<PAGE>
[LOGO OF EXCELSIOR FUNDS INC. APPEARS HERE]
INTERNATIONAL EQUITY PORTFOLIOS
ANNUAL REPORT
MARCH 31, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S INTERNATIONAL EQUITY MARKETS REVIEW............................. 2
ADVISER'S INVESTMENT REVIEWS
International Fund....................................................... 3
Pacific/Asia Fund........................................................ 4
Pan European Fund........................................................ 5
Emerging Americas Fund................................................... 6
STATEMENTS OF ASSETS AND LIABILITIES...................................... 7
STATEMENTS OF OPERATIONS.................................................. 8
STATEMENTS OF CHANGES IN NET ASSETS....................................... 9
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 10
PORTFOLIOS OF INVESTMENTS
International Fund....................................................... 12
Pacific/Asia Fund........................................................ 15
Pan European Fund........................................................ 17
Emerging Americas Fund................................................... 20
NOTES TO FINANCIAL STATEMENTS............................................. 23
INDEPENDENT AUDITORS' REPORT.............................................. 29
FEDERAL TAX INFORMATION................................................... 30
</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 AND AFFILIATES
AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. FUND SHARES ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
LETTER TO SHAREHOLDERS
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the annual report for Excelsior Funds, Inc. The 1997
fiscal year was another year of growth for the fund complex, highlighted by
strong financial markets and new fund offerings which helped push the assets
of the funds over the $5 billion milestone.
In our on-going efforts to provide you with investment opportunities that
are best suited to meet your investment needs in the ever-evolving financial
marketplace, we continually evaluate the current Excelsior fund offerings. In
the coming year, we may make recommendations to you which we believe can
achieve this goal. These recommendations may include, among other things, the
establishment of new funds and possibly the consolidation of certain equity
funds. We will keep you apprised of these developments as our assessment of
these matters progresses.
The coming year promises to be both interesting and exciting. We are
cautiously optimistic regarding the domestic equity markets, international
equity markets continue to look attractive, and fiscal policy has been
effective in keeping inflation under control. With this in mind, I am
confident that the Excelsior fund family will continue to provide you with the
appropriate investment vehicles and dedicated service staff to help you meet
your investment objectives.
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
1
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INTERNATIONAL EQUITY
MARKETS REVIEW
- -------------------------------------------------------------------------------
Overall, international markets posted solid advances for the fiscal year
ended March 31, 1997. Regional performances, however, were decidedly mixed,
with strong performances from the Latin American and European markets but
generally weak performance from the Asia Pacific.
EUROPE: Fiscal 1997 saw overall bullish equity market conditions across
Europe. The underlying economic conditions of low inflation and declining
interest rates along with the ongoing European trends of corporate
restructuring, cost cutting and productivity improvements were advantageous
for European equities. During the fiscal year, of the major markets, Spain and
the U.K. were the top performers. Investors were attaching increased
probability to the chance that Spain would take part in EMU, which was
narrowing Spanish interest spreads against German rates, and increasing equity
valuations there. The U.K. market rose as a result of strong economic growth,
leading to strength in the British pound, which added significantly to dollar
gains. The Scandinavian markets also continued to move higher with Finland and
Sweden among the top gainers, as a result of economic strength across the
region. The French and German markets slightly lagged relative to Europe in
U.S. dollar terms, but still managed to post reasonable gains. Heading into
the final quarter, Switzerland and Germany were the strongest European
markets, and Spain the weakest. The U.K., however, was the most disappointing
of the large European markets for the final quarter. It should be briefly
added that fiscal 1997 was a banner year for Emerging Europe, where relative
political stability and economic reforms were good for Eastern and Southern
European company earnings and equity markets.
LATIN AMERICA: Through fiscal 1997, the top-performing market in the region
was Venezuela, which more than doubled. Investors were anticipating an
economic turnaround, due in large part to the positive impact of higher-than-
average oil prices. Also strong were Brazil and Colombia. Weaker markets
during the period included Chile--particularly in the fiscal third quarter--
Mexico and Peru. The region's equity markets displayed continued overall
strength in the fourth fiscal quarter, paced by Brazil, where the stock market
reacted favorably to progress on constitutional reform, including a measure to
allow the President to run for re-election. While U.S. interest rate moves did
cause some volatility in the period, regional developments are increasingly
becoming the primary driver of Latin American markets. Near term, we feel the
regional outlook does present some risks--regarding Mexican elections, trade
and fiscal deficits in Brazil, etc. This is understandable. After all, Latin
America is in the midst of wrenching long-term transformation; although
progress is generally steady, occasional setbacks are inevitable. Latin
American markets should remain volatile, moving two steps forward and then one
step back. At present, valuations overall remain attractive and GDP growth
remains high.
PACIFIC/ASIA: Through fiscal 1997, markets in the greater China region,
namely Taiwan and Hong Kong, generated good returns. Markets in developing
countries such as Malaysia, Indonesia, New Zealand, Australia, and the
Philippines also did well. Markets that lost ground were India, Singapore, and
most important, Japan. Finally, hampered by poor economic underpinnings,
markets in Thailand and South Korea were the biggest losers. The region as a
whole was particularly weak in the fourth quarter. The major markets of Japan,
Hong Kong, and Australia all lost ground. Japan fell on fears that the banking
crisis would worsen and that the economy would weaken further. The Hong Kong
market was down due to sharp declines in property prices and widespread
nervousness approaching the "transition." In addition, mounting concerns of
financial collapse in Thailand had a ripple effect on the region's small
emerging markets. India and Taiwan finished up for the quarter, while the
Philippines and Indonesia were essentially flat.
2
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
INTERNATIONAL FUND
- --------------------------------------------------------------------------------
For the twelve months ended March 31, 1997, the Fund achieved a total return
of 6.78%* versus 1.7% for the FT/S&P Actuaries World Indices--World Excluding
U.S. Index** and 19.83% for the Standard & Poor's 500 Composite Price Index.***
Fiscal 1997 saw overall bullish equity market conditions across Europe and
Latin America. Asian markets were weak overall. During the first half, changes
to the portfolio were few in terms of country weightings. The Fund's Japanese
and U.K. commitments hampered performance during the period, while the Latin
American positions aided it. Toward the end of the fiscal third quarter, we
restructured the Fund, reducing the total number of holdings and emphasizing a
bottom-up fundamental value investment approach. Specifically, we overweighted
Continental Europe, with substantial investments in France and Germany. The
Asian weighting came in at a distant second, with emphasis in Australia, Hong
Kong, Indonesia, and the Philippines. Japan remained significantly
underweighted. Latin American exposure was led by Brazil. In the final quarter,
Fund performance was helped by solid representation in 1) the emerging markets,
and 2) medium-capitalization stocks.
International Fund+
- --------------------------------------------------
Average Annual Total Return Ended on 3/31/97*
- --------------------------------------------------
1 year 5 year Since Inception (7/21/87)
- --------------------------------------------------
6.78% 8.65% 6.14%
- --------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
International Fund International Fund FT/S&P-Actuaries World Indices--
(exclusive of sales charge) (reflects prior maximum sales charge)++ World Excluding U.S. Index**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7/21/87 10,000 9,550 10,000
3/31/88 9,872 9,424 10,930
3/31/89 10,918 10,423 12,160
3/31/90 12,982 12,393 10,950
3/31/91 12,307 11,749 11,290
3/31/92 11,772 11,238 10,420
3/31/93 12,343 11,784 11,630
3/31/94 15,101 14,416 14,190
3/31/95 14,809 14,137 14,760
3/31/96 16,700 15,942 16,816
3/31/97 17,832 17,023 17,100
</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. INTERNATIONAL INVESTING IS SUBJECT TO
SPECIAL RISKS SUCH AS CURRENCY FLUCTUATIONS AND DIFFERENCES IN ACCOUNTING AND
TAXATION STANDARDS.
The above illustration compares a $10,000 investment made in International
Fund and a broad-based index since 7/21/87 (inception date). For comparative
purposes, the value of the Index on 6/30/87 is used as the beginning value on
7/21/87. All dividends and capital gain distributions are reinvested. The
Fund's performance takes into account fees and expenses. The index does not
take into account charges, fees and other expenses. Further information
relating to Fund performance is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Goldman Sachs -- The FT/S&P-Actuaries World Indices-World Excluding
U.S. Index is a widely accepted, unmanaged index of global stock market
performance, including Canada, Mexico, Europe, Australia, New Zealand,
South Africa and the Far East. The Index includes dividends reinvested.
