<PAGE>
[LOGO OF EXCELSIOR FUNDS INC. APPEARS HERE]
INTERNATIONAL EQUITY PORTFOLIOS
ANNUAL REPORT
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S INTERNATIONAL EQUITY MARKET REVIEW.............................. 2
ADVISER'S INVESTMENT REVIEWS
International Fund....................................................... 3
Pacific/Asia Fund........................................................ 4
Pan European Fund........................................................ 5
Latin America Fund (formerly Emerging Americas Fund)..................... 6
Emerging Markets Fund.................................................... 7
STATEMENTS OF ASSETS AND LIABILITIES...................................... 8
STATEMENTS OF OPERATIONS.................................................. 9
STATEMENTS OF CHANGES IN NET ASSETS....................................... 10
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 12
PORTFOLIOS OF INVESTMENTS
International Fund....................................................... 14
Pacific/Asia Fund........................................................ 17
Pan European Fund........................................................ 20
Latin America Fund (formerly Emerging Americas Fund)..................... 23
Emerging Markets Fund.................................................... 25
NOTES TO FINANCIAL STATEMENTS............................................. 28
INDEPENDENT AUDITORS' REPORT.............................................. 34
FEDERAL TAX INFORMATION................................................... 34
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, U.S. TRUST COMPANY OF
CONNECTICUT, THEIR PARENT AND AFFILIATES AND SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
<PAGE>
LETTER TO SHAREHOLDERS
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the annual report for Excelsior Funds, Inc. Fiscal
1998 was an exciting year in the financial markets as a whole and for the fund
family. Highlights included exceptional performance by many of the funds, the
reconfiguration of some of our existing equity funds, and the commencement of
several new fund offerings.
During the year, we introduced the Large Cap Growth Fund, Real Estate Fund and
Emerging Markets Fund. These funds provide access to important asset classes
and subclasses not previously offered by Excelsior. As always, we will
continue to evaluate the current Excelsior funds and will consider expanding
our offerings to help you meet your financial goals.
Buoyed by low interest rates and the lack of inflationary pressures, corporate
profits continued to grow. These factors combined to produce another year of
extraordinary returns on domestic equity investments. They also combined to
constrain returns on fixed-income investments to modest levels. International
markets were mixed, with strong returns in Europe, moderate Latin American
returns and down markets in Asia, brought on by a weakened economic
environment and currency devaluations in several countries.
The financial markets will present many challenges and opportunities during
the coming year. Fiscal policy has continued to be effective in keeping
inflation under control. We remain cautiously optimistic regarding the
domestic equity markets. International markets, as a whole, remain attractive.
A close watch will be required in Asia, as efforts are made to right their
recent economic woes. I am confident that the Excelsior fund family will
continue to provide you with the appropriate investment vehicles to respond to
economic environment and to 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
- -------------------------------------------------------------------------------
During the first quarter of Fiscal 1998, the Latin American markets proved
particularly strong, led by Brazil. The European markets continued to make
solid advances, paced by Spain and Switzerland and the Asian markets saw mixed
but generally improved performance as the turn in the yen seemed to remove
some negative pressure on the region. In U.S. dollar terms, Hong Kong was
strong and Japan staged something of a comeback, but the markets of the
Philippines, Malaysia, and Thailand all proved disappointing.
During the ensuing two fiscal quarters, the economic meltdown and currency
devaluations in Southeast Asia were the largest factors impacting
international equity markets. In the second fiscal quarter Indonesia,
Malaysia, Philippines, and especially Thailand saw substantial currency
declines. Their stock markets were down even more dramatically. Japan provided
no help either during this time as it confronted faster-than-expected economic
slowdown. Korea, India, and Singapore all showed negative performance numbers
as well. In addition, the Southeast Asian difficulties had a ripple effect on
the emerging markets of Latin America, as Brazil was down for the period. The
only bright spots in the quarter came from Europe and Mexico, both up. Europe
remained resilient in the fiscal third quarter as well, paced by Switzerland
and Italy; emerging Europe, on the other hand, suffered from the ripple
effects of the Asian crisis. The markets of Latin America, the worst-
performing of which were Chile and Venezuela, saw substantial declines and
Asia overall continued weak in the period.
For the final fiscal quarter, the environment for international equities
provided favorable in general. Europe's advance was led by Spain, Italy,
Finland and Portugal. Valuations were high historically but attractive versus
the U.S.
Latin American markets were overall flat. While Asian concerns subsided, the
crisis caused an increase in the cost of capital and weakness in commodity
prices. The crisis did, however, produce the political will to reduce fiscal
spending and accelerate reform legislation and privatizations--which should
lay a solid foundation for continued growth.
Asian markets were mixed; the best-performing were Korea and Thailand.
Japan, after a strong start, finished only slightly up and Malaysia and
Indonesia were the big losers.
2
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
INTERNATIONAL FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1998, the Fund realized a total return
of 19.42%* versus 18.61%** for the MSCI EAFE Index 16.27%*** for the MSCI ACWI
Free ex USA and 48.00%+ for the Standard & Poor's 500 Composite Stock Price
Index. During the first fiscal quarter, the Fund benefited from overall
strength of the International equity markets, led by Latin America and Europe.
Asian markets saw mixed but generally improved performance. Moving into the
fiscal second and third quarters, the largest factor impacting performance was
currency weakness, which depressed U.S. dollar returns. Specifically, the Fund
was negatively affected by the economic meltdown and currency devaluations in
Southeast Asia, as well as the ripple effect on the emerging markets of Latin
America. The only bright spots came from Europe and Mexico. We note the solid
performance from our European technology holdings. The oil area proved strong
as well, at least in the fiscal second quarter. In the final quarter, Europe
once again advanced strongly, Latin American markets were overall flat, and
Asian markets were mixed, but with some strong improvements. Strength for the
Fund was concentrated among our positions in Europe, particularly the
peripheral European countries. From a sector point of view, financials and
services were the Fund's big winners. Drags on performance did come from
several of our individual Japanese holdings as well as positions in Indonesia,
Malaysia, and Latin America in general. Regarding portfolio structure and
strategy, we maintained a broadly diversified portfolio -- though we did
overweight Europe -- with a consistent emphasis on bottom-up stock selection
and a longer-term investment horizon. During the year, we added to positions
in the smaller, peripheral European countries. Also, as the year progressed,
we took advantage of bargain prices in the Pacific Asia region to benefit from
resumption of that region's long-term growth.
[LINE GRAPH APPEARS HERE]
International Financial Times MSCI ACWI
Date Fund World Indes MSCI EAFE Index** Free ex USA***
---- ---- ----------- --------------- -----------
3/31/88 9872 10000 10000 10000
3/31/89 10918 11130 11160 11180
3/31/90 12982 10020 9870 10050
3/31/91 12307 10330 10120 10370
3/31/92 11772 9540 9310 9840
3/31/93 12343 10650 10390 10870
3/31/94 15101 12980 12730 13480
3/31/95 14809 13660 13500 14070
3/31/96 16700 15380 15170 15920
3/31/97 17832 15650 15390 16480
3/31/98 21571 18340 18250 19160
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 broad-based indices over the past ten fiscal years. All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The indices do not take into account charges, fees
and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the MSCI EAFE Index and the MSCI ACWI Free ex USA rather
than the FT/S&P Index as these indices better represent the Fund's investment
universe. Further information relating to Fund performance is contained in the
Financial Highlights section of the Prospectus and elsewhere in this report.
- -------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International EAFE (Europe, Australasia, Far East) Index is a widely
accepted, unmanaged index composed of a sample of companies from 21
countries representing the developed stock markets outside North America.
*** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International All Country World Index Free ex USA is a widely accepted,
unmanaged index of global stock market performance comprising 47 countries
with developed and emerging markets excluding the United States.
+ Source: Standard & Poor's Corporation -- Reflects the reinvestment of
income dividends and, where applicable, capital gain distributions. The
Standard & Poor's 500 Composite Stock Price Index is a widely accepted
unmanaged index of U.S. stock market performance.
++ Source: 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.
+++ 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.
ADVISER'S INVESTMENT REVIEW
PACIFIC/ASIA FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1998, the Fund realized a negative
total return of (27.56)%* versus negative (16.74)%** for the MSCI AC Asia
Pacific Index and 48.00%*** for the Standard & Poor's 500 Composite Stock
Price Index. The Fund posted solid gains in the fiscal first quarter;
thereafter, the Fund was impacted, along with Asian markets as a whole, by a
combination of currency devaluations and poor government policy responses.
Throughout the fiscal year, our goal was to continue to emphasize countries
with favorable policy responses and to be vigilant in seeking out the
inevitable individual investment opportunities that emerge from crises. In the
fiscal third quarter, we turned positive on Thailand, as that country's credit
cycle appeared to have found a bottom, and we began to see value emerging in
Japan. In relative terms, the Fund was served well by 1) an underweight
position in Hong Kong, and 2) solid performances from the Fund's Japanese
stocks (despite the weak Japanese stock market). We also eliminated all of the
Fund's property and banking exposure; we sold all but one of our holdings in
Korea, exited Malaysia entirely, and scaled back dramatically on our already
underweight Hong Kong position. The environment improved somewhat during the
fiscal fourth quarter, though Asian markets were mixed. Performance drivers
for the Fund included its Korean, Thai, and Philippine holdings. The Fund also
benefited from an earlier decision to continue to maintain an underweight
position in Japan.
