<PAGE>
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[LOGO FOR EXCELSIOR FUNDS APPEARS HERE]
International Equity Portfolios
ANNUAL REPORT
March 31, 1999
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S INTERNATIONAL EQUITY MARKET REVIEW.............................. 2
ADVISER'S INVESTMENT REVIEWS
International Fund....................................................... 4
Pacific/Asia Fund........................................................ 5
Pan European Fund........................................................ 6
Latin America Fund....................................................... 7
Emerging Markets Fund.................................................... 8
STATEMENTS OF ASSETS AND LIABILITIES...................................... 9
STATEMENTS OF OPERATIONS.................................................. 10
STATEMENTS OF CHANGES IN NET ASSETS....................................... 11
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 12
PORTFOLIOS OF INVESTMENTS
International Fund....................................................... 14
Pacific/Asia Fund........................................................ 17
Pan European Fund........................................................ 19
Latin America Fund....................................................... 21
Emerging Markets Fund.................................................... 23
NOTES TO FINANCIAL STATEMENTS............................................. 26
INDEPENDENT AUDITORS' REPORT.............................................. 33
FEDERAL TAX INFORMATION................................................... 34
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. Initial Purchase and Prospectus Information and Shareholder Services 1-800-
446-1012 (From overseas, call 617-557-8280)
. Current Price and Yield Information 1-800-446-1012
. Internet Address: http://www.excelsiorfunds.com
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and 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 distributed by
Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, U.S. TRUST COMPANY 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
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Dear Shareholder:
I am pleased to present the annual report for the Excelsior Funds. Fiscal
1999 was an exciting year in the financial markets as a whole and for the fund
family.
Low interest rates and subdued inflation in tandem with turbulent Asian and
Latin American markets proved to be the catalysts for another year of strong--
though narrowly focused--domestic equity performance. At the same time, these
factors combined to constrain the returns on fixed-income investments to
modest levels. The search for consistency and predictability amidst
uncertainty-- regarding heightened valuations here at home, international
economic crises, not to mention the course of the U.S. economy--created a
"flight to quality." Continuing the dominant trend of the past few years,
investors redirected much of their money to a relatively small group of
extremely large-capitalized growth companies within the Standard & Poor's 500
Index, leaving the broader market lagging well behind. As a result, small and
mid-sized companies as well as value-oriented investments underperformed
relative to growth-oriented investments. This environment made it difficult
for broadly diversified equity portfolios to meet or exceed the performance of
this narrowly focused market.
On the international front, economic crises and inflationary pressures in
Asia, Eastern Europe, and Latin America temporarily disrupted equity markets
around the world. Many of these troubled economies--and widespread investor
concerns about them--have begun to turn around and are showing sign of
recovery. In Western Europe, equity performance in general was strong, and the
conversion to a single currency, the Euro, was completed on time and without
disrupting the financial markets.
The financial markets will present many challenges and opportunities during
the coming year. U.S. fiscal policy continues to be effective in keeping
inflation under control, and we continue to be cautiously optimistic regarding
the domestic equity markets. International markets, while remaining attractive
on a long-term basis, will require continuous evaluation. In our new global
economy, events in international markets will have a direct impact on the U.S.
economy.
I am confident that the Excelsior fund family will continue to provide you
with the appropriate investment vehicles to respond to the always-changing
economic/financial market environment and to pursue your long-term 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
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Ignited by economic crisis in Asia, conditions were markedly challenging for
international equities in general through much of the first half of the past
fiscal year ended March 31, 1999. The third fiscal quarter did see substantial
recovery from many markets, but this proved short lived in many instances as
performances diverged in the final quarter of the fiscal year.
Europe: European equity markets endured a roller-coaster fiscal year. In the
fiscal first quarter, European equity markets overall fell off considerably.
Within the region, however, individual markets diverged. Core Europe showed
the greatest strength. Russia, in particular, was weak and dragged down other
East European markets with it. From an industry sector standpoint, the
cyclical sectors proved strongest. After worsening further in the fiscal
second quarter, the fiscal third quarter saw a positive shift in direction.
Returns were helped by a weaker US dollar. Also, several peripheral European
countries lowered rates, causing a surge in European equity markets. This
didn't last, however, as markets languished during the fiscal fourth quarter
due to deteriorating economic growth forecasts. Expectations for lower
interest rates and the hostilities in Kosovo contributed to the Euro's
unexpected decline. As a result, many of the final quarter's best-performing
markets were outside the Euro zone (Turkey, Greece, Finland, Sweden). Of the
major markets, the UK was the frontrunner. Despite the temporary slowness, we
feel, the outlook for European equities remains bright. The recent interest-
rate cut and increased spending from European leftist governments should fuel
consumption growth, which should underpin economic expansion in the latter
part of the year. We also expect to see continued high merger and acquisition
activity in Europe, as companies adapt to the new reality of the single Euro
market.
Asia: Asian equity markets unraveled in the first fiscal quarter,
particularly the emerging markets. After growing encouraged by government
policy responses to the crisis, investors seemed to realize that some of the
proposed fixes would probably not be sufficient, and even those that were
would take time to have an impact. When the yen weakened further, a chill
spread over the Asian markets, which continued on a downward and increasingly
volatile path in the second fiscal quarter. In the fiscal third quarter,
however, the Asian equity markets staged a substantial rebound. Gains were
paced by the Japanese market, but even greater gains were reported in our
areas of focus -- Singapore, Philippines, Korea and Thailand. Although strong
performances continued in the final fiscal quarter, the markets were
characterized by volatility and disparity of returns. The best-performing
markets were: India, Japan, and Singapore with exceptionally poor performance
from China and, to a lesser extent, Indonesia and Thailand. We feel the
outlook is encouraging. We continue to witness a trend of strengthening
economic numbers throughout Southeast Asia and a more determined approach to
monetary easing by the Japanese government. Although there remains near-term
risk in the macro situations in Japan and Hong Kong, we believe that most
markets in Asia will reflect the strengthening economic situations that we
envision throughout the new fiscal year.
Latin America: Latin American markets endured a turbulent fiscal year,
impacted by difficulties in international markets. Recovering somewhat in the
fiscal third quarter, Latin American markets benefited from Brazil President
Cardoso's re-election, the announcement of a fiscal adjustment program, and
approval of an IMF-led financing package. However, Congressional defeat of one
of the
2
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INTERNATIONAL EQUITY MARKETS REVIEW (Continued)
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measures led to renewed skepticism, and Latin American markets sold-off in
early December. In the fiscal fourth quarter, the Brazilian devaluation led to
a deterioration in the macroeconomic outlook for the region, highlighted by a
significant slowdown in GDP growth. However, we feel, signs of encouragement
have surfaced in Brazil: i) the appointment of a new Central Bank president;
ii) a renewed agreement with the IMF; and iii) a more cooperative Congress has
given fiscal policy a new air of credibility. This has led to a strengthening
of the currency, a decline in interest rates, and a dampening of inflationary
expectations. Looking ahead, we expect economic growth to slow throughout
Latin America in calendar 1999, as i) commodity prices remain depressed, ii)
interest rates remain high, and iii) corporations faced with a cash flow
squeeze focus on cost cutting by lowering capital expenditure plans and
laying-off personnel. Still, this slowdown is necessary, in our opinion, to
reduce Latin America's financing needs in the face of less liquid
international capital markets. Furthermore, the fiscal adjustment programs,
while painful now, should establish a better foundation for future growth.
3
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EXCELSIOR FUNDS, INC. INTERNATIONAL FUND
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For the twelve months ended March 31, 1999, the Fund realized a total return
of negative (3.18)%,* versus 6.03%** for the MSCI EAFE Index and 3.09%*** for
the MSCI ACWI Free ex USA Index. During the first half of the fiscal year, the
Fund's European holdings proved most resilient, though the portfolio's
essential absence of deep cyclicals didn't help (this was intentional, as we
are oriented more toward long-term sustainable growth and believe our approach
will bring greater rewards over time). Our decision to hold nothing in
Malaysia and Hong Kong proved correct. The Fund's Latin American holdings hurt
performance in the period. Regarding portfolio activity, we continued to focus
on domestic-oriented European companies. We also added cautiously to several
of our Asian holdings with compelling valuations and growth rates. We did
reduce some of the Fund's Latin American holdings. During the second half, the
Fund benefited from its holdings in emerging markets in general, and from
those in Southeast Asia in particular, but suffered from exposure to European
cyclical companies. The Fund was also hurt by its exposure to small and medium
sized companies, which generally underperformed larger companies in the
period. At the end of the year the Fund held large stakes in France, the
United Kingdom, and Japan and maintained a significant presence in the
peripheral markets of Spain, Portugal, Ireland, and Italy.
