currency exchange contracts: The Portfolios'
participation in forward currency exchange contracts will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging involves the purchase or sale of foreign currency with
respect to specific receivables or payables of a Portfolio generally
arising in connection with the purchase or sale of its portfolio
securities. Risk may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts
and is generally limited to the amount of unrealized gain on the contracts,
if any, at the date of default. Risk may also arise from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Contracts are marked-to-market daily and the change in market value is
recorded as unrealized appreciation or depreciation. Realized gains or
losses arising from such transactions are included in net realized gains or
losses from foreign currency transactions.
(B) SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Security transactions are recorded on a trade date basis. Realized gains
and losses on investments sold are recorded on the basis of identified
cost. Interest income, including where applicable, amortization of discount
on investments, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except for certain dividends from foreign
securities, which are recorded as soon as the Portfolios are informed of
the dividend.
(C) REPURCHASE AGREEMENTS:
Excelsior Fund may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to
the seller's agreement to repurchase and Excelsior Fund's agreement to
resell such securities at mutually agreed upon prices. Securities purchased
subject to such repurchase agreements are deposited with Excelsior Fund's
custodian or sub-custodian or are maintained in the Federal
Reserve/Treasury book-entry system and must have, at all times, an
aggregate market value greater than 102% of the repurchase price (including
accrued interest).
If the value of the underlying security, including accrued interest,
falls below the value of 102% of the repurchase price plus accrued
interest, Excelsior Fund will require the seller to deposit additional
collateral by the next business day. Default or bankruptcy of the seller
may, however, expose the applicable Portfolio of Excelsior Fund to possible
delay in connection with the disposition of the underlying securities or
loss to the extent that proceeds from a sale of the underlying securities
were less than the repurchase price under the agreement.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income are declared and paid quarterly. Net
realized capital gains, unless offset by any available capital loss
carryforward, are distributed to shareholders at least annually.
35
<PAGE>
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 and post-October losses.
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
(E) FEDERAL TAXES:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
At March 31, 1996, the following Portfolios had approximate capital loss
carryforwards for Federal tax purposes available to offset future net
capital gains through the indicated expiration dates:
<TABLE>
<CAPTION>
EXPIRATION DATE
MARCH 31,
--------------------------
2002 2003 2004 TOTAL
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Aging of America Fund.................. $ 32,000 $279,000 $ -- $311,000
Environmentally-Related Products and
Services Fund......................... 154,000 52,000 261,000 467,000
</TABLE>
To the extent that such carryforward is utilized, no capital gain
distribution will be made. During the year ended March 31, 1996, Equity
Fund, Aging of America Fund, Global Competitors Fund and Long-Term Supply
of Energy Fund utilized capital loss carryforwards for Federal tax purposes
totaling approximately $206,000, $22,000, $228,000 and $48,000,
respectively.
Net capital losses incurred after October 31 and within the taxable year
are deemed to arise on the first business day of a Portfolio's next taxable
year. Business and Industrial Restructuring Fund and Global Competitors
Fund incurred, and elected to defer, net capital losses of approximately
$2,000 and $87,000, respectively, for the year ended March 31, 1996.
36
<PAGE>
At March 31, 1996, 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 (DEPRECIATION) APPRECIATION
------------ -------------- ------------
<S> <C> <C> <C>
Equity Fund....................... $56,799,280 $(1,427,857) $55,371,423
Income and Growth Fund............ 29,665,031 (1,503,782) 28,161,249
Aging of America Fund............. 9,955,946 (226,930) 9,729,016
Business and Industrial Restruc-
turing Fund...................... 16,027,645 (1,056,984) 14,970,661
Communication and Entertainment
Fund............................. 7,079,227 (2,292,834) 4,786,393
Early Life Cycle Fund............. 17,382,087 (7,281,857) 10,100,230
Environmentally-Related Products
and Services Fund................ 1,023,151 (29,272) 993,879
Global Competitors Fund........... 12,717,105 (712,541) 12,004,564
Long-Term Supply of Energy Fund... 4,271,961 (715,438) 3,556,523
Productivity Enhancers Fund....... 1,566,093 (1,227,252) 338,841
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS
United States Trust Company of New York ("U.S. Trust") serves as the
investment adviser to Excelsior Fund. For the services provided pursuant to
the Investment Advisory Agreement, U.S. Trust is entitled to receive a fee,
computed daily and paid monthly, at the annual rates of .75% of the average
daily net assets of the Equity Fund and Income and Growth Fund, and .60% of
the average daily net assets of the Aging of America Fund, Business and
Industrial Restructuring Fund, Communication and Entertainment Fund, Early
Life Cycle Fund, Environmentally-Related Products and Services Fund, Global
Competitors Fund, Long-Term Supply of Energy Fund and Productivity Enhancers
Fund.
