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[LOGO OF EXCELSIOR FUNDS]
International Equity Portfolios
ANNUAL REPORT
March 31, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
LETTER TO SHAREHOLDERS.................................................... 1
ADVISER'S INTERNATIONAL EQUITY MARKET REVIEW.............................. 2
ADVISER'S INVESTMENT REVIEWS
International Fund....................................................... 3
Pacific/Asia Fund........................................................ 4
Pan European Fund........................................................ 5
Latin America Fund....................................................... 6
Emerging Markets Fund.................................................... 7
STATEMENTS OF ASSETS AND LIABILITIES...................................... 8
STATEMENTS OF OPERATIONS.................................................. 9
STATEMENTS OF CHANGES IN NET ASSETS....................................... 10
FINANCIAL HIGHLIGHTS -- SELECTED PER SHARE DATA AND RATIOS................ 11
PORTFOLIOS OF INVESTMENTS
International Fund....................................................... 13
Pacific/Asia Fund........................................................ 16
Pan European Fund........................................................ 18
Latin America Fund....................................................... 20
Emerging Markets Fund.................................................... 22
NOTES TO FINANCIAL STATEMENTS............................................. 24
INDEPENDENT AUDITORS' REPORT.............................................. 32
FEDERAL TAX INFORMATION................................................... 33
VOTING RESULTS OF SPECIAL MEETING OF SHAREHOLDERS......................... 33
</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, THEIR
PARENT AND AFFILIATES AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
Dear Shareholder:
The fiscal year ended March 31, 2000 was exciting and rewarding both
domestically and abroad. In the U.S. and around the world, preparations for
"Y2K" and millennium celebrations consumed everyone's thoughts. The U.S.
economy was in the midst of an extraordinary expansion. Simultaneously, Europe
prepared for and converted to a new central currency, the Euro. Meanwhile, Asia
rebounded from fiscal turmoil in several key markets in early 1999.
All the major domestic equity indices exhibited strong performance. As the
fiscal year ended, the breadth of performance extended from the familiar large-
capitalization stocks to the mid-sized and small-cap stocks. Technology stocks
led all market sectors to new highs. This occurred, despite several interest
rate hikes by the Federal Reserve Board. The rising interest rate environment
and continued economic expansion seemed to temper only the performance of the
fixed-income markets.
Given the continued rate of expansion of the U.S. economy, we believe
interest rate increases are inevitable. This environment will make the coming
year a challenging one in the financial markets. We are confident that the
broad array of domestic and international equity as well as taxable and tax-
exempt fixed-income funds will help you meet your financial objectives.
On May 31, 2000, U.S. Trust Corporation, parent of the advisers to the
Excelsior Fund family ("U.S. Trust"), merged with a subsidiary of The Charles
Schwab Corporation. Earlier in the month, shareholders of the Excelsior Funds
approved new advisory contracts that will enable U.S. Trust to remain as the
investment adviser to the Excelsior Funds after the merger. We look forward to
participating in the benefits which the merger of such outstanding
organizations may bring to Excelsior Funds.
Sincerely,
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
1
<PAGE>
EXCELSIOR FUNDS, INC.
ADVISER'S INTERNATIONAL EQUITY MARKETS REVIEW
-------------------------------------------------------------------------------
In the first quarter of the fiscal year ended March 31, 2000, international
markets rose moderately. The weakest region was Europe, specifically the UK,
whereas Emerging Asia was the strongest, followed by Latin America and Japan.
One of the major surprises in the period was the weakness of the Euro, due to
1) the shifting of assets by investors from Europe to Asia. Many so-called
"global and international" managers were almost entirely invested in Europe at
calendar year end and were unprepared for Asia's sharp recovery; 2) the
predecessor currencies had strengthened significantly before the Euro was
introduced; 3) the surprising strength of the US economy and therefore the US
dollar caused Euro weakness by default; 4) the core European economies bore
the brunt of export weakness in response to last year's emerging markets
crises.
In the meanwhile, the Asian economies were recovering strongly, as corporate
restructuring began to be embraced in Japan and throughout emerging asia,
boosting earnings growth.
The international markets picked up in the second fiscal quarter. A weaker
US dollar helped returns, especially in Japan, the best performer among
developed markets during the quarter, after two consecutive quarters of
positive GDP growth. As a result, Asia Pacific did well in spite of South East
Asia falling victim to profit taking after its strong run. Similarly Latin
America was the weakest region globally, after a strong run in the prior two
quarters, Europe was the laggard amongst the regions.
The third quarter saw a powerful rally for the world's equity markets --
representing the first time since 1994 that international equities
outperformed the U.S. market. Europe and Latin America picked up markedly in
the quarter, but the performance driver was clearly Asia. In Europe, Finland
and Sweden led the pack with their high concentration in telecommunications
stocks. The Y2K issue turned out to be a non-event, even in the least
developed parts of the world.
The fiscal fourth quarter began on a mixed note with no clear regional
direction and an overwhelming differentiation of "old economy" versus "new
economy" companies. The period experienced tremendous volatility and rapid
sector rotation. The world's developed markets were down a small fraction.
Canada, and emerging markets led performance, while there was no clear
regional leadership as seen by Europe, Asia, and Latin America -- each of
which posted moderate gains in the period.
2
<PAGE>
EXCELSIOR FUNDS, INC. INTERNATIONAL FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 60.30%*-more than double the performance of each of its benchmarks, the
MSCI EAFE Index which rose 25.11%** and the MSCI ACWI Free ex USA Index which
rose 28.88%***, for the same period. And the Fund ranked 95 out of 643 funds,
based on total return, in the Lipper International Funds category++, for the
same one-year period. In this same Lipper category the Fund performed well for
the five years ended March 31, 2000, ranking 65 out of 254 funds with a
cumulative total return of 123.29%* while for the ten years ended March 31,
2000 the Fund ranked 30 out of 44 funds with a cumulative total return of
154.73%* in this category. The Fund began the year on a positive note, thanks
to strong performance by Datacraft, Nintendo, and Don Quijote and in spite of
an absence of cyclical stocks in the Fund. Having added several Asian stocks
to the Fund early in the year, the resulting underweight position in Europe
and overweight in Asia Pacific also helped. Our European technology and
telecom stocks also contributed strongly to performance. The same can be said
of the fiscal second quarter. Most of the year's gains, however, came in the
fiscal third quarter. This was driven in part by powerful market rallies, but
also by stock selection, with ten holdings gaining over 100% for the quarter.
A few Japanese stocks performed particularly well, e.g. Furukawa Electric, NTT
Data and Sony. Some European winners were Ericsson, STMicroelectronics and
Mannesmann. The fiscal fourth quarter however, saw performance drop off
considerably. The new millennium started on a mixed note with no clear
regional direction and an overwhelming differentiation of "old economy" versus
"new economy" companies. The period experienced tremendous volatility and
rapid sector rotation. The world's developed markets were down a small
fraction. Canada and emerging markets led fund performance, while there was no
clear regional leadership as seen by Europe, Asia or Latin America. Fund
performance was aided by our continued focus on stock selection, long-term
investment horizon and portfolio diversification.
[GRAPH]
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International Fund+
-------------------------------------------------------
Average Annual Total Return Ended on 3/31/00*
-------------------------------------------------------
1 year 5 years 10 years
-------------------------------------------------------
International MSCI-EAFE MSCI-ACWI Free
Fund Index** ex U.S. Index**
3/31/90 10,000 10,000 10,000
3/31/91 9,480 10,252 10,326
3/31/92 9,068 9,431 9,791
3/31/93 10,160 10,525 10,825
3/31/94 11,631 12,893 13,417
3/31/95 11,407 13,677 14,002
3/31/96 12,899 15,363 15,848
3/31/97 13,736 15,587 16,400
3/31/98 16,403 18,488 19,068
3/31/99 15,882 19,603 19,657
3/31/00 25,459 24,525 25,334
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 indicies 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 indicies 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, Australia, Asia, 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,
umanaged index of global stock market performance comprising 47 countries
with developed and emerging markets excluding the United States.
++ Source: Lipper Analytical Services, Inc.--Lipper is an independent mutual
fund performance monitor.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
3
<PAGE>
EXCELSIOR FUNDS, INC. PACIFIC/ASIA FUND
-------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 79.88%* strongly outpacing the MSCI AC Pacific Index's return of 45.14%**.
The strength of the Asian markets in the first three quarters was exceptional
-- fueled by rising current account surpluses, a turnaround in consumption,
and corporate restructuring. The Fund's performance benefited from our
emphasis upon bottom-up stock selection (as opposed to asset allocation among
markets) as the top ten performing names came from companies in five different
industries and five different countries. Again, technology-oriented companies,
especially in the area of telecommunications, provided exceptionally strong
performance. During this period, we saw the performance of some of our non-
technology names suffer because of the market's lack of interest here. As we
continued to believe in these companies' longer-term prospects, we added to
these positions. In the fourth quarter, given the dramatic strength
experienced in the year's previous quarters, we were not surprised to see a
correction in stock prices. We continued to focus on "new economy" investments
and believe we are strategically well placed for the long term. All in all, we
believe that the outlook for Asia will be quite positive for the foreseeable
future.