*** Source: Standard & Poor's Corporation -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
3
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
PACIFIC/ASIA FUND
- -------------------------------------------------------------------------------
The Fund reported a negative total return of 4.80%* for the twelve months
ended March 31, 1997 versus negative 19.1% for the Morgan Stanley Capital
International Pacific Free Index** and 19.83% for the Standard & Poor's 500
Composite Stock Price Index.*** Through the first three fiscal quarters,
Taiwan and Hong Kong, generated good returns. Meanwhile, markets in Malaysia,
Indonesia, New Zealand, Australia, and the Philippines also did well. Markets
that lost ground were India, Singapore, and most important, Japan. The region
as a whole continued weak in the fourth quarter. The major markets of Japan,
Hong Kong, and Australia all lost ground. In addition, mounting concerns of
financial collapse in Thailand had a ripple effect on the region's small
emerging markets. During the first half, portfolio activity centered on
increasing weightings in Japan and selling into the strength of the Hong Kong
market. During the second half, we restructured the Fund, emphasizing a
disciplined bottom-up investment process. As a result, Japan was underweighted
further, but our fundamental value investment approach uncovered some
excellent opportunities among Japan's dominant global competitors; in fact,
these proved to be among the Fund's strongest performers in the final quarter.
Stock selection also resulted in overweight positions in Indonesia and the
Philippines; our holdings in these areas made positive contributions to the
Fund as well. On the other hand, our small holdings in Thailand were a drag to
performance.
- -------------------------------------------------
Pacific/Asia Fund+
- -------------------------------------------------
Average Annual Total Return Ended on 3/31/97*
- -------------------------------------------------
1 year Since Inception (12/31/92)
- -------------------------------------------------
-4.80% 11.06%
- -------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Pacific/Asia Fund Pacific/Asia Fund Morgan Stanley Capital International
(exclusive of sales charge) (reflects prior maximum sales charge)++ Pacific Free Index**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/92 10,000 9,550 10,000
3/31/93 10,771 10,286 11,745
9/30/93 12,782 12,207 14,504
3/31/94 14,876 14,207 14,725
9/30/94 15,408 14,715 15,808
3/31/95 14,000 13,370 15,178
9/30/95 15,128 14,447 15,182
3/31/96 16,911 15,673 16,260
3/31/97 15,623 14,921 13,160
</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. INTERNATIONAL INVESTING IS SUBJECT TO
SPECIAL RISKS SUCH AS CURRENCY FLUCTUATIONS AND DIFFERENCES IN ACCOUNTING AND
TAXATION STANDARDS.
The above illustration compares a $10,000 investment made in Pacific/Asia
Fund and a broad-based index since 12/31/92 (inception date). All dividends
and capital gain distributions are reinvested. The Fund's performance takes
into account fees and expenses. The index does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International Pacific Free Index is a widely-accepted, unmanaged index
composed of a sample of companies representative of the market structure
of six Pacific Basin countries. The Index includes dividends reinvested.
*** Source: Standards & 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.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
4
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
PAN EUROPEAN FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1997, the Fund achieved a total return
of 23.76%* versus 23.74% for the FT/S&P-Actuaries World Indices--Europe
Index** and 19.83% for the Standard & Poor's 500 Composite Price Index.*** Low
inflation and declining interest rates along with ongoing European corporate
restructuring, cost-cutting and productivity improvements were advantageous
for European equities. Of the major markets, Spain, the Netherlands and the
U.K. were among the big winners. A banner year was had as well by Emerging
Europe, where relative political stability and economic reforms boosted
company earnings and equity markets. The Fund benefited from investments in
several of these countries. During the first half, regarding portfolio
activity, we increased the Fund's weighting in Germany and France, and reduced
our weighting in Switzerland, the Netherlands, and Italy. During the second
half of the year, we restructured the Fund, focusing increasingly on bottom up
individual stock selection. Specifically, we aim to generate long-term capital
appreciation by investing in European companies with sustainable long-term
growth available at reasonable prices. This strategy began to pay off in the
final quarter as several of the Fund's best-performing stocks came from some
of the Fund's more lackluster markets.
- --------------------------------------------------
Pan European Fund+
- --------------------------------------------------
Average Annual total Return Ended on 3/31/97*
- --------------------------------------------------
1 year Since Inception (12/31/92)
- --------------------------------------------------
23.76% 14.25%
- --------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Pan European Fund Pan European Fund FT/S&P-Actuaries World Indices--
(exclusive of sales charge) (reflects prior maximum sales charge )++ Europe Index**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/92 10,000 9,550 10,000
3/31/93 10,486 10,014 10,493
9/30/93 10,907 10,418 11,585
3/31/94 11,540 11,020 12,107
9/30/94 11,819 11,287 13,057
3/31/95 12,039 11,497 14,063
9/30/95 13,373 12,771 15,625
3/31/96 14,236 13,596 16,841
3/31/97 17,618 16,826 20,839
</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. INTERNATIONAL INVESTING IS SUBJECT TO
SPECIAL RISKS SUCH AS CURRENCY FLUCTUATIONS AND DIFFERENCES IN ACCOUNTING AND
TAXATION STANDARDS.
The above illustration compares a $10,000 investment made in Pan European
Fund and a broad-based index since 12/31/92 (inception date). All dividends
and capital gain distributions are reinvested. The Fund's performance takes
into account fees and expenses. The index does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Goldman Sachs -- FT/S&P-Actuaries World Indices-Europe Index is a
widely-accepted, unmanaged index composed of a sample of companies
representative of the market structure of 14 European countries. The Index
includes dividends reinvested.
*** Source: Standard & Poor's Corporation -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
5
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
EMERGING AMERICAS FUND
- --------------------------------------------------------------------------------
The Fund posted a total return of 29.09%* for the twelve months ended March
31, 1997 versus 30.6% for the Morgan Stanley Capital International/EMF Latin
American Index** and 19.83% for the Standard & Poor's 500 Composite Stock Price
Index.*** During the first half of the fiscal year, the Fund's emphasis on
Mexico and Brazil and underweighting in Chile benefited performance as overall
solid Latin American stock market performance was paced by markets in
Venezuela, Mexico and Brazil. Chile and Argentina lagged. We also maintained a
roughly 11% weighting in Canada, began to scale back on Argentina, and to build
positions in Mexico. Venezuela, Brazil and Mexico continued to dominate the
region's stock markets in the fiscal third quarter. During this period, we
significantly trimmed the Fund's total number of holdings. During the fourth
quarter, we continued to reduce the number of holdings in order to focus on our
best ideas; specifically, we sold the Fund's Canadian investments in order to
concentrate on Latin American opportunities. We moved to overweight positions
in Brazil (given a positive outlook for privatizations), Venezuela, Peru,
Argentina, and Colombia (we are looking for additional opportunities here). We
moved to underweight positions in Chile, given heightened valuations, and
Mexico. For Mexico, we are looking to add to positions, though selectively,
focusing on export-oriented companies given a cautious outlook for the domestic
economy.
- --------------------------------------------------
Emerging Americas Fund+
- --------------------------------------------------
Average Annual Total Return Ended on 3/31/97*
- --------------------------------------------------
1 year Since Inception (12/31/92)
- --------------------------------------------------
29.09% 10.64%
- --------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Emerging Americas Fund Emerging Americas Fund Morgan Stanley Capital International
(exclusive of sales charge) (reflects prior maximum sales charge )++ EMF Latin America Index**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/92 10,000 9,550 10,000
3/31/93 10,171 9,714 11,340
9/30/93 11,294 10,785 12,100
3/31/94 13,452 12,846 15,850
9/30/94 15,735 15,026 19,070
3/31/95 9,353 8,932 10,900
9/30/95 11,348 10,837 13,210
3/31/96 11,965 11,370 13,240
3/31/97 15,368 14,678 17,290
</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. INTERNATIONAL INVESTING IS SUBJECT TO
SPECIAL RISKS SUCH AS CURRENCY FLUCTUATIONS AND DIFFERENCES IN ACCOUNTING AND
TAXATION STANDARDS.