[LINE CHART APPEARS HERE]
----------------------------------------------------
Pacific/Asia Fund++
----------------------------------------------------
Average Annual Total Return Ended on 3/31/98*
----------------------------------------------------
1 year 5 years
----------------------------------------------------
(27.56%) 0.99%
----------------------------------------------------
Morgan Stanley Capital MSCI-AC Asia
Date Pacific/Asia Fund International Pacific Free Index Pacific Index
---- ----------------- -------------------------------- -------------
12/31/92 10000 10000 10000
3/31/93 10771 11745 11700
3/31/94 14876 14725 14760
3/31/95 14000 15178 15280
3/31/96 16911 16260 16060
3/31/97 15623 13160 13360
3/31/98 11317 11124 11120
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 broad-based indices 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 indices do not take into account charges,
fees and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the MSCI AC Asia Pacific Index rather than the MSCI
Pacific Free Index as this index better represents the Fund's investment
universe. Further information relating to Fund performance is contained in the
Financial Highlights section of the prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International All Country Asia Pacific Index is a widely accepted,
unmanaged index composed of a sample of companies representative of the
market structure of 15 developed and emerging market Pacific Basin
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.
+ 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.
++ 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.
ADVISER'S INVESTMENT REVIEW
PAN EUROPEAN FUND
- -------------------------------------------------------------------------------
For the twelve months ended March 31, 1998, the Fund realized a total return
of 38.02%* versus 42.02%** for the MSCI Europe Index and 48.00*** for the
Standard & Poor's 500 Composite Stock Price Index. During the first three
quarters of fiscal 1998, led by Switzerland and Italy, European stock markets
saw consistent gains. Emerging Europe, excluding Russia and Hungary, saw the
region's weakest performances due largely to the Asian crisis and consequent
fears of currency collapse. Principal performance drivers for the period were
concentrated among the Fund's financial services and consumer-oriented names.
Weaker performers included several of the Fund's capital goods and technology
companies with emerging markets exposure. Regarding Fund strategy, within the
context of our broadly diversified portfolio, we began to scale back on
capital goods holdings due to the slowdown in Asia. We also began to shift
emphasis toward the beneficiaries of domestic European growth. Heading into
the fiscal fourth quarter, European stock market performance picked up
strongly. Specific drivers for the Fund were concentrated among our positions
in the peripheral European countries. Our solid presence in Spain allowed us
to benefit from that country's strength, and we benefited similarly, though to
a lesser extent, from holdings in Italy and Finland. From a sector point of
view, financials and services were the Fund's big winners. Among the changes
to the portfolio, we added to positions in peripheral Europe, companies with a
particular focus on the consumer.
[LINE CHART APPEARS HERE]
----------------------------------------------------
Pan European Fund++
----------------------------------------------------
Average Annual Total Return Ended on 3/31/98*
----------------------------------------------------
1 year 5 years
----------------------------------------------------
38.02% 18.30%
----------------------------------------------------
Financial Times
Date Pan European Fund Actuaries Index MSCI Europe Index
---- ----------------- --------------- -----------------
12/31/92 10000 10000 10000
3/31/93 10486 10493 10650
3/31/94 11540 12107 12740
3/31/95 12039 14063 13640
3/31/96 14236 16841 16200
3/31/97 17618 20839 19840
3/31/98 24316 29697 28170
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 broad-based indices 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 indices do not take into account charges,
fees and other expenses. Beginning with this report, we are now comparing the
Fund's performance to the MSCI Europe Index rather than the FT/S&P Index as
this index better represents the Fund's investment universe. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International Europe Index is a widely accepted, unmanaged index composed
of a sample of companies representative of the market structure of 15
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.
+ 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.
++ 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.
ADVISER'S INVESTMENT REVIEW
LATIN AMERICA FUND
(FORMERLY EMERGING AMERICAS FUND)
- --------------------------------------------------------------------------------
For the twelve months ended March 31, 1998, the Fund realized a total return
of 14.05%* versus 11.29%** for the MSCI EMF Latin America Index and 48.00%***
for the Standard & Poor's 500 Composite Stock Price Index. During the first
fiscal quarter, the Fund benefited significantly from overweights in Brazil,
Venezuela, and even Peru. Still, strength was broadbased as only five of the
Fund's holdings saw declines in the period. While Brazil, the Fund's single
biggest weighting, declined in the second fiscal quarter, the Fund was buoyed
by its emphasis on fundamental industries key to the economic growth of the
region (steel, for instance) as well as its exposure to the Mexican retail
sector. The environment changed markedly in the fiscal third quarter as
currency and market turmoil in Asia brought broadbased weakness to Latin
American markets. Our overweight in Brazil, whose market declined even more
sharply in this quarter, hurt performance, but our Mexican consumer-related
stocks again were the Fund's top performers. Our zero exposure to Chile, the
Fund's most significant underweight, offset downward price pressure throughout
Latin America. For the fiscal fourth quarter, Latin American markets were
basically flat. Our overweight in Mexico and the drop in oil prices negatively
affected Fund performance during the period. The best-performing market was
Brazil, where steel stocks were the Fund's top performers. We continue to be
optimistic on Brazil's privatization plans, and the Fund remains heavily
weighted in telecoms and electric utilities in anticipation of near term
privatizations.
[LINE CHART APPEARS HERE]
----------------------------------------------------
Latin America Fund++
----------------------------------------------------
Average Annual Total Return Ended on 3/31/98*
----------------------------------------------------
1 year 5 years
----------------------------------------------------
14.05% 11.48%
----------------------------------------------------
Date Latin American Fund MSCI-EMF Latin America Index
---- ------------------- ----------------------------
12/31/92 10000 10000
3/31/93 10171 10480
3/31/94 13452 16230
3/31/95 9353 11390
3/31/96 11965 14210
3/31/97 15368 19030
3/31/98 17527 21770
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 Latin America
Fund and a broad-based index since 12/31/92 (inception date). All dividends and
capital gain distributions are reinvested. The Fund's performance takes into
account fees and expenses. The index does not take into account charges, fees
and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: 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.
6
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INVESTMENT REVIEW
EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
For the period from January 2, 1998 (inception date) to March 31, 1998, the
Fund realized a negative total return of (0.14)%* versus 6.19%** for the MSCI
EMF (Emerging Markets Free) Index and 13.95%*** for the Standard & Poor's 500
Composite Stock Price Index. During the period, the emerging markets were
characterized by high volatility, especially in Asia. 1998 began with a sharp
selloff in virtually all markets, followed by a recovery through the end of
the first quarter. Asia sold off less, since it had already lost half its
value in 1997, and therefore showed the best performance. Although we are
confident of its long-term prospects, the Fund's structure did not benefit
performance in its initial three-month period. Our most significant
overweight, Latin America, was nearly flat in the period; our most significant
underweight, Asia, saw strong gains. However, we believe that price recovery
in Asia is only temporary and that economic growth in the region will continue
to be problematic. We remain positive on the outlook for Latin America. We
have focused our overweight in the region mostly on Brazil, where corporate
bottom-line growth from increased operating efficiency remains the driving
force. In Mexico, the recovery of consumer spending continues unabated, and
most of our holdings are direct beneficiaries of this trend. We have also
invested in Eastern Europe, where our favorite country is Hungary, which we
feel has the strongest economic fundamentals in the region. Our strategy has
been to focus on the best-managed companies with leading products which can
compete in export markets. We have also identified select opportunities in
Egypt, Israel and South Africa.
[LINE CHART APPEARS HERE]
--------------------------------------
Emerging Markets Fund+
--------------------------------------
Total Return Ended on 3/31/98*
--------------------------------------
Since Inception (1/2/98)
--------------------------------------
(0.14%)
--------------------------------------
Date Emerging Markets Fund MSCI-EMF (Emerging Markets Free) Index
---- --------------------- --------------------------------------
1/2/98 10000 10000
1/31/98 9100 9220
2/28/98 9614 10180
3/31/98 9986 10620
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
Markets Fund and a broad-based index since 1/2/98 (inception date). For
comparative purposes, the value of the index on 12/31/97 is used as the
beginning value on 1/2/98. All dividends and capital gain distributions are
reinvested. The Fund's performance takes into account fees and expenses. The
index does not take into account charges, fees and other expenses. Further
information relating to Fund performance is contained in the Financial
Highlights section of the Prospectus and elsewhere in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
international EMF (Emerging Markets Free) Index is a widely-accepted,
unmanaged index composed of a sample of companies representative of the
market structure of 26 global emerging market 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.