Effective January 1, 1996, U.S. Trust, Chase Global Funds Services Company
("CGFSC"), a subsidiary of The Chase Manhattan Bank, N.A. (formerly, Mutual
Funds Service Company ("MFSC") which was a subsidiary of U.S. Trust), and
Federated Administrative Services (collectively, the "Administrators") provide
administrative services to Excelsior Fund. For the services provided to the
Portfolios, the Administrators are entitled jointly to annual fees, computed
daily and paid monthly, based on the combined aggregate average daily net
assets of Excelsior Fund (excluding Excelsior Fund's international equity
portfolios), Excelsior Tax-Exempt Fund and Excelsior Institutional Trust, all
of which are affiliated investment companies, as follows: .200% of the first
$200 million, .175% of the next $200 million, and .150% over $400 million.
Administration fees payable by each Portfolio of the three investment
companies are determined in proportion to the relative average daily net
assets of the respective Portfolios for the period paid. After such allocation
has been made, the Administrators are entitled jointly to an annual minimum
fee of $50,000 from Aging of America Fund, Business and Industrial
Restructuring Fund, Communication and Entertainment Fund, Early Life Cycle
Fund, Environmentally-Related Products and Services Fund, Global Competitors
Fund, Long-Term Supply of
37
<PAGE>
Energy Fund and Productivity Enhancers Fund. From September 1, 1995 through
December 31, 1995, CGFSC and Federated Administrative Services served as
administrators to Excelsior Fund; from August 1, 1995 through August 31, 1995,
MFSC and Federated Administrative Services served as administrators to
Excelsior Fund; and prior to August 1, 1995, MFSC and Concord Holding
Corporation served as administrators to Excelsior Fund all under the same
terms, conditions and fees as stated above.
For the period from April 1, 1995 through August 31, 1995, administration
fees charged by MFSC were as follows:
<TABLE>
<S> <C>
Equity Fund............................................................. $88,449
Income and Growth Fund.................................................. 63,693
Aging of America Fund................................................... 16,412
Business and Industrial Restructuring Fund.............................. 22,540
Communication and Entertainment Fund.................................... 20,677
Early Life Cycle Fund................................................... 33,507
Environmentally-Related Products and Services Fund...................... 3,776
Global Competitors Fund................................................. 20,649
Long-Term Supply of Energy Fund......................................... 11,182
Productivity Enhancers Fund............................................. 13,771
</TABLE>
From time to time, as they may deem appropriate in their sole discretion, or
pursuant to applicable state expense limitations, U.S. Trust and the
Administrators may undertake to waive a portion or all of the fees payable to
them and also may reimburse the Portfolios for a portion of other expenses.
Until further notice to Excelsior Fund, U.S. Trust and/or Administrators
intend to voluntarily waive fees to the extent necessary for each of Aging of
America Fund, Business and Industrial Restructuring Fund, Communication and
Entertainment Fund, Early Life Cycle Fund, Environmentally-Related Products
and Services Fund, Global Competitors Fund, Long-Term Supply of Energy Fund
and Productivity Enhancers Fund to maintain an annual expense ratio of not
more than .99%. In addition, the Administrators intend to maintain their
annual joint minimum fee at $18,000 until further notice for Aging of America
Fund, Business and Industrial Restructuring Fund, Communication and
Entertainment Fund, Early Life Cycle Fund, Environmentally-Related Products
and Services Fund, Global Competitors Fund, Long-Term Supply of Energy Fund
and Productivity Enhancers Fund. For the year ended March 31, 1996, U.S. Trust
and the Administrators waived fees as follows:
<TABLE>
<CAPTION>
U.S.