The above illustration compares a $10,000 investment made in Emerging
Americas Fund and a broad-based index since 12/31/92 (inception date). All
dividends and capital gain distributions are reinvested. The Fund's performance
takes into account fees and expenses. The index does not take into account
charges, fees and other expenses. Further information relating to Fund
performance is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested, without taking into account the 4.5%
maximum initial sales charge which was eliminated effective 2/14/97.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International EMF Latin America Index is a widely-accepted, unmanaged index
composed of a sample of companies representative of the market structure of
seven Latin American countries. The Index includes dividends reinvested.
*** Source: Standard & Poor's Corporation -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 300 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.
++ Reflects 4.5% maximum sales charge on initial investment. The sales charge
was eliminated effective 2/14/97.
6
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1997
<TABLE>
<CAPTION>
PAN EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN AMERICAS
FUND FUND FUND FUND
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at cost --
see accompanying
portfolios............ $117,492,184 $90,993,251 $112,461,830 $61,912,772
============ =========== ============ ===========
Investments, at value
(Note 1).............. $127,364,707 $89,848,805 $125,872,644 $71,189,928
Foreign currency (cost
$110,076)............. -- -- -- 108,968
Dividends receivable... 321,493 262,196 162,733 167,981
Interest receivable.... 20,818 17,676 43,070 19,706
Receivable for
investments sold...... 19,564 115,843 410,927 --
Receivable for fund
shares sold........... 499,280 374,016 803,945 374,764
Withholding tax
receivable............ 63,674 3,907 101,310 --
Prepaid expenses....... 4,402 3,630 3,507 2,465
Unamortized
organization costs
(Note 5).............. -- 3,171 3,171 3,171
------------ ----------- ------------ -----------
TOTAL ASSETS.......... 128,293,938 90,629,244 127,401,307 71,866,983
LIABILITIES:
Payable for investments
purchased............. 446,178 110,902 5,224,487 699,057
Payable for fund shares
redeemed.............. 255,678 154,975 24,921 122,100
Investment advisory
fees payable (Note 2). 97,625 71,073 90,048 54,585
Due to custodian bank.. 601,256 262,711 3,461 38,652
Accrued expenses and
other payables........ 78,063 84,586 66,891 52,730
------------ ----------- ------------ -----------
TOTAL LIABILITIES..... 1,478,800 684,247 5,409,808 967,124
------------ ----------- ------------ -----------
NET ASSETS.............. $126,815,138 $89,944,997 $121,991,499 $70,899,859
============ =========== ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ 4,184 $ (55,665) $ (14,995) $ (20,056)
Accumulated net
realized gain (loss)
on investments and
foreign currency
translations.......... 2,112,045 (3,317) 7,691,078 (4,526,527)
Unrealized appreciation
(depreciation) of
investments and
foreign currency
translations.......... 9,868,167 (1,146,118) 13,404,622 9,275,258
Par value (Note 4)..... 11,183 9,899 11,148 7,496
Paid in capital in
excess of par value... 114,819,559 91,140,198 100,899,646 66,163,688
------------ ----------- ------------ -----------
TOTAL NET ASSETS........ $126,815,138 $89,944,997 $121,991,499 $70,899,859
============ =========== ============ ===========
Shares of Common Stock
Outstanding............ 11,182,739 9,899,310 11,147,884 7,496,081
NET ASSET VALUE PER
SHARE.................. $11.34 $9.09 $10.94 $9.46
====== ===== ====== =====
</TABLE>
See Notes to Financial Statements
7
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PAN EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN AMERICAS
FUND FUND FUND FUND
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income........... $2,480,846 $ 1,730,245 $ 1,796,414 $ 964,590
Interest income........... 108,344 233,905 297,303 139,476
Less: Foreign taxes
withheld................. (272,624) (123,674) (251,005) (38,741)
---------- ----------- ----------- -----------
TOTAL INCOME............. 2,316,566 1,840,476 1,842,712 1,065,325
EXPENSES:
Investment advisory fees
(Note 2)................. 1,086,989 861,818 686,526 537,379
Administrators' fees (Note
2)....................... 217,403 172,364 137,305 107,476
Administrative servicing
fees (Note 2)............ 87,203 65,606 48,947 42,898
Shareholder servicing
agent fees............... 53,974 44,187 28,541 34,987
Custodian fees............ 145,193 127,303 102,438 80,751
Registration and filing
fees..................... 14,175 8,093 11,783 13,237
Legal and audit fees...... 15,710 11,610 8,731 7,830
Directors' fees and
expenses (Note 2)........ 4,761 3,818 2,415 2,218
Shareholder reports....... 16,019 9,317 9,533 6,772
Amortization of
organization costs (Note
5)....................... -- 4,176 4,176 4,176
Miscellaneous expenses.... 5,274 2,899 3,415 1,724
---------- ----------- ----------- -----------
TOTAL EXPENSES........... 1,646,701 1,311,191 1,043,810 839,448
Fees waived by investment
adviser and
administrators (Note 2).. (87,203) (65,606) (48,947) (42,898)
---------- ----------- ----------- -----------
NET EXPENSES............. 1,559,498 1,245,585 994,863 796,550
---------- ----------- ----------- -----------
NET INVESTMENT INCOME...... 757,068 594,891 847,849 268,775
---------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain (loss):
Security transactions.... 3,347,088 807,429 8,497,213 2,391,383
Foreign currency
transactions............ (82,336) (80,603) (67,066) (56,352)
---------- ----------- ----------- -----------
Total net realized gain... 3,264,752 726,826 8,430,147 2,335,031
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... 2,694,849 (6,021,214) 7,055,247 10,692,877
---------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS............... 5,959,601 (5,294,388) 15,485,394 13,027,908
---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................ $6,716,669 $(4,699,497) $16,333,243 $13,296,683
========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PAN EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN AMERICAS
FUND FUND FUND FUND
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
YEAR ENDED MARCH 31, 1997
Net investment income..... $ 757,068 $ 594,891 $ 847,849 $ 268,775
Net realized gain on
investments and foreign
currency transactions.... 3,264,752 726,826 8,430,147 2,335,031
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... 2,694,849 (6,021,214) 7,055,247 10,692,877
------------ ----------- ------------ -----------
Net increase (decrease) in
net assets resulting from
operations............... 6,716,669 (4,699,497) 16,333,243 13,296,683
Distributions to
shareholders:
From net investment
income.................. (979,932) (609,545) (742,102) (287,871)
In excess of net
investment income....... -- (55,665) (14,995) (20,056)
From net realized gain on
investments............. (1,733,863) (1,359,412) (1,679,580) --
In excess of net realized
gain on investments..... -- (3,317) -- --
Increase in net assets
from fund share
transactions (Note 4).... 24,961,768 20,480,180 60,179,089 14,751,385
------------ ----------- ------------ -----------
Net increase in net
assets................... 28,964,642 13,752,744 74,075,655 27,740,141
NET ASSETS:
Beginning of year........ 97,850,496 76,192,253 47,915,844 43,159,718
------------ ----------- ------------ -----------
End of year (1).......... $126,815,138 $89,944,997 $121,991,499 $70,899,859
============ =========== ============ ===========
--------
(1) Including
undistributed
(distributions in
excess of) net
investment income.... $ 4,184 $ (55,665) $ (14,995) $ (20,056)
============ =========== ============ ===========
YEAR ENDED MARCH 31, 1996
Net investment income..... $ 663,789 $ 649,969 $ 569,564 $ 399,810
Net realized gain (loss)
on investments and
foreign currency
transactions............. 1,761,069 1,080,727 2,226,541 (2,681,651)
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... 6,821,262 7,511,232 4,458,964 9,542,153
------------ ----------- ------------ -----------
Net increase in net assets
resulting from
operations............... 9,246,120 9,241,928 7,255,069 7,260,312
Distributions to
shareholders:
From net investment
income.................. (644,347) (572,461) (503,212) (177,450)
In excess of net
investment income....... (91,134) (86,949) -- (211,904)
From net realized gain on
investments............. (548,777) (97,072) (1,786,988) --
Increase in net assets
from fund share
transactions (Note 4).... 25,836,676 20,089,608 2,974,013 8,945,030
------------ ----------- ------------ -----------
Net increase in net
assets................... 33,798,538 28,575,054 7,938,882 15,815,988
NET ASSETS:
Beginning of year........ 64,051,958 47,617,199 39,976,962 27,343,730
------------ ----------- ------------ -----------