7
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<CAPTION>
LATIN
AMERICA
FUND
(FORMERLY
PAN EMERGING EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN AMERICAS MARKETS
FUND FUND FUND FUND) FUND
------------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost --
see accompanying
portfolios............ $166,101,466 $53,024,614 $148,062,385 $79,300,489 $6,977,413
============ =========== ============ =========== ==========
Investments, at value
(Note 1).............. $202,722,629 $42,022,387 $206,029,984 $86,952,422 $7,153,805
Cash................... 1,346,573 122,153 1,258,437 -- 4,603
Foreign currency (cost
$11,746).............. -- -- -- 11,587 --
Dividends receivable... 451,031 117,220 331,420 464,864 20,461
Interest receivable.... 43,630 10,591 51,143 8,260 612
Receivable for
investments sold...... 791,144 229,745 547,303 2,820,428 --
Receivable for fund
shares sold........... 2,548 960,082 574,323 5,496 --
Withholding tax
receivable............ 51,953 1,509 94,588 11,850 --
Net unrealized
appreciation on open
forward foreign
currency contracts.... 468,253 447,360 -- -- --
Prepaid expenses....... 7,551 1,831 7,135 4,029 --
Receivable for
Investment Advisory
fees (Note 2)......... -- -- -- -- 98
Unamortized
organization costs
(Note 5).............. -- -- -- -- 37,255
------------ ----------- ------------ ----------- ----------
TOTAL ASSETS.......... 205,885,312 43,912,878 208,894,333 90,278,936 7,216,834
LIABILITIES:
Payable for investments
purchased............. 727,533 5,771 332,633 1,132,135 633,530
Payable for fund shares
redeemed.............. 520 9,352 665,770 17,160 --
Investment advisory
fees payable (Note 2). 153,399 39,617 147,807 60,795 --
Administration fees
payable (Note 2)...... 33,920 6,321 32,854 13,735 962
Administration service
fees payable
(Note 2).............. 11,652 2,995 10,100 5,755 381
Directors' fees payable
(Note 2).............. 1,346 1,085 1,926 961 34
Foreign taxes payable.. -- -- -- -- 2,056
Due to custodian bank.. -- -- -- 313,101 --
Accrued expenses and
other payables........ 67,905 39,420 67,469 38,932 44,421
------------ ----------- ------------ ----------- ----------
TOTAL LIABILITIES..... 996,275 104,561 1,258,559 1,582,574 681,384
------------ ----------- ------------ ----------- ----------
NET ASSETS.............. $204,889,037 $43,808,317 $207,635,774 $88,696,362 $6,535,450
============ =========== ============ =========== ==========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (526,577) $ (406,289) $ (201,032) $ 447,256 $ 20,788
Accumulated net
realized gain (loss)
on investments and
foreign currency
translations.......... (1,856,161) (15,869,131) 7,812,727 3,210,760 --
Unrealized appreciation
(depreciation) of
investments and
foreign currency
translations.......... 37,077,610 (10,562,506) 57,959,638 7,649,451 176,703
Par value (Note 4)..... 15,763 6,721 14,691 8,364 934
Paid-in capital in
excess of par value... 170,178,402 70,639,522 142,049,750 77,380,531 6,337,025
------------ ----------- ------------ ----------- ----------
TOTAL NET ASSETS........ $204,889,037 $43,808,317 $207,635,774 $88,696,362 $6,535,450
============ =========== ============ =========== ==========
Shares of Common Stock
Outstanding............ 15,763,174 6,721,068 14,691,472 8,364,205 933,824
NET ASSET VALUE PER
SHARE.................. $13.00 $6.52 $14.13 $10.60 $7.00
====== ===== ====== ====== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
LATIN
AMERICA
FUND
(FORMERLY
PAN EMERGING EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN AMERICAS MARKETS
FUND FUND FUND FUND) FUND*
------------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income............................... $ 2,616,860 $ 1,180,551 $ 2,234,918 $2,237,399 $ 22,138
Interest income............................... 693,852 221,603 199,386 119,316 18,880
Less: Foreign taxes withheld.................. (262,546) (118,897) (277,916) (64,147) --
----------- ------------ ----------- ---------- --------
TOTAL INCOME................................. 3,048,166 1,283,257 2,156,388 2,292,568 41,018
EXPENSES:
Investment advisory fees (Note 2)............. 1,725,722 754,268 1,655,757 964,783 12,106
Administration fees (Note 2).................. 345,145 150,854 331,158 192,957 1,957
Custodian fees................................ 272,440 117,433 256,316 151,022 3,533
Administrative servicing fees (Note 2)........ 134,970 67,805 120,297 96,449 994
Shareholder servicing agent fees.............. 56,743 31,174 32,876 37,036 175
Legal and audit fees.......................... 28,154 29,340 27,610 17,050 266
Registration and filing fees.................. 12,669 9,407 14,327 12,986 1,681
Shareholder reports........................... 11,395 7,552 13,036 7,421 76
Directors' fees and expenses (Note 2)......... 8,285 4,578 8,687 5,011 34
Foreign taxes expense......................... -- -- -- 40,951 1,975
Amortization of organization costs (Note 5)... -- 3,171 3,171 3,171 1,931
Miscellaneous expenses........................ 33,058 6,261 25,549 13,975 2,153
----------- ------------ ----------- ---------- --------
TOTAL EXPENSES............................... 2,628,581 1,181,843 2,488,784 1,542,812 26,881
Fees waived by investment adviser and
administrators (Note 2)...................... (134,970) (67,805) (120,297) (96,449) (8,751)
----------- ------------ ----------- ---------- --------
NET EXPENSES................................. 2,493,611 1,114,038 2,368,487 1,446,363 18,130
----------- ------------ ----------- ---------- --------
NET INVESTMENT INCOME (LOSS)................... 554,555 169,219 (212,099) 846,205 22,888
----------- ------------ ----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain (loss):
Security transactions........................ 2,423,128 (15,708,454) 11,932,509 9,207,853 --
Foreign currency transactions................ (248,511) (220,353) (228,570) (156,061) (4,031)
----------- ------------ ----------- ---------- --------
Total net realized gain (loss)................ 2,174,617 (15,928,807) 11,703,939 9,051,792 (4,031)
Change in unrealized appreciation/depreciation
of investments and foreign currency
translations during the year................. 27,209,443 (9,416,388) 44,555,016 (1,625,807) 176,703
----------- ------------ ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS................................... 29,384,060 (25,345,195) 56,258,955 7,425,985 172,672
----------- ------------ ----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $29,938,615 $(25,175,976) $56,046,856 $8,272,190 $195,560
=========== ============ =========== ========== ========
</TABLE>
* Emerging Markets Fund commenced operations on January 2, 1998.
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LATIN
AMERICA
PAN FUND (FORMERLY EMERGING
INTERNATIONAL PACIFIC/ASIA EUROPEAN EMERGING MARKETS
FUND FUND FUND AMERICAS FUND) FUND*
------------- ------------ ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED MARCH 31, 1998
Net investment income
(loss)................... $ 554,555 $ 169,219 $ (212,099) $ 846,205 $ 22,888
Net realized gain (loss)
on investments and
foreign currency
transactions............. 2,174,617 (15,928,807) 11,703,939 9,051,792 (4,031)
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... 27,209,443 (9,416,388) 44,555,016 (1,625,807) 176,703
------------ ----------- ------------ ----------- ----------
Net increase (decrease) in
net assets resulting from
operations............... 29,938,615 (25,175,976) 56,046,856 8,272,190 195,560
Distributions to
shareholders:
From net investment
income.................. (310,285) (53,878) (12,080) (222,831) --
In excess of net
investment income....... (526,577) (406,289) -- -- --
From net realized gain on
investments............. (4,535,116) -- (11,544,148) (1,470,567) --
In excess of net realized
gain on investments..... (1,856,161) -- -- -- --
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 55,363,423 (20,500,537) 41,153,647 11,217,711 6,339,890
------------ ----------- ------------ ----------- ----------
Net increase (decrease) in
net assets............... 78,073,899 (46,136,680) 85,644,275 17,796,503 6,535,450
NET ASSETS:
Beginning of period...... 126,815,138 89,944,997 121,991,499 70,899,859 --
------------ ----------- ------------ ----------- ----------
End of year (1).......... $204,889,037 $43,808,317 $207,635,774 $88,696,362 $6,535,450
============ =========== ============ =========== ==========
(1) Including
undistributed
(distributions in
excess of) net
investment income.... $ (526,577) $ (406,289) $ (201,032) $ 447,256 $ 20,788
============ =========== ============ =========== ==========
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 (2).......... $126,815,138 $89,944,997 $121,991,499 $70,899,859
============ =========== ============ ===========
--------
(2) Including
undistributed
(distributions in
excess of) net
investment income.... $ 4,184 $ (55,665) $ (14,995) $ (20,056)
============ =========== ============ ===========
</TABLE>
--------
* Emerging Markets Fund commenced operations on January 2, 1998.
See Notes to Financial Statements
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DIVIDENDS DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM FROM NET IN EXCESS OF FROM NET
BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT REALIZED GAIN
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INCOME ON INVESTMENTS
--------- ---------- -------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL FUND --
(7/21/87*)
Year Ended March 31,
1994................... $ 8.66 $ 0.05 $ 1.88 $ 1.93 $ (0.02) $(0.12) $(0.01)
1995................... 10.44 0.10 (0.29) (0.19) -- (0.11) (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)
1998................... 11.34 0.04 2.11 2.15 (0.02) (0.04) (0.31)
PACIFIC/ASIA FUND --
(12/31/92*)
Year Ended March 31,
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) -- ++ (0.16)
1998................... 9.09 0.01 (2.52) (2.51) (0.01) (0.05) --
PAN EUROPEAN FUND --
(12/31/92*)
Year Ended March 31,
1994................... $ 7.34 $ 0.03 $ 0.70 $ 0.73 $ -- $(0.04) --
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) -- ++ (0.27)
1998................... 10.94 (0.01) 4.01 4.00 -- -- (0.81)
LATIN AMERICA FUND --
(12/31/92*)
(formerly Emerging Americas Fund)
Year Ended March 31,
1994................... $ 7.12 $ 0.05 $ 2.24 $ 2.29 $ (0.03) $(0.02) $(0.06)
1995................... 9.30 0.01 (2.56) (2.55) -- (0.17) --
1996................... 5.86 0.10 1.49 1.59 (0.04) (0.04) --
1997................... 7.37 0.05 2.09 2.14 (0.05) -- ++ --
1998................... 9.46 0.10 1.22 1.32 (0.02) -- (0.16)
EMERGING MARKETS FUND --
(01/02/98*)
Period Ended March 31,
1998................... $ 7.00 -- ++ -- ++ -- ++ -- -- --
</TABLE>
* Commencement of operations.