[CHART APPEARS HERE]
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. 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.
+ 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. PACIFIC/ASIA FUND
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For the twelve months ended March 31, 1999, the Fund realized a total return
of 5.14%* versus 8.36%** for the MSCI AC Pacific Index. Asian equity markets
unraveled in the first fiscal quarter as investors seemed to realize that some
of the proposed fixes to the region's economic crisis would probably not be
sufficient, or at least have any immediate effect. The Fund's best-performing
stocks came from Japan, and several of the Fund's Hong Kong holdings made
positive contributions in the period. The Asian equity markets continued on a
downward and increasingly volatile path in the second quarter. At that time,
we began to feel that much of the market risk had been rung out of the stocks,
and careful research began to yield, what we believe to be, excellent
investment candidates at very cheap prices. Indeed, the Asian equity markets
staged a substantial rebound in the third fiscal quarter. The Fund's strongest
performances came from stocks in countries where we had seen a bottoming in
the economies and some (albeit short) history of strengthening data. Improved
performance continued through the fourth fiscal quarter, though the markets
were characterized by volatility and disparity of returns. The Fund's
performance continued to benefit from favorable individual stock selection as
the top ten performing names came from companies in ten different industries
and four different countries. Some of the best performance during the quarter
came from a conscious effort to increase exposure to technology.
[CHART APPEARS HERE]
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. International investing is subject to
special risks such as currency fluctuations and differences in accounting and
taxation standards.
The above illustration compares a $10,000 investment made in Pacific/Asia
Fund and a broad-based index since 12/31/92 (inception date). All dividends
and capital gain distributions are reinvested. The Fund's performance takes
into account fees and expenses. The index does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
5
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EXCELSIOR FUNDS, INC. PAN EUROPEAN FUND
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For the twelve months ended March 31, 1999, the Fund realized a negative total
return of (8.84)%* versus positive 4.59%** for the MSCI Europe Index. European
equity market conditions grew increasingly difficult in the first fiscal
quarter. Strength in support services helped the Fund. The biggest factor
affecting performance, however, was the Fund's intentional absence of deep
cyclicals, which proved markedly strong in the period. In the second fiscal
quarter conditions worsened. Areas of greatest weakness included the Fund's
financial stocks as well as small emerging European holdings, which were badly
hit despite solid fundamentals. Portfolio activity centered upon reducing
holdings in global companies, particularly in the capital goods sector, and
the U.K., which we expected to be first to head into recession, and increasing
exposure to more defensive companies--those oriented more toward domestic
European markets. The environment improved substantially in the third fiscal
quarter although the Fund was slightly hampered due to its conservative
positioning and the presence of some small and mid-cap holdings. Portfolio
activity focused upon adding large-cap stocks well positioned for pan-European
leadership. In the final quarter of the fiscal year, European markets
languished. Many of the portfolio's best-performing names were located in the
U.K. The Fund was also helped by oil companies as the oil price recovered. The
Fund maintained a significant overweight in the peripheral European markets of
Spain, Portugal, Ireland and Italy. We continue to believe that these markets
will benefit from high economic growth as a result of the historically low
(Euro zone) interest rates and unprecedented consolidation, merger and
acquisition activity.
[CHART APPEARS HERE]
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. International investing is subject to
special risks such as currency fluctuations and differences in accounting and
taxation standards.
The above illustration compares a $10,000 investment made in Pan European
Fund and a broad-based index since 12/31/92 (inception date). All dividends
and capital gain distributions are reinvested. The Fund's performance takes
into account fees and expenses. The index does not take into account charges,
fees and other expenses. Further information relating to Fund performance is
contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
- --------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** 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.
+ 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. LATIN AMERICA FUND
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For the twelve months ended March 31, 1999, the Fund realized a negative total
return of (47.19)%,* versus negative (26.91)%** for the MSCI EMF Latin
American Index. Latin American markets overall had a challenging and volatile
fiscal year. This was due in part to economic crises in Asia and Russia, but
also due to concerns regarding Brazil and Latin American economic growth in
general. The Fund's performance was similarly volatile, reflecting the nature
of the markets. In the early part of the year, our overweight in Brazil hurt
the Fund's performance; in particular, Telebras and Petrobras, then the Fund's
two largest holdings, put in a weak showing. We also note the negative impact
of the Fund's small and mid-cap stocks (approximately one third of the
portfolio was invested in companies with a market cap of under $1 billion) as
well as less liquid securities at a time of unprecedented investor preference
for liquidity. In the fourth fiscal quarter, however, we repositioned the
Fund. Market cap and liquidity became important criteria for stock selection.
We focused on adding large-cap companies that we believe 1) enjoy balance
sheet strength and generate free cash flow, and are therefore less reliant on
external capital (Telmex, Cifra); 2) are undergoing cost-cutting and
restructuring efforts, and are expected to experience earnings growth even in
an environment of economic slowdown (Televisa); and 3) will benefit from a
declining interest rate environment (Banacci, Unibanco). At the same time, we
reduced the presence of small- and mid-cap companies from 33% of the Fund to
15%.
[CHART APPEARS HERE]
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.
+ 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. EMERGING MARKETS FUND
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For the twelve months ended March 31, 1999, the Fund recorded a negative total
return of (41.21)%,* versus negative (20.94)%** for the MSCI EMF (Emerging
Markets Free) Index. The past year was quite challenging for investors in
emerging markets. For the year as a whole, the Fund's performance was
negatively impacted by 1) a significant overweight position in Latin America,
Brazil in particular; and 2) an underweight of Asia. Regarding portfolio
activity, we increased the Fund's Asian exposure. We also reduced the Fund's
weighting in Latin America, as well as its exposure to commodities suffering
from depressed global demand -- focusing holdings on companies with healthy
balance sheets and defensive characteristics. In the final two months of the
year, the Fund did begin to see strong gains. At the same time, in order to
control risk, the Fund was repositioned by closely monitoring deviation from
index weights (regional and industry).
[CHART APPEARS HERE]
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.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
8
<PAGE>
Excelsior Funds, Inc.
Statements of Assets and Liabilities
March 31, 1999
<TABLE>
<CAPTION>
Pan Latin Emerging
International Pacific/Asia European America Markets
Fund Fund Fund Fund Fund
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost --
see accompanying
portfolios............ $167,153,521 $ 31,178,027 $131,610,843 $ 15,230,932 $ 6,145,785
============ ============ ============ ============ ===========
Investments, at value
(Note 1).............. $200,813,578 $ 31,864,721 $157,739,434 $ 13,609,589 $ 5,806,361
Cash................... -- 1,284 -- 23,751 55,490
Dividends receivable... 336,046 46,904 205,883 97,597 40,043
Interest receivable.... 1,652 8,144 1,679 7,165 55
Receivable for
investments sold...... 532,912 569,869 1,054,089 424,744 10,222
Receivable for fund
shares sold........... 1,524,027 413,035 846,795 101,110 --
Withholding tax
receivable............ 110,313 1,509 94,376 38,112 --
Prepaid expenses....... 4,431 54 4,060 1,310 71
Receivable for
Investment Advisory
fees (Note 2)......... -- -- -- -- 5,239
Unamortized
organization
costs (Note 5)........ -- -- -- -- 29,422
------------ ------------ ------------ ------------ -----------
Total Assets.......... 203,322,959 32,905,520 159,946,316 14,303,378 5,946,903
LIABILITIES:
Payable for investments
purchased............. -- 4,314,230 -- 77,922 465,052
Payable for fund shares
redeemed.............. 567,744 505,450 1,589,194 3,881 14,027
Investment advisory
fees payable
(Note 2).............. 139,429 23,204 124,776 11,093 --
Administration fees
payable (Note 2)...... 33,413 2,740 20,887 1,729 872
Administration service
fees payable
(Note 2).............. 17,398 1,489 9,986 967 738
Directors' fees payable
(Note 2).............. 1,850 232 2,052 944 48
Foreign taxes payable.. 1,055 3,290 -- -- 2,018
Net unrealized
depreciation on open
forward foreign
currency contracts.... 93,737 28,751 -- -- --
Due to custodian bank.. 313,474 -- 294,806 -- --
Accrued expenses and
other payables........ 71,625 18,554 68,815 24,151 53,368
------------ ------------ ------------ ------------ -----------
Total Liabilities..... 1,239,725 4,897,940 2,110,516 120,687 536,123
------------ ------------ ------------ ------------ -----------
NET ASSETS.............. $202,083,234 $ 28,007,580 $157,835,800 $ 14,182,691 $ 5,410,780
============ ============ ============ ============ ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (753,831) $ (634,725) $ (30,793) $ 127,537 $ 264
Accumulated net
realized gain (loss)
on investments and
foreign currency
translations.......... (5,460,796) (29,623,408) 10,461,469 (30,502,057) (2,639,289)
Unrealized appreciation
(depreciation) of
investments and
foreign currency
translations.......... 33,558,671 649,796 26,120,287 (1,667,368) (345,700)
Par value (Note 4)..... 16,138 4,237 12,737 2,975 1,340
Paid-in capital in
excess of par value... 174,723,052 57,611,680 121,272,100 46,221,604 8,394,165
------------ ------------ ------------ ------------ -----------
Total Net Assets........ $202,083,234 $ 28,007,580 $157,835,800 $ 14,182,691 $ 5,410,780
============ ============ ============ ============ ===========
Shares of Common Stock
Outstanding (Note 4)... 16,138,039 4,236,710 12,737,232 2,974,617 1,339,742
NET ASSET VALUE PER
SHARE.................. $12.52 $6.61 $12.39 $4.77 $4.04
====== ===== ====== ===== =====
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Excelsior Funds, Inc.