End of year (2).......... $ 97,850,496 $76,192,253 $ 47,915,844 $43,159,718
============ =========== ============ ===========
--------
(2) Including
distributions in
excess of net
investment income.... $ 324,489 $ 90,699 $ 38,681 $ 238,455
============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS
For a Fund share outstanding throughout each year.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET NET REALIZED DIVIDENDS DIVIDENDS FROM NET
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET IN EXCESS OF REALIZED
BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT GAIN ON
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
--------- ---------- -------------- ---------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL FUND -- (7/21/87*)
Year Ended March 31,
1993................... $ 8.27 $ 0.15 $ 0.25 $ 0.40 $(0.01) $ -- $ 0.00
1994................... 8.66 0.05 1.88 1.93 (0.02) (0.12) (0.01)
1995................... 10.44 0.10 (0.29) (0.19) 0.00 (0.11) (0.32)
1996................... 9.82 0.10 1.15 1.25 (0.08) (0.01) (0.07)
1997................... 10.91 0.09 0.63 0.72 (0.10) -- (0.19)
PACIFIC/ASIA FUND -- (12/31/92*)
Year Ended March 31,
1993................... $ 7.00 $ 0.00 +++ $ 0.54 $ 0.54 $ 0.00 $ -- $ 0.00
1994................... 7.54 0.08 2.81 2.89 (0.05) (0.06) (0.28)
1995................... 10.04 0.08 (0.58) (0.50) (0.03) (0.23) (0.83)
1996................... 8.45 0.12 1.33 1.45 (0.09) (0.01) (0.02)
1997................... 9.78 0.07 (0.53) (0.46) (0.07) 0.00 +++ (0.16)
PAN EUROPEAN FUND -- (12/31/92*)
Year Ended March 31,
1993................... $ 7.00 $(0.00)+++ $ 0.34 $ 0.34 $ 0.00 $ -- $ 0.00
1994................... 7.34 0.03 0.70 0.73 0.00 (0.04) 0.00
1995................... 8.03 0.09 0.25 0.34 (0.09) -- (0.09)
1996................... 8.19 0.11 1.35 1.46 (0.10) -- (0.36)
1997................... 9.19 0.11 2.01 2.12 (0.10) 0.00 +++ (0.27)
EMERGING AMERICAS FUND -- (12/31/92*)
Year Ended March 31,
1993................... $ 7.00 $(0.00)+++ $ 0.12 $ 0.12 $ 0.00 $ -- $ 0.00
1994................... 7.12 0.05 2.24 2.29 (0.03) (0.02) (0.06)
1995................... 9.30 0.01 (2.56) (2.55) 0.00 (0.17) 0.00
1996................... 5.86 0.10 1.49 1.59 (0.04) (0.04) 0.00
1997................... 7.37 0.05 2.09 2.14 (0.05) 0.00 +++ 0.00
</TABLE>
* Commencement of operations.
** Annualized.
*** Not annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Total return data, for periods prior to March 31, 1997, does not reflect
the sales load payable on purchases of shares. The sales load was
eliminated effective February 14, 1997.
+++ Amount represents less than $0.01 per share.
# For fiscal years beginning on or after September 1, 1995 a fund is required
to disclose the average commission rate per share it paid for portfolio
trades, on which commissions were charged, during the period.
See Notes to Financial Statements
10
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTIONS
IN EXCESS RATIO OF NET RATIO OF GROSS RATIO OF NET
OF NET NET ASSETS, OPERATING OPERATING INVESTMENT
REALIZED NET ASSET END OF EXPENSES EXPENSES INCOME (LOSS) PORTFOLIO FEE
GAIN ON TOTAL VALUE, END TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER WAIVERS
INVESTMENTS DISTRIBUTIONS OF PERIOD RETURN++ (000) NET ASSETS NET ASSETS+ NET ASSETS RATE (NOTE 2)
- ------------- ------------- ---------- -------- ----------- ------------ -------------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $(0.01) $ 8.66 4.85 % $ 30,374 1.50% 1.50% 1.27 % 31% 0.00
-- (0.15) 10.44 22.34 % 55,737 1.53% 1.53% 0.18 % 64% 0.00+++
-- (0.43) 9.82 (1.93)% 64,052 1.47% 1.53% 0.71 % 66% 0.01
-- (0.16) 10.91 12.77 % 97,850 1.40% 1.50% 0.82 % 39% 0.01
-- (0.29) 11.34 6.78 % 126,815 1.43% 1.51% 0.70 % 116% 0.01
$ -- $ 0.00 $ 7.54 7.71 %*** $ 9,665 1.67%** 2.00%** 0.27 %** 1% $0.00+++
-- (0.39) 10.04 38.11 % 53,027 1.53% 1.77% 0.54 % 68% 0.04
-- (1.09) 8.45 (5.89)% 47,617 1.47% 1.52% 0.85 % 69% 0.01
-- (0.12) 9.78 17.22 % 76,192 1.43% 1.51% 1.12 % 29% 0.01
0.00+++ (0.23) 9.09 (4.80)% 89,945 1.45% 1.52% 0.69 % 126% 0.01
$ -- $ 0.00 $ 7.34 4.86 %*** $ 3,797 1.67%** 3.13%** (0.33)%** 9% $0.02
-- (0.04) 8.03 10.05 % 36,675 1.61% 1.72% 0.06 % 30% 0.05
-- (0.18) 8.19 4.33 % 39,977 1.51% 1.57% 1.11 % 47% 0.00+++
-- (0.46) 9.19 18.25 % 47,916 1.46% 1.55% 1.28 % 42% 0.01
-- (0.37) 10.94 23.76 % 121,991 1.45% 1.52% 1.23 % 82% 0.01
$ -- $ 0.00 $ 7.12 1.71 %*** $ 3,830 1.67%** 2.56%** (0.04)%** 76% $0.02
-- (0.11) 9.30 32.25 % 39,282 1.49% 1.71% 0.29 % 51% 0.03
(0.72) (0.89) 5.86 (30.47)% 27,344 1.50% 1.57% 0.06 % 69% 0.01
-- (0.08) 7.37 27.29 % 43,160 1.48% 1.57% 1.12 % 54% 0.01
-- (0.05) 9.46 29.09 % 70,900 1.48% 1.56% 0.50 % 73% 0.01
AVERAGE
BROKER
COMMISSION
RATE#
----------
<C>
N/A
N/A
N/A
N/A
$0.0123
N/A
N/A
N/A
N/A
$0.0094
N/A
N/A
N/A
N/A
$0.0012
N/A
N/A
N/A
N/A
$0.0005
</TABLE>
See Notes to Financial Statements
11
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
INTERNATIONAL FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- 96.08%
FRANCE -- 12.50%
50,892 AXA-UAP................................................. $ 3,375,272
2,880 Carrefour S.A........................................... 1,791,054
22,022 Compagnie Generale des Eaux............................. 3,001,128
32,044 +SGS-Thomson Microelectronics N.V....................... 2,254,811
23,380 Technip S.A............................................. 2,515,636
33,563 Total S.A., Class B..................................... 2,911,165
------------
15,849,066
------------
JAPAN -- 10.97%
83,000 Canon, Inc.............................................. 1,779,387
160,080 Credit Saison Co. Ltd................................... 2,926,792
209 DDI Corp................................................ 1,320,516
75,000 Denso Corp.............................................. 1,474,395
27,000 Rohm Co................................................. 1,992,072
42,800 Sony Corp............................................... 2,995,065
146,000 Suzuki Motor Co. Ltd.................................... 1,417,361
------------
13,905,588
------------
UNITED KINGDOM &
POSSESSIONS -- 9.65%
227,218 Airtours plc............................................ 3,686,141
191,006 Granada Group plc....................................... 2,881,942
616,524 Medeva plc.............................................. 3,117,649
150,987 Siebe plc............................................... 2,548,770
------------
12,234,502
------------
GERMANY -- 6.24%
9,359 SAP AG.................................................. 1,593,881
9,335 SGL Carbon AG........................................... 1,273,514
40,855 Siemens AG.............................................. 2,200,036
49,562 VEBA AG................................................. 2,847,229
------------
7,914,660
------------
SWITZERLAND -- 5.39%
72 Lindt & Spruengli AG.................................... 1,391,256
2,926 +Novartis AG (Registered)............................... 3,632,332
210 Roche Holding AG........................................ 1,816,536
------------
6,840,124
------------
HONG KONG -- 5.02%
139,200 HSBC Holdings plc....................................... 3,233,783
238,000 Swire Pacific Ltd., Class A............................. 1,873,726
308,000 Television Broadcasts Ltd............................... 1,252,162
------------
6,359,671
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
AUSTRALIA -- 4.99%
142,626 Brambles Industries Ltd............................... $ 2,343,940
310,434 F.H. Faulding & Co. Ltd............................... 1,824,651
125,993 Lend Lease Corp. Ltd.................................. 2,158,469
------------
6,327,060
------------
SWEDEN -- 4.44%
11,783 ABB AB, Class A....................................... 1,333,730
33,876 Astra AB, Class A..................................... 1,640,446
61,466 Autoliv AB............................................ 2,658,020
------------
5,632,196
------------
BRAZIL -- 4.22%
81,477 Eletrobras ADR........................................ 1,711,017
4,480,000 Petrobras............................................. 890,500
26,829 Telebras ADR.......................................... 2,746,619
------------
5,348,136
------------
INDONESIA -- 3.96%
914,300 PT Matahari Putra Prima (Foreign)..................... 1,333,354
960,905 PT Tambang Timah (Foreign)............................ 1,501,414
1,429,491 PT Telekomunikasi (Foreign)........................... 2,188,908
------------
5,023,676
------------
CANADA -- 3.75%
133,000 Bombardier, Inc., Class B............................. 2,409,002
121,000 +Gulf Canada Resources, Ltd........................... 896,782
14,300 Northern Telecom Ltd.................................. 933,688
26,000 Thomson Corp.......................................... 514,172
------------
4,753,644
------------
FINLAND -- 3.41%
34,710 Oy Nokia AB, Class A.................................. 2,093,964
123,783 Valmet Corp........................................... 2,226,493