[GRAPH]
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Pacific Asia Fund+
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Average Annual Total Return Ended on 3/31/00*
-------------------------------------------------------
1 year 5 years Since Inception (12/31/92)
-------------------------------------------------------
Pacific/Asia Fund MSCI-AC Asia Pacific Index
12/31/92 10,000 10,000
3/31/93 10,771 11,700
3/31/94 14,876 14,760
3/31/95 14,000 15,280
3/31/96 16,911 16,060
3/31/97 15,623 13,360
3/31/98 11,317 11,120
3/31/99 11,899 12,054
3/31/00 21,422 17,496
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.
4
<PAGE>
EXCELSIOR FUNDS, INC. PAN EUROPEAN FUND
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For the twelve months ended March 31, 2000, the Fund realized a total return
of 42.77%*-more than double the performance of its benchmark, the MSCI Europe
Index which rose 18.50%** for the same period. European markets were relatively
flat during the first fiscal quarter, as economic conditions remained mixed.
The Fund declined for the three months due to underperformance in several
pharmaceutical and financial holdings, exposure to peripheral Europe and
deliberate underweighting in cyclical issues. Many of the best stocks were in
the technology and telecom sectors. This remained true for the fiscal second
quarter as well. European markets surged during the third quarter. The Fund
significantly outperformed its benchmark index for the quarter. This was
attributed in large part to significant weightings in several
technology/telecommunications holdings (Ericsson, Nokia, STMicroelectronics and
Mannesmann). Although we benefited from positive trends in technology and
telecommunications, we continued to employ risk control measures to ensure a
well-diversified portfolio. As we saw positive trends in a variety of areas in
Europe, we positioned the Fund with overweightings in the industrial and
consumer sectors. Though the overall market index was flat for the final
quarter, there was a marked divergence in the performance of "new" and "old
economy" stocks. While the "TMT" (technology, media, telecommunications) sector
led the market, the underperforming heavy industrials/cyclicals, defensives and
financial sectors offset these gains. Again the Fund substantially outperformed
its benchmark in the quarter. Looking ahead, we have positioned the Fund to
take advantage of developments in technology, with an emphasis on mobile
telephony, where we believe Europe leads the world. However, we continue to
also find exciting prospects in "old economy" sectors, and seek companies that
will utilize technology such as the Internet to increase growth and
profitability.
[GRAPH]
-------------------------------------------------------
Pan European Fund+
-------------------------------------------------------
Average Annual Total Return Ended on 3/31/00*
-------------------------------------------------------
1 year 5 years Since Inception (12/31/92)
-------------------------------------------------------
Pan European Fund MSCI-Europe Index
12/31/92 10,000 10,000
3/31/93 10,486 10,650
3/31/94 11,540 12,740
3/31/95 12,039 13,640
3/31/96 14,236 16,200
3/31/97 17,618 19,840
3/31/98 24,318 28,170
3/31/99 22,169 29,463
3/31/00 31,651 34,914
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.
5
<PAGE>
EXCELSIOR FUNDS, INC. LATIN AMERICA FUND
--------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 54.52%* versus 46.29%** for the MSCI EMF Latin American Index. In the first
fiscal quarter, the Fund held 33 securities and maintained its bottom-up stock-
picking style. Overall, country risk went down in Latin America, as some
countries experienced lower inflation rates. The Fund profited from renewed
interest in cyclical stocks. In a renewed commitment to industrial reform,
Brazilian authorities came through with long awaited tariff increases for
telephone and power companies. The Fund benefited through holdings in Copel-
powered generation and Telesp-the telephone operator in Sao Paolo. In the
fiscal second quarter, the Fund was negatively impacted due to its large
percentage of bank stocks, which suffered due to fears regarding currencies and
interest rates. The third fiscal quarter saw this situation reverse, however,
as bank stocks contributed meaningfully to performance. Media was another area
of significant overweight that contributed in the quarter. Telecommunications
were also a favored sector, along with the steel sector given strong world
economic growth prospects. In the fiscal fourth quarter, the cloud of
uncertainty that had plagued the region's markets through much of the year
finally lifted. Investment, both equity and direct, started to flow back.
Inflation rates were under control, and political uncertainties diminished. The
Fund benefited accordingly. Telecom exposure was the main driver of
performance. Internet potential also helped banks and retailers. The Fund
continues to maintain significant exposure to telecom, Internet, and media.
Internet users in Latin America are predicted to grow to 30 to 40 million in
the next 3 years from 6 million at present. At the corporate level, companies
should be able to lower costs and increase profits through rollout of the
Internet. Our outlook for the region going forward remains optimistic.
[GRAPH]
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Latin American Fund+
-------------------------------------------------------
Average Annual Total Return Ended on 3/31/00*
-------------------------------------------------------
1 year 5 years Since Inception (12/31/92)
-------------------------------------------------------
Latin MSCI-EMF Latin
America Fund America Index
12/31/92 10,000 10,000
3/31/93 10,171 10,480
3/31/94 13,452 16,230
3/31/95 9,353 11,390
3/31/96 11,965 14,210
3/31/97 15,368 19,030
3/31/98 17,527 21,770
3/31/99 9,257 15,908
3/31/00 14,304 23,272
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.
6
<PAGE>
EXCELSIOR FUNDS, INC. EMERGING MARKETS FUND
--------------------------------------------------------------------------------
For the twelve months ended March 31, 2000, the Fund realized a total return
of 82.77%* outpacing the MSCI EMF (Emerging Market Free) Index's return of
51.61%** and ranked 43 out of 183 funds, based on total return, in the Lipper
Emerging Markets Funds category*** for the same period. In the first fiscal
quarter, the Fund benefited from Asia's overall strong performance. Of the top
ten contributors to return, eight were in Asia. During the quarter, we reduced
our Latin America exposure and increased our Asian exposure, a move that would
ultimately prove to the Fund's benefit for the full year. From a sector
standpoint, telecommunication companies continued to dominate. However, as the
quarter was characterized by good performance in cyclical stocks, and
stabilization of problem areas, many quality telecommunication companies
lagged. Our long-term positive views remained undiminished, and this view was
validated in the ensuing quarters. In the second fiscal quarter, the Fund was
negatively impacted by underweight positions in Greece and India, which were
the top two performing countries in the quarter. Technology stocks in Taiwan
performed well. In the third fiscal quarter, Fund performance picked up
dramatically, largely due to our overweight in telecom stocks. In the final
quarter of the fiscal year, network equipment related stocks drove Fund
performance. Cellular companies also contributed to performance. India had two
of the top performing stocks we held (ICICI and Satyam Infoway). We expect the
Internet to continue to grow outside the US, and that emerging markets will
participate. While keeping an eye on valuations and fundamentals, the Fund will
continue to look at Internet-related ideas.
[GRAPH]
-------------------------------------------------------
Emerging Markets Fund+
-------------------------------------------------------
Average Annual Total Return Ended on 3/31/00*
-------------------------------------------------------
1 year Since Inception (1/2/98)
-------------------------------------------------------
82.77% 7.46%
-------------------------------------------------------
Emerging MSCI-EMF (Emerging
Markets Fund Markets Free) Index
1/2/98 10,000 10,000
3/31/98 9,986 10,620
9/30/98 5,360 6,328
3/31/99 5,879 8,396
9/30/99 6,183 9,906
3/31/00 10,745 12,729
Past performance is not predictive of future performance. Investment returns
and principal values will vary and shares may be worth more or less at
redemption than their original cost. International investing is subject to
special risks such as currency fluctuations and differences in accounting and
taxation standards.
The above illustration compares a $10,000 investment made in Emerging Markets
Fund and a broad-based index since 1/2/98 (inception date). For comparative
purposes, the value of the index on 12/31/97 is used as the beginning value on
1/2/98. All dividends and capital gain distributions are reinvested. The Fund's
performance takes into account fees and expenses. The index does not take into
account charges, fees and other expenses. Further information relating to Fund
performance is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
--------
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** Source: Morgan Stanley & Co., Incorporated -- Morgan Stanley Capital
International EMF (Emerging Markets Free) Index is a widely-accepted,
unmanaged index composed of a sample of companies representative of the
market structure of 26 global emerging market countries. The Index
includes dividends reinvested.
*** Source: Lipper Analytical Services, Inc.--Lipper is an independent mutual
fund performance monitor.
+ The Fund is currently waiving certain fees. Had the Fund not waived fees,
returns would have been lower. This voluntary waiver may be modified or
terminated at any time.
7
<PAGE>
Excelsior Funds, Inc.