Statements of Operations
Year Ended March 31, 1999
<TABLE>
<CAPTION>
Pan Latin Emerging
International Pacific/Asia European America Markets
Fund Fund Fund Fund Fund
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income........... $ 2,839,594 $ 432,218 $ 2,888,313 $ 1,296,206 $ 195,659
Interest income........... 738,231 50,223 373,134 62,905 37,513
Less: Foreign taxes
withheld................. (299,613) (45,247) (308,683) (42,169) (21,754)
----------- ----------- ------------ ------------ -----------
Total Income............. 3,278,212 437,194 2,952,764 1,316,942 211,418
EXPENSES:
Investment advisory fees
(Note 2)................. 2,139,439 281,666 2,011,633 414,790 74,574
Administration fees (Note
2)....................... 427,888 56,333 402,327 82,958 11,814
Custodian fees............ 321,080 42,250 302,747 65,562 17,195
Administrative servicing
fees (Note 2)............ 204,157 26,565 147,344 42,137 11,666
Shareholder servicing
agent fees............... 53,854 31,527 58,916 42,532 7,360
Legal and audit fees...... 28,051 3,623 29,217 6,913 827
Shareholder reports....... 23,982 3,049 24,428 7,193 634
Registration and filing
fees..................... 13,505 13,181 22,682 13,017 11,869
Directors' fees and
expenses (Note 2)........ 8,690 425 8,142 2,313 231
Foreign taxes expense..... -- -- -- 601 52
Amortization of
organization costs
(Note 5)................. -- -- -- -- 7,833
Miscellaneous expenses.... 24,035 3,142 13,997 6,543 2,083
----------- ----------- ------------ ------------ -----------
Total Expenses........... 3,244,681 461,761 3,021,433 684,559 146,138
Fees waived by investment
adviser and
administrators (Note 2).. (204,157) (26,565) (147,344) (42,137) (48,466)
----------- ----------- ------------ ------------ -----------
Net Expenses............. 3,040,524 435,196 2,874,089 642,422 97,672
----------- ----------- ------------ ------------ -----------
NET INVESTMENT INCOME...... 237,688 1,998 78,675 674,520 113,746
----------- ----------- ------------ ------------ -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(Note 1):
Net realized gain (loss):
Security transactions.... (2,957,075) (13,314,225) 11,540,927 (30,367,846) (2,639,289)
Foreign currency
transactions............ (585,382) 83,754 (44,863) (116,510) (29,567)
----------- ----------- ------------ ------------ -----------
Total net realized gain
(loss)................... (3,542,457) (13,230,471) 11,496,064 (30,484,356) (2,668,856)
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... (3,518,939) 11,212,302 (31,839,351) (9,316,819) (522,403)
----------- ----------- ------------ ------------ -----------
Net realized and unrealized
loss on investments....... (7,061,396) (2,018,169) (20,343,287) (39,801,175) (3,191,259)
----------- ----------- ------------ ------------ -----------
Net decrease in net assets
resulting from operations. $(6,823,708) $(2,016,171) $(20,264,612) $(39,126,655) $(3,077,513)
=========== =========== ============ ============ ===========
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Excelsior Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Pan Latin Emerging
International Pacific/Asia European America Markets
Fund Fund Fund Fund Fund*
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Year Ended March 31, 1999
Net investment income..... $ 237,688 $ 1,998 $ 78,675 $ 674,520 $ 113,746
Net realized gain (loss)
on investments and
foreign currency
transactions............. (3,542,457) (13,230,471) 11,496,064 (30,484,356) (2,668,856)
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... (3,518,939) 11,212,302 (31,839,351) (9,316,819) (522,403)
------------ ------------ ------------ ------------ -----------
Net decrease in net assets
resulting from
operations............... (6,823,708) (2,016,171) (20,264,612) (39,126,655) (3,077,513)
Distributions to
shareholders:
From net investment
income.................. (453,377) (474,648) -- (877,729) (112,687)
In excess of net
investment income....... (753,831) (634,725) -- -- --
From net realized gain on
investments............. -- -- (7,074,130) -- --
In excess of net realized
gain on investments..... -- -- -- (2,935,882) --
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 5,225,113 (12,675,193) (22,461,232) (31,573,405) 2,065,530
------------ ------------ ------------ ------------ -----------
Net decrease in net
assets................... (2,805,803) (15,800,737) (49,799,974) (74,513,671) (1,124,670)
NET ASSETS:
Beginning of year........ 204,889,037 43,808,317 207,635,774 88,696,362 6,535,450
------------ ------------ ------------ ------------ -----------
End of year (1).......... $202,083,234 $ 28,007,580 $157,835,800 $ 14,182,691 $ 5,410,780
============ ============ ============ ============ ===========
(1) Including
undistributed
(distributions in
excess of) net
investment income.... $ (753,831) $ (634,725) $ (30,793) $ 127,537 $ 264
============ ============ ============ ============ ===========
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 (2).......... $204,889,037 $ 43,808,317 $207,635,774 $ 88,696,362 $ 6,535,450
============ ============ ============ ============ ===========
--------
(2) Including
undistributed
(distributions in
excess of) net
investment income.... $ (526,577) $ (406,289) $ (201,032) $ 447,256 $ 20,788
============ ============ ============ ============ ===========
</TABLE>
--------
* Emerging Markets Fund commenced operations on January 2, 1998.
See Notes to Financial Statements
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,
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)
1999................... 13.00 0.01 (0.42) (0.41) (0.03) (0.04) --
PACIFIC/ASIA FUND -- (12/31/92*)
Year Ended March 31,
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) --
1999................... 6.52 -- # 0.29 0.29 (0.09) (0.11) --
PAN EUROPEAN FUND -- (12/31/92*)
Year Ended March 31,
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)
1999................... 14.13 -- ++ (1.26) (1.26) -- -- (0.48)
LATIN AMERICA FUND -- (12/31/92*)
Year Ended March 31,
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)
1999................... 10.60 0.21 (5.29) (5.08) (0.18) -- --
EMERGING MARKETS FUND -- (01/02/98*)
Period Ended March 31,
1998.................. $ 7.00 -- ++ -- ++ -- ++ -- -- --
Year Ended March 31,
1999.................. 7.00 $0.07 $(2.95) $(2.88) $(0.08) -- --
</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.
@ The annualized ratio of net operating expenses to average net assets,
excluding foreign investment taxes, is 1.65%.
# For comparative purposes per share amounts for the year ended March 31,
1999 are based on average shares outstanding.