------------
4,320,457
------------
NETHERLANDS -- 3.40%
65,995 ING Groep N.V......................................... 2,600,806
14,242 Wolters Kluwer N.V.................................... 1,715,693
------------
4,316,499
------------
ITALY -- 2.87%
261,925 Edison S.p.A.......................................... 1,399,971
1,341,832 Telecom Italia S.p.A.................................. 2,245,778
------------
3,645,749
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
INTERNATIONAL FUND -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
PHILIPPINES -- 2.60%
4,414,400 Metro Pacific Corp.................................... $ 1,340,744
75,012 Metropolitan Bank & Trust Co.......................... 1,950,768
------------
3,291,512
------------
AUSTRIA -- 2.14%
18,440 VA Technologie AG..................................... 2,718,708
------------
SPAIN -- 2.10%
43,855 Banco Bilbao Vizcaya, S.A. (Registered)............... 2,663,900
------------
ARGENTINA -- 1.87%
453,400 Siderca S.A., Class A................................. 956,827
53,228 YPF S.A. ADR.......................................... 1,410,542
------------
2,367,369
------------
PORTUGAL -- 1.53%
129,800 Banco Comercial Portugues, S.A........................ 1,935,234
------------
TAIWAN -- 0.97%
88,700 +Yang Ming Marine Transport GDR....................... 1,228,495
------------
MALAYSIA -- 0.91%
133,000 United Engineers Ltd. ................................ 1,159,790
------------
THAILAND -- 0.87%
73,400 Banpu Public Co. Ltd. (Registered).................... 1,103,972
------------
SINGAPORE -- 0.68%
107,000 Singapore Airlines Ltd. (Foreign)..................... 859,855
------------
MEXICO -- 0.64%
136,400 Sanluis Corporacion S.A. de C.V....................... 817,436
------------
INDIA -- 0.48%
52,100 +Mahindra & Mahindra Ltd. GDR......................... 612,175
------------
KOREA -- 0.48%
21,000 Korea Electric Power Corp............................. 611,422
------------
TOTAL COMMON STOCKS
(Cost $111,992,742)................................... 121,840,896
------------
PREFERRED STOCK -- 0.33%
GERMANY -- 0.33%
2,500 SAP AG -- VORZUG (Cost $402,442)...................... 426,811
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
<C> <S> <C>
DEMAND NOTES -- 4.02%
UNITED STATES -- 4.02%
$ 513,000 Associates Corp. of North America Master Notes....... $ 513,000
4,584,000 General Electric Co. Promissory Notes................ 4,584,000
------------
TOTAL DEMAND NOTES
(Cost $5,097,000).................................... 5,097,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $117,492,184*)...................................... 100.43% $127,364,707
OTHER ASSETS & LIABILITIES (NET).......................... (0.43) (549,569)
------ ------------
NET ASSETS................................................ 100.00% $126,815,138
====== ============
</TABLE>
- --------
* -- For Federal income tax purposes, the tax basis of investments aggregates
$117,523,204.
+ -- Non-income producing.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
13
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
INTERNATIONAL FUND -- (CONTINUED)
At March 31, 1997, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ ------------
<S> <C> <C>
Consumer Cyclical....................................... 22.97% $ 29,129,398
Financial............................................... 16.24 20,592,331
Technology.............................................. 12.50 15,856,585
Capital Goods........................................... 12.24 15,520,598
Utilities............................................... 10.33 13,106,323
Consumer Staples........................................ 6.67 8,455,088
Energy.................................................. 5.92 7,508,961
Raw/Intermediate Materials.............................. 5.25 6,652,263
Transportation.......................................... 4.29 5,446,160
Demand Notes............................................ 4.02 5,097,000
------ ------------
Total Investments....................................... 100.43% $127,364,707
Other Assets and Liabilities (Net)...................... (0.43) (549,569)
------ ------------
Net Assets.............................................. 100.00% $126,815,138
====== ============
</TABLE>
See Notes to Financial Statements
14
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
PACIFIC/ASIA FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
--------- ------------
<C> <S> <C>
COMMON STOCKS -- 96.97%
JAPAN -- 20.50%
124,000 Canon, Inc............................................ $ 2,658,361
132,250 Credit Saison Co. Ltd................................. 2,417,968
333 DDI Corp.............................................. 2,103,980
80,000 Denso Corp............................................ 1,572,688
39,000 Rohm Co............................................... 2,877,437
34,000 Secom Co., Ltd........................................ 1,911,658
42,300 Sony Corp............................................. 2,960,076
199,000 Suzuki Motor Co. Ltd.................................. 1,931,883
------------
18,434,051
------------
HONG KONG -- 12.46%
3,081,000 Giordano International Ltd............................ 1,868,912
150,800 HSBC Holdings plc..................................... 3,503,265
256,500 Swire Pacific Ltd., Class A........................... 2,019,372
661,000 Television Broadcasts Ltd............................. 2,687,269
739,000 Varitronix International Ltd.......................... 1,125,449
------------
11,204,267
------------
PHILIPPINES -- 12.22%
4,775,158 C&P Homes, Inc........................................ 2,266,115
9,550,700 Metro Pacific Corp.................................... 2,900,744
138,958 Metropolitan Bank & Trust Co.......................... 3,613,752
636,500 San Miguel Corp., Class B............................. 2,211,076
------------
10,991,687
------------
INDONESIA -- 11.75%
688,500 PT Hanjaya Mandala Sampoerna (Foreign)................ 3,227,344
1,482,000 PT Matahari Putra Prima (Foreign)..................... 2,161,250
1,357,187 PT Tambang Timah (Foreign)............................ 2,120,605
1,998,560 PT Telekomunikasi (Foreign)........................... 3,060,295
------------
10,569,494
------------
AUSTRALIA -- 9.54%
2,053,788 AAPC Ltd.............................................. 1,239,355
186,492 Brambles Industries Ltd............................... 3,064,841
333,747 F.H. Faulding & Co. Ltd............................... 1,961,679
135,143 Lend Lease Corp. Ltd.................................. 2,315,224
------------
8,581,099
------------
MALAYSIA -- 7.23%
156,400 AMMB Holdings Bhd..................................... 1,300,702
296,000 New Straits Times Press Bhd........................... 1,816,391
118,000 Telekom Malaysia Bhd.................................. 919,419
283,000 United Engineers Ltd.................................. 2,467,824
------------
6,504,336
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
NEW ZEALAND -- 6.03%
1,118,512 Carter Holt Harvey Ltd............................... $ 2,368,232
332,131 Telecom Corporation of New Zealand Ltd............... 1,510,200
150,000 Tranz Rail Holdings Ltd.............................. 902,805
36,000 Tranz Rail Holdings Ltd. ADR......................... 639,000
------------
5,420,237
------------
SINGAPORE -- 4.45%
504,000 GP Batteries International Ltd....................... 1,375,920
270,000 Keppel Fels Ltd...................................... 826,741
224,000 Singapore Airlines Ltd. (Foreign).................... 1,800,069
------------
4,002,730
------------
TAIWAN -- 3.42%
222,000 +Yang Ming Marine Transport GDR...................... 3,074,700
------------
THAILAND -- 3.28%
94,000 Banpu Public Co. Ltd. (Registered)................... 1,413,806
403,200 Siam Makro Public Co., Ltd. (Foreign)................ 1,539,406
------------
2,953,212
------------
INDIA -- 3.05%
233,800 Mahindra & Mahindra Ltd. GDR......................... 2,747,150
------------
KOREA -- 3.04%
94,000 Korea Electric Power Corp............................ 2,736,842
------------
TOTAL COMMON STOCKS
(Cost $88,364,251)................................... 87,219,805
------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 2.92%
UNITED STATES -- 2.92%
$ 574,000 Associates Corp. of North America Master Notes....... 574,000
2,055,000 General Electric Co. Promissory Notes................ 2,055,000
------------
TOTAL DEMAND NOTES
(Cost $2,629,000).................................... 2,629,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $90,993,251*)........................................ 99.89% $89,848,805
OTHER ASSETS & LIABILITIES (NET)........................... 0.11 96,192
------ -----------
NET ASSETS................................................. 100.00% $89,944,997
====== ===========
</TABLE>
- --------
* -- For Federal income tax purposes, the tax basis of investments aggregates
$91,024,186.