** Annualized.
*** Not Annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
++ Amount represents less than $0.01 per share.
# 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.
@ The annualized ratio of net operating expenses to average net assets,
excluding foreign investment taxes, is 1.65%.
See Notes to Financial Statements
12
<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>
-- $(0.15) $10.44 22.34 % $ 55,737 1.53% 1.53% 0.18 % 64% --
-- (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
$(0.12) (0.49) 13.00 19.42 % 204,889 1.44% 1.52% 0.32 % 37% 0.01
-- $(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
-- ++ (0.23) 9.09 (4.80)% 89,945 1.45% 1.52% 0.69 % 126% 0.01
-- (0.06) 6.52 (27.56)% 43,808 1.48% 1.57% 0.22 % 52% 0.01
-- $(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% -- ++
-- (0.46) 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
-- (0.81) 14.13 38.02 % 207,636 1.43% 1.50% (0.13)% 40% 0.01
-- $(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
-- (0.18) 10.60 14.05 % 88,696 1.50% 1.60% 0.88 % 77% 0.01
-- -- $ 7.00 (0.14)%*** $ 6,535 1.85%**@ 2.74%** 2.33 %** -- -- ++
<CAPTION>
DISTRIBUTIONS
IN EXCESS
OF NET AVERAGE
REALIZED BROKER
GAIN ON COMMISSION
INVESTMENTS RATE#
- -------------- ----------
<S> <C>
-- N/A
-- N/A
-- N/A
-- $0.0123
$(0.12) 0.0105
-- N/A
-- N/A
-- N/A
-- ++ $0.0094
-- 0.0169
-- N/A
-- N/A
-- N/A
-- $0.0012
-- 0.0026
-- N/A
$(0.72) N/A
-- N/A
-- $0.0005
-- 0.0004
-- $0.0002
</TABLE>
See Notes to Financial Statements
13
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL FUND
SHARES (NOTE 1)
------ ------------
COMMON STOCKS -- 94.76%
FRANCE -- 14.58%
71,542 AXA-UAP............................................... $ 7,370,343
5,469 Carrefour S.A......................................... 3,223,344
26,580 Compagnie Financiere de Paribas S.A., Series A........ 2,691,091
116,430 Dassault Systemes S.A................................. 4,690,740
29,042 Elf Aquitaine S.A..................................... 3,807,926
45,644 +SGS-Thomson Microelectronics N.V..................... 3,588,636
16,120 Technip S.A. ......................................... 1,952,236
21,188 Total S.A., Class B................................... 2,545,475
------------
29,869,791
------------
UNITED KINGDOM & POSSESSIONS -- 10.90%
554,754 Airtours plc.......................................... 4,656,721
252,481 Granada Group plc..................................... 4,543,338
297,300 Serco Group plc....................................... 6,490,549
304,248 Siebe plc............................................. 6,642,235
------------
22,332,843
------------
JAPAN -- 10.74%
83,000 Canon, Inc. .......................................... 1,874,194
191,100 Credit Saison Co., Ltd................................ 4,229,145
68,500 Meitec................................................ 2,142,873
90 NTT Data Corp. ....................................... 4,003,751
28,900 Rohm Co............................................... 2,645,011
67,800 Sony Corp............................................. 5,747,487
146,000 Suzuki Motor Co., Ltd................................. 1,369,092
------------
22,011,553
------------
GERMANY -- 7.99%
12,660 GEA AG................................................ 5,210,524
12,999 SAP AG................................................ 5,174,291
33,305 SGL Carbon AG......................................... 3,701,556
34,225 Siemens AG............................................ 2,282,284
------------
16,368,655
------------
SWITZERLAND -- 5.88%
170 Lindt & Spruengli AG.................................. 3,715,785
3,410 Novartis AG (Registered).............................. 6,038,845
211 Roche Holding AG...................................... 2,285,199
------------
12,039,829
------------
AUSTRALIA -- 5.33%
234,326 Brambles Industries Ltd. ............................. $ 4,872,754
441,202 F.H. Faulding & Co., Ltd.............................. 2,217,095
164,820 Lend Lease Corp., Ltd. ............................... 3,836,065
------------
10,925,914
------------
ITALY -- 5.32%
748,125 Edison S.p.A.......................................... 6,300,756
1,189,032 Telecom Italia S.p.A.................................. 4,600,810
------------
10,901,566
------------
CANADA -- 4.49%
191,400 Bombardier Inc., Class B.............................. 4,730,675
28,683 Northern Telecom Ltd. ................................ 1,855,787
83,200 Thomson Corp. ........................................ 2,610,817
------------
9,197,279
------------
NETHERLANDS -- 4.25%
102,880 ING Groep N.V......................................... 5,838,669
20,087 Wolters Kluwer N.V. .................................. 2,871,636
------------
8,710,305
------------
SPAIN -- 3.65%
159,065 Banco Bilbao Vizcaya S.A. (Registered)................ 7,472,648
------------
SWEDEN -- 2.86%
53,466 Autoliv Inc. ......................................... 1,660,788
203,940 Celsius AB, Series B.................................. 4,212,054
------------
5,872,842
------------
DENMARK -- 2.37%
37,200 +Den Danske Bank...................................... 4,861,750
------------
PORTUGAL -- 2.08%
131,800 Banco Comercial Portugues S.A. ....................... 4,257,565
------------
ARGENTINA -- 1.92%
608,775 Siderca S.A., Class A................................. 1,619,617
67,828 YPF S.A. ADR.......................................... 2,306,152
------------
3,925,769
------------
IRELAND -- 1.85%
286,400 Irish Permanent plc................................... 3,793,197
------------
BRAZIL -- 1.70%
26,829 Telebras ADR.......................................... 3,482,740
------------
See Notes to Financial Statements
14
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL FUND -- (CONTINUED)
VALUE
SHARES (NOTE 1)
------ ------------
COMMON STOCKS -- (CONTINUED)
THAILAND -- 1.38%
185,728 Banpu Public Co., Ltd. (Registered).................. $ 1,307,678
139,800 Dhipaya Insurance Public Co., Ltd. .................. 167,617
4,476,000 Onpa International Public Co., Ltd. (Foreign)........ 1,284,566
6,600 Sermsuk Public Co., Ltd. (Foreign)................... 75,765
------------
2,835,626
------------
SOUTH AFRICA -- 1.23%
311,800 Sasol Ltd............................................ 2,527,104
------------
FINLAND -- 0.98%
124,783 Valmet Corp.......................................... 2,002,473
------------
HUNGARY -- 0.86%
16,780 ++Gedeon Richter Rt. GDR (Registered)................ 1,757,705
------------
CHILE -- 0.77%
47,880 Vina Concha Y Toro S.A. ADR.......................... 1,568,070
------------
AUSTRIA -- 0.64%
8,290 VA Technologie AG.................................... 1,306,666
------------
INDIA -- 0.58%
143,300 Mahindra & Mahindra Ltd. GDR......................... 1,190,823
------------
INDONESIA -- 0.58%
1,399,405 +PT Tambang Timah (Foreign).......................... 1,179,731
------------
HONG KONG -- 0.55%
431,000 Television Broadcasts Ltd............................ 1,134,796
------------
SINGAPORE -- 0.54%
155,400 Singapore Airlines Ltd. (Foreign).................... 1,107,249
------------
MEXICO -- 0.34%
136,400 Sanluis Corporacion S.A. de C.V...................... 690,329
------------
TURKEY -- 0.20%
23,000,000 Global Menkul Degerler A.S. ......................... 411,728
------------
PHILIPPINES -- 0.20%
6,578,152 +Metro Pacific Corp.................................. 407,758
------------
TOTAL COMMON STOCKS
(Cost $157,595,289).................................. 194,144,304
------------
VALUE
SHARES (NOTE 1)
------ ------------
PREFERRED STOCK -- 0.63%
BRAZIL -- 0.63%
5,421,000 Petrobras
(Cost $1,160,138)................................... $ 1,292,190
------------
NO. OF
RIGHTS
------
RIGHTS -- 0.24%
PORTUGAL -- 0.24%
153,600 +Banco Comercial Portugues S.A., expiring 4/7/98 at
$16.45
(Cost $569,789)..................................... 491,885
------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BONDS -- 0.26%
PORTUGAL -- 0.26%
$ 4,500 Banco Comercial Portugues S.A., Series A (Preferred)
8.00%, 12/31/2049
(Cost $524,250)..................................... 542,250
------------
DEMAND NOTES -- 3.05%
UNITED STATES -- 3.05%
2,955,000 Associates Corp. of North America, Master Notes..... 2,955,000
3,297,000 General Electric Co. Promissory Notes............... 3,297,000
------------
TOTAL DEMAND NOTES
(Cost $6,252,000)................................... 6,252,000
------------
TOTAL INVESTMENTS
(Cost $166,101,466*)...................................... 98.94% $202,722,629
OTHER ASSETS & LIABILITIES (NET).......................... 1.06 2,166,408
------ ------------
NET ASSETS................................................ 100.00% $204,889,037
====== ============
- --------
*-- For Federal income tax purposes, the tax basis of investments aggregates
$167,058,933.