See Notes to Financial Statements
12
<PAGE>
<TABLE>
<CAPTION>
Distributions Ratio Ratio Ratio
in Excess of Net of Gross 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>
-- $(0.43) $ 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
-- (0.07) 12.52 (3.18)% 202,083 1.42% 1.52% 0.11 % 50% 0.01
-- $(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
-- (0.20) 6.61 5.14 % 28,008 1.55% 1.64% 0.01 % 78% 0.01
-- $(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
-- (0.48) 12.39 (8.84)% 157,836 1.43% 1.50% 0.04 % 46% 0.01
$(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
(0.57) (0.75) 4.77 (47.19)% 14,183 1.55% 1.66% 1.63 % 29% 0.01
-- -- $ 7.00 (0.14)%*** $ 6,535 1.85%**@ 2.74%** 2.33 %** -- --
-- $(0.08) 4.04 (41.21)% 5,411 1.65% 2.48% 1.93 % 73% $0.03
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
International Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- 98.24%
JAPAN -- 17.29%
452 DDI Corp. ............................................ $ 2,138,199
17,000 Don Quijote Co., Ltd. ................................ 3,791,181
200,900 Meitec Corp. ......................................... 5,854,916
25,000 NIDEC Corp. .......................................... 3,083,291
26,600 Nintendo Co., Ltd. ................................... 2,296,435
919 NTT Data Corp. ....................................... 7,111,032
56,800 +Nu Skin Enterprises, Inc., Class A................... 1,299,300
23,900 Rohm Co. ............................................. 2,856,775
46,800 Sony Corp. ........................................... 4,328,941
70,000 Taisho Pharmaceutical Co., Ltd. ...................... 2,187,870
------------
34,947,940
------------
FRANCE -- 13.04%
44,242 Axa................................................... 5,874,059
5,099 Carrefour S.A. ....................................... 3,936,302
111,230 Dassault Systemes S.A. ............................... 4,124,975
36,612 Elf Aquitaine S.A. ................................... 4,979,770
2,400 L'OREAL............................................... 1,520,597
21,388 Total S.A., Class B................................... 2,638,524
13,300 Vivendi............................................... 3,277,187
------------
26,351,414
------------
UNITED KINGDOM & POSSESSIONS -- 8.87%
574,254 Airtours plc.......................................... 4,173,357
76,800 Glaxo Wellcome plc.................................... 2,571,163
140,553 Granada Group plc..................................... 2,848,741
186,300 Serco Group plc....................................... 4,392,732
890,592 Siebe plc............................................. 3,930,140
------------
17,916,133
------------
ITALY -- 8.66%
259,700 Autogrill S.p.A. ..................................... 2,569,202
409,925 Edison S.p.A. ........................................ 3,780,582
413,500 Telecom Italia S.p.A. ................................ 4,399,221
785,332 Telecom Italia Mobile S.p.A. ......................... 3,039,776
686,100 Unicredito Italiano S.p.A. ........................... 3,709,050
------------
17,497,831
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
GERMANY -- 8.14%
10,650 GEA AG................................................ $ 241,810
54,750 Mannesmann AG......................................... 6,801,573
62,800 Metro AG.............................................. 3,992,475
12,219 SAP AG................................................ 3,520,774
28,825 Siemens AG............................................ 1,894,864
------------
16,451,496
------------
SWITZERLAND -- 6.45%
134 Lindt & Spruengli AG.................................. 3,812,233
1,411 Novartis AG (Registered).............................. 2,294,799
566 Roche Holding AG...................................... 6,920,206
------------
13,027,238
------------
NETHERLANDS -- 6.24%
104,180 ING Groep N.V......................................... 5,750,232
38,344 +STMicroelectronics N.V. ............................. 3,812,013
16,791 Wolters Kluwer N.V. .................................. 3,049,938
------------
12,612,183
------------
AUSTRALIA -- 4.42%
236,226 Brambles Industries Ltd. ............................. 6,006,266
152,740 Lend Lease Corp., Ltd. ............................... 1,946,477
1,394,800 +LibertyOne Ltd. ..................................... 973,195
------------
8,925,938
------------
SINGAPORE -- 3.89%
2,729,507 Datacraft Asia Ltd. .................................. 6,387,046
539,000 Natsteel Electronics Ltd. ............................ 1,473,548
------------
7,860,594
------------
SWEDEN -- 3.51%
149,656 Celsius AB, Series B.................................. 2,463,038
190,200 Telefonaktiebolaget LM Ericsson, Class B.............. 4,637,497
------------
7,100,535
------------
CANADA -- 3.30%
168,400 Bombardier Inc., Class B.............................. 2,218,436
111,650 +CGI Group, Inc. ..................................... 2,426,691
32,383 Northern Telecom Ltd. ................................ 2,020,177
------------
6,665,304
------------
IRELAND -- 2.82%
374,300 Irish Permanent plc................................... 5,706,163
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
International Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
THAILAND -- 2.41%
1,017,456 +Banpu Public Co., Ltd. (Registered).................. $ 1,226,749
630,400 BEC World Public Co., Ltd. (Foreign).................. 3,057,096
425,900 Dhipaya Insurance Public Co., Ltd. ................... 473,789
38,500 +Sermsuk Public Co., Ltd.
(Foreign)............................................. 104,636
------------
4,862,270
------------
SPAIN -- 2.39%
323,495 Banco Bilbao Vizcaya S.A. (Registered)................ 4,826,717
------------
PORTUGAL -- 2.04%
136,377 Banco Comercial Portugues S.A. ....................... 4,128,615
------------
HONG KONG -- 1.24%
816,600 Dairy Farm International Holdings Ltd. ............... 947,256
4,040,720 +Hengan International Group Co., Ltd. ................ 1,564,352
------------
2,511,608
------------
ISRAEL -- 0.96%
32,500 +Gilat Satellite Networks Ltd. ....................... 1,950,000
------------
ARGENTINA -- 0.89%
57,028 YPF S.A. ADR.......................................... 1,799,946
------------
SOUTH KOREA -- 0.71%
7,600 S1 Corp. ............................................. 1,438,173
------------
CHILE -- 0.59%
40,280 Vina Concha Y Toro S.A. ADR........................... 1,183,225
------------
HUNGARY -- 0.28%
17,280 Gedeon Richter Rt. GDR (Registered)................... 568,080
------------
INDIA -- 0.10%
3,660 Housing Development Finance Corp., Ltd. .............. 197,044
------------
TOTAL COMMON STOCKS
(Cost $165,256,094)................................... 198,528,447
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Warrants (Note 1)
-------- ------------
<C> <S> <C>
WARRANTS -- 0.82%
PHILIPPINES -- 0.82%
3,287,000 +QueenBee Restaurants --
Jollibee Foods Corp., expiring 03/24/03 at $19.25
(Cost $1,255,423)..................................... $ 1,660,531
------------
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
CONVERTIBLE BONDS -- 0.21%
PORTUGAL -- 0.21%
$ 3,800 Banco Comercial Portugues S.A., Series A (Preferred)
8.00%, 12/31/2049
(Cost $443,004)....................................... 425,600
------------
DEMAND NOTES -- 0.10%
UNITED STATES -- 0.10%
199,000 General Electric Co.
Promissory Notes
(Cost $199,000)....................................... 199,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $167,153,521*)...................................... 99.37% $200,813,578
OTHER ASSETS & LIABILITIES (NET).......................... 0.63 1,269,656
------ ------------
NET ASSETS................................................ 100.00% $202,083,234
====== ============
</TABLE>
- --------
*-- For Federal income tax purposes, the tax basis of investments aggregates
$167,737,787.
+-- Non-income producing
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
See Notes to Financial Statements
15
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
International Fund -- (continued)
FORWARD FOREIGN CURRENCY CONTRACTS
Under the terms of forward foreign currency contracts open at 3/31/99, the
International Fund is obligated to deliver currency in exchange for U.S.