+ -- Non-income producing.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
PACIFIC/ASIA FUND -- (CONTINUED)
At March 31, 1997, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ -----------
<S> <C> <C>
Consumer Cyclical........................................ 21.31% $19,170,886
Financial................................................ 20.25 18,212,906
Technology............................................... 11.57 10,407,532
Utilities................................................ 11.49 10,330,736
Consumer Staples......................................... 10.31 9,269,011
Transportation........................................... 8.36 7,523,282
Capital Goods............................................ 7.12 6,402,809
Raw/Intermediate Materials............................... 6.56 5,902,643
Demand Notes............................................. 2.92 2,629,000
------ -----------
Total Investments........................................ 99.89% $89,848,805
Other Assets and Liabilities (Net)....................... 0.11 96,192
------ -----------
Net Assets............................................... 100.00% $89,944,997
====== ===========
</TABLE>
See Notes to Financial Statements
16
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
PAN EUROPEAN FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- 93.61%
FRANCE -- 18.61%
59,989 AXA-UAP.............................................. $ 3,978,606
4,948 Carrefour S.A........................................ 3,077,130
28,350 Compagnie Generale des Eaux.......................... 3,863,499
28,042 Elf Aquitaine S.A.................................... 2,882,379
50,050 +SGS-Thomson Microelectronics N.V.................... 3,521,822
28,250 Technip S.A.......................................... 3,039,637
27,040 Total S.A., Class B.................................. 2,345,377
------------
22,708,450
------------
UNITED KINGDOM &
POSSESSIONS -- 16.46%
204,500 Airtours plc......................................... 3,317,589
178,600 Capita Group plc..................................... 2,070,631
904,000 +Cordiant plc........................................ 1,835,978
206,699 Granada Group plc.................................... 3,118,721
602,500 Medeva plc........................................... 3,046,732
14,000 Medeva plc ADR....................................... 276,500
153,600 Serco Group plc...................................... 1,742,900
185,700 Siebe plc............................................ 3,134,751
797,000 TC Group plc......................................... 1,540,027
------------
20,083,829
------------
GERMANY -- 8.15%
12,600 SAP AG............................................... 2,145,838
19,350 SGL Carbon AG........................................ 2,639,797
39,400 Siemens AG........................................... 2,121,684
52,900 VEBA AG.............................................. 3,038,990
------------
9,946,309
------------
SWITZERLAND -- 6.98%
145 Lindt & Spruengli AG................................. 2,801,835
3,316 +Novartis AG (Registered)............................ 4,116,477
185 Roche Holding AG..................................... 1,600,282
------------
8,518,594
------------
NETHERLANDS -- 6.73%
30,075 Ahrend Groep N.V..................................... 1,922,991
90,700 ING Groep N.V........................................ 3,574,408
22,550 Wolters Kluwer N.V................................... 2,716,534
------------
8,213,933
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SWEDEN -- 6.36%
15,700 ABB AB, Class A..................................... $ 1,777,099
46,500 Astra AB, Class A................................... 2,251,764
86,300 Autoliv AB.......................................... 3,731,935
------------
7,760,798
------------
FINLAND -- 5.27%
51,400 Oy Nokia AB, Class A................................ 3,100,829
185,000 Valmet Corp......................................... 3,327,607
------------
6,428,436
------------
AUSTRIA -- 4.97%
18,939 Austria Mikro Systeme International AG.............. 1,767,854
31,000 Flughafen Wien AG................................... 1,413,201
19,525 VA Technologie AG................................... 2,878,675
------------
6,059,730
------------
ITALY -- 4.40%
442,000 Edison S.p.A........................................ 2,362,460
1,793,140 Telecom Italia S.p.A................................ 3,001,116
------------
5,363,576
------------
TURKEY -- 3.33%
108,200,000 Global Menkul Degerler A.S.......................... 2,713,692
73,320,000 +Medya Holding...................................... 703,950
4,500,000 +Turk Sise ve Cam Fabrikalari A.S................... 643,663
------------
4,061,305
------------
IRELAND--3.26%
263,000 Irish Continental Group plc......................... 2,291,267
379,300 IWP International plc............................... 1,682,280
------------
3,973,547
------------
SPAIN -- 3.26%
65,400 Banco Bilbao Vizcaya, S.A. (Registered)............. 3,972,616
------------
PORTUGAL -- 2.23%
182,200 Banco Comercial Portugues, S.A...................... 2,716,484
------------
DENMARK -- 1.57%
21,300 Den Danske Bank..................................... 1,921,124
------------
CROATIA -- 1.23%
61,900 +Pliva d.d. GDR (Registered)........................ 896,002
</TABLE>
See Notes to Financial Statements
17
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
PAN EUROPEAN FUND -- (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
---------- ------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
CROATIA -- (CONTINUED)
38,850 +Pliva d.d. GDR...................................... $ 599,825
------------
1,495,827
------------
CZECH REPUBLIC -- 0.80%
30,800 Komercni Banka a.s. GDR.............................. 971,740
------------
TOTAL COMMON STOCKS
(Cost $100,843,970).................................. 114,196,298
------------
PREFERRED STOCK -- 0.84%
GERMANY -- 0.84%
6,000 SAP AG--VORZUG
(Cost $965,860)...................................... 1,024,346
------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
DEMAND NOTES -- 8.73%
UNITED STATES -- 8.73%
$2,949,000 Associates Corp. of North America Master Notes....... 2,949,000
7,703,000 General Electric Co. Promissory Notes................ 7,703,000
------------
TOTAL DEMAND NOTES
(Cost $10,652,000)................................... 10,652,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $112,461,830*)...................................... 103.18% $125,872,644
OTHER ASSETS & LIABILITIES (NET).......................... (3.18) (3,881,145)
------ ------------
NET ASSETS................................................ 100.00% $121,991,499
====== ============
</TABLE>
- --------
* -- Aggregate cost for Federal tax and book purposes.