Statements of Assets and Liabilities
March 31, 2000
<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............ $295,621,304 $68,898,940 $127,712,768 $16,985,745 $12,170,893
============ =========== ============ =========== ===========
Investments, at value
(Note 1).............. $460,555,034 $85,657,687 $188,381,081 $23,694,984 $17,246,664
Foreign currency (cost
$17,769, $45,856, $0,
$0, and $92,203,
respectively)......... 17,974 46,392 -- -- 93,266
Cash................... 13,768,945 2,436,653 627,380 -- 64,903
Dividends receivable... 295,492 75,648 131,356 97,383 24,179
Interest receivable.... 79,814 6,501 37,092 6,360 137
Receivable for
investments sold...... 1,542,064 1,393,916 1,749,535 -- --
Receivable for fund
shares sold........... 5,911 7,540 5,093,393 2,850 --
Receivable from fund
administrator......... -- 219,816 -- -- --
Withholding tax
receivable............ 57,619 -- 58,753 -- --
Prepaid expenses....... 8,642 2,283 3,553 483 253
Unamortized
organization costs
(Note 5).............. -- -- -- -- 21,568
------------ ----------- ------------ ----------- -----------
Total Assets.......... 476,331,495 89,846,436 196,082,143 23,802,060 17,450,970
LIABILITIES:
Payable for investments
purchased............. -- 913,475 387,476 -- 181,035
Payable for fund shares
redeemed.............. 590,721 1,377 11,486 39,650 --
Investment advisory
fees payable (Note 2). 321,240 68,524 157,303 22,635 8,827
Administration fees
payable (Note 2)...... 76,154 13,306 26,989 3,934 2,923
Administration
servicing fees payable
(Note 2).............. 66,601 11,268 15,496 3,222 1,794
Directors' fees payable
(Note 2).............. 1,518 212 950 111 83
Foreign taxes payable.. 800,279 279,980 -- -- 2,018
Net unrealized
depreciation on open
forward foreign
currency contracts.... 588,801 -- -- -- --
Due to custodian bank.. -- -- -- 4,586 --
Accrued expenses and
other payables........ 113,524 23,645 58,130 16,544 50,966
------------ ----------- ------------ ----------- -----------
Total Liabilities..... 2,558,838 1,311,787 657,830 90,682 247,646
------------ ----------- ------------ ----------- -----------
NET ASSETS.............. $473,772,657 $88,534,649 $195,424,313 $23,711,378 $17,203,324
============ =========== ============ =========== ===========
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ 85,542 $ (294,023) $ (1,751) $ (19,833) $ (4,244)
Accumulated net
realized gain (loss)
on investments and
foreign currency
translations.......... 1,576,217 (7,993,745) 14,087,695 (31,263,321) (2,602,682)
Unrealized appreciation
of investments and
foreign currency
translations.......... 163,543,829 16,480,425 60,667,429 6,710,744 5,076,864
Par value (Note 4)..... 23,665 7,443 12,241 3,294 2,341
Paid-in capital in
excess of par value... 308,543,404 80,334,549 120,658,699 48,280,494 14,731,045
------------ ----------- ------------ ----------- -----------
Total Net Assets........ $473,772,657 $88,534,649 $195,424,313 $23,711,378 $17,203,324
============ =========== ============ =========== ===========
Shares of Common Stock
Outstanding (Note 4)... 23,664,896 7,443,161 12,241,154 3,294,058 2,341,116
NET ASSET VALUE PER
SHARE.................. $20.02 $11.89 $15.96 $7.20 $7.35
====== ====== ====== ===== =====
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Excelsior Funds, Inc.
Statements of Operations
Year Ended March 31, 2000
<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.......... $ 2,724,083 $ 619,961 $ 1,906,334 $ 341,532 $ 92,095
Interest income.......... 623,104 106,238 160,535 40,400 15,226
Less: Foreign taxes
withheld................ (271,274) (38,502) (236,393) (9,716) (4,060)
------------ ----------- ----------- ---------- ----------
Total Income............ 3,075,913 687,697 1,830,476 372,216 103,261
EXPENSES:
Investment advisory fees
(Note 2)................ 2,899,227 634,421 1,499,973 176,241 119,303
Administration fees (Note
2)...................... 579,845 126,429 299,995 35,287 19,041
Custodian fees........... 434,940 95,639 224,996 27,397 14,281
Administrative servicing
fees (Note 2)........... 296,425 57,536 96,428 20,076 8,098
Shareholder servicing
agent fees.............. 47,883 36,337 68,876 32,687 10,489
Legal and audit fees..... 31,724 11,219 13,704 1,173 864
Shareholder reports...... 32,054 5,626 13,898 2,700 824
Registration and filing
fees.................... 17,082 30,890 14,333 11,380 8,918
Directors' fees and
expenses (Note 2)....... 5,928 1,247 2,990 177 207
Foreign taxes expense.... 31,132 44,009 122 8,157 3,593
Amortization of
organization costs
(Note 5)................ -- -- -- -- 7,854
Miscellaneous expenses... 31,395 8,940 12,687 2,059 4,017
------------ ----------- ----------- ---------- ----------
Total Expenses.......... 4,407,635 1,052,293 2,248,002 317,334 197,489
Fees waived and
reimbursed by investment
adviser and
administrators (Note 2). (296,425) (57,536) (96,428) (20,076) (36,469)
------------ ----------- ----------- ---------- ----------
Net Expenses............ 4,111,210 994,757 2,151,574 297,258 161,020
------------ ----------- ----------- ---------- ----------
NET INVESTMENT INCOME
(LOSS)................... (1,035,297) (307,060) (321,098) 74,958 (57,759)
------------ ----------- ----------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain (loss):
Security transactions
(net of foreign tax:
$29,691, $355,659, $0,
$0 and $0,
respectively).......... 13,938,276 21,767,519 21,150,870 (761,264) 36,607
Foreign currency
transactions........... (745,236) (395,186) 69,188 (39,729) (12,909)
------------ ----------- ----------- ---------- ----------
Total net realized gain
(loss).................. 13,193,040 21,372,333 21,220,058 (800,993) 23,698
Change in
unrealized appreciation/
depreciation of
investments and foreign
currency translations
during the year (net of
foreign tax on
unrealized appreciation:
$800,317, $279,980, $0,
$0 and $0,
respectively)........... 129,985,158 15,830,629 34,547,142 8,378,112 5,422,564
------------ ----------- ----------- ---------- ----------
Net realized and
unrealized gain on
investments.............. 143,178,198 37,202,962 55,767,200 7,577,119 5,446,262
------------ ----------- ----------- ---------- ----------
Net increase in net assets
resulting from
operations............... $142,142,901 $36,895,902 $55,446,102 $7,652,077 $5,388,503
============ =========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Excelsior Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Pan Emerging
International Pacific/Asia European Latin Markets
Fund Fund Fund America Fund Fund
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Year Ended March 31, 2000
Net investment income
(loss)................... $ (1,035,297) $ (307,060) $ (321,098) $ 74,958 $ (57,759)
Net realized gain (loss)
on investments and
foreign currency
transactions............. 13,193,040 21,372,333 21,220,058 (800,993) 23,698
Change in unrealized
appreciation/depreciation
of investments and
foreign currency
translations during the
year..................... 129,985,158 15,830,629 34,547,142 8,378,112 5,422,564
------------ ------------ ------------ ------------ -----------
Net increase in net assets
resulting from
operations............... 142,142,901 36,895,902 55,446,102 7,652,077 5,388,503
Distributions to
shareholders:
From net investment
income.................. -- -- -- (375,913) (39,421)
From net realized gain on
investments............. (752,504) -- (14,333,899) -- --
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 130,299,026 23,631,167 (3,523,690) 2,252,523 6,443,462
------------ ------------ ------------ ------------ -----------
Net increase in net
assets................... 271,689,423 60,527,069 37,588,513 9,528,687 11,792,544
NET ASSETS:
Beginning of year........ 202,083,234 28,007,580 157,835,800 14,182,691 5,410,780
------------ ------------ ------------ ------------ -----------
End of year (1).......... $473,772,657 $ 88,534,649 $195,424,313 $ 23,711,378 $17,203,324
============ ============ ============ ============ ===========
(1) Including
undistributed
(distributions in
excess of) net
investment income.... $ 85,542 $ (294,023) $ (1,751) $ (19,833) $ (4,244)
============ ============ ============ ============ ===========
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 (2).......... $202,083,234 $ 28,007,580 $157,835,800 $ 14,182,691 $ 5,410,780
============ ============ ============ ============ ===========
--------
(2) Including
undistributed
(distributions in
excess of) net
investment income.... $ (753,831) $ (634,725) $ (30,793) $ 127,537 $ 264
============ ============ ============ ============ ===========
</TABLE>
--------
See Notes to Financial Statements
10
<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 on
of Period (Loss) Investments Operations Income Income Investments
--------- ---------- -------------- ---------- ---------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL FUND -- (7/21/87*)
Year Ended March 31,
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) --
2000................... 12.52 (0.03) 7.57 7.54 -- -- (0.04)
PACIFIC/ASIA FUND -- (12/31/92*)
Year Ended March 31,
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) --
2000................... 6.61 0.02 5.26 5.28 -- -- --