dollars as indicated below:
<TABLE>
<CAPTION>
Currency In Net
to Exchange Settlement Unrealized
Deliver For Date Value (Depreciation)
----------------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Sales...... JPY 1,301,867,800 $10,998,106 6/3/99 $11,091,843 $(93,737)
</TABLE>
- --------
JPY -- Japanese Yen
At March 31, 1999, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification Assets Value
---------------------- ------ ------------
<S> <C> <C>
Technology.............................................. 22.25% $ 44,969,887
Consumer Cyclical....................................... 22.18 44,813,967
Financial............................................... 16.35 33,037,746
Consumer Staples........................................ 13.94 28,163,234
Energy.................................................. 6.53 13,198,822
Transportation.......................................... 6.23 12,594,279
Capital Goods........................................... 4.50 9,102,191
Raw / Intermediate Materials............................ 4.03 8,146,955
Utilities............................................... 3.26 6,587,497
Demand Notes............................................ 0.10 199,000
------ ------------
Total Investments....................................... 99.37% $200,813,578
Other Assets and Liabilities (Net)...................... 0.63 1,269,656
------ ------------
Net Assets.............................................. 100.00% $202,083,234
====== ============
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Pacific/Asia Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- 94.53%
JAPAN -- 42.60%
15,250 AFLAC, Inc. .......................................... $ 830,172
51,000 Arisawa Mfg. Co., Ltd. ............................... 626,837
200 DDI Corp. ............................................ 946,106
4,300 Don Quijote Co., Ltd. ................................ 958,946
19,600 Meitec Corp. ......................................... 571,211
26,000 Miura Co., Ltd. ...................................... 388,748
8,300 NIDEC Corp. .......................................... 1,023,653
9,000 Nintendo Co., Ltd. ................................... 776,989
118 NTT Data Corp. ....................................... 913,060
15,300 +Nu Skin Enterprises, Inc., Class A................... 349,987
5,000 Rohm Co. ............................................. 597,652
5,200 Ryohin Keikaku Co., Ltd. ............................. 825,815
5,500 Sony Corp. ........................................... 508,743
20,000 Taisho Pharmaceutical Co., Ltd. ...................... 625,106
40,400 Terumo Corp. ......................................... 807,113
5,500 Trend Micro, Inc. .................................... 631,863
47,500 Wacoal Corp. ......................................... 549,312
-----------
11,931,313
-----------
SINGAPORE -- 12.80%
504,000 Dairy Farm International Holdings Ltd. ............... 584,640
545,867 Datacraft Asia Ltd. .................................. 1,277,329
207,600 Natsteel Electronics Ltd. ............................ 567,548
751,000 Singapore Bus Services Ltd. .......................... 817,770
332,800 Want Want Holdings Ltd. .............................. 336,128
-----------
3,583,415
-----------
HONG KONG -- 12.50%
1,931,000 Cafe de Coral Holdings, Ltd. ......................... 541,996
12,000 +China Telecom (Hong Kong)
Ltd. ADR.............................................. 400,500
2,883,000 +Hengan International Group Co., Ltd. ............... 1,116,144
912,000 Kingmaker Footwear Holdings, Ltd. .................... 110,631
240,900 Varitronix International Ltd. ........................ 376,163
5,738,000 Yanzhou Coal Mining Co., Ltd. ........................ 955,223
-----------
3,500,657
-----------
AUSTRALIA -- 7.25%
46,662 Brambles Industries Ltd. ............................. 1,186,425
30,086 Lend Lease Corp., Ltd. ............................... 383,408
662,100 +LibertyOne Ltd. .................................... 461,967
-----------
2,031,800
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
SOUTH KOREA -- 5.98%
4,200 Dae Duck Electronics Co. ............................. $ 313,116
45,850 Medison Co., Ltd. ................................... 463,736
4,742 S1 Corp. ............................................. 897,335
-----------
1,674,187
-----------
THAILAND -- 5.04%
260,134 +Banpu Public Co., Ltd. (Registered).................. 313,644
109,100 BEC World Public Co., Ltd. (Foreign).................. 529,076
211,300 Matichon Public Co., Ltd. (Foreign)................... 249,135
70,700 +Sermsuk Public Co., Ltd. (Foreign)................... 192,150
79,500 Thai Reinsurance Public Co., Ltd. (Foreign)........... 127,098
-----------
1,411,103
-----------
NEW ZEALAND -- 3.31%
813,400 Restaurant Brands New Zealand Ltd. ................... 609,122
65,231 Telecom Corp. of New Zealand Ltd. .................... 318,216
-----------
927,338
-----------
PHILIPPINES -- 2.54%
130,530 Manila Electric Co., Class B.......................... 432,845
414,200 SPI Technologies, Inc. ............................... 278,995
-----------
711,840
-----------
INDIA -- 2.51%
39,400 Bharat Heavy Electricals Ltd. ........................ 220,956
26,100 +Bharat Heavy Electricals Ltd. (DEMAT Share).......... 146,370
13,300 Hero Honda Motors Ltd. ............................... 274,872
1,140 Housing Development Finance Corp., Ltd. .............. 61,374
-----------
703,572
-----------
TOTAL COMMON STOCKS
(Cost $25,858,667).................................... 26,475,225
-----------
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Pacific/Asia Fund -- (continued)
<TABLE>
<CAPTION>
No. of Value
Warrants (Note 1)
---------- -----------
<C> <S> <C>
WARRANTS -- 1.69%
PHILIPPINES -- 1.69%
935,300 +QueenBee Restaurants --
Jollibee Foods Corp., expiring 03/24/03 at $19.25
(Cost $402,360)....................................... $ 472,496
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- -----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS -- 17.55%
$4,917,000 U.S. Treasury Bill, 4.60%, 04/01/1999
(Cost $4,917,000)..................................... $ 4,917,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $31,178,027*)........................................ 113.77% $31,864,721
OTHER ASSETS & LIABILITIES (NET)........................... (13.77) (3,857,141)
------ -----------
NET ASSETS................................................. 100.00% $28,007,580
====== ===========
</TABLE>
- --------
*--For Federal income tax purposes, the tax basis of investments aggregates
$31,244,342.
+--Non-income producing
ADR--American Depositary Receipt
FORWARD FOREIGN CURRENCY CONTRACTS
Under the terms of forward foreign currency contracts open at 3/31/99, the
Pacific/Asia Fund is obligated to deliver currency in exchange for U.S.
dollars as indicated below:
<TABLE>
<CAPTION>
Currency In Net
to Exchange Settlement Unrealized
Deliver For Date Value (Depreciation)
--------------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Sales.......... JPY 399,315,000 $3,373,391 6/3/99 $3,402,142 $(28,751)
</TABLE>
- --------
JPY -- Japanese Yen
At March 31, 1999, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification Assets Value
---------------------- ------ -----------
<S> <C> <C>
Technology............................................... 26.76% $ 7,494,748
Consumer Cyclical........................................ 23.92 6,698,903
Consumer Staples......................................... 19.03 5,330,254
U.S. Treasury Obligations................................ 17.55 4,917,000
Transportation........................................... 8.14 2,279,067
Utilities................................................ 7.49 2,097,667
Financial................................................ 5.01 1,402,052
Raw/Intermediate Materials............................... 4.53 1,268,867
Capital Goods............................................ 1.34 376,163
------ -----------
Total Investments........................................ 113.77% $31,864,721
Other Assets and Liabilities (Net)....................... (13.77) (3,857,141)
------ -----------
Net Assets............................................... 100.00% $28,007,580
====== ===========
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Pan European Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 98.49%
FRANCE -- 19.19%
43,189 Axa..................................................... $ 5,734,251
6,963 Carrefour S.A. ......................................... 5,375,264
85,580 Dassault Systemes S.A. ................................. 3,173,742
35,342 Elf Aquitaine S.A. ..................................... 4,807,032
5,320 L'OREAL................................................. 3,370,656
28,473 Total S.A., Class B..................................... 3,512,563
17,500 Vivendi................................................. 4,312,088
------------
30,285,596
------------
UNITED KINGDOM & POSSESSIONS -- 16.12%
590,950 Airtours plc............................................ 4,294,695
504,000 Capita Group plc........................................ 5,827,907
62,300 Glaxo Wellcome plc...................................... 2,085,722
138,233 Granada Group plc....................................... 2,801,719
260,800 Serco Group plc......................................... 6,149,354
969,096 Siebe plc............................................... 4,276,574
------------
25,435,971
------------
ITALY -- 12.51%
325,900 Autogrill S.p.A. ....................................... 3,224,116
324,100 Edison S.p.A. .......................................... 2,989,051
699,800 Telecom Italia S.p.A. .................................. 7,445,164
635,440 Telecom Italia Mobile S.p.A. ........................... 2,459,590
669,800 Unicredito Italiano S.p.A. ............................. 3,620,932
------------
19,738,853
------------
GERMANY -- 12.16%
4,680 GEA AG.................................................. 106,260
52,660 Mannesmann AG........................................... 6,541,933
64,700 Metro AG................................................ 4,113,266
12,180 SAP AG.................................................. 3,509,536
6,646 Sartorius AG............................................ 1,415,572
6,534 Sartorius AG -- VORZUG.................................. 1,334,493
33,080 Siemens AG.............................................. 2,174,575
------------
19,195,635
------------
NETHERLANDS -- 7.93%
94,473 ING Groep N.V. ......................................... 5,214,452
35,150 +STMicroelectronics N.V. ............................... 3,494,478
20,919 Wolters Kluwer N.V. .................................... 3,799,754
------------
12,508,684
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
SWITZERLAND -- 7.12%
114 Lindt & Spruengli AG................................ $ 3,243,243
1,373 Novartis AG (Registered)............................ 2,232,997
471 Roche Holding AG.................................... 5,758,687
------------
11,234,927
------------
SWEDEN -- 5.74%
267,311 Celsius AB, Series B................................ 4,399,403
191,450 Telefonaktiebolaget LM Ericsson, Class B............ 4,667,975
------------
9,067,378
------------
IRELAND -- 5.52%
201,636 Irish Continental Group plc......................... 2,517,997
406,600 Irish Permanent plc................................. 6,198,573
------------
8,716,570
------------
SPAIN -- 3.95%
312,100 Banco Bilbao Vizcaya S.A.