+ -- Non-income producing.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
18
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
PAN EUROPEAN FUND -- (CONTINUED)
At March 31, 1997, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ ------------
<S> <C> <C>
Consumer Cyclical....................................... 22.83% $ 27,851,151
Financial............................................... 16.27 19,848,670
Consumer Staples........................................ 14.73 17,975,249
Technology.............................................. 10.25 12,506,982
Capital Goods........................................... 9.21 11,230,295
Demand Notes............................................ 8.73 10,652,000
Utilities............................................... 8.12 9,903,605
Holding Company Diversified............................. 6.59 8,037,139
Energy.................................................. 4.29 5,227,756
Raw/Intermediate Materials.............................. 2.16 2,639,797
------ ------------
Total Investments....................................... 103.18% $125,872,644
Other Assets and Liabilities (Net)...................... (3.18) (3,881,145)
------ ------------
Net Assets.............................................. 100.00% $121,991,499
====== ============
</TABLE>
See Notes to Financial Statements
19
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
EMERGING AMERICAS FUND
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<C> <S> <C> <C>
COMMON STOCKS -- 72.36%
BRAZIL -- 22.47%
129,146,843 Banco Bradesco.......... $ 1,024,394
25,567 Cia Energetica de Minas
Gerais ADR.............. 1,080,206
Cia Siderurgica
59,450,000 Nacional................ 2,132,678
8,021,800 Eletrobras.............. 3,317,798
+Light Participacoes
2,135,064 S.A. ................... 645,156
3,290,000 Light Servicos de
Eletricidade S.A. ...... 1,391,773
39,170,000 Telebras................ 3,949,919
10,700 Telebras ADR............ 1,095,412
5,165,731 TELESP S.A. ............ 1,292,652
-----------
15,929,988
-----------
MEXICO -- 18.66%
301,300 ALFA, S.A. de C.V....... 1,693,530
398,274 Cemex, S.A., CPO........ 1,457,223
+Corporacion GEO S.A.,
283,046 Class B................. 1,357,021
259,950 +Gruma S.A., Class B.... 1,279,088
Grupo Carso S.A., Class
221,000 A-1..................... 1,295,161
694,000 +Grupo Financiero
Banamex Accival S.A.,
Class B................. 1,583,084
294 Grupo Financiero
Inbursa,
S.A. de C.V. ........... 935
Industrias Penoles
381,300 S.A. ................... 1,876,192
Sanluis Corporacion S.A.
231,200 de C.V. ................ 1,385,566
+Tubos de Acero de
76,000 Mexico S.A.............. 1,300,227
-----------
13,228,027
-----------
ARGENTINA -- 12.66%
517,000 +Acindar Industria
Argentina de Aceros
S.A. ................... 1,034,165
306,992 Banco de Galicia y
Buenos Aires S.A., Class
B....................... 1,879,092
+Siderar S.A.I.C., Class
300,000 A....................... 1,038,166
635,200 Siderca S.A., Class A... 1,340,486
425,000 Telefonica de Argentina
S.A.,
Class B................. 1,253,951
91,600 YPF S.A. ADR............ 2,427,400
-----------
8,973,260
-----------
PERU -- 5.98%
+Compania Minera Milpo
16,000 S.A. ................... 135,891
770 Cia de Minas
Buenaventura,
Class A................. 7,241
193 Cia de Minas
Buenaventura,
Class B................. 2,028
139,188 Cia de Minas
Buenaventura,
Class T................. 1,253,638
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
----------- -----------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
PERU -- (CONTINUED)
49,093 Credicorp Ltd. .................................. $ 1,147,549
763,163 Telefonica del Peru S.A., Class B................ 1,694,637
-----------
4,240,984
-----------
VENEZUELA -- 5.39%
74,800 +CANTV ADR....................................... 2,178,550
574,000 Siderurgica Venezolana Sivensa ADR............... 1,645,945
-----------
3,824,495
-----------
CHILE -- 4.92%
10,905 Chilectra S.A. ADR............................... 689,374
22,839 Cia de Telecomunicaciones de Chile S.A. ......... 656,621
27,985 Enersis S.A. ADR................................. 888,524
22,900 Santa Isabel S.A. ADR............................ 592,538
11,511 Sociedad Quimica y Minera de Chile ADR........... 663,321
-----------
3,490,378
-----------
COLOMBIA -- 2.28%
66,270 Banco Industrial Colombiano ADR.................. 1,093,455
32,750 ++Cementos Diamante ADR.......................... 458,500
4,520 Cementos Diamante GDR............................ 63,280
-----------
1,615,235
-----------
TOTAL COMMON STOCKS
(Cost $44,691,262)............................... 51,302,367
-----------
PREFERRED STOCKS -- 21.88%
BRAZIL -- 21.88%
129,139,815 Banco Bradesco................................... 1,067,019
1,000,000 +CELESC.......................................... 1,142,587
1,611,870 Cia Cervejaria Brahma............................ 1,050,988
16,000,000 +Cia Energetica de Sao Paulo..................... 797,734
45,600 Cia Vale do Rio Doce............................. 1,037,734
125,500,000 Gerdau S.A. ..................................... 1,776,435
1,390,000 Itausa........................................... 1,181,303
270 Lojas Americanas................................. 4
15,009,999 Petroleo Brasileiro S.A. ........................ 2,983,574
6,654,025 +Telecomunicacoes de Sao Paulo S.A. ............. 1,690,210
15,200,000 +Telerj S.A. .................................... 2,109,628
601,000,000 Usinas Sider Minas Gerais........................ 675,345
-----------
TOTAL PREFERRED STOCKS
(Cost $12,846,510)............................... 15,512,561
-----------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
EMERGING AMERICAS FUND -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<C> <S> <C>
DEMAND NOTES -- 6.17%
UNITED STATES -- 6.17%
$1,727,000 Associates Corp. of North America Master Notes........ $ 1,727,000
2,648,000 General Electric Co. Promissory Notes................. 2,648,000
-----------
TOTAL DEMAND NOTES
(Cost $4,375,000)..................................... 4,375,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $61,912,772*)........................................ 100.41% $71,189,928
OTHER ASSETS & LIABILITIES (NET)........................... (0.41) (290,069)
------ -----------
NET ASSETS................................................. 100.00% $70,899,859
====== ===========
</TABLE>
- --------
* -- For Federal income tax purposes, the tax basis of investments aggregates
$62,178,560.
+ -- Non-income producing.
++ -- Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31,
1997 these securities amounted to $458,500, or 0.65% of net assets.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
21
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1997
EMERGING AMERICAS FUND -- (CONTINUED)
At March 31, 1997, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ -----------
<S> <C> <C>
Raw/Intermediate Materials............................... 17.70% $12,550,692
Utilities................................................ 17.32 12,278,193
Technology............................................... 15.83 11,225,386
Consumer Cyclical........................................ 12.31 8,730,517
Financial................................................ 11.00 7,795,527
Capital Goods............................................ 9.88 7,000,672
Demand Notes............................................. 6.17 4,375,000
Holding Company Diversified.............................. 3.49 2,476,465
Energy................................................... 3.42 2,427,400
Consumer Staples......................................... 3.29 2,330,076
------ -----------
Total Investments........................................ 100.41% $71,189,928
Other Assets and Liabilities (Net)....................... (0.41) (290,069)
------ -----------
Net Assets............................................... 100.00% $70,899,859
====== ===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Excelsior Funds, Inc. ("Excelsior Fund") was incorporated under the laws of
the State of Maryland on August 2, 1984 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 International
Fund, Pacific/Asia Fund, Pan European Fund and Emerging Americas Fund (the
"Portfolios"). Such policies are in conformity with generally accepted
accounting principles and are consistently followed by Excelsior Fund in the
preparation of the financial statements. Generally accepted accounting
principles require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates. The financial statements for the
remaining portfolios of Excelsior Fund and Excelsior Tax-Exempt Funds, Inc.
are presented separately.
(A) PORTFOLIO VALUATION:
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. Investments in securities
which are primarily traded on a domestic exchange are valued at the last
sale price on that exchange or, if there was no recent sale, at the last
current bid quotation.
Investments in foreign debt securities having maturities of 60 days or
less are valued at amortized cost, which approximates market value. All
other foreign securities are valued at the last current bid quotation if
market quotations are available, or at fair value as determined in
accordance with policies established by the Board of Directors. Investment
valuations, other assets, and liabilities initially expressed in foreign
currencies are converted each business day into U.S. dollars based upon
current exchange rates. Purchases and sales of foreign investments and
income and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing 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
23
<PAGE>
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 semi-annually.
Net realized capital gains, unless offset by any available capital loss
carryforward, are distributed to shareholders at least annually. Dividends
and distributions are recorded on the ex-dividend date.
Dividends and distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, passive foreign investment companies and
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
24
<PAGE>
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, 1997, the Emerging Americas Fund had a capital loss
carryforward for Federal tax purposes available to offset net capital gains
of approximately $4,261,000 which will expire on March 31, 2004.