+-- 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,
1998 these securities amounted to $1,757,705 or 0.86% of net assets.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
15
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL FUND -- (CONTINUED)
FORWARD FOREIGN CURRENCY CONTRACTS
Under the terms of forward foreign currency contracts open at 3/31/98, the
International Fund is obligated to deliver currency in exchange for U.S.
dollars as indicated below:
CURRENCY IN NET
TO EXCHANGE SETTLEMENT UNREALIZED
DELIVER FOR DATE VALUE APPRECIATION
--------------- ---------- ---------- ---------- ------------
Sales............ JPY 762,000,000 $6,220,154 5/14/98 $5,751,901 $468,253
- --------
JPY-- Japanese Yen
At March 31, 1998, sector diversification of the Fund's investment
portfolio was as follows:
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ ------------
Financial............................................... 20.57% $ 42,142,566
Consumer Cyclical....................................... 19.23 39,406,894
Technology.............................................. 15.37 31,491,486
Consumer Staples........................................ 11.16 22,870,064
Energy.................................................. 7.30 14,960,309
Capital Goods........................................... 7.27 14,876,222
Raw/Intermediate Materials.............................. 6.16 12,620,883
Transportation.......................................... 5.18 10,615,714
Utilities............................................... 3.65 7,486,491
Demand Notes............................................ 3.05 6,252,000
------ ------------
Total Investments....................................... 98.94% $202,722,629
Other Assets and Liabilities (Net)...................... 1.06 2,166,408
------ ------------
Net Assets.............................................. 100.00% $204,889,037
====== ============
See Notes to Financial Statements
16
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PACIFIC/ASIA FUND
VALUE
SHARES (NOTE 1)
---------- -----------
COMMON STOCKS -- 93.01%
JAPAN -- 30.26%
17,600 AFLAC, Inc. .......................................... $ 1,113,200
37,500 Canon Inc. ........................................... 846,774
90,500 Credit Saison Co., Ltd. .............................. 2,002,813
34,000 Meitec Corp. ......................................... 1,063,616
41 NTT Data Corp. ....................................... 1,823,932
14,000 Rohm Co. ............................................. 1,281,320
23,500 Sony Corp. ........................................... 1,992,123
86,700 Suzuki Motor Co., Ltd. ............................... 813,016
54,000 Taisho Pharmaceutical Co., Ltd. ...................... 1,207,202
79,400 Terumo Corp. ......................................... 1,113,863
-----------
13,257,859
-----------
AUSTRALIA -- 12.85%
101,262 Brambles Industries Ltd. ............................. 2,105,719
284,169 F.H. Faulding & Co., Ltd. ............................ 1,427,985
90,143 Lend Lease Corp., Ltd. ............................... 2,098,012
-----------
5,631,716
-----------
NEW ZEALAND -- 8.23%
435,512 Carter Holt Harvey Ltd. .............................. 594,226
1,080,000 Restaurant Brands New Zealand Ltd. ................... 805,400
254,731 Telecom Corp. of New Zealand Ltd. .................... 1,212,951
280,500 Tranz Rail Holdings Ltd. ............................. 991,670
-----------
3,604,247
-----------
SINGAPORE -- 7.76%
655,300 GP Batteries International Ltd. ...................... 2,151,853
174,900 Singapore Airlines Ltd. (Foreign)..................... 1,246,190
-----------
3,398,043
-----------
HONG KONG -- 6.72%
372,000 Television Broadcasts Ltd. ........................... 979,453
979,500 Varitronix International Ltd. ........................ 1,965,827
-----------
2,945,280
-----------
PHILIPPINES -- 5.78%
4,775,158 C&P Homes, Inc. ...................................... 430,080
265,000 Manila Electric Co., Class B.......................... 870,464
26,106 ++Manila Electric Co. GDR............................. 427,076
12,963,431 +Metro Pacific Corp. ................................. 803,561
-----------
2,531,181
-----------
THAILAND -- 5.19%
65,900 +Ayudhya Jardine CMG Life Assurance (Foreign)......... $ 26,057
130,067 Banpu Public Co., Ltd. (Registered)................... 915,778
179,600 +Matichon Public Co., Ltd. (Foreign).................. 297,806
958,000 Onpa International Public Co., Ltd. (Foreign)......... 274,936
41,500 Sermsuk Public Co., Ltd. (Foreign).................... 476,403
12,500 Thai Reinsurance Public Co., Ltd. (Foreign)........... 26,786
213,200 Thai Stanley Electric Public Co., Ltd. (Foreign)...... 255,622
-----------
2,273,388
-----------
KOREA -- 5.16%
174,050 Medison Co., Ltd. .................................... 1,496,528
5,580 S1 Corp. ............................................. 766,040
-----------
2,262,568
-----------
INDIA -- 4.42%
232,900 Mahindra & Mahindra Ltd. GDR.......................... 1,935,399
-----------
INDONESIA -- 3.95%
577,300 Hanjaga Madala Sampoerna.............................. 526,954
1,429,187 +PT Tambang Timah (Foreign)........................... 1,204,838
-----------
1,731,792
-----------
TAIWAN -- 2.69%
394,000 Want Want Holdings Ltd. .............................. 464,920
97,400 +Yang Ming Marine Transport GDR....................... 711,994
-----------
1,176,914
-----------
TOTAL COMMON STOCKS
(Cost $51,750,614).................................... 40,748,387
-----------
[LINE CHART APPEARS HERE]
17
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PACIFIC/ASIA FUND -- (CONTINUED)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
DEMAND NOTES -- 2.91%
UNITED STATES -- 2.91%
$625 Associates Corp. of North America Master Notes......... $ 625,000
649 General Electric Co. Promissory Notes.................. 649,000
-----------
TOTAL DEMAND NOTES
(Cost $1,274,000)...................................... 1,274,000
-----------
TOTAL INVESTMENTS
(Cost $53,024,614*)........................................ 95.92% $42,022,387
OTHER ASSETS & LIABILITIES (NET)........................... 4.08 1,785,930
------ -----------
NET ASSETS................................................. 100.00% $43,808,317
====== ===========
- --------
*-- For Federal income tax purposes, the tax basis of investments aggregates
$53,572,343.
+-- 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,
1998 these securities amounted to $427,076 or 0.97% of net assets.
GDR-- Global Depositary Receipt.
FORWARD FOREIGN CURRENCY CONTRACTS
Under the terms of forward foreign currency contracts open at 3/31/98, the
Pacific/Asia Fund is obligated to deliver currency in exchange for U.S. dollars
as indicated below:
CURRENCY IN NET
TO EXCHANGE SETTLEMENT UNREALIZED
DELIVER FOR DATE VALUE APPRECIATION
--------------- ---------- ---------- ---------- ------------
Sales............ JPY 728,000,000 $5,942,615 5/14/98 $5,495,255 $447,360
- --------
JPY -- Japanese Yen
See Notes to Financial Statements
18
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PACIFIC/ASIA FUND -- (CONTINUED)
At March 31, 1998, sector diversification of the Fund's investment
portfolio was as follows:
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ -----------
Technology............................................... 16.62% $ 7,282,701
Consumer Cyclical........................................ 16.60 7,274,487
Financial................................................ 13.85 6,070,430
Capital Goods............................................ 12.23 5,356,627
Consumer Staples......................................... 10.71 4,690,373
Utilities................................................ 9.15 4,007,019
Transportation........................................... 7.65 3,351,909
Raw/Intermediate Materials............................... 6.20 2,714,841
Demand Notes............................................. 2.91 1,274,000
------ -----------
Total Investments........................................ 95.92% $42,022,387
Other Assets and Liabilities (Net)....................... 4.08 1,785,930
------ -----------
Net Assets............................................... 100.00% $43,808,317
====== ===========
See Notes to Financial Statements
19
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PAN EUROPEAN FUND
VALUE
SHARES (NOTE 1)
----------- -----------
COMMON STOCKS -- 91.61%
FRANCE -- 17.92%
93,489 AXA-UAP............................................. $ 9,631,349
40,830 CIE Financiere de Paribas, Series A................. 4,133,832
7,443 Carrefour S.A. ..................................... 4,386,790
129,180 Dassault Systemes S.A. ............................. 5,204,413
36,442 Elf Aquitaine S.A. ................................. 4,778,198
56,050 +SGS-Thomson Microelectronics N.V. ................. 4,406,780
14,700 Technip S.A. ....................................... 1,780,264
24,073 Total S.A., Class B ................................ 2,892,072
-----------
37,213,698
-----------
UNITED KINGDOM & POSSESSIONS -- 15.13%
665,550 Airtours plc........................................ 5,586,766
707,800 Capita Group plc.................................... 5,395,902
331,768 Granada Group plc................................... 5,970,090
341,200 Serco Group plc..................................... 7,448,957
320,849 Siebe plc........................................... 7,004,662
-----------
31,406,377
-----------
GERMANY -- 10.34%
15,858 GEA AG.............................................. 6,526,738
14,820 SAP AG.............................................. 5,899,145
33,650 SGL Carbon AG....................................... 3,739,900
6,589 Sartorius AG........................................ 2,637,025
39,880 Siemens AG.......................................... 2,659,386
-----------
21,462,194
-----------
SWITZERLAND -- 8.72%
213 Lindt & Spruengli AG................................ 4,655,661
3,831 Novartis AG (Registered)............................ 6,784,403
283 Roche Holding AG.................................... 3,064,982
4,266 Schweizerische Lebensversicherungs-und.