(Registered)........................................ 4,656,698
145,025 Prosegur Cia de Seguridad S.A.
(Registered)........................................ 1,575,847
------------
6,232,545
------------
PORTUGAL -- 3.71%
193,474 Banco Comercial Portugues S.A. ..................... 5,857,143
------------
CROATIA -- 1.34%
103,850 ++Pliva d.d. GDR.................................... 1,562,943
36,900 Pliva d.d. GDR (Registered)......................... 555,345
------------
2,118,288
------------
FINLAND -- 1.29%
12,640 Nokia Oyj, Class A.................................. 2,037,652
------------
POLAND -- 0.99%
146,700 Elektrim Spolka Akcyjna S.A. ....................... 1,562,594
------------
TURKEY -- 0.92%
270,500,000 Global Menkul Degerler A.S. ........................ 450,168
140,670,034 +Medya Holding...................................... 443,665
32,566,875 Turk Sise ve Cam
Fabrikalari A.S. ................................... 559,463
------------
1,453,296
------------
TOTAL COMMON STOCKS
(Cost $129,084,848)................................. 155,445,132
------------
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Pan European Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
PREFERRED STOCKS -- 1.45%
PORTUGAL -- 1.45%
212,200 Lusomundo S.A.
(Cost $2,525,995)....................................... $ 2,294,302
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $131,610,843*)...................................... 99.94% $157,739,434
OTHER ASSETS & LIABILITIES (NET).......................... 0.06 96,366
------ ------------
NET ASSETS................................................ 100.00% $157,835,800
====== ============
</TABLE>
- --------
*-- Aggregate cost for Federal tax and book purposes.
+-- Non-income producing
++-- Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At March 31, 1999 these
securities amounted to $1,562,943 or 0.99% of net assets.
GDR-- Global Depositary Receipt
At March 31, 1999, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification Assets Value
---------------------- ------ ------------
<S> <C> <C>
Consumer Cyclical....................................... 33.49% $ 52,853,659
Financial............................................... 20.11 31,732,218
Consumer Staples........................................ 18.80 29,677,062
Technology.............................................. 10.36 16,357,447
Energy.................................................. 5.27 8,319,594
Holding Company Diversified............................. 4.88 7,709,290
Capital Goods........................................... 4.18 6,592,922
Utilities............................................... 2.85 4,497,242
------ ------------
Total Investments....................................... 99.94% $157,739,434
Other Assets and Liabilities (Net)...................... 0.06 96,366
------ ------------
Net Assets.............................................. 100.00% $157,835,800
====== ============
</TABLE>
See Notes to Financial Statements
20
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Latin America Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- -----------
<C> <S> <C>
COMMON STOCKS -- 67.08%
MEXICO -- 41.47%
1,280,800 +Biper S.A. de C.V., Series B....................... $ 210,100
171,982 Cemex S.A., CPO..................................... 702,576
340,300 +Cifra S.A. de C.V., Series V....................... 534,604
100,743 +Corporacion GEO S.A., Class B...................... 293,436
96,300 Corporacion Moctezuma S.A. de C.V., Series B2....... 105,110
12,718 Fomento Economico Mexicano S.A. de C.V. ADR......... 393,463
111,100 Grupo Continental S.A. ............................. 315,426
431,100 Grupo Elektra S.A. de C.V. CPO...................... 282,867
199,700 +Grupo Financiero Banamex Accival S.A. de C.V. Class
B................................................... 432,578
195,900 Grupo Modelo S.A. de C.V.
Series C............................................ 502,625
40,200 +Grupo Televisa S.A. CPO............................ 636,183
105,300 Industrias Penoles S.A. ............................ 328,855
150,900 Organizacion Soriana S.A. de C.V., Series B......... 522,041
9,500 Telefonos de Mexico S.A. ADR, Class L............... 622,250
-----------
5,882,114
-----------
BRAZIL -- 12.41%
51,000 Cia Vale do Rio Doce................................ 545,789
75,100 Copel ADR........................................... 563,250
138,411,400 +Tele Celular Sul
Participacoes S.A. ................................. 209,641
22,900 Unibanco GDR........................................ 440,825
-----------
1,759,505
-----------
ARGENTINA -- 7.16%
15,200 Banco de Galicia y Buenos Aires S.A. de C.V. ADR.... 244,150
11,300 Telefonica de Argentina S.A.
ADR................................................. 341,825
13,583 YPF S.A. ADR........................................ 428,713
-----------
1,014,688
-----------
CHILE -- 4.90%
14,900 Cia de Telecomunicaciones de Chile S.A. ADR......... 351,081
11,719 Vina Concha y Toro S.A. ADR......................... 344,246
-----------
695,327
-----------
PERU -- 1.14%
91,894 Minsur S.A. ........................................ 161,630
-----------
TOTAL COMMON STOCKS
(Cost $10,637,861).................................. 9,513,264
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- -----------
<C> <S> <C>
PREFERRED STOCKS -- 20.98%
BRAZIL -- 20.98%
6,300,000 Banco do Estado de
Sao Paulo S.A. ...................................... $ 287,368
18,989,874 CEMIG................................................ 425,884
137,716,300 Coelce............................................... 346,304
25,100,000 +Embratel Participacoes S.A. ........................ 422,884
39,211,200 Gerdau S.A. ......................................... 405,870
28,610,000 +Tele Celular Sul Participacoes S.A. ................ 57,555
28,300,000 +Tele Centro Sul Participacoes S.A. ................. 264,630
21,100,000 +Tele Norte Leste Participacoes S.A. ................ 323,286
21,079,400 +Telesp Participacoes S.A. .......................... 442,544
-----------
TOTAL PREFERRED STOCKS
(Cost $3,473,071).................................... 2,976,325
-----------
<CAPTION>
Principal
Amount
-----------
<C> <S> <C>
CONVERTIBLE BONDS -- 0.00%
BRAZIL -- 0.00%
$45,600 Cia Vale do Rio Doce Zero Coupon, 07/01/06
(Cost $0)............................................ --
-----------
DEMAND NOTES -- 7.90%
UNITED STATES -- 7.90%
600,000 Associates Corp. of North America Master Notes....... 600,000
520,000 General Electric Co. Promissory Notes................ 520,000
-----------
TOTAL DEMAND NOTES
(Cost $1,120,000).................................... 1,120,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $15,230,932*)........................................ 95.96% $13,609,589
OTHER ASSETS & LIABILITIES (NET)........................... 4.04 573,102
------ -----------
NET ASSETS................................................. 100.00% $14,182,691
====== ===========
</TABLE>
- --------
*-- For Federal income tax purposes, the tax basis of investments aggregates
$16,479,439.
+-- Non-income producing
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
See Notes to Financial Statements
21
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Latin America Fund -- (continued)
At March 31, 1999, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification Assets Value
---------------------- ------ -----------
<S> <C> <C>
Consumer Cyclical........................................ 21.69% $ 3,076,817
Utilities................................................ 18.69 2,650,594
Technology............................................... 13.61 1,930,639
Consumer Staples......................................... 10.97 1,555,760
Raw/Intermediate Materials............................... 10.17 1,442,144
Financial................................................ 9.91 1,404,922
Demand Notes............................................. 7.90 1,120,000
Energy................................................... 3.02 428,713
------ -----------
Total Investments........................................ 95.96% $13,609,589
Other Assets and Liabilities (Net)....................... 4.04 573,102
------ -----------
Net Assets............................................... 100.00% $14,182,691
====== ===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Emerging Markets Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- 84.60%
MEXICO -- 11.72%
91,000 +Cifra S.A. de C.V., Series V........................ $ 142,959
41,000 Grupo Financiero Banamex Accival S.A. de C.V., Class
B.................................................... 88,812
26,000 +Grupo Financiero Banamex Accival S.A. de C.V., Class
O.................................................... 56,319
5,810 +Grupo Televisa S.A. GDR............................. 182,289
2,500 Telefonos de Mexico S.A.,
Class L ADR.......................................... 163,750
-----------
634,129
-----------
SOUTH AFRICA -- 8.04%
816 Edgars Stores Ltd. .................................. 4,214
94,554 Metro Cash & Carry Ltd. ............................. 73,678
7,300 Nedcor Ltd. ......................................... 163,065
22,318 +South African Breweries plc......................... 193,833
-----------
434,790
-----------
SOUTH KOREA -- 7.86%
1,217 S1 Corp. ............................................ 230,297
15,965 SK Telecom Co. Ltd. ADR.............................. 194,573
-----------
424,870
-----------
INDIA -- 7.22%
41,650 +The India Fund, Inc. ............................... 390,469
-----------
HONG KONG -- 7.18%
3,600 +China Telecom (Hong Kong) Ltd. ADR.................. 120,150
53,000 Citic Pacific Ltd. .................................. 111,485
405,000 +Hengan International Group Co., Ltd. ............... 156,795
-----------
388,430
-----------
GREECE -- 5.86%
2,200 Alpha Credit Bank.................................... 146,569
7,000 Hellenic Telecommunications Organization S.A. ....... 170,440
-----------
317,009
-----------
TURKEY -- 5.74%
41,000 ++Akbank T.A.S. ADR.................................. 259,325
30,750,000 Global Menkul Degerler A.S. ......................... 51,174
-----------
310,499
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
CHILE -- 4.18%
5,100 Cia de Telecomunicaciones de Chile S.A. ADR........... $ 120,169
3,616 Vina Concha Y Toro S.A. ADR........................... 106,220
-----------
226,389
-----------
ARGENTINA -- 3.62%
3,300 Telefonica de Argentina S.A. ADR...................... 99,825
3,040 YPF S.A. ADR.......................................... 95,950
-----------
195,775
-----------
BRAZIL -- 3.43%
12,990 Cia Vale do Rio Doce.................................. 139,016
5,510,000 +Embratel Participacoes S.A. ......................... 46,690
-----------
185,706
-----------
THAILAND -- 3.28%
30,500 BEC World Public Co., Ltd.