PAN EUROPEAN FUND -- (12/31/92*)
Year Ended March 31,
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)
2000................... 12.39 (0.03) 4.90 4.87 -- -- (1.30)
LATIN AMERICA FUND -- (12/31/92*)
Year Ended March 31,
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) -- --
2000................... 4.77 0.03 2.53 2.56 (0.13) -- --
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) -- --
2000................... 4.04 (0.02) 3.35 3.33 (0.02) -- --
</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
11
<PAGE>
<TABLE>
<CAPTION>
Distributions Ratio Ratio
in Excess of Net of Gross Ratio of Net
of Net Net Assets, Operating Operating Investment
Realized Gain Net Asset End of Expenses Expenses Income (Loss) Portfolio Fee
on Total Value, End Total Period to Average to Average to Average Turnover Waivers
Investments Distributions of Period Return (000's) Net Assets Net Assets+ Net Assets Rate (Note 2)
------------- ------------- ---------- ------ ----------- ---------- ----------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- $(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
-- (0.04) 20.02 60.30 % 473,773 1.40% 1.51% (0.36)% 25% 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
-- -- 11.89 79.88 % 88,535 1.49% 1.58% (0.48)% 105% -- ++
-- $(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
-- (1.30) 15.96 42.77 % 195,424 1.43% 1.50% (0.21)% 46% 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
-- (0.13) 7.20 54.52 % 23,711 1.64% 1.75% 0.42 % 69% 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
-- (0.02) 7.35 82.77 % 17,203 1.65% 2.03% (0.60)% 57% 0.01
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
International Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- 96.87%
AUSTRALIA -- 0.92%
171,926 Brambles Industries Ltd............................... $ 4,365,429
------------
CANADA -- 6.45%
168,400 Bombardier Inc., Class B.............................. 4,223,325
288,300 +CGI Group, Inc....................................... 4,046,594
72,000 +JDS Uniphase Corp.................................... 8,676,000
85,950 Nortel Networks Corp.................................. 10,768,883
41,000 +Sierra Wireless, Inc................................. 2,825,203
------------
30,540,005
------------
CHILE -- 0.33%
40,280 Vina Concha Y Toro S.A. ADR........................... 1,550,780
------------
EGYPT -- 0.51%
49,800 Egyptian Company for Mobile Services (MobiNil)........ 2,413,664
------------
FINLAND -- 2.60%
39,900 Nokia Oyj............................................. 8,440,524
56,700 Sonera Oyj............................................ 3,869,696
------------
12,310,220
------------
FRANCE -- 10.37%
70,642 Axa................................................... 10,014,339
30,594 Carrefour S.A......................................... 3,921,219
88,130 Dassault Systemes S.A................................. 8,317,732
4,100 L'OREAL............................................... 2,649,061
93,051 Total Fina S.A., Class B.............................. 13,939,257
89,200 Vivendi............................................... 10,288,597
------------
49,130,205
------------
GERMANY -- 8.43%
18,800 Allianz AG............................................ 7,747,030
40,300 +Consors Discount Broker AG........................... 5,439,117
69,100 Deutsche Telekom AG................................... 5,337,721
15,819 SAP AG................................................ 9,009,491
87,925 Siemens AG............................................ 12,413,911
------------
39,947,270
------------
HONG KONG -- 4.60%
38,200 +China Telecom (Hong Kong) Ltd. ADR................... 6,770,950
4,518,720 Hengan International Group Co., Ltd................... 1,044,589
758,900 Johnson Electric Holdings Ltd......................... 5,189,935
1,900,000 Li & Fung Ltd......................................... 8,808,836
------------
21,814,310
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
INDIA -- 1.34%
174,000 Housing Development Finance Corp., Ltd................ $ 1,523,849
47,300 +Satyam Computer Services Ltd......................... 4,810,046
------------
6,333,895
------------
IRELAND -- 0.61%
318,800 Irish Life & Permanent plc............................ 2,898,986
------------
ISRAEL -- 0.80%
32,500 +Gilat Satellite Networks Ltd......................... 3,810,625
------------
ITALY -- 1.05%
1,253,700 Unicredito Italiano S.p.A............................. 4,992,191
------------
JAPAN -- 21.32%
552 DDI Corp.............................................. 4,512,599
46,900 Don Quijote Co., Ltd.................................. 8,088,571
1,203,000 Furukawa Electric Co., Ltd............................ 20,219,965
34,600 Kyocera Corp.......................................... 5,785,209
43,400 NIDEC Corp............................................ 3,932,768
45,000 Nintendo Co., Ltd..................................... 7,914,352
825 NTT Data Corp......................................... 15,514,469
17,900 Rohm Co., Ltd......................................... 6,226,542
115,000 Sony Corp............................................. 16,247,686
101,200 Tokyo Seimitsu Co., Ltd............................... 12,552,626
------------
100,994,787
------------
NETHERLANDS -- 5.33%
61,400 +Equant N.V........................................... 5,095,558
131,575 ING Groep N.V......................................... 7,128,433
63,688 STMicroelectronics N.V................................ 11,704,775
57,664 Wolters Kluwer N.V.................................... 1,324,708
------------
25,253,474
------------
PORTUGAL -- 0.65%
574,385 Banco Comercial Portugues S.A......................... 3,084,396
------------
SINGAPORE -- 5.35%
2,335,292 Datacraft Asia Ltd.................................... 21,834,980
539,000 Natsteel Electronics Ltd.............................. 3,527,199
------------
25,362,179
------------
SOUTH KOREA -- 1.75%
127,368 S1 Corp............................................... 1,947,976
21,000 Samsung Electronics................................... 6,366,516
------------
8,314,492
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
International Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
SPAIN -- 2.27%
439,295 Banco Bilbao Vizcaya Argentaria S.A................... $ 6,458,798
169,200 +Telefonica S.A....................................... 4,275,713
------------
10,734,511
------------
SWEDEN -- 4.15%
223,500 Telefonaktiebolaget LM Ericsson, Class B.............. 19,663,440
------------
SWITZERLAND -- 1.88%
78 Lindt & Spruengli AG.................................. 1,993,745
635 Roche Holding AG...................................... 6,897,276
------------
8,891,021
------------
TAIWAN -- 1.00%
699,000 +Taiwan Semiconductor Manufacturing Co................ 4,716,754
------------
THAILAND -- 1.39%
2,034,912 Banpu Public Co., Ltd. (Registered)................... 1,305,466
630,400 BEC World Public Co., Ltd. (Foreign).................. 4,702,984
425,900 Dhipaya Insurance Public Co., Ltd..................... 563,360
------------
6,571,810
------------
UNITED KINGDOM -- 13.77%
964,954 Airtours plc.......................................... 5,169,314
21,200 +Baltimore Technologies plc........................... 2,900,368
199,900 Glaxo Wellcome plc.................................... 5,708,158
621,889 Granada Group plc..................................... 6,653,097
1,679,416 Invensys plc.......................................... 7,440,501
310,509 Kingfisher plc........................................ 2,543,901
186,300 Serco Group plc....................................... 8,076,033
35,500 Shell Transport & Trading Co. ADR..................... 1,741,719
1,004,995 Shell Transport & Trading Co. plc..................... 8,313,539
3,013,091 Vodafone AirTouch plc................................. 16,704,510
------------
65,251,140
------------
TOTAL COMMON STOCKS (Cost $293,304,880)............... 458,945,584
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Warrants (Note 1)
-------- ------------
<C> <S> <C>
WARRANTS -- 0.34%
PHILIPPINES -- 0.31%
5,549,700 +QueenBee Restaurants -- Jollibee Foods Corp.,
expiring 03/24/03.................................... $ 1,453,332
------------
THAILAND -- 0.03%
1,017,456 +Banpu Public Co., Ltd., expiring 01/14/03........... 156,118
------------
TOTAL WARRANTS
(Cost $2,316,424).................................... 1,609,450
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $295,621,304*)....................................... 97.21% $460,555,034
OTHER ASSETS & LIABILITIES (NET)........................... 2.79 13,217,623
------ ------------
NET ASSETS................................................. 100.00% $473,772,657
====== ============
</TABLE>
--------
* -- For Federal inome tax purposes, the tax basis of investments aggregates
$296,139,718.
+ -- Non-income producing
ADR -- American Depositary Receipt
See Notes to Financial Statements
14
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
International Fund -- (continued)
FORWARD FOREIGN CURRENCY CONTRACTS
Under the terms of forward foreign currency contracts open at 3/31/00, the
International Fund is obligated to deliver currency in exchange for U.S.