Rentenanstat........................................ 3,609,369
-----------
18,114,415
-----------
NETHERLANDS -- 7.26%
119,342 ING Groep N.V. ..................................... 6,772,923
109,772 Koninklijke Ahrend Groep N.V. ...................... 3,886,387
30,879 Wolters Kluwer N.V. ................................ 4,414,460
-----------
15,073,770
-----------
COMMON STOCKS -- (CONTINUED)
IRELAND -- 6.56%
382,522 Irish Continental Group plc.......................... $ 6,755,034
357,400 Irish Permanent plc.................................. 4,733,550
379,300 IWP International plc................................ 2,138,251
-----------
13,626,835
-----------
ITALY -- 5.98%
840,500 Edison S.p.A. ....................................... 7,078,745
1,382,040 Telecom Italia S.p.A. ............................... 5,347,630
-----------
12,426,375
-----------
SWEDEN -- 4.51%
78,500 Autoliv AB........................................... 2,438,406
248,861 Celsius AB, Series B................................. 5,139,825
173,000 Munters AB........................................... 1,797,347
-----------
9,375,578
-----------
SPAIN -- 3.95%
174,500 Banco Bilbao Vizcaya S.A., (Registered).............. 8,197,763
-----------
PORTUGAL -- 2.70%
173,300 Banco Comercial Portugues S.A. ...................... 5,598,148
-----------
DENMARK -- 2.68%
42,636 Den Danske Bank...................................... 5,572,193
-----------
TURKEY -- 1.65%
108,200,000 +Global Menkul Degerler A.S. ........................ 1,936,914
52,100,013 +Medya Holding....................................... 557,449
26,053,500 Turk Sise ve Cam Fabrikalari A.S. ................... 922,058
-----------
3,416,421
-----------
HUNGARY -- 1.33%
26,400 Gedeon Richter Rt. GDR (Registered).................. 2,758,800
-----------
FINLAND -- 1.17%
151,200 Valmet Corp. ........................................ 2,426,404
-----------
CROATIA -- 0.88%
38,850 ++Pliva d.d. GDR..................................... 721,495
61,900 Pliva d.d. GDR (Registered).......................... 1,098,725
-----------
1,820,220
-----------
AUSTRIA -- 0.83%
10,910 VA Technologie AG.................................... 1,719,629
-----------
TOTAL COMMON STOCKS
(Cost $134,337,261).................................. 190,208,820
-----------
See Notes to Financial Statements
20
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PAN EUROPEAN FUND -- (CONTINUED)
VALUE
SHARES (NOTE 1)
--------- ------------
PREFERRED STOCKS -- 2.89%
PORTUGAL -- 2.33%
340,900 Lusomundo S.A. ...................................... $ 4,842,473
------------
GERMANY -- 0.56%
2,730 SAP AG-VORZUG........................................ 1,164,938
------------
TOTAL PREFERRED STOCKS
(Cost $3,867,120).................................... 6,007,411
------------
NO. OF
RIGHTS
---------
RIGHTS -- 0.29%
PORTUGAL -- 0.29%
190,500 +Banco Comercial Portugues S.A., expiring 4/7/98 at
$16.45
(Cost $683,904)...................................... 610,053
------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BONDS -- 0.43%
PORTUGAL -- 0.43%
$7,400 Banco Comercial Portugues S.A., Series A
(Preferred)8.00%, 12/31/49 (Cost $862,100)........... 891,700
------------
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
DEMAND NOTES -- 4.01%
UNITED STATES -- 4.01%
$ 4,132 Associates Corp. of North America, Master Notes....... $ 4,132,000
4,180 General Electric Co. Promissory Notes................. 4,180,000
------------
TOTAL DEMAND NOTES
(Cost $8,312,000)..................................... 8,312,000
------------
TOTAL INVESTMENTS
(Cost $148,062,385*)...................................... 99.23% $206,029,984
OTHER ASSETS & LIABILITIES (NET).......................... 0.77 1,605,790
------ ------------
NET ASSETS................................................ 100.00% $207,635,774
====== ============
- --------
*-- For federal income tax purposes, the tax basis of investments aggregates
$148,144,474.
+-- 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,
1998 these securities amounted to $721,495, or 0.35% of net assets.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
21
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
PAN EUROPEAN FUND -- (CONTINUED)
At March 31, 1998, sector diversification of the Fund's investment
portfolio was as follows:
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ ------------
Consumer Cyclical....................................... 25.38% $ 52,701,029
Financial............................................... 24.89 51,687,794
Consumer Staples........................................ 13.52 28,071,008
Technology.............................................. 10.20 21,173,481
Holding Company Diversified............................. 7.05 14,640,855
Capital Goods........................................... 6.11 12,686,017
Demand Notes............................................ 4.01 8,312,000
Energy.................................................. 3.69 7,670,270
Utilities............................................... 2.58 5,347,630
Raw/Intermediate Materials.............................. 1.80 3,739,900
------ ------------
Total Investments....................................... 99.23% $206,029,984
Other Assets and Liabilities (Net)...................... 0.77 1,605,790
------ ------------
Net Assets.............................................. 100.00% $207,635,774
====== ============
See Notes to Financial Statements
22
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
LATIN AMERICA FUND (FORMERLY EMERGING AMERICAS FUND)
VALUE
SHARES (NOTE 1)
----------- -----------
COMMON STOCKS -- 72.71%
MEXICO -- 31.78%
272,000 ALFA S.A. de C.V. ................................... $ 1,536,308
2,772,500 +Biper S.A. de C.V., Series B........................ 1,386,901
630,274 +Cemex S.A., CPO..................................... 2,808,701
348,593 +Corporacion GEO S.A., Class B....................... 2,288,204
869,000 +Corporacion Moctezuma S.A. de C.V., Series B2....... 1,275,540
238,942 Fomento Economico Mexicano S.A. de C.V., Series B.... 1,733,985
458,000 +Grupo Continental S.A. ............................. 1,618,812
1,443,600 Grupo Elektra S.A. de C.V. CPO....................... 2,203,711
93,400 +Grupo Televisa S.A. CPO............................. 1,716,428
398,500 +Industrias CH S.A. Series B......................... 1,759,465
455,500 Industrias Penoles S.A. ............................. 1,898,808
188,700 Kimberly-Clark de Mexico S.A. de C.V., Class A....... 970,533
654,800 Organizacion Soriana S.A. de C.V., Series B.......... 2,495,099
280,800 Sanluis Corporacion S.A. de C.V. .................... 1,421,145
83,500 +Tubos de Acero de Mexico S.A. ...................... 1,563,909
77,100 +TV Azteca S.A. de C.V. ADR.......................... 1,513,088
-----------
28,190,637
-----------
BRAZIL -- 21.79%
85,900 CBD Grupo Pao de Acucar ADR.......................... 1,975,700
40,667 Cemig ADR............................................ 1,977,827
150,400 Copel ADR............................................ 2,190,200
71,900 Cia Vale do Rio Doce................................. 1,587,377
844,300 Light Participacoes S.A. ............................ 219,077
83,455,000 Telebras............................................. 8,625,176
11,056,000 Telesp............................................... 2,752,087
-----------
19,327,444
-----------
ARGENTINA -- 10.50%
402,815 Banco de Galicia y Buenos Aires S.A., Class B........ 2,481,762
362,300 Siderar S.A.I.C., Class A............................ 1,775,572
812,898 Siderca S.A., Class A................................ 2,162,676
72,400 Telefonica de Argentina S.A., Class B................ 276,615
77,213 YPF S.A. ADR......................................... 2,625,242
-----------
9,321,867
-----------
VENEZUELA -- 3.40%
51,660 C.A. La Electricidad de Caracas...................... $ 48,777
46,940 CANTV ADR............................................ 1,962,679
60,479 +Siderurgica Venezolana Sivensa ADR.................. 1,002,629
-----------
3,014,085
-----------
PERU -- 2.97%
85,703 Credicorp Ltd. ...................................... 1,381,964
628,282 +Minsur S.A. ........................................ 1,248,940
-----------
2,630,904
-----------
CHILE -- 2.27%
7,600 +Linea Aerea Nacional Chile S.A. ADR................. 104,500
58,209 Vina Concha y Toro S.A. ADR.......................... 1,906,345
-----------
2,010,845
-----------
TOTAL COMMON STOCKS
(Cost $57,268,587)................................... 64,495,782
-----------
PREFERRED STOCKS -- 24.10%
BRAZIL -- 24.10%
1,823,400 CELESC............................................... 2,181,216
21,240,000 Cemig................................................ 1,031,267
637,470,000 Coelce............................................... 2,298,907
45,300,000 Copel................................................ 652,266
1,534,500 Cia Riograndense de Telecomunicacoes................. 1,930,104
78,784 +Cia Vale do Rio Doce................................ 1,891,814
193,557,700 Gerdau S.A. ......................................... 3,626,334
21,359,399 Petrobras............................................ 5,091,386
10,077,000 Telemig B............................................ 1,657,489
124,500 Usinas Sider Minas Gerais............................ 1,011,857
-----------
TOTAL PREFERRED STOCKS
(Cost $20,947,902)................................... 21,372,640
-----------
See Notes to Financial Statements
23
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
LATIN AMERICA FUND (FORMERLY EMERGING AMERICAS FUND) -- (CONTINUED)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
DEMAND NOTES -- 1.22%
UNITED STATES -- 1.22%
$383 Associates Corp. of North America Master Notes........ $ 383,000
701 General Electric Co. Promissory Notes................. 701,000
-----------
TOTAL DEMAND NOTES
(Cost $1,084,000)..................................... 1,084,000
-----------
TOTAL INVESTMENTS
(Cost $79,300,489*)........................................ 98.03% $86,952,422
OTHER ASSETS & LIABILITIES (NET)........................... 1.97 1,743,940
------- -----------
NET ASSETS................................................. 100.00% $88,696,362
======= ===========
- --------
*-- For Federal income tax purposes, the tax basis of investments aggregates
$79,434,699.