(Foreign)............................................. 147,909
18,500 Thai Reinsurance Public Co., Ltd.
(Foreign)............................................. 29,576
-----------
177,485
-----------
CHINA -- 3.27%
1,064,000 Yanzhou Coal Mining Co., Ltd., Class H................ 177,127
-----------
HUNGARY -- 3.13%
1,480 Matav Rt. ADR......................................... 39,590
2,800 ++MOL Magyar Olaj-es Gazipari Rt. GDR................. 60,068
1,800 OPT Bank Rt. ......................................... 69,854
-----------
169,512
-----------
PERU -- 2.76%
13,800 Cia de Minas Buenaventura S.A., Class B............... 93,438
31,769 Minsur S.A. .......................................... 55,878
-----------
149,316
-----------
POLAND -- 2.48%
12,600 Elektrim Spolka Akcyjna S.A. ......................... 134,211
-----------
ISRAEL -- 2.09%
1,900 +Gilat Satellite Networks Ltd. ....................... 113,288
-----------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Emerging Markets Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
CROATIA -- 1.53%
5,150 Pliva d.d. GDR
(Registered).......................................... $ 82,658
-----------
MALAYSIA -- 1.21%
53,200 xO.Y.L. Industries Bhd. .............................. 65,692
-----------
TOTAL COMMON STOCKS
(Cost $4,822,019)..................................... 4,577,355
-----------
PREFERRED STOCKS -- 12.67%
BRAZIL -- 12.67%
2,700,000 Banco do Estado de Sao Paulo S.A. .................... 123,158
58,107,873 Coelce................................................ 146,119
19,396,000 Copel................................................. 146,775
8,700,000 Embraer............................................... 91,070
8,500,000 Telesp Participacoes S.A. ............................ 178,450
-----------
TOTAL PREFERRED STOCKS
(Cost $775,752)....................................... 685,572
-----------
<CAPTION>
No. of
Warrants
----------
<C> <S> <C>
WARRANTS -- 2.13%
PHILIPPINES -- 2.13%
228,500 +QueenBee Restaurants --
Jollibee Foods Corp., expiring 03/24/03 at $19.25
(Cost $120,014)....................................... 115,434
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
---------- ----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 7.91%
UNITED STATES -- 7.91%
$428,000 Agreement with Chase Securities, Inc. Government
Dealership 4.65%, dated 03/31/99, due 04/01/99, to be
repurchased at $428,055 collateralized by $425,000
U.S. Treasury Notes 6.25%, due 08/31/02, valued at
$430,306
(Cost $428,000)....................................... $ 428,000
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $6,145,785*).......................................... 107.31% $5,806,361
OTHER ASSETS & LIABILITIES (NET)............................ (7.31) (395,581)
------ ----------
NET ASSETS.................................................. 100.00% $5,410,780
====== ==========
</TABLE>
- --------
*-- Aggregate cost for Federal tax and book purposes.
+-- Non-income producing
++-- Securities 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,
1999 these securities amounted to $319,393 or 5.90% of net assets.
x-- Security is valued at fair value. See Note 1 to financial statements.
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
See Notes to Financial Statements
24
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 1999
Emerging Markets Fund -- (continued)
At March 31, 1999, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification Assets Value
---------------------- ------ ----------
<S> <C> <C>
Financial................................................. 18.26% $ 987,854
Technology................................................ 16.02 866,489
Utilities................................................. 15.65 847,058
Consumer Cyclical......................................... 14.96 809,403
Consumer Staples.......................................... 12.54 678,434
Raw/Intermediate Materials................................ 8.60 465,459
Repurchase Agreements..................................... 7.91 428,000
Capital Goods............................................. 7.22 390,469
Holding Company Diversified............................... 3.27 177,177
Energy.................................................... 2.88 156,018
------ ----------
Total Investments......................................... 107.31% $5,806,361
Other Assets and Liabilities (Net)........................ (7.31) (395,581)
------ ----------
Net Assets................................................ 100.00% $5,410,780
====== ==========
</TABLE>
See Notes to Financial Statements
25
<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 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. The financial
statements for the remaining portfolios of Excelsior Fund and Excelsior Tax-
Exempt Funds, Inc. are presented separately.
(a) Portfolio valuation:
Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an occurrence
subsequent to the time a value was so established is likely to have changed
such value, then a fair value of those securities will be determined by
consideration of other factors under the direction of the Board of
Directors. A security which is traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market on
which the security is traded. Securities for which market quotations are
not readily available are valued at fair value, pursuant to guidelines
adopted by Excelsior Fund's Board of Directors. Investments in securities
which are primarily traded on a domestic exchange are valued at the last
sale price on that exchange or, if there was no recent sale, at the last
current bid quotation.
Investments in foreign debt securities having maturities of 60 days or
less are valued at amortized cost, which approximates market value. All
other foreign securities are valued at the last current bid quotation if
market quotations are available, or at fair value as determined in
accordance with policies established by the Board of Directors. Investment
valuations, other assets, and liabilities initially expressed in foreign
currencies are converted each business day into U.S. dollars based upon
current exchange rates. Purchases and sales of foreign investments and
income and expenses are converted into U.S. dollars based upon currency
exchange rates prevailing on the respective dates of such transactions.
Gains and losses attributable to foreign currency exchange rates are
recorded for financial statement purposes as net realized gains and losses
on investments. That portion of both realized and unrealized gains and
losses on investments that results from fluctuations in foreign currency
exchange rates is not separately disclosed.
Forward foreign currency exchange contracts: The Portfolios'
participation in forward currency exchange contracts will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging involves the purchase or sale of foreign currency with
respect to specific receivables or payables of a Portfolio generally
arising in connection with the purchase or
26
<PAGE>
sale of its portfolio securities. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms
of their contracts and is generally limited to the amount of unrealized
gain on the contracts, if any, at the date of default. Risk may also arise
from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. Contracts are marked-to-market daily and the change in
market value is recorded as unrealized appreciation or depreciation.
Realized gains or losses arising from such transactions are included in net
realized gains or losses from foreign currency transactions.
(b) Security transactions and investment income:
Security transactions are recorded on a trade date basis. Realized gains
and losses on investments sold are recorded on the basis of identified
cost. Interest income, including, where applicable, amortization of
discount on investments, is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date, except for certain dividends from
foreign securities, which are recorded as soon as the Portfolios are
informed of the dividend.
(c) Repurchase Agreements:
Excelsior Fund may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to
the seller's agreement to repurchase and Excelsior Fund's agreement to
resell such securities at mutually agreed upon prices. Securities purchased
subject to such repurchase agreements are deposited with Excelsior Fund's
custodian or sub-custodian or are maintained in the Federal
Reserve/Treasury book-entry system and must have, at all times, an
aggregate market value 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.
(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
27
<PAGE>
with the requirements of the Internal Revenue Code applicable to regulated
investment companies, and by distributing substantially all of its taxable
earnings to its shareholders.