dollars as indicated below:
<TABLE>
<CAPTION>
Currency In
to Exchange Settlement Net Unrealized
Deliver for Date Value (Depreciation)
----------------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Sales...... JPY 1,171,000,000 $11,085,866 8/8/00 $11,674,667 $(588,801)
</TABLE>
--------
JPY -- Japanese Yen
At March 31, 2000, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification (Unaudited) Assets Value
---------------------------------- ------ ------------
<S> <C> <C>
Information Technology.................................. 23.25% $110,148,741
Industrials............................................. 13.07 61,929,099
Consumer Discretionary.................................. 11.94 56,565,833
Financials.............................................. 10.52 49,850,500
Technology Hardware & Equipment......................... 9.59 45,419,866
Energy.................................................. 6.92 32,803,351
Telecommunication Services.............................. 5.67 26,853,772
Consumer Staples........................................ 5.36 25,396,017
Utilities............................................... 3.30 15,626,317
Health Care............................................. 2.66 12,605,433
Technology.............................................. 2.65 12,555,272
Telecommunications...................................... 1.43 6,770,950
Consumer Cyclical....................................... 0.54 2,568,299
Materials............................................... 0.31 1,461,584
------ ------------
Total Investments....................................... 97.21% $460,555,034
Other Assets and Liabilities (Net)...................... 2.79 13,217,623
------ ------------
Net Assets.............................................. 100.00% $473,772,657
====== ============
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Pacific/Asia Fund
<TABLE>
<CAPTION>
Value (Note
Shares 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- 95.29%
AUSTRALIA -- 0.58%
20,362 Brambles Industries Ltd................................ $ 517,018
-----------
HONG KONG -- 15.62%
490,300 Asia Satellite Telecommunications Holdings Ltd......... 1,920,523
2,475,000 Cafe de Coral Holdings Ltd............................. 794,645
17,250 +China Telecom (Hong Kong) Ltd. ADR.................... 3,057,563
3,265,000 Hengan International Group Co., Ltd.................... 754,768
1,041,000 +i-CABLE Communications Ltd. .......................... 788,788
145,200 Johnson Electric Holdings Ltd.......................... 992,988
355,000 Li & Fung Ltd.......................................... 1,645,861
7,356,000 +Quality Healthcare Asia Ltd........................... 3,188,403
4,272,000 Yanzhou Coal Mining Co., Ltd........................... 685,802
-----------
13,829,341
-----------
INDIA -- 6.27%
56,000 Hero Honda Motors Ltd. ................................ 1,247,302
24,500 Hindustan Lever Ltd.................................... 1,372,675
75,000 Housing Development Finance Corp., Ltd................. 656,831
22,400 Satyam Computer Services Ltd........................... 2,277,908
-----------
5,554,716
-----------
INDONESIA -- 2.22%
3,350,000 PT Ramayana Lestari Sentosa Tbk........................ 1,962,111
-----------
JAPAN -- 30.76%
13,000 AFLAC, Inc. ........................................... 592,312
63,800 Arisawa Mfg. Co., Ltd. ................................ 1,417,363
144 DDI Corp............................................... 1,177,200
7,300 Don Quijote Co., Ltd. ................................. 1,258,989
125,600 Furukawa Electric Co., Ltd. ........................... 2,111,079
9,000 Kyocera Corp. ......................................... 1,504,823
9,800 NIDEC Corp. ........................................... 888,044
9,700 Nintendo Co., Ltd. .................................... 1,705,983
121 NTT Data Corp.......................................... 2,275,456
21 NTT Mobile Communication Network, Inc. ................ 861,444
7,100 Rohm Co., Ltd. ........................................ 2,469,746
8,300 Ryohin Keikaku Co., Ltd. .............................. 1,504,239
2,400 Softbank Corp.......................................... 2,139,725
24,000 Sony Corp.............................................. 3,390,821
31,300 Terumo Corp. .......................................... 939,335
</TABLE>
<TABLE>
<CAPTION>
Value (Note
Shares 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
JAPAN -- (continued)
20,000 Tokyo Seimitsu Co., Ltd................................ $ 2,480,756
111,000 Yachiyo Industry Co., Ltd.............................. 519,146
-----------
27,236,461
-----------
NEW ZEALAND -- 2.03%
185,000 Baycorp Holdings Ltd................................... 1,008,344
1,258,179 Restaurant Brands New Zealand Ltd...................... 785,521
-----------
1,793,865
-----------
PHILIPPINES -- 1.15%
722,000 +ABS-CBN Broadcasting Corp. PDR........................ 1,020,122
-----------
SINGAPORE -- 8.98%
298,129 Datacraft Asia Ltd..................................... 2,787,506
1,468,000 +Del Monte Pacific Ltd................................. 458,884
367,200 Natsteel Electronics Ltd............................... 2,402,945
905,300 Singapore Bus Services Ltd. ........................... 999,718
27,050 +St Assembly Test Services Ltd. ADR.................... 1,301,781
-----------
7,950,834
-----------
SOUTH KOREA -- 10.57%
5,884 Dacom Corp. ........................................... 1,602,791
84,809 Dae Duck Electronics Co................................ 959,380
57,600 Haansoft, Inc.......................................... 1,355,294
7,254 Hankook Tire Co., Ltd.................................. 15,229
26,700 Hankuk Electric Glass Co., Ltd......................... 727,303
10,600 Korea Telecom Corp..................................... 940,090
57,896 S1 Corp................................................ 885,462
6,600 Samsung Electronics.................................... 2,000,905
125,000 Shin Sung ENG.......................................... 871,041
-----------
9,357,495
-----------
TAIWAN -- 13.39%
174,000 Asustek Computer, Inc.................................. 2,182,159
1,229,000 CTCI Corp.............................................. 1,084,174
10,455 +GigaMedia Ltd. ....................................... 569,797
237,000 +Hon Hai Precision Industry Co., Ltd................... 2,753,818
401,720 President Chain Store Corp............................. 1,877,691
27,000 ++Synnex Technology International Corp. GDR............ 855,341
375,000 +Taiwan Semiconductor Manufacturing Co. ............... 2,530,448
-----------
11,853,428
-----------
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Pacific/Asia Fund -- (continued)
<TABLE>
<CAPTION>
Value (Note
Shares 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
THAILAND -- 3.72%
1,562,868 Banpu Public Co., Ltd.
(Registered).......................................... $ 1,002,634
258,500 BEC World Public Co., Ltd. (Foreign).................. 1,928,492
211,300 Matichon Public Co., Ltd.
(Foreign)............................................. 363,346
-----------
3,294,472
-----------
TOTAL COMMON STOCKS
(Cost $67,105,615).................................... 84,369,863
-----------
<CAPTION>
No. of
Warrants
---------
<C> <S> <C>
WARRANTS -- 0.91%
PHILIPPINES -- 0.83%
2,804,100 +QueenBee Restaurants -- Jollibee Foods Corp.,
expiring 03/24/03..................................... 734,326
-----------
THAILAND -- 0.08%
452,934 +Banpu Public Co., Ltd., expiring 01/14/03............ 69,498
-----------
TOTAL WARRANTS
(Cost $1,309,325)..................................... 803,824
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value (Note
Amount 1)
---------- -----------
<C> <S> <C>
DEMAND NOTES -- 0.55%
UNITED STATES -- 0.55%
$200,000 Associates Corp. of North America Master Notes........ $ 200,000
284,000 General Electric Co. Promissory Notes................. 284,000
-----------
TOTAL DEMAND NOTES
(Cost $484,000)....................................... 484,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $68,898,940*)........................................ 96.75% $85,657,687
OTHER ASSETS & LIABILITIES (NET)........................... 3.25 2,876,962
------ -----------
NET ASSETS................................................. 100.00% $88,534,649
====== ===========
</TABLE>
--------
* --For Federal inome tax purposes, the tax basis of investments aggregates
$69,311,643.
+ --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,
2000 these securities amounted to $855,341 or 0.97% of net assets.
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
PDR--Philippine Depositary Receipt
At March 31, 2000, sector diversification of the Fund's investment
portfolio was as follows:
<TABLE>
<CAPTION>
Market
Sector Diversification (Unaudited) % of Net Assets Value
---------------------------------- --------------- -----------
<S> <C> <C>
Information Technology........................... 26.14% $23,147,621
Consumer Discretionary........................... 18.83 16,671,522
Technology....................................... 9.73 8,619,900
Consumer Staples................................. 9.71 8,594,236
Consumer Cyclical................................ 8.78 7,770,912
Telecommunication Services....................... 6.59 5,837,553
Industrials...................................... 5.22 4,620,802
Financials....................................... 4.97 4,397,213
Capital Goods.................................... 2.21 1,955,215
Materials........................................ 1.99 1,757,934
Health Care...................................... 1.06 939,335
Utilities........................................ 0.97 861,444
Demand Notes..................................... 0.55 484,000
------ -----------
Total Investments................................ 96.75% $85,657,687
Other Assets and Liabilities (Net)............... 3.25 2,876,962
------ -----------
Net Assets....................................... 100.00% $88,534,649
====== ===========
</TABLE>
See Notes to Financial Statements
17
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Pan European Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ------------
<C> <S> <C>
COMMON STOCKS -- 96.40%
CROATIA -- 1.08%
103,850 ++Pliva d.d. GDR........................................ $ 1,538,538
36,900 Pliva d.d. GDR (Registered)............................. 565,492
------------
2,104,030
------------
FINLAND -- 4.43%
33,630 Nokia Oyj............................................... 7,114,156
22,600 Sonera Oyj.............................................. 1,542,419
------------
8,656,575
------------
FRANCE -- 16.54%
38,959 Axa..................................................... 5,522,899
27,148 Carrefour S.A........................................... 3,479,547
45,780 Dassault Systemes S.A................................... 4,320,728
5,020 L'OREAL................................................. 3,243,484
49,637 Total Fina S.A., Class B................................ 7,435,739
72,200 +Vivendi................................................ 8,327,765
------------
32,330,162
------------
GERMANY -- 16.83%
17,880 Allianz AG.............................................. 7,367,920
37,000 +Consors Discount Broker AG............................. 4,993,730
52,520 Deutsche Telekom AG..................................... 4,056,977
57,320 +Global TeleSystems Group, Inc.......................... 1,175,060
45,900 +Infineon Technologies AG ADR........................... 2,636,381
9,380 SAP AG.................................................. 5,342,248
51,830 Siemens AG.............................................. 7,317,749
------------
32,890,065
------------
IRELAND -- 1.88%
138,236 Irish Continental Group plc............................. 1,587,840
229,300 Irish Life & Permanent plc.............................. 2,085,124
------------
3,672,964
------------
ITALY -- 1.76%
1,950 +I.Net S.p.A............................................ 328,512
780,200 Unicredito Italiano S.p.A............................... 3,106,730
------------
3,435,242
------------
NETHERLANDS -- 5.44%
36,300 +Equant N.V............................................. 3,012,520
35,810 +STMicroelectronics N.V................................. 6,581,271
45,476 Wolters Kluwer N.V...................................... 1,044,715
------------
10,638,506
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- ------------
<C> <S> <C>
COMMON STOCKS -- (continued)
POLAND -- 1.83%
246,456 +Elektrim Spolka Akcyjna S.A........................ $ 3,583,077
------------
PORTUGAL -- 1.62%
587,670 Banco Comercial Portugues S.A....................... 3,155,736
------------
SPAIN -- 5.31%
333,800 Banco Bilbao Vizcaya Argentaria S.A................. 4,907,743
216,040 +Telefonica S.A..................................... 5,459,367
------------
10,367,110
------------
SWEDEN -- 5.34%
118,690 +Telefonaktiebolaget LM Ericsson, Class B........... 10,442,299
------------
SWITZERLAND -- 5.78%
11,070 +Logitech International S.A......................... 6,997,396
396 Roche Holding AG.................................... 4,301,293
------------
11,298,689
------------
TURKEY -- 1.58%
79,893,434 +Medya Holding...................................... 1,391,399
111,375,838 Turk Sise ve Cam Fabrikalari A.S.................... 1,684,215
------------
3,075,614
------------
UNITED KINGDOM -- 26.98%
640,150 Airtours plc........................................ 3,429,320
6,700 +Baltimore Technologies plc......................... 916,626
306,600 Capita Group plc.................................... 7,818,517
122,600 Glaxo Wellcome plc.................................. 3,500,851
470,331 Granada Group plc................................... 5,031,699
1,048,613 Invensys plc........................................ 4,645,786
260,729 Kingfisher plc...................................... 2,136,069
210,800 +Kingston Communication (Hull) plc.................. 3,366,844
160,500 Serco Group plc..................................... 6,957,613
35,600 Shell Transport & Trading Co. ADR................... 1,746,625
478,585 Shell Transport & Trading Co. plc................... 3,958,960
1,663,445 Vodafone AirTouch plc............................... 9,222,102
------------
52,731,012
------------
TOTAL COMMON STOCKS (Cost $127,712,768)............. 188,381,081
------------
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Pan European Fund -- (continued)
<TABLE>
<CAPTION>
Value
(Note 1)
------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $127,712,768*)...................................... 96.40% $188,381,081
OTHER ASSETS & LIABILITIES (NET).......................... 3.60 7,043,232
------ ------------
NET ASSETS................................................ 100.00% $195,424,313
====== ============
</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,
2000 these securities amounted to $1,538,538 or 0.79% of net assets.