+-- Non-income producing.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
At March 31, 1998, sector diversification of the Fund's investment
portfolio was as follows:
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ -----------
Consumer Cyclical........................................ 24.42% $21,656,478
Technology............................................... 20.65 18,314,436
Utilities................................................ 17.75 15,748,461
Raw/Intermediate Materials............................... 17.14 15,203,532
Consumer Staples......................................... 8.15 7,234,841
Financial................................................ 4.36 3,863,726
Energy................................................... 2.96 2,625,242
Capital Goods............................................ 1.38 1,221,706
Demand Notes............................................. 1.22 1,084,000
------ -----------
Total Investments........................................ 98.03% $86,952,422
Other Assets and Liabilities (Net)....................... 1.97 1,743,940
------ -----------
Net Assets............................................... 100.00% $88,696,362
====== ===========
See Notes to Financial Statements
24
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
EMERGING MARKETS FUND
VALUE
SHARES (NOTE 1)
---------- ----------
COMMON STOCKS -- 73.98%
BRAZIL -- 18.99%
6,881,000 Cemig.................................................. $ 245,728
11,590 Cia Vale do Rio Doce................................... 254,860
220,900 Light Participacoes S.A. .............................. 57,319
4,210,000 Telebras............................................... 435,109
998,000 +Telesp S.A. .......................................... 248,425
----------
1,241,441
----------
MEXICO -- 13.68%
13,350 ALFA S.A. de C.V. ..................................... 75,403
134,000 Biper S.A. de C.V., Series B........................... 66,875
27,600 Fomento Economico Mexicano S.A. de C.V., Series B...... 200,291
47,200 Grupo Continental S.A. ................................ 166,829
126,900 Grupo Elektra S.A. de C.V. CPO......................... 193,718
5,210 +Grupo Televisa S.A. GDR............................... 190,816
----------
893,932
----------
HUNGARY -- 8.92%
1,615 Gedeon Richter GDR (Registered)........................ 169,171
4,000 ++MOL Magyar Olaj Rt. es Gazipari Rt. ................. 122,645
3,100 Pannonplast Rt. ....................................... 126,224
16,570 Zalakeramia Rt. GDR.................................... 164,872
----------
582,912
----------
TURKEY -- 5.89%
11,200 Akbank T.A.S. ADR...................................... 164,640
12,300,000 Global Menkul Degerler A.S. ........................... 220,185
----------
384,825
----------
SOUTH AFRICA -- 5.13%
118,200 Metro Cash & Carry Ltd. ............................... 112,706
7,500 South African Breweries Ltd. .......................... 222,586
----------
335,292
----------
CHILE -- 4.47%
7,400 Linea Aerea Nacional Chile SP ADR...................... 101,750
5,816 Vina Concha y Toro S.A. ADR............................ 190,474
----------
292,224
----------
ARGENTINA -- 4.07%
25,285 Banco de Galicia y Buenos Aires S.A., Class B.......... 155,782
3,240 YPF S.A. ADR........................................... 110,160
----------
265,942
----------
VALUE
SHARES (NOTE 1)
---------- ----------
COMMON STOCKS -- (CONTINUED)
RUSSIA -- 3.10%
2,370 Gazprom ADR....................................... $ 49,059
480 Lukoil Holding ADR................................ 33,741
3,770 Unified Energy Systems GDR........................ 119,660
----------
202,460
----------
CZECH REPUBLIC -- 2.95%
5,050 +CKD Praha Holding A.S. .......................... 192,703
----------
INDIA -- 2.90%
22,800 Mahindra & Mahindra Ltd. GDR...................... 189,468
----------
MALAYSIA -- 2.34%
44,600 O.Y.L. Industries Bhd. ........................... 153,159
----------
PERU -- 1.54%
50,500 Minsur S.A. ...................................... 100,387
----------
TOTAL COMMON STOCKS
(Cost $4,722,354)................................. 4,834,745
----------
PREFERRED STOCKS -- 15.67%
BRAZIL -- 15.67%
9,136,000 Cia Paranaense de Energi--Copel................... 131,547
7,000 Cia Vale do Rio Doce.............................. 168,089
65,184,000 Coelce............................................ 235,073
10,568,000 Gerdau S.A. ...................................... 197,993
1,223,000 Petrobras......................................... 291,523
----------
TOTAL PREFERRED STOCKS
(Cost $959,170)................................... 1,024,225
----------
PRINCIPAL
AMOUNT
----------
CONVERTIBLE BONDS -- 2.08%
POLAND -- 2.08%
$ 214,000 Elektrim S.A., 2.00% 05/30/04
(Cost $137,046)................................... 135,992
----------
U.S. GOVERNMENT OBLIGATIONS -- 15.24%
1,000,000 U.S. Treasury Bill, 5.16%, 04/30/98 (Cost
$995,843)......................................... 995,843
----------
[LINE CHART APPEARS HERE]
25
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
EMERGING MARKETS FUND -- (CONTINUED)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ----------
REPURCHASE AGREEMENT -- 2.49%
UNITED STATES -- 2.49%
$163,000 Agreement with Chase Securities, Inc. Government
Dealership 5.60% dated 03/31/98, due 04/01/98, to be
repurchased at $163,025 collateralized by $165,000 U.S.
Treasury Notes, due 11/15/98, valued at $168,384
(Cost $163,000)........................................ $ 163,000
----------
TOTAL INVESTMENTS
(Cost $6,977,413*)......................................... 109.46% $7,153,805
OTHER ASSETS & LIABILITIES (NET)........................... (9.46%) (618,355)
------ ----------
NET ASSETS................................................. 100.00% $6,535,450
====== ==========
- --------
*-- Aggregate Cost for Federal tax and book purposes.
+-- 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,
1998 these securities amounted to $122,645 or 1.9% of net assets.
ADR-- American Depositary Receipt.
GDR-- Global Depositary Receipt.
See Notes to Financial Statements
26
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS MARCH 31, 1998
EMERGING MARKETS FUND -- (CONTINUED)
At March 31, 1998, sector diversification of the Fund's investment
portfolio was as follows:
% OF
NET MARKET
SECTOR DIVERSIFICATION ASSETS VALUE
---------------------- ------ ----------
Utilities................................................. 19.94% $1,303,110
U.S. Treasury Obligations................................. 15.24 995,843
Consumer Staples.......................................... 13.66 892,887
Raw/Intermediate Materials................................ 12.97 847,552
Consumer Cyclical......................................... 12.86 840,623
Energy.................................................... 9.29 607,128
Financial................................................. 8.27 540,607
Technology................................................ 7.41 484,470
Capital Goods............................................. 3.83 250,022
Holding Company Diversified............................... 3.50 228,563
Repurchase Agreements..................................... 2.49 163,000
------ ----------
Total Investments......................................... 109.46% $7,153,805
Other Assets and Liabilities (Net)........................ (9.46) (618,355)
------ ----------
Net Assets................................................ 100.00% $6,535,450
====== ==========
See Notes to Financial Statements
27
<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 eighteen 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, Latin America Fund (formerly known
as the Emerging Americas Fund) and Emerging Markets 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. Emerging Markets Fund commenced operations on January 2,
1998. 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
28
<PAGE>
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 not less than the repurchase price.
If the value of the underlying security falls below the value of the
repurchase price, Excelsior Fund will require the seller to deposit
additional collateral by the next business day. Default or bankruptcy of
the seller may, however, expose the applicable Portfolio of Excelsior Fund
to possible delay in connection with the disposition of the underlying
securities or loss to the extent that proceeds from a sale of the
underlying securities were less than the repurchase price under the
agreement.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income are declared 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 net capital losses incurred after
October 31 and within the taxable year ("Post-October losses".)