TRUST ADMINISTRATORS
------- --------------
<S> <C> <C>
Aging of America Fund................................... $ 278 $ --
Environmentally-Related Products and Services Fund...... 25,855 33,102
Long-Term Supply of Energy Fund......................... -- 17,695
Productivity Enhancers Fund............................. 659 9,096
</TABLE>
Excelsior Fund has also entered into shareholder servicing agreements with
various service organizations (which may include affiliates of U.S. Trust)
requiring them to provide administrative support services to their customers
owning shares of the Portfolios. As a consideration for the administrative
services provided by each service organization to its customers, each
Portfolio will pay the service organization an administrative service fee at
the annual rate of up to .40% of the average daily net asset value of its
shares held by the service organizations' customers. Such services may include
38
<PAGE>
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. Until
further notice to Excelsior Fund, U.S. Trust and the Administrators have
voluntarily agreed to waive investment advisory and administration fees
payable by each Portfolio in an amount equal to administrative service fees
payable by that Portfolio. For the year ended March 31, 1996, 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>
Equity Fund............................................ $106,377 $6,450
Income and Growth Fund................................. 69,637 1,991
Aging of America Fund.................................. 15,659 26
Business and Industrial Restructuring Fund............. 21,119 53
Communication and Entertainment Fund................... 18,360 54
Early Life Cycle Fund.................................. 57,942 116
Environmentally-Related Products and Services Fund..... -- 4,404
Global Competitors Fund................................ 16,714 23
Long-Term Supply of Energy Fund........................ 10,935 11
Productivity Enhancers Fund............................ 11,154 15
</TABLE>
Effective August 1, 1995, Edgewood Services, Inc. (the "Distributor"), a
wholly-owned subsidiary of Federated Investors, replaced UST Distributors,
Inc. as the sponsor and distributor of Excelsior Fund. Certain sales of
Excelsior Fund's shares are subject to a maximum sales charge of 4 1/2% of the
offering price. Shares of each Portfolio are sold on a continual basis by the
Distributor.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000. No person who is an officer, director, or employee of
U.S. Trust or the Administrators, or of any parent or subsidiary thereof, who
serves as an officer, director or employee of the Excelsior Fund receives any
compensation from the Excelsior Fund.
U.S. Trust serves as shareholder servicing and dividend disbursing agent to
Excelsior Fund and effective September 1, 1995, CGFSC serves as sub-
shareholder servicing agent. Prior to September 1, 1995, MFSC served as sub-
shareholder servicing agent. For the period from April 1, 1995 through August
31, 1995, shareholder servicing fees charged by U.S. Trust and MFSC were as
follows:
<TABLE>
<S> <C>
Equity Fund............................................................. $27,309
Income and Growth Fund.................................................. 23,044
Aging of America Fund................................................... 4,112
Business and Industrial Restructuring Fund.............................. 7,854
Communication and Entertainment Fund.................................... 8,059
Early Life Cycle Fund................................................... 9,059
Environmentally-Related Products and Services Fund...................... 1,658
Global Competitors Fund................................................. 5,371
Long-Term Supply of Energy Fund......................................... 3,973
Productivity Enhancers Fund............................................. 4,284
</TABLE>
39
<PAGE>
Effective September 1, 1995, The Chase Manhattan Bank, N.A. ("Chase") serves
as custodian of Excelsior Fund's assets. Prior to September 1, 1995, U.S.
Trust served as the custodian of Excelsior Fund's assets. For the period from
April 1, 1995 through August 31, 1995, custody fees charged by U.S. Trust were
as follows:
<TABLE>
<S> <C>
Equity Fund............................................................ $33,312
Income and Growth Fund................................................. 24,706
Aging of America Fund.................................................. 10,721
Business and Industrial Restructuring Fund............................. 8,793
Communication and Entertainment Fund................................... 6,001
Early Life Cycle Fund.................................................. 9,841
Environmentally-Related Products and Services Fund..................... 466
Global Competitors Fund................................................ 7,703
Long-Term Supply of Energy Fund........................................ 3,469
Productivity Enhancers Fund............................................ 8,032
</TABLE>
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities, excluding short-term investments, for the
Portfolios aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Equity Fund.......................................... $ 55,591,338 $ 41,836,187
Income and Growth Fund............................... 28,579,853 24,264,551
Aging of America Fund................................ 24,369,799 10,879,836
Business and Industrial Restructuring Fund........... 53,804,566 26,742,517
Communication and Entertainment Fund................. 35,357,341 24,373,948
Early Life Cycle Fund................................ 43,003,883 23,638,280
Environmentally-Related Products and Services Fund... 2,666,655 3,938,610
Global Competitors Fund.............................. 40,641,334 7,454,927
Long-Term Supply of Energy Fund...................... 11,492,641 8,534,547
Productivity Enhancers Fund.......................... 124,220,943 119,542,633
</TABLE>
4. COMMON STOCK:
Excelsior Fund currently has authorized capital classified into forty
classes of shares, each representing interests in one of twenty separate
portfolios. Authorized capital for each Portfolio is as follows: With respect
to each of the Equity and Income and Growth Funds, 375 million shares of
Common Stock and 500 million shares of Common Stock--Special Series 1; and
with respect to each of the Aging of America Fund, Business and Industrial
Restructuring Fund, Communication and Entertainment Fund, Early Life Cycle
Fund, Environmentally-Related Products and Services Fund, Global Competitors
Fund, Long-Term Supply of Energy Fund and Productivity Enhancers Fund, 500
million shares of Common Stock and 500 million shares of Common Stock--Special
Series 1. At March 31, 1996, no shares of Common Stock--Special Series 1
(Trust Shares) of any Fund were outstanding.