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
At March 31, 2000, sector diversification of the Fund's investment portfolio
was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification (Unaudited) Assets Value
---------------------------------- ------ ------------
<S> <C> <C>
Information Technology.................................. 17.30% $ 33,800,702
Industrials............................................. 16.33 31,910,581
Financials.............................................. 15.93 31,139,883
Utilities............................................... 9.77 19,092,287
Consumer Discretionary.................................. 9.31 18,196,963
Energy.................................................. 6.73 13,141,324
Telecommunication Services.............................. 6.66 13,013,792
Health Care............................................. 5.07 9,906,174
Technology.............................................. 4.06 7,938,495
Consumer Cyclical....................................... 3.58 6,997,396
Consumer Staples........................................ 1.66 3,243,484
------ ------------
Total Investments....................................... 96.40% $188,381,081
Other Assets and Liabilities (Net)...................... 3.60 7,043,232
------ ------------
Net Assets.............................................. 100.00% $195,424,313
====== ============
</TABLE>
See Notes to Financial Statements
19
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Latin America Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- -----------
<C> <S> <C>
COMMON STOCKS -- 72.65%
ARGENTINA -- 5.60%
21,833 Banco de Galicia y Buenos Aires S.A. de C.V. ADR.... $ 442,118
18,578 +PC Holdings S.A. ADR............................... 318,148
14,500 Telefonica de Argentina S.A ADR..................... 569,125
-----------
1,329,391
-----------
BRAZIL -- 19.93%
17,800 Cia Vale do Rio Doce................................ 408,960
17,338,500 Companhia Siderurgica Nacional...................... 613,470
234,051,900 Tele Celular Sul Participacoes S.A. ................ 786,447
93,900 Tele Centro Oeste Celular Participacoes S.A. ADR.... 1,091,587
11,700 Telemig Celular Participacoes S.A. ADR.............. 1,036,181
20,000 Ultrapar Participacoes S.A. ADR..................... 220,000
17,910 Unibanco -- Uniao de Bancos Brasileiros GDR......... 568,643
-----------
4,725,288
-----------
CHILE -- 3.81%
17,129 Cia de Telecomunicaciones de Chile S.A. ADR......... 389,685
13,346 Vina Concha Y Toro S.A. ADR......................... 513,821
-----------
903,506
-----------
MEXICO -- 38.01%
12,256 +Cemex S.A., CPO.................................... 277,292
315,200 +Cifra S.A. de C.V., Series V....................... 746,839
15,098 Fomento Economico Mexicano S.A. de C.V. ADR......... 679,410
231,200 Grupo Continental S.A. ............................. 286,354
577,600 +Grupo Elektra S.A. de C.V. CPO..................... 735,297
250,200 +Grupo Financiero Banamex Accival S.A. de C.V.,
Class O............................................. 1,145,234
19,400 Grupo Imsa S.A. de C.V. ADR......................... 248,563
359,000 +Grupo Televisa S.A. CPO............................ 1,231,465
101,300 +Organizacion Soriana S.A. de C.V., Series B........ 467,496
47,690 Telefonos de Mexico S.A. ADR, Class L............... 3,195,230
-----------
9,013,180
-----------
PERU -- 1.53%
33,500 Credicorp Ltd. ..................................... 362,219
-----------
UNITED STATES -- 2.23%
17,600 +StarMedia Network, Inc............................. 528,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
----------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
VENEZUELA -- 1.54%
12,600 Compania Anonima Nacional Telefonos de Venezuela
ADR................................................. $ 365,400
-----------
TOTAL COMMON STOCKS
(Cost $12,035,777).................................. 17,226,984
-----------
PREFERRED STOCKS -- 21.61%
BRAZIL -- 21.61%
9,687,800 +Banco do Estado de Sao Paulo S.A. ................. 391,185
29,500,000 Eletrobras S.A. .................................... 564,245
6,500,000 Eletropaulo Metropolitana........................... 487,967
20,258,200 Gerdau S.A.......................................... 529,436
4,373,800 Petrobras S.A....................................... 1,185,775
28,610,000 Tele Celular Sul Participacoes S.A.................. 146,254
34,998,500 Tele Centro Sul Participacoes S.A................... 570,510
17,398,200 Tele Norte Leste Participacoes S.A.................. 466,683
26,555,200 Telesp Participacoes S.A............................ 780,945
-----------
TOTAL PREFERRED STOCKS
(Cost $3,604,968)................................... 5,123,000
-----------
<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 -- 5.67%
UNITED STATES -- 5.67%
700,000 Associates Corp. of North America Master Notes...... 700,000
645,000 General Electric Co. Promissory Notes............... 645,000
-----------
TOTAL DEMAND NOTES
(Cost $1,345,000)................................... 1,345,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $16,985,745*)........................................ 99.93% $23,694,984
OTHER ASSETS & LIABILITIES (NET)........................... 0.07 16,394
------ -----------
NET ASSETS................................................. 100.00% $23,711,378
====== ===========
</TABLE>
--------
* -- For Federal inome tax purposes, the tax basis of investments aggregates
$17,450,823.