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
29
<PAGE>
(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, 1998, the Pacific/Asia Fund had a capital loss carryforward
for Federal tax purposes available to offset net capital gains of
approximately $4,966,000 which will expire on March 31, 2006.
To the extent that such carryforwards are utilized, no capital gain
distributions will be made. During the year ended March 31, 1998, Latin
America Fund utilized capital loss carryforwards for federal tax purposes
totaling approximately $4,261,000.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. International Fund, Pacific/Asia Fund, Pan
European Fund, Latin America Fund and Emerging Markets Fund incurred, and
expect to defer, net currency losses of approximately $2,008,000,
$10,891,000 $203,000, $60,000 and $4,000, respectively, for the year ended
March 31, 1998.
At March 31, 1998, 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................ $44,958,360 $ (9,294,664) $ 35,663,696
Pacific/Asia Fund................. 2,430,664 (13,980,620) (11,549,956)
Pan European Fund................. 59,742,656 (1,857,146) 57,885,510
Latin America Fund................ 11,018,448 (3,500,725) 7,517,723
Emerging Markets Fund............. 238,443 (62,051) 176,392
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average daily net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS:
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment advisers to the Portfolios. For the
services provided pursuant to the Investment Advisory Agreements, U.S. Trust
is entitled to receive a fee, computed daily and paid monthly, at the annual
rate of 1% of the average daily net assets of each of International Fund,
Pacific/Asia Fund, Pan European Fund and Latin America Fund and 1.25% of the
average daily net assets of Emerging Markets Fund. Prior to May 16, 1997, U.S.
Trust NY served as the Portfolios' investment adviser pursuant to investment
advisory agreements substantially similar to those currently in effect for the
Portfolios. U.S. Trust NY and U.S. Trust CT are wholly-owned subsidiaries of
U.S. Trust Corporation, a registered bank holding company.
30
<PAGE>
U.S. Trust CT, Chase Global Funds Services Company ("CGFSC"), a corporate
affiliate of The Chase Manhattan Bank, and Federated Administrative Services
("FAS") (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, at the annual rate of .20% of the average daily net assets of each
Portfolio. Prior to May 16, 1997, U.S. Trust NY, CGFSC and FAS served as the
Portfolios' administrators pursuant to administration agreements substantially
similar to those currently in effect for the Portfolios. For the year ended
March 31, 1998, administration fees charged by U.S. Trust were as follows:
<TABLE>
<S> <C>
International Fund.................................................. $130,341
Pacific/Asia Fund................................................... 56,010
Pan European Fund................................................... 125,242
Latin America Fund.................................................. 72,549
Emerging Markets Fund............................................... 784
</TABLE>
From time to time, as they may deem appropriate in their sole discretion,
U.S. Trust and the Administrators may undertake to waive a portion or all of
the fees payable to them and also may reimburse the Portfolios for a portion
of other expenses. Until further notice to 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 Latin America Fund to maintain an
annual expense ratio of not more than 1.67% and for Emerging Markets Fund to
maintain an annual expense ratio of not more than 1.65%. For the year ended
March 31, 1998, U.S. Trust voluntarily waived investment advisory fees
totaling $7,757 for Emerging Markets Fund.
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S.
Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
administrative services provided by each service organization to its
customers, each Portfolio will pay the service organization an administrative
service fee at the annual rate of up to .40% of the average daily net asset
value of its shares held by the service organization's customers. Such
services may include assisting in processing purchase, exchange and redemption
requests; transmitting and receiving funds in connection with customer orders
to purchase, exchange or redeem shares; and providing periodic statements.
Administrative services fees paid to affiliates of U.S. Trust amounted to
$405,942, for the year ended March 31, 1998. 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 (including fees paid
to affiliates of U.S. Trust) by such Portfolio. For the year ended March 31,
1998, 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................................. $134,671 $ 299
Pacific/Asia Fund.................................. 67,740 65
Pan European Fund.................................. 119,690 607
Latin America Fund................................. 94,398 2,051
Emerging Markets Fund.............................. 994 --
</TABLE>
31
<PAGE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Fund.
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.
3. PURCHASES AND SALES OF SECURITIES:
For the year ended March 31, 1998, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ----------
<S> <C> <C>
International Fund................................... $105,235,417 59,442,178
Pacific/Asia Fund.................................... 36,539,438 57,394,339
Pan European Fund.................................... 91,535,912 64,158,679
Latin America Fund................................... 81,824,075 70,469,778
Emerging Markets Fund................................ 5,814,646 --
</TABLE>
4. COMMON STOCK:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
23,875 of which is currently classified to represent interests in one of
eighteen separate investment portfolios. Authorized capital currently
classified for each Portfolio is as follows: 375 million shares of the
International Fund and 500 million shares each of the Pacific /Asia Fund, Pan
European Fund, Latin America Fund and Emerging Markets Fund.
Each share has a par value of $.001 and represents an equal proportionate
interest in the particular Portfolio with other shares of the same Portfolio,
and is entitled to such dividends and distributions of taxable earnings on the
assets belonging to such Portfolio as are declared at the discretion of
Excelsior Fund's Board of Directors.
<TABLE>
<CAPTION>
INTERNATIONAL FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 7,823,402 $ 94,783,126 3,509,954 $ 39,006,438
Contribution in-kind....... -- -- 1,925,638 21,239,784
Issued as reinvestment of
dividends................. 64,967 759,358 29,055 314,909
Redeemed................... (3,307,934) (40,179,061) (3,250,261) (35,599,363)
---------- ------------ ---------- ------------
Net Increase............... 4,580,435 $ 55,363,423 2,214,386 $ 24,961,768
========== ============ ========== ============
<CAPTION>
PACIFIC/ASIA FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 5,372,797 $ 42,386,787 5,035,278 $ 48,378,451
Issued as reinvestment of
dividends................. 4,692 29,609 15,992 153,860
Redeemed................... (8,555,731) (62,916,933) (2,944,246) (28,052,131)
---------- ------------ ---------- ------------
Net Increase (Decrease).... (3,178,242) $(20,500,537) 2,107,024 $ 20,480,180
========== ============ ========== ============
</TABLE>
32
<PAGE>
PAN EUROPEAN FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold....................... 7,208,623 $ 85,852,102 7,066,575 $ 71,704,422
Issued as reinvestment of
dividends................. 73,319 865,174 8,104 77,487
Redeemed................... (3,738,354) (45,563,629) (1,141,350) (11,602,820)
---------- ------------ ---------- ------------
Net Increase............... 3,543,588 $ 41,153,647 5,933,329 $ 60,179,089
========== ============ ========== ============
LATIN AMERICA FUND
(FORMERLY EMERGING AMERICAS FUND)
--------------------------------------------------
YEAR ENDED YEAR ENDED
03/31/98 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold....................... 5,336,432 $ 59,019,030 3,809,798 $ 32,650,511
Issued as reinvestment of
dividends................. 18,526 193,175 2,196 18,453
Redeemed................... (4,486,834) (47,994,494) (2,174,370) (17,917,579)
---------- ------------ ---------- ------------
Net Increase............... 868,124 $ 11,217,711 1,637,624 $ 14,751,385
========== ============ ========== ============
EMERGING MARKETS FUND
-----------------------
01/02/98*-03/31/98
--------------------
SHARES AMOUNT
----------- ------------
Sold....................... 935,051 $ 6,348,553
Issued as reinvestment of
dividends................. -- --
Redeemed................... (1,227) (8,663)
----------- ------------
Net Increase............... 933,824 $ 6,339,890
=========== ============
* Commencement of operations.
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. LINE OF CREDIT:
The Portfolios and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 2% per year. In
addition a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating Portfolios at the end of
each quarter.
33
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders
and Board of Directors of
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, Latin America (formerly, Emerging Americas), and Emerging
Markets Funds (the "Portfolios") (five of the portfolios constituting the
Excelsior Funds, Inc.) as of March 31, 1998, and the related statements of
operations for the period then ended, the statements of changes in net assets
and the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of March 31, 1998, by correspondence with the custodian and brokers,
and other auditing procedures where replies from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the above mentioned Portfolios of Excelsior Funds, Inc. at March 31, 1998, the
results of their operations for the period then ended, the changes in their
net assets and the financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 8, 1998
- -------------------------------------------------------------------------------
FEDERAL TAX INFORMATION: (UNAUDITED)
For the year ended March 31, 1998, 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:
28% 20%
LONG-TERM LONG-TERM FOREIGN
FUND CAPITAL GAIN CAPITAL GAIN TAX CREDIT
---- ------------ ------------ ----------
International Fund..................... $2,674,000 $1,651,000 $262,000
Pacific/Asia Fund...................... -- -- 119,000
Pan European Fund...................... 6,112,000 650,000 267,000
Latin America Fund (formerly Emerging
Americas Fund)........................ -- 1,471,000 64,000
Emerging Markets Fund.................. -- -- 1,000
In addition, for the year ended March 31, 1998, gross income derived from
sources within foreign countries approximately amounted to the following:
FOREIGN SOURCE
FUND INCOME
---- --------------
International Fund............................................ $2,629,000
Pacific/Asia Fund............................................. 1,236,000
Pan European Fund............................................. 2,262,000
Latin America Fund (formerly Emerging Americas Fund).......... 2,173,000
Emerging Markets Fund......................................... 23,000
USTIEA398
34