Each share (irrespective of series designation) 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
40
<PAGE>
to such dividends and distributions of taxable earnings on the assets belonging
to such Portfolio as are declared at the discretion of Excelsior Fund's Board
of Directors.
<TABLE>
<CAPTION>
EQUITY FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,335,582 $ 53,181,056 1,514,081 $ 29,964,878
Issued in connection with
USAffinity
Acquisition (Note 6)..... -- -- 289,274 5,668,178
Issued as reinvestment of
dividends................ 305,329 6,724,708 57,340 1,088,850
Redeemed.................. (1,343,291) (30,587,413) (1,818,997) (35,755,808)
---------- ------------ ---------- ------------
Net Increase.............. 1,297,620 $ 29,318,351 41,698 $ 966,098
========== ============ ========== ============
<CAPTION>
INCOME AND GROWTH FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,141,034 $ 28,619,545 2,399,422 $ 27,811,019
Issued in connection with
USAffinity Acquisition
(Note 6)................. -- -- 264,712 3,053,313
Issued as reinvestment of
dividends................ 67,047 859,603 135,164 1,535,569
Redeemed.................. (1,842,621) (24,372,374) (2,439,219) (27,599,135)
---------- ------------ ---------- ------------
Net Increase.............. 365,460 $ 5,106,774 360,079 $ 4,800,766
========== ============ ========== ============
<CAPTION>
AGING OF AMERICA FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,314,243 $ 20,136,308 1,707,584 $ 12,399,386
Issued as reinvestment of
dividends................ 717 6,037 540 3,818
Redeemed.................. (577,612) (5,224,382) (395,623) (2,836,384)
---------- ------------ ---------- ------------
Net Increase.............. 1,737,348 $ 14,917,963 1,312,501 $ 9,566,820
========== ============ ========== ============
<CAPTION>
BUSINESS AND INDUSTRIAL RESTRUCTURING FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,885,350 $ 36,357,535 1,826,131 $ 17,995,664
Issued as reinvestment of
dividends................ 8,050 103,087 2,798 26,882
Redeemed.................. (476,976) (5,855,224) (465,836) (4,631,937)
---------- ------------ ---------- ------------
Net Increase.............. 2,416,424 $ 30,605,398 1,363,093 $ 13,390,609
========== ============ ========== ============
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
COMMUNICATION AND ENTERTAINMENT FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,119,351 $ 22,797,588 1,530,541 $ 13,804,283
Issued as reinvestment of
dividends................ 29,026 316,412 8,157 71,305
Redeemed.................. (701,525) (7,460,709) (840,212) (7,600,458)
---------- ------------ ---------- ------------
Net Increase.............. 1,446,852 $ 15,653,291 698,486 $ 6,275,130
========== ============ ========== ============
<CAPTION>
EARLY LIFE CYCLE FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 3,520,395 $ 36,370,860 3,639,278 $ 32,443,615
Issued as reinvestment of
dividends................ 41,814 408,622 8,625 73,252
Redeemed.................. (1,214,105) (12,475,517) (1,636,553) (14,832,732)
---------- ------------ ---------- ------------
Net Increase.............. 2,348,104 $ 24,303,965 2,011,350 $ 17,684,135
========== ============ ========== ============
<CAPTION>
ENVIRONMENTALLY-RELATED PRODUCTS
AND SERVICES FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 186,141 $ 1,314,576 301,109 $ 1,866,198
Issued as reinvestment of
dividends................ -- -- 45 271
Redeemed.................. (377,073) (2,674,660) (326,035) (2,008,274)
---------- ------------ ---------- ------------
Net Decrease.............. (190,932) $ (1,360,084) (24,881) $ (141,805)
========== ============ ========== ============
<CAPTION>
GLOBAL COMPETITORS FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 4,254,987 $ 42,316,428 1,876,723 $ 14,926,152
Issued as reinvestment of
dividends................ 1,393 13,702 526 4,062
Redeemed.................. (640,495) (6,356,442) (218,038) (1,724,311)
---------- ------------ ---------- ------------
Net Increase.............. 3,615,885 $ 35,973,688 1,659,211 $ 13,205,903