+ -- Non-income producing
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
See Notes to Financial Statements
20
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Latin America Fund -- (continued)
See Notes to Financial Statements
At March 31, 2000, sector diversification of the Fund's investment portfolio
was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification (Unaudited) Assets Value
---------------------------------- ------ -----------
<S> <C> <C>
Telecommunication Services............................... 39.63% $ 9,398,049
Consumer Discretionary................................... 13.42 3,181,097
Financials............................................... 12.27 2,909,398
Materials................................................ 8.76 2,077,721
Consumer Staples......................................... 6.24 1,479,585
Energy................................................... 5.93 1,405,775
Demand Notes............................................. 5.67 1,345,000
Utilities................................................ 4.44 1,052,211
Technology............................................... 3.57 846,148
------ -----------
Total Investments........................................ 99.93% $23,694,984
Other Assets and Liabilities (Net)....................... 0.07 16,394
------ -----------
Net Assets............................................... 100.00% $23,711,378
====== ===========
</TABLE>
21
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Emerging Markets Fund
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- 92.35%
ARGENTINA -- 3.78%
15,000 +IMPSAT Fiber Networks, Inc............................ $ 420,000
5,870 Telefonica de Argentina S.A. ADR....................... 230,397
-----------
650,397
-----------
BRAZIL -- 9.64%
25,641 Globo Cabo S.A. ADR.................................... 477,564
52,100 Tele Centro Oeste Celular Participacoes S.A. ADR....... 605,662
6,500 Telemig Celular Participacoes S.A. ADR................. 575,656
-----------
1,658,882
-----------
CHILE -- 1.97%
6,610 Cia de Telecomunicaciones de Chile S.A. ADR............ 150,378
4,896 Vina Concha Y Toro S.A. ADR............................ 188,496
-----------
338,874
-----------
EGYPT -- 2.08%
7,400 Egyptian Company for Mobile Services (MobiNil)......... 358,657
-----------
GREECE -- 2.50%
2,800 Alpha Credit Bank S.A.................................. 188,970
8,470 Hellenic Telecommunications Organization S.A........... 241,089
-----------
430,059
-----------
HONG KONG -- 8.60%
103,500 Asia Satellite Telecommunications Holdings Ltd. ....... 405,413
1,300,000 +China Star Entertainment Ltd.......................... 115,199
2,550 +China Telecom (Hong Kong) Ltd. ADR.................... 451,988
3,900 +China.com Corp., Class A.............................. 314,925
502,000 +Next Media Ltd........................................ 191,800
-----------
1,479,325
-----------
HUNGARY -- 1.12%
4,325 Magyar Tavkozlesi Rt. ADR.............................. 193,003
-----------
INDIA -- 6.62%
13,600 +ICICI Ltd. ADR........................................ 306,000
5,336 +Satyam Infoway Ltd. ADR............................... 285,809
32,200 +The India Fund, Inc................................... 547,400
-----------
1,139,209
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
INDONESIA -- 1.89%
34,300 PT Telekomunikasi Indonesia ADR....................... $ 325,850
-----------
ISRAEL -- 5.89%
16,800 +Jacada Ltd........................................... 243,600
16,600 +Magic Software Enterprises Ltd....................... 313,325
6,800 +Orckit Communications Ltd. .......................... 455,600
-----------
1,012,525
-----------
MEXICO -- 9.21%
141,300 +Cifra S.A. de C.V., Series V......................... 334,798
80,300 +Grupo Financiero Banamex Accival S.A. de C.V., Class
O..................................................... 367,555
6,950 +Grupo Televisa S.A. GDR.............................. 472,600
6,100 Telefonos de Mexico S.A., Class L, ADR................ 408,700
-----------
1,583,653
-----------
POLAND -- 2.61%
7,100 Softbank S.A.......................................... 449,019
-----------
RUSSIA -- 2.48%
10,100 +Vimpel-Communications ADR............................ 427,356
-----------
SOUTH AFRICA -- 4.63%
816 Edgars Stores Ltd. ................................... 8,832
513 Metro Cash & Carry Ltd. .............................. 444
17,820 Nedcor Ltd............................................ 363,289
179,000 +Old Mutual plc....................................... 423,275
-----------
795,840
-----------
SOUTH KOREA -- 11.75%
7,300 +Haansoft, Inc. ...................................... 171,765
11,600 Hankuk Electric Glass Co., Ltd. ...................... 315,982
7,438 Korea Telecom Corp. ADR............................... 325,412
17,700 LG Cable Ltd.......................................... 270,706
1,600 Samsung Electronics................................... 485,068
11,585 SK Telecom Co., Ltd. ADR.............................. 451,815
-----------
2,020,748
-----------
TAIWAN -- 11.95%
39,200 +Hon Hai Precision Industry Co., Ltd. ................ 455,484
80,080 President Chain Store Corp............................ 374,304
37,000 +Ritek, Inc........................................... 341,014
52,000 Synnex Technology International Corp.................. 412,508
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Emerging Markets Fund -- (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
--------- -----------
<C> <S> <C>
COMMON STOCKS -- (continued)
TAIWAN -- (continued)
70,000 +Taiwan Semiconductor Manufacturing Co................. $ 472,350
-----------
2,055,660
-----------
THAILAND -- 1.99%
45,900 BEC World Public Co., Ltd. (Foreign)................... 342,429
-----------
TURKEY -- 1.86%
87,630 ++Akbank T.A.S. ADR.................................... 319,850
-----------
UNITED STATES -- 1.78%
10,200 +StarMedia Network, Inc................................ 306,000
-----------
TOTAL COMMON STOCKS
(Cost $10,922,429)..................................... 15,887,336
-----------
PREFERRED STOCKS -- 3.04%
BRAZIL -- 3.04%
5,729,000 +Banco do Estado de Sao Paulo S.A...................... 231,332
9,895,000 Telesp Participacoes S.A. ............................. 290,996
-----------
TOTAL PREFERRED STOCKS
(Cost $411,464)........................................ 522,328
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
--------- -----------
<C> <S> <C>
REPURCHASE AGREEMENT -- 4.86%
UNITED STATES -- 4.86%
$837,000 Agreement with Chase Securities, Inc. Government
Dealership 5.90%, dated 03/31/00, due 04/03/00, to be
repurchased at $837,412 collateralized by $855,000
Federal Home Loan Bank Notes 7.10%, due 03/01/02,
valued at $859,973
(Cost $837,000)....................................... $ 837,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $12,170,893*)........................................ 100.25% $17,246,664
OTHER ASSETS & LIABILITIES (NET)........................... (0.25) (43,340)
------ -----------
NET ASSETS................................................. 100.00% $17,203,324
====== ===========
</TABLE>
--------
* -- For Federal income tax purposes, the tax basis of investments aggregates
$12,207,010.
+ -- 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,
2000 these securities amounted to $319,850 or 1.86% of net assets.
ADR-- American Depositary Receipt
GDR-- Global Depositary Receipt
At March 31, 2000, sector diversification of the Fund's investment portfolio
was as follows:
<TABLE>
<CAPTION>
% of
Net Market
Sector Diversification (Unaudited) Assets Value
---------------------------------- ------ -----------
<S> <C> <C>
Telecommunication Services............................... 26.48% $ 4,555,454
Information Technology................................... 20.11 3,458,719
Financials............................................... 12.79 2,200,270
Technology............................................... 7.25 1,247,748
Consumer Discretionary................................... 7.15 1,229,274
Consumer Staples......................................... 5.89 1,013,241
Utilities................................................ 5.24 901,506
Repurchase Agreements.................................... 4.86 837,000
Consumer Cyclical........................................ 4.61 793,546
Mutual Fund.............................................. 3.18 547,400
Industrials.............................................. 1.57 270,706
Capital Goods............................................ 1.12 191,800
------ -----------
Total Investments........................................ 100.25% $17,246,664
Other Assets and Liabilities (Net)....................... (0.25) (43,340)
------ -----------
Net Assets............................................... 100.00% $17,203,324
====== ===========
</TABLE>
See Notes to Financial Statements
23
<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
24
<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.
25
<PAGE>
(e) Taxes:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
Net realized and unrealized gains of the Portfolios derived in some
countries are subject to certain non-U.S. taxes.
At March 31, 2000, the following Portfolios had approximate capital loss
carryforwards for Federal tax purposes available to offset future net
capital gains through the indicated expiration dates:
<TABLE>
<CAPTION>
Expiration Date
March 31,
-----------------------
2007 2008 Total
----------- ----------- -----------
<S> <C> <C> <C>
International Fund....................... -- -- --
Pacific/Asia Fund........................ $ 7,805,000 -- $ 7,805,000
Pan European Fund........................ -- -- --
Latin America Fund....................... 13,841,000 $16,461,000 30,302,000
Emerging Markets Fund.................... 303,000 1,975,000 2,278,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gains
distributions will be made. During the year ended March 31, 2000,
International Fund and Pacific/Asia Fund utilized capital loss
carryforwards for Federal Tax purposes totaling approximately $2,133,000
and $18,199,000, respectively.
Post-October losses are deemed to arise on the first business day of a
Portfolio's next taxable year. Pacific/Asia Fund, Latin America Fund and
Emerging Markets Fund incurred, and expect to defer, net currency losses of
approximately $61,000, $20,000 and $4,000, respectively, for the year ended
March 31, 2000. In addition, Latin America Fund and Emerging Markets Fund
incurred, and expect to defer, net capital losses of approximately $496,000
and $289,000, respectively, for the year ended March 31, 2000.
At March 31, 2000, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities for which there
was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
Tax Basis Tax Basis Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) Appreciation
------------ -------------- ------------
<S> <C> <C> <C>
International Fund.................. $175,403,535 $(10,988,219) $164,415,316
Pacific/Asia Fund................... 22,379,429 (6,033,385) 16,346,044
Pan European Fund................... 68,429,338 (7,761,025) 60,668,313
Latin America Fund.................. 6,845,623 (601,462) 6,244,161
Emerging Markets Fund............... 5,810,465 (770,811) 5,039,654
</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.
26
<PAGE>
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 (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 is a state-chartered bank and trust
company and a member bank of the Federal Reserve System. U.S. Trust Company is
a Connecticut state bank and trust company. Each is a wholly-owned subsidiary
of U.S. Trust Corporation, a registered bank holding company.
On January 12, 2000, The Charles Schwab Corporation ("Schwab") and U.S.
Trust Corporation entered into a definitive agreement to merge (the "Merger").
After the Merger, U.S. Trust Corporation will be a wholly-owned subsidiary of
Schwab. The Merger is subject to the approval of U.S. Trust Corporation
shareholders. The Merger is expected to take place on or about May 31, 2000,
but could occur later.
As a consequence of the Merger and in order to provide continuity of
investment advisory services, the Board of Directors of Excelsior Fund
proposed for the approval of its shareholders a new advisory agreement with
U.S. Trust. The new proposed advisory agreement was submitted to and approved
by a vote of Excelsior Fund shareholders--see "Voting Results of Special
Meeting of Shareholders". The new advisory agreement will become effective on
the date of the Merger.