Net capital losses and net currency 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. International Fund, Pacific/Asia Fund, Pan
European Fund and Emerging Americas Fund incurred, and expect to defer, net
currency losses of approximately $34,000, $25,000, $23,000, and $26,000,
respectively, for the year ended March 31, 1997.
At March 31, 1997, 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 were as follows:
<TABLE>
<CAPTION>
NET
TAX BASIS TAX BASIS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
International Fund................ $13,050,298 $(3,208,795) $ 9,841,503
Pacific/Asia Fund................. 4,381,268 (5,556,649) (1,175,381)
Pan European Fund................. 14,156,742 (745,928) 13,410,814
Emerging Americas Fund............ 10,696,740 (1,685,372) 9,011,368
</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 quarterly, at the annual rate of 1% of the average
daily net assets of each Portfolio.
Effective November 1, 1996, the sub-advisory arrangements between U.S. Trust
and: (i) Foreign and Colonial Asset Management ("FACAM") with respect to the
International and Pan European Funds; and (ii) Foreign and Colonial Emerging
Markets Limited ("FCEML") with respect to the Emerging Americas and
Pacific/Asia Fund were terminated. Prior to November 1, 1996, U.S. Trust was
entitled to receive a fee, computed daily and paid quarterly, at the annual
rate of 1% of the average daily net assets of each Portfolio. FACAM was
entitled to receive from U.S. Trust an annual fee, computed and paid
quarterly, at the annual rate of .70% of the average daily net assets of each
of the International Fund and Pan European Fund. FCEML was entitled to receive
from U.S. Trust an annual fee, computed and paid quarterly, at an annual rate
of .70% of the average daily net assets of the Pacific/Asia Fund and .50% of
the average daily net assets of the Emerging Americas Fund.
U.S. Trust, Chase Global Funds Services Company ("CGFSC"), a subsidiary of
The Chase Manhattan Bank and Federated Administrative Services (collectively,
the "Administrators") provide administrative services to Excelsior Fund. For
the services provided to the Portfolios, the Administrators
25
<PAGE>
are entitled jointly to annual fees, computed daily and paid monthly, at the
rate of .20% of the average daily net assets of each Portfolio. For the year
ended March 31, 1997, Administration fees charged by U.S. Trust were as
follows:
<TABLE>
<S> <C>
International Fund................................................... $61,572
Pacific/Asia Fund.................................................... 48,412
Pan European Fund.................................................... 40,716
Emerging Americas Fund............................................... 31,002
</TABLE>
From time to time, as they may deem appropriate in their sole discretion, or
pursuant to applicable state expense limitations, U.S. Trust, the sub-advisers
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 intends to
voluntarily waive fees and reimburse expenses to the extent necessary for
Pacific/Asia Fund, Pan European Fund and Emerging Americas Fund to maintain an
annual expense ratio of not more than 1.67%. For the year ended March 31,
1997, no fees were waived or expenses reimbursed pursuant to this voluntary
limitation.
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S.
Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
administrative services provided by each service organization to its
customers, each Portfolio will pay the service organization an administrative
service fee at the annual rate of up to .40% of the average daily net asset
value of its shares held by the service organizations' customers. Such
services may include assisting in processing purchase, exchange and redemption
requests; transmitting and receiving funds in connection with customer orders
to purchase, exchange or redeem shares; and providing periodic statements.
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 the administrative service
fees payable by such Portfolio. For the year ended March 31, 1997, U.S. Trust
and the Administrators waived investment advisory and administration fees in
amounts equal to the administrative service fees for the Portfolios as set
forth below:
<TABLE>
<CAPTION>
U.S. TRUST ADMINISTRATORS
---------- --------------
<S> <C> <C>
International Fund................................. $87,156 $47
Pacific/Asia Fund.................................. 65,538 68
Pan European Fund.................................. 48,946 1
Emerging Americas Fund............................. 42,840 58
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Fund.
Effective February 14, 1997, shares of each Portfolio are sold without a sales
charge. Prior to February 14, 1997, certain sales of Excelsior Fund's shares
were subject to a maximum sales charge of 4.50% of the offering price.
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.
26
<PAGE>
3. PURCHASES AND SALES OF SECURITIES:
For the year ended March 31, 1997, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
CONTRIBUTION
PURCHASES IN KIND SALES
------------ ------------ ------------
<S> <C> <C> <C>
International Fund.................... $121,529,191 $21,239,784 $123,356,541
Pacific/Asia Fund..................... 123,752,598 -- 102,898,471
Pan European Fund..................... 107,888,464 -- 54,121,899
Emerging Americas Fund................ 49,138,342 -- 37,071,711
</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 the
International Fund, 375 million shares of Common Stock and 500 million shares
of Common Stock--Special Series 1; and with respect to each of the Emerging
Americas, Pacific/Asia and Pan European Funds, 500 million shares of Common
Stock and 500 million shares of Common Stock--Special Series 1. At March 31,
1997, no shares of Common Stock--Special Series 1 (Trust Shares) of any
Portfolio 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 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>
INTERNATIONAL FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 3,509,954 $ 39,006,438 4,594,884 $ 48,428,812
Contribution in-kind....... 1,925,638 21,239,784 -- --
Issued as reinvestment of
dividends................. 29,055 314,909 11,746 124,300
Redeemed................... (3,250,261) (35,599,363) (2,163,381) (22,716,436)
---------- ------------ ---------- ------------
Net Increase............... 2,214,386 $ 24,961,768 2,443,249 $ 25,836,676
========== ============ ========== ============
<CAPTION>
PACIFIC/ASIA FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 5,035,278 $ 48,378,451 3,596,013 $ 33,056,971
Issued as reinvestment of
dividends................. 15,992 153,860 7,394 67,403
Redeemed................... (2,944,246) (28,052,131) (1,446,336) (13,034,766)
---------- ------------ ---------- ------------
Net Increase............... 2,107,024 $ 20,480,180 2,157,071 $ 20,089,608
========== ============ ========== ============
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
PAN EUROPEAN FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 7,066,575 $ 71,704,422 1,870,905 $ 16,533,893
Issued as reinvestment of
dividends................. 8,104 77,487 12,177 104,293
Redeemed................... (1,141,350) (11,602,820) (1,550,885) (13,664,173)
---------- ------------ ---------- ------------
Net Increase............... 5,933,329 $ 60,179,089 332,197 $ 2,974,013
========== ============ ========== ============
<CAPTION>
EMERGING AMERICAS FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/97 03/31/96
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 3,809,798 $ 32,650,511 3,643,045 $ 25,964,699
Issued as reinvestment of
dividends................. 2,196 18,453 4,539 31,637
Redeemed................... (2,174,370) (17,917,579) (2,457,353) (17,051,306)
---------- ------------ ---------- ------------
Net Increase............... 1,637,624 $ 14,751,385 1,190,231 $ 8,945,030
========== ============ ========== ============
</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.
28
<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 International, Pacific/Asia,
Pan European and Emerging Americas Portfolios (four of the portfolios
constituting the Excelsior Funds, Inc.) as of March 31, 1997, 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, 1997, 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, 1997,
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 9, 1997
29
<PAGE>
FEDERAL TAX INFORMATION: (UNAUDITED)
For the year ended March 31, 1997, the percentage of dividends paid that
qualify for the 70% dividends received deduction for corporate shareholders,
the designation of long-term capital gain and the amounts expected to be passed
through to shareholders as foreign tax credits are approximated as follows:
<TABLE>
<CAPTION>
DIVIDENDS
RECEIVED LONG-TERM FOREIGN TAX
FUND DEDUCTION CAPITAL GAIN CREDIT
---- --------- ------------ -----------
<S> <C> <C> <C>
International Fund..................... -- $1,124,000 $273,000
Pacific/Asia Fund...................... 4.04% 1,363,000 124,000
Pan European Fund...................... -- 848,000 251,000
Emerging Americas Fund................. -- -- 39,000
</TABLE>
In addition, for the year ended March 31, 1997, gross income derived from
sources within foreign countries approximately amounted to the following:
<TABLE>
<CAPTION>
FOREIGN SOURCE
FUND INCOME
---- --------------
<S> <C>
International Fund......................................... $2,480,000
Pacific/Asia Fund.......................................... 1,693,000
Pan European Fund.......................................... 1,796,000
Emerging Americas Fund..................................... 965,000
</TABLE>
30