At March 31, 1999, the following Portfolios had approximate capital loss
carryforwards for Federal tax purposes available to offset future net
capital gains through the indicated expiration dates:
<TABLE>
<CAPTION>
Expiration Date March
31,
----------------------
2006 2007 Total
---------- ----------- -----------
<S> <C> <C> <C>
International Fund........................ -- $ 2,133,000 $ 2,133,000
Pacific/Asia Fund......................... $4,966,000 21,038,000 26,004,000
Pan European Fund......................... -- -- --
Latin America Fund........................ -- 13,841,000 13,841,000
Emerging Markets Fund..................... -- 303,000 303,000
</TABLE>
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Pan European Fund, Latin America Fund and
Emerging Markets Fund incurred, and expect to defer, net currency losses of
approximately $40,000, $249,000 and $39,000, respectively, for the year
ended March 31, 1999. In addition, International Fund, Pacific/Asia Fund,
Latin America Fund and Emerging Markets Fund incurred, and expect to defer,
net capital losses of approximately $3,305,000, $3,171,000, $15,412,000 and
$2,336,000, respectively, for the year ended March 31, 1999.
At March 31, 1999, 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................ $38,780,780 $(5,704,989) $33,075,791
Pacific/Asia Fund................. 4,201,609 (3,581,230) 620,379
Pan European Fund................. 35,065,653 (8,937,062) 26,128,591
Latin America Fund................ 659,719 (3,529,569) (2,869,850)
Emerging Markets Fund............. 443,694 (783,118) (339,424)
</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 adviser to the Portfolios. For the
services provided pursuant to the Investment Advisory Agreements, U.S. Trust
is entitled to receive a fee, computed daily and paid monthly, at the annual
rate of 1% of the average daily net assets of each of the International Fund,
Pacific/Asia Fund, Pan European Fund and Latin America Fund and 1.25% of the
average daily net assets of the Emerging Markets Fund. U.S. Trust NY and U.S.
Trust CT are wholly-owned subsidiaries of U.S. Trust Corporation, a registered
bank holding company.
28
<PAGE>
U.S. Trust CT, Chase Global Funds Services Company, a corporate affiliate of
The Chase Manhattan Bank, and Federated Administrative Services (collectively,
the "Administrators") provide administrative services to Excelsior Fund. For
the services provided to the Portfolios, the Administrators are entitled
jointly to annual fees, computed daily and paid monthly, at the annual rate of
.20% of the average daily net assets of each Portfolio. For the year ended
March 31, 1999, administration fees charged by U.S. Trust CT were as follows:
<TABLE>
<S> <C>
International Fund.................................................. $181,408
Pacific/Asia Fund................................................... 23,819
Pan European Fund................................................... 170,277
Latin America Fund.................................................. 34,676
Emerging Markets Fund............................................... 5,007
</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, 1999, U.S. Trust voluntarily waived investment advisory fees
totaling $36,800 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
$395,102 for the year ended March 31, 1999. 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,
1999, 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................................. $203,778 $ 379
Pacific/Asia Fund.................................. 26,291 274
Pan European Fund.................................. 142,822 4,522
Latin America Fund................................. 40,751 1,386
Emerging Markets Fund.............................. 11,666 --
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the sponsor and distributor of Excelsior
Fund.
29
<PAGE>
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, 1999, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
International Fund................................. $111,709,153 $101,637,962
Pacific/Asia Fund.................................. 21,965,809 34,539,662
Pan European Fund.................................. 88,878,779 108,546,891
Latin America Fund................................. 11,666,578 52,147,514
Emerging Markets Fund.............................. 5,866,082 3,803,029
</TABLE>
4. Common Stock:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
26.375 billion of which is currently classified to represent interests in one
of eighteen separate investment portfolios. Authorized capital currently
classified for each Portfolio is as follows: 375 million shares of the
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
03/31/99 03/31/98
-------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 15,653,287 $ 188,824,967 7,823,402 $ 94,783,126
Issued as reinvestment of
dividends............... 7,975 102,649 64,967 759,358
Redeemed................. (15,286,397) (183,702,503) (3,307,934) (40,179,061)
----------- ------------- ---------- ------------
Net Increase............. 374,865 $ 5,225,113 4,580,435 $ 55,363,423
=========== ============= ========== ============
<CAPTION>
Pacific/Asia Fund
----------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
-------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold..................... 7,320,979 $ 41,225,240 5,372,797 $ 42,386,787
Issued as reinvestment of
dividends............... 14,626 77,077 4,692 29,609
Redeemed................. (9,819,963) (53,977,510) (8,555,731) (62,916,933)
----------- ------------- ---------- ------------
Net Decrease............. (2,484,358) $ (12,675,193) (3,178,242) $(20,500,537)
=========== ============= ========== ============
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Pan European Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 20,254,265 $267,588,363 7,208,623 $ 85,852,102
Issued as reinvestment of
dividends................ 71,063 861,284 73,319 865,174
Redeemed.................. (22,279,568) (290,910,879) (3,738,354) (45,563,629)
----------- ------------ ---------- ------------
Net Increase (Decrease)... (1,954,240) $(22,461,232) 3,543,588 $ 41,153,647
=========== ============ ========== ============
<CAPTION>
Latin America Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 4,637,513 $ 29,862,001 5,336,432 $ 59,019,030
Issued as reinvestment of
dividends................ 103,826 468,733 18,526 193,175
Redeemed.................. (10,130,927) (61,904,139) (4,486,834) (47,994,494)
----------- ------------ ---------- ------------
Net Increase (Decrease)... (5,389,588) $(31,573,405) 868,124 $ 11,217,711
=========== ============ ========== ============
<CAPTION>
Emerging Markets Fund
---------------------------------------------------
Year Ended Year Ended
03/31/99 03/31/98*
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 974,643 $ 4,604,110 935,051 $ 6,348,553
Issued as reinvestment of
dividends................ 124 534 -- --
Redeemed.................. (568,849) (2,539,114) (1,227) (8,663)
----------- ------------ ---------- ------------
Net Increase.............. 405,918 $ 2,065,530 933,824 $ 6,339,890
=========== ============ ========== ============
</TABLE>
- --------
* For the period 01/02/98 (commencement of operations) through 03/31/98.
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. For the year ended March 31, 1999, the Portfolios had no
borrowings under the agreement.
31
<PAGE>
7. Year 2000 Risk (Unaudited):
Like other investment companies, financial and business organizations and
individuals around the world, the Portfolios could be affected adversely if
the computer systems used by the investment managers and the Portfolios' other
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Problem." The investment managers and the Portfolios' other
service providers have informed the Excelsior Fund that they are taking steps
to address the Year 2000 Problem with respect to the computer systems that
they use. Currently, they do not anticipate that the transition to the 21st
Century will have any material impact on their ability to continue to service
the Portfolios at current levels. At this time, however, there can be no
assurance that their efforts will be sufficient to avoid any adverse impact on
the Portfolios as a result of the Year 2000 Problem.
32
<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, and Emerging Markets Funds (the "Portfolios")
(five of the portfolios constituting the Excelsior Funds, Inc.) as of March 31,
1999, and the related statements of operations for the year 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, 1999, 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, 1999, the
results of their operations for the year 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 7, 1999
33
<PAGE>
Federal Tax Information: (Unaudited)
For the year ended March 31, 1999, the percentage of dividends paid that
qualify for the 70% dividends received deduction for corporate shareholders,
the designation of long-term capital gain and the amounts expected to be passed
through to shareholders as foreign tax credits are approximated as follows:
<TABLE>
<CAPTION>
Dividends 20%
Received Long-Term Foreign
Fund Deduction Capital Gain Tax Credit
---- --------- ------------ ----------
<S> <C> <C> <C>
International Fund......................... -- -- $300,000
Pacific/Asia Fund.......................... 0.06% -- 45,000
Pan European Fund.......................... 0.71% $5,634,000 309,000
Latin America Fund......................... -- 2,936,000 42,000
Emerging Markets Fund...................... -- -- 22,000
</TABLE>
In addition, for the year ended March 31, 1999, gross income derived from
sources within foreign countries approximately amounted to the following:
<TABLE>
<CAPTION>
Foreign Source
Fund Income
---- --------------
<S> <C>
International Fund............................................ $2,513,000
Pacific/Asia Fund............................................. 427,000
Pan European Fund............................................. 2,890,000
Latin America Fund............................................ 1,296,000
Emerging Markets Fund......................................... 198,000
</TABLE>
For the year ended March 31, 1999, the percentage of income earned from
direct treasury obligations for the Emerging Markets Fund was 20.94%.
USTIEA399
34