========== ============ ========== ============
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM SUPPLY OF ENERGY FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 1,212,809 $ 10,257,682 1,467,892 $ 11,543,268
Issued as reinvestment of
dividends................ 820 6,920 858 6,714
Redeemed.................. (770,397) (6,756,240) (358,847) (2,767,140)
---------- ------------ ---------- ------------
Net Increase.............. 443,232 $ 3,508,362 1,109,903 $ 8,782,842
========== ============ ========== ============
<CAPTION>
PRODUCTIVITY ENHANCERS FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/96 03/31/95
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 2,029,415 $ 18,271,102 1,751,841 $ 13,239,078
Issued as reinvestment of
dividends................ 16,492 143,555 759 5,671
Redeemed.................. (1,005,818) (9,148,291) (1,493,416) (11,376,889)
---------- ------------ ---------- ------------
Net Increase.............. 1,040,089 $ 9,266,366 259,184 $ 1,867,860
========== ============ ========== ============
</TABLE>
5. ORGANIZATION COSTS
Excelsior Fund has borne all costs in connection with the initial
organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under Federal and state securities
regulations. All such costs are being amortized on the straight-line basis
over periods of five years from the dates on which each Portfolio commenced
operations.
6. ASSET ACQUISITION
On March 10, 1995, Income and Growth Fund acquired certain assets (net of
liabilities) of $3,053,313 (excluding unamortized organization costs) from
USAffinity Growth and Income Fund in a tax-free exchange for 264,712 shares of
Income and Growth Fund. On the same date the Equity Fund acquired certain
assets (net of liabilities) of $5,668,178 (excluding unamortized organization
costs) from USAffinity Growth Fund in a tax-free exchange for 289,274 shares
of Equity Fund. On the same date the Equity Fund also acquired certain assets
(net of liabilities) of $1,857,648 (excluding unamortized organization costs)
from USAffinity Green Fund in exchange for 89,915 shares of Equity Fund; this
transaction was a taxable exchange for the shareholders of USAffinity Green
Fund.
43
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders
and Board of Directors
Excelsior Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Equity, Income and Growth,
Aging of America, Business and Industrial Restructuring, Communication and
Entertainment, Early Life Cycle, Environmentally-Related Products and Services,
Global Competitors, Long-Term Supply of Energy and Productivity Enhancers
Portfolios (ten of the portfolios constituting the Excelsior Funds, Inc.
(formerly UST Master Funds, Inc.)) as of March 31, 1996, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1996, by correspondence with the custodian and brokers or other
appropriate auditing procedures where replies from brokers were not received.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above mentioned Portfolios of Excelsior Funds, Inc. at March 31, 1996,
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 financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 13, 1996
44
<PAGE>
FEDERAL TAX INFORMATION: (UNAUDITED)
For the year ended March 31, 1996, the percentage of dividends paid that
qualify for the 70.0% dividends received deduction for corporate shareholders
and the designation of long-term capital gain for the Portfolios are
approximated as follows:
<TABLE>
<CAPTION>
DIVIDENDS RECEIVED LONG-TERM
FUND DEDUCTION CAPITAL GAIN
---- ------------------ ------------
<S> <C> <C>
Equity Fund............. 100.00% $14,150,000
Income and Growth Fund.. 38.82% 495,000
Aging of America Fund... 100.00% --
Business and Industrial
Restructuring Fund..... 40.18% 247,000
Communication and
Entertainment Fund..... 57.43% 2,123,000
Early Life Cycle Fund... 22.40% 2,876,000
Global Competitors
Fund................... 100.00% 172,000
Long-Term Supply of
Energy Fund............ 100.00% --
Productivity Enhancers
Fund................... 3.59% 341,000
</TABLE>
45
<PAGE>
USTDEQA396