U.S. Trust Company, 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, 2000, administration fees charged by
U.S. Trust Company were as follows:
<TABLE>
<S> <C>
International Fund.................................................. $268,535
Pacific/Asia Fund................................................... 58,694
Pan European Fund................................................... 138,026
Latin America Fund.................................................. 16,245
Emerging Markets Fund............................................... 8,858
</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. With regard to Pacific/Asia Fund and Pan European Fund, for
the period from April 1, 1999 through November 18, 1999, U.S. Trust
voluntarily waived fees and reimbursed expenses to the extent necessary to
maintain an annual expense ratio of not more than 1.67% for each Fund.
Beginning November 19, 1999, U.S. Trust contractually agreed to waive
investment advisory fees and to reimburse other ordinary operating expenses
through March 31, 2000 to the extent necessary to keep total operating
expenses from exceeding 1.50% of each of Pacific/Asia Fund's and Pan European
Fund's average daily net assets. U.S. Trust has extended this contractual
agreement through the fiscal year ended March 31, 2001. With regard to Latin
America
27
<PAGE>
Fund and Emerging Markets Fund, for the year ended March 31, 2000, U.S. Trust
voluntarily waived fees and reimbursed expenses to the extent necessary to
maintain an annual expense ratio of not more than 1.67% and 1.65%
respectively. This voluntary agreement will remain in effect until further
notice to Excelsior Fund. With regard to International Fund, beginning
November 19, 1999, U.S. Trust contractually agreed to waive investment
advisory fees and to reimburse other ordinary operating expenses through March
31, 2000 to the extent necessary to keep total operating expenses from
exceeding 1.50% of the Fund's average daily net assets. U.S. Trust has
extended this contractual agreement through the fiscal year ended March 31,
2001.
For the year ended March 31, 2000, no reimbursements were required pursuant
to the above except with regard to Emerging Markets Fund for which U.S. Trust
waived investment advisory fees totaling $28,371.
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
$445,710 for the year ended March 31, 2000. Through the year ended March 31,
2000, U.S. Trust and the Administrators voluntarily agreed to waive investment
advisory and administration fees payable by each Portfolio in an amount equal
to the administrative service fees expense (including fees paid to affiliates
of U.S. Trust) by such Portfolio. They will continue to do so through July 31,
2000. Effective August 1, 2000, U.S. Trust has voluntarily agreed to continue
waiving investment advisor and administration fees payable by each Portfolio
in an amount equal to the administrative services fees expense paid to
subsidiaries of U.S. Trust Corporation. For the year ended March 31, 2000,
U.S. Trust and the Administrators waived investment advisory and
administration fees in amounts equal to the administrative service fees for
the Portfolios as set forth below:
<TABLE>
<CAPTION>
U.S.
Trust Administrators
-------- --------------
<S> <C> <C>
International Fund................................... $295,860 $ 565
Pacific/Asia Fund.................................... 56,097 1,439
Pan European Fund.................................... 94,060 2,368
Latin America Fund................................... 18,635 1,441
Emerging Markets Fund................................ 8,098 --
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the distributor of Excelsior Fund.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman
28
<PAGE>
receives an additional annual fee of $5,000. Effective March 3, 2000, each
member of the Nominating Committee receives an annual fee of $2,000 for
services in connection with this committee.
3. Purchases and Sales of Securities:
For the year ended March 31, 2000, purchases and sales of securities,
excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
Purchases Sales
------------ -----------
<S> <C> <C>
International Fund.................................. $188,204,959 $70,506,578
Pacific/Asia Fund................................... 84,161,904 64,115,349
Pan European Fund................................... 68,208,889 88,229,113
Latin America Fund.................................. 13,826,772 11,535,693
Emerging Markets Fund............................... 10,880,468 5,303,543
</TABLE>
4. Common Stock:
Excelsior Fund currently has authorized capital of 35 billion shares of
Common Stock, 28.875 billion of which is currently classified to represent
interests in one of eighteen separate 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.
29
<PAGE>
<TABLE>
<CAPTION>
International Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 30,061,970 $ 485,999,199 15,653,287 $ 188,824,967
Issued as reinvestment
of dividends........... 3,974 69,436 7,975 102,649
Redeemed................ (22,539,087) (355,769,609) (15,286,397) (183,702,503)
----------- ------------- ----------- -------------
Net Increase ........... 7,526,857 $ 130,299,026 374,865 $ 5,225,113
=========== ============= =========== =============
<CAPTION>
Pacific/Asia Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 20,605,277 $ 193,006,185 7,320,979 $ 41,225,240
Issued as reinvestment
of dividends........... -- -- 14,626 77,077
Redeemed................ (17,398,826) (169,375,018) (9,819,963) (53,977,510)
----------- ------------- ----------- -------------
Net Increase (Decrease). 3,206,451 $ 23,631,167 (2,484,358) $ (12,675,193)
=========== ============= =========== =============
<CAPTION>
Pan European Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 17,951,587 $ 233,776,474 20,254,265 $ 267,588,363
Issued as reinvestment
of dividends........... 97,037 1,222,733 71,063 861,284
Redeemed................ (18,544,702) (238,522,897) (22,279,568) (290,910,879)
----------- ------------- ----------- -------------
Net Decrease............ (496,078) $ (3,523,690) (1,954,240) $ (22,461,232)
=========== ============= =========== =============
<CAPTION>
Latin America Fund
------------------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
-------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.................... 5,697,656 $ 31,220,269 4,637,513 $ 29,862,001
Issued as reinvestment
of dividends........... 16,775 86,729 103,826 468,733
Redeemed................ (5,394,990) (29,054,475) (10,130,927) (61,904,139)
----------- ------------- ----------- -------------
Net Increase (Decrease). 319,441 $ 2,252,523 (5,389,588) $ (31,573,405)
=========== ============= =========== =============
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Emerging Markets Fund
---------------------------------------------
Year Ended Year Ended
03/31/00 03/31/99
---------------------- ---------------------
Shares Amount Shares Amount
--------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold............................ 1,422,216 $ 9,011,110 974,643 $ 4,604,110
Issued as reinvestment of
dividends...................... 104 494 124 534
Redeemed........................ (420,946) (2,568,142) (568,849) (2,539,114)
--------- ----------- -------- -----------
Net Increase ................... 1,001,374 $ 6,443,462 405,918 $ 2,065,530
========= =========== ======== ===========
</TABLE>
5. Organization Costs:
Excelsior Fund has borne all costs in connection with the initial
organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under federal and state securities
regulations. All such costs are being amortized on the straight-line basis
over periods of five years from the dates on which each Portfolio commenced
operations.
6. Line of Credit:
The Portfolios and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus up to 2% per year.
In addition, a commitment fee, based on the average daily unused portion of
the line of credit, is allocated among the participating Portfolios at the end
of each quarter. For the year ended March 31, 2000, the Portfolios had no
borrowings under the agreement.
31
<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 (five of the portfolios
constituting the Excelsior Funds, Inc.), (the "Funds") as of March 31, 2000,
and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 2000, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of the
International, Pacific/Asia, Pan European, Latin America, and Emerging Markets
Funds at March 31, 2000, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended and the financial highlights for the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
/s/Ernst & Young LLP
Boston, Massachusetts
May 24, 2000
32
<PAGE>
Federal Tax Information: (Unaudited)
For the year ended March 31, 2000, 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......................... -- $ 753,000 $301,000
Pacific/Asia Fund.......................... -- -- 394,000
Pan European Fund.......................... -- 14,118,000 236,000
Latin America Fund......................... -- -- 10,000
Emerging Markets Fund...................... -- -- 4,000
</TABLE>
In addition, for the year ended March 31, 2000, gross income derived from
sources within foreign countries approximately amounted to the following:
<TABLE>
<CAPTION>
Foreign Source
Fund Income
---- --------------
<S> <C>
International Fund............................................ $2,755,000
Pacific/Asia Fund............................................. 616,000
Pan European Fund............................................. 1,911,000
Latin America Fund............................................ 342,000
Emerging Markets Fund......................................... 92,000
</TABLE>
For the year ended March 31, 2000, the percentage of income earned from
direct treasury obligations for the Pacific/Asia Fund and the Latin America
Fund was 6.18% and 2.51%, respectively.
--------------------------------------------------------------------------------
Voting Results of Special Meeting of Shareholders: (Unaudited)
The proposal described below was submitted to a vote of shareholders of
Excelsior Fund at a special meeting of shareholders held on May 3, 2000 (the
"Meeting"):
Proposal--Approval of a new investment advisory agreement between the
Portfolios and U.S. Trust:
At the Meeting, the shareholders of each Portfolio approved Proposal as
follows:
<TABLE>
<CAPTION>
Portfolio For Against Abstain
--------- ---------- ------- -------
<S> <C> <C> <C>
International Fund................................ 13,957,167 42,541 99,336
Pacific/Asia Fund................................. 3,800,715 34,142 14,773
Pan European Fund................................. 6,229,669 117,037 58,764
Latin America Fund................................ 1,714,361 6,882 56,939
Emerging Markets Fund............................. 1,348,128 -- 367
</TABLE>
USTIEAS00
33
